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New Budget-Office Rules for '91 Make the Numbers Game 'Intriguing'

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Washington--The ink on the 1990 federal budget is barely dry, but federal officials are already at work on the Bush Administration's 1991 request, which will have to meet an even stricter deficit-reduction target.

Administration officials will also have to cope with a new internal process, devised by Richard G. Darman, director of the Office of Management and Budget, that apparently is designed to strengthen the o.m.b.'s bargaining position and reduce the number of appeals agencies make to the White House.

Education advocates and the Education Department's chief budget official, Charles E.M. Kolb, agreed last week that it was impossible to predict how the department would fare under the new rules.

But Mr. Kolb, deputy undersecretary for planning, budget, and evaluation, was neither concerned nor surprised about Mr. Darman's system.

"I came from o.m.b., remember," he said. "[The new process is] novel. I find it intriguing."

As in previous years, the o.m.b. has given each agency a funding level for each program within its purview, as well as an aggregate "mark." But it has also segregated programs into an "A" pool and a "B" pool.

The programs in the "B" pool--which Mr. Kolb said is rumored to include the entire budgets of some small agencies--must vie for funds in a new competition. Agency heads will make their cases to President Bush, who will personally decide how to divvy up available funds, which will total less than the requests.

If agency officials are not happy with the o.m.b.'s marks for some of their "A" programs, they can negotiate with the budget agency, as in the past; they also have the option of adding them to the "B" pool and making a pitch to Mr. Bush for higher funding. In the past, all o.m.b. decisions could be appealed to the White House individually.

Entering the competition means taking a risk, as the program in question could end up with less than the o.m.b. had allotted. Therefore, officials say, this system not only forces Mr. Bush to choose between programs but also discourages agencies from making appeals for run-of-the-mill projects that would be pitted against high-priority initiatives.

Mr. Kolb said he didn't know how much money was in the "B" pool, and noted that the pot would grow when agencies added programs to it.

"You can bring your own chips to the table, so to speak," he said.

Mr. Kolb declined to say how many chips Secretary of Education Lauro F. Cavazos would be anteing up, or what programs they represented.

"I can't infer whether [education] will do better or worse" under the process, Mr. Kolb said.

"We're hopeful that given the priority the President has placed on education, the department will fare pretty well," he said.

Susan Frost, executive director of the Committee for Education Funding, added, "It depends on the President's feelings and priorities, since he's making the decision, and on how well the Secretary makes his case."

"The question is, is education going to fare better than housing or aids? Who knows?" she said.

Education advocates hope the public statements made by the President on the importance of education will translate into dollars. They note that the statement issued by Mr. Bush and the governors at their education summit in September advocated more federal support for programs that aid disadvantaged children and for education research.

But budget limits will be tighter than ever next year. To comply with the Gramm-Rudman-Hollings deficit-reduction law, the 1991 budget must produce a deficit of no more than $64 billion.

The 1990 deficit target was $110 billion, and was met only with liberal use of accounting gimmicks and one-time savings--and by across-the-board cuts in the amounts set in the appropriations process for discretionary programs.

Citing the tumultuous events in Eastern Europe as evidence of a lessening Communist threat, Administration officials have said they will propose significant cuts in the defense budget.

Some observers say those cuts, plus a revival of domestic-spending cuts proposed by the Reagan Administration and repeatedly rejected by the Congress, may be enough to meet the target and put the ball in the legislative branch's court.

Some education advocates fear Mr. Bush's willingness to accept defense cuts may mean he will accept a full-scale "sequester" next year under the deficit-reduction law rather than negotiate a budget agreement with the Congress. In the past, the threat of defense cuts brought the Administration to the bargaining table when across-the-board cuts loomed.

Others are concerned that the Congress will again use a partial sequester to help meet the target, as happened for the first time this year--when favorable funding levels won in the appropriations process were reduced in a last-minute budget agreement.

"I think that once they do this, it's a given unless there is a terrific push to stop it," Ms. Frost said. "It's easy for them to vote on at 4 o'clock in the morning."

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