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Budget Talks To Resume as Fiscal Troubles Mount

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WASHINGTON--Congressional leaders and White House officials plan to reconvene discussions this week in search of a budget package that can sell on Capitol Hill and avert ominous across-the-board cuts mandated by the Gramm-Rudman-Hollings deficit-reduction law.

During a monthlong recess, that challenge was further complicated by the threat of an expensive war in the Middle East, increased fear of an economic recession, and more pessimistic deficit predictions from Budget Director Richard G.Darman.

Mr. Darman now estimates that the budget deficit in the fiscal year that begins on Oct. 1 will reach $169 billion, not including the escalating cost of the savings-and-loan bailout.

Negotiators have been meeting for months trying to hit the Gramm-Rudman deficit target of $64 billion, and they have until Oct. 1 to reach an agreement before $105 billion in automatic spending cuts are imposed on Oct. 15. The leaders may revise the deficit target if they cannot agree on a significant amount of cuts.

One major sticking point is what type of tax increase would be included in the package.

Leaks of a Republican plan that reportedly included a proposal tot deductibility of state and local taxes prompted cries of outrage from some governors--as well as from education advocates--who said the move would cause residents to urge a reduction in state taxes, which generate large amounts of revenue used to pay for education.

$8.1 Billion at Stake

At stake in the budget talks is $8.1 billion for education programs. For example, under a full sequester, student financial-aid, Chapter 1 compensatory-education, special-education, and impact-aid programs would lose $2.1 billion, $1.8 billion, $885 million, and $247 million, respectively.

In preparation for the cuts, the Education Department has imposed a hiring freeze and told its workers that they may be furloughed for 22 days.

However, many observers say it is unlikely that the Congress or the President would allow such cuts in domestic programs in an election year. Half the sequester would come from defense programs, half from domestic programs.

"Politically, it's unpalatable to cut $100 billion out of the budget," one Congressional aide said.

"Every night the news would put on the welfare moms and their babies, the air-traffic controllers out of work," the aide noted.

Whatever the state of the budget talks, the Congress has the option of implementing a short-term funding proposal if the October deadline is not met and returning for a lame-duck session.

A declaration of war or an official determination that the nation is heading for a recession could also stop the cuts.

And the possibility still remains that budget negotiators will be able to reach a compromise.

Such an agreement could avoid a sequester, but education advocates fear it would also gut any increase in education funding voted by the Congress.

On July 19, the House approved a $170.7-billion speat schools serving the expatriate community in the two countries would be operating as usual.

In other Middle Eastern countries, however, educators at American and international schools were busy preparing for a Continued on Page 25

American Schools in the Middle East

Seek a 'Normal' Year Despite Turmoil

Continued from Page 1


new school year. Such schools in Saudi Arabia, Jordan, Bahrain, Israel, and other countries touched by the Gulf crisis reported last week that they were open or about to open.

But many of those schools were expecting drastically lower enrollments as the dependents of American diplomats, business officials, and other U.S. citizens elected to stay out of the unstable region for the time being.

"The general rule is that companies are sending home their dependents," said William P. Davison, president of International Schools Services of Princeton, N.J. The nonprofit organization operates some American schools overseas and helps with faculty recruitment and other services for many others.

2 Schools in Kuwait

At the time of the invasion, two major schools, both near Kuwait City, were serving Americans and other foreign nationals in Kuwait.

The American School of Kuwait enrolled some 295 American students out of a total of 1,087 students last year. Its faculty included an estimated 56 Americans.

Mr. Jahr, a native of Wisconsin, has worked at overseas American schools for 18 years, most recently in Manila. Before his aborted trip to Kuwait last month to assume the superintendency of the American School, he had previously spent only five days at the school.

Most of the school's teachers, as well as many American families with children enrolled there, were back in the United States for August vacations when the Iraqi forces moved into the emirate, Mr. Jahr said in an interview.

The principal of the school's elementary division, who lives in Kuwait year-round, managed to escape to Saudi Arabia. (See related story below.)

But 21 people associated with the school were still believed to be in Kuwait last week, Mr. Jahr said.

A clause in the staff members' contracts allows employees to be paid for up to three months during this kind of situation, Mr. Jahr said from Florida, where he is staying with relatives.

"But we have encouraged our staff to seek employment elsewhere for this year," he said. "We just don't see the school opening for this semester at least."

The other main institution serving U.S. citizens in Kuwait, the Universal American School, also had a predominantly American teaching staff, although American students made up only about 10 percent of its enrollment.

"Our students come from 50 different nationalities," Walid Abushakra, the school's superintendent, said from his home in Michigan. He said no American staff members from his institution were believed to be in Kuwait during the attack.

While he plans to release his teachers from their contracts, Mr. Abushakara said he would try to establish a school in Cairo, where many families of his native Middle Eastern students have fled.

The U.S. State Department has said that approximately 2,500 Americans were in Kuwait and 500 in Iraq at the time of the invasion. Had it not been August, many more American citizens would have been there, especially in Kuwait, officials have said.

In addition to diplomats and officials of U.S. corporations, many expatriates were oil-industry workers attracted by high pay in the Kuwaiti oilfields. Others drawn to the region included medical professionals, engineers, technical experts for military equipment, and bankers.

In Iraq, because of fewer ties with Western business, there were apparently far fewer dependent children of American families than in Kuwait. At the Baghdad International School, only 33 of 698 students enrolled last year were American. The staff of 68 included 13 Americans, according to International Schools Services. Officials of the Baghdad school could not be located.

500 Overseas Schools

Most American schools overseas were founded in the late 1950's and 1960's to provide an American curm to the children of U.S. diplomats and businessmen. Although some were started by church organizations and American companies, most are independent, nonprofit institutions that resemble private schools in this country.

One estimate, from ISS, is that nearly 500 American or American-curriculum schools are operating overseas, serving some 120,000 American students abroad.

Some 176 schools in 106 countries worldwide receive assistance from the State Department, according to the department's office of overseas schools. The aid totals about $7 million per year, and accounts for only a small portion of the budgets of most schools, which derive most of their funding from tuition. The office of overseas schools also monitors American schools abroad that do not receive government assistance.

State Department officials last week would not discuss American schools in the Middle East.

One significant trend at overseas American schools, those in the field say, is that many no longer cater mainly to American students. Many have become more international in their makeup and curriculum, with some serving 50 nationalities or more.

But many of the schools still have a largely American teaching staff, made up of those recruited in the United States and perhaps a few spouses of American diplomats or business officials hired overseas.

Concentration in Saudi Arabia

By far, the Middle Eastern country with the largest number of American schools is Saudi Arabia, where American business still has a major presence, in oil, construction, and military contracting.

More than 3,000 American students were enrolled in a variety of American schools in the country last year. But as Iraq gathered its troops at the Kuwait-Saudi border last month, many U.S. companies pulled out their employees' dependents.

The giant oil firm Saudi Aramco evacuacted 1,400 women and chilContinued on Following Page

The American School of Kuwait last year had some 295 students and 56 staff members from America.

Continued from Preceding Page

dren last month, and it estimates that another 1,400 were already out of the kingdom on vacation and have not returned, according to William Tracy, a spokesman for Aramco Services Company in Houston, the oil company's U.S. subsidiary.

Saudi Aramco, formerly called the Arabian American Oil Company, was once controlled by four top U.S. oil companies, but is now owned by the Saudi government. However, the company still employs approximately 2,700 U.S. and Canadian workers, Mr. Tracy said.

"Probably half of our women and children are out," he said, adding that many have elected to stay.

Company officials decided that its schools would open this fall as scheduled. The schools are operated free of charge for Aramco employees in three cities--Dhahran, Abqaiq, and Ras Tanura.

The schools' total enrollment last year was close to 2,000, with nearly 1,400 of those American. The schools operate through the 9th grade, after which most employees send their children to boarding schools in Europe or the United States.

"We're projecting that only 20 to 30 percent of [students] will be present" when the new school year begins on Sept. 8, D. Owen Harrison, superintendent of the Aramco schools, said from Dhahran, where the schools are headquartered and where many of the U.S. military forces being deployed to the region are entering.

"Things are very quiet, but we see the military presence," Mr. Harrison said.

Daryle Russell, superintendent of the Saudi Arabian International School in Riyadh, the capital, estimates that enrollment will be down 30 percent to 40 percent when the school opens on Sept. 8. The U.S. ambassador, he said, plans to speak to teachers before the start of school to help calm fears.

Most schools in the region reported that virtually all American teachers were reporting for duty.

Barbara Curtiss, principal of the Tibuk International School at a Saudi air base in Tibuk, was at home in Connecticut watching alarming television-news reports about the crisis just as she and her husband were preparing to return to Saudi Arabia for the new school year.

"We had our own war to convince our own families and friends that it was safe to return," she said from Saudi Arabia. "The only danger we feel here is driving on the roads."

'The Mood Is Positive'

Some school officials in Saudi Arabia said there were signs that family members and schoolchildren were starting to return to the country because they saw that schools were opening and felt that the threat of an imminent attack by Iraq had subsided.

"You don't see a lot of women and children here right now, but the mood is positive," said Robert J. Klapproth, finance director of the Saudi Arabian International School-Dhahran District, which is not tied to the Riyadh school. The Dhahran Academy, as it is also known, operates 10 schools throughout the country, including some for private companies such as McDonnell-Douglas.

Mr. Klapproth added that an underlying anxiety about a military attack was still present.

"We do not have airtight or bombproof facilities," he said. "We do not have gas masks for the kids. If we were attacked during school, we could not evacuate our children to an airport and get them out of the country in any reasonable amount of time. It would take three or four days."

American schools in neighboring countries also reported that they were trying to open school as usual. At the Bahrain School, in Manama, Bahrain, school is scheduled to open on time on Sept. 9.

"The situation is very calm," said Gilbert Fernandes, the principal there. The school, serving a small U.S. Navy support unit, is the only one operated for U.S. Department of Defense dependents in the Persian Gulf region. Only about 20 percent of the school's enrollment is American, Mr. Fernandes said.

The only other Department of Defense schools near the Middle East are at three U.S. air bases in Turkey, which shares a border with Iraq. The schools there opened Aug. 27, a Defense Department spokesman said.

Many American dependents have left two Middle Eastern countries where public sentiment favors Iraq--Jordan and Yemen.

The American Community School in Amman, Jordan, opened last month with 350 students. The enrollment is usually about 55 percentan, but that percentage is down, officials said, because of tensions in the region and a State Department advisory that urges Americans to consider leaving the country.

"Some State Department families have left," said Robbie Bonneville, the school's superintendent. "With the travel advisory on, it is an open-ended thing."

"But it has been a very normal opening," he said. "The math classes are talking about algebra, and the history classes are talking about history. We're hoping for a very normal year. But that can fall apart at anytime."

In Yemen, where pro-Iraq citizens have protested at the U.S. Embassy and demanded the withdrawal of American forces from Saudi Arabia, the State Department had pulled out all dependents and nonessential embassy personnel.

That is causing financial strain for the Sanaa International School in Sanaa.

"We have contracted with staff, bought them plane tickets, and bought materials," said James E. Gilson, the school's director. "We are committed for the budget. If students withdraw, it can cause a financial crisis."

While the school budgeted for an enrollment of 235, now only 160 to 170 are expected when school opens this week, he said. Instead of the usual 50 American students, there will probably be no more than 15 or 16.

The school has delayed construction of a new auditorium and is cutting other expenses, he said.

Meanwhile, in Israel, where local citizens are scrambling to get gear to protect against what some there fear will be an attack by Iraq using chemical weapons, classes at the Walworth Barbour American International School were to begin last week, said Forrest A. Broman, the superintendent.

The school planned the usual drills in its bomb shelter, but no gas masks had been distributed, said Mr. Broman, a lawyer and former New York City public official who moved in Israel 17 years ago.

"Saddam Hussein has threatened to use those weapons on Israel before," he said. "But there is a strong confidence in the country's defense."

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