Sources of Revenue for the State Share of Public Assistance Payments

IN THE fiscal year 1960-61, Federal grants-in-aid were available for five public assistance programs. Grants were first authorized for old-age assistance, aid to dependent children, and aid to the blind in 1935 and for aid to the permanently and tot,ally disabled in 1950. Medical assistance for the aged, the fifth of the grant programs, was established by the Social Security Amendments of 1960; Federal funds for this program have been available only since October 1, 1960. The amount of Federal funds granted to each State is determined in accordance with a formula for each program that is set forth in the basic legislation pertaining to that program. One of the requirements that the States must meet in order to receive Federal funds is that the State plan under which each program is administered must provide for State financial participation in the cost of these federally aided types of assistance. Each State decides whether the non-Federal share of thr cost is to be met entirely from State funds or from a combination of State and local funds. A sixth program, general assistance, is administered without Federal financial participation. -The State and/or local governments have administered general assistance under various names and in diverse forms (money payments, vrndor payments, payments in kind, work relief) from the early days of this country’s history. The program oftrn is financed entirely from local funds. Most frrquently, however, it is supported from State and local funds, and somrtimes it is financed entirely from State funds. In the majority of the States, general assistance is administered by the same State and/or local agency that administers t,hr federally aided catrgorics of assistance. This report, prescnt)s a comparison of thcl amounts rxpended for assistanrr payments from Statr revenues and thr tax sources used by thr States to finance thrir share of public assistanrc in the fiscal years 1960-61 and 1939-40. It also summarizes