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QUESTIONS SUBMITTED BY THE SUBCOMMITTEE

IMPLEMENTATION OF NEW CHILD CARE PROGRAMS

Ms. Barnhardt, you should know that we consider the job you have of implementing new child care programs to be very important.

Question. Tell the Committee where you stand on developing the necessary regulations and the focus these regulations will have on the questions of Child Development and quality of care.

Answer. The Family Support Administration is moving quickly to issue preliminary guidance to the States and eligible Indian Tribes on planning for the Child Care and Development Block Grant. We plan to issue regulations by late spring. In addition, procedural guidelines were issued on 12/9/90 to States interested in administering programs which provide child care to families at risk of becoming welfare dependent. We also plan to issue proposed regulations for the At-Risk program by late Spring.

A number of advocacy groups have met with us to express their concerns about early childhood development and quality of care issues. As a result of these meetings, we are aware of the importance of balancing regulatory requirements relating to quality, early childhood development and parental choice.

Both the preliminary guidance and the regulation will specify that 25 percent of the block grant funds must be reserved for early childhood development, before-and after-school care and quality improvement. A portion of the remaining 75 percent may also be used for quality improvement.

The statutory language regarding the use of block grant funds for quality improvements and to increase the availability of early childhood development services including before-and after-school care, is clear. Although we cannot directly discuss the content of the regulations at this time, we will assure that programs implemented by the States comply fully with all statutory requirements, including those related to quality improvements, early childhood development services, and health and safety requirements.

Question. As you know, regulations for the discretionary block grant program need to be finalized in plenty of time to meet the funding window between September 7 and September 30. Do you foresee any difficulties in obligating all the FY 1991 funds in a timely manner?

Answer. We plan to begin obligating FY 1991 Child Care and Development Block Grant funds on September 7, 1991, in accordance with the FY 1991 Appropriation. Recognizing the narrow funding window, we will ask States, Tribes and Territories to submit their plans well in advance of September 7. Grant amounts will be determined by formula, which is a relatively straightforward process, rather than through the discretionary grant review process.

As for obligating all the FY 1991 funds in a timely manner, we will allow time for negotiation with States and Tribes before the funds must be obligated. Recently, FSA successfully implemented the JOBS program, as well as the child care provisions of the Family Support Act, under similar time constraints. The process was similar to that being used for the Child Care and Development Block Grant. We, therefore, fully expect to obligate the Block Grant funds on a timely basis.

CHILD CARE COORDINATION

In addition to the Child Care and Development Block Grant, you also have responsibility for administering child care services to welfare

clientele under the JOBS program, as well as child care assistance to low-income families "at-risk" of going on welfare.

Question. Tell us what you are doing to coordinate these programs, to avoid duplication and overlap?

Answer. We require that States coordinate JOBS Child Care, Transitional Child Care and At-Risk Child Care with other child care such as Head Start, Department of Education, and the Block Grant, as well as other public and private child care resources. A State must assure such coordination in its request for funding. The purpose of this emphasis on coordination is to assist States in avoiding duplication and any inappropriate overlap.

At the Federal level, we are working to insure coordination across child care programs. Intra-agency working relationships have been established and brought into play in the development of regulations and State guidance. These as well as inter-agency relationships will continue to be put in place. Further, to improve coordination with other Federal programs, FSA has been holding meetings with staff in other agencies who run related programs such as Head Start and the Social Services Block Grant.

Question. To what extent will you be able to standardize and simplify State administration of these programs, in such areas as licensing and data collection and reporting?

Answer. While, under law, specific requirements with respect to licensure, certification, and registration must be met, each state will have the flexibility to examine how best to organize services to meet its needs.

There is no requirement for standardization of administration of these programs across States, but each State must meet the respective program requirements for child care under each funding source. FSA is working to develop regulations that will enhance, rather than complicate, State administration of these child care programs.

FSA has efforts underway regarding simplification and standardization of data collection and reporting requirements, such as requiring the same data to be reported for all title IV-A funded child care.

Question. How are you coordinating these child care programs with related services administered by the office of Human Development Services, including Head Start and the Social Services Block Grant ?

Answer. Coordination between the Job Opportunities and Basic Skills Training (JOBS) program and Head Start has been fostered through cross-training and technical assistance programs provided under contract in conjunction with the implementation of JOBS and special interagency initiatives.

Cross-training has occurred at the national, state and local levels through formal presentations on child care programs to program staff and at conferences sponsored by program agencies or professional associations.

Special initiatives are being undertaken as part of the Family Support Administration and office of Human Development Services strategic plans. This year's efforts include coordination between the JOBS and Head Start programs. Similar types of coordination activities with OHDS wili be done for the at-risk child care and the child care block grant programs. FSA has held meetings for the purpose of coordinating with staff who are working on the Social Services Block Grant, At-Risk Child Care and Head Start. addition, FSA as been strengthening Inter- and intra-agency working relationships as work on the development of the regulations continues. FSA and OHDS staff are developing an information package

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for Head Start grantees which will promote coordination at the provider level between Head Start and the JOBS program.

SLIAG

You are proposing total elimination of the remaining $1.1 billion 1992 appropriation for State Legalization Impact Assistance Grants (SLIAG). Part of the rationale for this is that, as of the end of 1990, States still had not drawn down over a billion dollars of funds granted in fiscal years 1988, 1989, and 1990. In addition, the $271 million appropriated in FY 1991 will soon be granted to the States, raising total availability to $1.3 billion.

Question. Will this unspent money be enough to pay all legitimate billings expected to be submitted by States in fiscal 1992?

Answer. We estimate that if funds were available States could draw down $2.5 billion. Funds available currently amount to $2.4 billion. Twenty eight States will have been allotted funds that amount to approximately $174 million in excess of their projected costs, because of earlier overestimates by the States of costs used in the allocation formula. As a result, the other States will not have as much money to cover costs as they should. Taking into account these under- and overestimates, 90 percent of all legitimate billings could be paid without the necessity of appropriating additional funds in FY 1992. Were funds to be reallocated, 96 percent of all legitimate billings could be paid. At present, however, HHS does not have clear authority to reallot funds already granted to States.

Your budget justification states that the number of aliens on whose behalf states can claim costs will start dropping rapidly beginning in FY 1992.

Question. How many fewer legalized aliens will still be eligible for services in FY 1992 compared to the previous four years of this program?

Answer. Estimates developed by the Department of Health and Human Services indicate that during FY8 1989 and 1990 there were approximately 2.8 million eligible aliens and that this number will remain approximately the same through FY 1991. During FY 1992, it is estimated that the number of eligible aliens will drop to 2.2 million, a decrease of 21 percent. Beginning in FY 1993, the number of eligible aliens at the end of each quarter is estimated to be as follows:

Quarter

Estimated Number of
Aliens (in thousands)

FY 1993

18t 2nd 3rd 4th

1,800 1,500

600 400

FY 1994

1st 2nd 3rd

57 3 2

LIHEAP CONTINGENCY FUND

Last year, this Subcommittee created a new, $200 million Energy Emergency Contingency Fund. It survived conference at $195 million, and the funds were recently distributed to States, since the price of home heating oil exceeded the "trigger", being more than 20 percent above the average of the previous four years.

Question. I am glad to see you are requesting a continuation of this activity, but what is your rationale for only requesting $100 million?

Answer. The lower request for a $100 million contingency fund is part of our overall lower request for LIHEAP funding in FY 1992. In addition to the $100 million in emergency funds, we are asking for a LIHEAP appropriation of $925 million in FY 1992.

The FY 1991 Energy Emergency Contingency Fund, in the amount of $195, 180,000, is in addition to the regular appropriation for FY 1991. This fund was established to assist LIHEAP grantees with increases in the costs of home heating oils resulting from the Middle East crisis. These funds were distributed on January 24, 1991, after the cost of home heating oil in December 1990 exceeded the "trigger" price by more than 20 percent above the average cost of the previous four Decembers.

We do not anticipate that states will incur as large an increase in fuel prices next winter. Since the start of Operation Desert Storm in January, heating oil prices have dropped considerably from the levels they were at the end of 1990. We expect that prices will decline further, now that the Middle East conflict is over and the worst of the 1990-1991 winter heating season has passed. In addition, production and supply of home heating fuels have been and are expected to remain high. This would help to avert big price hikes in the event that an unforeseen crisis were to happen, such as severely cold temperatures. We feel that next year's request for $100 million in emergency contingency funds is sufficient to assist our grantees should unanticipated circumstances occur, and allows the Federal government to play its appropriate role: providing benefits only in circumstancies of exceptional need.

Question. How have the States used these funds? For crisis assistance or to bolster regular program operations?

Answer. We currently do not have information from the states on how they are using their shares of the emergency contingency fund.

States and tribes may use contingency funds for any LIHEAP purpose, except that they may not transfer these funds to another block grant nor may they add the funds to the base on which transfers are calculated. The emergency contingency funds may be used for heating assistance (to assist users of any fuel type), cooling, crisis assistance, weatherization, administrative costs, and carryover, subject to normal LIHEAP restrictions.

LOW INCOME HOME ENERGY ASSISTANCE PROGRAM

In my home State of Iowa, 25,000 fewer people would be served if Congress were to accept the Administration's FY 1992 proposal to cut LIHEAP, the Low-Income Home Energy Assistance Program. Nationwide, 2 million fewer people would be served, even though current funding levels only help 28 percent of the eligible population and the portion of the heating bill now covered for eligible recipients has declined from 22 percent in 1981 to 14 percent in 1991.

We continue to hear testimony and see evidence that this program plays a vital role. But, year after year the Administration proposes to freeze, cut, or eliminate the program.

Question.

Why does the Administration oppose this program?

Answer. The President's budget requests over $1 billion for LIHEAP in FY 1992. The FY 1992 budget includes a request for $925 million for LIHEAP, plus a $100 million contingency fund to be released if heating oil prices are more than 20 percent above historical levels. The President's budget takes into account that for those households served by LIHEAP, their net home heating burden was 0.7 percent lower on average in FY 1989 than in FY 1981. At the same time, the average home energy burden of low income households declined from 8.0 percent of household income to 5.4 percent of household income, indicating a reduced need for LIHEAP in offsetting home energy costs as a percent of household income.

Tables 1 and 2 below present data on average energy prices expressed in current and constant dollars per million btu's (mmbtu). Energy prices are compared below between 1985, the year of highest federal funding of LIHEAP, and 1989, the most recent year in which annual fuel prices are available.

Table 1.

Average price by fuel type and by year, current dollars per mmbtu*

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ELECTRICITY

5.09 7.19 8.14 8.65 9.39 10.00 10.76 12.43 14.38 15.91 16.65 17.49 18.07 18.07 18.04 18.07 18.43

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*Not adjusted for inflation

**Corposite (all fuels) average is weighted based on the mount of each fuel (i.e., electricity, natural gas, and fuel oil) purchased for residential use.

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• Adjusted for inflation.

**Composite (all fuels) average is weighted based on the mount of each fuel (i.e., electricity, natural gas, and fuel oil) purchased for residential use.

When viewed in current dollars (table 1), average energy prices decreased or remained about the same since 1985, except for electricity which increased somewhat in 1989. The composite average fuel price rose only slightly from $9.80 in 1985 to $9.82 in 1989.

When viewed in constant dollars (table 2), average energy prices consistently decreased. The composite fuel prices declined from from $11.29 in 1985 to $9.35 in 1989.

The President's budget takes into account that the average home energy burden of low income households declined from 8.0 percent of household income to 5.4 percoent of household income, indicating a reduced need for LIHEAP in offsetting home energy costs as a percent of household income. Therefore, the President's budget request 18

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