LC. :4, I 8,/Z 1 R7702! CONGRESSIONAL RESEARCH SERVICE THE LIBRARY OF CONGRESS Issue Brief nive Si uumii . 3; -L’: .2; <3 \.,','.§ 5 . ‘A . f‘ L. V .._-,1 : .''.‘' ‘J 339-3“ \- “ ., ‘s ‘- :.~‘ “-':»:.~ 3 ‘ :-...- 1. H Y NOV 17 1989 .; ,_ »_ ._. g . _ u f'..:._, h‘*“'-‘- ’~" ‘-‘- ‘--' \v--' A. .'--¢1’c7:.‘§ I O10-103861 830 GRANT CONSOLIDATION FOR EDUCATION RROGRAMS ISSUE BRIEF NUMBER IB7902l AUTHOR: Irwin, Paul M. Education and Public Welfare Division Jordan, K. Forbis Education and Public Welfare Division THE LIBRARY OF CONGRESS CONGRESSIONAL RESEARCH SERVICE MAJOR ISSUES SYSTEM DATE ORIGINATED O3/02/79 DATE UPDATED 02/07/83 FOR ADDITIONAL INFORMATION CALL 287-5700 0209 CRS- l IB7902l UPDATE-02/07/83 ISSUE DEFINITION Major issues related to consolidation of Federal elementary and secondary education programs are how many programs will be consolidated, whether funds »‘Will be distributed only t0 States or Will flOW through t0 local SChDOl districts, and what fiscal and programmatic controls will be included. other issues relate to the role~ of State legislatures, program and planning requirements, level of Federal appropriations, loss of program identity, role of interest groups, and influence of economic conditions. Elementary and secondary education block grants were enacted in P.L. 97-35 with an authorization of $589 million, but the actual funding level was $484 million in FY82 and $479 million in FY83. The Administration's FY83 budget submission was $432 million. The Administration's FY83 budget proposed block grants for vocationalt and. adult education and for education -of the handicapped. Vocational and adult education and current education block grants were tentatively included in the "New Federalism" proposal for transfer to the States starting in FY84 and ending in FY91 with the termination of Federal funds. The Administration sent its vocational and adult proposal to the Congress on Apr. 1, 1982; the proposal was not introduced, but similar legislation was introduced (5. 2325). The FY84 budget proposes $479 million for existing education block grants, and reiterates the Administration's intention of consolidating vocational and hlt education programs. BACKGROUND AND POLICY ANALYSIS The Reagan Administration's FY84 budget request was released Jan. 31, 1983. The request is for $479 million for the block grant program under Ghapter 2 of the Education Consolidation and Improvement Act of 1981, the same funding level as provided in FY83 under P.L. 97-377. However, it requests an FY83 rescission of $2 million for discretionary activities authorized by Chapter 2. The FY84 budget request also repeats the proposal presented in the FY83 request for consolidating existing vocational and adult education programs, and indicates the intention of including both consolidations in the list of activities to be turned back to the States under a "new federalism" initiative. The outline off the proposed consolidation of vocational and adult education programs is similar to the formal proposal made to the Congress by the Administration on Apr. 1, 1982. The Administration found no sponsors in either the House or the Senate for the 1982 proposal. A modification of the consolidation proposal was introduced by Senator Hatch; hearings at the 'subcommittee level were held on the proposal, but the 97th Congress tOOk no further action. First announced on Jan. 26, 1982, and mentioned again in the FY84 budget F ssage, the President's "new federalism" initiative "has not- yet been formally submitted to Congress. Various versions have been circulated concerning_specific provisions; the basic.concept would repeal a ,number of existing Federal programs and would permit States the discretion of continuing program activities with their own funds -(this is the so-called "turnback" provision). The list of programs tentatively proposed for repeal CRS- 2 IB7902l fUPDATE-82/07/83 has changed with each revision-of the initiative; however, the list from the beginning has included the Chapter 2 education block grant program and t proposed consolidation of vocational and adult education programs. ‘ The Reagan Administration strongly indicated in its FY83 budget request that its plans for restructuring Federal education programs were not yet complete, despite passage of the Education Consolidation and Improvement Act of 1981 as part of the Omnibus Budget Reconciliation Act of 1981 (P.L. 97-35). The FY83 budget submission indicated that additional education program consolidation, block grants, and other similar changes would be proposed shortly to the 97th Congress. These proposals were to include (a) the consolidation and simplification of current vocational and adult education programs into a single program, (b) the ,consolidation and simplification of current education of the handicapped programs, and (c) the inclusion of the proposed vocational and adult education block grant and the elementary and secondary education block grant already authorized by P.L. 97-35 in the Administration's "New Federalism" initiative, whereby these programs would be transferred to the States beginning in FY84 and ending in FY91 with the termination of Federal funds. The Administration did not submit to the 97th Congress formal legislative proposals either for "New Federalism" or for education of the handicapped block grants. The Administration did submit its proposal for the vocational and adult education block grant on Apr. 1, 1982. Although this latter proposal was not introduced in either the House or the Senate, a similar proposal was introduced by Senator Hatch on Mar. 31, 1982 (S. 2325). The passage of an education block grant in P.L. 97-35 by the 1st Sessi of the 97th Congress constituted a dramatic shift in the Federal role ‘-4 elementary and secondary education. Effective with the 1982-83 school year, 20 FY81 appropriations and over 40 authorized programs were consolidated into‘ a single block grant to State and local educational agencies. These agencies may use the funds for any of over 30 approved activities. Independent funding was retained for compensatory education, education of the handicapped, vocational education, bilingual education, and impact aid. This legislation was an alternative to the original Reagan Administration proposal that would have included virtually all Federal elementary and secondary education legislation except those for vocational education, bilingual education, and impact aid. Since the enactment of the Smith-Hughes Act in 1917, most Federal funds for elementary and secondary education have been in the form of categorical aid with restrictions on either the population to be served or the use of the funds. Examples of major Federal categorical aid programs have been the Vocational Education Act, impact aid under P.L. ‘8l-874, National Defense Education Act, Elementary and Secondary Education Act, Adult Education Act, and Education of All Handicapped Children Act (P.L. 94-142). As the amount of Federal funds and the number of federally supported programs for elementary and secondary education have increased, Federal funding has tended to be categorical, with funds being allocated for specific purposes on the basis of federally established priorities. Block grant advocates have urged repeal of existing categorical programs and the r replacement with more general, broad-based funding mechanisms. Supporters 1: categorical funding have sought the retention of the current system. Block grant supporters state that programs and services for. school children could be improved if additional discretion were provided to States and localities, and that education block grants would reduce paperwork- and CRS- 3 , IB79O2l UPDATE-02/07/83 administrative burdens. These supporters contend that States and localities should have the flexibility to structure programs and use;Fgderal funds in a inner consistent with their own priorities because (1) local situations are so different that Federal goals'and categorical programs limit the capacity of States and localities to maximize scarce resourcesr in planning and conducting educational programs; (2) education is a State, rather than a Federal, function; and (3) the complex and extensive Federal regulations created to administer existing categorical programs may prevent effective coordination with State and local programs to meet many of the same educational needs. a Advocates for continuation and expansion of categorical funding believe that Federal funding should be targeted to specific programs and populations with careful planning and monitoring t0 ensure that funds are expended for, identified national educational priorities and needs. One of their contentions is that State and local school officials haye_not demonstrated an interest in responding to the educational needs of certain groups of children. They seek retention of categorical Federal funding to ensure (1) that neglected sectors of the school population will have access to educational programs and services needed to prepare them for a productive role in society; (2) that adequate attention will be given to identified national educational priorities; and (3) that maximum impact will be achieved with the relatively small percentage of total education expenditures funded by Federal dollars. Block grant supporters do not accept the contention that universally common national educational needs and priorities exist, but contend that Lfferences throughout the Nation are so great that State and local school officials must be relied upon to identify educational needs and priorities. other observers are expressing concern about the appropriateness of nationally identified educational needs and priorities because of the alleged tendency of the Federal Government to mandate that States and localities ‘address the priorities yet subsequently providing either no funds or inadequate funds to meet these needs (as in the case of education for all handicapped children). Some observers feel that the experience with previous Federal block grant programs has been mixed. In some instances, States and localities have followed the legislative intent in using the funds_ to address national priorities. In others, interest group support for the block grant declined, and the level of funding either declined or failed to keep pace with inflation. In others, portions of the block grant have been reserved for specific purposes or activities, and new or revitalized categorical programs have become adjuncts t0 the blOCk grant. For several years, different education interest groups have expressed support for the concept of consolidating Federal categorical programs into block grants, and evidence of additional interest may be found in the 1980 ' Republican platform statement that calls for replacement of the current "... crazyquilt of wasteful programs with a system of block grants that will restore decisionmaking to local officials responsible to voters and parents." ‘In the statement, recognition is given to the need to preserve special ‘mcational opportunities for the handicapped, disadvantaged, and other needy tlhdents. This position is in contrast with the thrust of the 1980 Democratic Party Platform statement that indicates continued support of the targeted categorical aid approach in providing Federal funds for education. CRS- 4 IB7902l UPDATE-O2/07/83 Initial Reagan Administration Proposal President Reagan, in his initial plans for Federal education programs, proposed a major consolidation of elementary and secondary programs in his announcement of "A Program for Economic Recovery" on Feb. 18, 1981. The Administration's proposal was subsequently presented to the Congress as S. 1103, which was introduced and referred to the Committee on Labor and Human Resources on May 4, 1981, and as H.R. 3645, which was introduced and referred to the Committee on Education and Labor on May 20, 1981. The proposal would have consolidated 44 existing programs, primarily for the disadvantaged and handicapped. _Jm_fl, _ Although the Administration's initial proposal was similar in many respects to the P.L. 97-35 education block grant that was signed into law- by President Reagan on Aug. 13, 1981, there were several differences as well. In comparison with P.L. 97-35, the- initial proposal would have included termination of programs of compensatory education for the disadvantaged under title I of the Elementary and Secondary Education Act of 1965 (ESEA), the Education of the_ Handicapped Act, and the Adult ‘Education Act, with subsequent authorization of their activities under the block grant. All requirements for maintenance of effort, supplementary use of funds, and advisory councils were to be terminated under the Administration's proposal, but retained in the P.L. 97-35 legislation. Consolidation Enacted in 1981 by P.L. 97-35 The Omnibus Budget Reconciliation Act of 1981 (P.L. 97-35) contained t. Education Consolidation and Improvement Act of 1981 (ECIA). ECIA authorizes a consolidation and simplification of many Federal elementary and secondary education programs. Chapter 1 of ECIA retains separate funding for ESEA title I, but simplifies its major provisions; chapter 2 of ECIA contains a program consolidation encompassing 20 former legislative appropriations and repealing legislative authorizations for over 40 programs. Purposes of the new chapter include basic skills development, educational improvement and support services, and special projects. The authorization ceiling contained in P.L. 97-35 for programs for educationally disadvantaged children under chapter 1 (formerly ESEA title I) is $3,480,000,000 for each of FY82-FY84. ECIA states that the authorization level for chapter 2 is such sums as necessary for FY82 and the five succeeding years, but the Omnibus Budget Reconciliation Act placed an authorization ceiling of $589,368,000 for each of FY82, FY83, and FY84. Chapter 1 of ESEA modifies ESEA title I by continuing financial assistance to state educational agencies (SEAs) and local educational agencies (LEAs) for programs to serve the special needs of educationally deprived children, but the Federal requirements are reduced to eliminate most provisions other than those related to fiscal accountability. The target group is to be identified through an annual needs assessment as provided in the application that must be approved by the SEA. Under the new legislation, LEAs may have- greater flexibility in identifying the children to be served and in design; ;‘ and implementing programs. Funds must be used to provide programs for the target population and may be used to purchase equipment and, where necessary, to construct school facilities. State agency‘ programs for handicapped, migratory,_and neglected and delinquent children are continued. CRS- 5 1379021 UPDATE-02/07/83 Chapter 2 of ECIA consolidates ESEA title II, III, IV, V, VI, VIII, IX xxcept part C) and repeals the relevant ESEA statutory provisions, effective Oct. 1, 1982. Other consolidated programs include the Alcohol and Drug Abuse . Education Act, Part A (Teacher Corps) and Section 532 (Teacher Centers) of Title V of the Higher Education Act, Part B of Title V of the Economic Opportunity Act of 1965 (Follow Through) on a phased-in basis with repeal of - the legislation effective Oct. 1, l984. Programs under Section 3(a)(l) of the National Science Foundation Act of 1950 (precollege science teacher training) and the Career Education Incentive Act also are consolidated into chapter 2. The provisions of chapter 2 have been grouped under three program, subchapters -- basic skills development, educational improvement and support services, and special projects -- and two general subchapters -- Secretary's discretionary funds and general provisions. Funds may be expended for the same purposes as set forth in the previous legislation, but educational needs and priorities among these purposes are to be determined by SEAs and LEAs. The intent of the legislation is (l) Ito vest greater power for program administration with SEAs, (2) to reduce the paperwork associated with Federal programs, and (3) to place responsibility for design and implementation of programs with local boards of education and school personnel involved in school operation. Of the funds appropriated for chapter 2, l% is for payments to support programs in outlying areas, and up to 6% is to be made available for the Secretary's discretionary fund. The remaining 93% is to be allocated to the ates (the 50 States plus the District of Columbia and Puerto Rico) in proportion to the State's share of school-age population ages (5-17); - however, each State shall receive a minimum of .5% of the funds available to States. Of the sums allocated to each State, no less than 80% is to be distributed to LEAs according to the relative enrollment in private and ‘public schools within the LEAs, adjusted to provide additional funds for LEAs with the greatest number of high cost pupils such as those from low income families, those living in economically depressed urban and rural areas, or those living in sparsely populated rural areas. Both SEAs and LEAs are required to submit applications before receiving funds. Each State is required to file an application for qfunds with the Secretary of Education; assurances are to be included concerning (the SEA serving as the responsible State agency, establishment of a State advisory committee, the process to be used in allocating the SEA's share of the funds, dissemination of information, program evaluation, compliance with other .requirements, and formula provisions for allocating funds to LEAs, but approval authority is limited to provisions concerning the latter formula. The LEA application is to be submitted to the SEA and is to indicate how funds will be distributed among the approved activities, ensure participation for private school children, ensure maintenance of required records, and -provide for systematic consultation with parents, school staff, and others deemed appropriate by local school officials. Consistent with the statements included in its application, each LEA is to have complete discretion in iallocating funds among the authorized activities. Both SEA and LEA F plications are to be for a period not to exceed 3 years, and may be amended annually without submitting a new application. In allocating the funds available afor the Secretary of Education's discretionary fund (up to 6% of the appropriation), first priority is to be given to the inexpensive book distribution activity as carried out through CRS- 6 IB7902l UPDATE-02/07/83 12318 Reading is Fundamental program, activities Of national. significance in C116‘ arts in education program, and alcohol and drug abuse programs. T"? Secretary iS also authorized t0 use funds fOI' broad purposes S'ClCh _ .-4 dissemination Of information about program effectiveness, research, training ‘of teachers and other instructional personnel, and assistance to SEAS and LEAS in implementation of programs. Maintenance of effort requirements are included for both chapters, but the required level is 90% of the amount expended in the second prior year, with provisions for pro rata reduction (rather than complete cutoff) of Federal payments in the event that spending falls below the 90% level. As in current ESEA Title I provisions, provisions for a bypass mechanism to provide services directly to nonpublic school students are included for both chapters. They become operable if a State is prohibited by law from providing for private school children to participate in programs, or the SEA or LEA has failed or is unwilling to provide for private school children to participate in programs on an equitable basis. Chapter 3 of ECIA requires that the Secretary issue regulations relating to proper fiscal accounting for funds, State payment methods for funds to LEAS, and specific requirements and assurances provided in" the Act. with regard to other matters relating to planning, developing, implementing, and evaluating programs and projects by SEAS and LEAs, the Secretary is prohibited from issuing regulations, but is to consult and, upon request, provide technical assistance. 1 Federal vocational education programs, adult education programs, bilingual education programs, programs for education of the handicapped, and the impact aid program §P.L. 81-874) are not included in the Education Consolidation and Improvement Act of 1981. The Senate version of the ECIA legislation was included in S. 1377 as reported to the Senate Budget Committee by the Senate Committee on Labor and Human Resources on June 10, 1981. The measure was reported by the Budget Committee (S.Rept. 97-139); passed by the Senate, as amended, June 25, 1981; but ordered held at the desk. The House version, in H.R. 3982, was part of the substitute floor amendment passed by the House on June 26, 1981, and this proposal was used as the basic legislation in the Conference. The Conference report for H.R. 3982 was agreed to by the House and the Senate on July 31, 1981. The President signed the Act as P.L. 97-35 on Aug. 13, 1981. The National Association of State Boards of Education has published a discussion of the potential policy and legal issues regarding both chapter 1 and chapter 2 of the Act. Certain questions are raised about the impact of the Act in terms of possible changes in intergovernmental ,relations and responsibilities, problems in meeting Federal requirements, reduced local flexibility in administration of ’ programs for the educationally disadvantaged, and participation by private school students. ECIA Regulations Final regulations for chapters 1 and 2 of ECIA were re-issued by the Secretary of Education on Nov. 19, 1982. On Aug. 10, the Congress disapproved final regulations originally issued by the Secretary on July 29, 1982. The primary reason for congressional disapproval was the decision by CRS- 7 1379021 UPDATE-O2/OJ/83 the Secretary that the bulk Of the General Education Provisions ACt (GEPA) did not apply to ECIA. Among other provisions, GEPA contains two) }quirements of central concern: first, a provision that makes it applicable to all programs administered by the head of an educatign_ agency (unless specified otherwise), and second, a provision that permits the Congress to disapprove any education regulation inconsistent with its respective legislative authority. The re-issued regulations responded to the congressional disapproval; GEPA was made to apply in general to ECIA programs. Overall, the regulations were rather brief, addressed relatively few program issues, and were intended to minimize regulatory burden and maximize State and local flexibility in implementing the ECIA legislation. The Department of Education has promised, however, that further "non-regulatory guidance" will be provided at a later date. On Dec. 3, 1982, the Secretary issued proposed regulations for the State agency programs under chapter 1 of ECIA. Amendments to ECIA Legislation enacted or proposed by the 97th Congress illustrates a variety of ways in which block grants may be changed with subsequent amendments. P.L. 97-313 (H.R. 5658) added citizenship education to the list of authorized activities for State and local educational agencies, without providing additional funds or otherwise altering the general provisions of the ECIA chapter 2 program. H.R. 7137 would require the Secretary of Education to use discretionary funds already available under chapter 2 to fund law-related education as a national priority program, as well as retaining law-related Eucation as an authorized activity under chapter 2. H.R. 5818/S. 2648 would define in legislation (for the first time) the National Diffusion Network (NDN) and require the Secretary to use discretionary funds already available under chapter 2 to fund the NDN as a national priority qprogram. H.R. 7336 would make certain technical amendments to ECIA with the intention of ‘improving its implementation. H.R. 7271/S. 2995 would re-establish the Emergency School Aid Act as a separate categorical program under ESEA. This program for school desegregation activities, one of the major antecedent components consolidated into chapter 2, would be deleted from the list of authorized activities under ECIA. Impact and Future Of BlOCk Grants ‘In comparison with the total FY80 funding level of the antecedent programs terminated by ECIA, FY82 funds for the chapter 2 block grant ($483 million) under P.L. 97-161 represented a decrease of 40%, and the FY83 budget request was for a decrease of 46% from the FY80 level. FY82 funds were distributed to the States July 1, 1982 (for the 1982-83 school year). Since ECIA chapter 2 provisions first took effect on July 1, 1982, States and localities have had little experience in the actual implementation or operation of the -chapter 2 program. The FY82 funding level represented approximately $10.50 per pupil, or approximately-0.5% of current expenditures for these children. All 46 million public and private elementary and secondary school children ‘can be considered as .potential beneficiaries Of chapter 2 programs and_ F rvices. with the exception of the 6% set-aside of funds for national priority programs under the Secretary's discretion, the principal effect of chapter 2 is to transfer decisionmaking authority to the 'States and» localities. At least 80% Of the funds available to the States are distributed to local CRS- 8 IB7902l UPDATE-O2/07/83 school districts, along with the responsibility for determining the use of the funds. Although sub—State allocations are adjusted- for the number yr’ high cost pupils, it is expected that large urban school districts wile receive proportionally the greatest reductions in funds in comparison with distributions under the antecedent programs repealed by ECIA. It is also expected that all school districts will receive at least a portion of chapter 2 funds, and that there will be a higher level of participation for private school children than under the antecedent programs. Information about State responses to the reduction in Federal funds is not yet generally available, although preliminary information suggests that States are having problems securing sufficient revenue to maintain their ongoing commitments for programs that have been funded in prior years with State funds. There appears to be little likelihood that a significant number of States will provide additional State funds to replace the reductions in Federal funds for the antecedent programs that have been included in the education block grant. State and local impact from the changes in the Federal program will occur in different ways. ,By placing the funds in block grants, the Federal Government relinquishes the prerogative of identifying national priorities and providing targeted funds for innovative or demonstration programs. The point can be made that States and localities-will still have the option of making these choices in the use of funds and may be in a better position to make the priority decisions, but their relative options will be restricted because of the continuing pattern of reducing funds for the block grant. The future of education block grants is less clear. It appears that t Administration will continue to urge the enactment of additional block grants, such as those it is currently supporting for vocational and adult education and for the education of the handicapped, as well as to reduce the Federal role in education through its own actions. The Administration has also proposed a "New Federalism" initiative which would turn over to the States both the responsibility and eventually the funding for programs such as the ECIA chapter 2 block grant. Under the "New Federalism" initiative, President Reagan maintains that State and local governments are more responsive to the needs of both benefit recipients and the taxpayers, can meet their needs more efficiently, and are capable of assuming greater responsibility than at present. Since the announcement of the initiative, the Administration has been consulting with representatives of the Congress, State Governors, State legislators, and State and local groups in order to identify areas of agreement for a specific federalism proposal. No public date has yet been given for the formal submission of the Administration's legislation to the Congress. The overall success of these efforts, however, will ultimately depend on the Administration's ability to obtain congressional approval. " In considering the possibility Of consolidating Federal programs fOI' elementary and secondary education, several issues are typically raised by interested individuals and groups. Federal System for Delivering Educational Services The system for delivering elementary and secondary educational services in America is unique in its reliance upon State and local school governing bodies. Almost 16,000 locally operated public school systems provide CRS- 9 1379021 UPDATE-02/07/83 elementary and secondary educational services to the Nation's children. tThe schools are administered under standards established by State governments. ;e percentage share varies among the States, but, on the national average, over 90% of the $99 billion spent annually for these services is derived on a nearly equal basis from state and local revenues. The Federal Government participates in this system by funding programs for certain educational activities it considers to be in the national interest. Currently, over $9 billion in Federal funds are provided each year for public elementary and secondary educational expenditures, representing less than l0% of total expenditures. The Department of Education administers the funding for more than 200 programs for all levels of education. The federally funded programs represent categories, of aid, each with specific objectives, priorities, and recipients. Separate administrative structures frequently exist.for each categorical program at the Federal, State, and local levels. These programs often have individual appropriations, regulations, and paperwork requirements. Each program category might be considered as an exercise of Federal leadership to meet some perceived national need not generally being met by State or local education agencies. N Consolidating Federal funding for categorical programs has been suggested regularly in the last decade, starting with the Nixon administration's proposals for the "Education Special Revenue Sharing Act of l97l" and the “Better Schools Act of 1973." Neither bill was passed by the Congress. Both Nixon bills, as well as more recent proposals, would have affected various pects of federally funded categorical programs simultaneously. That is, multiple changes would have been made in objectives and priorities, in ‘recipients or target populations, and in administration and regulation. Funding levels would also have been affected. Support for the consolidation concept may be found inla 1975 study by the General Accounting Office (GAO) that suggested the Congress could simplify the current system of Federal assistance programs by consolidating programs with similar objectives into broader purpose programs. The GAO report noted that the 1974 amendments to the Elementary and Secondary Education Act (ESEA) did consolidate several categorical programs, permitted a simplified application approach, and provided for forward funding of appropriations. One of the continuing criticisms of the Department of Education's‘ ’administration of the 1974 consolidation efforts has been that the application process was consolidated but not the Federal administration of the program. As a result, State plans were reviewed in the same manner as before the consolidation. An April l980 GAO report indicated that some State officials reported that the 1974 consolidation efforts’ for elementary and secondary education and the 1976 consolidation amendments for vocational education had increased the paperwork required of them. In partial response to the 1975 GAO report, the Congress included provisions in the 1978 Education Amendments that were designed to (1) make 'programl requirements more understandable; (2) clarify administrative sponsibilities at the Federal, State, and local levels; (3) increase coordination among current programs; and (4) reduce paperwork requirements. Dther efforts to respond to the concerns of States and localities included pro‘ ‘ions for a single application, multiyear State and local applications ‘or ; ~:, and 3-year evaluation periods.. ‘ CRS-10 IB7902l UPDATE-O2/O7/83 Duplicated services for students and unnecessary administrative_g9st§__are CWO reasons frequently advanced by the advocates for adopting consolidation- These issues were addressed in the 1980 GAO report; the conclusions indicat that problems With duplicated services for students were not significant and ,also that no evidence was found to suggest that Consolidation would result in a reduction Of administrative costs. Some ~State education officials had indicated that consolidation might actually result in additional administrative costs. The GAO reported that the value Of consolidation was questionable until assurances could be provided that the congressionally identified target populations Of students would continue t0 be served and that specific administrative COSt reductions could be achieved. Efforts to consolidate Federal education categorical programs through Title IV of the Elementary and Secondary Education Act were also studied in an April 1980 Rand study. In addition to the findings relative to the programs consolidated under Title IV, the discussion includes implications for future program consolidations. First, the programs to be consolidated should be mutually compatible and be somewhat related. Second, the organizational structure for Federal administration of the consolidation should be consistent with the consolidation effort. Third, the emerging consolidation should be more than a shuffling together of prior categorical programs.i Lastly, if the intent is to change the operation of programs at the State and local levels, the Rand study suggested that incentives be provided to persuade State and local school officials to alter customary educational practices. i’ Types of Consolidation The concept of consolidating Federal programs and funds appears to exist at four levels. The first is exemplified by the Education Amendments of 1974 and the Vocational Amendments of 1976. The second is the FY82 Budget Reconciliation in which the principal large formula grant programs remain intact and smaller programs are merged with a series of nationally competitive discretionary programs. The third option is the Reagan Administration proposal in which the large formula grant programs are merged in one title and the smaller and discretionary programs are merged in a second title. The fourth is illustrated by the comprehensived consolidation of all Federal programs in which a recipient agency participates, as would be possible under S. 807, the Federal Assistance improvement Act of l98l. Under the 1974 and 1976 examples, the intent is to consolidate the funding and application process for some of ~the smaller components or types of similar categorical programs. States are to submit plans that will indicate how the Federal priorities will be addressed} Federal funding for these programs is to be consolidated to provide States more flexibility in program planning and operation. The second type of consolidation would have little overall impact on programs for special populations such as the disadvantaged or the handicapped or programs such- as vocational education or bilingual education, but States -and local school districts would have greater flexibility in identifying and meeting local educational priorities. The third concept of consolidation is much more comprehensive and involves merging funds for major programs such as Title I of the ESEA with those f “ education of the handicapped. In essence, virtually all Federal funds 1-: elementary and secondary education would be merged except those for bilingual education and vocational education. The State would then be responsible for developing a plan through which the Federal priorities would be_ met rather than relying upon the current format of specific programs for each priority. CRS-ll 1379021 UPDATE-02/07/83 Federal funds could not be traced to identifiable programs in local schools. The fourth level of consolidation possibly would merge all Wrelated__Federal fograms under which a State or local unit of government receives assistance, and could lead to the consolidation of related programs that are funded through different Federal agencies. S. 807, the Federal Assistance Improvement Act of l98l, introduced by ~Senator Roth and reported by the Committee on Governmental Affairs, directs the President to submit consolidation proposals for functionally related programs. 4 3 gevel of Federal Appropriations The current level of Federal funding for education programs might be viewed as the result of a coalition of the advocates for, and the recipients of services from, these various programs. From this viewpoint, program consolidation ultimately would affect the funding level because a new set of. recipients‘would benefit from the program changes. Program consolidation might reduce the interest of current program advocates to the extent that they feel their needs are not directly served by the consolidation. It might also generate broader support from State and local governments, leading to greater advocacy of Federal education funding. The net result of such changes is difficult to predict; if the need for Federal assistance persists, the support for funding might be forthcoming regardless of program consolidation. iProgram consolidations in other Federal service areas have had mixed t¢SultS with regard to appropriation funding levels. . In some instances, —funding has increased as growth has occurred in the rest of the Federal budget, but in others, a constant level Of funding has been maintained. When appropriations are not increased during periods Of inflation, an actual IOSS “could occur in the ability tO provide services. With regard to the antecedent education programs included in chapter 2 as authorized activities or repealed by P.L. 97-35, the individual programs were funded at a level of $805 million in FY80, and $601 million in FY81. Authorized funding for the consolidation was limited to $589,368,000 for FY82 under the provisions of P.L. 97-35. Under P.L. 97-l6l, the chapter 2 funding level was $484 million in FY82. The Administration has recommended $432 million in its FY83 budget submissions. No funds were requested for -Follow Through, Women's Education Equity, or Training and Advisory services for desegregation activities on the grounds that these programs can be supported under the current block grant authority. The Department of Education Appropriation Act, l983 (included in P.L. 974377), provides $479 million for chapter 2 for FY83. .Identifiable Programs The concept Of grant consolidation assumes that the original programs Will ~cease to exist as national priorities and that States and localities will h“ve greater flexibility in identifying and addressing their needs. Previous }_mgrams may be merged or discontinued and funds may be used for other target populations or activities. As’decisions about programs are delegated to States and localities, prior programs may lose their identity, funds may be commingled, and the original characteristics of the Federal programs may be blurred or disappear. CRS-12 IB79o2l UPDATE-O2/O7/83 The loss of program identity may also mean «the loss“ of education?‘ information. The paperwork generated by categorical programs often includ statistics regarding the number and needs of educationally disadvantaged children served by such programs as well as data on successful techniques for meeting such needs. The advantage of reduced paperwork may be counterbalanced by the loss of educational data; this is one of the difficult choices facing the designers of most federally funded programs, whether categorical or consolidated. Influence of Interest Groups Special interest groups have served as advocates for various Federal initiatives for the past two decades. Under a grant consolidation that shifts decisions about program funding priorities to States and localities, the traditional interest groups will shift their activities from Washington to the State capitals and local school districts. An unanswered question is whether or not these interest groups can be as effective advocates when decisionmaking and priority setting is decentralized to the 50 states and 16,000 local school districts. BOth the clientele currently served by federally funded programs, and the organized advocates for these programs, Will continue t0 exert influence, and can be expected to seek protection for the programs that serve their own interests. The Federal administrative structure for categorical programs, the State personnel associated with these programs, and the clientele and advocates of current categorical programs may in combination inhibit maj changes in the actual administration of consolidated programs. " Ahdministrative organization Consolidation would likely result in additional administrative changes within State-level education agencies. T To the extent that program consolidation means a change in organization, administrative istructure, and mission, some Federal and State education personnel would presumably lose their jobs. To the extent that new programs under the consolidation require different talents and skills, some staff would have to be replaced or retrained. It seems more likely, however, that many employees managing current programs would continue to administer the consolidated programs. Reappropriation of Funds at the State Level The reappropriation of Federal funds, as well as other types of oversight activities, by State legislatures appears to have gained in importance recently, and has implications for Federal programs providing educational and non-edficational services alike. Under reappropriation, the State legislature provides some type of approval prior to the expenditure of Federal funds by the State executive branch or the political subdivisions within the State. A 1980 report from the National Conference of State Legislatures indicates that legislative bodies in 38 States currently exercise some degree F? appropriations control over Federal funds during the State budgetary process. The level of control varied from routine and perfunctory approval of funds to a high .degree of legislative control in which specific sums were reappropriated for detailed purposes. Many reappropriation activities have taken place under the current Federal grants system that seldom specifies any CRS-l3 .' 1379021 UPDATE-O2/07/83 role for State legislatures to assume in the administration of Federal categorical grant programs. l’Under a consolidation of Federal grants that would permit increased administrative choices at the State level, State legislatures might have additional opportunities to influence and direct the expenditure of Federal funds within their States. Advocates for strengthening the role of State _legislatures contend that Federal funds must be reappropriated in order for State legislatures t0 fulfill their constitutional responsibilities for control Of State revenues and budgetary allocations. Since Federal revenues constitute 20% to 30% of state expenditures, to ignore these funds would’ greatly undermine the State legislature's traditional control over the purse strings. Opponents of reappropriation by State legislatures contend that isuch legislative activity might interfere with and usurp .the power of the Federal Government to determine priorities for Federal programs, as well as to specify how States are to administer Federal programs. Currently, requirements accompanying Federal funds generally permit little discretion in their use. This condition was noted in a December 1980 GAO report entitled "Federal Assistance Should Be Changed to Permit Greater Involvement by State Legislatures." The GAO report contends that the problem is essentially twofold. First, attention needs to be given to the manner in which State and Federal efforts can be better coordinated to improve services. Second, State legislatures are not sufficiently involved in decisions concerning submission of State plans, applications, and budgets for Federal programs. An underlying issue appears to be the relationships ibetween State executive and legislative agencies and the legislature's rconcern that executive agencies have excessive discretion in administering mheral programs. The contention is that State legislatures should have a ‘greater role in determining priorities, reviewing State plans, designating responsible agencies, and evaluating programs. ‘Tax and Expenditure Limitations For the dozen States that recently have enacted tax and expenditure limitations, the fiscal impact on education in general, and Federal funding for education in particular, is nbt clear. In those cases where the voters or the State legislators have placed a ceiling on increases in the local property or State taxes and also on increases in the assessed value of real property, governmental taxing units are restricted in the famount of funds they can raise for governmental services. For several reasons, the full effect of these restrictions has not been felt. Many State and local governmental agencies have had fiscal surpluses. They may also be able to delay certain, expenditures. Budget shortages, competition among State priorities, and conflicts between State and Federal program requirements will possibly increase as State and local agencies enter rthe second and third years Of new fiscal restrictions. Even then, however, changes in economic activity, such as inflation and property sales, may permit some revenue increases. ‘ A potential source of conflict stems from.two Federal program restrictions 5 * funding eligibility. Most federally funded education iprograms contain “maintenance—of-effort" and "supplement-not-supplant" requirements. The maintenance-of-effort restriction requires that the level of State and local ‘expenditures, either in aggregate or per pupil, remain at least as high as in the preceding year. If educational revenues decrease, an impasse could occur CRS-14 IB7902l UPDATE-O2/O7/83 over this Federal program requirement. It seems more likely at this time, however, that the general pattern will be limitations that prevent revenue growth rather than cause an actual decline. Some revenue decreases cou' occur in conjunction with declining pupil enrollments and the Federal requirement for maintaining per pupil expenditures could be met. The effect on the capacity of local education agencies to meet Federal requirements cannot be ascertained until expenditure data have been available for. several years. i The supplement-not-supplant restriction requires that Federal funds be expended in such a way that they do not replace State and local funds. Under tight budgets, there would be a tendency to use the Federal funds for as many activities as possible at the State and local level. State and local governments would have more flexibility under program ‘consolidation in the use of Federal funds, possibly to the extent of commingling those funds with funds from other sources. Under these conditions, however, the task of fiscal accountability might increase considerably. The task of guaranteeing that the Federal funds from consolidated grants are not being used to replace State and local funds could become formidable. LEGISLATION P.L. 97-313, H.R. 5658 _ Amends the Education Consolidation and Improvement Act of 1981 to provide for programs to teach the principles of citizenship to be included in the list of authorized activities under the education block grant. Introdug 1 Mar. 2, 1982; referred to Committee on Education and Labor. Reported Sept. 9, 1982; passed the House by voice vote Sept. 14, 1982. Passed the Senate by voice vote on Oct. 1, 1982. Signed by the President on Oct. 14, 1982 (P.L. 97é3l3). H.R. 5818 (Kildee)/S. 2648 (Pell et al.) National Diffusion Network Act. Provides a separate authorization for the National Diffusion Network, and requires the Secretary of ED to administer the program using discretionary funds provided under chapter 2 of ECIA. H.R. 5818 introduced Mar. 11, 1982; referred to Committee on Education and Labor. Subcommittee hearings held June 9, 1982. S. 2648 introduced June 17, 1982; referred to Committee on Labor and Human Resources. H.R. 7137 (Simon et al.) Increases the authorizations of appropriations for law school clinical experience ‘programs in higher education institutions; adds law-related education programs to the list of national priority programs to be funded from the Secretary of Education's discretionary fund in Chapter 2 of the Education Consolidation and Improvement Act of 1981; and authorizes funding for the Ellender Fellowship Program and the General Daniel James Memorial Health Education Center. rlntroduced Sept. 16, 1982; referred to Committee on Education and Labor. Reported Sept. 24, 1982 (H.Rept. 97-869); passed the House Sept. 29, 1982. “ H.R. 7271 (LaFa1ce et al.)/S. 2995 (Moynihan) Emergency School Aid Act. b Amends ESEA to re-establish, the Emergency School Aid Act and deletes school desegregation activities from the block CRS-15 IB7902l UPDATE-02707/83 grant under chapter 2 of ECIA. H.R. 7271 introduced Oct--la 1982; referred to Committee on Education and Labor. S. 2995 introduced Sept.; 30, 1982; Ferred to Committee on Labor and Human Resources. H.R. 7336 (Goodling) Makes certain technical amendments to ECIA. Introduced Nov. 30, 1982; referred to Committee on Education and Labor. Reported (H.Rept. 97-977) by committee and passed House, amended, Dec. 17, 1982. Passed the Senate Dec. 20, 1982, and presented to the President. Pocket vetoed by the President Jan. 14, 1983. H.Con.Res. 388 (Perkins et al.) Disapproves regulations for the Education Consolidation and Improvement Act of 1981. Introduced July 29, 1982; referred to Committee on Education and Labor. Reported by committee (H.Rept. 97-701); passed the House and the Senate Aug. 10, 1982. s. 2325 (Hatch) Vocational and Adult Education Consolidation Act of 1982. Consolidates ' and simplifies existing Federal programs_in vocational and adult education. Introduced Mar. 31, 1982; referred to Committee on Labor and Human Resources. subcommittee hearings held July 1, 1982. ?“3E££§§ _U.S. Congress. House. Committee on Education and Labor. Subcommittee on Elementary, Secondary, and Vocational Education. Consolidation of certain education programs. Hearings, 94th Congress, 2d session, on H.R. 12196. June 9 and 15, 1976. Washington, U.s. Govt. Print. Off., 1976. 135 p. ‘REPORTS AND CONGRESSIONAL DOCUMENTS Baker, Howard H., Jr. Republican Party 1980 Platform. Congressional record [daily ed.] vol. 125, July 31, 1980: Sl0383-Sl0384. Education amendments of 1978, S. 1753.‘ Debate and vote in the Senate. Congressional record [daily ed.] v. 124, Aug. 23, 1978: Sl4066-S14079. Moynihan, Daniel P. The 1980 Democratic Party Platform. Congressional record [daily ed.] vol. 125, July 31, 1980: Sl0452-$10454. Pell, Claiborne. S. 1839, Education Amendments of 1980. Congressional record [daily ed.] vol. 126, June 23, 1980: S7897-7899. U.S. Congress. Senate. Committee on Governmental Affairs. Federal Assistance Reform Act of 1980; report to accompany S. 878. Washington, U.S. Govt. Print. Off., 1980. (96th Congress, 2d session. Senate. Report no. 96-972) UOSO UOSO Congress. amendments of 1978:. Govt. 2d session. CRS-l6 IB79021 UPDATE-02/07/83 Committee on Human Resources. Education report to accompany S. 1753. Washington, Off., 1978. p. 116 (95th Congress, Report no.°95-856) Senate . Print. Senate. CHRONOLQGY OF EVENTS 01/31/83 11/19/82 10/14/82 10/01/82 09/29/82 09/24/82 09/16/82 09/14/82 09/09/82 08/10/82 03/31/82 03/02/82 02/08/82 08/13/81 07/31/81 Reagan Administration budget request for FY84 was presented to the Congress, repeating the FY83 proposal for the consolidation of vocational and adult education programs. Secretary of Education re-issued final regulations for ECIA chapters 1 and 2. H.R. 5658 signed by the President (P.L. 97-313). H.R. 5658 passed the Senate by voice vote. H.R. 7137 passed the House by voice vote. H.R. 7137 reported by Committee on Education and Labor (H.Rept. 97-869). H.R. 7137 introduced and referred to Committee on Education and Labor. H.R. 5658 passed the House by voice vote under suspension. H.R. 5658 reported as amended by Committee on Education and Labor (H.Rept. 97-798). The Congress disapproved final regulations for ECIA (H.Con.Res. 388). H.R. 5658 ordered to be reported as amended by Committee on Education and Labor. ' S. 2325 was introduced and referred to the Committee on Labor and Human Resources. H.R. 5658 introduced and referred to Committee on Education and Labor. Reagan Administration budget request for FY83 was presented to the Congress, containing preliminary proposals for two new block grants in education, one to consolidate vocational and adult education programs, the other to consolidate education of the handicapped programs. President Reagan signed H.R. 3982 as P.L. 97-35. Conference Report on H.R. 3982 agreed to by the Senate by vote of 80-14. . CRS-17 IB7902l UPDATE-02/07/83 4- Conference Report on H.R. 3982 agreed to by the House. 06/26/81 -- H.R. 3982 was passed by the House by vote of 232 to 193. 06/25/81 -- S. 1377 was passed by the Senate by vote of 80 to 15. 06/10/81 -- S. 1377 amendment, "Elementary and Secondary t Education Program Consolidation and Improvement Act," was ordered to be reported to the Senate Budget committee by the Committee on Labor and Human Resources. 05/04/81 -- S. 1103 was introduced and referred to the ‘Committee on Labor and Human Resources. ADDITIONAL REFERENCE SOURCES Advisory Commission on Intergovernment Relations. Block grants: a comparative analysis, the intergovernmental grant system: an assessment and proposed policies. Washington, U.S. Govt. Print. Off., 1977. 47 p. (LRS77-20686) Barfield, Claude E. Rethinking Federalism: Block grants and Federal, State, and local responsibilities. Washington, American Enterprise Institute for Public Policy Research, 1981. 99 p. (AEI Studies 349) Ereak, George F. Intergovernmental fiscal relations in the United States. Washington, The Brookings Institution, 1967. 273 p. (HJ275.B67) ' Broder, David S. Tax turnback to States is done, aide says. The Washington post, Oct. 23, 1981: A14. Education Policy Research Institute. Changing the Federal/State partnership in education: an analysis of S. 1780, The Reorganization and Consolidation Demonstration Project. Washington, Educational Testing Service, 1979. 109 p. ----— Fact sheet, New Federalism Initiative. Office of the Press Secretary, The White House. Jan. 27, 1982. 13 p. Halperin, Samuel. _Block grants or°categorical aids? What do we _really want -- consolidation, simplification, decentralization? Federalism at the crossroads, improving educational policymaking. Washington, Institute for Educational Leadership, 1978. Hill, Paul T. Do Federal education programs interfere with each other? Santa Monica, The Rand Corporation. September 1979. *33 p. (Rand/P 1646) -~--- Enforcement and informal pressure in the management of Federal programs in education. Santa-Monica, The Rand Corporation, August 1979. 37 p. _(Rand/N-1232-HEW) CRS-18 IB79021 UPDATE-O2/07/83 Kearney, C. Phillip and Elizabeth A. VanderPutten, eds. Grants consolidation: a new balance in federal aid to schools? Washington, Institute for Educational Leadership, 1979. 171 p. Keppel, Francis. The national interest and educational variation. In Dilemmas in school finance. Chicago, Midwest Administration Center, 1978. 114 p. (LB2826.I3D54) McDonnell, Lorraine M. and Milbrey W. McLaughlin. Program _ consolidation and the State role in ESEA Title IV. Santa Monica, The Rand Corporation, April 1980. 119 p. (Rand/ R-2531-HEW) ' 1 McDonnell, Lorraine, and John Pincus. Federal aid to education: an intergovernmental perspective. Santa Monica, The Rand Corporation, 1977. (Rand/WM-9959—HEW) National Conference of State Legislatures. A legislator's guide to oversight of Federal funds. Washington, 1980. 81 p. National Governors‘ Association. 1982 governors’ guide to block grant implementation. Washington, Feb. 1982. 131 p. 1980 Republican platform test. Congressional quarterly, v. 38, no. 29, July 19, 1980: 2034. Reagan, Michael D. The new federa1ism.. New York, Oxford University Press, 1972. 175 p. (HJ275.R3) A Reagan wants to end most Federal aid, adviser says. Manpower and vocational education weekly, Oct. 15, 1981: 3. Silverstein, Robert and Sandra McMullan. The Education Consolidation and Improvement Act of 1981. Washington, National Association of State Boards of Education, 1981. 32 p. Sundquist, James L. Making federalism work. Washington, The Brookings Institution, 1969. 293 p. (JK325.S86) Vogel, Mary. Education grant consolidation: its potential fiscal and distributive impacts. Santa Monica, The Rand Corporation, 1977. (Rand/WM-10059-HEW) U.s; General Accounting Office. An analysis of concerns in Federal education programs: duplication of services and administrative costs; Report to the Congress by the Comptroller General of the United States. [Washington] 1980. (HRD-80-18, Apr. 30, 1980). 70 p. ‘ --+--_Early observations on block grant implementation. [Washington] 1982. (GAO/GGD-82-79, Aug. 24, 1982). 57 p. ----~ Federal assistance system should be changed to permit greater involvement by State legislatures. [Washington] 1980. (GGD-81-3, Dec. 15, 1980). as p. ----- Fundamental changes are needed in Federal assistance Wilde CRS-19 IB7902l to State and local governments; Report to the Congress by the Comptroller General of the United States- [Washington]- 1975.. (GGD-75-75, Aug. 19, 1975). 91 p. ‘Lessons learned from past block grants: implications for congressional oversight. [Washington] 1982. (GAO/IPE-82-8, Sept. 23, 1982). 123 pp. A summary and comparison of the legislative provisions of the block grants created by the 1981 Omnibus Budget Reconciliation Act. [Washington] 1982. (GAO/IPE-83-2, Dec. 30, 1982). 106 p. Library of Congress.« Congressional Research Service. Analysis of S. 1103, Elementary and Secondary Education Consolidation Act of 1981 [by] Paul M. Irwin and others. Paper. May 6, 1981. 33 p. Analysis of S. 2325, Vocational and Adult Education Consolidation Act of 1982 [by] Paul M. Irwin and others. Paper. June 2, 1982. 33 p. 3 Education Consolidation and Improvement Act of 1981 [by] K. Forbis Jordan and Paul M. Irwin. Paper. Aug. 25, 1981. 14 P0 ' Provisions of State applications for chapter 2 (block grants) funds under the Education Consolidation and Improvement Act of 1981 [by] K. Forbis Jordan and Paul M. Irwin. Paper. Sept. 10, 1982. 20 p. , James A. Grants-in-aid: the analytics of design response. National tax iournal, V. 24, June 1971: 143-155. 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