Federal Grants to State and Local Governments, 1953–54

3). This amount was equal to a little more than 89 percent of the total increase in monthly old-age and survivors insurance benefits paid to these cases. The average reduction in the old-age assistance payment was $4.44; the average increase in the old-age and survivors insurance benefit was $4.98. For aid to dependent children, the total reduction of $197,000 in monthly assistance payments equaled 91 percent of the total increase in monthly benefits. The average reduction in their assistance payment was $7.48 per family, compared with an increase of $8.24 in the family insurance benefit. The total reduction in the assistance payments was less than the increase in old-age and survivors insurance benefits for various reasons. Need previously unmet, particularly need for medical care, absorbed part or all of the increase in benefits for some cases. These were usually cases in which State maximums had prevented larger payments. Some agencies recognized new items of in. dividual need or raised the amount allowed in their standards for basic items, thus increasing the amount of need required. Michigan, for ex. ample, added a monthly medical allowance of $2 to requirements at the same time the old-age and survivors insurance benefit was increased. In New York, the seasonal increase in the fuel and clothing allowance diverted some of the increase in bene. fits. Montana raised the allowance for shelter in October, but the effect on payments was not noticeable because the increase was made effective at the time of the periodic reinvestigation process. Other States have a policy permitting use of income for needs of dependents, which modified the effect of the increase in benefits. Louisiana, Michigan, and Minnesota have such policies. In States where payments are based on a percentage of the budget deficit, the reduction in assistance payments represents only a per. centage of the increase in benefits even though the entire increase was considered. In New Mexico, for example, the payments for aid to dependent children meet 80 percent of the budget deficit. When the budget was recalculated on the basis of the increased benefits and the percentage adjustment applied, the decrease in payments for many cases was 20 percent less than the increase in old-age and survivors insurance bene. fits. In contrast, reductions in pay. ments that were larger than the increase in benefits were reported by 15 States for old-age assistance and 18 States for aid to dependent children. Tennessee, for example, put into effect restrictive policy measures that accounted, in a number of cases, for a decrease in payments in addition to that produced by the higher oid-age and survivors insurance benefits. In five States-Alaska, Florida, Mississippi, Missouri, and South Dakota-reductions in monthly assist. ante payments to beneficiary families receiving aid to dependent children amounted to less than half the total increase in their insurance benefits. In Mississippi the reduction both for that program and for old-age assistance represented less than one-third the increase in the monthly insurance benefits. Table 3.-Old-age assistance and aid to dependent children: E#ect of increase in OASI benefits on monthly expenditures for assistance payments for cases reported through December 1954, by State 1