This appropriation provides for grants to States under Titles I, IV, X, XIV, XVI and XIX of the Social Security Act. Assistance is provided for needy aged (OAA), blind (AB), and disabled (APTD), persons and families with dependent children (AFDC). Child welfare services and assistance to repatriated United States nationals are also funded from this appropriation.

The amounts requested for the various activities and components are based upon estimates submitted by the States in November 1970, with the exception of child welfare services and assistance to repatriated U. S. Nationals. The estimates for the latter two programs were developed at the Federal level. The States' estimates of November 1970 have been adjusted for administrative actions whose net effect has been to reduce the fiscal requirements. These administrative

actions include a redefinition of unemployed parents as related to assistance for families with dependent children; changes in managerial methods and procedures in the medical assistance program and a limitation of 110 percent of FY-1971 expenditures placed upon the aggregate of maintenance assistance administration, social services and State and local training.

The redefinition of unemployed parents consisted of changing the maximum hours that a parent could work and be considered as unemployed from 35 hours per week to 100 hours per month.

The changes in managerial methods and procedures in the medical assistance program include a more critical review of the utilization of medical services with the intent of substituting out-patient and nursing home care for hospitalization where appropriate and reducing the length of stay in hospitals and nursing homes; requiring prior authorization for extended stays in hospitals and nursing homes by physicians or utilization review panels, the establishment of fee schedules for doctors and dentists and improved surveillance of claims processing.

The President's Budget in Section 208 of the General Provisions, provides for a limitation of 110% of 1971 payments on the amount of the federal payments to each State for fiscal year 1972 for social services, administration of maintenance assistance and related training. The limitation is an attempt to place some measure of control over those portions of public assistance which do not directly affect recipient income pending enactment of proposed legislation which would provide for better control of these expenditures. Historical data indicate that between 1965 and 1970, public assistance recipients have increased by 48 percent and the payments to these people have increased by 62 percent. During this same time period, expenditures for administration, social services and training have increased 324 percent.

Since the States were faced with this limitation one year ago, when it was first proposed, they have had an additional year to increase or shift emphasis on these programs as they desired.

Tables 1, 2 and 3 indicate the levels and rate of growth of social services, administration and State and local training estimated by the States in November 1970 for fiscal years 1970, 1971 and 1972.

Table 4 shows the effect of the 110 percent limitation in total and on each of the individual States. The total effect of this provision is to reduce estimated Federal expenditures by about $111,000,000.

Under the proposed limitation the States would be able to determine the actions they would take to allocate resources between services, administration of maintenance assistance and training. The budget reflects proportionate reductions in these programs but the actual allocation would be at the States' discretion.

Proposed legislation reflected in the President's Budget would provide additional resources for services, administration and training. Under proposed Social Service reform legislation, general appropriations for social services would be limited by allotments at approximately the levels proposed in the budget, but $162,000,000 would be added for foster care and adoptions and for assistance to State governors in planning their social service programs. Proposed Family Assistance legislation would provide additional funds to States for conversion to administration of maintenance assistance under the new system and for staff training related thereto. These additional funds would more than offset the reductions imposed by the 110% limitation, but they would do it in such a way that federal expenditures would be focused on national priorities rather than simply being used to match whatever expenditures the States chose to make.