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The original documents are located in Box 8, folder "FY 1976 - 12/4/74, Health, Education
and Welfare; Labor" of the White House Special Files Unit Files at the Gerald R. Ford
Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. Gerald Ford donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
Digitized from Box 8 of the White House Special Files Unit Files at the Gerald R. Ford Presidential Library
This
Item remard from blue buider
labelled [ Muting with Right Goh
12/5/74 to new pore Budget
-DAH 4/20/77
MEMORANDUM OF PRESIDENTIAL HANDWRITING
FILE CODE
DATE:
12/4/74
SUBJECT: Meeting with Roy L. Ash, 12/5/74, to review FY 76 budgets
for the Departments of Health, Education & Welfare and Labor
RECOMMENDED
LETTER
MEMO
PHONE CALL
NEWS SUMMARY
NEWS CLIPPING
OTHER
BRIEFING PAPER
TO: THE PRESIDENT
FROM: ROY ASH
GERALD LIBRARY ? FORD
NOTE: Above removed from Special Files Box #4.
CHECKMARK ONLY
SENSITIVE - NO HANDWRITING
this sheet
(remound from blue binder 3/24/77 -044)
THE WHITE HOUSE
WASHINGTON
December 4, 1974
MEETING WITH ROY L. ASH
Thursday, December 5, 1974
4:00 p.m. (60 minutes)
Cabinet Room
From: Roy L. Ash
I. PURPOSE
To review the FY 76 budgets for the Departments of
Health, Education, and Welfare, and Labor.
II. BACKGROUND, PARTICIPANTS AND PRESS PLAN
A. Background: The Departments of HEW and Labor have
submitted their FY 76 budgets and OMB and members of
)
the White House staff have reviewed their budget
requests. The results of this review have been trans-
mitted to both departments. This meeting will focus
on the issues raised in the Labor and HEW budget
review that require Presidential consideration and
determinations.
B. Participants: Roy L. Ash, Paul O'Neill, and
Dale McOmber
C. Press Plan:
David Kennerly photo.
III. TALKING POINTS
A. Paul O'Neill what is the first issue we'll be
considering in our review of the FY 76 budget for
the Department of Health, Education, and Welfare?
B. Paul O'Neill, will you begin our discussion of the
issues raised by the FY 76 budget for the Department
of Labor?
BERALO FORD LIBRARY
ORIGINAL IN PRESIDENTIAL
HANDWRITING FILE
THE WHITE HOUSE
WASHINGTON
MEMORANDUM FOR THE PRESIDENT
FROM:
ROY L. ASH
SUBJECT: 1976 Budget Decisions: Department of Health,
Education, and Welfare
Secretary Weinberger's initial request, my recommended allow-
ance, and his appeal are presented in the tabulation attached
at Tab A. The Secretary's appeal letter to you is provided
at Tab B. The major outstanding issues on which we need your
decision are provided in individual issue formats which
include the Department's appeal language. Because HEW
involves 14 major issues, we recommend you use the issue
formats under the program tabs to register your decisions.
OVERVIEW
1976 Effect of 1975 Reduction Decisions
The major reductions which you recently approved for your 1975
proposals to the Congress were excluded from the HEW request
and appeal. These reductions are not discussed in this
material, but account for outlay savings in 1976 as follows:
1976 Outlay Savings
($ in millions)
New legislation
Medicare cost sharing
1,311
Medicaid matching formula
636
School assistance in federally
affected areas (Impact Aid)
30
Change in AFDC matching formula
60
OASDI retirement test
215
Absent parent support
90
Offsetting effect of Medicare and AFDC
proposals on Medicaid (Net)
-105
Total
2,237
Change in pending legislation
OASDI retroactive benefit option
430
AFDC income disregard
203
Medicaid - adult dental care
76
Health resources planning
15
Total
724
2
Administrative actions
Medicare reforms
193
AFDC regulations
172
Medicaid actions, including utilization review
20
Total
385
Other rescissions, deferrals, and amendments
159
Total
3,505
HEW Request and Appeal
The total HEW appeal is $120.1 billion in outlays. This compares
with $93.3 billion in 1974 and $108.1 billion in 1975, based on
your recent decisions.
The total increase in outlays requested by the Department from
your 1975 decision level is $12 billion, of which $11.5 billion
is in Social Security and Medicare. There is no programmatic
disagreement between OMB and HEW on this portion of the increase.
You should be aware, however, of three important items in
this area:
First, Secretary Weinberger has requested 7,200 more permanent
employees for the Social Security Administration as a first
installment of what will probably be a 13,000 increase in
personnel. We have prepared for your decision a separate
analysis of this issue.
Second, part of your 1975 reduction proposals were legislative
reforms in the uncontrollable program areas of Social Security,
Medicare, Medicaid, and Public Assistance. If these bills are
not enacted by the Congress, the total outlays for these
programs in 1976 will be higher by almost $3 billion.
Third, the estimates for Social Security, Supplemental Security
Income, Medicare, Medicaid, and Public Assistance benefits will
have to be updated before the 1976 Budget is printed. These
estimates could be significantly increased by the actual
experience from more recent monthly reports.
The major uncontrollable programs in the HEW budget make up
$106.9 billion of the total $120.5 billion outlay request.
There are essentially no programmatic or policy differences
between my allowance and the Secretary's appeal in these
program areas with the exception of the Social Services
program included as an issue sheet. Estimating differences
will be resolved as we work toward the final figures for
printing.
3
In the controllable programs, the HEW appeal level is higher
than the allowance by $973 million in Budget Authority and
$465 million in Outlays. It is also $825 million over your
1975 decision level in Budget Authority for controllable
programs.
There are two basic thematic differences between the allowance
and the appeal in the controllable program areas. These
differences are reflected in the specific issue sheets.
1. Federal Role. The allowance proposes to begin a gradual
phase-out of Federal funding for the direct delivery of health,
education, and some social services by increasing the share of
program costs borne by state, local, and private grantees --
usually starting with a 20% non-Federal matching requirement
in 1976. This shift to shared funding is primarily in areas
where the Federal Government has been providing general support
for operating programs. It is based on the following:
- The Federal Government has no contribution to bring to
these operating programs except general funding support
with essentially no convincing rationale for the budget
level proposed by HEW except limited funds.
- Shared funding responsibility will encourage tighter
administration and more rigorous evaluation of the worth
of programs at the local level.
- The present distribution of Federal support for operating
service programs is inequitable since it is not based on
individual or community ability to pay, but rather on the
fortuitous nature of the grant mechanisms.
- In the Social Services program, the increase in state and
local financial responsibility is consistent with the
greater discretion in program design and direction which
is being provided in the new legislation now pending in
Congress.
- In the health services field, Medicare and Medicaid
provide more equitable general financial assistance
to finance needed care, as will health insurance if
it is enacted.
- In the education field, the allowance would shift Federal
assistance from general operating assistance to programs
of innovative development and capacity building. This is
the thrust of the allowance for vocational and handicapped
education, for example.
FORD
GERALD
4
- The benefits of income assistance programs and the health
financing programs for the poor are increasing commensurate
with the general rate of inflation.
HEW maintains that this is not a sound course to follow because:
- The Congress will not agree to the proposals for program
reform if we are asking for dollar reductions at the
same time.
- It results in reductions in programs which help the poor
in a time of inflation.
- Federal funding of the direct delivery of health services
should be retained until Comprehensive Health Insurance
is in place.
- State and local governments should not be asked to share
more of the costs since their recent surpluses are now
expected to be followed by deficits in the near future.
The basic problem with the HEW appeal is that it contains no
overall conceptual basis for limiting the Federal financial
exposure or focusing the Federal role on areas where it can
make a significant and meaningful contribution. The HEW
request and appeal do not propose to the Congress a structural
change in the Federal role in these controllable programs. The
HEW proposals merely offer an alternative funding level higher
than the allowance but lower than Congress is likely to accept.
I do not think that is a sound posture for the Executive Branch.
Moreover, in the past it has not given us an adequate basis for
resisting additional appropriations. The Congress can always
be the high bidder when there is no conceptual limit to the
Federal responsibility. We may not succeed in persuading the
Congress to limit the Federal role, but we will have reasonable
grounds for our position.
2. Protecting the Controllable Programs Against Inflation.
The other basic difference between the OMB allowance and the
HEW appeal is that the allowance attempts wherever possible
to hold the controllable programs at the 1975 revised level.
HEW maintains that this ignores the impact of projected inflation
and could result for instance in a 10 to 15 percent reduction
in health research activity if anticipated inflation occurs.
To provide increases as a cushion against future inflation
would, if applied government-wide, raise the 1976 Budget
totals to unacceptable levels and would, in itself, contribute
to even higher inflationary pressures. It would also have
the effect of indexing the discretionary programs to price
and wage increases and, to that extent, making these programs
uncontrollable.
DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE 1/
1976 Budget
BUDGET AUTHORITY
($ in Millions)
1976
1974
1975
Agency
OMB
HEW
actual
estimate
request
Recom.
Appeal
Health Agencies
5,304
4,563
5,161
4,341
4,969
Education Division
6,126
5,868
6,120
5,704
5,989
Social and Rehabilitation
Service
12,629
14,019
14,083
14,001
14,169
Social Security Administration 75,504
88,882
98,849
98,849
98,849
(Social Security
trust funds)
(72,190)
(83,184)
(92,673)
(92,673)
(92,673)
Special Institutions
85
119
139
124
124
Office of Human Development
695
732
784
735
756
Office of the Secretary
113
125
178
163
165
Subtotal
100,456
114,308
125,314
123,917
125,021
Receipts and audit
recoveries
-16
-134
-134
-134
-134
Total
100,440
114,174
125,180
123,783
124,887
1/
Except Work Incentive Program, which
is in Department of Labor totals.
DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE
1/
1976 Budget
OUTLAYS
($ in Millions)
1976
1974
1975
Agency
OMB
HEW
actual
estimate
request
Recom.
Appeal
Health Agencies
4,427
5,293
5,224
4,952
5,171
Education Division
4,903
5,791
6,246
5,899
6,087
Social and Rehabilitation
Service
13,845
14,049
14,153
14,081
14,241
Social Security Administration 69,515
82,304
93,791
93,791
93,791
(Social Security trust
funds)
(66,258)
(76,732)
(87,624)
(87,624)
(87,624)
Special Institutions
113
131
118
115
115
(
Office of Human Development
411
535
733
704
720
Office of the Secretary
81
155
156
153
153
Subtotal
93,296
108,258
120,420
119,694
120,280
Receipts and audit
recoveries
-16
-134
-134
-134
-134
Total
93,280
108,124
120,286
119,560
120,146
1/
Except Work Incentives Program, which is in
Department of Labor totals.
GERALD FORD LIBRARY
EDUCATION
I
THE SECRETARY OF HEALTH. EDUCATION, AND WELFARE
WASHINGTON, D.C 20201
MEMORANDUM FOR THE PRESIDENT
SUBJECT: Fiscal Year 1976 Budget
I have received from OMB their mark-up of my budget request for 1976.
I understand that Roy Ash wants to present my reactions to the OMB
recommendations when you consider the HEW budget for the first time,
and I applaud this procedure.
The Department's detailed comments, I am told, will be incorporated
into the individual issue papers which you will be considering.
In this memorandum, I would like to call your attention to certain
broader considerations and implications raised by the OMB proposals.
You should first consider what has happened to the Department's
1976 budget estimates during the past several months. I have
attached a table which records those events (Attachment A, Table I).
I have said and deeply believe that HEW must do its share in
reaching prudent fiscal totals, and our recommendations have
followed that conviction. Inflation, however, is eating us alive,
and the prospective economic downturn and rising unemployment
will bring us more customers and further increase costs of our
programs. The message conveyed by the attached table is the
following:
We estimated last summer that a normal 1976
budget, without any new initiatives, would be
priced at $123-124 billion in outlays.
We were asked by OMB to submit a $118.5 billion
outlay budget, and we came in below this
target. This involved substantial reductions
in the normal rate of program cost increases
(actually less than half the normal rate of
budget growth).
The President
2
By the time appropriate inflation assumptions
and the results of the President's decisions on
the 1975 budget were included, our $118.4
billion submission became $120.6 billion
without any increase in real program output.
Trust fund receipts, however, have also risen
by $2.5 billion 80 that the net effect of the
revisions to the HEW budget was to reduce
the FY 1976 Federal budget deficit by
$300 million.
OMB now proposes a reduction of $1.4 billion
in budget authority and $700 million in
outlays for the Department's controllable
programs. They do 80 in a very uneven way
with the heaviest reductions coming in
health and education. (See Attachment A,
Tables II and III.)
I fully agree with the need for fiscal prudence. I am afraid that the
OMB recommendations are programmatically unbalanced and politically
not possible of achievement. Thus you would be hurt by asking for
things which will not be agreed to. The results would be the worst
of two worlds: You absorb all the political heat with no hope of
budgetary constraint.
You and I have both stated publicly our
intention to preserve programs which actually
help the poor. The OMB recommendations
break that commitment.
Virtually every program in the education area
targeted to special groups was severely
reduced (Indians, blacks, spanish speaking
and asians) and programs for the handicapped
were cut across-the-board. Health programs
serving the poor and migrants were heavily
reduced. Progress in expanding health
services for Indians would be halted.
The President
3
Educational program reductions were concentrated
in the elementary and secondary area as opposed
to higher education and research. Health
program cuts fall heavily in services which are
particularly troublesome since we have said
publicly that these service programs should
be retained until comprehensive health insurance
is in place.
Many of the cuts seem predicated on the notion
that State and local governments can shoulder
a larger share of the burden. While last year's
figures lent credence to such an argument,
this year's economic picture removes that
argument. State and local treasuries as well
as ours are in substantial trouble. The State
and local budget surpluses of the past several
years are turning into substantial deficits
for 1974 and 1975; by some estimates, over
$7 and $11 billion respectively.
The policy of holding program budgets to the
1975 revised level actually makes major
reductions in 1976 since the budget assumptions
ignore the impact of inflation. Thus, a level
budget proposed for the National Institutes
of Health really means a 10 to 15 percent
reduction in health research activity.
The proposed budget reductions in controllable
programs failed to take into account any of
the Department's overall strategy of program
reform. They ignore our planning and thus
destroy our ability to operate within
reasonable budget levels--the various program
pieces no longer add-up to any coherent whole.
As a result, Agency Heads and others in key
leadership positions are left to carry out
fiscal reduction decisions which both ignore
and block their planning for the future.
The President
4
The proposed allowance would again have us seek
program reforms from Congress while at the
same time cutting the budget. For example,
consolidation of the several vocational
education programs is still proposed, but with
substantially less funds than previously
allocated to each of the pieces of the
consolidation. This approach has repeatedly
been rejected by Congress. It defeats con-
solidation before being seriously considered
by the Congress, and we see no point in trying
it again in fiscal year 1976.
I am, as you know, loath to increase Federal
personnel. Nevertheless, I must point out that
many of the OMB actions fail to recognize the
need to administer programs effectively we are
mandated by statute to run. If we fail to
administer properly the programs assigned us,
we can hardly expect favorable treatment by
the Congress of the reforms we seek.
A budget of the kind OMB recommends is a prescription for failure.
While I can accept a portion of the reduction which OMB recommends,
I am asking you to restore $465 million* of the $730 million in outlays
cut by OMB, and 2,286 positions of the 3,467 cut. The personnel appeal
is exclusive of the Social Security Administration, St. Elizabeth's
Hospital, and the Office of the Secretary.
The principal areas where we are seeking restorations are as follows:
-- Approximately $200 million for restoring
programs aimed at the poor and disadvantaged.
These programs include neighborhood health
centers, maternal and child health,
Indian health and education, bilingual
education, and alcoholism programs.
I emphasize that except for alcoholism,
these programs help only the poor and
disadvantaged, and at least a large
portion of the alcoholism funds help
the same groups.
*$85 million could be offset in your budget submission by again seeking
legislation to cease operating Public Health Service hospitals.
GCRALD FORD VIBRABY
The President
5
- An additional $65 million for programs
aiding the handicapped including
vocational rehabilitation grants to
States, education for the handicapped,
and the extension of head start services
to handicapped children.
-- An additional $95 million for the
National Institutes of Health and
health research activities to maintain
a balanced effort in 1976.
-- $65 million to carry out the Department's
proposed vocational education legislation
which would consolidate existing programs
and focus additional aid on vocational
training for the disadvantaged.
-- An additional $20 million to maintain
the preventive health and consumer
protection programs of the Food and Drug
Administration and the Center for
Disease Control.
We also ask that you reject the OMB proposal to submit legislation
decreasing Federal matching for social services under Public Assistance
to 65 percent in 1976 and 50 percent in 1977. This proposal would
destroy the progress made thus far in working out compromise legislation
with Congress to reform this program. Less than two weeks ago, the
Department testified before the House Ways and Means Committee that
this matching rate would remain at 75 percent. The Committee responded
by unanimously approving our compromise. In addition, I do not believe
that we can justify further shifts of costs to States and localities
in light of their sharply deteriorating fiscal position. The additional
funds required by this revision could be made within the total proposed
by OMB for Public Assistance programs.
Secretary
Enclosures
Attachment A
Table I: The Development of the HEW Budget
Outlay in billions
Preliminary HEW budget projection
*
$ 123.5
OMB planning ceiling
118.5
HEW budget request, September 30, 1974
118.4
Budget Revisions:
New OMB economic assumptions
+3.7
Impact of 1975 Presidential decisions
-1.7
Other revisions
+.2
Revised budget
120.6
Outlay increase over September 30 budget
+2.2
Additional trust fund income
+2.5
Net effect of revisions on Federal deficit
-0.3
Table II: Non-controllables VS. Controllables
(in billions)
Non-controllable programs:
HEW
OMB
Difference
Budget authority
112.9
113.0
+.1
Outlays
107.8
107.9
+.1
Controllable programs:
Budget authority
12.6
11.2
-1.4
(
Outlays
12.8
12.1
-.7
Table III: Reductions in Controllables
(1976 budget authority in millions)
HEW
OMB
Difference
Health agencies
5,116
4,287
-829
Education Division
5,605
5,182
-423
Human Development/Social and
Rehabilitation Service
1,770
1,638
-132
Total reductions
1,384
* Based on continuing all programs existing in July 1974.
H-1
1976 Presidential Determinations
Department of Health, Education, and Welfare
Food and Drug Administration
($ in millions)
1975
1976
1974
President's
HEW
HEW
OMB
Actual
Decisions
Request
Allowance
Appeal
Recom.
BA
165
196
225
196
218
196
0
165
189
209
195
200
195
Allowance: The allowance held FDA to its 1975 level.
HEW Appeal: HEW appeals for restoration of its entire original
request, excluding $7 million to be requested subsequently for
legislation if enacted. The HEW appeal is for a $22 million in-
crease over 1975. The Secretary's letter refers to FDA as one of
the five "principal areas where we are seeking restorations."
HEW maintains that the OMB allowance would:
" require absorption of $2 million in
mandatory expenses
-- not permit any expansion of FDA's
activities."
The Department's original request for FY 1976, on the other hand,
"would support expansion of the agency's scientific and regulatory
activities, including:
-- inspection of an additional 2,400 food
establishments (for a total of 35,4.00),
thus reducing the average time between
inspections from 2.4 to 2.3 years
-- more than doubling the number of retail
food samples examined (to 56,000 samples)
-- inspection of an additional 500 drug firms
(for a total of 3,500)
-- timely review of 90 percent of new animal
drug applications (an increase of 500
applications for a total of 2,700)
GERALB FORD CIBRARY
H-2
-- inspection of an additional 300 manufacturers
of medical devices and diagnostic products
(for a total of 1,500) and the publication of
10 proposals for medical device standards
(double the number to be published in FY 1975)
-- more than doubling the number of diagnostic X-ray
installations inspected to reduce unnecessary
patient exposure (for a total of 5,000)
-- expansion of the agency's legal staff by 20 in
order to increase the rate at which legal action
can be taken against violators of the food and
drug law. "
OMB Recommendation: We recommend affirming the original allowance,
on the grounds that decisions on program levels in FDA cannot be
definitively related to degrees of consumer health and safety.
There is, for example, no objectively "right" inspection rate or
level. Moreover, necessary program initiatives or expansions can
probably be provided through reallocations from lower priority
program areas. Finally, as compared to other areas (e.g., occu-
pational cancer research), we believe FDA is relatively well-funded
at the allowance level.
December 2, 1974
1976 Presidential Determinations
Department of Health, Education, and Welfare
(Budget Authority in millions of $)
Food and Drug Administration
1975
1976
1974
President's
HEW
HEW
OMB
Actual
Decisions
Request
Allowance
Appeal
Recommendation
Foods
66.5
63.8
69.5
63.8
68.0
63.8
Drugs
63.2
76.5
90.2
76.5
85.4
76.5
Radiological
Products
14.9
16.5
18.1
16.5
18.1
16.5
National Center
for Toxicological
Research
9.0
10.9
16.0
10.9
16.0
10.9
Program Management
11.3
27.7
27.9
27.7
27.9
27.7
Buildings and
Facilities
--
1.0
3.0
1.0
3.0
1.0
Total
164.9
196.4
224.7
196.4
218.4
196.4
GERALD
R.FORD
FORD
H-3
December 2, 1974
H-4
1976 Presidential Determinations
Department of Health, Education, and Welfare
Health Services Administration
($ in millions)
1975
1976
1974
President's
HEW
HEW
OMB
Actual
Decisions
Request
Allowance
Appeal
Recom.
BA
1,216
1,129
1,261
972
1,240
982
0
907
1,098
1,216
1,052
1,200
1,055
Allowance: The allowance included a 20% reduction in the narrow
categorical health service delivery programs with a requirement
that grant recipients match 20%. These programs would be phased-
out over a four-year period at 20% a year with funding responsi-
bility shifted to grantees. Other HSA programs will generally be
funded at the 1975 level. This policy action reflects the existence
of over $22 billion in Medicare and Medicaid to finance services
to the aged and low-income. The allowance also provided $40 million
rather than $84 million for PSRO's and held other programs at the
1975 level.
HEW Appeal: HEW appeals all of the items in the allowance -- except
$20 million of the $40 million PSRO reduction and the lower emer-
gency medical services program level -- and. requests an additional
$5 million for the National Health Service Corps. The HEW appeal
is based upon a concern that grantees, especially State and local
governments, cannot assume the 20% non-Federal match that the pro-
posed phase-out calls for and that, as a result, services to
beneficiary groups will be reduced.
HEW also believes a higher PSRO funding level is necessary to main-
tain momentum and that the health maintenance organization and
emergency medical services programs should be expanded and perpetu-
ated beyond their current expectations. Detailed HEW comments are
attached behind the table.
OMB Recommendation: We recommend affirming the allowance on a
gradual phasing-out of narrow categorical health service delivery
programs in light of the Federal Government's $22 billion in
financing programs -- Medicare and Medicaid. Such a strategy
stressed a Federal role limited -- in the area of health services --
to financing through national programs rather than a series of
project grants to a few favored grantees who fortuitously receive
grants while citizens of other communities are limited to the more
uniform financial assistance available under Medicare and Medicaid.
H-5
On PSRO's we recommend allowing a $50 million program with policy
guidance that HEW fund evaluations during the current year that
will determine the effectiveness of PSRO's for consideration in
1977.
In other program areas -- Indian Health Service, National Health
Service Corps, Health Maintenance Organizations, and PHS hospitals --
we recommend holding to the 1975 program levels only recently ap-
proved by the President. In Indian health, the current funding
levels result in a force of 8,000 Federal employees for 500,000
beneficiaries and roughly $576 per Indian or over $2,300 annually
for an Indian family of four. The current funding levels for
National Health Service Corps and Health Maintenance Organizations
reflect a demonstration responsibility of the Federal Government
rather than a strategy of national "wall-to-wall" grants. We also
recommend holding PHS hospitals to the current level of activities
rather than expanding their outreach activities for non-eligible
community beneficiaries.
HEW also proposes extending the authorities for the Health
Maintenance Organizations and Emergency Medical Services programs
which do not expire until 1977 and 1976, respectively. We recom-
mend against expanding those programs on the grounds that the
existing authorization periods allow a five-year period during
which an ample number of Health Maintenance Organizations and
Emergency Medical Services demonstrations will have been funded
at Federal expense.
December 2, 1974
1976 Presidential Determinations
Department of Healt Education, and Welfare
(Budget Author
in millions of $)
Health Services Administration
1975
1976
1974
President's
HEW
HEW
OMB
Actual
Decisions
Request
Allowance
Appeal
Recommendation
Health Services:
1. Community health services
(a) Grants to States
90
45
--
--
--
(b) Neighborhood health
centers
205
200
207
160
207
160
(c) Maternal and child
health
266
265
289
213
289
213
(d) Family Planning
101
100
97
80
97
80
(e) Migrant health
24
24
34
19
34
19
(f) Health maintenance
organizations
61
19
50
18
50
18
(g) National health service
corps
9
9
23
9
28
9
Subtotal
756
662
700
500
704
500
2. Quality Assurance
(a) Medical care standards.
6
6
12
6
12
6
(b) PSRO's
33
37
84
40
60
50
Subtotal
39
43
96
46
72
56
3. Patient care and special
health services
105
108
118
109
117
109
4. Emergency medical services 27
27
34
27
27
27
5. Buildings & Facilities
21
1
--
:
:
:
6. Program management
34
32
38
28
36
28
Less trust fund transfer -22
-33
-55
-25
-42
-2.5
H
Indian Health Service
250
288
330
288
326
288
Emergency health
6
--
:
--
--
Total HSA
BA 1,216
1,129
1,261
972
1,240
982
O
907
1,098
1,216
1,052
1,200
1,055
Attacnment
H-7
HEW Comments
OMB allowance means a 20% reduction below 1974 budget of $1.2
billion for programs primarily serving the poor and others
with limited geographic access to care.
The Department is asking for $267 million and
related
positions above the OMB allowance to proceed with the proposed
1976 program efforts.
Reduction is premised on incorrect assumption, i.e., State and
local governments can assume greater share of the cost.
Where possible, the Department's request had already assumed
maximum support of health services by third party resources
such as Medicare and Medicaid and fees assessed to participants
rather than increases in direct appropriations.
Services reduced by this allowance include those provided through
community health centers, maternal and child health centers,
migrants and Indians, family planning services, and placement of
physicians in health manpower shortage areas. This would mean a:
27% reduction in the estimated 9 million preventive health
services provided to mothers and children in 1975.
-- 17% reduction in the 1.6 million women receiving care at HEW
family planning centers in 1975.
30% reduction in the 200 health manpower shortage areas
staffed in 1975.
Further reductions in care to Indians and migrants, who already
rank as the groups with the poorest health status compared to
other Americans. Indians, for example, have a death rate 1.2
times that of the other Americans."
Professional Standards Review Organizations
The OMB allowance reduced the Department's request of $84 million
to $40 million. The Department is requesting a restoration of
$20 million.
In the 1975 budget the Administration stated its objective of
establishing PSRO's in all 203 areas designated throughout the
country by 1977.
The Department feels this program is clearly cost-effective;
PSRO's have already shown evidence that they can decrease hospital
stays.
The 1975 budget would have established 77 operating grants, most
of which had previously been funded as planning grants, but
Congress cut this back to 49 operating grants.
H-8
The OMB allowance would only add 10 operating grants to the
49 appropriated in 1975 and further requires termination of
46 planning grants which are ready to move into operating
status in 1976.
The Department's appeal would permit 39 new operating grants
and require termination of 17 planning grants."
Legislation: Health Maintenance Organizations and Emergency Medical Services
"
The allowance also recommends that the Department not be allowed
to seek extension of the legislation for the Health Maintenance
Organization (HMO) and Emergency Medical Services Programs (EMS).
EMS was enacted at end of calendar year 1973, amd has just gotten
underway. Department intends to continue it through 1977.
-- To terminate EMS prematurely would waste already expended
funds, and not allow newly initiated EMS systems to be completed.
HMO legislation also enacted at the end of calendar year 1973, and
initial grant awards are just now being made.
-- HMO's were publicized in FY 1975 as a major Presidential initi-
ative to improve the distribution of health and control rising
health costs.
-- Termination would be counter-productive to the strategy of
improving health care and lowering costs."
Extend
H-9
1976 Presidential Determinations
Department of Health, Education, and Welfare
Center for Disease Control
($ in millions)
1975
1976
1974
President's
HEW
HEW
OMB
Actual
Decisions
Request
Allowance
Appeal
Recom.
BA
142
137
160
124
146
128
0
131
136
165
143
158
144
Allowance: The allowance requires a reduction of 20% in venereal
disease and immunization project grant funding to be made up by a
20% match on the part of grant recipients. It also reduces disease
surveillance activities by $1 million. Otherwise, it holds CDC
programs to their 1975 level or the HEW 1976 request level.
HEW Appeal: HEW appeals the allowance on the basis that it
would:
" require a 20% reduction (and eventual termination) of
federal efforts to assist States in control of venereal
and vaccine-preventable diseases, thus breaking the
momentum of the national campaign against epidemic
levels of venereal disease (which is just beginning to
show results) and reducing resources available to address
low levels of immunity against such diseases as measles,
polio, and whooping cough among pre-school age children,
particularly in inner city and rural areas;
-- not permit intensification of effort to identify, prevent,
and reduce cancer of occupational origin (which accounts
for a major portion of the estimated 600,000 new cancers
developed annually and the 350,000 cancer deaths annually);
-- not permit contracts to demonstrate the potential of
influenza immunization and of surveillance and diagnosis
of birth defects by State health department laboratories
for reducing national medical care costs;
-- not permit re-orientation of federal health education
efforts, as recommended by the President's Committee
on Health Education; and
GERALD POND
H-10
-- not permit new efforts to ensure that 30,000-50,000
clinical laboratories based in physicians' offices
(and not subject to Federal licensure) have available
to them the latest knowledge of diagnostic methods
and materials."
Nevertheless, it should be noted that HEW is appealing only the
first two components of the allowance--the 20% project grant
reduction and the occupational cancer program.
OMB Recommendation: We recommend:
-- affirming the allowance to reduce venereal disease
and immunization project grant funding by 20% and
require a 20% grantee match on the grounds that (a)
it encourages tighter management on the part of
grantees and more vigorous evaluation of program
worth; (b) the Federal Government supports venereal
disease and immunization activities primarily--and
in substantially greater amounts than with project
grants--through Medicaid; and (c) direct Federal
project grant funding represents only a tiny portion
of total State and local resources devoted to venereal
disease and immunization activities; and
-- allowing $4 million of the requested $8 million increase
to mount a new program in occupational cancer research,
since this has been an area of heightened concern over
the past year (the detection of vinyl chloride as a
carcinogen, etc. ) The entire requested increase is
not necessary given the existing funding for related
work in the National Cancer Institute.
December 2, 1974
1976 Presidential Determinations
Department of Health, Education, and Welfare
(Budget Authority in millions of $)
Center for Disease Control
1975
1976
1974
President's
HEW
HEW
OMB
Actual
Decisions
Request
Allowance
Appeal
Recommendation
Disease Control:
(a) Project grants:
(1) Venereal disease
24.8
24.8
24.8
19.8
24.8
19.8
(2) Immunizations
6.2
6.2
6.2
5.0
6.2
5.0
(3) Rat control
13.1
13.1
10.1
10.1
10.1
10.1
(4) Lead paint poisoning.
9.0
6.5
3.5
3.5
3.5
3.5
(b) Laboratory improvement
8.6
9.1
:
8.5
8.6
10.3
8.6
(c) Health education
1.7
3.0
4.6
3.0
3.0
3.0
(d) Disease surveillance
40.7
38.3
46.0
37.3
42.1
37.3
Occupational health
29.1
27.4
36.4
27.4
36.1
31.4
Program direction
6.6
8.8
14.6
8.8
11.1
8.8
--
Buildings and Facilities
2.0
3.0
:
--
--
TOTAL
141.7
136.7
159.5
123.5
145.8
127.5
H-11
December 2, 1974
H-12
1976 Presidential Determinations
Department of Health, Education, and Welfare
National Institutes of Health
($ in millions)
1975
1976
1974
President's
HEW
HEW
OMB
Actual
Decisions
Request
Allowance
Appeal
Recom.
1749
BA
1,785
1,725
1,984
1,725
1,893
1,725
(HEW-
NCI)
(527)
(566)
(617)
(566)
(590)
(566)
(NCI
Appeal)
--
--
(899)
--
(899)
:
O
1,603
1,852
1,854
1,742
1,817
1,742
Allowance: The OMB allowance held NIH at the 1975 overall funding
level in 1976. Within the total allowance, research training funds
were limited to support for 1,000 new postdoctoral fellowships. For
the National Cancer Institute, the 1975 level would also be carried
into 1976.
HEW Appeal: HEW has appealed for increases of $168 million over the
allowance, stating that the level of new research and training funds
would be too low compared with 1974 and 1975 funding. HEW argues
that it could not effectively implement new legislation, such as the
new National Institute of Aging, within the allowance.
HEW has also appealed the allowance for research training. HEW pro-
poses to increase the amount for training in 1975 and to reallocate
training funds in 1975 and 1976 to provide for predoctoral training
and institutional training support "to meet congressional intent as
expressed in the National Research Service Act."
The HEW appeal includes increased funds for an uninterruptible power
source, additional positions, and physicians bonus pay--all of which
would have been allowed by OMB within the total allowance.
NCI Appeal: The National Cancer Institute, in a separate appeal, has
stated that it should be returned to its originally-requested level
of $899 million. NCI argues that its program has been a success, and
therefore should be continued at the maximum rate possible. NCI
states that it would accept an intermediate level of $786 million, if
the full request is not possible. HEW's appeal for NCI is $590
million.
The texts of the HEW and NCI appeals are shown in the attachment
behind the table.
H-13
OMB Recommendation: We recommend staying at the allowance level
for NIH research. Although the allowance for NIH research is
admittedly a tight one, NIH would still be able to maintain a sub-
stantial amount of research begun in previous years. A limited
amount of high priority new research would also be permitted under
the allowance. A tight allowance provides incentives for NIH to
initiate administrative reforms to free-up additional funds for
new research.
Consistent with the 1975 reduction exercise, cancer research fund-
ing should be treated like other NIH research based on the close
similarity of the research supported. Basic research funded by NCI
is virtually indistinguishable from other basic research funded by
NIH and the reseach breakthroughs in cancer may just as well come
from other NIH research. At the allowance level of $566 million,
the NCI budget reflects an expanded research effort that has grown
by 143% since 1971, when the priority research initiative was
announced. By comparison, NIH research, as a whole, has grown by
42%.
We also recommend reaffirming the policy announced in the 1975
budget of limiting NIH training to postdoctoral awards. The HEW
appeal includes funding for new research pre-and postdoctoral and
training awards in 1975, and an increase in 1976 for predoctoral
and postdoctoral training. HEW believes this implements the "intent
of Congress" under the new National Research Service Award authority.
The Administration's announced policy has been to limit new research
training to postdoctoral fellowships on the rationale that predoc-
toral support is available through other sources, especially the
general student support programs of the Office of Education and
because there is no acceptable basis for singling out "life sciences"
students for special Federal subsidies. NIH proposes to provide
funds for more trainees than the number of new scientists it supports
annually in its research programs. This excess of trained researchers
is one reason for the seemingly insatiable demand for research funds.
1976 Presidential Determinations
Department of Health, Education, and Welfare
(Budget Authority in millions of $)
National Institutes of Health
1975
1976
1974
President's
HEW
HEW
OMB
Actual
Decisions
Request
Allowance
Appeal
Recommendation
National Cancer
Institute
BA
527
566
617
566
590
566
O
423
553
607
569
580
569
(NCI Recommendation) BA
(899)
(899)
O
(746)
(746)
Other Research
Institutes
BA 1,211
1,112
1,315
1,112
1,253
1,112
(Research Training)
BA
(128)
(128)
(143)
(124)
(142)
(124)
Other NIH
BA
47
47
52
47
50
47
Total, NIH
BA
1,785
1,725
1,984
1,725
1,893
1,725
O
1,603
1,852
1,854
1,742
1,817
1,742
(NCI Recommendation) BA
(2,266)
(2,202)
O
(2,037)
(1,983)
H-14
December 2, 1974
Attachment
HEW Appeal
H-15
The 1976 allowance would hold research institutes and divisions to
the 1975 revised budget totals, a reduction of $60 million below
1974 and $365 million below the 1975 Conference Committee action.
-- New research program grant awards would be reduced to less than
13 percent of the total program, as compared with 26 percent in
1975 and 36 percent in 1974.
-- New research initiatives embodied in new legislation (e.g., the
new National Institute on Aging) could not be effectively funded.
-- The number of new trainees in biomedical research would be cut by
50 percent, thus making it impossible to honor the three year
funding program announced by the administration in 1974.
The Department requests an increase of $168 million over the OMB
allowance to be distributed as follows:
-- $140 million for new research grants, contracts and intramural
research principally in order to expand research efforts in
areas of basic research such as immunology, virology, genetics,
endocrinology and the molecular biology of disease.
-- OMB's suggestions regarding savings to be achived through adminis-
trative reforms appear to have some merit and deserve further
study, however, we would point out that such reforms should be
considered and if found desirable, applied on a Government-wide
basis.
-- $18 million for research training that would include a minimum
of predoctoral and institutional awards to enable us to meet
Congressional intent as expressed in the new National Research
Service Act; and
-- $9.4 million for an uninterrupted power source for the clinical
center, the cost of the bonus pay for NIH/PHS physicians, and the
cost of the 200 additional staff also requested, principally, to
maintain the level of effort proposed and for the intramural
laboratory and clinical research programs."
NCI Appeal
"The requested $898.5 million level for 1976 represents the resources
necessary to exploit the available science base and continue the
momentum that has been developed within the National Cancer Program.
However, recognizing the other demands on the Federal Budget, a minimum
of $786 million would allow the program to progress in an orderly
fashion. To reduce the level below $786 million would seriously impede
the achievement of objectives of the National Cancer Program as called
GERALD PORO
H-16
for in the National Cancer Act. Additionally, the proposed Budget
uthority for the National Cancer Program for FY 1975 of $566.5
million is $14.6 million below that obligated in FY 1974, and $125.2
million below the Congressional Appropriation. Of all diseases, the
American people fear cancer the most, unfortunately with good reasons.
This new program was begun in 1972. It is a bona fide success and
is already saving and ensuring good lives. Americans and others know
and very much appreciate this. The program will more than pay for
itself through better health and through tax revenues of people
returned to work. The impact of this cut will be a severe reduction
in new reseach projects that can be supported and the termination and/or
cutback of existing high priority projects, resulting in a certain
increase in the number of patients and families exposed to the ravages
of cancer."
H-17
1976 Presidential Determinations
Department of Health, Education, and Welfare
Alcohol, Drug Abuse, and Mental Health Administration
($ in millions)
1975
1976
1974
President's
HEW
HEW
OMB
Actual
Decisions
Request
Allowance
Appeal
Recom.
BA
833
718
789
686
749
686
0
632
862
810
774
791
774
Allowance: The allowance reflects maintaining the Alcohol, Drug
Abuse, and Mental Health Administration's (ADAMHA) research at
the 1975 level. The phase-out of training would be continued
and support for 100 new postdoctoral research fellowships would be
allowed. The community mental health centers (CMHC) would continue
to be phased out. No new multi-year commitments for alcoholism
projects would be made. The period of support for alcoholism
projects currently eligible for their second or third and last
year of Federal support would be expanded to four years but an
increasing non-Federal match would be required so that generally
the non-Federal match for projects in their first, second, third,
and fourth year is at least 20%, 40%, 60% and 80%, respectively.
There would be no new awards for drug abuse demonstration projects,
but by decreasing the Federal match about 10% below the current
80% Federal match the allowance would support the present federally-
funded treatment capacity of 95,000 slots. The funded slots would
continue to be targeted primarily for heroin abusers. Support for
direct operations and program management was reduced in proportion
to overall program decreases and also reflects elimination of lower
priority management and information activities.
St. Elizabeths Hospital would be proposed for transfer and funds
for renovation and new construction would be requested after
transfer. Funding for St. Elizabeth's operating costs, however,
is already included in the allowance.
HEW Appeal: The HEW appeal on these programs states:
"Mental Health
Research - Allowance would halt new research in
schizophrenia, depression, aging. Appeal will
allow $16 million in new starts in these areas.
Drug Abuse
Research - Appeal would restore new starts in such
areas as new treatment methods, marihuana research.
H-18
Community Projects - Appeal would permit support
of the 95,000 treatment slots mandated for the drug
program.
Alcohol
Research - Appeal permits new research in diagnosis,
biological effects, and treatment and restores a $1.3
million cut into the commitment base.
Community Projects - Appeal would permit new starts
in research covering high risk populations (Indians,
poverty).
St. Elizabeths - Buildings and Facilities - Allowance
eliminates funds which were entirely directed to badly
needed repairs to existing plant. Proposal to transfer
St. Elizabeths to D.C. has little chance unless St.
Elizabeths facilities are improved."
OMB Recommendation: We recommend affirming the allowance which
allowed about $12 million for new research starts which, although
tight, would still allow support for promising and important new
research in many areas including those described as being "halted."
The allowance provided adequate support for 95,000 drug abuse
treatment slots but it requires HEW to maximize the non-Federal
match wherever possible. This is consistent with the original
objectives of the Federal drug abuse initiative. Moreover, of
the current utilized capacity, only 2/3 is devoted to the priority
target group, i.e., heroin addicts. The allowance for alcoholism
projects would fund all existing program commitments at a 80%
Federal match and reflects a policy of phasing out Federal support
for categorical project grants. In 1976, HEW will still be
supporting over 300 alcohol community projects that more than
adequately research and demonstrate the provision of care for
alcoholism to -- among others -- high risk populations. In fact,
only $3 million of the HEW appeal is for new starts for high risk
populations and the Secretary, in his letter, points out that
only some alcoholism programs help the poor and disadvantaged.
While we recommend seeking all funds necessary for St. Elizabeths
facility repairs, we believe these should be sought once the
hospital has been transferred as part of an effort to bring about
the transfer.
December 2, 1974
1976 Presidenti
eterminations
Department of Health, Education, and Welfare
(Budget Authority in millions of $)
Alcohol, Drug Abuse and Mental Health Administration
1975
1976
1974
President's
HEW
HEW
OMB
Actual
Decisions
Request
Allowance
Appeal
Recommendation
General Mental Health:
Research
90
81
91
81
88
81
Training
100
64
48
45
45
45
Construction
14
--
--
--
--
--
Staffing grants
156
172
142
135
135
135
Children's services
19
27
26
25
25
25
Management & Information
23
19
21
18
20
18
Subtotal
402
363
329
305
314
305
Drug Abuse:
Research
37
32
38
32
36
32
Training
15
10
7
3
3
3
Projects
161
121
138
127
138
127
State grants
15
35
40
35
35
35
Management & Information
16
13
16
14
14
14
Subtotal
243
211
238
211
226
211
Alcoholism:
Research
8
9
20
9
15
9
Training
7
2
7
7
7
7
Projects
67
25
66
45
66
45
State grants
46
46
46
46
46
46
Management & Information
10
9
10
7
7
7
Subtotal
138
90
148
114
140
114
Buildings and Facilities
--
--
12
--
12
--
Program Direction
9
10
12
10
12
10
St. Elizabeths Hospital
40
44
50
46
46
46
H-19
Total
BA
833
718
789
686
749
686
O
632
862
810
774
791
774
December 2, 1974
H-20
1976 Presidential Determinations
Department of Health, Education, and Welfare
Health Resources Administration
($ in millions)
1975
1976
1974
President's
HEW
HEW
OMB
Actual
Decisions
Request
Allowance
Appeal
Recom.
BA
1,110
594
664
556
654
556
0
956
1,092
888
960
925
960
Allowance: The phase out of health manpower capitation grants is
continued, and there would be no "new starts" in health manpower
special project activities. Funding for National Health Service
Corps scholarships is increased by $10 million. The allowance
includes $75 million for the new health resources planning legis-
lation, and $100 million--as in 1975--for hospital modernization
project grants. Health statistics receives $25 million and health
services research $26 million in the allowance. No funds are
included in either 1975 or 1976 for the proposed new pre-doctoral
health services research training program. HRA program management
would be held to $40 million.
HEW Appeal: The HEW appeal goes back to the amounts in the
original request for health statistics and health manpower special
projects, and would increase health services research by $20 million
above the allowance. Program management would be restored to a
level consistent with the revised 1975 request, including the
salaries and expenses associated with health resources planning.
In sum, HEW maintains that the OMB allowance:
-- "virtually halts all initiatives associated with
preparation for comprehensive health care financing
system";
-- "prevents acquisition of essential data on which to
determine gaps in resources and services and base
decisions on appropriate regulatory and legislative
proposals"; and
-- "eliminates possibilities of strengthening primary
care resource capacity. Family medicine, nurse
practitioner, and physician assistant training
reduced sharply.'
H-21
OMB Recommendation: Remain at the allowance levels. The HEW
appeal is couched in very general terms, which do not clarify
what opportunities would be foregone by adoption of the OMB
allowance levels. With reference specifically to the above-
quoted HEW position on the allowance:
-- it is unclear which HRA activities are deemed to be
"initiatives associated with preparation for compre-
hensive health care financing
If this is meant
to refer broadly to health services research, the
allowance provides for a level of "new starts" that
is approximately the same as in 1975, some of which
would be associated with health care financing issues.
Moreover, "preparation for comprehensive health care
financing" is an ongoing concern of other parts of
HEW, as well as of HRA;
-- the allowance does not prevent acquisition of needed
data, but in fact would provide a $3.5 million increase
over the 1975 level for further development of the co-
operative health statistics system's vital statistics,
manpower, and facilities components; and
-- the allowance neither "eliminates" capacity building
in primary care, nor sharply reduces support for
family medicine, nurse practitioner, and physician
assistant training. The allowance permits funding
of the continuation costs for such activities that
are currently being supported.
December 2, 1974
1976 Presidential Determinations
Department of Health, Education, and Welfare
(Budget Authority in millions of $)
Health Resources Administration
1975
1976
1974
President's
HEW
HEW
OMB
Actual
Decisions
Request
Allowance
Appeal
Recommendation
Health Statistics
19
22
39
25
39
25
Health Services Research
1
70
36
53
26
46
26
Health Manpower:
Capitation Grants
220
125
101
101
101
101
"Special Projects"
128
128
155
97
155
97
NHSC Scholarships
--2/
13
13
23
23
23
Other Student Assistance
122
67
52
45
45
45
Other
86
15
15
15
15
15
Subtotal
556
348
336
281
339
281
HRA Program Management
40
40 3
52
40
46
40
All other HRA
425
148
184
184
184
184
TOTAL, BA
1,110
594
664
556
654
556
Outlays
956
1,092
888
960
925
960
H-22
1/ Includes $27 million for EMS grants, transferred to the Health Services Administration
2/
Excludes $3 million for this activity transferred from the Health Services Administration.
3/
Excludes $6.6 million in salaries and expenses covered under "health resources planning" activity.
GERALOR
December 2, 1974
CHON
E-1
1976 Presidential Determinations
Department of Health, Education, and Welfare
($ in millions)
Program: Bilingual Education
1975
1976
1974
President's
HEW
HEW
OMB
Actual
Decisions
Request
Allowance
Appeal
Recommendation
BA
58
70
70
55
70
55
o
35
44
61
61
61
61
Allowance:
This program has provided support to local education agencies for
programs of classroom activities, inservice teacher training and
materials development. The allowance reflects the following changes
from the FY 1976 requested amount:
-- Termination of the materials development portion of the
program.
-- No new starts in the project grant portion of the program.
-- No increase in teacher training.
-- Phase-out Federal support by 1978.
HEW Comment:
-- Department requests restoration of $15 million cut by OMB
allowance, bringing total for bilingual education to $70
million.
-- Reduction is inconsistent with Administration testimony in
response to Lau Supreme Court decision. In that testimony
the Federal role was stressed for developing varied models
for programs to impart competence in English.
OMB allowance of $38.9 million for projects would provide for
no new model building; would support 239 continuation projects
serving about 167,000 students. Restoring $7.3 million
would provide for 45 new demonstrations serving an estimated
30,000 additional students.
03RALD FORD LIBRARY
E-2
HEW request of $16.7 million for training would serve about
9,000 inservice trainees at approximately $900 each; 1,400
preservice scholarships at about $3,500 each; 100 fellowships
at $6,000 each; and 20 projects averaging $150,000 at insti-
tutions of higher education. Reduction of $730,000 by OMB
would be felt in inservice training since the allowance
would provide for fewer classroom projects. Some 800 fewer
teachers, aides, and other personnel would be trained at
this program level.
Recommend restoration of $7 million included in original
request for materials development. As part of capacity
building effort in bilingual education, request would
support about 10 centers in 1976. The only curricula
developed to date have been in Spanish and now, because of
the Lau decision, materials need to be developed in several
other languages.
OMB Recommendation:
(
change from the allowance. Since the program is forward funded,
e effect of the FY 1976 reduction will not be felt in outlays until
FY 1977. Given the requirements of the Lau decision, we believe
local educational agencies should be working, on their own, toward
compliance by FY 1976. Hence, we see no need for new Federally
supported projects beyond FY 1976. We see no justification to
increase teacher training above the FY 1975 level. We also believe
that, given the broad requirements of Lau, sufficient demand for new
textbooks will cause an adequate response from the private sector to
develop sufficient curriculum materials.
An open-ended Federal commitment at a higher level of funding will
invite:
-- Additional unrequested funding by the Congress.
-- Inflated but unfilled expectations on the part of bilingual
citizens, since no one is proposing that the Federal budget
meet all of the need.
-- School districts awaiting Federal assistance instead of
assuming their financial, program and legal responsibilities.
E-3
1976 Presidential Determinations
Department of Health, Education, and Welfare
($ in millions)
Program: Indian Education
1975
1976
1974
President's
HEW
HEW
OMB
Actual
Decisions
Request
Allowance
Appeal
Recommendation
1
BA
40
2
46
--
40
O
18
39
43
4
43
4
Allowance:
The allowance reflects the decision to seek termination of the program
through a rescission of $40 million, the forward-funded component,
in the FY 1975 appropriation. Two million dollars would be provided
in FY 1975 for administration. In FY 1976, no new funds would be
requested. This recommendation is based upon the view that this
program does not add anything of special programmatic value and is
duplicative of other existing educational authorities which are
etter able to serve Indian citizens.
HEW Comment:
Appeals FY 1975 rescission of $40 million and $43 million of
$46 million included in original 1976 HEW request. (1975
rescission was not included in November 26 package trans-
mitted to Congress).
Terminating this program would affect more than 220,000
Indian students benefitting from grants to local educational
agencies to meet the special educational needs of Indian
children, and more than 1,200 school districts in both 1975
and 1976.
-- Although OMB and the Department felt at the onset of this
program in FY 1973 that this target group was reached
directly or indirectly by other education programs, pre-
liminary reports we have received on the joint Office of
Education-Bureau of Indian Affairs study indicate that such
Reflects rescission of $40 million in Budget Authority in FY 1975.
E-4
is not the case. This program is the only one which provides
for extensive Indian involvement in allocating funds to meet
specific educational needs of Indians. The program has
strong Indian support.
OMB Recommendation:
No change from the allowance. OMB recommends that the program be
terminated through rescission in FY 1975 and no funding requested in
FY 1976. Although the study cited may well indicate that certain
groups of Indians are not being served through existing authorities,
we do not believe this is sufficient reason to maintain new, duplica-
tive authorities. Rather, we believe that deficiencies in existing
authorities should be improved. Further, changes can also be made
in existing educational authorities (ESEA Title I, Impact Aid,
Johnson-O'Malley) to provide for increased involvement of citizens
in the allocation of funds. Funding for Indian education from the
Bureau of Indian Affairs above is $221 million in FY 1975. This is
augmented by funds from other existing Federal authorities such as
Impact Aid and Title I funds.
E-5
1976 Presidential Determinations
Department of Health, Education, and Welfare
($ in millions)
Program: Education for the Handicapped
1975
1976
1974
President's
HEW
HEW
OMB
Actual
Decisions
Request
Allowance
Appeal
Recommendation
BA
147
147
182
150
175
150
O
122
125
154
125
147
135
Allowance:
The allowance provides an increase for "capacity building" assistance
to State and local education agencies in areas such as innovation,
research and demonstration and decreases the Federal operational
service support role. Reduces the 100% Federal funding to a 50/50
match for the operational program. Redistributes $25 million of the
FY 1976 HEW request of $50 million for the State Grant program to
the capacity building programs which are recommended for funding at
(
?5 million -- an increase of $25 million.
HEW Appeal:
-- The Department appeals $25 million of the $32 million reduc-
tion. This restores the State Grant program to its present
level of support.
Increased cost sharing by States at a time when State and
local budgets for the education of the handicapped are under
great strain is not politically realistic.
The HEW request reflects a strategy of emphasizing the
Federal capacity building role both through research and
demonstration and assistance to States in gearing up to
meet equal opportunity commitments.
The OMB reduction would deprive the Administration of this
alternative to Congressional pressures for Federal aid based
on cost of services to the handicapped -- a far more expensive
approach.
FORD VIBRAR,
E-6
OMB Recommendation:
No change from the allowance. We continue to believe that newly
court-mandated State responsibilities do not require an increased
Federal role in operational assistance. Rather, the Federal
Government's role should move toward innovative capacity building
programs and be decreased through increased matching requirements
under the State Grant programs which support ongoing operations.
E-7
1976 Presidential Determinations
Department of Health, Education, and Welfare
($ in millions)
Program: Occupational, Vocational
and Adult Education
1975
1976
1974
President's
HEW
HEW
OMB
Actual
Decisions
Request
Allowance
Appeal
Recommendation
BA
595
593
666
528
637
531
o
568
631
672
565
643
565
Allowance:
This program now provides general operational support for vocational
and adult education ($559 million) and funding for projects of research
and innovation ($38 million). The allowance retains the operational
support program at a lower level ($369 million) and allows HEW to
increase its capacity building efforts in the innovative projects
area to $160 million. The Federal role is moved to one of limited
ants (3 years) for research, innovation and dissemination and away
om financing a portion of service delivery. The allowance for the
operational support Basic Grant program provides a 60/40 State-
Federal matching requirement and decreases the Federal share to zero
by 1980. A 50/50 match would be required for innovative grants --
down from 80 to 90%. Sixty-five ($65 million) dollars are allowed
for Adult Education to meet H.R. 69 hold-harmless provisions.
HEW Appeal:
-- The Department appeals restoration of $106 million of the
cut of $138 million for vocational education, for a total
of $570.3 million.
-- The key issue is consolidation. If we are to achieve it,
Congress has made clear that we must increase total funding.
If we no longer consider consolidation a priority matter,
restoration of funds is not necessary.
In addition, the OMB reduction would eliminate support for
more than one million students who are disadvantaged or
handicapped and who are not receiving special services
through State efforts.
FORD
928870
LIBRARY
E-8
-- A secondary issue relates to the distribution of funds. The
OMB allowance would shift $122 million from formula grants
to project grants.
-- The shift in funds would increase project grant activities
by more than four times the amount included in the HEW
request. Yet no guidelines have been given as to how this
expanded program will be conducted and no additional positions
are allowed to meet increased administrative responsibilities.
-- The Department is appealing the OMB redistribution as follows:
$ $323 million - basic grants
$205 million - grants for special needs
$4.3 million - State advisory councils
$38 million - innovation
HEW Comment - Adult Education
-- An additional $2.7 million is required for adult education
since a total of $67.4 million is needed to meet the hold-
harmless provisions of the Education Amendments of 1974
which must be met to trigger consolidation fought for by
the Administration.
OMB Recommendation:
Allow an increase in Adult Education of $2.7 million but no restoration
of the overall funding. We do not understand that achievement of con-
solidation of the categorical programs requires additional funds as
HEW contends. The allowance does not eliminate support for the dis-
advantaged or the handicapped since these funds were included in the
proposed innovative projects area. Also, the total Federal funding
level in 1975 provides only 16% of total funding for vocational and
adult education.
While the allowance would increase funds in the innovative area by
fourfold, the greatest change is in emphasis. Programs proposed for
inclusion under the HEW special needs category could be funded under
innovation, however, they would require innovative or capacity
building approaches, problems would be identified, solutions pro-
posed and a limited (3-year) life for the project would be planned
+ the outset.
E-9
1976 Presidential Determinations
Department of Health, Education, and Welfare
($ in millions)
Program: Higher Education: State Student
Incentive Grants (SSIG)
1975
1976
1974
President's
HEW
HEW
OMB
Actual
Decisions
Request
Allowance
Appeal
Recommendation
BA
19
20*
44
--
44
:
O
--
19
20
:
20
:
Allowance:
The State Student Incentive Grants program matches State student aid
grants with equal Federal grants. The allowance would rescind $20
million in FY 1975 BA and allow no funds in FY 1976.
HEW Appeal:
-- Restore 1975 rescission and 1976 request (1975 rescission
was not included in the November 26 package sent to Congress).
-- State Student Incentive Grant program is the only authorized
student aid program that provides the States with a positive
incentive to join the Federal government in a student aid
strategy. Fifty percent matching requirement makes Federal
funds go farther. Allocation of State funds for scholarship
purposes rather than institutional aid helps redress public-
private imbalance.
-- Allowance eliminates 80,000 scholarship awards in FY 1975
(60,000 continuing awards and 20,000 new awards) and 176,000
awards in FY 1976 (66,800 continuing awards and 109,200 new
awards). /Average Federal funds per award: $250 - OMB insert/.
OMB Recommendation:
No change from the allowance. Authorizing legislation currently
permits States to operate widely varying programs. Most States do
not permit students to use these funds at schools out of State, thus
limiting school choice. Some States make grants only to students
*
Level of FY 1975 HEW-Labor Appropriations Conference Bill.
E-10
at public colleges; others only to students at private colleges.
Assessment of financial need of students varies widely between the
States. Some States apply academic merit screening process before a
student may be an award candidate. Few States permit grants to be
used at proprietary vocational schools. We do not believe the goal
of equal educational opportunity is enhanced by this program as
currently designed.
E-11
1976 Presidential Determinations
Department of Health, Education, and Welfare
($ in millions)
Program: Higher Education: Developing
Institutions
1975
1976
1974
President's
HEW
HEW
OMB
Actual
Decisions
Request
Allowance
Appeal
Recommendation
110
BA
100
110
90
52
52
o
38
64
84
82
82
82
Allowance:
Allowance provides $52 million limited to the basic program of grants
to small (largely minority) colleges. It would suspend funding of
larger one-time grants ($1 - $2 million). Given the number of schools
already funded (through FY 1975) in the advanced (larger grant) program,
further funding for that program should not be sought until its effect
and success can be evaluated.
(
W Appeal:
The Developing Institutions program provides developmental assistance
to colleges (primarily black colleges) which are "out of the main-
stream of American higher education." The program is administered in
two parts: (1) a basic program which awards annual grants for improve-
ment of curriculum, faculty, administration, and student services;
(2) an advanced program which awards multi-year (3-5 years) grants
to accelerate development among relatively highly developed colleges.
(The basic grants average $250k per year -- the advanced grants
average $1 to $2 million - OMB insert).
Allowance eliminates the advanced program which included new awards
for 18 colleges; supplemental awards for 21 colleges.
HEW agrees with the Office of Management and Budget allowance in
terms that the special program has now funded most, if not all, of the
black colleges which are ready to move from developing to developed
status. Therefore, the Department is not appealing the allowance.
E-12
However, the President should be aware that his predecessor gave
high priority to this program and made a commitment to the black
college community which this allowance would not honor.
OMB Recommendation:
No change from the allowance. Sixty percent (60%) of the funds would
continue to go to black colleges as in the past. Outlays for Develop-
ing Institutions are estimated to increase to $82 million in
FY 1976. There will have been 82 schools awarded the advanced grants
through 1975. It can be reasonably maintained that the commitment
has been honored and that a suspension pending evaluation is warranted.
However, the schools affected may interpret the previous commitment
as being to the $120 million level in the 1975 President's Budget.
(The Congress deleted $10 million).
E-13
1976 Presidential Determinations
Department of Health, Education, and Welfare
($ in millions)
Program:
Educational Support and
Innovation
1975
1976
1974
President's
HEW
HEW
OMB
Actual
Decisions
Request
Allowance
Appeal
Recommendation
BA
173
124
173
133
173
133
O
157
151
204
184
204
184
Allowance:
The proposed allowance is a projection into 1976 of the funding level
associated with the 1975 decision to discontinue Federal grants of
$39 million for Assistance to State Departments of Education. This
is the only difference between the allowance and the HEW appeal.
The allowance is in conflict with the requirement in the new Elemen-
tary and Secondary Education Act to meet certain funding levels before
mited consolidation of grant programs can take place.
HEW Comment:
-- The OMB allowance provides $133 million for Support and
Innovation, a decrease of $39 million from the original
request of $172 million. The proposal includes appropria-
tion language that would eliminate the trigger in P.L 93-
380 which requires the 1974 level or the 1975 level,
whichever is higher, to be maintained before consolidation
can take place.
HEW believes that an appeal must be made to restore the
original request of $172,888,000 to maintain the commitment
to consolidation that has repeatedly been made by the
Administration to the Congress. This is the minimum level
that would trigger the consolidation.
The OMB proposal to ask for legislation to repeal the
trigger is not only unrealistic but also represents a break
in commitments made to the interest groups, the Congress
E-14
and the public. Additionally, if our appeal is not allowed,
the Administration will have effectively abandoned what has
been its primary innovative concept in elementary and second-
ary education over the past three years.
OMB Recommendation:
No change from the allowance. The Administration requested termina-
tion of this program as part of the FY 1975 reduction exercise
because it is a low priority use of Federal funds to provide general
operating support to State administrative agencies. However, if
States so choose, they would be able, under consolidation, to con-
tinue this activity. The reduced amount will require States to
choose their priorities more carefully. Finally, we believe that
substantive legislation is the most effective way of achieving
elimination of the mandated funding levels currently required to
"trigger" consolidation.
E-15
1976 Presidential Determinations
Department of Health, Education, and Welfare
($ in millions)
Program:
Fund for the Improvement of
Postsecondary Education
1975
1976
1974
President's
HEW
HEW
OMB
Actual
Decisions
Request
Allowance
Appeal
Recommendation
BA
10.0
11.5
20.0
11.5
17.5
11.5
O
--
10.0
14.9
11.0
12.0
11.0
Allowance:
Holds program to 1975 level. Fund supports projects of innovation
and reform in postsecondary education through grants to schools,
other institutions and individuals.
HEW Appeal:
-- Appeals $6 million, for a total of $17.5 million.
-- Allowance provides $9.2 million for the continuation of
existing projects, but reduces allocation of money for new
projects from $10.8 million to $2.3 million.
-- The purpose of the Fund is to increase the effectiveness
of postsecondary education by supporting activities and
projects which have the potential for achieving needed
reforms and improvements in the field of postsecondary
education.
-- The proposed cut of $8.5 million would leave the Fund with
insignificant resources to conduct the following priority
programs in 1976:
Initiate major new starts in competency-based
learning, a program which already has had major
impact upon Department-wide strategies in educa-
tion and work.
BERRAD FORD
E-16
Initiate efforts to improve system-wide practices in
postsecondary education, such as accreditation and
licensing practices; and
Conduct major evaluation and dissemination efforts
to obtain maximum benefits from the Fund's first
three years.
OMB Recommendation:
No change from the allowance. Although grants made by the Fund have
been well received by the academic community, there is no compelling
necessity to increase its resources in a tight budget year. The
HEW appeal is based on a high cost of continuation grants which
leaves limited funds for new starts within the allowance. The Fund
precipitated this situation by disregarding suggestions that projects
be multi-year funded at the outset, so that continuation costs would
not occur.
E-17
1976 Presidential Determinations
Department of Health, Education, and Welfare
($ in millions)
Program:
Child Development
1975
1976
1974
President's
HEW
HEW
OMB
Actual
Decision
Request
Allowance
Appeal
Recommendation
BA
392
430
450
430
450
430
O
387
412
439
439
439
439
Allowance:
Head Start provides educational and development services to disad-
vantaged pre-school children.
The allowance provides continuation of the current level.
HEW Appeal:
? Head Start request included an additional $20 million to serve
idicapped children. Congress has explicitly stated that it wants
Head Start to serve severely handicapped children. This will require
$20 million since it requires special equipment and highly trained
teachers.
OMB Recommendation:
No change from the allowance for Head Start. The program has been
serving handicapped children since its inception. The requirement
that 10% of the children served be handicapped has been in the basic
legislation since 1972. It is true that the costs of serving the
more severely handicapped are higher and that there has been Con-
gressional pressure to enroll more of the seriously handicapped.
We believe this should be done under the existing program level even
if it forces decreases in overall enrollment. There is no assurance
that the $20 million increase is adequate as an add-on or that it will
deter even greater increases by the Congress. This decision should be
reached with the understanding that the Head Start program in total
does not reach anywhere near the eligible population.
GERALD FORD
IM-1
1976 Presidential Determinations
Department of Health, Education, and Welfare
Program:
Public Assistance - Social
Services
1975
1976
1974
President's
HEW
HEW
OMB
Actual
Decisions
Request
Allowance
Appeal
Recommendation
BA
1,345
1,829
1,850
1,300
1,921
1,300
O
1,392
1,806
1,850
1,300
1,921
1,300
Allowance:
This program provides 75% Federal matching funds for social services
such as child care, homemaker, visiting nurses, and counselling
services to welfare recipients and other disadvantaged persons but
without a strict income test. The allowance would reduce the
matching rate from 75% to 65% in 1976, and to 50% for 1977 and
thereafter. (Requires a legislative change).
HEW Appeal:
OMB mark of $1.3 billion was based upon a legislative proposal
reduce the matching rate from 75% to 65% (and to 50% for each
subsequent year).
We are appealing for a restoration of $621 million to our latest
estimate of $1.921 billion based on current legislation. The higher
estimate is based on the latest state estimates for Social Services
expenditures. A commitment has been made by the Administration to
support new Social Services legislation. It would be inconsistent
and inappropriate to recommend such a dramatic departure from the
provisions of this bill which has been negotiated with the Governors
and reported out without change by the House Ways and Means Committee.
This HEW appeal amount over the OMB allowance is more than made up
for by HEW suggested reductions from the OMB allowance in Cash
Assistance and Medicaid.
IM-2
OMB Recommendation:
Retain the proposed allowance. The OMB allowance would be a departure
from current policy. It rests on the principle that a heavier sharing
of the costs of these services by state and local governments will
encourage improved administration and a more rigorous evaluation of
the worth of these services at the local level. This incentive is
consistent with the proposed new legislation which allows more manage-
ment discretion at the local level. While the Administration has not
officially endorsed the current Federal matching rate, reducing it will
probably result in criticism from Congress and the interest groups as
reneging on an implied commitment. However, seeking a greater degree
of financial participation concommitant with more flexibility by
state and local governments is a reasonable proposition -- especially
in a program area which has never been able to demonstrate hard
program accomplishment.
IM-3
1976 Presidential Determinations
Department of Health, Education, and Welfare
($ in millions)
Program: Vocational Rehabilitation
1975
1976
1974
President's
HEW
HEW
OMB
Actual
Decisions
Request
Allowance
Appeal
Recommendation
BA
734
725
777
736
776
736
O
727
762
785
751
785
751
Allowance:
The allowance assumes no increase for vocational rehabilitation (VR)
activities from 1975 to 1976.
HEW Appeal:
HEW is appealing for a restoration of OMB's $40 million cut.
Section 110(c) of the Rehabilitation Act contains a mandatory reallot-
it provision. Since the States have reported aggregate spending
plans which would require Federal matching over the authorization
level of $720 million, a lower level would require point-of-order
language in the FY 1976 Appropriations language. The chances of
getting such language successfully through the appropriations
process are most remote.
OMB Recommendation:
Propose point-of-order language in the 1976 appropriations bill to
eliminate the mandatory spending requirement of the VR bill. This
proposal is consistent with the stringent 1976 budget guidelines
and would return to the appropriations committees the control of
funding levels. In addition, there are serious concerns about
inadequacies in the administration of this program which militate
against substantial increases at this time.
This recommendation can be expected to raise considerable opposition
from the VR interest groups.
Labor
THE WHITE HOUSE
WASHINGTON
MEMORANDUM FOR THE PRESIDENT
FROM:
ROY L. ASH
SUBJECT:
1976 Budget Decisions: Department of Labor
The agency request and my recommendations with respect to the
1976 budget amounts for the Department of Labor are presented
in the tabulation attached (Tab A). The Secretary's letter
appealing my initial allowance is attached as Tab B. Summa-
ries of the principal differences between the Secretary and
myself are attached as Tab C.
The Secretary also maintains that the initial OMB allowance
does not include sufficient resources to support the program
levels allowed. These costing problems can be worked out be-
tween the Department and ourselves with no significant effect
on overall budget totals. In addition, the amounts to be in-
cluded in the 1976 budget for unemployment insurance benefits
and your proposed National Employment Assistance Act will have
to be determined later when final economic assumptions are
decided upon. In the meantime, we have included these programs
in the tabulation (Tab A) at the Department's request. It is
probable that the final figures will be significantly higher.
Four key issues have been identified for your consideration.
More detail on the first three of them is included in Tab C.
I.
Comprehensive Manpower Assistance.
DOL recommends $2.4 billion (equal to the congressional
enactment for 1975 which you have agreed to accept) to assure
that our commitment to reducing unemployment is adequately ad-
dressed. However, it requests that the final amount be left
open to permit a higher level based on latest unemployment data.
OMB recommends returning to the $2.05 billion, equal to the
amount initially proposed for 1975. There is no programmatic
reason for relating the appropriation level for this program to
2
economic conditions. There is no information on program
accomplishment to justify exceeding the level proposed for
1975. It appears that State and local sponsors will not fully
utilize the 1975 amounts, carrying substantial authority into
1976. Actual training and public employment in 1976 will there-
fore be only slightly less than in 1975, even with the OMB
recommended appropriation.
Decision: Approve agency recommendation
Approve OMB recommendation
See me
II. Grants to States for Unemployment Insurance and
Employment Services
The Department recommends $1,087 million for 1975 and
$1,222 million for 1976 in order to (a) fully fund State Unem-
ployment Insurance Services (UIS) for a 4.6% unemployment rate
assuming the same production rates achieved when unemployment
is under 4%, (b) keep basic Employment Service (ES) employment
at the November 1974 level as directed by the Congress, (c) in-
crease the employment service by $75 million in 1976 to comply
with a court decision relating to services to migrants, and
(d) allow for a 12% cost increase.
OMB recommends $1,051 million for 1975 and $1,060 million
for 1976. This would be sufficient to meet the expected UIS
workload since experience shows productivity increases as unem-
ployment rises and if ES staff (which has fewer opportunities to
find jobs for people when unemployment is high) is diverted to
UIS claims processing. A 7% cost increase should be sufficient.
No justification for a 15% ES increase to serve such a minor
proportion of the total population as the migrants has been re-
ceived. The increases proposed by DOL would require increases
in the Federal Unemployment Tax, and interim advances of General
Revenues to the Unemployment Trust Fund.
Decision: Approve agency recommendation
Approve OMB recommendation
See me
III. Personnel Ceiling
DOL recommends an end of year ceiling on full-time employees
in permanent positions of 13,470 in 1975 and 13,632 in 1976, com-
pared to a current ceiling of 12,492. The increases are primarily
for (a) carrying out the new private pension reform law, (b) the
Manpower Administration (MA), reflecting congressional add-ons
3
for apprenticeship programs and the court decision on migrants,
and (c) the Occupational Safety and Health Administration (OSHA)
reflecting congressional increases in safety and health in-
spectors.
OMB recommends end-of-year ceiling of 13,091 for 1975 and
13,101 for 1976, including 350 which DOL was informed last
February would be allowed if it reduced its demand on other
agencies for Job Corps operations by that amount. The actual
portion of the 350 to be included depends on how much DOL has
actually decreased other agency personnel requirements. OMB
and DOL agree on initial Pension Reform staffing. OMB is con-
vinced that DOL's Manpower Administration is overstaffed to carry
out the revenue sharing type program provided by the Comprehensive
Employment and Training Act and that additional staff is not
needed to apply any new standards required by the migrant deci-
sion. Additional OSHA inspectors should await analysis of State
by State needs and accident reductions achieved by inspectors.
Decision: Approve agency recommendation
Approve OMB recommendation
See me
IV. Work Incentive Program
DOL and OMB agree in recommending sufficient budget authority
to maintain the Work Incentive Program in 1976 at the program
level agreed to for 1975. Although evidence seems to indicate
that the program is not effective in getting people off welfare
or achieving welfare savings, you decided that the program should
not be reduced in 1975 while unemployment rates remained high.
Decision:
Agree
Disagree
See me
Attachments
A
1976 Presidential Determinations
Department of Labor
Summary Tabulations
($ in millions)
1975
1976
1974
Allow-
DOL
DOL
Allow-
DOL
OMB
Actual
ance
Appeal
Request
ance
Appeal
Recom.
Uncontrollable Programs
UI Benefits
BA
7,539
7,722
7,722
7,969
7,969
7,969
7,969
BO
5,239
7,916
7,916
7,990
7,990
7,990
7,990
Federal Unemployment
BA
365
453
453
1,040
530
530
530
Benefits
B0
362
453
453
1,011
530
530
530
Special Benefits
BA
138
165
165
201
201
201
201
BO
107
165
165
201
201
201
201
Other
BA
-37
0
0
-198
0
0
0
BO
2
2
2
2
2
2
2
Total Uncontrollable
BA
8,005
8,340
8,340
9,012
8,701
8,701
8,701
BO
5,710
8,536
8,536
9,202
8,722
8,722
8,722
gislation
NEAA
BA
0
2,760
2,760
0
0
0
0
BO
0
1,211
1,211
1,549
1,549
1,549
1,549
Job Security Act
BA
0
0
0
2,395
0
0
0
BO
0
0
0
2,395
0
0
0
Controllable Programs
Comprehensive Manpower
BA
2,266
2,394
2,394
2,265
2,050
2,394
2,050
Assistance
B0
1,450
2,790
2,790
2,433
2,512
2,687
2,512
Work Incentive
BA
340
210
210
363
330
330
330
Program
BO
340
316
316
360
315
315
315
Grants to States for
BA
64
64
64
81
71
81
71
Unemployment Insurance B0
892
1,051
1,087
1,285
1,060
1,222
1,060
& Employment Services
Other2/
BA
306
361
365
448
377
413
377
BO
914
446
450
470
401
437
401
Total DOL
BA
10,981
14,129
14,133
14,564
11,529
11,919
11,529
BO
9,306
14,350
14,390
17,694
14,559
14,932
14,559
Pending receipt of DOL legislative program.
51
Subject to costing adjustments in 1975 and 1976.
U.S. DEPARTMENT OF LABOR
OFFICE OF THE SECRETARY
WASHINGTON
NOV 2 7 1974
Honorable Roy L. Ash
Director
Office of Management
and Budget
Washington, D.C. 20503
Dear Mr. Ash:
Outlined below is the Department of Labor's reaction and appeal
from the recommendations of the Office of Management and Budget
relating to resource allowances and policy directions for Fiscal
Years 1975 and 1976. I want to state initially, that this
reaction to the tentative OMB budget allowance is based on our
desire to do the best possible job for the American worker under
the policy set by President Ford at the beginning of his Admini-
stration--the authority for policy direction falls upon the
responsible Cabinet Officer.
Before addressing the specific issues as they relate to each
program account, it should be noted that our review of the recom-
mendations concludes that major adjustments will be allowed:
(1) to reflect current economic assumptions at the time the
budget is submitted--in both the areas of uncontrollable budget
authority for unemployment insurance and the proposed National
Employment Assistance Act and controllable budget authority
related to administration of the Comprehensive Employment and
Training Act, (2) to provide additional resources for agreed
upon new legislation which may be enacted in this session of
Congress or will be submitted to the first session of the 94th
Congress, and (3) to reconcile what appear to be significant
pricing or costing problems that will necessitate actual reduc-
tions in on-board personnel over and above those suggested in
your recommendations.
Beyond these general issues, the Department is appealing the
specific resource allowances and policy directives under the
following program accounts.
- 2 -
MANPOWER ADMINISTRATION PROGRAM ADMINISTRATION
The Department appeals the ceiling reductions of 350 related
to Job Corps Center reductions in the Departments of Agriculture
and Interior, 100 for economies related to the implementation of
CETA, 75 for the anticipated Congress directed expansion of
the Apprenticeship staff, and 8 for the National Commission on
Manpower Policy. The restoration of these reductions would
provide for a base ceiling of 3,153 for 1975 and 1976. The budget
authority for 1976 would be increased to $101,351,000. Additional
ceiling of 116 and funds of $1,483,000 in 1975 and $3,004,000
in 1976 will be required for implementation of Judge Richey's
court order discussed later under this account.
The OMB allowance is predicated upon the assumption that further
economies can be made in moving from categorical programs to
CETA and any increases authorized by the Congress for BAT can
be accommodated by reallocation among manpower programs. This
assumption is rejected for two fundamental reasons:
1. The Manpower Administration has already made all the
economies that can be made in the movement from categorical
programs to CETA.
2.
The present economic posture requires that the Manpower
Administration exert all its reduced staff resources to
ensure that the manpower systems--the Employment Service,
Unemployment Insurance and CETA prime sponsors move with
dispatch to use the program and funds to lessen the
severity of the economic situation.
Over the past 2 years the Manpower employment ceiling has been
reduced from 4,201 in Fiscal Year 1973 to an adjusted 1975
ceiling of 3,379, a reduction of 822 or 20 percent. In addition
to this net staff reduction, the Manpower Administration has
absorbed or will absorb a total of 131 additional positions for
additional Veteran's Employment Representative (68), the OEO
Migrant and R&D Programs (64), Indian Program (40), and the
Rural Development Program (9). These absorptions, when added
to the net staff reductions, equate to a total reduction of
1,002 or about 25 percent from the 1973 employment level.
- 3 -
The experience under CETA demonstrates that prime sponsors
are only now aware of the dimensions of their responsibilities
under the Act and now are requesting Federal assistance far in
excess of anything contemplated. Reporting is only one such
area. Only about 50 percent of prime sponsors, as of mid-
November, had yet submitted their first quarter reports and
are requesting Federal assistance in preparing reports and
establishing reporting systems. In addition, Federal staff
must assist prime sponsors to speed up the employment under
the Title II and EEA programs if these programs are to respond
to the current economic crisis. For these reasons the further
100 position reduction and the absorption of the expansion of
BAT cannot be accommodated.
With respect to the question of the ceiling reduction of 350
positions until concomitant reductions in the Departments of
Agriculture and Interior Job Corps Centers are made, the
Department believes adequate reductions have already been
made in those Departments to merit being given these ceilings.
These Departments have indicated that reductions of 350 have
been made below their Fiscal Year 1974 operating levels, that
funding has been reduced to reflect such levels, and that the
February 5, 1974, OMB allowance letters for Fiscal Year 1975
imposed cuts even beyond the 350 reduced from the operating
levels. Though the Departments of Agriculture and Interior
have not formally agreed to reduce their ceilings by 350, the
Department of Labor does not believe that it should be
penalized for the failure of the approach outlined in the OMB
Fiscal Year 1975 allowance letter. The Department requests
that this ceiling reduction be restored.
The National Commission on Manpower Policy had been proposed
to be funded under the CMA national account since it is
authorized by Title V of CETA. The allowance indicated that
its costs should be absorbed from Program Administration.
The National Commission is a Presidential Commission not
related to carrying out the Secretary's responsibilities
under the Act. It should be separately funded either within
this account or more appropriately under the CMA appropriation.
Pursuant to a suit filed in the U.S. District Court for the
District of Columbia by the NAACP, Western Region, et al.
versus Peter J. Brennan, a decision was issued by Charles R.
Richey, U.S. District Judge, dated August 9, 1974, setting
various requirements upon the Employment Service in its
provision of services to migrants and seasonal farmworkers.
Briefly these require the provision of
- 4 -
qualitatively equivalent and quantitatively proportionate
manpower services to rural areas. If the Department is to
be in compliance, the following additional resources are needed.
These resources have been included under the two individual
accounts involved.
Account
Fiscal 1975
Fiscal 1976
Program Administration
$1,483,000
$3,004,000
Grants to States
27,000,000
75,400,000
Comprehensive Manpower Assistance
The appeal for FY 1976 is based on the anticipated continued
high level of unemployment into FY 1976. Unemployment which
has risen from 5.2% in July to 6% in October is not expected
to peak until late this fiscal year or early next fiscal year.
To counteract this trend, the Department has accepted the
Conference level of $2.4 billion for the CMA appropriation
in FY 1975 and has already released $970,000,000 of public
employment funds this year. The appeal assumes that sufficient
funds should be made available in Fiscal Year 1976 to assure
that our commitment to reducing unemployment is adequately
addressed. Therefore, the Department proposes to maintain
funding at the Fiscal Year 1975 level of $2,394,400,000
authorized by the Conference.
The need to provide sufficient assistance will be affected by
both unemployment and other economic factors. However, the
same reasons that prompted the President to accept the
Congressional level in 1975 are still extant. It is,
therefore, proposed that this matter be discussed again
after Congressional action on the current legislative package,
especially as pertains to the National Employment Assistance
Act.
- 5 -
GRANTS TO STATES FOR EMPLOYMENT SERVICES
AND UNEMPLOYMENT INSURANCE
Fiscal Year 1975
The OMB allowance provides $1,051,009,000, $582,609,000 for
the Unemployment Insurance activity and $468,400,000 for the
Employment Services activity. The OMB allowance would require
reprogramming of $35,500,000 between ES and UI. In light of the
need to retain $27,000,000 to comply with the Judge Richey de-
cision, it will be necessary to request a supplemental in the
amount of $35,500,000 to process the anticipated UI claims work-
load.
To attempt to absorb these increased costs would require an 11
percent reduction in regular ES services during the last half
of the Fiscal Year. In light of Congressional intent to main-
tain ES staffing levels at the November 1974 staffing level,
and the increased need for employment services during periods
of rising unemployment, absorption is not a feasible option.
The only other alternative, if these resources are not pro-
vided, would be non-compliance with the court order, pending
legal appeal.
Fiscal Year 1976
The OMB allowance provides $585,000,000 for UI Grants admin-
istration, of which $60,000,000 is earmarked for UI contingency
workload and $5,600,000 for additional cost model maintenance.
The remaining $519,400,000 is available to finance the base UI
workload. However, during Fiscal Year 1976, $560,700,000 is
needed to fund a base workload averaging 1,500,000 UI claims
per week. The $560,700,000 needed to fund the base UI opera-
tions was computed by applying 95 percent of the cost model
time factors to the base workload, thereby imposing a 5 percent
productivity assessment.
- 6 -
The ONB allowance indicated that the Department should phase-in
the amounts needed to fully fund tax activities in an effort
to reduce the base requirements. The 1976 net increase over
the 1975 allocated man-years is 088 man-vears nationwide.
The savings which yould accrue on a phased-in basis would be
minimal and certainly would be outveighed in terms of lost
tax revenues. Any effort less than maximum at a time when
unemployment is causing drains on Trust Fund revenues is
inconsistent with sound fiscal policy.
In view of the above, the Department feels that it must fund the
base UI requirements at the $560,700,000 level, which would
leave $18,700,000 for UI contingency workload above the
1,500,000 claims per week. This amount would finance 11 percent
of the anticipated UI workload above the base, or a total
unerployment rate of 4.2 percent. With unerployment estimates
ranging above 7 percent for calendar year 1975, we bclieve the
reductions applied against this activity to be totally
unaccentable. Therefore, it is necessary to restore $41,300,000
to the UI workload contingency in order to provide a minimum of
$60,000,000, which will provide for a 4.6 percent unemployment
rate. The final amount needed, however, will be determined by
the rate of insured unemployment realized.
The 0.15 allowance of $475,000,000 For ES would provide 26,200
man-years during 1976. This would result in a reduction of
2,600 man-years or 9 percent from the November 1974 staffing
level. Full-year costs of complying with the Richev decision
would require $75,400,000. The absorption of these costs would
result in a further reduction of 11 percent, or 4,100 man-vears,
in regular ns services during the vear. This absorption plus
the reduction in the ONB allowance would effectivelv reduce
needed employment services to the Nation's unemployed by 20
percent.
The Department appeals the ONE) allowance since it will not even
maintain the November 1974 State employment service staffing
level during = clinking workload period and is, therefore, in
conflict with ourressed Congressional intent. Further, we
request an additional 375,400,000 required to comply with the
Richey decision.
FORD
GERALD
- 7 -
The ONB proposal to take ES reductions only in poorly performing
States is not an acceptable approach to budget reduction and,
therefore, is appealed. Our rationale is based on the
assumption that the 11 States which would fall into this category
(Connecticut, New Jersey, New York, Pennsylvania, Illinois,
Michigan, Kansas, Colorado, Massachusetts, Maryland, and
Minnesota) are highly industrialized States and would suffer
a substantial staffing cut at a time when unemployment is
rising in these areas. We strongly believe that such action
would be counterproductive and is not a feasible solution to the
Administration's economic strategy.
The Department's request for UI-ES Grants administration included
an 11.4 percent increase for State administrative costs above
the 1975 level. The request includes 6.0 percent for Statewide
salary increases, 1.7 percent for salary increments (State
within-grades), 1.8 percent for related personnel benefits, 1.2
percent for supplies, rents and utilities, and .7 percent for
postage. The postage increase reflects the 25 percent increase
which was effective March 1974. We have reviewed the mandatory cost
increases with respect to the OMB allowance of 7 percent, and
believe that the request is modest in view of the rate of cost
increases the nation is currently experiencing. The reduction
of mandatory costs to the 7 percent level is appealed.
The Department pursued a diversion policy for several years in
which State employment security agencies were permitted to
divert employment service staff to UI activities during periods
of sudden and substantial increases in claims and related UI
activities after all efforts had been made to accomplish the
added workloads with existing UI resources. It became evident,
however, that this practice of diverting employment service staff
resulted not only in substantial reductions in the ability of
State agencies to provide adequate services to those workers
and employers seeking assistance but also resulted in quality
deterioration in important UI functions. Further, accomplishing
increases in UI workloads through the diversion of ES staff
was more costly than providing direct funding for UI temporaries
through an adequate UI workload contingency fund.
- 8 -
The OMB allowance indicates that an active diversion policy
should be pursued so that ES staff is utilized in the UI claims
workload processing as needed. The Department feels there is
no justification for changing the present diversion policy, and
therefore, the OMB position on diversion is appealed. The De-
partment does, however, feel that its current policy of applying
savings realized through normal budgetary adjustments to accom-
plish added UI claims workloads as necessary is effective.
The total funds needed for 1975 are $1,086,509,000, which is
$35,500,000 above the allowance and for 1976 $1,222,100,000,
which is $162,100,000 above the allowance.
Work Incentives
The Department is not appealing the 1976 OMB allowance of
$330,000,000 in budget authority and $315,000,000 in outlays.
The workload statistics provided with the mark, however, do
not appear viable at these levels. Current estimates are that
On-the-Job Training, Public Service Employment and Work Experi-
ence man-years will be reduced in 1976 by about 4,000 to a total
level of about 21,100. The 1975 man-years for these programs
are also expected to be lower by about 3,000 man-years of service.
Expanded Use of Unemployment Trust Fund
The Department appeals any OMB action to expand usage of the
Unemployment Trust Fund to replace Federal funds. Current es-
timates indicate that $1,290,300,000 will be available in FY
1976 for UTF administrative costs. The current amount for
Grants to States, as appealed, is $1,151,000,000, and the Federal
administrative level is projected at $75,200,000, leaving only
$64,100,000 in unused funds, a minimal amount. Further, Grants
to States funding is only provided to process a workload of
approximately 1,900,000 average claims per week. Given current
trends toward higher unemployment, it is felt that this is an
inappropriate time to put an increased burden on an already
minimum difference between expected fund usage and availability.
- 9 -
(
Labor-Management Services Administration
Salaries and Expenses
The allowance for the Labor-Management Services Administration
recommends a 12 position reduction in the Veterans Re-employment
Rights and Federal Labor Management Relations-program support
areas, coupled with a reduction of $1,440 thousand. To accommodate
this dollar reduction, would require further staff reductions of
40-45 positions. Pending amendment to the executive order
relating to Federal Labor-Management relations, together with
current workloads and backlog levels in basic programs, militate
against any reduction in operating staff. Appeal is made for
a 1976 allowance at the standstill level of $29,305,000.
Pension Reform (Employee Retirement Income Security Act)
No appeal is being made at this time to restore the request
for a second supplemental for the pension reform program. However,
it is understood that as demand materializes for resources
for these activities, a request will be submitted for a
supplemental at some later date for additional resources.
(
Workload is currently increasing in this area and is expected
to continue increasing substantially during the course of
the fiscal year. The request will be made with the understanding
that the Department will not be able to offer any offsetting
decreases in other program areas.
Employment Standards Administration
The Fiscal Year 1976 request for the Employment Standards
Administration included an increase of 40 positions and
$840,000 for strengthened enforcement of the Age Discrimination
in Employment Act. The request included development of a new
approach designed to expand the legal base for the enforcement
program. Over the last several years, Congress has urged a
stronger ADEA effort, including attempts to add more resources
to the Department's request. The Administration has publically
committed the Department to an active and vigorous enforcement
effort. Moreover, organizations and agencies such as the
U.S. Civil Rights Commission are becoming increasingly vocal
on the Department's administration of the Act.
- 10 -
The issue of age discrimination becomes more important under
the current economic conditions. As layoffs and plant closings
increase, so does the probability of discriminatory actions
related to a worker's age. We have also received complaints
alleging a number of incidents of discriminatory practices
related to the new Pension Reform as employers purge older
workers before the vesting provisions take place.
As our initial justification pointed out, there are needs for
legal precedents and cases with high impact and visability.
These needs cannot be met within existing resources.
The Departments submission to OMB included $3,548,000 in FY 1976
including annualization, for the 150 positions to be sought
in a January 1975 supplemental. This was to be the second
installment of the commitment to ESA approved by OMB to provide
resources to meet increasing workload mandated by law. It is
now my opinion that this item should be deferred until action
on the first supplemental is completed and the impact of these
resources has been determined.
Occupational Safety and Health Administration
For fiscal year 1975, the Department is requesting personnel
ceiling for the 180 additional compliance officer positions
included in the 1975 Department of Labor Appropriation,
commensurate with the budget and program authority allowance.
These new compliance officer positions will be utilized to
expand federal safety and health enforcement.
For fiscal year 1976 restoration or allowance for the following
items is requested:
An amount of $3.2 million to pay for the full-year
costs of positions authorized by Congress in 1975, but
funded for only part of the year. This appeal includes
funds for annualization of positions for which ceiling
has been allowed and the additional positions placed in the
1975 appropriation for which employment ceiling has been
requested above.
Restoration of $3 million in State grant funds. This
appeal is cognizant of the recommendation to disapprove
$1 million in research activities presently performed under
State grants, and does not include funds for this purpose.
Unless States which presently have approved plans but lack
- 11 -
enabling legislation drop out, reductions in developmental
State programs will have to be assumed proportionately
by all participating States. This in turn will have
serious implications concerning the integrity of State
safety programs efforts as a working example of
"New Federalism", and could result in a loss of State
confidence concerning the level of future support with
concomitant losses of State Legislative and appropriation
support.
A request for $5 million in grant funds to continue the
funding of 7 (c) (1) agreements with non-plan States to
conduct consultation programs for small employers. In
1975, Congress authorized the transfer of up to $5 million
in State grant funds for this purpose. Additional funds
will be needed in FY 1976 to continue this.
Provision of funds is requested to cover the costs of the
FY 1975 pay raise which will be initially absorbed by a
transfer of funds from State grants, but which cannot be
financed in the 1976 base program without reducing State
programs.
- 12 -
Bureau of Labor Statistics
CPI Revision - Neither the Fiscal Year 1975 nor the Fiscal
Year 1976 allowance includes the proposed Fiscal Year 1975
amendment for the CPI Revision currently before Congress
($600,000). It should be noted that the Conference Com-
mittee is currently considering this item and a Senate
reduction of $300,000. Regardless of final Congressional
action, the Department will require the full $600,000 in
Fiscal Year 1976 if we are to meet the BLS-DOL commitment
to produce the Urban Wage Earner and Clerical Worker CPI
as well as the Urban Population CPI as planned.
General Wage Index - The Department's plan for further
development of the General Wage Index reflects the priority
that the Economic Policy Board attached to the development
of a total measure of compensation. The OMB recommendation
with respect to the GWI reflects a different set of priori-
ties. The Department's position is that the Seevers Com-
mittee recommendation should be followed, and that the funds
provided should be used to do SO.
PATC Survey - Discussions are currently under way between
the Bureau of Labor Statistics, OMB and CSC on expanding the
scope of the Bureau's PATC survey and on collecting bonus
information. In a letter of November 22 to you and Chair-
man Hampton, we agreed to conduct a Fiscal Year 1975 pilot
test work with current funds for PATC improvement (quality
and training) but indicated that in order to carry on the
Fiscal Year 1976 full and expanded survey, additional
resources would be needed. Therefore, the BLS allowance of
$60,973,000 for Fiscal Year 1976 will have to be increased
by the amount necessary to carry on the PATC survey at the
indicated expanded level once that number is known. An
estimate will be available shortly.
Personnel Ceiling Positions
In our FY 1976 request, the Department provided a breakdown
of BLS requirements for "Other" ceiling in Fiscal Year 1975
and Fiscal Year 1976. No mention was made in the OMB
allowance of a decision on the request. I must reiterate
the critical need for the additional ceiling requested. If
the cciling is not received the BLS will be unable to conduct
several important programs planned for Fiscal Years 1975 and
1976 that require the increased ceiling.
- 13 -
Impact Statement
OMB staff have advised the Department that the Fiscal Year
1976 allowance of $60,973,000 included $1,500,000 for the
SIC Conversion Program.
The SIC amount, plus the $3,250,000 for new programs recom-
mended by the Seevers Committee, amounts in total to $4,750,000.
OMB proposed that BLS offset some of the increases by reducing
its base program by $2,088,000. While we are not appealing the
amount of the base reduction, we plan a different array of de-
creases to meet the required decrease of $2,088,000 (Attach-
ment A).
1080 LIBRANT
- 14 -
DEPARTMENT MANAGEMENT
It has been my goal for some time to reduce Departmental
"overhead" and the actions I propose would achieve that goal
while giving me the maximum flexibility to array and manage my
resources. Specifically I propose the following actions:
a. Appropriation Structure.
1. Solicitor--It is vital that we have a separate appro-
priation account for the Office of the Solicitor. This function
is so closely tied to the operations of our programs (as opposed
to direction of them) that a separate account has become vitally
necessary to the conduct of the Department's business.
2. EEO. This important program has never been properly
budgeted in spite of our efforts to do so on two previous
occasions. I propose to transfer these positions from the
Consolidated Working Fund to Departmental Management, S&E in
1976 and to reduce the budgets of the agencies that are supporting
it proportionately.
b. Overall Management
The Condolidated Working Fund has properly been the subject
of much criticism over recent years. Starting now and ending in
FY 1976 I propose to cut its use drastically and forego most of
the functions that are now funded by this device. By the end of
fiscal year 1976, the Consolidated Working Fund will have been
reduced by a total of 49 positions and $1,838,000. I would
remind you that in preparing the 1974 budget we made a similar
proposal. In the course of budget decisions the agency contri-
butions to the Consolidated Working Fund were reduced but we were
directed to continue to "find" funds for the activities covered.
In view of this it would be a grievous error to once again
reduce the agencies' budgets as an offset.
I accept the dollar reduction to the Working Capital Fund and
staff is now preparing options for achieving this $2.5 million
cut.
- 15 -
In view of these sizeable reductions to the more controversial
elements of our management resources I must register a strong
appeal for restoration of pay increase supplement and for
restoration of proposed transfers out of the appropriation. In
other words the Departmental Management account and Office of the
Solicitor should be set at the 1975 conference level as adjusted
for (a) the recent supplemental and (b) full pay costs. We will
absorb any increase in travel costs. For 1976 these accounts must
be held at a standstill level--that is 1975 base dollars plus
1976 mandatory costs.
PENSION BENEFIT GUARANTY CORPORATION
The allowance for the Department of Labor reflects 75 positions
and related funds for the Pension Benefit Guaranty Corporation in
fiscal year 1975. As I have noted in an earlier communication to
you regarding this program, I and other members of the Board of
Directors of the Corporation believe it is inappropriate to
include allowances for the Corporation's resources in the Labor
Department budget totals particularly, since the provisos of
the Employee Retirement Income Security Act established
this organization as a separate entity of the U.S. Government.
As Chairman of the Board of Directors I am in the near future
transmitting to you a separate Corporation budget for additional
resources for fiscal years 1975 and 1976. Consequently, I
assume that resources levels for the Corporation will be discussed
as a separate issue that is unrelated to or unconnected with resource
allowances for the Department of Labor.
This letter of course does not cover the great amount of detail
that support its conclusions. As final decisions evolve, further
discussions will be necessary. Given the utmost importance of
these programs, I urge your favorable consideration of these
appeals.
Sincerely
Sknnan
Secretary of Labor
Attachment A
SUMMARY TABLE OF PROPOSED REDUCTIONS
OMB Suggestion
BLS Plan
Pilot 790 (Hours and Earnings
of Nonproduction or Supervisory
Workers)
$345,000
$345,000
BEA Contract
300,000
300,000
Travel
116,000
---
Reduction in BLS Regional
Offices
200,000
---
Productivity Technological
Studies
217,000
75,000
Wages and Industrial Relations.
410,000
---
Increase in Export and Import
Prices
---
300,000
Economic Growth
---
100,000
Census Bureau - CPS
---
125,000
SIC Conversion Program
(New Program)
----
200,000
Executive Direction
500,000
643,000
Total
2,088,000
2,088,000
1976 Presidential Determinations
Department of Labor
Comprehensive Manpower Assistance
($ in millions)
1975
1976
1974
President's
DOL
DOL
OMB
Actual
Decisions
Request
Allowance
Appeal
Recom.
Hel
BA
2,266
2,394
2,265
2,050
2,394
2,050
O
1,450
2,790
2,433
2,512
2,687
2,512
Allowance:
This account finances manpower training and public service jobs
under the Comprehensive Employment and Training Act (CETA). The
1975 Presidential decision accepted the congressional level of
$2,400 million BA, $350 million over the request of $2,050M.
Within the 1975 level, over $1 billion is available for public
service jobs. Presidential guidance given the Department on the
FY 75 level expressly rejected tying the level to variations in
the unemployment rate. The primary emphasis was to be placed on
gaining congressional acceptance of the National Employment Assis-
tance Act (NEAA). The FY 76 allowance of $2,050 million BA, the
;ame as the 1975 request, is based on the lack of evidence of impact
on participants or the economy.
DOL Appeal:
DOL requests tentatively continuing the 1975 BA level in 1976. DOL
states the expectation that the account will be increased if economic
conditions worsen, without regard to enactment of NEAA. The Secretary
believes it is unrealistic to expect the public to comprehend a reduc-
tion in BA (which the public will equate to a reduction in public
service jobs) while seeking increases for NEAA (also interpreted by
the public as public service jobs).
OMB Recommendation:
There is no program evidence presented to support a direct relation
between changes in the level of CMA funds and economic conditions.
Should analysis of program performance over the coming years demon-
strate grounds for different levels, there will be ample opportunity
to develop funding patterns to reflect this new knowledge. In addi-
tion, current spending information indicates that States and locali-
ties will be unable to use all funds available in 1975, and will
carry them over to 1976. Training and employment will therefore be
only slightly lower than in 1975 even with the OMB recommendation.
Emergency programs, like the NEAA, should be the primary method for
combating worsening economic conditions.
December 2, 1974
1976 Presidential Determinations
Department of Labor
Grants to States for Unemployment Insurance (UIS)
and Employment Services (ES)
($ in millions)
1975
1976
1974
Allow-
DOL
DOL
OMB
Actual
ance
Appeal
Request
Allowance
Appeal
Recom.
Obl./O
892
1,051
1,087
1,285
1,060
1,222
1,060
Allowance:
To fund added unemployment insurance (UI) claims processing, we
allowed a $100M increase in FY 75, in part by diverting Employment
Services (ES) staff to UI work -- the method used in past economic
downturns. In FY 76, cost increases of 7% were assumed rather than
the 12% requested and reductions of $25M were recommended for the
ES, to be taken in States with high costs and low production. Suffi-
cient funding was allowed to process the anticipated FY 76 UI work-
load, recognizing that past experience shows productivity increases
as workload increases.
DOL Appeal:
)L states "this practice of diverting employment service staff
,esulted not only in substantial reductions in the ability of State
agencies to provide adequate services
but
also
resulted
in
quality
deterioration in important UI functions." DOL believes it must en-
hance the UI function in FY 76 and " [t]herefore it is necessary to
restore $41.3 million
which will provide for a 4.6 percent unem-
ployment rate. The final amount, however, will be determined by the
rate of insured unemployment." For FY 75 ES services to migrants
and seasonal farmworkers, DOL needs "to retain $27 million, and in
FY 76 "we request an additional $75.4 million required to comply with
the Richey [Court] decisions."
OMB Recommendation:
Additional program evidence from DOL to support large staff increases
has not been made available. The DOL request will deplete revenues
earmarked for administrative costs, necessitating a proposal to in-
crease the Federal Unemployment Tax in FY 76 meanwhile seeking advances
from general revenues. DOL arguments against seeking higher produc-
tivity of existing UI staff and diversion of ES staff to UI workload
when unemployment rises -- reduced services lower quality -- do not
address the primary arguments. In the past, productivity has increased
December 2, 1974
2
as unemployment rose. Moreover, the ES staff cannot find people
jobs when unemployment is high and thus could perform as well as
new hires in handling UI claims, without increasing cash require-
ments. We recommend limiting the UI increases over FY 74
($462 million) to $120 million in FY 75 and $125 million in FY 76,
with modest diversion from the 30,000 ES staff. Additional services
for migrants pursuant to the Court order should not require the 15%
increase in the allowance sought by DOL. Additional justification
is needed, including the relationship of the added ES services to
other DOL programs for which an overall policy is being prepared.
1976 Presidential Determinations
Department of Labor
Personnel Ceiling
(Full-time Employment in Permanent Positions at End of Year)
1974
1975
1976
DOL
DOL
OMB
DOL
DOL
OMB
Actual
Req.
Allow.
Appeal
Rec.
Req.
Allow.
Appeal
Rec.
MA
3,200
3,211
3,070
3,269
3,070
3,211
2,970
3,269
2,97(
Other
8,856
11,891
10,171
10,201
10,021
11,654
10,131
10,363
10,13
V
Total
12,418 15,102 13,241
13,470
13,091
14,865
13,101
13,632
13,10
See next determination paper.
2/ Includes 350 subject to negotiation, as described in next determination
paper.
Allowance:
The current DOL ceiling is 12,492 plus 350 if it reduces its demand on
other agencies by an equal amount.
DOL was exempted from its share of the 40,000 August personnel cut in
order to allow it to hire 300 more to enforce the amendments to the
minimum wage and related laws. The allowance for 1975 includes 399
above the current ceiling to administer the new private pension reform
law. The 1976 allowance included a 140 reduction: 100 for the Manpower
Administration (see next determination paper) and 40 to reflect reduced
workload in the Labor-Management Services Administration (LMSA) (12)
and apparent excessive overhead staffing in the Occupational Safety and
Health Administration (OSHA) (28) Requirements for NEAA are not included
pending DOL justification of needs.
DOL Appeal:
DOL is now requesting increases in the 1975 allowance of 199 for the
Manpower Administration (see next determination paper) and 180 for OSHA
to reflect the increase provided by the 1975 appropriation conference
committee for additional safety and health inspectors. DOL, however,
now recommends deferral of half of the staff increase for the minimum
wage law perhaps until 1976. For 1976, it is requesting in addition
December 2, 1974
2
restoration of the 12 in LMSA because of pending amendments to the
executive order relating to Federal labor-management relations (FLMR)
and workloads and backlogs in other programs and 40 to mount a new,
intensive enforcement of the Age Discrimination in Employment Act
(ADEA).
OMB Recommendation
OMB recommends accepting the proposed deferral of 150 of the minimum
wage increase until 1976, but to accept none of the increases over the
allowances proposed. The rationale for the Manpower Administration
is explained in the next determination paper. Amendments to the FLMR
executive order have not yet been fully developed and it is not known
whether they will result in additional workload; DOL justification
materials do not show workload or backlog problems in other LMSA
programs. If a more effective approach to ADEA enforcement is desired,
redirection of the existing staff (approximately 84, including the
supplemental pending in Congress) is the appropriate way to accomplish
it. OSHA has not yet effected a rationale for allocating existing
inspection staff among States without their own programs and States
with OSHA-approved programs. 180 provided by Congress is in addition
to a 150 increase proposed in the 1975 budget. OMB believes further
increases should await a more thorough analysis of needs and
accomplishments (i.e., reduction of occupational accidents and disease).
Not allowing the 180 increase will probably require a 1975 deferral or
rescission proposal to the Congress.
1976 Presidential Determinations
Department of Labor
Manpower Administration Program Administration
(Full-time Permanent Ceiling)
1974
1975
1976
Actual
Req.
Allow.
Appeal
Rec.
Req.
Allow.
Appeal Recom.
Base
3,200
3,070
3,070
1
/
3,070
3,070
3,070
3,0701
3,070
3,0701
Prog.
--
+66
0
+8
0
+66
0
+8
0
Apprent.
--
+75
0
+75
0
+75
0
+75
0
CETA
--
--
--
--
--
--
-100
(+100)
-100
New Req.
--
--
--
+116
0
--
--
+116
0
Total
3,200 3,211 3,0701/
3,269
3,070-
3,211 2,9701
3,269
2,9703
1
Reflects congressional reductions of 130. Includes up to 350
subject to negotiation (see below).
Allowance:
ast February, DOL was told it could increase its ceiling by up to
350 if it achieved similar reductions in Agriculture and Interior by
reducing Job Corps activity. Agreements with these departments have
not been negotiated as directed. The allowance also rejected
apprenticeship and other program increases because existing resources
are underutilized and took out 100 to reflect continued savings
attributable to CETA.
DOL Appeal:
DOL rejects responsibility for negotiations on the 350, requesting
full allocation without regard to offsets. It maintains that all
economies possible due to decategorization under CETA have been
achieved. MA has already come down over 800 positions since 1973.
All available resources are needed to make programs work toward
"lessening the severity of the economic situation." A new request
for 116 is needed to support a plan developed in response to a
Federal Court order concerning Employment Services for Migrants.
OMB Recommendation:
DOL failed to initiate appropriate negotiations on the 350. The
rejection of responsibility announced in the appeal requires OMB
December 2, 1974
2
adjudication. Pending review, the allowance should continue the
terms of the original agreement. Review will be concluded prior to
budget printing.
CETA programs became operational September 1974. Currently DOL has
assigned 853 Federal staff positions in the field (2 per sponsor)
plus 46 in headquarters. This is very heavy staffing for a revenue
sharing type program regardless of legitimate technical assistance
needs of new sponsors. Program management should yield continued
savings as sponsors gain experience. In addition, periodic Civil
Service Commission reviews have consistently found massive over-
grading and underutilization of MA staff.
The new request did not include any analysis. MA already has 254
Federal staff positions in the field for monitoring State ES agen-
cies (5 per agency), plus 195 more in headquarters. In the absence
of any justification, OMB assumes that this staff is sufficient to
explain any new requirements to the State agencies and to monitor
compliance.
OFFICE OF MANAGEMENT AND BUDGET
ROUTE SLIP
ployment Trust
Mr. Paul O'Neill
Take necessary action
TO
ince Act
Approval or signature
Comment
Prepare reply
Discuss with.me
NEAA
For your information
Continued
See remarks below
5.3
4.7
4.5
G. Phillips Hanna
12-5-74
FROM
DATE
3.8
N/A
REMARKS
UTF/NEAA Outlay Estimates.
cc: Mr. Dale McOmber
y Request.
10 billion for the UI
ssuming a 6.1% average
1975. The President
$8.9 billion for the
OMB FORM 4
REV Aug 70
GERALB 10RD LIBRARY
Alternative FY 76 Outlay Estimates for Unemployment Trust
Fund and National Employment Assistance Act
($ in Billions)
NEAA
Unemployment
Dec. 31, 1975
NEAA
Rate
UTF
Cut-off
Continued
7.3
13.5 1
3.4 2/
5.3
7.1
13.3
2.8
4.7
6.8
12.2
2.8
4.5
6.5
11.5
2.6
3.8
5.8
9.0 3/
1.5
N/A
1/
Included in control figures.
2/
$3.8B included in control figures.
3/
Included in Presidential Materials. Agency Request.
Note: For 1975, the control figures include $10 billion for the UI
Trust Fund and $1.5 billion for NEAA, assuming a 6.1% average
unemployment rate reaching 6.6% in June 1975. The President
material includes the Agency Request of $8.9 billion for the
UI Trust Fund and $1.2 billion for NEAA.
December 5, 1974
Alternative FY 76 Outlay Estimates for Unemployment Trust
Fund and National Employment Assistance Act
($ in Billions)
NEAA
Unemployment
Dec. 31, 1975
NEAA
Rate
UTF
Cut-off
Continued
7.3
13.5 1/
3.4 2/
5.3
7.1
13.3
2.8
4.7
6.8
12.2
2.8
4.5
6.5
11.5
2.6
3.8
5.8
9.0 3/
1.5
N/A
1/
Included in control figures.
27
$3.8B included in control figures.
3/
Included in Presidential Materials. Agency Request.
Note: For 1975, the control figures include $10 billion for the UI
Trust Fund and $1.5 billion for NEAA, assuming a 6.1% average
unemployment rate reaching 6.6% in June 1975. The President
material includes the Agency Request of $8.9 billion for the
UI Trust Fund and $1.2 billion for NEAA.
December 5, 1974