request for these programs is appoximately $350 million lower than the comparable amount proposed for fiscal year 1975. Nevertheless, within these constraints, we would fund a number of initiatives by proposing offsetting reductions elsewhere within the total for controllable programs.

NONCONTROLLABLE PROGRAMS

These, as I have said take the form of recommended amendments to the basic authorizing legislation and I know these proposals do not come before the Appropriations Committees but I think it is important to mention them here to provide the context in which our budget is being submitted.

The two largest proposals affect social security programs and would limit, for 1 year only, the July automatic cost-of-living benefit to a 5-percent increase and would introduce greater cost sharing into the medicare program. Together these proposals would save about $4.2 billion.

I would note that the President has proposed that all Federal pay and benefit programs linked to the cost of living be limited to a 5percent increase this year and he is strongly encouraging the private sector to exercise similar restraint on wage and price increases. Nevertheless, total Federal spending for social security cash and medical benefits will increase approximately $7 billion in 1976, assuming that the President's proposals are adopted.

The legislative proposals affecting public assistance include revising the Federal matching formulas in each of the three major public assistance programs: cash assistance, medicaid, and social services. If the Department's recommendations are adopted, the overall average matching rate for these three programs would be approximately 50 percent, although States with low per capita income could still earn up to 78 percent matching under cash assistance and medicaid. We are also putting forward a number of proposals to the authorizing. committees, to tighten eligibility standards in order to focus public assistance benefits on those most in need. These efforts would produce outlay savings for both State and Federal Governments.

With regard to the shift to greater reliance on State funding, it should be noted that our proposals would require less than a 1-percent increase in State funding. Further, total Federal aid to State and local governments is expected to reach $55.6 billion in 1976, $3 billion more than in 1975.

CONTROLLABLE PROGRAMS

As I mentioned earlier, the total budget request for HEW's controllable programs is $350 million less than the 1975 revised estimate. Despite this overall reduction, we have been able to fund a number of program initiatives which I would like to call to your attention.

EDUCATION

The Education budget contains $2.3 billion to provide advance funding for the major formula grants for elementary and secondary education.

I am very proud, Mr. Chairman and members of the committee, of this advanced funding concept. That was started in the 1975 supplemental after we asked for it a year before, and that provides school districts for the first time with early and certain knowledge of the amount of Federal assistance so they can plan to use it as efficiently as possible.

As you know, it was necessary to try to fund 2 years' appropriations in one in order to get this cycle started. We are now on that cycle. I very much hope it will not be interrupted because the certainty of the knowledge and the fact that you have that knowledge early from the point of view of the local school districts and the State education departments makes this Federal assistance at least twice as valuable as before. The 1976 advance funding request includes the amounts necessary to trigger the consolidation that was authorized by the Education Amendments of 1974.

Thus, the consolidation of selected elementary and secondary education programs into two broad categories will be implemented during the next fiscal year and continued on this basis in subsequent years. Besides maintaining formula grant support for handicapped education at the 1975 revised level, the 1976 budget proposes an increase of $26 million in funds for innovative projects to improve the delivery of educational services to handicapped children. In a similar vein, we are proposing new authorizing legislation for vocational education programs which would shift $125 million from the category of general subsidies to school districts for vocational education, to targeted efforts on specific areas of need and innovative educational techniques. This shift will not make a reduction in the total amount of Federal funds being made available to the States but will require more intensive planning and project review before the funds can be spent. We are again proposing full funding for the basic opportunity grant program of aid to disadvantaged college students. Our budget estimate would provide awards up to $1,400 for 1.3 million full-time and part-time students. An increase of $390 million over the 1975 appropriation is needed to carry out this objective. We are also proposing an increase of $24 million over 1975 for the State student incentive program. This would provide assistance to 175,000 students, 109,000 more than under the current appropriation. We would finance these increases by again asking Congress to provide no funds for supplementary opportunity grants and direct loans-programs which we regard as less effective.

The 1976 budget also provides additional funding for research and innovation, including an additional $21 million to implement the new Special Projects Act. $10 million more for the National Institute of Education, and $8 million for educational statistics.

I believe that the National Institute of Education is now demonstrating that it can program its resources effectively. I would hope, therefore, that the Congress will approve the modest increase in program activity proposed in the 1976 budget. There is also a real need for improved educational statistics. There is a fundamental necessity to expand and standardize educational statistics at all levels, from the local school district on up.

If we improve our understanding of what is actually happening, then I think we can make the most efficient use of our Nation's investment in education, which of course is considerable.

This proposed additional funding is a very tiny amount by comparison to the potential benefits.

HEALTH PROGRAMS

The 1976 budget proposes to implement the new health planning legislation enacted into law last December. We are proposing $75 million in both fiscal years 1975 and 1976 to make the transition to the new health systems agencies and the new State health planning bodies authorized by the act.

The budget for the National Institute of Occupational Safety and Health will permit the annual output of standards criteria on hazardous substances to be raised from 8 in 1974 to 20 per year. New emphasis will be placed on identifying and preventing occupational hazards which can cause cancer. In addition, work will begin on amplifying 375 older standards which have remained unchanged since the Occupational Safety and Health Act was first enacted in 1970.

The budget proposes an accelerated effort to enforce standards for the 17,400 nursing homes which receive reimbursements from medicare and medicaid. To strengthen this vital effort, we consolidated the nursing home inspection force in our regional offices last year. The 1976 budget requests 146 new positions to enforce new regulations governing standards for intermediate care facilities. This increase would bring the total inspection staff to 375.

An increase of $72 million over the 1975 revised budget is proposed for the National Institutes of Health, bringing its total investment in biomedical research to $1.8 billion. This increase would be divided about equally between the National Cancer Institute and other activities of NIH.

The budget proposes an increase of $4 million for the next phase of the new Federal, State, and local health statistics system. The situation here is very similar to that existing in education. Major health financing and resource decisions are necessarily made on the basis of fragmentary or poorly documented statistics. We need uniform data and information on aspects of the health services system which we now know little or nothing about. Again, I believe that the potential benefits of improved statistics far exceed the costs involved.

HUMAN DEVELOPMENT

The 1976 budget provides an increase of $30 million over the 1975 revised budget for the Department's human development programs. For children and youth an increase of $20 million will provide additional services to handicapped children in Head Start, and maintain the momentum and activities of the newly established child abuse programs undertaken in 1975. The 1976 budget will concentrate resources on the severely handicapped in the rehabilitation programs, and provide an additional $6 million for increased training support for students qualified to provide skilled rehabilitation services to the severely handicapped.

I think there is a shortage of people who are trained and equipped to do this kind of service and our request would concentrate on trying to provide additional training support to qualify people in that special field.

PRINCIPAL BUDGET REDUCTIONS

In addition to the proposed termination of two of the less effective student aid programs which I mentioned a moment ago, the direct loans and the supplementary opportunity grant, we are also proposing a number of other funding reductions in the controllable programs. The largest single reduction is our latest proposal to reform the impacted area aid program.

Over the years there has been a growing consensus that this program was inequitable and provided windfall benefits to many of the wealthiest school districts. I think it is of some note, Mr. Chairman, that every single President in recent years, and including all of the ones who have come from the Congress, have changed their minds when they became part of the executive branch and decided that the elimination or major revision of this wholly inequitable, but I suppose politically beguiling, program should be undertaken. It might be tolerable to have a system which provided windfall benefits to the wealthiest school districts, even though it wasn't defensible, when our resources are unlimited.

But under today's circumstances, with a projected minimum deficit of $52 billion, it seems to me that continued large scale funding for impacted aid is simply intolerable, and I certainly hope that this view will be shared by enough Members to bring about the revisions that we have proposed.

I think the growth of impact aid, through the efforts of your committee and the Congress, has been dampened a little, but the total cost still remains very high and we are proposing a new approach in the 1976 budget which would require the school districts to absorb the impact of children of Federal employees up to 5 percent of the school district's prior year operating budget.

The way this would work is that a district's entitlement would be calculated on the basis of the percentages of entitlement in the 1975 Appropriation Act. This would then be reduced by a factor equal to 5 percent of its prior year's operating budget. This would reduce. Federal spending by $390 million for that program which, as I said, we regard as quite indefensible.

We are asking States, localities, and private groups to increase their support for health service programs, including maternal and child health clinics, neighborhood health centers, family planning projects, migrant health services, and other special programs directed at disadvantaged groups.

Some have viewed this as an indication of our lack of commitment or support for these programs. It is not that at all. We believe that many of these programs are essential and vital, but we also believe that it is entirely fair, given the existing circumstances, that nonFederal participation be increased to offset the proposed reduction of about 20 percent in Federal grants, and we will be able to maintain the 1975 level of services next year if States and localities believe that

these services are vital for their communities and if they attach the same high priority to these programs that we do. And, I will mention. again the increase of about $3 billion in Federal aid to the States and the fact that the increased funding that we are requesting from the States would amount to something less than 1 percent of the total State funding that is involved.

I understand that proposing even modest restraints on growth in any budget is never easy and probably is unprecedented. I know from long experience that it is even harder to get people to agree to these restraints.

But ultimately I think this is the only way to free funds for new program initiatives without ruinous increases in costs, and it is the only way to prevent more ruinous inflation.

I might also add if we don't do it, we perpetuate the funding of programs which we believe have either outlived their usefulness or perhaps were never really effective, anyway.

These are certainly not normal times and I understand that proposals of this kind have been made before in normal times and rather uniformly and automatically rejected, but I hope this year we will be joined by others in recognizing that the times call for nontraditional actions and a special kind of courage.

I invite and urgently need your help, and on a practical note, I think I should add that I really believe this year that your constituents in all parties and in all districts would welcome such evidence of the determination to do something effective about ever higher governmental spending leading inevitably to ever higher governmental taxation.

Thank you, Mr. Chairman.

Mr. FLOOD. Thank you, Mr. Secretary. As usual, you made an excellent statement in the best Weinberger tradition. I can assure you we listened attentively. We read the statement and we will keep your words in mind as we consider the 1976 budget estimate.

EDUCATION BUDGET

This year, as we have on two previous occasions, we intend to act on the appropriations for the education programs separately. Secretary WEINBERGER. Yes.

Mr. FLOOD. That is, by separate, I mean in a separate education appropriation bill. For that reason, after our overview hearings today and tomorrow with you, Mr. Secretary, and after we complete the hearings on the 1975 supplemental estimates, then we will turn immediately to the 1976 budget estimates for the education programs. When the education appropriation bill has been reported from committee, we shall resume the hearings on the remainder of the HEW appropriations.

Secretary WEINBERGER. I think that is an excellent procedure, Mr. Chairman, and as I mentioned, I am delighted that we were joined in this idea of advance funding last year and I just hope that cycle can be maintained.

Mr. FLOOD. We did this before on two occasions. We ran into a veto once and we overrode the veto on the separate education bill. We know the need back out in the country, and especially with school districts