COMMITTEE ON APPROPRIATIONS

JAMIE L. WHITTEN, Mississippi, Chairman

FREDERICK G. MOHRMAN, Clerk and Staff Director

(II)

DEPARTMENTS

OF LABOR, HEALTH AND

HUMAN SERVICES, AND EDUCATION, AND RELATED AGENCIES APPROPRIATIONS FOR 1986

WEDNESDAY, FEBRUARY 20, 1985.

DEPARTMENT OF EDUCATION

TECHNICAL BRIEFING

WITNESSES

SALLY H. CHRISTENSEN, DIRECTOR, BUDGET SERVICE
THOMAS P. SKELLY, DIRECTOR, BUDGET SYSTEMS DIVISION
JOHN HAINES, DIRECTOR, POSTSECONDARY ANALYSIS DIVISION

Mr. NATCHER. At this time, we begin the hearings on the budget submitted by the President for the fiscal year 1986 for the Departments of Labor, Health and Human Services, and Education.

It is a distinct honor and a privilege for me to serve on this subcommittee with all of the members on my left and on my right, I would like to say at this time that all of these gentlemen that serve on this subcommittee are able Members of the House.

The President signed the appropriation bill for fiscal year 1985 on November 8, 1984. We appreciate the fact that this bill was signed.

For a period of over five years, as you members on the subcommittee recall, this bill had to go into the continuing resolution year after year, not only because of some of the amounts involved, but also because of other legislative matters that were very controversial. For those reasons, the bill had to go into the continuing resolution almost on an annual basis.

In 1983, as you recall, we passed this bill in the House in one hour and 35 minutes, and that is the way it should be. It speaks well for all of the members of the subcommittee. It also speaks well for the staff of this subcommittee.

We have an excellent staff, one of the best on the Hill, and one of the best in the City of Washington. That again, I would like to say on the record, is the way it should be.

We hold hearings on this bill for 14 to 16 weeks every year. We carefully examine all of the requests before the committee, and then we proceed to mark-up the bill. As I recall, we have never had a rollcall vote at a mark-up.

We are all friends on this subcommittee-on both sides. We all work hard to prepare a good bill, and take it to the House. The House has usually accepted our bill, and I think it speaks well for the members and staff of the subcommittee.

This is the way I hope we can proceed for the fiscal year 1986. One of the nicest things that has happened to me during my lifetime is the fact that I have had an opportunity to serve on this subcommittee with all of the members on my left and on my right.

At this time we have before the committee, certain representatives of the Department of Education, to present an overview of the education budget for fiscal year 1986.

We have before the committee Mrs. Christensen. Who do you have with you there at the table?

Mrs. CHRISTENSEN. I have accompanying me two persons on my staff. On my left is Tom Skelly, Director of our Division of Budget Systems, who has prepared the various briefing materials and charts for the members today, and on my right is John Haines, Director of our Postsecondary Analysis Division in the Budget Service and the Department's expert in the student aid programs.

Mr. NATCHER. You go right ahead.

Mrs. CHRISTENSEN. I would like to reiterate what you have said about the hard work of the committee in the past years, particularly in the past two or three years, regarding the appropriation for the Department. It certainly has avoided a lot of administrative problems, rather than operating under a continuing resolution. We in the Department certainly appreciate all the hard work of your committee.

Mr. NATCHER. We appreciate the support and the help we have always received from each of the three Departments. We hope that the new Secretary of Education will like the bill that we report out. We are going to bring one out that he will like. We used to say to Secretary Bell-"Mr. Bell, don't you worry about it, we will bring you a bill that you will like, you may not be able to say so, but you will like it."

Mrs. CHRISTENSEN. Thank you, Mr. Chairman.

With your permission, I would like to proceed with a short statement. It is a real pleasure to be here with you today. We brief your staff each year, so it is a real honor to do the same kind of technical briefing for the members, to know you are interested in some of these details before the Secretary comes up to testify on the philosophical aspects of our budget, primarily.

I am going to give a brief overall presentation, and turn to you for any questions you might have. You have before you two packets that we have prepared. One is copies of the charts over there which I am using, so you can follow along as we use those, and secondly, some other summary materials which might be helpful as I go through the presentation.

Our total 1986 request for the Department of Education is $15.5 billion. This is a decrease of $2.9 billion, or 16 percent, from a revised 1985 estimate of $18.4 billion in full budget authority.

Our first chart shows for your information the total levels for the Department since 1960, so you can get an overall perspective.

However, in terms of program level, because our 1985 total is inflated by over $700 million to meet prior-year costs in both the GSL and the Pell Grant programs, the decrease is really only $2 billion or 11 percent; that is, from $17.7 billion in 1985 to $15.7 billion in 1986.

Now, I have prepared-this is a little confusing, so I have prepared a reconciliation which is on the first page of that second S packet that you have, entitled Education Totals. At the bottom you will see how we come up to that, the minus 16 percent and the minus 11 percent out to the right, in case you had questions on that or it sounded confusing.

I would mention two other highlights of our total budget. First, 85 percent of our total budget is allocated for programs for disadvantaged, handicapped, limited English-proficient children, and financially-needy college students, and other underprivileged popula

tions.

Secondly, our proposal to restructure student aid, which as you so well know, has grown so rapidly in the past few years, results in a redistribution between elementary and secondary education versus postsecondary education.

In our second chart, we show this redistribution. Specifically, elementary and secondary, in our 1986 budget would receive 46 percent and postsecondary education would receive 42 percent, which is a dramatic comparison in 1985, where elementary and secondary received 40 percent and postsecondary education received 49 percent.

I would now like to give you a few brief highlights of our proposals. What has been referred to as our freeze-plus strategy, and I am sure you have all heard those words by now, is really another way of saying that we have four major objectives or strategies within our Department in which to carry out our two overall goals of: first, reducing the Federal deficit, and secondly, working towards our educational goals of providing leadership at the Federal level, and at the same time, protecting aid for the disadvantaged and the handicapped in our society.

The four strategies are freezes, reforms, terminations and administrative cost savings. The third chart that we have, in fact, shows that as a result of these actions, we will save in outlays about $3.7 billion in 1986 and 1987, which is basically the difference between the current services or what it would cost if you built in inflation versus what the President's budget is.

I will go into each of these four areas with you to show you how we came up to these totals.

The first strategy is freezes. This is our highest-priority area. This category contains over half of the Department's programs. They target on the disadvantaged and handicapped or reflect a special Federal responsibility and therefore, these programs are protected by basically freezing or maintaining them in 1986 at the 1985 level of $8.5 billion.

About five of the highest-priority ones, such as Chapter 1, education for the handicapped and RSA basic grants, A category children under impact aid, and special institutions actually show increases in the outyears for inflation, even though they are frozen this year.

Some examples: our Chapter 1 grants to LEAs, at $3.2 million, will provide compensatory education services for almost 5 million. disadvantaged children, the same as being currently served.

I would also add that the budget for this program is 24 percent of our total, which is the largest single allocation of funds for any program within our Department.

For State grants under P.L. 94-142, we would continue that level at over $1.1 billion. This would maintain a 7-percent Federal share of excess costs to serve over 4 million handicapped children, which is roughly also the same level of children that we are serving this year.

Rehabilitation State grants would also be level-funded at $1.1 billion, we would continue to assist over 900,000 physically and mentally handicapped adults to be gainfully employed.

A couple of smaller programs, bilingual education we would maintain at $143 million, but here we have a shift from training where there is not as much of a need at the current time, to direct services through local educational agency grants to teach limited English-proficient children, so that the number of children would be increased by about 20,000 to 225,000 in total from last year.

In Indian education, we would continue the program at $67 million, and thereby provide remedial tutoring and other services to about 335,000 Indian children and adults.

Impact aid for A children, as you know, compensates school districts for children whose parents both work and live on Federal property, thus generating little or no revenue for local school districts. We see this as a true Federal responsibility and have levelfunded that at $513 million, which should provide 100 percent entitlement, if not very close to it.

The second area is reforms. We are recommending some longneeded reforms for about 15 programs. The total for these would decrease from $9.2 billion in 1985 to $6.7 billion in 1986.

The most sweeping change in student aid is our proposal to return to the traditional emphasis on parent and student responsi bility for college costs, and eliminate or lessen aid to higher-income family students.

This shift would bring down the high cost of the grant and loan programs. This is the most important part of it-it would focus aid on those students who cannot attend college without it.

Some of the major changes are, and you have heard all of these: Students would be expected to provide $800 on their own before receiving a Federal grant or loan, no student whose family's adjusted gross income exceeds $25,000 would receive Pell Grants or direct loans, no student whose family AGI exceeds $32,500 could receive a subsidized GSL, and no student could receive more than $4,000 annually from our highly-subsidized Department programs.

In addition, a family could also qualify for a $4,000 PLUS loan for a total aid package of $8,000, which is not subsidized but certainly is guaranteed. As a result, scarce Federal funds would be targeted on 4.25 million of our neediest students who could not attend college without this aid, compared to 5.25 million under current law and policies. One other statistic that is interesting-85 percent of Pell Grant funds would go to students with family incomes below $12,000 compared with 76 percent in 1985.

A couple of other examples of needed reforms are our Chapter 1 migrant program for formerly-migrant children. Right now, that program authorizes LEAS to count children who have migrated in