H.R. 2264 -- DEPARTMENT OF LABOR, HEALTH AND HUMAN SERVICES, EDUCATION, AND
RELATED AGENCIES APPROPRIATIONS BILL, FY 1998
(Sponsors: Livingston (R), Louisiana; Porter (R), Illinois)

The Committee has developed a bill that provides requested funding for many of the Administration's priorities. We are pleased that the Committee has fully funded Bilingual and Immigrant Education, School to Work, Head Start, Technology Literacy Challenge, 21st Century Community Learning Centers, the targeted portion of the Title I formula, and education statistics and assessment. The Administration is also pleased that the Committee has limited the number of appropriations riders consistent with the terms of the Bipartisan Budget Agreement. The House is urged to continue this practice. However, as discussed below, the Administration will seek restoration of certain of the Subcommittee's reductions.

The Administration is committed to working with the House to identify reductions in the bill in order to find offsets for the restoration of funds that the Administration seeks. For example, the Committee bill provides nearly $1 billion more than the President has requested for more than two dozen authorities in the Department of Education, while cutting the President's request by over $1 billion. We strongly urge the House to reduce funding for lower priority programs, or for programs that would be adequately funded at the requested level, and to redirect funding to programs of higher priority, particularly those contained in the Bipartisan Budget Agreement as noted below.

Department of Education

The Administration appreciates the Committee's efforts to provide substantial new funding for education activities. Unfortunately, the Subcommittee has failed to provide the $260 million necessary for the President's America Reads Challenge in the Department of Education, and the bill provides only $10 million of the $42 million requested for America Reads in the portion of the Corporation for National and Community Service budget funded by this bill. The Committee has provided advance funding for America Reads to the Department of Education for FY 1999, pending new authorization, which would produce a full year's delay in getting needed reading assistance to millions of children. The Bipartisan Budget Agreement specifically calls for funding a lite racy program, "with the goals and concepts of the President's America Reads program" at the levels proposed in the President's FY 1998 Budget. America Reads is one of the Administration's highest funding priorities. The Administration believes that the full funding should be restored to both the Department of Education and the Corporation for National and Community Service for FY 1998.

The Administration is working closely with the authorizing committees to develop legislation effective for FY 1998. There is ample time to enact legislation, as needed, by April 1 for a program that would begin on July 1, in time for summer activities and the 1998 - 1999 school year.

The Bipartisan Budget Agreement calls for a $1.7 billion increase over FY 1997 for Pell grants, to support both a $3,000 maximum award and expanded eligibility for independent students. The Committee bill underfunds the independent student policy by $197 million, contingent on authorization during the year. The Administration is proposing to aid independent students in the Higher Education Act reauthorization proposal, but based on information from the authorizing committees, the Administration cannot expect the Act to be reauthorized in time to make FY 1998 awards. Rather than withhold this benefit from independent students, the Administration proposes that the appropriation act include one year of authority while the reauthorization process is complete d. This authorization is no different from the Committee's annual procedure of authorizing the maximum Pell grant award. In accordance with the terms of the Bipartisan Budget Agreement, we urge the House to fully fund Pell grants and to authorize both the maximum award and the independent student change.

The Committee bill funds Education Reform at $1.13 billion, $110 million below the level assumed under the Bipartisan Budget Agreement. Within the total, GOALS 2000 is funded at only $475 million, $145 million below the request. GOALS 2000 funds provide essential support to virtually every State's education improvement strategy. We strongly urge the House to restore full funding for GOALS 2000.

We appreciate the Committee's support for development of voluntary national tests for 4th grade reading and 8th grade math. We support the bill's requirement that the Department of Education contract with the National Academy of Sciences to conduct a study and report on the testing initiative. We are seriously concerned, however, that the bill fails to provide adequate FY 1998 funding for development of the tests within the Fund for the Improvement of Education.

The Administration urges the House to provide the funds necessary for this important national effort to make sure our students are mastering the basics and meeting challenging standards in reading and math and would strongly oppose an amendment that may be offered that would restrict the Administration's ability to move forward on our plan for educational testing.

The Committee has included language amending the definition of an eligible lender in the Federal Family Education Loan Program. The language would provide a broad exception to the current limitation on how much of a bank's portfolio can be guaranteed student loans, including loans that a bank holds as a trustee for a third party. It would also allow finance companies, the financial solvency of which is not regulated by a public entity as are banks, to be eligible lenders. Both of these provisions would increase the Federal exposure to financial risk and weaken parts of the statute that have been passed specifically in response to prior abuses. The provision should be stricken from the bill.

A number of other high priority Education programs are funded significantly below the President's request. These include Adult Education, Safe and Drug-Free Schools, Eisenhower Professional Development, and Charter Schools. We urge the House to fully fund these activities at the levels requested in the President's FY 1998 Budget.

Department of Health and Human Services

The Administration is deeply concerned that the Committee has failed to provide $21 million for the Administration's new Adoption Initiative. The goal of this program is to double the number of children adopted or permanently placed outside of child welfare systems by FY 2002. The additional investment is small compared to the potential rewards of placing children in supportive and loving homes. The Administration strongly urges the House to fully fund this urgently-needed program at the President's requested level.

We understand that an amendment may be made in order that would expand the current "Hyde Amendment" prohibition on Medicaid payment for abortion services to include a prohibition on the purchase of health benefit coverage that includes abortion. The President believes that abortion should be safe, legal, and rare. We believe that the amendment could curtail the availability of State-only and privately funded abortion services. Most States purchase health coverage for Medicaid beneficiaries from managed care organizations (MCOs). Under this amendment, States may be prohibited from contracting with MCOs that offer abortion services to any woman, even using private or State funds. This provision could limit States' ability to negotiate contracts with providers, limiting access to quality care for Medicaid beneficiaries. This prohibition could also limit States' flexibility to purchase abortion services with their own funds and may even have the effect of causing MCOs to drop all coverage of abortion services for women with private health insurance so the MCO may continue to participate in the Medicaid program. The Administration opposes this attempt to constrain further the availability of abortion services and strongly urges House not to adopt this amendment.

The Administration supports efforts to encourage minors to discuss their health care needs with their families. However, it would oppose a potential amendment on the House floor requiring parental consent for minors to receive reproductive health services in Title X Family Planning clinics. Mandating parental consent could discourage sexually active minors from seeking health care and reproductive counseling services and thus lead to more unwarranted pregnancies, more abortions and more sexually transmitted diseases, including HIV, among our nation's youth. As an alternative, the Administration supports the amendment adopted in Committee that requires clinics to certify that they encourage family participation in the decision of minors to seek family pla nning services and provide counseling to minors on resisting attempts to coerce minors into engaging in sexual activities.

The House Committee has not provided funding for the Medicare Transaction System (MTS), noting criticisms of the MTS design. The President's $89 million request would fund consolidation of HCFA's current contractor systems, which needs to occur prior to, and independent of, final resolution of MTS design issues. The Committee also notes that funding for the Medicare Integrity Program, established by the Kassebaum-Kennedy legislation, could be used to fund MTS. We believe that using Medicare Integrity Program funding for this purpose would be inappropriate since it was established specifically to combat fraud and abuse. The Administration urges the House to restore funding to the requested level to the extent possible.

The Administration is pleased that the Committee has provided the requested increase of $40 million over FY 1997 for Ryan White AIDS Treatment Grants, and an additional $132 million to help States purchase drugs. However, the Subcommittee has not allocated the $40 million increase among the Titles of the Ryan White CARE Act toward primary care as proposed in the FY 1998 Budget. The Administration's proposed allocation targets additional resources to those Titles that emphasize the delivery of primary care, a particularly important priority now that the prospects for medical care for people infected with HIV have improved dramatically. The Administration looks forward to working with Congress to ensure that the resources provided to the Ryan White AIDS Treatment Grants are distributed consistent with the priorities placed on primary care in the President's budget.

The Administration is concerned that the Committee bill does not appropriate a specific amount for AIDS research through a single appropriation for the National Institutes of Health's (NIH's) Office of AIDS Research as requested in the President's budget. The single appropriation would help NIH plan and target NIH research funds effectively, minimizing duplication and inefficiencies across the 21 institutes and centers that carry out HIV/AIDS research

The Administration is concerned that the Committee has not provided the full increase requested for HIV prevention programs of the Center for Disease Control and Prevention. The Budget proposes a $17 million increase for this activity to target HIV prevention for intravenous drug users at risk of developing the virus. The Administration urges the Committee to provide the full requested amount to the extent possible.

The Committee has rescinded $21 million in mandatory research funds. The President's request assumes $18 million in discretionary and $21 million in mandatory welfare research funds, for a total of $39 million. The Committee has provided only $26 million in Administration for Children and Families and Assistant Secretary for Planning and Evaluation. In order to gauge the effects of welfare reform, research is needed now more than ever. The Administration urges the House to drop the rescission and to fund welfare research at the President's requested level.

Department of Labor

The Bipartisan Budget Agreement specifies funding at the levels proposed in the President's budget for Training and Employment Services, including Job Corps. The Committee mark provides the Administration's request for low-income youth and adult training programs, dislocated workers, and the Job Corps. However, in order to be consistent with the Agreement, we urge the House to provide an additional $233 million to fully fund the request for new and existing TES programs in FY 1998. The Committee has provided $100 million in FY 1999 for the Youth Opportunity Area proposal subject to passage of authorizing legislation. This program may be carried out under existing legislation, and a separate authorization is not necessary. The House is urged to provide resources for this initiative in FY 1998 without the restriction provided by the Subcommittee.

The Administration appreciates the Committee's allocation of $200 million to help finance the year 2000 conversion of State Unemployment Insurance (UI) systems. However, the Committee has failed to provide $89 million for spending on UI "integrity" initiatives (e.g., increased eligibility reviews, tax audits). This spending is explicitly assumed in the Bipartisan Budget Agreement, and would, over five years, achieve $763 million in mandatory savings assumed in the Agreement. The House is urged to provide this increase.

On July 17, 1997, the President sent to Congress a budget amendment for $6.2 million for the Labor Department to administer the $3 billion Welfare to Work program. This program is agreed to by Congress in the Bipartisan Budget Agreement and will be included in the final Reconciliation bill, effective October 1, 1997. We urge the House to add these funds to this appropriation bill so that the administrative resources needed to move long-term welfare recipients off of welfare and into lasting unsubsidized employment are available on a timely basis.

Social Security Administration

The Committee has provided $245 million for additional Continuing Disability Review (CDR) funding and SSI reforms implementation, $45 million less than the President's request. The pending reconciliation bill contains a provision that would provide authority for a $290 million upward cap adjustment ($45 million more than current law) to the non-defense discretionary spending caps for funding provided by the Subcommittee for additional CDRs.

This is consistent with the President's request. Failure to provide the additional funds means some 15 percent fewer individuals will have their status reviewed in FY 1998, potentially costing hundreds of millions of dollars in benefits to individuals who would have been found no longer eligible. We urge the House to provide the additional $45 million.

The Committee has included language to authorize increases to the fee States pay SSA for administering State payments that are supplemental to SSI benefits, and provide for such funds to be available, subject to appropriations action, upon collection for SSA administrative expenses. This provision is consistent with the Bipartisan Budget Agreement, and the Administration commends the Committee's actions.

Additional Administration concerns with the Committee bill are contained in the attachment.

Attachment

Attachment

ADDITIONAL CONCERNS
DEPARTMENTS OF LABOR, HEALTH AND HUMAN SERVICES,
EDUCATION, AND RELATED AGENCIES APPROPRIATIONS BILL, FY 1998
(AS REPORTED BY THE HOUSE COMMITTEE)

All Agencies Covered by the Bill

• Operating Plans. The Committee report calls for all agencies covered in the bill to provide to the Committee "operating plans" for appropriations. We are prepared to work with the Committee to discuss the purpose of this request and determine how to address it.

• Community Schools: Violent Crime Reduction. While the Administration supports the Committee's funding of Violence Against Women Act programs, the Committee has provided no funding for the Community Schools program within the Violent Crime Reduction Programs account or for the Community-Based Resource Centers and Developmental Disabilities Special Projects activities. We urge the House to restore funding for these programs.

• Aging Services Programs. Within the Administration on Aging, the Committee has provided no funding for certain Aging Services Programs, including Preventive Health Maintenance, Alzheimer's Initiative, and Research, Training, and Discretionary activities. These important programs provide critical resources for the elderly.

• Medicare Survey and Certification User Fees. The President's budget proposes total funding of $158 million for the surveys and certification program, $148 million in budget authority and $10 million in user fees. The Committee has provided $148 million in budget authority which is $10 million be low the President's request. On March 27, 1997, the Administration transmitted legislation to Congress for the authorization of $10 million in new survey and certification user fees. The Administration believes that health care providers who derive considerable benefit from the Medicare program should fund the cost of conducting initial surveys required for entry into the program. We urge Congress to enact the Administration's survey and certification user fee proposal and to fully fund the President's request for this activity.

• Hansen's Disease. The bill includes language that would transfer HHS's Hansen Disease treatment facility at Carville, Louisiana, to the State of Louisiana. The Administration supports this transfer, but objects to how the language transfers property to the State of Louisiana and how it handles personnel issues. We believe that the General Services Administration, the Federal government's property asset manager, should handle the transfer as authorized in the Federal Property and Administrative Services Act of 1949. In addition, the Administration strongly opposes those provisions pertaining to the computation of employee annuities and disability retirement benefits. The Administration urges the House to delete these provisions. There are a variety of ways to ensure the well-being of and retirement benefits for these employees, and the Administration wants to work with the House to draft language that is consistent with current law.

• Additional Health Concerns. The Administration is concerned that the Committee has not provided the full request for the Office of Emergency Preparedness, HRSA Organ Transplantation, the Office for Civil Rights, CDC's National Center for Health Statistics, and SAMHSA Data Collection activities. To the extent possible, we urge that the requested funding level be provided.

• Worker Protection and Enforcement Funding. The Committee has provided $981 million, an increase of $32 million over the FY 1997 enacted level for the Department of Labor workplace protection programs, about half of the proposed increase. The independent National Labor Relations Board was frozen, a cut of $11 million below the request. The Administration urges the House to enact the Administration's request for these programs. Without the requested increases, the Department will not be able to carry out a balanced program of targeted enforcement with expanded partnerships and compliance assistance in the regulated community, or streamline its operations to provide assistance to small businesses in complying with various workplace laws and related executive orders, such as the systems and technical assistance improvements, requested for the Office of Federal Contract Compliance.

• Official Time. Language of the Committee bill would bar the expenditure of trust fund money for employees who conduct union activities on official time. Paying for such expenses is consistent with both Federal law and SSA's collective bargaining agreements. Restricting certain funding sources from paying for this activity would unfairly shift costs to the general fund and not reduce the amount of Federal funds expended on this legitimate activity. This limitation should be stricken from the bill.

• Inspector General. The Committee has included language prohibiting the use of any funds other than those in the Inspector General (IG) account for the provision of supplies, space, and services by other offices of the Railroad Retirement Board (RRB) to the IG. The language should be stricken from the bill. The Administration believes that the current means of financing centralized services provided to the IG is consistent with the provisions of the IG Act and that the RRB should not be singled out in this respect. The ad ministration also notes that, once the amount specified in report language related to these support services is factored into the total for the IG, the Committee would effectively reduce the IG budget by 17 percent from the FY 1997 enacted level. The President's request is for level funding; the Committee's reduction is excessive.

• Inspector General. The Committee bill includes language prohibiting the Railroad Retirement Board (RRB) Inspector General from using funds for any audit, investigation, or review of the Medicare program. RRB has statutory authority to administer a separate contract for RRB, Part B Medicare claims. The Administration believes that this language should be dropped. As long as RRB has authority to negotiate and administer a separate Medicare contract, the RRB Inspector General ought not to be prohibited from using funds to review, audit, or investigate activity related to that contract.