In response to your letter of March 20, 1972, requesting our comments on S. 3368, a bill, which if enacted, will be cited as the "Vocational Rehabilitation Amendments of 1972," we offer the following comments.

Neither S. 3368 nor the Vocational Rehabilitation Act, as amended, contains a provision authorizing the Secretary of Health, Education, and Welfare and the Comptroller General or his representatives to have access, for the purpose of audit and examination, to the books and records of the recipients of the Federal grants. Such authority is provided to Federal grantor agencies and to the Comptroller General With respect to grants-in-aid to States pursuant to section 202 of the Intergovernmental Cooperation Act of 1968, 82 Stat. 1101. We Sunt that the Committee consider providing this authority with respect to other recipients of funds under S. 3368. This could be accomplished by the following language:

"Ich recipient of a grant under this Act shall
keep such records as the Secretary way prescribe, in-
cluding records which fully disclose the amount and
disposition by such recipient of the proceeds of such
Grant, the total cost of the project or undertaking
in comection with which such grant is made or used,
the amount of that portion of the cost of the project
or mydertaking supplied by other sources, and such
records as vill facilitate an effcctive audit.

"The Secretary and the Comptroller General of the United States, or any of their duly authorized repreSalutives, shall have access for the purpose of audit dening tion to suy looks, Corrents, papers, and wevels of this recinical of thy gevat uner this Act hich are pertinent to such grant."

Following are some suggestions regarding the format and organization of the proposed bill.

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Section 15(b)(5) of the proposed bill apparently should read "*** as section 13(d) by subsection (a) of this section" rather then "14(d)". Section 2(b) of the proposed bill should read "Section 7 of such Act is amended by striking out subsection (a) thereof and redesignating subsection (e) as subsection (d)".

The Committce may wish to reorganize the format of the proposed bill. Many of the Act's existing subsections are renumbered by section 15(a) of the proposed bill, after several references and changes have been made to these sections. It may eliminate a certain amount of confusion by inserting the changes contained in section 15(a) of the proposed bill as section 2 of the proposed bill.

Also, there are a number of references contained in the Act which would need to be changed as a result of the revisions contained in the proposed bill.

In section 11(g) of the present Act, reference to section 5(a)(1) should be changed to section 4(a)(1).

In section 11(1) of the present Act, reference to sections 12 and 16, should be changed to sections 10 and 14, respectively.

In coction 11(i) of the present Act, reference to section 11(a)(2)() should be changed to section 9(a)(2)(E); and reference to section 12(c) should be changed to section 10(e).

In sections 12(g) 2nd 13(a)(3)(b) of the present Act, rer wonce to section 5(a)(1) should be changed to section 4(a)(1).

In section 14 of the preacat het, reference to sectina 5(a)(3) should be changed to section 4(a)(3).

In section 15(a) of the rant Act, reference to sections 11(b) and 11(b) should be ching to section9(h) and 9(b), respectively. Also, references

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in section 15(b), (c), and (d) of the present Act to
various subparagraphs of section 5 should be changed
to section 4.

(Additional Departmental letters appear on pp. 1728-1732.)

Senator CRANSTON. Senator Stafford, do you have any remarks at this point?

Senator STAFFORD. I have no remarks at this point, except I am very glad to be here and serve on this very important subcommittee with you and the chairman, Mr. Jennings Randolph.

Senator CRANSTON. Our witnesses this morning are Mr. Stephen Kurzman, Assistant Secretary for Legislation, Department of Health, Education, and Welfare; accompanied by Mr. John D. Twiname, Administrator, Social and Rehabilitation Service; Commissioner Edward Newman, Rehabilitation Services Administration; and Richard E. Verville, Deputy Assistant Secretary for Congressional Liaison.

STATEMENT OF STEPHEN KURZMAN, ASSISTANT SECRETARY FOR LEGISLATION, DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE, ACCOMPANIED BY JOHN D. TWINAME, ADMINISTRATOR, SOCIAL AND REHABILITATION SERVICE; EDWARD NEWMAN, COMMISSIONER, REHABILITATION SERVICES ADMINISTRATION; AND RICHARD E. VERVILLE, DEPUTY ASSISTANT SECRETARY FOR CONGRESSIONAL LIAISON

Mr. KURZMAN. Mr. Chairman and members of the subcommittee, it is a great pleasure to appear before this newly constituted Subcommittee on the Handicapped, many of whose members have long been pioneers of vocational rehabilitation legislation, to discuss the important new measures to extend and amend the Vocational Rehabilitation Act pending before you today. These include S. 3368, the administration's proposal, which was introduced by Senator Taft; H.R. 8395, the bill recently passed by the House of Representatives; and S. 3158, introduced by Senator Williams.

Before addressing these proposals specifically, I would like to take a moment at the outset to describe the administration's goals for the Vocational rehabilitation (VR) program and our plans for improving the Nation's vocational rehabilitation efforts under both the Vocational Rehabilitation Act and H.R. 1.

The vocational rehabilitation program is one which this administration views with a great deal of pride. In 1953, under the Eisenhower administration, the program was identified as one that could provide needed services to a broad segment of the disabled population.

Accordingly, new legislative initiatives for innovation, special projects, training, and increased Federal financial participation were developed and enacted. Over the intervening years, this legislation provided the foundation for the growth of vocational rehabilitation as an important element in aiding disabled people who would otherwise be institutionalized or dependent on others to achieve selfsufficiency through employment.

This administration is fully dedicated to strengthening the longstanding national commitment to vocational rehabilitation. In fulfilling this commitment, we have set two principal goals for the vocational rehabilitation program: first, preventing and reducing dependency and, second, reforming the institutions which deliver vocational

rehabilitation services. Both of these goals are central not only to the vocational rehabilitation program, but also to the Department's overall strategy for meeting human needs.

Whatever the cause of dependency-mental illness, retardation, drug abuse, alcoholism, traumatic injury, or social disadvantage-our main goal is helping individuals achieve a dignified, self-sufficient, and productive way of life through employment. Efforts to prevent dependency respond to the deepest instincts of a society which affirms the ultimate worth and dignity of each individual. As one of the founders of the National Association for Retarded Children once said, "We learn-many of us perhaps only subconsciously-that if our way of life is to survive, every individual-must be counted an individual and accorded his place in the sun."

Moreover, resources invested today in preventing or reducing dependency can yield major long-term economies in the application of society's resources. One disabled individual may, during a lifetime, receive anywhere from $30,000 to $100,000 in public assistance payments. But if he were not dependent and had an average annual income of $8,000, the same individual in a family of four would pay taxes totaling $42,000 over his lifetime. Thus, when a handicapped person is helped to become a contributing member of society, he is transformed from a charge on the public into a productive person able to contribute through his taxes to helping others.

In addition to preventing and reducing dependency, the Department also seeks to enhance the capacity of State and local institutions to serve the public. Consequently, we seek to provide State and local VR agencies with the management tools necessary to respond effectively to the changing needs of their clients and to new target groups.

With the administration's two principal goals of decreasing dependency and reforming institutions in mind, I would now like to explain our efforts under the existing Vocational Rehabilitation Act and our plans for the implementation of H.R. 1 as that legislation was passed by the House in June 1971.

This administration has continued the growth of the vocational rehabilitation program and the development of new initiatives begun in the Eisenhower administration. For example, when the administration took office in fiscal year 1969, the basic service program authorized by section 2 of the Vocational Rehabilitation Act was funded at $346 million. The President's budget request for section 2 in fiscal year 1973 would increase funding to $610 million.

Despite the growth of the program, we have still had to make choices and set priorities. We have decided to emphasize VR assistance to those who need services most, such as the severely disabled and disabled public assistance recipients.

For example, the administration set for itself the target of reaching and serving all trainable public assistance recipients, some 300,000 in number. During this fiscal year, the program served 203,000 disabled recipients, 58,000 of whom were rehabilitated and placed in jobs. Our goal is to be achieved over 2 years with half of the unserved, but eligible, public assistance recipients included in the program in fiscal year 1973, and the remaining half in fiscal year 1974. Thus, over the 2 years, the level of disadvantaged individuals served will rise by 100,000 to a total of 300,000. Our program is also expanding to meet our objectives

of serving other needy categories of disabled, such as the severely disabled.

In addition, we are in the process of developing a "weighted case closure system" which will give greater weight to the closing of more difficult cases than to successes achieved with relatively easier ones. Implementation of such a system should result in a greater effort to serve those with the greatest need for assistance, often the more severely disabled persons.

In another initiative under existing law, the Department has undertaken a major new effort to direct the latest engineering concepts to the benefit of the disabled. Under this program, the Department is estab lishing a national system of Rehabilitation Engineering Centers, where engineers will work with physicians to apply the most modern technology in treating the disabled. The centers will concentrate on problem areas where unique technological capabilities have been demonstrated, such as electrode implantation to stimulate paralyzed muscles. The activities at these centers implement the commitment made by President Nixon in his 1972 state of the Union message to apply to domestic purposes the technological knowledge developed in defense and space efforts.

The administration's existing commitment to vocational rehabilitation is not expressed only through the Vocational Rehabilitation Act (VR). The vocational rehabilitation program would be significantly expanded under the provisions of H.R. 1, the welfare reform measure supported by the administration and now pending before the Senate Finance Committee in executive session.

Under H.R. 1, the State VR agencies would become responsible for determining and certifying the degree of vocational incapacity suffered by individuals applying for public assistance benefits, judgments which they have no responsibility for making under existing law. The State VR agency would also evaluate the work potential of handicapped public assistance applicants and provide them with the rehabilitation services necessary to return them to productive employment. The vocational rehabilitation program would receive 100 percent reimbursement from the Federal welfare agency for these services.

When H.R. 1 is enacted, we anticipate that vocational rehabilitation services for a substantial number of public assistance recipients will be paid for not from VR funds, as is now the case, but from public assistance funds. The result will be the freeing of a significant amount of section 2 funds to serve other handicapped persons. We expect that this will particularly benefit the handicapped to whom a high priority is attached, particularly the economically disadvantaged and the severely disabled.

Mr. Chairman, I would now like to turn to the bills to extend the Vocational Rehabilitation Act which are before your committee for consideration.

In keeping with the strategy I outlined earlier, the Administration's proposed amendments, S. 3368, were developed to meet two main objectives: (a) expanding the scope of the program in an effort to lessen dependency further and (b) providing the management tools necessary for the program to respond better to the needs of its clients, the handicapped.