Impact of Budget Plan on Children, Students, and Schools

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WASHINGTON--While most of the debate in Congress over President Clinton's deficit-reduction proposal focused on the plan's controversial tax increases and spending cuts, the omnibus package also contained a number of provisions affecting children, students, and schools.

The legislation, HR 2264, was signed by the President last month after squeaking through both the House and Senate by the narrowest possible margins. The five-year, $496 billion measure achieves roughly half its deficit reductions through a combination of increases in the gasoline tax and income taxes on the wealthy, with the remainder coming from spending cuts in health and discretionary-spending programs.

Following is a summary of provisions of special interest to educators:

Child Immunization

  • Creates $585 million program to buy vaccines for poor and uninsured children, beginning in 1995, with free shots available at federally funded clinics for children lacking proper insurance.
  • Health and Human Services Department to buy vaccines from drug manufacturers at the 1993 government price, adjusted for inflation.
  • Dropped from final version of bill: $250 million for outreach programs and to extend clinic hours; bonuses for states that boost immunization rates; and national immunization-tracking program.

Child Welfare And Family Preservation

  • Provides $1 billion in new child-welfare funds to states over the next five years.
  • Includes $930 million for a new, capped entitlement to support programs to preserve or reunify families in crisis and to avert placing children in foster care.
  • Authorizes grants to state courts to assess their effectiveness in carrying out child-welfare laws and to help them overcome barriers.
  • Improves existing foster-care and adoption services in such areas as training, data collection, and program evaluation.

Earned-Income Tax Credit

  • Earmarks $21 billion over five years for the credits, which supplement the incomes of working families, and increases benefit levels and availability.
  • Within three years, a family with two or more children would be eligible for a credit equal to 40 percent of its first $8,425 in earnings. Families with incomes below $11,000 would qualify for the maximum credit of $3,370. Those earning more would get smaller credits, and eligibility would be cut off for families with incomes of $27,000 or above. The current phase-out level is $24,000.
  • Includes a smaller increase for families with one child, and for the first time extends the credit to very low-income workers without children.

Gasoline Tax

  • School districts exempted from 4.3-cents-per-gallon tax increase on gasoline and other transportation fuels.

Mickey Leland Childhood Hunger Act

  • Increases food-stamp benefits to poor families that devote a high share of their income to housing.
  • Initially increases the current limit on the amount of shelter costs a household can deduct when benefits are being determined; eventually removes the cap entirely.
  • Other changes include allowing families sharing living quarters to qualify separately for food stamps, letting families remain eligible while setting aside savings for education or a home, and increasing their access to employment and training programs.

Student Loans

  • Government will begin making loans directly to students in academic year 1994-95. Five percent of loan volume will be made directly that year, rising to at least 60 percent by 1998-99.
  • Graduates will be allowed to repay loans over a longer period if they wish--up to 20 years instead of the current 10-year repayment period--and will be able to choose to make payments on the basis of income.
  • Maximum loan-origination and insurance fees reduced from 8 percent to 4 percent.
  • Interest rates capped at 8.25 percent instead of 9 percent.
  • New fees imposed on lenders, the Student Loan Marketing Association, and holders of consolidated loans. Payments to lenders holding defaulted loans reduced, as are interest subsidies that are paid while borrowers are in school.
  • Reforms expected to save $4.3 billion over five years.

Assistant Editor Deborah L. Cohen and Staff Writer Jessica Portner also contributed to this story.

Vol. 13, Issue 01

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