By Dana Milbank
Washington Post Staff Writer
Thursday, February 27, 2003; Page A25

A Bush administration bookkeeping decision has left a funding shortfall for the AmeriCorps national service program that could force enrollment cuts of as much as 50 percent -- instead of the 50 percent increase President Bush had promised.

The president embraced AmeriCorps, a Clinton-era program, after the Sept. 11, 2001 terrorist attacks, and has made it a central part of his "compassionate conservative" agenda. During his State of the Union address last year, he called for AmeriCorps enrollment to grow to 75,000 from 50,000.

Instead, it is possible that enrollment will be held to 26,000 this year unless changes are made, AmeriCorps officials said.

The development has left the White House, Congress and AmeriCorps officials pointing fingers at each other. Democrats say it is another example of the president and his allies failing to back his "compassion" agenda with funding. They say Bush and the GOP-controlled Congress have also cut funding for housing and after-school programs that the president has promoted, and that Bush's plan for a Citizen Corps of volunteers devoted to homeland security has not advanced.

The administration hotly disputes such accusations. But the shortfall at AmeriCorps, if not remedied, could prove awkward. Bush often lauds the program's value. In December, he said AmeriCorps was "expanding mightily," and a spokeswoman predicted that the program would reach Bush's goal of increased membership.

But the omnibus spending legislation approved by Congress earlier this month caps AmeriCorps enrollment at 50,000 for 2003 -- no increase. The administration has told Congress that an accounting change required by the White House Office of Management and Budget will leave AmeriCorps with a $64 million shortfall in its $100 million trust fund for volunteers' scholarships.

Based on these figures, the Progressive Policy Institute, a centrist Democratic group, calculated that AmeriCorps will have only enough funds for 28,000 slots.

While hoping to enroll the 50,000 volunteers allowed by Congress, Sandy Scott, a spokesman for the Corporation for National Service, the agency that oversees AmeriCorps, said that without changes it is "possible" that only 26,000 positions could be filled this year. That's the number of slots approved for the current year before a freeze was imposed in November. "It's still unclear what's going to happen," Scott said.

Members of AmeriCorps, a domestic incarnation of the Peace Corps, receive scholarships and modest stipends for their work with communities and nonprofits dealing with such issues as housing, mentoring, health and the environment.

Scott and other administration officials blame Congress for not fully funding Bush's request to expand AmeriCorps. "The president and White House and OMB have been extremely supportive," Scott said. "We hope that Congress will make national service the same priority that the president has."

But John Scofield, GOP spokesman for the House Appropriations Committee, said that while it was the decision of lawmakers to cap enrollment at 50,000, the accounting change that produced the trust fund shortfall was the administration's doing. He said OMB has not requested funds to plug the gap.

"If OMB wants to submit a deficiency notice and request additional funds, we'll consider it, but not unless they submit a request," Scofield said.

In a letter to Bush this week, Democratic Sens. Hillary Rodham Clinton (N.Y.) and John Edwards (N.C.) wrote: "a new ruling from your Office of Management and Budget could force massive cuts in AmeriCorps membership this year." They asked Bush to overrule OMB and reaffirm the service organization's "longstanding accounting practices" or to request additional funding.

The prospective cuts also bothered Sen. John McCain (R-Ariz.), who has pushed for a vastly expanded service program along with Sen. Evan Bayh (D-Ind.). "Senator McCain believes that we should be expanding rather than limiting opportunities for young Americans to enlist in causes greater than their self-interest," said spokesman Marshall Wittmann.

OMB spokesman Trent Duffy said the agency has no choice but to make the bookkeeping change because of what he called "Enron-like" accounting at AmeriCorps, which registered more volunteers than it had money for in the past. "Call us crazy, but we feel it's important to operate programs within the law," Duffy said.

In 2000 and 2001, AmeriCorps surpassed its 50,000-volunteer enrollment target, exceeding the capacity of the National Service Trust, which pays for volunteers' scholarships. As enrollment surged again in 2002, AmeriCorps began an enrollment suspension on Nov. 15 that lasted until Congress approved new funds.

The fiscal 2003 spending measure approved by Congress and signed by Bush last week provided AmeriCorps with $175 million in grants and $100 million for the trust -- enough to reach the cap of 50,000 volunteers that lawmakers wrote into the legislation.

However, OMB officials told Congress that $64 million would be shifted from the trust to satisfy past interest obligations. Duffy said the $64 million is the amount that AmeriCorps previously overspent by improperly using interest on the scholarship trust to pay for volunteers' stipends. "We took this course of action to protect the integrity of the program," the OMB spokesman said.

Administration officials have suggested various ways Congress could offset the shortfall, but OMB did not make a formal request because there "wasn't time," Duffy said. He said possible solutions, including a relaxing of accounting rules to allow AmeriCorps to shift funds between accounts, are "under review."

A House Appropriations Committee aide, citing "a history of financial mismanagement" at AmeriCorps, said lawmakers are not inclined to provide more funds. But the issue is moot, the aide said, because "OMB has not requested the money."

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