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President Reportedly Will Seek Block Grants For Handicapped and

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Washington--On the eve of the President's formal release of the federal budget for 1983, Administration officials disclosed that they were hedging their bets on the future of the Education Department by preparing alternative budget proposals--for the department as it is and for the foundation they would like to have.

The Administration's budget, the sources said, would reduce federal spending for education by one-third--from $14.9 billion in the current school year to $9.95 billion in fiscal year 1983.

If the Administration succeeds in its at-tempt to reduce the department to a "Foundation for Education Assistance," including the transfer of 31 programs to other agencies and the elimination of 23 other programs, the foundation's budget would be reduced to $8.8 billion, the sources said.

In addition, the plan would create two new state block-grants packages, one for vocational and adult education and another for education of the handicapped. And the proposal would include legislative changes for bilingual education, according to the sources, who asked not to be identified. (See related story on this page.)

The President's overall budget proposal, which was scheduled to be made public this week, was said by sources to include three separate listings for certain education programs.

'Flexible' Strategy

The "flexible" budget strategy--as it is known--was designed by officials of the Office of Management and Budget (omb) to enable the Administration to achieve its desired budget reductions, even if the department is not reduced to a foundation or if the Congress blocks the proposed program transfers, the sources said.

The $81-million Indian-education program, for example, was selected last fall by Secretary of Education Terrel H. Bell as a candidate for transfer to the Bureau of Indian Affairs (bia) next year. That program is listed not only in the bia budget, but in the department's budget and in the foundation's budget as well, sources said. In all of the listings, In-dian education is slated for a 37-percent budget cut, sources said.

Sources said the proposed education budget appears to represent a compromise between the $13-billion funding level requested by Secretary Bell last September and the $8.4-billion planning ceiling set by David A. Stockman, the omb director, last November.

If the budget office had won the cuts it originally sought, education spending would have been reduced by 44 percent in two years.

The current plan includes large reductions in elementary- and secondary-education programs, the sources said. Those included:

A 37-percent cut in the $3.104-billion Title I program, leaving $1.942 billion in 1983;

A 19-percent cut in the $535-million block-grant package to the states, leaving $433 million;

A 62-percent cut in the $757-million impact-aid program, leaving $284 million;

A 41-percent cut from the $161-million bilingual-education program, leaving $94.5 million;

A 17-percent cut in the $1.025-billion education for the handicapped program, leaving $845 million;

A 36-percent cut in the $782-million vocational- and adult-education programs, leaving $500 million;

A 37-percent cut in the $81-million Indian education program, leaving $51 million; and

An 18-percent cut in the National Institute of Education, leaving $54 million.

Transferred Programs

Those programs to be transferred would include impact aid, rehabilitation services, Indian education, and international education.

In addition, the Administration's budget provides no funds for 23 current programs, including public and research libraries, museum services, and cooperative education.

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