Pennsylvania.
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The correct option is "Few children knew how to read printed material."
The care of war orphans was an important function for local organizations, as well as for the state and local government. A typical state was Iowa, where the private "Association of Iowa Soldiers' Orphanages" operated with funds from the legislature and public donations. Orphanages were created in Davenport, Glenwood and Cedar Falls. The state government financed the pensions of the widows and children of soldiers. Orphan schools were created to provide housing, care and education for the orphans of civil war soldiers. They became a matter of state pride, orphans were exhibited around demonstrations to show the power of a patriotic education.
They were treated poorly because of the same reason the Nazi's treated adult jews; it was because of their heritage. After they were sent into camps, it did not matter how old they were, no one was spared of his wrath.
If you want to know exactly what happened to them with great visuals, I suggest plugging "Children of The Holocaust" into YouTube and finding a great visual explanation to go along with your research.