Major Savings and Reforms

in the 

President's 2006 Budget

FEBRUARY 11, 2005

i

 

Table of Contents

 

Introduction............................................................................................. 1 

 

Savings from Discretionary Program Terminations, Reductions, and Reforms................ 7 

 

 Program Terminations............................................................................ 11 

 Spending Reductions............................................................................. 83

 Spending Reform Proposals..................................................................... 129 

Transformation and Restructuring, Department of Defense..................................... 151 

Savings from Mandatory Spending Reductions and Reforms.................................... 173 

 

 Mandatory Program Reforms..................................................................... 175 

 User Fees........................................................................................... 209 

 

Budget Enforcement and Other Reforms............................................................ 227 

 

 General Notes 

1. All years referred to are fiscal years, unless otherwise noted. 

2. Detail in this document may not add to the totals due to rounding.

3. PART refers to the Program Assessment Rating Tool. 
ii
INTRODUCTION 

1
2
Major Savings and Reforms in the President's 2006 Budget 

“America's prosperity requires restraining the 

spending appetite of the federal government. I 

welcome the bipartisan enthusiasm for spending 

discipline. I will send you a budget that holds the 

growth of discretionary spending below inflation, 

makes tax relief permanent, and stays on track to 

cut the deficit in half by 2009. 

My budget substantially reduces or eliminates more 

than 150 government programs that are not getting 

results, or duplicate current efforts, or do not fulfill 

essential priorities. The principle here is clear: 

Taxpayer dollars must be spent wisely, or not at 

all.” 

President George W. Bush 

State of the Union Address 

February 2, 2005 

Introduction 

The 2006 Budget meets the Nation’s priorities in a fiscally responsible way. In order to focus 

Government resources on these priorities, the Administration is proposing this package of 

savings and reforms. 

During his first term, the President worked with Congress to meet historic challenges: a 

collapsing stock market, a recession, revelation of corporate scandals and, of course, the terrorist 

attacks of September 11th. To meet the economy’s significant challenges, the President proposed 

and signed into law, in each year of his first term, major tax relief that fueled recovery, business 

investment and job creation. 

Those remedies are clearly working: the U.S. economy is strong and fundamentals point to 

continuing prosperity and expansion. Sustaining this economic expansion requires additional 

action, including even greater spending discipline. When the Federal government focuses on its 

priorities and limits is claims on resources taken from the private sector, that helps sustain a 

stronger, more productive economy. 

This supplementary document to the 2006 Budget explains the specific savings proposed in the 

President’s Budget. Combined with continuation of pro-growth economic policies, the spending 

restraint this package of savings and reforms enables will keep us on track to meet the 

President’s goal of cutting the deficit in half by 2009. 

This document describes the major sources of budget savings from reductions and terminations 

in existing discretionary non-defense programs; major reforms in mandatory spending programs; 

3
user fee proposals; transformation and restructuring of Defense programs to meet 21st Century 

threats; and budget process reform proposals. 

Each description includes background material to help inform budgetary decisions by the new 

Congress as it works to enact a budget resolution and subsequent laws that accomplish spending 

restraint and deficit reduction in a responsible manner. 

As the Administration drew up its list of proposed major reforms and budget savings, we were 

guided by three major criteria: 

• Does the program meet the Nation’s priorities? The Budget increases funding to 

strengthen our Armed Forces, improve our homeland defenses, promote economic 

opportunity, and foster compassion. 

• Does the program meet the President’s principles for appropriate use of taxpayer 

resources? If an appropriate Federal role could not be identified in a program’s mission, 

the Budget generally proposes to reduce or eliminate its funding. 

• Does the program produce the intended results? The Bush Administration is measuring 

the effectiveness of the government’s programs—and the results are helping us make 

budgeting decisions. 

These criteria are evident in the discussions throughout this document. The major sections of the 

document are described briefly below. 

 

Savings from Discretionary Program Terminations and Reductions 

About one-third of budget spending comes from discretionary programs, which are reviewed 

each year by the Appropriations Committees. The Administration has undertaken a thorough 

review of these programs to identify low-performing programs and lower priority activities. As 

a result, the Budget includes a number of proposals to terminate or reduce discretionary 

spending. These proposals are described in more detail in the following chapters. 

Program Terminations.—Terminations of 99 discretionary programs will reduce spending by 

$8.8 billion in 2006. 

Spending Reductions.—Proposed reductions of 55 programs in discretionary spending will 

reduce 2006 spending by $6.5 billion. 

Spending Reform Proposals.—This year’s budget review paid special attention to long-term 

reforms to improve the government’s effectiveness, especially when several agencies have 

overlapping programs that serve a similar purpose. A number of reforms of such programs, in 

both discretionary and mandatory spending categories, will result in both savings to taxpayers 

and improved government services. These reforms will reduce 2006 spending by a net total of 

$1.9 billion, including $4.7 billion in reform savings and $2.9 billion in reform costs. 

4
Transformation and Restructuring, Department of Defense 

The President’s Budget increases the defense budget by $19 billion or 4.8 percent, providing for 

a total increase since the President took office of 41 percent, the largest increase since the 

Reagan Administration. As part of Secretary Rumsfeld’s efforts to transform the military from a 

Cold War posture to a more mobile, more lethal force to confront the War on Terror and the 

threats of a new century, the budget shifts resources to fund priorities as part of this 

transformation program. Savings from proposed transformations and restructuring will make 

available $6.6 billion in resources to support DOD’s transformation effort. 

Savings from Mandatory Spending Reductions and Reforms 

About two-thirds of budget spending comes from mandatory programs, which includes 

entitlement programs. Because this funding is not generally subject to annual congressional 

review, these programs often grow faster than originally envisioned. Even when that occurs, 

there is no automatic mechanism to impose restraint. The only way to constrain the growth of 

mandatory spending is by enacting laws that change the rules governing these spending 

programs. Examples of programs in this category are the Medicaid program and Education 

Student loans. 

The President’s Budget shows $137.0 billion in net mandatory savings for 2006 through 2015, 

including both programmatic reforms and user fee proposals. This amount includes $25 billion 

in mandatory spending increases that are not reflected in the mandatory spending reductions and 

reforms in this document. 

Mandatory Program Reforms.— This budget savings volume includes changes in mandatory 

programs that will reduce 2006 spending by $7.3 billion, 2006-2010 spending by $66.7 billion, 

and 2006–2015 spending by $147.6 billion. 

User Fees.—Most Federal programs are paid for from general tax revenues. Yet some programs 

are focused on a small subset of users who finance those programs through direct user fees. For 

example, financial services firms pay user fees in order to finance regulatory activities in their 

industry. In a number of cases, the budget proposes to expand the financing of specific programs 

that benefit a clearly identifiable group of users through new or expanded user fees. These 

proposals will reduce 2006 spending by $0.8 billion, 2006–2010 spending by $6.9 billion, and 

2006–2015 spending by $14.3 billion. 

Budget Enforcement and Other Reforms 

In the spring of last year, the Administration transmitted to the Congress a comprehensive budget 

enforcement legislation package in the form of the Spending Control Act of 2004. The 

Administration plans to re-propose that legislation, including appropriate updates and revisions, 

shortly. In addition, administrative steps will be taken to ensure that Executive Branch 

regulatory actions do not increase spending. 

5
What is the PART program?

The Program Assessment Rating Tool (PART) was designed to help assess the management and 

performance of government programs. PART helps evaluate a program’s purpose, design, 

planning, management, results, and accountability to determine its overall effectiveness. Based 

on each evaluation, recommendations are made to improve the management and performance of 

programs. 

The PART consists of approximately 30 questions that examine four critical areas: 

• Clarity of purpose and quality of design

• Value of strategic planning / results-orientation

• Quality of management

• Level of results and accountability

This marks the third year that the PART was used to assess programs’ strengths and weaknesses 

and to make recommendations for improved program performance. These assessments, in turn, 

are factors in decisions about program funding. Over the next two years, the Administration will 

assess all remaining Federal programs. To date, the Administration has assessed:

• 607 programs (60 percent of the Federal budget, or $1.4 trillion) with the following 

program ratings: 

o 15% are Effective

o 26% are Moderately Effective

o 26% are Adequate

o 4% are Ineffective

o 29% are Results Not Demonstrated

Background

For years, advocates of good government have been trying to find ways to improve 

accountability, to focus on results, and to integrate the performance of programs with budget 

decisions. Presidents throughout the latter half of the 20th Century sought by various means to 

make performance matter.

The PART was initially designed by officials at the Office of Management Budget. It was 

reviewed by a number of independent groups, including the Performance Measurement Advisory 

Council, chaired by former Deputy Secretary of Transportation Mortimer Downey, and a group 

from the President’s Council on Integrity and Efficiency. The PART was then the subject of a 

special workshop sponsored by National Academy of Public Administration and a congressional 

hearing. The President’s Management Council approved a final version of the PART on July 10,

2002 and it was released for use on July 16, 2002.

6
SAVINGS FROM DISCRETIONARY PROGRAM 

TERMINATIONS AND REDUCTIONS 

7
8
02/11/05

08:04 AM

Terminations of Discretionary Programs in 2006

99 programs terminated in the 2006 Budget

59 of those terminations have been proposed in previous years

$8.8 billion savings over 2005 Enacted

Major Program Reductions in 2006

55 programs have major reductions in the 2006 Budget

27 of those reductions have been proposed in previous years

$6.5 billion savings over 2005 Enacted

Major Reform Proposals

16 programs have major reform proposals

$4.7 billion savings in 2006 over 2005 Enacted

$2.9 billion in costs in 2006 over 2005 Enacted

Discretionary TOTAL for Program Terminations, Major Reductions, and Reform Proposals

$20.0 billion in gross savings (excluding Reform costs) over 2005 Enacted

$17.2 billion in net savings (including Reform costs) over 2005 Enacted

Major Discretionary Terminations, Reductions, and Reform Proposals in the FY 2006 Budget

OVERVIEW

9
10
PROGRAM TERMINATIONS 

11
12
2005 2005 2006

Terminations 2002 2003 2004 Request Enacted Request

Department of Agriculture

AMS Biotechnology Program............................................................................. N N N 4 4 ---

Forest Service Economic Action Program............................................................ N Y Y --- 19 ---

High Cost Energy Grants.................................................................................................. Y Y Y --- 28 ---

NRCS Watershed and Flood Prevention Operations................................................ N Y N 40 75 ---

Research and Extension Grant Earmarks and Low Priority Programs............................. Y Y Y --- 180 ---

Total, Agriculture Terminations............................................................................................................................................ 44 306 ---

Department of Commerce

Advanced Technology Program....................................................................................... Y N Y --- 136 ---

Emergency Steel Guarantee Loan Program.................................................................... Y Y Y -35 --- -50

Public Telecommunications Facilities, Planning and Construction Program.................... N N Y 3 21 2

Total, Commerce Terminations............................................................................................................................................ -33 157 -48

Department of Education

Comprehensive School Reform........................................................................... N N Y --- 205 ---

Educational Technology State Grants.............................................................................. N N N 692 496 ---

 Even Start...................................................................................................... N N N --- 225 ---

High School Program Terminations:

 Vocational Education State Grants............................................................................... N N N 1,000 1,194 ---

Vocational Education National Activities....................................................................... N N Y --- 12 ---

Tech Prep State Grants ....................................................................................... ........ N N Y --- 106 ---

Upward Bound............................................................................................................... N N N 316 313 ---

Talent Search .............................................................................................................. N N N 146 145 ---

GEAR UP ....................................................................................... ............................. N N N 298 306 ---

Smaller Learning Communities .................................................................................... Y Y Y --- 94 ---

Perkins Loans: Capital Contributions and Loan Cancellations........................................ N N N 66 66 ---

Regional Education Laboratories..................................................................................... N N Y --- 66 ---

Safe and Drug Free Schools State Grants ...................................................................... N N N 441 437 ---

Small Elementary and Secondary Education Programs:

Javits Gifted and Talented Education ........................................................................... Y Y Y --- 11 ---

National Writing Project................................................................................. Y Y Y --- 20 ---

School Leadership..................................................................................... -NA- Y Y --- 15 ---

Dropout Prevention Program ....................................................................................... -NA- Y Y --- 5 ---

Close Up Fellowships ....................................................................................... ........... Y Y Y --- 1 ---

Ready to Teach ....................................................................................... .................... Y Y Y --- 14 ---

Parental Information and Resource Centers ................................................................ Y Y Y --- 42 ---

Alcohol Abuse Reduction ....................................................................................... ..... -NA- Y Y --- 33 ---

Foundations for Learning ....................................................................................... ...... -NA- -NA- -NA- --- 1 ---

Mental Health Integration in Schools ............................................................................ -NA- -NA- -NA- --- 5 ---

Community Technology Centers................................................................................... Y Y Y --- 5 ---

Exchanges with Historic Whaling and Trading Partners ............................................... -NA- Y Y --- 9 ---

Foreign Language Assistance ...................................................................................... Y Y Y --- 18 ---

Excellence in Economic Education ............................................................................... -NA- N N --- 1 ---

Arts in Education ....................................................................................... .................. Y Y Y --- 36 ---

Women's Educational Equity ....................................................................................... Y Y Y --- 3 ---

Elementary and Secondary School Counseling ........................................................... Y Y Y --- 35 ---

Civic Education ....................................................................................................... Y Y N --- 29 ---

Star Schools ....................................................................................... ......................... Y Y Y --- 21 ---

Smaller Higher Education Programs:

Higher Education Demos for Students w/Disabilities ................................................... Y Y Y --- 7 ---

Underground Railroad Program ................................................................................ Y Y Y --- 2 ---

Interest Subsidy Grants ............................................................................................... N N N --- 1 ---

Small Job Training and Adult Education Programs:

Occupational and Employment Information .................................................................. Y Y Y --- 9 ---

Tech-prep Demonstration ....................................................................................... ..... Y Y Y --- 5 ---

Literacy Programs for Prisoners ................................................................................... N Y Y --- 5 ---

State Grants for Incarcerated Youth ............................................................................ N Y Y --- 22 ---

Small Postsecondary Student Financial Assistance Programs:

LEAP ....................................................................................... .................................... Y Y Y --- 66 ---

Byrd Scholarships ......................................................................................................... N N N 41 41 ---

B.J. Stupak Olympic Scholarships ............................................................................... Y Y Y --- 1 ---

Thurgood Marshall Legal Opportunity ......................................................................... Y Y Y --- 3 ---

Small Vocational Rehabilitation Programs:

 Vocational Rehabilitation Recreational Programs........................................................ N Y Y --- 3 ---

Vocational Rehab. (VR) Migrant and Seasonal Workers ............................................ N Y Y --- 2 ---

Projects with Industry.................................................................................................... N Y Y --- 22 ---

 Supported Employment ............................................................................................... N Y Y --- 37 ---

Teacher Quality Enhancement Program.......................................................................... N N N 89 68 ---

Total, Education Terminations.............................................................................................................................................. 3,089 4,263 ---

Has the termination been 

proposed before?

Summary of Discretionary Terminations in the FY 2006 Budget 

(Budget authority in millions)

13
2005 2005 2006

Terminations 2002 2003 2004 Request Enacted Request

Has the termination been 

proposed before?

Summary of Discretionary Terminations in the FY 2006 Budget 

(Budget authority in millions)

Department of Energy

Hydropower Program....................................................................................................... N N N 6 5 ---

Nuclear Energy Plant Optimization................................................................................... N Y Y --- 2 ---

Nuclear Energy Research Initiative.................................................................................. N N Y --- 2 ---

Oil and Gas Programs...................................................................................................... Y Y Y 41 79 20

Total, Energy Terminations................................................................................................................................................... 47 88 20

Health and Human Services

ACF Community Service Programs.................................................................................. N N N 5 30 ---

ACF Early Learning Opportunities Fund........................................................................... Y Y Y --- 35 ---

CDC Congressional Earmarks ........................................................................................ Y Y Y --- 60 ---

CDC Preventive Health and Health Services Block Grant............................................... N N N 132 131 ---

CDC Youth Media Campaign........................................................................................... N N N 4 59 ---

Direct Service Worker Delivery Grants............................................................................. N N N 3 3 ---

HRSA Emergency Medical Services for Children............................................................. N N N 20 20 ---

HRSA Health Facilities Construction Congressional Earmarks........................................ Y Y Y --- 476 ---

HRSA Healthy Community Access Program.................................................................... Y Y Y 10 82 ---

HRSA State Planning Grant Program.............................................................................. N Y Y --- 11 ---

HRSA Trauma Care......................................................................................................... N Y Y --- 3 ---

HRSA Traumatic Brain Injury........................................................................................... N N N 9 9 ---

HRSA Universal Newborn Hearing Screening................................................................. N Y Y --- 10 ---

Real Choice Systems Change Grants.............................................................................. N N N 40 40 ---

Total, HHS Terminations....................................................................................................................................................... 224 970 ---

Department of Housing and Urban Development

HOPE VI........................................................................................................................... N Y Y --- 143 -143

Total, Terminations................................................................................................................................................................ --- 143 -143

Department of the Interior

BLM Jobs-in-the-Woods Program............................................................................... N N N 6 6 ---

LWCF State Recreation Grants (NPS) ............................................................................ N N N 91 90 ---

National Park Service Statutory Aid............................................................................ N N N --- 11 ---

Rural Fire Assistance (BLM, NPS, FWS, BIA) ........................................................... N N N 5 10 ---

Total, Interior Terminations................................................................................................................................................... 102 117 ---

Department of Justice

Byrne Discretionary Grants.............................................................................................. Y Y Y --- 168 ---

Byrne Justice Assistance Grants...................................................................................... N N N 528 626 ---

COPS Hiring Grants ........................................................................................................ N N N --- 10 ---

COPS Interoperable Communications Technology Grants.............................................. Y Y Y --- 99 ---

COPS Law Enforcement Technology Grants................................................................... N N N --- 137 ---

Juvenile Accountability Block Grants................................................................................ N N Y --- 54 ---

National Drug Intelligence Center**.................................................................................. N N N 35 39 17

Other State/Local Law Enforcement Assistance Program Terminations..................... N N N 30 94 ---

State Criminal Alien Assistance Program (SCAAP)......................................................... N Y Y --- 301 ---

Total, Justice Terminations................................................................................................................................................... 593 1,528 17

Department of Labor

Migrant and Seasonal Farm Worker Training Program.................................................... N Y Y --- 76 ---

Reintegration of Youthful Offenders................................................................................. Y Y Y 55 50 ---

Total, Labor Terminations..................................................................................................................................................... 55 126 ---

Department of Transportation

National Defense Tank Vessel Construction Program..................................................... N N N --- 74 ---

Railroad Rehabilitation Infrastructure Financing Loan Program....................................... N N N --- -NA- -NATotal, Transportation Terminations...................................................................................................................................... --- 74 ---

Enviromental Protection Agency

Unrequested Projects....................................................................................................... Y Y Y --- 489 ---

Water Quality Cooperative Agreements........................................................................... N N N 21 17 ---

Total, EPA Terminations........................................................................................................................................................ 21 506 ---

National Aeronautics and Space Administration

Hubble Space Telescope Robotic Servicing Mission....................................................... N N N 30 291 ---

Total, NASA Terminations..................................................................................................................................................... 30 291 ---

Other Agencies

National Veterans Business Development Corporation................................................... N N N 2 2 ---

Postal Service: Revenue Forgone Appropriation............................................................ N N N --- 29 ---

SBA: Microloan Program................................................................................................. N N N --- 15 ---

SBA: Small Busines Investment Company (SBIC) Participating Securities Program...... N N N --- --- ---

Total, Other Agency Terminations....................................................................................................................................... 2 46 ---

TOTAL, Terminations 4,174 8,614 -154

14
Department of Agriculture: Discretionary Proposal

AMS Biotechnology Program

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 4 --- –4

Background

The Agricultural Marketing Service’s (AMS) biotechnology program was initiated in 2002 to 

develop the agency’s capacity to test non-grain commodities for bio-engineered traits. Since 

2002, AMS has received annual appropriations in support of its biotechnology program and has 

used these funds to upgrade its laboratory testing facilities. As initially justified, a core 

component of the AMS biotechnology program was the establishment of a fee-for-service 

accreditation and testing program to allow private sector labs to perform biotechnology tests on 

non-grain commodities. After several years of funding, the agency has yet to establish an 

accreditation program due to a lack of demand for these services among the private sector.

Administration Action

The 2006 Budget proposes to terminate the AMS biotechnology program, a reduction of $4 

million from the 2005 enacted level due to a lack of demand for these services among the private 

sector. If demand for these services becomes apparent, AMS will work with the affected 

industries to determine alternative mechanisms to facilitate the movement of agricultural 

commodities. This reduction will not adversely affect the Department’s overall biotechnology 

initiative, as grain varieties account for the majority of all genetically modified commodities and 

are regulated and tested by the Grain Inspection, Packers and Stockyard Administration.

15
Department of Agriculture: Discretionary Proposal

Forest Service Economic Action Program

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 19 --- –19

Background

The Economic Action Program provides technical and financial assistance to forest-dependent 

communities and local groups to enhance rural economies through the utilization of forest and 

related natural resources. The program was established in the 1990 Farm Bill, and is heavily 

earmarked by the Congress each year. 

The Administration proposed termination of this program in the 2005 Budget, citing its 

duplication of other rural development programs. 

Administration Action

The 2006 Budget proposes to eliminate funding for the program. This program is duplicative of 

other USDA Rural Development programs that address priority needs in rural areas including 

several programs that can assist forest-based industries. These other programs include Business 

and Industry guaranteed loans; Intermediary Re-lending Program; and Cooperative Development 

Grants. In addition, the President has proposed significant increases in stewardship contracting 

that will benefit local businesses by allowing private companies, communities and others to 

retain forest and rangeland products in exchange for the service of thinning trees and brush and 

removing dead wood. Stewardship contracting fosters a public/private partnership to restore 

forest and rangeland health by giving those who undertake the contract the ability to invest in 

equipment and infrastructure. 

16
Department of Agriculture: Discretionary Proposal

High Cost Energy Grants

Funding Summary

(In millions of dollars)

 2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 28 --- –28

Background

The High Cost Energy Grant program, which provides grants for areas where the cost to deliver 

energy is significantly higher than the average, was first funded in 2001. Only Alaska, Hawaii 

and a few isolated areas within the United States qualify for these grants. These same areas are 

eligible for low cost electric loans through the Rural Utilities Service.

Administration Action

The Budget proposes no new funding for High Cost Energy Grants. This program is duplicative. 

Funds are available through the Rural Utilities Service’s electric loan program which can be used 

to support the provision of electric service in high cost areas. Also, using loans to provide 

support is more efficient than grants by allowing for more support (loan level) with fewer 

appropriated dollars.

17
Department of Agriculture: Discretionary Proposal

NRCS Watershed and Flood Prevention Operations

Funding Summary

(In millions of dollars)

 2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 75 --- –75

Background

The Watershed and Flood Prevention Operations program provides technical and financial 

assistance to local communities to plan, design, and construct flood protection, water supply, and 

water quality improvement projects. By agreement with the Army Corps of Engineers, this 

program funds only operations in small, rural watersheds and in communities with small 

populations. The Natural Resources Conservation Service (NRCS) has helped to construct 

thousands of usually privately-owned dams and other flood control projects across the country 

over the program’s 60-year history. 

In the 2004 Budget, OMB compared the cost effectiveness of the Corps of Engineers’, NRCS’s, 

and Federal Emergency Management Agency’s flood damage reduction programs. OMB

evaluated projects that were completed over a five-year period and, in total for all projects, 

NRCS’s program provided the fewest benefits per dollar.

Administration Action

The 2006 Budget proposes to terminate NRCS’s Watershed Operations program. The program 

funds local, in many cases privately-owned, flood prevention and water improvement projects 

that are not Federal responsibilities. In addition, an OMB analysis in the 2004 Budget found that 

NRCS’s program was the least cost effective Federal flood damage reduction program. The 

Budget proposes to cancel funding for this program and redirect the dollars to other higher 

priority programs.

18
Department of Agriculture: Discretionary Proposal

Research and Extension Grant Earmarks and Low Priority Programs

Funding Summary

(In millions of dollars)

 2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 180 --- –180

Background

The Congress provides funding for research and extension grants earmarked to specific locations 

and for specific purposes, often for work that may not be in the national interest or a Federal 

responsibility. Examples of these earmarks include: asparagus technology and production, 

jointed goatgrass control, dairy and meat goat research, and alternative salmon products. Many 

of these projects have received continuous funding for more than a decade. The Congress has 

continued to provide funding for such earmarks, at increasingly higher levels in recent years.

Administration Action

In the 2006 Budget, the Administration proposes not continuing about 280 research and 

extension grants that are earmarked to specific projects and locations, as well as several lower 

priority programs. These “earmarks” and lower priority projects do not represent the most 

effective use of Federal dollars. The Administration proposes that such funding be redirected to 

competitive, peer reviewed grants. Competitive grants that are peer reviewed and can be 

targeted toward high priority National needs are a more effective use of Federal research 

funding. The 2006 Budget also includes an increase of $70 million (+39 percent) in the National 

Research Initiative competitive grant program.

19
 

Department of Commerce: Discretionary Proposal

Advanced Technology Program (ATP)

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 136 --- –136

Background

The Advanced Technology Program (ATP) supports industry-led research and development 

projects in areas of emerging technology. The Administration believes that grants to industry for 

such projects are not necessary, particularly given the growth in available sources of private 

funding, such as venture capital firms and corporate research labs. As an alternative to direct 

spending on R&D, the Administration supports permanent extension of the broadly available 

research and experimentation tax credit. The PART for this program noted that large shares of 

ATP funding have gone to major corporations, which may not be an appropriate use of Federal 

resources, and that past GAO studies found projects often have been similar to those conducted 

by firms not receiving such subsidies. 

Administration Action

The Budget terminates ATP, providing no funding for new or prior year awards. The 2005 

appropriated level does not provide for new awards, so the program is already effectively on a 

path to termination. 

The Administration believes the program is no longer warranted in today’s research and 

development environment. To address the highest priority needs of the U.S. science and 

technology base, the Budget provides $485 million for the National Institute of Standards and 

Technology.

20
Department of Commerce: Discretionary Proposal

Emergency Steel Guarantee Loan Program

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ --- –50 –50

Background

The Emergency Steel Guarantee Loan Program was enacted in 1999 to help steel firms suffering 

from financial losses from low prices and the inability to obtain credit for continued operations 

and facility re-investment. Since 2003, the Administration has proposed to rescind funds from 

the program as it provides an unwarranted corporate subsidy and exposes taxpayers to significant 

costs from defaults. One of the first firms to receive a guarantee experienced difficulties within 

months and formally defaulted on its $110 million loan after a year. 

The Administration imposed temporary safeguard tariffs in March 2002 to benefit the domestic 

steel industry. Those tariffs were lifted in December 2003, as industry conditions improved. In 

2004, conditions further improved as international demand for steel increased significantly and 

consolidations occurred in the domestic market. Demand for the guarantees has been lower than 

expected. 

Administration Action

The Administration is proposing to rescind all remaining credit subsidy balances for the 

Emergency Steel Guarantee Loan Program. 

21
Department of Commerce: Discretionary Proposal

Public Telecommunications Facilities, Planning and Construction Program

Funding Summary

(In millions of dollars)

 2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 21 2 –19

Background

The Public Telecommunications Facilities, Planning and Construction Program (PTFP) was 

created in the early 1960s to assist in the planning and construction of public telecommunications 

facilities through matching grants. The Commerce Department’s National Telecommunications 

and Information Administration has administered the program since 1979.

Since 2000, almost 70 percent of PTFP awards have supported public television stations’ 

conversion to digital broadcasting. Funding for public television’s conversion to digital is 

available elsewhere. The Corporation for Public Broadcasting has awarded grants totaling 

approximately $76 million to assist 122 public television stations in their efforts to transition to 

digital broadcasting, and has $39 million available to assist broadcasters’ conversion in 2005.

Administration Action

The Administration proposes to terminate PTFP grant funding in 2006. The Administration 

proposes instead that $30 million of the Corporation for Public Broadcasting’s already-enacted 

2006 funding be made available for public television’s digital transition. The Budget requests $2 

million for PTFP administrative costs, including program termination. 

22
Department of Education: Discretionary Proposal

Comprehensive School Reform

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 205 --- –205

Background

The Comprehensive School Reform (CSR) program supports research-based reform models that 

address multiple aspects of schools and instruction, in particular in low-performing schools. In 

2004, the Administration used the PART to analyze the program and found it to be duplicative of 

several aspects of Title I Grants to Local Educational Agencies, the largest No Child Left Behind 

(NCLB) program. For example, NCLB allows significantly more schools than under the prior 

law to use Title I funds to carry out the types of whole-school reforms supported by the CSR 

program. As a result, nearly 26,000 of the highest poverty Title I schools already operate 

schoolwide projects and thus enjoy the opportunity to conduct comprehensive reform efforts. In 

addition, within Title I funding, there is a set-aside of about $520 million specifically for 

improvement activities in low-performing schools, the same as the highest priority grant 

recipients in the CSR program. School districts may use these funds to implement 

comprehensive reforms when they determine those reforms are the most effective route toward 

improving academic achievement. 

Data indicate that CSR is unnecessary as a catalyst for change. The National Longitudinal 

Survey of Schools during the 2000-2001 school year found that a significant number of Title I 

schools were implementing research-based reform models, the focus of CSR, absent CSR funds. 

About 30,000 schools were implementing research-based school reform models, yet fewer than 

10 percent were using CSR funds to do so. 

In 2004 and 2005, the Administration proposed to eliminate CSR. Congress cut the program for 

the first time in 2005 (-$29 million), from $234 million to $205 million.

Administration Action

The Administration proposes to eliminate the Comprehensive School Reform program and 

redirect funds toward Title I. The program duplicates Title I, and it is unnecessary, as the vast 

majority of schools that have adopted research-based models have done so without receiving 

CSR funding.

23
Department of Education: Discretionary Proposal

Educational Technology State Grants

 

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 496 --- –496

Background

The Educational Technology State Grants program supports funding for States and local school 

districts to utilize technology to improve instruction and student learning. It was created in the 

No Child Left Behind Act of 2001 as a consolidation of disparate educational technology 

programs. Program funding to States is locally distributed -- half by formula and half by a 

competitive process to eligible school districts. Funding supports teacher training in educational 

technology, technology deployment, and a host of other activities designed to utilize educational 

technology to improve student achievement. 

While the program was created to better focus educational technology investments on student 

achievement, it is not clear that Educational Technology State Grants has been successful in 

accomplishing this mission. There is no performance information available to indicate whether 

the program is enhancing student learning.

Administration Action

The 2006 Budget proposes to terminate the Educational Technology State Grants program and 

redirect its funding to higher priority programs that are more closely focused on student 

achievement and have a more rigorous accountability structure in place. States can continue to 

support similar activities through other, larger Department of Education programs such as Title I 

Grants to Local Educational Agencies ($13.3 billion) and Teacher Quality State Grants ($2.9 

billion).

24
Department of Education: Discretionary Proposal

Even Start

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 225 --- –225

 

Background

Launched as a small demonstration program in 1988, Even Start combines early childhood 

education, adult education, and parenting classes into “family literacy” programs for low-income 

children and their parents. Three national evaluations of the program, including two with 

rigorous random control trial designs, show that Even Start is not effective. The children and 

adults who participate in the program do not make greater literacy gains than non-participants. 

The most recent evaluation concluded that, while Even Start participants made small gains, they 

did not perform better than the comparison group that did not receive Even Start services. In 

addition, the scores of Even Start participants after one year of participation in the program were 

very low. For example, Even Start children scored at the 6th percentile when tested at the end of 

the program on a measure of vocabulary knowledge and Even Start parents scored at the 3rd 

grade level when tested at the end of the program on a measure of reading comprehension. Even 

Start received an Ineffective rating on the PART in 2004.

In 2004, the Administration proposed to fund only continuation awards, based on PART findings 

and the evaluations, to begin phasing out the program. In 2005, the Administration proposed 

termination. Congress provided the first funding cut for the program in 2005 (-$22 million), 

reducing it from $247 million to $225 million.

Administration Action

The Administration proposes to eliminate the Even Start program and redirect funds to programs 

that are likely to be more effective at improving early childhood education including Title I. 

Even Start’s Ineffective PART rating and its poor results on national evaluations provides strong 

justification for terminating the program. 

25
Department of Education: Discretionary Proposal

High School Program Terminations

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 2,170* --- –2,170

* This includes $1.68 billion that supports high school activities and $0.48 billion under Vocational Education and Tech Prep 

State Grants that supports postsecondary training. 

Background

The following seven narrow-purpose programs fund high school activities.

Vocational Education (Voc Ed) State Grants and Voc Ed National Activities (2005 budget 

authority: $1.206 billion) provide grants to States to support high school and community college 

activities related to vocational and technical education, as well as national-level assessment, 

evaluation, dissemination, and technical assistanc e. About two-thirds of the funding supports 

high school activities and the remainder support postsecondary technical training. In its Final 

Report to Congress in June 2004, the National Assessment of Vocational Education found no 

evidence that high school vocational courses themselves contribute to academic achievement or 

college enrollment. Under the Administration’s PART, Vocational Education State Grants was 

rated Ineffective because it has produced little or no evidence of improved outcomes for students 

despite decades of increasing Federal investment. Last year the Administration proposed a 

“Blueprint” for a reformed Voc Ed program that funds projects that demonstrate positive 

academic and work-related outcomes. Neither the House nor Senate reauthorization bills 

adopted significant reforms last year; no action was completed. 

Tech Prep State Grants (2005 budget authority: $105.8 million) supports partnerships that 

develop structural links between secondary and postsecondary institutions to integrate academic 

and vocational education. About two-thirds of the funds support high school activities. The 

PART found that the program could not demonstrate results based on a series of national 

evaluations indicating that the program provides no measurable advantage for high school 

students in terms of high school completion, postsecondary enrollment, and academic 

achievement.

Upward Bound (UB) (2005 budget authority: $312.6 million) makes competitive grants to 

institutions of higher education to help low-income secondary school students graduate from 

high school and pursue postsecondary education through activities such as tutoring and guidance. 

Based on a 2004 Mathematica evaluation, UB received an Ineffective PART rating, as the study 

concluded that UB was not serving the high-risk students who were most likely to benefit from 

the program. 

Talent Search (2005 budget authority: $144.9 million) makes competitive grants to institutions 

of higher education that provide academic, career and financial counseling to low-income middle 

26
and high school students to increase their likelihood of pursuing a postsecondary degree. A 

PART assessment found that there was no evidence that program services have a substantial 

impact. 

GEAR UP (2005 budget authority: $306.5 million) makes competitive grants to States and 

partnerships involving institutions of higher education and secondary schools. Although it 

provides services similar to Upward Bound, GEAR UP supports entire cohorts, or classes, of 

students through grades 7-12. No definitive data exists on GEAR UP’s capacity to achieve its 

long-term performance goals. 

Smaller Learning Communities (2005 budget authority: $94.5 million) makes competitive grants 

to support the creation or expansion of smaller learning communities in large high schools. No 

conclusive evidence exists that this program improves student outcomes. In 2004, there were not 

a sufficient number of quality applications, and the program returned $26.5 million in unspent 

funds to the Treasury. 

Administration Action

The Administration proposes to consolidate funding from the seven narrow-purpose programs 

described above that support a particular high school intervention strategy and to redirect it to the 

President’s new High School Initiative. While these programs were intended to support 

promising educational approaches, most lack strong accountability mechanisms and have failed 

to demonstrate measurable results despite decades of investment. Furthermore, because the 

Federal government sets annual spending levels for each of these programs, States and school 

districts do not have the flexibility and control to allocate funds to activities they determine will 

best meet the needs of at-risk students.

These programs would be replaced by the new $1.5 billion High School Initiative which includes 

$250 million for High School Assessments and $1.2 billion for a High School Intervention 

program to provide States with flexible funding to support a wide range of effective 

interventions. (See discussion of “High School Initiative” elsewhere in this volume.) In return 

for this flexibility, States would be held accountable for improving student achievement and 

graduation rates. These new initiatives would augment new or expanded high school activities 

totaling nearly $400 million that were previously proposed by the President such as Striving 

Readers, Math and Science Partnerships, Advanced Placement, and State Scholars that are 

designed to improve student achievement in high schools.

The strategies supported by the existing programs – vocational training, mentoring, and 

partnerships with institutions of higher education to prepare students for college – would be 

allowable activities under the new High School Intervention program. The Administration 

expects that States and localities would continue those projects supported under existing 

programs if the projects are performing effectively and reaching students who need them most. 

During the initial years of the program, the Administration would honor its commitment to fund 

multi-year continuation awards under the current programs.

27
Department of Education: Discretionary Proposal

Perkins Loans: Capital Contributions and Loan Cancellations

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 66 --- –66

Background

The Perkins Loan Program was created in 1958 under the National Defense Education Act, well 

before the establishment of the larger direct and guaranteed Federal student loan programs. 

Under this program, the Education Department provides funding to colleges and universities to 

make low interest loans available to needy students. However, the institutional allocation 

formula (i.e., how much program funding is given to each school to offer Perkins aid) is 

designed to heavily benefit postsecondary institutions that have participated in the program for a 

long time, at the expense of more recent entrants. Most of the Federal funding for Perkins Loans 

was provided in the early years of the program. Over time, the balance of the Federal 

contributions in the revolving funds has grown to $6 billion. In 2005, Congress accepted the 

Administration’s proposal to eliminate Federal capital contributions for institutional revolving 

funds.

Certain Perkins Loan borrowers are eligible to receive loan forgiveness in exchange for 

undertaking certain public service employment, such as teaching in Head Start programs, fulltime law enforcement, or nursing. In 2005, the $66 million Federal appropriation will reimburse 

institutional revolving funds for these loan cancellations. 

By statute, Perkins Loan interest rates are fixed at five percent, which is currently higher than the 

variable interest rates available under the larger direct and guaranteed student loan programs.

The PART analysis conducted in 2004 rated this program as Ineffective. It found that this 

program is duplicative of the direct and guaranteed student loan programs and is not well 

targeted to the neediest students.

Administration Action

Because Perkins Loans are duplicative of the larger Federal student loan programs, and not well 

targeted to the neediest students, the Administration proposes to terminate this program and 

recall the $6.0 billion Federal portion of the Perkins Loan revolving funds held by participating 

institutions of higher education.

The 2006 Budget requests no discretionary appropriations for loan cancellations. Eligible 

Perkins loans would continue to be cancelled but no appropriations would need to be made to 

replenish the institutional revolving funds.

28
Department of Education: Discretionary Proposal

Regional Educational Laboratories

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 66 --- –66

Background

The Regional Educational Laboratories (Labs) program supports a network of 10 Labs to provide 

training, technical assistance (TA), applied research, development, and dissemination of best 

practices to help State and local administrators improve schools. The Labs program was first 

authorized in 1965 by the Elementary and Secondary Education Act and reauthorized in 2002 

under the Education Sciences Reform Act. The current contracts with the 10 Labs expire in 

December 2005. The allocation of assistance among the regions is based, in part, on the number 

of local educational agencies and the number of school-age children. 

This program has not consistently provided quality research or TA despite long-term investment 

and funding increases in recent years. Research plays a critical role in the implementation of No 

Child Left Behind, but research must adhere to standards of scientific quality so that it can 

produce evidence with which to inform State and local reform decisions. According to the 

Follow-up Public School Survey on Education Reform (1999), only one percent of principals 

surveyed said that they found TA provided by the Labs very helpful in understanding or 

implementing comprehensive reforms. 

Although the Education Sciences Reform Act of 2002 requires that the Department of Education 

establish rigorous standards for the conduct, evaluation, and peer review for the Labs to assess 

their performance, the Act did not include clear authority for the Institute of Education Sciences 

to oversee the implementation of these standards and to enforce them. The Administration first 

proposed terminating funds for the Labs program in 2004, but Congress continued to fund it. 

Administration Action

The 2006 Budget re-proposes terminating the Regional Educational Laboratories program. Since 

Federal funds for education research are limited, only research programs that can be held 

accountable to rigorous standards warrant further investment. The Education Department’s 

research project grants and the What Works Clearinghouse, which provides a trusted source for 

scientific evidence of the effectiveness of education interventions, represent better research 

investments. Also, the Administration believes that the TA, training, and professional 

development needs of States and local school systems can be met more effectively through the 

new Comprehensive Centers authorized under the Educational Technical Assistance Act of 2002. 

29
Department of Education: Discretionary Proposal

Safe and Drug-Free Schools State Grants

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 437 --- –437

Background

The Safe and Drug-Free Schools (SDFS) State Grants program provides formula grants to States 

and school districts for an array of activities intended to reduce youth crime and drug-abuse. 

Even though the State grant program is nearly 20 years old, it cannot demonstrate it has had a 

positive impact on reducing drug use and violence. A 2001 RAND study determined that the 

structure of the program is fundamentally flawed. It concluded that SDFS State Grants, which 

distributes funds according to a formula, are spread too thinly to support quality interventions. 

The PART rated this program as Ineffective in 2004. This program received its first significant 

reduction (-$28 million) in 2004. 

Administration proposal

The Administration proposes to terminate the Safe and Drug-Free Schools (SDFS) State Grants 

program, and redirect a portion of the funds to SDFS National Programs. As a result, funding for 

SDFS National Programs will increase by $83 million to support projects with measurable 

outcomes and strong accountability mechanisms to help ensure that Federal funding in the area 

produces positive results. This includes an increase of $15 million for the school-based Drug 

Testing initiative.

30
Department of Education: Discretionary Proposal

Small Elementary and Secondary Education Programs

 

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 304 --- –304

Background

The following 19 small elementary and secondary education grant programs are narrow-purpose 

and have no demonstrated results. Many of the activities supported by these programs can be 

supported under large formula grants if localities determine the need to be pressing. Others 

support activities that do not fill an appropriate Federal role. While most of these programs are 

intended to support laudable purposes, their design has not allowed them to meet their goals. 

Many of them lack performance objectives and measures and none have rigorous evaluations, 

preventing the Department of Education from assessing program effectiveness and identifying 

successful intervention strategies that could have broad national impact. Further, most of these 

programs lack administrative mechanisms for holding grantees accountable for achieving results, 

and several earmark funds for specific service providers rather than running true competitions 

(these are identified with an asterisk). These programs differ from many other programs 

authorized under the No Child Left Behind (NCLB) Act, such as Title I and Reading First, which 

have a strong accountability framework and encourage the use of scientifically based 

interventions, improving the prospects for participants to achieve positive and measurable 

outcomes. 

Javits Gifted and Talented Education (2005 budget authority: $11 million) supports activities to 

help high schools meet the special educational needs of gifted and talented students. Two-thirds 

of these program funds support research and demonstration grants; this function can be carried 

out under the Department’s Institute of Education Sciences research.

* National Writing Project (2005 budget authority: $20.3 million) provides a non-competitive 

grant to a nonprofit educational organization that promotes K-16 teacher training programs in the 

teaching of writing. The 2006 PART assessment rated this program as Results Not 

Demonstrated. Funds for training teachers in all academic subjects are provided under the 

Teacher Quality State Grants program.

School Leadership (2005 budget authority: $14.9 million) supports recruiting, training, and 

retaining principals and assistant principals. These activities are specifically authorized under 

the Teacher Quality State Grants program.

Dropout Prevention (2005 budget authority: $4.9 million) supports dropout prevention programs 

in schools and districts with above-average dropout rates. Districts wishing to implement dropout prevention programs may use funds from Title I Grants to Local Educational Agencies 

31
(LEAs), State Grants for Innovative Programs, or the new High School Intervention program. At 

the 2006 request level, States may use up to $110 million from their allocations under Title I Part 

A to support dropout prevention programs in LEAs and other activities.

* Close-Up Fellowships (2005 budget authority: $1.5 million) provides a non-competitive grant 

to the Close Up Foundation to provide fellowships to low-income students and their teachers to 

finance their participation in one-week Washington, D.C., seminar programs to learn about the 

Federal government. In 1997, Congress requested that the Close-Up Foundation provide a plan 

to continue its fellowships without Federal funding. In the succeeding years, the foundation 

surpassed its private sector fundraising goals. Given the popularity of this program and its 

successful private fundraising, the Administration believes this program would continue without 

Federal support.

Ready to Teach (2005 budget authority: $14.3 million) supports competitive grants to nonprofit 

telecommunications entities to carry out programs to improve teaching in core curriculum areas, 

and to develop and distribute innovative educational and instructional video programming. These 

activities may be supported by the Teacher Quality State Grants program. 

Parental Information and Resource Centers (2005 budget authority: $41.9 million) support 

grants to States and localities for increasing parental education and family involvement. Parent 

education and support activities are required and funded under other NCLB programs such as 

Title I.

Alcohol Abuse Reduction (2005 budget authority: $32.7 million) supports programs to reduce 

alcohol abuse in secondary schools. These activities can be supported by the Safe 

Schools/Healthy Student program in Safe and Drug-Free School National Activities.

Foundations for Learning (2005 budget authority: $1 million), first funded in 2005, provides 

grants for comprehensive services to help children under seven who have multiple at-risk 

characteristics -- including exposure to violence or abuse, low birth weight and cognitive deficits 

-- be prepared to enter school. IDEA, Head Start, and Title I all help at-risk pre-school children 

enter school ready to learn.

Mental Health Integration in Schools (2005 budget authority: $5 million), first funded in 2005, 

provides grants to States and school districts to support collaborative efforts between school 

systems and mental health systems. Safe Schools/Healthy Students supports the same purpose.

Community Technology Centers (2005 budget authority: $5 million) support centers that offer 

residents of economically distressed areas access to computers and training. The Grants to State 

Library Agencies program supports similar purposes by providing community access to 

computers and the internet.

Exchanges with Historic Whaling and Trading Partners (2005 budget authority: $8.6 million) 

supports culturally based educational activities for Alaska Natives, Native Hawaiians, and 

children and families of Massachusetts. The program earmarks funds for specific entities serving 

these populations. This narrow-purpose program does not address a national need. States and 

school districts that view this activity as a high priority can carry out similar activities under 

State Grants for Innovative Programs.

32
Foreign Language Assistance (2005 budget authority: $18 million) supports activities to promote 

improvement and expansion of foreign language instruction. States and school districts can carry 

out similar activities under State Grants for Innovative Programs.

* Excellence in Economics Education (2005 budget authority: $1.5 million) supports a grant to a 

single non-profit educational organization to promote economic and financial literacy for K-12 

students. 

* Arts in Education (2005 budget authority: $35.6 million) makes non-competitive awards to 

Very Special Arts and the John F. Kennedy Center for the Performing Arts as well as 

competitive awards for demonstration projects and leadership activities to encourage the 

integration of arts into the school curriculum.

Women’s Education Equity (2005 budget authority: $3 million) supports activities promoting 

educational equity of girls and women. States and school districts can carry out similar activities 

under State Grants for Innovative Programs.

Elementary and Secondary School Counseling (2005 budget authority: $34.7 million) makes 

grants to support elementary and secondary school counseling programs. All appropriations 

below $40 million must be used for elementary school counseling. States and school districts 

can carry out similar activities under State Grants for Innovative Programs.

* Civic Education (2005 budget authority: $29.4 million) supports one non-competitive grant to 

an organization that promotes civic responsibility through teacher training and instructional 

materials, and educational exchanges with developing democracies.

Star Schools (2005 budget authority: $20.8 million) supports a variety of distance education 

projects. An evaluation was initiated in 1999 but yielded no reliable findings of program 

effectiveness and was never completed.

Administration Action

The Administration proposes to terminate these 19 programs. Termination of these narrowpurpose programs does not mean that Federal support is no longer available for these activities. 

States and school districts that view these issues as a high priority can support them with funds 

provided under broad-purpose Federal education programs such as Title I, Teacher Quality State 

Grants, and State Grants for Innovative Programs. 

33
Department of Education: Discretionary Proposal

Small Higher Education Programs

 

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 11 --- –11

 

Background

The following programs support activities that have accomplished their intended missions and no 

longer require additional Federal investment.

Demonstration Projects to Ensure Quality Higher Education for Students with Disabilities (2005 

budget authority: $6.9 million) funds technical assistance and professional development 

activities for faculty and administrators in institutions of higher education in order to improve the 

quality of education for students with disabilities. This program has achieved its primary goal of 

funding model demonstration projects. Similar projects can and do receive funding under the 

Fund for the Improvement of Postsecondary Education.

Underground Railroad Program (2005 budget authority: $2.2 million) provides grants to nonprofit educational organizations to establish facilities that house, display, and interpret artifacts 

relating to the history of the Underground Railroad, as well as to make the interpretive efforts 

available to institutions of higher education. This program was not intended to provide a 

permanent source of funding, and prior grants have succeeded in spreading the history of the 

Underground Railroad through websites, expanded library collections, and private funding and 

endowment funds to support ongoing operations. 

Interest Subsidy Grants (2005 budget authority: $1.5 million) finance the interest subsidy costs 

of a portfolio of higher education facilities loans guaranteed under Federal agreements with 

participating institutions of higher education. Balances from prior year appropriations are 

sufficient to cover all remaining obligations; no new funds are necessary.

Administration Action

The Administration proposes to terminate funding in 2006 because these three small higher 

education grant programs have achieved their purpose and are no longer necessary.

34
Department of Education: Discretionary Proposal

Small Job Training and Adult Education Programs

 

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 41 --- –41

Background

The following programs provide job training or adult education to a limited population and lack 

a strong accountability mechanism to ensure positive results.

Occupational and Employment Information (2005 budget authority: $9.3 million) supports State 

career guidance and academic counseling programs for youth and adults. Under the 

Administration’s PART, this program received a Results Not Demonstrated rating because the 

impacts of this program are not known and no national evaluation exists.

Tech Prep Demonstration (2005 budget authority: $4.9 million) supports demonstration projects 

to support consortia that establish secondary technical education programs on community college 

campuses. The Department has no data on the performance of this program.

Literacy Programs for Prisoners (2005 budget authority: $5 million) funds competitive grants to 

State and local correctional institutions and correctional education agencies to support programs 

intended to reduce recidivism through the improvement of "life skills." The Department has 

almost no performance information for this program.

State Grants for Incarcerated Youth (2005 budget authority: $21.8 million) provides formula 

grants to State correctional agencies intended to assist and encourage incarcerated youth to 

acquire functional literacy skills and life and job skills. The Department has almost no 

performance information for this program.

Administration Action

The Administration proposes to terminate these four small job training and adult education 

programs that are narrow purpose and have no demonstrated results. While these programs are 

intended to support laudable purposes, they lack clear performance objectives, measures, and 

evaluations, and do not have strong administrative mechanisms for holding grantees accountable 

for outcomes. The Administration’s proposed Workforce Investment Act reforms will ensure 

continued strong Federal support for needed job training.

35
Department of Education: Discretionary Proposal

Small Postsecondary Student Financial Assistance Programs

 

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 111 --- –111

 

Background

The following programs provide financial assistance to selected groups of postsecondary 

students. These programs have either served their mission or are duplicative of other Federal, 

State, local or non-profit activities.

Leveraging Educational Assistance Program (LEAP) (2005 budget authority: $66 million) has 

accomplished its objective of stimulating all States to establish need-based postsecondary student 

grant programs, and Federal incentives for such aid are no longer required. The program 

received a PART rating of Results Not Demonstrated. State grant leve ls have expanded greatly 

over the years, and most States significantly exceed the statutory matching requirements.

Byrd Scholarships (2005 budget authority: $41 million) are intended to promote academic 

excellence through grants to States which support scholarship assistance for up to four years to 

high-performing high school students entering an undergraduate course of study. The program 

received a PART rating of Results Not Demonstrated and does not have a need-based component 

unlike other ED postsecondary aid programs.

B.J. Stupak Olympic Scholarships (2005 budget authority: $1 million) provide financial 

assistance to athletes who are training at Olympic Training centers and who are pursuing a 

postsecondary education. This program received a PART rating of Results Not Demonstrated. 

Athletes may still receive grant, work-study, and loan assistance through the Department's 

traditional postsecondary student aid programs.

Thurgood Marshall Legal Educational Opportunity (2005 budget authority: $3 million) provides 

minority, low-income, or disadvantaged college students with information, preparation, and 

financial assistance to help them gain access to and complete law school. This program is 

largely duplicative of similar assistance that is available through the Department's traditional 

postsecondary student financial aid programs.

Administration Action

The Administration proposes to terminate these four small postsecondary student financial 

assistance programs that have either achieved their purpose or are duplicative.

36
Department of Education: Discretionary Proposal

Small Vocational Rehabilitation Programs

 

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 64 --- –64

Background

The following programs provide life skills or job training services to individuals with disabilities. 

Most are duplicative of the $2.7 billion Vocational Rehabilitation (VR) State grant program.

VR Migrant and Seasonal Farmworkers (2005 budget authority: $2.3 million) supports 

rehabilitation services to migratory workers with disabilities. Originally established as a 

demonstration program in the mid-1970s, the program no longer needs to demonstrate the 

benefits of serving migratory workers. The much larger VR State grants program serves the 

same population.

Projects with Industry (PWI) (2005 budget authority: $21.6 million) help individuals with 

disabilities obtain employment and advance their career in the competitive labor market. PWI is 

duplicative, as the VR State Grants program provides the same services to the same target 

populations.

VR Recreational Programs (2005 budget authority: $2.5 million) supports projects that provide 

recreation and related activities for individuals with disabilities to aid in their employment, 

mobility, independence, socialization, and community integration. The program has limited 

impact, and State and local agencies and the private sector can more appropriately provide these 

services.

Supported Employment (2005 budget authority: $37.4 million) was created in 1986 to encourage 

VR agencies to provide supported employment services to individuals with significant 

disabilities. At the time, supported employment was a new practice to employ individuals who 

traditionally would not be employed in integrated settings. Today, supported employment is 

recognized as an effective strategy to help individuals with significant disabilities obtain jobs. In 

fact, since 1996 more individuals received supported employment services through VR State 

Grant funding than through the separate Supported Employment funding. The Supported 

Employment program has achieved its original purpose.

37
Administration Action

The Administration proposes to terminate VR Migrant and Seasonal Farmworkers, Projects with 

Industry and Supported Employment, since the populations served and services provided under 

these programs are served under VR State Grants. In addition, the Administration proposes to 

terminate the VR Recreational Program because participants can be adequately served by State, 

local, and private entities.

38
Department of Education: Discretionary Proposal

Teacher Quality Enhancement Program

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 68 --- –68

Background

The Teacher Quality Enhancement program, first funded in 1998, provides support for multiple 

types of activities, including Recruitment and Partnership Grants that support collaboration 

between schools of education and local school districts to recruit and train teachers to serve in 

high-need schools, and Grants to States for reforming their teacher preparation and accreditation 

systems. 

In 2004, the Administration completed a PART assessment of this program and gave it a rating 

of Results Not Demonstrated, due to its lack of performance information and program 

management deficiencies. The assessment concluded that the Recruitment and Partnership grant 

components of this program are redundant of other Department of Education programs which 

have greater promise for success, particularly the $2.9 billion Teacher Quality State Grants 

program. In addition, the State grants portion of the program does not have a demonstrated track 

record of results, with some States even declining to apply for these grants.

Administration Action

Because the Teacher Quality Enhancement program has failed to show results and many of its 

activities can be supported under the Teacher Quality State Grants program, the Administration 

proposes to eliminate funding for it in 2006. As part of its effort to support the most promising 

teacher quality activities, the Administration proposes to redirect funding to other programs with 

a greater likelihood of success, including the President’s new Teacher Incentive Fund.

39
Department of Energy: Discretionary Proposal

Hydropower Program

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 5 --- –5

Background

The program funds research and development (R&D) and testing of hydropower turbine designs 

that are intended to increase the efficiency of electricity generation and improve environmental 

performance, such as fish survivability. In the early 1990s, the program was funded at about $1 

million annually and focused on conducting regulatory reviews to help hydropower operators 

navigate complex re-licensing processes. Later, the program conducted hydropower resource 

assessments and began developing prototype turbines that could improve efficiency and fish 

survivability. The program ended work on its prototype turbine in 2003 when it could not find a 

private partner willing to cost-share in full-scale testing. The program’s focus then switched to 

R&D on existing commercial designs with the potential for efficiency gains. This work is within 

industry’s financial capability and in industry’s financial interest. Therefore, it is not appropriate 

for Federal funding under the Administration’s R&D Investment Criteria.

Administration Action

The Administration proposes to terminate the program because hydropower technology R&D 

has advanced to the point that it can now be conducted by industry. The Budget includes 

$500,000 for the program to closeout current projects and transfer results to industry.

40
Department of Energy: Discretionary Proposal

Nuclear Energy Plant Optimization (NEPO)

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 2 --- –2

Background

The NEPO program was started by the Department of Energy in 2000 to address the technical 

issues that may prevent existing nuclear power plants from continuing to operate. These

technical issues include mitigating plant aging and improving plant reliability, availability, and 

productivity. The Administration’s Research and Development (R&D) Investment Criteria, 

jointly issued by the Office of Management and Budget and the Office of Science and 

Technology Policy, require R&D for technologies that address industry needs to demonstrate 

public benefits and justify that there is a market failure such that there is no motivation for

private-sector investment. This program does not meet these criteria. 

Administration Action

Consistent with the R&D Investment Criteria, the 2006 Budget proposes to terminate this 

program because of the limited public benefits and industry’s ability and financial interest in 

undertaking this R&D. The benefits of the program accrue primarily to private utilities. The 

2006 Budget allocates funds previously provided for this program to other nuclear energy 

research and development efforts that support innovative ideas that benefit the public interest and 

would otherwise not be pursued by the private sector (such as deriving hydrogen from nuclear 

power and next generation (Generation IV) nuclear power technologies). 

41
Department of Energy: Discretionary Proposal

Nuclear Energy Research Initiative (NERI)

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 2 --- –2

Background

Initiated in 1999, the NERI program funds research and development (R&D) on next-generation 

nuclear energy technologies and fundamental areas of nuclear science. Starting in 2004, the 

Department began incorporating NERI activities directly into its main nuclear R&D programs 

(e.g., Generation IV R&D, the Advanced Fuel Cycle Initiative, and the Nuclear Hydrogen 

Initiative). Housing NERI within the core R&D programs allows for more targeted and 

coordinated research. This should lead to improved results for the Department of Energy’s

nuclear R&D efforts and should achieve greater participation of the Nation’s university research 

community in these activities. The 2006 Budget completes this transition.

Administration Action

The 2006 Budget proposes to eliminate funding for NERI as a separate program and to integrate 

these funds into the Department’s main nuclear R&D programs. These funds will continue to be 

devoted entirely to nuclear energy research conducted at universities and colleges throughout the 

United States. The programs retain the independent peer review critical to ensuring the pursuit 

of leading-edge technologies. 

42
Department of Energy: Discretionary Proposal

Oil and Gas Programs

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 79 20 –59

Background

The Oil and Gas research and development (R&D) programs develop technologies that reduce 

the cost of exploration and production of petroleum and natural gas reserves. The programs’ 

activities often duplicate private-sector R&D efforts, and do not meet the Administration’s 

performance results or R&D Investment Criteria. The Oil and Gas R&D programs were rated 

“Ineffective” in the PART analysis of program performance, based largely on their inability to 

demonstrate clear results of the research efforts. 

Administration Action

The 2006 Budget provides for the orderly termination of the Oil and Gas R&D programs. These 

R&D activities are more appropriate for the private-sector oil and gas industry to perform. The 

industry has the financial incentive and resources to develop new ways to extract oil and gas 

from the ground more cheaply and safely. The $20 million of budget authority proposed in the 

Budget will be used to fulfill environmental remediation, contract termination, and other legal 

obligations incurred by ending the program. Prior-year funds will be used to support ongoing 

projects. The orderly termination of the programs will be structured to avoid disruption to the 

Federal workforce and minimize contractual obligations in 2006.

43
Department of Health and Human Services: Discretionary Proposal

ACF Community Service Programs

(not consolidated into the Economic and Community Development Programs)

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 30 --- –30

Background

The National Youth Sports program is an annual grant that provides a developmental and 

instructional sports program to low-income youth. For over 30 years the same grantee has 

received this funding creating, in effect, a noncompetitive program (2005 budget authority: $18 

million).

The Community Food and Nutrition program provides grants to public and private entities to 

coordinate food assistance, identify sponsors for child nutrition programs, and test approaches to 

meet the nutrition needs of low-income people. States currently receive similar assistance 

through progr ams administered by the Department of Agriculture’s Food and Nutrition Service

(2005 budget authority: $7 million).

The Job Opportunities for Low-Income Individuals (JOLI) program provides grants to nonprofits to create new employment and business opportunities for low-income individuals. Local 

communities may provide similar services targeted to low-income individuals with funding from 

the economic development grant in the Commerce Department (2005 budget authority: $5 

million).

These programs have no performance standards to assess their effect. 

Administration Action

No funds are being requested for National Youth Sports, Community Food and Nutrition, and 

JOLI for 2006. These programs are too narrowly focused to have a major benefit and either 

duplicate other Federal programs or are essentially noncompetitive. This year’s Budget focuses 

resources on other, higher priority programs.

44
Department of Health and Human Services: Discretionary Proposal

ACF Early Learning Opportunities Program

Funding Summary

(In millions of dollars)

 

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 35 --- –35

Background

The Early Learning Opportunities Program was created in 2001 to provide grants supporting 

local community efforts that help parents, caregivers, educators, and childcare providers increase 

their capacity to facilitate child development. Grants may also be used to improve access to 

existing learning programs by expanding the hours centers are open or the number of children 

served. In 2004, the Administration for Children and Families awarded about 40 grants, ranging 

from $268,000 to $1 million, to local community councils. 

The program duplicates the Department of Education’s Early Reading First program (2006 

budget authority: $104 million), and the Early Childhood Education Professional Development 

Grant program (2006 budget authority: $15 million) funds activities similar to this program. 

Administration Action

No funds are being requested for the Early Learning Opportunities Program in 2006. This is 

consistent with the Administration’s requests for fiscal years 2002-2005. The Early Reading 

First and the Early Childhood Education Professional Development grants will support local

community efforts in a more comprehensive manner.

45
Department of Health and Human Services: Discretionary Proposal

CDC Congressional Earmarks

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 60 --- –60

Background

The Congress earmarked $60 million for specific projects at nearly 200 universities, community 

organizations and other entities through the Centers for Disease Control and Prevention (CDC) 

in 2005. The Congress has directed over $250 million of the Federal investments made through 

CDC to individual awardees since 2001. Examples of earmarks funded by the Congress through 

CDC in 2005 include an award to a local YMCA for fitness equipment and an award for the 

International Species Information System. These earmarks are not awarded competitively by 

CDC and do not go through CDC’s merit-based awards process.

Administration Action

The 2006 Budget requests no funding for project earmarks funded by the Congress at the Centers 

for Disease Control and Prevention. The Administration believes that these earmarks do not 

represent an effective use of Federal dollars. Competitive grants that are peer reviewed and can 

be targeted toward high priority National needs are a more effective use of Federal funding. 

46
Department of Health and Human Services: Discretionary Proposal

CDC Preventive Health and Health Services Block Grant

Funding Summary

(In millions of dollars)

 2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 131 --- –131

Background

The main uses of the Preventive Health and Health Services Block Grant (PHHSBG) are chronic 

disease prevention (40%), public health infrastructure (16%), access to healthcare (13%), injury 

reduction (7%), prevention and services for sex offenses (6%), immunizations and infectious 

diseases (6%), and other activities (12%). In 2004, the average award to States was 

approximately $2 million. The PHHSBG has been funded at about the same level for each of the 

past six years.

The PHHSBG was created in 1981 through the consolidation of multiple categorical programs. 

Since that time, categorical programs have reemerged. In the main areas covered by the block 

grant, CDC categorical programs have grown to more than $750 million a year. The block grant 

lacks national level performance outcome information and overlaps with categorical funding.

Administration Action

The 2006 Budget proposes no funding for the Preventive Health and Health Services Block 

Grant (PHHSBG) at the Centers for Disease Control and Prevention (CDC). The 2006 Budget 

instead invests in categorical grants at CDC where there is greater accountability and evidence of 

impact, such as grants for cancer prevention and children’s immunizations. The 2006 Budget 

also continues to make significant investments in the public health system through State and 

local bioterrorism preparedness grants through the Public Health and Social Services Emergency 

Fund. 

47
Department of Health and Human Services: Discretionary Proposal

CDC Youth Media Campaign

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 59 --- –59

Background

The CDC Youth Media Campaign is a paid media campaign to encourage young people aged 9-

13 to be more physically active. The campaign was first funded in 2001 at $125 million. The 

Administration requested no funding in 2002 and 2003 and $5 million each year in 2004 and 

2005. The Youth Media campaign has developed lessons and materials over the past four years 

that can also be used for public service announcements and by the private sector. Some owners 

of children’s programming have recently created programs intended to get children to be more 

physically active, including Nickelodeon, the Disney Channel and PBS Kids. The establishment 

of these programs, which support the same objectives as the Youth Media Campaign, illustrates 

that there is no longer a need for this Federal program.

Administration Action

The 2006 Budget proposes no funding for the Youth Media Campaign at the Centers for Disease 

Control and Prevention (CDC). Instead, the 2006 Budget invests in competitive grants in school 

health, nutrition, and physical activity to help States and local communities improve the health of 

the Nation’s youth. 

48
Department of Health and Human Services: Discretionary Proposal

Direct Service Worker Grants

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 3 --- –3

Background

The Direct Service Worker grants were proposed as a time-limited demonstration in the 2003 

and 2004 Budgets, and then extended in the 2005 Budget. These workforce demonstration 

grants test the effectiveness of various strategies to recruit and retain direct care services workers 

that support disabled individuals who want to stay in the community. 

Administration Action

The 2006 Budget does not include the Direct Service Worker grants, which are a three year, 

time-limited demonstration. These grants expire after 2005.

The 2006 Budget includes approximately $3 billion over ten years ($385 million in budget 

authority in 2006) in other mandatory demonstrations and programs in support of the President’s 

New Freedom initiative for individuals with disabilities, including the Money Follows the Person 

demonstration. The Budget’s Medicaid modernization proposal also addresses the institutional 

bias by promoting State efforts to emphasize community-based care for disabled individuals.

49
Department of Health and Human Services: Discretionary Proposal

HRSA Emergency Medical Services for Children

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 20 --- –20

Background

The Emergency Medical Services for Children (EMSC) program provides grants to States to 

improve existing Emergency Medical Services (EMS) systems and to schools of medicine to 

develop and evaluate improved procedures and protocols for treating children. This is the first 

year that EMSC will not receive funding in the Budget, based to a large extent on the program’s 

low PART rating and its inability to demonstrate results.

The EMSC PART assessment found that despite twenty years of funding, the program has not 

demonstrated a connection to improvements in health outcomes of children and adolescents 

receiving emergency medical services. The program also failed to set long-term health outcome 

goals that would provide evaluators with measures with which to measure the program’s 

effectiveness in the future. 

Administration Action

The 2006 Budget proposes no funding for Emergency Medical Services for Children (EMSC) 

program at the Health Resources and Services Administration (HRSA). The EMSC program has 

not demonstrated that its activities have led to improvements in the health outcomes of children 

and adolescents who have required emergency medical care. The objectives of this program can 

be achieved by States through programs funded by the much larger ($724 million in 2006) 

Maternal and Child Health Block Grant.

50
Department of Health and Human Services: Discretionary Proposal

HRSA Health Facilities Construction Congressional Earmarks

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 476 --- –476

Background

In 2005, the Congress directed almost half a billion dollars in earmarks through the Health 

Resources and Services Administration (HRSA). The Congress provided $486 million to over 

900 hospitals, universities, and other entities. The earmarks are awarded to specific projects and 

locations and do not go through HRSA’s merit-based awards process. Many of these projects 

have received continuous funding for years. The Congress has directed more than $1.7 billion 

through this program to individual awardees since 2001. Examples of earmarks funded by the 

Congress through HRSA in 2005 include an award to a policy institute for developing internetbased educational materials for integrative medicine and an award to a health department 

for medical resident stipends. 

Administration Action

In the 2006 Budget, the Administration will again propose the elimination of funding for HRSA 

awards earmarked to specific projects and locations. The Administration believes that these 

earmarks do not represent an effective use of Federal dollars. Competitive grants that are peer 

reviewed and can be targeted toward high priority National needs are a more effective use of 

Federal funding. 

51
Department of Health and Human Services: Discretionary Proposal

HRSA Healthy Community Access Program

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 82 --- –82

Background

The Healthy Community Access Program (HCAP) at the Health Resources and Services 

Administration (HRSA) was first funded in 2000. Past Budget requests have reduced or 

eliminated the program. 

The program provides small grants to consortia of healthcare providers to build networks and 

support coordination. HCAP consortia include health departments, federally qualified health 

centers, public hospitals, and businesses. Funds can be used for a broad range of activities, such 

as buying computers, developing disease management protocols, and developing referral 

arrangements. The program lacks concrete goals and does not have a demonstrated impact on 

expanding access to health care. 

Administration Action

The 2006 Budget proposes to terminate the Healthy Community Access Program. As of 2005, 

the Federal government has invested $525 million in HCAP without knowing what return has 

been received.

The Budget includes $125 million for Health Information Technology activities. The Budget 

invests generously in programs that provide access to health care. The President has requested 

$2.0 billion for Health Centers, a $304 million increase over the 2005 level, to provide access to 

care for more than 16.3 million low-income individuals, regardless of ability to pay. The Budget 

also includes $1 billion in grants over two years for Cover the Kids, a new campaign to enroll 

millions more low-income children in Medicaid and SCHIP. The Budget also includes tax 

policies that will facilitate individuals’ purchase of health insurance, including:

o $74 billion over 10 years for health-insurance tax credits for low-income families that 

will ultimately help 15 million families purchase affordable health insurance.

o $4 billion in grants to States to establish health insurance purchasing pools, through 

which people who qualify for the tax credit can obtain coverage.

o $28.5 billion over 10 years for tax deductions premiums for major medical insurance, 

which will ultimately help 6 million Americans save for their health care costs in tax-free 

accounts.

o $19.2 billion over 10 years for tax rebates for small businesses that contribute to their 

employees’ HSAs, encouraging more small employers to offer health benefits.

52
Department of Health and Human Services: Discretionary Proposal

HRSA State Planning Grant Program

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 11 --- –11

Background

The State Planning Grant Program at the Health Resources and Services Administration (HRSA) 

was first funded in 2000. Past Budget requests have reduced or eliminated the program. The 

program provides grants to States to conduct health insurance surveys and develop plans for 

expanding access to insurance. The program lacks concrete goals and does not have an impact 

on expanding access to health insurance or reducing the number of uninsured. 

Administration Action

The 2006 Budget proposes no funding for the State Planning Grant Program. As of 2005, the 

Federal government has invested $87 million in the program without knowing what return has 

been received.

The Budget invests generously in programs that provide access to health care. The President has 

requested $2.0 billion for Health Centers, a $304 million increase over the 2005 level, to provide 

access to care for more than 16.3 million low-income individuals, regardless of ability to 

pay. The Budget also includes $1 billion in grants over two years for Cover the Kids, a new 

campaign to enroll millions more low-income children in Medicaid and SCHIP. The Budge t also 

includes tax policies that will facilitate individuals’ purchase of health insurance, including:

o $74 billion over 10 years for health-insurance tax credits for low-income families that 

will ultimately help 15 million families purchase affordable health insurance.

o $4 billion in grants to States to establish health insurance purchasing pools, through 

which people who qualify for the tax credit can obtain coverage.

o $28.5 billion over 10 years for tax deductions premiums for major medical insurance, 

which will ultimately help 6 million Americans save for their health care costs in tax-free 

accounts.

o $19.2 billion over 10 years for tax rebates for small businesses that contribute to their 

employees’ HSAs, encouraging more small employers to offer health benefits.

53
Department of Health and Human Services: Discretionary Proposal

HRSA Trauma Care

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 3 --- –3

Background

The Trauma Care Program was first funded in 2001. The program was developed to assist States 

in stabilizing the infrastructure of the Trauma/Emergency Medical Services (EMS) systems. 

Funds for this program have also been used to provide State-by-State Trauma/EMS assessments. 

These program’s activities are duplicative of those already provided by the States through their 

much larger ($724 million in 2006) Maternal and Child Health Block Grant. The past three 

President’s Budgets have not requested funding for the program. 

Administration Action

The 2006 Budget proposes no funding for the Trauma Care Program at the Health Resources and 

Services Administration (HRSA). This program’s activities are duplicative of activities funded 

by the much larger Maternal and Child Health Block Grant. 

54
Department of Health and Human Services: Discretionary Proposal

HRSA Traumatic Brain Injury

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 9 --- –9

Background

Since 1997, the Traumatic Brain Injury (TBI) Grant Program has funded the development and 

implementation of statewide systems designed to provide access to comprehensive and 

coordinated traumatic brain injury services. This is the first year that the Budge t does not fund 

TBI, based to a large extent on the program’s low PART rating and its inability to demonstrate 

results. The TBI PART assessment found that the program had failed to demonstrate results and 

had not set long-term health outcome measures that would enable evaluators to determine the 

effectiveness of its activities. 

Administration Action

The 2006 Budget proposes no funding for Traumatic Brain Injury (TBI) Program at the Health 

Resources and Services Administration (HRSA). The TBI program has not demonstrated that its 

activities have led to improvements in the health outcomes of children and adolescents who have 

suffered traumatic brain injury. 

55
Department of Health and Human Services: Discretionary Proposal

HRSA Universal Newborn Hearing Screening

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 10 --- –10

Background

The Universal Newborn Hearing Screening Program supports the physiologic testing of newborn 

infants prior to their hospital discharge, audiologic evaluation by three months of age, and entry 

into a program of early intervention by six months of age. HRSA awards competitive grants to 

the States to implement the program. Presently, all States are screening the vast majority of 

infants. 

This program’s activities are duplicative as States provide population-based services through the 

much larger ($724 million in 2006) Maternal and Child Health Block Grant. The past three 

President’s Budgets have not requested funding for the program. 

Administration Action

The 2006 Budget proposes no funding for the Universal Newborn Hearing Screening Program at 

the Health Resources and Services Administration (HRSA). The program has largely 

accomplished its mission of helping States implement newborn hearing screening programs. In 

addition, the program’s activities are duplicative of activities already provided by the States 

through their much larger Maternal and Child Health Block Grant. 

56
Department of Health and Human Services: Discretionary Proposal

Real Choice Systems Change Grants

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 40 --- –40

Background

The Centers for Medicare and Medicaid Services Real Choice Systems Change grants have been 

funded since 2001. These grants were established to help States develop improvements to 

provide community-based supports for individuals with disabilities. 

Administration Action

The 2006 Budget does not continue this transition grant. The Real Choice Systems Change 

grants encourage States to develop the infrastructure to move more disabled individuals from 

institutions into home and community-based care. After five years, these grants have helped 

States develop a better understanding of how to improve their home and community-based 

supports and provide these services more effectively. 

The 2006 Budget includes approximately $3 billion over ten years ($385 million in budget 

authority in 2006) in other mandatory demonstrations and programs in support of the President’s 

New Freedom initiative for individuals with disabilities, including the Money Follows the Person 

demonstration. These mandatory proposals fund several demonstrations that are similar to those 

funded under the Systems Change grants. The Budget’s Medicaid modernization proposal also 

addresses the institutional bias by promoting State efforts to emphasize community-based care 

for disabled individuals.

57
Department of Housing and Urban Development: Discretionary Proposal

HOPE VI

Funding Summary

(In millions of dollars)

 2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 143 –143 –286

Background

In 1992, Congress established the Revitalization of Severely Distressed Public Housing (HOPE 

VI) program to address 100,000 of the most severely distressed public housing units in the 

Nation’s urban neighborhoods by 2003. Through competitive grants, HOPE VI has awarded 

local public housing authorities over $6 billion to demolish, rehabilitate, and replace obsolete 

public housing with mixed-income communities as well as provide social services to residents.

The program was originally designed to address a discrete problem – demolish 100,000 

dangerous and dilapidated public housing units by the end of 2003. Today, that goal has been 

exceeded. Through 2004, 117,000 units have been demolished and HUD has approved and 

funded the future demolition of almost 50,000 more. In addition, the 2005 PART analysis found 

the program to be more costly than other alternatives. GAO found the housing-related costs of a 

HOPE VI unit were 27 percent higher than a housing voucher and 47 percent higher when nonhousing costs were included. And finally, the program has also been slow to produce results. 

Typically at least five years pass between the time a HOPE VI award is made and when a new 

unit is occupied. In contrast, the HOME block grant program produces new rental units within 

about 2 years. 

Given the program has exceeded its primary objective, has higher per-unit costs than other 

alternatives, and has extensive delays, HOPE IV is not the most productive way to address 

capital needs in public housing. Therefore, the Administration continues to recommend 

terminating the program. 

Administration proposal

The 2006 Budget proposes to terminate the HOPE VI program. The program has surpassed its 

primary goal to demolish 100,000 severely distressed public housing units by 2003. While the 

program has achieved success in removing dangerous public housing, the 2005 PART analysis 

showed the program to be slow at completing construction and more costly than other programs 

that serve the same population. The Budget proposes to cancel 2005 funding for this program 

(and requests no further funding in 2006) and to redirect the dollars to more cost-effective 

alternatives such as Section 8 Tenant-based Rental Assistance.

58
Department of the Interior: Discretionary Proposal

BLM Jobs-in-the-Woods Program

Funding Summary

(In millions of dollars)

 2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 6 --- –6

Background

The Bureau of Land Management’s (BLM) Jobs-in-the-Woods program began in the early 1990s 

as a temporary program to assist timber workers in the Northwest displaced as a result of reduced 

timber harvests on Federal lands, primarily related to litigation over the endangered Northern 

Spotted Owl and retooling in the wood-products industry. The program employed workers to 

conduct a variety of ecosystem restoration activities. Since then, many displaced workers have 

moved on to find other work. 

More recently, timber volume offered on Federal lands has increased, and the Administration is 

requesting additional funding for timber management on Federal lands in 2006. A similar 

program in the Fish and Wildlife Service was terminated in 2005. 

Administration Action

The 2006 Budget proposes to terminate the BLM’s Jobs-in-the-Woods program. The program 

was a temporary measure and is no longer necessary. It was initiated in the early 1990s to 

provide temporary employment for timber workers affected by decreased harvesting allowed on 

Federal lands. The programmatic effects of this change will be partially offset by funding 

increases for other ecosystem restoration activities, including increased thinning of late 

successional forests to improve their old-growth characteristics.

59
Department of the Interior: Discretionary Proposal

LWCF State Recreation Grants

Funding Summary

(In millions of dollars)

 2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 90 --- –90

Background

Land and Water Conservation Fund (LWCF) State recreation grants were first authorized under 

the 1965 LWCF Act, which sought to “conserve, develop, and utilize [outdoor recreation] 

resources for the benefit and enjoyment of the American people.” Until the mid-1990’s, LWCF 

funds were only used for Federal land acquisition and State recreation grants. Since then, the 

Congress and the Administration have broadened the use of LWCF funds to support a variety of 

conservation and partnership programs. The 2006 Budget continues to propose LWCF funds for 

these programs, which generally help fulfill Federal goals and needs.

A 2003 PART review of the LWCF State recreation grants program gave it a low score (25% out 

of 100%) because the program lacked performance measures and could not demonstrate results. 

Administration Action

The 2006 Budget terminates LWCF State recreation grants. These grants support improvements 

to State and local parks that are more appropriately funded through State revenues or bonds. In 

fact, State bonds have raised billions of dollars for State and local parks and recreation programs 

in recent years. Federal funding for these local purposes is not a responsibility for Federal 

taxpayers. Further, a PART review found the current program could not measure performance or 

demonstrate results. 

60
Department of the Interior: Discretionary Proposal

NPS Statutory Aid

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 11 --- –11

Background

The National Park Service (NPS) statutory aid includes a variety of small earmarks to different 

groups that have some connection to conservation, historic preservation, or outdoor recreation. 

The Executive Branch historically has sought to limit the number of these grants, because they 

are not subject to a competitive merit-based process and generally do not fund national priorities. 

Starting with the 2005 Budget, the Administration has proposed to completely eliminate these 

grants in order to concentrate resources on higher Federal priorities, such as maintaining national 

parks.

Administration Action

The President’s Budget terminates NPS grants to various non-Federal entities conducting 

historical or recreational activities. These activities are secondary to the NPS mission and are 

not a Federal responsibility. They also have no performance requirements and have not 

demonstrated results. 

61
Department of the Interior: Discretionary Proposal

Rural Fire Assistance Program

Funding Summary

(In millions of dollars)

 2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 10 --- –10

Background

Begun as a pilot program in 2001, the Department of the Interior’s Rural Fire Assistance 

program provides grants to rural fire protection districts that serve communities of less than 

10,000. The grants require a 10% local cost share and are largely used for the purchase of fire 

engines and other firefighting equipment, but can also be used for firefighter training and other 

related support. The Department of Homeland Security and USDA’s Forest Service both operate

grant programs that provide similar services to rural fire departments across the country.

Administration Action

The 2006 Budget proposes to terminate the Rural Fire Assistance program. The program is 

duplicative of other fire assistance grant programs. The items and activities funded by these 

grants could be funded with existing Department of Homeland Security and Forest Service grant 

funding. Instead, the Department of the Interior will focus more of its fire preparedness 

resources on training and certification of local firefighters so that they are qualified to assist with 

fires on Federal lands.

62
Department of Justice: Discretionary Proposal

Byrne Discretionary Grants

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 168 --- –168

Background

The Byrne Discretionary grants were authorized in the Anti-Drug Abuse Act of 1988 and are

intended to help State and local law enforcement control violent and drug-related crime, as well 

as improve operations and coordination. While other similar grants were formula-based, the 

discretionary program was intended to allow funds to be targeted to high priority needs.

In recent years, each annual funding bill has prescribed funding for a lengthy list of projects 

(over 200 in 2005), making it virtually impossible to target resources to priority crime needs. 

Without performance reporting, the program has not been able to demonstrate an impact on 

crime. 

Administration Action

The 2006 Budget proposes to terminate the Byrne Discretionary Grant Program. Without the 

ability to target funds to the most meritorious projects, based on a competitive grant process, and 

with no demonstrable impact on crime, there is little justification for continued funding. The 

Budget proposes to cancel funding for this program and to redirect the dollars to other higher 

priority law enforcement programs.

63
Department of Justice: Discretionary Proposal

Byrne Justice Assistance Grants

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 626 --- –626

Background

The Byrne Justice Assistance Grant (JAG) Program was first funded by the Congress in 2005. 

The JAG is a formula grant program created from the merger of the Byrne Formula Grant and 

the Local Law Enforcement Block Grant. The JAG program is intended to help State and local 

law enforcement control violent and drug-related crime, as well as improve operations and 

coordination. These grants can be used for multiple purposes, including hiring, equipment, and 

training. 

The crime rate has declined during this Administration—today, the crime rate is at a 30-year 

low. Also, despite spending more than $4 billion since 2001, the JAG grants and its 

predecessors have not been able to demonstrate an impact on crime. Much of the justification 

for such assistance has diminished in comparison to other priority needs, such as increasing 

Federal counterterrorism efforts and reducing the Federal deficit.

Administration Action

The 2006 Budget proposes to terminate the JAG grants. With the crime rate at an historic low 

and with no demonstrable impact on crime, there is little justification for continued funding in 

comparison to other priority needs. The Budget proposes to cancel funding for this program and 

to redirect the dollars to other higher priority programs.

64
Department of Justice: Discretionary Proposal

COPS Hiring Grants

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 10 --- –10

Background

The Community Oriented Policing Services (COPS) Hiring Grants, administered by the Office 

of Community Oriented Policing, provide temporary, 3-year grants to local police departments 

for the hiring of police officers, after which the local agencies absorb the full costs of retention of 

the officers. The program has met the previous Administration’s goal for the hiring of 100,000 

officers; funding has been provided for the hiring of over 118,000 police officers.

Evaluations of the COPS Hiring Grants have raised questions about the effectiveness of such 

grants in producing a measurable impact on crime. A 2004 PART assessment showed that the 

program could not demonstrate results. In addition to the PART assessment, the Heritage 

Foundation's Center for Data Analysis has found the grants ineffective in reducing violent crime. 

The crime rate has declined during this Administration. Today, the crime rate is at a 30-year low 

and much of the justification for such assistance has diminished in comparison to other priority 

needs, such as increasing Federal counterterrorism efforts and reducing the Federal deficit.

Administration Action

The 2006 Budget proposes to terminate the COPS Hiring Grant program as have previous 

Administration budgets. The program has accomplished its goals. The lack of demonstrated 

results as well as a crime rate at an historic low call into question continued funding for the 

program. The Budget proposes to cancel funding for this program and to redirect the dollars to 

other higher priority programs.

65
Department of Justice: Discretionary Proposal

COPS Interoperable Communications Technology Grants

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 99 --- –99

Background

Administered by the Office of Community Oriented Policing Services, the COPS Interoperable 

Communications Technology Grant Program was initiated in 2003 to provide grants to 

State/local law enforcement agencies to upgrade communications equipment and promote 

interoperability among emergency response agencies.

As in preceding years, the 2006 Budget proposes consolidating such assistance through the 

Department of Homeland Security (DHS) to ensure that priority needs for interoperable 

communications are met at the State and local level. (In 2004, DHS grantees allocated over $800 

million for this purpose.) The 2006 Budget proposes almost $3.6 billion in grants within DHS 

for homeland security grants, of which State and local law enforcement would be eligible for 

$2.5 billion. Addressing interoperable communications needs of first responders, including law 

enforcement, is a top priority for this DHS funding. As a result, a separate program within the 

Department of Justice is not needed.

Administration Action

The 2006 Budget proposes to terminate the COPS Interoperable Communications Technology 

Grant Program because it is duplicative of DHS grants. The interoperable communications 

technology needs of first responders, including State and local law enforcement, are addressed 

by DHS homeland security grants.

66
Department of Justice: Discretionary Proposal

COPS Law Enforcement Technology Grants

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 137 --- –137

Background

The COPS Law Enforcement Technology Grant dates to 1998, when it received its first 

appropriation. The program provides grants to State and local law enforcement for technology 

and equipment to assist with crime fighting. In recent years, each annual funding bill has 

prescribed funding for a lengthy list of projects (over 300 in 2005), making it virtually 

impossible to target resources to priority crime needs. The program has not been able to 

demonstrate its impact on crime. 

The crime rate has declined during this Administration. Today, the crime rate is at a 30-year low 

and much of the justification for such assistance has diminished in comparison to other priority 

needs, such as increasing Federal counterterrorism efforts and reducing the Federal deficit.

Administration Action

The 2006 Budget proposes to terminate the COPS Law Enforcement Technology Grant Program. 

Without the ability to target funds to priority projects based on a competitive grant process, with 

the crime rate at an historic low, and with no demonstrable impact on crime, there is little 

justification for continued funding. The Budget proposes to cancel funding for this program and 

to redirect the dollars to other higher priority programs.

67
Department of Justice: Discretionary Proposal

Juvenile Accountability Block Grants

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 54 --- –54

Background

The Juvenile Accountability Block Grants (JABG) Program dates to 1998. It is intended to help 

States and localities improve their juvenile justice systems by implementing accountability-based 

reforms. Overly broad categories of assistance (the program has 16 general purpose areas) have 

limited the Department’s ability to target funding to priority juvenile justice needs and ensure 

that funds are spent wisely. 

Much of the justification for this assistance has diminished in comparison to other priority needs, 

such as increasing Federal counterterrorism efforts and reducing the Federal deficit. The 

program was assessed and found ineffective using the PART process for the 2004 Budget. Other 

than anecdotal information, there is little evidence that the program reduces juvenile crime.

Today, the crime rate is at a 30-year low. Juvenile crime has fallen as well-- by 23 percent over 

the last decade.

Administration Action

The 2006 Budget proposes to terminate the JABG Program. With crime at an historic low, 

juvenile arrests falling, and the program found ineffective, there is little justification for 

continued funding. The Budget proposes to cancel funding for this program and to redirect the 

dollars to other higher priority law enforcement programs.

68
Department of Justice: Discretionary Proposal

National Drug Intelligence Center

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 39 17 –22

Background

The National Drug Intelligence Center (NDIC) was established in 1993 to support Federal, State 

and local law drug enforcement efforts through intelligence reports, technical assistance and 

national, regional and State drug threat assessments. While the NDIC is managed by the 

Department of Justice (DOJ), its funding is provided through the Department of Defense (DOD) 

appropriation.

The Administration has been evaluating existing drug intelligence capabilities within DOJ, 

DOD, the Department of Homeland Security, and the Central Intelligence Agency to assess their 

ability to address emerging threats, including threats of terrorism. Recent reports produced by the 

Government Accountability Office (GAO) indicate that the proliferation of intelligence centers

across the government has not necessarily led to more or better intelligence, but rather more 

complications in the management of information. GAO’s reports also note duplication and lack 

of coordination between DOD and law enforcement intelligence entities. 

Administration proposal

The Administration proposes to terminate funding for NDIC. This proposal would allow the 

Administration to focus resources on a smaller number of intelligence providers, including the 

new multi-agency Drug Intelligence Fusion Center, which will help to reduce intelligence 

duplication and coordination problems and enhance the government’s ability to address 

emerging threats. An additional $14 million is requested for the Fusion Center in 2006. The 

Budget provides $17 million of residual funding in 2006 for associated shutdown costs of the 

NDIC. An additional $14 million is requested for the Fusion Center in 2006. 

 

69
Department of Justice: Discretionary Proposal

Other State/Local Law Enforcement Assistance Program Terminations

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 94 --- –94

Background

The Office of Justice Program manages a number of small assistance programs that are intended 

to assist State and local law enforcement. No funding is requested for the Crime Information 

Technology Assistance (CITA) Program (-$28 million) or the Coverdell Forensic Science Grants 

(-$15 million) because the Administration is prioritizing Federal assistance to DNA funding for 

crime labs through the Administration’s DNA Initiative, consistent with prior budgets, funded at 

$236 million in the 2006 Budget. Police Corps (-$15 million) has not proven cost-effective at 

approximately $180,000 per officer trained. In addition, funding is not requested for: Victims of 

Trafficking Grants (-$10 million), the White Collar Crime Information Center (-$9 million), the 

Automated Victim Notification Program (-$8 million), COPS Safe Schools (-$4 million), Law 

Enforcement Family Support (-$2 million), Elderly Telemarketing Fraud (-$2 million), and the 

Alzheimer Patient Safe Return Program (-$1 million). Most of these programs are too narrow 

and fragmented to have a nationwide impact on crime. Hate Crime Technical Assistance and 

Training (-$1 million) was a one-time request for 2005. 

For forensic sciences and laboratory improvement grants, the Budget focuses on improvements 

that support uses of DNA to solve crimes and protect the innocent, rather than the general 

improvements that have been funded through the Crime Information Technology and Coverdell 

programs. Most of the programs above cannot demonstrate results. 

Administration Action

The 2006 Budget proposes to terminate several State and local law enforcement assistance 

programs. In some cases (CITA and Coverdell grants), needs are being addressed through the 

DNA Initiative, funded at $236 million in the 2006 Budget. In other cases the programs have not 

demonstrated results and are too fragmented to have a nationwide impact on crime. The Budget 

proposes to cancel funding for these programs and to redirect the dollars to other higher priority 

law enforcement programs.

70
Department of Justice: Discretionary Proposal

State Criminal Alien Assistance Program

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 301 --- –301

Background

The State Criminal Alien Assistance Program (SCAAP) provides reimbursements to States and 

localities for some costs of incarcerating criminal illegal aliens held in State/local correctional 

facilities. The program functions as a form of revenue sharing, as funds can be used for any 

lawful purpose by the States. As structured, SCAAP does not require that States and localities 

use funding to address local crime or correctional issues. In the 2005 Budget, SCAAP was 

evaluated using the PART process and received a score of 15 out of 100. The program lacked 

goals and performance measures and could not demonstrate results.

The 2006 Budget proposes $3.8 billion for immigration enforcement in the Department of 

Homeland Security, an increase of about 10 percent compared with 2005. The Budget requests 

increases for the Detention and Removal program, worksite enforcement, and the Border Patrol. 

Enhancing immigration enforcement addresses the causes of having to incarcerate criminal 

aliens in State/local detention facilities. In addition, programs such as the Department of 

Justice’s Project Safe Neighborhoods work with local prosecutors to prosecute violent criminals 

through the Federal courts—reducing some of the burden of State/local courts and law 

enforcement. As a result, the Federal government is taking custody of more offenders, including 

criminal aliens who otherwise would be incarcerated at the State or local level.

Administration Action

The 2006 Budget proposes to terminate SCAAP. Because of SCAAP’s lack of performance 

results, as well as other Federal efforts to strengthen immigration enforcement, the 

Administration proposes to reallocate funding to other priority needs such as Federal counterterrorism efforts and deficit reduction.

71
Department of Labor: Discretionary Proposal

Migrant and Seasonal Farmworkers Training Program

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 76 --- –76

 

Background

Authorized in section 167 of the Workforce Investment Act (WIA) of 1998, the Migrant and 

Seasonal Farmworkers program is intended to help economically disadvantaged migrant and 

seasonal farmworkers, and their families, move out of chronic unemployment and 

underemployment. The program strives to achieve its mission by awarding competitive grants to 

organizations that provide participants training and supportive services, such as emergency 

assistance and housing. 

An analysis of program results determined that about 60 percent of participants receive no 

training, and instead receive only low-cost supportive services that other Federal programs also 

finance. Despite the importance of these short-term supportive services, the program does not 

achieve its primary purpose, which is to help farmworkers find more stable, year-round 

employment, with a goal of reaching economic self-sufficiency.

Administration Action

The 2006 Budget proposes to terminate the Migrant and Seasonal Farmworkers Training 

program. This program duplicates the training and services provided through other Federal 

efforts, does not focus sufficiently on job training, demonstrates poor performance accountability 

for grantees, and earned an Ineffective rating in its assessment using the PART.

The Administration is proposing legislation to reform the Workforce Investment Act so that 

States and WIA’s nearly 3,600 One-Stop Career Centers can better train and assist migrant 

farmworkers through a consolidated, flexible State grant program.

72
Department of Labor: Discretionary Proposal

Reintegration of Youthful Offenders

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 50 --- –50

Background

The Reintegration of Youthful Offenders program is a narrow-purpose demonstration project 

that provides employment and training services to ex-offenders under the age of 35. Although it 

has been financed through earmarked funding since 1998, the program has not demonstrated 

accountability for employment outcomes. An innovative, comprehensive strategy is needed to 

help individuals leaving prison make a successful transition to community life and long-term 

employment.

More than 600,000 offenders are released from prisons each year and face multiple barriers upon 

their return to society, including inadequate job skills and housing. Approximately two-thirds of 

prisoners are re-arrested within three years of their release, and half return to prison during that 

same period.

Administration Action

The 2006 Budget proposes to terminate earmarked funding for the Reintegration of Youthful 

Offenders program, and better serve this population through the President’s Prisoner Re-entry 

Initiative. Proposed in the 2004 State of the Union address and the 2005 Budget, this four-year 

initiative will offer a range of job training, housing, and mentoring services and harness the 

experience of faith-based and community organizations. The 2006 Budget includes $75 million 

in new funding for the President’s Prisoner Re-entry Initiative to address the problems faced by 

ex-offenders in a more effective way, through services provided by the Departments of Labor, 

Housing and Urban Development, and Justice. 

73
Department of Transportation: Discretionary Proposal

Maritime Administration

National Defense Tank Vessel Construction Program 

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 74 --- –74

Background

The National Defense Tank Vessel Construction Program was established in 2005 to provide 

financial assistance to the private sector for the construction of new product tank vessels (e.g. 

specialized oil tankers). $74 million was appropriated for this program in the Consolidated 

Appropriations Act of 2005. While these vessels may be made available for the military when 

needed, the primary purpose will be for commercial service. 

Administration Action

The President’s Budget proposes to terminate the National Defense Tank Vessel construction 

program and rescind the $74 million provided in 2005. The program is similar to a costly and 

ineffective ship construction program that was terminated in 1981. 

The proposal to terminate this program is aimed at reducing unwarranted corporate subsidies. 

The Administration believes that the commercial shipbuilding industry should rely on private 

sector financial investment based on market demand. 

74
Department of Transportation: Discretionary Proposal

Federal Railroad Administration

Railroad Rehabilitation and Improvement Financing Loan Program (RRIF)

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ NA NA NA

Background

The goal of the Railroad Rehabilitation and Improvement Financing Loan Program (RRIF),

which was established in 1997, is to provide low cost funding to support the financing of

improvement and rehabilitation of rail infrastructure. The interest rate charged to borrowers is 

the rate paid on comparable Treasury securities.

The utility and equity of making government loans to private railroads is unclear. Currently, 

RRIF is open to both large and small railroads, without regard for their ability to draw upon

private capital. Further, RRIF loans are not limited to financing safety or capacity capital 

investment; railroads may use these loans to refinance their existing debts to private lenders. 

The recently enacted “American Jobs Creation Act of 2004” provides benefits similar to the 

RRIF program. This law creates tax credits for smaller railroads for track maintenance, and 

eliminates the 4.3 cent per gallon diesel fuel tax previously imposed on all railroads. 

Administration Action

Based on recent changes in tax law, which provides assistance more equitably to railroads than 

RRIF, the Budget recommends terminating the RRIF loan program. The program does not 

receive appropriated funds to make loans, so eliminating it would not produce budget savings. 

However, it would reduce the Federal Government’s exposure to the risk of costly defaults. 

75
Environmental Protection Agency: Discretionary Proposal

Unrequested Projects

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 489 --- –489

Background

Unrequested or earmarked projects often serve local interests and do not fulfill national priorities 

or Federal responsibilities. Earmarks are not subject to competitive or merit-based processes that 

typically assure higher priorities are funded first. A vast majority of these earmarks are targeted 

for wastewater or drinking water infrastructure projects, while others are for specific research 

projects. These earmarks require even more oversight and technical assistance from EPA than 

standard grants since many recipients are unprepared to spend or manage the funds. These 

projects generally take several years to complete, requiring EPA resources for an extended 

period of time. Earmarks have increased in number and/or dollars in recent years. 

Administration Action

The 2006 Budget proposes savings from not continuing funding for earmarked projects in three 

EPA accounts. These projects divert funding from other higher priority programs, circumvent

competitive processes, and divert people and associated financial resources from the Agency’s

core mission activities. While funding for such projects decreased from 2004 to 2005, the 

number of projects increased to a record 863 in 2005. As the number of grants increase, EPA 

must devote more resources to oversight, regardless of funding levels.

76
Environmental Protection Agency: Discretionary Proposal

Water Quality Cooperative Agreements

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 17 --- –17

Background

The Water Quality Cooperative Agreements program provides grants to States, municipalities, 

and other entities to promote the prevention, reduction and elimination of water pollution. 

Activities eligible for funding through the Water Quality Cooperative Agreements program 

include research, investigations, experiments, training, environmental technology 

demonstrations, surveys, and studies. However, the program’s utility to applicants is limited, as 

funds cannot be used for ongoing programs.

Administration Action

The Budget redirects funding for Water Quality Cooperative Agreements to EPA Water 

Pollution Control grants. Unlike the Water Quality Cooperative Agreements, which cannot fund

ongoing programs, Water Pollution Control grants help States establish and implement ongoing 

clean water programs. States have the primary responsibility for developing and implementing 

programs to comply with the Clean Water Act, and are facing challenges in meeting the Act’s 

requirements. These additional funds will provide States with resources for long-term critical 

activities such as water quality permitting and monitoring.

77
National Aeronautics and Space Administration: Discretionary Proposal

Hubble Space Telescope Robotic Servicing Mission

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 291 --- –291

Background

The Hubble Space Telescope was deployed in 1990 and had a planned 15-year lifetime. The 

telescope was designed to be upgraded and maintained every few years using Space Shuttle 

flights. Due to astronaut safety concerns, NASA cancelled the next Shuttle-based servicing 

mission, prompting the agency to refocus its attention on developing a mission to service Hubble 

via robotic means.

Recent evaluations conducted by a number of independent groups have concluded that a robotic 

servicing mission may cost upwards of $2 billion and that there is a high probability that the 

mission will fail due to the use of unproven technology and the compressed schedule required to 

reach Hubble before the telescope’s systems fail beyond repair.

Administration Action

The 2006 Budget proposes to terminate the mission to robotically service the Hubble Space 

Telescope. Given the high cost and low chance of success associated with a Hubble robotic 

servicing mission, it is more appropriate to allocate limited resources to the development of the 

next-generation of space telescopes that will replace the Hubble. Hubble’s science operations 

will continue to be funded as long as the telescope remains operable, and NASA will continue to 

aggressively work on further extending Hubble’s useful life, developing techniques to conduct 

scientific investigations even as the telescope’s pointing system ages and becomes less stable.

NASA will continue developing a device to de-orbit Hubble for public safety reasons as planned 

at the end of its useful life. The 2006 Budget supports the development of several telescopes 

expected to be launched within the next decade that will surpass Hubble’s scientific capability.

78
National Veterans Business Development Corporation: 

Discretionary Proposal

Funding Summary

(In millions of dollars)

 

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 2 --- –2

Background

The National Veterans Business Development Corporation (NVBDC) was created under the 

Veterans Entrepreneurship and Small Business Development Act of 1999 with the mandate of 

helping the nation’s veterans access technical assistance and develop small businesses. Funding 

for NVBDC was originally authorized through 2003 and the organization was mandated to 

become financially self-sufficient thereafter. Because the organization encountered delays in 

establishing a reasonable business plan for financial independence, appropriations were 

subsequently provided in 2004 and 2005. 

Administration Action

The Administration is no longer requesting to fund the NVBDC and proposes that the 

organization become financially self-sufficient, consistent with its authorization language. 

79
Postal Service: Discretionary Proposal

Revenue Forgone Appropriation

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 29 --- –29

Background

This program reimburses USPS for prior years’ lost revenue from legislatively mandated reduced 

rates to non-profit mailers. In 1994, the Congress authorized $1.2 billion to be appropriated to 

USPS in $29 million increments over a 42 year period. Through 2004, the President’s Budget 

has proposed, and the Congress has appropriated, $29 million annually. As of 2005, USPS has 

been reimbursed $348 million, with a remaining balance of $870 million. The President’s 2005 

Budget proposed to discontinue this reimbursement. During the 2005 budget process, the House 

agreed to discontinue the reimbursement but the Senate did not. The final enacted 2005 

Appropriations Act included the reimbursement. 

Administration Action

The Budget proposes to terminate the $29 million appropriation to reimburse the Postal Service 

for revenue forgone for reduced rate mail. In 2003, the Administration worked with the 

Congress to re-estimate the pension costs of the Postal Service and the Congress enacted 

significant reforms. USPS is now benefiting from pension savings of approximately $3 billion 

per year as a result of that legislation, more than compensating the organization for the loss of 

this small revenue forgone appropriation.

80
Small Business Administration: Discretionary Proposal

Microloan Program

Funding Summary

(In millions of dollars)

 

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 15 --- –15

Background

The Small Business Administration (SBA) Microloan program provides small loans to start-up

and growing small businesses through intermediaries, that also receive technical assistance.

Under this program, SBA makes funds available to nonprofit community-based lenders 

(intermediaries) which, in turn, make loans to eligible borrowers in amounts up to a maximum of 

$35,000. 

Administration Action

The Budget proposes termination of the Microloan program because it is not cost effective. The

program costs taxpayers nearly $1 for each $1 lent. The small businesses currently served by the 

Microloan program can be served by other SBA programs, including 7(a) Community Express, 

as well as other government and non-government programs. 

81
Small Business Administration: Discretionary Proposal

Small Business Investment Company Participating Securities Program

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority*.............................. --- --- ---

*Program was funded in 2004 through borrower fees rather than subsidy appropriations.

Background

The Small Business Investment Company (SBIC) Participating Securities program was created 

in 1994 as an equity-based complement to SBA’s debt-based venture-capital program, SBIC 

Debentures. Over the past ten years, the SBIC Participating Securities program has sustained 

losses to the taxpayer – as evidenced by cumulative net upward credit-subsidy reestimates – of 

$2.2 billion (excluding $0.5 billion in interest on the reestimates) on slightly more than $6 billion 

in disbursements. These losses are indicative of a structurally flawed program. 

Moreover, the private venture capital industry has grown substantially over the past decade; 

SBIC Participating Securities represent only about 3 percent of industry activity over the period 

1994 – 2004.

Participating Securities ceased making new guaranteed commitments on October 1, 2004,

because sufficient borrower fees were not enacted to cover the program’s costs.

Administration Action

The 2006 Budget does not support new guaranteed investments for the SBIC Participating 

Securities program. Rather than make new investments through this program, SBA will continue

to improve efforts to measure and mitigate risk in approximately $9 billion in commitments in 

the program’s portfolio.

In addition, the 2006 Budget supports $3 billion in guaranteed venture capital investments for 

small businesses through the related SBIC Debentures program. 

82
SPENDING REDUCTIONS 

83
84
Delta:

2005 2005 2006 2006 Request

Major Reductions 2002 2003 2004 Request Enacted Request less 2005 Enacted

Department of Agriculture

Federal (In-House) Research................................................................................. Y Y Y 988 1,102 996 -106

Forest Service Capital Improve and Maintenance.......................................... N N N 501 515 381 -134

Forest Service Wildland Fire Management (incl. supp. and emergency funding)... N N N 1,695 2,097 1,444 -653

Mandatory Reductions Providing Discretionary Offsets:

Biomass Research and Development........................................................ N N N --- -NA- -2 -2

Broadband........................................................................................... N N Y -40 -NA- -50 -50

CCC - Bioenergy................................................................................. N N Y -50 -NA- -90 -90

CCC - Market Access Program............................................................... N N Y -15 -NA- -75 -75

Farm Bill Programs (EQIP) ................................................................... N Y Y -200 -NA- -200 -200

Farm Bill Programs (CSP) ...................................................................... N N N -40 -NA- -40 -40

Farm Bill Programs (WHIP) ................................................................... N Y Y -25 -NA- -25 -25

Farm Bill Program (Farm and Ranchland Protection)......................................... N Y Y -13 -NA- -16 -16

Farm Bill Programs (Ag. Management Assistance) ..................................... N N N --- -NA- -14 -14

IFAS................................................................................................... Y Y Y -260 -NA- -300 -300

Renewable Energy................................................................................ N Y Y -23 -NA- -23 -23

Rural Firefighter Grants.......................................................................... N Y Y -30 -NA- -40 -40

Rural Strategic Investment Program................................................................... N N N -100 -NA- -100 -100

Rural Business Investment Program................................................................... N N N -65 -NA- -89 -89

Value-added Grants............................................................................................ N Y Y -80 -NA- -120 -120

Watershed Rehabilitation........................................................................ N Y Y -150 -NA- -210 -210

NRCS Conservation Operations............................................................................ N N Y 710 831 768 -63

NRCS Resource Conservation and Development Program.................................. N N N 51 51 26 -25

Water and Wastewater Grants and Loans............................................................. Y Y Y 439 548 450 -98

[non-add program level: grant BA plus loan level] [1,424] [1,526] [1,456] [-70]

Total, Agriculture Major Reductions........................................................................................................................ 3,293 5,144 2,671 -2,473

Department of Commerce

Manufacturing Extension Partnership.................................................................... N Y Y 39 108 47 -61

Total, Commerce Major Reductions......................................................................................................................... 39 108 47 -61

Department of Education

Adult Education State Grants................................................................................. N N N 574 570 200 -370

State Grants for Innovation ................................................................................... N N N 296 198 100 -98

Total, Education Major Reductions.......................................................................................................................... 870 768 300 -468

Department of Energy

Environmental Management.................................................................................. N N N 7,187 7,054 6,505 -549

Total, Energy Major Reductions............................................................................................................................... 7,187 7,054 6,505 -549

Health and Human Services

HRSA Children's Hospitals GME Payment Program............................................. Y Y Y 303 298 200 -98

HRSA Health Professions...................................................................................... Y Y Y 158 447 161 -286

HRSA Rural Health................................................................................................ Y Y Y 56 147 33 -114

SAMHSA Programs of Regional and National Significance................................... N N N 979 891 838 -53

State, Local & Hospital Bioterrorism Preparedness Grants................................... N N N 1,305 1,418 1,280 -138

Total, HHS Major Reductions.................................................................................................................................... 2,801 3,201 2,512 -689

Department of Housing and Urban Development

Housing for Persons with Disabilities..................................................................... N N Y 249 238 120 -118

Native American Housing Block Grant................................................................... N N N 626 622 522 -100

Public Housing Capital Fund.................................................................................. N N N 2,674 2,579 2,327 -252

Total, HUD Reductions.............................................................................................................................................. 3,549 3,439 2,969 -470

Department of the Interior

Bureau of Indian Affairs School Construction................................................ N N N 229 263 174 -89

National Heritage Area Grants ...................................................................... N Y Y 3 15 5 -10

Payments in Lieu of Taxes............................................................................ Y Y Y 226 227 200 -27

USGS, Mineral Resources Program...................................................................... N Y Y 48 54 25 -29

Total, Interior Reductions.......................................................................................................................................... 506 558 404 -154

Department of Justice

Federal Bureau of Prisons Construction Program................................................. N N Y 189 189 -144 -333

High Intensity Drug Trafficking Areas Program...................................................... N Y Y 208 227 100 -127

Juvenile Justice Law Enforcement Assistance Programs...................................... N N Y 210 321 198 -123

Total, Justice Major Reductions............................................................................................................................... 607 737 154 ---

Department of Labor

International Labor Affairs Bureau......................................................................... Y Y Y 31 93 12 -81

Office of Disability Employment Policy................................................................... N N N 48 47 28 -19

Workforce Investment Act Pilots and Demonstrations........................................... Y Y Y 30 85 30 -55

Total, Labor Reductions............................................................................................................................................ 109 225 70 -155

Department of State

Assistance for the Independent States of the Former Soviet Union...................... N N N 550 556 482 -74

Total, State Major Reductions................................................................................................................................... 550 556 482 -74

Has the reduction been proposed

before?

Reductions are proposed to various mandatory programs authorized by the FY 2005 Farm Bill to 

create discretionary savings.

Summary of Selected Discretionary Program Reductions in the FY 2006 Budget

(Budget authority in millions)

85
Delta:

2005 2005 2006 2006 Request

Major Reductions 2002 2003 2004 Request Enacted Request less 2005 Enacted

Has the reduction been proposed

before?

Summary of Selected Discretionary Program Reductions in the FY 2006 Budget

(Budget authority in millions)

Department of Transportation

FAA - Facilities and Equipment.............................................................................. N N N 2,500 2,525 2,448 -77

FAA - Airport Improvement Program (Oblim)................................................ N N N 3,500 3,497 3,000 -497

FRA - Next Generation High Speed Rail................................................................ N N N --- 19 --- -19

Department of Treasury

Internal Revenue Service - Taxpayer Service........................................................ N N N -NA- 3,606 3,567 -39

Total, Treasury Reductions....................................................................................................................................... -NA- 3,606 3,567 -39

Enviromental Protection Agency

Alaska Native Villages............................................................................................ N N N 40 45 15 -30

Clean Water State Revolving Fund........................................................................ N N N 850 1,091 730 -361

Total, EPA Major Reductions.................................................................................................................................... 890 1,136 745 -391

National Aeronautics and Space Administration

Aeronautics: Vehicle Systems Program................................................................ N N N 577 569 459 -110

Jupiter Icy Moons Orbiter....................................................................................... N N N 405 402 280 -122

Total, NASA Major Reductions................................................................................................................................. 982 971 739 -232

Other Agencies

NARA: National Historical Publications & Records Commission........................... N N N 10 5 --- -5

U.S. Institute of Peace, Construction of New Building........................................... N N N --- 99 --- -99

Total, Other Agency Reductions............................................................................................................................... 10 104 --- -104

SUBTOTAL, MAJOR REDUCTIONS.................................................................................................................................... 23,893 30,151 23,613 -6,538

Major Reform Proposals with 2006 Savings

2005 

Enacted

2006 

Request 2006 - 2005 Delta

Agriculture: Rural Telephone Bank................................................................................................................................................. 3 2 -1

Commerce: Economic and Community Development Programs................................................................................................... 5,314 3,710 -1,604

Homeland Security: State and Local Homeland Security Grants................................................................................................... 3,985 3,565 -420

Homeland Security: Transportation Security Administration, Recover Aviation Security Screening Costs Through Fees............ -2,580 -4,139 -1,559

Labor: Job Training Reform, Consolidate Grants Program............................................................................................................. 4,059 3,913 -146

Transportation: Amtrak................................................................................................................................................................... 1,207 360 -847

Army Corps of Engineers (Civil Works): Performance Guidelines for Funding Construction Projects............................................ 1,782 1,637 -145

U.S. Agency for International Development and Department of Agriculture: International Food Aid............................................. 1,558 1,541 -17

SUBTOTAL, MAJOR REFORM PROPOSALS WITH 2006 SAVINGS................................................................................................... 15,328 10,589 -4,739

TOTAL, Major Reductions and Reform Proposal with 2006 Savings -11,277

86
Department of Agriculture: Discretionary Proposal 

Federal (In-House) Research 

Funding Summary 

(In millions of dollars) 

2005 

Enacted

2006 

Proposed

Change 

From 2005

 

Budget Authority ........................... 1,102 996 –106 

Background 

This program provides funding for in-house work by Federal scientists on agricultural issues, in 

such areas as agricultural productivity and human nutrition. The research consists of about 

1,000 projects at over 100 Federal facilities. The Administration requests additional funding to 

meet priority research needs, such as homeland security issues. In past years, the Congress has 

included funding for specific projects at specific locations while significantly under funding 

unencumbered funds. 

Administration Action 

In the 2006 Budget, the Administration proposes savings from not continuing $175 million in 

earmarks in the Agricultural Research Service, while also proposing an additional $88 million 

for high priority areas, such as food safety, homeland security, genomics and genetics, and 

environmental conservation. Earmarked projects often avoid the competitive process, and create 

a challenge to efficiently and effectively manage research staff. 

87
Department of Agriculture: Discretionary Proposal 

Forest Service Capital Improvement and Maintenance 

Funding Summary 

(In millions of dollars) 

2005 

Enacted

2006 

Proposed

Change 

From 2005

 

Budget Authority ........................... 515 381 –134 

Background 

The Capital Improvement and Maintenance program provides funding to improve and maintain 

facilities, roads, and trails infrastructure for recreation, fire, administrative, and other uses of the 

National Forest System and infrastructure for forest research programs. Other Federal agencies 

typically have a working capital fund to fund these needs. Working capital funds charge the cost 

of various services back to the federal program that benefits from the service. However, the 

Forest Service lacks authority for such a working capital fund. In addition, the Forest Service 

has closed a large number of old or functionally obsolete facilities. The Forest Service currently 

has pilot authority to sell these facilities and retain the proceeds to reduce maintenance costs, but 

it lacks a permanent disposal authority to aid its ability in addressing its maintenance backlog.

Administration Action 

The Administration proposes the establishment of a working capital fund for facilities 

management to which Forest Service programs that use facilities will for the first time pay a 

share of the cost to maintain those facilities. In addition, the proposal establishes authority for 

the Forest Service to retain the proceeds from sales of unneeded facilities, with proceeds to be 

used to address the agency’s deferred maintenance needs. The funds generated will reduce the 

need for the current appropriated level for the program. The Forest Service expects receipts of 

$50 million in 2006 from the sale of excess facilities. Finally, the Budget proposes saving from 

not continuing $29 million in 2005 Congressionally earmarked projects. 

88
Department of Agriculture: Discretionary Proposal 

Forest Service Wildland Fire Management 

Funding Summary 

(In millions of dollars) 

2005 

Enacted*

2006 

Proposed**

Change 

From 2005

 

Budget Authority ........................... 2,097 1,444 –653 

*

Includes $394 million in unrequested supplemental funding and $263 million in hazardous fuels. 

**Reflects transfer of $281 million in hazardous fuels funding to National Forest Systems account. 

Background 

The Wildland Fire Management Program protects life, property, and natural resources from 

wildland fire on 192 million acres of National Forest System lands and adjacent lands under 

agreements with State and local governments. The program includes planning, prevention, 

detection, training, equipment and supply purchase and replacement, fire suppression, and other 

actions. Because wildfire suppression costs can vary greatly from year to year, the 

Administration’s policy is to budget for the cost of fire suppression using the 10-year average. 

This level reduces the need for supplemental appropriations or Forest Service redirecting 

resource management funds to fight fires. A 2004 PART evaluation noted weaknesses in 

incentives for controlling suppression costs and in the process for allocating preparedness 

resources effectively. In 2005, the Congress appropriated $394 million in unrequested one-time 

supplemental funds for suppression. 

Administration Action 

The Budget provides the ten-year average for wildfire suppression costs while maintaining fire 

readiness funding at the 2005 Budget level. The Administration’s proposal includes Forest 

Service implementation of key recommendations of the PART review to improve accountability 

for fire costs and improved performance measurement. The proposal does not continue $394 

million in one-time supplemental fire suppression funding provided in the 2005 appropriation, 

which only becomes available if suppression costs in 2005 exceed the ten-year average. 

89
Department of Agriculture: Discretionary Proposal 

Mandatory Reductions Providing Discretionary Offsets 

Funding Summary 

(In millions of dollars) 

 2005 2006 Change 

 Enacted Proposed From 2005

Budget Authority: 

Initiative for Future Agriculture 

and Food Systems........ –260 –300 –40 

Watershed 

Rehabilitation............. –150 –210 –60 

Environmental Quality 

Incentives Program....... –183 –200 –17 

Value-added 

Marketing Grants......... –80 –120 –40 

Rural Strategic 

Investment Program...... –100 –100 --- 

Bioenergy Program....... –50 –90 –40 

Rural Business 

Investment Program...... –86 –89 –3 

Market Access............. --- –75 –75 

Broadband Program...... –40 –50 –10 

Conservation 

Security Program......... –47 –40 7 

Rural Firefighter 

Grant Program............ –30 –40 –10 

Wildlife Habitat 

Incentives Program....... –38 –25 13 

Renewable Energy........ –23 –23 --- 

Farmland 

Protection Program....... –13 –16 –3 

Agriculture Management 

Assistance Program...... --- -14 –14 

Biomass Research........ --- -2 –2

Total BA Offsets......... –1,100 –1,394 –294 

Note: The 2005 Consolidated Appropriations Act contained language which enacted obligation delays, rather than cancellations, 

of $1,280 million in funding for mandatory programs authorized by the 2002 Farm Bill, a portion of which is listed above. As a 

result of the obligation delays, the funding for some of the programs becomes available again in 2006. The 2006 Budget rebases

the effect of the provisions as mandatory because the funding is authorized for mandatory, rather than discretionary, programs.

The 2006 Budget proposes to cancel a portion of the funding for these mandatory programs and use the savings as a discretionary

offset in 2006.

90
Background

The 2002 Farm Bill contained funding for numerous mandatory programs. During the 

appropriations process over the last several years, the Congress has routinely blocked, rather than 

cancelled, funding for these mandatory programs to offset increased discretionary spending. For 

example, the Congress approved mandatory reductions totaling $360 million in 2002, $443 

million in 2003, and $377 million in 2004. 

Administration Action 

The 2006 Budget proposes to cancel funding for lower-priority and duplicative programs 

authorized by the 2002 Farm Bill which will allow the Administration to provide additional 

discretionary resources in support of higher-priority programs. The proposed mandatory funding 

cancellations (listed in order of amount of dollars saved) would affect the following programs. 

In the past the Administration has proposed and the Congress has adopted similar savings except 

where indicated by an asterisk (*). In many cases programs are supported elsewhere in the 

Budget through tax proposals or discretionary programs. 

• Initiative for Future Agriculture Food Systems – This program provides funding for 

competitive research grants. The Budget proposes to cancel $300 million comprised of 

both new authority and funding made available in prior years. 

• Watershed Rehabilitation – This program provides funding to communities to assist in 

the construction of flood prevention infrastructure. The Budget proposes to cancel $210 

million comprised of both new authority and funding made available in prior years. 

• Environmental Quality Incentives Program – This program provides financial and 

technical assistance to farmers and ranchers to install conservation measures on working 

lands to address a variety of natural resource concerns, including air, soil, and water 

quality. The Budget proposes to cancel $200 million out of $1.2 billion available in 

2006. 

• Value-added Grants – This program provides marketing assistance grants to local 

communities. The Budget proposes to cancel $120 million comprised of both new 

authority and funding made available in prior years. 

• Rural Strategic Investment Program – This program provides rural communities with 

resources to develop strategic planning and economic development strategies. The 

Budget proposes to cancel all program funds ($100 million) in 2006. 

• Bioenergy Program – This program compensates agricultural producers for increased 

production of biodiesel and ethanol. The Budget proposes to cancel $90 million out of 

$150 million available in 2006. The Administration provides significant support for 

alternative fuels through tax proposals and other domestic programs. 

• Rural Business Investment Program – The purpose of this program is to promote 

economic development in rural areas through loans and grants to rural businesses. The 

Budget proposes to cancel all available program resources ($89 million) in 2006. 

• Market Access Program – This program helps U.S. producers, exporters, private 

companies, and other trade organizations finance promotional activities for U.S. 

agricultural products. The Budget proposes to cancel $75 million out of $200 million 

available in 2006. 

91
• Broadband – This program provides loans to improve telecommunications services in 

rural areas. The proposal would eliminate a mandatory loan program designed to finance 

the installation of broadband transmission capacity to rural communities but instead 

proposes $10 million for a discretionary program that will support an additional $359 

million in loans. This program is part of the President’s commitment to make broadband 

available to everyone by 2007. The Budget proposes to cancel $50 million comprised of 

both new mandatory authority and mandatory funding made available in prior years. 

• Conservation Security Program – The program provides financial and technical 

assistance to producers who have already performed high levels of conservation in order 

to reward and maintain their model stewardship. The program also pays qualified 

producers to do further environmental enhancements on their operations. The Budget 

proposes to cancel $40 million out of $314 million available in 2006. 

• Rural Firefighter Grants – This program provides grants to local communities for 

firefighter training and is duplicative of other grant programs. The Budget proposes to 

cancel $40 million comprised of both new authority and funding made available in prior 

years. 

• Wildlife Habitat Incentives Program – This program provides financial and technical 

assistance to landowners to develop habitat for upland and wetland wildlife. The Budget 

proposes to cancel $25 million out of $85 million available in 2006. 

• Renewable Energy – This program provides loans and grants to farmers, ranchers and 

small rural businesses to purchase renewable energy systems. The Budget proposes to 

cancel the $23 million made available in 2006. 

• Farm and Ranch Land Protection Program – The program provides matching funds to 

State, Tribal, and local governments and to non-governmental organizations to help 

purchase development rights to keep productive farm and ranch land in agricultural uses. 

The Budget proposes to cancel $16 million out of $100 million available in 2006. 

• Agricultural Management Assistance * – The program provides assistance to agricultural 

producers to mitigate financial risk by using conservation measures to reduce soil erosion 

and improve water quality. The Budget proposes to cancel $14 million out of $20 million 

made available in 2006. 

• Biomass Research * – This program’s primary goal is to coordinate and accelerate 

Federal biobased products and bioenergy research and development. The Budget 

proposes to cancel $2 million out of $14 million available in 2006. 

92
Department of Agriculture: Discretionary Proposal 

NRCS Conservation Operations

Funding Summary 

(In millions of dollars) 

2005 

Enacted

2006 

Proposed

Change 

From 2005

 

Budget Authority ........................... 831 768 –63 

Background 

The Natural Resources Conservation Service (NRCS) Conservation Operations account 

primarily funds the staff costs for the agency’s State- and field-level personnel to provide 

voluntary conservation technical assistance to land-users, communities, State and local 

government, and other Federal agencies in planning and implementing conservation systems. 

The agency works primarily with agricultural producers to identify natural resource concerns on 

their farming and ranching operations, and then to design and deliver conservation measures to 

address their concerns. 

Increasingly, the Congress is adding earmarks to NRCS’s Conservation Operations account with 

over $100 million in local projects added in both 2004 and 2005. 

Administration Action 

The 2006 Budget proposes to eliminate unrequested congressional earmarks in NRCS 

Conservation Operations account. The earmarks fund a large number of local conservation, 

education, and research projects, many of which are not a Federal priority or responsibility, and 

reduce the agency’s ability to address higher conservation priorities. 

93
Department of Agriculture: Discretionary Proposal 

NRCS Resource Conservation and Development Program

Funding Summary 

(In millions of dollars) 

2005 

Enacted

2006 

Proposed

Change 

From 2005

 

Budget Authority ........................... 51 26 –25 

Background 

The Resource Conservation and Development (RC&D) Program provides assistance to local 

communities to develop strategic plans that address their locally identified natural resource and 

economic development concerns. The program’s purpose is to improve the capability of local 

communities to plan and deliver improvement projects. 

Because the program was first established in the 1960s, over half of the 375 RC&D areas have 

received Federal financial support for at least 20 years. In many cases, RC&D areas have 

received Federal support for more than 30 or 40 years. 

A PART assessment of the program found that it is highly duplicative of other USDA and 

Federal resource conservation and rural development programs. Also, the RC&D Program does 

not prioritize and target funding based on need or performance. 

Administration Action 

The 2006 Budget proposes a new policy for the RC&D Program that phases out Federal support 

for the local planning areas after 20 years of funding. In effect, this policy would cancel Federal 

funding for 189 RC&D areas (out of a total of 375 areas) in the 2006 Budget for a savings of $25 

million. At this point, most of these local communities should have the experience and capacity 

to identify, plan, and address their own priorities. Despite the fact that this program goal has 

largely been achieved, local communities have never stopped receiving funding. The resulting 

savings would be redirected to other high-priority conservation activities. 

94
Department of Agriculture: Discretionary Proposal 

Water and Wastewater Grants & Loans 

Funding Summary 

(In millions of dollars) 

2005 

Enacted

2006 

Proposed

Change 

From 2005

 

Budget Authority ........................... 548 450 –98 

Program Level................................ 1,526 1,456 –70 

Background 

For over 60 years, USDA has provided financing to rural communities for water and wastewater 

treatment facilities. Specifically, these funds are available to low-income rural communities of 

10,000 or fewer people. The program finances drinking water, sewer, solid waste disposal, and 

storm drainage facilities through direct or guaranteed loans and grants. Priority is given to loans 

serving smaller communities that have greater financial need, based on their median household 

income, poverty levels, and size of service population. 

Administration Action 

Funding for the Water and Wastewater Grants and Loans are recommended at a reduced level 

from what was provided in 2005. The Administration’s proposal funds the program at 

approximately the same level that it has been requested for the last three years. Because of the 

relatively low interest rate on loans, more rural communities are able to afford to repay loans so 

that the program can operate at a higher loan to grant ratio than it has over previous years when 

rates were higher. At the requested level, an estimated 570,000 rural households will experience 

new or improved service facilities. 

95
Department of Commerce: Discretionary Proposal 

Manufacturing Extension Partnership 

Funding Summary 

(In millions of dollars) 

2005 

Enacted

2006 

Proposed

Change 

From 2005

 

Budget Authority ........................... 108 47 –61 

Background 

The Manufacturing Extension Partnership (MEP) provides business and technical consulting 

services to small and medium sized manufacturers. MEP’s original 1988-legislated design called 

for a phase-out of Federal monies to each center after six years of funding, with the goal of 

making each center self-sufficient. Currently, fees generally cover one-third of the program’s 

cost; the Federal government and State/local matching grants together cover the remaining twothirds of the cost. In principle, firms should be willing to pay for consulting services 

that increase their profitability. 

Administration Action 

The Budget proposes to fund MEP at $47 million, a 50-percent reduction from the 2005 grant 

level. The Administration's approach will maintain a strong national network of centers while 

focusing funding based on centers' performance and need. The program has also augmented 

funding through expanding partnerships with other agencies and institutions. Given this new 

operating environment, the Administration believes the program has evolved to a stage at which 

less reliance on direct appropriations is required. 

The Administration is committed to strengthening the competitiveness of the Nation’s 

manufacturing industry. Since taking office, the President has provided tax relief that has 

benefited manufacturers of all sizes, and has proposed an aggressive job training initiative. The 

President has also outlined a six-point plan to reduce healthcare costs, decrease lawsuit burdens, 

ensure an affordable and reliable energy supply, streamline regulations, open markets for 

American products, and enable families and businesses to plan for the future with confidence. 

96
Department of Education: Discretionary Proposal 

Adult Education State Grants

Funding Summary 

(In millions of dollars) 

2005 

Enacted

2006 

Proposed

Change 

From 2005

 

Budget Authority ........................... 570 200 –370 

Background 

The Adult Education (Adult Ed) State Grants program provides grants to states intended to teach 

adults how to read and learn other skills that will help them obtain a high school diploma, 

employment, and economic self-sufficiency. The PART found that the program could not 

demonstrate results because of poor data quality and the absence of a national evaluation to 

assess the program’s effectiveness and rated it Results Not Demonstrated. The program does not 

have strong accountability mechanisms to ensure that States and localities support effective 

programs that will achieve measurable results. The program has made only modest gains on 

measures of performance linked to program completion and English Language skill attainment. 

For example, in 2003, only 36 percent of English as a Second Language participants improved 

their English skills to advance to the next level. 

As part of the Workforce Investment Act reauthorization, the Administration proposed a 

“Blueprint” for a reformed Adult Ed program that funds research-based programs that 

demonstrate positive literacy and work-related outcomes. Although both the House and Senate 

reauthorization bills introduced last year adopted some reforms, they did not create sufficiently 

strong accountability mechanisms to ensure positive outcomes from Federal investments. Action 

was not completed on those bills. 

Administration Action 

The Administration proposes to reduce the funding requested for Adult Ed. The total request for 

this program the Administration includes $69 million for English Language and Civics 

Education grants to ensure that a large portion of the immigrants served by Adult Ed still receive 

services. The Department of Education will work with States to improve the overall program 

and ensure that funds support local programs that will lead to measurable, positive outcomes for 

participants.

97
Department of Education: Discretionary Proposal 

State Grants for Innovative Programs 

Funding Summary 

(In millions of dollars) 

2005 

Enacted

2006 

Proposed

Change 

From 2005

 

Budget Authority ........................... 198 100 –98 

Background 

State Grants for Innovative Programs support formula grants to State and local educational 

agencies (LEAs) for projects designed to support the reform of elementary and secondary 

education. A wide array of activities can be carried out with program funds including: 

professional development and class-size reduction activities; charter schools; community service 

programs; consumer, economic and personal finance education; public school choice; programs 

to hire and support school nurses, and school-based mental health services. 

 

This program is not well targeted to districts and schools with the greatest need, does not have 

strong accountability mechanisms to ensure funds are helping to improve student achievement, 

and does not have a demonstrated track record of measurable results. 

Administration Action 

The Administration proposes to reduce the amount of funding for State Grants for Innovative 

Programs. This request is consistent with the Administration’s policy of increasing resources 

for targeted, high-priority programs that hold the greatest promise for helping States and school 

districts close the achievement gap. School districts may use funds provided under other Federal 

programs, such as Improving Teacher Quality State Grants ($2.9 billion in 2006) and Title I 

Grants to LEAs ($13.3 billion in 2006), to support many of the activities authorized under State 

Grants for Innovative Programs. The request level continues the recent trend in reduced 

appropriations for this block grant program, as Congress reduced its funding by 35 percent in 

2005. 

98
Department of Energy: Discretionary Proposal 

Environmental Management 

Funding Summary 

(In millions of dollars) 

2005 

Enacted*

2006 

Proposed

Change 

From 2005

 

Budget Authority ........................... 7,054 6,505 –549 

*For comparability, the 2005 Enacted numbers have been adjusted to remove the costs of activities proposed in the 2006 Budget 

to be transferred to the National Nuclear Security Administration (NNSA). 

Background 

More than five decades of nuclear weapons production and energy research have left significant 

quantities of radioactive and hazardous contamination and waste at Federal facilities, which must 

be cleaned up. Established in 1989, this program is responsible for cleaning up 107 of the 

Department of Energy’s (DOE) sites, subject to oversight by State and Federal regulators. In 

February 2002, DOE completed an extensive review of the program and began implementing 

recommendations to accelerate cleanups. In addition, the 2003 Budget proposed to provide 

significant additional resources (more than $4.5 billion over five years for all sites) to sites that 

agreed with the regulators to implement revised cleanup strategies. 

Administration Action 

The Administration proposes to reduce program funding due to the success of program reforms, 

which have significantly reduced environmental, safety, and health risks. For instance, the 

cleanup of Rocky Flats will be completed in 2006 after nearly 15 years of work. The 2006 

Budget continues these cleanup reforms, which are expected to accelerate cleanup at remaining 

sites by 35 years and save over $50 billion, reducing the estimated total lifecycle costs from $196 

billion to $142 billion, including NNSA sites. The peak year of funding for this initiative was 

2005. 

99
Department of Health and Human Services: Discretionary Proposal 

HRSA Children’s Hospitals Graduate Medical Education Payment Program 

Funding Summary 

(In millions of dollars) 

2005 

Enacted

2006 

Proposed

Change 

From 2005

 

Budget Authority ........................... 298 200 –98 

Background 

Children’s Hospitals Graduate Medical Education Payment Program (CHGME PP) at the Health 

Resources and Services Administration (HRSA) was first funded in 2000 at $40 million. Since 

2000, the size of the program has increased nearly eight-fold. Past Budgets have requested 

reduced funding for the program. The program provides payments to free-standing children’s 

hospitals via a statutory formula that incorporates the number of residents, number of discharges, 

number of beds, and the hospital’s case-mix. In 2005, the program provided an average subsidy 

of $4.9 million to 61 children's hospitals. 

A PART assessment concluded that there is not a demonstrated need for CHGME PP. As a 

group, the financial status of children’s hospitals is generally better than other hospitals. In 

2000, seventy-four percent of supported children’s hospitals reported operating with positive 

total margins. That same year, only sixty-seven percent of all hospitals and fifty-nine percent of 

major teaching hospitals reported positive margins. 

Administration Action 

The 2006 Budget requests $200 million for the Children’s Hospitals Graduate Medical Education 

Payment Program. The request will continue substantial Federal support for freestanding 

children’s hospitals. The Budget will provide 61 children’s hospitals with an average award of 

$3.3 million. The Budget simply reduces funding for a subsidy that has as its only purpose to 

provide funding to hospitals regardless of need or financial status. 

The Budget improves access to health care by focusing investments on programs with a 

demonstrated impact on placing health professionals in underserved areas. The Budget proposes 

$123 million for the National Health Service Corps to direct health professionals into 

communities facing a critical shortage of physicians, dentists, and other health professionals and 

invests $150 million in the education of nurses. 

100
Department of Health and Human Services: Discretionary Proposal 

HRSA Health Professions 

Funding Summary 

(In millions of dollars) 

2005 

Enacted

2006 

Proposed

Change 

From 2005

 

Budget Authority ........................... 447 161 –286 

Background 

Health Professions training grants at the Health Resources and Services Administration (HRSA) 

finances 40 different grants and cooperative agreements to roughly 1,700 institutions. Eighteen 

of the last nineteen Budgets have reduced funding for Health Professions. 

The Health Professions programs were created forty years ago, partially in response to an 

anticipated national shortage of physicians. That shortage does not exist. Between 1991 and 

2001, the U.S. physician population increased by 26 percent, twice the rate of growth of the total 

population. Evaluations have not linked the Health Professions programs to changes in supply, 

distribution, and minority representation of physicians and other health professionals. The 

Health Professions program has received an Ineffective PART rating. 

Administration Action 

The 2006 Budget requests $161 million for Health Professions training grants. Continuing these 

subsidies to persuade people to enter well-paid medical careers is not the best use of Federal 

funds, particularly when there is no national shortage of physicians. There are regions and 

pockets of the county that face critical shortages, but eight of every ten providers who benefit 

from the program’s long-term training support do not enter shortage areas. For those graduates 

who do enter service in shortage areas, there are no data on how long they continue to serve. 

In contrast to physicians, the Nation does face a nursing shortage. The Budget invests $150 

million in the education of nurses, including $31 million for scholarships and loan repayments 

tied to a service commitment in an underserved community. 

The Budget improves access to health care by focusing investments on programs with a 

demonstrated impact on placing health professionals in underserved areas. The Budget proposes 

$123 million for the National Health Service Corps to direct health professionals into 

communities facing a critical shortage of physicians, dentists, and other health professionals. 

101
Department of Health and Human Services: Discretionary Proposal 

HRSA Rural Health 

Funding Summary 

(In millions of dollars) 

2005 

Enacted

2006 

Proposed

Change 

From 2005

 

Budget Authority ........................... 147 33 –114 

Background 

Rural Health programs at the Health Resources and Services Administration (HRSA) provide 

support to Critical Access Hospitals (CAH) and fund policy development, State offices of rural 

health, and provider network planning. Past Budgets have reduced or eliminated funding for the 

Rural Health programs. In past years, these programs have funded numerous Congressional 

earmarks. 

The HRSA Rural Health programs are duplicative of other Federal programs. The Department 

of Health and Human Services (HHS) administers 225 health and social services programs that 

provide resources to rural areas. The Medicare Modernization Act (MMA) increased payments 

to rural areas by approximately $20 billion over 10 years. The MMA increased funding to 

hospitals (including CAHs), physicians, ambulance services, skilled nursing facilities, and home 

health agencies that serve rural areas. 

Administration Action 

The 2006 Budget requests $33 million for HRSA’s Rural Health programs. The Budget 

maintains funding for rural health research activities conducted under the Policy Development 

program to help advise the Secretary on rural health issues. The Budget also maintains funding 

for telehealth activities and State offices of rural health. Funding is reduced for defibrillators, as 

much of the demand for these medical devices has been met. Consistent with previous 

President’s requests, funding is eliminated for programs that are duplicative of other HHS and 

Federal agencies’ programs. 

 

The Budget maintains support for health care in rural areas. The rural provisions of the MMA 

ensured that beneficiaries can continue to find a Medicare provider wherever and whenever they 

need care. The Budget proposes $2.0 billion, a $304 million increase, for Health Centers. More 

than 50 percent of Health Centers are in rural areas and more than seven million low-income and 

underserved individuals will receive health care from rural Health Centers in 2006. 

102
Department of Health and Human Services: Discretionary Proposal 

SAMHSA Programs of Regional and National Significance 

Funding Summary 

(In millions of dollars) 

2005 

Enacted

2006 

Proposed

Change 

From 2005

 

Budget Authority ........................... 891 838 –53 

Background 

The Substance Abuse and Mental Health Services Administration’s (SAMHSA’s) three 

Programs of Regional and National Significance (PRNS) programs—Mental Health, Substance 

Abuse Prevention, and Substance Abuse Treatment—include two components. The Best 

Practices component supports grants and contracts to identify and disseminate information on 

effective strategies for treatment and prevention of mental illness and substance abuse. The 

Targeted Capacity Expansion component supports competitive grants and contracts to provide 

direct services and programs to treat and prevent mental illness and substance abuse. 

The PART analysis of Substance Abuse Treatment PRNS rated the program as Adequate, but 

recommended shifting funding from Best Practices to Targeted Capacity Expansion component 

to focus resources on expanding access to treatment for those who need it. 

Administration Action 

The 2006 Budget proposes to reduce funding for Best Practices in PRNS. The Administration’s 

proposal focuses SAMHSA’s funding on grants for service and program delivery, while 

continuing to support research of effective treatment and prevention strategies conducted by the 

National Institutes on Drug Abuse (NIDA), Alcohol Abuse and Alcoholism (NIAAA), and 

Mental Health (NIMH). The 2006 combined budgets of NIDA, NIAAA, and NIMH to conduct 

research on the prevention and treatment of drug and alcohol abuse and mental illness total $2.9 

billion. 

103
Department of Health and Human Services: Discretionary Proposal 

State, Local and Hospital Bioterrorism Preparedness Grants 

Funding Summary 

(In millions of dollars) 

2005 

Enacted

2006 

Proposed

Change 

From 2005

 

Budget Authority ........................... 1,418 1,280 –138 

Background 

State, Local and Hospital Bioterrorism Preparedness Grants are provided directly to the States to 

support improvements to public health and hospital systems that will increase preparedness 

against a bioterrorist attack or other public health emergency. In 2001 this program was funded 

at $67 million, growing to more than $1.5 billion by 2003. That growth was based on the need to 

improve preparedness following the events of September 11, 2001, and the anthrax attacks of 

that fall, rather than a strong scientific rationale behind a specific funding level. It has never 

been intended that these investments should be permanent or borne entirely by the Federal 

government. 

Based on those factors and the need to make more directed Federal investments to address 

emerging priorities such as biosurveillance for early attack warning, the 2005 Budget proposed a 

reduction to these grants (-$145 million) for the first time. The proposed reduction was not 

enacted. 

Administration Action 

The 2006 Budget continues to invest heavily in assistance for State, local and hospital 

bioterrorism preparedness, requesting $1.28 billion for 2006. While this is a reduction of $138 

million, it would bring the total investment in this area since 2001 to $6.7 billion. The 2006 

Budget re-directs Federal Biodefense investments for priorities such as medical surge capacity, 

and increased supplies of life saving treatments and vaccines in the Strategic National Stockpile. 

Overall, the 2006 Budget provides $4.2 billion for HHS Biodefense preparedness activities, an 

increase of $154 million over 2005. 

104
Department of Housing and Urban Development: Discretionary Proposal 

Housing for Persons with Disabilities 

Funding Summary 

(In millions of dollars) 

2005 

Enacted

2006 

Proposed

Change 

From 2005

 

Budget Authority ........................... 238 120 –118 

Background 

The Housing for Persons with Disabilities program (also known as "Section 811" program) has 

provided construction grants, housing operating subsidies and housing vouchers for very lowincome persons with disabilities. Federal grants finance the acquisition, construction, or 

rehabilitation of multifamily or group homes. Funds for project operation are provided when 

projects are occupied. The PART analysis found that the capital grant program is prone to 

development delays and construction cost overruns. 

HUD also funds housing vouchers, which give assistance directly to recipients so that they can 

afford to rent apartments on their own in the private market. HUD’s efforts to combat 

homelessness and more general forms of housing assistance (public housing, project-based 

housing, and vouchers) also serve many persons with disabilities. 

Administration Action 

The Administration proposes to eliminate funding for capital grants to construct housing for lowincome persons with disabilities. Funds are included for about 1,000 new vouchers for persons 

with disabilities. Furthermore, assistance funded in prior years is continued and fully funded in 

2006; there will be no reduction in the number of people served. 

105
Department of Housing and Urban Development: Discretionary Proposal 

Native American Housing Block Grant 

Funding Summary 

(In millions of dollars) 

2005 

Enacted

2006 

Proposed

Change 

From 2005

 

Budget Authority ........................... 622 522 –100 

Background 

This program provides funds on a formula basis to Indian tribes and their designated housing 

entities to address housing needs in their communities. Grantees have substantial latitude in 

applying funds to various housing investments. While there is a prevalence of poor housing 

conditions on many Indian reservations, the program is unable to demonstrate that it is effective 

in improving conditions.

Administration Action 

The Administration proposes to reduce Native American Housing Block Grants by 16 percent in 

2006. This program was reviewed two years ago using the PART, and it was determined that the 

program could not demonstrate results. No measures of outcomes for the program are currently 

in place. 

Despite the reduction in new funding proposed, the program will have the same amount of funds 

available in 2006 as were appropriated in 2005. The program has significant unspent balances of 

funds which HUD will draw upon to maintain an adequate program level. 

Grantees can leverage additional funds by pledging their awards as collateral for housing 

financing (under the Title VI loan guarantee program). Use of this tool has increased the amount 

of housing funds available to tribes: the Budget projects guarantees will increase from $18 

million in 2005 to $38 million in 2006. 

106
Department of Housing and Urban Development: Discretionary Proposal 

Public Housing Capital Fund 

Funding Summary 

(In millions of dollars) 

2005 

Enacted

2006 

Proposed

Change 

From 2005

 

Budget Authority ........................... 2,579 2,327 –252 

Background 

Since the 1930s, the Federal Government has supported the provision of housing assistance to 

low-income households through the construction and operation of public housing. Although the 

housing is owned by local public housing authorities, Federal funds are provided to pay a 

substantial portion of operating costs as well as capital improvements. This arrangement often 

requires assisted households to live in less desirable locations and units in order to benefit from 

this form of housing subsidy. In contrast, other alternatives, such as Section 8 Tenant-based 

Rental Assistance, allow families to select housing in neighborhoods with lower poverty and 

crime rates as well as better schools. 

The Public Housing Capital Fund currently pays for the annual and long-term modernization 

needs of over 1.2 million public housing units. Public housing capital needs are estimated to 

accrue at a rate of $2.2 billion a year. 

The condition of public housing units has improved in most cases through modernization and, in 

other cases, demolition of units in the worst condition, as evidenced by the fact that 85 percent of 

public housing units meet HUD’s physical standards today as opposed to 82 percent in 2001. To 

pay for more comprehensive capital improvements, public housing authorities have been 

exercising new authority to use their Capital Fund dollars to leverage additional private bond or 

mortgage financing. The use of such authority has grown to over $1.8 billion in private financing 

since its enactment in 1998. 

Administration Action 

The Budget proposes to reduce funding for public housing modernization and renovation by 10 

percent in 2006. The amount provided continues to cover the $2.2 billion annual rate of accrual 

of new capital needs, but public housing authorities are able to fund backlog capital needs by 

leveraging private investment dollars with their Capital Fund allocations. The Budget proposes 

to redirect program savings to other higher priority programs that more effectively deliver 

housing assistance to low-income households, such as Section 8 Tenant-based Rental Assistance. 

107
Department of the Interior: Discretionary Proposal 

Bureau of Indian Affairs School Construction 

Funding Summary 

(In millions of dollars) 

2005 

Enacted

2006 

Proposed

Change 

From 2005

 

Budget Authority ........................... 263 174 –89 

Background 

The Bureau of Indian Affairs (BIA) serves approximately 48,000 students and resident-only 

boarders (about seven percent of all Native American children) in 184 elementary and secondary 

schools and dormitories located in 23 states. In 2001, only 35 percent of these schools were in 

good or fair condition. The President committed to spend nearly $1 billion to repair and build 

Indian schools starting in 2002. This funding commitment has been met. 

A 2006 PART of the program showed that BIA is making progress to address deficiencies 

identified in the initial 2004 PART. For example, BIA no longer finalizes construction cost 

estimates before the design is completed, and now limits the amount of funds obligated for 

construction projects prior to completion of planning and design. However, the 2006 PART and 

recent Inspector General audits have noted that problems remain in the program. For example, 

new schools are being designed larger than necessary due to inflated student enrollment levels. 

In addition, BIA has had difficulty absorbing funding increases during the last five years, and has 

carried over large unobligated balances each year, including approximately $200 million into 

2005. 

Administration Action 

The 2006 budget proposes to reduce funding for the BIA school construction program, reflecting 

successful completion of the President’s repair and building commitment and a slowdown in 

construction to allow planning and design to catch up with construction awards. With the 2006 

budget, funding will have been secured for replacement and major improvement projects for 

approximately 40 percent of the entire inventory of BIA schools. When these projects are 

completed, more than 65 percent of the schools will be in good or fair condition, nearly double 

the number that were in that condition in 2001. 

108
Department of the Interior: Discretionary Proposal 

National Heritage Area Grants 

Funding Summary 

(In millions of dollars) 

2005 

Enacted

2006 

Proposed

Change 

From 2005

 

Budget Authority ........................... 15 5 –10 

Background 

National Heritage Area grants began in the 1980s on an ad hoc basis as a means to assist local 

groups in protecting historical resources. These Areas are managed by non-Federal groups, but 

they usually receive National Park Service (NPS) grants once they are federally designated. 

During the late 1990s, the amount of Federal funding and the number of Areas grew rapidly, so 

that now there are 27 federally designated Areas and proposals for dozens more. As initially 

proposed, Federal funding would be temporary until newly established Areas could find a stable 

source of permanent funds. However, none of the existing 27 Areas have stopped receiving 

Federal funds. 

A 2004 GAO report found that “no systematic process currently exists for identifying qualified 

sites and designating them as national heritage areas.” The report went on to recommend that, 

absent congressional action to establish a formal heritage area program, NPS needs to increase 

accountability by: (1) developing standards for reviewing management plans; (2) requiring 

regular financial audits; and (3) developing results-oriented performance measures for heritage 

area activities. 

Administration Action 

The President’s Budget reduces NPS grants to non-Federal groups that are responsible for 

managing National Heritage Areas. These Areas were designated without national criteria and 

are managed by non-Federal groups without agreed upon performance requirements. This 

reduction seeks to encourage heritage areas in becoming self-sufficient and to prompt action in 

establishing a formal program that sets limits and criteria for what areas are worthy of 

designation. 

109
Department of the Interior: Discretionary Proposal 

Payments in Lieu of Taxes 

Funding Summary 

(In millions of dollars) 

2005 

Enacted

2006 

Proposed

Change 

From 2005

 

Budget Authority ........................... 227 200 –27 

Background 

The Department of the Interior’s Payments in Lieu of Taxes (PILT) program provides payments 

to units of local government (e.g., counties) that contain federally owned land within their 

boundaries. The formula-based payments are meant to compensate local governments for their 

inability to tax Federal lands within their jurisdiction. In effect, PILT is a form of revenue 

sharing. If the lands were privately owned, States and local governments would be able to 

collect taxes from the owners. On the other hand, they would not share in the revenues 

generated from mineral and other extractive industries, as they do now. The Federal 

Government also incurs many of the costs associated with managing these lands (e.g., roads and 

facilities) that would otherwise be borne by local governments. Local areas also enjoy many 

benefits from Federal lands within their boundaries such as increased tourism and recreation. 

PILT funding was essentially flat for two decades. It increased 48 percent in 2001 during a time 

of Federal surpluses and State budget troubles and has continued to increase each year. Funding 

for PILT has increased 69 percent since 2000. 

Administration Action 

The Budget provides $200 million for PILT, a 12 percent decrease from the record high 2005 

enacted level, as a deficit reduction measure. However, this funding is still high by historical 

standards because PILT funding has increased dramatically in recent years. As recently as 2000, 

PILT funding was only $134 million. While State budgets are still tight, State finances have 

improved since 2001. According to the National Conference of State Legislatures, the States 

faced a cumulative budget gap of $17.5 billion in 2003. For 2005, the gap has shrunk 97 percent 

to $568 million. Given the need to restrain federal spending, maintaining the same level of PILT 

funding is not justified. 

110
Department of the Interior: Discretionary Proposal 

United States Geological Survey, Mineral Resources Program 

Funding Summary 

(In millions of dollars) 

2005 

Enacted

2006 

Proposed

Change 

From 2005

 

Budget Authority ........................... 54 25 –29 

Background 

The Mineral Resources Program (MRP) maintains national databases and provides information 

on the location and quantity of minerals, formation of minerals, and the impact of mining on the 

environment. MRP annually produces 4-5 systematic analyses, 700-720 mineral commodity 

reports and maintains five national geologic, geochemical, geophysical databases. A PART 

found that while the program is generally well managed, the program goals were too broad. 

Many of the products are directed to the interests of States, local governments, industry and 

academia rather than the Federal Government. 

Administration Action 

The 2006 Budget reduces MRP work on national and international mineral assessment products 

and basic research that benefit States, local governments, industry and academia. State and local 

governments, industry and universities could fund their own mineral assessments and basic 

research if they consider these products a priority. The reduction is consistent with a PART 

recommendation to focus MRP on activities that support land use and economic planning 

decisions. Remaining funds will be focused on mineral surveys and studies that are relevant to 

ongoing Federal energy, land management, regulatory, and remediation activities.

111
Department of Justice: Discretionary Proposal 

Federal Bureau of Prisons Construction Program 

Funding Summary 

(In millions of dollars) 

2005 

Enacted

2006 

Proposed

Change 

From 2005

 

Budget Authority ........................... 189 –144 –333 

Background 

The Federal Bureau of Prisons (BOP) construction program was established 75 years ago to meet 

prisoner bedspace capacity requirements through the construction of new prisons, the expansion 

of existing prisons and the acquisition and conversion of military and other properties to house 

Federal prisoners. In addition, the construction program provides for the modernization and 

repair of Federal prisons. Currently, there are 104 federally owned and operated prisons 

nationwide housing over 153,000 inmates. Although current prison crowding is 39 percent, new 

prison activations and additional contract bedspace will allow BOP to meet its goal of reducing 

system-wide crowding to 35 percent by the end of 2005. 

As part of the 2007 Budget review process, BOP will compare its prison construction program 

with those of the private sector and State and local governments to determine whether it is using 

the most cost effective methods to meet Federal inmate bedspace capacity requirements. BOP 

will also complete a review of existing prisons for upgrade and modification to house higher 

security inmates and review the availability of private sector and State and local jail space to help 

meet its capacity requirements for low security inmates. In addition, BOP will determine the 

degree to which inmate crowding is acceptable depending on security level. 

Administration Action 

The 2006 Budget proposes a moratorium on new prison construction pending the outcome of 

reviews to determine the best manner and methods to meet prisoner capacity requirements. In 

addition, the Budget proposes to rescind $314 million associated with the construction of two 

prisons – one in the Mid-Atlantic States and the other in New England. These funds are assigned 

to medium security prison construction projects which are not scheduled to complete 

construction and receive prisoners until 2009 – or beyond. As of the end of 2004, there were 

over $570 million of unobligated prison construction balances. 

112
Department of Justice: Discretionary Proposal 

High Intensity Drug Trafficking Areas Program 

Funding Summary 

(In millions of dollars) 

2005 

Enacted

2006 

Proposed

Change 

From 2005

 

Budget Authority ........................... 227 100 –127 

Background 

The High Intensity Drug Trafficking Areas (HIDTA) program was established in 1990 for the 

purpose of providing assistance to Federal, State and local law enforcement entities operating in 

those areas most adversely affected by drug trafficking. The first five HIDTAs were designated 

in New York, Los Angeles, Miami, Houston, and the Southwest Border area. Additional 

HIDTAs have been added, with a current total of 28 across the country. 

The growth of the HIDTA program has taken it well beyond its original focus on a limited 

number of regions experiencing severe effects from unusually high levels of drug trafficking. In 

2005, the program will spend $227 million on 28 areas that encompass 60 percent of the 

Nation’s population. The program’s growth has diluted the impact of funds and, as noted by the 

Government Accountability Office (GAO), has led to difficulties in program guidance and 

oversight. In addition, the GAO found it difficult to measure the program’s impact. This 

corresponds with a 2005 PART assessment of HIDTA, in which the program was given a 

“Results Not Demonstrated” finding primarily due to the lack of necessary performance data. 

Administration Action 

The Administration proposes to reduce funds for the HIDTA program and relocate the program 

from the Office of National Drug Control Policy to the Department of Justice (DOJ). The 

restructuring and relocation would provide for a leaner, more focused HIDTA program that 

would allocate funds to a smaller number of areas. In the future, funding allocations would be 

based on a review of the local threat level, quality of the proposed programs and budgets 

submitted by HIDTA candidates, and extent to which the proposals complement the National 

Drug Control Strategy. The changes would allow for a more strategic targeting of funds while 

retaining the most effective aspects of the program. 

In addition, placement of the HIDTA program in DOJ would enable HIDTA to complement 

other Federal drug enforcement programs within DOJ, especially the Drug Enforcement 

Administration and the Organized Crime and Drug Enforcement Task Force. 

113
Department of Justice: Discretionary Proposal 

Juvenile Justice Law Enforcement Assistance Programs 

Funding Summary 

(In millions of dollars) 

2005 

Enacted

2006 

Proposed

Change 

From 2005

 

Budget Authority ........................... 321 198 –123 

Background 

The Department of Justice (DOJ) administers a number of programs to provide juvenile justice 

law enforcement assistance to States and localities that are unable to demonstrate results. For 

example, the Title II Part E Demonstration Grants Program, authorized in 2002, is intended to 

fund promising initiatives and programs for the prevention, control, or reduction of juvenile 

delinquency. Yet, in recent years, a lengthy, prescribed list of projects has been funded in this 

program, making it virtually impossible to for DOJ to target resources to the highest priority 

juvenile justice needs. 

Today, the crime rate is at a 30-year low. Juvenile crime has fallen, as well. Between 1993 and 

2002 (most recent data published), the annual number of juvenile arrests fell 23 percent. 

Administration Action 

The 2006 Budget proposes to reduce juvenile justice law enforcement assistance programs. 

These reductions are principally focused on the Title II Part E Demonstration Grants and the 

Gang Resistance Education and Training Program programs. Without the ability to target 

resources or demonstrate results, these programs are no longer cost-effective – especially at a 

time when juvenile crime has fallen. The Budget proposes to redirect these dollars, in part to a 

more promising approach to countering gang activity that leverages the efforts of faith-based and 

community organizations. 

In addition, the Administration is proposing a three-year $150 million Anti-Gang Initiative to 

help youth at risk of gang influence and involvement. The aim is to provide grants to faith-based 

and community organizations for programs that will assist youth ages 8-17 who are at risk of 

gang involvement. These programs will help the at-risk youth make healthy decisions and will 

assist communities that are most in need. 

114
Department of Labor: Discretionary Proposal 

International Labor Affairs Bureau

Funding Summary 

(In millions of dollars) 

2005 

Enacted

2006 

Proposed

Change 

From 2005

 

Budget Authority ........................... 93 12 –81 

Background 

The International Labor Affairs Bureau (ILAB) is charged with supporting the Secretary of 

Labor and the President's international labor agenda by undertaking a policy, research, analysis, 

and advocacy role. However, ILAB's mission has been redefined over the years to accommodate 

additional functions delegated from Congress and the Executive Branch. Between 1996 and 

2002, ILAB’s funding rose by 1,500 percent, when the agency assumed expanded grant making 

responsibilities designed to combat international child labor, develop and disseminate AIDS 

prevention information in the international workplace, support core labor standards development, 

and provide bilateral technical assistance 

Administration Action 

Consistent with Administration policy, the 2006 Budget eliminates funding for the ILAB’s grantmaking activities and restores the agency to its original mission of research and advocacy. The 

Administration believes that other international agencies, not the Department of Labor, should 

carry out grant-making activities that affect other countries. The Administration created the 

Millennium Challenge Account (MCA) to provide targeted, accountable international 

development assistance to poor countries with a demonstrated commitment to ruling justly, 

investing in people, and encouraging economic growth. The 2006 Budget requests $3.0 billion 

to continue the MCA’s international assistance activities in developing countries.

115
Department of Labor: Discretionary Proposal 

Office of Disability Employment Policy

Funding Summary 

(In millions of dollars) 

2005 

Enacted

2006 

Proposed

Change 

From 2005

 

Budget Authority ........................... 47 28 –19 

Background 

In the Consolidated Appropriations Act of 2001, Congress created the Office of Disability 

Employment Policy (ODEP) to provide policy analysis, technical assistance, and dissemination 

of effective practices in order to increase the employment opportunities for people with 

disabilities within the Department of Labor’s (DOL) programs. ODEP succeeded the expiring 

President’s Task Force on Employment of Adults with Disabilities, which was created through 

an Executive Order and terminated in 2002 after submitting its final report. Since 2001, ODEP 

has assumed a wide range of grant-making responsibilities that have blurred its original mission.

Its diverse portfolio includes grants that serve youth and adults with disabilities, and focus on 

emergency preparedness, homelessness, and veterans issues. 

 

Administration Action 

The 2006 Budget proposes to reduce funds for grant activities and return ODEP closer to its core 

mission. In 2006, the Budget request of $28 million will support research on disability 

employment, efforts to improve access by the disabled population to DOL’s programs, and a 

targeted grant program to support the President’s New Freedom Initiative. 

116
Department of Labor: Discretionary Proposal

Workforce Investment Act Pilots and Demonstrations 

Funding Summary 

(In millions of dollars) 

2005 

Enacted

2006 

Proposed

Change 

From 2005

 

Budget Authority ........................... 85 30 –55 

Background 

Section 171(b) of the Workforce Investment Act of 1998 (WIA) authorizes the Secretary of 

Labor to carry out pilot and demonstration projects for the purpose of developing and 

implementing approaches and demonstrating the effectiveness of special methods in addressing 

employment and training needs. WIA stipulates that grants or contracts awarded for carrying out 

such projects should be awarded primarily on a competitive basis. 

Administration Action 

The 2006 Budget eliminates earmarked funding for nearly 200 narrow-purpose demonstration 

projects that were added by Congress in the 2005 Consolidated Appropriations Act. These 

earmarks support noncompetitive grants that often duplicate programs that are supported through 

the WIA State grant programs. The 2006 Budget returns this activity to the 2005 request level, 

which is sufficient to support a national pilot and demonstration effort, as authorized in the WIA. 

117
Department of State: Discretionary Proposal 

Assistance for the Independent States of the Former Soviet Union 

Funding Summary 

(In millions of dollars) 

2005 

Enacted

2006 

Proposed

Change 

From 2005

 

Budget Authority ........................... 556 482 –74 

Background 

Assistance for the Independent States of the Former Soviet Union (FSA) provides funds for 

programs supporting economic and democratic transitions. These programs are designed to 

consolidate the process of political and economic transition to market democracies, and to help 

address major socioeconomic dislocations where they occur during these transitions. This 

account was first authorized in 1992 and first funded in 1993. The programs and funding are 

managed by the office of the Assistance Coordinator for Europe and Eurasia at the State 

Department. The economic and democratic transitions supported by these programs are 

progressing in several of the formerly Soviet countries. 

Administration Action 

The 2006 Budget request for FSA includes a reduction of almost 50 percent in the amount of 

assistance to Russia and 25 percent reductions to both Armenia and Georgia from the 2005 

request. These countries have made considerable progress toward the goals of the program. 

Russia is an upper middle income country, running a federal budget surplus and experiencing 

increasing real disposable income and decreasing inflation. Russia also has the economic stature 

to be a member of the G-8. The U.S. will continue to support $48 million for programs in Russia 

focused on democracy and civil society, health, and social sector reform programs. Armenia and 

Georgia are both eligible for funding by the Millennium Challenge Account (MCA). The MCA 

is a multi-billion dollar innovative program that allows countries with good governance and 

sound economic policies to target and redirect aid efforts to reduce poverty and create sustained 

economic growth. MCA was planned for countries which graduated from traditional 

development assistances. As MCA assistance compacts are agreed to with these countries a 

gradual phase out of traditional aid was expected. 

118
Department Transportation: Discretionary Proposal 

Federal Aviation Administration – Facilities and Equipment 

Funding Summary 

(In millions of dollars) 

2005 

Enacted

2006 

Proposed

Change 

From 2005

 

Budget Authority ........................... 2,525 2,448 –77 

Background 

The Federal Aviation Administration’s (FAA) Facilities and Equipment (F&E) program was 

established by the Federal Aviation Act in 1958. The purpose of the program is to develop and 

acquire products and services that enable the FAA to enhance the safety, capacity and efficiency 

of the national airspace system. 

A recent Department of Transportation (DOT) Inspector General Report states that “we have 

consistently found a lack of basic contract administration” in the F&E program, which FAA has 

“problems with cost growth, schedule slips, and performance shortfalls.” The PART review of 

this program, which received a score of “Adequate,” indicated that information technology 

modernization projects consistently experience large cost overruns and project benefits were 

often unclear. 

Administration Action 

The 2006 Budget proposes $2,448 million for the F&E program. FAA’s grant program is 

reduced in order to finance growth in FAA’s salary and expense program, including hiring 595 

air traffic controllers and over 90 safety inspectors. Within the requested level, the following are 

requested: $210 million to improving airspace safety, $220 million for priority facility 

improvements, and $1.5 billion to increase airspace capacity. This funding level continues to 

fund FAA’s top safety and capacity priorities including: 

• $100 million for Wide Area Augmentation System -- a high precision navigational 

technology; 

• $123 million for the first phase of Terminal Automation -- replacing existing 

infrastructure to enhance operations at terminal facilities; and 

• $345 million to modernize the En Route Automation system – to improve automated 

flight processing capabilities thereby increasing air space capacity. 

Over the past year the coordinated efforts of DOT and FAA’s Air Traffic Organization have 

resulted in greater management oversight of FAA’s information technology modernization 

projects and a decision-making and review process that has focused on cost benefit analysis prior 

to project approval. 

119
Department Transportation: Discretionary Proposal 

Federal Aviation Administration – Airport Improvement Program 

Funding Summary 

(In millions of dollars) 

2005 

Enacted

2006 

Proposed

Change 

From 2005

 

Budget Authority ........................... 3,497 3,000 –497 

Background 

In 1946, the Federal-Aid Airport Program was authorized to promote the development of a 

system of airports around the country. The current program, known as the Airport Improvement 

Program (AIP), was established by the Airport and Airway Improvement Act of 1982. AIP 

funding is drawn from the Airport and Airway Trust fund, which is supported by user fees, fuel 

taxes and other revenue sources. AIP, which includes formula and discretionary grants, is used 

to improve airport capacity through the rehabilitation and construction of new and existing 

runways, taxiways and facilities. Funds are also used to improve airport safety and address noise 

and environmental concerns. 

A PART review of the program, which received a score of “Moderately Effective,” concluded 

that dependence on AIP assistance varies based on airports’ location, size and financial 

resources. Large airports are less dependent on Federal funds because of their ability to access 

different revenue sources, such as landing fees and passenger facility charges. 

 

Administration Action 

The 2006 Budget proposes a funding level of $3.0 billion for AIP – a $497 million reduction 

from 2005. This level of funding is robust by historical standards – AIP was funded at just $1.9 

billion as recently as 2000. FAA’s grant program is reduced in order to finance growth in FAA’s 

salary and expenses program, including hiring 595 air traffic controllers and over 90 safety 

inspectors. Under the proposed funding level, sufficient resources are provided to fund 

construction of all planned new runways, which are the single-most effective way to add 

capacity. In the next five years, seven major new runway projects will be built accommodating 

900,000 more operations a year. 

In addition, airports can meet infrastructure needs through revenues generated from passenger 

facility charges. Many airports do not take full advantage of this legal authority to charge user 

fees which FAA estimates could produce an additional $350 million annually for airport 

development needs. 

120
Department Transportation: Discretionary Proposal 

Federal Railroad Administration – Next Generation High Speed Rail 

Funding Summary 

(In millions of dollars) 

2005 

Enacted

2006 

Proposed

Change 

From 2005

 

Budget Authority ........................... 19 --- –19 

Background 

The Next Generation High Speed Rail program, which was established in 1991, funds research, 

development, and technology demonstration programs that support future high-speed rail 

infrastructure. 

The National Academy of Science’s Transportation Research Board has questioned the focus of 

the program’s research, development, and demonstration efforts. The Administration 

recommends that passenger high speed rail technology development be pursued through the 

Federal Railroad Administration’s existing Research and Development Program and compete for 

resources with other rail research areas. 

Administration Action 

The 2006 Budget proposes to terminate funding for the Next Generation High Speed Rail 

program. 

The Administration believes research should be consolidated within the Federal Railroad 

Administration’s existing research and development program and compete for resources based 

on project merit. The Administration is also concerned that the research funded under this 

program has been extensively designated for specific projects, thereby undermining the selection 

of projects based on merit. 

121
Department of the Treasury: Discretionary Proposal 

Internal Revenue Service – Taxpayer Service 

Funding Summary 

(In millions of dollars) 

2005 

Enacted

2006 

Proposed

Change 

From 2005

 

Budget Authority ........................... 3,606 3,567 –39 

Background 

The taxpayer service program provides the public with assistance on tax law and account issues 

and processes tax returns. The program makes tax filing easier and more accurate. In 2004, the 

Internal Revenue Service (IRS) processed more than 130 million individual tax returns, 

answered 69 million calls, served 7.7 million taxpayers in walk-in offices, and had 739 million 

downloads from its web site. Recent program assessments have found significant improvements 

in taxpayer service over the past few years. IRS is answering a higher percentage of calls and 

electronic filing is growing steadily. IRS has used new technology – particularly the internet and 

electronic filing – to improve service and productivity. These assessments also identified an 

opportunity to shift towards greater use of telephone and internet options rather than walk-in 

service. 

Administration Action 

The Budget includes $134 million in program reductions to taxpayer service programs made 

possible by ongoing productivity improvements. ($96 million of these savings will be reinvested 

in the IRS to meet increased costs of salaries, rents, and administration.) These program 

reductions are possible as a result of an increasingly efficient IRS taxpayer service program. 

The IRS expects management improvements, such as increased use of pay-for-performance 

incentives, to continue to improve productivity. In addition, electronic filing growth will 

continue because of IRS program improvements such as the Modernized E-File technology 

program. Increases in electronic filing are also expected with enactment of the Administration’s 

legislative proposals to extend the April 15 filing date to April 30 for electronically filed tax 

returns and to provide IRS additional authority to require electronic filing. Further savings will 

be achieved as a result of two recent competitions between IRS staff and private contractors in 

which IRS employees were able to find better, cheaper ways to run tax form distribution and 

technology support services. Finally, savings will be achieved by decreasing dependence on 

walk-in taxpayer service centers and increasing reliance on more efficient telephone and internet 

service options. 

122
Environmental Protection Agency: Discretionary Proposal 

Alaska Native Villages 

Funding Summary 

(In millions of dollars) 

2005 

Enacted

2006 

Proposed

Change 

From 2005

 

Budget Authority ........................... 45 15 –30 

Background 

The Alaska Native Villages program provides grants to the State of Alaska for the development 

and construction of public water systems and wastewater systems in rural and Native villages. 

Many rural and Native Alaska communities lack basic sanitation infrastructure – specifically, 

flush toilets and running water. In these communities rudimentary sewage collection and 

disposal poses a threat to the health and environment of villagers. The Environmental Protection 

Agency (EPA) has provided $323 million in funding for this program over the last 11 years. 

A PART evaluation revealed serious programmatic and financial weaknesses in this program that 

prevent citizens from fully benefiting from the program. The program lacks sufficient oversight 

at both the Federal and State level, as evidenced by the findings of waste and abuse in a State of 

Alaska legislative audit. The audit found many unexplainable purchases of services and 

equipment, and poor project management that led to cost overruns and other wasteful spending. 

The EPA Office of Inspector General recently released a report with similar conclusions. 

Administration Action 

The Budget provides $15 million for the Alaska Native Villages program, a $30 million 

reduction from 2005. The Administration also recommends that EPA develop regulations that 

improve accountability and address the program’s systemic financial and programmatic 

deficiencies. The funding reduction will be reconsidered once the program can demonstrate that 

funding is likely to effectively and efficiently help villagers. The Administration will continue to 

work to address the remaining unserved villages. 

123
Environmental Protection Agency: Discretionary Proposal 

Clean Water State Revolving Fund 

Funding Summary 

(In millions of dollars) 

2005 

Enacted

2006 

Proposed

Change 

From 2005

 

Budget Authority ........................... 1,091 730 –361 

Background 

The Clean Water State Revolving Fund (SRF) provides grants to States to capitalize their 

municipal wastewater State revolving funds. States provide matching funds and then make loans 

to communities at below-market rates for wastewater infrastructure projects such as sewer 

rehabilitation and treatment plant expansion. Loan repayments and interest are recycled back 

into the program, allowing it to “revolve.” The revolving level is the amount of loans available 

annually over the long term after Federal capitalization ends. 

The 2004 Budget committed to providing the Clean Water SRF a total of $6.8 billion ($850 

million annually) between 2004 and 2011, resulting in a long-term $3.4 billion annual revolving 

level. This new policy represented six additional years of funding beyond the previous 

Administration’s commitment, and an increase from the previous revolving level target of $2 

billion. 

Administration Action 

The Budget funds the Clean Water SRF at $730 million. In 2004 and 2005, the Congress 

provided significantly more for the program than requested (+$492 million and +$291 million, 

respectively). Because of these increases, the program needs less funding than in previous years 

to meet the Administration’s Federal capitalization target of $6.8 billion and long-term annual 

revolving level target of $3.4 billion. 

124
National Aeronautics and Space Administration: Discretionary Proposal 

Aeronautics: Vehicle Systems Program 

Funding Summary 

(In millions of dollars) 

2005 

Enacted

2006 

Proposed

Change 

From 2005

 

Budget Authority ........................... 569 459 –110 

Background 

In existence since 1915, the National Aeronautics and Space Administration’s (NASA) Vehicle 

Systems program conducts long-range research on aeronautics and develops and transfers to 

industry and other Government agencies technologies that create a safer, more secure, 

environmentally friendly and efficient air transportation system. The program also conducts 

research to support Earth and space science missions. 

Some of NASA’s aeronautics work focuses on the development of technologies that can be 

commercialized in the near-term. Such development should be funded by the private sector and 

are not consistent with the guidance provided by the Administration’s R&D Investment Criteria. 

In addition, the National Research Council (NRC) recently reviewed the program and 

recommended that NASA reduce the number of projects in its research portfolio and focus on 

more high-risk, high-payoff aeronautics technologies. The NRC also recommended the disposal 

of underutilized assets and facilities. Over the years, the program has built up excess capacity. 

Administration Action 

The Budget reduces funding for program activities in which the government role is no longer 

justified and emphasizes higher risk NASA research programs where the private sector will not 

invest the necessary funds due to the risk of inadequate financial returns. In order to align the 

program’s workforce/skill sets with NASA’s priorities, NASA will reduce the number of civil 

servants, contractors, and facilities affiliated with the program. In addition, NASA will 

emphasize more extensive use of peer review. 

NASA will use an aggressive strategy to improve the program by focusing the remaining funding 

on the highest priority areas of research that still require government involvement and that will 

continue to improve the air transportation system, consistent with recommendations of the 

National Research Council. 

125
National Aeronautics and Space Administration: Discretionary Proposal 

Jupiter Icy Moons Orbiter 

Funding Summary 

(In millions of dollars) 

2005 

Enacted

2006 

Proposed

Change 

From 2005

 

Budget Authority ........................... 402 280 –122 

Background 

The Jupiter Icy Moons Orbiter (JIMO), a multi-billion dollar space nuclear power demonstration 

mission to Jupiter’s moons, was proposed as a new initiative in the February 2003 Budget. The 

heart of JIMO was to be a nuclear reactor that would power the spacecraft’s instruments as well 

as its electric propulsion system. The reactor would provide JIMO with hundreds of times more 

power than is available on current interplanetary spacecraft. This would shorten travel times and 

enable the gathering of vast amounts of scientific data. JIMO’s launch was tentatively planned 

for the middle of the next decade. 

In January 2004, the President announced his vision for space exploration, a sustained and 

affordable human and robotic program to explore the solar system and beyond. Although space 

nuclear power may have an important role in the space exploration vision, the particular type of 

reactor and propulsion system proposed for JIMO was not necessarily optimal for supporting the 

human and robotic explorers that will carry out the vision. In addition, early cost estimates for 

JIMO suggested that the mission would be very costly (on the order of $10 billion or more) due 

to its high level of technical complexity. 

Administration Action 

The 2006 Budget indefinitely defers the JIMO mission due to concerns over costs, technical 

complexity, and the applicability of JIMO’s technologies to the new vision for space exploration. 

The Budget provides continued funding for space nuclear power research and development, as 

well as for a future space nuclear demonstration mission that will establish a foundation for 

potential applications of nuclear technology for human and robotic exploration of the Solar 

System and beyond. The Budget does not rule out the possibility that a future science mission to 

Jupiter’s moons could be selected through NASA’s competitive science programs. 

126
National Archives and Records Administration: Discretionary Proposal 

National Historical Publications and Records Commission 

Funding Summary 

(In millions of dollars) 

2005 

Enacted

2006 

Proposed

Change 

From 2005

 

Budget Authority ........................... 5 --- –5 

Background 

The National Historical Publications and Records Commission (NHPRC) provides grants to 

States, local governments and other institutions for non-Federal projects to preserve and publish 

historical records. Other Federal agencies, such as the National Endowment for the Humanities, 

also provide grants for which some NHPRC recipients would be eligible to apply. 

Administration Action 

The Administration proposes no new funding for grants for the NHPRC in order to fund higher 

priority areas within the National Archives and Records Administration (NARA), such as 

security of NARA’s collections. The Commission itself would retain all other authorized 

functions. 

127
U.S. Institute of Peace: Discretionary Proposal 

Construction of New Building 

Funding Summary 

(In millions of dollars) 

2005 

Enacted

2006 

Proposed

Change 

From 2005

 

Budget Authority ........................... 99 --- –99 

Background 

The U.S. Institute of Peace’s (USIP) mission is to promote the prevention, management, and 

peaceful resolution of international conflicts. USIP plans to construct a new headquarters 

building which is to serve as a national center for research, education, training, and policy and 

program development on issues of international conflict prevention, management, and resolution. 

The two-and-a-half-acre site for the building is located at Constitution Avenue and 23rd Street 

NW in Washington, D.C. The land was made available to the Institute by act of Congress in 

1996 and the U.S. Navy. The original intention was to fund the construction of the building from 

private support. 

Administration Action 

The 2005 Consolidated Appropriations Act included $100 million for the construction of a 

permanent headquarters facility for USIP. The 2006 Budget does not include additional funding 

for this program, as this was intended to be a one-time appropriation. Between the 2005 

appropriation and private contributions, there will be sufficient funds available to complete this 

project on schedule. USIP has raised $3.2 million thus far from the private sector. These funds 

supported initial planning for the project. 

128
SPENDING REFORM PROPOSALS 

129
130
02/11/05

08:04 AM

Reform Proposal 2005 Enacted 2006 Request

Delta: 2006 Request 

less 2005 Enacted

Department of Agriculture

Enhancing Forest Service Efficiency and Results 1,381 1,651 271

Formula and Competitive Research Grants 386 425 39

Rural Telephone Bank 3 2 -1

Department of Commerce

Economic and Community Development Programs 5,314 3,710 -1,604

Pacific Coastal Salmon Recovery Fund 88 90 2

Department of Education

High School Initiative --- 1,490 1,490

Department of Homeland Security

State and Local Homeland Security Grants 3,985 3,565 -420

Transportation Security Administration: Recover Aviation Security Screening 

Costs Through Fees -2,580 -4,139 -1,559

Department of Housing and Urban Development

Flexible Voucher Program 14,766 15,845 1,079

Department of Labor

Job Training Reform: Consolidate Grants Program 4,059 3,913 -146

Department of Transportation

Amtrak 1,207 360 -847

Army Corps of Engineers (Civil Works)

Performance Guidelines for Funding Construction Projects 1,782 1,637 -145

National Science Foundation and Coast Guard 

Polar Icebreakers 58 58 ---

U.S. Agency for International Development and Department of Agriculture

International Food Aid 1,558 1,541 -17

Government-wide Lines of Business

Lines of Business Initiatives -NA- -NA- -NASmartBUY -NA- -NA- -NATOTAL, Savings from Reform Proposals -1,858

Summary of Discretionary Reform Proposals

(Budget authority in millions)

131
Department of Agriculture: Discretionary Proposal

Enhancing Forest Service Efficiency and Results

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 1,381 1,651* 271

*Reflects funding in the National Forest System account including the proposed transfer of $281 million in 2006 for hazardous 

fuels management that was previously funded through the Wildland Fire Management account.

Background

Through competitive sourcing studies and administrative reforms, the Forest Service is 

consolidating upwards of 1,400 information technology, financial management, and human 

resources jobs, which will save taxpayers more than $115 million over three years. Even with 

these improvements, however, inefficiencies increase program delivery costs and are impeding 

Forest Service performance. The Forest Service is also experiencing a maintenance backlog, and 

the proposed establishment of a working capital fund for facilities and expanded real property 

disposal authority will enable the Forest Service to improve its response to this backlog.

Administration Action

The Administration proposes additional reforms to enhance Forest Service efforts to improve its 

accountability and focus on measurable results in the management of our national forests. These 

reforms will:

• Significantly reduce overhead, business management, and other indirect costs to improve 

efficiency and program delivery, and 

• Establish a working capital fund for facilities and allow the sale of unneeded facilities, with 

receipts being devoted to maintenance or replacement of needed existing facilities.

132
Department of Agriculture: Discretionary Proposal

Formula and Competitive Research Grants

 Funding Summary

 (In millions of dollars)

 

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 386 425 39

Background

The Federal Government has provided financial assistance through formula grants to institutions 

of higher education, including land-grant universities for many years. Funding for these grants 

are not allocated to eligible institutions based on performance or merit based criteria, but instead 

generally are based on each State’s farm and rural populations.

Administration Action

This proposal would reallocate $106 million in resources to competitive grants from three 

existing formula grant programs (Hatch, McIntire-Stennis and Animal Health and Disease) that 

are restricted to only certain, generally land grant, institutions, as part of a phase out of formula 

funds for these programs. It would establish a new competitive grant program of $75 million for 

research that would be allocated to these institutions, and increase funding for the National 

Research Initiative (NRI) from $180 million to $250 million. All research institutions, including 

the land grant universities, would be able to compete for NRI funds, including the additional $70 

million requested in 2006. Competitive research grants that can be targeted to high priority 

national needs represent the most flexible and effective use of Federal dollars. The 2006 Budget 

will also propose to eliminate the current artificial limitation on indirect costs, in order to put 

USDA on an even level with other Federal programs. This limitation discourages researchers 

from applying to the NRI program.

133
Department of Agriculture: Discretionary Proposal

Rural Telephone Bank

 Funding Summary

 (In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 3 2 –1

Loan Level......................................... 175 --- –175

 

Background

The Rural Telephone Bank (RTB) was designed to provide a commercial source of financing 

once it was privatized after 1985. When the RTB was created in 1972 there were limited options 

for rural telecommunications providers to obtain financing outside the government. However, a 

recent analysis estimated that, of the telecommunications capital needs each year, 50 percent was 

provided from internal funding, 10 percent from the Rural Utilities Service, seven percent from 

the RTB, and the remainder (33 percent) from other sources including the Rural Telephone 

Finance Cooperative (private) and the Universal Service Fund (government). In addition, 

funding for this program has significantly exceeded demand for financing of rural 

telecommunications investments. Currently, there is over $1.3 billion in undisbursed loans 

available.

Administration Action

The Administration proposes to establish the process and terms to implement a dissolution of the 

RTB. Dissolution is more appropriate than privatization as the demand for loans has been 

fulfilled through other sources, such as private banks. Dissolution will result in the government 

being repaid for all outstanding stock and the borrowers, who are the other stockholders, 

receiving a cash payout for their outstanding stock. This will prevent the situation of a privatized 

RTB that needs continuing federal assistance to remain in operation. In addition, to maintain the 

same level of support for rural telecommunications, the Rural Utilities Service’s 

telecommunications loan program has been increased by $175 million.

134
Department of Commerce: Discretionary Proposal

Economic and Community Development Programs

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority*.............................. 5,314 3,710 –1,604

*Consolidated programs only. Program level for the broader set of development programs (including budget authority, loan 

volume and tax incentives) is approximately $16.2 billion for 2005 and $15.5 billion under the Administration’s proposal for 

2006.

Background

Multiple Federal agencies currently provide economic and community development assistance 

through a variety of programs, including grants, loans and tax incentives. A cross-cutting PART 

review of these programs showed that many had unclear objectives, did not coordinate 

effectively, and were unable to demonstrate improvement in economic and community wellbeing. Specifically, $5.3 billion provided through 18 different grant programs were found to be 

duplicative or ineffective (see attached list of programs). Although the intent of these programs 

is to help communities in distress, many relatively well-off communities continue to receive 

funding. For example, while the Community Development Block Grant (CDBG) program at 

Department of Housing and Urban Development was created to serve distressed communities, 38 

percent of funds go to communities and States with poverty rates lower than the national 

average. 

Administration Action

The 2006 Budget proposes consolidating many of the existing Federal community and economic 

development programs into a new $3.71 billion program within the Department of Commerce, 

the “Strengthening America’s Communities Grant Progr am.” This proposal will make better use 

of taxpayer dollars by eliminating duplication, simplifying access to the Federal system and 

improving upon the strengths of the existing programs. The program would focus resources on 

supporting economic growth and opportunity such as job creation, private sector investment, 

homeownership, and commercial development and would include rigorous accountability 

measures and incentives. The proposal would tighten eligibility criteria to target funding to 

those communities with higher levels of poverty and job loss, meaning that those eligible 

communities may receive increases in funding relative to their 2005 CDBG levels. In exchange 

for flexibility in the use of funds and reduced administrative burdens, the program would set 

strong accountability standards and make continued funding contingent on communities’ 

progress towards meeting program goals. In addition, the program would provide a bonus fund 

for communities that demonstrate they are ready for development (e.g., through improvements in 

schools, reduced regulatory barriers and reductions in crime). The Commerce Department will 

also administer the Administration’s related Opportunity Zone program, which is aimed to assist 

communities in transition to 21st Century economies. 

135
Programs Consolidated into the Strengthening America’s Communities Grant Program

Department of Agriculture

Rural Business Enterprise Grants

Rural Business Opportunity Grants

Economic Impact Grants

Rural Empowerment Zones (EZ)/ Enterprise Communities (EC)

Department of Commerce

Economic Development Assistance Programs

Department of Health and Human Services

Community Services Block Grant Program

Community and Economic Development

Rural Community Facilities

Department of Housing and Urban Development

Community Development Block Grant (CDBG) Formula Grants

National Community Development Initiative

CDBG Set-Asides

Brownfields Economic Development Initiative

Rural Housing and Economic Development

Urban Empowerment Zones Round II Grants

Community Development Loan Guarantees (Section 108)

Department of Treasury

Community Development Financial Institutions (CDFI) Program

Bank Enterprise Award (BEA) Program

CDFI Native Initiatives

136
Department of Commerce: Discretionary Proposal

Pacific Coastal Salmon Recovery Fund

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 88 90 2

Background

Currently, the Department of Commerce issues non-competitive grants to States and Tribes in 

the Pacific Northwest for salmon recovery and enhancement activities through the Pacific 

Coastal Salmon Recovery Fund (PCSRF). A significant portion of the funds are spent on lower 

priority uses that do not target threatened, endangered, or otherwise sensitive salmon stocks.

Amendments to the original authorization for this fund removed a 25 percent State matching 

requirement. While most States still provide matching contributions at or above this level, others 

contribute as little as 10 percent. 

Administration Action

The Budget proposes to better allocate funds from the PCSRF account toward high priority uses 

according to guidelines developed by the Department of Commerce. Grants would be issued to 

States and Tribes in the Pacific Northwest for projects tha t address the recovery needs of 

threatened, endangered, or otherwise sensitive salmon stocks. This proposal directly addresses a 

recommendation from the 2004 PART that the PCSRF should target funding based on salmon 

recovery needs. 

The Budget also proposes to require a State or local contribution of at least 25 percent of total 

costs. While some States already provide more funding than would be required, others are not 

providing significant matching contributions.

137
Department of Education: Discretionary Proposal

High School Initiative

 

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ --- 1,490 1,490

Background

Too many of the nation’s high school students are failing to complete high school prepared for 

postsecondary education or employment. Nationally, of 100 ninth graders, only 68 will 

graduate from high school on time, and only 40 will directly enter college. The rates for 

minority students are even lower. While No Child Left Behind is beginning to show positive 

results for primary students, high school students have been left behind.

Part of this failure can be attributed to the design of, and lack of coordination among, current 

Federal high school programs. The Federal government currently invests in an array of Federal 

programs serving high school students that are narrow in focus and that support a particular 

education strategy such as vocational education, school restructuring, and partnerships with 

postsecondary institutions to prepare students for college. These programs lack strong 

accountability mechanisms, and despite many years (in some cases decades) of investment, these 

programs have failed to demonstrate positive results for high school participants. Furthermore, 

because the Federal government sets the annual spending levels for each of these programs, 

States and school districts do not have adequate flexibility and control to allocate the funds to 

activities they determine will best meet the needs of at-risk high school students

Administration Action

The President proposes to address these problems through a $1.5 billion high school initiative 

that includes:

ÿ $1.24 billion for a new High School Intervention program to help States hold schools 

accountable for teaching all students and to support effective instructional strategies for 

those students who are not learning at grade level.

ÿ $250 million for State assessments for high school students to ensure that high school 

diplomas are truly meaningful and to help schools determine which students are learning 

and which need help.

In essence, the initiative will bring the high standards and accountability of No Child Left 

Behind to secondary education. States, which would be required to test students in grades 9 

138
through 11 and develop individualized plans for meeting each student’s educational needs, will 

receive flexible funding under the High School Intervention program to design strategies for 

serving at-risk students. In return for this flexibility, States would be held accountable for 

improving student achievement and graduation rates. 

The High School Intervention program will consolidate and replace seven narrow-purpose 

programs: Vocational Education State Grants, Vocational Education National Programs, Tech 

Prep, Upward Bound, Talent Search, GEAR UP, and Smaller Learning Communities. Activities 

supported by these programs would be allowable activities under the new program if they can 

lead to improved student achievement. 

For further discussion of the programs proposed for termination, see “High School 

Terminations” elsewhere in this volume. 

The Administration expects that States and localities would continue those projects supported 

under the existing programs if the projects are performing effectively and reaching students who 

need them most. A portion of the funding for the High School Intervention program will be 

used for randomized trials and evaluations to identify the most effective intervention strategies to 

enable school administrators to make better choices on what educational strategies to adopt. 

Federal grants would go to State educational agencies which would make competitive awards to 

local school districts for promising programs. During the initial years of the program, the 

Administration will honor its commitment to fund continuation awards for GEAR-UP, Talent 

Search, and Upward Bound for multi-year grants made prior to 2006.

The High School Initiative builds on the President’s previously proposed high school reform 

efforts that are included in the 2006 Budget including Striving Readers, Math/Science 

Partnerships, Advanced Placement, and State Scholars. The President is requesting nearly $400 

million for these activities to improve student achievement at the high school level.

139
Department of Homeland Security: Discretionary Proposal

Transportation Security Administration

Recover Aviation Security Screening Costs Through User Fees

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ –2,580 –4,139 –1,559

Background

Aviation security fees were first implemented after the September 11th attacks with the 

establishment of the Transportation Security Administration (TSA) and the Federal takeover of 

responsibility for airport screening. TSA sets the fee levels up to the maximum stipulated by 

law. Currently, the passenger security fee maximum can be set no higher than $5.00 per oneway trip.

The Administration's decision to increase the aviation security fees will recover nearly the full 

cost of the screening and improve the overall management of aviation screening. 

Administration Action

The Budget proposes to increase aviation security passenger fees and substantially decrease fee 

collection estimates for the air carrier security fee. In general, passenger security fees will rise 

by $3.00. On a typical one-way ticket, the passenger security fee will rise from $2.50 to $5.50. 

For passengers flying multiple legs on a one-way ticket, the fee will rise from a maximum of 

$5.00 under current law to a maximum of $8.00. The Budget assumes collections of the air 

carrier security fee levied on the airlines will total $350 million in 2006. This is a reduction from 

the Administration’s collection assumption for 2005 of $750 million. 

Fee collections will rise from $2.6 billion for 2005, to $4.1 billion for 2006. This level will help 

recover nearly all of the $4.4 billion cost associated with Federal airport screening. Cost 

recovery of airport screening by the users of the screening system is an important goal. Aligning 

costs to fees will encourage system managers to pay more attention to efficiency needs in tandem 

with an effective security program. It will help airports and the Federal Government guide 

security screening investment decisions. Reducing the support by general taxpayers of airport 

screening frees up homeland resources to be spent on needs that are more dispersed across the 

general population. Reductions in the expected air carrier security fee will both reduce cost 

burdens on air carriers and eliminate business uncertainty concerning future fee obligations. 

140
Department of Homeland Security: Discretionary Proposal

State and Local Homeland Security Grants

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 3,985 3,565 –420

Background

The Department of Homeland Security (DHS) assists States and local homeland security efforts 

through a variety of grants, training, and other assistance programs. Despite the 

recommendations of the 9/11 Commission, the Heritage Foundation, the American Enterprise 

Institute, and the Government Accountability Office, the majority of the $14.5 billion in DHS 

responder grants awarded since 2001 have been awarded through formulas or criteria that do not 

target funds based on terrorism risks, vulnerabilities, and needs. 

State Homeland Security Grants have been awarded through a formula carried over from crimefighting grant programs that are ill-suited to the complexities of homeland security. The 

allocation of grants to urban areas has not been well understood by local jurisdictions, and has 

not accounted for capabilities and needs. Grants for fire departments have largely funded basic 

fire response needs in rural areas, but the Nation’s larger departments that protect nearly half the 

U.S. population continue to face capability gaps, especially for responding to terrorism and other 

mass casualty events. 

Both State Homeland Security Grants and Assistance to Firefighter Grants were reviewed under 

the PART and were found to have “results not demonstrated” due to lack of funding 

prioritization, weak performance measures, and inadequate monitoring of results.

Administration Proposal

The Administration proposes to address these shortcomings by restructuring the allocation 

process for State and regional grants. The Secretary of Homeland Security would allocate these 

funds based on: 1) assessments of risk and vulnerability; and 2) State and regional strategies, 

needs, and priorities. Assistance to Firefighter Grants would give greater priority to homeland 

security needs, including communications interoperability and explosives detection and

response. The Administration will work with Congress on passing legislation consistent with 

these principles.

These proposals are consistent with recommendations of the 9/11 Commission, and would 

enhance the safety of American citizens by addressing critical homeland security needs and 

improving accountability for the how these funds are spent. Both the House and Senate have 

passed legislation to address some of these concerns, but differences over the allocation of funds 

have stalled final passage.

141
Department of Housing and Urban Development: Discretionary Proposal

Flexible Voucher Program

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 14,766 15,845 1,079

Background

The Housing Choice Voucher Program helps 2 million low-income families afford rental 

housing or to become homeowners. The program provides funding to 2,500 public housing 

agencies (PHAs) across the country. 

The current program performs well (it received a “Moderately Effective” rating on the PART) 

because it costs less than other programs and allows recipients to shop for housing in the private 

market that best meets their needs. However, its benefits are reduced by a cumbersome 

regulatory structure. 

The program also has experienced rapid cost increases without corresponding gains in benefits. 

Outlays for Section 8 increased by 13 percent in 2003 and by seven percent in 2004 without 

increasing the number of families assisted. The 2005 Consolidated Appropriations Act capped 

both the funding and the number of vouchers that can be issued in each locality but did not 

provide public housing authorities (PHAs) with corresponding flexibility to manage within the 

capped funding.

Administration Action

The Administration proposes to give PHAs more flexibility to set the level and terms of 

subsidies. PHAs will receive an allocation of dollars rather than an allocation for a fixed number 

of vouchers. This will make it easier to control costs. The flexibility to vary terms of assistance, 

such as amount of tenant contribution and length of stay, within a framework of performance 

standards, will allow PHAs to be innovative and tailor the program to local conditions. This 

reform will allow fixed dollars to help more families move to self-sufficiency and 

homeownership.

142
Department of Labor: Discretionary Proposal

Job Training Reform: Consolidated Grants Program

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority*.............................. 4,059 3,913 –146

*Represents discretionary funds for the proposed WIA consolidated State grants program. An additional $3.8 billion in 2005 and 

$3.7 billion in 2006 would support other DOL training and employment programs, including $250 million for community college 

grants, and programs for special targeted groups.

Background

The Workforce Investment Act (WIA) of 1998 authorizes formula grants to States and localities 

to provide job training and employment-related services to adults, dislocated workers, and 

disadvantaged youth. Services are provided primarily through the nationwide network of some 

3,600 One-Stop Career Centers. WIA’s authorization expired in 2003. Numerous Government 

Accountability Office (GAO) reports have urged reforms. Under current law, too few workers 

are trained, duplicative programs produce excessive overhead costs and administrative 

complexity, accountability is insufficient, Governors have too little control and flexibility, and 

programs do not train workers for jobs in high-growth industries.

Administration Action

The 2006 Budget proposes comprehensive reforms to WIA that would consolidate in a single 

State grant the funds for four major Federal training and employment programs (i.e., Dislocated 

Workers, Adults, Youth, and the Employment Service), and give Governors broad flexibility to 

include within the consolidated State grant additional related programs. Governors would have 

to meet strict performance standards and would be held accountable for results (employment, 

retention, and earnings of persons trained with Federal funds). The proposal also would create 

new Innovation Training Accounts for self-directed worker training. The proposal would reduce 

Federal red tape and put strict limits on overhead, allowing a modest reduction in new budget 

authority while ensuring that more of the funding goes to train workers. The reform builds on 

the Administration’s previous proposals to reauthorize and reform WIA.

143
Department of Transportation: Discretionary Proposal

Amtrak

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 1,207 360 –847

Background 

The National Railroad Passenger Corporation (Amtrak) was established in 1970 and was 

intended to be operated and managed as a for-profit corporation. Since its inception, the 

Administration estimates that this for-profit corporation has received approximately $29 billion 

in Federal subsidies. 

Amtrak continues to be confronted with a set of intractable problems. According to the 

Department of Transportation Inspector General, “Unsustainably large operating losses, poor ontime performance, and increasing levels of deferred infrastructure, and fleet investment are a 

clarion call to the need for significant changes in Amtrak’s strategy.” Drawn from the 

recommendations of the non-partisan Amtrak Reform Council, the Administration proposed a 

reform plan in 2003 that is modeled after the Federal role in other transportation infrastructure 

programs. The Federal Government, partnering with States, would help invest in rail 

infrastructure but would no longer support rail operations. By allowing States to guide 

investment, projects that most benefit the public would be funded. Also, private companies 

could compete based on cost and other performance measures to contract with States to operate 

trains. 

Administration Action

The Budget recommends no direct Federal subsidy for Amtrak. The nation’s passenger rail 

system needs reform, and the Administration does not support continuing to provide funding for 

this flawed railroad. With no Federal subsidy, Amtrak may face a bankruptcy scenario; such a 

scenario would likely yield restructuring and efficiencies through the auspices of a bankruptcy 

court. However, to preserve commuter rail traffic, the Budget recommends $360 million to be 

managed by the Surface Transportation Board. This sum would be spent to reimburse Amtrak 

for the support to continue commuter rail operations over Amtrak facilities. 

The Administration seeks to enact fundamental reforms as previously proposed by the 

Department of Transportation. Without such reforms in place – whether through legislation or 

other means -- the Administration will not propose funding for intercity passenger rail. 

144
Army Corps of Engineers (Civil Works): Discretionary Proposal

Performance Guidelines for Funding Construction Projects

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ 1,782 1,637 –145

Background

The Army Corps of Engineers civil construction program builds water resources projects within 

three main mission areas: commercial navigation, flood and storm damage reduction, and aquatic 

ecosystem restoration. These projects contribute to the Nation’s safety and economic growth. 

Between 2000 and 2005, however, funding for the construction program increased by 30 percent, 

and much of this increase was directed to start and continue work on projects that yield a 

relatively low return to the Nation and/or are outside the Corps’ main mission areas. 

The Corps currently has a $50 billion backlog of authorized construction work, of which only 

$15 billion is for projects that meet current economic and environmental standards, are within 

the Corps main mission areas, or are otherwise consistent with Administration policy. This 

backlog has grown significantly in recent years and has resulted in some projects costing more 

than they need to, and most projects being finished many months – and sometimes years – later 

than they could be. 

Administration Action

The Budget proposes seven performance guidelines for funding Corps construction projects in 

order to generate greater benefits to the Nation. Under the performance guidelines, construction 

projects will be funded based on their estimated economic and environmental return and funding 

will be redirected from the lowest priority projects to accelerate completion of the highest 

priority projects. The guidelines are based on sound financial management principles similar to 

those used by private industry to rank and select investments.

The total Budget request of $1,637 million for the Corps construction program marks the highest 

funding level ever proposed by the Administration for this program. Of this amount, $200 

million will be available if Congress allocates construction funds in a manner consistent with the 

seven performance guidelines. The public will be better served through the use of these 

guidelines, which will ensure that projects with the highest public benefits are completed more 

quickly.

145
National Science Foundation/Coast Guard: Discretionary Proposal

Polar Icebreakers

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority:

 National Science Foundation........... 10 58* 48

 Coast Guard...................................... 48 --- –48

*Does not include additional major ship maintenance that may be required in 2006.

Background

Since the 1960s, the Coast Guard has been responsible for maintaining and operating the polar 

icebreaking fleet, and the National Science Foundation (NSF) and other agencies have 

reimbursed the Coast Guard for its icebreaking services. This fleet currently consists of two 

heavy icebreakers, typically used in the Antarctic, and one research icebreaker, typically used in 

the Arctic. In recent years, the polar icebreaking fleet has been used almost exclusively to 

support the resupply of the Nation’s Antarctic research stations and to perform research in the 

Arctic. 

The Coast Guard Polar Icebreaking Program received a rating of “Results Not Demonstrated” 

(with a score of 33 out of 100) when assessed by the PART. The rating was due to poor 

alignment of the program with the user community and inadequate performance measures. In 

contrast, a PART assessment of NSF’s Polar Tools, Facilities, and Logistics program found it to 

be “Effective.” In addition, Department of Homeland Security priorities make it unlikely that the 

Coast Guard could provide funding in future years for refurbishment or replacement of the 

icebreakers, which in turn threatens the research programs that depend on their services. 

Administration Action

The President’s Budget proposes to transfer funding for the Nation’s three polar icebreakers 

from the Coast Guard to NSF. NSF is the primary customer for the icebreakers, so the transfer 

will better align the funding with the beneficiaries of the services. While the Coast Guard will 

initially continue to operate and maintain the ships, NSF will have flexibility to pursue 

alternatives to current operations. The likely outcome will be continued services at a lower cost 

and services that are more directly tailored to the needs of the research community. 

146
U.S. Agency for International Development and

Department of Agriculture: Discretionary Proposal

International Food Aid

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority:

 P.L. 480 Title II Food Aid ............... 1,173 885* –288

 Int'l Disaster and Famine Assist....... 385* 656 271

*Regular appropriations only, excludes $100 million supplemental for Caribbean Hurricanes.

Background

P.L. 480 Title II, the Administration’s major international food aid program, is appropriated to 

the Department of Agriculture but managed by the U.S. Agency for International Development 

(USAID). It provides emergency and non-emergency (development) food aid to food-insecure 

countries. 

In the 2004 Budget, OMB rated the program as adequate, noting that one of the major obstacles 

the program faces is legislative mandates that create high costs and other inefficiencies, 

especially costs for shipping food on U.S.-flagged ships. In addition, U.S. international food aid 

programs are required to use U.S. commodities, whose delivered cost has been estimated to be 

up to one-third higher on average than the equivalent products procured near food crisis areas.

Because U.S. food usually takes three months or more to buy and deliver, P.L. 480 Title II can 

take at least a month longer than a cash-based program to react to crises. 

Administration Action

For 2006, the Administration proposes to reduce P.L. 480 Title II food aid by $300 million and 

increase USAID’s International Disaster and Famine Assistance (IDFA) by an equivalent 

amount of cash for emergency food aid needs. These IDFA funds will be used in those instances 

where the rapid use of cash assistance is critical to saving lives. 

Providing cash food aid enables the U.S. Government to purchase food locally with reduced 

transportation costs, allowing us to provide more food for the same amount of funding. IDFA 

already uses small amounts of cash to buy food. The proposal allows the U.S. to provide U.S.-

grown food to needed areas but increases our ability to purchase locally-grown food to meet 

critical emergencies. Thus, with the same level of resources as last year, the U.S. can feed an 

additional one million people for six months, and in an acute situation, could conservatively save 

50,000 lives during that six-month period. 

147
Government-wide Lines of Business: Discretionary Proposal

Lines of Business Initiatives

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ NA NA NA

Background

As a means of reducing the number of duplicative information technology (IT) investments 

government-wide, improving service delivery and realizing efficiencies, OMB brought together 

appropriate agencies to analyze and develop broad-based approaches to promote inter-agency 

data sharing and cooperation in building common solutions, rather than maintaining separate 

investments. The Lines of Business initiative organized inter-agency taskforces in the areas of 

financial management (FM), human resources (HR) management, grants management, Federal 

Health Architecture and case management. In August 2004, OMB directed agencies interested 

in becoming a Shared Service Center (SSC)/Center of Excellence (COE) to submit business 

cases as part of the 2006 Budget process requesting funds necessary to scale, enhance operations, 

etc. to support cross-servicing activities in the areas of FM and HR. In September 2004, 

agencies submitted business cases requesting funds to become SSCs/COEs. OMB designed and 

implemented a structured process to review and assess those business cases. Based on the 

assessment results, OMB has identified four agencies tha t are eligible to enter into competitions 

to provide cross agency FM services on a government-wide basis and five agencies eligible to 

enter into competitions to provide cross-agency HR management services on a government-wide 

basis.

Administration Action

The 2006 Budget proposes to conditionally approve these SSC and COE agencies as candidates 

to compete for other agency business in hosting and managing their FM and HR management 

systems and operations. The 2006 Budget also proposes to begin aligning agency investments in 

these areas around service centers. Government-wide savings for the FM and HR Management 

Lines of Business are estimated at $5 billion through 2015. Savings are dependent upon full 

migration of agency HR and FM systems to those provided by the Shared Service Center/Center 

of Excellence.

148
Government-wide Lines of Business: Discretionary Proposal

SmartBUY

Funding Summary

(In millions of dollars)

2005

Enacted

2006

Proposed

Change

From 2005

Budget Authority................................ NA NA NA

Background

The Federal Government can become a smarter buyer of commercial software. Pursuant to 

Section 5112 of the Clinger-Cohen Act of 1996, OMB is responsible for improving the 

acquisition and use of information technology (IT) by the Federal Government and designating 

Executive agents for government-wide acquisitions of information technology. To assure that the 

Federal government is leveraging its immense buying power to achieve the maximum cost 

savings and best quality for commodity software, OMB created the SmartBUY initiative. 

SmartBUY is a Federal government-wide enterprise software licensing initiative to streamline 

the acquisition process and provide best priced, standards-compliant IT. General Services 

Administration (GSA) is designated the Executive Agent under Section 5112(e) of the ClingerCohen Act for the SmartBUY interagency initiative, and leads the interagency team in 

negotiating government-wide enterprise licenses for software. Since OMB announced the 

SmartBUY program in June 2003, the program has completed agreements with four software 

vendors (ESRI, Manugistics Group, Novell, WinZip).

Administration Action

The 2006 Budget proposes to further the progress of the SmartBUY initiative by directing 

agencies to postpone all further purchase requirements for a category of software once GSA has 

notified the agencies of its intention to award a SmartBUY contract. This is a continuance of a 

February 2004 memorandum to all Senior Procurement Officers and Chief Information Officers 

from OMB’s Administrator of the Office of E-Government and IT and in conjunction with 

OMB’s Associate Administrator of the Office of Procurement Policy. Further implementation of 

this initiative will occur as agencies renew contractual arrangements with software vendors under

arrangements negotiated by the SmartBUY program. OMB has established a formal waiver 

process for agencies that have compelling procurement needs. This process ensures compliance 

with SmartBUY and promotes negotiating leverage with software vendors.

149
150
TRANSFORMATION AND RESTRUCTURING, 

DEPARTMENT OF DEFENSE

151
152
Department of Defense Transformation and Restructuring

(In millons of dollars)

2006 2007 2008 2009 2010 2011 2006-2011

Savings from Transformational Initiatives

Aircraft Carrier Retirement....................................................................................... 89 -157 -288 -276 -304 -306 -1,244

Management Headquarters Services....................................................................................... -100 -100 -100 -100 -100 -100 -600

Army Business Proces Reengineering Initiative....................................................................................... -1,500 -1,500 -1,500 --- --- --- -4,500

DOD Contractor Support....................................................................................... -2,000 -2,000 -2,000 -2,000 -2,000 -2,000 -12,000

 Total Transformation Savings....................................................................................... -3,511 -3,757 -3,888 -2,376 -2,404 -2,406 -18,344

Savings from Restructuring

V-22 Aircraft.............................................................................................................................................................................. -275 -504 -426 -88 22 19 -1,253

Expeditionary Fighting Vehicle.............................................................................................................................................................................. -157 14 -191 -475 -611 -112 -1,532

Missile Defense program.............................................................................................................................................................................. -1,000 -800 -800 -800 -800 -800 -5,000

F/A-22 Aircraft .............................................................................................................................................................................. --- -2 -11 -3,919 -3,711 -2,830 -10,474

Wind Corrected Munitions Dispenser.............................................................................................................................................................................. -47 -64 -60 -72 -87 -74 -404

Joint Common Missile Program.............................................................................................................................................................................. -271 -210 -350 -455 -518 -569 -2,373

Virginia Class Submarine.............................................................................................................................................................................. 64 -300 -482 -2,078 -1,483 -995 -5,272

(DD(X)) Destroyer....................................................................................... --- 115 79 -1,728 -1,240 196 -2,578

Marine Amphibious Ship (LPD-17) .............................................................................................................................................................................. 140 285 -1,200 -52 -126 --- -953

C-130J Airlift Aircraft.............................................................................................................................................................................. -26 -431 -753 -1,216 -1,307 -1,264 -4,997

NATO Alliance Ground Surveillance program.............................................................................................................................................................................. -4 -43 -77 -120 -119 -113 -476

153
Department of Defense Transformation and Restructuring

(In millons of dollars)

2006 2007 2008 2009 2010 2011 2006-2011

Savings from Restructuring

E-10A Intelligence/Surveillance Aircraft ....................................................................................... -300 -300 --- --- --- --- -600

Joint Unmanned Combat Air Systems (JUCAS)....................................................................................... -395 20 -488 -203 -46 41 -1,071

Army Future Combat Systems....................................................................................... -821 -673 -1,656 -1,005 -1,747 -3,076 -8,978

 Total Restructuring Savings....................................................................................... -3,092 -2,893 -6,415 -12,210 -11,773 -9,576 -45,960

Total Savings.......................................................................................

-6,603 -6,650 -10,304 -14,587 -14,177 -11,982 -64,304

154
Department of Defense

Transformation and Restructuring

Aircraft Carrier

Funding Summary

(In millions of dollars)

2005 2006 2007 2008 2009 2010 2011 2006-11

Budget Authority................................ 291 219 247 288 276 304 306 1,641

Proposed Savings ................................ -232 89 -157 -288 -276 -304 -306 -1,244

Proposal Description

The proposal would result in the early retirement of an aircraft carrier in 2005, reducing the fleet 

of carriers from 12 to 11.

Proposal Impact

This retirement is being carried out in large part due to the new Fleet Response Plan which is 

driving innovation and improvements in manning, maintenance and training. The Fleet 

Response Plan provides higher levels of readiness for the fleet which allows it to surge five or 

six carrier strike groups within 30 days of notice, and to send follow-on forces for a total of 

seven carrier groups within 90 days. Prior to the Fleet Response Plan, the Navy routinely only 

had three carriers deployed at one time. DOD believes that these higher readiness levels allow 

the Navy to respond successfully to the needs of the Nation in both peacetime and in times of 

crisis while we use the savings to transform the force to meet future threats. The success of the 

Fleet Response Plan has been built upon the higher levels of readiness the Administration and 

Congress made possible by providing robust funding to the military over the last four years. 

The estimate assumes substantial savings in 2005 due to eliminating major maintenance work 

scheduled to begin this year.

155
Department of Defense

Transformation and Restructuring

Management Headquarters Services

Funding Summary

(In millions of dollars)

2005 2006 2007 2008 2009 2010 2011 2006-11

Budget Authority................................ 2,832 2,894 2,970 3,327 3,627 3,723 3.820 20,631

Proposed Savings ................................ --- -100 -100 -100 -100 -100 -100 -600

Proposal Description

Management headquarters services are used throughout DOD to provide a variety of 

administrative support such as data processing, printing and reproduction, and travel. DOD is 

currently implementing several initiatives to modernize and improve the efficiency of its 

management processes. 

Proposal Impact

The impact of this proposal will be to continue the level of support services to our military forces 

at a greatly reduced cost through efficiencies. Management headquarters supports the armed 

forces and defense agencies through a variety of ways: development of policy and guidance, 

long-range planning, programming and Budgeting, performance reviews and evaluations, and 

distribution of resources. 

Transforming how the Department of Defense conducts business is just as critical as 

transforming U.S. military capabilities. Reflecting this, the Department is preparing an 

ambitious plan to overhaul its management processes and systems. This will include 

streamlining some DOD processes and using its workforce more efficiently. The 2006 Budget

supports the implementation of these efforts. Reductions of funding for management 

headquarters activities for the Army, Navy, Air Force, Office of the Secretary of Defense, and 

the Joint Staff are possible because of the cost savings that will be realized through these 

initiatives.

156
Department of Defense

Transformation and Restructuring

Army Business Process Reengineering Initiative

Funding Summary

(In millions of dollars)

2005 2006 2007 2008 2009 2010 2011 2006-11

Budget Authority................................ 26,075 27,473 28,380 28,734 NA NA NA 84,587

Proposed Savings ................................ --- -1,500 -1,500 -1,500 --- --- --- -4,500

Proposal Description

The Army plans to reengineer its business practices, which will result in savings from 2006 to 

2008. Starting in 2009, these savings will be used to fund the Army’s combat unit reorganization 

known as “Modularity,” which explains why the table above shows no net savings after 2008.

The Army is aggressively reviewing its business processes for providing support to combat 

troops, maintaining its facilities and equipment and activities related to military readiness. It has 

determined that it can save $1.5 billion annually over 2006 – 2011. This two percent reduction 

to the Army’s total 2006 budget request will provide operation and maintenance services to 

Army forces at lower cost. 

Proposal Impact

In the spring of 2005, the Secretary of Defense will review the “modularity” plan to enhance the 

Army’s combat power. The business process review will help develop innovative ways for the 

Army to use its personnel and provide support to its forces more effectively and will be an 

integral part of the Army’s transformation plan. The results of this review will provide effective 

services to Army forces at lower cost and complement the Army’s goal of transforming its force 

structure. This proposal is also consistent with DOD’s goal of realigning military personnel out 

of support positions and into positions that cannot be performed by civilians, thus increasing the 

Department’s combat capabilities.

157
Department of Defense

Transformation and Restructuring

Contractor Services

Funding Summary

(In millions of dollars)

2005 2006 2007 2008 2009 2010 2011 2006-11

Budget Authority................................ NA 43,213 45,500 NA NA NA NA 88,600

Proposed Savings ................................ --- -2,000 -2,000 -2,000 -2,000 -2,000 -2,000 -12,000

Proposal Description

DOD relies on contractor services to gain private sector efficiencies, reduce the reliance on 

military personnel for non-military tasks, and provide support to the Department’s major 

functions within the DOD, such as logistics, human resources, installation support, and 

information technology.

DOD is currently studying the support that military services receive from contractors and 

anticipates that greater rationalization of such use can provide savings. Starting in 2006, the 

Department has determined that its contractor support can be reduced by $2 billion per year, 

from a base of roughly $40 billion per year (a five-percent reduction). Support contracts are a 

subset of all the goods and services that DOD purchases from contractors. The support contract 

savings amount to less than one percent of total that DOD spends on contracts (about $230 

billion per year). The initial DOD savings assessment reduces contractor support to each of the 

military services and agencies on a pro-rata basis.

Proposal Impact

The impact of this proposal will be to continue the level of support services to our military forces 

at a reduced cost. The military services will evaluate which services are needed and which ones 

are less important. Greater rationalization of the use of contractor services will allow the 

Department to focus resources where they can best contribute to our national security.

158
Department of Defense

Transformation and Restructuring

V-22 Production

Funding Summary

(In millions of dollars)

2005 2006 2007 2008 2009 2010 2011 2006-11

Budget Authority................................ 1,698 2,055 2,866 3,102 3,166 3,223 3,231 17,643

Proposed Savings ................................ --- -275 -504 -426 -88 22 19 -1,253

Proposal Description

The V-22 is a tilt-wing aircraft that is intended to improve Marine Corps expeditionary 

capabilities and expand the operational flexibility of special forces. This proposal would slow 

the ramp-up in numbers of aircraft procured each year from 2006 through 2009. Originally, 

DOD planned to buy 15, 24, 32, and 38 V-22s in these fiscal years for both the Marine Corps and 

Air Force. The slower ramp-up in production will result in 11, 16, 24, and 36 being produced in 

the same years. Beginning in 2010, the program will return to its planned production rate of 40 

or more aircraft per year. This slower ramp-up in production will allow V-22 testing to be 

completed before reaching peak production and provide more time for integration into fleet 

operations.

Proposal Impact

The changed production profile should reduce the acquisition risk early in the program while 

testing continues and allow more time for operational experience to accumulate with this new 

type of aircraft. The previous production plan used a rapid ramp-up in production numbers to 

achieve cost efficiencies. However, any changes required from early testing experience with this 

aircraft could require potentially costly modifications of relatively large numbers of V-22s, that 

would eliminate any early production savings. Under current plans, the Marine Corps and Air 

Force will continue to buy a planned total of 458 V-22s, unaffected by the slower production 

ramp-up. Marine Corps readiness will not be affected and existing helicopter assets will allow 

them to respond effectively to required deployments.

159
Department of Defense

Transformation and Restructuring

Expeditionary Fighting Vehicle

Funding Summary

(In millions of dollars)

2005 2006 2007 2008 2009 2010 2011 2006-11

Budget Authority................................ 305 431 438 635 984 1,292 1,292 5,387

Proposed Savings ................................ --- -157 14 -191 -475 -611 -112 -1,532

Proposal Description

The Expeditionary Fighting Vehicle (EFV) replaces the Assault Amphibious Vehicle. It will be 

a self deploying, high water-speed, armored amphibious vehicle, capable of transporting Marines 

from ships located beyond the horizon to shore. The EFV will allow the Navy and Marine Corps 

to coordinate ship-to-shore operations, thus providing a new capability in support of 

Expeditionary Maneuver Warfare. The EFV will carry 17 combat equipped Marines and a crew 

of three. 

Proposal Impact

The next acquisition milestone for this program, originally scheduled for March 2005, has been 

delayed to complete testing. As a result of the need for more testing the production and fielding 

of the EFV has been delayed until 2011—saving $1.5 billion. Although fewer EFVs will be 

produced in the short-term, the total planned number remains unchanged. The existing Marine 

Corps amphibious vehicles will be adequate to support the delayed fielding of EFVs with no 

impact on overall U.S. capabilities. In addition, DoD’s Quadrennial Review will assess new 

concepts such as “Sea Basing” which may impact how the Marine Corps fights in the future.

160
Department of Defense

Transformation and Restructuring

Missile Defense Agency

Funding Summary

(In millions of dollars)

2005 2006 2007 2008 2009 2010 2011 2006-11

Budget Authority................................ 8,806 8,780 10,381 8,670 8,893 9,083 9,276 55,083

Proposed Savings ................................ --- -1,000 -800 -800 -800 -800 -800 -5,000

Proposal Description

The Missile Defense Agency (MDA) is developing a multi-layered, global defensive system 

against ballistic missiles. The first increment of this capability was delivered in 2004 and 

provides a limited defense against long-range missiles from North Korea. However, the program 

still requires considerable testing to bring this capability to full maturity and higher reliability. 

This proposal reduces the MDA research and development program by a total of $5 billion over 

the next six years. The restructured program will reduce the emphasis on new technology and 

next generation systems, which have higher technical risk, and focus on near-term deployments

and system testing.

Proposal Impact

MDA has adopted a very flexible, transformational acquisition strategy that allows for rapid 

adjustments to program plans based on ballistic missile threats, technology, and system maturity, 

among other factors. The Department continually reviews its missile defense needs and makes 

adjustments; fielding systems that are mature; slowing down those with high-risk; and 

redirecting resources as needed.

As MDA research and development progress, the agency will increasingly concentrate resources 

on technologies that can be successfully deployed. The proposed reductions will not affect the 

President’s priority for fielding near-term defenses against long-range missiles from Asia and the 

Middle East. These early deployments are well underway and are providing an initial defensive 

capability. In addition, missile defenses against shorter-range theater missiles will continue to be 

deployed as planned (e.g., PAC-III and the Theater High Altitude Area Defense system). MDA 

will delay some next-generation missile defenses (e.g., the Ballistic Missile Defense Interceptors 

program) whose technical risk is high and which can be delayed without affecting our overall 

missile defense capability.

161
Department of Defense

Transformation and Restructuring

F/A-22 Fighter Aircraft

Funding Summary

(In millions of dollars)

2005 2006 2007 2008 2009 2010 2011 2006-11

Budget Authority................................ 4,163 4,243 4,937 4,824 4,588 4,373 3,686 26,651

Proposed Savings ................................ --- --- -2 -11 -3,919 -3,711 -2,830 -10,474

Proposal Description

The F/A-22 Air Force fighter aircraft was designed to meet the threat posed by advanced Soviet 

fighter aircraft. It employs advanced sensor systems, stealth, and other technologies to achieve a 

high degree of performance, but at high cost. Since the demise of the Soviet Union the threat 

that the F/A-22 was designed to meet has diminished considerably. Over the last decade the Air 

Force has steadily reduced the number of F/A-22s it planned to acquire because of increased 

program costs and the diminished threat. As part of transformation, DOD continually reviews its 

future requirements and rapidly adjusts to the more fluid demands of the 21st Century. This 

process may result in modifications to existing programs and reduced procurements to shift 

funding to higher-priority needs in the Global War on Terror, or to better meet different, rapidlyevolving threats.

Proposal Impact

The proposal maintains procurement of the F/A-22 fighter aircraft program until 2008. 

Procurement would stop after 2008, thereby reducing the planned F/A-22 force from 276 to 179 

aircraft. However, the reduced force of F/A-22s, together with the stealthy Joint Strike Fighter, 

the new F/A-18E/F Navy fighter, and the existing Air Force F-15s, will be able to meet all 

DOD’s air-to-air and air-to-ground attack requirements for the foreseeable future. 

162
Department of Defense

Transformation and Restructuring

Wind Corrected Munitions Dispenser Extended Range

Funding Summary

(In millions of dollars)

2005 2006 2007 2008 2009 2010 2011 2006-11

Budget Authority................................ 59 47 64 60 72 87 74 463

Proposed Savings ................................ --- -47 -64 -60 -72 -87 -74 -404

Proposal Description

Wind Corrected Munitions Dispenser (WCMD) and Wind Corrected Munitions Dispenser 

Extended Range (WCMD-ER) are precision guided tail kits installed on conventional bombs to 

correct for directional errors caused by high winds, ballistic errors and adverse weather on 

weapons at medium and high altitudes. Procurement of the basic WCMD ended in 2005; all 

procurement funding in the following years is for the Extended Range version. 

Proposal Impact

The Department has decided there is a decreasing requirement for this class of area weapon and 

that it is less important than higher priorities within the Air Force. The existing version of the 

WCMD has already been procured and is being integrated on current and future Air Force strike 

aircraft. The WCMD-ER was determined not to add significant value relative to cost.

163
Department of Defense

Transformation and Restructuring

Joint Common Missile 

Funding Summary

(In millions of dollars)

2005 2006 2007 2008 2009 2010 2011 2006-11

Budget Authority................................ 152 271 210 350 455 524 576 2,539

Proposed Savings ................................ --- -271 -210 -350 -455 -518 -569 -2,373

Proposal Description

The Joint Common Missile (JCM) program involved the Army (lead), Navy and Marine Corps 

and an associated Cooperative Development Program with the United Kingdom. A multi-use, 

single missile to replace five U.S. and three coalition missiles, the JCM was intended as the 

primary missile for the Apache, Cobra, Super Hornet and Seahawk. The program has 

experienced excessive cost growth with significant technical challenges and is being terminated 

due to higher priorities.

Proposal Impact

This proposal will eliminate the “single missile” objective and continue reliance on the TOW 

missile, Hellfire family of missiles, and various joint and coalition missiles. This system was 

originally scheduled for fielding in 2009. There would be no likely impact to military operations 

since the Department of Defense currently has a large overall missile inventory and sufficient 

industrial base capacity.

164
Department of Defense

Transformation and Restructuring

Virginia Class Submarines

Funding Summary

(In millions of dollars)

2005 2006 2007 2008 2009 2010 2011 2006-11

Budget Authority................................ 2,453 2,337 2,714 3,011 5,667 5,263 4,785 26,320

Proposed Savings ................................ --- 64 -300 -482 -2,078 -1,483 -995 -5,272

Proposal Description

The Navy procured the first Virginia class attack submarine in 1998, and since then, it has 

generally acquired one submarine per year. The Department had planned to increase 

procurement to two attack submarines per year beginning in 2009. The Budget reduces the 

procurement of submarines from two to one in 2009, 2010, and 2011. The Department’s focus 

on transformation requires continuous review of their current priorities and programs, with a 

willingness to rapidly adjust plans to meet the challenges of the 21st Century. 

Proposal Impact

The reduction in the planned procurement of the Virginia class submarines will not affect our 

security readiness. The Department will maintain procurement of one submarine per year, while 

beginning to explore additional undersea systems options. The Department is looking to what 

the next-generation system will be for undersea superiority and it will spend $600 million 

through 2011 in designing a future undersea system. 

165
Department of Defense

Transformation and Restructuring

DD(X) Destroyers

Funding Summary

(In millions of dollars)

2005 2006 2007 2008 2009 2010 2011 2006-11

Budget Authority................................ 306 716 2,453 2,736 4,271 3,870 1,990 16,432

Proposed Savings ................................ --- --- 115 79 -1,728 -1,240 196 -2,578

Proposal Description

The new DD(X) is the Navy’s land-attack destroyer focused on providing fire-support for U.S. 

forces ashore, and employing a number of new technologies. Rather than seven DD(X)s, the 

Navy will procure five DD(X)s through 2011, when it will begin procurement of the CG(X) 

cruiser program. The Department’s focus on transformation requires continuous review of their 

current priorities and programs, with a willingness to rapidly adjust plans to meet the challenges 

of the 21st Century. With an early introduction of the next generation cruiser, the Department 

has decided it needs less DD(X)s and the budget reflects that change. 

Proposal Impact

The DD(X) destroyer is the technology precursor to the CG(X) cruiser, which will be used to 

replace retiring guided missile cruisers and to fulfill missile defense requirements. Over the past 

few years, the Department has developed different options for transitioning between the two 

programs as DD(X) technologies mature. The Department believes that procuring one DD(X) 

per year is the appropriate investment for the DD(X) program until the CG(X) is procured in 

2011. In addition, the upcoming 2005 Quadrennial Defense Review will review the Navy’s 

current fleet and determine the capabilities needed in the future, which could impact the number 

of DD(X)s bought and the appropriate transition to CG(X) cruisers.

166
Department of Defense

Transformation and Restructuring

 LPD-17 Amphibious Transport Dock

Funding Summary

(In millions of dollars)

2005 2006 2007 2008 2009 2010 2011 2006-11

Budget Authority................................ 967 1,205 1,299 1,306 52 126 --- 4,955

Proposed Savings ................................ --- 140 285 -1,200 -52 -126 --- -953

Proposal Description

The LPD-17 Amphibious Transport Dock carries troops, vehicles, and equipment of a Marine 

expeditionary unit. The Navy is procuring the LPD-17 to replace older amphibious assault ships, 

and it will provide twice as much vehicle space and more helicopters and landing craft. The 

LPD-17 will operate with other amphibious assault ships, surface combatant ships, and an attack 

submarine, in expeditionary strike groups. The Budget completes the LPD-17 program in 2007, 

rather than 2008 as scheduled, reducing the planned production by one ship for a total of nine 

LPD-17s.

Proposal Impact

The early completion of the LPD-17 program will not affect our security readiness. The Navy 

has reduced the number of its expeditionary strike groups, resulting in a decreased need for 

additional LPD-17s. The Department wants to shift resources towards Seabasing, its evolving 

concept to stage, launch, and sustain land operations from ships. In addition, the 2005 

Quadrennial Defense Review will review the Navy’s current fleet size and determine the number 

and types of amphibious ships needed in the future.

167
Department of Defense

Transformation and Restructuring

C-130J Airlift Aircraft

Funding Summary

(In millions of dollars)

2005 2006 2007 2008 2009 2010 2011 2006-11

Budget Authority................................ 1,228 1,218 1,076 1,027 1,319 1,403 1,376 7,419

Proposed Savings ................................ --- -26 -431 -753 -1,216 1,307 -1,264 -4,997

Proposal Description

The C-130 Hercules aircraft is a medium-range, tactical airlift aircraft designed primarily for 

transporting troops and cargo. It first flew in 1954 and has been in continuous production ever 

since. The current C-130 fleet is comprised of nearly 700 aircraft in 12 different variants, but 

most are C-130 E and H models whose mission is to deliver combat equipment into hostile areas. 

In 2003 the Air Force agreed to buy 168 new C-130J aircraft to replace older C-130Es and Hs,

and signed the first six-year multiyear contract for 42 aircraft for the Air Force and for 20 aircraft 

for the Marines. It is this contract that is proposed for termination in the 2006 Budget, before all 

62 aircraft are procured.

Proposal Impact

One of the key tenets of transformation is the ability to evolve rapidly and adjust future planning 

to account for changes in the global environment. DOD’s review of the C-130J and changes in 

its forecast airlift needs are a result of this dynamic process.

Although this proposal terminates production of the C-130J tactical airlift aircraft for the Air 

Force, it provides for twelve KC-130J refueling aircraft for the Marine Corps in 2006 to enable 

the Corps to modernize its tanker fleet. This termination will have no impact on the Air Force’s 

tactical airlift capabilities since there are a large number of C-130s in the current inventory with 

many years of service life remaining. Together with KC-130Js bought in previous years the 

Marine Corps will have a total of 33 new KC-130J tanker aircraft which, with its older KC-130 

models, will enable it to meet its refueling requirements. Terminating the C-130, which is a 

1950s design, opens the way in the future for a new tactical airlifter specifically designed to meet

the conditions imposed by 21st Century warfare.

168
Department of Defense

Transformation and Restructuring

NATO Alliance Ground Surveillance Program

Funding Summary

(In millions of dollars)

2005 2006 2007 2008 2009 2010 2011 2006-11

Budget Authority................................ 30 29 84 130 176 181 185 785

Proposed Savings ................................ --- -4 -43 -77 -120 -119 -113 -476

Proposal Description

The NATO Alliance Ground Surveillance (AGS) program is designed to provide surveillance of 

ground targets for NATO operations, using airborne radar systems. Currently, AGS consists of a 

manned aircraft portion and an Unmanned Aircraft Vehicle (UAV). The manned aircraft would 

be a modified Airbus, while the UAV would be a U.S. Global Hawk, both carrying advanced 

technology radars. The combined manned/unmanned aircraft system is designed to provide 

continuous, all-weather radar surveillance of a crisis or combat area. The program would be 

fully interoperable with U.S. surveillance systems and the primary radar technology would be 

provided by the U.S. The proposed restructuring of AGS is designed to take advantage of 

existing or planned airborne surveillance programs to meet NATO requirements in a more costeffective manner. These alternatives will be examined over the coming year both in DOD’s 

Quadrennial Review process and internally within the AGS program. Pending these reviews, the 

restructured AGS program assumes that existing NATO and U.S. Global Hawk aircraft can be 

adapted for the AGS mission, rather than producing completely new systems. The restructured 

program also allows additional time to explore alternative technologies.

Proposal Impact

As part of transformation, DOD needs to evolve rapidly and adjust its future planning to account 

for changes and new opportunities. Within the context of total alliance surveillance assets, there 

may be more cost-effective approaches to the current NATO AGS program that will provide 

similar capability at reduced costs, thus freeing funds for higher priority needs. These 

alternatives could use existing aircraft and UAVs to minimize new development costs, while still 

achieving program goals. The reduction in 2006 is small to ensure the program has adequate 

resources to explore fully different alternatives and allow time for coordination with international 

partners.

169
Department of Defense

Transformation and Restructuring

E-10A Command and Control Aircraft

Funding Summary

(In millions of dollars)

2005 2006 2007 2008 2009 2010 2011 2006-11

Budget Authority................................ 419 696 683 578 497 967 824 4,245

Proposed Savings ................................ --- -300 -300 --- --- --- --- -600

Proposal Description

This proposal recognizes that there is no urgent need for the E-10A command, control and 

surveillance aircraft and restructures and slows the development program, since the aircraft that 

currently perform the E-10A missions, such as the AWACS and JSTARS aircraft, are in good 

condition and will meet DOD’s needs for several more years. This delay will also allow DOD 

time to explore cost-reduction opportunities to improve the E-10A’s affordability .

Proposal Impact

There will be no adverse impacts on U.S. capabilities with the restructuring of the E-10A 

program. By slowing development the proposed restructure will allow DOD to determine if 

there are new and more transformational ways of meeting this requirement, for example, from 

space. It will also free funding for other, higher-priority needs.

170
Department of Defense

Transformation and Restructuring

Joint Unmanned Combat Air System Program

Funding Summary

(In millions of dollars)

2005 2006 2007 2008 2009 2010 2011 2006-11

Budget Authority................................ 587 667 380 1,042 983 1,001 1,023 4,580

Proposed Savings ................................ --- -395 20 -488 -203 -46 41 -1,071

Proposal Description

Joint Unmanned Combat Air System (J-UCAS) is a program to develop unmanned combat 

aircraft, unlike most current Unmanned Aerial Vehicles, which are used primarily for 

surveillance missions. The proposal significantly restructures the J-UCAS program, slowing 

development and moving management of the program from the Defense Advanced Research 

Projects Agency to a new joint program office in the Air Force with Navy representation. One of 

the key tenets of transformation is the ability to evolve rapidly and adjust future planning to 

account for changes in the global environment. DOD’s review of the J-UCAS program and its 

decision to focus on near-term capabilities and deployments was a product of this on-going 

process. The restructure from a technology-focused program into a service-led program is 

designed to speed the deployment of this new capability. 

Proposal Impact

The proposal will change the emphasis of the program, focusing it on the near-term development 

of air vehicles that can undertake high-risk missions such as the suppression of enemy air 

defenses in the early stages of a conflict. As such, DOD will have the opportunity to field 

vehicles capable of performing missions already identified for unmanned combat air vehicles 

earlier than would be otherwise possible. The savings from changing the technology scope and 

focusing on obtaining useful capability early in the program frees funding to be used for other 

high-priority efforts.

171
Department of Defense

Transformation and Restructuring

Future Combat Systems 

Funding Summary

(In millions of dollars)

2005 2006 2007 2008 2009 2010 2011 2006-11

Budget Authority................................ 2,801 4,251 4,372 5,453 4,744 6,376 9,267 37,661

Proposed Savings ................................ --- -821 -673 -1,656 -1,005 -1,747 -3,076 -8,978

Proposal Description

The Future Combat System (FCS) is the Army’s major program to transform itself into a lighter, 

more agile, “smarter” combat force, capable of greater battlefield mobility and precision 

firepower. FCS consists of 18 different major systems, including unmanned aerial vehicles, 

unattended ground sensors, new rocket artillery, various robotic ground systems, and a new set 

of armored vehicles, with an advanced computer network linking all of them into a single 

operation. This year, the Army significantly restructured FCS to reduce technical risk and 

provide some of the 18 systems earlier than previously planned. Four of the 18 systems will be 

deployed with a special Evaluation Brigade in 2008. Following successful evaluation, 

production and fielding of these systems will begin for the rest of the Army’s brigades. This 

process will be repeated for each successive system until all 18 are fully deployed. The first 

goals of this restructure are to provide improved networking capability and a better artillery 

system sooner than would otherwise be possible, with higher confidence and lower cost.

Proposal Impact

The new FCS capabilities will begin to be fielded in 2008, an acceleration of two years from 

earlier plans. A full brigade equipped with all 18 systems will be operational in 2014, a four year 

delay from the original program. This restructuring is intended to assure new technology is 

introduced, tested, and is operational before proceeding to the next level of effort. The plan will 

reduce the risk associated with deploying all 18 systems at once. The new acquisition strategy 

will save nearly $9 billion through 2011.

172
SAVINGS FROM MANDATORY SPENDING 

REDUCTIONS AND REFORMS 

173
174
MANDATORY PROGRAM REFORMS 

175
176
Mandatory Program Reforms

(Outlays in billions of dollars)

2006 2007 2008 2009 2010 2

Programmatic Reforms: Agriculture: Commodity Credit Corporation: Market Loan Gains................................................................................... -0.4 -0.5 -0.1 * *  Tighten and Expand Payment Limits........................................................ -0.2 -0.2 -0.2 -0.2 -0.1 

 Reduce Crop Payments ............................................................................ -0.4 -0.6 -0.5 -0.4 -0.3  Sugar Marketing Assessment.................................................................... * * * * * 

 Dairy Price Supports................................................................................. -0.1 -0.1 * * * 

 Extend Dairy Income Payments................................................................ 0.6 0.6 --- --- --- 

 Crop Insurance Coverage Change................................................................ --- -0.1 -0.1 -0.1 -0.1  Limit Food Stamp Categorical Eligibility..................................................... -0.1 -0.1 -0.1 -0.1 -0.1 

 Allow Food Stamp Agencies to Use New Hires National Directory......... --- * * * *  Education: Increase Maximum Pell Grant Award ......................................................... 0.1 0.5 0.9 1.3 1.7  Student Loan Reforms.................................................................................. -1.3 -2.5 -2.7 -2.7 -2.7  Energy: Power Marketing Administration Rate Reforms.......................................... * -0.2 -0.4 -1.1 -1.4 

 Health and Human Services: Medicaid Payment Reform .......................................................................... --- -1.3 -1.4 -1.5 -1.6  Medicaid Prescription Drugs ....................................................................... -0.5 -0.7 -1.3 -1.4 -1.5  Appropriate Payments for Medical Services................................................ -0.1 -0.4 -0.7 -0.8 -1.0  Medicaid Provider Taxes.............................................................................. -0.2 -0.5 -0.8 -0.8 -0.8 

 Medicaid Administration ............................................................................. --- -0.1 -0.2 -0.3 -0.5  Medicaid Asset Transfers............................................................................. -0.1 -0.2 -0.3 -0.4 -0.5  Foster Care Administrative Payments........................................................... -0.1 -0.1 -0.1 -0.1 -0.1 * Less than $50 million.

177
Mandatory Program Reforms

(Outlays in billions of dollars)

2006 2007 2008 2009 2010 2

 Housing and Urban Development: FHA Rehabilitation Grants and Below-Market Sales .................................. -0.1 -0.1 -0.1 -0.1 -0.1 

 Interior: Southern Nevada Land Sales........................................................................ -0.2 -0.4 -0.6 -0.6 -0.6  ANWR, Lease Bonuses............................................................... --- -1.2 * -0.1 * 

 Pick-Sloan Project Cost Repayment............................................................. * * * * *  Eliminate Bureau of Land Management Range Improvements Fund.................................................................................. * * * * *  Labor: Pension Benefit Guaranty Corporation Reform............................................ -2.2 -3.7 -3.5 -3.2 -2.9 

 Unemployment Insurance Integrity............................................................... -0.3 -0.3 -0.4 -0.4 -0.4  Federal Employees' Compensation Act Reforms.......................................... * * * * * 

 Black Lung Trust Fund Debt Refinancing ...................................... --- --- --- --- --- 

 Treasury: Continued Dumping and Subsidy Offset Act repeal..................................... -1.6 -1.6 -1.6 -0.9 -0.9  Eliminate 10-year Statute-of-Limitations on Non-Tax Debt..................... * * * * * 

 Federal Communications Commission: Extend Spectrum Auction Authority............................................................. --- --- 1.1 -2.2 -3.2 

 Close Telecommunications Development Fund........................................... * * * * *  Federal Deposit Insurance Corporation: Merge Bank Insurance Fund and Savings Association Insurance Fund......................................................................................... --- --- * 0.4 0.9  Social Security Administration: Supplemental Security Income Pre-Effectuation Reviews  and Other Technical Adjustments............................................................. * * * -0.1 -0.1 

 Total, Programmatic Reforms............................................................... -7.4 -14.1 -13.4 -16.0 -16.6 

* Less than $50 million.

178
Department of Agriculture: Mandatory 

Commodity Credit Corporation

Funding Summary

(In millions of dollars)

2006 2007 2008 2009 2010 2006-10 2006-15

Baseline outlays .................. 16,414 13,149 10,077 7,645 6,780 54,065 151,643

Proposed changes

 Marketing Loan Gains............... -432 -509 -106 -4 -2 -1,053 -1,054

 Tighten Payment Limits............ -200 -190 -175 -150 -130 -845 -1,200

 5% Payment Reduction............. -383 -629 -468 -351 -309 -2,140 -3,642

 Sugar Marketing Assessment.... -42 -43 -43 -43 -43 -213 -435

 Dairy Price Supports................. -130 -80 -50 -50 -50 -360 -610

 Extend Dairy Income Payments 600 600 --- --- --- 1,200 1,200

Total changes............................... -587 -850 -842 -598 -533 -3,411 -5,741

Background 

Farm commodity programs were first introduced in 1933, during the Great Depression. 

Currently, every five to seven years Congress passes a Farm Bill which lays out how agricultural 

support is to be provided until the legislation expires. The 2002 Farm Bill provided a total of 

$176 billion for payments to farmers, a 74 percent increase over the assistance the previous Farm 

Bill would have provided in the absence of any emergency assistance. Agricultural support was 

reduced twice in the 1990’s by omnibus budget reconciliation acts. Following is a list of 

commodity program issues addressed by the Administration proposal. 

Marketing Loan Gains: Commodity loan programs allow producers of designated crops to 

receive a loan from the government at a commodity-specific loan rate per unit of production by 

pledging production as loan collateral. After harvest, a farmer may obtain a loan for all or part of 

the new commodity production. Commodity loans may be repaid in three ways: at the loan rate 

plus interest; by forfeiting the pledged crop to the CCC at loan maturity; or at an alternative loan 

repayment rate. When market prices are below the loan rate, farmers are allowed to repay the 

commodity loans at a lower loan repayment rate (local county price or the prevailing world 

market price for rice and upland cotton). Loan program benefits can also be taken directly as 

loan deficiency payments, calculated as the gap between the market price and the loan rate. 

Tighten and Expand Payment Limits: Under the current system, there are many gaps in 

agricultural payment limits. The farm bill limits farm payments to $180,000 per person. 

However, current rules allow an individual farmer to receive up to $360,000 per year on three 

separate farming operations (a full payment on the first operation and up to a half payment for 

each of two additional entities). The payment limits on marketing loan gains can be exceeded 

using commodity certificates. Producers can also exceed the limits on direct and countercyclical payments by expanding and restructuring entities to maximize government payments. 

Payments to individuals from dairy operations are not currently subject to individual payment 

limitations. 

179
Commodity Payments: Commodity payments are designed to ensure that farmers have a base 

level of income adequate to allow them to keep farming. Direct payments are fixed payments 

that are based on historical production and vary by commodity, designed to provide a minimum 

level of income. Counter-cyclical payments are also based on historical production and provide 

income support when commodity prices fall below a specified level. Marketing loan payments 

provide price and income support when prices fall below a different price level (see full 

description in Commodity Marketing Loan section above). 

Sugar Marketing Assessment: A sugar marketing assessment, a fee on the amount marketed, in 

the range of 1.1 percent to 1.47 percent of the loan rate was in place from 1991 to 1999 as a 

result of a previous budget reconciliation to help reduce a budget deficit. That marketing 

assessment generated $279 million over 10 years. The marketing assessments were not included 

in the 2002 Farm Bill. 

Dairy Price Support: Current dairy prices are well above the legally mandated support rate of 

$9.90 per hundredweight. The average price of milk used to make butter and powder in 2004 

was $12.48. In 2005 this price is estimated to be in the range of $11.70 - $12.60. USDA has 

often continued to purchase nonfat dry milk even when prices have been above the support rate. 

If USDA does not lower the current nonfat dry milk (NDM) purchase price, CCC is expected to 

purchase 200 million pounds in 2005. 

Extend Dairy Income Payments: In October, the President committed to “working with 

Congress to extend the Milk Income Loss Contract Program” (MILC) through fiscal year 2007. 

MILC provides payments to dairy producers to ensure a high price for the first 2.4 million 

pounds of production. The 2002 Farm Bill authorized the program though 2005. 

Administration Proposal and Impact 

The Budget includes a broad set of savings proposals. These proposals do not target any specific 

commodity or region, but instead are spread throughout the industry. The proposals will reduce 

subsidies more for larger, more financially secure farms, and will promote more efficient 

production decisions. By historical standards this is a reasonable proposal. Agriculture savings 

were included in each of the three omnibus budget savings bills of the past 15 years. This 

proposal reduces agricultural spending by an amount similar to the reduction in the 1993 bill and 

lower than amounts in other previous bills (such as $13 billion in 1990). The Administration 

understands the value of our farm assistance and believes this strikes a good balance between 

spending restraint and continuing to offer farmers a sound safety net. 

Marketing Loan Gains: This proposal would pay commodity marketing loan gains on historical 

direct payment yields rather than on current production. This proposal would avoid the 

production-encouraging and trade-distorting impacts of the current program and minimize 

impediments to long-term trade agreements. 

Tighten and Expand Payment Limits: This proposal would reduce the payment limit cap for 

individuals from $360,000 to $250,000 for all commodity payments, including all types of 

180
marketing loan gains while removing current rules that allow some individuals to exceed those 

limits. It also makes marketing loans recourse (i.e. the crop cannot be forfeited instead of 

repaying the loan) above the payment limit. This reform would eliminate major gaps in the 

marketing loan limit. In addition, government payments received by individuals from dairy 

operations would be counted toward individual payment limitations. 

5 Percent Payment Reduction: The President’s Budget proposes reducing all commodity and 

dairy payments to producers by five percent. Payments to farmers would be calculated using 

current law and then payments would be reduced by five percent. 

Sugar Marketing Assessment: The Administration proposes a sugar marketing assessment to be 

paid by sugar cane and sugar beet processors on all marketed sugar. An assessment of 1.2 

percent of the raw sugar loan rate would be paid by first processors for both cane and beets. The 

proposed change would have a minimal impact on processors and would generate significant 

budgetary savings. 

Dairy Price Support: USDA would be required to operate the dairy price support program at the 

least cost to taxpayers possible. USDA would be required to adjust their purchase prices for 

dairy products to reduce government purchases and storage costs when dairy prices are above the 

minimum required support levels. 

 

Extend Dairy Income Payments: The Milk Income Loss Contract (MILC) program would be 

extended for two years. MILC payments would be made to eligible dairy operations on 

production up to 2.4 million pounds. The proposal would be subject to the same 5 percent across 

the board reduction and income payment limitations as for other commodity programs. 

181
Department of Agriculture, Risk Management Agency: Mandatory 

Crop Insurance

Funding Summary

(In millions of dollars)

2006 2007 2008 2009 2010 2006-10 2006-15

Baseline outlays .................. 3,640 3,768 3,938 4,100 4,225 19,671 41,919

Proposed change (change from 

current law)....................... --- -140 -140 -140 -140 -560 -1,260

Background 

Crop Insurance was designed to be the primary risk management tool for all farmers. It was 

developed in the late 1930’s in response to the dust bowl. Without this program, risk 

management through insurance would be prohibitively expensive to many farmers. For instance, 

when drought strikes it generally impacts a large geographic area. The regular widespread loss 

areas common to agriculture industry prevent the development of commercially available crop 

insurance. 

 

In order to increase farmer participation and get private companies to offer insurance, the 

Government subsidizes the farmers’ premiums, the risk that the insurance companies take, and 

the insurance companies’ administrative costs. The Agriculture Risk Protection Act of 2000 

(ARPA) increased the premium subsidy paid by the Government for the farmer, and was 

intended to end the need for large ad-hoc farm disaster payments. However, ad-hoc disaster 

payments continued, costing over $10 billion, even with the increased crop insurance subsidies. 

This is, in part, because, the minimum coverage level, catastrophic coverage (CAT), typically is 

not viewed by farmers as providing enough coverage when they suffer a large loss. 

Administration Proposal and Impact 

The 2006 Budget proposal strengthens the role of crop insurance in risk management by tying 

direct farm payments to the purchase of an adequate level of crop insurance. This change will 

ensure that all farmers growing the major commodity crops (e.g. wheat, corn, soybeans, and 

cotton) will have insurance coverage, ensuring that a farmer’s revenue loss in a disaster will 

never be greater than 50 percent. Consequently, farmers will have more crop protection the next 

time disaster strikes, thereby reducing the need for ad-hoc disaster assistance. 

The Administration’s proposal includes a moderate reduction in premium subsidies and a 

reduction in the administrative costs paid to insurance companies. The smaller subsidy should 

have a minimal affect on farmers (on average the cost increase will be $150 per insurance policy 

per year). Under the proposal, a farmer’s insurance premium will continue to be subsidized, on 

average, by more than 50 percent. In addition, insurers will continue to be fairly compensated, 

and will continue to make policies widely available. 

182
Department of Agriculture: Mandatory 

Food Stamp Program

Funding Summary

(In millions of dollars)

2006 2007 2008 2009 2010 2006-10 2006-15

Baseline outlays .................. 35,837 35,797 35,674 35,295 36,207 178,809 375,638

Proposed change (change from 

current law)....................... -57 -113 -112 -111 -114 -507 -1,124

Background 

The Food Stamp program alleviates hunger and improves nutrition by providing eligible, lowincome households with a voucher in the form of an electronic debit card redeemable for food at 

retail stores. Eligibility is based on income, expenses, assets and non-financial factors such as 

citizenship or legal immigration status, and fulfillment of applicable work requirements. 

Historically, households which were determined eligible for comparable means-tested benefits 

were deemed “categorically,” or automatically, eligible for food stamps. When the Temporary 

Assistance for Needy Families (TANF) program was established, categorical food stamp 

eligibility was extended to households receiving TANF cash assistance as well as those only

receiving TANF-funded services. However, in practice, TANF-funded services are extremely 

diverse, and do not necessarily have eligibility criteria that are comparable to the Food Stamp 

program. In some cases, States have expanded categorical eligibility for food stamps to those 

who have received a pamphlet published with TANF funds. As a result, in some States, 

households with income and resources well above the regular eligibility criteria are able to 

receive food stamps. 

Administration Proposal and Impact 

 

The Budget proposes to limit Food Stamp categorical eligibility to households receiving 

Supplemental Security Income (SSI) or Temporary Assistance for Needy Families (TANF) cash 

benefits. Households receiving TANF-funded services, but not cash, would no longer be 

automatically eligible for food stamps, but could apply under regular program rules. This 

proposal conforms the program’s rules to their historical intent, ensuring that Federal assistance 

is targeted to individuals who are most in need. 

183
Department of Agriculture: Mandatory 

Food Stamp Program Administration

Funding Summary

(In millions of dollars)

2006 2007 2008 2009 2010 2006-10 2006-15

Baseline outlays .................. 35,837 35,797 35,674 35,295 36,207 178,809 375,638

Proposed change (change from 

current law)....................... --- -2 -2 -2 -2 -8 -18

Background 

The Food Stamp program alleviates hunger and improves nutrition by providing eligible, lowincome households with a voucher in the form of an electronic debit card redeemable for food at 

retail stores. Eligibility is based on income, expenses, assets and non-financial factors such as 

citizenship or legal immigration status, and fulfillment of applicable work requirements. In 

2003, an estimated 6.64 percent of food stamp benefits was issued in error, either as over or as 

under-payments. An estimated 5 percent, or about $1.1 billion, was issued to people who 

intentionally or inadvertently received benefits for which they were not eligible. 

In 1996, Congress mandated the establishment of a national repository of employment and wage 

information to improve enforcement of child support obligations. This database, called the 

National Directory of New Hires (NDNH), contains employment information on newly hired 

employees, quarterly wage information, and employment information on Unemployment 

Insurance (UI) applicants and recipients. 

While State Food Stamp agencies can access their own State’s information, they may not access 

the information from other States contained in the NDNH. Only programs with specific 

legislative authority can use the NDNH. Currently, these programs include the Earned Income 

Tax Credit, the Supplemental Security Income program, the Federal student loan programs, 

Federal housing programs, and the Unemployment Insurance program. 

Administration Proposal and Impact

The Budget proposes to allow State Food Stamp agencies to use the NDNH to verify 

employment and wage information on food stamp applications and reports. This proposal would 

improve Food Stamp program integrity by helping to prevent benefits from being issued to 

people who are not eligible for them. State Food Stamp agencies will be able to obtain more 

timely information about food stamp applicants and recipients who live in one State but work in 

another, as well as on those who work for a multi-State employer which reports information to a 

different State. 

 

184
Department of Education: Mandatory

Federal Student Aid 

Funding Summary

(In millions of dollars)

2006 2007 2008 2009 2010 2006-10 2006-15

Proposed changes

Pay off Pell Shortfall (non-add BA 

only)........................................... 4,301 --- --- --- --- 4,301 4,301

Increase maximum Pell award.... 101 509 915 1,321 1,734 4,580 14,959

Student loan reforms................... -1,273 -2,510 -2,667 -2,658 -2,720 -11,269* -25,066*

* Net of 2005 loan modification costs

Background

 

In 2005, the Federal Government will provide over $70 billion in new grants, loans, and workstudy assistance to help students pay for postsecondary education, including $57 billion in 

student loans and $13 billion in Pell Grants. Federal student aid can be used to pay for 

postsecondary education expenses, including tuition, fees, room, and board. 

 

The Department of Education administers two student loan programs with equal terms for 

students: a bank-based program where loan capital is provided by private lenders and guaranteed 

by the Federal Government (begun in 1965), and a direct lending program where the Federal 

Government provides the capital (begun in 1994). The Department also manages the Federal 

Perkins Loan program, where participating institutions make loans to students with Federal 

revolving funds. The PART found Perkins Loans to be duplicative of the larger direct and 

guaranteed student loan programs and not well targeted to the neediest students. 

 

Although the Federal Government continues to provide significant levels of aid to about 10 

million students each year, more funds are needed to increase the level of Pell Grant aid to lowincome students. As found in the PART analyses, Pell Grants are well targeted to low-income 

families and help increase the college enrollment rates of historically underrepresented students. 

 

The PART also found that the student loan programs are not market sensitive—fixed borrower 

interest rates do not account for market fluctuations and statutorily set subsidies prevent 

taxpayers from benefiting when market efficiencies lower lenders’ operating costs. In particular, 

the statutorily set subsidy payments to banks and other student loan lenders, and payments made 

to guaranty agencies, do not account for changes in the industry, and are thus higher than 

necessary to ensure that all eligible students will receive loans. 

 

Finally, the PART found that disproportionate amount of program benefits were provided to 

borrowers out of school versus those currently attending school. For instance, while borrowers 

out of school are able to lock in fixed interest rates for their student loans that are well below 

market rates, the maximum amount a student can borrow has remained essentially the same for 

decades. 

 

185
Administration Proposal and Impact

The President proposes a package of reforms to address these problems while improving the 

effectiveness of the Pell Grant and student loan programs. These reforms will increase the 

maximum Pell Grant award from $4,050 to $4,550 over five years and provide additional student 

loan benefits to students in school. Coupled with this package of reforms is a new budget 

scoring rule for Pell Grants, which will ensure the program is fully funded each year, which 

means that funding shortfalls will be fully paid for and will not accumulate in future years. 

 

The President also proposes to reduce subsidies to student loan lenders and guaranty agencies, 

who would also be required to bear a greater share of overall program risk. Since the last 

reauthorization of the Higher Education Act in 1998, student loan servicing has been 

significantly concentrated in a few large companies, allowing economies of scale to be achieved. 

Additionally, lenders have increased their financial returns through several means, including 

aggressive participation in the secondary market for loans, without a corresponding reduction in 

Federal subsidy rates. The President’s Budget takes advantage of these efficiencies by reducing 

the cost of the student loan programs to the taxpayer, without reducing the ability of all eligible 

students to receive loans. 

 

To ensure student loan interest rates are market sensitive, the President’s Budget proposes to 

eliminate borrowers’ ability to lock in low fixed interest rates through loan consolidations. 

However, the Budget does propose to allow all borrowers to take advantage of historically low 

variable interest rates, including those borrowers who currently have high fixed interest rates. To 

help make college more affordable, and direct more benefits to current students, the 

Administration also increases loan limits for borrowers in their first two years of college and 

borrowers in graduate school. 

 

Finally, the President proposes to eliminate the Perkins Loan program and recall the Federal 

portion of the Perkins Loan revolving funds held by participating institutions. Only a small 

number of postsecondary institutions participate in the Perkins Loan program, and, by and large, 

these institutions do not serve the neediest students. The Administration believes that it can 

better serve students if it directs these funds to student aid programs that serve all low-income 

students, regardless of the institution in which they enroll. 

 

In total, these reforms provide $33.8 billion in mandatory savings over 10 years, including $27.8 

billion in student loan savings and $6.0 billion in savings from eliminating the Federal Perkins 

Loan program. These savings will be used to invest $19.3 billion in new mandatory funding in 

the Pell Grant program to both increase the maximum award by $500 and retire the $4.3 billion 

Pell Grant shortfall accumulated in prior years (the latter also counts as deficit reduction). These 

savings will also be used to provide $8.7 billion in additional benefits to borrowers in the student 

loan programs, and $5.8 billion in additional deficit reduction. Overall, this package of reforms 

reduces the deficit by $10.1 billion over 10 years.

186
Department of Energy: Mandatory 

Power Marketing Administrations (PMAs)

Funding Summary

(In millions of dollars)

2006 2007 2008 2009 2010 2006-10 2006-15

Baseline outlays .................. -3,353 -3,353 -3,353 -3,353 -3,353 -16,765 33,530

Proposed change (change from 

current law)....................... -40 -157 -446 -1,145 -1,406 -3,194 -12,434

Background 

The PMAs were established beginning in the 1930’s to help electrify rural and underserved parts 

of the country and sell the power generated by the hydroelectric dams the Federal Government 

constructed. Today, the PMAs sell power to about 1,200 wholesale customers in 32 States, who 

in turn distribute the power to about 36 million end-consumers (households and businesses). In 

most cases, wholesalers blend the PMA power into power from other, usually private power 

suppliers. In most States where power wholesalers buy PMA power, excluding Bonneville 

which serves the Northwest, PMA power represents less than five percent of their total power; 

Bonneville’s customers receive about 40 percent of their power from the PMA. 

The PMAs are required by statute to recover the cost of producing and transmitting the power 

they sell, and can only charge rates to recover their costs. But, as documented in GAO and other 

reports, the PMAs do not recover all their costs. Taxpayers cover some costs, such as when 

PMAs repay construction costs at a lower interest rate than the rate at which Treasury borrowed 

the funds. The average price for PMA power is roughly 50 percent of market rates, except for 

Bonneville, whose rates are closer to market levels. 

Administration Proposal and Impact 

The 2006 Budget allows the PMAs to slowly increase their rates from current subsidized levels 

and charge their customers a rate closer to what other wholesale sellers charge for their power. 

Reducing the often deep discount in their rates will bring greater equity with other market 

participants, and greater fairness to general taxpayers. This will have a modest and gradual 

affect on end-consumers of PMA power, because the PMA power generally makes up a small 

amount of a wholesaler’s total power supply. For 90 percent of all PMA consumers, the 

estimated impact is less than 50 cents per month in 2006 and less than a dollar per month in 

2007. Existing contracts will be honored, and modified when allowed. 

 

187
Department of Health and Human Services: Mandatory 

Medicaid/SCHIP

Funding Summary

(In millions of dollars)

2006 2007 2008 2009 2010 2006-10 2006-15

Baseline outlays .....................197,996 210,609 228,769 249,021 270,837 1,157,232 2,873,925

Proposed changes

 Medicaid Payment Reform....... --- -1,322 -1,415 -1,513 -1,619 -5,869 -15,189

 Medicaid Prescription Drugs.... -542 -723 -1,255 -1,372 -1,493 -5,385 -15,091

 Appropriate Payments

 for Medical Services........... -129 -427 -715 -845 -969 -3,084 -11,742

 Medicaid Provider Taxes......... -231 -461 -811 -825 -839 -3,167 -7,615

 Medicaid administration........... --- -128 -221 -329 -452 -1,130 -5,953

 Medicaid Asset Transfers......... -99 -197 -295 -393 -491 -1,476 -4,505

Background 

Created in 1965, Medicaid is an open-ended means-tested entitlement program that is jointly 

financed by the Federal Government and States. In 2006, Medicaid is projected to provide 

health coverage and services to more than 46 million low-income children, pregnant women, 

elderly, and disabled individuals. Created in 1997, the State Children’s Health Insurance 

Program (SCHIP) is a capped means-tested health program that targets health coverage to 

children with incomes up to 200 percent of the Federal Poverty Level (FPL). States have more 

flexibility in designing and administering SCHIP, including benefit packages, cost sharing, and 

health delivery systems. 

Medicaid’s complexity and open-ended finance structure encourages efforts by States to draw 

down Federal matching funds, sometimes inappropriately. These financing practices undermine 

the Federal-State partnership and jeopardize the financial stability of the Medicaid program. The 

2006 Budget proposes to build on past efforts to improve efficiencies and the fiscal integrity of 

Medicaid and SCHIP while still maintaining Medicaid growth at a robust rate of 7.2 percent. 

Administration Proposal and Impact 

Medicaid payment reform: The 2006 Budget proposes to further improve the integrity of the 

Medicaid matching rate system by requiring the Centers for Medicare and Medicaid Services 

(CMS) to recover Federal funds inappropriately retained by or returned to the State. Medicaid’s 

open-ended financing structure encourages States to maximize the amount of Federal matching 

funds they receive without contributing the legally-determined State share. Through such 

mechanisms, Federal funds intended to pay for health services are either retained by or returned 

to the State and “recycled” to draw additional Federal dollars. These financing strategies have 

led to dramatic increases in Federal funding without a corresponding increase in Medicaid 

services. 

188
This proposal is intended to reinforce the Federal/State partnership while eliminating Medicaid 

financing arrangements that undermine the program’s integrity. This proposal allows States to 

set adequate rates for Medicaid services. Instead, the proposal affects funding that does not 

directly pay for health services. The Federal Government remains committed to providing 

quality services to Medicaid beneficiaries. In addition, this proposal is consistent with reforms 

proposed by the HHS Office of the Inspector General (OIG). In past years, the HHS OIG has 

recommended this proposal as a strategy to curb inappropriate financing mechanisms. 

The 2006 Budget also proposes to better align Federal reimbursement for government providers 

to the cost of providing Medicaid services. Today, States have a financial incentive to make 

excessive payments to government providers as part of a strategy to leverage additional Federal 

funds. In many cases, the excessive payments do not remain with the government provider. 

Instead, the funds are transferred back to the State where they can be used for other purposes. 

The Government Accountability Office has recommended that HHS address this issue by 

reimbursing providers on a cost basis. 

Medicaid prescription drugs: Currently, most States reimburse pharmacies a percentage 

discount off the Average Wholesale Price (AWP), a list price set by the drug manufacturer, plus 

a flat dollar dispensing fee. In recent years, the HHS Inspector General has found that 

pharmacies acquire drugs for a cost that is generally much lower than their reimbursement. The 

difference between the pharmacy acquisition cost and the reimbursed amount is referred to as the 

spread. The larger the spread, the more a pharmacy profits on the reimbursement from 

Medicaid. The current system has created an incentive for manufacturers to artificially raise the 

AWP to make their products more attractive to pharmacies because the profit will be larger with 

the higher price. As a result, AWP is consistently inflated and therefore a faulty reference price. 

Moving to an ASP-based system creates a more transparent Medicaid pharmacy reimbursement 

system, which could slow down the rapidly rising costs of Medicaid drugs. 

The Budget proposes to require States to reimburse the Average Sales Price (ASP) of a drug to 

pharmacies for Medicaid drugs, plus a 6 percent fee for storage, dispensing, and counseling. 

ASP is the weighted average of all non-Federal sales from manufacturers, and is therefore a 

sound proxy for pharmacy acquisition cost. This reimbursement scenario aligns pharmacy 

reimbursement with pharmacy acquisition cost and will create a more sustainable system. 

Reimbursing ASP + 6 percent is consistent with Medicare reimbursement for Part B-covered 

drugs as established by the Medicare Modernization Act. 

Appropriate payment for Medicaid services: In an effort to further rationalize Medicaid 

spending, the 2006 Budget proposes to clarify reimbursement policies for targeted case 

management (TCM) services, rehabilitation services, and “free care” principles. Currently, a 

majority of States offer rehabilitation and targeted case management services. However, 

reimbursement policies for these services are not well articulated. This ambiguity has resulted in 

questionable cost-shifting of services onto Medicaid, which increases costs. Although the 

Federal Government would continue to pay for these services, this proposal tightens the 

definitions of what would be reimbursable under these services. Additionally, the 2006 Budget 

articulates a sound financial management principle that states that Medicaid cannot be charged 

189
for a service that is provided free of charge. Clarifying these policies ensures the integrity of 

Medicaid payments. 

The 2006 Budget also proposes to reduce the Federal matching rate for targeted case 

management services from State-specific Federal medical assistance percentages (FMAP). 

FMAP currently averages 57 percent. The Budget would reduce this to 50 percent. Targeted 

case management is largely an administrative activity, therefore, it is appropriate to reimburse it 

at 50 percent, similar to other Medicaid administrative activities. The proposal would also align 

reimbursement for TCM services with other Federal programs, such as Foster Care. This 

proposal does not affect the amount of reimbursement that States will receive for other Medicaid 

services to which an individual may be referred by a case manager. This proposal only affects 

States whose Federal matching rate for medical services is above 50 percent. 

Medicaid provider taxes: Provider taxes are a financing mechanism States have used to generate 

State funds needed to obtain Federal Medicaid matching payments. During the mid 1980s, 

States began using provider taxes as a mechanism to leverage additional Federal funds and cost 

shift Medicaid expenses to the Federal Government. After the taxes were matched with Federal 

funds and paid to the providers, the providers did not keep the payments. Rather, the providers 

returned most of the Federal monies to the States, where the funds could be used for other 

purposes. In 1991, the Congress passed legislation to limit States’ use of provider taxes. While 

Congress limited the use of this creative financing mechanism, the previous Administration 

created a “safe harbor” for provider taxes. The safe harbor allows States to tax providers up to 

six percent of revenues, under certain circumstances. The tax must be applied uniformly across 

all health care providers in the same class (e.g., all hospitals). Recently, use of this financing 

mechanism began to expand. 

The 2006 Budget proposes to phase down the allowable tax rate States can charge providers 

from six percent to three percent and require that managed care organizations (MCOs) be treated 

the same as other classes of health care providers with respect to uniformity requirements. These 

proposals are intended to strengthen requirements and ensure the fiscal integrity of the Medicaid 

program. 

 

Medicaid Administration: The 2006 Budget proposes to establish individual State allotments for 

Medicaid administrative costs to encourage States to use more cost-effective methods in 

administering the program. Currently, Medicaid reimburses administrative claims under an 

open-ended financing framework, which does not create incentives for States to operate the 

program as efficiently as possible. In addition, States have taken advantage of open-ended 

funding to cost shift non-Medicaid activities to the Federal Government. This proposal 

encourages program efficiencies and deters inappropriate cost shifting by slowing the rate of 

growth related to administrative claims. 

Medicaid asset transfers: Medicaid’s current rules restrict individuals from keeping more than a 

nominal amount of assets to qualify for long term care services. States are required to impose 

penalties on individuals who transfer assets (e.g., a house) at less than fair market value within 

three years of applying for Medicaid benefits. The penalty delays Medicaid eligibility by the 

amount of long-term-care services that could have been purchased with the dollar value of 

190
impermissible asset transfer. The penalty is largely ineffective because an individual can avoid 

eligibility delays by timing an asset transfer in advance of applying for benefits. If an asset 

transfer is timed properly, the penalty period runs out before a Medicaid application is made. In 

this case, the applicant has successfully protected his/her assets and qualified for Medicaid long 

term care services. 

The 2006 Budget proposes to strengthen Medicaid requirements by requiring that penalties start 

on the date of eligibility for Medicaid LTC services or the date of transfer, whichever occurs 

later. Under this change, an applicant who transfers an asset in an impermissible manner would 

not be able to circumvent Medicaid penalties. Several States have expressed interest in pursuing 

this reform as part of an effort to promote personal responsibility and planning for an 

individual’s long term care needs. 

The 2006 Budget also includes a proposal to encourage the purchase of private long term care 

insurance. The proposal would eliminate the existing statutory ban on new Partnership for Long 

Term Care programs. Under these programs, individuals who purchase and use Partnershipapproved insurance can become eligible for Medicaid services after their insurance coverage is 

exhausted. 

The Administration proposes to restore Medicaid’s original promise to protect and promote the 

health of the least financially fortunate among us, while fostering a more balanced Federal-State 

partnership that improves the program’s long-term financial stability. The program’s openended finance structure encourages efforts by States to draw down Federal matching funds, 

sometimes inappropriately. These financing practices undermine the Federal-State partnership 

required by the Medicaid statute and jeopardize the financial stability of the program. The 2006 

Budget proposes several program integrity measures to reduce inappropriate use of Federal 

commitments under Medicaid. Also, the Administration proposes to apply lessons learned from 

the successful State Children’s Health Insurance Program by giving States more flexibility to 

provide needed care to larger numbers of the uninsured, while reducing needless overhead and 

waste. Together with the President’s package of proposals to help the uninsured, this reform will 

focus on increasing health insurance coverage for low-income families while also promoting 

more efficient and rational ways of delivering care, such as community-based care alternatives 

for persons with disabilities. 

Other Proposals Included in the Budget 

The descriptions above focus on savings proposals and do not include the Medicaid program 

enhancements proposed in the 2006 Budget. For example, the Budget includes the Cover the 

Kids initiative to get as many eligible children as possible covered, New Freedom proposals to 

improve services for the disabled, various extensions of existing authorities, Medicaid and 

SCHIP Modernization, and the Administration’s proposed tax system improvements to expand 

health insurance coverage. 

191
Department of Health and Human Services: Mandatory 

Payments to States for Foster Care and Adoption Assistance 

Funding Summary

(In millions of dollars)

2006 2007 2008 2009 2010 2006-10 2006-15

Baseline outlays .................. 6,619 6,870 7,091 7,426 7,732 35,738 80,132

Proposed change (change from 

current law)....................... -72 -74 -77 -79 -81 -383 -833

Background 

Payments to States for Foster Care and Adoption Assistance include programs which assist 

States with the costs of maintaining eligible children in foster care, preparing older foster care 

children for living on their own, and adopting children under special conditions. Administrative 

and training costs also are supported. Foster Care and Adoption Assistance support child welfare 

services, which are intended to enhance the capacity of families to raise children in a nurturing, 

safe environment; to protect children who have been or are at risk of being abused or neglected; 

to provide safe, stable, family-like settings consistent with the needs of each child when 

remaining at home is not in the best interest of the child; to reunite children with their biological 

families when appropriate; and to secure adoptive homes or other permanent living arrangements 

for children whose families are not able to care for them. 

In March of 2003, the Ninth Circuit Court of Appeals ruled against the Federal Government in 

Rosales v. Thompson and expanded the definition of “home of removal” so that Ninth Circuit 

States may shift some of their Foster Care costs to the Federal Government. 

Administration Proposal and Impact 

The Budget includes a proposal to amend the definition of “home of removal” by clarifying the 

language regarding “home of removal” in the section setting forth the eligibility of children for 

title IV-E foster care maintenance payments. HHS seeks to amend the statute so that it is in 

accord with the Department’s long-standing interpretation of the Social Security Act. Doing so 

will prevent increased costs to the Federal Government resulting from new title IV-E claims 

from States within the Ninth Circuit and will prevent inconsistent policy interpretations and 

ultimately legal and policy challenges from States outside of the Ninth Circuit. This policy is 

projected to save the Federal Government of approximately $72 million in fiscal year 2006 and 

$383 million over five years. 

 

192
Department of Housing and Urban Development: Mandatory 

FHA Rehabilitation Grants and Below-Market Sales

Funding Summary

(In millions of dollars)

2006 2007 2008 2009 2010 2006-10 2006-15

Baseline outlays .................. 286 146 92 90 70 684 929

Proposed change (change from 

current law)....................... -60 -100 -100 -100 -100 -460 -960

Background 

HUD’s Federal Housing Administration (FHA) insures the mortgages of multi-family residential 

properties. Under several statutory provisions, HUD has the authority to remedy problems with 

the operation and condition of FHA-insured multi-family properties. These authorities allow the 

use of rehabilitation grants and property sales at prices below their market value for properties in 

mortgage default. These authorities impose costs on the FHA insurance fund and, as there is 

little restriction to their use, represent an open-ended liability. These are the only mandatory 

forms of assistance for low-income housing in HUD. In the case of mortgage default, FHA can 

use these authorities to facilitate transactions designed to make a property financially and 

physically viable. 

Administration Proposal and Impact 

This proposal would make several FHA multi-family authorities subject to appropriations. By 

making their use subject to appropriations, the Administration and Congress will be able to set 

the level of activity for these authorities and have an opportunity to better control their use. The 

2006 Budget lowers spending under these authorities (relative to the current law baseline level) 

and therefore creates savings. The Budget includes other forms of assistance for residents in 

distressed properties including mortgage restructuring under the “Mark-to-Market” program, rent 

subsidy amendments, and tenant protection vouchers. 

FHA has often used these authorities for properties receiving project-based rental assistance. 

The latter was subject to a PART finding that the program lacks strong financial controls and 

imposes long-term liabilities for the Federal Government. This proposal addresses that finding 

by improving control and oversight of spending. 

193
Department of the Interior: Mandatory 

Southern Nevada Public Land Sales Reform 

Funding Summary

(In millions of dollars)

2006 2007 2008 2009 2010 2006-10 2006-15

Baseline outlays .................. 775 1,101 1,041 1,020 1,017 4,954 9,914

Proposed change (change from 

current law)....................... -227 -418 -636 -641 -642 -2,564 -5,782

Background 

 

Enacted in 1998, the Southern Nevada Public Land Management Act (SNPLMA) sets aside 

funds from the sale of Federal lands around Las Vegas for specific uses in Nevada. Under 

SNPLMA, 15 percent of revenues are provided directly to State and local entities, and the 

remainder of the proceeds is devoted to local projects on both Federal and local lands without 

further consideration by the Congress. 

SNPLMA was enacted with the understanding that a substantial portion of the revenues 

generated would be spent to acquire and conserve other lands in Nevada. However, a 2006 

PART review found that as SNPLMA land sale receipts have risen dramatically in the last few 

years, the available funding grossly outpaced land acquisition needs. This has resulted in only 8 

percent of funds approved for the latest round of projects being dedicated to land acquisition, 

while 67 percent of these funds are devoted to local projects. For example, $16 million of land 

sale receipts were earmarked for the first phase of a recreational shooting range outside Las 

Vegas. These projects are formulated and implemented without the further consideration of 

Congress typically applied to similar projects. 

Compounding this problem is the fact that the amount of receipts generated by these land sales 

has been much higher than anyone, including the bill’s sponsors, ever anticipated when 

SNPLMA was passed. When originally passed, proceeds from land sales under the bill were 

estimated at roughly $70 million per year; receipts will be 17 times that level ($1.2 billion) in 

2005. 

Administration Proposal and Impact 

The 2006 Budget proposes to amend SNPLMA to redirect 70 percent of all receipts to the 

Treasury, where Federal land sale receipts have historically been deposited. The 15 percent of 

the receipts that currently go to State and local entities is not affected and 15 percent of receipts 

will still be directed to conservation and local projects on Federal and other public lands. This 

proposal serves the general taxpaying public while still providing about four times the level of 

spending in Nevada as originally anticipated in 1998. 

194
Department of the Interior: Mandatory 

Arctic National Wildlife Refuge (ANWR) Development 

Funding Summary

(In millions of dollars)

2006 2007 2008 2009 2010 2006-10 2006-15

Baseline outlays .................. --- --- --- --- --- --- ---

Proposed change (change from 

current law)....................... --- -1,201 -1 -101 -1 -1,304 -1,473

Background 

One of the most promising areas for future domestic oil and gas development is the coastal plain 

of the Arctic National Wildlife Refuge (ANWR). In 1980, Congress enacted the Alaska National 

Interest Lands Conservation Act (ANILCA). The Act re-designated the Arctic Range as the 

Arctic National Wildlife Refuge and expanded the boundaries to include an additional 9.2 

million acres. ANILCA designated much of the original Refuge as a wilderness area. However, 

the coastal plain (also referred to as the “1002 Area”) continued to be considered for possible 

resource development and Congress directed a resource study of this area. 

Administration Proposal and Impact 

The 2006 Budget proposes to authorize exploration and, if resources are discovered, 

environmentally-responsible oil and gas development in the 1002 Area of the Arctic National 

Wildlife Refuge. Technological advances have dramatically reduced the environmental impact 

of new oil and gas production since ANILCA was passed in 1980. For instance, the 

development footprint from production would cover only about one-tenth of one percent of the 

1002 Area. 

Reducing the Nation’s dependence on foreign energy sources is a top Administration priority. 

The Department of the Interior estimates that the 1002 Area holds between 5.7 billion and 16 

billion barrels of recoverable reserves, or up to 1 million barrels per day of new domestic oil 

supply. Revenues from bonus bids, rents, and royalties collected from oil and gas production in 

ANWR would be split 50/50 with the State of Alaska. 

195
Department of the Interior: Mandatory

Pick-Sloan Missouri Basin Program Cost Repayment Project

Funding Summary

(In millions of dollars)

2006 2007 2008 2009 2010 2006-10 2006-15

Baseline outlays .................. -164 -154 -179 -174 -167 -838 -1,775

Proposed change (change from 

current law)....................... -33 -33 -31 -31 -29 -157 -300

Background 

This multipurpose, multi-agency (Reclamation, Corps of Engineers, and Western Area Power 

Administration (WAPA)) irrigation, flood control, and power generation program serves parts of 

ten States in the Midwest. Power customers have repaid the construction costs of most of the 

project, and annually reimburse Reclamation for its operating and maintenance (O&M) expenses 

on that portion of the project. However, approximately $500 million of the program’s 

hydropower and water storage capital costs were allocated to irrigators, but because the irrigation 

was never developed, the capital and O&M costs on this portion of the project are not being 

repaid to the Federal Government. Meanwhile, power customers have been using, but not 

paying for, the dams and reservoirs originally allocated to irrigation, and the price of the power 

has, therefore, been subsidized. 

The government successfully took similar cost re-allocation action for part of this project in the 

mid-1980s, with minimal impacts to power rates. Both the Government Accountability Office 

and the Department of the Interior’s Office of the Inspector General have raised concerns that 

these costs are not being paid, and suggested that costs be re-allocated to power customers. 

Administration Proposal and Impact 

The Budget proposes to re-allocate repayment of capital costs of the Pick-Sloan Missouri Basin 

Program. Power customers will be responsible for repayment of all construction from which 

they benefit, whereas to date they have only been responsible for a portion of it. This proposal 

will not impact services, and will ensure taxpayer investments are being repaid as intended, 

through a modest increase in power rates to the program’s beneficiaries. This increase could be 

phased in gradually over time and phased out when the costs are repaid. 

196
Department of the Interior: Mandatory 

BLM Range Improvement Fund 

Funding Summary

(In millions of dollars)

2006 2007 2008 2009 2010 2006-10 2006-15

Baseline outlays .................. 10 10 10 10 10 50 100

Proposed change (change from 

current law)....................... -7 -10 -10 -10 -10 -47 -97

Background 

The Bureau of Land Management’s (BLM) Range Improvement program is funded from a 

combination of money from both appropriations and grazing fees received for allowing ranchers 

to graze livestock on public lands. These grazing fees compensate the public for the use of 

Federal lands for this purpose. Range improvements include vegetation projects, fencing, and 

livestock watering troughs. 

Administration Proposal and Impact 

The 2006 Budget proposes to eliminate BLM’s range improvement fund. The mandatory nature 

of the funding does not allow program managers to consider an array of spending options and 

shift funding toward higher priorities. Under the Administration’s proposal, BLM would retain 

the ability to fund range improvements to benefit wildlife within its appropriated budget. The 

Budget proposes to increase funding for BLM’s Challenge Cost Share grants program and allow 

range improvement proposals that benefit wildlife to compete for project funding. 

In addition, BLM expects to publish new regulations in 2005 that will allow grazing permittees 

to share title to range improvements. This should increase the level of private investment in 

improvements in 2005 and thereafter, and will decrease the need for the Federal Government to 

fund these projects. 

197
Department of Labor: Mandatory 

Pension Benefit Guaranty Corporation (PBGC) Reform

Funding Summary

(In millions of dollars)

2006 2007 2008 2009 2010 2006-10 2006-15

Baseline outlays* .................. -315 -95 -7 246 503 333 5,095

Proposed changes 

 PBGC Outlays........................... -2,195 -3,702 -3,495 -3,226 -2,916 -15,534 -26,521

 Tax Receipts**.......................... -151 -1,432 869 2,699 1,762 3,747 12,735

Total effects................................. -2,346 -5,134 -2,626 -527 -1,154 -11,787 -13,786

* Baseline includes interest from U.S. securities paid from the Treasury, but no tax effects of the program. 

** Tax receipts line displays tax effect on deficit.

Background 

Created by the Employee Retirement Income Security Act (ERISA) of 1974, the PBGC is a 

wholly-owned government corporation that currently protects the pensions of 44 million 

Americans. Its single-employer insurance program guarantees payment of benefits under 

defined-benefit pension plans, subject to statutory limitations, in the event the employer can no 

longer maintain the plan. PBGC insurance is mandatory for most private, defined-benefit 

pension plans. The program receives no general revenues; its funding derives from premiums 

paid for covered plans, assets from terminated plans that come into PBGC trusteeship, and 

investment earnings. This program currently has a deficit of $23 billion. The Government 

Accountability Office (GAO) has placed the PBGC’s single-employer insurance program on its 

“High Risk” list and recommended comprehensive reforms and improved disclosure 

requirements to address the long-term financial risks to the program. In addition, an analysis 

conducted through the PART indicated that funding reforms are needed to control PBGC’s 

exposure. 

Administration Proposal and Impact 

The 2006 Budget proposes legislation to better protect workers’ defined-benefit pensions by 

reforming funding rules, revising PBGC’s insurance premiums, and improving disclosure of 

pension funding. The Administration’s proposed changes to funding rules would require pension 

plans whose liabilities exceed their assets to pay down the funding shortfall over a period of 7 

years. Each plan’s funding target would be dependent on the employer’s financial health. 

Proposed changes to employer premiums would adjust the flat-rate premium annually for growth 

in worker wages, while updating the variable-rate premium to reflect new funding targets and 

authorize PBGC’s Board to make revisions periodically, as needed, to cover the cost of expected 

claims. The reforms also would provide employers greater flexibility to contribute additional 

amounts toward their defined-benefit pension plans in good economic times, and improve 

disclosure to workers, investors, and regulators about pension plan status. 

198
Department of Labor: Mandatory 

Strengthening Financial Integrity in the Unemployment Insurance Program 

Funding Summary

(In millions of dollars)

2006 2007 2008 2009 2010 2006-10 2006-15

Baseline outlays .................. 36,891 38,485 40,871 43,238 45,656 205,141 472,534

Proposed change (change from 

current law)....................... -281 -347 -418 -429 -436 -1,911 -4,423

Background 

The Unemployment Insurance (UI) program was created by the Social Security Act of 1935 to 

provide temporary, partial wage replacement to qualifying unemployed workers who have lost 

their jobs through no fault of their own. UI is a Federal-State partnership. The Federal 

Government finances the program’s administrative expenses, while the States make benefit 

payments from State-levied employer payroll taxes. In 2004, the UI program provided benefits 

totaling $42.5 billion to 8.8 million unemployed workers. 

Legislation passed in 2004 strengthened the integrity of the UI program by ending manipulative 

practices by which employers avoid their fair share of State UI taxes. The law also grants access 

by State UI agencies to the National Directory of New Hires, which allows quick detection of 

individuals who go back to work and continue to collect UI. However, more needs to be done to 

reduce UI improper payments, which were estimated at $3.9 billion in 2004. 

Administration Proposal and Impact 

The 2006 Budget proposes legislation to reduce UI improper payments through amendments to 

the Social Security Act to: (1) boost States’ incentives to recover benefit overpayments by 

permitting them to retain a portion of recovered funds to combat fraud and promote error 

reduction; (2) require States to impose a monetary penalty for UI fraud, which would be used to 

reduce overpayments; (3) permit more active participation by private collection agencies in the 

recovery of overpayments and delinquent employer taxes; and (4) require States to charge 

employers when their actions lead to overpayments. In addition, the Administration is proposing 

legislation to authorize the collection of UI overpayments through garnishment of Federal 

income tax refunds, in cases where an individual has received UI benefits payments to which he 

or she is not entitled and the State is unable to recover them. These proposals combined are 

estimated to reduce UI improper payments by $4.4 billion over ten years. 

The 2006 Budget also requests $40 million in discretionary funds for two UI program integrity 

initiatives with estimated benefit savings of $330 million in 2006. These initiatives – to prevent 

UI identity theft and to conduct continued eligibility reviews in the One-Stop Career Centers – 

will be funded through an adjustment in the discretionary spending caps. 

199
Department of Labor: Mandatory 

Black Lung Disability Trust Fund Debt Refinancing

Funding Summary

(In millions of dollars)

2006 2007 2008 2009 2010 2006-10 2006-15

Baseline outlays .................. 1,068 1,079 1,090 1,100 1,111 5,448 11,219

Proposed change (change from 

current law)....................... --- --- --- --- --- --- ---

Background 

Enacted in 1969, the Black Lung Benefits Act entitles coal miners who have been totally 

disabled by occupational black lung disease to monetary and medical benefits. Benefits are paid 

by the "responsible" mine operator or, where no such operator can be found, the Trust Fund, 

which is financed through an excise tax on coal. Currently estimated at $9 billion, the Black 

Lung Trust Fund’s debt arose during the program’s early years, when coal excise taxes fell short 

of compensation costs and the Fund had to borrow from the Treasury. Since 1990, the Trust 

Fund’s tax revenue generally has covered program costs, but not the interest due on past 

borrowing. As a result, each year the Trust Fund has had to borrow additional amounts to 

service its debt, and DOL has repaid none of the principal. Under current conditions, the Trust 

Fund’s debt could never be repaid. The Fund’s insolvency is a long standing concern of the 

Labor Department’s Inspector General. 

Administration Proposal and Impact 

The 2006 Budget re-proposes legislation to restructure the Black Lung Disability Trust Fund 

debt and restore solvency to the Fund. Proposed reforms would: (1) refinance the debt to take 

advantage of current, low interest rates (the current blended interest rate is 9 percent); (2) extend 

until the debt is repaid the Fund’s excise tax levels, which are set to revert to lower levels in 

January 2014; and (3) upon enactment of the bill, provide a one-time appropriation for a payment 

to the U.S. Treasury to cover the forgone interest payments. Because this is an 

intragovernmental transfer, there is no net government-wide budgetary effect until the proposed 

extension of current excise tax rates causes revenues to increase by an estimated $639 million in 

2014 and 2015. 

200
Department of Labor: Mandatory 

Federal Employees’ Compensation Act (FECA) Reform 

Funding Summary

(In millions of dollars)

2006 2007 2008 2009 2010 2006-10 2006-15

Baseline outlays .................. 237 336 262 318 289 1,442 2,108

Proposed change (change from 

current law)....................... -6 -12 -20 -17 -17 -72 -172

Background 

Administered by the Department of Labor (DOL), the Federal Employees’ Compensation Act 

(FECA) program covers nearly three million Federal employees, providing wage-replacement 

and medical benefits to those workers who suffer occupational injury or disease. FECA benefits 

are paid by the Department of Labor, which is then reimbursed by Federal agencies for benefits 

paid to their employees. FECA pays up to 75 percent of the individual's basic pay, adjusted 

annually based on the Consumer Price Index. Under current law, individuals can receive FECA 

benefits indefinitely, as long as their injury or illness diminishes their wage-earning capacity. 

Because they are tax-free, FECA benefits typically exceed Federal retirement, which entices 

individuals to remain on FECA past when they would otherwise have retired. FECA has not 

been substantially updated since 1974. 

Administration Proposal and Impact 

The 2006 Budget proposes legislation to update the FECA program’s benefit structure, adopt 

best practices of State workers’ compensation systems, and strengthen return-to-work incentives. 

The proposed legislation would amend FECA to convert prospectively retirement-age 

beneficiaries to a retirement annuity-level benefit; impose an up-front waiting period for 

benefits, as is done in every State workers’ compensation system; streamline claims processing; 

permit DOL to recapture compensation costs from responsible third parties; and make other 

changes to improve and update FECA. (The table above reflects net savings, and does not 

include projected reductions in Federal agencies’ payments for FECA benefits paid to their 

employees. On a government-wide basis, these reforms are expected to produce ten-year 

government-wide savings of more than $720 million.) 

201
Department of Treasury: Mandatory 

Continued Dumping and Subsidy Offset Act of 2000

Funding Summary

(In millions of dollars)

2006 2007 2008 2009 2010 2006-10 2006-15

Baseline outlays .................. 1,608 1,615 1,624 855 865 6,567 11,035

Proposed change (change from 

current law)....................... -1,608 -1,615 -1,624 -855 -865 -6,567 -11,035

Background 

The Bureau of Customs and Border Protection collects duties assessed pursuant to a 

countervailing duty order, an antidumping duty order, or a finding under the Antidumping Act of 

1921. The Continued Dumping and Subsidy Act (CDSOA) was enacted as a permanent 

provision in the Agriculture Appropriations Act for Fiscal Year 2001 without going through the 

authorization process. Prior to its enactment, collected duties were deposited in the general fund 

of the Treasury. The CDSOA redirects tariff revenues collected from antidumping (AD) and 

countervailing duty (CVD) cases from the U.S. Treasury to the U.S. industry petitioners who 

brought the AD or CVD cases. These distributions provide a significant additional benefit to 

producers that already gain protection from the increased prices on imports provided by the 

tariffs. This not only represents an unwarranted subsidy, but also encourages more firms to file 

or support antidumping cases, regardless of whether the case has merit, because this law makes 

the distribution of duty revenues contingent on whether a firm supported the AD/CVD case in 

question. The World Trade Organization (WTO) ruled in January 2003 that CDSOA violates 

our WTO commitments and has authorized retaliatory sanctions against the United States by 

seven WTO members, including the European Union, Canada and Japan. 

Administration Proposal and Impact 

The Administration will propose repeal of the Continued Dumping and Subsidy Offset Act of 

2000. This proposal would uphold our WTO commitment and deposit collected duties in the 

general fund of the Treasury to reduce borrowing needs. The Administration has proposed 

repeal of the CDSOA in both FY 2004 and FY 2005. Companies injured by unfair trading 

practices will continue to benefit from the imposition of increased tariffs on imports where 

appropriate. 

202
Department of the Treasury: Mandatory 

Financial Management Service (FMS) Debt Collection Initiative: 

Eliminate the 10-year Statute-of-Limitations on the Collection of Non-Tax Debt Owed to 

Federal Agencies

Funding Summary

(In millions of dollars)

2006 2007 2008 2009 2010 2006-10 2006-15

Baseline outlays .................. --- --- --- --- --- --- ---

Proposed change (change from 

current law)....................... -11 -6 -6 -6 -6 -35 -65

Background 

The FMS debt collection offset process is a well established tool to collect delinquent non-tax 

debts owed to Federal agencies. In 2004, the debt collection program collected $3 billion in 

delinquent non-tax debt. Last year, the Debt Collection program received an “effective” rating 

on an evaluation using OMB’s PART. As a result of the PART analysis, the 2005 President’s 

Budget proposed four initiatives to increase opportunities to collect delinquent debt owed to 

Federal agencies. Two of the four proposals were enacted into law last year - - this is one of the 

proposals that remain to be enacted. 

Administration Proposal and Impact 

This proposal would eliminate the 10-year statute of limitations period applicable to the offset of 

Federal non-tax payments. These payments are offset in order to collect debts owed to Federal 

agencies. Under current law, Federal payments made to payees (e.g., vendors, beneficiaries) 

who owe delinquent debt to the Federal Government cannot be offset if the debt has been 

outstanding for more than 10 years. The proposal would ensure that delinquent obligations to the 

Federal Government can be collected by offset without regard to any Federal or State statutory, 

regulatory or administrative limitation on the period within which debts may be collected. The 

ability to pursue collection indefinitely would be tempered by government-wide regulations that 

set forth standards for when it is and is not appropriate to continue collection. Such standards are 

intended to ensure that the Federal Government’s debt collection efforts are directed toward 

those with the ability to pay. 

203
Federal Communications Commission (FCC): Mandatory 

Auctions Receipts

Funding Summary

(In millions of dollars)

2006 2007 2008 2009 2010 2006-10 2006-15

Baseline offsetting receipts* ...... -100 -2,288 -13,252 -12,448 -1,494 -29,582 -29,582

Proposed change (change from 

current law)*..................... --- --- 1,083 -2,156 -3,239 -4,312 -5,112

* Shows effect of offsetting receipts on mandatory outlays.

Background 

The Federal Communications Commission (FCC) began auctioning spectrum in 1994. These 

auctions have been widely recognized as an effective and successful approach to allocating 

licenses. Unfortunately, the FCC’s authority to auction spectrum to telecommunication 

providers and other users expires at the end of fiscal year 2007. Absent this authority, there 

could be no viable alternative mechanism for resolving mutually exclusive applications and 

recovering the value of the spectrum for the public. 

In addition, while there is a desire to auction the analog television frequencies, a timetable for 

terminating analog broadcasts is still being formulated. Extending auction authority provides the 

FCC time to address uncertainty involving the digital television transition and schedule the 

auction for when there is greater certainty involving the availability of the spectrum. 

Administration Proposal and Impact 

The Administration proposes to extend the FCC’s auction authority indefinitely. Auction of 

spectrum licenses has proved to be an efficient, fair, and transparent approach to allocating this 

resource and has helped ensure that taxpayers receive fair market value. 

In addition, extension of auction authority enables the FCC to conduct auctions closer to the time 

when spectrum currently used for other purposes will become available; this reduces bidder 

uncertainty regarding the availability of spectrum and equipment, and is expected to raise 

receipts. 

204
Federal Communications Commission (FCC): Mandatory 

Telecommunications Development Fund (TDF) 

Funding Summary

(In millions of dollars)

2006 2007 2008 2009 2010 2006-10 2006-15

Baseline outlays .................. 2 2 3 3 4 14 34

Proposed change (change from 

current law)....................... -2 -2 -3 -3 -4 -14 -34

Background 

 

The Telecommunications Development Fund (TDF) was created in 1996 with the mandate to 

finance small businesses in the telecommunications sector, help develop new technologies, and 

promote universal service. It started operations in 1998 as an equity investment venture capital 

fund focusing on early-stage companies. Over the years, the firm has been capitalized by the 

Federal Government; it retains the interest earned on deposits made by bidders in FCC spectrum 

auctions. Between 1998 and 2003, TDF received nearly $50 million in interest on these deposits. 

Through the end of calendar year 2003, TDF had invested a total of $14.5 million in about 14 

companies. TDF has already written off more than $10 million of these investments. 

Meanwhile, TDF spent approximately $9 million on salaries and other administrative expenses 

during the same period. As of December 2003, TDF also held $29 million in cash equivalent 

securities. 

Administration Proposal and Impact 

As a result of TDF’s disappointing performance, lack of impact, and high administrative costs, 

the Budget proposes terminating the fund and returning remaining assets to the Treasury. This 

will have no appreciable impact on the telecommunications industry as the private sector invests 

significant venture capital in this area; between 1998 and 2003, the private venture capital 

market invested nearly $40 billion in the industry. 

 

205
Federal Deposit Insurance Corporation: Mandatory 

Federal Deposit Insurance Fund

Funding Summary

(In millions of dollars)

2006 2007 2008 2009 2010 2006-10 2006-15

Baseline outlays .................. --- --- --- --- --- --- ---

Proposed change (change from 

current law)....................... --- --- -1 377 855 1,231 1,063

Background 

The Federal Deposit Insurance Corporation protects bank and thrift customers by insuring their 

deposits up to $100,000. FDIC currently has two separate funds that insure bank and thrift 

deposits—the Bank Insurance Fund (BIF) and the Savings Association Insurance Fund (SAIF). 

Under baseline assumptions (current law), BIF is expected to increase dramatically the insurance 

premiums it charges banks in 2009. Because a merged fund would be financially stronger, the 

combined Federal Deposit Insurance Fund is not expected to need to increase premiums until 

2012. (The funding summary above thus reflects a reduction in premium receipts.) 

Administration Proposal and Impact 

The Administration proposes to strengthen the deposit insurance system for banks and thrifts by 

merging the FDIC’s BIF and SAIF funds, which offer identical products. A single merged fund 

would be stronger and better diversified than either fund alone and therefore would improve the 

system’s ability to withstand possible future losses. Relative to current law, this proposal would 

reduce the amount of premiums that the FDIC would need to collect over the next 5-10 years. 

However, a larger fund would have a diversified source of income, would reduce the risk that 

Federal taxpayer assistance would be needed in an unlikely event of a large number of bank 

failures (or the failure of a very large financial institution). 

206
Social Security Administration: Mandatory 

Supplemental Security Income Pre-Effectuation Reviews

Funding Summary

(In millions of dollars)

2006 2007 2008 2009 2010 2006-10 2006-15

Baseline outlays .................. 37,546 37,148 41,429 42,879 44,349 203,351 449,150

Proposed change (change from 

current law)....................... -4 -18 -40 -64 -92 -218 -1,133

Background 

The Supplemental Security Income (SSI) program was established in 1972 and provides monthly 

cash benefits to the needy aged, blind, and disabled. For blind and disabled cases, State 

disability determination agencies assess whether applicants meet the medical requirements for 

benefits. Some applications are allowed (i.e., approved) that should not be. In 1980, Congress 

required a review of allowances of Social Security disability applications, but not SSI 

allowances. 

Administration Proposal and Impact 

The Budget proposes that the Social Security Administration conduct reviews of a specific 

percentage of SSI initial disability and blindness cases of individuals aged 18 and older that were 

allowed by State disability determination agencies. The reviews would be done to ensure the 

accuracy of such allowances, and would be completed before the individuals were awarded 

benefits. 

The provision would be substantially the same as the current-law Social Security disability preeffectuation review requirement and would ensure consistent eligibility assessment standards 

across similar programs. The provision would be phased in as follows. For fiscal year 2006, the 

Commissioner would be required to review 25 percent of the allowances made after March 31st 

or, if a bill is not enacted by then, the date of the bill's enactment. Beginning in fiscal year 2007 

and thereafter, 50 percent of all allowances would be reviewed. 

207
208
USER FEES 

209
210
User Fee Proposals

(Outlays in millions of dollars)

2006 2007 2008 2009 2010 2006-10 2006-15

User Fee Proposals:

 Agriculture:

 Animal Welfare User Fees *.......................................................................................-11 -11 -11 -12 -12 -57 -121

 Food Safety and Inspection Service *....................................................................................... -139 -142 -145 -148 -151 -725 -1,529

 Grain Inspection, Packers & Stockyards Administration *..................................................................................... -25 -26 -26 -27 -27 -130 -275

 Agricultural Marketing Service Standardization *....................................................................................... -3 -3 -3 -3 -3 -15 -30

 Justice:

 Bureau of Alcohol, Tobacco, Firearms and Explosives:

 Explosives Regulation *......................................................................................-120 -120 -120 -120 -120 -600 -1,200

 Labor:

 Foreign Labor Certification ..................................................................................... --- --- --- --- --- --- ---

 Transportation:

 St. Lawrence Seaway Development Corporation *..................................................................................... -8 -17 -17 -17 -17 -76 -170

 Treasury:

 Tax and Trade Bureau Regulatory Activity *................................................................................. -29 -29 -29 -29 -29 -145 -297

 Veterans Affairs:

 Annual Medical Fees for higher income veterans with

 non-service-connected disabilities *...................................................................................... -248 -248 -248 -248 -248 -1,240 -2,480

 Drug Copay Increase *...................................................................................... -176 -178 -180 -181 -183 -898 -1,841

 Total for Medical Services 

 (Illustrative discretionary spending authority - non-add)................. (424) (426) (428) (429) (431) (2,138) (4,321)

 Army Corps of Engineers:

 Additional Recreation User Fees and Contributions....................................................................................... -9 -9 -1 --- --- -19 -19

 Environment Protection Agency:

 Premanufacture Notification Fee Cap Removal *....................................................................................... -4 -8 -8 -8 -8 -36 -76

 Pesticide Tolerance *....................................................................................... -20 -20 -21 -21 -22 -104 -221

 Pesticide Registration *....................................................................................... -26 -27 -27 -28 -28 -136 -288

 Federal Communications Commission:

 Authorize Spectrum License User Fees ....................................................................................... --- -50 -150 -300 -300 -800 -3,125

 Analog Spectrum Lease Fees ............................................................................................ --- -500 -500 -480 -450 -1,930 -2,580

 Total, User Fees.................................................................................................-818 -1,388 -1,486 -1,622 -1,598 -6,911 -14,252

* The Administration will work with Congress to reclassify the enacted fees as discretionary beginning in 2007. Once reclassified, the Administration proposes to offset these fees against 

discretionary spending. Discretionary totals in those years will be reduced by these fees.

211
Department of Agriculture: Mandatory*

Animal Welfare User Fees

Funding Summary

(In millions of dollars)

2006 2007 2008 2009 2010 2006-10 2006-15

Proposed change (change from 

current law)....................... -11 -11 -11 -12 -12 -57 -121

* The Administration will work with Congress to reclassify the enacted fees as discretionary beginning in 2007.

Once reclassified, the Administration proposes to offset these fees against discretionary spending. Discretionary 

totals in those years will be reduced by these fees.

Background

The USDA Animal Welfare Program, operated by the Animal and Plant Health Inspection 

Service, is responsible for the humane treatment of animals covered by the Animal Welfare Act. 

This program has traditionally been funded entirely through appropriations. In prior years, the 

Administration has unsuccessfully sought legislation to offset appropriated funds with 

collections. This program monitors the humane treatment of animals through inspections of 

research facilities, certain animal dealers, circuses, and carriers and interstate handlers of covered 

animals, including the inspection of premises to ensure the proper treatment of animals. 

Administration Proposal

In 2006, the Administration will propose user fees to cover the cost of monitoring research 

facilities, animal dealers, and other covered entities. Funding this program through a fee would 

reduce the burden on the general public. This proposal is consistent with the Administration’s 

efforts to shift funding for programs that benefit specific and identifiable groups to user fees.

The Budget proposes permanent legislation to collect mandatory receipts. Language in the 

appropriations bill will allow these receipts to be spent on discretionary programs for 2006 only. 

OMB will work with the Congress to reclassify these enacted fees as discretionary in 2007 so 

that they may be used by USDA toward animal welfare programs. 

212
Department of Agriculture: Mandatory*

Food Safety and Inspection Service

Funding Summary

(In millions of dollars)

2006 2007 2008 2009 2010 2006-10 2006-15

Proposed change (change from 

current law)....................... -139 -142 -145 -148 -151 -725 -1,529

* The Administration will work with Congress to reclassify t he enacted fees as discretionary beginning in 2007.

Once reclassified, the Administration proposes to offset these fees against discretionary spending. Discretionary 

totals in those years will be reduced by these fees.

Background

The primary objectives of the Food Safety and Inspection Service (FSIS) are to ensure that meat, 

poultry, and processed egg products are wholesome, unadulterated, and properly labeled and 

packaged, as required by the Federal Meat Inspection Act, the Poultry Products Inspection Act, 

and the Egg Products Inspection Act. FSIS inspection personnel inspect meat, poultry, and 

processed egg products at over 6,000 facilities throughout the United States and its territories.

Currently, FSIS requires establishments to reimburse the agency for the cost of providing 

overtime inspection when a partial or unplanned shift occurs. An establishment does not 

reimburse FSIS for regularly scheduled eight hour shifts. 

Administration Proposal

The Budget proposes providing FSIS with new authority to charge user fees to cover the cost of 

providing all inspection services beyond a primary eight hour shift at all establishments 

inspected by FSIS. The Federal Government would continue to pay the full costs for a primary, 

eight hour inspection shift. This proposal is consistent with the Administration’s efforts to shift 

funding for programs that benefit specific and identifiable groups to user fees

This year the Budget proposes to pass permanent legislation to collect mandatory receipts. 

Language in the appropriations bill will allow these receipts to be spent on discretionary 

programs for 2006 only. OMB will work with Congress to reclassify these enacted fees as 

discretionary in 2007. 

213
Department of Agriculture: Mandatory*

Grain Inspection, Packers and Stockyards Administration

Funding Summary

(In millions of dollars)

2006 2007 2008 2009 2010 2006-10 2006-15

Proposed change (change from 

current law)....................... -25 -26 -26 -27 -27 -130 -275

* The Administration will work with Congress to reclassify the enacted fees as discretionary beginning in 2007.

Once reclassified, the Administration proposes to offset these fees against discretionary spending. Discretionary 

totals in those years will be reduced by these fees.

Background

The Grain Inspection, Packers and Stockyards Administration’s (GIPSA) core function is to 

facilitate the marketing of livestock, poultry, meat, cereals, oilseeds and other related agricultural 

products and to promote fair and competitive trading practices for the overall benefit of 

consumers and agricultural producers. GIPSA develops, reviews, and maintains official U.S. 

grain standards used by the entire grain industry. In addition, GIPSA administers the Packers 

and Stockyards Act which prohibits deceptive and fraudulent trading practices by livestock 

market agencies, dealers,stockyards, packers, and swine contractors.

Administration Proposal

The Budget proposes to charge user fees to recover the cost of administering two programs under 

GIPSA. These proposals would enable GIPSA to charge fees for the development, review, and 

maintenance of official U.S. grain standards and also for licensing fees to livestock market 

agencies, dealers, stockyards, packers, and swine contractors. Current law provides the agency 

with registration requirements for market agencies and dealers, but there is no authority for 

licensing fees. Both of these proposals are consistent with the Administration’s efforts to shift 

funding for programs that benefit specific and identifiable groups to user fees.

This year the Budget proposes to pass permanent legislation to collect mandatory receipts. 

Language in the appropriations bill will allow these receipts to be spent on discretionary 

programs for 2006 only. OMB will work with Congress to reclassify these enacted fees as 

discretionary in 2007.

214
Department of Agriculture: Mandatory*

AMS Standardization User Fees

Funding Summary

(In millions of dollars)

2006 2007 2008 2009 2010 2006-10 2006-15

Proposed change (change from 

current law)....................... -3 -3 -3 -3 -3 -15 -30

* The Administration will work with Congress to reclassify the enacted fees as discretionary beginning in 2007.

Once reclassified, the Administration proposes to offset these fees against discretionary spending. Discretionary 

totals in those years will be reduced by these fees.

Background

The Agricultural Marketing Service (AMS) carries out a wide range of activities designed to 

facilitate the marketing of U.S. agricultural products, both domestically and internationally. 

AMS provides many of these services on a voluntary, fee-for-service basis, often at the request 

of industry groups. In 1995, Congress provided AMS with the authority to collect fees for 

standards development through regulation. This law provides the agency with general user fee 

authority to charge for these activities, but does not also provide the agency with authority to use 

the fees to offset their appropriated funding. 

Administration Proposal

The budget proposes to recover the cost of developing, reviewing and modifying quality grade 

standards through user fees. This proposal would enable AMS to charge fees to customers of the 

agency’s inspection and grading programs for the costs associated with the development, review, 

and maintenance of official grading standards for which the agency has these established 

services. This proposal is consistent with the Administration’s efforts to shift funding for 

programs that benefit specific and identifiable groups to user fees.

This year the Budget proposes to pass permanent legislation to collect mandatory receipts. 

Language in the appropriations bill will allow these receipts to be spent on discretionary 

programs for 2006 only. OMB will work with Congress to reclassify these enacted fees as 

discretionary in 2007.

215
Department of Justice : Mandatory*

Alcohol, Tobacco, Firearms and Explosives Bureau

Funding Summary

(In millions of dollars)

2006 2007 2008 2009 2010 2006-10 2006-15

Proposed change (change from 

current law)....................... -120 -120 -120 -120 -120 -600 -1,200

* The Administration will work with Congress to reclassify the enacted fees as discretionary beginning in 2007.

Once reclassified, the Administration proposes to offset these fees against discretionary spending. Discretionary 

totals in those years will be reduced by these fees.

Background

The mission of the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATFE) is the 

enforcement of Federal criminal laws relating to alcohol, tobacco, firearms, explosives, and 

arson. In connection with explosives, ATFE aims to counter crimes of violence and protect 

public safety through enforcement of Federal explosives laws, regulation of the explosives 

industry and explosives safety efforts. ATFE currently collects licensing and other fees that 

partially offset its regulatory costs. 

Administration Proposal

The Budget proposes to charge a $0.02/pound fee on all explosives produced in, or imported 

into, the United States. The user fee would enable ATFE to offset fully the cost to inspect sales 

outlets and storage facilities, complete explosives inventories, ensure that only authorized 

personnel are at work in the explosives industry, prevent diversion of explosives, and other 

activities associated with regulating the industry. The user fee would avoid overly adverse 

consequences to small businesses by charging producers and importers a fee proportional to their 

size in the industry. This proposal is consistent with the Administration’s efforts to shift funding 

for programs that benefit specific and identifiable groups to user fees.

This year the Budget proposes to pass permanent legislation to collect mandatory receipts. 

Language in the appropriations bill will allow these receipts to be spent on discretionary 

programs for 2006 only. OMB will work with Congress to reclassify these enacted fees as 

discretionary in 2007.

216
Department of Labor: Mandatory

Application Fee for the Permanent Foreign Labor Certification Program

Funding Summary

(In millions of dollars)

2006 2007 2008 2009 2010 2006-10 2006-15

Proposed change (change from 

current law)....................... --- --- --- --- --- --- ---

*The proposed fee would generate an estimated $40 million annually, which would be used to finance Permanent 

Foreign Labor Certification activities and result in no net budgetary effect.

Background

The Permanent Foreign Labor Certification program is the first step in the process U.S. 

employers must follow before they may legally hire foreign workers. As required by the 

Immigration and Nationality Act, employers who are seeking to permanently hire foreign 

workers must apply to the Department of Labor (DOL) for a certification of two things, namely, 

that: (1) qualified U.S. workers are not available for the job being offered to the foreign worker;

and (2) such hiring would not adversely affect the wages and working conditions of similarly 

employed U.S. workers. Once an employer obtains the DOL certification, it may sponsor the 

worker in an immigration petition with the Department of Homeland Security, and the worker 

can file a visa request with the Department of State.

Administration Proposal

The 2006 Budget proposes legislation to authorize a cost-based application fee forservices DOL 

provides employers under a reformed Permanent Foreign Labor Certification program. DOL 

recently published a final regulation for a new Permanent Electronic Review Management 

(PERM) system that will drastically reduce application processing time from years to weeks, and 

prevent future backlogs. 

The mandatory fee would be based on the total cost of administering the program, which in 2006 

is estimated to be $40 million. It would be paid by employers filing applications under the new 

program, which is effective in 2005. In addition, employers with pending applications filed 

under the predecessor program could choose to pay the fee to take advantage of new, streamlined 

application processing. This proposal is consistent with the Administration’s efforts to shift 

funding for programs that benefit specific and identifiable groups to user fees.

Processing of employer applications for the Permanent program is currently funded through 

annual discretionary appropriations that provide grants to States for activities such as the 

supervision of employer efforts to recruit U.S. workers and fund direct DOL review and 

“certification” of State-approved employer applications. Upon enactment of the fee, funding for 

these activities in the 2006 Budget will be reviewed and adjusted.

217
Department of Transportation: Mandatory*

St. Lawrence Seaway Development Corporation

Funding Summary

(In millions of dollars)

2006 2007 2008 2009 2010 2006-10 2006-15

Proposed change (change from 

current law)....................... -8 -17 -17 -17 -17 -76 -170

* The Administration will work with Congress to reclassify the enacted fees as discretionary beginning in 2007.

Once reclassified, the Administration proposes to offset these fees against discretionary spending. Discretionary 

totals in those years will be reduced by these fees.

Background

Established in 1954, the Saint Lawrence Seaway Development Corporation (SLSDC) is a wholly 

owned government corporation and an operating administration of the Department of 

Transportation responsible for the operations and maintenance of the U.S. portion of the St. 

Lawrence Seaway between Montreal and Lake Erie. The SLSDC coordinates its activities with 

the Canadian counterpart, the St. Lawrence Seaway Management Corporation, which currently 

supports its operations through fees. 

Administration Proposal

The President’s Budget proposes permanent legislation to authorize SLSDC to collect mandatory 

receipts. The Administration supports efforts to improve service delivery and believes that this 

proposal would enable SLSDC to function more like a private corporation. The proposal also 

provides $8 million in 2006 for SLSDC if revenues are not sufficient to cover full operational 

costs. 

This year the Budget proposes to pass permanent legislation to collect mandatory receipts. 

Language in the appropriations bill will allow these receipts to be spent on discretionary 

programs for 2006 only. The Administration will work with Congress to reclassify these enacted 

fees as discretionary in 2007.

218
Department of the Treasury: Mandatory*

Alcohol and Tobacco Tax and Trade Bureau (TTB) User Fees

Funding Summary

(In millions of dollars)

2006 2007 2008 2009 2010 2006-10 2006-15

Proposed change (change from 

current law)....................... -29 -29 -29 -29 -29 -145 -297

* The Administration will work with Congress to reclassify the enacted fees as discretionary beginning in 2007.

Once reclassified, the Administration proposes to offset these fees against discretionary spending. Discretionary 

totals in those years will be reduced by these fees.

Background

TTB enforces Federal laws related to the production and distribution of alcohol and tobacco 

products through education, inspection, laboratory testing, and investigation. TTB works with 

industry, State governments, and other interested parties to facilitate compliance with regulatory 

requirements and provides technical expertise, training, information, and research results to 

industry members, Government agencies and others in order to better protect and serve the 

public. 

Administration Proposal

The Budget proposes to establish user fees to cover the costs of TTB's regulatory functions under 

its "Protect the Public" line-of-business. The new user fees include administrative fees for 

“drawbacks” from Manufacturers of Non-Beverage Products (MNBP), filing fees for all new 

Certificate of Label Approvals (COLA's) for distilled spirits, wine, beer, American Viticultural 

Areas (AVA’s), proposed formulas, and new (does not apply to amended) permit applications. 

The industry should pay for the benefits it receives from TTB’s regulatory efforts. These efforts 

assure the public of unadulterated alcohol and tobacco products, and thereby are of value to the 

industry.

This year the Budget proposes to pass permanent legislation to collect mandatory receipts. 

Language in the appropriations bill will allow these receipts to be spent on the discretionary 

programs for 2006 only. OMB will work with Congress to reclassify these enacted fees as 

discretionary in 2007.

219
Department of Veterans Affairs: Mandatory*

Medical Care Fees for Higher Income Veterans with No Service Disabilities

Funding Summary

(In millions of dollars)

2006 2007 2008 2009 2010 2006-10 2006-15

Proposed changes

 Annual enrollment fee....................................................................................... -248 -248 -248 -248 -248 -1,240 -2,480

 Higher drug copays....................................................................................... -176 -178 -180 -181 -183 -898 -1,841

Total medical services (Ilustrative 

discretionary spending authority - 

non-add)................................. (424) (426) (428) (429) (431) (2,138) (4,321)

* The Administration will work with Congress to reclassify the enacted fees as discretionary beginning in 2007.

Once reclassified, the Administration proposes to offset these fees against discretionary spending. Discretionary 

totals in those years will be reduced by these fees.

Administration proposal

The proposal will refocus resources on VA’s core medical care mission – serving veterans with 

military disabilities, low incomes, and special needs (such as spinal cord injuries) – by charging 

higher income veterans with no service disabilities new fees that better align with the private 

sector (health care deductibles and copays).

The President will submit legislation to implement a $250 annual enrollment fee and higher drug 

copays (from $7 to $15) for non-disabled higher-income veterans (PL 7 and PL 8 veterans). 

Prior to 1998, PL 7/8 veterans were only treated on a case-by-case basis, if resources were 

available, and totaled only 2 percent of patients. In 1998, VA opened up the system to PL 7/8 

veterans who mainly began to use VA to complement other health coverage. In January 2003, 

VA closed the system to future new PL 8 veterans, but ensured that no veteran currently in the 

system would be denied care. Today, these veterans still comprise about 25 percent of patients.

These proposals were in the 2004 and 2005 President’s Budgets (appropriation language only)

but not adopted by the appropriators. This year the Budget proposes to pass permanent 

legislation to collect mandatory receipts. Language in the appropriations bill will allow the 

spending from these receipts to be scored against the appropriations bill for 2006 only. The 10-

year savings credited to the authorizers would equal $3.9 billion - the $4.3 billion in receipts over 

this period minus the $0.4 billion of spending in 2006 only. OMB will work with Congress to 

reclassify these enacted fees as discretionary in 2007 so that they may be used by VA towards 

the medical care needs of its core mission population.

220
U.S. Army Corps of Engineers: Mandatory

Recreation Management

Funding Summary

(In millions of dollars)

2006 2007 2008 2009 2010 2006-10 2006-15

Baseline outlays .................. -37 -37 -37 -37 -37 -185 -370

Proposed change (change from 

current law)* ..................... -9 -9 -1 --- --- -19 -19

* Collections net of expenditures

Background

The U.S. Army Corps of Engineers (Civil Works) is one of the largest Federal providers of 

outdoor recreation services. It manages 4,300 recreation areas at 465 projects, such as water 

reservoirs, in 43 States. The agency spends about $268 million annually to support this popular 

program. Many of the agency’s recreation facilities at the lakes it manages need to be 

modernized. They were built 30 to 40 years ago and were designed to meet recreation needs of 

the public at that time.

Administration Proposal

The 2006 Budget proposes a Corps recreation modernization initiative that is based on a 

promising model now used by the U.S. Park Service, the Forest Service and other major Federal 

recreation providers. Legislation will be proposed to allow the Corps to implement a limited 

number of demonstration projects to use a portion of the expanded user fees it collects to 

improve service and facilities at the site where the fees are collected. The Corps will also explore 

authority to operate new public/private partnerships, such as lake improvement districts that 

encourage local communities, property owners and environmental groups to work with the Corps 

to maintain and upgrade Corps recreation facilities. This collaborative approach is consistent 

with the approach taken in the President’s cooperative conservation efforts. The proposal will 

lead to better services for users of the Corps’ facilities.

221
Environmental Protection Agency: Mandatory*

Pre-Manufacture Notice (PMN) Fee

Funding Summary

(In millions of dollars)

2006 2007 2008 2009 2010 2006-10 2006-15

Proposed change (change from 

current law)....................... -4 -8 -8 -8 -8 -36 -76

* The Administration will work with Congress to reclassify the enacted fees as discretionary beginning in 2007.

Once reclassified, the Administration proposes to offset these fees against discretionary spending. Discretionary 

totals in those years will be reduced by these fees.

Background

As required by the Toxic Substances Control Act (TSCA), EPA evaluates new chemicals and 

their intended uses to ensure that they are not harmful to human health and the environment. 

Manufacturers seeking to bring these new chemicals into commerce must submit a premanufacture notice (PMN) to EPA for review. Since 1999, EPA has collected limited fees to 

defray part of the cost of reviewing and processing these notices. However, TSCA limits the fee 

amount that can be charged to manufacturers at a level ($2,500) which does not adequately 

support the PMN program activities. Currently, the fees collected cover approximately 20 

percent of the program costs. 

Administration Proposal

The Administration proposes to eliminate the $2,500 cap on the PMN Fee in Section 26(b) of 

TSCA in order to allow the full amount of the assessed fee to be collected and to permit EPA to 

recover a greater portion of the cost of the program. The Administration is proposing to pass

permanent legislation to collect mandatory receipts. This proposal is consistent with the 

Administration’s efforts to shift the source of funding for programs that benefit specific and 

identifiable groups to user fees.

Language in the appropriations bill will allow these receipts to be spent on discretionary 

programs for 2006 only. OMB will work with Congress to reclassify these enacted fees as 

discretionary in 2007.

 

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Environmental Protection Agency: Mandatory*

Pesticide Tolerance Fee

Funding Summary

(In millions of dollars)

2006 2007 2008 2009 2010 2006-10 2006-15

Proposed change (change from 

current law)....................... -20 -20 -21 -21 -22 -104 -221

* The Administration will work with Congress to reclassify the enacted fees as discretionary beginning in 2007.

Once reclassified, the Administration proposes to offset these fees against discretionary spending. Discretionary 

totals in those years will be reduced by these fees.

Background

The Federal Food, Drug, and Cosmetic Act (FFCDA) requires the Environmental Protection 

Agency (EPA) to establish maximum limits on the amount of pesticides that may remain in or on 

foods after they have been treated in order to protect human health. In setting these limits –

called tolerances – EPA must make a safety finding that the pesticide can be used with 

"reasonable certainty of no harm." FFCDA also requires EPA to collect fees from pesticide 

manufacturers for establishment and reassessment of tolerances. However, the collection of 

tolerance fees has been prohibited in appropriations acts since 2001. Most recently, provisions in 

the fiscal year 2004 Consolidated Appropriations Act (P.L. 108-199) extended the prohibition 

through 2008.

Administration Proposal

The Administration proposes to eliminate the prohibition on the collection of the Pesticide 

Tolerance Fee beginning in fiscal year 2006. Taken in aggregate, the pesticide fee collections 

currently allowed by Congress cover approximately 23 percent of EPA’s total pesticides 

programs cost. Continuing to cover such a small percentage of EPA’s pesticide activities with 

fees unnecessarily burdens the general taxpayers to pay for these programs. This proposal is 

consistent with the Administration’s efforts to shift funding for programs that benefit specific 

and identifiable groups to user fees.

This year, the Administration is proposing to pass permanent legislation to collect mandatory 

receipts. Language in the appropriations bill will allow these receipts to be spent on 

discretionary programs for 2006 only. OMB will work with Congress to reclassify these enacted 

fees as discretionary in 2007.

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Environmental Protection Agency: Mandatory*

Pesticide Registration Fee

Funding Summary

(In millions of dollars)

2006 2007 2008 2009 2010 2006-10 2006-15

Proposed change (change from 

current law)....................... -26 -27 -27 -28 -28 -136 -288**

* The Administration will work with Congress to reclassify the enacted fees as discretionary beginning in 2007.

Once reclassified, the Administration proposes to offset these fees against discretionary spending. Discretionary 

totals in those years will be reduced by these fees.

** Due to the reclassification of collections as offsetting mandatory receipts beginning in 2011, mandatory savings 

beginning in that year are offset by a reduction in receipts accounts.

Background

The Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) requires the Environmental 

Protection Agency (EPA) to register pesticides before they can be introduced into commerce. 

The pesticide registration process is designed to prevent unreasonable risks to human health and 

the environment. Under existing authority EPA has promulgated a rule to collect fees from 

manufacturers for the registration of new pesticides. However, the collection of this registration 

fee has been prohibited through appropriations acts since 1989. Most recently, provisions in the 

fiscal year 2004 Consolidated Appropriations Act (P.L. 108-199) extended this prohibition 

through 2010.

Administration Proposal

The Administration is proposing to eliminate the prohibition on the collection of the Pesticide 

Registration Fee beginning in fiscal year 2006. Taken in aggregate, the pesticide fee collections 

currently allowed by Congress cover approximately 23 percent of EPA’s total pesticides 

programs cost. Continuing to cover such a small percentage of EPA’s pesticide activities with 

fees unnecessarily burdens the general taxpayers to pay for these programs. This proposal is 

consistent with the Administration’s efforts to shift funding for programs that benefit specific 

and identifiable groups to user fees.

This year, the Administration is proposing to pass permanent legislation to collect mandatory 

receipts. Language in the appropriations bill will allow these receipts to be spent on 

discretionary programs for 2006 only. OMB will work with Congress to reclassify these enacted 

fees as discretionary in 2007.

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Federal Communications Commission: Mandatory Proposal

Spectrum License User Fees 

Funding Summary

(In millions of dollars)

2006 2007 2008 2009 2010 2006-10 2006-15

Proposed change (change from 

current law)....................... --- -50 -150 -300 -300 -800 -3,125

Background

The Federal Communications Commission (FCC) is prohibited by statute from auctioning 

particular types of licenses, including spectrum for certain international satellite services. Also, 

auctions may not be the most appropriate distribution method for certain other types of spectrum 

licenses. This can lead to inefficiencies in spectrum allocation because some licensees do not 

have to pay the opportunity costs of using spectrum. The United Kingdom and other countries 

have introduced user fees to promote more efficient spectrum use. 

Administration Proposal

To promote efficient spectrum use, the Administration proposes providing the FCC with new 

authority to set user fees on unauctioned spectrum licenses, based on public interest and 

spectrum management principles. Fees would be phased in as the FCC undertakes rulemaking to 

determine the appropriate categories and fee levels. Because some fees will not be imposed until 

licenses are renewed, full phase-in of the fees is estimated to take several years. Annual fee 

collections are anticipated to reach $500 million. However, the FCC’s final methodology for 

setting fees will determine actual collections.

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Federal Communications Commission: Mandatory Proposal

Analog Lease Fees 

Funding Summary

(In millions of dollars)

2006 2007 2008 2009 2010 2006-10 2006-15

Proposed change (change from 

current law)....................... --- -500 -500 -480 -450 -1,930 -2,580

Background

By statute, television broadcasters must surrender their analog spectrum licenses on December 

31, 2006, or when 85 percent of television viewers can receive digital signals, whichever is later. 

Despite this requirement, there has been growing recognition that the transition to digital 

television is moving too slowly. Lease fees could be designed to encourage broadcasters to 

expedite the transition to digital broadcasting and to return their licenses soon after 2006. This 

would free 24 MHz of spectrum designated for public safety, as well as additional spectrum for 

other wireless services. 

Administration Proposal

The Administration proposes authorizing the Federal Communications Commission (FCC) to 

establish an annual lease fee totaling $500 million for the use of analog television spectrum by 

commercial broadcasters beginning in 2007. Once individual broadcasters return their analog 

licenses, they would be exempt from the fee and revenues would decline. On average, a 

commercial station that continues to hold both digital and analog licenses would pay about 

$366,000 annually. 

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BUDGET ENFORCEMENT AND OTHER REFORMS 

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BUDGET ENFORCEMENT AND OTHER REFORMS 

To ensure responsible spending restraint, the Budget proposes a comprehensive framework to 

establish spending controls to bind the Congress and the President. In addition, it proposes other 

reforms to make the Budget process more accountable, orderly, and transparent. 

Last spring, the Administration sent to the Congress a comprehensive budget enforcement 

legislation package in the form of the proposed Spending Control Act of 2004. The 

Administration plans to repropose that legislation with appropriate updates and revisions. In 

addition, certain administrative steps are planned to require agencies to propose offsets for 

regulatory actions that would increase mandatory spending. This section summarizes these 

proposals and other budget reforms supported by the Administration. (For more details on 

budget reform proposals, see Chapter 15, Budget Reform Proposals, in the Analytical 

Perspectives volume of the Budget.) 

Discretionary spending caps 

The Administration proposes to set limits, or caps, for 2005 through 2010 on net discretionary 

budget authority and outlays equal to the levels proposed in the 2006 Budget. Legislation that 

exceeds the discretionary caps would trigger a sequester of non-exempt discretionary programs. 

This approach would put in place a budget framework for the next five years that ensures 

constrained, but reasonable growth in discretionary programs. For 2005 through 2007, separate 

defense and nondefense categories would be enforced. For 2008 through 2010, there would be a 

single cap for all discretionary spending. In addition, a separate category for transportation 

outlays, financed by dedicated revenues, would be established for 2005 through 2009. 

Pay-as-you-go (PAYGO) for mandatory spending 

To restrain spending growth, the Administration proposes that legislative proposals that increase 

mandatory spending be offset by reductions in other mandatory spending. This proposal would 

require a three-fifths vote of the Senate for legislation that violated this requirement. If 

legislation was enacted that caused a net increase in mandatory spending, OMB would be 

required to make across-the-board reductions in non-exempt programs. This proposal is 

modeled after the PAYGO requirement in the Budget Enforcement Act, with two exceptions. 

First, it does not apply to tax legislation. Second, it also does not permit mandatory spending 

increases to be offset by tax increases. In the past PAYGO has been used to allow tax increases 

to pay for new spending. Most states recognize there is a bias for spending increases over tax 

relief and have established procedures to prevent tax increases. Thirty states have tax and 

expenditure limitations. In 15 states, it takes a three-fifths vote to raise taxes. And, two states 

require tax increases to be approved by a majority of the voters. 

Budget discipline for agency administrative actions 

Support for restoring a PAYGO requirement for mandatory spending is integral to the 

Administration’s commitment to reducing the deficit and enforcing fiscal discipline. However, a 

significant amount of Federal policy is made via administrative actions, which can substantially 

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increase Federal spending in entitlement programs. Often, these actions are not accompanied by 

other actions that would pay for the proposed change. The Office of Management and Budget 

plans to establish an internal review process that requires agencies, when proposing substantial 

administrative actions that increase mandatory spending, to propose other offsetting 

administrative actions that reduce mandatory spending. 

Program integrity cap adjustments 

An improper payment occurs when Federal funds go to the wrong recipient, the recipient 

receives an incorrect amount of funds, or the recipient uses the funds in an improper way. The 

Administration has made the elimination of improper payments a major focus. Toward that end, 

the Administration is proposing adjustments for spending above a base level of funding within 

the discretionary levels for the following program integrity initiatives: continuing disability 

reviews (CDRs) in the Social Security Administration; Internal Revenue Service (IRS) tax 

enforcement; the Health Care Fraud and Abuse Control (HCFAC) program in the Centers for 

Medicare and Medicaid Services; and Unemployment Insurance improper payments in the 

Department of Labor. These adjustments will ensure funding is targeted to activities that reduce 

error and generate program savings. 

In the past decade, there have been a variety of successful efforts to ensure dedicated resources 

for program integrity efforts. For example, these efforts included cap adjustment funding for 

Social Security CDRs. These initiatives have led to increased savings for the Social Security 

program. Additional spending on program integrity initiatives has proven to reduce erroneous 

payments in these programs. The Administration’s proposed adjustments for program integrity 

activities will total $755 million in budget authority in 2006 and $877 million in budget authority 

in 2007. 

Long-term unfunded obligations 

To prevent enactment of legislation that worsens the long-term unfunded obligations of Federal 

entitlement programs, the Administration proposes new enforcement measures to analyze the 

long-term impact of legislation on the unfunded obligations of major entitlement programs and 

make it more difficult to enact legislation that would expand the unfunded obligations of these 

programs over the long run. These measures would highlight proposed legislative changes that 

appear to cost little in the short run but result in large increases in the spending burdens passed 

on to future generations. 

First, the Administration proposes a point of order against legislation that worsens the long-term 

unfunded obligation of major entitlements. The specific programs covered would be those 

programs with long term actuarial projections, including Social Security, Medicare, Federal 

civilian and military retirement, veterans disability compensation, and Supplemental Security 

Income. Additional programs would be added once it becomes feasible to make long-term 

actuarial estimates for those programs. 

Second, the Administration proposes new reporting requirements to highlight legislative actions 

worsening unfunded obligations. The Administration would be required, as part of the 

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President’s Budget, to report on any legislation enacted in the past year that worsens the 

unfunded obligations of the specified programs. 

Results Commissions 

Program overlap often impedes performance and increases costs. The success of reform 

proposals is hindered by overlapping jurisdictions in both Executive Branch agencies and 

Congressional committees. Program overlap is one of the reasons 30 percent of programs are 

rated as either ineffective or unable to demonstrate results. Overlapping jurisdictions in the 

Executive Branch and the Congress provide daunting hurdles to legislative remedies to the poor 

performance of duplicative programs.

The Administration proposes Results Commissions—to consider and revise Administration 

proposals to improve the performance of programs or agencies by restructuring or consolidating 

them. Congress would approve the establishment of individual Results Commissions to address 

single program or policy areas where duplication and the overlapping jurisdictions of Executive 

Branch agencies or congressional committees hinder reform. Proposals approved by the 

commission would then be approved by the President and considered by the Congress under 

expedited procedures. 

Sunset Commission

The Administration also proposes a process by which programs undergo the regular scrutiny 

brought about by having to defend their existence before a Sunset Commission. Programs would 

be reviewed according to a schedule enacted by the Congress under expedited procedures. The 

Commission would consider proposals to retain, restructure, or terminate programs. Programs 

would automatically terminate according to the schedule unless the Congress took some action to 

reauthorize them. 

Line-item veto 

A perennial criticism of the Federal Government is that spending and tax legislation contain too 

many provisions benefiting a relative few, which would likely not become law if considered as a 

stand-alone bill. The persistence of special interest items diverts resources from higher priority 

programs and erodes the confidence of citizens in Government. Appropriations bills, especially 

those considered at the end of the congressional session, often attract special interest spending 

items that could not be enacted on their own. 

The President proposes that the Congress correct this state of affairs by providing him and future 

Presidents with a line item veto that would withstand constitutional challenge. From the Nation’s 

founding, Presidents have exercised the authority to not spend appropriated sums. However, the 

Congress sought to curtail this authority in 1974 through the Impoundment Control Act, which 

restricted the President’s authority to decline to spend appropriated sums. Although the Line 

Item Veto Act of 1996 attempted to give the President the authority to cancel spending authority 

and special interest tax breaks, the U.S. Supreme Court found that law unconstitutional. The 

President’s proposal would correct the constitutional flaw in the 1996 Act. 

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Specifically, the President proposes a line-item veto linked to deficit reduction. This proposal 

would give the President the authority to defer new spending whenever the President determines 

the spending is not an essential Government priority. All savings from the line-item veto would 

be used for deficit reduction, and they could not be applied to augment other spending. 

Joint Budget Resolution 

A joint budget resolution would set the overall levels for discretionary spending, mandatory 

spending, receipts, and debt in a simple document that would have the force of law. Under the 

current process, the Congress annually adopts a ‘‘concurrent resolution,’’ which does not require 

the President’s signature and does not have the force of law. A joint budget resolution would 

bring the President into the process at an early stage, require the President and the Congress to 

reach agreement on overall fiscal policy before individual tax and spending bills are considered, 

and it would give the limits provided in the budget resolution the force of law. 

Biennial Budgeting and Appropriations 

Only twice in the last 50 years have all appropriation bills been enacted by the beginning of the 

fiscal year. Because Congress must enact these bills each year, it cannot devote the time 

necessary to provide oversight and fully address problems in Federal programs. The 

preoccupation with these annual appropriations bills frequently precludes review and action on 

authorization legislation and on the growing portion of the Budget that is permanently funded 

under entitlement laws. According to the Congressional Budget Office, the Congress has 

appropriated about $170 billion for fiscal year 2005 for programs and activities whose 

authorizations of appropriations have expired. In contrast, a biennial budget would allow 

lawmakers to devote more time every other year to ensuring that taxpayers’ money is spent 

wisely and efficiently. In addition, Government agencies would receive more stable funding, 

which would facilitate longer range planning and improved fiscal management. 

Government Shutdown Prevention 

For 23 out of the past 24 years, one or more of the 13 appropriations bills have not been enacted 

by the October 1st deadline, the beginning of the new fiscal year. When appropriations bills are 

not enacted by the beginning of the fiscal year, the Congress must pass “continuing resolutions” 

(CRs), which provide temporary funding authority for Government activities usually at current 

levels until the final appropriations bills are signed into law. If Congress does not pass a CR or 

the President does not sign it, the Federal Government must shutdown. 

Important Government functions should not be held hostage simply because of an impasse over 

temporary funding bills. Under the President’s proposal, if an appropriations bill is not signed 

by October 1 of the new fiscal year, funding would be automatically provided at the lower of the 

levels specified in the President’s Budget or the prior year’s level. 

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Federal Pell grants 

The Pell Grant program provides grant aid to postsecondary students to help pay for their 

education. While Pell Grant funding is discretionary and provided through the annual 

appropriations process, if a Pell-eligible student enrolls in school, he or she is automatically 

eligible for a need-based award up to the maximum award set in appropriations, regardless of the 

budget authority appropriated. In recent years, Pell Grant appropriations have been insufficient 

to cover program costs, creating a $4.3 billion funding shortfall through the 2005-2006 award 

year. 

To ensure funding shortfalls do not accumulate in future years, the Administration proposes to 

score Pell Grant appropriations at the amount needed to fully fund the award level set in 

appropriations acts, even if the amount appropriated is insufficient to fully fund all awards. This 

amount would be increased to cover any prior year funding shortfalls and reduced by any prior 

year funding surpluses. This new budget scoring rule is a necessary component of the 

Administration’s FY 2006 student aid reform proposal to use mandatory student aid savings to 

both retire the $4.3 billion shortfall and increase the $4,050 Pell Grant maximum award by $500 

over the next five years. 

Federal Pay 

In a budget that holds total discretionary spending growth to 2.1 percent, the Administration 

proposes to increase pay for both military and civilian personnel. The Administration has again 

proposed a civilian pay adjustment that is different from the proposed military pay adjustment. 

The Budget proposes a 3.1 percent increase for military personnel. The proposed 2.3 percent 

civilian pay adjustment will ensure that we are able to recruit, motivate, and retain quality 

people. This proposed increase and our highly competitive civilian employee benefits package 

will give agencies a favorable position in the labor market relative to private sector 

employers without diverting resources from high priority programs. 

Over the past 4 years, the Congress has increased the civilian pay raise to the same increase 

requested for the military. These higher pay levels will cost approximately $15.4 billion through 

2005. If civilian pay is increased again at the same level as military pay, it will cost an 

additional $0.9 billion in 2006. In the past, the Congress has required that agencies absorb these 

additional pay costs within their existing budgets, which means fewer resources for education, 

health, veterans and other priorities. 

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