Unfunded Mandates: Analysis of Reform Act's Coverage and Views on
Possible Next Steps (14-APR-05, GAO-05-533T).
The Unfunded Mandates Reform Act of 1995 (UMRA) was enacted to
address concerns about federal statutes and regulations that
require nonfederal parties to expend resources to achieve
legislative goals without being provided funding to cover the
costs. UMRA generates information about the nature and size of
potential federal mandates but does not preclude the
implementation of such mandates. At various times in UMRA's
10-year history, Congress has considered legislation to amend
aspects of the act to address ongoing questions about its
effectiveness. This testimony is based on GAO's reports, Unfunded
Mandates: Analysis of Reform Act Coverage (GAO-04-637, May 12,
2004) and Unfunded Mandates: Views Vary About Reform Act's
Strengths, Weaknesses, and Options for Improvement (GAO-05-454,
March 31, 2005). Specifically, this testimony addresses (1)
UMRA's procedures for the identification of federal mandates and
GAO's analysis of the implementation of those procedures for
statutes enacted and major rules issued in 2001 and 2002, and (2)
the views of a diverse group of parties familiar with UMRA on the
significant strengths and weaknesses of the act as the framework
for addressing mandate issues and potential options for
reinforcing the strengths or addressing the weaknesses.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-05-533T
ACCNO: A21683
TITLE: Unfunded Mandates: Analysis of Reform Act's Coverage and
Views on Possible Next Steps
DATE: 04/14/2005
SUBJECT: Cost analysis
Federal funds
Federal law
Federal legislation
Intergovernmental fiscal relations
Intergovernmental relations
Private sector
Regulatory agencies
Statutory law
Federal regulations
Policy evaluation
Government and business
******************************************************************
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GAO-05-533T
United States Government Accountability Office
GAO Testimony
Before the Subcommittee on Oversight of Government Management, the Federal
Workforce and the District of Columbia; Committee on Homeland Security and
Governmental Affairs, U.S. Senate
For Release on Delivery Expected at 10:00 a.m. EST Thursday, April 14,
2005
UNFUNDED MANDATES
Analysis of Reform Act's Coverage and Views on Possible Next Steps
Statement of Orice M. Williams, Director Strategic Issues
a
GAO-05-533T
[IMG]
April 14, 2005
UNFUNDED MANDATES
Analysis of Reform Act's Coverage and Views on Possible Next Steps
What GAO Found
The identification and analysis of intergovernmental and private sector
mandates is a complex process under UMRA. Proposed legislation and
regulations are subject to various definitions, exceptions, and exclusions
before being identified as containing mandates at or above UMRA's cost
thresholds. Also, some legislation and rules may be enacted or issued via
procedures that do not trigger UMRA reviews. In 2001 and 2002, 5 of 377
statutes enacted and 9 of 122 major or economically significant final
rules issued were identified as containing federal mandates at or above
UMRA's thresholds. Despite the determinations under UMRA, at least 43
other statutes and 65 rules resulted in new costs or negative financial
consequences that affected nonfederal parties might perceive as unfunded
or underfunded federal mandates.
GAO obtained information from 52 knowledgeable parties, who provided a
significant number of comments about UMRA, specifically, and federal
mandates, generally. Their views often varied across and within the five
sectors we identified (academic/think tank, public interest advocacy
groups, business, federal agencies, and state and local governments).
Overall, the numerous strengths, weaknesses, and options for improvement
identified during the review fell into several broad themes, including,
among others, UMRA-specific issues such as the act's coverage and
enforcement, and more general issues about the design, funding, and
evaluation of federal mandates. UMRA's coverage was, by far, the most
frequently cited issue by parties from the various sectors. Parties across
most sectors said that UMRA's numerous definitions, exclusions, and
exceptions leave out many federal actions that might significantly impact
nonfederal entities and suggested that they should be revisited. However,
a few parties, primarily from the public interest advocacy sector, viewed
UMRA's narrow coverage as a strength that should be maintained. Another
issue on which the parties had particularly strong views was the perceived
need for better evaluation and research of federal mandates and more
complete estimates of both the direct and indirect costs of mandates on
nonfederal entities. The most frequently suggested option to address these
evaluation issues was more post-implementation evaluation of existing
mandates or "look backs" at their effectiveness.
Going forward, the issue of unfunded mandates raises broader questions
about assigning fiscal responsibilities within our federal system. The
longterm fiscal challenges facing the federal and state and local
governments and the continued relevance of existing programs and
priorities warrant a national debate to review what the government does,
how it does business, and how it finances its priorities. Such a
reexamination includes considering how responsibilities for financing
public services are allocated and shared across the many nonfederal
entities in the U.S. system.
United States Government Accountability Office
Mr. Chairman and Members of the Committee:
I am pleased to have the opportunity to provide testimony today on federal
mandates and the Unfunded Mandates Reform Act of 1995 (UMRA).1 As you
know, UMRA was enacted to address concerns expressed by state and local
governments about federal statutes and regulations that require nonfederal
parties to expend resources to achieve legislative goals without providing
funding to cover the costs.2 Many federal programs and initiatives, in
areas ranging from homeland security to health care and environmental
protection, involve shared responsibilities-and benefits- for the federal
government, state, local, and tribal governments, and the private sector.
Determining the appropriate balance of fiscal responsibility between the
federal government, state, local, and tribal governments, and the private
sector in carrying out these federal mandates is a constant challenge. As
the budgets of federal, state, and local governments become more
constrained, balancing the costs of legislative actions with increasingly
limited fiscal resources has brought this debate to the forefront.
Mr. Chairman, my testimony today focuses on the findings from two reports
we issued over the past year at your request.3 We believe that both are
important to this committee in the context of considering possible
revisions to UMRA. The first report, issued in May 2004, focused on UMRA's
procedures for identifying federal mandates and our analysis of the
implementation of those procedures for statutes enacted and major rules
issued in 2001 and 2002. Building upon the work of the first report, the
second report, which is being released publicly today, focuses on the
views of a diverse group of parties from the academic/think tank,
business, federal agency, public interest advocacy groups, and state and
local governments sectors on the strengths and weaknesses of UMRA and
their suggested options for reinforcing the strengths or addressing the
weaknesses. While the information gathered for this second report reflects
only the perspectives of those individuals who participated in our review,
1Pub. L. No. 104-4.
2Pub. L. 104-4 pmbl. As in the act, we generally refer to the
identification of federal mandates, rather than unfunded mandates, in this
statement.
3GAO, Unfunded Mandates: Analysis of Reform Act Coverage, GAO-04-637
(Washington, D.C.: May 12, 2004) and Unfunded Mandates: Views Vary About
Reform Act's Strengths, Weaknesses, and Options for Improvement,
GAO-04-454 (Washington, D.C.: Mar. 31, 2005).
this information comes from organizations and individuals recognized as
being knowledgeable about the implementation of UMRA and/or federal
mandate programs.
In summary, our May 2004 report concluded that while information provided
under UMRA about potential mandates may have helped to discourage or limit
federal mandates, proposed legislation and regulations must pass through
multiple steps and meet multiple conditions before being identified as
containing mandates at or above UMRA's thresholds. In 2001 and 2002, the
period of our review, we found that 5 of 377 statutes and 9 of 122 major
or economically significant rules were identified as containing federal
mandates at or above UMRA's thresholds. Despite the determinations made
under UMRA, we found that some of the statutes and rules that had not
triggered UMRA's requirements appeared to have potential financial impacts
on affected nonfederal parties similar to those of actions that were
identified as mandates at or above UMRA's thresholds. For example, at
least 43 statutes and 65 rules issued in 2001 and 2002 resulted in new
costs or other negative financial impacts that affected parties might
perceive as unfunded or under funded mandates even though they did not
meet UMRA's definition of a mandate.
In our most recent report, we found a wide variety of views and
perspectives on UMRA specifically and federal mandates more generally. Not
surprisingly, the comments provided fell into several broad categories or
themes, specifically, (a) UMRA coverage, (b) UMRA enforcement, (c) other
UMRA issues including the use and usefulness of the information generated
under the Act and consultations with state and other governments, and (d)
broader issues involving federal mandates included the design and funding
of federal mandates and evaluating those mandates. Those issues discussed
most frequently were UMRA's coverage, enforcement, and the evaluation of
federal mandates. While there was some broad-based support by parties
across most sectors that these are issues that warrant review and
reconsideration, there was less agreement about suggested options for
dealing with them.
Identification of The procedures under UMRA for the identification and
analysis of
intergovernmental and private sector mandates are very complex.Mandates
Under Moreover, some potential mandates are enacted through procedures
that UMRA Is Complex never require them to be reviewed under UMRA. For
example, UMRA does
not require the automatic review of potential mandates contained in
appropriation bills, nor does the act cover rules that were issued as
final
without having been preceded by a notice of proposed rulemaking. Even if
proposed legislation or regulations are reviewed under UMRA, those
provisions are subject to various definitions, exclusions, and exceptions
before being identified as containing mandates at or above UMRA's cost
thresholds. For example, UMRA does not apply to legislative provisions
that cover constitutional rights, discrimination, emergency aid,
accounting and auditing procedures for grants, national security, treaty
ratification, and certain parts of Social Security. As figure 1
illustrates, a provision in legislation must pass through a multiple step
process before the Congressional Budget Office prepares required
statements identifying and estimating the costs of mandates in legislation
that meet certain criteria and determines whether or not those estimated
costs meet or exceed UMRA's thresholds.4
4UMRA has several titles. Title I requires congressional committees and
the Congressional Budget Office to identify and provide information on
potential federal mandates in certain legislation. Similarly, title II of
UMRA requires federal agencies to prepare a written statement identifying
the costs and benefits of federal mandates contained in certain
regulations and consult with affected parties. For legislation, the
thresholds are direct costs (in the first 5 fiscal years that the relevant
mandates would be effective) of $50 million or more for intergovernmental
mandates and $100 million or more for private sector mandates, while the
threshold for regulations is expenditures of $100 million or more in any
year. The dollar thresholds are in 1996 dollars and are adjusted annually
for inflation.
Figure 1: The Multistep Process Necessary for CBO to Identify Federal Mandates
in Proposed Legislation
Procedures Yes No
Is provision contained in authorizing Subject to Not subject to
legislation reported by an authorizing automatic CBO automatic CBO
committee and not added after initial CBO review review
UMRA review?
Definition Yes No
Is provision an enforceable CBO issues UMRA
duty on state, local, or CBO specifies type of statement stating
tribal governments or the mandate contained in legislation does not
private sector, and is it the legislation contain a mandate under
not subject to exceptions? UMRA
Cost threshold Yes No
Does direct cost CBO issues UMRA statement CBO issues UMRA statement
estimate for all specifying type of federal specifying type of
provisions in mandate contained in the federal mandate contained
legislation meet or legislation and that it in the legislation and
exceed thresholds? meets or exceeds the that it is below the
applicable cost threshold applicable cost threshold
Source: GAO.
Based on UMRA's requirements, we found that few provisions in statutes or
rules are considered mandates as defined by UMRA. As mentioned previously,
in 2001 and 2002, the period of our review, only 5 of the 377 statutes
enacted and 9 of the 122 major rules issued contained federal mandates at
or above UMRA's thresholds. All 5 statutes and 9 rules contained private
sector mandates and only one final rule-an Environmental Protection Agency
standard on arsenic in drinking water- contained an intergovernmental
mandate.
Despite the determinations made under UMRA, nonfederal parties affected by
federal actions viewed many more federal actions in statute and regulation
as containing unfunded or under funded mandates. When we explored this
issue, we found that some of the statutes and rules that had not triggered
UMRA's requirements appeared to have potential financial impacts on
affected parties similar to those of actions that had been flagged as
containing mandates at or above UMRA' s thresholds. Specifically, we
identified at least 43 statutes and 65 rules issued in 2001 and 2002 that
resulted in new costs or other negative financial impacts on nonfederal
parties that the affected parties might perceive as unfunded or under
funded mandates even though they did not meet UMRA's definition of a
mandate or did not meet or exceed UMRA's thresholds. For these statutes
and rules, CBO or federal agencies most often had determined that the
estimated direct costs or expenditures, as defined by UMRA, would not meet
or exceed the applicable thresholds or that one or more of the other
definitions, exclusions, or exclusions applied. These findings raised the
question of whether UMRA, given its procedures, definitions, and
exclusions, adequately captures and subjects to scrutiny federal statutory
and regulatory actions that might impose significant financial or other
burdens on affected nonfederal parties. To begin to address this question,
you asked us to obtain the views of a diverse group of parties
knowledgeable about UMRA and federal mandates.
Views of Parties Regarding UMRA and Unfunded Mandates
Parties from the various sectors provided a variety of comments but they
generally fell into several broad themes. UMRA's coverage was the most
frequently cited theme, with comments provided by all the sectors
(academic/think tank, business, federal agencies, public interest advocacy
groups, and state and local governments). Issues involving enforcement
were the second most frequently cited but with far fewer parties providing
comments. Other themes that emerged from the comments included the use and
usefulness of the information generated under UMRA, UMRA's analytic
framework, and consultation under UMRA. Finally, issues involving the
design and funding and evaluation of federal mandates also emerged as
themes.
UMRA Coverage Generally Given the findings from our May 2004 report, it's
not surprising that UMRA's Viewed as a Weakness but a coverage, including
its numerous definitions, exclusions, and exceptions, Few Parties Disagree
was the most frequently cited issue by parties from all five sectors. Most
parties from the state and local governments, federal agency, business,
and
academic/think tank sectors viewed UMRA's narrow coverage as a major
weakness that leaves out many federal actions with potentially significant
financial impacts on nonfederal parties. However, a few parties, from
public interest advocacy groups and academic/think tank sectors,
considered some of the existing exclusions important or identified UMRA's
narrow scope as one of the Act's strengths.
The comments about weaknesses in UMRA's coverage ranged from general to
specific. For example, some parties commented, in general, about the
number of exclusions and exemptions. Others provided more specific
comments, including points regarding issues with the exclusion of indirect
costs and UMRA's cost thresholds for legislative and regulatory mandates,
which result in excluding many federal actions that may significantly
impact nonfederal entities. Others raised more fundamental concerns about
the exclusions for appropriations and other legislation not covered by the
Act and for rules issued by independent regulatory agencies, which are
also not covered by UMRA but can result in provisions that contain
mandates. CBO estimates that in 2004, 5 of the 8 laws containing federal
mandates (as defined by UMRA) that it did not review before enactment,
were appropriations acts.5 Finally, parties from the state and local
government sector also identified concerns about gaps in UMRA's coverage
of federal preemption of state and local authority.6 Although some
preemptions are covered by UMRA such as those that preempt state or local
revenue raising authority, they are covered only for legislative actions
and not for federal regulations. According to CBO's 2005 report on
unfunded mandates, "Over half of the intergovernmental mandates for
5CBO, A Review of CBO's Activities in 2004 Under the Unfunded Mandates
Reform Act (Washington D.C.: March 8, 2005).
6Preemption refers to the power of the federal government to enact
statutes that override state laws. This power derives from the supremacy
clause of the United States Constitution, which states that "The Laws of
the United States...shall be the supreme Law of the Land...any Thing in
the Constitution or Laws of any state to the Contrary notwithstanding."
U.S. Const. art. VI, cl. 2. For example, the Internet Tax Freedom Act
prohibits states from enacting a tax on Internet access or multiple or
discriminatory taxes on electronic commerce between October 1998 and
November 2004 and preempts any state or local laws enacted during this
period. Pub. L. No. 105-277, Div. C, Tit. XI, S: 1101 (1998) (amended
2004). Title I of UMRA only applies to legislation that prohibits states
from raising revenue, such as the Internet Tax Freedom Act. 2 U.S.C. S:
658(3)(A)(i). Other preemptions of states' regulatory authority are not
subject to UMRA's enforcement scheme.
which CBO provided estimates [in 2004] were preemptions of state and local
authority."7
Despite the widespread view in several sectors that UMRA's narrow coverage
leaves out federal actions with potentially significant impacts on
nonfederal entities, there was less agreement by parties about how to
address this issue. The options ranged from general to specific but those
most frequently suggested were:
o Generally revisit, amend, or modify the definitions, exceptions, and
exclusions under UMRA and expand UMRA's coverage.
o Clarify UMRA's definitions and ensure their consistent implementation
across agencies to ensure that all covered provisions are being included.
o Change the cost thresholds and/or definitions that trigger UMRA by, for
example, lowering the threshold for legislative or executive reviews and
expanding cost definitions to include indirect costs.
o Eliminate or amend the definitional exceptions for conditions of
federal financial assistance or that arise from participation in voluntary
federal programs.
o Expand UMRA coverage to all preemptions of state and local laws and
regulations, including those nonfiscal preemptions of state and local
authority.
As I mentioned previously, while most parties thought UMRA's narrow
coverage was a weakness, a few parties from academic/think tank and public
interest advocacy groups sectors view UMRA coverage differently. They
viewed UMRA's narrow scope as one of its primary strengths. In fact,
rather than expanding UMRA's coverage, these parties said that it should
be kept narrow and that the exceptions and exclusions are needed. Between
1996 and 2004, CBO reports that of 5,269 intergovernmental statements, 617
had mandates and of 5,151 private sector statements, 732 had
7CBO's March 2005 UMRA report.
mandates.8 Of the mandates identified by CBO, about 9 percent of the
intergovernmental mandates and almost 24 percent of private sector
mandates had costs that would exceed the thresholds. As discussed at our
January 26, 2005, symposium on UMRA and federal mandates, some parties
also identified a number of suggestions that they could not support,
namely any attempt to expand UMRA to cover constitutional or civil rights
or excluding private sector mandates.
UMRA Enforcement Issues involving UMRA enforcement were the second most
frequently cited issue but with far fewer parties from each sector
commenting. Parties across and within sectors had differing views on both
the enforcement mechanisms provided in the law itself and the level of
effort exercised by those responsible for implementing UMRA's provisions.
Many of the comments focused on the point of order-one of the primary
tools used to enforce UMRA requirements in title I of UMRA. Although the
point of order provides members of Congress the opportunity to raise
challenges to hinder the passage of legislative provisions containing an
unfunded intergovernmental mandate, views were mixed about its
effectiveness. Those representing state and local government and federal
agency sectors said that the point of order should be retained because it
has been successful in reducing the number of unfunded mandates by acting
as a deterrent to their enactment, without greatly impeding the process.
Conversely, some parties primarily from academic/think tank, business, and
federal agency sectors did not believe the point of order has been
effective in preventing or deterring the enactment of mandates and
suggested otions to strengthen it. Moreover, others commented about its
infrequent use.9
8According to CBO's 2005 report, the numbers represent official mandate
statements transmitted to Congress by CBO. CBO prepared more
intergovernmental mandate statements than private-sector mandate
statements because in some cases it was asked to review a specific bill,
amendment, or conference report solely for intergovernmental mandates.
These numbers also exclude preliminary reviews and informal estimates for
other legislative proposals. Finally, mandate statements may cover more
than one mandate. Similarly, CBO may address a single mandate in more than
one statement.
9In the last 10 years, at least 13 points of order under UMRA were raised
in the House of Representatives and none in the Senate. Only 1 of the 13,
regarding a proposed minimum wage increase as part of the Contract with
America Advancement Act in 1996, resulted in the House voting to reject
consideration of a proposed provision.
Some parties said the point of order needs to be strengthened by making it
more difficult to defeat. One suggested revision was to require a
threefifths vote in Congress, rather than a simple majority, to overturn a
point of order. This change was believed to strengthen the "institutional
salience of UMRA" and to ensure that no mandate under UMRA could be
enacted if it was supported only by a simple majority. As you know, on
March 17, 2005, the Senate approved the fiscal year 2006 budget, which
included a provision that would increase to 60 the number of votes needed
to overturn an UMRA point of order in the Senate. 10
A few parties from the federal agency and academic/think tank sectors
commented on another enforcement mechanism for regulatory mandates-UMRA's
judicial review provision, which subjects any agency compliance or
noncompliance with certain provisions in the Act to judicial review. Most
felt that this mechanism does not provide meaningful relief or remedies if
federal agencies have not complied with the requirements of UMRA because
of its limited focus. Specifically, judicial review is limited to
requirements that pertain to preparing UMRA statements and developing
federal plans for mandates that may significantly impact small government
agencies. Furthermore, if a court finds that an agency has not prepared a
written statement or developed a plan for one of its rules, the court can
order the agency to do the analysis and include it in the regulatory
docket for that rule; but the court may not block or invalidate the rule.
The few parties commenting about judicial review suggested expanding it to
provide more opportunities for judicial challenges and more effective
remedies when noncompliance of the Act's requirements occur. A few parties
primarily from the academic/think tank and public interest advocacy groups
sectors said that efforts to limit or stop implementation of mandates
through legal action might be unwarranted, because UMRA was not intended
to preclude the enactment of federal mandates. They were primarily
concerned about litigation being used to slow down the regulatory process.
Commenting parties from business, federal agency, and state and local
governments sectors questioned some federal agencies' compliance with UMRA
requirements and the effectiveness of enforcement mechanisms to address
this perceived noncompliance. They mentioned the failure of some agencies
to consult with state, local and tribal governments when
10As of April 11, 2005, the fiscal year 2006 budget was in conference
negotiations with the House of Representatives.
developing regulations that may have a significant impact on nonfederal
entities. Likewise, at least one party of each of the three sectors
expressed concerns about the lack of accurate and complete information
provided by federal agencies, which are responsible for determining
whether a rule includes a mandate and whether it exceeds UMRA's
thresholds. The perceived lack of compliance with certain UMRA
requirements generated several suggested changes to UMRA. However, the
only suggestion that had support across parties from multiple sectors was
to replicate CBO's role for legislative mandates by creating a new office
within OMB that would be responsible for calculating the cost estimates
for federal mandates in regulations.
Parties Across All Sectors Raise Other Issues Regarding UMRA, but Little
or No Consensus Emerges
Parties from all sectors also raised a number of other issues about the
use and usefulness of UMRA information (in decreasing the number of
unfunded mandates), UMRA's analytic framework, and federal agency
consultations with state, local, and tribal governments, but there was no
consensus in their views about how these issues should be addressed. The
parties provided mixed but generally positive views about the use and
usefulness of UMRA information. Some parties commented that the Act does
increase awareness of unfunded mandates but thought more could be done to
increase its usefulness. However, the only option that attracted multiple
supporters was a suggestion for a more centralized approach for generating
information within the executive branch similar to the suggestions
mentioned about improving enforcement. Parties also provided a number of
comments about the provisions of UMRA that establish the analytic
framework for cost estimates, which generated a few suggested options
aimed at improving the quality of information generated such as including
indirect costs for threshold purposes and clarifying certain definitions
(e.g. "federal mandates" and "enforceable duty"). UMRA's consultation also
emerged as a recurring theme within and across certain sectors. The
comments generally were about a perceived lack of consistency across
agencies when consulting with state and local governments.
Sectors Also Raise Parties from all sectors also raised a number of
broader issues about Concerns About Federal federal mandates-namely, the
design and funding and evaluation of Mandates in General federal
mandates-and suggested a variety of options. While most of the
comments were about the evaluation of federal mandates, some parties also
raised concerns about the design and funding of mandates, which varied
across sectors. Issues raised include: (1) costs for mandates may
vary across different affected nonfederal entities, (2) mismatches between
the funding needs of parties compared to federal formulas, and (3) effects
of the timing of federal actions and program changes on nonfederal
parties. Most often, the comments focused on a perceived mismatch between
the costs of federal mandates and the amount of federal funding provided
to help carry them out. Others raised issues about the need to address the
incentives for the federal government to "over leverage" federal funds by
attaching (and often revising) additional conditions for receiving the
funding.
Parties, primarily from the academic/think tank sector, suggested a wide
variety of options to address their concerns, but there was no broad
support for any option. For example, while some parties across four
sectors suggested providing waivers or offsets to reduce the costs of the
mandates on affected parties or "off ramps" to release them of some
responsibilities to fulfill the mandates in a given year if the federal
government does not provide sufficient funding. Others said that
compliance with federal mandates should not be made contingent on full
federal funding and off ramps and waivers can introduce other issues. The
option of building into the design of federal mandates "look back" or
sunset provisions that would require retrospective analyses of the
mandates' effectiveness and results was also suggested.
About half the parties, representing most sectors commented on the
evaluation of federal mandates and offered suggestions to improve
mandates, whether covered by the Act or not. Not surprisingly parties in
the academic/think tank sector, who felt that the evaluation of federal
mandates was especially important because there is a lack of information
about the effects of federal mandates on affected parties, provided most
of the comments. The issues raised included concerns about the lack of
focus on evaluating the effectiveness (results) of the mandates; the
questionable accuracy and completeness of cost estimates, particularly
ones prepared by federal agencies, and the lack of evaluation of the
impact of mandates.
All of these issues are related and the concerns expressed touched upon
the need to adequately evaluate mandates in the context of costs,
benefits, impacts, and effectiveness of the mandated actions to achieve
desired goals. Parties across the sectors suggested that various forms of
retrospective analysis are needed for evaluating federal mandates after
they are implemented. Some suggestions for retrospective analysis focused
on costs and effectiveness of mandates, including comparing them to the
estimates and expected outcomes. Others from the state and local
governments sector also suggested focusing on the cumulative costs and
effects of mandates-the impact of various related federal actions, which
when viewed collectively, may have a substantial impact although any one
may not exceed UMRA's thresholds. Finally, parties primarily from the
academic/think tank sector suggested examining local and regional impacts
of mandates and analyzing the benefits of federal mandates, when
appropriate, not just costs.
Observations Regarding Next Steps
As Congress reevaluates UMRA on its 10-year anniversary, the information
we provided over the past year provides some useful insights. First,
although parties from various sectors generally focused on the areas of
UMRA and federal mandates that they would like to see fixed, they also
recognized positive aspects and benefits of UMRA. In particular, they
commented about the attention UMRA brings to potential consequences of
federal mandates and how it serves to keep the debate in the spotlight. I
also found it notable that no one suggested repealing UMRA.
Second, when considering changes to UMRA itself, UMRA's narrow coverage
stands out as the primary issue for most sectors because it excludes so
many actions from coverage under UMRA and contributes to complaints about
unfunded or under funded mandates as discussed in both of our reports.
Even with an issue such as coverage on which there was some general
agreement across most sectors, the variety of suggested options indicates
that finding workable solutions will require including all affected
parties in the debate.
Third, one of the challenges for Congress and other federal policy makers
is to determine which issues and concerns about federal mandates are best
addressed in the context of UMRA and which are best considered as part of
more expansive policy debates on federal mandates and federalism. On
broader policy issues concerning federal mandates, various parties
recognized that UMRA is only part of the solution and the issue raises
broader public policy questions about structuring and funding mandates in
general. These parties made it clear that retrospective analysis is needed
to ensure that mandates are achieving their desired goals, which could
help provide additional accountability for federal mandates and provide
information that could lead to better decisions regarding the design and
funding of mandate programs.
Finally, as we move forward in an environment of constrained fiscal
resources, the issue of unfunded mandates raises broader questions about
the assignment of fiscal responsibilities within our federal system.
Reconsideration of such responsibilities begins with the observation that
most major domestic programs, costs, and administrative responsibilities
are shared and widely distributed throughout our system. Part of this
public policy debate includes a reexamination of the federal government's
role in our system and a need to sort out how responsibilities for these
kinds of programs should be financed in the future.11 If left unchecked,
unfunded mandates can weaken accountability and remove constraints on
decisions by separating the enactment of benefit programs from the
responsibility for paying for these programs. Likewise, 100 percent
federal financing of intergovernmental programs can pervert fiscal
incentives necessary to ensure proper stewardship at the state and local
level for shared programs.
Mr. Chairman, once again I appreciate the opportunity to testify on these
important issues and I would be pleased to address any questions you or
other members of the committee might have.
Contacts and If additional information is needed regarding this testimony,
UMRA or federal mandates, please contact Orice M. Williams at (202)
512-5837 or
Acknowledgements [email protected] or Tim Bober at (202) 512-4432 or
[email protected]. Other key contributors to the work which was associated
with this testimony were Tom Beall, Kate Gonzalez, and Boris Kachura.
11For a broader discussion of our work on 21st century challenges see,
21st Century Challenges: Reexamining the Base of the Federal Government,
GAO-05-325SP (Washington, D.C.:February 2005).
GAO's Mission The Government Accountability Office, the audit, evaluation
and investigative arm of Congress, exists to support Congress in meeting
its constitutional responsibilities and to help improve the performance
and accountability of the federal government for the American people. GAO
examines the use of public funds; evaluates federal programs and policies;
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