on the federal matching share of medicaid costs, a condition not imposed on states. Virgin Island health and social service are discriminatory and limit the ceilings that officials claimed local government's ability to provide service to territorial They believe the Virgin Islands should be considered residents. Puerto Rico beaS a state for the purpose of program funding. lieved that all programs available to states should be fully Although Puerto Rico does receive available to Puerto Rico. statelike treatment for most federal programs, ‘there are some exceptions; it is excluded from the Supplemental Security ,Income program, as are all other territories except NMI, and receives set funding levels for Aid to Families with Dependent Children, Medicaid, and the Social Services and Nutrition Assistance Block A consulting firm under contract with the Puerto Rican Grants. government estimated that Puerto Rico would have gained about $1 in billion in federal program benefits receiving the same benefits as states. In fiscal year 1981 its comprehensive economic study of Puerto Rico in December 1979, ings, issued the Department of Commerce stated that "There is no apparent underlying the mixture and by consistent rationale of exclusions, ceil- differential matching rates that are currently applied by Congress to Puerto Rico in its Federal program participation.” As far as we could determine, the conclusion reached then by the Commerce study remains true today. THE FEDERAL GOVERNMENT RECOGNIZES PROBLEMS AND HAS TAKEN SOME CORRECTIVE ACTION In recent years, the United States has shown greater under- standing and flexibility in dealing with the territories' unique ‘conditions. Legislation has been passed to provide special treatment, such as Title V of Public Law 95-134 enacted in 1977 which authorized federal agencies to consolidate certain grants to the territories to minimize administrative burdens created by application and reporting procedures. Under this law, federal agencies may permit a territory to submit a single application for a consolidated grant. Territorial program officials said that grant consolidation bas significantly eased program admini- stration. The . Congress limitations; has Public also Law recognized 96-205 the enacted territories" in 1980 funding directed the Department of the Interior to waive matching requirements for all grants to the territories, and other federal departments were required to waive matching 37 5000244 requirements for grants under