With respect to section 701 of S. 2479, there is attached to my statement a page showing certain language changes which seem to be needed to conform the statement of purpose contained in that section to the content of the sections which follow. Section 703 within title II provides guidelines and authority for appropriate selective reliance by Federal agencies on State and local audits, and provides for cross-serving audit arrangements between Federal agencies. We believe that this section of S. 2479 is appropriate and provides adequate guidance and authorization. As a matter of information, the Bureau of the Budget issued Circular A-73 on August 4, 1965, regarding audit of Federal grants-in-aid to State and local governments. That circular provided to Federal agencies essentially the same guidance and authorization as would be provided by enactment of section 703. However, enactment of section 703 would provide clear congressional support for the executive action already taken. Senate bill 2479 does not contain a section 704 similar to (1) the section 704 in House bill 7366 and (2) the section 704 of the draft Senate bill which evolved into S. 2479. The section 704 dealt with the audit functions of the GAO, and required the Comptroller General to (1) prescribe rules and regulations on auditing, (2) accept the audit work of States and political subdivisions, and (3) make an annual report to the Congress on this matter. Our letter of April 24, 1969, to this Committee, commenting on the draft bill which evolved into S. 2479, suggested deletion of that version of section 704 from the draft bill. Senate bill 2479 was introduced without inclusion of section 704. We also made a deletion proposal to the House Committee on the companion bill-H.R. 7366. However, during hearings on H.R. 7366, before the House Subcommittee, a question was raised as to whether it might not be desirable to have a substitute which would provide for the issuance of auditing principles and standards for the guidance of State and local audit groups, and also expressly provide that in our work, we in the General Accounting Office would consider the implementation of such principles and standards. At the request of Chairman Fountain of the House Committee, we are cooperating with that Subcommittee staff in developing such a substitute. Our efforts in creating a substitute section 704 are currently represented by a draft which I submit for your consideration. As a matter of clarification and to avoid any future misunderstandings or diverse interpretations regarding the effect of the bill on the responsibilities of the General Accounting Office, we recommend that a new section 705 be added to S. 2479, reading as follows: "Nothing in this title shall be construed to diminish the authorities and responsibilities of the Comptroller General of the United States under existing law." Consolidation of Federal assistance programs Title III of S. 2479 provides a method to achieve consolidation of Federal assistance programs. It provides that the President shall from time to time examine the various Federal assistance programs established by law and shall determine what consolidations of such programs are necessary or desirable to make the programs or aspects thereof more consistent, efficient, and effective, and then the President is to submit consolidation plans to the Congress for review. These Presidential plans would become law unless rejected by either House of the Congress. We believe that title III of S. 2479 provides an effective and practical means for achieving constructive action to consolidate those Federal assistance programs which are appropriate for such consolidation. The growth in the number of these programs in recent years has created a highly complex structure within the Government and causes confusion among, and needless difficulties in administration for the recipients as well as for the Federal administrators. The consolidation plan approach provides an avenue for constructive remedial action through proposals made by the President based on studies and consideration by those entities which administer the programs proposed for consolidation. There are several differences between title III of S. 2479 and the related S. 2035, although both have the same general approach and both provide for grant program consolidation through proposals by the President that are subject to rejection by the Congress. There is attached to my statement an outline of some of the specific differences between the two bills. That outline may be useful to the Committee and the Committee staff in considering the two bills. Incidentally, title III of S. 2479 and the companion title III of H.R. 7366 are almost identical. We noted two differences, and in each instance we prefer the Senate bill. One feature in the House bill (page 9, lines 17-19), but not included in the Senate bill, indicated that the unexpended balances involved in a consolidation may be used only for the purpose for which the appropriation was made. We believe this feature would tend to defeat the purpose of the consolidation during the first year of consolidation. The other difference relates to the effective date of a consolidation. Both bills provide an effective date after the lapse of 60 or 90 days, but the Senate bill provides an effective date on the first day of the month after the lapse of 90 days from date of transmittal of a consolidation plan to the Congress by the President. We think it desirable that a consolidation plan be effective on the first day of a month as provided in S. 2479. Joint funding simplification Title IV of S. 2479 would amend the Intergovernmental Cooperation Act of 1968 by adding to it a new title IX-Joint Funding Simplification. We fully support the general objective of simplifying and improving the administration of related grant-in-aid programs. Today's large number of individual grant-in-aid programs, each with its own set of complex special requirements, separate authorizations and appropriations, cost-sharing ratios, allocation formulas, and financial procedures, makes it increasingly difficult to manage and administer those programs in a comprehensive or efficient manner. It is our opinion that there is presently much, in the way of coordinating and standardizing current Federal grant-in-aid programs, which could be done on an administrative level without additional legislation. However, we believe that the real key to significantly improved administration lies in the legislative consolidation of programs into broader categories of assistance, and the placement of like programs in a single agency, rather than establishing an administrative apparatus to deal with a continuing proliferation of single narrow purpose programs. Both title III of S. 2479, and S. 2035, would provide a most significant means for achieving constructive action in the future to consolidate those Federal assistance programs which are appropriate for such consolidation. As these consolidations occur there should be less need for implementing joint funding action under title IV of S. 2479. Also, the results of studies and information assembled pursuant to title VI of the Intergovernmental Cooperation Act of 1968 (Public Law 90-577), as proposed for amendment by title V of S. 2479, should lead to congressional consideration of, and possible action on, consolidation of Federal assistance programs. This action would tend to further reduce the situations where action would be needed under the joint funding simplification title. If title IV of S. 2479, regarding joint funding, is considered favorably for enactment, we believe that it should be carefully and gradually implemented under the required Presidential guidelines with provision for thorough evaluations of results achieved, and that a specific provision should be included in the legislation for limiting its application to geographical areas or perhaps to programs. Our concern is that there could exist pressures which might force too rapid an adoption of untested concepts and procedures, and once placed in operation, would make difficult the reversal of procedures found to be unworkable. We would endorse legislation limited in its application as indicated above. This would not only serve to more specifically delineate the advisability of full implementation of the proposals, but would also provide valuable information relating to programs which might be more efficiently administered if consolidated as contemplated by title III of S. 2479 and as contemplated in S. 2035. With respect to specific provisions of S. 2479, section 902 of the proposed new title IX of the 1968 act, as it relates to intradepartmental joint projects, would permit the inauguration of the program in all affected agencies without provision for going through an experimental and testing period. We would prefer first having a limited application to eliminate any problem areas prior to full-scale implementation. Such limited application is provided for interdepartmental projects authorized by section 903. Section 903 (d) within title IV of S. 2479, which authorizes the establishment of joint management funds to account for projects financed from more than one Federal program or appropriation, provides that any excess funds therein should be returned to the participating Federal agencies in accordance with a formula mutually acceptable as providing an equitable distribution, and for effecting returns accordingly to the applicable appropriations. Inherent in the joint funding concept is the possibility that the actual spending for individual programs merged into a joint program under a joint fund may be somewhat different than was planned when the joint project was established, although the sum of the individual programs would not exceed the overall total. The extent of variance between the plans and the actual results for each program in a joint project may or may not be discernible upon completion. This fact is presented as a matter of information and not necessarily as an objection to the joint funding concept. A similar situation would apply to intra-agency joint funds under section 803 (d). Access to records The last sentence of section 202 of the 1968 act provides that the head of the Federal agency and the Comptroller General shall have access for the purpose of audit and examination to any books, documents, papers, and records that are pertinent to the grant-in-aid received by the States. We recommend an appropriate change in S. 2479 which would change that sentence by adding at the end thereof the words "or their political subdivisions." This amendment will avoid the necessity of enacting specific provisions of law therefor in each Federal assistance program in which political subdivisions of the States may participate. STATEMENT REGARDING S. 2035 Senate bill 2035 provides for consolidation of grant programs on a basis generally similar to that provided in title III of S. 2479. Senate bill 2035 provides, as does S. 2479, that the President will initiate the Federal assistance program consolidation action, subject to review and rejection by the Congress. Senate bill 2035 does not provide for certain auditing and accounting features, nor for joint funding arrangemets. We endorse the general aspects of S. 2035, as well as title III of S. 2479. As mentioned earlier, there is attached to my statement an outline of some differences between the program consolidation features of the two bills that may be of assistance to your Committee and the staff in developing a bill that is finally agreed upon. STATEMENT REGARDING S. 60 The bill S. 60 would authorize the creation and publication of a catalog of Federal assistance programs. The bill requires that the catalog be revised at monthly intervals. It would provide general congressional endorsement in principle for the Federal assistance program catalog that is now issued by the Government, under Bureau of the Budget Circular A-89. We are in general agreement with the overall objective of publicizing the various Federal assistance programs. The bill requires inclusion in the catalog of detailed budgetary information, including information on obligations incurred. It requires the inclusion of names, addresses, and telephone numbers of officials in Washington and at the local level who may be consulted regarding any given program. This data alone will make the catalog voluminous. Since the large number of programs and the nature of the general program information to be included in the catalog for each program will result in a very voluminous catalog, even if only limited data are included, the inclusion of information on financial activity and names of officials will cause it to be even larger, and will add to the required extensive changes that must be made each time it is revised and published. We suggest that further consideration be given to the need for including detailed budgetary information, including data on obligations incurred, in the published catalog. Such data would not seem to be of great value to the various potential beneficiaries of Federal assistance programs, and the data would be obsolete before it could be published. It would seem desirable to consider for inclusion in a master, Governmentwide catalog, only those essential items to make a reader generally aware of available programs, and then he may proceed to specific program literature for details regarding officials to consult, application requirements, etc. We raise a question regarding the proposal for preparation and publication of catalog revisions on a monthly basis. The cost of making a revision and then printing the revised version will be substantial. We suggest that consideration be given to updating and revising the catalog on an annual cycle basis rather than on a monthly cycle basis. The annual revision could be made after each session of the Congress, thus updating each year for legislative as well as other changes made during the past year. Mr. Chairman, this concludes my statement and I will be happy to answer any questions that you or the other Committee members may have. Also, if you desire, we will be glad to work with your staff members in modifying the language of any of the bills. An outline of some differences between title III of S. 2479 and S. 2035 The statement of purpose is expressed differently in the two bills, but we believe the objectives are consistent. S. 2035 states the purpose of the bill in part by relating the new bill to the existing reorganization law (5 U.S.C. 901(a)), whereas S. 2479 includes a statement of purpose (page 6) without reference to the present law on reorganization. Either approach seems to be an adequate means of stating the purpose of the proposal. The provisions of the two bills regarding content of consolidation plans are stated and presented differently, but are directed to essentially the same objective. (S. 2479, pages 7 and 8; S. 2035, pages 3 through 6.) We note that S. 2035 contains a section (page 5) on limitation of powers. It would seem that a section of this character would be desirable for inclusion in S. 2479 if that bill is favorably considered by the Committee. The consolidation provisions of each bill will apply to "Federal Assistance Programs." We note, however, that under the respective definitions of the term "Federal Assistance Programs" under the two bills, the possible application of the consolidation provisions would differ considerably. For example, the definition included in title I of the Intergovernmental Cooperation Act of 1968, which would be applicable to consolidations as proposed in title III of S. 2479, specifically excludes shared revenues, payment of taxes, payments in lieu of taxes, payments under certain contracts, etc., in contrast to the definition in section 1002 of S. 2035 which specifically includes these items. We suggest that the Committee give consideration to this matter of definition in order that any legislation which might be enacted to provide for consolidation of assistance programs will precisely define the scope of its intended application. The provisions for congressional consideration are similar in the two bills (S. 2479, pages 9 and 10, and S. 2035, pages 6 and 7). However, S. 2479 states a 90-day period while S. 2035 states a 60-day period for congressional consideration. Also, S. 2479 provides for making a consolidation plan effective on the first day of the month following the end of the period for congressional consideration, while S. 2035 provides for making a plan effective a stated number of days after transmittal to the Congress which could make it effective on any day in the month. It may be preferable from the standpoint of simplifying the implementation of the actual consolidation, if S. 2035 is considered favorably to make it effective on the first day of the month after the expiration of the stated period of time. Senate bill 2035 contains section 1006 (page 7) regarding effect on other laws and regulations, while S. 2479 does not. The section in S. 2035 may be desirable for inclusion in S. 2479 to make the legislation as clear as possible, if S. 2479 is favorably considered. It is noted that S. 2035 has an expiration date of April 1, 1971 (section 1004(b), page 6), while S. 2479 (page 13) has an expiration date of 3 years after its enactment. It may be desirable to provide a 3-year period. Senate bill 2479 contains considerable material regarding the procedures to be observed by the Congress when considering consolidation plans. These procedures seem to be comparable to those applicable under reorganization plans (5 U.S.C. 900 et. seq.) which are incorporated by reference in S. 2035. Either approach seems acceptable, but the difference is pointed out as a matter of information. ATTACHMENT TO THE STATEMENT BY THE COMPTROLLER GENERAL, PROPOSED "SEC. 701. It is the purpose of this title to encourage simplification and standardization of financial reporting requirements of Federal assistance programs and to promote, among Federal agencies administering such programs, accounting and auditing policies that rely on State and local financial management control systems meeting standards. [and to authorize the Comptroller General of the United States to prescribe rules and regulations for use of audits of States and political subdivisions in meeting the responsibilities of the General Acounting Office with respect to such programs.] "STANDARDS OF AUDITING TO BE DEVELOPED "SEC. 704. (a) The Bureau of the Budget, or such other agency as the President may designate, in cooperation with the Comptroller General, is hereby authorized to develop and issue principles and standards of auditing for the guidance of State and local government agency groups as well as outside public accountants engaged in the review and audit of Federal assistance programs and those State and local administrative processes related to Federal assistance programs. Such principles and standards shall serve the purpose of providing technical guidance to the various audit organizations but shall not be construed as relieving such audit organizations of their responsibility for the effective administration of their audit programs. "(b) The Comptroller General shall include in his audits of Federal assistance programs reviews of the extent of utilization made by the Federal departments and agencies of audits performed by State and local government agency audit groups or outside auditors and of the implementation of the principles and standards issued pursuant to subsection (a) of this section. He shall include in his reports on such audits information on the extent of such utilization and implementation. "(c) The Comptroller General shall from time to time make such recommendations to the Federal agencies administering Federal assistance programs as he determines desirable to assist such agencies in complying with the provisions of this title and any regulations or principles and standards of auditing prescribed pursuant thereto. "SEC. 705. Nothing in this title shall be construed to diminish the authorities and responsibilities of the Comptroller General of the United States under existing law. Senator MUSKIE. Our next witness is Mr. Wayne F. McGown, president of the National Association of State Budget Officers, and secretary of the department of administration of the State of Wisconsin. Mr. McGown, we welcome you this morning. STATEMENT OF WAYNE F. McGOWN, PRESIDENT, NATIONAL ASSOCIATION OF STATE BUDGET OFFICERS; ACCOMPANIED BY DICK SEAMAN, WISCONSIN DEPARTMENT OF ADMINISTRATION, MADISON; AND ARLENE T. SHADOAN, THE COUNCIL OF STATE GOVERNMENTS, WASHINGTON, D.C. Mr. McGown. Thank you, Mr. Chairman. It is a pleasure to be here. I would like to introduce my associates at the table; Mrs. Arlene Shadoan, who is on the staff of the Council of State Governments here in Washington with which the National Association of State Budget Officers is affiliated, and Mr. Dick Seaman, who is on my staff in the State of Wisconsin. In the interest of time, Mr. Chairman, I will skip through parts of my printed testimony, but would request that it be made a part of the record. Senator MUSKIE. That will be done. Mr. McGown. And particularly I would direct your attention to the fact that the National Association of State Budget Officers, meeting in its annual convention in Albany, N.Y., in August of this year, unanimously endorse the resolution which is printed in my statement, which gives support to the concept of the three bills that are pending before this subcommittee, and congratulating the Congress both on the tremendous progress that we as State budget officers felt was made with the legislation of the last year, and encouraging the continuation of the kind of legislation like these bills that are pending. I would like to turn first to S. 2479-Intergovernmental Coopera |
