Administration officials yesterday denied that genuinely poor people would be hurt by budget cuts or that states and localities would be able to divert federal education, health and welfare grants away from the poor under "block grant" proposals in President Reagan's new budget.
Secretary of Education Terrel H. Bell took strong issue with a statement by a subordinate that $4.7 billion a year in federal education funds, now going mainly to poor and handicapped children under about 45 grant programs, could be spent in the future for whatever educational purposes state and local authorities chose under Reagan's proposal to unite the 45 programs into two big "block grants" with 20 percent less money.
Bell told reporters at a briefing at the Office of Management and Budget that states and localities would have to spend the money for the same purposes as had been previously specified in the programs being consolidated, though not in the same proportions. As a result, he said, he fully expected that most of the education funds would continue to go for special school enrichment programs for educationally disadvantaged children and for the handicapped.
Bell also denied that the Reagan administration had made a final decision to let the states and localities use the consolidated grants to supplant local funds and cut their own taxes, instead of using the federal money to supplement their own efforts, despite a statement to that effect in the OMB budget book. The OMB later said that it would prefer dropping the requirement, but had ceded to Bell the right to draft the education block grant bill and the issue wouldn't be ultimately decided until later.
Secretary of Health and Human Services Richard S. Schweiker said the administration is thinking of consolidating about 40 small health and welfare programs, now totaling about $9.3 billion a year, into four smaller "block grant" programs with 25 percent less money. Like Bell, he said the states would be required to spend the money on the same purposes as previously stated in the 40 programs, but could allocate the funds among the programs as they wished instead of having the federal government dictate precisely how much would go to each.
The four block grants would cover preventive health care, basic health care, social services and emergency assistance.
Both Schweiker and Bell argued that savings in administrative costs would offset most of the overall cuts. Schweiker said administration proposals for cuts in social programs would have little effect on most of the genuinely needy, affecting those with somewhat higher income for the most part.
Bell said the existing college grant program for low-income students (which has a family income of $26,000 as the eligibility cutoff) would be somewhat toughened to sharpen its "focus upon truly needy students," with the expectation that the cutoff would drop by $4,000 possibly.
Before getting the aid, families and students would be required to contribute a bit more out of their own pockets (20 percent of family discretionary income instead of 14 percent, and $750 for the student). Moreover, Bell said, the guaranteed student loan program would be made available only to those who fall below the needy line after subtracting what they can pay for college. Interest rates would be raised and charged for years in school, instead of only years after the student left school.
On Capitol Hill, Sen. Claiborne Pell (D-R.I.), authors of most existing student aid legislation, called the college-aid cuts "penny wise and pound foolish."