AmeriCorps Hang-up Leaves Agencies Dangling

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With youth-serving agencies around the country bracing for major losses in volunteer staff because of a financial crisis at AmeriCorps, Congress stepped in late last month to ease some of the pain – at least temporarily.

Reacting swiftly to devastating cuts announced for AmeriCorps positions to be filled this fall, Congress passed legislation to change how the Corporation for National and Community Service (CNCS), which runs the program, manages its accounts.

The accounting change will make up for some of the shortfall that was revealed in mid-June, when AmeriCorps estimated that only 35,000 positions could be supported with its grants this year, instead of the 50,000 approved by Congress. That left programs that rely on AmeriCorps workers reeling from the prospect of getting far fewer, if any, AmeriCorps positions this fall.

“We are going berserk,” said Mark Lazzara, executive director of the West Seneca Youth Bureau in New York, which built itself into a regional multiservice agency with hundreds of AmeriCorps staff, but may get none this fall. “Talk about grave. Real people won’t get fed. Real children won’t be able to read.”

As the fall approaches, many programs that rely on AmeriCorps workers are unclear about where they stand.

How It Happened

The primary cause of the funding crisis is the level of the education trust fund that holds money to pay volunteers their education stipends for completing service. Members can earn up to two education awards worth $4,725 each. About half of AmeriCorps workers also receive health benefits and a $9,300 living allowance.

Volunteers have up to seven years after they complete service to request their education awards, paid from the trust. In the past, the corporation has put money aside using a formula that anticipates how many awards will need to be made each year, how much the trust will earn in interest and how many volunteers will forfeit their awards.

Corporation officials acknowledged last fall they had overenrolled AmeriCorps for several years and tried to find out how it happened. In the midst of the review, an accounting dispute arose between the White House and Congress.

The U.S. General Accounting Office (GAO), the investigative arm of Congress, said the corporation must place in the fund enough money to pay awards to each volunteer accepted each year. More funds must be set aside now than in the past, reducing available funds for administration, living allowances and benefits, according to a letter to state AmeriCorps offices from John Foster-Bey, director of the state and national AmeriCorps program.

The Office of Management and Budget, which oversees the budget for the executive branch, took a more lenient position. Nonetheless, even using the OMB guidelines would have resulted in a decrease in money available for grants.

The corporation has already requested and received a $64 million supplemental payment this year to add to its education trust fund.

When Congress approved a fiscal 2003 enrollment cap of 50,000, it directed AmeriCorps to include 22,000 slots that were awarded last fall and were supposed to be supported with fiscal 2002 appropriations.

AmeriCorps programs typically run concurrent with school years, rather than fiscal years. Therefore, the 2003-04 program year that begins late this August and in early September is funded with fiscal 2003 appropriations.

Given the 22,000 previously awarded slots, and estimates of being able to support only 35,000 in total, AmeriCorps was looking at only 13,000 new slots for the year when it issued its first round of state competitive grants last month. The corporation awarded just 3,000 positions at that time, leaving 10,000 slots for the other AmeriCorps programs: multistate and national organization grants, Volunteers in Service to America and the National Civilian Community Corps. Those grants are expected to be awarded this summer.

But the state competitive grants program – through which grants are passed to state AmeriCorps offices, then down to organizations – is AmeriCorps’ biggest. AmeriCorps-staffed programs were anticipating some cuts – Congress reduced AmeriCorps funding from $240 million in fiscal 2002 to $175 million this year – but were shocked by the depth of the initial reductions.

“It’s a travesty that men and women are being denied an opportunity to serve in national service,” said Rhode Island AmeriCorps Director Vincent Marzullo, president of the National Association of State Program Directors.

In March, AmeriCorps received 487 state competitive grant proposals. It approved 54, placed 57 on a deferred decision list and rejected 376.

Of the 41 organizational applications in New York, for instance, only one was approved. The After-School Corporation was awarded about $690,000 to support 54 positions.

Wrath of Congress

Days after AmeriCorps announced the first-round winners, Congress unanimously passed legislation (S 1276) to change the accounting procedures. The bill was introduced June 18 and was cleared for the White House the next day.

The new rules should allow the corporation to make more grants this year, said CNCS spokesman Sandy Scott. “It achieves what everyone wants,” he said. “It establishes clear accounting and allows us to enroll thousands more AmeriCorps volunteers.”

The bill will allow AmeriCorps to fund grants based on the estimate of the number of members who will probably complete their service and use their education awards, bill sponsors said, instead of following the GAO’s stricter funding requirement for all enrollments. Scott said about 76 percent of AmeriCorps volunteers eventually use their awards.

The specific impact on the number of grants this year was not immediately clear. “We’re still analyzing the legislation, but we’re hoping we’ll be able to reach the 50,000 level,” Scott said. More money may still be needed. Lawmakers in both chambers, who were swamped with desperate pleas for help from programs back home, also encouraged President Bush to request a $200 million supplemental appropriation to fund additional slots this year.

But while some members of Congress sympathize with AmeriCorps workers and the programs they serve, they are not happy with the organization. Sen. Barbara Mikulski of Maryland, the ranking Democrat on the Senate Appropriations subcommittee that funds CNCS, said corporation CEO Les Lenkowsky should resign.

Lawmakers have grilled Lenkowsky and other corporation officials about accounting procedures, which led to an overenrollment of about 20,000 volunteers.

“Congress has not cut AmeriCorps. The corporation has cut AmeriCorps,” Mikulski said on the Senate floor last month. “And it’s because there is a persistent pattern of mismanagement.”

Mikulski and Sen. Christopher S. Bond (R-Mo.), chairman of the subcommittee, introduced the accounting legislation. Bond said it is unlikely Congress would approve a fiscal 2003 supplement even if AmeriCorps is not able to reach the 50,000 level for the 2003-04 program year, using the new accounting standards.

“Bailing the program out again this year becomes an even more difficult decision, because you have a program that, on one hand, doesn’t have the confidence of many of us because of the layers of complicated problems that have built over the years and that are not on the way to a speedy recovery,” Rep. Jack Kingston (R-Ga.), a critic of the CNCS and a House Appropriations subcommittee chairman, said in a written statement to Youth Today. “On the other hand, you have students who count on the scholarship help.”

The nine members of the CNCS board of directors were unavailable for comment.

Contact: AmeriCorps, (800) 942-2677,