584 ADDRESSES AND STATE PAPERS

the budget was made. However, the average cost has shot beyond
a day and has reached $77 a clay at two of the larger Baltimore hos-
pitals. In some cases, the costs are increasing at the rate of $1 a day
each month, and there is considerable disagreement among medical
professionals about the need for continuing policies which make these
increases necessary.

"Federal regulations require that we reimburse hospitals at their
full audited cost. If we were to continue the program at its present
level, we would run a deficit of $6. 5 million for the current fiscal year
and face a further increase of at least $18 million next fiscal year.

"Our General Fund revenues, already weakened by an unexpected
drop of $12 million in anticipated sales tax collections, will not ab-
sorb such an increase.

"We intend to continue to try to find an answer to the problem.
We intend to continue our efforts to persuade the Federal government
to adopt more realistic and predictable standards.

"I have today written to the Maryland congressional delegation urg-
ing their help with the problem. I also am asking that the National
Governors' Conference examine this matter as it relates to all of
the states and perhaps through concerted action try to obtain more
flexibility in Federal standards.

"Above all else, we must continue to try to get at the root causes
of the problem — to find some way to stop this astronomical spiral of
increases in costs at our hospitals.

"Meanwhile, there is no other practical answer except to discon-
tinue payments to those who are needy but who don't meet the Fed-
eral standards of abject poverty.

"I regret that the action is necessary and I take it only with the
greatest reluctance. "

NEWS RELEASE AND STATEMENT ON CLOSING FARMS

OPERATED BY MENTAL HOSPITALS AND
JUVENILE OR CORRECTIONAL INSTITUTIONS

December 29, 1967

Governor Agnew announced today that the State will close, as an
economy measure, the farms it now operates in connection with
mental hospitals and juvenile and correctional institutions.

The farms showed a net operating loss last year of $133, 230 ex-
clusive of any funds spent for capital improvements.