Statement of Administration Policy: H.R. 5679 - Department of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Bill, FY 1993

(House Floor)
(Sponsors: Whitten (D), Mississippi; Traxler (D), Michigan)

This Statement of Administration Policy expresses the Administration's views on H.R. 5679, the Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Bill, FY 1993, as reported by the House Appropriations Committee.

The President's senior advisers would recommend that the bill be vetoed if it were presented to him in its current form. The Administration strongly objects to several provisions and funding levels as outlined below. Further, the Administration opposes the amendment to be offered by Representatives Traxler and Green that would eliminate funding for building Space Station Freedom. Acceptance of this amendment would devastate America's civil space program.

The funding concerns raised below could be satisfactorily addressed by the House through a reallocation of funding from lower-priority programs. Reductions from the Committee recommendations for Subsidized Housing, Community Development Grants, various construction accounts, and other programs would allow resources to be allocated to initiatives that would more effectively meet national needs.

The Committee has failed to invest in what are arguably some of the most important programs for the nation's future economic growth. This failure would likely have serious adverse consequences for our ability to make advances in key technology areas that help ensure U.S. competitiveness. In the Administration's view, the relative priorities reflected in the Committee mark demonstrate the inability of the Committee to make choices consistent with investments in America's future.

The Administration supports efforts to defeat the rule, which prevents consideration of the Kolbe/Espy amendment. This amendment would provide additional funding for HOPE, a program which helps low-income people realize the dream of homeownership.

Space Station

The Administration supports full funding of the President's request for Space station Freedom. The Space Station program is the nation's centerpiece space activity for advancing manned spaceflight, conducting world-class research, and developing new technologies. It continues to meet all design, schedule, and budget criteria previously imposed by the Congress. The Committee's reduction would greatly delay the launch schedule, increase the total development cost, result in immediate layoffs of large numbers of contractor personnel, and adversely affect commitments made to our foreign partners.

HOPE

The Administration objects to the Committee's funding of HOPE grants at $361 million — a reduction of more than 60 percent from the President's request and a freeze at the FY 1992 level. HOPE is an essential part of the Administration's urban assistance program. It will provide low-income people with access to assets, private property, and opportunity, and help them to realize the dream of homeownership. The rejection of the requested funding of $1 billion would eliminate the opportunity to own a home for as many as 80,000 low-income families.

HOPE is one of the six urban initiatives the President announced in the wake of the L.A. riots as essential to fighting poverty in America's inner cities. Demand for the program is strong. HUD has already received 1,167 applications this year, and more than 3,600 people have attended HOPE Training Workshops across the country. Further, requests for planning grants show that demand for the program will be even greater in the future. The demonstrated need for HOPE is far beyond what can be met by the current funding level. The Administration strongly urges the House to fund this initiative at the requested level.

High Performance Computing and Communications Initiative (HPCC)

The Administration objects to the $82 million reduction to the President's request for the HPCC program. Of this reduction, $15 million is taken from NASA's portion of the HPCC program, and $62 million is taken from the National Science Foundation's (NSF's) portion of the HPCC program implicit in the Committee's mark. The HPCC is a high-priority, interagency research program that will have major impacts on U.S. industrial competitiveness and scientific and technological leadership. Congress has already recognized the importance of the HPCC program in the High Performance Computing Act of 1991.

Reducing planned funding for NSF's and NASA's activities in the HPCC program would delay the development of advanced hardware, software, and network technologies and Grand Challenge applications in many fields of science and technology. Specifically, it would compromise NASA's ability to lead the software element of the HPCC program, the element deemed most critical if the program is to succeed. Further, it would result in a lengthy delay of the development of the National Research and Education Network led by NSF.

Federal Housing Administration (FHA) Mortgage and Closing Cost Limitations

The Administration opposes Committee proposals to raise the maximum single family FHA mortgage from $125 thousand to $172 thousand, and to eliminate the 57-percent limit on the amount of closing costs a borrower can finance in the FHA mortgage. The existing provisions were agreed upon by the Congress and the Administration during negotiation on the National Affordable Housing Act of 1990 (NAHA). They were intended to help the FHA Mutual Mortgage Insurance (MMI) fund achieve the specific minimum capital ratios both sides agreed were necessary to enable the fund to withstand adverse economic conditions through the year 2000.

The 57-percent ratio is necessary to meet the capital ratios mandated in NAHA and to reduce FHA's default rate to below 11 percent. Anything above 57 percent would prevent the fund from meeting these soundness standards. Indeed, the Department of Housing and Urban Development currently estimates that eliminating the 57-percent cap would increase FHA mortgage defaults by 3,700 per year.

The Administration opposes the considerable increase in the mortgage limitation since it moves FHA away from its traditional role as a financial resource for middle and lower income buyers, particularly within inner cities.

Waiver of HUD Vacancy Rule

The Administration strongly objects to the Committee's decision to continue to prevent HUD from implementing a proposed vacancy rule that reforms the public housing program. The proposed rule would reduce operating subsidies paid by HUD for vacant public housing units. Under the existing regulation, HUD pays full operating subsidies on vacant units without regard to whether such units incur full operating costs. This works as a powerful disincentive to local housing authorities to fill vacant units despite high demand by low-income persons for these units.

Superfund

The Administration strongly objects to the Committee's $334 million reduction from the President's request for Superfund activities and the reallocation of $52 million to fund activities that do not contribute to site cleanup. At the Committee's funding level, Congress would have reduced the President's Superfund requests by $800 million over the last four years, bringing the program to its lowest level since FY 1989. The Committee's mark, which is $184 million below FY 1992 funding, would eliminate 30 planned new cleanup starts in FY 1993. Such a reduction would seriously delay Superfund cleanup activities and unnecessarily extend the risk posed by these sites to public health and the environment.

Environmental Quality Along the Mexican Border

The Administration strongly objects to the Committee impeding the Administration's efforts to improve environmental quality along the Mexican Border in support of the North American Free Trade Agreement. Specifically, the Committee has reduced by one-half the requested $65 million for the international sewage treatment project to treat Tijuana sewage. Further, none of the requested funding has been provided for initiatives to remedy major water quality problems in Nogales, Arizona, and Calexico, California, resulting from Mexican sewage flows, or to address the total lack of sewage facilities in many of the impoverished colonias in Texas.

Federal Emergency Management Agency Disaster Relief

The Committee bill fails to fund the Administration's $200 million budget amendment for disaster relief, which was transmitted to Congress on March 23, 1992. The amendment resulted from a review of disaster funding needs, and is intended as a "contingency" fund to be used in the event that FY 1993 is a higher than average disaster year. Funding the budget amendment will ensure that sufficient resources are available in FY 1993.

National Space Council

The Administration strongly opposes the elimination of $1.6 million for the National Space Council. Over the past year, the Council has coordinated the development and implementation of policies related to Landsat, Mission to Planet Earth, trade with the former Soviet Union, and Space Exploration. Eliminating funds for this agency would seriously impede the nation's ability to implement a coordinated, cost effective national space program. In addition, it would hamper our ability to adjust to the changes brought on by the end of the cold war and the concomitant decline in government spending for aerospace.

Preliminary Scoring

On the basis of OMB's preliminary scoring, the Committee bill exceeds the House 602(b) allocation for domestic discretionary budget authority by $405 million and exceeds the outlay allocation by $292 million. The bill is within the allocations for defense discretionary budget authority and outlays. The House 602(b) allocations are consistent with the statutory spending limits enacted in the Budget Enforcement Act.

Additional Administration comments regarding the Committee bill are contained in the attachment.

Attachment

Attachment
(House Floor)

ADDITIONAL CONCERNS
H.R. 5679 — DEPARTMENT OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT, AND INDEPENDENT AGENCIES APPROPRIATIONS BILL, FY 1993

MAJOR PROVISIONS OPPOSED BY THE ADMINISTRATION

A. Funding Levels

Inspectors General (IG):

General Reductions in Funding for Inspectors General. The Committee reduced the President's requested increases for each of the Inspectors General of the Departments of Veterans Affairs (VA) and Housing and Urban Development (HUD), the Environmental Protection Agency (EPA), the National Aeronautics and Space Administration (NASA), and the National Science Foundation (NSF) by 75 percent. This reduction would affect seriously the performance of legislatively- mandated audits of financial statements as well as audits or investigations of high risk programs or other priority issues. Audits of the VA's health care inspection program, contracts with NASA suppliers, and EPA procurement and contract management could be curtailed and essential oversight over high risk areas may be reduced significantly. The High Risk List included in the President's budget shows $17 billion at risk in HUD, inadequate systems to manage $158 billion in outstanding loan guarantees in VA, and inadequate financial management at NASA. The Administration strongly urges the House to fund each of these Inspectors General at the requested level.

Federal Emergency Management Agency (FEMA) Inspector General. The Committee would reduce funding for the FEMA Inspector General's Office by 50 percent below the President's request and by 42 percent below the FY 1992 enacted level. The $3 million funding level provided by the Committee bill would cause the IG to reduce staff to 37 FTE, from the current level of 65 FTE. A reduction-in-force would be likely, and FEMA might have to close field office in Atlanta, San Francisco and San Juan, Puerto Rico.

The Committee's recommendation could result in only about half of the anticipated audit activities being performed, and almost half of FEMA's budget would be at risk (not subject to any IG oversight). At a time when agencies are being asked to correct situations involving fraud, waste, abuse, or management shortcomings, the Administration believes that a 50 percent reduction in funding would be shortsighted and counterproductive. The House is urged to restore funding to the requested level.

Resolution Trust Corporation (RTC) Office of Inspector General (OIG). The Committee has reduced the Administration's request for OIG by $9 million, to $34 million. This reduction would not allow the OIG to monitor adequately the RTC, which currently holds $80 billion in assets from failed thrifts. The management and sale of these assets remains highly susceptible to waste, fraud, and abuse. The Committee's mark would freeze the OIG at the current level of 315 FTE and would reduce the resources available for contracting by 50 percent. The OIG had planned to contract out the audits of the 1988 FSLIC arrangements as required in last year's appropriations bill. The OIG has also been asked by the RTC to undertake receivership audits.

Department of Housing and Urban Development (HUD):

Perestroika for Public Housing. The Committee bill would provide no funding for the Administration's new "Perestroika for Public Housing" initiative. This initiative represents a radical and critical restructuring of the public housing program as it relates to the most distressed public housing authorities in the country. The principle underlying the initiative is choice: namely, affording residents of troubled public housing the right to choose either alternative management or ownership. Offering residents a greater range of choice for the control, modernization, and operation of their public housing communities will increase management's incentives to improve efficiency. Perestroika will force public housing authorities to be accountable to the people who live in public housing.

Community Development Block Grants (CDBG). The Committee recommends $4 billion for Community Development Block Grants, an increase of nearly 18 percent from the FY 1992 enacted level. While CDBG is considered an important tool for communities in economic development activities, States and communities have not spent nearly $6 billion of previous appropriations for CDBG. Given this backlog, the Administration believes that it would be very unlikely that the dramatic increase in funding recommended by the Committee would assist in the current economic recovery.

Subsidized Housing — Housing Vouchers. The President's budget proposes rental housing assistance for 87,000 new families at a cost of $3 billion. Almost all of this assistance would be delivered through tenant-based housing vouchers. While the Committee has adopted some of the Administration's request, it also has funded a number of high-cost, new construction programs. As a result, the Committee bill would assist only 74,222 new families, at a higher overall cost of over $4 billion. The Administration favors assisting more families through a lower cost mix of programs.

Further, the Committee bill would provide $866 million, an increase of 7.5 percent over the FY 1992 enacted level, for public and Indian housing new construction. This program is one of the Federal government's least cost-effective housing programs. With the same amount of dollars used for direct rental assistance (vouchers and certificates), the Federal government would help twice as many low-income persons find decent housing. Moreover, vouchers and certificates allow individuals freedom ln deciding where to live. In the Administration's view, the existence of over 104,000 vacant public housing units makes the Committee's funding level for the construction of new public housing units even more difficult to justify as an appropriate use of scarce resources.

The President's budget funds Indian housing units through a set-aside of $125 million in the HOME program. Funding Indian housing through the HOME program would provide greater flexibility to Indian tribes to develop housing programs that they believe are most effective.

HUD Administration. The Committee bill would reduce total funding for HUD staff by almost five percent. Further, the bill stipulates that most of these reductions must be taken from headquarters staff. This means that the workforce reduction would fall on a small fraction of HUD employees. These reductions would tie the hands of those who run HUD, as well as those, like the Inspector General, who audit and investigate its programs. This action would restrict HUD's ability to develop the capacity to meet the mandates imposed by Congress to reduce management problems and to address effectively the needs of those who depend on HUD's programs. If left unchanged, these cuts would precipitate reductions-in-force and/or lengthy furloughs of HUD employees.

Public Housing Modernization. The Committee recommends nearly $700 million in excess of the President's request for Public Housing Modernization. Funding this program at this level would only exacerbate a backlog of over $6.8 billion in available but unspent modernization funds. The House is urged to lower funding to the requested level.

Subsidized Housing — Section 8 Certificate Amendments. The Committee bill would fund Section 8 certificate amendments at $400 million, a reduction of $312.5 million from the request of $712.5 million. The reduction is based upon a finding in the April 2lst Report of the Inspector General that HUD may have overstated funding needs for Section 8 certificate amendments by $312.5 million. The Inspector General's finding is a lower bound on the amount of funding for certificate amendments. The finding specifically cautions that no funding is provided for amendments that cannot be accurately estimated through the accounting system. Because of HUD's systems problems that continue to make accurate estimates difficult to achieve, and to avoid a subsequent supplemental, language providing flexibility to move funds among HUD's housing programs should be added to the bill.

Subsidized Housing -- Leasing for Housing for the Elderly. The Committee does not implement the Administration's proposal to complement new housing construction with the added flexibility of permitting non-profit organizations to lease existing housing units for the elderly. Leasing is not only less expensive than new construction, but also provides more choice in housing and provides for housing more quickly where housing stock is available. The House is urged to adopt the Administration's proposal as an alternative to higher-cost approaches to meeting the unique housing needs of the elderly and disabled.

Restore. The Committee bill does not fund the Administration's program for Restore grants and loans. This program is a comprehensive approach to solving the problems of troubled, HUD-assisted and insured multifamily housing projects. Restore would base all assistance on an assessment of the total physical and financial needs of each project. Restore would also encourage greater tenant participation by giving tenants a financial stake in their projects. Further, it would encourage greater tenant choice by replacing long-term, project-based rental assistance with project stabilization vouchers portable after two years.

Flexible Subsidy Fund. The Committee bill would deny the Administration's request to transfer $87.6 million in offsetting collections to the general fund of the Treasury. Since it is a direct loan program, the Flexible Subsidy Fund should be set up consistent with the requirements for such programs under the Credit Reform Act. The Administration urges the House to adopt its requested appropriations language.

Congregate Services. The Committee mark would provide $7.5 million for the Congregate Services program, which provides support services directly to the elderly and disabled. An evaluation of this program has shown it to be less effective than alternative programs, specifically, the HOPE Elderly Independence initiative and Service Coordinators for the elderly and disabled. The Administration urges the House to delete funding for Congregate Services in favor of funding for more effective programs.

Department of Veterans Affairs (VA):

Construction. The Administration strongly objects to the Committee action adding $157.5 million to construct a major clinical addition, a second parking garage, d several other new buildings at the Ann Arbor, Michigan VA hospital. These funds would increase the size of the hospital by 77 percent. This project would serve a declining population of veterans and duplicate highly expensive medical technologies already available to veterans under VA contracts with the University of Michigan (located across the street from the VA hospital). 7.. the past five years, Ann Arbor has closed 16 percent of its operating beds. Further, the facility is located within 50 miles of a new $300 million, 503-bed VA hospital in Detroit. Since FY 1991, including this $158 million increase, VA medical centers in Michigan have received 29 percent of all VA major construction funds. This is not only an inequitable distribution of resources among VA's hospitals, but it is wasteful spending that should be deleted from this bill.

The Administration objects to the Committee's $29.3 million reduction to the request for VA's minor construction. This reduction would hamper VA's efforts to maintain and upgrade its aging medical facilities because it would delay vital patient environment and life safety projects by at least one year.

The Administration further objects to the Committee action adding $42 million to build an outpatient clinic in El Paso, Texas — a project that exceeds VA's planning standards. These funds would be more effectively allocated to the construction of an outpatient addition at the Wilmington, Delaware VA hospital. The Committee deleted the Administration's $20.5 million request for this project, which is needed to meet VA's outpatient workload projections.

Medical Care. The Administration objects to the significant increase in staff for Medical Care as proposed by the Committee. Redirecting over $45 million to increased staffing levels would generate roughly 950 FTE over the budget request. The request already includes an FTE increase over FY 1992 of 2,053 for opening new facilities, meeting new residency standards, and other activities. To improve the veterans' Medical Care system with this $45 million, the Administration believes that the Committee should allow the VA to spend these funds as VA deems necessary. For example, such funds could offset pharmaceutical cost increases or decrease the equipment backlog.

Environmental Protection Agency (EPA):

Construction Grants. The Administration objects to the Committee's reduction of $164 million for sewage treatment construction funding and the diversion of an additional $100 million to unwarranted special interest projects. This would reduce the amount of infrastructure funding available to States, through their State revolving funds, to address sewage treatment problems within their borders that pose the greatest environmental risks.

Operating Program. The Administration objects to the reduction of $135 million in funds requested to address high priority environmental risk through EPA's operating programs (Salaries and expenses; Abatement, control and compliance; Research and development; and Inspector General) in order to fund numerous unrequested special interest projects. These reductions would hamper implementation of high priority programs, such as Clean Air implementation, in order to fund projects that are unneeded, duplicate other projects, bypass competitive funding procedures, or are not appropriate for a Federal role.

Buildings and Facilities. The Administration objects to the Committee's $95 million increase for projects not needed to accomplish EPA's mission. In particular, the $85 million provided for a research and training facility in Bay City, Michigan, to house a yet-to-be determined program was not requested, and the facility would be duplicative of existing facilities. Even more egregious is a $10 million earmark to build a biomedical center at Columbia University that would have no direct benefit to EPA or the taxpayers.

National Aeronautics and Space Administration (NASA):

National Aerospace Plane. The Administration strongly objects to the deletion of the President's request ($80 million) for NASA's portion of the joint NASA/DOD National Aerospace Plane program. The program represents the cutting edge of research and technology in materials, propulsion, and computing applications. Further, it bolsters America's preeminence in the aerospace industry during a time of severe industry cutbacks.

To date, over $2 billion has been invested by government and industry on the unique skills and facilities required for hypersonic research. A reduction of this magnitude would severely delay the completion of the technology development phase, and eliminate NASA's contribution to a program that has civilian as well as military applications.

U.S Global Change Research Program. The Committee recommends a reduction of $75 million from the request for NASA's Earth Observing System (EOS). EOS is a series of space-based remote sensing instruments that will collect a broad range of key environmental data needed to support the U.S. Global Change Research Program (USGCRP) initiative authorized by Congress. This reduction would significantly delay the collection of data needed to support policy decisions related to global change issues (e.g., ozone depletion, global warming, desertification).

The Committee also has recommended that $33.5 million of this reduction be used to fund a noncompetitively- selected, special interest research institute in Saginaw, Michigan (including $50 million for construction of a building for this institute in NASA's construction account).

Advanced Solid Rocket Motor (ASRM). The Administration objects to the provision of $480 million in unrequested funding to continue development of the Advanced Solid Rocket Motor (ASRM) and construction of related facilities. This program, which would develop a new solid motor for the Space Shuttle, has been proposed for cancellation because of its high remaining cost — over $2.5 billion for the ASRM to reach flight status no earlier than 1997.

Unlike other NASA projects competing for these scarce resources, alternatives exist to offset the loss of the ASRM capability. The existing motor, which entered service after the ASRM program was initiated, has performed successfully in all 23 of its Shuttle missions to date.

New Launch System. The Committee bill provides only $10 million of the $125 million requested for the development of a New Launch System (NLS). This joint NASA/Department of Defense (DOD) program is intended to reduce the operating cost of launch vehicles and to improve their reliability, responsiveness, and mission performance. Additional funding is required for NASA to continue its important role in this joint effort. NLS will support the launch needs of DOD and NASA. Therefore, development funding should be shared by both agencies.

Space Exploration. The Committee bill deletes $28 million of the $31 million requested in the President's budget for activities related to future exploration of the Moon and Mars. The Administration objects to the deletion of all of the funding requested to initiate two small, low-cost unmanned exploration missions to the Moon. These missions, planned for launch in three to four years, will map the Moon's surface features, surface composition, and gravity field. The data and experience that will be provided by these missions is needed to support decisions on future exploration missions to the Moon and Mars.

Aeronautics. The Administration objects to the $10 million reduction to the President's budget for a new state-of-the-art supercomputer (HSP-3) for aeronautics research. The loss of HSP-3 would severely disrupt planned upgrades to the Numerical Aerodynamic Simulation (NAS) program, the nation's premier supercomputer facility for supporting commercial and military aeronautics research. The HSP-3 will quadruple the current NAS computing capacity to help meet the burgeoning demand to solve more complex aeronautical problems. The Administration believes that NASA's procurement of the new supercomputer is wholly consistent with existing legislation and regulations and should not be delayed.

The Committee earmarks $1.25 million more for civilian tiltrotor activities than the President has requested. The request of $5.4 million for advanced rotorcraft technology is sufficient for addressing high priority research areas in tiltrotor aircraft. The earmark is objectionable particularly given tight resources elsewhere in the agency.

Advanced Materials and Processing. The President's Budget proposes a new multi-year interagency program to enhance research and development efforts in materials science and technology. While the Committee does not specify its recommendations for this program in NASA (or for the National Science Foundation), the Administration is concerned that the program would not be fully supported within the funds provided in the bill. .The House is urged to provide the requested funding to improve the synthesis, processing and performance of materials.

National Science Foundation (NSF):

Research and Related Activities. The Committee has recommended freezing NSF's Research and Related Activities account at the FY 1992 level, a $333 million, or 15-percent, decrease from the President's FY 1993 request. Report language directs NSF to take this reduction proportionally across all research disciplines. This recommendation would effectively terminate the President's initiative to double NSF's budget by FY 1994 and would have severe adverse impacts on NSF's contributions to the President's interagency research initiatives (i.e., global change, materials, biotechnology, and high performance computing).

These investments in basic research and education activities are central to the goal of creating new knowledge that can help keep our nation competitive in the world marketplace and train the next generation of scientists and engineers. The Committee's recommended across-the-board reductions would also jeopardize the programmatic balance established by the National Science Board and the merit review process.

Education and Human Resources. The Committee bill would freeze the Foundation's Education and Human Resources account at the FY 1992 funding level — a $14 million, or three-percent, decrease from the President's FY 1993 request. This recommendation would have serious adverse impacts on NSF's efforts to train the next generation of scientists and engineers and greatly diminish NSF's contribution to the President's interagency Math and Science Education initiative.

Salaries and Expenses. The Committee has recommended eliminating $19.5 million proposed in the President's budget for NSF's moving expenses. NSF's current lease expires in 1995, and the GSA has competitively procured a new facility in Ballston, Virginia. The Committee recommendation would eliminate the funds needed for relocation, plus a repayment to GSA of $3.5 million for FY 1992 pre-move planning efforts. The Administration urges the House to restore these funds.

Federal Emergency Management Agency (FEMA):

Civil Defense. The Committee bill would fund Civil Defense activities at a level 14 percent higher than the Administration's request. Specifically, the Committee would increase funding for Emergency Management Assistance grants by $6 million (10 percent), and for the repair of underground storage tanks at Emergency Broadcast System (EBS) stations and State and local Emergency Operating Centers (EOCs) by $10 million (500 percent). Additionally, the bill would provide unrequested funds for direction control and warning systems, and for an emergency operations center in Jones County, Mississippi.

Hazardous Materials Training Grants. The bill would provide $5 million for Hazardous Materials Training Grants, which are authorized in the Superfund Amendments Reauthorization Act (SARA) but not requested in the President's budget. The Administration believes that funding for this program is unnecessary because other existing FEMA, EPA, and DOT programs already provide funding to States and local governments for hazardous materials training.

Administrative Provisions. The Administration objects to bill language that has the effect of micromanaging the agency. For example, the bill caps selected headquarters' staff by office. This action impedes the ability of the FEMA Director to utilize staff resources most efficiently.

Federal Deposit Insurance Corporation (FDIC):

Low-income Housing. The Administration opposes $10 million provided by the Committee for the operation by the FDIC of a low-income housing program. FDIC's efforts would be better directed toward the maximization of sales prices of liquidated assets in order to ensure the Bank Insurance Fund's ability to repay borrowings from the Treasury. FDIC's expertise is in carrying out the deposit insurance function, not in operating housing programs.

Bank Enterprise Act. The Administration opposes $1 million provided by the Committee for "issuing minimum requirements and guidelines" for the Bank Enterprise Act. FDIC's efforts would be better directed toward protecting the deposit insurance system by resolving insolvent institutions, not in operating a new loan or investment subsidy program.

Other Agencies:

Points of Light Foundation. The Committee's recommendation for the Points of Light Foundation is $5 million below the President's request of $10 million. The Foundation was appropriated $5 million for FY 1991 and FY 1992. The Points of Light Foundation should be funded at the requested level to enable it to achieve its goal of making direct and consequential service aimed at serious social problems central to the life and work of every American.

Commission on National and Community Service. The Committee's recommendation for the Commission is $38 million below the President's request of $75 million. The President's request represents a freeze at the Commission's FY 1992 level of funding. A funding level of $37 million in FY 1993 would not enable the Commission to continue support for the three-year grant programs begun in June 1992. The more than $60 million that the Commission has awarded for FY 1992 grants would be wasted if sufficient funding is not appropriated.

B. Language Provisions

Department of Housing and Urban Development:

Assistance for the Renewal of Expiring Section 8 Subsidy Contracts. The Committee is urged to restore the requested transfer authority of up to five percent. This will provide a needed contingency in case the initial budget estimates prove to be too low. HUD has worked to improve the budget estimates for these contract renewals. However, they still rest on a survey of voluminous paper records in HUD's field offices that have been subject to error in the pestle assure adequate funding, some flexibility through transfer authority is necessary in order to assure that all expiring contracts are renewed.

Limitation on Amendment Funding for New HUD Rental Assistance Contracts. The Committee is urged to restore the requested language that would cease the practice of budgeting an initial amount for rental assistance contracts and then seeking additional appropriations to cover "shortfalls" in such funding. Such amendment shortfalls recently reached over $2 billion annually, which is a substantial portion of HUD's total appropriation. The requested language would prohibit such amendments on new contracts funded in FY 1993 but would not affect existing contracts. The use of shorter-term five-year contracts and central reserve accounts should permit implementation of this prohibition without adversely affecting program recipients or contract administrators.

Departmental Management. The Administration urges a return to the long-standing practice of a single Salaries and expenses appropriation for HUD. Last year, eight separate appropriations were established, and the Committee continues this practice this year. Separate appropriations limit the Secretary's ability to manage staff efficiently and to reallocate staff so they can respond to unexpected demands.

Senior Executive Service Limits. The Administration urges deletion of the provision in the Committee bill that would limit HUD to 15 non-career positions in the Senior Executive service (SES). Such micromanagement of an Executive Branch agency severely limits management flexibility.

Section 8 Fees for Rental Assistance. The Administration opposes language recommended by the Committee that would raise administrative fees paid to local housing authorities from the proposed 7.25 percent to 8.2 percent. Research by the General Accounting Office and HUD has determined that a fee in the range of 7.2 percent is sufficient to cover the costs of local housing authorities.

HUD Administrative Provisions. The Administration objects to a number of provisions of the Committee bill that would exempt certain communities from the rules and requirements of several HUD programs (CDBG, Section 202, and HoDAG). For example, the provisions would require HUD to pay Milton, Massachusetts, for otherwise ineligible housing development costs and would alleviate the City of Springfield, Massachusetts, of its responsibility to return certain housing development grants to HUD. These provisions would set an undesirable precedent and raise equity issues with respect to other communities that have "played by the existing rules".

Environmental Protection Agency:

Personnel Ceiling. The Administration opposes inclusion of specific staff levels for EPA headquarter offices and activities related to an unbuilt and unneeded research and training facility in Bay City, Michigan. Congressional micromanagement of this nature eliminates the necessary flexibility to allocate staff resources to the most pressing needs. The House is urged to delete these provisions.

Pollution Prevention Act Implementation. The Administration strongly opposes the provision related to implementation of the Pollution Prevention Act through EPA's Toxic Chemical Release Inventory Form R, as revised on May 19, 1992. This provision represents an unnecessary and inappropriate abridgement of the requirements of the Paperwork Reduction Act of 1980. The Paperwork Reduction Act makes adequate provision for the extension of Agency paperwork forms; there is no justification for an indefinite extension of this specific paperwork. The Paperwork Reduction Act also provides for public consultation and a formal public record for comments from interested parties. The "logging" requirements for any communication related to the revision of Form R is both unnecessary and unduly burdensome.

Department of Veterans Affairs:

Medical Care. The Administration urges the House to delete two provisions that would earmark $9.4 billion for personnel services and prohibit funds from being used to implement an agency directive. These provisions would infringe upon VA's executive management of the veterans' health care system and preclude the Department from utilizing medical resources in the most effective and efficient manner.

Language making equipment, land, and structures funds available for two fiscal years ls not necessary. VA medical centers have adequate time to plan and obligate funds for these activities. The restriction on obligation of certain funds until the fourth quarter of the fiscal year would simply delay the obligation of funds. It would not preclude VA medical centers from taking all steps necessary before August 1st each year to ensure that obligations can be made before the end of the fiscal year. The House is urged to delete this language.

Consumer Product Safety Commission. (CPSC):

User Fees. Private industry currently receives CPSC advice, expertise, and safety "certification" free-of- charge. The President's Budget proposes to recover the costs of these services through user fees. This proposal is consistent with the CPSC reauthorization bill currently pending in the House, which allows CPSC to keep any user fees it charges. In failing to adopt the proposed user fee language, the Committee has missed an opportunity to Improve the operation and equity of Federal services. The House is urged to adopt the proposed language.

Selective Service System:

Draft Registration. The Administration opposes the provision that would prevent the Selective Service System from obligating sufficient funds to continue draft registration after March 31, 1993. Selective Service registration is a component of national security preparedness. Registration is accepted by the public; compliance is at 97 percent. The House is urged to delete this provision.

Various Agencies:

Quota Directives. The Committee bill directs the EPA, NASA, and the RTC to "ensure that at least 8 per centum of Federal funding for prime and subcontracts awarded in support of authorized programs ... be made available to business concerns or other organizations owned or controlled by socially and economically disadvantaged individuals." Such individuals "shall be deemed to include women."

A Congressional grant of Federal money or benefits solely on the basis of the recipient's race or gender is presumptively unconstitutional under the equal protection provisions of the Constitution. The Supreme Court has held that race or gender preferences violate the Constitution unless they are substantially related to the accomplishment of important goals. See Metro Broadcasting. Inc., v. FCC, 110 S. Ct. 2997 (1990) (holding that Congressionally enacted racial preferences must serve important governmental goals and be substantially related to achieving those goals); Mississippi University for Women v. Hogan, 458 U.S. 718 (1982) (prescribing similar standards for gender preferences). The provisions in the Committee bill would withstand constitutional scrutiny only if there were sufficient evidence to meet this standard.