The Committee also has some concern about the possible consequences of increased Federal arts support on state contributions to the arts. The Committee notes that the authorizing legislation for the NEA has a strict provision prohibiting the use of Federal funds to supplant non-Federal support for the arts. The 1990 NEA reauthorization legislation increased significantly the amount of NEA support which goes to the States. Since 1990 many states, although receiving increased NEA support, have experienced decreases in state budgetary support for the arts. Many members of the Committee are concerned that states may in fact be substituting Federal dollars for state dollars despite the non-supplanting provision in existing law. The Committee believes that this issue should be examined thoroughly. The Committee requests that each of the three agencies review its awarding of grants to the states and report to the Committee, within six months of the enactment of this legislation, about what states are doing with Federal funds and the impact these funds are having on state budgetary decisions. In addition, the Committee requests that each of the three agencies inform the committee about steps they are taking to enforce whatever "non-supplanting" language they may have, and recommend whether additional legislative authority might be needed to prevent any potential substitution of Federal funds for non-Federal funds. The Committee strongly believes that Federal funds should be a stimulus to increased support for the arts and humanities at the state and local level, not substitute for such state and local support. The Committee looks forward to receiving reports from each of the three agencies as to the impact Federal support is having at the state and local level and what legislative changes might be needed to ensure that Congressional intent is carried out in this funding area.

BACKGROUND

The National Endowment for the Arts is an independent Federal agency created in 1965 to encourage and support the arts in the United States. Its mission is to foster the excellence, diversity and vitality of the arts and to help broaden their availability and appreciation. The NEA provides support, through grants and services, to nonprofit organizations and individuals in dance, design arts, folk arts, literature, media arts, museums, opera and musical theater, and visual arts. In addition, the NEA supports state, regional and local arts agencies, and a broad array of arts education initiatives as well as programs for underscored areas, especially rural and inner city areas.

The National Endowment for the Humanities is an independent Federal agency created in 1965 to develop and promote a broadly conceived national policy of support for the humanities. The NEH supports scholarly research, education, and public programs in the humanities. Grants are provided to individuals, institutions, and organizations for projects and programs concerned with history, literature, philosophy, languages, archaeology, and other humanistic disciplines.

The Institute of Museum Services is an independent Federal agency created in 1976 to increase and improve museum services. The IMS provides grants for general operating expenses and con

servation activities for all types of museums, including aquariums, arboretums and botanical gardens, art museums, historic houses and sites, history museums, nature centers, natural history and anthropology museums, planetariums, science and technology centers, specialized museums, and zoological parks.

HISTORY

The National Foundation on the Arts and the Humanities was established in 1965 by P.L. 89-209. The original Act was thereafter amended in 1967 by P.L. 90-83; in 1968 by P.L. 90-348; in 1970 by P.L. 91-346; in 1973 by P.L. 93-133; in 1976 by P.L. 94-462 and P.L. 94-555; in 1980 by P.L. 96-946; in 1984 by P.L. 98–306; in 1985 by P.L. 89-209; and in 1990 by P.L. 101–512.

The 1965 Act created a National Endowment for the Arts and the National Endowment for the Humanities, and a Federal Council on the Arts and Humanities. Each of the Endowments has a Chair and a 26 member presidentially appointed council to oversee the awarding of grants which it is authorized to make.

The Museum Services Act was first enacted as Title II of the Arts, Humanities and Cultural Affairs Act of 1976 (P.L. 94-462). The Act was thereafter amended in 1980 by P.L. 96-946; in 1984 by P.L. 98-306; and in 1990 by P.L. 101–512. The 1976 Museum Services Act (Title II of P.L. 94-462) establishing the Institute of Museum Services. The Institute has a director, who with policy direction from a 15 member presidentially appointed board, administers the programs and oversees the awarding of grants which the Institute is authorized to make.

CONGRESSIONAL BUDGET OFFICE ESTIMATE

In compliance with clause 2(1)(3)(C) of Rule XI of the Rules of the House of Representatives, the estimate prepared by the Congressional Budget Office pursuant to section 403 of the Congressional Budget Act of 1974, submitted prior to the filing of this report, is set forth as follows:

Hon. WILLIAM D. FORD,

U.S. CONGRESS,

CONGRESSIONAL BUDGET OFFICE,
Washington, DC, July 14, 1993.

Chairman, Committee on Education and Labor,
House of Representatives, Washington, DC.

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 2351, the Arts, Humanities, and Museums Amendments of 1993, as ordered reported by the House Committee on Education and Labor on June 29, 1993. The bill would not affect direct spending or receipts and thus would not be subject to pay-as-you-go procedures under section 252 of the Balanced Budget and Emergency Deficit Control Act of 1985. If you wish further details on this estimate, we will be pleased to provide them.

Sincerely,

ROBERT D. REISCHAUER, Director.

CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

1. Bill number: H.R. 2351.

2. Bill title: The Arts, Humanities, and Museums Amendments of 1993.

3. Bill status: As ordered reported by the House Committee on Education and Labor on June 29, 1993.

4. Bill purpose. To authorize appropriations for fiscal years 1994 and 1995 to carry out the National Foundation on the Arts and Humanities Act of 1965, and the Museum Services Act.

5. Estimated Costs to the Federal Government:

The costs of this bill fall within budget function 500.

Basis of estimate: This bill reauthorizes for two years appropriations for the National Endowment for the Arts, the National Endowment for the Humanities, and the Institute for Museum Services.

H.R. 2351 authorizes appropriations of specific amounts for fiscal year 1994 and such sums as may be necessary for fiscal year 1995. Authorizations of such sums as may be necessary have been estimated by increasing the amount specified for 1994 to reflect projected inflation. All outlay estimates assume appropriation of the full authorized amount at the beginning of each fiscal year. Estimated outlays reflect spending patterns of the current programs.

6. Pay-as-you-go considerations: The Budget Enforcement Act of 1990 sets up procedures for legislation affecting direct spending or receipts through 1995. CBO estimates that enactment of H.R. 2351 would not affect direct spending or receipts. Therefore, pay-as-yougo procedures would not apply to this bill.

7. Estimated cost to State and local governments: Assuming full appropriations of the authorized amounts, the state and local government costs for matching funds for grants under the National Endowment for the Arts, the National Endowment for the Humanities, and the Institute for Museum Services are described below. National Endowment for the Arts (NEA)-The grants provided by NEA to state and local agencies require state and local governments to match 50 percent of the federal funds. CBO estimates that grants to state and local governments would be $50 million each year for fiscal years 1994 and 1995. The resulting costs to

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state and local agencies for matching funds would be $15 million, $41 million, $31 million, $9 million, and $4 million in fiscal years 1994 through 1998, respectively.

National Endowment for the Humanities (NEH)-According to staff at the NEH, none of the NEH funds currently go to state and local governments. Based on this information and recent program experience, CBO estimates there would be no effect on state and local budgets for NEH programs.

Institute for Museum Services-The state and local costs related to grants provided by the Institute for Museum Services vary depending on the type of grant received. General operating and support grants may provide up to a 15 percent federal share of the costs for a specific museum but not more than a maximum of $112,500 per grant, project grants may provide up to a 50 percent federal share of a specific project, and assessment grants may provide full federal funding for assessments. Staff at the institute believe that about 10 percent of the grants currently go to museums that are considered state or local entities. Using this assumption, CBO estimates that state and local costs under this program at $4 million in fiscal year 1994, $13 million in 1995, and $9 million in 1996. These costs, however, will be incurred only if state and local governments accept the grants.

8. Estimate comparison: None.

9. Previous CBO estimate: None.

10. Estimate prepared by: Cory Oltman.

11. Estimate approved by: C.G. Nuckols, Assistant Director for Budget Analysis.

COMMITTEE ESTIMATE

With reference to the statement required by clause 7(a)(I) of Rule XIII of the Rules of the House of Representatives, the Committee accepts the estimate prepared by the Congressional Budget Office.

INFLATIONARY IMPACT STATEMENT

Pursuant to clause 2(1)(4) of Rule XI of the Rules of the House of Representatives, the Committee estimates that the enactment of H.R. 2351 will have no inflationary impact on prices and costs in the operation of the national economy. It is the judgment of the Committee that the inflationary impact of this legislation as a component of the Federal budget is negligible.

OVERSIGHT FINDINGS OF THE COMMITTEE

With the reference to clause 2(1)(3)(A) of Rule XI of the Rules of the House of Representatives, the Committee's oversight findings are set forth in the "Committee Views" section of this report. No additional oversight findings are applicable at this time.

OVERSIGHT FINDINGS AND RECOMMENDATIONS OF THE COMMITTEE ON GOVERNMENT OPERATIONS

In compliance with clause 2(1)(3)(D) of Rule XI of the Rules of the House of Representatives, no findings or recommendations by the Committee on Government Operations were submitted to the

Committee with reference to the subject matter specifically addressed in H.R. 2351.

SECTION ANALYSIS

SECTION 1. SHORT TITLE

Section 1 of the bill recites the short title of the Act.

SECTION 2. AMENDMENTS TO THE NATIONAL FOUNDATION ON THE ARTS AND THE HUMANITIES ACT OF 1965

Section 2(a)(1) of the bill provides for a two year extension of the authorization of definite program appropriations for the National Endowment for the Arts for fiscal years 1994 and 1995. It authorizes $119,985,000 for fiscal year 1994 and such sums as may be necessary for fiscal year 1995. It further provides that 27.5% of the definite program appropriations for NEA for fiscal years 1994 and 1995 will continue to be allocated for carrying out grants-in-aid to the states, and that 7.5% of the definite program appropriations for NEA for 1994 and 1995 will continue to be allocated for carrying out programs to expand public access to the arts in rural and inner city areas.

Section 2(a)(2) of the bill provides for a two year extension of the authorization of definite program appropriations for the National Endowment for the Humanities for fiscal years 1994 and 1995. It authorizes $130,573,000 for fiscal year 1994 and such sums as may be necessary for fiscal year 1995.

Section 2(b)(1) of the bill extends the authorization of appropriations for NEA's treasury funds for two years, authorizes $16,955,000 for fiscal year 1994 and such sums as may be necessary for fiscal year 1995 for the NEA's treasury funds, extends the authorization of appropriations for NEH's treasury funds for two years, and authorizes $11,963,000 for fiscal year 1994 and such sums as may be necessary for fiscal year 1995 for the NEH's treasury funds.

Section 2(b)(2) of the bill extends the authorization of appropriations for NEA's Challenge Grant Program for two years, authorizes $13,187,000 for fiscal year 1994 and such sums as may be necessary for fiscal year 1995 for the NEA's Challenge Grant Program, extends the authorization of appropriations for NEH's Challenge Grant Program for two years, and authorizes $14,228,000 for fiscal year 1994 and such sums as may be necessary for fiscal year 1995 for NEH's Challenge Grants.

Section 2(b)(3) of the bill corrects a technical error in section 103(1)(2)(B) of P.L. 101-512.

Section 2(c) of the bill extends the authorization of appropriations for administrative funds for NEA by authorizing $24,466,000 for fiscal year 1994 and such sums as may be necessary for fiscal year 1995, and extends the authorization of administrative funds for NEH by authorizing $20,727,000 for fiscal year 1994 and such sums as may be necessary for fiscal year 1995.

Section 2(d) of the bill extends the limitations of total appropriations authorized for the NEA to $174,593,000 for fiscal year 1994, and for the NEH to $177,491,000 for fiscal year 1994.