Strengthening the Partnership in Intergovernmental Service Delivery

EXECUTIVE SUMMARY


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 THE SYSTEM IS IN QUESTION.

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]


DUPLICATION AND OVERLAP.

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.

INCREASED MANDATES.
  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.


Opportunity for Change.

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.


Goals of Change.

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.


Recommendations.

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.


Endnotes

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).