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In the past 12 years, the trend toward federal categorical grantmaking has escalated dramatically-- to more than 600 federal grant programs that will spend an estimated $226.1 billion in fiscal year 1994. Some grants are distributed on a formula basis; many others on a competitive or discretionary basis; and still others as entitlements depending upon the enrollment of eligible participants.
Federal grantmaking is not an end in itself. Funds are intended to promote federal policy objectives and contribute to the resolution of real problems affecting real people. Yet, state and local governments, and the clients and customers of the programs these federal funds support, face a maze of different and sometimes contradictory rules, regulations, administrative procedures, and program standards and requirements across this myriad of grants.
The current system of federal grantmaking fragments the ability of government at all levels to address people's needs in an integrated manner. By establishing discrete and often incompatible eligibility standards, and administrative rules and requirements, the proliferation of categorical grants has made government at all levels less effective. Block grants, intended to overcome some of the limitations of categorical programs, are not immune from red tape and unintended consequences. These problems have contributed to the frustration of individuals and families that depend on federal assistance, and have added to taxpayer and customer cynicism about government's ability to manage.
For example, there are more than 140 federal programs directed toward assisting children and their families. These funds are administered by 10 different federal departments and two independent agencies. According to a Congressional Research Service report, over 15 percent of the programs are directly administered by the federal government, more than 40 percent are administered by state governments, and another 40 percent of the programs are directed through local private or public groups.[Endnote 1] The largest number of programs are aimed at providing educational and social service support. The largest amount of dollars, however, is designated for income support and nutritional programs. Each federal grant program has a distinct definition as to who it is intended to serve. For example, programs such as Aid to Families with Dependent Children (AFDC) and Food Stamps are aimed at children and their families that meet specific income criteria--although the definition of income and assets differs for the two programs. In other programs, such as the social services block grant, recipients may be children or children and families or certain unrelated adults.
Government programs are established as needs are identified. For example, a job training program is established to train the high school drop-out so that she or he can obtain a job and support the family. Another program is established to help someone recover from drug abuse, be rehabilitated from injuries in an accident, or recover from a crime. Yet another program is established to help a person obtain safe, decent, and sanitary housing that is affordable. All are worthwhile programs.
But government service providers are hamstrung to integrate these programs if the customer happens to be the same person. Programs are operated by separate agencies (often in different geographic locations), by separate people with different expertise, and in accordance with rules and regulations developed and overseen by different federal agencies.
In the past few years, there has been increasing recognition at all levels of government that individuals and families, subordinate governments, special districts, and businesses and corporations may simultaneously be the client of a wide variety of programs. The failure to see the intergovernmental system from the perspective of the citizen-customer not only perpetuates inefficiency and wasted time, effort, and money, but also leads to poor program design and a significantly reduced probability that the goals and outcomes desired will be achieved.
One by one, block and categorical grants and their accompanying rules and regulations may make sense; but in combination they often defeat the very purpose for which they were established and undermine, rather than enhance, the ability of service providers and managers to be truly accountable for outcomes.
For example, the Job Opportunity in Basic Skills (JOBS) program is funded through the U.S. Department of Health and Human Services (HHS) and is administered at the local level by social services departments. The JOBS goal is to help citizens become self-sufficient (get jobs) by providing education, work experience, job search training, and job placement.
The Job Training Partnership Act (JTPA) is funded through the Department of Labor and is administered at the local level by community groups known as Private Industry Councils. The goal of this program is to help citizens become self-sufficient by providing training that leads directly to employment.
Although these programs are intended to be compatible, they are seldom used together because: 1) they have different accounting requirements, 2) they have different evaluation procedures, 3) they have different eligibility requirements, and 4) funds from the two programs cannot be pooled. A person wishing to take advantage of both programs, therefore, must go to two sites and be qualified under each program's guidelines. Then they must attempt to arrange the training they need under the programs and coordinate them. On an administrative level, the programs require separate staff, separate offices, and other supporting costs. Consolidation of the programs would benefit the customer, the community, and the federal government.
Or take, for example, a recent situation where local officials were working to restore a severely blighted but historic area of a city. Federal Community Development Block Grant funds were being used in conjunction with local public and private resources to create new and rehabilitated affordable housing for residents of the area. The city wanted to combine these housing and community redevelopment activities with federal job training funds to hire and train unemployed persons in the construction activity. However, this was not possible because of the conflicting regulations of the separate federal programs.[Endnote 2]
1. Create flexibility and encourage innovation by designing a bottom-up solution to the problem of grant proliferation and its accompanying red tape. (3)
For decades, top-down proposals to solve the problems of federal grant management and administration have been offered. Most have failed, or failed to be completely effective, because of a combination of special interest politics, lack of effective inter- departmental planning and decisionmaking at the federal level, and competing and sometimes conflicting needs and priorities among and between other levels of government. The National Performance Review believes that the approach to the problem should be turned, quite literally, upside down.
Instead of concentrating federal efforts on revamping all 600 grants, reconciling the thousands of rules and regulations, and anticipating every possible instance when flexibility and latitude might enhance actual program outcomes at the state or local level, the responsibility of identifying the obstacles and designing the best solution should be given to the states and localities themselves.
Let the grant consolidation solutions come from the bottom-up, in response to actual barriers and obstacles in the field. Create a partnership that offers administrative and regulatory relief when and where it really matters, and let the learning that process could generate gradually build a body of knowledge about how the overall system can or should be reformed.
Precedent for "bottom-up-type" local initiative exists in some individual federal agencies and programs. EPA is experimenting with greater flexibility and latitude in meeting regulatory and grant requirements; the Job Training Partnership Act provided for fairly extensive local public-private partnership and autonomy; the Intermodal Surface Transportation Efficiency Act (ISTEA) provides for some greater local discretion.
Notwithstanding some of these experiments, the bottom-up concept will challenge many long standing federal attitudes and bureaucratic assumptions:
--states and localities can't be trusted to protect minority rights and ensure fairness and equity;
--if the federal government doesn't punish errors and omissions they will become the norm--federal systems have to prevent errors (even if it means impeding results);
--statutory and administrative rules and regulations can control jurisdictions or grant recipients otherwise inclined to fraud, waste, and abuse;
--each and every congressional committee and federal department and agency has a right to design its own standards and priorities--regardless of how it affects the citizen-customer;
--the federal government is more competent and exercises better judgment than state and local elected officials and managers;
--flexibility and latitude are inconsistent with performance and delivery on national programmatic goals; and
--the federal government can design how best to do things, as well as the overall outcomes desired, from desks and offices in executive agencies and the halls of Congress in Washington, D.C.
Each of these notions has had merit at points in our history and with respect to specific, often notorious cases of abuse. But they do not provide a foundation for reinventing government or refocusing our collective intergovernmental effort toward outcomes instead of process.
To create a bottom-up solution, federal legislation will be required. Omnibus legislation that authorizes states and localities to consolidate funding streams and reconcile contradictory rules as a matter of right (for smaller amounts) and as a matter of federal-state-local negotiation for more complicated and comprehensive proposals should be the goal.
Incentives should be provided in the legislation to encourage states and localities to design solutions from the citizen-customers' perspective--to integrate services at the point of contact between citizen- customers and the government and to eliminate their own state and local bureaucratic barriers to more effective outcomes.
Partnership should be the hallmark of the proposal-- between the federal and lower levels of government, and among and between the public, private, and private non-profit sectors at the service delivery level. Incentives to obtain broad stakeholder commitment to new ways of service delivery and to reduce paperwork, monitoring, and process controls should be designed.
At the same time legitimate federal interests must be protected and compliance with broad cross-cutting regulations (equal employment opportunity, worker health and safety, for example) ensured. By focusing on what outcomes should be rather than precisely how to achieve them, both the flexibility needed of states and localities and the need to protect legitimate federal interests can be met.
--What funding streams will be included?
--If states and localities are allowed to consolidate some smaller amounts and reconcile regulatory conflicts associated with them as a matter of right, how high or low should the threshold be?
--How can accountability to Congress and federal departments be ensured?
--How can yet another bureaucratic structure and more process to implement such a program be avoided?
--How will these recommendations be affected by, or can they affect, administration initiatives in the area of health and welfare reform?
--How would conflicting eligibility standards be reconciled and what are the potential consequences of letting states and localities choose the least restrictive rules?
Each of these issues can be successfully addressed if federal, state, and local officials collaborate on drafting the necessary legislation and pursue its implementation in good faith. The following suggests how a bottom-up solution could work--it is intended to be illustrative rather than prescriptive.
After a grant award of federal funds has been made to a state, or local government agency, that recipient agency may elect to consolidate all or part of the grant program with another program serving the same customers. [Endnote 3] To be eligible for consolidation, the following requirements must be met:
1. The integrated program must demonstrably address the national objectives set forth in the legislation authorizing the federal program to be consolidated.
2. The consolidating agency must define in writing, after appropriate consultation with stakeholder groups having an interest in the program, the measures of effectiveness that will be used to evaluate the success of the consolidated program.
3. If the federal program being consolidated is small (each individual grant under $10 million), the consolidation is triggered by written notification to the responsible federal awarding office (and state agency, if applicable) of the decision to consolidate. The awarding office may respond with comments within 30 days. The notification must:
a. Describe the way in which the consolidation will provide effective integration of service delivery, including appropriate descriptive information about the integrated program, such as information about the customers served or area covered;
b. Explain how the consolidated program will demonstrably address the national objectives of the federal program so consolidated; and
c. Define the measures of effectiveness that will be used to judge the success of the program.
4. If the federal program being consolidated is large, i.e., any individual grant over $10 million, the federal awarding office(s) (and state, if applicable) must approve the proposal to consolidate. Procedurally, the consolidating agency will notify each responsible federal (and state) agency, providing the same information required for small bottom-up consolidations.
To ensure consistency with federal priorities and interests and to minimize red tape:
--The cross-cutting requirements with which grant recipients must comply (e.g., civil rights compliance) would be unaffected by this approach.
--Regular reporting on progress or service delivery goals to both federal agencies and congressional committees is assumed.
--One of the primary impediments to effective service delivery integration is the confusing array of often conflicting rules and regulations. Under the concept of bottom-up grant consolidation, the consolidating agency is authorized to resolve any conflict between the statutes or regulations of consolidated programs, by selecting which statute or regulation will be followed. The intent is to empower the integrating state or local agency to resolve such conflicts in favor of a customer-oriented program of service.
--A state or local government that has successfully integrated, or which demonstrates plans to effectively integrate, a federal grant program with other services will be accorded preference in future discretionary funding of the consolidated program.
--A federal program that is administered through states is eligible for consolidation at the point of service delivery. If the consolidating agency is a unit of local government, the state as well as the responsible federal agency must be notified of the consolidation, and on large consolidations should be included in the decisionmaking review.
2. Support proposals for Federal-State Flexibility Grants. (3)
While NPR advocates a broadly based bottom-up grant consolidation option, it will not be suitable or desirable for many jurisdictions where current accounting standards, contradictory rules, etc. are not major problems. Even in these cases, however, improvement in the overall system of grants administration can reduce cost and improve administrative effectiveness. Complementary to the bottom-up approach, NPR also recommends support for consolidation proposals that provide increased flexibility to states and localities that complement federal programs.
One such proposal, developed by the National Governors' Association (NGA) and National Conference of State Legislatures (NCSL), would consolidate ". . . approximately 55 existing programs, with a funding level of approximately $12.9 billion in fiscal 1993, into flexibility grants in six broad areas: education reform, workforce quality, air and land environmental management, water quality, defense conversion, and housing." The proposal is designed to respect the jurisdictional authority of congressional committees (see Appendix B).[Endnote 4]
The NGA/NCSL proposal was intended to affect only funds going to state recipients, although local government advocates are concerned that some pass- through monies may be affected. NPR's support for flexibility grants is conditioned upon the fact that there be no increase in grant funds going to overhead costs, or a related diminution in program allocations at the point of service delivery--concerns held by local governments that now receive some of these funds directly from the federal government.
3. Establish a Cabinet-level Enterprise Board to oversee new initiatives in community empowerment. (2)
In order to improve the implementation of federal domestic service delivery, the President should establish a Cabinet-level Enterprise Board. The Board would lead the federal government in a new effort to improve the coordination and integration of major domestic program service delivery initiatives. This board will be committed to solutions based on "bottom-up" initiatives and will approve large, cross-agency bottom-up grant consolidation proposals generated by state and local agencies, as well as by federal agencies. The board will be responsible for coordinating the administration's community empowerment agenda, beginning with the nine zones and 95 enterprise communities that passed Congress as part of the President's economic plan.[Endnote 5] The board will empower innovative communities by reducing red tape and regulation of federal programs.
The board should be chaired by the Vice President. The Assistant to the President for Domestic Policy and Assistant to the President for Economic Policy should serve as vice-chairs. The following cabinet- level officers should serve as members of the board:
Secretary of Commerce
Secretary of Labor
Administrator of EPA
Attorney General
Secretary of HUD
Secretary of Education
Secretary of Agriculture
Secretary of HHS
Secretary of the Interior
Director of OMB
Administrator of SBA
Secretary of Transportation
Secretary of Treasury
Director, Office of National Drug Control Policy
Chair, Council of Economic Advisors
It is recommended that the board include as regular, ex-officio members, representatives of state and local government and the private non-profit sector.
NPR recommends additional flexibility to give federal agency heads more discretionary authority to improve service delivery by waiving rules and regulations. This new authority also will provide additional incentives for cabinet officers to collaborate on overall improvements in service delivery. In addition to the Cabinet-level Enterprise Board, agency heads should collaborate by bringing management teams together outside of Washington, closer to the point of service delivery, and by working with their intergovernmental partners, state and local governments, to improve the service delivery system.
Cross References to Other NPR Accompanying Reports
Department of Health and Human Services, HHS01: Promote Effective, Integrated Service Delivery for Customers by Increasing Collaborative Efforts.
Department of Education, ED02: Reduce the Number of Programs the Department of Education Administers.
1. Library of Congress, Congressional Research Service, Federal Programs for Children and Their Families (Washington, D.C., December 15, 1992).
2. This problem actually happened in the Betts- Longworth area of Cincinnati, Ohio.
3. ". . . the same customers," must be liberally construed. Obviously a definition drawn to the specific individual would completely vitiate the concept.
4. Correspondence dated March 11, 1993 to the President from the NGA/NCSL.
5. Public Law 103_66, Omnibus Budget Reconciliation Act.
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