EXECUTIVE OFFICE OF THE PRESIDENT OFFICE OF MANAGEMENT AND BUDGET WASHINGTON, D.C. 20503

June 22, 2000
(Senate)

The President's FY 2001 Budget is based on a balanced approach that maintains fiscal discipline, eliminates the national debt, extends the solvency of Social Security and Medicare, provides for an appropriately sized tax cut, establishes a new voluntary Medicare prescription drug benefit in the context of broader reforms, expands health care coverage to more families, and funds critical investments for our future. An essential element of this approach is ensuring adequate funding for discretionary programs. To this end, the President has proposed new discretionary spending limits at levels that we believe are necessary to serve the American people.

Unfortunately, the FY 2001 congressional budget resolution provides inadequate resources for discretionary investments. We need realistic levels of funding for critical government functions that the American people expect their government to perform well, including education, national security, law enforcement, environmental protection, preservation of our global leadership, air safety, food safety, economic assistance for the less fortunate, research and technology, and the administration of Social Security and Medicare. Based on the inadequate budget resolution, this bill fails to address critical needs of the American people. While the Senate bill contains higher funding levels for a number of important programs compared to the House bill, the Administration has very serious concerns, discussed below, with the Committee bill. If the bill presented to the President does not address these issues, the President would veto the bill.

The Administration understands that an amendment may be offered to prohibit the Occupational Safety and Health Administration (OSHA) from finalizing its standard to protect the Nation's workers from ergonomic injuries. The Administration strongly opposes any such amendment. Each year approximately 1.8 million American workers suffer musculoskeletal disorders, one-third of which are serious enough to require time away from work. OSHA estimates that its proposed standard would reduce the rate of MSDs by 26 percent over a ten-year period. After more than 10 years of experience with ergonomic guidelines, exhaustive scientific study, five months of public comment and public hearings on the proposed regulations, and millions of unnecessary injuries, it is time to move forward to finalize this standard.

Department of Education

The Senate bill fails to provide adequate funding to help strengthen accountability and turn around failing schools, reduce class size, improve after-school and summer-school opportunities, increase school safety, renovate aging and neglected schools, improve teacher quality, and prepare students for college. The most significant problems with the bill include the following:

• Class Size. The Senate Committee bill does not guarantee funding to hire 100,000 new teachers by FY 2005 to reduce class sizes to a nationwide average of 18 in the primary grades. The bill effectively repeals the bipartisan agreement on class size reduction, jeopardizing the Federal commitment to hire as many as 20,000 new teachers next year and to continue support for the 29,000 teachers already hired. As many as 2.9 million children could be denied the benefits of smaller classes.

• Urgent School Renovation. The Senate Committee bill provides no dedicated funding to provide $1.3 billion in loan subsidies and grants to repair 5,000 aging and neglected public schools buildings, including $50 million for public schools with high concentrations of Native American students.

• Accountability. The Senate Committee bill provides no funding for the Title I Accountability Fund that helps States and districts turn around low-performing schools and ensure that no student is trapped in a failing school. As a result, nearly 6,000 low-performing schools would not receive extra assistance to improve student achievement. In addition, the bill provides no funds for the proposed Reward and Recognition program that supports rewards to States that show significant gains in student achievement and narrow the achievement gap between high- and low- performing students.

• 21st Century Community Learning Centers. The Senate Committee bill cuts the $1 billion request by $400 million, denying funding for over 3,000 centers, which would provide after- and summer-school programs to over one million children. Extended learning time is an essential strategy to help all students master challenging academic material and reach high standards. The request would support 10,000 after-school and summer-school centers serving 2.5 million children.

• Teacher Quality. The Senate bill fails to provide adequate funding for the proposed $1 billion Teaching to High Standards teacher quality programs. The request includes $690 million, $255 million more than the Senate bill, for States and school districts to provide teacher professional development. Also included in the Teaching to High Standards programs is $310 million for teacher quality and recruitment initiatives of national significance such as Hometown Teachers and Transition to Teaching to help recruit teachers to high-need communities, Early Childhood Educator Professional Development, the School Leadership Initiative, and other teacher quality incentive programs. The Senate bill does not provide any funding for these programs. The Senate bill also fails to provide the $10 million increase for Special Education State Improvement and to support professional development related to the needs of children with disabilities.

• Helping Schools Create Smaller and Safer Learning Environments. The Senate Committee bill provides inadequate funding for programs that create better and safer school learning environments. For Safe and Drug-Free Schools, the Senate provides no funding for Project SERV, which would provide emergency assistance to schools affected by serious violence and other crises, and inadequate funding for National Programs such as Safe Schools/Healthy Students, which develops comprehensive community-wide violence prevention strategies. For Small, Safe, and Successful High Schools, the bill fails to provide the $120 million requested, denying as many as 700 high schools support to establish or expand smaller learning communities of no more than 600 students. Research shows that when students are a part of a small and more intimate learning community, they are more successful both academically and socially.

• Comprehensive School Reform Demonstrations. The Senate Committee bill fails to provide the $240 million requested to help schools implement comprehensive school reform programs that are based on reliable research and effective practices. This includes $150 million in Title I and $50 million under the Fund for the Improvement of Education. As a result, support for nearly 700 schools currently receiving funds would be discontinued, and 1,900 new schools would not receive support for research-based school reforms.

• Educational Technology and the Digital Divide. The Senate Committee bill would hamper efforts to bridge the digital divide and provide technology training to teachers. The budget requests $150 million to train over 250,000 teachers in the use of technology. The Senate bill would eliminate training for about 40,000 teachers. The President's budget also provides funding for 1,000 Community Technology Centers. The Senate bill would not fund over 300 of these centers, denying access to computers and technology, particularly educational technology, to thousands of adults and children residing in economically distressed, high-poverty areas. Finally, the bill does not provide funding to expand cutting edge technologies to improve education through the Next Generation Technology Innovation program.

• Opportunities to Improve our Nation's Schools (OPTIONS). The Senate Committee bill provides no funding for the $20 million OPTIONS initiative to support innovative public school choice programs such as worksite schools and inter-district choice programs. The bill would deny 40 States and districts support to develop and implement new models for enhancing public school choice.

• GEAR UP. The Senate Committee bill provides a $25 million increase in funding for GEAR UP, $100 million below the request. The FY 2001 Budget would provide $325 million for GEAR UP to support early intervention and college preparation services for approximately 1.4 million low-income students. The Senate bill would deny these services to more than 400,000 students.

• Dual Degree Program. The Senate Committee provides no funding for Dual Degree Programs for Minority-Serving Institutions, the initiative to increase academic opportunities for students at minority-serving institutions. The Senate bill would deny up to 3,000 students the chance to earn two degrees in five years and enter professions in which minorities are under represented.

• Hispanic Education Action Plan. The Senate Committee bill fails to increase the Federal investment in essential components of the Hispanic Education Action Plan. For instance, the Senate bill does not provide the $75 million requested for Adult Education English as a Second Language civics. The Committee level would deny 250,000 immigrants and limited English proficient (LEP) adults the literacy and civics skills necessary to become successful participants in American society. The Senate bill also provides $17 million less than the budget for Bilingual Education. This shortfall would prevent 1,200 additional new or certified teachers from receiving training and skills they need to teach LEP students.

• Research and Statistics. The Senate Committee bill fails to support increases for education research, including the budget's requested $30 million increase for Education Research and the $16 million increase for Statistics. Now, more than ever, teachers, parents, and policymakers are demanding education reforms that are based on proven educational research. The Department of Education's research investments and data collection activities are vital to producing an up-to-date knowledge base for improving student performance.

• America's Tests. The Senate Committee bill provides no funds for America's Tests, which would help principals, teachers, and parents assess how well students are doing compared to challenging academic standards in reading and math. The tests would help communities improve their schools and help parents hold their schools accountable for raising student achievement.

• Departmental Management. The Senate Committee does not provide sufficient increases in administrative funding for the Department of Education, including the Office for Civil Rights. These funds are necessary to ensure proper oversight and management of Federal education programs.

Department of Health and Human Services

The Senate bill shortchanges critical health and social services programs by cutting requested funding for domestic and global HIV/AIDS prevention and treatment, the Social Services Block Grant, mental health and substance abuse services, family planning, health care access for the uninsured, and training for health professionals in children's hospitals. The Administration is concerned about the following cuts to key health and social services programs:

• Social Services Block Grant (SSBG). The Administration is deeply concerned that the Senate Committee cuts the SSBG by $1.175 billion, or two-thirds, below the current level. A cut of this magnitude would guarantee reductions in essential social services at the State and local level, and threaten the care and safety of foster children, child abuse victims, the elderly, and the disabled. State and local programs already make do with $1.0 billion less in SSBG funding than they received in 1995.

• Tobacco Litigation. The Senate Committee bill does not include requested HHS funding to support the Department of Justice's tobacco litigation efforts. The costs of preventing and treating tobacco-related disease exceed $50 billion per year, and the Department of Health and Human Services pays a substantial portion of these costs. The tobacco litigation is in full accord with the HHS mission and is vital to efforts to improve the health of all Americans. We strongly urge the Senate to assist in the Federal government's efforts to recover health care costs incurred as a result of tobacco-related illnesses.

• Family Caregivers. The Senate Committee fails to provide the budget request of $125 million to support caregiver activities for 250,000 families who care for elderly relatives with chronic illness or disabilities. These funds would provide older persons with quality respite care and other support services necessary for them to remain independent in their homes and communities. Support for caregiver activities is a critical component of the long-term care initiative.

• Advance Appropriations. The Senate Committee fails to follow past practice of appropriating advance funds for Low Income Home Energy Assistance Program (LIHEAP) and child care. The advance appropriation for LIHEAP is needed so that States can commit funds early in the fiscal year to meet winter home heating needs. For child care, the uncertainty of funding levels for FY 2002 undermines efforts by States and child care providers to invest the additional funds provided in FY 2001 in a way that will lead to long-term improvements in the quality, accessibility, and affordability of child care.

• Ryan White HIV/AIDS Treatment. The bill would reduce requested funding by $70 million. This funding would enhance medical services, including pharmaceuticals, for people living with HIV/AIDS currently served by Ryan White funds, and provide access to services for people living with HIV/AIDS who are not receiving care. Ryan White currently serves approximately 500,000 people living with HIV/AIDS, nearly two-thirds of the individuals living with HIV/AIDS in the U.S.

• Health Care Access. The Committee bill underfunds the Community Access Program, which would improve health care access for many Americans. The full request of $125 million for the Health Care Access for the Uninsured Initiative would enable the development of integrated systems of care and better coordinate health services for the uninsured and underinsured.

• Family Planning. The Committee bill does not include the full $35 million increase requested for Family Planning services. This increase would provide family planning services to an additional 500,000 clients who neither are Medicaid eligible nor have health insurance.

• Health Professions Training. The Committee bill reduces funding by $67 million for health professions training from the President's budget. At this level, it may not be possible to fund Children's Hospital Graduate Medical Education (GME) at the requested level of $80 million. These funds are necessary to support medical education programs at the Nation's free-standing children's hospitals, which receive a very small share of Medicare GME dollars.

• Ricky Ray Hemophilia Relief Fund. The bill does not provide requested funding for Ricky Ray. The Administration urges the Senate to fund the full FY 2001 request and to act on the Administration's supplemental request for FY 2000. These funds would provide relief payments of $100,000 to hemophiliacs who contracted HIV/AIDS, and their families.

• Centers for Disease Control and Prevention (CDC). The Committee bill reduces CDC's funding by $78 million below the request for many critical public health programs, including domestic and global HIV prevention, infectious diseases, and race and health demonstrations. This funding level could impair CDC's ability to reduce the number of new HIV infections, hamper efforts to improve surveillance for infectious diseases, and slow CDC's ability to understand better and address racial disparities in health.

• Mental Health Services. The Committee bill reduces funding for mental health services by $69 million from the requested level. This includes a $50 million reduction to the Mental Health Block Grant that could hamper the ability of States to support comprehensive community systems of care for adults with severe mental illness and children with serious emotional disturbances. The bill also ignores the $30 million request for new Targeted Capacity Expansion grants, which fund early intervention and prevention, as well as local service capacity expansion.

• Substance Abuse Prevention and Treatment. The Committee reduces total funding for substance abuse services by $23 million from the requested level. Funding for Targeted Capacity Expansion grants is reduced by $44 million from this request. This would reduce our ability to provide a rapid, strategic response to emerging substance abuse trends, and would result in a reduction in prevention and treatment services for those struggling with substance abuse.

• Bioterrorism. The Administration urges the Senate to provide the President's request of $265 million for the Department of Health and Human Services to counter threats posed by terrorism and the use of biological and chemical weapons of mass destruction. Adversaries are expected to rely increasingly on these unconventional stategies to offset U.S. military superiority. These funds requested would improve our ability to defend against and manage the consequences of an attack.

• Health Care Financing Administration (HCFA) Program Management. The Senate Committee bill funds HCFA at $2.1 billion, which is $50 million below the FY 2000 enacted level and $203 million below the FY 2001 request of $2.3 billion. This reduction would threaten the Administration's efforts to ensure the quality and safety of nursing homes by forcing States to scale back or eliminate facility inspections and complaint investigations, and eliminate the Administration's efforts to tighten oversight of Medicare's contractors as directed by recent General Accounting Office and Office of the Inspector General reports. Additionally, the Senate has provided only $15 to $19 million of the President's request of $150 million in Medicare+Choice user fees, which would be used to educate beneficiaries, enabling them to make informed health decisions.

• State Children's Health Insurance Program (SCHIP). The Administration is concerned about the proposed funding shift in SCHIP. SCHIP was enacted on a bipartisan basis in 1997 to cover millions of uninsured children. The shift included in the bill has the potential to disrupt State funding and efforts to reach eligible, low-income uninsured children. The Administration opposes using unspent SCHIP funds for any other purpose.

• Office of the Secretary. The Committee bill also fails to fully fund the Secretary's management and policy oversight activities, as well as such programmatic activities as health informatics. The Senate bill also underfunds efforts to address the threat posed by bioterrorism.

• Abortion. The Administration urges the Senate to strike sections 508 and 509 of the Committee bill, which would prohibit the use of funds for abortion. The President believes that abortion should be safe, legal, and rare. These provisions would continue to limit the range of conditions under which a woman's health would permit access to abortion services. Furthermore, section 509 requires a physician to make a legal determination that these conditions have been met. The Administration proposes to work with the Congress to address the issue of abortion funding.

• Medicare Competitive Pricing Demo Project. The Senate bill includes language that would prevent funds from being used to administer the Medicare+Choice Competitive Pricing Demonstration Project. This demonstration was passed by Congress as part of the Balanced Budget Act in order to provide valuable information regarding the use of competitive pricing methodologies in Medicare managed care. The information that could be learned from this demonstration is particularly relevant as the important task of Medicare reform is being considered. The Administration urges the Senate to remove this provision and to allow HCFA to implement the demonstration.

Department of Labor

The Senate Committee bill would cut the Labor Department by $920 million, or seven percent, from the request. This level would provide inadequate funding for initiatives to support dislocated workers with training and re-employment services and to assist at-risk youth develop the skills needed for 21st century jobs. The bill also underfunds efforts to help low-income fathers work, support their families and stay off welfare, and to improve educational alternatives to abusive child labor abroad. The Administration appreciates the Senate Committee's decision to fully fund worker safety and health programs, to establish the new Office of Disability Policy, and to fully fund the international core labor standards and Global AIDS in the Workplace initiatives. The Administration also appreciates the Senate Committee's inclusion of language to extend the availability of the Welfare-to-Work grants funds for an additional two years to allow grantees to take advantage of the program eligibility improvements enacted in the FY 2000 Appropriations Act.

The Administration's most significant concerns with the bill as reported by the Senate Committee include the following:

• Dislocated Workers. The Senate Committee cuts the Administration's request for Dislocated Worker assistance by $181 million, or 10 percent. This level would deny training, job search, and re-employment services to over 100,000 dislocated workers.

• Re-employment Services. The Senate Committee bill provides only half of the $50 million requested. At this level, over 111,000 unemployment insurance claimants would be denied the customized re-employment services needed to speed their reentry into the workforce.

• One-Stop Career Center/America's Labor Market Information System . The Senate Committee bill ignores the President's proposal for an FY 2001 $44 million enhancement designed to improve access to One-Stop services for millions of Americans. This initiative would fund improvements in America's Job Bank, mobile vans for one-stop access to rural areas, a toll-free telephone number for the workforce investment system, and improvements in basic labor market information.

• Fathers Win/Families Win Initiative. The Senate Committee bill does not provide any funding for the President's Fathers Work/Families Win initiative, for which the Administration has requested $255 million. Building on the partnerships developed under Welfare-to-Work, this important initiative would help approximately 80,000 low-income fathers and working families get the support and skills necessary to support their families and avoid welfare.

• Youth Job Training. Funding for the Youth Opportunity Grants program falls $125 million short of the President's request and would deny 27,000 youth in high-poverty communities access to vital education, training, and employment assistance and eliminate the proposed expansion of the program to 12 to 15 new communities. In addition, funding for the Youth Activities program, which includes Summer Jobs, is cut by $21 million, which would eliminate almost 13,000 low income youth from the program. Further, the Senate bill denies $29 million in proposed Job Corps enhancements thereby inadequately funding cost increases in that program.

• Youth Violence. The Senate bill partially funds two initiatives aimed at reducing youth violence. It provides $20 million of the $40 million requested to enable the Department of Labor to join the interagency Safe Schools/Healthy Students Initiative. The bill funds $30 million of the $75 million initiative to bring young offenders into the workplace through job training and related services.

• Homeless Veterans. The Senate Committee bill's $2.5 million reduction to the request for job assistance to homeless veterans would result in 1,400 fewer homeless veterans obtaining meaningful employment and economic security.

• Unemployment Insurance (UI) Administration. The Senate Committee has adopted the President's proposal to restructure UI administrative funding to bring it in line with modern service delivery systems but has provided $76 million less than necessary to administer the UI benefit entitlement program, even under continuing favorable economic conditions.

• International Child Labor Activities. While the Senate Committee bill fully funds the proposed expansion of International Labor Organization's International Program for the Elimination of Child Labor, it only funds $15 million of the requested $55 million for the President's new initiative to improve access to basic education in developing countries. This initiative is part of a comprehensive plan aimed at making global abolition of the worst forms of child labor a reality.

• Other Worker Protection Initiatives. The Administration appreciates the Committee's full funding of worker safety and health programs but is concerned that funding for other worker protection programs falls short of what is needed to address serious compliance problems in low-wage industries, including the garment and agriculture industries, and to expand public education on pension and health care plans. Funding for these important activities is reduced by $18 million below the Administration's request.

• Information Technology. The Committee bill provides slightly more than half of the requested $54 million for the Department's information technology initiative. This initiative would address information security, infrastructure and web development, and office automation needs in a more efficient and comprehensive manner, thereby enhancing the Department's ability to implement its responsibilities and expand its Internet capacity to serve employers and the public better.

• National Economic Indicators. The Senate Committee bill reduces the request by $7 million, which would prevent improvements to some of the most sensitive and important economic data collected by the Bureau of Labor Statistics. These improvements include expanding price, output, and productivity measures for the service sector, improving State and local employment and unemployment data, and surveying how Americans spend their time in work and non-work activities, including child and elder care.

Social Security Administration

At the Senate Committee funding level, the Social Security Administration would not be able to hire thousands of direct service employees, resulting in longer wait times for individuals filing retirement and disability claims, and diminished service for individuals who call the agency's 1-800 phone service.

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