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governmental relationships need the most careful study so that financial self-sufficiency and harmonious fiscal policy among the various governmental units may be promoted to the greatest extent possible.

Under the best possible division of fiscal responsibility, however, there will remain wide differences in the available tax and revenue resources of the States and localities. In order to encourage the States to provide the assistance required for health and decency, Federal participation in financing old-age assistance, aid to dependent children, and aid to the blind should be continued on a basis whereby the Federal Government will pay a higher proportion of the total cost of assistance in the low-income States than in those with high per capita income.

The Council believes, furthermore, that differences between the. needs and resources of the various counties within States require a flexible use of State and Federal funds on an equalization basis so that State plans may be uniformly and equitably in effect in all parts of a State. The Council believes that this end may be attained by State action and by Federal participation in the development of State plans, and that further Federal legislation is not now required to effect the desired end.

RECOMMENDATIONS

1. The Federal Government's responsibility for aid to dependent children should be made comparable to the responsibility it has assumed for old-age assistance and aid to the blind. In determining the extent of Federal financial participation, the needs of adult members of the family as well as of the children should be taken into consideration. Federal funds should equal three-fourths of the first $20 of the average monthly payment per recipient (including children and adults) plus one-half the remainder, except that such participation should not apply to that part of payments to recipients in excess of $50 for each of 2 eligible persons in a family and $15 for each additional person beyond the second

Today more than 1.1 million children under 18 years of age are receiving aid to dependent children through the State-Federal program because one or both of their parents are dead, absent from the home, or incapacitated. These children, regardless of the State in which they now live, will someday find their place in the productive activities of the Nation and, should the necessity arise, will take part in defending our Nation. Many of these children will be seriously handicapped as adults because in childhood they are not receiving proper and sufficient food, clothing, medical attention, and the other bare necessities of life. The national interest requires that the Federal Government provide for dependent children at least on a par with its contributions toward the support of the needy aged and blind.

Since Federal grants to States under the Social Security Act were first available, the Federal Government has made it possible for States to provide higher assistance payments to the needy aged and the needy blind than to those who meet the act's definition of "dependent children." The maximum amount of assistance payments in which the Federal Government will participate, beginning October 1, 1948, will be $50 for old-age assistance and aid to the blind and $27 for the first child and $18 for each additional child in a family receiving

aid to dependent children. The Federal share of payments for oldage assistance and aid to the blind will be three-fourths of the first $20 of the average monthly payment per recipient, plus one-half the remainder within the maximums. The Federal share in aid to dependent children will be three-fourths of the first $12 of the average monthly payment per child, plus one-half the remainder up to the maximums. Thus the Federal Government will contribute a maximum of $30 a month toward meeting the needs of a recipient of old-age assistance or aid to the blind, while the maximum Federal contribution in aid to dependent children will be $16.50 for the first child in a family and $12 for each additional child aided. Yet, by and large, families with dependent children need as much in assistance payments as do aged and blind persons.

Further evidence of the favored position of old-age assistance and aid to the blind is found in the proportion of the total expenditures for assistance supplied by the Federal Government in States with approved plans. În 1947, under the matching formula then in effect, Federal funds represented 53 percent of total expenditures for old-age assistance and 51 percent for aid to the blind, but only 39 percent for aid to dependent children. (See appendix A, tables 3, 4, and 5.) The Federal Government contributed $19.05 a month per recipient of old-age assistance, as compared with $6.92 per person receiving aid to dependent children (including the children and one adult in each family). In all States the average payment to recipients as well as the average amount paid from Federal funds was lower in aid to dependent children than in old-age assistance. (See chart A, p. 13.)

We believe that it is sound national policy for the Federal Government to make it possible for the States to provide payments for aid to dependent children comparable to those for the needy aged and blind. This result could be substantially attained if the Federal maximums for aid to dependent children were established at $50 for each of the first two persons in a family and $15 for each additional person and if the Federal Government shared in assistance payments within these maximums on a basis similar to that in old-age assistance and aid to the blind. Under our recommendation, Federal funds for aid to dependent children would equal three-fourths of the first $20 of the average payment per recipient, plus one-half the remainder within the maximums. The maximum Federal share would be $30 for each of the first two persons in a family and $11.25 for each additional

person.

In determining the extent of Federal financial participation, the needs of the adult members of the household who are essential to the well-being of the children should be taken into consideration. Thus for a family consisting of a mother and one child, the Federal Government should participate with the State in an assistance payment to the child and to the mother. The mother and child would thus be entitled to the same consideration from the Federal Government as a husband and wife when both receive old-age assistance.

The matching formula in effect from October 1, 1946, to September 30, 1948, set the Federal share of assist ance payments at two-thirds of the first $15 of the average monthly payment per recipient, plus one-half the remainder within the maximums of $45 for old-age assistance and aid to the blind, and two-thirds of the first $9 of the average payment per child plus one-half of the remainder within the maximums of $24 for the first child and $15 for each additional child aided in a family receiving aid to dependent children.

CHART A

OLD-AGE ASSISTANCE AND AID TO DEPENDENT CHILDREN: AVERAGE MONTHLY PAYMENT PER RECIPIENT FROM FEDERAL, AND STATE AND LOCAL FUNDS, CALENDAR YEAR 1947

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toNE ADULT PER FAMILY, AS WELL AS THE CHILDREN, COUNTED AS A RECIPIENT.

Many families, of course, would not receive payments as high as the maximums set for Federal participation, since the amount of the payments would depend on the extent of the need of the children and adults and on the willingness and ability of the States and localities to put up their share of the cost. In October 1947, 34 percent of all payments for aid to dependent children were below the existing low maximum in the Federal law. (For distribution of payments for October 1947, see appendix A, table 9.)

The estimated additional annual cost to the Federal Government for the liberalized provisions for aid to dependent children that we have recommended would range from a low of $135,000,000 to a high of $160,000,000. This estimate is based on March 1948 case loads, the latest month for which data are available.

2. Federal grants-in-aid should be made available to the States for general assistance payments to needy persons not now eligible for assistance under the existing State-Federal public assistance programs. Federal financial participation should equal one-third of the expenditures for general assistance payments, except that such participation should not apply to that part of monthly payments to recipients in excess of $30 for each of two eligible persons in a family and $15 for each additional person beyond the second. In addition, the Federal Government should match administrative expenses incurred by the States for general assistance on a 50-50 basis, in the same manner that it now shares in administrative expenses for the existing State-Federal public assistance programs. The proposed grants-in-aid for general assistance, however, should not be considered as a substitute for a program designed to deal with large-scale unemployment 5

The Social Security Act limits Federal participation in the costs of public assistance to three groups of needy persons-the aged, the blind, and certain children. Federal funds may be used along with State funds for an assistance payment to a man aged 65 or over, but not to his 64-year-old wife, who may be just as much in need. Federal funds are available for assistance payments to a person handicapped by blindness but not to one incapacitated by paralysis. The Federal Government will share in the cost of aid to needy children living with certain relatives under conditions specified in the Social Security Act, but if the children are living with relatives other than those enumer ated or are living with their parents under conditions other than those specified, the Federal Government assumes no share of the cost of assistance for them, regardless of how needy the children may be.

The persons who are not eligible for public assistance under the Social Security Act and who require assistance during periods of high employment usually have physical or mental handicaps, suffer from temporary or chronic illness, or are unable to earn a living because of age or home responsibility. In addition, there are some persons who, even during periods of high employment, are temporarily unemployed, are ineligible for unemployment insurance benefits, lack resources, and therefore require assistance.

• Four members of the Council do not favor Federal grants-in-aid for general assistance, but do favor the expansion of aid to the needy blind to include other disabled persons. The reasons for this opinion are given in appendix C.

Three members of the Council believe that its recommendations on Federal grants-in-aid for general assistance should be as generous as those for other categories.

The State-Federal vocational rehabilitation program provides payents for the maintenance of needy disabled persons when they are ceiving training or services directed toward physical restoration, it that program provides no financial aid for their families. Payents for maintenance are made to facilitate rehabilitation of disabled dividuals who must meet three basic conditions of eligibility: (1) hey must be of employable age, (2) they must have an occupational ndicap by reason of disability, and (3) it must be possible for them become employable or more suitably employed through rehabilitaon service. Only 13,062 persons received maintenance payments der this program during the fiscal year 1946-47. The responsibility rother persons without resources, who are not eligible for assistance der the existing State-Federal programs, now rests with the States d localities.

In March 1948, 402,000 cases (900,000 persons) were on State and al general assistance rolls, and assistance expenditures from State d local funds totaled $18,000,000 for the month. The average yment per case ranged from $67.16 in New York to $10.39 in ississippi.

Wide differences in average payments are found not only among ates, but also among communities within States. In some nmunities, general assistance payments are grossly inadequate. one community, for example, the local public welfare agency granted ly $2.50 per family per month to meet all the needs of the destitute nilies on the rolls. In another county, general assistance payments eraged $2.75 per person per month.

In 15 States general assistance is financed exclusively by the alities. In 15 additional States the local units of government bear re than half the costs (see chart B, p. 16). In view of the fact that ny States have shown little interest in contributing to the general istance program within their own boundaries, one may well ask y the Federal Government should contribute. The Council does believe that lack of interest on the part of some States should deter Federal Government from offering to bear a part of the cost of eral assistance. The Council believes that as in old-age assistance, to the blind, and aid to dependent children, State financial parpation should be made a condition of Federal aid to general istance. When the financing of any assistance program is dependupon the revenue that can be raised by local units of government hout substantial contributions from a governmental unit with ader revenue-raising resources, the assistance needs of persons iding in impoverished communities cannot be met.

Many localities lack revenues sufficient to finance the other governntal functions imposed upon them and at the same time to furnish equate aid to needy persons. States and localities tend to put the ney available for public assistance into the programs in which State 1 local dollars will be augmented by Federal matching. This situan is particularly true in low-income States. Consequently, the visions for public assistance in the Social Security Act, which ognize the needs of only those among the aged, the blind, and the >endent children who meet prescribed conditions of eligibility, netimes have the effect of depriving other needy persons of adequate p from State and local funds.

80258-48-4

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