February 15, 2008

Budget Proposes to Eliminate or Reduce 151 Programs

On Feb. 4, President Bush released a list of 151 programs that he proposes to either terminate or substantially reduce funding. The plan entitled Major Savings and Reforms in the President's 2009 Budget details the programs on the chopping block, and describes funding levels for major discretionary and mandatory savings and reforms.

The proposal includes a number of domestic programs that have been targeted for reduction or elimination over the past several years, including certain Vocational Rehabilitation (VR) programs, such as Projects with Industry (PWI) and Supported Employment programs, which help individuals with disabilities obtain employment and advance their career in the competitive labor market. According to the administration, PWI is duplicative of the VR State Grants program because both provide the same services to the same target populations. This would eliminate $19.2 million of funding.

The administration also proposes to eliminate the Supported Employment program. Created in 1986 to encourage VR agencies to provide services to individuals with significant disabilities, VR agencies recognize and utilize supported employment practices as an effective strategy to help individuals with significant disabilities obtain jobs. According to the administration, the program has achieved its original purpose. This would eliminate $29 million of funding.

Since 2004, President Bush has called for increased “flexibility” in the nation’s job training programs. The administration argues that the current system of federal job training programs is too complex, with multiple funding streams and federal and state bureaucracies. As a result, the President re-introduced his proposal to consolidate job-training programs (the Adult, Dislocated Worker, Youth Activities, and Work Opportunity Tax Credit, Labor Market Information, and Employment Service State grants) into a single state grant into “Career Advancement Accounts.” The budget also calls for $48.8 million for One-Stop Centers, representing a 6 percent cut compared to the $52 million appropriated in FY 2008.

The Office of Disability Employment Policy (ODEP) is charged with providing national leadership by developing and influencing disability-related employment policy and practice affecting the employment of people with disabilities. The President’s FY 2009 budget proposes $12.4 million for ODEP, which represents a 54 percent cut in funding.

The proposal also would eliminate funding for Work Incentive Grants, a pilot program designed to demonstrate new approaches to improving the accessibility of One-Stop services for job seekers with disabilities.

The FY 2008 budget merged the Prisoner Reentry program and the Responsible Reintegration of Youthful Offenders program into a single program that would provide mentoring and job training to promote the successful return of adult and juvenile ex-offenders into mainstream society. The President’s FY 2009 budget proposes $39.6 million for ex-offender programs within the U.S. Department of Labor. This represents a 46 percent cut compared to FY 2008 funding.

The budget again proposes to transfer the Job Corps program and administrative funding to the U.S. Department of Labor’s Employment and Training Administration, and would reduce funding for Job Corps.

The Community Service Employment for Older Americans program provides grants to nonprofit organizations and states to provide training and to hire older low-income people part-time to perform community service. The proposal calls for a reduction in funding for this program by 33 percent. Under the proposal, this program would receive $350 million – $171 million less than the approximately $521 million appropriated for FY 2008.

The President’s budget also proposes major cuts to the Small Business Administration’s (SBA) micro lending program. Under this program, SBA makes funds available to nonprofit community-based lenders (intermediaries) that, in turn, make loans to eligible borrowers up to a maximum of $35,000. The budget proposes to eliminate the $17 million of direct loan subsidy cost and technical assistance funding. The administration argues that intermediaries can absorb technical assistance costs.

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A rising number of employers require their employees to sign mandatory arbitration agreements. These agreements require employees to seek redress for any employment dispute through an arbitrator or panel of arbitrators rather than by a judge or jury. While employers see this as a faster and less expensive way to address disputes many employee rights advocates believe these agreements put workers at a disadvantage.

The House Health, Employment, Labor, and Pensions Subcommittee heard from more than a dozen panelists during a hearing Feb. 12, Protecting American Employees from Workplace Discrimination, to address the use of pre-dispute employment arbitration agreements, as well as the need for federal legislation protecting the employment of volunteer firefighters and EMS personnel.

The panel also examined whether there were “loopholes” in the Uniformed Services Employment and Reemployment Rights Act (USERRA) and whether Congress should strengthen Title VII of the Civil Rights Act to provide stronger protection for individuals of a certain religious faiths.

The panel first reviewed the use of pre-dispute employment arbitration. Michael Foreman of the Lawyers' Committee for Civil Rights Under Law in Washington, D.C. said acceptance of the agreements is not voluntary as a practical matter and that job seekers are being forced to forfeit the protection of procedures built into Title VII of the 1964 Civil Rights Act and other statutes.

A second panel of witnesses testified on the proposed Workplace Religious Freedom Act H.R. 1431 and generally supported the proposal, although one of the lawyers appearing at the hearing expressed reservations about specifics in the legislation.

Zainab Alsuwaij, executive director of the American Islamic Congress, told the subcommittee that AIC represents "Muslim-Americans, passionate about moderation who shares the values this country has been built on." Supporting the proposed legislation, Alsuwaij said "I want to ensure that both employees and employers work together in an environment of mutual respect."

Much of the testimony reflected disagreement about the appropriateness of new action by Congress. On each issue, witnesses differed on the need for legislation and the wisdom of some of the proposals already before Congress.

The Council of Economic Advisers (CEA) released on Feb. 11 the Economic Report of the President, an annual report to Congress on the nation's economic progress. The report reviews the state of the U.S. economy, the outlook for the next couple of years, and a wide variety of economic issues that underlie many of the Bush administration's economic policies. The report indicates that our economy is structurally sound for the long-term and but there remain uncertainties in the short-term.

In the report, President Bush stated the $168 billion economic rescue package passed by Congress, and signed into law, will keep "our economy growing and our people working." The report urges Congress to take action on the tax cuts of 2001 and 2003 that will expire soon if they are not renewed. President Bush believes if no action is taken, 116 million taxpayers will see their taxes rise by an average of $1,800.

The administration predicts the economy will grow by 2.7 percent this year. The economy should pick up strength in the next two years, growing by 3 percent. While the forecast prepared by the CEA predicts 2.7 percent gross domestic product growth in 2008, both the Congressional Budget Office (CBO) and the Blue Chip Economic Indicators' survey have cut back their predictions to 1.7 percent growth. The survey originally predicted 2.2 percent. Economists report in the Blue Chip survey released on Feb. 10 that the chance of a recession stands at almost 50 percent.

For this year, on a quarter- to- quarter basis, the CEA projects an average 4.9 percent unemployment rate and average payroll growth of 109,000 jobs per month, compared to 192,000 jobs per month in 2006. Payroll growth would increase to an average of 129,000 jobs per month. The CEA predicts the growth falling to only an average gain of 92,000 jobs per month by 2013, which reflects fewer people in the labor force as baby boomers retire.

The full report is available at: http://www.whitehouse.gov/cea/2008_erp.pdf

The U.S. Department of Labor (DOL) on Feb. 12 published its proposed new regulations on the Family and Medical Leave Act (FMLA). However, the Senate Committee on Health, Education, Labor and Pensions Committee (HELP) Chair Edward M. Kennedy (D-MA), along with Senators Christopher Dodd (D-CT) and Patty Murray (D-WA), criticized the department’s recommended revisions in a hearing on Feb. 13 entitled Writing the Next Chapter of the Family and Medical Leave Act – Building on a Fifteen Year History of Support for Workers.

The published proposed rules include an enhanced medical certification process, changes to the definition of a serious health condition, more employer notice requirements, and other proposals. Chairman Kennedy argued that these changes could discourage employees from using FMLA programs.

FMLA currently requires businesses with 50 or more workers to offer employees who have worked at the business for one year -- or 1,250 hours -- 12 weeks of unpaid leave to care for an infant. The law also requires that unpaid leave be available for serious health conditions; to care for a newly adopted child; or to care for a seriously ill spouse, child or parent. Currently, employees can take two days off before requesting leave, but the proposed rule generally would require workers to call in to request leave before taking it. The proposal also would require fitness-for-duty certification for some workers before they return from leave. Employees with chronic health condition must, under the proposed regulations, demonstrate they have visited their medical professional at least two times per year.

In addition, the update would allow employers to contact medical professional directly to obtain clarification or authentication of documentation. DOL has opened a 60-day comment period on the proposal, after which the department will have the rest of the year to finalize the regulatory changes.

The proposal is available online in the Federal Register.

The Bush administration proposed fundamental changes in Medicaid that would, over the next few months, shift billions of dollars in costs to states. The first proposed regulation to be issued March 3 would end payments for ancillary services provided under case-management plans, such as assistance finding housing or paying utility bills.

Next, on May 25, the regulations would limit how much states could pay health care providers, end Medicaid reimbursements for medical intern and resident salaries, end reimbursements to schools for busing Medicaid-eligible students, and limit the range of services that could be considered "rehabilitation" for Medicaid patients.

States and the federal government share the costs of Medicaid -- about 57 percent -- is covered by federal funds, which is an estimated $204 billion in fiscal year 2008. The regulations would reduce federal spending by about $12 billion over the next five years.

In 2007, Congress did pass moratoriums against three planned Medicaid regulations, which will soon expire in a few months. There is no chance that Congress would pass a moratorium on the first regulation. If state officials fail to get Congress to block this measure, they could respond by cutting services the federal government will not fund, which may increase political pressure in Congress. Sixty supporters are needed to block the proposed Medicaid rules.

On Feb. 14, officials from the Government Accounting Office (GAO) testified before the House Veterans Affairs Disability Assistance and Memorial Affairs Subcommittee. During the hearing, the GAO officials explained that the U.S. Department of Veterans Affairs disability claims systems needs fundamental changes, including more staff to handle hundreds of thousands of veterans’ disability claims. They also suggested that other fundamental reforms may be needed to improve its disability program for the longer term.

“Programs remain mired in concepts from the past, particularly the concept that impairment equates to an inability to work,” said Daniel Bertoni GAO’s Education, Workforce and Income Security Issues Director. “We found that these programs are poorly positioned to provide meaningful and timely support for Americans with disabilities.”

Rep. John Hall (D-NY), who chairs the subcommittee, signaled his support for electronically transferring records from the U.S. Department of Defense to the U.S. Department of Veterans Affair for members of the armed forces who have become disabled. “They should be compensated from day one,” said Hall, who did not rule offering legislation to make the changes. “We have to move in the direction where some of these things are automatic.” Hall said he hoped to enact reforms, including changes that would allow service members with multiple disability claims to receive benefits immediately upon their discharge for readily-apparent injuries, such as a lost limb.

Go to http://veterans.house.gov/hearings/hearing.aspx?NewsID=189 to access information, including testimony, from the hearing.