Statement of Administration Policy: S. 243 - Older Americans Act Reauthorization Amendments of 1991

(Senate)
(Adams (D) WA and ten others)

The Administration supports reauthorization of the Older Americans Act of 1965, but strongly opposes the pension restoration provision included in S. 243. If the bill were presented to the President with the pension restoration provision included, his senior advisers would recommend a veto.

Programs under the Older Americans Act will continue to operate if this bill is vetoed. Under FY 1992 appropriations, these programs (such as Meals on Wheels) will continue to operate even without reauthorization.

The pension provision is highly objectionable because it would:

—   Create an ill-conceived, unfunded entitlement program to provide benefits for individuals whose pension plans terminated prior to enactment of the Employee Retirement Income Security Act of 1974 (ERISA), which created the Pension Benefit Guaranty Corporation (PBGC). The PBGC was established to insure benefits in plans terminating after its creation, and it is funded with premiums paid by companies with pension plans covered by ERISA.

—   Violate the pay-as-you-go requirement of the Budget Enforcement Act (BEA) by increasing direct spending without providing offsets. The bill attempts to circumvent the BEA by drawing down PBGC's trust funds and prescribing special accounting rules. The true effect would be to increase direct spending, which could trigger a sequester at the end of this session of Congress.

—   Potentially add $500 million in liability to the PBGC, which already has a deficit of at least $2 billion that could grow still higher in light of recent increased fund liabilities.

—   Create an administrative nightmare for the individuals who lost their pensions and for the PBGC. Those who lost their pensions could find it extremely difficult or impossible to supply the necessary documentation to support their claims. The PBGC would be burdened by a new, complex program that would add costly and difficult claims to a workload that is growing dramatically due to recent large pension plan terminations.

—   Distort the current Federal pension insurance system by requiring the PBGC and its premium payers to pay for a new program without a financing offset. If PBGC premiums were increased to pay for the cost of this provision, employers could be discouraged from sponsoring defined benefit plans insured by the PBGC.

In addition, the provision currently includes a financial test that the PBGC must meet before it can pay benefits. If the PBGC cannot meet the financial test, no benefits would be paid, thus making the provision a hollow promise to the elderly it purports to benefit.

S. 243 contains other highly objectionable amendments to the Older Americans Act of 1965.

The bill would establish a number of costly, duplicative, and unnecessary activities and programs. It would impose overly prescriptive requirements on the Federal Administration on Aging (AoA) and on State and area agencies on aging. Such requirements would impair the flexibility needed to administer programs under the Act as efficiently and effectively as possible. In addition, S. 243 would authorize excessive appropriations. Provisions particularly objectionable to the Administration would:

—   Create within the AoA an Office of Long-Term Care Ombudsman (LTCO), an Associate Commissioner for LTCO, a National Ombudsman Resource Center, and a National Center on Elder Abuse. S. 243 also would create a separate State grant program for LTCO, elder abuse, legal assistance, and outreach activities.

—   Add new programs with earmarked funding for multi- generational meals programs and for supportive activities for in-home caregivers.

—   Prescribe how Federal and State responsibilities would be carried out under the Act. Particularly objectionable examples include: (1) requiring the Commissioner to consult with State agencies on program goals and grant priorities, (2) requiring the use of nutrition and volunteer coordinators, and (3) requiring certain evaluation, reporting, and data collection — especially the costly and ill-advised mandates placed on the National Center for Health Statistics and the Bureau of Labor Statistics on nursing home aides and home health aides.

—   Limit the flexibility of States to transfer funds among their nutrition and supportive service programs and require preferential funding of certain "grandfathered" Indian tribes regardless of qualifications.

—   Require (rather than authorize) the establishment of resource centers on long-term care, food and nutrition services, and demonstrations on housing and community service needs (including a project that would duplicate congregate housing and elderly independence programs already administered by the Department of Housing and Urban Development).

—   Expand the entitlement for the Child and Adult care Food Program (CACFP). The change in definition in section 811 of S. 243 could permit unrelated senior citizens cooking facilities to participate in CACFP. For example, residents of apartment complexes for senior citizens, retirement communities, and fraternal or church homes could become entitled to Federally subsidized meals. According to preliminary OMB estimates, this provision is likely to have pay-as-you- go costs of up to several hundred million dollars per year. If the bill's sponsors intended only to clarify existing policies, they should do so by building into the law explicit references to USDA regulations and policies in effect on October 1, 1991.

The Administration will work to remedy these problems in the House-Senate conference.

Scoring for the Purpose of Pay-As-You-Go

In addition to the likely pay-as-you-go costs associated with the revised definition of "adult day care center", the pension restoration provision of S. 243 would increase direct spending. The bill, therefore, is subject to the pay-as-you-go requirement of the Omnibus Budget Reconciliation Act (OBRA) of 1990. No offsets to the direct spending increases are provided in the bill. A budget point of order applies in both the House and Senate against any bill that is not fully offset under CBO scoring. If, contrary to the Administration's recommendation, the Senate waives any such point of order that applies against S. 243, the effects of enactment of this legislation would be included in a look back pay-as-you-go sequester report at the end of the congressional session.

OMB's preliminary scoring estimates are presented below. Final scoring of this legislation may deviate from these estimates. If S. 243 were enacted, final OMB scoring estimates would be published within five days of enactment, as required by OBRA 1990. The cumulative effects of all enacted legislation on direct spending will be issued in monthly reports transmitted to the Congress.

ESTIMATES OF PAY-AS-YOU-GO
(outlays in millions)