[Senate Report 106-103]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 199
106th Congress                                                   Report
                                 SENATE
 1st Session                                                    106-103
_______________________________________________________________________




                     FEDERAL FINANCIAL ASSISTANCE


                  MANAGEMENT IMPROVEMENT ACT OF 1999

                               __________

                              R E P O R T

                                 OF THE

                   COMMITTEE ON GOVERNMENTAL AFFAIRS

                          UNITED STATES SENATE

                              TO ACCOMPANY

                                 S. 468

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




                  July 1, 1999.--Ordered to be printed

                               __________

                    U.S. GOVERNMENT PRINTING OFFICE
69-010                     WASHINGTON : 1999


                   COMMITTEE ON GOVERNMENTAL AFFAIRS

                   FRED THOMPSON, Tennessee, Chairman
WILLIAM V. ROTH, Jr., Delaware       JOSEPH I. LIEBERMAN, Connecticut
TED STEVENS, Alaska                  CARL LEVIN, Michigan
SUSAN M. COLLINS, Maine              DANIEL K. AKAKA, Hawaii
GEORGE V. VOINOVICH, Ohio            RICHARD J. DURBIN, Illinois
PETE V. DOMENICI, New Mexico         ROBERT G. TORRICELLI, New Jersey
THAD COCHRAN, Mississippi            MAX CLELAND, Georgia
ARLEN SPECTER, Pennsylvania          JOHN EDWARDS, North Carolina
JUDD GREGG, New Hampshire
             Hannah S. Sistare, Staff Director and Counsel
     Kristine I. Simmons, Staff Director, Oversight of Government 
                              Management,
        Restructuring and the District of Columbia Subcommittee
       Joyce A. Rechtshaffen, Minority Staff Director and Counsel
            Mark W. Cleveland, Minority Congressional Fellow
   Marianne Upton, Minority Staff Director, Oversight of Government 
                              Management,
        Restructuring and the District of Columbia Subcommittee
                 Darla D. Cassell, Administrative Clerk
                            C O N T E N T S

                              ----------                              
                                                                   Page
  I. Summary and Purpose..............................................1
 II. Background.......................................................1
III. Legislative History..............................................3
 IV. Explanation of Amendments........................................3
  V. Section-by-Section Analysis......................................4
 VI. Estimated Cost of Legislation....................................7
VII. Evaluation of Regulatory Impact..................................9
VIII.Changes in Existing Law..........................................9

                                                       Calendar No. 199
106th Congress                                                   Report
                                 SENATE
 1st Session                                                    106-103

======================================================================



 
  THE FEDERAL FINANCIAL ASSISTANCE MANAGEMENT IMPROVEMENT ACT OF 1999

                                _______
                                

                  July 1, 1999.--Ordered to be printed

                                _______


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

                              R E P O R T

                         [To accompany S. 468]

    The Committee on Governmental Affairs, to which was 
referred the bill (S. 468) 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 as amended do pass.

                         I. SUMMARY AND PURPOSE

    S. 468, the Federal Financial Assistance Management 
Improvement Act of 1999, 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. 468 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, eleven agencies administer 
over 100 community and regional development programs with 
outlays exceeding $11 billion. Ninety early childhood programs 
are administered through 11 agencies and 20 offices. Job 
training 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 the State and local governments 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. 468 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 36 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 (by October 
        2003);
           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 grant recipients 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. The Committee expects that agencies will comply fully with 
OMB timelines and directives, which OMB may establish pursuant 
to its responsibilities to direct, coordinate and assist the 
agencies in complying with the provisions of this Act.
    In addition to overseeing and coordinating agency 
activities, OMB would be responsible for developing more 
uniform administrative rules that cross program and agency 
lines and for developing a release form that allows grant 
information to be shared across programs. The Committee expects 
that agencies will adopt any uniform administrative rules 
developed by OMB verbatim and subsequently codify the rules in 
their regulations.
    The General Accounting Office would submit an evaluation of 
this Act's effectiveness in six years. The bill sunsets in 
eight years.

                        III. LEGISLATIVE HISTORY

    Senator Voinovich introduced S. 468 on February 25, 1999. 
Senators Thompson, Lieberman and Durbin are original 
cosponsors. The bill was referred to the Committee on 
Governmental Affairs and to the Subcommittee on Oversight of 
Government Management, Restructuring and the District of 
Columbia.
    At a Governmental Affairs Committee hearing on ``The State 
of Federalism'' on May 5, 1999, testimony in support of S. 468 
was received from Governor Tommy Thompson of Wisconsin on 
behalf of the Council of State Governments; Governor Michael 
Leavitt of Utah on behalf of the National Governors' 
Association; State Representative Dan Blue of North Carolina on 
behalf of the National Conference of State Legislatures; and, 
Mayor Clarence Anthony of South Bay, Florida on behalf of the 
National League of Cities.
    The legislation has been endorsed by the National 
Governors' Association, the National Conference of State 
Legislatures, the National League of Cities, the U.S. 
Conference of Mayors, the National Association of Counties, the 
Council of State Governments, and the International City/County 
Management Association. It has also been endorsed by the 
National Council of Nonprofit Associations and OMB Watch, a 
not-for-profit group.
    S. 468 and a series of amendments offered by Senator 
Voinovich were polled out of the Subcommittee unanimously on 
May 19, 1999. The bill as amended by the Subcommittee was 
ordered reported by the Full Committee on May 20, 1999 by voice 
vote.
    This legislation is based on legislation introduced in the 
105th Congress, S. 1642, by Senator Glenn with Senators 
Thompson, 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. Then-Governor 
George Voinovich of Ohio and Governor Ben Nelson of Nebraska, 
representing the National Governors' Association, testified in 
favor of S. 1642 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. EXPLANATION OF AMENDMENTS

    The Subcommittee approved several Voinovich amendments by 
unanimous consent. A brief description of each amendment 
follows.
     An amendment to add a paragraph to Section 6 
instructing the Director of OMB to submit a report to Congress 
within 18 months of the enactment of this Act containing 
recommendations for changes in law to improve the 
effectiveness, performance, and coordination of federal 
financial assistance programs. The purpose of the amendment is 
to ensure that Congress is able to identify any statutory 
barriers to the effective administration of federal grant 
programs.
     An amendment to Section 7 which substitutes the 
General Accounting Office for the National Academy of Public 
Administration as the entity that will evaluate the 
effectiveness of this Act. The purpose of the amendment is to 
eliminate the additional expense to the federal government of 
contracting with NAPA for the performance of this evaluation.
     An amendment to Section 5 to extend the period for 
agencies to develop and implement streamlined applications and 
reporting requirements from 18 months, plus a 12-month 
extension, to 36 months with no extension. This amendment is in 
response to OMB's concerns that agencies would not have enough 
time to implement the Act within the bill's original deadlines.
     An amendment to Section 5 clarifying that to 
``implement'' a plan includes the promulgation of rules and 
amendments to existing collections of information.
     An amendment to Section 5 to extend the period for 
agencies to develop and implement a plan that allows applicants 
to electronically apply for, and report on the use of, funds 
from Federal grant programs to October 2003. The amendment 
makes the deadline consistent with the deadline contained in 
the Government Paperwork Elimination Act, which requires 
agencies to provide for the optional use and acceptance of 
electronic documents and signatures.
     An amendment to Section 6 clarifying that OMB must 
complete its responsibilities to convene interagency working 
groups and coordinate agency activities in developing common 
application and reporting requirements within 18 months of 
enactment of this Act. This was implied, but not explicit, in 
the bill as introduced.
     An amendment to Section 7 directing that GAO 
evaluate the effectiveness of this Act after six years, instead 
of four. This amendment is necessary to comport with the new 
deadlines established by these amendments.
     An amendment to Section 11 providing that this 
legislation sunsets after eight years instead of five. This 
amendment is necessary to comport with the new deadlines 
established by these amendments.

                     V. SECTION-BY-SECTION ANALYSIS

Sec. 1. Short title

    This Act may be cited as the ``Federal Financial Assistance 
Management Improvement Act of 1999''.

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 Federal agencies

    (a) In General. Except as provided under subsection (b), 
not later than 36 months after enactment of this Act, each 
Federal agency shall develop and implement, including 
promulgation of rules and amendments to existing collections of 
information, 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 6(a);
          (3) demonstrates agency use of the uniform 
        application and system developed under section 6(a);
          (4) designates a lead agency official;
          (5) allows applicants to apply for, and report on the 
        use of, Federal funds electronically;
          (6) ensures recipients of Federal assistance provide 
        timely, complete, and high quality information in 
        response to Federal reporting requirements;
          (7) in cooperation with recipients of Federal 
        financial assistance, establishes annual goals and 
        objectives to measure performance, which may be done as 
        part of the agency's annual responsibilities under the 
        Government Performance and Results Act of 1993.
    (b) Extension. The Director may extend the period for 
development and implementation of a plan to allow applicants to 
apply for, and report of the use of, Federal funds 
electronically to October 31, 2003 for every agency unable to 
comply with the requirements of subsection (a).
    (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 the Director and Congress and report annually on its 
implementation and performance. Such report may be included as 
part of any other required general management report.

Sec. 6. Duties of the Director

    (a) In General. The Director shall direct, coordinate and 
assist federal agencies in establishing--
          (1) a common application and reporting system, 
        including--
                  (A) a common application or set of common 
                applications to be used to apply for assistance 
                from multiple Federal programs that serve 
                similar purposes and are administered by 
                different Federal agencies;
                  (B) a common system, including electronic 
                processes, wherein an applicant can apply for, 
                manage, and report on the use of funding from 
                multiple Federal programs that serve similar 
                purposes and are administered by different 
                Federal agencies;
                  (C) common administrative rules for multiple 
                Federal programs across different Federal 
                agencies; and
          (2) an interagency process for addressing--
                  (A) ways to streamline administrative 
                procedures and reporting requirements for 
                grantees;
                  (B) improved interagency and 
                intergovernmental coordination of information 
                collection and sharing of data pertaining to 
                Federal financial assistance programs; and
                  (C) improvements in the timeliness, 
                completeness, and quality of information 
                received.
    (b) Lead Agency and Working Groups. The Director may 
designate a lead agency and use interagency working groups to 
assist in carrying out this section.
    (c) Review of Plans and Reports. Agencies shall submit to 
the Director, for the Director's review, information and other 
reporting regarding agency implementation of this Act.
    (d) Exemptions. The Director may exempt any Federal agency 
if he determines it does not have a significant number of 
Federal aid programs. The Direct shall maintain a list of the 
exempted agencies on the Internet.
    (e) Changes in Existing Law. The Director shall report to 
Congress within 18 months any recommendations for changes in 
existing law which will improve the effectiveness, performance 
or coordination of federal financial assistance programs.
    (f) Deadline. All actions required under this section shall 
be carried out not later than 18 months after the date of 
enactment of this Act.

Sec. 7. Evaluation

    (a) In General. GAO shall evaluate the effectiveness of 
this Act. The evaluation shall be submitted to the Director and 
Congress not later than 6 years after the enactment of this 
Act. The evaluation shall be performed with input from State, 
local and tribal governments, and nonprofit organizations.
    (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) assess the level of coordination among the 
        Director, agencies, and grantees in implementing this 
        Act.

Sec. 8. Collection of information

    Nothing in this Act shall prevent the Director from 
gathering information or exempt any recipient of assistance 
from providing information that is required for review of 
services of an activity assisted by a Federal financial 
assistance program.

Sec. 9. Judicial review

    There shall be no judicial review of compliance or 
noncompliance with any of the provisions of this Act. This Act 
can not be used to create any right or benefit enforceable by 
any judicial action.

Sec. 10. Statutory requirements

    Nothing in this Act shall be construed as a means to 
deviate from the statutory requirements relating to applicable 
Federal financial assistance programs.

Sec. 11. Effective date and sunset

    This Act shall take effect on the date of enactment and 
shall cease to be effective 8 years after such date of 
enactment.

                   VI. ESTIMATED COST OF LEGISLATION

                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, May 27, 1999.
Hon. Fred 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. 468, the Federal 
Financial Assistance Management Improvement Act of 1999.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are John R. 
Righter (for federal costs), and Susan Sieg (for the state and 
local impact).
            Sincerely,
                                          Barry B. Anderson
                                    (For Dan L. Crippen, Director).
    Enclosure.

               congressional budget office cost estimate

S. 468--Federal Financial Assistance Management Improvement Act of 1999

    Summary: S. 468 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. 468 would increase 
planning and reporting costs by between $5 million and $10 
million over the 2000-2004 period. This estimate includes 
several million dollars in costs for federal agencies to 
develop and report on plans to implement the bill's provisions 
and between $1 million and $2 million for the Office of 
Management and Budget (OMB) to oversee the effort.
    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. 468 
contains no intergovernmental or private-sector mandates as 
defined in the Unfunded Mandates Reform Act (UMRA) and would 
impose no costs on the budgets of 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 seven objectives, including creating a single form for 
applicants to apply for multiple federal assistance programs, 
allowing applicants to apply for and report on the use of 
federal funds electronically, and establishing performance 
measures. The bill also contains several reporting 
requirements. Within three years of enactment, agencies would 
be required to develop a plan to implement the bill's 
objectives, which the agencies would report on in subsequent 
years. It also would require OMB to report to the Congress on 
the agencies' plans and the General Accounting Office (GAO) to 
evaluate and report to OMB and the Congress on the bill's 
effectiveness. The bill's provisions would expire eight years 
after enactment.
    Estimated cost to the Federal Government: Subject to 
appropriation of the necessary amounts, CBO estimates that S. 
468 would increase planning and reporting costs by between $5 
million and $10 million over the 2000-2004 period.
    Much of S. 468 would codify current law or current policy. 
For instance, a uniform application--SF 424, Appliation 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. 468 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 seven 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 significant for any one 
agency, but that they would total at least several million 
dollars over the five-year period. (We expect the bill would 
apply to the approximately 20 agencies that provide nearly all 
of domestic federal assistance.)
    In addition, the bill would require OMB to oversee the 
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 the GAO to evaluate and 
report on the bill's effectiveness within six years of the 
bill's enactment. Because the report would not be due until 
fiscal year 2005, CBO estimates that implementing this 
provision would result in a minor increase in costs over the 
2000-2004 period.
    Pay-as-you-go-considerations: the Balanced Budget and 
Enforcement Deficit Control Act specifies procedures for 
legislation affecting direct spending and receipts. Pay-as-you-
go procedures would apply toS. 468 because it could affect 
spending by agencies not funded through annual appropriations, but CBO 
estimates that any such effects would not be significant.
    Intergovernmental and private-sector impact: S. 468 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would impose no costs on the budgets of 
state, local, or tribal governments. The bill would reduce the 
costs of meeting application and reporting requirements for 
state, local, and tribal governments.
    Estimate prepared by: Federal Costs: John R,. Righter. 
Impact on State, Local, and Tribal Governments: Susan Sieg.
    Estimate approved by: Paul N. Van de Water, Assistant 
Director for Budget Analysis.

                  VII. 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. 468. 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.

      VIII. 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. 468, 
as reported, makes no changes in existing law.

                                  
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