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Welfare Compromise Would Halt Public-Aid Guarantees

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Washington

Republican leaders in Congress announced an agreement last week on a compromise welfare-reform bill that would halt 60 years of public-assistance guarantees for millions of needy children and their families.

Both the House and the Senate had voted to provide states with a set amount of federal money in lump-sum payments to run their own welfare programs.

But to reach agreement on a final version of the measure after several weeks of negotiations, House and Senate conferees bowed to conservatives on strategies to combat illegitimacy and acquiesced to moderates on funding levels for child care.

One of the main concessions to conservatives was a requirement that states bar additional payments to women who have more children while on welfare. States could opt out of the "family cap" mandate, however, by overriding the measure in their legislatures.

The agreement would also give states a financial bonus for lowering the fraction of births that occur out of wedlock. The provision would increase block-grant funding by 5 percent for states that reduced their "illegitimacy ratio" by 1 percent. States that lowered their illegitimacy ratio by 2 percent would earn a 10 percent bonus.

Moderate Republicans did win one battle, however, on the volatile issue of teenage pregnancy. A House proposal to bar cash welfare assistance to unwed teenage mothers was left as an option for states. Children's advocates have criticized such measures as punitive to children and ineffective in reducing adolescent pregnancy.

The conference committee eliminated another big concern of moderate lawmakers when it approved a relatively generous funding formula for child-care programs. The agreement would establish a child-care block grant and would authorize $17 billion in funding over seven years.

That is $200 million a year less than the Senate bill would have authorized for similar block grants, but far exceeds the $10 billion over five years that the House bill would have authorized for several state-run child-care programs.

Clinton Vows a Veto

The welfare plan is included in a massive budget-reconciliation bill that would make many changes in entitlement programs to help balance the federal budget over seven years. Both the House and Senate were poised to begin debate on the bill late last week.

One section of the bill would slash $4.9 billion in student-loan expenses by capping the Department of Education's direct-lending program for college students at 10 percent of total loan volume and increasing costs charged to private lenders.

The Clinton administration wants to expand direct lending, saying it would save money in the long run. About 35 percent of all student loans are now made through direct lending, and the cap would force some 1,000 colleges out of the program. (See Education Week, Nov. 15, 1995.)

The welfare-reform plan--which its authors say would save $16.3 billion a year--is included in the reconciliation package to help Republicans meet their budget targets. But Senate Democratic leaders said they would try to jettison some provisions they oppose--such as the illegitimacy bonuses and the "family cap"--under a Senate rule that bars inclusion of measures that do not reduce spending in a reconciliation bill.

In any case, President Clinton has promised to veto the bill, which he says would cut too deeply into "safety net" programs.

If the president carries out that threat, or major provisions are removed due to the Senate rules, Republican leaders have said they intend to bring a free-standing welfare-reform measure to a vote.

A controversial effort to turn federal school-meals programs into a block grant could also be included in that measure, or a later version of the reconciliation bill, although it was not included in last week's agreement. (See story, page 13.)

In seeking to enact welfare reforms, GOP leaders say they are relying on a promise that the president has made repeatedly, espe- cially during his 1992 campaign, "to end welfare as we know it."

But the president has said he would veto any welfare-reform bill that would increase the number of children living below the federal poverty line. A recent report by the White House's Office of Management and Budget--which Republicans dispute--concluded that the Senate's welfare bill, which is more generous than the compromise version, would push an additional 1.2 million children into poverty.

SSI and Medicaid

Another provision the Clinton administration is expected to oppose would change the eligibility requirements for the Supplemental Security Income program, which provides cash benefits to disabled children and adults.

The agreement would create a new, two-tiered system for determining eligibility. Children with the most severe disabilities would receive 100 percent of the cash benefits they are eligible for based on their family incomes, while those with moderate disabilities would receive 75 percent of those benefits. Currently, benefits are based solely on income.

The plan would also require applicants to meet specific definitions of disability, eliminating an alternative, more subjective assessment process that critics have argued encourages fraud and abuse. Disability-rights advocates say the change would unfairly remove 200,000 poor disabled children from the rolls.

The plan would also replace with a block grant another program that serves children with disabilities: Medicaid, the federal health-care program for the poor. The agreement would remove the guarantee of coverage, limit Medicaid spending, and turn the funds over to the states with relatively few strings attached. A Senate provision guaranteeing coverage for pregnant women and children under 12 was included.

Worried that the proposed Medicaid cuts could hurt schools, representatives from the American Association of School Administrators had secured the support of Sen. Nancy Landon Kassebaum, R-Kan., for a provision that would protect schools' ability to apply for Medicaid funding to pay for health services for poor students--from school nurses to hospital-like care for the severely disabled. (See Education Week, Oct. 25, 1995.)

Aasa officials said late last week that they were unsure whether the provision was included in the reconciliation bill; if not, they hoped to revive it at a later stage of the budget negotiations.

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