oversight

Federal Assistance: Grant System Continues to Be Highly Fragmented

Published by the Government Accountability Office on 2003-04-29.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                          United States General Accounting Office

GAO                       Testimony
                          Before the Subcommittee on Technology, Information
                          Policy, Intergovernmental Relations and the Census,
                          Committee on Government Reform, House of
                          Representatives

For Release on Delivery
Expected at 10 a.m. EDT
Tuesday, April 29, 2003
                          FEDERAL ASSISTANCE
                          Grant System Continues to
                          Be Highly Fragmented
                          Statement of Paul L. Posner, Managing Director
                          Federal Budget Issues and Intergovernmental Relations,
                          Strategic Issues




GAO-03-718T
                          A
                                               April 29, 2003


                                               FEDERAL ASSISTANCE

                                               Grant System Continues to Be Highly
Highlights of GAO-03-718T, a report to the
Subcommittee on Technology, Information        Fragmented
Policy, Intergovernmental Relations and
the Census, Committee on Government
Reform, House of Representatives




The Federal Financial Assistance               While the Federal Financial Assistance Management Improvement Act of
Management Improvement Act of                  1999 (FFAMIA) offers promising opportunities to improve the federal grant
1999 is one of the most recent in a            system, there remain over 600 different federal financial assistance programs
series of efforts to reform the                to implement domestic policy. Federal grant recipients must navigate
federal grants management system.              through a myriad of federal grant programs in order to find the appropriate
The act seeks to improve the
effectiveness and performance of
                                               source of funds to finance projects that meet local needs and address local
Federal financial assistance                   issues.
programs; simplify application and
reporting requirements; improve                Despite the process reforms initiated under FFAMIA, the federal grant
delivery of services to the public;            system continues to be highly fragmented, potentially resulting in a high
and facilitate greater coordination            degree of duplication and overlap among federal programs. Since the 1960s
among those responsible for                    the number and dollar amount of federal grant programs has grown
delivering such services. GAO has              substantially (see figure below). Growth in both the number of grant
a responsibility to evaluate the               programs and the level of funding have created a high level of complexity in
implementation of this Act by 2005             the system.
and will soon begin developing an
approach and methodology for the
study. This testimony describes
                                               While the act seeks to improve the effectiveness and performance of federal
the problems fostered by                       assistance programs by simplifying grant administration and facilitating
proliferation and fragmentation,               coordination among grant recipients, Congress could also consider
which the Act addresses indirectly.            consolidating grants that have duplicative objectives and missions.
                                               Consolidation can be achieved through a variety of ways including
                                               combining multiple programs into block grants, establishing performance
                                               partnerships, and providing for waiver authority of federal funding
We do not make any                             restrictions and program rules when requested and sufficiently justified by
recommendations in this
                                               state or local governments. Each of these alternatives has implications for
testimony; however, if Congress
chooses to address fragmentation               accountability that Congress will face as it considers improvements to the
in the federal grant system more               federal grant system.
directly we have provided several
options. Fragmentation of the                  Total Outlays for Grants to State and Local Governments (Fiscal Years 1940-2008).
grant system could be addressed                400 Billions of constant (1996) dollars
through consolidation of programs              350
with overlapping missions and                  300
objectives by (1) combining
multiple programs into block                   250

grants, (2) establishing                       200
performance partnerships, and                  150
(3) providing for waiver authority
                                               100
of federal funding restrictions and
program rules when requested and                50
sufficiently justified by state or               0
local governments.
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www.gao.gov/cgi-bin/getrpt?GAO-03-718T.
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                                                               Grants to state and local governments for payments to individuals
To view the full report, including the scope
and methodology, click on the link above.                      All other grants to state & locals
For more information, contact Paul Posner at   Source: Budget of the United States Government, FY 2004, Office of Management and Budget.
(202) 512-9573 or posnerp@gao.gov.
Mr. Chairman and Members of the Subcommittee:

I appreciate the opportunity to be here today to discuss issues relating to
the management of the federal grant system. The Federal Financial
Assistance Management Improvement Act of 1999 is one of the most recent
in a series of efforts to reform the federal grants management system
extending back to the mid-1960s. Like most of the earlier reforms, the act
seeks to:

• Improve the effectiveness and performance of Federal financial
  assistance programs;

• Simplify federal financial assistance application and reporting
  requirements;

• Improve delivery of services to the public; and

• Facilitate greater coordination among those responsible for delivering
  such services.

As such, the act seeks to address many of the administrative burdens that
confound the nation’s many grant recipients. As the 106th Congress found,
there are still more than 600 different federal financial assistance programs
to implement domestic policy—in fact, OMB’s latest count in 2001 found
668 different grant programs. On the one hand, the administration’s efforts
to implement the act seek to streamline the flow of information on the
various grants and develop uniform application and reporting procedures.
On the other hand, federal grant recipients must still navigate through a
myriad of federal grant programs in order to find the appropriate source of
funds to finance projects that meet local needs and address local issues. In
many cases, numerous grants from several different agencies support
similar purposes and activities, giving rise to the potential for
fragmentation in service delivery.

In testimony this morning you may hear about the administration’s efforts
to implement this act. GAO has a responsibility to evaluate the
implementation of the act by 2005 and will soon begin developing an
approach and methodology for the study. This hearing provides valuable
information to help us understand the progress made and helps us better
understand congressional oversight interests. We look forward to working
with your subcommittee as well as other congressional clients as we
develop our approach and methodology for this study.



Page 1                                                            GAO-03-718T
                    Today, I would like to provide a broader perspective on the structure of
                    federal grants to state and local governments in general and the kinds of
                    management and service delivery problems fostered by the proliferation of
                    federal assistance programs and the fragmentation of responsibility among
                    different federal departments and agencies. In my statement this morning,
                    I would like to offer a short history of grant management reform efforts,
                    describe the current profile of federal grants to states and local
                    governments, and discuss GAO’s recent work on these issues. Using the
                    homeland security grants as an example, I will explain how the system
                    continues to be highly fragmented, potentially resulting in a high degree of
                    duplication and overlap among federal programs. Finally, I would like to
                    suggest a range of alternatives available to Congress as it weighs reforms of
                    the nation’s homeland security grant programs.

                    This testimony draws upon our wide-ranging ongoing and completed work
                    on federal grants management issues, grant reform efforts, homeland
                    security, and performance management initiatives. We conducted our work
                    in accordance with generally accepted government auditing standards.



Trends in Federal   In 1862, Congress enacted the Morrill Act to help states establish and
                    maintain land-grant colleges. The act carefully specified the grant’s
Grants              objectives, placed conditions on the use of revenue derived from the sale of
                    the granted lands, and required annual reports. This established the
                    pattern of categorical grants—providing needed resources for specific
                    purposes in exchange for acceptance of minimum national standards. In
                    the 1960s, the number and dollar amount of federal assistance programs
                    grew substantially. (See fig. 1.) During this timeframe, major steps were
                    taken to broaden elementary, secondary, and higher education
                    opportunities; promote development in economically depressed areas; to
                    help finance health services and medical care for the indigent; launch a war
                    on poverty; and attempt a comprehensive physical, social, and economic
                    program to transform slum and blight-ridden cities into model
                    neighborhoods.




                    Page 2                                                            GAO-03-718T
Figure 1: Total Outlays for Grants to State and Local Governments (Fiscal Years 1940-2008)
400 Billions of constant (1996) dollars


350


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100


  50


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                 Grants to state and local governments for payments to individuals




                                                                                                                                      04

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                                                                                                                                      20

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                 All other grants to state & locals

Source: Budget of the United States Government, FY 2004, Office of Management and Budget.



                                                                 Growth in the both the numbers of new grant programs and the level of
                                                                 funding created greater complexity. During the 1960s and into the 1970s,
                                                                 various reforms were begun to address the complexity in the grant system.
                                                                 In 1968, Congress passed the Intergovernmental Cooperation Act of 1968
                                                                 that sought to improve the cooperation and coordination of activities
                                                                 among levels of government. From 1969-1973, the President initiated the
                                                                 Federal Assistance Review—a government-wide effort with a goal to
                                                                 streamline, simplify, and speed up the flow of federal assistance and
                                                                 improve the federal government’s responsiveness to its state and local
                                                                 partners. In addition, Federal Management Circular 74-7, issued in 1974,
                                                                 provided for standardized administrative provisions across grant programs.
                                                                 The Joint Funding Simplification Act of 1974 permitted grantees to
                                                                 streamline federal assistance by enabling them to combine funding from
                                                                 several grants administered by one or more federal agencies.

                                                                 As previous congressional committee reports have noted, these
                                                                 administrative simplification initiatives, while useful in addressing certain
                                                                 administrative burdens associated with grants, did not address the more
                                                                 fundamental challenges stemming from the fragmented nature of the grant
                                                                 system. For example, the House Government Operations Committee, the



                                                                 Page 3                                                                          GAO-03-718T
                                                       predecessor to the House Government Reform Committee, noted that the
                                                       legislative consolidation of closely related categorical programs into
                                                       broader purpose grants and the placement of similar programs in a single
                                                       federal agency have more potential for significantly improving grant-in-aid
                                                       administration.

                                                       Over the years, Congress at times has acted to improve the grant system
                                                       through consolidation. The Omnibus Budget Reconciliation Act of 1981
                                                       consolidated a number of social service programs into nine block grants
                                                       which allowed for greater state and local autonomy and flexibility in the
                                                       fashioning of local strategies to address federal objectives. More recently,
                                                       in 1996 the 104th Congress consolidated a number of welfare-related
                                                       programs into the Temporary Assistance for Needy Families block grant.
                                                       Notwithstanding these efforts, as figure 2 shows, over the last 20 years each
                                                       period of consolidation was followed by a proliferation of new federal
                                                       programs. Moreover, some of the block grants were later recategorized, as
                                                       Congress added new set-asides and cost-ceilings to address national
                                                       programmatic concerns, thereby limiting the grants’ flexibility.



Figure 2: Trend in the Number of Federal Grant Programs to State and Local Governments 1980-2001
700 Number of grants

650

600

550

500

450

400

350

300

250

200


  0
        80

                81

                         82

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       Year
Source: OMB analysis.




                                                       Page 4                                                                             GAO-03-718T
A sizable increase in the number of grant programs could be justified and
simply be an indication that as society evolves the nation’s needs also
change and we need new tools—in the form of new programs—at our
disposal to address those needs. As such, program proliferation may be an
indication that there is heightened congressional interest in ensuring that
federal funds are directed in such a way as to meet specific—more
narrowly defined—national goals and objectives. Nonetheless, the
problems associated with a proliferation of federal programs are
compounded when multiple grants are available for the same or similar
purposes, forcing grant recipients to package different programs with
potentially conflicting requirements to address common problems.

Moreover, the total funds available for many of these programs are quite
small. As figure 3 shows, the vast majority of available federal funds—78
percent—are concentrated in 20 large grant programs. Stated differently,
Mr. Chairman, in 2001 169 federal grant programs were funded at less than
$5 million. Cumulatively, these small programs receive less than 1 percent
of all federal funds provided through the grant system.



Figure 3: Grant Fragmentation: Many Grants Were Funded At Less Than $5 Million
in 2001
                                                       456




  258.7


                                         191
                                                                      169




                                 66.8

            20
                                                 5.6            0.4
    Largest                    Programs of       Programs       Programs
     grant                    $50M or more      between $5M   less than $5M
   programs                   (not in top 20)    and $50M

          Obligations (in billions)
          Number of programs

Source: OMB analysis.




Page 5                                                                        GAO-03-718T
                       As you can imagine, at the recipient level, the funds available can be quite
                       small, particularly—as you may hear in the statements of members of the
                       second panel—in relation to the administrative effort and costs incurred in
                       applying for and managing the grant. For example, FEMA’s Hazardous
                       Materials Assistance program provided grants from “a few dollars to
                       $20,000” per applicant, according to the Catalog of Federal Domestic
                       Assistance. FEMA’s State Fire Training Systems Grants ranged from only
                       $25,000 to $30,000 per state. While these funds undoubtedly served
                       important purposes, the question is whether the funds could have been
                       provided through more efficient means.



Continuing             Many of the same grants management challenges from the past are still
                       with us today. GAO’s work over the years has repeatedly shown that
Fragmentation in the   mission fragmentation and program overlap are widespread in the federal
Structure of Federal   government and that crosscutting program efforts are not well
                       coordinated. As far back as 1975, GAO reported that many of the
Grants                 fundamental problems in managing federal grants were the direct result of
                       the proliferation of federal assistance programs and the fragmentation of
                       responsibility among different federal departments and agencies.1 While
                       we noted that the large number and variety of programs tended to ensure
                       that a program is available to meet a defined need, we found that
                       substantial problems occur when state and local governments attempt to
                       identify, obtain, and use the fragmented grants-in-aid system to meet their
                       needs.

                       More recently, GAO has addressed mission fragmentation through the
                       framework provided under the Government Performance and Results Act
                       (the Results Act). The Results Act's key stages include defining missions
                       and outcomes, developing a strategy, measuring performance, and using
                       performance information. For example, we reported in 2000 on the 50
                       programs for the homeless that were administered by 8 federal agencies.
                       Housing services were provided under 23 programs operated by 4 agencies,
                       and food and nutrition services were under 26 programs administered by 6
                       agencies.2


                       1
                         U.S. General Accounting Office, Fundamental Changes are Needed in Federal Assistance
                       to State and Local Governments, GAO/GGD-75-75 (Washington, D.C.: Aug. 19, 1975).
                       2
                         U.S. General Accounting Office, Managing for Results: Continuing Challenges to
                       Effective GPRA Implementation, GAO/T--GGD-00-178 (Washington, D.C.: July 20, 2000).




                       Page 6                                                                    GAO-03-718T
                    We recently identified 44 programs administered by 9 different federal
                    agencies that provided a range of employment and training services.3 In the
                    late 1990s, the Congress tried to bring some unity to this fragmented
                    employment and training system by requiring states to provide most
                    federally funded employment-related services through a centralized service
                    delivery system—one-stop centers. Two years earlier, welfare reform
                    legislation provided states with the flexibility to focus on helping needy
                    adults with children find and maintain employment. Despite the similar
                    focus, the welfare program was not required to be a part of the new
                    workforce investment system. We recently reported4 that nearly all states
                    report some coordination of their welfare and workforce systems services
                    at the state and local level, but that several challenges remain. For
                    example, different definitions of what constitutes work as well as complex
                    reporting requirements under both programs hamper state and local
                    coordination efforts. Though some states and localities have found
                    creative ways to work around these issues, the differences remain barriers
                    to coordination for many others. Each of these programs is operated out of
                    a different federal agency; the welfare program is administered from the
                    Department of Health and Human Services (HHS), and the Department of
                    Labor (Labor) administers the workforce investment program. We found
                    that HHS and Labor have not addressed differences in program definitions
                    and reporting requirements.



Fragmentation in    It falls to the 108th Congress to redesign the nation’s homeland security
                    grant programs in light of the events of September 11, 2001. In so doing,
Homeland Security   Congress must balance the needs of our state and local partners in their
Grants for First    call for both additional resources and more flexibility with the nation’s
                    goals of attaining the highest levels of preparedness. This goal is too
Responders          important, and federal resources too scarce, to worry about holding our
                    partners accountable after they have already spent the funds.




                    3
                      U.S. General Accounting Office: Multiple Employment and Training Programs:
                    Funding and Performance Measures for Major Programs GAO-03-589 (Washington, D.C.:
                    Apr. 18, 2003.)
                    4
                     U.S. General Accounting Office, Workforce Investment Act: States and Localities
                    Increasingly Coordinate Services for TANF Clients, but Better Information Needed on
                    Effective Approaches, GAO-02-696 (Washington D.C.: July 3, 2002).




                    Page 7                                                                    GAO-03-718T
Funding increases for combating terrorism have been dramatic and reflect
the high priority that the administration and Congress place on this
mission. These increases bring an added responsibility to ensure that this
large investment of taxpayer dollars is wisely applied. We recently
reported on some of the management challenges that could stem from
increased funding and noted that these challenges—including grants
management—could impede the implementation of national strategies if
not effectively addressed.5

GAO testified before this subcommittee last year on the development of
counter-terrorism programs for state and local governments that were
similar and potentially duplicative. We have identified at least 16 different
grant programs that can be used by the nation’s first responders to address
the nation’s homeland security. These grants are currently provided
through two different directorates of the new Department of Homeland
Security, the Department of Justice, and HHS and serve state governments,
cities and localities, as well as counties and others. Multiple fragmented
grant programs can create a confusing and administratively burdensome
process for state and local officials seeking to use federal resources for
pressing homeland security needs. This is illustrated in figure 4 which
shows the complex delivery structure for these 16 preparedness grant
programs.




5
  U.S. General Accounting Office, Combating Terrorism: Funding Data Reported to
Congress Should Be Improved, GAO-03-170 (Washington, D.C., Nov. 26, 2002).




Page 8                                                                   GAO-03-718T
Figure 4: Web of Federal Homeland Security Grant Programs

  Department of Homeland Security           Department of Justice              Department of Health and Human Services


      Border and          Emergency                             Office of                Center for            Health
                                           Office of
    Transportation       Preparedness                          Community                 Disease             Resources
                                            Justice
       Security          and Response                           Policing                Control and         and Services
                                           Programs
        (ODP)              (FEMA)                               Services                Prevention          Administration




                                                       State




                                                     City/County



                    Law                                                Emergency                   Public Health/
                                          Fire
                Enforcement                                           Medical Service                Hospitals
Source: GAO analysis.


                                        To illustrate the level of fragmentation across homeland security programs,
                                        we have shown in table 1 significant features for the major assistance
                                        programs targeted to first responders.6 As the table shows, substantial
                                        differences exist in the types of recipients and the allocation methods for
                                        grants addressing similar purposes. For example, some grants go directly
                                        to local first responders such as firefighters, others go to state emergency
                                        management agencies, and at least one goes to state fire marshals. The
                                        allocation methods differ as well—some are formula grants while others
                                        involve discretionary decisions by federal agency officials on a project
                                        basis. Grant requirements differ as well—DHS’ Assistance to Firefighters
                                        Grant has a maintenance of effort requirement (MOE) while the State Fire
                                        Training Systems Grant has no similar requirement.




                                        6
                                          This table is not meant to be all-inclusive; there are other—broader purpose—grants which
                                        may also be used for first responder preparedness.




                                        Page 9                                                                        GAO-03-718T
Table 1: Selected Characteristics of Homeland Security Grant Programs

                                                                                 Funding Formulas And Cost Sharing
Grant               Federal Agency      Grantee                    Match   MOE   Provisions
State Domestic      ODP/DHS             State and local units of                 The funds are allocated to the States on the basis
Preparedness                            government                               of a formula that provides a base amount to each
Equipment                                                                        State, with the balance of the funds distributed on
Support Program                                                                  the basis of population.
Local Law           Bureau of Justice   Local units of             •       •     The federal funds may not exceed 90 percent of the
Enforcement Block   Assistance in the   government                               total costs of a program.
Grants Program      Office of Justice
(LLEBG)             Programs, DOJ                                                Federal funds may not be used to supplant state
                                                                                 and local funds.
Emergency           FEMA/DHS            State and local units of   •             For each state, a target allocation is derived by
Management                              government                               calculating the same proportion of available funds
Performance                                                                      as the State received the prior year.
Grants (EMPG)
                                                                                 A matching requirement is calculated for each
                                                                                 State. Each recipient's cost share percentage will
                                                                                 increase by 1 percent over the prior year until the
                                                                                 50/50 level is reached.
Edward Byrne        Bureau of Justice   State and local units of   •       •     Each participant state receives a base amount of
Memorial State      Assistance in the   government                               $500,00 or .25 percent of the amount available for
and Local Law       Office of Justice                                            the program, whichever is greater, with the
Enforcement         Programs, DOJ                                                remaining funds allocated to each state on the
Assistance (Byrne                                                                basis of the state's relative share of total U.S.
Formula Grant                                                                    population.
Program)
                                                                                 Match for the formula grant programs will be
                                                                                 provided for on a project-by-project basis, state-
                                                                                 wide basis, unit-of-government basis, or a
                                                                                 combination of the above.

                                                                                 The Act restricts the use of funds for supplanting
                                                                                 state and local funds and land acquisition.
State Homeland  ODP/DHS                 State and local units of                 FY2003 allocations determined by using a base
Security Grant                          government                               amount of .75 percent of the total allocation to the
Program (SHSGP)                                                                  states (including DC and the Puerto Rico) and .25
                                                                                 percent of the total allocation for the territories, with
                                                                                 the balance of funds being distributed on a
                                                                                 population-share basis.
State and Local     ODP/DHS             Providers of Training,                   none
Domestic                                States, and local units
Preparedness                            of government
Training Program
State and Local     ODP/DHS             Providers of Exercise                    none
Domestic                                Support, States, and
Preparedness                            local units of
Exercise Support                        government




                                            Page 10                                                                          GAO-03-718T
(Continued From Previous Page)
                                                                                  Funding Formulas And Cost Sharing
Grant                Federal Agency      Grantee                    Match   MOE   Provisions
State and Local      ODP/DHS             Providers of Techincal                   none
Domestic                                 Assistance
Preparedness
Technical
Assistance
First Responder   FEMA/DHS               Fire & emergency first                   none
Counter-Terrorism                        responders; law
Assistance                               enforcement
                                         personnel with
                                         operational and/or
                                         incident mgt
                                         responsibilities
State Fire Training FEMA/DHS             Representatives from                     none
Systems Grants                           the 50 State Fire
(National Fire                           Training Systems
Academy Training
Grants)
Hazardous            FEMA/DHS            States, locals, tribes,                  none
Materials                                US territories, State
Assistance                               Emergency Response
Program                                  Committees, and
                                         Local Emergency
                                         Planning
                                         Commissions
Assistance to        FEMA/DHS            Fire departments in        •       •     Applicants who protect a population of 50,000 or
Firefighters Grant                       the States. An EMS                       less must provide a nonfederal cost-share of not
                                         unit can apply if the                    less than 10 percent of the total award. Applicants
                                         unit is under the                        who protect a population of 50,000 or more must
                                         auspices of a fire                       provide a nonfederal cost-share of not less than 30
                                         department as defined                    percent of the total award.
                                         above.
                                                                                  This program also has a maintenance-of-effort
                                                                                  requirement.
Edward Byrne         Bureau of Justice   State and local public             •     Federal funds may not be used to supplant state
Memorial State       Assistance in the   safety entities.                         and local funds.
and Local Law        Office of Justice
Enforcement          Programs, DOJ
Discretionary
Grants Program
Public Safety        Office of           State and local units of   •             Some grants, such as for hiring and the Schools
Partnership and      Community           government                               Grant Program, require no local percentage match
Community            Oriented Policing                                            required. Other awards generally are made for 75
Policing Grants      Services, DOJ                                                percent of allowable project costs.
(COPS)




                                             Page 11                                                                     GAO-03-718T
(Continued From Previous Page)
                                                                                                  Funding Formulas And Cost Sharing
Grant                       Federal Agency                Grantee                   Match   MOE   Provisions
CDC -                       CDC/HHS                       States, political                       none
Investigations &                                          subdivisions of States,
Technical                                                 local health
Assistance                                                authorities, and
                                                          organizations with
                                                          specialized health
                                                          interests may apply.
Public Health and           Health Resources              Federal agencies,                       none
Social Services             and Services                  State and local
Emergency                   Administration/               governments, and
Fund—                       HHS                           other service
Bioterrorism                                              providers in areas
Hospital                                                  impacted.
Preparedness
Program
Source: Catalogue of Federal Domestic Assistance, December 2002.


                                                                   Table 2 shows considerable overlap in the activities that these programs
                                                                   support—for example, funding from both the State and Local Domestic
                                                                   Preparedness Exercise Support Program and the State Domestic
                                                                   Preparedness Equipment Support Program can be used for planning and
                                                                   conducting exercises.




                                                                   Page 12                                                            GAO-03-718T
Table 2: Overlap and Duplication in Homeland Security Grant Programs

Grant                                                                                       Equipment    Training    Exercises    Planning
State Domestic Preparedness Equipment Support Program                                       •                        •            •
Local Law Enforcement Block Grants Program (LLEBG)                                          •            •                        •
Emergency Management Performance Grants (EMPG)                                                           •           •            •
Edward Byrne Memorial State and Local Law Enforcement Assistance                            •            •           •            •
(Byrne Formula Grant Program)
State Homeland Security Grant Program (SHSGP)                                               •            •           •            •
State and Local Domestic Preparedness Training Program                                                   •
State and Local Domestic Preparedness Exercise Support                                                               •            •
State and Local Domestic Preparedness Technical Assistance                                                                        •
First Responder Counter-Terrorism Assistance                                                             •
State Fire Training Systems Grants (National Fire Academy Training Grants)                               •
Hazardous Materials Assistance Program                                                                   •           •            •
Assistance to Firefighters Grant                                                            •            •           •            •
Edward Byrne Memorial State and Local Law Enforcement Discretionary                         •            •           •            •
Grants Program
Public Safety Partnership and Community Policing Grants (COPS)                                           •
CDC - Investigations & Technical Assistance                                                                                       •
Public Health and Social Services Emergency Fund—Bioterrorism Hospital                      •            •                        •
Preparedness Program
Source: Catalogue of Federal Domestic Assistance, December 2002.


                                                                   The fragmented delivery of federal assistance can complicate coordination
                                                                   and integration of services and planning at state and local levels. Homeland
                                                                   security is a complex mission requiring the coordinated participation of
                                                                   many federal, state, and local government entities as well as the private
                                                                   sector. As the National Homeland Security Strategy recognizes, preparing
                                                                   the nation to address the new threats from terrorism calls for partnerships
                                                                   across many disparate actors at many levels in our system. Within local
                                                                   areas, for example, the failure of local emergency communications systems
                                                                   to operate on an interoperable basis across neighboring jurisdictions
                                                                   reflects coordination problems within local regions. Local governments are
                                                                   starting to assess how to restructure relationships along contiguous local
                                                                   entities to take advantage of economies of scale, promote resource sharing,
                                                                   and improve coordination on a regional basis. The complex web of federal
                                                                   grants depicted in figure 4 suggests that by allocating federal aid to
                                                                   different players at the state and local level, federal grant programs may
                                                                   continue to reinforce state and local fragmentation.


                                                                   Page 13                                                            GAO-03-718T
                         Some have observed that federal grant restrictions constrain the flexibility
                         state and local officials need to tailor multiple grants to address state and
                         local needs and priorities. For example, some local officials have testified
                         that rigid federal funding rules constrains their flexibility and cannot be
                         used to fund activities that meet their needs. We have reported that overlap
                         and fragmentation among homeland assistance programs fosters
                         inefficiencies and concerns in first responder communities. State and local
                         officials have repeatedly voiced frustration and confusion about the
                         burdensome and inconsistent application processes among programs. We
                         concluded that improved coordination at both federal and state and local
                         levels would be promoted by consolidating some of these first responder
                         assistance programs.7



Potential Alternatives   In addressing the fragmentation prompted by the current homeland
                         security grant system, Congress has several alternatives available. Actions
                         taken by federal agencies under the rubric of the Federal Financial
                         Assistance Management Improvement Act of 1999 will help to streamline
                         the process for obtaining aid across the myriad of programs and
                         standardize administrative requirements. These initiatives promise to
                         reduce administrative burdens at all levels and promote a more efficient
                         grants management process in general.

                         Going beyond these initiatives to address the underlying fragmentation of
                         grant programs remains a challenge for our federal system in the homeland
                         security area, as well as across other program areas. Several alternatives
                         have been pursued in the past to overcome problems fostered by
                         fragmentation in the federal aid structure. I will discuss three briefly here—
                         block grants, performance partnerships, and grant waivers.

                         Block grants are one option that Congress has chosen to consolidate
                         related programs. Block grants currently are used to deliver assistance in
                         such areas as welfare reform, community development, social services, law
                         enforcement, public health and education. While such initiatives often
                         involved the consolidation of categorical grants, block grants also typically
                         devolve substantial authority for setting priorities to state or local
                         governments. Under block grants, state and local officials bear the primary
                         responsibility for monitoring and overseeing the planning, management,

                         7
                           U.S. General Accounting Office, Combating Terrorism: Selected Challenges and Related
                         Recommendations, GAO-01-822 (Washington, D.C., Sept. 20, 2001).




                         Page 14                                                                    GAO-03-718T
and implementation of activities financed with federal grant funds.
Accordingly, block grant proposals generally call for Congress to make a
fundamental decision about where power and authority to make decisions
should rest in our federal system for a particular program area.

While block grants devolve authority for decisions, they can and have been
designed to facilitate some accountability for national goals and objectives.
Since federal funds are at stake, Congress typically wants to know how
federal funds are spent and what state and local governments have
accomplished. Indeed, the history of block grants suggests that the absence
of national accountability and reporting for results can either undermine
continued congressional support or prompt more prescriptive controls to
ensure that national objectives are being achieved. For instance, the block
grants enacted as part of the Omnibus Reconciliation Act of 1981 were not
implemented in a manner that encouraged consistent reporting of program
data. These block grants have been subject to at least 58 subsequent
congressional actions, many of which served to recategorize the programs
by tightening program requirements and limiting the grantees’ flexibility.8

The consolidation of categorical grants, however, need not be structured as
a block grant. In fact, federal funding streams can be combined while
retaining strong performance oriented accountability by state and local
governments for discrete federal goals and objectives. State and local
governments can be provided greater flexibility in using federal funds in
exchange for more rigorous accountability for results. One example of this
model involves what became known as “performance partnerships,”
exemplified by the initiative of the Environmental Protection Agency
(EPA). Under this initiative, states may voluntarily enter Performance
Partnership Agreements with their EPA regional offices which can include
major federal environmental grant programs. These agreements delineate
which problems would receive priority attention within a state and how the
state’s performance will be measured. Congress provided states with
flexibility to use funds from two or more environmental program grants in
a more flexible and streamlined manner.

The benefits of the EPA performance partnership system are ones that
should also be helpful for other areas such as homeland security. EPA
partnerships (1) allowed states to shift resources to address priority needs


8
  U.S. General Accounting Office, Block Grants: Increases in Set-Asides and Cost Ceilings
Since 1982, GAO/HRD-92-58FS (Washington, D.C., July 27, 1992).




Page 15                                                                     GAO-03-718T
and fund crosscutting efforts that are difficult to support with traditional
grants, (2) provided a way to support innovative or unique projects, (3)
increased the focus on environmental results and program effectiveness,
and (4) fostered reduced reporting burden and improved information
management.

But we reported some significant implementation issues for the
performance partnership approach as well. In 1999, we reported9 that the
initiative was hampered by an absence of baseline data against which
environmental improvements could be measured and the inherent
difficulty in quantifying certain results and linking them to program
activities and the considerable resources needed for high-quality
performance measurement.

The challenge for developing performance partnerships for homeland
security grants will be daunting because the administration has yet to
develop clearly defined federal and national performance goals and
measures. We have reported that the initiatives outlined in the National
Strategy for Homeland Security often do not provide performance goals
and measures to assess and improve preparedness at the federal or
national levels. The strategy generally describes overarching objectives
and priorities, but not measurable outcomes. Lacking such measures and
outcomes at the national level will surely encumber the federal, state, and
local partners’ ability to establish agreements on what sort of goals are
expected of our state and local partners, much less how they could be
measured.

A third approach to overcoming fragmentation could be to provide in law
for waivers of federal funding restrictions and program rules when
requested and sufficiently justified by state or local governments. In the
homeland security area, legislation has been introduced to provide waivers
for states to use funds from one category of federal assistance, such as
equipment, to support other homeland security activities such as training.
This approach could help recipients adjust available federal funds to
unique needs and conditions in each state. Unlike full grant
consolidation—which is legislated—each waiver must be approved by
federal agency officials before grantees could have the kind of flexibility


9
  U.S. General Accounting Office, Environmental Protection: Collaborative EPA-State
Effort Needed to Improve New Performance Partnership System, GAO/RCED-99-171
(Washington, D.C.: June 21, 1999).




Page 16                                                                    GAO-03-718T
              they desire. Some might view the approval requirement as an additional
              administrative burden while others consider the federal role essential to
              ensuring accountability.



Conclusions   Mr. Chairman, we are eager to work with your subcommittee and others to
              improve the efficiency and effectiveness of our federal grant system.
              Improving the grant partnership among federal and nonfederal officials is
              vital to achieving important national goals. The Federal Financial
              Assistance Management Improvement Act of 1999 offers promising
              opportunities to help those officials achieve their mutual goals through the
              use of federal assistance programs. We look forward to reviewing the
              activities undertaken pursuant to the Act with an eye toward both
              highlighting progress as well as identifying further improvements that can
              be made at all levels of our federal system. We are also ready to assist
              Congress in identifying the problems stemming from the underlying nature
              of the grant system and in sorting through the tradeoffs Congress will face
              in resolving these problems.


              This concludes my prepared statement. I would be pleased to answer any
              questions you or the members of the subcommittee may have at this time.




(450211)      Page 17                                                          GAO-03-718T
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