Mr. Chairman, we intend to issue our report on these

important topics in a few months. At that time, we will advise you of the agency's position on our recommendations and, if

necessary, propose legislation to assure that needed actions are taken.

Mr. Chairman, this concludes my remarks. I would be happy

to answer any questions you may have.

Chairman ROYBAL. What I would like to do is take 5 minutes to ask a question from each one of you and then give everybody an opportunity to question further.

Mr. Bechill, in your testimony, you state that mandatory costsharing in Title III of the Older Americans Act would eventually convert it to a traditional welfare program. Would you elaborate? Tell us how that would happen.

Mr. BECHILL. I think that what would eventually happen it would be an evolutionary process. It would start with mandatory cost-sharing and then the pressures would develop very soon and very shortly to introduce not only income tests but resource tests, and I think it would not take too long for that kind of pressure to develop, and then what you have, Mr. Chairman, at that point is not something that you have had under the Older Americans Act. It has been the strength, and the vitality, and the mission of the Older Americans Act which is to recognize the needs of all older people in the United States. It would be obviating, in my judgment, the whole intent of the Title I provisions of the Act by that kind of a process. I see it as an evolutionary process. It would not happen immediately, but it would happen. The pressure would be moving in that direction.

Chairman ROYBAL. Thank you. Mr. Mangano, I would like to briefly review a major finding in your report: that is cost-sharing being considered fair and appropriate. I don't think there is any dispute in that regard, but there is a very marked difference of opinion even with the people that you interviewed. You state in this major finding that nearly 90 percent of the recipients say paying is fair, and then you go on to say that almost 80 percent say their share is figured fairly. You already lost 10 percent, so the other 10 percent probably would say it was not figured fairly.

Now, if you say it is a hardship to pay, I would agree with that. Nearly all say the states should require seniors to pay something for adult care and in-home services. This again, goes back to the pride of the senior citizen. They want to make contributions, but then in your own major finding you add if they can afford it, which goes back to the present practice.

Senior citizens are participating, as Chairman Martinez has indicated, contributing millions of dollars throughout the country in various programs. No one, apparently, who has a substantial income, if that is the case, refuses to pay. Based just on that particular report, do you still recommend that without going further, without finding out what the income would be in mandatory versus voluntary that mandatory loss should be implemented? Since there have been no studies on this, would you still recommend we go ahead with it?

Mr. MANGANO. Well, Mr. Chairman, our report doesn't make a recommendation as to whether there should be cost-sharing or not. What we tried to do was present what the views were of the persons who were cost-sharing today.

Chairman ROYBAL. I understand that but I would like to know what your opinion is.

Mr. MANGANO. I saw substantial evidence to the effect that seniors supported, and that the state officials supported it. Primarily the seniors want to feel as though they are participating in the cost

of the services, particularly services that they view as valuable to themselves.

The agencies at the state and local level tell us that funds are drying up, and we do need some extra help in that area.

Chairman RoYBAL. All right.

Mr. MANGANO. This helps expand those programs.
Chairman ROYBAL. All right.

Mr. MANGANO. One other point I would like to make is that the states make it a practice that the real low income are not really participating in the cost-sharing as it is right now. They range anywhere from using 100 percent of poverty up to 250 percent of the poverty level so anyone below that level is not participating in the cost-sharing.

Chairman ROYBAL. All right. Mr. York, is it true that it is currently impossible to determine whether the Older Americans Act is adequately serving low-income minorities?

Mr. YORK. Yes, Mr. Chairman. We found such a variety of data problems in the system as we examined it that we were concerned that the Congress does not have information available now to determine what trends are in minority participation and whether specific attempts to improve targeting are effective or not effective. We heard some references to that during the discussion earlier this morning. Some persons testifying argue that there have been favorable trends, in minority participation. I just don't think we know.

Chairman ROYBAL. Thank you. Mr. Martinez.

Chairman MARTINEZ. I was going to push this thing up to give me a little more time, but I can't work it. Mr. Mangano, I am particularly interested in the reversionary statement you made about the amount of properties that were actually sold or no longer used for senior citizens, and the government didn't get any of their investment back, or what they were actually entitled to include in the interest on that investment, or the appreciated value of those properties, and you said you studied three states and in that you said, your statement was, to be accurate, that, "There was a potential for losing $38 million." The potential is something different than losing.

How did you arrive that there was a potential for losing it? Are these properties that are abandoning the use for senior citizens?

Mr. MANGANO. Okay. Let me begin that and then I am going to turn it over to Jack Ferris whose office actually did this study. What we talked about was identifying senior centers of which the U.S. government did have a financial interest in. When we said potential, it meant that there were in at least two of the states no inventories kept and in all three of the states no system to recover if we got to the point where the center was no longer providing the services that they were required or changed ownership out of a nonprofit organization. Jack, do you want to amplify that?

Mr. FERRIS. Yes. We did three states, and, essentially, what we found was there was no accountability of the properties that we acquired either through construction, acquisition, or renovation. The states did not maintain records, discrete records, which would show which ones still exist and were used for the purposes of the program, which ones may have been sold, and the Federal Govern

ment also did not have an inventory which would reflect this kind of information.

In addition, many of the states did not have any procedures in place which would reflect the Federal requirements which would set forth the processes to dispose of and allow the Federal Government to recapture its portion of the funds in the appreciated value on that property.

Chairman MARTINEZ. Well, I understand that if the Federal Government has invested in something for a purpose and then that purpose is no longer or that they have acquired is no longer used for the purpose in which they acquired it, that they have a right to expect that their money is going to be returned, but you said there was a potential for $38 million. What you have said right now is that there is no reporting system to identify what has been lost or is in danger of being lost because you have some evidence that it is no longer going to be used for senior citizen purposes. I think that is an assumption you make rather than an accurate conclusion that you make.

But what I am interested in is, in fact, if you say that the states don't have these inventories, that maybe we need to do something to put in place the requirement for them to maintain inventories so that we can accurately determine what you have assumed that there is a potential for this great loss. Do you have a record-do you have knowledge of even in the three states of properties that reverted to some other use or were sold and the government did not recover their portion of equity?

Mr. FERRIS. I think your recommendation is right on target, sir, with regard to establishing an inventory system. The Commissioner on Aging, Dr. Berry, has indicated and has instructed the states to put in a place an inventory system. At this time, the $38 million which we talked about with regard to the three states are those at risk. It is not that they have been sold and this money is due to the Federal Government. That is not the case.

Chairman MARTINEZ. Well, then I think it is a little misleading to say that there is a potential for a $38-million loss, but thatnever mind that. If there even were in that small number, three states, you have got to realize that there is a potential, and I could see where, yes, if nationwide the government has invested monies and has an equity built up in properties for a purpose and it is no longer used for that purpose, I think the government is entitled to get it back.

I would like to see that money come back and reverted back into the use for the same programs. I hope that would be the recommendation, but you really wouldn't be able to have any of this information until those inventories were in place so that you can then monitor it.

Mr. MANGANO. That is correct.

Chairman MARTINEZ. Now, I think that is something that we need to do really because it seems like there might be a potential of great loss of dollars to the program itself. If we then consider since they were initially used for that purpose and they revert back or we gain that money back, that it should be used for that purpose again someplace else where there is a greater need. Would you agree with that?

Mr. MANGANO. We agree with that. We have made the recommendation that the Commissioner institute measures to obtain that inventory, and the Department is working on its own.

Chairman MARTINEZ. Mr. Bechill, your testimony is-I am quite a bit in sympathy with your testimony, and since you are a former Commissioner on Aging and you adamantly oppose cost-sharing, what are the alternatives? You know, we have talked about some form of matching funds on an incentive basis from states, we talked about public/private partnerships, but what are the alternatives to inject more dollars into this? Because even if we are able to successfully authorize and appropriate monies, additional monies for this, we have great opposition from the Administration for more monies. They still feel we can do more for less even though we have done as much as we possibly can for that less so what are the alternatives?

And in line with that question, because my time is running out and you will get to answer it beyond the red, what is your position on moving from the philosophy of the Older Americans Act, as you state in your testimony, which was really to be for all older Americans without cost? Those two.

Mr. BECHILL. Well, I don't think that you can realistically accomplish the missions of this program without substantially increased public dollars from Federal, State, and local governments. I have to say that. I was very interested in Congressman Fawell's comments. Maybe one of the mistakes that was made in this program was not requiring some mandatory sharing by State governments of the Federal dollars that were coming in particularly under the Title III program.

We need to look at what are the ways that we can encourage incentives for State and local governments to provide matching money without going to a means-test.

Now, let me mention something about the 36 states. I just have a feeling that most of those 36 states have started cost-sharing in connection with in-home services or community-based, long-term care programs. They have done that out of the fact that we do not have a coherent, long-term care policy in this country, and they are feeling the pressures. They are feeling the pressures on their Medicaid program, and they look to any resource including the Older Americans Act, to meet part of those pressures including alternative services. This is what has driven a lot of the states and the governors of the states to go the cost-sharing route with non-federally matched monies that they control and have been appropriated by the States.

So, it is a very complex issue. The philosophy of the Older Americans Act, in my opinion, should not be changed. It is one of the finest programs that I think the United States Congress ever has enacted in behalf of older people. I rank it along with the Social Security Program and the Medicare Program for a program that has large and widespread public acceptance. The reason for that is that underpinning it is this philosophy of a universal program for all older people, people being treated with respect and dignity, and I know something about a means-test. I have been a social worker for over 41 years. I started as a welfare investigator in the City of Detroit. I ran and was the Director of a County Department of