AFI Human Services Committee

Budget Update

Massive FY 1999 Spending Measure Signed into Law:
Human Services Wins and Losses

November 17, 1998

Table of Contents

Introduction
Block Grants
Child Care/Early Childhood Education
Social Services
Food and Nutrition Programs
Transportation/Welfare
Refugee and Entrant Assistance
Revenue Provisions

Introduction

On October 21, 1998, the President signed P.L. 105-277 (H.R. 4328), the massive FY 1999 omnibus appropriations bill containing eight of the 13 appropriations measures that Congress failed to resolve earlier in the session. The $518 billion dollar expenditures and revenue package includes appropriations for programs that fall within the jurisdiction of the NCSL Human Services Committee. A preliminary NCSL summary of FY 1999 appropriations authorized in the bill is available online at http://www.ncsl.org/statefed/omni99.htm. The following is a more detailed summary of the federal funding provisions that impact state human services programs.

The largest increases in mandatory human services spending include a 22 percent increase in child support enforcement and a 14 percent increase in foster care and adoption assistance. Effective lobbying by state legislators and NCSL thwarted efforts by the U.S. House of Representatives to reduce the Temporary Assistance for Needy Families block grant (TANF) and to eliminate funding for the Low Income Home Energy Assistance Program (LIHEAP). Notwithstanding tremendous state, local and grassroots efforts to oppose reductions to the Social Services Block Grant, Title XX of the Social Security Act, Congress accepted the Administration's proposed 17 percent cut in the final bill. This reduces federal funds available to states under Title XX from the $2.38 billion authorized in the 1996 welfare reform law $1.9 billion in FY 1999. The cut, $399 million less than FY 1998 appropriations and $480 million less than the 1996 authorized level, provides further evidence that the federal government may continue to chip away at the historic welfare agreement forged with states two years ago.

The law also includes a provision prohibiting the National Highway Traffic Safety Administration (NHTSA) from promulgating regulations related to federalizing the state driver's license issuance process and requiring states to place Social Security numbers on driver's licenses for one year. The delay of this unfunded mandate was in response to extensive lobbying efforts by state legislators, NCSL and other national advocacy organizations. NCSL will continue to urge the 106th Congress to permanently repeal this violating section of law (Section 656 (b) of the Immigration Reform Act of 1996).

For further information, please contact Sheri Steisel (202/624-8693) or Kirsten Rasmussen (202/624-5882) with the Human Services Committee at NCSL. Cara Blodgett, Human Services Intern, contributed to this report.

Block Grants

Temporary Assistance for Needy Families Block Grant (TANF). Congressman John Kasich's (R-OH) House Budget Resolution contained $10 billion in proposed reductions from the income security budget category that includes the TANF block grant and other welfare-related programs. Subsequent budget proposals also suggested limiting the amount that states could transfer from the TANF block grant to Title XX to the amount a state had transferred in FY 1998. However, state legislators and other elected officials were successful in communicating a singular message to Congress: any reduction in the welfare block grant is a serious violation of the agreement forged during welfare reform and altogether unacceptable. As a result, no reductions to the welfare block grant were used to offset budget provisions in the omnibus bill. However, significant cuts to the Title XX block grant (see below) set a negative precedent for maintaining the integrity of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA).

Welfare-to-Work Block Grant. The conference agreement reduces federal funds to states under the welfare-to-work block grant by $137 million. This reflects a provision in the omnibus bill that requires that in any fiscal year, unallotted state formula funds under welfare-to-work revert back to the treasury.

Social Services Block Grant (Title XX). The final agreement establishes FY 1999 appropriations at $1.9 billion, the same level as requested by the President and the Senate. This represents a reduction of $399 million from FY 1998 levels and $480 million from the authorized level established in the 1996 welfare reform law. No further limitations were put on the amount that a state can transfer from the TANF block grant into Title XX, as were proposed in the House bill. However, transportation legislation signed into law earlier this year (P.L. 105-178; TEA-21), did restrict transferability to 4.25 percent (from 10 percent) starting in FY 2001 and reduced funding to $1.7 billion beginning in FY 2001 as well.

Child Care/Early Childhood Education

The Child Care Development Block Grant is forward-funded in FY 2000 at $1.182 billion (FY 1999 appropriations were established in the FY 1998 federal budget at $1 billion). The final conference agreement includes a $50 million earmark for activities that improve the quality of infant and toddler child care above the set-aside in PRWORA for FY 1999. Of the FY 2000 appropriations, $222 million is earmarked for child care quality improvements above the 4 percent of the block grant already earmarked in PRWORA for these purposes (4 percent is the minimum set-aside for quality; states could opt to earmark additional funds for these purposes). The FY 2000 quality set-aside includes $50 million for infant and toddler child care. An additional $19 million is also earmarked in the FY 2000 appropriation for child care resource and referral and school-aged child care.

Though the Administration is touting this as an increase in child care funds in this year's budget, these increases are offset by significant reductions to the Social Services Block Grant, which a number of states use to provide child care services. These Title XX reductions equal $399 million less than the FY 1998 appropriation and $480 million less than the amount authorized in the 1996 welfare reform law. As a result, states that use Title XX for child care may experience an overall decrease in child care slots.

Head Start is increased $313 million over the FY 1998 level, bringing FY 1999 appropriations to $4.66 billion. Of these appropriations, $337.5 million is to be used as a set-aside for Early Head Start. The final conference agreement does not include an earlier Senate provision to provide advanced Head Start appropriations in FY 2000 of $1.365 billion.

21st Century Learning Centers. The conference agreement includes $200 million for the 21st Century Learning Centers, a $160 million increase over FY 1998 appropriations. The conference agreement is based on the understanding that the Department received applications in fiscal year 1998 far in excess of available funds. Additional funds have been provided to establish new after school learning centers in approximately 1,600 schools. These funds are targeted to high-need rural communities, urban communities and small cities that have low achieving students and lack resources to establish after school centers. Communities with high rates of juvenile crime, school violence, and student drug abuse will also receive a priority for funding. Further, the final agreement encourages the Secretary of Education to consider applications that involve community-based partnerships with business and other agencies that can collaborate to meet the needs of students and other community members. Federal funds expended for after school programs must be aligned with state and local academic standards, document student progress and utilize trained instructors.

Child Care Access Means Parents in School (CCAMPS). The CCAMPS program, authorized under Subpart 7 of Part A of Title IV of the Higher Education Act (P.L. 105-244), is funded at $5 million in FY 1999 to provide grants to higher education institutions for campus-based child care programs, including after-school programs. Grants are awarded for a four-year period and can be used to support existing or new child care or after-school care programs. Funds cannot be used for construction, except for minor renovation or repairs. State legislators can work with the higher education institutions in their states to successfully apply for a CCAMPS grant. The USDE will give priority to applications from higher education institutions that propose to leverage significant local or institutional resources, including in-kind contributions, and that use a sliding fee scale for child care services to support of low income parents pursuing post-secondary education at the institution.

Social Services

Foster Care and Adoption Assistance. Payments to states for Foster Care and Adoption Assistance under Title IV-E of the Social Security Act total $3.764 billion in FY 1999, with an additional advanced appropriation of $1.355 billion for the first quarter of FY 2000. Of that amount, $20 million is provided for the new adoption incentive payments in FY 1999, as established in P.L. 105-200. Family preservation is funded at $275 million.

Low Income Home Energy Assistance (LIHEAP). The final omnibus conference agreement rejected the House budget proposal to rescind $1.1 billion in FY 1999 appropriations (that were appropriated in the FY 1998 budget) for LIHEAP. FY 1999 appropriations were maintained and the program received advanced appropriations for FY 2000 of $1.1 billion. This is an increase of $100 million over FY 1998 appropriations. The conference agreement also provided $300 million for emergency appropriations (same as FY98).

Individual Development Accounts. The conference agreement provides a $10 million appropriation for the creation of Individual Development Accounts to empower low-income families and individuals to save for a first home, post-secondary education or to start a new business. This program was authorized in Head Start reauthorization legislation (P.L. 105-285) as a five-year, $125 million demonstration program to establish IDAs for more than 50,000 people.

Food and Nutrition Programs

Child Nutrition Programs. The omnibus bill includes $9 billion for child nutrition programs, broken out into the following program authorizations:

School lunch program: $5,384,452,000

School breakfast program: $1,396,955,000

Child and adult care food program: $1,611,520,000

Summer food service program: $294,414,000

Special milk program: $18,055,000

State administrative expenses: $118,074,000

Commodity procurement and computer support: $337,127,000

School meals initiative: $10,000,000

Coordinated review effort: $4,300,000

Food safety education: $2,000,000

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Total: $9,176,897,000

Appropriations for the Child and Adult Care Food Program (CACFP) were increased by $201.7 million in FY 1999 over FY 1998 levels. It is interesting to note that while there is no direct correlation with the increased funds in FY 1999, eligibility for food in after-school programs through CACFP was expanded in recent reauthorization legislation to include 13-18 year old children.

Of the $10 million provided in the conference agreement for the school meals initiative, $4 million is earmarked for food service training grants to states and $1.6 million for technical assistance materials.

Special Supplemental Nutrition Program for Women, Infants and Children (WIC). The conference agreement provides $3.924 billion for the WIC program. The conferees require that USDA reduce to 120 days the time period in which states are required to report on the monthly obligation of these funds. The conference agreement also includes language as proposed by the House that state agencies required to procure infant formula using a competitive bidding system award a contract only to the bidder offering the lowest net price. Furthermore, the agreement provides that none of the funds appropriated be available to pay administrative expenses of WIC clinics except those that have an announced policy of prohibiting smoking within the space used to carry out the program.

Food Stamp Program. The conference agreement provides $22.585 billion for the Food Stamp

Program. Included in this amount is a contingency reserve of $100 million. Also included in this amount is $1.236 billion for nutrition assistance to Puerto Rico.

Transportation/Welfare

Job Access and Reverse Commute Grants. The conference agreement includes a $75 million appropriation for job access and reverse commute grants, only half of the $150 million allocated in the authorizing legislation (P.L. 105-178; TEA-21). Of the appropriated funds, $10 million is earmarked for reverse commute projects. Additionally, as directed by Section 3037(1)(3)(C) of TEA-21, $10 million will be allocated for non-urban areas. The conferees have explicitly directed that from this earmark, the FTA must give high priority to applications that address the transportation access needs of counties that are not served or are underserved by public transportation systems.

The conference agreement also directs the FTA to publish its selection of Job Access and Reverse Commute applications in each authorized award category and within each award category in the Federal Register by February 28, 1999. In this award announcement, FTA must specify the amounts awarded applicants that represent general reverse commute grant projects. The FTA shall also specify which awards reflect applications where proposed services are located in counties which are without public transportation services or which are significantly underserved.

Federalization of state drivers' licenses. States, in coalition with a broad range of advocacy groups, were successful in delaying the federalization of driver's licenses, including the mandatory use of social security numbers. This preemption of traditional state authority was included in Section 656(b) of the 1996 illegal immigration reform law. The stated objective was to reduce fraudulent use of identification documents by requiring states to imprint or verify social security numbers on state-issued driver's licenses. However, the statute and subsequent preliminary rule issued by the National Highway Traffic Safety Administration (NHTSA) would impose significant administrative burdens on states, violate the Unfunded Mandate Reform Act (UMRA) and raise privacy concerns. The omnibus spending bill prohibits the NHTSA from promulgating final regulations implementing the offending provision of law for one year. States and other advocacy groups continue to call for outright repeal of Section 656(b). For further information on this provision of law, including NCSL's federal analysis and communications, point your Internet browser to http://www.ncsl.org/statefed/drlicom2.htm.

Refugee and Entrant Assistance

The conference agreement includes a $415 million appropriation for Refugee and Entrant Assistance. $20,000,000 will be available in 1999 from 1997 carryover funds; these funds will be used under social services to increase educational support to schools with a significant proportion of refugee children and for the development of alternative cash assistance programs that involve case management approaches to improve resettlement outcomes. This will include intensive English language training and cultural assimilation programs.

The conference agreement also provides $220,698,000 for refugee transitional and medical services, a decrease of $10 million below the House and Senate bills. This reduction reflects lower estimates of 1998 program costs that are continued into 1999. The conference report indicates that the funding level for transitional and medical services is sufficient to continue the policy of providing eight months of assistance to new arrivals.

The conference agreement provides $139,990,000 for refugee social services, including $26 million for increased support to communities with large concentrations of refugees whose cultural differences make assimilation especially difficult, thus justifying a more intense level and longer duration of federal assistance. Funding for refugee social services also includes $14 million to address the needs of refugees and communities impacted by the recent changes in federal assistance programs relating to welfare reform and $19 million for assistance to communities impacted by Cuban and Haitian entrants and refugees whose arrivals in recent years have increased. This funding also includes $4,835,000 for preventive health services.

The State Criminal Alien Assistance Program (SCAAP), which reimburses states for the costs of incarcerating illegal immigrant felons, is funded at $585 million. $420 million of these funds are to reimburse states for incarcerating criminal aliens and $165 million for the State Prison Grants Program.

Revenue Provisions

Extension of Work Opportunity Tax Credit. The work opportunity tax credit is extended from July 1, 1998, through June 30, 1999. This tax credit will remain available on an elective basis for employers hiring individuals from one or more of eight targeted groups for an additional year. The credit equals 40 percent (25 percent for employment of 400 hours or less) of qualified wages. The maximum credit per employee is $2,400 (40% of the first $6,000 of qualified first-year wages). With respect to qualified summer youth employees, the maximum credit is $1,200 (40 percent of the first $3,000 of qualified first-year wages). The employer's deduction for wages is reduced by the amount of the credit. No credit is allowed for wages paid to employees who work less than 120 hours in the first year of employment.

The eight targeted groups are: (1) families eligible to receive benefits under the Temporary Assistance for Needy Families (TANF) Program; (2) high-risk youth; (3) qualified ex-felons; (4) vocational rehabilitation referrals; (5) qualified summer youth employees; (6) qualified veterans; (7) families receiving food stamps; and (8) persons receiving certain Supplemental Security Income (SSI) benefits.

Extension of the Welfare-To-Work Tax Credit. The welfare-to-work tax credit is extended from its expiration date on April 30, 1999, through June 30, 1999. This revenue provision provides employers a tax credit on the first $20,000 of eligible wages paid to qualified long-term family assistance (AFDC or its successor program) recipients during the first two years of employment. The credit is 35 percent of the first $10,000 of eligible wages in the first year of employment and 50 percent of the first $10,000 of eligible wages in the second year of employment. The maximum credit is $8,500 per qualified employee.

Qualified long-term family assistance recipients are: (1) members of a family that has received family assistance for at least 18 consecutive months ending on the hiring date; (2) members of a family that has received family assistance for a total of at least 18 months (whether or not consecutive) after the date of enactment of this credit if they are hired within two years after the date that the 18-month total is reached; and (3) members of a family who are no longer eligible for family assistance because of either federal or state time limits, if they are hired within two years after the federal or state time limits made the family ineligible for family assistance.

AFI Human Services Committee

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