of Governor Herbert R. O'Conor 197

I should like to see the Federal departments withdraw gradually from the field
of direct administration, and supply to the states the type of advisory and
supervisory service, along with financial participation, that Maryland renders
to its local agencies. The Federal Government is in a position to lay down
broad principles of national policy, and to study effective methods of carrying
these into effect; but it should not be necessary for it to administer the pro-
grams directly, at the expense of State and local initiative and responsibility.

In saying this, I would distinguish between those programs in which the
objective is primarily national, that is to say, within the powers delegated to
the Federal Government exclusively, and those where the general welfare of
individual citizens or groups of citizens is involved. In the latter field coopera-
tion is essential, and the primary administrative responsibilty should rest upon
the states, within the broad outlines of policy laid down by Congress. Too much
centralization in the Federal Government will not only upset the balance of
Federal-State relations, and tend to destroy the spirit of local self-government,
but it will throw such additional burdens upon the Federal Government as to
interfere seriously with the performance of strictly Federal functions, such as
National Defense, for example.

Let us examine for a moment the basis of Federal financial participation.
Certainly it is regarded as a step forward that the Federal share of expendi-
tures for the three types of public assistance is now on the same basis—all
one-half, instead of one-third for aid to dependent children, and one-half for old
age assistance and the blind, as was formerly the case. This was a difference
which had no reason and it is a matter of satisfaction that dependent children
will now benefit in the same proportion.

The bases of sharing in the cost of administration, however, have not yet
been made uniform. The states still receive, as the contribution of the Federal
Government toward administration of old-age assistance, 5% of the total
Federal assistance payments during the period, whereas in the case of aid to
dependent children and the blind, the Federal Government pays one-half of the
actual expenditures for administration. These three should be made uniform,
due to the fact that unnecessary complexity arises from lack of such uniformity.
Whether this should be accomplished by making old age assistance like the
other two, or by making the latter two like the old age assistance, is a moot
question.

The difficulty which the departments encounter when the Federal Govern-
ment offers to pay one-half actual administrative costs is an expressed need on
the part of the Federal agencies to examine what items of administration go
into the total. Methods for determining these costs are still questionable, and
elaborate systems of time studies are burdensome to the agency. Most states
have multiple administration—that is, all types of relief and assistance, in-
cluding the referral of persons for WPA, the distribution of surplus com-
modities, and so on, are lodged in the same department. To isolate the separate
costs of each type of program is a complex problem in cost accounting which
has not yet been solved satisfactorily.

On the other hand, there are weighty arguments against the use of a
percentage of total expenditures as a way to determine what administrative
costs ought to be. This has frequently been pointed out, but to illustrate one
of the weaknesses of the use of a percentage as a measure of administration,
let me use the following examples. Let us say that in one hypothetical depart-