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The federal budget office has drafted new rules to restrict lobbying and other political activities by nonprofit organizations that receive federal funds.

The regulations, a summary of which has been circulated among affected organizations, are scheduled to be published in the Federal Register later this summer. The rules are a less stringent version of a proposal drafted by the federal budget office in January, which prompted widespread criticism from nonprofit groups, trade associations, and members of Congress.

The revised version forbids the use of federal funds for expenses incurred in "lobbying and related activities," but it does not forbid such activities outright, as the earlier version did.

The budget office has also published a final version of rules, which take effect on Oct. 1, that introduce a new procedure for streamlining communication between the federal and state governments.

Under the new guidelines, states may designate one central office to serve as a conduit for state responses to federal programs and laws. The regulations appear in the June 24 Federal Register.

Prayer Amendment Passage This Year Said Unlikely

The prospects for passage of a school-prayer amendment this year are said to be unlikely, as disagreements over the wording of the measure prompted the Senate Judiciary Committee on July 14 to pass two different versions of the proposed amendment.

The committee approved a so-called "silent prayer" version, drafted by Senator Orrin G. Hatch, Republican of Utah, that would permit "silent prayer or meditation in public schools" and "equal access to the use of public-school facilities by all voluntary student groups."

But it also passed the Reagan Administration's version of the bill, which states simply that "individual or group prayer in public schools" may not be prohibited.

The Senator, who chairs the Subcommittee on the Constitution, and the Administration had been at odds since May over the proper wording of the amendment. To appease the Senator and others, the Administration added to its version a sentence that forbids "any state [to] compose the words of any prayer to be said in public schools."

Even with that addition, the Administration's proposal "leads to a lot more dissonance and irritation," Senator Hatch said. He added that the disagreement has left the outlook for the measure's passage "clouded."

Chapter 1 Formula To Remain the Same

The Senate earlier this month defeated a move by a group of Southern senators to change the way the Education Department distributes $2.7 billion in Chapter 1 aid for disadvantaged children.

By a 60-to-35 vote, the chamber defeated a proposal sponsored by Senators Dale Bumpers, Democrat of Arkansas, and Mack Mattingly, Republican of Georgia, that would have added state per-capita income to the formula for determining Chapter 1 aid to states.

Currently, Chapter 1 funds are distributed to states on the basis of census counts of children living under the poverty line.

Many Southern states that saw a decrease in the number of poor children during the past 10 years expected their Chapter 1 grants to shrink dramatically because the Education Department this year began distributing funds on the basis of 1980 rather than 1970 census data.

The proposed formula change would have shifted additional federal dollars to most Southern states, which have lower per-capita incomes in general, at the expense of many Northern states, where per-capita income is higher.

The Senate, however, did make a concession to the losers in the formula fight. By a 63-to-34 vote, it agreed to spend up to $40 million more for the program this year to ensure that all states receive at least 95 percent of the amount that they received under the program last year.

The Chapter 1 proposals were offered as amendments to a government-wide supplemental appropriations bill for the current fiscal year. That measure is now under consideration by a House-Senate conference committee.

Justice Receives Filing Extension In Grove City Case

The Justice Department earlier this month received a one-month extension from the U.S. Supreme Court to file its brief in Grove City College v. Bell--a lawsuit in which the Justices are widely expected to determine the degree to which the federal government can enforce the federal law barring sex discrimination in education.

The government originally was scheduled to file its brief in the case on July 8, but now has until Aug. 8 to do so, according to a spokesman for William Bradford Reynolds, the assistant attorney general for civil rights.

The case centers on the right of the Education Department to require the small, private college to comply with Title IX of the Education Amendments of 1972 in all its programs and activities because some of its students receive federal tuition grants.

The college contends that it is not required to comply with the law because it does not receive federal aid directly.

Civil-Rights Panel Critical of Funding Proposed by Reagan

The U.S. Commission on Civil Rights chastised the Reagan Administration earlier this month for proposing a 13-percent cut in federal spending on education next year.

"Given the current state of American education ..., this is an inopportune time for the Federal government to reduce federal aid," the commission said in releasing a report on the proposed cuts. "Although all of the nation's educational problems cannot be solved with increased federal expenditures alone, many of the educational programs slated for cuts are those that have met with success in improving the quality of education for the neglected and disadvantaged--groups whose education is in need of greater improvement than that of the nation as a whole."

Last February, the Administration presented the Congress with a $13.2-billion budget request for Education Department activities in the fiscal year 1984. This year, the Congress set federal education spending at just over $15 billion.

Secretary of Education Terrel H. Bell was quick to defend the Administration position, stating that the Commission's allegations were "disappointing."

"[The panel's report] distorts and undervalues what this Administration is doing for education," Mr. Bell said. "The President has sought to awaken all of us to the responsibilities of federal, state, and local authorities, and he has, by consistently calling attention to the importance of education, risen above the narrow focus of some of his critics."

The President and a majority of the fact-finding panel's members have been at loggerheads over most civil-rights issues since he took office in 1981.

In late May, Mr. Reagan announced his intention to replace three members of the six-member commission with people whose views more closely matched his own. Their nominations are now pending before the Senate Judiciary Committee.

If the full Senate approves the nominations, Mr. Reagan will have appointed five of the panel's six members.

Vol. 02, Issue 39

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