The Administration has proposed amending the LIHEAP statute to permit States under certain circumstances to fully draw down LIHEAP allocations prior to March 15, 1990. CMB has interpreted this section to mean that 10% of a State's grant shall be reserved until after March 15; however, in the past CMB has waived this rule. In fact, in mid-January Family Support Administration officials were advising that States which had exhausted their initial LIHEAP allocations should request a waiver of the 90% rule, indicating that all requested waivers had been granted.

Question. On its face, the Administration's proposal recognizes a crisis situation. Why is a one time legislative change necessary when the statute places requirements on the States, not the Department and when waivers have been granted administratively?

Answer. On Friday, February 2, HHS sent a

reapportionment request to CMB asking to make available for obligation funds held in reserve for award during the third quarter of fiscal year 1990. Subsequently, on February 5 the Administration suggested legislative modifications to the current statute which requires States to defer from obligations until march 15 of each year a reserve of funds to meet crisis. As of February 13, the OMB has apportioned $6 million of additional funds for 3 States: Maine, New Hampshire, and Iowa. These States had unusual conditions including excess cold weather together with a surge in prices for fuels used heavily in that state, and had fully dedicated the State's LIHEAP funds for energy assistance. At that time, not other Governors of States meeting these criteria had requested accelerated funding.

Question. Was the Department consulted on this legislation and did you participate in the development of the proposal?

Answer. The Department was not consulted prior to the submission of the Administration's legislative proposal.

Question. How many and which States will be assisted by the proposed statutory change?

Answer. We do not have this information at this time.

Question. Will this legislation solve the problem or is an emergency supplemental what this program really needs?

Answer. The legislation is intended to assist those States which experienced unusual circumstances resulting from the cold weather in Northern States this past December. We do not believe a supplemental is needed. Warm weather in January made up for cold weather in December. The National weather service predicts an average October to April heating season.

Less than a quarter of LIHEAP-eligible households were affected by temporary increases in fuel oil and propane prices.

MEDICARE SAVINGS

The FY 1991 budget achieves a $1.5 billion savings in Medicare outlays by accelerating the payment of Medicare claims through a regulatory process, thereby shifting payments which would have occurred in FY 91 to FY 90. This is contrary to policy initially established by the 1987 Budget Reconciliation Act which prohibited the payment of Medicare claims for 14 days after receipt of the claim and violates CMB's won policy guidelines for payment of claims. The 14-day holding period was established to provide financial accountability in the program.

OMB Director Darman has pointed out that the statutory basis for administratively accelerating these payment occurred as a result of a three-month gap in legislative prohibitions against administratively implementing Medicare cost savings in excess of $50 million. I would venture that the speed at which HHS implemented this regulatory change is unprecedented in the history of the agency.

Question. Where did this proposal originate? Did it come from HHS or was it developed by CMB?

Answer. This proposal originated during the formulation of the President's Budget. Both the Department and CMB had a hand in developing the proposal.

Question. How would the Medicare budget be affected if Congress should disapprove this shift in funds? Would the $1.5 billion loss result in an added burden on the beneficiaries, providers and carriers, who are already experiencing the results of overall cutbacks as a result of budgetary constraints?

Answer. The Medicare budget would have $1.4 billion more in outlays in FY 1991 that are now projected if this acceleration of payments is disapproved. Likewise, FY 1990 will have $1.4 billion less in outlays. Currently, Medicare contractors are maintaining a 14-day floor. Disapproval would have a slight adverse effect on providers, because it would slow the receipt of their payments in the interim period. Beneficiaries may be slightly affected by slower payments.

QUESTIONS SUBMITTED BY SENATOR THAD COCHRAN JOB CREATION DEMONSTRATION

Question. Section 505 of the 1988 Family Security Act authorized a three year job creation demonstration which will

use community development corporations to promote job opportunities for those on public assistance. The Fiscal Year 1990 budget year appropriation bill provided some $10 million for Family Support Administration research and evaluations. the conference report accompanying the bill identified the job creation demonstration as one of the activities to be funded. A number of members of the Senate, including myself, have written to the Secretary urging that this demonstration be fully implemented.

Please provide the Committee with a complete status

report on the demonstration including its placement within FSA, the amount of funds that will be allocated to it, the number of grants to be made and the schedule for implementation.

Answer. Section 505 demonstrations will be administered by the Office of Community Services (OCS) in the Family Support Administration (FSA) beginning in FY 1990. A total of $3.5 million will be available in FY 1990 for these projects. The number of demonstrations funded will be based on the number and quality of the applications submitted. A program announcement is currently being developed, and funds will be awarded by the fourth quarter of this fiscal year.

COMMUNITY ECONOMIC DEVELOPMENT PROGRAM

Question. It is my understanding that the Community Economic Development program funded out of the CSBG

discretionary fund is the only Federal program which targets economic development efforts by community development corporations working in poor communities. What is the rationale for terminating this program in FY 1991?

Answer. There are other Federal programs which provide similar services to those in the Community Economic Development program, e.g., the Minority Business Development Agency in the Department of Commerce and Small Business Administration loan programs.

QUESTIONS SUBMITTED BY SENATOR BOB GRAHAM

STATE LEGALIZATION IMPACT ASSISTANCE

Question. Does the Administration's FY 91 SLIAG proposal eliminate the FY 92 SLIAG appropriation provided for in Public Law 101-166?

Answer. Yes. The Department's FY 1991 SLIAG budget proposes to eliminate the funds Congress moved from FY 1990 to FY 1992.

Question. Does the Administration's language eliminate the "carry forward" authority of unused FY 1991 funds as provided for in the authorizing statute, the Immigration Reform and Control Act of 1989 (Sec. 204 (b) (4))?

Answer. No. The proposed language does not affect any funds already granted to States. We do not eliminate the "carry forward" authority of unused FY 1991 funds in our proposed appropriation language.

Question. Does the Administration's language eliminate the return of any unused FY 1991 Federal offset funds to the States as provided for in the authorizing statute (Sec. 204 (a) (2) (D))?

Answer. The Department's FY 1991 budget appropriates $302,597 for the State Legalization Impact Assistance Grants Program, regardless of Federal offset estimates.

Question. It appears that the Administration's primary justification for reducing the FY 1991 appropriation and eliminating the FY 1992 appropriation is the low draw down rate by the States and low costs. How has the Administration taken into consideration that SLIAG was designed to be a

reimbursement program and that there is a considerable lag between the time costs are incurred by local governments and the time they are billed to the Federal Government?

Answer.

The combination of requested funding, low costs, and carryover balances will fund the services needed to assist legalized aliens as they assimilate into society. Congress clearly stated in IRCA that these funds are "to offset some of the costs incurred by State and local governments" in providing certain public assistance, public health assistance and educational services. By the end of 1991, most of these aliens will have been living and working in the United States for ten years.

Question. In the Administration's justifications to the Appropriations Committee, the following statement is made: "Data available to us so far indicates that newly legalized of the general population." This statement implies that the Administration does not yet have sufficient data on SLIAG costs. Does this statement indicate that additional data may become available that will demonstrate additional costs not anticipated in the Administration's request?

Answer. As in all program areas, the budgeting process is based on estimates of projected costs. Four years since Congress' original estimate of $4 billion, our projections for this program are more accurate. Based on actual costs submitted by the States, State estimates, draw down rates and an additional $1 billion States can expect to have as a result of much lower Medicaid costs than originally anticipated, we believe there are enough Federal funds to offset the costs experienced by States in serving the newly legalized aliens.

Question. Does the Administration have a State estimate of services liabilities accrued, but not yet billed and paid?

Answer. The Department has received State plans, estimates, and some actual costs.

Question. What is the factual basis for the

Administration's statement that "Aliens legalized under the Immigration Reform and Control Act of 1986 (IRCA) have proven to be much more resourceful and self-sufficient than Congress and the Executive Branch had expected?" Please provide a detailed state by state analysis.

Answer. The States of California and Maryland, as well as the INS conducted surveys of aliens applying for legal status which indicated that this population has a high rate of employment and are not accessing public assistance programs. Aliens were not eligible for legalization if they were likely to become "public charges." Thus, legalized aliens are taxpayers, contributing directly and indirectly to State and local revenues.

date?

Question. What is the "draw down rate" for each State to

Answer. The information follows: