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Document Name: Chapter 1 -- Cutting Red Tape Part III
Date: 09/07/94
Owner: National Performance Review
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Title:Chapter 1 -- Cutting Red Tape Part III
Author: Vice President Albert Gore's National Performance Review
Date:7 September 1993 10:00:00 EST
Content-Type: text/ascii charset=US ASCII
Content-Length: 106599
Under the act, some agencies may apply for waivers from
federal regulations if they meet specific performance targets. In
other words, they will be exempt from some administrative
requirements if they do their jobs better. The law applies only
to internal regulations and government agencies, but it also
urges wider waivers authority to test the potential benefits. In
the spirit of that legislation, we seek to expand the concept of
greater flexibility for greater accountability.
The President should direct each federal agency to establish
and publish,in a timely manner, an open process through which
other federal agencies can obtain waivers from that agency's
regulations--with an expedited appeals process. Rules adopting
this new waiver process would state that all future agency
regula-tions would be subject to the waiver process unless
explicitly prohibited. We will also ask Congress to specify that
legislation would be subject to waivers unless explicitly
prohibited.
Action: Reduce the burden of congressionally mandated reports.45
Woodrow Wilson was right. Our country's 28th president once
wrote that "there is no distincter tendency in congressional
history than the tendency to subject even the details of
administration" to constant congressional supervision. One place
to start in liberating agencies from congressional
micromanagement is the issue of reporting requirements. Over the
past decades, we have thrown layer upon layer of reporting
requirements on federal agencies, creating an almost endless
series of required audits, reports, and exhibits.
Today the annual calendar is jammed with report deadlines.
On August 31 of each year, the Chief Financial Officers (CFO) Act
requires that agencies file a 5-year financial plan and a CFO
annual report. On September 1, budget exhibits for financial
management activities and high risk areas are due. On November
30, IG reports are expected, along with reports required by the
Prompt Payment Act. On January 31, reports under the Federal
Civil Penalties Inflation Report Adjustment Act of 1990 come due.
On March 31, financial state-ments are due and on May 1 annual
single-audit reports must be filed. On May 31 another round of IG
reports are due. At the end of July and December, "high-risk"
reports are filed. On August 31, it all begins again. And these
are just the major reports!
In fiscal year 1993, Congress required executive branch
agencies to prepare 5,348 reports.46 Much of this work is
duplicative. And because there are so many different sources of
information, no one gets an integrated view of an agency's
condition--least of all the agency manager who needs accurate and
up to date numbers. Meanwhile, trapped in this blizzard of
paperwork, no one is looking at results. We propose to
consolidate and simplify reporting requirements, and to redesign
them so that the manager will have a clear picture of the
agency's financial condition, the condition of individual
programs, and the extent to which the agency is meeting its
objectives. We will ask Congress to pass legislation granting OMB
the flexibility to consolidate and simplify statutory reports and
establishing a sunset provision in any reporting requirements
adopted by Congress in the future.
Step 6: --Empower State and Local Governments
What we usually call "government" is, in fact, a tangle of
different levels of government agencies--some run from
Washington, some in state capitals, and some by cities and towns.
In the United States, in fact, some 80,000 "governments" run
everything from local schools and water supply systems to the
Defense Department and overseas embassies. Few taxpayers
differentiate among levels of government, however to the average
citizen, a tax is a tax--and a service a service--regardless of
which level of government is responsible. To reinvent government
in the public's eyes, we must address the web of
federal-state-local relations.
Washington provides about 16 percent of the money that
states and localities spend and shapes a much larger share of
such spending through mandates. Much of Washington's domestic
agenda, $226 billion to be precise, consists of programs actually
run by states, cities, and counties. But the federal government
doesn't always distribute its money--or its mandates--wisely.
For starters, Washington allocates federal money through an
array of more than 600 different grant programs. Many are small:
445 of them distribute less than $50 million a year nationwide;
some 275 distribute less than $10 million. Through grants,
Congress funds some 150 education and training programs, 100
social service programs, and more than 80 health care programs.
Considered individually, many categorical grant programs
make sense. But together, they often work against the very
purposes for which they were established. When a department
operates small grant programs, it produces more bureaucracy, not
more services. Thousands of public employees--at all levels of
government--spend millions of hours writing regulations, writing
and reviewing grant applications, filling out forms, checking on
each other, and avoiding oversight. In this way, professionals
and bureaucrats siphon money from the programs' intended
customers: students, the poor urban residents and others. And
states, and local governments find their money fragmented into
hundreds of tiny pots, each with different, often contradictory
rules, procedures, and program requirements.
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Were we directed from Washington when to sow and when to reap, we
should soon want for bread.
Thomas Jefferson
1826
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Henry Cisneros, Secretary of Housing and Urban Development,
likens federal grants to a system of pipelines spreading out
across the country. The "water," says Cisneros, reaches states
and localities through hundreds of individual pipelines. This
means there is little chance for the water to be mixed, properly
calibrated to local needs, or concentrated to address a specific
problem, geographic area, or population.
In employment and training, for example, Washington funds
training programs, literacy programs, adult education programs,
tuition grant programs, and vocational education programs.
Different programs are designed for different groups--welfare
recipients, food stamp recipients, displaced homemakers, youth in
school, drop-outs, "dislocated workers," workers displaced by
foreign trade, and on and on.
At a plant in Pittsfield, Massachusetts, General Electric
recently laid off a large group of workers. Some workers could
get Trade Adjustment Assistance benefits, because their jobs were
lost to foreign competition. Others could not; their jobs fell to
defense cutbacks. Because they have a union, people working in
one area began exercising their seniority rights and bumping
people in other areas. Some workers bumped from trade-affected
jobs to defense contracting jobs, then lost those a few weeks
later. Under federal regulations, they could no longer get Trade
Adjustment Assistance. Thus, friends who had spent years working
side by side found themselves with very different benefits. Some
got the standard 6 months of unemployment checks. Others got 2
years of unemployment checks and extensive retraining support.
Try explaining that to people who have lost the only jobs they've
ever held!
People who run such programs struggle to knit together funds
from three, four, or five programs, hoping against hope that
workers get enough retraining to land decent new jobs. But the
task is difficult; each program has its own requirements, funding
cycles, eligibility criteria, and the like. One employment center
in Allegheny County, New York, has tried hard to bring several
programs together and make them appear as seamless as possible to
the customers. At the end of the day, to accommodate reporting
requirements, the staff enters information on each customer at
four different computer terminals: one for Job Training
Partnership Act (JTPA) programs, one for the JOBS program, one
for the Employment Service, and one for tracking purposes.
When Congress enacted JTPA, it sought to avoid such
problems. It let local areas tailor their training programs to
local needs. But federal rules and regulations have gradually
undermined the good intentions. Title III, known as the Economic
Dislocation and Worker Adjustment Assistance Act (EDWAA), helps
states respond immediately to plant closings and large layoffs.
Yet even EDWAA's most flexible money, the "national reserve
fund," has become so tangled in red tape that many states won't
use it. As Congress's Office of Technology Assessment put it,
"the process is simply too obstacle ridden. ... many state EDWAA
managers cannot handle the complexities of the grant application,
and those that do know how are too busy responding to clients'
urgent needs to write demanding, detailed grant proposals."
When Congress amended JTPA in 1993, targeting more funds to
those with "multiple barriers" to employment, homeless advocates
thought the change would help their clients. After all, who has
more barriers to employment than someone without an address or
phone number? But the new JTPA formula also emphasized training
over job search assistance. So a local program in Washington,
D.C. that had won a Labor Department award for placing 70 percent
of its clients in jobs--many of them service sector jobs paying
more than the minimum wage--lost its JTPA funding. Why? It didn't
offer training. It just helped the homeless find jobs.47
But federal programs rarely focus on results. As structured
by Congress, they pay more attention to process than outcomes--in
this case, more to training than to jobs. Even in auditing state
and local programs, federal overseers often do little more than
check to see whether proper forms are filed in proper folders.
The rules and regulations behind federal grant programs were
designed with the best of intentions--to ensure that funds flow
for the purposes Congress intended. Instead, they often ensure
that programs don't work as well as they could--or don't work at
all.
Virtually every expert with whom we spoke agreed that this
system is fundamentally broken. No one argued for marginal or
incremental change. Everyone wants dramatic change--state and
local officials, federal managers, congressional staff. As in
managing its own affairs, the federal government must shift the
basic paradigm it uses in managing state and local affairs. It
must stop holding programs accountable for process and begin
holding them accountable for results.
-- The task is daunting; it will take years to accomplish.
We
propose several significant steps on the journey:
-- Establish a Cabinet-level Enterprise Board to oversee new
initiatives in community empowerment;
-- Cut the number of unfunded mandates that Washington
imposes;
-- Consolidate 55 categorical grants into broader "flexible
grants;"
-- Increase state and local flexibility in using the
remaining categorical grants;
-- Let all agencies waive rules and regulations when they
conflict with results; and
-- Deregulate the public housing program.
The likely benefits are clear: administrative savings at all
levels; greater flexibility to design solutions; more effective
concentration of limited resources; and programs that work for
their customers.
Action: The President should establish a Cabinet-level Enterprise
Board to oversee new initiatives in community empowerment.48
The federal government needs to better organize itself to
improve the way it works with states and localities. The
President should immediately establish a working group of
cabinet-level officials, with leadership from the Vice President,
the Domestic Policy Council, and the National Economic Council.
The Board will look for ways to empower innovative
communities by reducing red tape and regulation on federal
programs. This group will be committed to solutions that respect
"bottom-up" initiatives rather than "top-down" requirements. It
will focus on the administration's community empowerment agenda,
beginning with the 9 Empowerment Zones and 95 Enterprise
Communities that passed Congress as part of the President's
economic plan.
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Sometimes we need to start out with a blank slate and say, "hey,
we've been doing this for the last 40, 50 years. It doesn't
work." Let's throw out everything, clear out minds...Let's have
as a goal doing the right thing for the right reasons, even if it
entails taking risks.
Vincent Lane, Chairman, Chicago Housing Authority, Reinventing
Government Summit Philadelphia, June 25, 1993
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In participating communities, for example, federal programs
could be consolidated and planning requirements could be
simplified; waivers would be granted to assure maximum
flexibility; federal funding cycles would be synchronized; and
surplus federal properties could be designated for community use.
Action: The President should issue a directive limiting the use
of unfunded mandates by the administration.49
As the federal deficit mounted in the 1980s, Congress found
it more and more difficult to spend new money. Instead, it often
turned to "unfunded mandates"-- passing laws for the states and
localities to follow, but giving them little or no money to
implement those policies. As of December 1992, there were at
least 172 separate pieces of federal legislation in force that
imposed requirements on state and local governments. Many of
these, such as clean water standards and increased public access
for disabled citizens, are unquestionably noble goals.
But the question remains: How will state and local
governments pay to meet those goals? We recommend that Congress
refrain from this practice and that the President's directive
establish that the executive branch will similarly limit its use
of unfunded mandates in policies, legislative proposals and
regulations.
The directive would narrow the circumstances under which
departments and agencies could impose new unfunded burdens on
other governments. It also would direct federal agencies to
review their existing regulations and reduce the number of
mandates that interfere with effective service delivery. OMB's
Office of Information and Regulatory Affairs (OIRA) should review
all major regulations or legislation proposed by the executive
branch for possible adverse impacts on states and localities.
Finally, OIRA's director should create a forum in which federal,
state, and local officials could develop solutions to problems
involving unfunded mandates.
Action: Consolidate 55 categorical grant programs with funding of
$12.9 billion into six broad "flexible grants"--in job training,
education, water quality, defense conversion, environmental
management, and motor carrier safety.50
This proposal came from the National Governors Association
(NGA) and National Conference of State Legislatures (NCSL), which
describe it as "a first step toward broader, more ambitious
reforms." It would consolidate some 20 education, employment and
training programs, with a combined $5.5 billion in fiscal year
1993 spending; roughly 10 other education programs ($1.6
billion); 10 small environmental programs ($392 million); six
water quality programs ($2.66 billion); and six defense
conversion programs ($460 million).
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How Much Do You Get for a 1983 Toyota?
What does the price of a used car have to do with the
federal government's family policies?
More than it should. Caseworkers employed by state and local
government to work with poor families are supposed to help those
families become self-sufficient. Their job is to understand how
federal programs work. But as it turns out, those caseworkers
also have to know something about used cars. Used cars? That's
right. Consider this example, recounted to Vice President Gore at
a July 1993 Progressive Foundation conference on family policy in
Nashville, Tennessee:
Agencies administering any of the federal government's
programs for the poor must verify many details about people's
lives. For instance, they must verify that a family receiving
funds under Aid to Families with Dependent Children (AFDC) does
not own a car worth more than $1,500 in equity value. To give a
poor family food stamps, it must verify that the family doesn't
own a car worth more than $4,500 in market value. Medicaid
specifies a range that it allows for the value of a recipient's
car, depending on the recipient's Medicaid category. But under
food stamp rules, the car is exempt if it is used for work or
training or transporting a disabled person. And under AFDC, there
is no exemption for the car under any circumstances.
Recounting that story to a meeting of the nation's governors,
the vice president asked this simple question: "Why can't we talk
about the same car in all three programs?"
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Action: Congress should allow states and localities to
consolidate separate grant programs from the bottom up.51
Recognizing the political and administrative obstacles to
wholesale reform of more than 600 existing categorical grants in
the short term, the National Performance Review focused on an
innovative solution to provide flexibility and to encourage
result-oriented performance at the state and local levels.
Our proposal calls for Congress to authorize "bottom-up"
grant consolidation initiatives. Localities would have authority
to mix funding from different programs, with simple notification
to Washington, when combining grants smaller than $10 million
each. For a consolidation involving any program funded at more
than $10 million, the federal awarding office (and state, if
applicable), would have to approve it before implementation. In
return for such consolidation, the state and local governments
will waive all but one of the programs' administrative payments
from the federal government.
When different grants' regulations conflict, the
consolidating agency would select which to follow. States and
localities that demonstrated effective service integration
through consolidation would receive preference in future grant
awards. Each of the partners in the intergovernmental system must
work collaboratively with others--federal, state, and local--to
refine this recommendation.
The details of this proposal will be negotiated with
important state and local organizations, such as the NGA, the
NCSL, U.S. Conference of Mayors, and the National League of
Cities, before legislation is drafted. Bottom-up consolidation
will be given a high priority by the administration. It
represents a way to improve state and local performance without
tackling the thorny political problem involved in consolidating
600 grant programs, reconciling thousands of rules and
regulations, and anticipating every possible instance when
flexibility might be necessary. It puts the burden of identifying
obstacles and designing the best solution where it belongs--on
those who must make the programs work.
Action: Give all cabinet secretaries and agency heads authority
to grant states and localities selective waivers from federal
regulations or mandates.52
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The National Performance Review is not intended to be the final
word on reinventing government but rather a first step. This long
overdue effort will require continuing commitment from the very
top to truly change the way government does business.
U.S. Rep. John Conyers (D. Mich.)
August 28, 1993
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For federal grant programs to work, managers must have
flexibility to waive rules that get in the way. Some departments
have this authority; others don't. Federal decisions on most
waivers come very slowly, and states often must apply to a
half-dozen agencies to get the waivers they need. Florida, for
example, has a two-year waiver allowing it to provide hospice
care to AIDS patients under Medicaid. Its renewal takes 18
months. So state officials have to reapply after only six months.
Waiver legislation should grant broad waiver authority, with the
exception of fair housing, non-discrimination, environmental, and
labor standards. We will ask Congress to grant such authority to
Cabinet officers. These waivers, should be granted under limited
circumstances, however. They must be time-limited and designed to
include performance measures. When each experiment is concluded,
the granting agency should decide whether the new way of doing
things should be included in standard practice.
Action: Give control of public housing to local public housing
authorities with histories of excellent management and
substantially deregulate the rest.53
Public housing is a classic story of good intentions gone
awry. When the program began in the 1930s, it was hailed as an
enlightened response to European immigrants' squalid living
conditions in cities across the country. Through an enormous
bureaucracy stretching from Washington into virtually every city
in America, the public housing program brought clean, safe,
inexpensive living quarters to people who could not afford them
otherwise.
Now, however, public housing is even more troubled than our
categorical grant programs. With its tight, centralized control,
it epitomizes the industrial-era program: hierarchical,
rule-bound, and bureaucratic. HUD's Washington, regional, and
local offices rigidly control local public housing authorities,
who struggle to help the very poor. Frustrated by the failure of
public housing, innovative state and local governments began to
experiment with new models of developing, designing, financing,
managing, and owning low-income housing. Successful efforts
tailored the housing to the characteristics of the surrounding
community. Local public housing authorities began to work with
local governments and non-profit organizations to create
innovative new models to serve low-income people.
HUD recognizes that local authorities with proven records of
excellence can serve their customers far better if allowed to
make their own decisions. We and the secretary recommend that
Congress give HUD authority to create demonstration projects in
which local housing authorities would continue to receive
operating subsidies as long as they met a series of performance
targets, but would be free from other HUD control. Individual
demonstrations could vary, but all federal rules would be open
for waivers as long as HUD could measure performance in providing
long-term, affordable housing to those poor enough to be eligible
for public housing.
In addition, HUD should work closely with local housing
authorities, their national organizations, public housing tenant
organizations, and state and local officials to eliminate
unnecessary rules, requirements, procedures, and regulations. In
particular, HUD should replace its detailed procurement and
operating manuals and design and site selection requirements with
performance measures, using annual ranking of local housing
authorities to encourage better service and greater
accountability. It should eliminate the annual budget review, an
exercise in which HUD field staff spend thousands of hours
reviewing and approving detailed budgets from local housing
authorities --even though the reviews do not influence federal
funding decisions. And it should work with Congress to change
current rent rules, which create strong incentives for people to
move from public housing as soon as they find jobs. Conclusion
Conclusion
The changes described above are ambitious. They will take
enormous effort and enormous will. It will be many years before
all of them take root. But if they succeed, the American people
will have a government capable of attacking their problems with
far more energy, and far less waste, than they can today imagine.
We must move quickly because the bureaucracy, by its nature,
resists change. As Tom Peters wrote in Thriving on Chaos, "Good
intentions and brilliant proposals will be dead-ended, delayed,
sabotaged, massaged to death, or reversed beyond recognition or
usefulness by the overlayered structures...."54
But the changes we propose will produce their own momentum
to overcome bureaucratic resistance. As the red tape is being
cut, federal workers will become more and more impatient with the
red tape that remains. They will resist any reversal of the
process. And they will be strengthened in their resistance by the
steps we propose in the next chapters.
.