A r c h i v e d  I n f o r m a t i o n

Enacting a Budget that Invests in Education, Health Care,
and America?s New Markets

December 21, 2000

Today, President Clinton signed the last budget legislation of his Administration. The budget reflects the President?s eight-year emphasis on educating our children. It includes the largest increase ever for the Department of Education and invests more than twice as many federal resources in education as eight years ago. The budget includes legislation to strengthen our health care system by improving service to Medicare beneficiaries, providing health coverage to vulnerable populations, and restoring reimbursements to Medicare and Medicaid providers disproportionately impacted by the Balanced Budget Act of 1997. Today?s legislation includes the New Markets and Renewal Communities Initiatives to help poor urban and rural communities to participate in our economic prosperity, based upon the agreement that President Clinton and Speaker Hastert reached in November 1999.

Investing in America?s Students. The education budget is a landmark achievement, providing a $6.5 billion (or 18 percent) increase for the Department of Education, the largest ever and a 76 percent increase since 1993. It enacts the President?s emergency school repair initiative and provides the largest increases ever for after-school programs, Head Start, school accountability, and Pell Grants for low-income college students (since they were fully implemented in 1974).

• $1.2 Billion for a New Urgent School Repair Initiative. President Clinton fought for and won a new initiative to repair America?s schools, providing $1.2 billion for urgent school renovation. Nearly one-quarter of the funds will strengthen special education and invest in education technology. This initiative was a top priority of the President?s, but the first Republican budget passed by the House of Representatives did not include it. The initiative includes $75 million for Native American schools.



• $933 Million Increase for Head Start, Doubling Resources since 1993. President Clinton won a $933 million increase for Head Start to $6.2 billion, serving 935,000 children. This is the largest one-year increase in Head Start ever. Since 1993, Head Start has more than doubled from $2.8 billion to $6.2 billion.



• Staying on Track to Hire 100,000 Teachers to Reduce Class Size. President Clinton won $1.6 billion for his class-size reduction initiative?a $323 million (or 25 percent) increase over last year?to stay on track to hire 100,000 new high-quality teachers to reduce class sizes in the early grades. The House Republican budget failed to dedicate funds for class-size reduction.



• Nearly Doubling After-School Learning Opportunities. The budget includes $846 million for after-school programs, a $392 million (or 87 percent) increase over last year and $246 million above the House Republican plan. The 21st Century Community Learning Centers program will serve about 1.3 million children nationwide.



• $567 Million to Improve Teacher Quality. The budget includes $567 million for the President?s teacher quality initiatives, a 52 percent increase. It invests in professional development, recruitment, and retention; expands the successful Troops to Teachers program to other mid-career professionals; and trains early childhood educators.



• Holding Schools Accountable for Student Achievement. President Clinton won $225 million?a 70 percent increase?to turn around low-performing schools. The House Republican budget didn?t invest in this priority.



• Creating College Opportunities. Last January, President Clinton announced his request for a $1 billion increase in efforts to expand student aid and prepare students for college. Consistent with his plan, the budget:



• Provides the Largest Increase in Pell Grants Ever. The budget increases the maximum Pell grant to $3,750, a $450 increase since last year?the largest one-year increase since the program was phased-in in 1974?and a $1,450 increase since 1993.



• Increases Funding for GEAR UP by $95 Million to $295 Million. The House Republican plan froze GEAR UP at $200 million. The budget will help 1.2 million disadvantaged students prepare for college through academic enrichment, college information, mentoring, and the promise of college scholarships.



• Provides the Second-Largest TRIO Increase in History. The budget increases TRIO funding by $85 million to $730 million. It also incorporates key elements of the President?s College Completion Challenge Grants proposal into TRIO; combining support services with scholarship aid is a proven strategy for college retention.



• Funds One Million Work-Study Jobs. It sustains the President?s commitment to give one million students the opportunity to work their way through college.

Strengthening Health Care. The President?s budget will strengthen and improve the Medicare, Medicaid, and State Children?s Health Insurance Program by investing nearly $35 billion to improve coverage and assure quality, as well as increase investments in public health programs by $5 billion. Highlights include:

• Improving Service to Medicare Beneficiaries, Including Preventative Care. The legislation expands Medicare?s preventive benefits to include new nutrition therapy and glaucoma screening and provides greater access to colon and cervical cancer screening. It reduces the cost-sharing that beneficiaries have to pay for hospital outpatient services; provides permanent coverage of drugs that help prevent the rejection of organ transplants; and facilitates the use of therapeutic adult day care services for persons with Alzheimer?s disease. It waives the 24-month waiting period for Medicare for people with Lou Gehrig?s Disease (ALS).



• Providing Health Coverage for Vulnerable Populations. The legislation:



• Extends for another year Medicaid coverage for people leaving welfare for work.



• Enhances outreach and enrollment for children eligible for Medicaid and S-CHIP. The law permits states to enroll uninsured but eligible children in Medicaid and S-CHIP at schools, child support enforcement agencies, program eligibility centers, and other sites.



• Simplifies enrollment of low-income Medicare beneficiaries in cost-assistance programs through a uniform application and outreach through Social Security.



• Restore Reimbursements to Medicare and Medicaid Providers. The legislation addresses the needs of health care providers affected by the disproportionate cuts of the Balanced Budget Act of 1997 by increasing Medicare and Medicaid reimbursements to hospitals, home health agencies, skilled nursing facilities, managed care plans, and other health care providers.



• Supporting Biomedical Research. The budget invests $20.3 billion in cutting-edge biomedical research at the National Institutes of Health, the largest increase ever and nearly double the $10.3 billion spent in 1993.



• Creating the Family Caregivers Program. The budget provides $125 million for states to provide respite and other support services to families who care for elderly relatives with long-term care needs.



• Expanding AIDS Care, Prevention, and Research. The budget includes a $165 million increase in funding for domestic and international HIV prevention activities; a $213 million increase for the Ryan White CARE Act, which helps provide primary care and support for those living with HIV/AIDS; and an estimated $2.2 billion in additional funds for AIDS-related research at the NIH.



• Funding the Ricky Ray Hemophilia Relief Fund Act. The budget provides $580 million for a total of $655 million for one-time payments of $100,000 to people with hemophilia who were infected with HIV by blood solids during the 1980s.



• Improving Mental Health and Substance Abuse Activities. The budget increases resources for the prevention and treatment of mental health and substance abuse by 12 percent, providing nearly $3 billion.



• Promoting Community-Based Services and Supports for Americans with Disabilities. The budget invests $50 million to help states plan to care for people with disabilities in the most appropriate setting.



• Improving Nursing Home Quality. The budget includes a $32 million (68 percent) increase for the Nursing Home Initiative to ensure more rigorous inspections of nursing facilities and improve federal oversight of nursing home quality.

Revitalizing America?s Underserved Communities. Today?s legislation includes the historic new bipartisan New Markets and Community Renewal initiative. This initiative resulted from the commitment President Clinton and Speaker Hastert made in Chicago last November to develop a bipartisan legislative initiative on New Markets to revitalize impoverished communities. This initiative will help encourage private sector equity investment in underserved communities throughout the country to ensure that all Americans share in our nation?s economic prosperity. This New Markets Initiative was originally proposed in President Clinton and Vice-President Gore?s FY 2000 budget. President Clinton has highlighted the potential of the nation?s New Markets in three separate trips across America to underserved inner city and rural communities like Newark, NJ, Hartford, CT, the Mississippi Delta, Appalachia, and rural Arkansas, and the Pine Ridge Indian Reservation in S. Dakota. The key elements of the legislation are:

• The New Markets Tax Credit. The credit will spur $15 billion in equity investment for business growth in low- and moderate-income rural and urban communities throughout the United States and Puerto Rico. The credit, worth over 30 percent of the amount invested (in present value terms), will be available to taxpayers who invest in a wide range of privately managed community development investment funds?such as community development banks and other CDFIs, venture funds, and new investment companies?that finance businesses in low- and moderate-income communities.



• New Markets Venture Capital Firms. NMVC firms will provide incentives to increase the availability of venture capital in low- and moderate-income communities for small businesses. Expert guidance will also be made available to small business entrepreneurs in inner city and rural areas. Ten to 20 NMVC firms are planned. The agreement authorizes the SBA to guarantee up to $150 million in loans to match $100 million in private equity?a total of $250 million?and provides $30 million in technical assistance for small businesses.



• BusinessLINC (Learning, Investment, Networking and Collaboration). The budget provides $7 million in funding for BusinessLINC?an innovative public-private partnership launched by Vice President Gore and designed to encourage large businesses to partner with small business owners and entrepreneurs in economically distressed communities.



• Strengthened and Expanded Empowerment Zones. President Clinton and Vice President Gore proposed and signed Empowerment Zone legislation in 1993 establishing nine EZs across the country. Today there are 31 across America. This agreement includes:



• A third round of nine new EZs, bringing the total number to 40, and extends all EZs to 2009.



• An additional $110 million, for a total of $200 million in discretionary investment this year for existing Round II EZs.



• Expansion of the 20 percent EZ wage credit (on the first $15,000 in annual wages for each worker), increased small business expensing (up to $35,000 more than in current law for equipment), and enhanced tax-exempt bonds to all EZs.



• Tax-free rollovers for EZ investments and 60 percent capital gains exclusion for investment in EZ small businesses.



• Renewal Communities. The creation of 40 Renewal Communities designated by the U.S. Department of Housing and Urban Development with targeted, pro-growth tax benefits. Key incentives aimed at spurring investment in Renewal Communities include:



• Zero capital gains rate on the sales of certain assets held for more than five years.



• Increased small business expensing (up to $35,000 more than in current law for equipment).



• 15 percent employment wage credit (first $10,000 in annual income for each worker).



• Commercial revitalization deductions for taxpayers who revitalize buildings in a Renewal Community.



• Low-Income Housing Tax Credit. To expand and improve the supply of available low-income housing, This bill increases the Low-Income Housing Tax Credit by more than 40 percent over two years and then indexes the credit for inflation thereafter. The increase will help to create 180,000 additional units of affordable housing for working families over the next five years. The credit will increase to $1.50 per capita for each state in 2001 and $1.75 per capita in 2002.



• Private Activity Bond Cap. The legislation increases the state private activity bond cap from $50 per resident to $75 per resident, phased in from 2001 to 2002. Private activity bonds allow states and municipalities to encourage economic growth in communities through the issuing of lower cost tax-exempt bonds.

Investing in the Mississippi Delta. Today's legislation also includes authorization for the Delta Regional Authority (DRA), a newly created agency that will focus $20 million for area development and technical assistance on distressed counties in the Mississippi Delta Region. The authorization will permit the establishment of the DRA, which will work to improve the economic status of some of our Nation's most impoverished communities.

Preparing America?s Workers for the 21st Century. The budget invests in worker training to raise productivity and help Americans compete in the global economy.

• Creating Opportunities for Youth. The final budget provides a $102 million increase (to $1.1 billion) to provide job training and summer job opportunities to roughly 660,000 disadvantaged young people. It also increases Youth Opportunity Grants to $275 million to provide comprehensive employment and training assistance to 63,000 out-of-school young people in high poverty areas.



• Continuing the Universal Reemployment Initiative. The budget creates $35 million Reemployment initiative to help 156,000 Unemployment Insurance claimants get jobs faster. It also provides $1.6 billion for Dislocated Workers, nearly tripled from $597 million in 1993.



• Protecting Workers. The final budget includes $1.2 billion to enforce federal safety, health, pensions, wages, and nondiscrimination practices. This $102 million increase will support 1,500 inspections to ensure safe and healthy workplaces. In addition, it supports efforts to increase labor law compliance, including child labor, to expand public education and outreach to get more employers to offer pension and health plans, and to protect these benefits.

Fighting Crime and Gun Violence and Making Our Communities Safer. To continue the nationwide decline in gun violence, President Clinton fought for the largest national gun enforcement initiative ever. Today?s legislation includes:

• Enforcing Gun Laws. President Clinton won nearly $200 million for his Gun Enforcement Initiative, $94 million of which is included in today?s legislation. The initiative is the largest in history and will hire 500 ATF firearms agents and inspectors, fund over 600 federal state and local gun prosecutors, and expand crime gun tracing and ballistics testing.



• Increasing Community Supervision of Released Offenders. The budget provides a total of $115 million, $85 million of which is in today?s legislation, to help communities reduce recidivism for ex-offenders returning to their communities through increased supervision, employment, and substance abuse treatment.

Supporting Working Families. The final budget helps all families balance their responsibilities at home and at work by improving access to quality child care and helping them save for the future.

• Helping More Low-Income Families Afford Child Care. The President fought for and won $2 billion for the Child Care and Development Block Grant, an $817 million increase. These new resources, combined with the child care funds provided in welfare reform, will serve over 2.2 million children in 2001, an increase of nearly 1 million since 1997.



• Promoting Early Learning by Improving the Quality of Child Care. This year, President Clinton called on Congress to include an Early Learning Fund in the budget to help improve child care quality and early childhood education for children under five years old. The final budget included the Stevens-Kennedy Early Learning Opportunities Act and provided $20 million to allow states and communities to help improve child care quality and promote readiness for school. Helping Low-Income Families Invest for the Future. Congress approved the President's request of $25 million for Individual Development Accounts that empower low-income working families to save for a first home, post-secondary education, or to start a new business.

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