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Since your hearings are scheduled for March 23, 24, and 25, I am taking the liberty of sending directly by Special Delivery, the attached correspondence which was reviewed at the annual meeting of the Regional Advisory Group of the Alabama Regional Medical Program now in progress.

The Regional Advisory Group felt that Mr. Laitin's answer to my letters to President Nixon and Mr. George Shultz was unsatisfactory and incomplete, and directed me to write again requesting specific answers to the following questions:

1. Why is RMPS restricted to $70.3 million for grants in fiscal 1971 if the appropriation was $106.5 million?

2. Who made this decision?

3. On what grounds was the decision made?

4. By whom was this "major shift in emphasis" authorized?

5. What is the justification for this occasion?

We thought you might be able to pose the same questions to representatives of the Executive Office of the President, for they apply to all 55 Regional Medical Programs as well as to the Regional Medical Program Services in the Department of Health, Education, and Welfare.

Sincerely yours,

R. R. MCBRYDE, M.D., Chairman, Regional Advisory Group, Alabama Regional Medical Program.

EXHIBITS

R. R. MCBRYDE, M.D., Montgomery, Ala., February 19, 1971.

President RICHARD M. NIXON,

The White House,

Washington, D.C.

DEAR PRESIDENT NIXON: Your recent speeches acknowledge that you recognize your responsibility to every citizen regarding better health care. You stated on November 18th that your goal was "not merely to finance a more expensive medical system but to organize a more efficient one." On February 15th, in your health message to Congress, you said, "I believe that our government and our people, business and labor, the insurance industry and the health profession, can work together in a national partnership to achieve our health objectives."

Certainly the purpose of Regional Medical Programs is in line with your "health objectives." In Alabama, RMP has taken the leadership in bringing together the health provider, the recipient of health services, the federal and state governments with their myriad subdivisions and resources, industry in general and the insurance industry in particular, for purposes of exploring better ways to deliver quality medical service to all citizens. There can be no doubt that a partnership as you described must be formed throughout America-and that the nation has a mechanism in Regional Medical Programs to form this partnership. Yet, the $34.5 million hold-back to this year's budget imposed by your Administration's Office of Management and Budget and a projected $52 million release for fiscal 1972 makes it virtually impossible for this most viable and efficient organization to function.

The Alabama Regional Medical Program concept of involving regional citizenry in exploring needs and solutions to health problems with emphasis on activities which will achieve future independent financial status was, to say the least, a most refreshing deviation from the usual national approach. It is, therefore, inconceivable to us, a group numbering approximately sixty individuals representing a cross section of almost three million Alabamians. that your Administration has imposed such extreme fiscal curtailment of this program.

Health care is a vital issue recognized by both national and state governments. It will continue to achieve more political prominence at all levels. But more importantly, continued and consistent support must be made available for those activities such as RMP which can immediately move toward actions to reduce the "deepening crisis” which threatens all of our citizens. The Alabama Regional Advisory Group, a highly concerned and dedicated

group of volunteer workers, appeals directly to you as President for reconsideration and directed action to preserve the integrity of the Regional Medical Programs.

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DEAR DR. MCBRYDE: On behalf of the President and Mr. George Shulz, I would like to respond to your recent letters expressing concern about the level of funding for Regional Medical Programs in 1971 and 1972.

The 1971 appropriation provides that RMP funds may remain available for use through fiscal 1972. This is in contrast to the general pattern applicable to most appropriation acts where money appropriated in a fiscal year expires if it is not obligated in that year. Thus, the Department of Health, Education, and Welfare plans to utilize all of the 1971 appropriation of $106.5 million but will obligate some of it in fiscal year 1972. This will permit a slight increase in program level for RMP grants from $70.3 million in 1971 to $75.0 million in 1972.

We appreciate your interest in this subject and hope that you will maintain your active participation in the Alabama Regional Medical Program, working towards the "national partnership" in our health care system which the President stressed in his message of February 18, 1971.

Sincerely,

JOSEPH LAITIN, Assistant to the Director.

MARCH 22, 1971.

Mr. JOSEPH LAITIN,

Assistant Director,

Office of Management and Budget,
Washington, D.C.

DEAR MR. LAITIN: Your answer of March 9, 1971 to my letters to President Nixon and Mr. George Shultz was read today to the annual meeting of the Regional Advisory Group of the Alabama Regional Medical Program and was considered unsatisfactory and incomplete.

You state that "the 1971 appropriation provides that RMP funds may remain available for use through fiscal 1972. This is in contrast to the general pattern applicable to most appropriation acts where money appropriated in a fiscal year expires if it is not obligated in that year. Thus, the Department of Health, Education, and Welfare plans to utilize all of the 1971 appropriation of $106.5 million but will obligate some of it in fiscal year 1972. This will permit a slight increase in program level for RMP grants from $70.3 million in 1971 to $75.0 million in 1972.

You thus imply that RMPS was not able to obligate $36.2 million of appropriated funds in fiscal 1971. Yet the ARMP has $1.31 million of projects which were approved by the National Advisory Council and yet remain unfunded. Nation-wide there must be in excess of $40 million approved but unfunded projects. We consider these "obligated" funds. The Regional Advisory Group has directed me to request from you specific answers to the following questions:

1. Why is RMPS restricted to $70.3 million for grants in fiscal 1971 if the appropriation was $106.5 million?

2. Who made this decision?

3. On what grounds was the decision made?

You also failed to answer the second major question to my letters. The "appendix to the budget for fiscal year 1972" (page 398) directs a "major shift in emphasis by the Regional Medical Programs" which seems to us to be in direct conflict with Public Law 89-239 and subsequent amendments which states in part in Sec. 900 (c): "and to accomplish these ends without interfering with the pattern, or the methods of financing, of patient care or professional practice, or with the administration of hospitals . . ." we request specific answers to these additional questions:

4. By whom was this "major shift in emphasis" authorized?

5. What is the justification for this occasion?

The Regional Advisory Group looks forward to receiving specific answers to the above questions.

Sincerely,

R. R. MCBRYDE, M.D., Chairman, Regional Advisory Group, Alabama Regional Medical Program.

DECEMBER 1, 1969.

HON. EDWARD L. MORGAN,

Deputy Counsel to the President,

The White House,

Washington, D.C.

DEAR ED: Attached is a memorandum dealing with the authority of the President to impound funds appropriated for assistance to federally impacted schools. A memorandum dealing with other education programs is in preparation.

Sincerely,

THOMAS E. KAUPER,
Deputy Assistant Attorney General,
Office of Legal Counsel.

MEMORANDUM

Re Presidential Authority to Impound Funds Appropriated for Assistance to Federally Impacted Schools.

You have asked us to consider whether the President may, by direction to the Commissioner of Education or to the Bureau of the Budget, impound or otherwise prevent the expenditure of funds appropriated by Congress to carry out the legislation for financial assistance to federally impacted schools, Act of September 30, 1950, as amended ("P.L. 874"), 20 U.S.C. 236 et seq., and Act of September 23, 1950, as amended ("P.L. 815"), 20 U.S.C. 631 et seq.

In July the House of Representatives, in adopting the Joelson Amendment to the Labor-HEW Appropriations bill, added approximately one billion dollars to the sum to be appropriated for various programs administered by the Office of Education. One of the largest increases was in the appropriation to carry out P.L. 874, which was raised to $585 million, nearly $400 million over the figure requested by the Administration and reported by the House Appropriations Committee. The appropriation for P.L. 815, on the other hand, is only $15,167,000, the same as that requested by the Administration.

The question arises whether, assuming that the appropriations carried in the Joelson Amendment are not significantly reduced by the Senate, the Administration is bound to spend the money appropriated. This memorandum considers the situation with respect to P.L. 874 and P.L. 815, particularly the former. In a subsequent memorandum we shall consider the situation with respect to certain of the other items in the Joelson Amendment.'

P.L. 874 authorizes financial assistance for the maintenance and operation of local school districts in areas where school enrollments are affected by Federal activities. Payments are made to eligible school districts which provide free public education to children who live on Federal property with a parent employed on Federal property (§ 3 (a)) and to children who either live

1 This memorandum does not consider title I of the Elementary and Secondary Education Act of 1965. 20 U.S.C. 241a et seq., which, although enacted as title II of P.L. 874. is usually cited as a separate statute and is listed as a separate appropriation item in the Joelson Amendment.

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on Federal property or live with a parent employed on Federal property (§ 3 (b)); to those school districts having a substantial increase in school enrollment resulting from Federal contract activities with private companies (§ 4); and to school districts when there has been a loss of tax base as a result of the acquisition of real property by the Federal Government (§ 2). Where the State or local educational agency is unable to provide suitable free public education to children who live on Federal property, the Commissioner of Education is required to make arrangements for such education (§ 6). Major disaster assistance is authorized for local educational agencies under section 7 of P.L. 874. It should be noted that the $585 million provided by the Joelson Amendment is for assistance "as authorized by sections 3, 6, and 7" of P.L. 874. Consequently, no funding is provided for sections 2 and 4, and these sections need not concern us further.

Section 3 of P.L. 874 requires the Commissioner to compute the "entitlement" of a local educational agency under a formula, whereby simply stated, the number of category A children and one-half the category B children 2 is multiplied by the local contribution rate for the school district as determined under section 3 (d). The determination of entitlement is not entirely mechanical, for within fairly narrow limits the Commissioner has discretion in selecting the basis for his determination of the local contribution rate, and other provisions permit him to make favorable adjustments in entitlements under narrowly defined circumstances (§§ 3(c) (2), 3(c) (4), 3(e), 5(d)(1) ).

Once a district's section 3 entitlement has been determined, however, the process of making payments becomes mechanical. Section 5(b) of P.L. 874 provides:

*

"(b) The Commissioner shall * * from time to time pay to each local educational agency, in advance or otherwise, the amount which he estimates such agency is entitled to receive under this title. *** Sums appropriated pursuant to this title for any fiscal year shall remain available, for obligation and payments with respect to amounts due local educational agencies under this title for such year, until the close of the following fiscal year."3

However, P.L. 874 does not constitute a promise by the United States to pay the full entitlement, for the statute contemplates that Congress may choose not to appropriate sufficient money to fund the program at 100% of entitlement. In such a circumstance section 5(c) provides that the Commissioner after deducting the amount necessary to fund section 6, shall, subject to any limitation in the appropriation act, apply the amount appropriated pro rata to the entitlements.3 (Since the Joelson Amendment provides no funding for sections 2 and 4, this would mean that after deducting the amount necessary to fund section 6 and, perhaps, constituting a reserve for possible application to section 7, the appropriation would be applied to the payment of section 3 entitlements.)

In sum, whatever limited discretionary authority the Commissioner may have with respect to determining entitlements, section 5 does not appear to permit any exercise of discretion in the application of appropriated funds to the payment of entitlements. Since the $585 million carried in the Joelson Amendment is only 90% of the total estimated entitlements, Departments of Labor and HEW Appropriations, 1970, Hearings before a subcommittee of the House Appropriations Committee, 91st Cong., 1st Sess., Pt. 5, p. 229, discretionary cutbacks on entitlements would have to exceed 10% of the total before there would be any impact on the total funding of the program.

2 The terms "category A" and "category B" refer to the standards for eligibility under subsections 3(a) and 3(b) respectively.

This provision for continued availability beyond the close of the fiscal year conflicts with section 405 of the appropriation bill. However, we understand that HEW regards the obligation of the funds as occurring within the fiscal year, even though the precise amount due may not be ascertained until after the close of the fiscal year.

3 Thus, he would have no authority to vary this formula in order to provide fuller funding for category A entitlements at the expense of category B entitlements unless Congress were so to provide in the appropriation act.

It is arguable that since the Joelson Amendment appropriates funds to carry out sections 3, 6 and 7, the Commissioner could set up a reserve for contingencies under section 7, disaster assistance. On the other hand, section 7(c) of P.L. 874 permits the Commissioner, notwithstanding the Anti-Deficiency Act, to grant assistance under section 7 out of moneys appropriated for the other sections, such funds to be reimbursed out of subsequent appropriations for carrying out section 7. Since the statute permits such application of funds allocated to carrying out section 3. it would be hard for the Commissioner to justify withholding funds from allocation on the basis of the possibility that they might be needed for disaster assistance.

We do not, in short, find within P.L. 874 any statutory authority for the Commissioner in the exercise of his discretion to avoid applying to the entitlements the full sum appropriated, and we conclude that the provisions of section 5 are mandatory in this respect. We understand that this conclusion is consistent with the position taken over the years by the General Counsel of the Department of HEW.

P.L. 815 authorizes payments to assist local school districts in the construction of school facilities in areas where enrollments are increased by Federal activities. The entitlement for assistance is computed under a statutory formula, and in addition there is provision for judicial review of a Commission's determination refusing to approve part or all of any application for assistance under the Act. (P.L. 815, § 11(b), 20 U.S.C. 641(b).) On the other hand, the mechanics of administration of P.L. 815 differ significantly from those of P.L. 874. First, the Commissioner is not required to apply appropriations pro rata among the eligible districts, but in accordance with priorities which he establishes by regulation (§3). Second, entitlement for assistance is not computed on a annual basis, but as a share of the cost of a particular project. Thus, if funds are held up in one fiscal year, the project may be funded the next year. Finally, the Commissioner is apparently free to allot, in his discretion, an indefinite share of the appropriation to section 14 purposes, school construction on Indian Reservations.

While we hesitate to conclude, on this fairly summary consideration, that the Commissioner has discretionary authority under P.L. 815 to delay indefinitely the obligation and expenditure of funds appropriated to carry out the statute, it does appear to us that there are enough discretionary powers throughout the statute to permit him to postpone the obligation of funds during fiscal 1970. Indeed, the Joelson Amendment provides that the appropriation for P.L. 815 shall remain available until expended, which would seem to confirm the conclusion that there is no legal requirement that the funds be obligated in the year for which the appropriation is made. However, inasmuch as the appropriation in question is relatively small and is consistent with the Administration's budget request, we see no need to discuss in greater detail the legal arguments which could be used to support a deferral of action to obligate the funds.

Notwithstanding the apparently mandatory provisions of P.L. 874, it has been suggested that the President has a constitutional right to refuse to spend funds which Congress has appropriated. In particular, there have been a number of statements by Congressmen with respect to the very programs of the Office of Education presently under consideration that Congress could not force the President to spend money which he did not want to spend.

Section 406 of the Vocational Education Amendments of 1968, 20 U.S.C.A. 1226 (Feb. 1969 Supp.) provides that notwithstanding any other provision of law, unless expressly in limitation of this provision, funds appropriated to carry out any Office of Education program shall remain available for obligation until the end of the fiscal year. The purpose of this provision was to deny to the President authority which he would otherwise have had under the Revenue and Expenditure Control Act (P.L. 90-364), §§202, 203, to reduce obligations and expenditures on Office of Education programs, and, in particular, the impacted area programs and title III of the National Defense Education Act, 20 U.S.C. 441 et seq. See 114 Cong. Rec. S11864. During the debate in both Houses on this provision several members stated that section 406 would not interfere with the President's constitutional authority to reduce expenditures in the area of education. See remarks of Senators Dominick and Yarborough, 114 Cong. Rec. $11869; remarks of Congressmen Perkins and Quie. 114 Cong. Rec. H9463.

Similar views were expressed almost contemporaneously in connection with the House of Representatives' consideration of a Senate amendment to the

5 Mandatory, that is, provided that the school district is in compliance with applicable federal statutes and regulations. Where a district is not in compliance, the Commissioner may have authority to withhold or terminate assistance, see e.g., Civil Rights Act of 1964, title VI, 42 U.S.C. 2000d et seq.; 45 C.F.R. Part 80. Whether in the event of such a withholding or termination the Commissioner would be required to apply the funds to the unfunded entitlements of other districts is a point we need not decide at this time.

Memorandum of March 29, 1966 from General Counsel Willcox to Assistant Secretary Huitt; Memorandum of August 6, 1958 from General Counsel Bants to the Secretary (HEW files do not indicate whether this memo was actually sent).

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