[Senate Report 105-194]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 386
105th Congress                                                   Report
                                 SENATE

 2d Session                                                     105-194
_______________________________________________________________________


 
    FEDERAL FINANCIAL ASSISTANCE MANAGEMENT IMPROVEMENT ACT OF 1998

                               __________

                              R E P O R T

                                 of the

                   COMMITTEE ON GOVERNMENTAL AFFAIRS

                          UNITED STATES SENATE

                              to accompany

                                S. 1642

   TO IMPROVE THE EFFECTIVENESS AND PERFORMANCE OF FEDERAL FINANCIAL 
ASSISTANCE PROGRAMS, SIMPLIFY FEDERAL FINANCIAL ASSISTANCE APPLICATION 
AND REPORTING REQUIREMENTS, AND IMPROVE THE DELIVERY OF SERVICES TO THE 
                                 PUBLIC





                  May 22, 1998.--Ordered to be printed


                   COMMITTEE ON GOVERNMENTAL AFFAIRS

                   FRED THOMPSON, Tennessee, Chairman
WILLIAM V. ROTH, Jr., Delaware       JOHN GLENN, Ohio
TED STEVENS, Alaska                  CARL LEVIN, Michigan
SUSAN M. COLLINS, Maine              JOSEPH I. LIEBERMAN, Connecticut
SAM BROWNBACK, Kansas                DANIEL K. AKAKA, Hawaii
PETE V. DOMENICI, New Mexico         RICHARD J. DURBIN, Illinois
THAD COCHRAN, Mississippi            ROBERT G. TORRICELLI, New Jersey
DON NICKLES, Oklahoma                MAX CLELAND, Georgia
ARLEN SPECTER, Pennsylvania
             Hannah S. Sistare, Staff Director and Counsel
             Kristine I. Simmons, Professional Staff Member
                 Leonard Weiss, Minority Staff Director
          Sebastian Okelly, Minority Professional Staff Member
                       Lynn L. Baker, Chief Clerk


                            C O N T E N T S

                              ----------                              
                                                                   Page
  I. Summary and Purpose..............................................1
 II. Background.......................................................1
III. Legislative History..............................................3
 IV. Section-by-Section Analysis......................................3
  V. Estimated Cost of Legislation....................................6
 VI. Evaluation of Regulatory Impact..................................7
VII. Changes in Existing Law..........................................8


                                                       Calendar No. 386
105th Congress                                                   Report
                                 SENATE

 2d Session                                                     105-194
_______________________________________________________________________


    FEDERAL FINANCIAL ASSISTANCE MANAGEMENT IMPROVEMENT ACT OF 1998

                                _______
                                

                  May 22, 1998.--Ordered to be printed

_______________________________________________________________________


Mr. Thompson, from the Committee on Governmental Affairs, submitted the 
                               following

                              R E P O R T

                         [To accompany S. 1642]

    The Committee on Governmental Affairs, to which was 
referred the bill (S. 1642) to improve the effectiveness and 
performance of Federal financial assistance programs, simplify 
Federal financial assistance application and reporting 
requirements, and improve the delivery of services to the 
public, having considered the same, reports favorably on the 
bill and recommends that the bill do pass.

                         I. summary and purpose

    S. 1642, the Federal Financial Assistance Management 
Improvement Act of 1998, requires federal agencies to 
coordinate and streamline the process by which applicants apply 
for assistance from Federal financial assistance programs, 
particularly where similar programs are administered by 
different Federal agencies. The purpose is to facilitate better 
coordination among the Federal Government, State, local and 
tribal governments, and not-for-profit organizations, simplify 
Federal financial assistance application and reporting 
requirements, and ultimately improve the delivery of services 
to the public.

                             II. background

    There are over 600 federal programs which provide 
assistance to State, local and tribal governments and non-
profit organizations. Funds provided under these programs are 
intended to meet a variety of domestic policy needs and 
objectives, and ultimately resolve some of the real problems 
facing our nation's residents. However, administrative red tape 
often impedes the effective delivery of services to those who 
need them most. The goal of S. 1642 is to improve the 
performance of Federal grant and other assistance programs by 
streamlining their application, administration and reporting 
requirements and facilitating greater coordination among 
federal agencies and their non-federal partners. The bill 
builds on past Committee efforts to improve performance 
(through the Government Performance and Results Act of 1993) 
and reduce Federal burdens on State, local and tribal 
governments (through the Paperwork Reduction Act and the 
Unfunded Mandates Reform Act). Furthermore, the bill recognizes 
the Federal Government's growing reliance on electronic 
information and the Internet by emphasizing the use of 
electronic reporting in the grant application and management 
process.
    Many of the programs available to States and localities and 
non-profits serve similar purposes but are administered by 
different agencies. For example, taxpayers spend $20 billion on 
163 job training programs administered by 15 different federal 
agencies. Eleven agencies administer over 90 early childhood 
programs. Economic development is another area involving dozens 
of different programs and multiple agencies at the Federal 
level. The result is a confusing maze of overlapping programs 
that is difficult for even experienced service providers to 
navigate. Among other problems, this maze results in varied and 
different applications for like programs; duplicative 
information collection requirements; unnecessary separate and 
distinct reporting requirements; and, inefficiently timed funds 
dispersal and auditing procedures. Not only does this process 
frustrate State and local government and non-profit 
organizations charged with carrying out Federal grant programs, 
it also causes program inefficiency which reduces the 
effectiveness of these programs at all levels.
    S. 1642 is intended to bring some coordination to these 
programs and to simplify the process by which States and 
localities and non-profits apply for and report on the use of 
the funds available under these programs.
    The bill is short and straightforward. It requires relevant 
Federal agencies, with oversight from the Office of Management 
and Budget (OMB), to develop plans within 18 months that do the 
following:
          Streamline application, administrative and reporting 
        requirements;
          Develop a uniform application (or set of 
        applications) for related programs;
          Develop and expand the use of electronic applications 
        and reporting via the Internet;
          Demonstrate interagency coordination in simplifying 
        requirements for cross-cutting programs; and,
          Set annual goals to further the purposes of the Act.
    Agencies would consult with outside parties in the 
development of the plans. Plans and annual reports would be 
submitted to Congress and the Director of OMB and could be 
included as part of other management reports required under 
law.
    In addition to overseeing and coordinating agency 
activities, OMB would be responsible for developing more common 
rules (one common rule, for example, is the restriction on the 
useof Federal funds for lobbying) that cross program and agency 
lines and for developing a release form that allows grant information 
to be shared across programs. The National Academy of Public 
Administration would submit an evaluation of this Act's effectiveness 
in four years. The bill sunsets in five years.

                        iii. legislative history

    S. 1642 was introduced by Senator Glenn on February 12, 
1998 with Committee Chairman Thompson and Senators Levin, 
Lieberman and Akaka. While still in draft form, the legislation 
was endorsed by the National Governors' Association, the 
National Association of Counties, the National Conference of 
State Legislatures, the National League of Cities, and the 
Council of State Governments. Governor George Voinovich (R-OH) 
and Governor Ben Nelson (D-Neb), representing the National 
Governors' Association, testified in favor of the legislation 
during the Committee's hearing on regulatory reform on February 
24, 1998.
    The Committee proceeded to consider S. 1642 on April 1, 
1998. No amendments were offered. S. 1642 was ordered reported 
unanimously by recorded vote of 9 to 0.

                    iv. section-by-section analysis

Sec. 1. Short title

    This Act may be cited as the ``Federal Financial Assistance 
Management Improvement Act of 1998''.

Sec. 2. Findings

    This section finds that there are over 600 Federal 
financial assistance programs designed to implement domestic 
policy, and that some of the administrative requirements of 
these programs may be impeding the cost effective delivery of 
services at the local level; further, State, local and tribal 
governments and non-profit organizations are dealing with 
increasingly complex problems, and simplifying the procedures 
and reporting requirements of Federal aid programs will improve 
the delivery of services to the public.

Sec. 3. Purposes

    The purposes of this Act are to improve the effectiveness 
and performance of Federal aid programs, simplify application 
and reporting requirements, improve the delivery of services to 
the public, and facilitate greater coordination among those 
responsible for delivering services.

Sec. 4. Definitions

    This section defines the terms used in this Act, including 
``Federal financial assistance program''.

Sec. 5. Duties of the Director

    (a) In General.--The Director of the Office of Management 
and Budget shall coordinate and assist federal agencies in 
establishing--
          (1) a uniform application or set of uniform 
        applications to be used to apply for assistance from 
        multiple Federal programs that serve similar purposes 
        and areadministered by different Federal agencies;
          (2) ways to streamline administrative procedures and 
        reporting requirements for grantees;
          (3) a uniform system wherein an applicant can apply 
        for, manage, and report on the use of funding multiple 
        Federal programs across different Federal agencies;
          (4) a process by which applicants can apply for and 
        report on the use of Federal funds electronically;
          (5) use if common rules for multiple Federal programs 
        across different Federal agencies;
          (6) improved interagency and intergovernmental 
        coordination of information collection, including the 
        development of a release form to facilitate information 
        sharing;
          (7) a process to strengthen the information resources 
        management capacity of grantees pertaining to the 
        administration of Federal programs; and
          (8) specific annual goals and objectives to further 
        the purposes of this Act.
      (b) Action Consistent With Statutory Requirements.--
Actions taken by the Director must be consistent with the 
statutory requirements of any applicable Federal program.
      (c) Lead Agency and Working Groups.--The Director may 
designate a lead agency and use interagency working groups to 
assist in carrying out this section.
      (d) Review of Plans and Reports.--
          (1) In general.--The Director shall review agency 
        plans and reports, monitor the annual performance of 
        each agency, and ensure that each agency plan does not 
        diminish standards to measure performance and 
        accountability of financial assistance programs.
          (2) Report.--Not later than 3 years after the 
        enactment of this Act, the Director shall report to 
        Congress on the implementation of this section. Such 
        report may be included as part of any required general 
        management report.
      (e) Exemptions.--
          (1) In general.--The Director may exempt any Federal 
        agency if he determines it does not have a significant 
        number of Federal aid programs.
          (2) Agencies exempted.--Not later than November 1 of 
        each fiscal year, the Director shall submit a list of 
        exempted agencies, and an explanation for such 
        exemption, to the Senate Committee on Governmental 
        Affairs and the House Committee on Government Reform 
        and Oversight.
      (f) Guidance.--Not later than 120 days after the 
enactment of this Act, the Director shall issue guidance to 
Federal agencies on its implementation and include a statement 
on the common rules the Director intends to review and 
standardize under this Act.

Sec. 6. Duties of Federal agencies

      In General.--Not later that 18 months after enactment of 
this Act, each Federal agency shall develop and implement a 
plan that--
          (1) simplifies the application, administrative, and 
        reporting procedures for each Federal program 
        administered by the agency;
          (2) demonstrates active participation in the 
        interagency process under section 5(a);
          (3) demonstrates agency use of the uniform 
        application and system developed under section 5(a);
          (4) designates a lead agency official;
          (5) allows applicants to apply for, and report on the 
        use of, Federal fundselectronically;
          (6) strengthens the information resources management 
        capacity of grantees pertaining to the administration 
        of Federal programs; and
          (7) in cooperation with grantees, establishes annual 
        goals and objectives to measure performance.
    (b) Plan Consistent With Statutory Requirements.--Each plan 
developed and implemented under this section shall be 
consistent with statutory requirements relating to any 
applicable Federal program.
    (c) Comment and Consultation on Agency Plans.--
          (1) Comment.--Each agency shall publish its plan in 
        the Federal Register for comment and hold public 
        hearings on its plan.
          (2) Consultation.--The lead official designated by 
        each agency shall consult with State, local and tribal 
        governments and qualified organizations during 
        development of the agency plan. Consultation with 
        state, local and tribal governments shall be in 
        accordance with section 204 of the Unfunded Mandates 
        Reform Act of 1995 (2 U.S.C. 1534).
    (d) Submission of Plan.--Each agency shall submit its plan 
to Congress and the Director of OMB and report annually on its 
implementation and performance. Such report may be included as 
part of any other required general management report.

Sec. 7. Evaluation

    (a) In General.--The Director (or lead agency official) 
shall contract with the National Academy of Public 
Administration to evaluate the effectiveness of this Act. The 
evaluation shall be submitted to the Director and Congress not 
later than four years after the enactment of this Act.
    (b) Contents.--The evaluation shall--
          (1) evaluate the effectiveness of this Act and make 
        recommendations to further its implementation;
          (2) evaluate the performance of each agency in 
        achieving its goals and objectives;
          (3) access the level of coordination among the 
        Director, agencies, and grantees in implementing this 
        Act.

Sec. 8. Effective date and sunset

    This Act shall take effect on the date of enactment and 
shall cease to be effective five years after such date.

                    v. estimated cost of legislation

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, April 21, 1998.
Hon. Fred D. Thompson,
Chairman, Committee on Governmental Affairs,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 1642, the Federal 
Financial Assistance Management Improvement Act of 1998.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is John R. 
Righter.
            Sincerely,
                                              James L. Blum
                                   (For June E. O'Neill, Director).
    Enclosure.

S. 1642--Federal Financial Assistance Management Improvement Act of 
        1998

    Summary: S. 1642 would require federal agencies to simplify 
the procedures for state and local governments and nonprofit 
organizations to apply for and report on federal grant and 
assistance programs. Assuming appropriation of the necessary 
amounts. CBO estimates that implementing S. 1642 would cost 
between $5 million and $10 million over the 1999-20003 period. 
This estimate includes several million dollars in costs for 
federal agencies to develop and report on plans to implement 
the bill's provisions, between $1 million and $2 million for 
the Office of Management and Budget (OMB) to oversee the 
governmentwide effort, and about $0.5 million for OMB to 
contract with the National Academy of Public Administration 
(NAPA) to study and report on the bill's effectiveness.
    Because the bill could affect direct spending by agencies 
not funded through annual appropriations, such as the Tennessee 
Valley Authority, pay-as-you-go procedures would apply. CBO 
estimates that such effects would not be significant. S. 1642 
contains no intergovernmental or private-sector mandates as 
defined in the Unfunded Mandates Reform Act of 1995 (UMRA) and 
would impose no costs on state, local, or tribal governments.
    Description of the bill's major provisions: The bill would 
direct OMB to oversee an interagency effort to implement the 
bill's eight objectives, including creating a single form for 
applicants to apply for multiple federal assistance programs 
and allowing applicants to apply for and report on the use of 
federal funds electronically. The bill also contains several 
reporting requirements. Within 18 months of enactment, agencies 
would be required to develop a plan to implement the bill's 
objectives, including a set of performance measures, which the 
agencies would report on in the following years. It also would 
require OMB to report to the Congress on the agencies' plans 
and NAPA to evaluate and report to OMB and the Congress on the 
bill's effectiveness. The bill's provisions would sunset five 
years after enactment.
    Estimated cost to the Federal Government: Subject to 
appropriation of the necessary amounts, CBO estimates that S. 
1642 would increase planning and reporting costs by between $5 
million and $10 million over the 1999-2003 period.
    Much of S. 1642 would codify current law or current policy. 
For instance, a uniform application--SF 424, Application for 
Federal Assistance--already exists. Additionally, initiatives 
currently are under way to streamline application and reporting 
requirements (such as measures resulting from the Paperwork 
Reduction Act of 1995) and increase the use of electronic 
methods (such as the Interagency Electronic Grant Committee), 
although S. 1642 could expedite and improve such efforts. 
Expediting the reduction of paperwork requirements and the 
implementation of electronic information systems for federal 
financial assistance programs could reduce some administrative 
costs, but CBO expects that savings over the next five years 
would probably not be significant.
    The bill would require agencies to devise plans to 
implement its eight objectives, including establishing 
performance measures to track their progress, and to report 
annually on their success relative to such measures. CBO 
estimates that such costs would not be signficiant for any one 
agency, but that, governmentwide, the costs would total at 
least several million dollars over the bill's five-year period. 
(We expect the bill would apply to the approximately 20 
agencies that provide nearly all of domestic federal financial 
assistance.)
    In addition, the bill would require OMB to oversee the 
governmentwide effort, which CBO estimates would cost between 
$1 million and $2 million. That estimate would cover the annual 
costs of one to two staff-years to coordinate and oversee the 
interagency effort, as well as the costs to review and comment 
on the agencies' performance plans and reports and to report to 
the Congress on such plans.
    Finally, the bill would require that OMB contract with NAPA 
to evaluate and report on the bill's effectiveness. Based on 
information from NAPA, which estimates it would need about a 
year to complete the analysis, CBO estimates that the study 
would cost about $0.5 million.
    Pay-as-you-go considerations: The Balanced Budget and 
Enforcement Deficit Control Act of 1985 specifies procedures 
for legislation affecting directing spending and receipts. Pay-
as-you-go procedures would apply to S. 1642 because it could 
affect spending by agencies not funded through annual 
appropriations. CBO estimates that such effects would not be 
significant.
    Intergovernmental and private-sector impact: S. 1642 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would impose no costs on state, local, or 
tribal governments. The bill could reduce the cost of meeting 
application and reporting requirements for state, local, and 
tribal governments and nonprofit organizations receiving 
federal assistance.
    Estimate prepared by: John R. Righter.
    Estimate approved by: Robert A. Sunshine, Deputy Assistant 
Director for Budget Analysis.

                  vi. evaluation of regulatory impact

    Pursuant to the requirement of paragraph 11(b) of rule XXVI 
of the Standing Rules of the Senate, the Committee has 
considered the regulatory and paperwork impact of S. 1642. The 
legislation contributes to the efficient administration and 
management of Federal financial assistance programs by 
facilitating the use of uniform application and reporting 
requirements and increasing the use of electronic reporting. It 
would impose no additional regulatory burdens, and should 
reduce paperwork and administrative burdens on Federal grant 
recipients by eliminating redundant and obsolete requirements 
related to the administration of Federal financial assistance 
programs. Over time, it should also reduce paperwork burdens on 
Federal agencies in moving to both a more streamlined Federal 
grant management process and by expanding the use of electronic 
reporting and applications.

       vii. changes in existing law made by the bill, as reported

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, the Committee states that S. 
1642, as reported, makes no changes in existing law.

                            
