[House Report 104-847]
[From the U.S. Government Publishing Office]



104th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 2d Session                                                     104-847
_______________________________________________________________________


 
             LOCAL EMPOWERMENT AND FLEXIBILITY ACT OF 1996

                                _______
                                

 September 26, 1996.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

  Mr. Clinger, from the Committee on Government Reform and Oversight, 
                        submitted the following

                              R E P O R T

                             together with

                     MINORITY AND DISSENTING VIEWS

                        [To accompany H.R. 2086]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Government Reform and Oversight, to whom 
was referred the bill (H.R. 2086) to increase the overall 
economy and efficiency of Government operations and enable more 
efficient use of Federal funding, by enabling local governments 
and private, nonprofit organizations to use amounts available 
under certain Federal assistance programs in accordance with 
approved local flexibility plans, having considered the same, 
report favorably thereon with an amendment and recommend that 
the bill as amended do pass.
    The amendment is as follows:
    Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Local Empowerment and Flexibility Act 
of 1996''.

SEC. 2. FINDINGS.

  The Congress finds that--
          (1) many Federal programs have addressed the Nation's 
        problems by providing categorical financial assistance with 
        detailed requirements relating to the use of funds;
          (2) although Federal financial assistance has been directed 
        at critical national needs, some inflexible program 
        requirements impede the effective delivery of services;
          (3) State, local, and tribal governments and private, 
        nonprofit organizations are dealing with increasingly complex 
        problems that require the delivery of services in many 
        different ways;
          (4) the Nation's communities are diverse, and national needs 
        often require different solutions in different communities;
          (5) many recipients of Federal financial assistance have 
        innovative planning and public involvement strategies for 
        providing services which, if given sufficient flexibility to 
        integrate Federal financial assistance from multiple programs 
        or with State, local, tribal, or private, nonprofit programs, 
        could be used to maximize the effectiveness and efficiency of 
        Federal financial assistance; and
          (6) it is more important than ever to--
                  (A) promote more effective and efficient delivery of 
                government services to meet the needs of individuals, 
                families, and communities;
                  (B) respond flexibly to national needs in the 
                Nation's diverse communities;
                  (C) reduce the barriers between programs that impede 
                the ability of State, local, and tribal governments and 
                private, nonprofit organizations to effectively deliver 
                services, and meet national as well as community 
                objectives;
                  (D) coordinate the delivery of programs and services 
                by administering agencies; and
                  (E) allow State, local, and tribal governments and 
                private, nonprofit organizations to be innovative in 
                creating solutions to address national policy goals in 
                ways that recognize the diversity of our Nation's 
                communities.

SEC. 3. PURPOSES.

  The purposes of this Act are to--
          (1) ensure the more efficient use of Federal, State, local, 
        and tribal resources through program flexibility and 
        coordination;
          (2) place emphasis in Federal programs on achieving Federal 
        policy goals;
          (3) remove Federal impediments to local service delivery;
          (4) enable State, local, and tribal governments and private, 
        nonprofit organizations to adapt programs of Federal financial 
        assistance to the particular circumstances of their 
        communities, by--
                  (A) integrating appropriate Federal financial 
                assistance programs into flexibility or coordination 
                plans that increase the effectiveness and efficiency of 
                those programs in their communities;
                  (B) simplifying procedures across Federal programs to 
                avoid needless duplication, overlap, and cost; and
                  (C) authorizing Federal officials to waive some 
                program requirements when necessary to enhance the 
                delivery of services; and
          (5) encourage State, local, and tribal governments and 
        private, nonprofit organizations to work together to build 
        stronger cooperative partnerships to address critical needs and 
        problems.

SEC. 4. DEFINITIONS.

  For purposes of this Act:
          (1) Approved flexibility or coordination plan.--The term 
        ``approved flexibility or coordination plan'' means a 
        flexibility or coordination plan (or part of such a plan) that 
        is approved by the Community Empowerment Board under section 8, 
        and for which the President certifies that approval under 
        section 8(g).
          (2) Board.--The term ``Board'' means the Community 
        Empowerment Board established under section 6.
          (3) Community advisory committee.--The term ``community 
        advisory committee'' means such a committee established or 
        designated by an eligible applicant in accordance with section 
        10.
          (4) Covered federal financial assistance program.--The term 
        ``covered Federal financial assistance program'' means an 
        eligible Federal financial assistance program that is included 
        in a flexibility or coordination plan of an eligible applicant.
          (5) Eligible applicant.--The term ``eligible applicant'' 
        means--
                  (A) a State, local, or tribal government, or 
                qualified organization that is eligible to receive 
                financial assistance under 1 or more eligible Federal 
                financial assistance programs; or
                  (B) a qualified consortium.
          (6) Eligible federal financial assistance program.--The term 
        ``eligible Federal financial assistance program''--
                  (A) except as provided in subparagraph (C), means a 
                domestic assistance program (as defined under section 
                6101(4) of title 31, United States Code) under which 
                financial assistance is available, directly or 
                indirectly, to eligible applicants;
                  (B) includes any component of a program described in 
                subparagraph (C), under which financial assistance is 
                provided to pay administrative costs if the level of 
                Federal funding for those costs is, by statute or 
                regulation, established separately from the level of 
                Federal funding for benefits provided under the 
                program; and
                  (C) except as provided in subparagraph (B), does not 
                include a program carried out with direct spending (as 
                defined in section 250(c)(8) of the Balanced Budget and 
                Emergency Deficit Control Act of 1985 (2 U.S.C. 
                900(c)(8)).
          (7) Flexibility or coordination plan.--The term ``flexibility 
        or coordination plan'' means a comprehensive plan for the 
        integration and administration by an eligible applicant of 
        financial assistance provided by the Federal Government under 2 
        or more eligible Federal financial assistance programs, that--
                  (A) combines funds from Federal, State, local, or 
                tribal government or private sources to address the 
                service needs of a community; or
                  (B) is a strategic plan submitted in an application 
                for designation as an enterprise community or an 
                empowerment zone under section 1391 of the Internal 
                Revenue Code of 1986 (26 U.S.C. 1391).
          (8) Local government.--The term ``local government'' means--
                  (A) a political subdivision of a State that is a unit 
                of general local government (as defined under section 
                6501 of title 31, United States Code);
                  (B) any combination of political subdivisions 
                described in subparagraph (A) that submits an 
                application to the Board; or
                  (C) a local education agency (as defined under 
                section 14101(18) of the Elementary and Secondary 
                Education Act of 1965 (20 U.S.C. 8801(18)).
          (9) Priority funding.--The term ``priority funding'' means 
        giving higher priority (including by the assignment of extra 
        points, if applicable) to applications for Federal financial 
        assistance submitted by an eligible applicant pursuant to this 
        Act.
          (10) Qualified consortium.--The term ``qualified consortium'' 
        means a group that--
                          (A) is composed of any combination of 
                        eligible applicants described in paragraph 
                        (5)(A); and
                          (B) includes not less than 3 eligible 
                        applicants described in paragraph (5)(A) that 
                        provide services under eligible Federal 
                        financial assistance programs in not less than 
                        3 of the following areas:
                                  (i) Education.
                                  (ii) Head Start.
                                  (iii) Child care.
                                  (iv) Family support and preservation.
                                  (v) Maternal and child health.
                                  (vi) Job training.
                                  (vii) Housing.
                                  (viii) Nutrition.
                                  (ix) Juvenile justice.
                                  (x) Drug abuse prevention and 
                                treatment.
                                  (xi) Community and economic 
                                development.
          (11) Qualified organization.--The term ``qualified 
        organization'' means a private, nonprofit organization 
        described in section 501(c)(3) of the Internal Revenue Code of 
        1986 (26 U.S.C. 501(c)(3)) that is exempt from taxation under 
        section 501(a) of the Internal Revenue Code of 1986 (26 U.S.C. 
        501(a)).
          (12) State.--The term ``State'' means each of the 50 States, 
        the District of Columbia, Puerto Rico, American Samoa, Guam, 
        the Northern Mariana Islands, and the Virgin Islands.
          (13) State legislative official.--The term ``State 
        legislative official'' means--
                  (A) the majority leader of a chamber of a State 
                legislature; and
                  (B) the minority leader of a chamber of a State 
                legislature.
          (14) Tribal government.--The term ``tribal government'' means 
        the governing entity of an Indian tribe, as that term is 
        defined in the Federally Recognized Tribe List Act of 1994 (25 
        U.S.C. 479a).

SEC. 5. PROVISION OF FEDERAL FINANCIAL ASSISTANCE IN ACCORDANCE WITH 
                    APPROVED FLEXIBILITY OR COORDINATION PLAN.

  Notwithstanding any other law, amounts available to an eligible 
applicant under a covered Federal financial assistance program included 
in an approved flexibility or coordination plan shall be paid and 
administered in the manner specified in the approved flexibility or 
coordination plan.

SEC. 6. ESTABLISHMENT OF COMMUNITY EMPOWERMENT BOARD.

  (a) In General.--There is established a Community Empowerment Board, 
which shall consist of--
          (1) the Secretary of Housing and Urban Development,
          (2) the Secretary of Health and Human Services,
          (3) the Secretary of Agriculture,
          (4) the Secretary of Transportation,
          (5) the Secretary of Education,
          (6) the Secretary of Commerce,
          (7) the Secretary of Labor,
          (8) the Secretary of the Treasury,
          (9) the Attorney General,
          (10) the Secretary of the Interior,
          (11) the Secretary of Energy,
          (12) the Secretary of Veterans Affairs,
          (13) the Secretary of Defense,
          (14) the Director of the Federal Emergency Management Agency,
          (15) the Administrator of the Environmental Protection 
        Agency,
          (16) the Director of National Drug Control Policy,
          (17) the Administrator of the Small Business Administration,
          (18) the Director of the Office of Management and Budget, and
          (19) the Administrator of General Services.
  (b) Chair.--The President shall designate the Chair of the Board from 
among its members.
  (c) Functions.--The Board shall--
          (1) receive, review, and approve or disapprove flexibility or 
        coordination plans in accordance with section 8;
          (2) establish interagency teams to provide training and 
        technical assistance to eligible applicants, comprised of 
        representatives of the agencies that administer eligible 
        Federal financial assistance programs;
          (3) monitor the progress of development and implementation of 
        flexibility or coordination plans;
          (4) review regulations governing, and identify more efficient 
        operation and coordination of, eligible Federal financial 
        assistance programs in the areas of--
                  (A) education;
                  (B) Head Start;
                  (C) child care;
                  (D) family support and preservation;
                  (E) maternal and child health;
                  (F) job training;
                  (G) housing;
                  (H) nutrition;
                  (I) juvenile justice;
                  (J) drug abuse prevention and treatment; and
                  (K) community and economic development;
          (5) coordinate and assist Federal agencies in eliminating, 
        revising, and coordinating regulations under eligible Federal 
        financial assistance programs;
          (6) coordinate and assist Federal agencies in creating a 
        uniform application to be used to apply for assistance under 
        eligible Federal financial assistance programs in the areas 
        listed in paragraph (4);
          (7) coordinate and assist Federal agencies in creating a 
        release form to be used to obtain consent from beneficiaries 
        under eligible Federal financial assistance programs to 
        facilitate, where appropriate and otherwise lawful, the sharing 
        of information across such programs;
          (8) coordinate and assist agencies in creating a system under 
        which an eligible applicant may use one proposal to apply for 
        funding under multiple eligible Federal financial assistance 
        programs; and
          (9) evaluate current performance standards and evaluation 
        criteria for eligible Federal financial assistance programs, 
        and make specific recommendations to agencies regarding how to 
        revise such standards and criteria in order to establish 
        specific and measurable performance and outcome measures upon 
        which program success and success of approved flexibility or 
        coordination plans may be judged and future funding decisions 
        may be made.
  (d) Flexibility Councils.--
          (1) In general.--The Chair of the Board may appoint a 
        Flexibility Council to review any application for approval of a 
        flexibility or coordination plan. The Flexibility Council shall 
        consist of 5, 7, or 9 members of the Board, and shall include 
        the Board members representing the departments most affected by 
        the flexibility or coordination plan for which the council is 
        appointed. The Flexibility Council shall review the plan under 
        section 8 and make recommendations to the Board regarding 
        approval or disapproval of all or part of the plan.
          (2) Authority to approve plans.--The Board may delegate to a 
        Flexibility Council the authority of the Board under section 8 
        to approve or disapprove the flexibility or coordination plan 
        for which it is appointed, if the application for approval of 
        the plan--
                  (A) does not contain a request for a waiver under 
                section 8; or
                  (B) only contains requests for waivers under section 
                8 for which alternative measures are not required under 
                section 8(d)(5).
  (e) Guidance and Other Materials.--The Board shall--
          (1) issue guidance to implement this Act within 180 days 
        after the date of enactment of this Act; and
          (2) issue other subsequent materials that may assist eligible 
        applicants in the development and implementation of flexibility 
        or coordination plans.

SEC. 7. APPLICATION FOR APPROVAL OF FLEXIBILITY OR COORDINATION PLAN.

  (a) In General.--An eligible applicant may submit to the Board in 
accordance with this section an application for approval of a 
flexibility or coordination plan.
  (b) Contents of Application.--An application submitted under this 
section shall include--
          (1) a proposed flexibility or coordination plan that complies 
        with subsection (c);
          (2) written certification by the chief executive of the 
        applicant, or in the case of a qualified consortium by the 
        chief executive officer of each eligible applicant that is a 
        member of the consortium, and such additional assurances as may 
        be required by the Board, that--
                  (A) the applicant has the ability, authority, and 
                resources to implement the proposed plan, throughout 
                the geographic area in which the proposed plan is 
                intended to apply; and
                  (B) amounts are available from non-Federal sources to 
                pay the non-Federal share of all covered Federal 
                financial assistance programs included in the proposed 
                plan;
          (3) all comments on the proposed plan submitted under 
        subsection (d) by a Governor or State legislative official of a 
        State or a chief executive of a local or tribal government that 
        would be directly affected by implementation of the proposed 
        plan, and the applicant's responses to those comments;
          (4) public comments on the proposed plan, including the 
        transcript of at least 1 public hearing and comments of the 
        appropriate community advisory committee designated or 
        established under section 10 for the plan; and
          (5) other relevant information the Board determines, after 
        consultation with the applicant, to be necessary to approve the 
        proposed plan.
  (c) Contents of Plan.--A flexibility or coordination plan submitted 
under this section shall include--
          (1) a brief description of the plan;
          (2) the geographic area to which the plan would apply and the 
        rationale for selecting the area;
          (3) the agencies and organizations that will collaborate to 
        provide services and benefits under the plan;
          (4) the particular groups of individuals, by service needs, 
        economic circumstances, or other defining factors, who would 
        receive services and benefits under the plan;
          (5)(A) general goals and measurable performance criteria, and 
        a description of how the plan is expected to attain those goals 
        and criteria;
          (B) a description of how performance shall be measured; and
          (C) a system for the comprehensive evaluation of the impact 
        of the plan on the community in the geographic area covered by 
        the plan, and of program costs, that shall include--
                  (i) a list of goals to improve the community and the 
                lives of its citizens;
                  (ii) a list of goals identified by the State in which 
                the plan is to be implemented, except that if no such 
                goals have been established by the State the plan may 
                propose the goals; and
                  (iii) a description of how the plan will--
                          (I) attain the goals listed under clause 
                        (ii);
                          (II) measure performance;
                          (III) collect and maintain data;
                          (IV) identify specific subgroups of 
                        individuals within the geographic area covered 
                        by the plan; and
                          (V) measure the impact of the plan on those 
                        subgroups;
          (6) the eligible Federal financial assistance programs 
        included in the plan as covered Federal financial assistance 
        programs and the specific benefits to be provided under the 
        plan under such programs, including--
                  (A) criteria for determining eligibility for benefits 
                under the plan;
                  (B) the services to be made available or activities 
                to be undertaken;
                  (C) the amounts and form (such as cash, in-kind 
                contributions, or financial instruments) of nonservice 
                benefits; and
                  (D) any other descriptive information the Board 
                considers necessary to approve the plan;
          (7) any Federal statutory or regulatory requirement 
        applicable under a covered Federal financial assistance program 
        included in the plan, the waiver of which is necessary to 
        implement the plan, and justification for the waiver, except 
        that if the applicant is uncertain whether a waiver or waivers 
        are required the applicant may request that the Board make such 
        a determination after the application is accepted for 
        consideration;
          (8) any State, local, or tribal statutory, regulatory, or 
        other requirement, the waiver of which is necessary to 
        implement the plan, and indicia of commitments by the relevant 
        State, local, or tribal governments to grant such waivers;
          (9) fiscal control and related accountability procedures 
        applicable under the plan;
          (10) a description of the sources of all non-Federal funds 
        that are required to carry out covered Federal financial 
        assistance programs included in the plan, and indicia of 
        commitments to provide those funds;
          (11) written certification from each State, local, or tribal 
        government for which certification is required under subsection 
        (b)(2);
          (12) the estimated duration of any additional planning, 
        training, or system development period that is required between 
        approval of the plan and implementation of any waivers approved 
        by the Board; and
          (13) other relevant information the Board may require to 
        approve the plan.
  (d) Procedure for Applying.--
          (1) Submission to affected state and local governments.--An 
        eligible applicant that is not a State shall, at least 60 days 
        before submitting an application for approval of a proposed 
        flexibility or coordination plan to the Board, submit the plan 
        to--
                  (A) the Governor and each State legislative official 
                of each State that the applicant considers to be 
                directly affected by the plan;
                  (B) the chief State school officer of each State that 
                the applicant considers to be directly affected by the 
                plan, if the constitution of the State--
                          (i) provides for the election of such an 
                        official by the voters in the State; and
                          (ii) vests primary authority over education 
                        programs of the State in such an officer; and
                  (C) each tribal government that the applicant 
                considers to be directly affected by the plan.
          (2) Action by affected government.--Each person that receives 
        an application submitted under paragraph (1) may, by no later 
        than 60 days after the date of that receipt--
                  (A) prepare comments on the proposed flexibility or 
                coordination plan included in the application, 
                including a statement of approval or disapproval of all 
                or any part of the plan;
                  (B) describe and make commitments to waive any State 
                or local laws or other requirements that are necessary 
                for successful implementation of the proposed plan;
                  (C) describe and make commitments to provide any 
                financial and technical support that is necessary for 
                successful implementation of the proposed plan; and
                  (D) submit the comments and commitments to the 
                eligible applicant.
          (3) Submittal to board.--If the Governor or a State 
        legislative official of a State or the chief executive officer 
        of a local government--
                  (A) fails to act within 60 days after receiving an 
                application under paragraph (1);
                  (B) does not make and submit to the eligible 
                applicant the commitments referred to in paragraph (2) 
                (A) and (B); or
                  (C) disagrees with all or part of the proposed 
                flexibility or coordination plan;
        the eligible applicant may submit the application to the Board 
        if the application is amended as necessary for the successful 
        implementation of the proposed plan without cooperation of the 
        State or local government, including by adding a discussion 
        regarding the ability of the proposed flexibility or 
        coordination plan to meet plan goals and satisfy performance 
        criteria in the absence of statutory and regulatory waivers and 
        financial and technical support from the State or local 
        government.
  (e) Treatment as Application for Covered Federal Financial Assistance 
Program.--Notwithstanding any other provision of law, an application 
for approval under this Act of a flexibility or coordination plan--
          (1) shall be considered by each affected agency as an 
        application for assistance under each covered Federal financial 
        assistance program included in the plan; and
          (2) shall be given priority consideration for funding under 
        that program.

SEC. 8. REVIEW AND APPROVAL OF FLEXIBILITY OR COORDINATION PLANS AND 
                    WAIVER REQUESTS.

  (a) Flexibility or Coordination Plans Accepted for Review.--The Board 
shall review at least the first 50 applications submitted under section 
7(a) each year. The Board--
          (1) shall give priority consideration to applications that--
                  (A) are submitted from communities that applied for 
                designation as an enterprise community or an 
                empowerment zone under section 1391 of the Internal 
                Revenue Code of 1986;
                  (B) coordinate covered Federal financial assistance 
                programs in at least 3 of the areas of--
                          (i) education;
                          (ii) Head Start;
                          (iii) child care;
                          (iv) family support and preservation;
                          (v) maternal and child health;
                          (vi) job training;
                          (vii) housing;
                          (viii) nutrition;
                          (ix) juvenile justice;
                          (x) drug abuse prevention and treatment; and
                          (xi) community and economic development; or
                  (C) are reviewable by a Flexibility Council under 
                section 6(d); and
          (2) may develop criteria to govern the factors to be applied 
        in determining which additional applications it reviews after 
        the first 50 each year.
  (b) Review of Applications.--Upon acceptance of an application for 
review under this section, the Board shall--
          (1) notify the applicant of the Board's acceptance of the 
        application for review and the procedures for consultation with 
        the applicant during the review process;
          (2) by a majority vote, approve or disapprove all or part of 
        the plan within 120 days after accepting the plan for review, 
        except that the Board may extend this period by another 60 days 
        if--
                  (A) the Board determines through consultation with 
                affected Federal agencies that a waiver of 1 or more 
                Federal statutory or regulatory requirements is 
                necessary to implement the plan;
                  (B) the Board determines that additional information 
                or clarification is needed from the applicant to make a 
                decision regarding the application; or
                  (C) the applicant requests additional time to 
                strengthen its application because of information that 
                it has obtained from the Board;
          (3) notify the applicant in writing of that approval or 
        disapproval by not later than 15 days after the date of that 
        approval or disapproval of certification by the President under 
        subsection (g); and
          (4) in the case of any disapproval of a plan, include a 
        written justification of the reasons for disapproval in the 
        notice of disapproval sent to the applicant.
  (c) Approval of Plans.--
          (1) In general.--The Board may approve a flexibility or 
        coordination plan for which an application is submitted by an 
        eligible applicant under this Act, or any part of such a plan, 
        if the Board determines that--
                  (A) the plan or part will improve the effectiveness 
                and efficiency of providing benefits under covered 
                Federal financial assistance programs included in the 
                plan or part by reducing administrative inflexibility, 
                duplication, and unnecessary expenditures;
                  (B) the plan or part does not result in a qualitative 
                reduction in services or benefits provided to 
                individuals and families that receive benefits under 
                covered Federal financial assistance programs under the 
                plan or part;
                  (C) the eligible applicant has adequately considered, 
                and the plan or part appropriately addresses, any 
                effect that administration of each covered Federal 
                financial assistance program under the plan or part 
                will have on administration of the other covered 
                Federal financial assistance programs under the plan or 
                part;
                  (D) the eligible applicant has or is developing data 
                bases, planning, and evaluation processes for 
                determining whether implementing the plan or part 
                includes the specific goals, measurable performance 
                criteria, comprehensive evaluation system, and other 
                matters required under section 7(c)(5);
                  (E) the plan or part will more effectively achieve 
                the general goals of each covered Federal financial 
                assistance program under the plan or part at the State, 
                local, and tribal level and will better meet the needs 
                of State, local, and tribal citizens;
                  (F) implementation of the plan or part will achieve 
                the purposes of this Act and of each covered Federal 
                financial assistance program under the plan or part;
                  (G) the plan or part and the application for approval 
                of the plan comply with the requirements of this Act;
                  (H) the eligible applicant has--
                          (i) waived the requirements of its own laws 
                        and regulations the waiver of which is 
                        necessary for implementation of the plan or 
                        part; and
                          (ii) obtained commitments for any additional 
                        necessary waivers from other State, local, or 
                        tribal governments;
                  (I) Federal funds made available under the plan or 
                part will not supplant non-Federal funds for existing 
                services and activities that promote the goals of the 
                plan or part; and
                  (J) none of the Federal or non-Federal funds used 
                under the plan or part will be used--
                          (i) to pay the non-Federal share of 
                        activities under programs that are not covered 
                        Federal financial assistance programs under the 
                        plan or part; or
                          (ii) to meet maintenance of effort 
                        requirements of such an activity.
          (2) Limitation on authority to approve certain parts of 
        plans.--The Board may not approve a part of a flexibility or 
        coordination plan--
                  (A) if implementation of that part would result in 
                any increase in the total amount of obligations or 
                outlays of discretionary appropriations or direct 
                spending under covered Federal financial assistance 
                programs included in that part, over the amounts of 
                such obligations and outlays that would occur under 
                those programs without implementation of that part; or
                  (B) in the case of a part that applies to assistance 
                to a qualified organization under an eligible Federal 
                financial assistance program, if the qualified 
                organization does not consent in writing to the receipt 
                of that assistance in accordance with the part.
          (3) Requirement to disapprove part.--The Board shall 
        disapprove a part of a flexibility or coordination plan if the 
        Board determines that the part fails to comply with paragraph 
        (1).
          (4) Specification of period of effectiveness.--
                  (A) In general.--In approving any part of a 
                flexibility or coordination plan, the Board shall 
                specify the period during which the part is effective, 
                which--
                          (i) may not begin before the date the 
                        President certifies approval of the plan under 
                        subsection (g); and
                          (ii) in no case shall be greater than the 5-
                        year period beginning on the date of that 
                        certification.
                  (B) Effectiveness after termination of this act.--An 
                approved flexibility or coordination plan (or part of a 
                plan) shall be effective for the period of time 
                specified by the Board, regardless of whether that time 
                extends beyond the date of the termination of the 
                effectiveness of this Act under section 14.
                  (C) Effective period shorter than proposed.--The 
                Board may specify an effective period for an approved 
                flexibility or coordination plan (or part of a plan) 
                that is shorter than a period proposed by the eligible 
                applicant for the plan.
  (d) Waivers of Federal Requirements.--
          (1) In general.--Subject to the limitations in paragraphs 
        (2), (3), (4), (5), and (6), the Board may waive any statutory 
        or regulatory requirement of a covered Federal financial 
        assistance program included in an approved flexibility or 
        coordination plan, and any procedural, administrative, or 
        reporting requirement of a statute or regulation generally 
        applicable to eligible Federal financial assistance programs, 
        if that waiver is reasonably necessary for implementation of 
        the plan.
          (2) Effective period of waiver.--A waiver under this 
        subsection shall terminate on the earlier of--
                  (A) the expiration of a period that shall be 
                specified by the Board in making the waiver, and that 
                may not exceed the 5-year period beginning on the 
                effective date of the waiver; or
                  (B) any date on which the flexibility or coordination 
                plan for which the waiver is granted ceases to be 
                effective.
          (3) Requirements that may not be waived.--The Board may not 
        waive under this subsection--
                  (A) any requirement that enforces any constitutional 
                right;
                  (B) any requirement under--
                          (i) title VI of the Civil Rights Act of 1964 
                        (42 U.S.C. 2000d et seq.);
                          (ii) section 504 of the Rehabilitation Act of 
                        1973 (29 U.S.C. 701 et seq.);
                          (iii) title IX of the Education Amendments of 
                        1972 (86 Stat. 373 et seq.);
                          (iv) the Age Discrimination Act of 1975 (42 
                        U.S.C. 6101 et seq.);
                          (v) the Americans with Disabilities Act of 
                        1990 (42 U.S.C. 12101 et seq.);
                          (vi) the Fair Housing Act (42 U.S.C. 3601 et 
                        seq.); or
                          (vii) the Individuals With Disabilities 
                        Education Act (20 U.S.C. 1400 et seq.); or
                  (C) any requirement that enforces any other civil 
                right or nondiscrimination provision, including any 
                requirement under--
                          (i) title VII of the Civil Rights Act of 1964 
                        (42 U.S.C. 2000e et seq.);
                          (ii) the Equal Pay Act of 1963 (29 U.S.C. 
                        206(d)); or
                          (iii) the Age Discrimination in Employment 
                        Act of 1967 (29 U.S.C. 621 et seq.).
          (4) Waivers that may not be granted.--The Board may not waive 
        under this subsection a requirement if--
                  (A) the waiver would--
                          (i) diminish national labor relations or 
                        labor standards;
                          (ii) diminish national environmental 
                        standards;
                          (iii) diminish educational equality or 
                        opportunity;
                          (iv) create a threat to public health or 
                        safety;
                          (v) diminish financial management 
                        requirements or impair the Federal Government's 
                        position regarding loans or loan guarantees;
                          (vi) diminish occupational health or safety;
                          (vii) diminish banking or financial service 
                        standards; or
                          (viii) impair pensions; or
                  (B) the waiver pertains to taxation.
          (5) Waivers for which alternative measures required.--
                  (A) In general.--The Board may not waive any 
                procedural, administrative, or reporting requirement 
                described in subparagraph (B) unless the approved 
                flexibility and coordination plan for which the waiver 
                is made contains, and the eligible applicant for the 
                plan commits to undertake, alternative measures to 
                replace the requirement to be waived.
                  (B) Requirements described.--Subparagraph (A) refers 
                to the following requirements:
                          (i) Any procedural, administrative, or 
                        reporting requirement in any statute or 
                        regulation that establishes or enforces labor 
                        relations or labor standards.
                          (ii) Any procedural, administrative, or 
                        reporting requirement in any statute or 
                        regulation that establishes or enforces 
                        environmental standards.
                          (iii) Any procedural, administrative, or 
                        reporting requirement in any statute or 
                        regulation that establishes or enforces 
                        educational equality or opportunity.
                          (iv) Any procedural, administrative, or 
                        reporting requirement in any statute or 
                        regulation that protects public health or 
                        safety.
                  (C) Finding by the board.--The Board may not waive 
                any requirement described in subparagraph (B) unless 
                the Board determines that the alternative measures 
                contained in the plan with respect to the waiver will 
                maintain or advance national goals, standards, or 
                protections as effectively as the waived requirement.
          (6) State, local, or tribal authority.--Nothing in this Act 
        shall be construed to grant the Board or any eligible applicant 
        authority to waive or otherwise preempt--
                  (A) any State, local, or tribal law or regulation; or
                  (B) any State plan for the use of Federal financial 
                assistance.
          (7) Notice of requested waivers.--Prior to submitting an 
        application to the Board, eligible applicants shall provide 
        notice of all waivers of Federal, State, and local laws and 
        regulations that are requested. Notice shall be provided to the 
        community or communities deemed by the eligible applicant to be 
        affected by the waivers via publication in a newspaper of 
        general circulation. Whenever possible, notice of the requested 
        waivers shall be provided as part of the notice for the public 
        hearing.
  (e) Memoranda of Understanding Required.--
          (1) In general.--The Board may not approve any part of a 
        flexibility or coordination plan unless each eligible applicant 
        that would receive Federal financial assistance administered 
        under the plan enters into a memorandum of understanding under 
        this subsection with the Board.
          (2) Contents.--A memorandum of understanding under this 
        subsection shall specify all understandings that have been 
        reached among the Board, Federal agencies that administer 
        covered Federal financial assistance programs under the 
        flexibility or coordination plan, and approved applicants that 
        are subject to the plan, regarding the approval and 
        implementation of all approved parts of the plan. The 
        memorandum shall include understandings with respect to--
                  (A) all requirements under covered Federal financial 
                assistance programs that are to be waived under 
                subsection (d);
                  (B) all State, local, or tribal statutory and 
                regulatory requirements that are to be waived;
                  (C)(i) the total amount of Federal funds that will be 
                provided as benefits under or used to administer 
                covered Federal financial assistance programs included 
                in those parts; or
                  (ii) a mechanism for determining that amount, 
                including specification of the total amount of Federal 
                funds that will be provided or used under each covered 
                Federal financial assistance program included in those 
                parts;
                  (D) the amounts and sources of all non-Federal funds 
                and technical support that will be provided as benefits 
                under or used to administer those parts; and
                  (E) measurable performance criteria that will be used 
                during the effective period of those parts to determine 
                the extent to which the goals and performance levels of 
                the parts are achieved, and the data to be collected to 
                make that determination.
  (f) Limitation on Confidentiality Requirements.--The Board may not, 
as a condition of approval of any part of a flexibility or coordination 
plan or with respect to the implementation of an approved flexibility 
or coordination plan, establish any confidentiality requirement that 
would--
          (1) impede the exchange of information needed for the design 
        or provision of benefits under the plan; or
          (2) conflict with any law related to confidentiality.
  (g) Certification by President Required.--
          (1) In general.--A decision by the Board to approve or 
        disapprove a flexibility or coordination plan under this 
        section, or to terminate the effectiveness of such a plan under 
        section 9, shall not be effective until the end of the 60-day 
        period beginning on the date the President certifies that the 
        approval or disapproval is in accordance with this Act.
          (2) Time for certification.--The President shall make a 
        certification for purposes of paragraph (1) regarding a 
        decision of the Board, or issue a written finding that the 
        certification may not be made, within 15 days after the date of 
        the decision by the Board.

SEC. 9. IMPLEMENTATION OF APPROVED FLEXIBILITY OR COORDINATION PLANS.

  (a) Special Assistance.--To the extent permitted by law, the head of 
each Federal agency shall seek to provide special assistance to an 
eligible applicant to support implementation of an approved flexibility 
or coordination plan, including expedited processing, priority funding, 
and technical assistance.
  (b) Evaluation and Termination.--
          (1) Reports and evaluations by approved applicants, 
        generally.--An eligible applicant for an approved flexibility 
        or coordination plan, in accordance with guidance issued by the 
        Board, shall--
                  (A) submit any reports on and cooperate in any audits 
                of the implementation of the plan; and
                  (B) periodically evaluate the effect implementation 
                of the plan has had on--
                          (i) individuals who receive benefits under 
                        the plan, including the specific subgroups 
                        identified in the plan under section 
                        7(c)(5)(C)(iii)(IV);
                          (ii) communities in which those individuals 
                        live; and
                          (iii) costs of administering and providing 
                        assistance under covered Federal financial 
                        assistance programs included in the plan.
          (2) Initial 1-year report.--No later than 90 days after the 
        end of the 1-year period beginning on the date of the approval 
        by the Board of an approved flexibility or coordination plan of 
        an eligible applicant, and annually thereafter, the eligible 
        applicant shall submit to the Board a report on the principal 
        activities and achievements under the plan during the period 
        covered by the report, comparing those achievements to the 
        goals and performance criteria included in the plan under 
        section 7(c)(5).
          (3) Termination of plan by board.--
                  (A) In general.--The Board may terminate the 
                effectiveness of an approved flexibility or 
                coordination plan if, after consultation with the 
                eligible applicant and the head of each Federal agency 
                responsible for administering a covered Federal 
                financial assistance program included in the plan, the 
                Board determines that--
                          (i) the goals and performance criteria 
                        included in the plan under section 7(c)(5) have 
                        not been met, and those goals and criteria are 
                        sound;
                          (ii) the goals and performance criteria 
                        included in the plan under section 7(c)(5) are 
                        not sound, and the plan would not meet goals 
                        and criteria that are sound;
                          (iii) the eligible applicant for the plan is 
                        unable to meet its commitments under this Act; 
                        or
                          (iv) there has been fraud or abuse involving 
                        Federal funds under the plan.
                  (B) Transition period.--In terminating an approved 
                flexibility or coordination plan under this paragraph, 
                the Board shall allow a reasonable period of time for 
                appropriate Federal agencies and eligible applicants to 
                resume administration of Federal programs that are 
                covered Federal financial assistance programs included 
                in the plan.
                  (C) Effectiveness of decision to terminate.--A 
                decision by the Board to terminate the effectiveness of 
                a flexibility or coordination plan shall take effect as 
                provided in section 8(g).
          (4) Revocation of waiver authorized.--The Board may revoke a 
        waiver under section 8(d) if the Board finds that the eligible 
        applicant--
                  (A) fails to comply with the requirements of the 
                plan;
                  (B) fails to make acceptable progress towards 
                achieving the goals and performance criteria included 
                in the plan under section 7(c)(5); or
                  (C) fails to use funds in accordance with the plan.
  (c) Final Report; Extension of Plan.--
          (1) Final report.--No later than 60 days before the end of 
        the effective period of an approved flexibility or coordination 
        plan, the approved applicant shall submit to the Board a final 
        report on its implementation of the plan, including a full 
        evaluation of the successes and shortcomings of the plan and 
        the effects of that implementation on individuals who receive 
        benefits under covered Federal financial assistance programs 
        under the plan.
          (2) Extension of effective period of plan.--The Board may 
        extend the effective period of an approved flexibility or 
        coordination plan for up to 5 years, based on the report of an 
        approved applicant under paragraph (1).

SEC. 10. COMMUNITY ADVISORY COMMITTEES.

  (a) Establishment.--An eligible applicant that applies for approval 
of a flexibility or coordination plan under this Act shall--
          (1) designate an existing organization that meets the 
        requirements of subsection (c) to be a community advisory 
        committee for purposes of this section; or
          (2) establish a community advisory committee in accordance 
        with this section.
  (b) Functions.--A community advisory committee shall advise an 
eligible applicant in the development and implementation of its 
flexibility or coordination plan, including with respect to--
          (1) conducting public hearings; and
          (2) reviewing and commenting on all community policies, 
        programs, and actions under the plan that affect low-income 
        individuals and families, with the purpose of ensuring maximum 
        coordination and responsiveness of the plan in providing 
        benefits under the plan to those individuals and families.
  (c) Membership.--The membership of a community advisory committee 
shall--
          (1) consist of--
                  (A) persons with leadership experience in the private 
                and voluntary sectors;
                  (B) local elected officials;
                  (C) representatives of participating qualified 
                organizations; and
                  (D) the general public; and
          (2) include individuals and representatives of community 
        organizations who will help to enhance the leadership role of 
        the eligible applicant in developing a flexibility or 
        coordination plan.
  (d) Opportunity for Review and Comment by Committee.--Before 
submitting an application for approval of a final proposed flexibility 
or coordination plan, an eligible applicant shall submit the final 
proposed plan for review and comment by the community advisory 
committee designated or established under this section.
  (e) Committee Review of Reports.--Before submitting any annual or 
final report on an approved Federal assistance plan, an approved 
applicant shall submit the report for review and comment to the 
community advisory committee.

SEC. 11. TECHNICAL AND OTHER ASSISTANCE.

  (a) Technical Assistance.--The Board may provide, or direct the head 
of a Federal agency to provide, technical assistance to an eligible 
applicant in developing information necessary for the design or 
implementation of a flexibility or coordination plan, if the eligible 
applicant submits a request that includes, in accordance with 
requirements established by the Board--
          (1) a description of the flexibility or coordination plan the 
        eligible applicant proposes to develop;
          (2) a description of the groups of individuals to whom 
        benefits will be provided under covered Federal financial 
        assistance programs included in the plan; and
          (3) such assurances as the Board may require that--
                  (A) in the development of the application to be 
                submitted under this Act for approval of the plan, the 
                eligible applicant will provide adequate opportunities 
                to participate to--
                          (i) individuals and families that will 
                        receive benefits under covered Federal 
                        financial assistance programs included in the 
                        plan; and
                          (ii) governmental agencies that administer 
                        those programs; and
                  (B) the plan will be developed after considering 
                fully--
                          (i) the needs expressed by those individuals 
                        and families;
                          (ii) community priorities; and
                          (iii) available governmental resources in the 
                        geographic area to which the plan shall apply.
  (b) Details and Assignments to Board.--At the request of the Board 
and with the approval of a Federal agency head who is a member of the 
Board, staff of the agency may be detailed or assigned to the Board on 
a nonreimbursable basis.

SEC. 12. REPORTS BY BOARD.

  No less than 18 months after the date of the enactment of this Act, 
and annually thereafter, the Board shall submit a report to the 
President and the Congress on the Federal laws or regulations that are 
most frequently waived under section 8(d) with respect to approved 
flexibility or coordination plans.

SEC. 13. REPEAL.

  (a) In General.--This Act is repealed on September 30, 2001.
  (b) Continued Application With Respect to Plans in Effect.--
Notwithstanding subsection (a), this Act, as in effect immediately 
before the date specified in subsection (a), shall continue to apply to 
any approved flexibility or coordination plan in effect immediately 
before that date, and any waivers granted under section 8(d) with 
respect to such a plan shall continue in effect, until the end of the 
6-month period beginning on the date of termination of effectiveness of 
the plan or waiver, respectively, in accordance with this Act.

                            I. Bill Summary

    The purpose of the Local Empowerment and Flexibility Act is 
to ensure the more efficient use of Federal, State, local and 
tribal resources through program flexibility and coordination. 
The bill enables State, local and tribal governments and 
nonprofit organizations to adapt Federal grant programs to the 
particular circumstances of their communities by (1) 
integrating Federal programs into ``flexibility plans'' that 
increase the effectiveness of the programs; (2) eliminating 
wasteful duplication across Federal programs; and (3) 
authorizing Federal officials to waive statutory and regulatory 
program requirements to enhance the delivery of services.
    A ``flexibility plan'' or ``coordination plan'' is a plan 
for the integration and administration of at least two Federal 
grant programs with State, local, or tribal government or 
private sources of funds to address the service needs of a 
community. Plans submitted for designation as an empowerment 
zone or enterprise community may also be considered 
``flexibility plans.''
    Flexibility plans may include a request for any Federal 
statutory or regulatory waivers necessary to implement the 
plan. Plans will also include the agencies and organizations 
that will collaborate to provide the services and benefits, the 
particular groups of individuals who would receive services and 
benefits, and the general goals, performance criteria and 
accountability measures which will be used to evaluate the 
plan. Eligible applicants must involve the community in writing 
the flexibility plan, and must give the State government and 
affected local governments an opportunity to comment on the 
plan before it is submitted to the Community Empowerment Board.
    The Community Empowerment Board (CEB) shall approve or 
disapprove flexibility plans (in whole or in part), including 
any requests for waivers of statutory and regulatory program 
requirements. The CEB may approve plans that improve the 
efficiency of Federal grant programs and the delivery of 
services to the public, and which do not reduce the quality of 
services for individuals and families. The CEB may not approve 
any waiver which, if implemented, would diminish civil rights, 
labor, environmental or financial service standards, or would 
threaten public health and safety. Further, the CEB may not 
approve any waiver which would increase Federal obligations or 
outlays.
    This legislation would be repealed on September 30, 2001.

                     II. Scope of Committee Review

    Pursuant to rule X of the House of Representatives, the 
Committee on Government Reform and Oversight has jurisdiction 
over the ``Relationship of the Federal government to the States 
and municipalities generally.'' Within the Government Reform 
and Oversight Committee, the Subcommittee on Human Resources 
and Intergovernmental Relations has jurisdiction over the 
relationship of the Federal Government to the States and 
municipalities.
    H.R. 2086, the Local Empowerment and Flexibility Act, was 
referred to the Committee on Government Reform and Oversight 
and forwarded to the Subcommittee on Human Resources and 
Intergovernmental Relations. The subcommittee amended the bill 
and forwarded it to the full committee on March 14, 1996. The 
full committee further amended the bill and ordered it reported 
favorably by a vote of 21 to 19 on April 24, 1996.
    The Human Resources and Intergovernmental Relations 
Subcommittee held three hearings on H.R. 2086, on August 3, 
1995, September 20, 1995 and February 22, 1996.

                              A. Hearings

                           1. August 3, 1995

    On August 3, 1995, the Subcommittee on Human Resources and 
Intergovernmental Relations held the first of three hearings on 
the Local Empowerment and Flexibility Act. The Subcommittee 
heard testimony from: Senator Mark Hatfield (R-OR) sponsor of 
S. 88, the Senate companion bill; Judy A. England-Joseph, 
Director, Housing and Community Development Issues for the 
General Accounting Office (GAO); Charles Griffiths, Director, 
Intergovernmental Liaison for the Advisory Commission on 
Intergovernmental Relations (ACIR); and Carl W. Stenberg, 
Director, Chair of the Standing Panel on the Federal System for 
the National Academy of Public Administration (NAPA).
    The Subcommittee heard that the current inflexibility in 
federal grants wastes resources which could be used to achieve 
program goals. The current system is overly burdensome for 
organizations to administer. To be effective, federal, state, 
and local programs must recognize the difference among 
communities, permit variation in spending and administration 
based on local needs and changing conditions, and seek to 
provide flexibility while enhancing accountability for results 
that really matter. The Subcommittee also heard testimony that 
a past federal effort to allow integration of grant funds 
failed because of interagency fighting at the federal level and 
statutory barriers to program coordination.
    The Senate sponsor of the Local Empowerment and Flexibility 
Act, Senator Mark Hatfield, testified that his motivation for 
introducing the bill was two-fold. According to his testimony, 
national policy objectives often stifle creativity at the State 
and local level because authorities are compelled to comply 
with rigid federal stipulations. Senator Hatfield also told the 
Subcommittee that as an appropriator, he has witnessed first 
hand the shrinking pool of federal resources for local and 
State governments. Senator Hatfield testified that this decline 
is unavoidable and more should be done to make the most of the 
scarce dollars that are available.
    Senator Hatfield testified there are four crucial aspects 
to the Local Empowerment and Flexibility Act. First, that 
different levels of government have different strengths. The 
Federal Government effectively establishes broad goals that tie 
us together as a nation and can achieve certain economies of 
scale which cannot be attained at the local level. However, 
local and State governments are innovators.
    According to Senator Hatfield, the second aspect is that 
the Local Empowerment and Flexibility Act will encourage 
solutions that best fit the local context. According to Senator 
Hatfield, universal requirements often force Congress to 
legislate to the lowest common denominator. Consequently, few 
governments perform to their full capability. In addition, 
providing flexibility will eliminate regulations that force 
local governments to `solve' problems they do not have.
    Third, the Subcommittee heard that the legislation will 
create a new system of accountability. Senator Hatfield 
testified that currently the Federal Government holds State and 
local governments accountable through regulation, procedures 
and paperwork. This system is very good at determining where 
federal money is spent, but it tells very little about whether 
results are actually achieved. The current structure of 
accountability has made the Government and the grant recipient 
responsible to each other, rather than to the citizens that 
both are supposed to serve.
    Finally, Senator Hatfield testified that all governments 
must be re-tooled for this new relationship. They must be re-
equipped to function in a new cooperative environment, and 
federal bureaucracies need to renew their ability to listen to 
and learn from State and local governments.
    The Subcommittee heard testimony from the GAO that was 
based on a February 1995 report, ``Community Development: 
Comprehensive Approaches Address Multiple Needs but Are 
Challenging to Implement.'' (GAO/RCED/HEHS-95-69) The GAO 
examined multifaceted, or comprehensive, approaches taken by 
four community-based nonprofit organizations to improve 
conditions in distressed urban neighborhoods.
    According to GAO testimony, the proliferation of federal 
grant programs and the lack of coordination among federal 
agencies that administer the programs impose a burden on local 
organizations that attempt to piece together programs to serve 
their communities. The neighborhood organizations GAO studied 
found it burdensome to manage multiple programs with individual 
funding streams, application requirements, and reporting 
expectations.
    The Subcommittee heard that the Federal Government assists 
distressed urban communities and their residents through a 
complex system involving at least 12 federal departments and 
agencies. Together, these agencies administer hundreds of 
program in the areas of housing, economic development, and 
social services. The GAO testified that there are, for example, 
at least 154 employment and training assistance programs, 59 
programs that could be used for preventing substance abuse, and 
over 90 early childhood development programs. According to GAO 
testimony, many of these categorical programs make sense when 
considered individually; together, they often work against the 
purposes for which they were established.
    The GAO said that one organization reported it had strained 
its managerial and financial systems to meet federal record-
keeping and accounting standards for several funding sources. 
While the organization implemented the necessary procedures to 
comply with the standards, officials said the administrative 
burdens nearly forced the organization to reduce the scope of 
its services.
    The GAO elaborated on the problems caused by federal 
inflexibility with grant programs in its report on Community 
Development. According to the report:

          Representatives from three of the organizations said 
        that they have turned down funding from certain federal 
        programs or have chosen not to apply for some federal 
        grants because the programs were not flexible enough to 
        be used to address community needs. For example, one 
        organization decided not to apply for a community 
        development initiative loan from HUD because it did not 
        believe that the repayment term was realistic for the 
        planned project. Another organization does not use 
        federal funding for some of its programs because 
        beneficiaries would be required to meet stricter 
        eligibility standards than the organization deems 
        reasonable. A third organization intended to use funds 
        from HUD's Nehemiah Grants program to support its 
        development of new homes in the community. However, 
        since mortgages supported by a program grant could not 
        be assumed by future home buyers, the organization 
        could not ensure that the housing would be kept 
        affordable for future home buyers. Because of this 
        restriction, the organization decided not to accept the 
        funding.1
---------------------------------------------------------------------------
    \1\ General Accounting Office, Report #GAO/RCED/HEHS-95-69, 
Community Development: Comprehensive Approaches Address Multiple Needs 
But Are Challenging to Implement (February 1995); p. 42.

    Mr. Stenberg testified that the federal categorical grants 
system has grown like topsy. In his testimony Mr. Stenberg 
cited a 1995 study by the Advisory Commission on 
Intergovernmental Relations (ACIR) that there were 618 
categorical programs available to State and local governments 
as of January 1, 1995. The count included 110 education 
programs, more than 100 health care grant programs, 82 social 
service grant programs, and close to 30 grant programs dealing 
with community and regional development. The Subcommittee heard 
that as the number and variety of categorical grants has grown, 
so too has the list of requirements and restrictions imposed 
through both statute and regulation.
    Mr. Stenberg testified that while categorical grants were 
born of good intentions, in practice they can hinder or 
frustrate effective efforts to achieve the ambitious goals 
these programs have established. As Mr. Stenberg told the 
Subcommittee, negotiating the maze of mandates related to 
planning, applying for, and administering some of these 
programs would test the patience of Job and the wisdom of 
Solomon. It also imposes significant compliance costs. Scarce 
resources are diverted from the intended recipient to 
administration and overhead.
    The Subcommittee also heard from Mr. Stenberg that:

          In the kind of overly centralized, prescriptive 
        system that's been created, we also pay a price for 
        limiting the ability of others to experiment and to 
        learn how to get the public's work done better, faster, 
        or cheaper. Setting priorities and ensuring 
        accountability for producing real results are the 
        responsibility of top policy makers and political 
        leaders. Dictating the details of the strategies, 
        methods, and procedures applied to meet those goals may 
        be counterproductive, however. The control of 
        discretion and resources does not guarantee that the 
        holder has a monopoly on the knowledge about how to 
        adapt and respond to the disparate needs of communities 
        across the country. America is too diverse for ``one 
        size fits all'' policies and programs. Administrative 
        ``stovepipe'' mentality precludes addressing 
        functionally related needs. To be effective, federal, 
        state, and local programs must recognize the difference 
        among our communities, permit variation in spending and 
        administration based on local needs and changing 
        conditions, and seek to provide flexibility while 
        enhancing accountability for results that really 
        matter. 2
---------------------------------------------------------------------------
     2 Testimony of Carl W. Stenberg, Director, Center for Public 
Service at the University of Virginia, representing the National 
Academy of Public Administration, before the Subcommittee on Human 
Resources and Intergovernmental Relations Hearing on H.R. 2086, the 
Local Empowerment and Flexibility Act of 1995 (August 3, 1995); printed 
transcript, p. 42.

    Mr. Stenberg provided an example of how,  * * * the burden 
of federal compliance and oversight measures can be 
overwhelming and often wasteful and detrimental to achieving 
program goals. For example, in Multnomah County, Oregon, a 
local community college leads a consortium that has integrated 
a wide range of services and is showing remarkable success in 
supporting the transition from dependency to work for local 
welfare recipients. A portion of the funds are provided by the 
Job Training Partnership Act (JTPA). The JTPA link created two 
administrative problems. First, although JTPA funding amounts 
to less than 10 percent of the community college's overall 
funding, a separate accounting process is required to meet 
JTPA's precise financial monitoring and reporting requirements. 
Second, in some cases equipment purchased with JTPA funds 
cannot be use by clients or students who do not meet JTPA 
eligibility requirements. To comply with the letter of the law, 
some equipment would be left idle when it could be put to 
fuller use with clients who are not JTPA eligible. 3
---------------------------------------------------------------------------
     3 Id.

    The Subcommittee heard testimony from Charles Griffiths of 
the Advisory Commission on Intergovernmental Relations about a 
past effort to provide flexibility with federal grant programs 
that failed because of interagency fighting and statutory 
barriers to program consolidation.
    According to Mr. Griffiths' testimony, the Integrated Grant 
Administration (IGA) was initiated in 1972 by the Office of 
Management and Budget (OMB) as a test for simplifying the 
funding and administration of federal program assistance. As 
with the Local Empowerment and Flexibility Act, the central 
objective of the IGA was to simplify the process by which state 
and local grantees identified, applied for, and administered 
funds comprised of more than one Federal assistance program to 
carry out a single project.
    To qualify as an IGA project, the federal programs involved 
had to be included in a single application, be related by a 
common purpose or ability to support related goals, and based 
on an overall strategy to achieve a common objective. One 
federal agency ``point-of-contact'' was appointed to process 
each consolidated application, rather than making an applicant 
deal with multiple federal agencies. A single grant award 
notice was issued with synchronized funding periods. Funding 
was pooled from the different federal agencies, and delivered 
as a single funding stream through one federal agency. Grantees 
were required to submit single financial reports to a single 
federal agency. These reports were guided by one set of 
coordinated federal requirements to monitor progress. The IGA 
began with 24 approved projects totaling over $33 million 
dollars.
    According to Mr. Griffiths's testimony,

          OMB's [Office of Management and Budget] first 
        assessment of the program was a favorable one. For 
        example, the assessment found that the IGA promoted 
        improved intergovernmental working relationships. On 
        the other hand, assessments by OMB and GSA [General 
        Services Administration] found a need for greater 
        commitment on the part of federal agencies for 
        participating in this program. Problems of ``turf'', as 
        well as statutory barriers to program consolidation 
        were seen as stumbling blocks to agency cooperation. It 
        was also found that the IGA required more time and 
        effort by federal agencies than what would be normally 
        expected with individual categorical grants. Observers 
        believed this to be a normal part of the ``learning 
        curve'', and not necessarily a long-term condition. 
        This latter finding suggested that significant changes 
        to existing financial assistance processes required 
        several years to implement and refine, before their 
        full potential could be realized. 4
---------------------------------------------------------------------------
     4 Testimony of Charles Griffiths, Intergovernmental Liaison, 
Advisory Commission on Intergovernmental Relations, before the 
Subcommittee on Human Resources and Intergovernmental Relations Hearing 
on H.R. 2086, the Local Empowerment and Flexibility Act of 1995 (August 
3, 1995); printed transcript, p. 35.
---------------------------------------------------------------------------

                         2. September 20, 1995

    At the September 20, 1995 hearing the Subcommittee heard 
from: Howard Glaser, Deputy Assistant Secretary for Operations, 
Office of Community Planning and Development for the Department 
of Housing and Urban Development; John Koskinen, Deputy 
Director for Management for the Office of Management and 
Budget; Gary MacDougal, Chairman of the Governor's Task Force 
on Human Services Reform for the State of Illinois; Norma 
Paulus, Superintendent of Public Instruction for the State of 
Oregon; Peter Lehner, Senior Attorney for the Natural Resources 
Defense Council; and David Baker, Director of the Public 
Division of the Service Employees International Union.
    The Subcommittee heard from Mr. Glaser that the Local 
Empowerment and Flexibility Act would complement the objectives 
of the Empowerment Zone/Enterprise Community Initiative and 
that some of the lessons learned from that program, and the 
regulatory waiver authority connected with it, were applicable 
to the legislation. According to Mr. Glaser's testimony, of the 
271 waiver requests made by the 12 Empowerment Zones, 115 were 
beyond the statutory authority of the agencies responsible for 
program administration. The requests for relief made by 
communities cannot be accomplished without statutory changes, 
or the ability to waive statutory requirements.
    Mr. Glaser also testified that many of the waiver requests 
were really requests for assistance which would be resolved 
through dialogue between the appropriate federal, state and 
local agencies. Nevertheless, the requests have prompted a 
productive discussion between local governments and federal 
agencies. This ongoing dialogue is one of the prime benefits of 
the Empowerment Zone/Enterprise Community effort.
    The Subcommittee heard from Mr. Glaser that another benefit 
of the Empowerment Zone/Enterprise Community effort is the 
wealth of ideas on the creative use of federal programs. It 
also provides a valuable source of information for policy-
makers seeking to identify the sticking points in regulatory 
mechanisms, and reduce regulatory and statutory barriers to 
local flexibility. Mr. Glaser testified that,

          Where several communities identify similar program 
        impediments, it makes sense to consider whether 
        statutory or regulatory changes are appropriate, rather 
        than granting relief on an ad-hoc basis to communities 
        which request it. For example, in response to the ideas 
        contained in the EZ/EC [Empowerment Zone/Enterprise 
        Community] waiver requests, the Department of Housing 
        and Urban Development completed a page-by-page review 
        of all of the Department's regulations, eliminating 65 
        codes and 2800 pages of regulations. An additional 153 
        codes and regulations will be simplified and 
        streamlined. As a result of these changes, localities 
        no longer need waivers from HUD to accomplish a number 
        of their objectives. The legislation under 
        consideration by the Committee would facilitate this 
        process by requiring reports similar to those produced 
        by the EZ/EC Task Force on the federal regulations most 
        frequently waived. 5
---------------------------------------------------------------------------
     5 Testimony of Howard Glaser, Deputy Assistant Secretary for 
Operations, Office of Community Planning and Development for the 
Department of Housing and Urban Development, before the Subcommittee on 
Human Resources and Intergovernmental Relations Hearing on H.R. 2086, 
the Local Empowerment and Flexibility Act of 1995 (September 20, 1995); 
printed transcript, p. 59.

    In his testimony, Mr. Glaser stated that, ``* * * the 
Department believes that H.R. 2086 would support and expand the 
Federal Government's ability to respond to local innovation and 
creativity in kind. 6 The Subcommittee heard two 
suggestions from Mr. Glaser to improve the legislation. Mr 
Glaser told the Subcommittee the Community Empowerment Board, 
which reviews waiver requests under the Empowerment Zone/
Enterprise Community program, should be given the 
responsibility of reviewing waiver requests under the Local 
Empowerment and Flexibility Act.
---------------------------------------------------------------------------
     6 Id., p. 60.
---------------------------------------------------------------------------
    Mr. Glaser also said the existing Community Empowerment 
Board should replace the Flexibility Council which would be 
created under the legislation to administer the federal 
responsibilities of the act. According to Mr. Glaser, the 
Community Empowerment Board has a membership and mission very 
similar to that outlined in the bill for the Flexibility 
Council. Furthermore, the Community Empowerment Board has 
proven to be an effective entity for managing interagency 
cooperation and ensuring federal responsiveness to locally 
driven, ``bottom-up'' strategic planning.
    Mr. Glaser suggested including States as eligible 
participants, and noted that some federal departments, 
including Education, Labor and Health and Human Services, make 
a large number of categorical grants directly to state 
agencies. Therefore, States are important partners in any 
attempt to devolve flexibility to local governments.
    A second Administration witness, Mr. Koskinen, testified 
that in a time of declining availability of federal resources, 
granting waivers and providing flexible funding streams are two 
ways to increase the impact of federal programs. Mr. Koskinen 
pointed out that in September 1993, the National Performance 
Review (NPR) recommended bottom-up grant consolidation to 
encourage innovation and create flexibility in the face of 
grant proliferation.
    Mr. Koskinen told the Subcommittee one of the major 
impediments to empowering State and local governments the 
Administration attempted to remove was the myriad regulations, 
applications, and red tape associated with the ever-growing 
number of grant programs.
    While the Administration has taken steps to devolve power 
to the local level, Mr. Koskinen testified that for federal 
grant programs to work, the Administration strongly believes 
the Executive Branch agencies must have the flexibility to 
waive statutes and remove barriers that interfere with 
communities trying to improve their economic and social 
conditions.
    Mr. Koskinen told the Subcommittee the Administration would 
like to support the Local Empowerment and Flexibility Act if 
agreement could be reached on issues that the Administration 
considered critical to the effectiveness of the legislation. 
Those issues include: (1) lengthening the time frame for 
reviewing waivers and ensuring that the process does not become 
so complex and difficult to administer that it unnecessarily 
delays community efforts; (2) making approval of plans by the 
Flexibility Council contingent upon the submission of a 
strategic plan containing specific goals and measurable 
performance criteria; (3) making States as well as local 
governments eligible for waivers and expanding the involvement 
of States in the review of proposed waivers; (4) providing 
additional exclusions for certain areas, such as tax policy, 
worker safety, environmental protection, financial management, 
and public health; (5) providing appropriate authority for 
federal agency heads to approve waiver requests and sufficient 
administrative support for the interagency mechanism to respond 
efficiently to the local strategic plans and waiver requests; 
(6) replacing the Flexibility Council with the Community 
Empowerment Board, removing the Assistants to the President for 
Domestic and Economic Policy, and maintaining the President's 
discretion in choosing the Community Empowerment Board's 
members; (7) tying the continuation of waivers to the 
performance measures provided under related strategic plans; 
and (8) narrowing the criteria of those who can apply or 
providing some priority consideration to communities of greater 
need or distress so that the departments can process requests 
in reasonable time frames.
    The next witness, Mr. MacDougal, described to the 
Subcommittee the efforts of Illinois Governor Jim Edgar's Task 
Force on Human Service Reform. The Task Force was charged with 
the responsibility to reexamine Illinois' Health and Human 
Service delivery system; determine the nature and scope of the 
problems of the system as experienced by citizens, providers, 
advocates, and public services; and develop community-based 
strategies for implementation of statewide reform.
    As part of the effort, five pilot sites in ethnically and 
geographically distinct areas were chosen. These sites are 
referred to as Federations and the composition of each is 
inclusive of all segments of the community. The role of a 
Federation is to determine the needs of their communities and 
to develop strategies that enable the state human services 
system to effectively reach specific outcomes relevant to those 
needs.
    The cornerstone of the Illinois effort is to decentralize 
the systems to get closer to the people, link the systems to 
communities and to the private sector, and measure the outcomes 
to see whether the spending changes the life of a human being.
    Mr. MacDougal noted that while measuring outcomes sounds 
obvious, it is usually process which is measured. Measuring 
processes can verify the funds were spent as intended, but not 
whether the funds produced any difference in anybody's life.
    Mr. MacDougal applauded the intent of the Local Empowerment 
and Flexibility Act, and in particular, the act's emphasis on 
listening to local communities, which he said is the absolute 
key to the Illinois effort. He added that providing flexibility 
in use of funds could not be more important.
    Mr. MacDougal gave the subcommittee two examples of how 
providing flexibility could result in less waste. Mr. MacDougal 
said he visited the Project Chance welfare-to-work program in 
Illinois and asked the project director, who holds a master's 
degree in social work, what percentage of the participants get 
jobs. The answer was three percent or less. Mr. MacDougal asked 
why then the program was being run. The project director 
responded that it was what the regulations called for in order 
for the participants to be eligible for other programs.
    Mr. MacDougal said he then asked the project director what 
he would do if it were his money funding the program. The 
response was, ``That is easy. I would get a van and I would run 
it from Robert Taylor Homes (public housing) to Elk Grove 
Village where the jobs are.''
    Another example of program rigidity related to the use of a 
Special Supplemental Food Program for Women, Infants, and 
Children (WIC) computer. Mr. MacDougal told the Subcommittee 
there is a WIC computer that by federal law cannot be used for 
any services other than WIC. Yet one of the big needs at the 
community level is integrated management information systems, 
so that when a person who is receiving services comes to an 
intake worker, the information can cover the whole range of 
services provided.
    Mr. MacDougal continued that he asked the Governor what he 
thought about the service delivery system. The Governor 
responded that 70 percent of the problems are related to the 
Federal Government. If those problems could be addressed, more 
could be done with less money in terms of outcomes.
    The state of Oregon has already started to use flexibility 
with grant programs through the ``Ed-flex'' waiver authority 
with education programs. Ms. Paulus told the Subcommittee that 
flexibility has been beneficial in Oregon in a multitude of 
situations. She provided three examples.

          Federal dollars for mathematics and science education 
        restrict teacher training to school workshops. With ed-
        flex, school districts in Oregon may use the money to 
        send teachers to businesses and industries where they 
        can learn how mathematics, science and technology are 
        used in the workplace.
          Oregon has a K-14 system. The Oregon Office of 
        Professional Technical Education urged the forming of 
        regional consortia because school reform and school-to-
        work initiatives tend to be regionally focused. This is 
        a different configuration than suggested in the Carl 
        Perkins Vocational Education Act. Without ed-flex, it 
        would not have been possible for Oregon to receive 
        funds for their efforts in vocational education.
          Title 1 regulations require money to be targeted to 
        schools most in need. With ed-flex, administrators can 
        distribute the grant throughout the district in turn 
        helping all children. In addition, Title 1 migrant and 
        English-as-a-second-language regulations typically 
        require children who receive these services to be 
        pulled out of the regular classroom. With ed-flex, all 
        students may participate in the entire school program. 
        These students receiving special services will no 
        longer feel isolated from the rest of their 
        class.7
---------------------------------------------------------------------------
    \7\ Testimony of Norma Paulus, Superintendent of Public Instruction 
for the State of Oregon, before the Subcommittee on Human Resources and 
Intergovernmental Relations Hearing on H.R. 2086, the Local Empowerment 
and Flexibility Act of 1995 (September 20, 1995); printed transcript, 
p. 87.

    Ms. Paulus added that each Federal grant program comes with 
its own paperwork and mandates compliance with its own set of 
regulations and restrictions. With ed-flex, administrators can 
allocate Federal money where it is most needed, accounting for 
its use as a whole. She continued by saying the existing 
accountability structure is very good at determining where 
Federal money is spent, but it tells us very little about 
whether we are actually achieving results. Local administrators 
know best how to achieve the maximum results from the scarce 
Federal dollar.
    Ms. Paulus told the Subcommittee the Federal Government 
should compliment, not hinder the efforts of innovators at the 
local level. She said the need to provide flexibility to local 
and State governments is immense. These localities need to be 
able to use their acquired funds in a manner suitable to the 
needs of their communities. According to Ms. Paulus, the Local 
Empowerment and Flexibility Act will permit variation in how 
local governments meet national goals, encourage solutions that 
best fit the local context, and eliminate regulations that 
force local governments to solve problems that they do not 
have.
    Two witnesses testified about concerns they had with the 
Local Empowerment and Flexibility Act. Mr. Lehner told the 
Subcommittee the Natural Resources Defense Council supports the 
concept of local input in establishing Federal spending 
priorities at the local level. However, he stated, the 
challenge of the bill is to tap into the knowledge and energy 
of the local level without hindering the attainment of 
important baseline national environmental health and safety 
safeguards.
    Mr. Lehner continued that this enhanced role must be guided 
and bound by three key principles. First, trade-offs between 
programs must be limited to those groups of programs where the 
benefits of the trade-offs can be understood and balanced, 
rather than based on the vagaries of political power and media 
hype. Second, flexibility should not jeopardize fundamental 
health, safety and environmental protections. Third, important 
procedural requirements that now exist, particularly those 
relating to public input on decisions and access to information 
and data, need not and should not be waived. Finally, the 
flexibility should relate to the establishment of relative 
schedules for funding environmental improvements; it should not 
allow environmental requirements to be weakened.
    Several additional issues were of concern to Mr. Lehner. He 
told the Subcommittee it was not clear if environmental 
programs are meant to be covered by the bill. He also expressed 
concerns about the scope of the bill. Mr. Lehner said that some 
procedural safeguards such as those relating to public input, 
review and access are important and there would seem to be no 
need to waive those requirements in order to enhance municipal 
flexibility.
    In addition, he noted that many environmental limits are 
based on scientific assessments about levels of certain 
pollutants which could cause human health or environmental 
problems. Mr. Lehner said a flexibility plan should not be able 
to alter scientific and health reality underlying those 
standards. While there could be flexibility as to the timing of 
environmental improvements, there should not be any waivers of 
the environmental standards or requirements.
    Another witness, Mr. Baker, told the Subcommittee the 
Service Employees International Union opposed the Local 
Empowerment and Flexibility Act. According to Mr. Baker, the 
bill would allow localities to waive critical labor and 
environmental statutes and regulations, all in the name of 
local innovation and flexibility.
    Mr. Baker told the Subcommittee, ``According to H.R. 2086, 
the Flexibility Council can waive any requirement under Federal 
law for the administration or provision of benefits under 
Federal assistance programs as long as the waiver is 
``reasonably necessary for the implementation of the plan.'' 
Such language grants localities broad discretion in seeking 
waivers for Federal statutes and regulations. The SEIU [Service 
Employees International Union] is particularly concerned about 
the threat these waivers may present to maintaining essential 
labor standards.8
---------------------------------------------------------------------------
    \8\ Testimony of David Baker, Director of the Public Division of 
the Service Employees International Union, before the Subcommittee on 
Human Resources and Intergovernmental Relations Hearing on H.R. 2086, 
the Local Empowerment and Flexibility Act of 1995 (September 20, 1995); 
printed transcript, p. 108.
---------------------------------------------------------------------------
    Of additional concern to Mr. Baker was that the Community 
Advisory Committee established under the bill does not require 
inclusion of representatives from the public sector, other than 
local government officials, and does not require the inclusion 
of the unions representing the public sector workers.
    Finally, Mr. Baker said the bill fails to take into account 
the needs of low-income individuals or the communities in which 
they live. He testified he thought the bill provides no 
assurance that low-income communities will benefit from the 
Federal grant programs.

                          3. February 22, 1996

    At the third hearing the Subcommittee received testimony 
from: Congressman Steny Hoyer of Maryland; Connecticut State 
Representative Andrew Norton on behalf of the National 
Conference of State Legislatures; Angela Park, Coordinator, 
Sustainable Communities, President's Council on Sustainable 
Development; Lloyd Smith, President and Chief Executive Officer 
of the Marshall Heights Community Development Organization, 
Inc.; Dick Cowden, Executive Director of the American 
Association of Enterprise Zones; and Eddie R. Battle of Eddie 
Battle Associates.
    Congressman Hoyer said he wanted to work with the 
Subcommittee to make Federal programs for children and families 
work better and more efficiently. Congressman Hoyer described 
the problem.

          Over the years, Congress has created hundreds of 
        categorical programs to help communities and families 
        deal with the myriad of issues confronting them. Each 
        of the programs was created with its own rules and 
        regulations to deal with a particular problem.
          In some areas, where local needs don't fit the 
        problems covered by our categorical programs, our 
        services for children and families are vastly 
        inadequate. In other areas, services overlap and 
        duplicate each other; for example, multiple programs 
        may provide case workers to a single family, but each 
        case worker deals only with one aspect of that family's 
        needs.
          Case workers spend far too much time dealing with red 
        tape and paperwork, juggling multiple programs with 
        multiple eligibility criteria, application processes 
        and service requirements. The Federal Government has 
        created hundreds of different taps through which 
        assistance flows--and communities, programs and 
        families must run from tap to tap with a bucket to get 
        the help they need.
          I welcome your work on H.R. 2086 because I believe 
        that a concerted federal effort to rationalize and 
        coordinate programs for children and families is long 
        overdue. This effort should eliminate federal red tape 
        and unnecessary regulations. It should give local 
        programs the flexibility they need to address local 
        problems. It should create incentives for program 
        coordination which services kids and families better 
        while making more efficient use of our resources. 
        9
---------------------------------------------------------------------------
     9 Prepared written statement of the Honorable Representative Steny 
Hoyer (D-MD) before the Subcommittee on Human Resources and 
Intergovernmental Relations Hearing on H.R. 2086, the Local Empowerment 
and Flexibility Act of 1995 (February 22, 1996).

    Congressman Hoyer told the Subcommittee he planned to 
introduce legislation based on the Local Empowerment and 
Flexibility Act that would make several additional changes to 
strengthen the waiver process of the legislation.
    According to Congressman Hoyer, there should be a greater 
emphasis on cross-program coordination, which he said is the 
key to improving service quality and efficiency. The 
Subcommittee learned that his bill would allow the creation of 
consortia of program providers in a community. Consortia 
members could include State government, local government, and 
not-for-profit organizations which provide services to children 
and families. Each consortium would have to include providers 
in at least three of the program areas of Elementary and 
Secondary Education, Head Start, child care, job training, 
housing, WIC, maternal and child health, and Family Support and 
Preservation. The consortium could then develop a flexibility 
plan and waiver request which would coordinate their services 
to children and families.
    The second concern of Congressman Hoyer was that the Local 
Empowerment and Flexibility Act places the burden of fixing 
federally-created problems on local and state programs. It was 
his opinion that the Federal Government has the responsibility 
to fix the problems it created. In Congressman Hoyer's bill, 
the Flexibility Council would be responsible for overseeing 
federal efforts to eliminate regulations, simplify 
requirements, and make waiver requests unnecessary.
    In Congressman Hoyer's bill, programs would be 
automatically exempted from meeting duplicative requirements as 
long as the requirement was met by the consortium or one of its 
members. Congressman Hoyer told the Subcommittee that 
authorizing legislation requires many programs to assess 
community needs each year and to provide case managers to 
assist families. However, it does not make sense for each 
program to repeat work done by several others. Congressman 
Hoyer said that under the Local Empowerment and Flexibility Act 
a consortium would have to ask for a waiver to stop doing 
duplicative work while under the Hoyer bill the waiver would be 
automatic.
    Finally, Congressman Hoyer told the Subcommittee his bill 
would provide a workable system for tracking and evaluating 
federal investments and ensuring accountability. Under the 
Hoyer bill, states would identify desired outcomes and 
flexibility plans would identify a short list of goals from the 
state list which the plan is designed to promote. Consortia 
with approved plans would be responsible for collecting data 
over time to measure progress towards these goals. Data would 
be collected on a community-wide basis, disaggregated by 
appropriate subgroups as identified by the consortium, and 
published.
    Congressman Hoyer argued that four purposes would be met by 
collecting and publishing data in this way. First, collection 
of data would show how well the programs accomplish their goals 
for all people in the community, and allow the consortium to 
improve and adapt services as necessary. Second, publication of 
data would create bottom-up pressure within the community to 
serve all segments of the community. Third, disaggregation of 
data would help to prevent programs from cherry-picking the 
``best'' clients just to improve their outcome statistics, and 
would create incentives to address the needs of the hardest to 
serve as well as the easiest. And fourth, collection of this 
type of data would allow the Flexibility Council to evaluate 
the effectiveness of its waivers and its financial investment.
    The second witness was Connecticut State Representative 
Andrew Norton. Representative Norton testified on behalf of the 
National Conference of State Legislatures that the Local 
Empowerment and Flexibility Act represents a tremendous 
opportunity to continue the reinvigoration of the 
intergovernmental trust that has been built up during the 104th 
Congress.
    Representative Norton told the Subcommittee that 
legislation giving State and local governments greater 
flexibility would help make more progress in addressing many of 
the nation's domestic problems. Representative Norton said that 
over the years, federal rules and regulations have made an 
already puzzling grant system counterproductive to efficiency. 
They have stifled creative local approaches to managing change. 
The myriad of programs designed to get at the same basic issue 
are overly targeted and duplicative and take more resources 
than necessary to administer and evaluate.
    Representative Norton told the Subcommittee the National 
Conference of State Legislatures is very supportive of the 
concept of the Local Empowerment and Flexibility Act and could 
strongly endorse its passage if three points were addressed. 
Those points were making States eligible to submit plans and 
apply for waivers, involving the state legislative branch in 
the review and application process, and keeping the application 
and review process as simple as possible.
    States should be eligible, according to Representative 
Norton, because States manage a significant portion of the 
general domestic agenda of the Federal Government. In addition, 
where rural and more sparsely populated communities are 
involved, States are often the level of government most 
involved in the programs that serve those communities. 
Furthermore, States are actively involved in the process of 
change and experimentation, and can share successful approaches 
with each other.
    With regard to the second point, Representative Norton said 
the state legislative branch should be involved in the review 
and application process because state funds are appropriated by 
the state legislative branch and federal funds are currently 
appropriated by the state legislature in most states as well.
    Finally, Representative Norton urged the Subcommittee to 
keep the application and review process as simple as possible. 
He said it is not appealing to have to jump through a dozen 
hoops to avoid having to jump through two dozen others. Keeping 
the process simple by working with the state and local 
organizations will help insure the most positive results.
    Representative Norton told the Subcommittee about 
Connecticut's Neighborhood Revitalization Zone program which 
allows neighborhoods to identify local and state codes and 
regulations that are impediments to the neighborhood's 
revitalization plans, and request waivers and modifications of 
those regulations. As Representative Norton said, the Local 
Empowerment and Flexibility Act would dovetail nicely with what 
Connecticut is already doing since many of the dollars a 
community receives flow from the Federal Government.
    Representative Norton also observed that oversight would be 
increased under the Local Empowerment and Flexibility Act.

          One of the things I have noticed in our State when 
        towns make applications, they start to get clever about 
        how to apply for things. And we had one case in which 
        they were trying to get together an AIDS hospice in one 
        of our cities, and we were going through, and 
        eventually the names started coming up again, and they 
        were applying for grants under the Department of Health 
        and under the Department of Welfare and under the 
        Department of Housing. They were doing their job.
          This local group was doing everything they could to 
        get every type of money from [sic] this different area. 
        But in the meantime, we had no idea how much money the 
        State was giving them, because it was coming from so 
        many different areas. If a group like that could just 
        come to the State Government, be honest and say we want 
        $700,000, can you give it to us, we could probably do 
        it. But they get $150,000 here and there, I got to tell 
        you, if we had a clean system where we could do that, 
        we would have better oversight and we would know what 
        they were doing. 10
---------------------------------------------------------------------------
    \10\ Testimony of the Honorable State Representative Andrew Norton 
(CT), on behalf of the National Conference of State Legislatures, 
before the Subcommittee on Human Resources and Intergovernmental 
Relations Hearing on H.R. 2086, the Local Empowerment and Flexibility 
Act of 1995 (February 22, 1996); original transcript, p. 95.

    The Subcommittee heard from its third witness, Ms. Park, 
about the President's Council on Sustainable Development. Ms. 
Park told the Subcommittee that sustainable development is 
about doing things in ways that work for the long run because 
they are better from every point of view--better economically, 
environmentally and socially. Sustainable communities flourish 
because they build a mutually supportive, dynamic balance 
between social well-being, economic opportunity, and 
environmental quality.
    According to Ms. Park, the role of communities is becoming 
increasingly important as the United States, and much of the 
rest of the world, moves toward more decentralized decision-
making. The Federal Government will continue to bear the 
responsibility for bringing together diverse interests to 
establish national standards, goals and priorities. However, 
she said the Federal Government is providing greater 
flexibility and expanding the roles played by States, counties, 
and local communities in implementing policies and programs to 
address national goals.
    Ms. Park observed a trend that is quickly growing into a 
movement in communities throughout the United States is that of 
broad, community-based planning. The first recommendation in 
the Sustainable Communities Task Force report is to bring 
people together to identify, prioritize, and learn about key 
issues in their community. The next step is to develop a vision 
of what they want their community to be and set goals for 
realizing that vision. Then they must establish indicators for 
measuring progress, identify the resources needed to reach the 
goals and implement actions that will advance them.
    Ms. Park testified that categorical financial assistance is 
a barrier to local innovation because it forces a community 
that has used a holistic, broad-based planning process to 
identify key community needs to then turn around and force its 
projects into often narrowly-structured federal grants.
    The Subcommittee heard from three witnesses representing 
organizations and communities that believe greater flexibility 
with federal grant programs would improve the programs they 
administer.
    For example, Mr. Smith made the same observation as 
Representative Norton, that one of the biggest benefits of the 
Local Empowerment and Flexibility Act would be greater 
oversight coordination since communities would be allocating 
resources based on a single plan.
    Mr. Cowden explained to the Subcommittee how the Local 
Empowerment and Flexibility Act would help the City of New 
Orleans work with Tulane University to improve opportunity for 
that city's youth. The proposal developed by the university and 
city, Project Fulcrum, will involve comprehensive improvements 
in housing, public schools and jobs development. The two 
partners will marshal their own resources and will seek 
assistance from the State. However, they will also pursue 
federal support through programs such as the Community 
Development Block Grants, Home Investment Partnerships, Job 
Training Partnership Act, Rehabilitation Act Special 
Demonstration Projects and Community Policing. Mr. Cowden 
testified that all of these measures could add substantially to 
Project Fulcrum's chances for success. However, if Tulane, the 
City and organizations participating in Project Fulcrum must 
comply with a complex series of application, administration, 
monitoring and auditing procedures, the project will suffer.

                             B. Discussion

    The Local Empowerment and Flexibility Act allows for the 
more efficient use of federal, state, local and tribal 
resources through program flexibility and coordination. The 
legislation enables state, local and tribal governments, and 
non-profit organizations to adapt federal grant programs to the 
particular circumstances of their communities by: (1) 
integrating federal programs into ``flexibility plans'' that 
increase the effectiveness of the programs, (2) eliminating 
wasteful duplication across federal programs, and (3) 
authorizing federal officials to waive statutory and regulatory 
program requirements to enhance the delivery of services.
    The purpose of the bill is to make each program included in 
a ``flexibility plan'' more effective so that it better serves 
individuals and the community. To get approval of a 
``flexibility plan'' an applicant must be able to demonstrate 
that each program included will be at least as effective as it 
would have been if it had not been included in the plan.

A bipartisan history

    The legislation has a bipartisan history. In the 103rd 
Congress, legislation to provide greater flexibility and allow 
the waiver of regulatory and statutory requirements was 
introduced by Congressman John Conyers (D-MI), then-Chairman of 
the House Government Operations Committee. That legislation, 
H.R. 2856, the Local Flexibility Act of 1993, was cosponsored 
by Congressman William F. Clinger, Jr., then-ranking minority 
member of the committee.
    The Local Flexibility Act of 1993 received the support of 
key Democrats such as then-House Majority Leader Richard A. 
Gephardt (D-MO). In his written testimony for the October 6, 
1993 Human Resources and Intergovernmental Relations 
Subcommittee hearing entitled ``Can State and Local Governments 
Afford to Implement Health Care and Welfare Reform?'' 
Congressman Gephardt said:

          This nexus of short- and long-term budgetary problems 
        in some of our central cities presents a serious 
        dilemma for our country. Lawmakers at all levels of 
        government must work together to develop targeted 
        economic development policies that will reverse this 
        systemic trend that plagues these urban areas. 
        Eliminating duplicative and cumbersome administrative 
        and regulatory requirements is essential to this 
        effort. We must be able to coordinate and direct 
        government assistance. To that end, I support the Local 
        Flexibility Act sponsored by Government Operations 
        Committee Chairman Conyers and Ranking Member Clinger, 
        which would give local governments and private, not-
        for-profit organizations the flexibility to propose 
        integrated plans for more efficient and effective use 
        of federal assistance. (Emphasis added.)

    A Government Operations Committee news release of October 
12, 1993 quoted Chairman Conyers as saying:

          Noting that each Federal grant program now has its 
        own requirements, Conyers, who is Chairman of the 
        Committee on Government Operations, said, ``Each of 
        these Federal programs makes sense when viewed from 
        Washington in isolation. But testimony from local not-
        for-profit groups and public officials demonstrates 
        that at the local level the requirements of these 
        multiple Federal programs cause confusion, waste, and 
        inefficiency.'' (Emphasis added.)

    The same October 12, 1993 news release quoted Congressman 
Edolphus Towns (D-NY), then-Chairman of the Subcommittee on 
Human Resources and Intergovernmental Relations, as saying:

          Towns said, ``At the Subcommittee's first hearing 
        this Congress on the crisis in urban America, not-for-
        profit organizations testified that burdensome Federal 
        regulations are the biggest barrier to providing 
        services to poor residents. H.R. 2856 is an important 
        first step toward addressing this critical problem.'' 
        (Emphasis added.)

    In the Senate, similar legislation, S. 88, the Local 
Empowerment and Flexibility Act, was introduced by Senator Mark 
Hatfield (R-OR) in the 104th Congress. In the 103rd Congress, 
Senator Hatfield offered the bill as an amendment to H.R. 820, 
the National Competitiveness Act of 1993. The amendment passed 
the Senate by voice vote; however, the National Competitiveness 
Act was not enacted.

Waiver authority: A comparison

    The Local Empowerment and Flexibility Act of 1996 retains 
and adds to the same statutory and regulatory waiver authority 
that was included in the Local Flexibility Act of 1993. The 
Local Empowerment and Flexibility Act of 1996 adds additional 
language to prohibit the waiver of constitutional rights, civil 
rights and non-discrimination provisions. Language to prohibit 
waivers that would diminish national standards in certain 
sensitive areas such as labor and environmental protections was 
also added.
    The following charts compare the waiver authority included 
in H.R. 2086 with the waiver authority granted under H.R. 2856, 
the Local Flexibility Act of 1993.


Administration support for flexibility

    As pointed out by one witness, the Local Empowerment and 
Flexibility Act of 1996 is consistent with the rhetoric of 
President Clinton and his Administration. The first 
recommendation of Vice President Al Gore's National Performance 
Review report on ``Strengthening the Partnership in 
Intergovernmental Service Delivery'' is to, ``Create 
flexibility and encourage innovation by designing a bottom-up 
solution to the problem of grant proliferation and its 
accompanying red tape.''11
---------------------------------------------------------------------------
    \11\ Strengthening the Partnership in Intergovernmental Service 
Delivery, Accompanying Report of the National Performance Review; 
Office of the Vice President, Washington, D.C. (September 1993); p. 9.
---------------------------------------------------------------------------
    Vice President Gore's report describes the current system 
and the problems it creates.

          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.12
---------------------------------------------------------------------------
    \12\ Id., p. 7.

    Vice President Gore's report also provides examples of 
---------------------------------------------------------------------------
fragmentation.

          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 and 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. 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.13
---------------------------------------------------------------------------
    \13\ Id., p. 8.

    Vice President Gore's report gives a second example of how 
---------------------------------------------------------------------------
grant fragmentation reduces program outcomes.

          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.14
---------------------------------------------------------------------------
    \14\ Id., pp. 8-9.

    For a solution to grant fragmentation to succeed it must 
``create flexibility'' and be ``bottom-up'' as described by 
---------------------------------------------------------------------------
Vice President Gore's report.

          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 
        interdepartmental 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 solutions 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.15
---------------------------------------------------------------------------
    \15\ Id., p. 9.

    The Local Empowerment and Flexibility Act gives the 
responsibility of identifying the obstacles and designing the 
best solutions to the States and localities, and lets grant 
consolidation solutions come from the bottom-up.

Why does H.R. 2086 allow waivers of statutory program requirements?

    In the testimony of Judy A. England-Joseph, Director, 
Housing and Community Development Issues, Resources, Community, 
and Economic Development Division of the General Accounting 
Office, she stated that almost 60 percent of the more than 
1,000 waiver requests submitted by the Empowerment Zone and 
Enterprise Community applicants were statutory in nature. 
Because the EZ/EC authorizing legislation does not permit 
agencies to waive statutory requirements, these requests were 
denied. The Local Empowerment and Flexibility Act would correct 
this barrier to grant integration and consolidation by 
permitting the Community Empowerment Board to waive both 
regulatory and statutory program requirements, when such waiver 
would be in accordance with the provisions of the Act.
    At the September 20, 1995 hearing Howard Glaser, Deputy 
Assistant Secretary for Operations, Office of Community 
Planning and Development, Department of Housing and Urban 
Development, testified that of the 271 requests for waivers 
made by the 12 largest federal Empowerment Zone and Enterprise 
Communities, 115 were beyond the statutory authority of the 
agencies responsible for program administration.
    One of those requests came from Louisville, Kentucky and 
typifies the kind of requirements that could be waived under 
the Local Empowerment and Flexibility Act. Louisville requested 
that the word ``weekly'' be waived as it relates to Davis-Bacon 
reporting requirements for a federally funded construction 
project. (The law, which was written before computers were 
invented, requires weekly certification that prevailing wages 
have been paid.)
    Funding for the project was coming from both the Community 
Development Block Grant (CDBG) and the HOME programs and 
involved a contractor with sophisticated management and 
financial systems. Louisville asked for a waiver of the weekly 
reporting requirement in favor of a requirement that the 
builder certify at the beginning and end of construction that 
the prevailing wages will be and have been paid. This would 
have ensured the prevailing wage was paid but would have 
reduced administrative costs.
    In a December 6, 1995 letter to Louisville Mayor Jerry E. 
Abramson, HUD Assistant Secretary for Community Planning and 
Development Andrew Cuomo informed the mayor his request for a 
waiver was denied because the Department did not have authority 
to waive statutory requirements.
    Under the Local Empowerment and Flexibility Act, the City 
of Louisville would be able to request the waiver, and if it 
were granted, use the money saved to improve or expand the 
project. Rather than spend money to comply with a requirement 
that predates computers, the same labor protection could be 
ensured while advancing the goals of the programs funding the 
project.
    H.R. 2086 authorizes the waiver of statutory requirements, 
such as the one in the Louisville example, but only when 
reasonably necessary for implementation of a plan which 
improves the effectiveness of the programs included in the 
plan. Waivers can only be granted by the 19 member Community 
Empowerment Board and only after the Board finds that a waiver 
meets certain tests as defined by the legislation.
    Further, a waiver can be granted only if it is submitted by 
an eligible applicant and is part of an approved plan that 
combines two or more federal grant programs the applicant is 
eligible to receive. This prevents non-Federal governments and 
non-profits which are not submitting flexibility plans from 
receiving waivers simply because they do not like a particular 
regulatory or statutory program requirement. Waivers may only 
be granted if they are an integral part of a flexibility plan.

Findings by the Community Empowerment Board

    For a plan to be approved, it must describe the 
organizations participating in the plan, the individuals that 
will be served by the plan, the goals of the plan, a 
description of how the plan will meet those goals, and a 
description of the system that will evaluate the success of the 
plan based on those specific performance goals.
    In addition, section 7 requires that to approve a plan, the 
Board must find that:

          (1) the plan will improve the effectiveness and 
        efficiency of providing benefits under programs 
        included in the plan by reducing administrative 
        inflexibility, duplication, and unnecessary 
        expenditures;
          (2) the plan will not result in a qualitative 
        reduction in services or benefits provided to 
        individuals and families that receive benefits under 
        programs included in the plan;
          (3) the plan will appropriately address any effect 
        the administration of programs included in the plan 
        will have on programs not included in the plan;
          (4) the applicant has data bases, planning and 
        evaluation process for determining whether the plan is 
        meeting its objectives;
          (5) the plan will more effectively achieve the 
        general goals of each program included;
          (6) implementation of the plan will achieve the 
        purposes of each program included;
          (7) the plan complies with the requirements of this 
        legislation;
          (8) the applicant has waived or has received 
        commitments to waive any state or local requirements 
        necessary to implement the plan;
          (9) Federal funds under the plan will not supplant 
        non-Federal funds; and
          (10) no Federal funds under the plan will be used to 
        pay the non-Federal share or meet maintenance of effort 
        requirements of programs included.

Changes made in subcommittee and full committee

    In the Chairman's amendment in the nature of a substitute 
offered at the Subcommittee mark-up on March 14, 1996, a number 
of changes were made to the legislation to reflect the comments 
and concerns raised by witnesses at the three hearings.
    At the second hearing, John Koskinen, Deputy Director for 
Management, Office of Management and Budget testified that the 
Administration wanted to support the Local Empowerment and 
Flexibility Act if agreement could be reached on certain 
issues. On September 21, the Subcommittee received a letter 
from Vice President Al Gore reinforcing Mr. Koskinen's 
testimony regarding Administration support if certain issues 
were addressed.
            a. Time for considering applications
    Vice President Al Gore wrote the Subcommittee Chairman a 
September 21, 1995 letter restating the Administration's 
concerns with the Local Empowerment and Flexibility Act. The 
first issue was, ``Improving ways to review applications for 
waivers, such as establishing an appropriate time frame for 
reviewing waivers (the 45 day review period does not provide 
sufficient time to ensure that strategic plans are of a high 
quality), and ensuring the legislation does not make the 
process so complex and difficult to administer that it 
unnecessarily delays community efforts.''
    The Subcommittee lengthened the time frame for reviewing 
applications from 45 days to 120 days. In addition to the 120 
days, a 60 day extension could be granted if a waiver was 
needed, more information was needed, or the applicant requested 
additional time to strengthen its application.
            b. Performance measures
    The second issue of concern to the Administration was 
making clear that approval will be granted only to those 
strategic plans that contain specific goals and measurable 
performance criteria.
    H.R. 2086 as introduced already contained significant 
requirements for performance measures. Section 7 requires that 
flexibility plans include ``general goals and measurable 
performance criteria, and a description of how the plan is 
expected to attain those goals and criteria; a description of 
how performance shall be measured; and a system for the 
comprehensive evaluation of the impact of the plan on the 
community and program costs * * * .''
    At the third hearing Congressman Hoyer recommended 
additional accountability language. The Subcommittee substitute 
reflects Congressman Hoyer's suggestion in the form of 
additional language that requires contents of plans include a 
system for the comprehensive evaluation of the impact of the 
plan on the community. In addition, plans must include 1) a 
list of the goals to improve the community and the lives of the 
citizens, 2) a list of goals identified by the State, if any, 
3) a description of how the plan will attain the goals, measure 
performance, collect and maintain data, identify specific 
subgroups within the geographic area covered, and measure the 
impact on those subgroups
            c. States as eligible applicants
    The Administration's third recommendation was to make 
States as well as local governments eligible for waivers and 
expand the State's involvement in the review of proposed 
waivers.
    The Subcommittee expanded the definition of eligible 
applicants to include States. The Committee amendment in the 
nature of a substitute provides an opportunity for the majority 
and minority leader of the state legislative body, and the 
chief school officer for the State, to comment on proposed 
flexibility plans. The Governor of each State already has this 
opportunity under H.R. 2086 as introduced.
            d. Additional exemptions
    The fourth concern of the Administration was providing 
additional exclusions for certain areas, such as tax policy, 
worker safety, environmental protection, financial management, 
and public health. This concern was echoed by Mr. Lehner of the 
Natural Resources Defense Council (NRDC) and Mr. Baker of the 
Service Employees International Union.
    The Committee does not believe the broad exemptions 
requested by the Administration are necessary or consistent 
with the bill's goal of flexibility with accountability.
    Under section 8(d)(1) the waiver of a requirement can only 
be approved ``if that waiver is reasonably necessary for 
implementation of the plan.'' It is the intent of the 
legislation that a waiver cannot be granted unless the 
applicant and the Board find the waiver necessary in order for 
the plan to achieve its performance goals.
    The subcommittee and full committee added additional 
protections. Section 8(d)(4)(A) states that the Board may not 
waive any requirement if, in the Boards' judgement, the waiver 
would ``(I) diminish national labor relations or labor 
standards; (ii) diminish national environmental standards; 
(iii) diminish educational equality or opportunity; (iv) create 
a threat to public health or safety; (v) diminish financial 
management requirements or impair the Federal Government's 
position regarding loans or loan guarantees; (vi) diminish 
occupational health or safety; (vii) diminish banking or 
financial service standards; or (viii) impair pensions.'' 
Furthermore, section 8(5)(B)(ii) provides that the Board may 
not waive ``any procedural, administrative, or reporting 
requirement in any statute or regulation that establishes or 
enforces environmental standards'' unless alternative measures 
are undertaken to replace the requirement being waived.
    If a waiver request met this ``non-diminish test'' the 
Board would also have to determine that alternative measures 
would maintain or advance national goals, standards or 
protections as effectively as waived requirements for any 
requirements found in any law or regulations that: establishes 
or enforces labor relations or labor protections, establishes 
or enforces environmental standards or protections, establishes 
or enforces educational equality or opportunity, or that 
protects public health and safety.
    The Committee believes that this language is more than 
adequate to permit program flexibility while protecting 
important national standards. An extensive list of exempted 
statutes, as proposed by the Administration, will unnecessarily 
narrow the scope of the bill and prevent the waiver of even 
basic administrative or procedural regulatory and statutory 
requirements.
    Further, the Committee expects that the Board will consult 
with a wide array of interested parties in making the 
determinations required under this section.
            e. The CEB vs. agency heads: Who should have authority to 
                    approve waivers?
    The Administration's fifth issue was providing appropriate 
authority for Federal agency heads to approve waiver requests 
and sufficient support for the interagency mechanism to respond 
efficiently to the local strategic plans and waiver requests.
    As Vice President Gore's National Performance Review report 
noted, a lack of effective interdepartmental planning and 
decision making at the federal level contributed to the failure 
of past attempts to solve the problems of federal grant 
management. The Committee finds that to enhance 
interdepartmental planning and decision making, the Community 
Empowerment Board should approve flexibility plans and 
accompanying waiver requests. The Board may not approve a plan 
unless a memorandum of understanding is entered into by the 
applicants, the Board and the Federal agencies administering 
the programs included in the plan.
    It is important to note that each agency head with programs 
covered by this bill have a seat on the Community Empowerment 
Board; therefore, by design the Board will act with the input 
of affected agency heads.
            f. Replacing Flexibility Council with the Community 
                    Empowerment Board
    The Administration recommended replacing the Flexibility 
Council with the Community Empowerment Board, removing the 
Assistants to the President for Domestic and Economic Policy as 
members of the Board; and maintaining the President's 
discretion in selecting the Board members.
    The Subcommittee substitute replaced the Flexibility 
Council with the Community Empowerment Board and removes the 
Assistants to the President for Domestic and Economic Policy as 
members of the Board. However, a ``Flexibility Council'' may be 
established by the Board to approve flexibility plans which do 
not request waivers.
            g. Prioritizing applicants
    The Administration's seventh issue of concern was narrowing 
the criteria of those who can apply or providing some priority 
consideration to communities of greater need or distress so 
that the agencies can process requests in reasonable time 
frames.
    In the Subcommittee substitute, the Board will review at 
least 50 plans a year. The Board must give priority 
consideration to plans that are submitted from communities that 
applied for designation as an Empowerment Zone or Enterprise 
Community, that seek to coordinate programs from at least three 
different subject areas, or that do not contain waiver 
requests. After reviewing the first 50 plans received, the 
Board may develop additional criteria to govern which 
additional plans it reviews.
    Development and submission of a flexibility or coordination 
plan requires time, resources and commitments beyond those of 
normal applications. The legislation reflects that fact and 
provides priority funding to offset the additional investments 
made by applicants submitting flexibility or coordination 
plans. All applicants are eligible for priority funding, 
whether they are a private, nonprofit organization, a local 
government, or a State.

``Qualified consortia''

    At the third hearing Congressman Steny Hoyer (D-MD) argued 
for a greater emphasis on cross- program coordination. 
Congressman Hoyer suggested the bill allow for the creation of 
consortia of program providers in a community. Consortia 
members could include state government, local government, and 
not-for-profit organizations which provide services to children 
and families. Each consortium must include providers in at 
least three of the program areas of Elementary and Secondary 
Education, Head Start, child care, job training, housing, WIC, 
maternal and child health, and Family Support and Preservation. 
The consortium would then develop a flexibility plan and waiver 
request which coordinate their services to children and 
families.
    The Subcommittee substitute included qualified consortia as 
eligible applicants, as suggested by Congressman Hoyer. The 
substitute also requires that plans submitted by qualified 
consortia be given priority consideration by the Board.

Additional powers of the Community Empowerment Board

    Congressman Hoyer also told the Subcommittee that he 
thought the Local Empowerment and Flexibility Act placed the 
burden of fixing federally-created problems on localities and 
States, and that the Federal Government should be responsible 
for fixing the problems created by grant fragmentation.
    As suggested by Congressman Hoyer, the Subcommittee 
substitute added language in Section 4 giving the Community 
Empowerment Board the responsibility to oversee agency efforts 
to eliminate unnecessary regulations, simplify requirements, 
and make waiver requests unnecessary.
    This language does not, and is not intended, to give the 
Board any additional authority to waive federal, state, local 
or other requirements which it may not otherwise waive. It 
simply establishes the Board's role as facilitator of agency 
efforts.
    In addition, the Committee added language in section 8 
which states: ``Nothing in this Act shall be construed to grant 
the Board or any eligible applicant authority to waive or 
otherwise preempt (A) any State, local or tribal law or 
regulation, or (B) any State plan for the use of Federal 
financial assistance.'' This provision clarifies that the Board 
may only waive federal requirements.

Public participation

    Mr. Lehner testified that important procedural requirements 
that now exist, particularly those relating to public input, 
need not and should not be waived. Section 8(d)(7) increases 
opportunity for public input and access to information by 
requiring that notice of all waivers of federal, state and 
local laws and regulations that are requested be published in a 
local newspaper as part of the notice for the public hearing. 
Section 7(b)(4) requires that all applications include ``public 
comments on the proposed plan, including the transcript of at 
least 1 public hearing and comments of the appropriate 
community advisory committee designated or established under 
section 10 for the plan.'' Section 10 requires the 
establishment or use of existing community advisory committees 
for development and implementation of a plan. Section 
10(c)(1)(D) requires that ``the general public'' be part of the 
membership of a community advisory committee.
    The Committee intends that the primary purpose of a 
community advisory committee, or similar entity, is to ensure 
that the general public, and especially low-income people 
receiving benefits under federal grant programs, is integrally 
involved in developing a flexibility or coordination plan.

                    III. Section-by-Section Analysis

Section 1. Short title

    The Local Empowerment and Flexibility Act of 1996.

Section 2. Findings

    The Congress finds that federal categorical financial 
assistance programs are used to address our nation's problems. 
However, some inflexible program requirements impede the 
effective delivery of services. State, local, and tribal 
governments and private, nonprofit organizations are dealing 
with increasingly complex problems that require the delivery of 
services in many different ways. The nation's communities are 
all very diverse, and national needs often require different 
solutions in different communities. Recipients of financial 
assistance programs have innovative planning and public 
involvement strategies for providing services which, if give 
sufficient flexibility to integrate federal financial 
assistance from multiple programs, could maximize the 
effectiveness and efficiency of federal financial assistance.
    It is more important than ever to: promote more effective 
and efficient delivery of government services; respond flexibly 
to national needs; reduce the barriers between programs; 
coordinate the delivery of programs; and, allow innovation in 
creating solutions to address national policy goals in ways 
that recognize the diversity of our nation's communities.

Section 3. Purposes

    The purposes of this Act are to: ensure the more efficient 
use of federal, state, local and tribal resources through 
program flexibility and coordination; place emphasis in federal 
programs on achieving policy goals; and, remove Federal 
impediments to local service delivery. In addition, the 
purposes are to enable state, local and tribal governments and 
private, nonprofit organizations to adapt programs of Federal 
financial assistance to the particular circumstances of their 
community by: integrating appropriate federal financial 
assistance programs into flexibility or coordination plans; 
simplifying procedures across federal programs; authorizing 
federal officials to waive some program requirements when 
necessary to enhance delivery of services; and, encouraging 
cooperative partnerships to address critical needs and 
problems.

Section 4. Definitions

    A ``flexibility or coordination plan'' is a comprehensive 
plan to combine two or more federal financial assistance 
programs to address the service needs of a community. An 
``eligible federal financial assistance program'' is a domestic 
assistance program to carry out activities consistent with 
national policy goals, and does not include entitlements such 
as Social Security or Aid to Families with Dependent Children. 
The ``Board'' is the Community Empowerment Board or a 
Flexibility Council. The Board of a Flexibility Council has the 
authority to review plans and may waive regulatory or statutory 
requirements to make the plan possible. ``Eligible applicants'' 
are states, local, or tribal governments, qualified 
organizations or qualified consortia that are eligible to 
receive financial assistance under one or more eligible Federal 
financial assistance programs. A ``qualified consortium'' is 
one composed of any combination of qualified organizations, 
state agencies or local agencies that receive federally 
appropriated funds and includes not less than three 
organizations providing services in not less than three of the 
following areas: education, Head Start, child care, family 
support and preservation, maternal and child health, job 
training, housing, nutrition, juvenile justice, drug abuse 
prevention and treatment, and community and economic 
development.

Section 5. Provision of federal financial assistance in accordance with 
        approved flexibility or coordination plan

    Upon approval of a flexibility or coordination plan, 
federal financial assistance that is included in the approved 
plan shall be paid and administered in the manner specified in 
the plan.

Section 6. Establishment of a community empowerment board

    This section establishes the Community Empowerment Board 
(Board) as the Secretaries of: HUD; HHS; Agriculture; 
Transportation; Education; Commerce; Labor; Treasury; Interior; 
Energy; Veterans Affairs; and, Defense; in addition to: the 
Attorney General; the Director of FEMA; the Administrator of 
the EPA; the Director of National Drug Control Policy; the 
Administrator of the SBA; the Director of the OMB; and, the 
Administrator of General Services. The President will appoint a 
Chair of the Board.
    For plans that contain no waiver requests or less 
significant waiver requests, the Chair may name 5, 7 or 9 of 
the most affected agency heads to a Flexibility Council to 
review and consider the plan.
    The Board is responsible for: reviewing plans for approval 
or disapproval; establishing interagency technical assistance 
teams; and, reviewing and better coordinating regulations 
dealing with: education, head start; child care; family support 
and preservation; maternal and child health; job training; 
housing; nutrition; juvenile justice; drug abuse prevention and 
treatment; and, community and economic development. The Board 
must also assist federal agencies in creating: a uniform 
application to apply for assistance from different programs; a 
release form to share appropriate information across programs; 
and, a single system to apply for multiple programs. In 
addition, the Board must evaluate current performance standards 
and evaluation criteria for federal financial assistance 
programs and recommend improvements.
    The Board must issue guidelines to implement the Act within 
180 days of approval.

Section 7. Application for approval of a flexibility or coordination 
        plan

    Applications are submitted to the Board. Applications must 
include: comments by the governor and leaders of the state 
legislative body; the applicant's responses to those comments; 
written commitments of state action and support, including 
waivers of state regulations, if the state has agreed to any; 
public comments on the plan, including the transcript of at 
least one public hearing; a list of any federal regulatory or 
statutory requirements the applicant believes should be waived 
and a justification for the waiver; and other information the 
Board and the applicant determine is necessary.
    The contents of the plan must include: a brief description; 
the geographic area to which it applies; the agencies and 
organizations collaborating to provide services and benefits; 
the individuals that will receive services and benefits; the 
general goals and measurable performance criteria; a 
description of how the plan is expected to attain those goals; 
and, a system for the evaluation of the plan's impact. The 
system to evaluate the plan must include a list of goals to 
improve the community and a list of goals identified by the 
state, if any. In addition, the application must describe how 
the plan will: attain the goals; measure performance; collect 
and maintain data; and, identify specific subgroups within the 
community and measurement of the impact of the plan on these 
subgroups.
    Applications must also include a description of sources of 
all non-federal funds required to carry out covered federal 
financial assistance programs included in the plan, and the 
estimated duration of any additional planning time necessary 
between approval and implementation of the plan's waivers.
    At least 60 days prior to submitting the plan to the Board, 
applications must be submitted to the state government and 
local governments that are directly affected by the plan. 
Within 60 days, the governor, leaders of the state legislative 
body, chief state school officer, and chief executive officer 
of a local government that receives an application must: 
prepare comments; make commitments to waive requirements under 
any state or local laws or regulations, if any; describe and 
make commitments to provide financial or technical support; and 
submit the comments and commitments to the applicant. In the 
event one of these entities fails to act within 60 days or 
disagrees with all or part of the plan, the applicant may 
submit the plan to the Board with any additional changes 
needed. An application for approval under this Act shall be 
considered by each affected agency as an application for 
assistance under each covered federal financial assistance 
program, and shall be given priority consideration for funding 
under that program.

Section 8. Review and approval of flexibility or coordination plans and 
        waiver requests

    The Board shall review at least the first 50 plans each 
year. Priority consideration will be given to plans that; are 
reviewable by a Flexibility Council, are submitted by a 
community that applied for EZ/EC status; or that coordinate 
Federal financial assistance programs from at least three of 
the following areas: education; Head Start; child care; family 
support and preservation; maternal and child health; job 
training; housing; nutrition; juvenile justice; drug abuse 
prevention and treatment; or, community and economic 
development. After reviewing the first 50 plans, the Board may 
develop its own criteria to determine which subsequent plans 
will be reviewed.
    The Board must notify the applicant upon acceptance of an 
application for review. Within 120 days, by a majority, the 
Board must approve or disapprove of all or part of the plan. 
The review period may be extended an additional 60 days if: the 
Board determines the waiver of one or more Federal statutory or 
regulatory requirements is necessary; additional information or 
clarification is necessary; or, the applicant requests 
additional time to strengthen its application. The Board must 
notify the applicant within 15 days of its decision regarding 
the plan. Notification of disapproval must include a written 
justification for the disapproval.
    A Board may approve a plan if: the plan improves 
effectiveness and efficiency of providing benefits; the plan 
does not result in a qualitative reduction in services; the 
applicant has considered and the plan addresses any effect the 
administration of each covered Federal financial assistance 
program will have on other covered Federal financial assistance 
programs; evaluation processes are or have been developed; the 
plan more effectively achieves Federal government goals; 
implementation of the plan or part of the plan will achieve the 
purposes each of Federal financial assistance program under the 
plan; waivers or commitments to waive any needed state, local 
or tribal statutory or regulatory requirements are included; 
federal funds do not supplant non-federal funds; and, 
maintenance of effort requirements are met.
    The Board may not approve a plan or part of a plan if it 
would result in an increase in obligations or outlays of 
discretionary appropriations or direct spending under covered 
federal financial assistance programs.
    The Board may waive statutory or regulatory requirements of 
a federal financial assistance program included in an approved 
plan, if that waiver is necessary for implementation of the 
plan. The Board may waive statutory or regulatory procedural, 
administrative, or reporting requirements that are generally 
applicable to the federal financial assistance program, if that 
waiver is necessary for implementation of the plan.
    The Board must specify the period during which a plan is 
approved, which in no case shall be greater than 5 years.
    The Board may not waive any requirement that enforces any 
constitutional right or any requirement under: title VI of the 
Civil Rights Act of 1964; section 504 of the Rehabilitation Act 
of 1973; title IX of the Education Amendments of 1972; the Age 
Discrimination Act of 1975; the Americans with Disabilities Act 
of 1990; the Fair Housing Act; or, the Individuals with 
Disabilities Education Act.
    The Board may not waive any requirement that enforces any 
other civil right or nondiscrimination provision, including any 
right under: title VII of the Civil Rights Act of 1964; the 
Equal Pay Act of 1963; or, the Age Discrimination in Employment 
Act of 1967.
    The Board may not approve any waiver, that would: diminish 
national labor relations or labor standards; diminish national 
environmental standards; diminish educational equality or 
opportunity; create a threat to public health or safety; 
diminish financial management requirements or impair the 
federal government's position regarding loans or loan 
guarantees; diminish occupational health or safety; diminish 
banking or financial service standards; pertain to taxation; 
or, impair pensions.
    In addition, the Board shall not approve a waiver of any 
procedural, administrative, or reporting requirement applicable 
to the administration of a covered federal grant program that: 
establishes or enforces labor relations or labor standards; 
establishes or enforces environmental standards; establishes or 
enforces educational equality or opportunity; protects public 
health or safety, unless the Board finds that a plan contains 
an alternative measure(s) that will maintain or advance 
national goals, standards, or protections as effectively as 
those being waived.
    Nothing in this act shall be construed to grant the Board 
or any eligible applicant authority to waive or otherwise 
preempt any state, local or tribal law or regulation, or any 
state plan for the use of federal financial assistance.
    Prior to submitting an application to the Board eligible 
applicants must notify the affected community(s) of all the 
waivers requested as part of the plan by publishing a notice in 
a newspaper of general circulation.
    A memorandum of understanding shall specify all 
understandings reached among the Board, federal agencies 
administering federal financial assistance programs under the 
plan, and eligible applicants.
    A decision by the Board to approve or disapprove a plan 
will not be effective until the end of the 60 day period 
beginning on the date the President certifies that the approval 
or disapproval is in accordance with this act. The President 
shall make a certification within 15 days after the date of the 
decision by the Board.

Section 9. Implementation of approved flexibility or coordination plans

    Any benefit provided under a covered federal financial 
assistance program included in an approved plan shall be paid 
and administered in the manner specified in the plan. Federal 
agency heads shall seek to provide special assistance to 
eligible applicants to support implementation of approved 
plans.
    Approved applicants must: periodically evaluate the effect 
the plan has on individuals and subgroups receiving benefits; 
communities in which those individuals live; and, the cost of 
implementing the plan. Within 90 days of the one year 
anniversary of the approval of a plan the applicant must submit 
a report on the plan's principal activities and achievements.
    The Board may terminate a plan if: it is not achieving the 
established goals and performance criteria; the goals and 
criteria are not sound; the approved applicant is unable to 
meet its commitment; or, there has been fraud or abuse 
involving Federal funds.
    A final report on implementation of the plan shall be 
submitted to the Board no later than 60 days before the end of 
the effective period of an approved plan.

Section 10. Community advisory committees

    Community Advisory Committees shall advise applicants in 
the development and implementation of plans, including advice 
on conducting public hearings, and reviewing any proposed 
actions that would affect low-income individuals and families.
    Community Advisory Committees must consist of persons: with 
private and voluntary sector leadership experience; local 
elected officials; representatives of participating qualified 
organizations; and, the general public. Existing organizations 
with the required membership may serve as Community Advisory 
Committees.
    Before submitting a plan for final approval or a report on 
an existing plan, the Community Advisory Committee shall review 
and comment on the plan or report.

Section 11. Technical and other assistance

    The Board may provide or direct the head of a federal 
agency to provide technical assistance to an eligible applicant 
in developing information necessary for the design or 
implementation of a plan, if the eligible applicant provides a 
description of the plan and a description of the groups or 
individuals who would benefit. The Board may also request 
assurances that all members of the community affected will have 
adequate ability to participate in the proposed flexibility or 
coordination plan.

Section 12. Reports by the board

    Beginning no less than 18 months enactment, the Board shall 
submit to the President and the Congress an annual report 
listing the statutory or regulatory requirements that were most 
frequently waived.

Section 13. Repeal

    The Local Empowerment and Flexibility Act is repealed on 
September 30, 2001.
                           IV. RollCall Votes



              v. congressional budget office cost estimate

                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, May 17, 1996.
Hon. William F. Clinger, Jr.,
Chairman, Committee on Government Reform and Oversight,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
reviewed H.R. 2086, the Local Empowerment and Flexibility Act 
of 1996, as ordered reported by the House Committee on 
Government Reform and Oversight on April 24, 1996. We estimate 
that enacting H.R. 2086 would increase the cost to the Federal 
Government to review state and local plans for integrating 
federal and nonfederal programs and funding. Depending on the 
number and complexity of these plans, the additional cost could 
be significant; however, we are unable to estimate the extent 
of the increase. Any increase in federal spending would be 
subject to the availability of appropriated funds. Because the 
bill would not affect direct spending or receipts, pay-as-you-
go procedures would not apply.
    Bill purpose.--H.R. 2086 would statutorily establish the 
Community Empowerment Board; it would be comprised of the heads 
of 19 departments and agencies. (The Board has already been 
created by the President; H.R. 2086 would require its existence 
by statute, and would broaden its role.) The Board would 
approve or disapprove state and local plans for integrating and 
administering certain federal and nonfederal programs that 
provide funding for education, juvenile justice, health and 
social services, and community development. In approving a 
plan, the Board would have the authority to waive the 
requirements of certain federal statutes and regulations, thus 
potentially reducing regulatory burdens while enhancing state 
and local flexibility in administering the consolidated 
programs. H.R. 2086 would prohibit the Board from waiving 
requirements that enforce constitutional or civil rights or 
that would serve to diminish certain national standards, such 
as those for the environment, education, and workplace safety. 
Finally, the bill would prohibit the Board from approving any 
plan that would result in an increase in Federal spending.
    Under H.R. 2086, the Board could approve a plan for a 
period of up to five years. Any decision by the Board to 
approve or disapprove a plan or to terminate an approved plan 
would require the certification of the President. The bill and 
its provisions would terminate on September 30, 2001.
    Federal budgetary impact.--The President established the 
Community Empowerment Board to assist with the implementation 
of the Empowerment Zone and Enterprise Communities program 
included in the 1993 Omnibus Budget Reconciliation Act (OBRA). 
H.R. 2086 would broaden the Board's role and authority to 
include proposals to integrate programs in areas other than 
community development and to allow for the waiver of certain 
statutory requirements.
    Because the Board could not approve a plan that would 
increase federal spending, H.R. 2086 would not affect direct 
spending. However, by significantly expanding both the Board's 
authority and the number of potential petitioners--the Office 
of Management and Budget estimates that about 19,000 local 
communities would be eligible--the bill would increase the 
costs to the federal government of reviewing plans submitted by 
state and local governments. In the budget submitted for fiscal 
year 1997, the President requested $1 million for the Board; 
that amount would provide the funding for a staff of eight 
full-time employees.
    Because CBO cannot predict the number of additional plans 
that would be submitted for review, or the amount of additional 
time needed to review requests for waivers from existing 
statutes, we are unable to estimate the extent that costs would 
increase under H.R. 2086. Based on the prior experience of the 
Community Empowerment Board, we expect that for some agencies, 
such as the Departments of Housing and Urban Development and 
Health and Human Services, the additional costs could be 
significant.
    H.R. 2086 also could result in some savings in 
administrative costs to the federal government. Enacting the 
bill would encourage communities to consolidate their efforts 
related to multiple federal programs. As a result, having the 
state or local government primarily responsible for monitoring 
and administrating the consolidated program could reduce the 
need for some federal administrative activities. But because we 
do not know the type or number of plans that would be approved 
under H.R. 2086, we cannot estimate the extent of such 
potential savings.
    In sum, we expect that costs would increase under H.R. 
2086, but at this time, CBO cannot estimate the likely level of 
the net increase. Funds for any increase would be subject to 
the availability of appropriated amounts.
    Mandates statement.--H.R. 2086 contains no 
intergovernmental or private sector mandates as defined in 
Public Law 104-4, and would impose no direct costs on state, 
local, or tribal governments. The bill would provide these 
governments with additional flexibility in using and 
consolidating federal financial assistance. Such flexibility 
could lead to significant savings in the administration of some 
federal grant programs.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are John R. 
Righter, for the federal costs, and Theresa Gullo, for the 
state and local costs.
            Sincerely,
                                         June E. O'Neill, Director.

                   VI. Inflationary Impact Statement

    Pursuant to clause 2(l)(4) of rule XI of the House of 
Representatives, the Committee estimates that H.R. 2086 will 
have no significant inflationary impact on prices and costs in 
the national economy.

                      VII. Compliance with Rule XI

    Pursuant to rule XI, clause 2(l)(3) of the Rules of the 
House of Representatives, under the authority of rule X, clause 
2(b)(1), and clause 3(f), the results and findings from the 
Committee oversight activities are incorporated in the bill and 
this report.

      VIII. Changes in Existing Law Made by the Bill, As Reported

    Clause 3 of rule XIII of the Rules of the House of 
Representatives requires that changes in existing law made by 
the bill, as reported, be included in the report.
    This bill makes no direct amendments to any Act.

  IX. Congressional Accountability Act: P.L. 104-1; Section 102(b)(3)

    H.R. 2086 is not applicable to the legislative branch 
because it does not relate to any terms or conditions of 
employment or access to public services or accommodations.

                   X. Budget Analysis and Projections

    This Act provides for no new authorizations or budget 
authority or tax expenditures. Consequently, the provisions of 
section 308(a)(1) of the Congressional Budget Act are not 
applicable.
                             MINORITY VIEWS

    Although we oppose passage of the ``Local Empowerment and 
Flexibility Act of 1996'', we favor the concept of providing 
greater flexibility to local governments and not-for-profit 
organizations in the use of Federal grants. During the 103rd 
Congress, the Subcommittee on Human Resources and 
Intergovernmental Relations held hearings on a bipartisan bill 
similar to H.R. 2086 that was introduced by Chairman Clinger 
and the former Chairman of the Committee, John Conyers, Jr.
    During that same Congress, Members of this Committee were 
appointed as conferees to a local flexibility provision 
attached by Senator Hatfield to the National Competitiveness 
Act. All conferees, both House and Senate, Democrat and 
Republican, supported the conference agreement on local 
flexibility. The Administration also supported the conference 
agreement. However, disagreement on other parts of the Act 
stalled the bill in conference.
    This bipartisan House-Senate flexibility compromise limited 
waivers only to regulations, and then only to specific grant 
items such as substance abuse treatment, juvenile justice, and 
school lunch programs; and specifically prohibited statutory 
waivers.
    By contrast, H.R. 2086, was reported by a partisan vote of 
21-19. The bill is opposed by the Administration, and a broad 
coalition of labor, education, child welfare and environmental 
organizations. Thus, what started out as a bipartisan issue, 
has evolved into a partisan Republican bill, which just barely 
has the support of a majority of Committee Members.
    H.R. 2086 would permit the indiscriminate waiver of Federal 
law. Pursuant to Section 8(d)(4) the ``Community Empowerment 
Board'', an Executive branch board established as part of 
Enterprise Zone legislation, is granted broad authority to 
waive laws relating to labor relations or labor standards; 
national environmental standards; educational standards; 
educational equality; threats to public health or safety; 
financial management; and occupational health or safety so long 
as a waiver plan submitted by local governments or community 
organizations does not ``diminish'' the requirements in these 
laws.
    In the areas of labor relations or labor standards, Section 
8(d)(4) would permit the waiver of such laws as the Fair Labor 
Standards Act, Davis-Bacon, Family and Medical Leave Act, ERISA 
and the National Labor Relations Act. In the area of national 
environmental standards, the bill would permit the waiver of 
laws like the Clean Air Act, the Clean Water Act, the Safe 
Drinking Water Act, Superfund, the Toxic Substances Control Act 
and the Endangered Species Act. Regarding health and safety the 
bill would permit the waiver of the Federal Meat Inspection 
Act, the Ryan White Act, the Federal Aviation Act, the Child 
Nutrition Act and the Breast and Cervical Cancer Screening Act. 
Educational laws like Head Start, the Elementary and Secondary 
Education Act and the Goals 2000: Educate America Act could be 
waived under the bill.
    The sponsor of the bill indicated that Section 8(d)(4) 
would not permit the waiver of these fundamental laws, and 
stated that the word ``diminish'' would prevent any weakening 
of the statutory requirements of these and other laws. However, 
the bill contains no definition of the bill's concept to 
``diminish'' the requirements of law. Moreover, the 
Subcommittee on Human Resources and Intergovernmental 
Relations, which held hearings on H.R. 2086, received no 
testimony on this issue.
    Without any definition or legislative history of 
``diminishing'' Federal requirements, a new ``Community 
Empowerment Board'' would be free to apply whatever standard it 
chooses in determining what constitutes a diminishing 
requirement under this bill. Without Congressional guidance on 
this issue, these standards will change dramatically from 
Administration to Administration.
    For example, there are those who argue that the elimination 
of the minimum wage requirement does not diminish labor 
standards, and provides more flexibility to our business 
community. When the reauthorized Clean Water Act exempted 
70,000 chemicals from existing pollution control, and allowed 
waivers for over 20 cities from the current requirement for 
treatment of sewage before discharging it into the ocean, 
supporters argued that the requirements of the Act were not 
diminished. When big cuts were made in funds for safe drinking 
water, supporters also justified those cuts by arguing that 
they did not diminish the protections in the Act. If these cuts 
and changes in labor and environmental law are not viewed as 
``diminishing'' then almost any reduction in statutory 
protections can be viewed as not ``diminishing''.
    In addition, the bill has a list of laws that cannot be 
waived. Section 8(d)(3) provides that the ``Board'' may not 
waive any Constitutional right or any civil right. The bill's 
sponsor stated that the ``Board'' may not waive any laws listed 
in this section. However, since the waiver of laws related to 
labor, the environment, education, and health and safety are 
not in Section 8(d)(3), clearly these laws can be waived. The 
only questions is when and under what circumstances.
    In support of statutory waivers several supporters of the 
bill argued that since Congress could not possibly know of 
every circumstance that might come up under a particular 
statute, waivers were a good way to put flexibility into the 
law in order to handle unforeseen circumstances, and to avoid a 
``one size fits all'' approach to legislating.
    We agree that in some circumstances we may need more 
flexibility in the process by which the rights guaranteed in 
our laws are achieved. That is what regulations are for. But 
that is much different from permitting the Executive branch to 
waive the rights guaranteed in our laws. Congress should not 
turn over to agency officials the responsibility for deciding 
whether to waive Federal law.
    Several supports of the bill also implied that the waiver 
of Federal laws was acceptable since the original ``Local 
Flexibility Act'' introduced by the former Democratic Chairman 
of the Committee, John Conyers, Jr., contained statutory 
waivers. It is true that the original Conyers-Clinger bill 
contained statutory waiver. But after further consideration 
this concept was discarded.
    The bi-partisan agreement reached on the National 
Competitiveness Act in the last Congress, limiting waiver only 
to regulations reflected the Democratic position on local 
flexibility during the 103rd Congress.
    Consistent with the bi-partisan agreement reach on the 
National Competitiveness Act, Rep. Edolphus Towns, Ranking 
Member of the subcommittee, offered an amendment which would 
have applied H.R. 2086 only to agency regulations. The Towns 
amendment stated:

          The Board may not waive under this subsection any 
        requirement established by or required under any 
        Federal statute.

    This straightforward amendment, if adopted, would have 
solved one of the major problems with H.R. 2086. However, the 
Towns amendment was defeated after Rep. Morella offered an 
amendment to the Towns amendment which was approved by the 
Committee.
    According to Rep. Morella, her amendment limits any waivers 
on laws relating to cross-cutting requirements on the 
environment, labor issues, occupational safety and public 
health to procedural, administrative or reporting requirements 
in those laws. However, a careful reading of the amendment 
makes it clear that the amendment does not in any way limit the 
waiver of substantive law under H.R. 2086.
    We are also deeply concerned that this bill creates 
confusing levels of government bureaucracy. Section 6(c) of 
H.R. 2086 gives the ``Community Empowerment Board'' established 
under Enterprise Zone legislation, broad new powers to review 
and approve flexibility plans and to draft regulations. The 
``Community Empowerment Board'' consists of the heads of 19 
different agencies. As the Director of the Office of Management 
and Budget, Alice Rivlin said in an April 17, 1996 letter to 
subcommittee Chairman Shays opposing H.R. 2086:

          The Subcommittee bill makes the CEB a 
        ``superagency.'' It vests authority in the CEB to 
        approve or revoke waivers and approve or terminate 
        plans, rather than the ``affected Federal agencies * * 
        *'' In addition, the bill gives the CEB, not the 
        agencies, the lead in setting a wide range of policies. 
        In the spirit of reinvention and smaller government, we 
        are opposed to creating a new bureaucracy to approve 
        the wavier requests.

    The proposed board will likely be unworkable. Each agency 
head will inevitably attempt to protect the power and influence 
of their agency. At a time when the Clinton Administration is 
carefully streamlining the Federal government, this new 
``superagency'' takes us in the wrong direction.
    We are also concerned that H.R. 2086 creates additional 
levels of bureaucracy at the local level. Under Section 10 of 
the bill, an eligible applicant for financial assistance is 
required to designate an existing organization as a ``community 
advisory committee.'' The ``community advisory committee'' is 
supposed to advise the applicant in the development and 
implementation of its flexibility or coordination plan.
    In the real world what will happen is that different groups 
are going to fight over who will become the ``community 
advisory committee'' in order to influence the direction and 
operation of the flexibility or coordination plan in an effort 
to control which organizations get grants. This will lead to 
even less flexibility.
    There are many additional problems with this bill. Two of 
those problems are also discussed in the Administration's April 
17th letter to subcommittee Chairman Shays. According to the 
Administration H.R. 2086 may encourage financial mismanagement.

          As drafted, H.R. 2086 appears to allow broad 
        fungibility of Federal grant funds and provides 
        insufficient financial management and performance 
        accountability * * * Moreover, the extent of the 
        fungibility of Federal funds implied by the House bill 
        raises significant legal and financial accountability 
        issues for Federal agencies responsible for managing 
        these grant programs.

    The other issue raised in the Administration's letter 
involves the role of State government:

          Under the House bill, local governments might seek to 
        bypass the State and obtain funds directly from the 
        Federal Government. In addition, this provision would 
        substantially increase the complexity of flexibility 
        proposal, and bog down the review process * * * 
        Further, it is not appropriate to by-pass the role of 
        State governments and other partners who must remain 
        involved in intergovernmental service delivery.

                                Summary

    As described above, we favor the need to increase 
flexibility in regulations regarding Federal grant programs. 
The Federal government now has over 528 different categorical 
grant programs. Access to these programs is often confusing and 
difficult for individuals, families and local governments.
    However, in fashioning a responsible bill we should 
remember that Americans do not wish to see programs that are 
designed to protect the environment, labor, education and 
health and safety dismantled in the name of flexibility. 
Moreover, at a time when the Administration and Congress are 
streamlining the Federal government we, should also avoid the 
creation of additional levels of bureaucracy which will only 
make it more difficult for the American people to understand 
the operations of the Federal government.
    The supporters of this bill should work with all sides to 
achieve a fair consensus. Unfortunately, this bill has ventured 
far beyond its original objectives of flexibility, and in the 
process has lost its broad support.

                                   Cardiss Collins.
                                   Edolphus Towns.
                                   Henry A. Waxman.
                                   Tom Lantos.
                                   Bob Wise.
                                   Major R. Owens.
                                   John Spratt.
                                   Louise Slaughter.
                                   Bernard Sanders.
                                   Karen L. Thurman.
                                   Carolyn B. Maloney.
                                   Tom Barrett.
                                   Barbara-Rose Collins.
                                   Gene Green.
                                   Carrie P. Meek.
                                   Chaka Fattah.
                                   Tim Holden.
           DISSENTING VIEWS OF REPRESENTATIVE CARRIE P. MEEK

    I support the general objective of H.R. 2086. We all know 
of examples of Federal requirements that impede the effective 
delivery of services to those who are supposed to benefit from 
Federal grants. But we must be very careful in how we draft the 
legislative solution.
    The basic approach of H.R. 2086 is to have Congress 
transfer its authority over legislation to the Executive 
branch. Under section 8(d) of the reported bill, the Executive 
branch will be able to waive many statutory requirements passed 
by Congress if the Executive branch approves a plan submitted 
by a State, a local government, a tribe, or a local not-for 
profit organization.
    That is giving too much power to the Executive branch.
    This point can be illustrated by focusing on the Elementary 
and Secondary Education Act (``ESEA''). The last Congress 
completely rewrote the ESEA when it passed the Improving 
America's Schools Act. There was bipartisan support for that 
legislation.
    That law went about the waiver issue in the correct way. It 
gave the Secretary of Education waiver authority, but it also 
said that there were nine statutory requirements in the ESEA 
that could not be waived by the Secretary.
    The current ESEA waiver authority is working well. In the 
last year the Department of Education has received 241 requests 
for waivers. It has granted 101, and for 57 it explained to the 
local schools that a waiver was not needed to do what the local 
schools wanted to do. The Department did not approve 14 waiver 
requests, and the other 69 waiver requests are currently being 
reviewed.
    H.R. 2086 will permit a future Executive branch to wavie 
parts of the ESEA that the 103rd Congress so carefully agreed 
could not be waived. For example, H.R. 2086--
          Permits a future Executive branch to waive the 
        current statutory prohibition on a school district's 
        spending Federal funds for religious worship or 
        instruction;
          Permits a future Executive branch to let a particular 
        school district eliminate the current statutory right 
        of parents to be involved in the local decisions on who 
        to use Federal education funds;
          Permits a future Executive branch to allow a 
        particular governor to change the current statutory 
        formulas for the allocation of Title I funds within a 
        particular state; and
          Permits a future Executive branch to ignore the 
        current statutory prohibition on a local government's 
        replacing local school expenditures with Federal funds.
    In conclusion, reasonable people may differ on such key 
education issues as the use of Federal funds for religious 
instruction, the rights of parents, the allocation of Title I 
funds within a State, and whether Federal funds should replace 
local funds. But H.R. 2086 has the unfortunate effect of 
overturning the bipartisan judgment of the 103rd Congress that 
Congress--not the Executive branch--should decide these 
fundamental issues.
                                                    Carrie P. Meek.

                                
