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Toyota Repair/87 Camry Smog Failure

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Question
1987 Toyota Camry, 246K miles, 4-cylinder.

My car failed CA smog check in this area:
HC (PPM)
15 MPH - measrd reading 119 ppm (max allowable 118, avg 31)
25 MPH - measrd reading 113 ppm (max allowable 93, avg 20)

Other readings were fine, but higher than avg.
NO (PPM) - 620 (max 799, avg 237 at 15 mph
and 532 (max 738, avg 199) at 25 mph

OK .. the issue is very likely needing a new catalytic converter.  Since this is close to the manifold, this is going to be expensive .. correct ?  
State can offer upto $500 to repair this after I put in first $100, but I am worried, it will end up costing much more.  Car has other problems (power steering fluid leaks, I need to add a little every three months), burns oil (need to add a quart every three months)

Any ideas ?  Other option - if I agree to retire the vehicle, state will pay me upto $1000.  I'd like to keep the car as it is so expensive to get a new one.

Thx for your help.

Answer
Higher than normal HC readings are usually caused by inclomplete combustion, could be a slight misfire condition which could be caused by worn ignition parts such as spark plugs, wires etc. or even low cylinder compression so i would suggest checking to make sure the engine is not having any of these problems before replacing the catalityc converter.

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