Solution to Grant Proliferation and Its Red Tape

1. Design bottom-up solution for problem of grant proliferation.

(Create flexibility and encourage innovation by designing a bottom-up
solution to the problem of grant proliferation and its accompanying red
tape.)

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.


Challenging Assumptions.

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.

Reviewers of the bottom-up concept have raised a number of legitimate
concerns and questions:

--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.


How Consolidation Would Work.

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.

Other Features of the Bottom-up program

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.

Endnotes

3. ". . . the same customers," must be liberally construed.
Obviously a definition drawn to the specific individual would completely
vitiate the concept.