Rep. Peter A. Peyser (D-N.Y.) announced yesterday that the Department of Education has decided to release library funds that Peyser contended had been illegally impounded by the Reagan administration.
The dispute involved money voted by Congress last December under Titles I and III of the Library Services and Construction Act.
Although the appropriation totaled $71.5 million on an annualized basis, according to New York State authorities, the department released funds for the first quarter of 1982 at an annualized rate of only $52 million, the amount President Reagan had requested for the program in September.
Peyser, backed by a written advisory opinion from the General Accounting Office, contended that the withholding of part of the voted funds was an illegal impoundment.
Peyser said the department told him it was releasing $10 million, the amount withheld for the first six months of the fiscal year.
He said the remaining $10 million would be forthcoming at the end of March for the second half of the fiscal year.
Office of Management and Budget spokesman Edwin L. Dale Jr. confirmed that the first $10 million was being released, but said the OMB does not concede that the withholding of the funds was illegal and has not accepted the GAO opinion as valid.