To understand the state of intergovernmental relations today, consider the state of the U.S. Advisory Commission on Intergovernmental Relations (ACIR), a once-proud, federally funded institution that has fallen on hard times.
Among the functions outlined in its charter, ACIR is supposed to bring together representatives of the federal, state, and local governments to discuss common problems; provide a forum to discuss how to coordinate grant and other programs requiring intergovernmental cooperation; provide technical assistance to determine how legislation in Washington would affect the federal system; recommend how best to allocate governmental functions, responsibilities, and revenues among levels of government; and suggest how to coordinate tax laws and administrative practices to achieve a more orderly, less competitive fiscal relationship among levels of government.
Twenty years ago, ACIR was a prestigious institution that produced numerous analytical reports on the intergovernmental impact of federal policy. Its role was augmented by the establishment of intergovernmental offices in the Office of Management and Budget and the General Accounting Office.
But in recent years, ACIR has lost stature, influence, and resources. In 1986, Congress cut ACIR's budget by 53 percent. Most recently, Congress considered eliminating all funding and sharply reduced it further. Today, ACIR sometimes has trouble attracting a quorum to its meetings.
The ACIR's decline is just one reason--albeit a symbolically important one--why state and local officials view the federal government as unconcerned about the intergovernmental effects of its decisions. More important are the federal government's decisions about how much money to give states and localities, how to package that money in grants and other programs, and how to require that states and localities offer services that Washington cannot afford to provide itself.
The health of our intergovernmental system may strike some as a boring, merely philosophical matter. In fact, the importance of a well-functioning intergovernmental system can hardly be overstated. We cannot achieve the National Performance Review's (NPR) broad goals--cutting red tape, putting customers first, empowering employees to get results, and cutting back to basics--without a new approach to intergovernmental partnership in delivering services to the public.
In addition, a well-functioning system is central to Americans' quality of life and Washington's ability to pursue a domestic policy agenda. Americans spend hundreds of billions of dollars each year to implement public policies at all levels of government. Hundreds of thousands of dedicated public employees, along with thousands of other committed citizens, work hard to solve human and societal problems, helping one another and striving to build a better country.
Despite all of these efforts and money, Americans increasingly feel that public institutions and programs aren't working. In fact, serious social and economic problems seem to be getting worse. The percentage of low-birth-weight babies, the number of single teens having babies, and arrest rates for juveniles committing violent crimes are rising; the percentage of children graduating from high school is falling; welfare rolls and prison populations are swelling; median incomes for families with children are falling; more than half of children in female- headed households are poor; and 37 million Americans have no basic health care coverage or not enough.
Why? At least part of the answer lies in an increasingly hidebound and paralyzed intergovernmental process. A significant number of federal domestic programs are administered through federal grants to state and local governments--for everything from wastewater treatment to well-baby care--or through income transfers administered jointly by federal and state governments. Together, these grant and income transfer programs will amount to an estimated $226.1 billion in fiscal 1994. Notwithstanding years of debate at all levels about grant consolidation and simplification, the number of grant programs--now more than 600--continues to escalate. Of these programs, 451--75 percent--are grants of $50 million or less.[Endnote 1]
So, too, do the problems of duplication and overlap. Take, for instance, the case of federal programs designed to help children and their families. Today, 10 departments and two independent agencies administer more than 140 such programs. More than 15 percent of them are directly administered by the federal government, more than 40 percent by state governments, and another 40 percent by local, private, or public groups.[Endnote 2]
Unfortunately, the myriad of federal mandates and regulations that accompany grant programs are cumbersome and very costly to administer, lack a coordinated implementation strategy between levels of government, and are not achieving the intended outcomes. Each separate program has its own array of rules and regulations that must be observed, regardless of their impact on the effectiveness and quality of customer service. States and localities have limited ability to customize service delivery by integrating programs because of competing, often conflicting federal rules and requirements that accompany each grant program.
In Cincinnati, for instance, local officials were working to restore a severely blighted but historical area. They were using federal Community Development Block Grant funds in conjunction with public and private resources to create new and rehabilitated affordable housing for residents of the area. But when they sought to combine these activities with federal job training funds to hire and train unemployed persons in the construction industry, conflicting federal regulations got in the way.[Endnote 3]
To the taxpayer "a tax is a tax" and "a service is a service" regardless of which level of government is responsible. Reinvention of the federal government must recognize this reality and must place a high priority on improving government management at all levels.
Meanwhile, Washington has increasingly imposed mandated requirements and regulations (often without adequate funding to cover costs) to help realize policy objectives. As of December 1992, at least 172 pieces of federal legislation were imposing mandates on states and localities. "The federal government's own fiscal weakness has not made it any less eager to tell states and localities what to do," wrote Alice Rivlin. "Indeed, when its ability to make grants declined, the federal government turned increasingly to mandates as a way of controlling state and local activity without having to pay the bill."[Endnote 4]
A Vision for the Future. In a perfect world, we would consolidate the 600 federal grant programs into broad funding pools, organized around major goals and desired outcomes--for example, safe and secure communities, a competitive workforce, healthy and self-sufficient families and children, or a clean environment. In addition, we would streamline administrative mechanisms, providing flexibility to account for regional differences and the diversity of needs; ensuring accountability by measuring performance and outcomes, not transactions and errors; and driving program design and management responsibility down to the point of contact between government and the end consumer.
To create this perfect world, we would have to massively reform the existing system of intergovernmental grantmaking. Such a reform would touch every federal department and agency, every congressional committee and subcommittee, every special interest and advocacy group, and each and every one of the thousands of states, counties, cities, townships, and special purpose districts across the country.
Previous reform efforts, mainly designed to consolidate grants and reduce administrative red tape, have largely flopped. President Reagan achieved limited success in his early efforts to create a system of block grants, but subsequent efforts to expand the model to other categorical programs have almost universally failed.
While the political obstacles to enacting such proposals continue to seem almost insurmountable, an opportunity for change may be at hand. Even Congress itself is becoming exasperated with the micromanaged nature of grantmaking.[Endnote 5] As one congressional staffer noted, "There is a tremendous pent-up legion of followers in Congress [and elsewhere] if forceful leadership is provided . . ." Recent actions, such as passage of the 1991 Intermodal Surface Transportation Efficiency Act, demonstrate some willingness by major congressional committees to approach grantmaking more rationally. In addition, the National Governors' Association and the National Conference of State Legislatures have developed a proposed grant consolidation plan, the spirit of which many see as feasible to provide increased flexibility to states and localities.
Even with an enthusiasm for change that breaks sharply with history, the federal government will not achieve its goals easily or quickly. We cannot achieve improvements solely, even primarily, through federal action. As a result, each partner in the system must work collaboratively with the others-- federal, state, and local--to refine the concepts and recommendations outlined in this report. Such collaboration has already begun; in mid-1993, President Clinton and Vice President Gore held discussions with the nation's governors and mayors.
Specific solutions can be perfected and refined over time, but the basic needs are, and have been, clear for more than a decade:
1. The number of categorical grants must be reduced;
2. Governments at all levels (but especially the federal government) must reduce the degree to which unfunded mandates are imposed on other levels of government;
3. Program rules and regulations must be fundamentally rethought and their focus changed from compliance to outcomes, from sanctions to incentives; and
4. Federal interdepartmental and intergovernmental collaboration must be actively facilitated if any real improvement in government's credibility is to be successful.
The federal government will have to work with states and localities to define a more viable federal partnership, find the optimal balance between flexibility and accountability, while simultaneously addressing the budget constraints imposed by the federal deficit.
Federal, state, and local government attention should focus on mutually agreed-upon measurable outcomes for public service delivery. The intergovernmental relationship should be a partnership, not an adversarial or competitive system. Federal financial support should be provided to achieve broad goals, but also should provide latitude and flexibility in how to accomplish them and be tailored to real local needs. Rather than defining accountability by inputs, transactions, error rates, and failure to progress, the federal government should hold state and local governments accountable for performance. The system should support and reward what works, rather than imposing rules and sanctions on the majority because of errors or omissions by the minority.
In this report, we offer the following five broad recommendations on how to improve the system:
--improve federal grant administration through simultaneous bottom-up and top-down initiatives;
--cut red tape and eliminate roadblocks by allowing waivers of regulations that detract from accomplishing program objectives or interfere with effective service delivery;
--simplify cost reimbursement procedures, saving time and money;
--eliminate needless paperwork by simplifying the compliance certification process and the common grant rule on small purchases; and
--reinvent ACIR and promote collaboration between the federal government and its state and local partners across federal policymaking and administration.
If implemented, our recommendations will result in:
--savings in overhead and administrative costs at all levels;
--much greater flexibility up and down the line to design solutions that work;
--more effective concentration of limited resources; and most importantly
--a much greater likelihood that federal, state, and local objectives will be achieved.
1. U.S. General Accounting Office, Federal Aid Programs Available to State and Local Governments, GAO/HRD-91-93FS (Washington, D.C.: U.S. General Accounting Office, May 1991).
2. Library of Congress, Congressional Research Service, Federal Programs for Children and Their Families (Washington, D.C., December 15, 1992)
3. This occurred in the city's Betts-Longworth area.
4. Rivlin, Alice, Reviving the American Dream (Washington, D.C.: The Brookings Institution, 1992), p. 107.
5. See, for example, Institute for Educational Leadership, Solving the Maze of Federal Programs for Children and Families: Perspectives from Key Congressional Staff (May 1993).
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