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PRESIDENT'S HUMAN SERVICES BUDGET PROPOSALS FOR 2001

February 8, 2000

The annual federal budget battle has begun. The first shot was the President's budget proposals released Monday. Congress will set out its proposals in the non-binding Congressional budget resolution expected by April 15^th. A look at the President's budget follows.

The President's budget reduces the TANF program by $250 million. This reduction reflects freezing the supplemental grants at the FY 1998 level ($240 million) and penalties reducing state block grants ($10 million).

States that have large population increases receive TANF supplemental grants. States potentially affected by this change are: Alabama, Alaska, Arizona, Arkansas, Colorado, Florida, Georgia, Idaho, Louisiana, Mississippi, Montana, Nevada, New Mexico, North Carolina, Tennessee, Texas and Utah. NCSL believes that the states affected by the penalty reductions are the states that failed to meet the two-family workforce participation rate requirements. For 1998, those states were Alaska, Arkansas, Delaware, the District of Columbia, Minnesota, Nebraska, New Mexico, North Carolina, Pennsylvania, Rhode Island, Texas, Virginia, Washington, and West Virginia.

The President's budget provides a $75 million increase for 2001over the authorized level of $1.7 billion. The authorized level for the program changed as a result of the 1998 Transportation Reauthorization bill. (The authorized funding level was previously $2.3 billion.) $25 million of the increase in the President's plan is earmarked for second chance homes for unmarried teen parents and their children. Under the President's plan, there is no change in the scheduled reduction of transferability of TANF funds to SSBG (from 10% to 4.25%) that was enacted in the T-21 Highway law. NCSL supports the additional funding, but cannot support the earmark in a program that is valuable to states because of its flexibility.

The 90% federal match rate for paternity testing is reduced to 66%.

The President's proposed budget includes federal funds for a new state option to pass-through of child support collections to families and disregard these funds when determining assistance levels for TANF families. The federal government would share in the cost of amounts above a state's current pass-through and disregard policy, up to the greater of $100 per month or $50 over current state effort.

There is also an option for states to adopt a simplified distribution of child support collections. Child support collected for families on assistance would still be retained by the federal and state governments, but child support collections for families no longer on assistance would be paid to the family, and the federal government would forgo its share of the collections.

States would be required to review child support orders every three years.

Several new collection measures are part of the President's budget plan.

• States would have to pass a law requiring vehicles of non-custodial parents owing at least $1,000 in child support would be booted. No federal funds would be provided for the state expense to states, including the costs to state DMVs. Gambling winnings of non-custodial parents with child support arrears would be intercepted. It is unclear whether or not state legislation would be required in this area.
• Passports would be denied to delinquent non-custodial parents with arrears of over $2.500. The present threshold is $5,000.
• SSA benefits would be used to offset past due support.
• The Secretary of HHS would have discretion to exclude doctors with child support arrearages from participation in Medicare.
• States would be required to have procedures in place to require individuals who owe overdue child support to pay or engage in work activities.

A $225 million new grant program to help to put non-custodial parents who owe child support to work and help low-income custodial parents with job advancement is proposed.

The FY 2001 budget proposal includes $2 billion for the discretionary Child Care and Development Block Grant (CCDBG), representing an increase of $815 million. This will pay for subsidies for nearly 150,000 additional children. The $2 billion includes earmarks of $223 million to improve the quality of child care, and $19 million to support school-age child care.

A new Early Learning Fund would be funded for FY 2001 with $600 million in mandatory funds available for community level challenge grants to improve early learning and the quality and safety of child care for children up to age five. The program would be authorized at $3 billion over five years in entitlement funds.

The President is also proposing doubling funding for 21^st Century Community Learning Centers. Under the President's proposal, an additional $547 million would go to this grant program to create or expand school-based academic and recreational after-school programs.

The Child Care and Dependent Care Tax Credit (DCDT) would be expanded by increasing the credit for middle income families, and by making the DCTC refundable beginning in 2003.

The President is proposing an increase of $1 billion over 2000. This level of funding would allow 70,000 more children to be served in Head Start. The Head Start request also supports an additional 10,000 children in Early Head Start.

The budget includes a $5 million pilot to support Tribal management of child welfare systems. Funding for the Promoting Safe and Stable Families Program is increased by $10 million. The Independent Living Program is funded at the $140 million level authorized in the 1999 Foster Care Independence Act. This is $20 million more than was appropriated last year.

The President's budget proposal includes an increase of $15 million for core supportive services programs.

The budget contains a proposal for legislation that will offer states the option of conforming the rules on the resource value of vehicles to the TANF program. TANF often employs more generous rules permitting reliable vehicles to be owned by recipients. The federal Food Stamp vehicle asset limit is presently $4,650. The regulations make it clear that states can use the more generous motor vehicle asset limit.

The proposed budget for the Food and Nutrition services includes a $6 million universal free school breakfast demonstration project, and $6 million to enhance ongoing efforts to promote the use of Electronic Benefit Transfer in the WIC program. Legislation is being proposed that would save the agency $0.8 million with management changes to improve oversight in the Child and Adult Care Food Program.

The President's budget provides for a 10 year, $23.6 billion expansion of the Earned Income Tax Credit. Specifically, the budget provides for :

1. credit received by larger families (3 +kids)is increased by $500;
2. families w/ 2 or more kids get slower phase-out; and
3. marriage penalty relief is provided for two-earner households by a $250 increase.

The program is extended for two more years for grantees to spend current funds. No additional funds are proposed.

The President's FY 2001 budget provides 2.5 billion over five years to:

1. Restore SSI and Medicaid to legal immigrants who entered the U.S. after August 22, 1996, have been here for five years, and become disable after entry;
2. Restore Food Stamps eligibility to legal immigrants who were in the country before August 22, 1996 and either subsequently reached age 65 or have children eligible for Food Stamps; and
3. Allow states to provide Medicaid or SCHIP to legal immigrant children and pregnant women regardless of their date of entry to the U.S. and legal immigrant parents of children who are covered by Medicaid or SCHIP (under proposed FamilyCare program).

Additional proposals addressing immigration issues include the English Language/Civics Instruction initiative, for which the President is requesting a $50,000 increase, and funding to improve INS services. Among the INS proposals is the establishment of a $93 million Immigration Services Capital Investment Act to fund-ongoing backlog reduction efforts. In addition, the budget for the State Criminal Alien Assistance Program is slightly increased.

For programs to assist the homeless, the President is proposing a 17.6% increase in funding.

Under the President's budget proposal, total funding for community services programs would be decreased by $53 million, including an $18 million reduction in the Community Services Block Grant.

LIHEAP is level-funded. The President again proposed a $1.1 billion budget, with a $300 million emergency contingency fund.

The federal government first funded the Individual Development Account (IDA) program in FY 99. The IDA program allows low-income individuals to save for a home, post-secondary education, or new business. For FY 2001, the President is recommending $25 million for IDAs, which will more than double the program. The funds are intended to support 110 non-profit organizations administering IDA demonstrations, and should allow an additional 20,500 low-income individuals to open these accounts. IDAs are also an acceptable use of TANF and MOE funds.

NCSL will keep you informed as the budget process continues. For further information about Human Services budget issues, please contact Sheri Steisel, or Lee Posey or call (202) 624-5400.