Federalism: Comments on S.1214--The Federalism Accountability Act of 1999
(Statement/Record, 07/14/1999, GAO/T-GGD-99-143).

The Federalism Accountability Act of 1999 (S. 1214) addresses issues
affecting intergovernmental relations, including the rules of
construction regarding preemption, legislative requirements, agency
rulemaking requirements, and performance measures for state-run federal
grant programs. This testimony focuses on the agency rulemaking and
performance measurement requirements. GAO discusses two earlier
initiatives by Congress and the executive branch that were, like section
7 of the bill, designed to highlight the impact of federal rules on
state and local government. Past GAO work showed the limited effect of
those initiatives, which suggests a need for this section of the
proposed legislation. GAO also points out similarities and differences
between the bill and the executive order. Finally, GAO comments on the
experience of one agency in setting the type of goals and performance
measures with states in a federal grant program that are contemplated in
section 8 of the bill.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  T-GGD-99-143
     TITLE:  Federalism: Comments on S.1214--The Federalism
	     Accountability Act of 1999
      DATE:  07/14/1999
   SUBJECT:  Agency proceedings
	     Performance measures
	     State-administered programs
	     Regulatory agencies
	     Federal/state relations
	     Proposed legislation
	     Reporting requirements
	     Legislative procedures
	     Economic analysis
IDENTIFIER:  Federal Agency Major Rules

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    United States General Accounting Office GAO
    Testimony Before the Committee on Governmental Affairs U.S. Senate
    Not to be Released Before 3:00 p.m. EDT Wednesday
    FEDERALISM July 14, 1999 Comments on S. 1214--The Federalism
    Accountability Act of 1999 Statement for the Record of L. Nye
    Stevens Director, Federal Management and Workforce Issues General
    Government Division GAO/T-GGD-99-143 Statement Federalism:
    Comments on S. 1214--The Federalism Accountability Act of 1999 Mr.
    Chairman and Members of the Committee: We welcome this opportunity
    to comment on S. 1214, the "Federalism Accountability Act of
    1999." The bill addresses a number of issues affecting
    intergovernmental relations, including rules of construction
    regarding preemption, legislative requirements, agency rulemaking
    requirements, and performance measures for state-administered
    federal grant programs. My comments are directed to the agency
    rulemaking and performance measurement requirements. I will focus
    most of my comments on two previous executive and legislative
    branch initiatives that, like section 7 of the bill, were designed
    to highlight the impact of federal rules on state and local
    governments. Our past work showed the limited effect of those
    previous initiatives during the period of our review, which
    suggests a need for this section of the proposed legislation. I
    will also point out a few similarities and differences between the
    bill and the executive order. Finally, I will briefly comment on
    the experience of one agency in cooperatively setting the type of
    goals and performance measures with states in a federal grant
    program that are contemplated in section 8 of the bill. During the
    past 20 years, state, local, and tribal governments as well as
    Executive Order and         businesses have expressed concerns
    about congressional and regulatory UMRA Had Little
    preemption of traditionally nonfederal functions and the costs of
    complying with federal regulations. The executive and the
    legislative Effect on Agencies'         branch have each attempted
    to respond to these concerns by issuing Rulemaking Actions
    executive orders and enacting statutes requiring rulemaking
    agencies to take certain actions when they issue regulations with
    federalism or intergovernmental relations effects. Two prime
    examples of these responses are Executive Order 12612
    ("Federalism") and the Unfunded Mandates Reform Act of 1995
    (UMRA). Executive Order 12612, issued by President Reagan in 1987,
    established a Few Federalism              set of fundamental
    principles and criteria for executive departments and Assessments
    Prepared        agencies to use when formulating and implementing
    policies that have Under Executive Order       federalism
    implications. The executive order says that federal agencies 12612
    Between April 1996    should refrain from establishing uniform,
    national standards for programs with federalism implications, and
    when national standards are required, and December 1998
    they should consult with appropriate officials and organizations
    representing the states in developing those standards. The order
    says that regulations and other policies have federalism
    implications if they "have substantial direct effects on the
    States, on the relationship between the Page 1
    GAO/T-GGD-99-143 Statement Federalism:  Comments on S. 1214--The
    Federalism Accountability Act of 1999 national government and the
    States, or on the distribution of power and responsibilities among
    the various levels of government." Executive Order 12612 also
    contains specific requirements for agencies. For example, the
    order requires the head of each agency to designate an official to
    be responsible for ensuring the implementation of the order. That
    official is required to determine which proposed policies have
    sufficient federalism implications to warrant preparation of a
    "federalism assessment." The assessment must contain certain
    elements (e.g., identify the extent to which the policy imposes
    additional costs or burdens on the states) and must accompany any
    proposed or final rule submitted to the Office of Management and
    Budget (OMB) for review under Executive Order 12866. 1 OMB, in
    turn, is required to ensure that agencies' rulemaking actions are
    consistent with the policies, criteria, and requirements in the
    federalism executive order. In May 1998, President Clinton issued
    Executive Order 13083 ("Federalism"), which was intended to
    replace both Executive Order 12612 and Executive Order 12875
    ("Enhancing the Intergovernmental Partnership").2 However, in
    August 1998, President Clinton suspended Executive Order 13083 in
    response to concerns raised by state and local government
    representatives and others about both the content of the order and
    the nonconsultative manner in which it was developed. Therefore,
    Executive Order 12612 remains in effect. To determine how
    Executive Order 12612 had been implemented in recent years, we
    reviewed (1) how often the preambles to covered agencies' final
    rules issued between April 1, 1996, and December 31, 1998,
    mentioned the executive order and how often they indicated the
    agencies had conducted federalism assessments under the order;3
    (2) what selected agencies have done to implement the requirements
    of the order; and (3) what OMB has 1Executive Order 12612 actually
    refers to rulemaking procedures under Executive Order 12291, which
    was revoked and replaced by Executive Order 12866 in 1993. Because
    only "significant" rules are submitted to OMB for review under
    Executive Order 12866, federalism assessments for nonsignificant
    rules are not required to be submitted to OMB. For a description
    of the review process under this order, see Regulatory Reform:
    Implementation of the Regulatory Review Executive Order (GAO/T-96-
    185, Sept. 25, 1996). 2Executive Order 12875, among other things,
    requires federal agencies to "develop an effective process to
    permit elected officials of state, local, and tribal governments
    to provide meaningful and timely input in the development of
    regulatory proposals containing significant unfunded mandates."
    3It is unclear whether Executive Order 12612 covers regulations
    and other policies issued by independent regulatory agencies, such
    as the Federal Communications Commission and the Securities and
    Exchange Commission. Therefore, we focused our review on executive
    departments and agencies that are not independent regulatory
    agencies. Page 2
    GAO/T-GGD-99-143 Statement Federalism:  Comments on S. 1214--The
    Federalism Accountability Act of 1999 done to oversee federal
    agencies' implementation of the order in the rulemaking process.4
    We focused on the April 1996 through December 1998 time frame
    because we were able to use our database to identify which rules
    were "major" under the Small Business Regulatory Enforcement
    Fairness Act (SBREFA) (e.g., those that have a $100-million impact
    on the economy). As a result, we cannot comment on rules issued
    outside of that time frame.  Although Executive Order 12612 does
    not require agencies to mention the order in the preamble to their
    final rules or to note in those preambles whether a federalism
    assessment was prepared, doing so is a clear indication that the
    agency was aware of and considered the order's requirements. Also,
    if an agency prepared a federalism assessment for a final rule, it
    would be logical for the agency to describe the assessment in the
    preamble to the rule. Agencies Prepared Few            Our work
    showed that Executive Order 12612 had relatively little visible
    Federalism Assessments During    effect on federal agencies'
    rulemaking actions during this time frame. To Review Timeframe
    summarize the nearly 3 years of data depicted in figure 1,
    agencies covered by the order mentioned it in the preambles to
    about 26 percent of the 11,414 final rules they issued between
    April 1996 and December 1998. 4Federalism: Implementation of
    Executive Order 12612 in the Rulemaking Process (GAO/T-GGD-99-93,
    May 5, 1999). Page 3
    GAO/T-GGD-99-143 Statement Federalism:  Comments on S. 1214--The
    Federalism Accountability Act of 1999 Figure 1: Agencies Indicated
    Only Five Final Rules Issued Between April 1996 and December 1998
    Had Federalism Assessments Note: The data for 1996 covers only
    those rules issued from April 1 to December 31. Source: Federal
    Register and GAO analysis. Five agencies issued the bulk of the
    final rules published during this period-the Departments of
    Agriculture (USDA), Commerce (DOC), Health and Human Services
    (HHS), and Transportation (DOT); and the Environmental Protection
    Agency (EPA). As figure 2 shows, these agencies varied
    substantially in the degree to which they mentioned the executive
    order. For example, DOT mentioned the order in nearly 60 percent
    of its nearly 4,000 final rules, whereas EPA did not mention the
    order in any of the more than 1,900 rules it issued. Page 4
    GAO/T-GGD-99-143 Statement Federalism:  Comments on S. 1214--The
    Federalism Accountability Act of 1999 Figure 2: Agencies Differed
    In Degree to Which They Mentioned Executive Order 12612 in Final
    Rules Issued Between April 1996 and December 1998 Source: Federal
    Register and GAO analysis. However, mentioning the order in the
    preamble to a rule does not mean the agency took any substantive
    action. The agencies usually just stated that no federalism
    assessment was conducted because the rules did not have federalism
    implications. Nearly all of these statements were standard,
    "boilerplate" certifications with little or no discussion of why
    the rule did not trigger the executive order's requirements. In
    fact, the preambles to only 5 of the 11,414 final rules that the
    agencies issued between April 1996 and December 1998 indicated
    that a federalism assessment had been done-2 in 1996 and 3 in
    1997. Those five rules are listed in table 1. Page 5
    GAO/T-GGD-99-143 Statement Federalism:  Comments on S. 1214--The
    Federalism Accountability Act of 1999 Table 1: Preambles Indicated
    Four                                       Date final rule
    Agencies Issued Five Final Rules With    Department or agency
    was published Title Federalism Assessments Between April
    Department of Health and Aug. 28, 1996            Regulations
    Restricting the Sale and 1996 and December 1998
    Human Services                                    Distribution of
    Cigarettes and Smokeless Tobacco to Protect Children and
    Adolescents Department of                  Dec. 16, 1996
    Roadway Worker Protection Transportation Department of Commerce
    Jan. 30, 1997              Florida Keys National Marine Sanctuary
    Mar. 28, 1997      Hawaiian Islands Humpback Whale National Marine
    Sanctuary Department of Labor            Mar. 31, 1997
    (Hazard) Abatement Verification Source: Federal Register and GAO
    analysis. Many of the final rules that federal agencies issue are
    administrative or routine in nature, and therefore unlikely to
    have significant federalism implications. As a result, it is not
    particularly surprising that agencies would not prepare federalism
    assessments for many of those rules. However, rules that are
    "major" under SBREFA and that involve or affect state and local
    governments would seem more likely to have federalism implications
    that would warrant preparation of an assessment. However, that
    does not appear to have been the case. As figure 3 shows, of the
    117 major final rules issued by covered agencies between April
    1996 and December 1998, the preambles indicated that only 1 had a
    federalism assessment. The agencies had previously indicated that
    37 of these rules would affect state and local governments, and
    the preambles to 21 of the rules indicated that they would preempt
    state and local laws in the event of a conflict. At least one of
    the four state and local government organizations that we
    consulted during the review said that federal agencies should have
    done assessments for most of these 117 major rules. In response,
    the agencies said that their rules did not have sufficient
    federalism implications to trigger the executive order's
    requirements. Page 6
    GAO/T-GGD-99-143 Statement Federalism:  Comments on S. 1214--The
    Federalism Accountability Act of 1999 Figure3: Only One Major Rule
    Issued Between April 1996 and December 1998 Had A Federalism
    Assessment Sources: Federal Register and GAO's major rule
    database. EPA Established High Threshold All three of the agencies
    we visited during our review (USDA, HHS, and for Federalism
    Assessments              EPA) had some kind of written guidance on
    the executive order and had designated an official or office
    responsible for ensuring its implementation.5 However, the
    criteria the agencies used to determine whether federalism
    assessments were needed varied among the agencies. USDA's guidance
    did not establish any specific criteria, with agency attorneys
    making their own determinations regarding federalism implications
    in the context of each rulemaking. HHS' guidance listed four
    threshold criteria that could be used to determine whether a
    federalism assessment was required, but said an assessment must be
    prepared if an action would directly create significant effects on
    states even if the action was mandated by law or the department
    otherwise had no discretion. 5The agencies that we visited were
    those with the most major rules that state and local government
    representatives believed should have had a federalism assessment.
    Page 7
    GAO/T-GGD-99-143 Statement Federalism:  Comments on S. 1214--The
    Federalism Accountability Act of 1999 The criteria in EPA's
    guidance established a high threshold for what constitutes
    "sufficient" federalism implications-perhaps explaining why none
    of the agency's more than 1,900 final rules issued during the
    April 1996 to December 1998 time frame had a federalism
    assessment. For example, in order for an EPA rule to require an
    assessment, the agency's guidance said the rule must meet all four
    of the following criteria: *  have an "institutional" effect on
    the states, not just a financial effect (regardless of magnitude);
*  change significantly the relative roles of federal and state
    governments in a particular program context, lead to federal
    control over traditional state responsibilities, or decrease the
    ability of states to make policy decisions with respect to their
    own functions; *  affect all or most of the states; and *   have a
    direct, causal effect on the states (i.e., not a side effect). At
    least one of these criteria appeared to go beyond the executive
    order on which it is based. Although EPA said a rule must affect
    all or most of the states in order to have sufficient federalism
    implications to warrant preparation of an assessment, Executive
    Order 12612 defines "state" to "refer to the States of the United
    States of America, individually or collectively." (Emphasis
    added.) EPA's guidance also said that, even if all four of these
    criteria are met, a rule would not require a federalism assessment
    if a statute mandates the action or the means to carry it out are
    implied by statute. However, EPA's actions appear to be allowable
    because the executive order does not define what is meant by
    "sufficient" federalism implications, leaving that determination
    up to the agencies. OMB Has Taken Little Recent      OMB officials
    told us that they had taken little specific action to ensure
    Action to Ensure                 implementation of the executive
    order, but said the order is considered Implementation of
    Executive      along with other requirements as part of the
    regulatory review process Order 12612                      under
    Executive Order 12866. They said that agencies had rarely
    submitted separate federalism assessments to OMB but have
    addressed federalism considerations, when appropriate, as a part
    of the cost-benefit analysis and other analytical requirements.
    Commenting on the results of our review, the Acting Administrator
    of OMB's Office of Information and Regulatory Affairs said it was
    not surprising that agencies were not focused on implementing
    Executive Order 12612 during the covered time period because they
    knew that the order was soon to be revised by Executive Order
    13083. However, he also said that Executive Order 12612 had not
    been implemented to any significant extent by the Reagan
    Administration "or its successors," Page 8
    GAO/T-GGD-99-143 Statement Federalism:  Comments on S. 1214--The
    Federalism Accountability Act of 1999 suggesting that the lack of
    implementation was unrelated to any pending revision of the order.
    In addition, the Acting Administrator said that the primary
    vehicles for improving federal-state consultation in the past 6
    years have been Executive Order 12875 and UMRA. We have not
    examined the implementation of Executive Order 12875. However, we
    have examined the implementation of UMRA, and concluded that it
    has had little effect on agencies' rulemaking activities. Title II
    of UMRA is one of Congress' primary efforts to address the effects
    UMRA Had Little Effect on    of federal agencies' rules on state
    and local governments. Section 202 of Agency Rulemaking
    the act generally requires federal agencies (other than
    independent regulatory agencies) to prepare "written statements"
    containing specific information for any rule for which a notice of
    proposed rulemaking was published that includes a federal mandate
    that may result in the expenditure of $100 million or more in any
    1 year by state, local, and tribal governments, in the aggregate,
    or the private sector. UMRA defines a "mandate" to be an
    "enforceable duty" that is not a condition of federal assistance
    and does not arise from participation in a voluntary federal
    program. For rules requiring a written statement, section 205
    requires agencies to consider a number of regulatory alternatives
    and select the one that is the least costly, most cost-effective,
    or least burdensome and that achieves the purpose of the rule.
    Other sections of the act focus even more specifically on the
    interests of state and local representatives. For example, section
    203 states that agencies must develop plans to involve small
    governments in the development of regulatory proposals that have a
    significant or unique effect on those entities. Section 204
    requires agencies to develop processes to consult with
    representatives of state, local, and tribal governments in the
    development of regulatory proposals containing "significant
    [f]ederal intergovernmental mandates." Last year, we reported that
    these and other requirements in title II of UMRA appeared to have
    had only limited direct impact on agencies' rulemaking actions in
    the first 2 years of the act's implementation.6 Most of the
    economically significant rules promulgated during UMRA's first 2
    years were not subject to the written statement requirements of
    title II. Some did not have an associated notice of proposed
    rulemaking that triggered the act's requirements. Many did not
    impose an enforceable duty other than as a condition of federal
    financial assistance or as a duty arising from participation in a
    voluntary program. Other rules did not result in "expenditures" of
    $100 million. Because no written statement was required 6Unfunded
    Mandates: Reform Act Has Had Little Effect on Agencies' Rulemaking
    Actions (GAO/GGD- 98-30, Feb. 4, 1998). Page 9
    GAO/T-GGD-99-143 Statement Federalism:  Comments on S. 1214--The
    Federalism Accountability Act of 1999 for these rules, the
    requirements in section 205 regarding the identification and
    selection of regulatory alternatives were not applicable to these
    rules. Also, title II of UMRA contains exemptions that allowed
    agencies not to take certain actions if they determined the
    actions were duplicative or not "reasonably feasible." Other
    provisions in title II also had little effect. During the first 2
    years of UMRA's implementation, the requirement in section 204
    that agencies develop an intergovernmental consultation process
    appears to have applied to no more than four EPA rules and no
    rules from other agencies. EPA generally used a consultation
    process that was in place before UMRA was enacted. Also, section
    203 small government plans were not developed for any of the 73
    final rules promulgated during this 2-year period. Officials in
    the four agencies that we contacted said none of their final rules
    had a significant or unique effect on small governments. Section
    208 of UMRA requires the Director of OMB to submit an annual
    report to Congress on agency compliance with UMRA. The fourth such
    report is scheduled to be delivered within the next few weeks. In
    his third UMRA report published in June 1998, the OMB Director
    noted that federal agencies had identified only three rules in the
    more than 3 years since the act was passed that affected the
    public sector enough to trigger the written statement
    requirements. Nevertheless, he said federal agencies had embraced
    the act's "overall philosophy," as evidenced by the range of
    consultative activities the report described. Section 7 of S. 1214
    contains several provisions that are similar to the Federalism Act
    Similar requirements in Executive Order 12612. For example, the
    bill would, if to But Different From            enacted, require
    the head of each agency to designate a "federalism officer" with
    responsibilities similar to the "designated official" in the
    Executive Order                  executive order.  Both the bill
    and the order require this individual to determine whether
    proposed or final rules have sufficient federalism implications to
    warrant preparation of an assessment.  The content of the
    assessments required in the bill and the order are also similar.
    For example, both assessments require agencies to determine the
    extent to which a proposed or final rule affects traditional state
    authority.  Whereas the executive order says the assessments
    should identify the extent to which a rule imposes "additional
    costs or burdens" on the states, the bill says the assessments
    should describe "significant impacts" on state and local
    governments-which logically would include (but not be limited to)
    costs or burdens.  Finally, neither the bill nor the executive
    order require agencies to declare whether their proposed or final
    rules have federalism implications.  In contrast, the Regulatory
    Flexibility Act of 1980 requires Page 10
    GAO/T-GGD-99-143 Statement Federalism:  Comments on S. 1214--The
    Federalism Accountability Act of 1999 agencies to state whether or
    not their rules have a "significant economic impact on a
    substantial number of small entities."7 S. 1214 is also different
    from the executive order in some respects.  For example, unlike
    the order, the bill requires agencies to notify and consult with
    officials in governments potentially affected by the rule before
    issuing a notice of proposed rulemaking.8  The bill also requires
    pre-publication consultation when agencies do not issue notices of
    proposed rulemaking. This is important because, as we reported
    last year, about half of all final rules are published without a
    proposed rule.9  Another requirement not found in the order is
    that agencies publish a summary of any federalism assessment when
    the rule is published in the Federal Register.  Doing so would
    clearly delineate when the designated officer believes a rule has
    federalism implications.10  Under the executive order, agencies do
    not have to publish the results of their federalism assessments.
    S. 1214 also differs from Executive Order 12612 in that it more
    clearly defines the type of rulemaking actions that should trigger
    the preparation of a federalism assessment.  Under the executive
    order, the designated official has broad discretion to determine
    whether a rule has "sufficient" federalism implications to warrant
    the preparation of an assessment. Some designated officials have
    used that discretion to conclude that preemption of state and
    local authority does not, in itself, constitute sufficient
    federalism implications. As I noted previously, the agencies
    indicated in 21 of the major rules without a federalism assessment
    that the rules would take precedence in the event they conflicted
    with state or local laws or regulations.  One of the 7However, the
    Small Business Administration's Office of Advocacy reports that
    some agencies have used "boilerplate" certifications indicating
    that their rules do not have a significant impact. Contributing to
    this problem is the fact that the Regulatory Flexibility Act does
    not define key terms, resulting in different agencies having
    different interpretations.  See Regulatory Flexibility Act:
    Inherent Weaknesses May Limit Its Usefulness for Small Governments
    (GAOHRD-91-16, Jan. 11, 1991). 8Executive Order 12866 says
    "[w]herever feasible, agencies shall seek views of appropriate
    State, local, and tribal officials before imposing regulatory
    requirements that might significantly or uniquely affect those
    governmental entities."  Also, Executive Order 12875 requires
    agencies to develop an effective process to permit representatives
    of state, local, and tribal governments to provide meaningful and
    timely input in the development of regulatory proposals containing
    significant unfunded mandates. 9See Federal Rulemaking: Agencies
    Often Published Final Actions Without Proposed Rules (GAO/GGD- 98-
    126, Aug. 31, 1998). 10We have previously supported the use of
    executive summaries in regulatory economic analyses.  See
    Regulatory Reform: Agencies Could Improve Development,
    Documentation, and Clarity of Regulatory Economic Analyses
    (GAO/RCED-98-142, May 26, 1998). Page 11
    GAO/T-GGD-99-143 Statement Federalism:  Comments on S. 1214--The
    Federalism Accountability Act of 1999 rules was an HHS regulation
    on organ procurement and transplantation.11 In the preamble to the
    rule, HHS noted that at least one state had passed a law that
    limited organ-sharing policies, and that such limitations were in
    conflict with a national organ-sharing system based on medical
    need. Therefore, the agency added a section to the regulatory text
    stating that "[n]o state or local governing entity shall establish
    or continue in effect any law, rule, regulation, or other
    requirement that would restrict" compliance with the regulations.
    However, on the same page in the Federal Register preamble as its
    preemption discussion, HHS said "[w]e have determined that this
    rule will not have consequential effects on States, local
    governments, or tribal governments." S. 1214 appears to require
    agencies to prepare a federalism assessment if they determine that
    their rules will have a preemptive effect on state and local
    governments.  Subsection 7(b) of the bill requires the previously-
    mentioned consultation process with state and local officials "for
    the purpose of identifying any preemption of State or local
    government authority or other significant federalism impacts that
    may result from the rule."  Subsection 7(c) says that the
    federalism officer "shall identify each proposed, interim final,
    and final rule having a federalism impact, including each rule
    with a federalism impact identified under subsection (b), that
    warrants the preparation of a federalism assessment."  (Emphasis
    added.) However, it is less clear what other "federalism impacts"
    might trigger a federalism assessment.  For example, if an agency
    proposes a rule that has a sizable financial impact on state or
    local governments, the agency's federalism officer may determine
    that those financial impacts alone do not require an assessment.
    Therefore, the drafters of S. 1214 may want to consider clarifying
    in the bill what is meant by a "federalism impact." Finally, I
    would like to briefly comment on section 8 of S. 1214, which says
    Consultation Enhances that federal agencies may not include any
    agency activity that is a state- Intergovernmental
    administered federal grant program in its annual performance plans
    developed pursuant to the Government Performance and Results Act
    of Partnership                      1993 (Results Act) "unless the
    performance measures for the activity are determined in
    cooperation with public officials." The bill defines "public
    officials" as elected officials of state and local governments,
    including certain organizations that represent those officials
    (e.g., the National Governors' Association and the United States
    Conference of Mayors). 11See 63 FR 16296, April 2, 1998. Page 12
    GAO/T-GGD-99-143 Statement Federalism:  Comments on S. 1214--The
    Federalism Accountability Act of 1999 The Results Act already
    requires agencies developing their strategic plans to "solicit and
    consider the views and suggestions of those entities potentially
    affected by or interested in the plan." The Senate Governmental
    Affairs Committee report on the Results Act noted that the
    strategic plan "is intended to be the principal means for
    obtaining and reflecting, as appropriate, the views of Congress
    and those governmental and nongovernmental entities potentially
    affected by or interested in the agencies' activities." In that
    regard, we believe that working with state and local governments
    or their representative organizations to develop goals and
    performance measures in federal grant-in-aid programs can
    strengthen the intergovernmental partnerships embodied in those
    programs. For example, in 1996, we reported on a joint goal and
    performance measure-setting effort between the federal Office of
    Child Support Enforcement (OCSE) and state governments.12
    Initially, the federal-state relationship was not so cooperative.
    In 1994, OCSE specified the performance levels that states were
    expected to achieve in such areas as the establishment of
    paternity and collections of child support. State program
    officials strongly objected to this federal mandate because they
    did not have an opportunity to participate in the planning
    process. Following these initial planning efforts, OCSE sought to
    obtain wider participation from program officials at the federal,
    state, and local government levels. OCSE also established task
    forces consisting of federal, state, and local officials to help
    focus management of the program on long- term goals. During the
    planning process, participants agreed that the national goals and
    objectives would be based on the collective suggestions of the
    states and that the plan's final approval would be reached through
    a consensus. For each goal, the participants identified interim
    objectives that, if achieved, would represent progress toward the
    stated goal. At the time of our review, OCSE and the states were
    also developing performance measures to identify progress toward
    the goals, and planned to develop performance standards to judge
    the quality of state performance. They created a Performance
    Measures Work Group to develop statistical measures for assessing
    state progress toward achieving national goals and objectives.
    OCSE also encouraged its regional staff to develop performance
    agreements with states, specifying both general working
    relationships between OCSE regional offices and state program
    officials and performance goals for each state. 12Child Support
    Enforcement: Reorienting Management Toward Achieving Better
    Program Results (GAO/HEHS/GGD-97-14, Oct. 25, 1996). Page 13
    GAO/T-GGD-99-143 Statement Federalism:  Comments on S. 1214--The
    Federalism Accountability Act of 1999 Overall, OCSE and most state
    officials that we contacted said the joint planning process
    strengthened the federal/state partnership by enabling them to
    help shape the national program's long-term goals and objectives.
    State and local government stakeholder involvement has also been
    important in the development of practical and broadly accepted
    performance measures in other federal programs, including some
    block grants.13  We believe that these kinds of intergovernmental
    cooperation can serve as models for the kinds of efforts that
    section 8 of the Federalism Accountability Act of 1999 seeks to
    encourage. Contacts and Acknowledgment For future contacts
    regarding this testimony, please contact L. Nye Stevens or Curtis
    Copeland at (202) 512-8676. Individuals making key contributions
    to this testimony included Elizabeth Powell, Joseph Santiago, Alan
    Belkin, and V. Bruce Goddard. 13Managing for Results:  Measuring
    Program Results That Are Under Limited Federal Control (GAO/GGD-
    99-16, Dec. 11, 1998); Grant Programs:  Design Features Shape
    Flexibility, Accountability, and Performance Information (GAO/GGD-
    98-137, June 22, 1998). Page 14
    GAO/T-GGD-99-143 Page 15    GAO/T-GGD-99-143 Page 16    GAO/T-GGD-
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