RATIONALE: Giving low doses of chemotherapy and antithymocyte globulin before a donor stem cell transplant helps stop the growth of cancer and abnormal cells. It may also stop the patient's immune system from rejecting the donor's stem cells. The donated stem cells may replace the patient's immune cells and help destroy any remaining cancer and abnormal cells (graft-versus-tumor effect).

PURPOSE: This phase II trial is studying how well a donor stem cell transplant works after busulfan, fludarabine, and antithymocyte globulin in treating patients with hematologic cancer or myelodysplastic syndrome.

OBJECTIVES:

• To evaluate the efficacy of HLA-haploidentical familial donor hematopoietic cell transplantation with a reduced-intensity conditioning regimen of busulfan, fludarabine phosphate, and anti-thymocyte globulin in patients with hematologic malignancies or myelodysplastic syndromes.

OUTLINE: Before receiving the reduced-intensity conditioning regimen, patients receive one dose of intrathecal (IT) methotrexate, then leucovorin calcium IV or orally 4 hours after methotrexate and every 6 hours for a total of 8 doses.

• Reduced-intensity conditioning regimen: Patients receive busulfan IV over 6 hours on days -7 and -6, fludarabine phosphate IV over 30 minutes on days -7 to -2, anti-thymocyte globulin (ATG) IV over 4 hours on days -4 to -1, and methylprednisolone IV over 30 minutes on days -4 to -1.
• HLA-haploidentical familial donor hematopoietic stem cell transplantation (HSCT): Patients undergo allogeneic HSCT over 1 hour on days 0 and 1.
• Graft-versus-host disease (GVHD) prophylaxis: Patients receive cyclosporine IV* over 2-4 hours every 12 hours on days -1 to 30 followed by a taper until day 60 and methotrexate IV on days 2, 4 , 7, and 12.

NOTE: *Cyclosporine can be given orally once oral medication can be tolerated

• CNS prophylaxis: When blood counts recover, patients with acute leukemia or chronic myelogenous leukemia in blastic crisis resume IT methotrexate once every 2 weeks for a total of 4 doses (including the dose given before the conditioning regimen) and leucovorin calcium IV or orally 4 hours after (each dose of methotrexate) and every 6 hours for a total of 8 doses.

After completion of study treatment, patients are followed periodically for up to 3 years.

DISEASE CHARACTERISTICS:

• Diagnosis of 1 of the following hematological malignancies:

  • Acute leukemia, including any of the following:

    • Refractory acute leukemia
    • Acute leukemia beyond first remission
    • Acute leukemia in first remission with intermediate to poor prognostic features as suggested by chromosomal findings

  • Chronic myelogenous leukemia (CML)

    • Second chronic phase
    • Accelerated phase
    • Blastic phase

  • Myelodysplastic syndrome (MDS)

    • High-risk MDS (refractory anemia with excess blasts [RAEB], RAEB in transformation, and chronic myelomonocytic leukemia) can be transplanted without prior therapy or after prior therapy failure with hypomethylating agents
    • Low-risk MDS can be considered for transplantation after prior therapy failure with immunosuppressive or hypomethylating agents

• No willing, suitable HLA-matched donor in family or in donor registries

  • Patients with active hematologic malignancy, who are felt to be in urgent need of allogeneic hematopoietic cell transplantation, can enroll without a search for HLA-matched unrelated donors

• Related donor with HLA-haploidentical mismatch at 3 or less of 6 loci available

PATIENT CHARACTERISTICS:

• Karnofsky performance status 70-100%
• Bilirubin < 2.0 mg/dL
• Creatinine < 2.0 mg/dL
• AST < 3 times upper limit of normal
• Ejection fraction > 40% by MUGA

PRIOR CONCURRENT THERAPY:

• See Disease Characteristics