What Bush Administration’s 2004 Budget Means for Nonprofit Groups

Following are some of the proposals in the president’s fiscal 2004 budget of interest to charities and foundations.

Because Congress had not yet approved 2003 budgets for most programs when Mr. Bush submitted his proposals, figures are compared to spending in 2002. Fiscal 2004 begins on October 1.

Arts and humanities. President Bush is seeking the same amount for the National Endowment for the Arts, $117-million, as the agency received in 2002.

The president’s budget proposal includes a $25-million increase for the National Endowment for the Humanities, earmarked for a new program called We the People. The program is designed to support projects to teach students and other Americans about the nation’s history and culture. The total amount requested for the endowment is $152-million. Even with the increase, the total falls below the $177-million received in 1994 before a series of cuts in the endowment’s budget.

Money for historic preservation faces a 10-percent decrease under Mr. Bush’s proposal, to $67-million.

Education. Mr. Bush has proposed a 40-percent reduction in spending on the 21st Century Community Learning Centers program, which provides funds for after-school activities, cutting it from $1-billion in 2002 to $600-million in 2004. That cut comes on the heels of a recent study for the Department of Education, which found that after-school programs do not appear to have much effect on how children perform academically. “The president proposed cutting it by 40 percent after a one-year evaluation, which is certainly not giving the approach a chance to be tested,” says Irving Katz, president of the National Assembly of Health and Human Service Organizations.

Other advocates of the program say the study’s findings miss the point: The learning centers’ main benefit is that the program keeps kids out of trouble and helps them develop nonacademic skills. “The hours immediately after school are prime time for kids getting into trouble,” says Tim Briceland-Betts, a senior government-affairs associate with the Children’s Welfare League, in Washington. “Between 3 and 6 p.m., Monday through Friday, is when youth crime peaks.”

Tim James, executive director of the Camp Fire USA Lone Star Council, in Dallas, says the after-school program his agency operates using funds from the 21st Century Community Learning Centers concentrates on giving children self-confidence and encouraging them to be more involved in their neighborhoods. “There seems to be this mindset that anything that goes on in a school needs to improve test scores,” he says. “In the after-school hours we need to focus on character development and teach other nonacademic skills these kids will need to be successful.”

Funds for Head Start, the preschool program for needy children, would be increased slightly from 2002, to $6.8-billion in 2004. But Mr. Bush’s plan to turn the program into a block grant administered by the states has drawn criticism from some charity leaders because of concern that the change will mean an overemphasis on academic teaching at the expense of the program’s social-service features, such as family counseling, health care, and nutrition. The Bush administration has said the change will help states more efficiently and effectively coordinate services provided by Head Start and other preschool programs to ensure that children entering public schools have the skills they need.

Health. The administration’s proposal would increase grants for community health centers by $284-million — to $1.6-billion — to pay for 230 new or expanded health-care centers to serve an additional 1 million people. The centers are nonprofit, neighborhood-based health clinics in poor neighborhoods or regions without enough doctors, which treat people even if they cannot afford to pay.

Mr. Bush’s plan calls for a $155-million reduction in Community Services Block Grants compared with 2002, for a total of $495-million in fiscal 2004. The grants help 1,100 local antipoverty groups that run job-training and preschool programs, as well as providing other social services.

Housing. The president’s housing budget would earmark $194-million for long-term rent subsidies for homeless people who are disabled or in need of other services, such as mental-health counseling and transportation. Housing advocates say that while it is not clear whether the amount would represent an actual increase over previous spending levels, because appropriations for fiscal 2003 have not yet been made by Congress, they are encouraged to see the administration specifically dedicate money to the homeless.

The proposed budget also calls for $70-million to be used to help chronically homeless people find housing and other services, including health care and substance-abuse treatment. Funds from the so-called Samaritan program would be distributed as grants to nonprofit groups and local governments that win in a competitive-bidding process.

Still, some housing advocates say that the federal government should do more to encourage the building of low-cost apartments. “We’re going to need a lot more money for homeless people because the federal government has done little to solve the affordable-housing crisis, which is a major cause of homelessness,” says Nan Roman, president of the National Alliance to End Homelessness, an advocacy group in Washington.

The Bush administration argues that financial assistance, rather than the construction of new housing, is what is most needed to help the homeless.

Continuing a decade-long federal push to increase the homeownership rate, the Bush budget calls for a $300-million increase in a program to encourage homeownership by offering low-cost mortgage loans for people with low to moderate incomes who live in rural areas.

Funds for the Community Development Block Grants, which were $5-billion in 2002, would be reduced by $300-million under Mr. Bush’s plan. The funds provide money to poor neighborhoods to build low-cost housing, clean up slums, build roads or bridges, or encourage economic development. Mr. Bush proposes to change the formula by which the funds are awarded, to go beyond Census data and include other measures of poverty and need. The change would mean that programs in some cities could get substantially less money than in the past, while others could get more.

But some rural renters and would-be homeowners would be hurt by cuts elsewhere, say some housing advocates. A $25-million program that provides grants to nonprofit groups and American Indian tribes so they can build low-cost housing would be eliminated. Groups such as Proyecto Azteca, a small charity that builds homes for poor residents of colonias in southwest Texas, will receive half of its $1.6-million budget from the program in fiscal 2003.

“We have the capacity and need to build about 300 homes, but in a good year we build 100 homes for people whose income can be as low as $7,500 per year,” says David Arizmendi, executive director of Proyecto Azteca, in San Juan, Tex. Without the federal funds the group might have to cut its programs in half, he says.

International aid. Mr. Bush has proposed spending $1.3-billion on a new foreign-aid program — the Millennium Challenge Account — for countries that meet certain criteria, such as fighting corruption and encouraging economic and political freedom.

Mr. Bush would also designate $450-million to combat AIDS, particularly in Africa and the Caribbean; $200-million in emergency food assistance; and $145-million to encourage democratic institutions in Arab nations.

Mary E. McClymont, president of InterAction, a coalition of charities that operate overseas, says Mr. Bush’s plans are a step in the right direction. But she says that “more needs to be done to address the global challenges of poverty, disease, and disaster.” Adds Ms. McClymont: “The funding requested for development assistance, child survival, disaster assistance, and refugees is actually below the level approved by Congress for this year.”

Public broadcasting. Funds for the Corporation for Public Broadcasting earmarked to help public television and radio stations convert to digital transmission were cut in this year’s budget request. Last year, the administration had set aside $25-million for the conversion, on top of a separate $43.5-million fund at the Department of Commerce that could be used for technical improvements, including digital conversion. Both programs are eliminated in this year’s budget proposal. Instead, the president is asking for a $5-million increase in funds for CPB over its 2002 budget, and suggests that the corporation spend $100-million of its budget on the conversions.

Social services. Mr. Bush proposes to freeze funds for state grants for the primary welfare program, Temporary Assistance for Needy Families, at $16.6-billion, the same amount as 2002. The federal government actually spent $18.7-billion in 2002, as states used up leftover welfare money that had been allocated to them in the 1990s, but which they did not spend when the economy was strong.

Funds for other programs that serve those in need, such as soup kitchens and food banks, would remain flat at $190-million. An exception is the food-stamp program, which would increase by nearly $3.6-billion from two years ago. The increase would make it possible for poor immigrants who have lived legally in the United States for at least five years to become eligible for food stamps.

The president proposes to spend $181-million on programs to strengthen families. Some of that money would pay for new programs, including $20-million for projects to promote “responsible fatherhood” among low-income or unemployed fathers, encouraging them to play a significant role in their children’s lives and to get and stay married.

Technology. The administration proposes eliminating programs that seek to bring information technology to people who are poor, live in rural areas, or are members of minority groups. Programs slated for termination include the U.S. Department of Education’s Community Technology Centers program, which makes grants to local organizations that provide access to information technology ($33-million), and Preparing Tomorrow’s Teachers to Use Technology ($63-million).

Volunteerism. Among the measures aimed at increasing the time and money that Americans give to charities, the president has asked that AmeriCorps, the national community-service program, receive a 54.7-percent increase in funds, to $590.5-million. The new money would pay for 75,000 AmeriCorps participants, up from 50,000.

The Peace Corps would receive an increase of $84-million as part of the USA Freedom Corps. Administration of the Freedom Corps by the Department of Justice is budgeted at $15-million. In addition, the administration’s budget seeks $181-million for the all-volunteer Citizen Corps within the new Department of Homeland Security. Members of the Corps would provide backup medical and police assistance as well as greater local scrutiny of potential terrorists and terrorist activities, among other duties. The programs would be run by councils that could include nonprofit officials. Nonprofit programs, such as Neighborhood Watch groups, could receive some of the money.

The president’s plan is available online at http://www.whitehouse.gov/omb/budget/fy2004/.

The table at left summarizes key items in the president’s budget that are of interest to nonprofit groups.