House Approves GOP's School Savings Plan; Budget Gets Extension

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The House passed a controversial education-savings-account plan last week, shortly after Congress voted to give itself a few more days to complete work on an education appropriations bill.

The savings plan that passed the House, 230-198, last Thursday has been tagged as a voucher program by some Democrats and education groups.

The plan, proposed by Sen. Paul Coverdell, R-Ga., would allow parents to set aside up to $2,500 a year in tax-exempt accounts that could be used to help pay education expenses for their children.

The money could be spent on any K-12 education-related expense, including tuition, at any public, private, or parochial school. Leftover savings could also be used later to pay for higher education.

Sen. Paul Coverdell

Meanwhile, in separate votes last Wednesday, the House and Senate voted to continue federal spending at fiscal 1997 levels until Nov. 7 while members of bicameral conference committees hash out final differences in versions of four fiscal 1998 appropriations bills.

Of the remaining spending bills, the labor, health and human services, and education bill will likely take the most time to resolve, John Raffetto, a spokesman for the Senate Appropriations Committee predicted. The White House and GOP lawmakers are still at odds over spending priorities and plans for voluntary national tests of student achievement.

But with members anxious to go on recess next month, the spokesman said last week was likely to be the last time Congress would vote to give itself more time to finish the bill, which initially was due by the start of the fiscal year, Oct. 1. The conference committee was planning to meet again late last week on the education spending measure.

Riley Blasts Plan

Fifteen Democrats crossed party lines to support Sen. Coverdell's education savings accounts. Rep. Floyd H. Flake, D-N.Y., co-sponsored the measure in the House, which is scheduled to come up for a vote in the Senate before Congress adjourns next month.

Rep. Charles B. Rangel

Secretary of Education Richard W. Riley denounced the Coverdell plan last week as a tax cut for the wealthy. "The House Ways and Means Committee [where tax bills originate] is trying to give us a regressive tax policy masquerading as an education bill," he said. He suggested that would-be lost tax revenue would be better spent on a plan to help districts pay interest on school construction bonds.

Sen. Coverdell, however, had some economic comments of his own. According to his staff, if a parent deposited $2,500 each year after a child was born into a tax-free account with a 7.5 percent interest rate, the child would have $58,415 when entering high school. In addition, the parent would save as much as $6,556 in taxes, according to his staff's estimates.

But Mr. Riley contested those figures, saying that the average family making less than $50,000 per year would only save about $2.50 in taxes each year.

Rep. Charles B. Rangel, D-N.Y., the senior Democrat on the Ways and Means Committee, called the plan "a bill for the wealthy ... that has absolutely no relation at all to education."

Bruce Hunter, the government-relations director for the American Association of School Administrators in Alexandria, Va., said the bill would take money away from public education. "We knew we were going to lose on it," he said, adding that he is hoping for a presidential veto.

Sen. Coverdell's plan, which was originally included in the five-year balanced-budget agreement but was withdrawn at the insistence of the Clinton administration, is expected to come up for a vote in the Senate before its scheduled adjournment Nov. 7.

The House Education and the Workforce Committee is also planning to introduce a school choice plan this week that would allow states and school districts to use funds from the Chapter 6 block grant--an omnibus block grant for miscellaneous education purposes--to run a school choice program for low-income students. Scholarships could be given to the poorest students to attend any private, public, or parochial school in their neighborhoods. A scheduled committee vote on the legislation was canceled last week.

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