for any of the purposes in Section 901 of Title 5 of the United States Code. However, Section 801 of S. 2479 restates all of those purposes except that of promoting economy to the fullest extent consistent with efficient operations. This may well be an inadvertent omission. However, we respectfully urge that the promotion of economy, which is of primary concern to the taxpayers of the nation, not be lost sight of in your finished bill. Consolidation and review Along with others who have been concerned with the administration of Federal grant-in-aid programs, the NAM has considered review and consolidation to be the top priorities. Now that the Intergovernmental Cooperation Act of 1968 has made a beginning on the review process, consolidation is the matter of prime concern. Proliferation has brought the grant system to the point where consolidations are the best immediately effective avenue to efficient management of the significant amount of resources now applied to their purposes. Consolidation by broad purpose could make for more responsible and responsive action at statelocal levels in meeting particular needs. There are some, however, who will be concerned that consolidation may weaken the review process by making some categorical grants that no longer have priority less conspicuous. For that reason we find Section 501 of S. 2479 reassuring insofar as it is designed to strengthen Congressional review procedures for grants-in-aid enacted on or after January 3, 1971. We believe, however, that language should be added to make it explicit that consolidated grants, resulting from the purposes and procedures defined in Sections 801, and 802, are also subject to review. During his appearance before this Subcommittee, the Director of the Bureau of the Budget, Robert P. Mayo, indicated that the present Administration anticipates continued use of regular legislative procedures to effect the more complex consolidations. In his view, those consolidations that cut across numerous jurisdictions or present major policy issues can best be handled by normal legislation. We are inclined to agree with this opinion and leave it to your judgment as to whether you want to specify this beyond the requirement that consolidation plans should involve only programs in closely related functional areas. Consolidation plans In his message of April 30th, the President suggested some limits on the power he was requesting. Both bills deal with the President's first suggestion: that only programs in closely related functional areas may be consolidated. Next in the President's selected list of limitations is the suggestion that "terms and conditions could be changed only to the extent necessary to achieve the plan." To this he added the suggestion that the President be limited in setting new terms and conditions by the range of those already provided in the programs being consolidated. Sections 802 (a) (2) and (3) of S. 2479 appear to require considerable specific detail on the nature of the changed conditions for assistance. We believe that this may be desirable insofar as an already busy Congress will have a relatively short time to make a decision. S. 2035 does, however, specify-as S. 2479 does not-that the President shall be limited by the range of terms and conditions for the provision of assistance already included in the plan. We hope that your report will recommend the greater specificity in both instances. Another limitation suggested by the President-that no plan could provide assistance to recipients not already eligible under one of the programs being merged-seems to us to need greater clarification than he offered or than is present in either of the bills under consolidation. S. 2479 states that each consolidation plan shall specify in detail "planning and eligibility requirements, as may be indicated by one or more of the statutes establishing the individual programs consolidated." S. 2035 specifies, in Section 1004 (a) (3), that a consolidation plan may not provide any type of Federal assistance included in such a plan to any recipient who was not eligible for Federal assistance under any of the programs included in the consolidation plan. However, it does not set any limits and, in some cases, the range of eligibilities may be very broad. We believe that the matter of eligibility should be clarified. Last among the President's suggestions was the one that responsibility for the consolidated program could not be vested in an agency or office not already responsible for one of those being merged. S. 2035 uses that concept in section 1004 on limitations on powers. S. 2479, on the other hand, refers only in Section 802 (a) (1) to a "single Federal agency" and then provides in 802 (a) (4) (5) and (6) for transfers of records, funds and appropriations and terminating the affairs of an agency or administrative unit whose programs have been transferred. These may be different approaches to the same issue. If not, we urge you to clarify your intention with respect to agencies or administrative units whose programs have been transferred. Effective dates S. 2035 provides, after the example of the Reorganization Act, that a consolidation plan shall become effective at the end of the first period of 60 days of continuous session of Congress after the date on which the plan is transmitted unless it is rejected by a resolution of either House, and unless the plan provides for a later effective date. S. 2479 allows 90 days for consideration. It seems to us that the 60-day interval provided for in the Reorganization Act has been adequate but we have no serious objection to the 90-day proposal. Both these bills properly include termination dates for this delegation of power to the President. We believe that a three-year trial period is proper and that a full three years should be provided for as specified in S. 2479. This reorganization power, like the model on which it is based, can be renewed by the Congress from time to time but it should first be reviewed. Joint funding simplification We turn now to several of the provisions of S. 2479 which are not included in S. 2035. Title IV of S. 2479 pertains to joint funding of both intra- and interdepart mental projects. The purpose is to permit States and their political subdivisions to adopt a "packaging" approach in applying for grants to meet their particular needs. But the great detail in which the procedures are specified suggests to us that administrative difficulties may be anticipated. It is also not clear whether this section applies to present categorical grants or to consolidated grants. Therefore we are not certain to what extent consolidation would limit the potential for joint projects. We note with interest the view of Mr. Elmer B. Staats, the Comptroller General, that the real key to significantly improved administration of grants-inaid lies in consolidation of programs into broader categories, and the replacement of like programs in a single agency-not in establishing an administrative apparatus to deal with what is really the continuation of single narrow purpose programs. It seems to us that the joint funding simplification proposal is really another approach to consolidation: one which consolidates on an ad hoc basis for the requirements of each applicant. Viewed in this light, if we were given a choice of approaches, we would support the basic consolidation approach. If, however, you think it desirable to test the potential of joint funding, we suggest that: (1) intradepartmental joint projects be put on the same demonstration basis suggested for interdepartmental joint projects; and (2) Congress accept the Comptroller General's suggestion for limiting this approach either to geographic areas or to programs. Such an experimental approach would guard against the adoption of procedures which would be difficult to reverse if proven undesirable after initiation on a more general basis. Improving financial management of federal assistance programs Title II of S. 2479 is the type of technical amendment on which we do not normally comment. We are, however, impressed by the Comptroller General's reservations and proposals on some aspects of these recommendations. Therefore, we urge you to defer to his judgment, and to that of the Budget Director, with respect to this Title. Improved congressional and executive oversight In principle, we approve Title V of S. 2479, with its requirements for improved study and report procedures with respect to grants-in-aid. We particularly endorse the proposal to provide each standing committee of the Senate and the House of Representatives responsible for the review, study, operation, administration and execution of one or more grant-in-aid programs with a review specialist as a member of the professional staff. With respect to the recommended reports of progress by Federal agencies, we question, however, whether the evaluations in the proposed Section 605(a) might not better be assigned to the Bureau of the Budget. In the normal budget making procedures they would receive information of the types indicated from the indi vidual agencies and would evaluate these reports in terms of other priorities. This might well give Congress, as well as the President, a broader basis for evaluating the effectiveness of grant-in-aid programs. Program information When Senator Boggs introduced S. 60, he commented not only on the difficulty of finding information on a particular program but on the probability that the absence of reliable cross-referenced information leads to overlapping and needless cost. We agree and, therefore, approve the principles involved in S. 60. The provisions of this legislation are very specific not only in requiring information but also in prescribing its form. We are impressed by Budget Director Mayo's statement to you that many aspects of the cataloguing process require careful review and evaluation. We suggest, therefore, that the bill be modified to allow greater latitude in achieving its important purpose. The National Association of Manufacturers believes that it should be the policy of Congress and the Executive Branch to give free rein and encouragement to the initiative of the States in solving state-local problems. Therefore, we favor the consolidation of grants-in-aid as an approach that increases the opportunity of the States to be flexible in assigning expenditure and program priorities within broad general purposes. We congratulate both the Congress and the Administration on moving so promptly to improve on the initial steps of the Intergovernmental Cooperation Act of 1968. Hon. EDMUND S. MUSKIE, FEDERAL GOVERNMENT ACCOUNTANTS ASSOCIATION, Chairman, Subcommittee on Intergovernmental Relations, DEAR SENATOR MUSKIE: The Federal Government Accountants Association appreciates the opportunity to present to you, as Chairman of the Intergovernmental Relations Subcommittee, our views on S. 2479. "Intergovernmental Cooperation Act of 1969," S. 2035, "Grant Consolidation Act of 1969," and S. 60, "Program Information Act." First, some background information on the Federal Government Accountants Association, called FGAA, in order to show the reasons for our interest in the proposed bills. The following are the purposes of the FGAA: (i) to unite the professional accountants in the Federal services for constructive endeavors; (ii) to encourage and provide a means for free interchange of ideas among accountants in the Federal service; (iii) to aid in the improvement of accounting and auditing in the Federal service; and (iv) to contribute to the improvement of education in the field of accountancy, with emphasis on the application of accounting and auditing to the activities of the Federal Government. Based on the above purposes, we do have an active interest in any legislation which is intended to bring about greater efficiency in the Federal Government related to financial management. The S. 2479 and S. 2035 both have the objective of improvements in the management of the Federal assistance programs. The FGAA wholeheartedly concurs in the objective. Since S. 60 has no direct financial management impact, no further review of this Bill was made; however, the FGAA endorses the concept of a catalog of Federal assistance programs. S. 2479 is a Bill with provisions (i) to improve the financial management of Federal assistance programs, (ii) to facilitate the consolidation of such programs, (iii) to provide temporary authority to expedite the processing of project applications drawing upon more than one Federal assistance program and (iv) to strengthen further congressional review of the Federal grants-in-aid. The S. 2479 provisions add three new titles and amends an existing title to the Intergovernmental Cooporeation Act of 1968 (Public Law 90-577). S. 2035 is a Bill to amend Title 5, United States Code to authorize consolidation of Federal assistance programs. The proliferation of Federal grants in recent years has given rise to numerous financial management and administration problems which have resulted in certain duplication of function and effort, confused program requirements, manpower shortage, and less than satisfactory program controls. We believe that the S. 2479 and S. 2035 Bills provide the necessary principles for improvements in the financial management and administration of Federal assistance programs. However, we would like to offer some suggestions for your consideration as follows: a. Section 703 of S. 2479 states that heads of each agency shall determine the adequacy of the internal financial management control system employed by recipient jurisdictions. Under these provisions, it will still be possible that different determinations could be made by heads of the many Federal agencies with respect to any individual recipient jurisdiction. Thus, some of the confusion and inconsistencies, existing now, could continue. To insure maximum uniformity, the FGAA suggests that the Bill provide for: 1. Establishment of a single centralized agency within the Executive Department for the complete administration of all financial matters concerning Federal grants. This single agency would have full responsibility for (i) formulating standards and criteria concerning the financial administration of grants, (ii) determining the adequacy of the internal financial management control systems of the recipient jurisdictions, (iii) administering all grant provisions pursuant to requirements of sponsoring agency or department, and (iv) making payments to receipient jurisdictions, or as an alternative to the foregoing. 2. The establishment of a separate commission or centralized activity within the Executive Department to develop uniform standards and criteria which would be applicable to all Federal agencies for evaluating the adequacy of the recipient jurisdiction's internal financial management control systems. b. Title VIII of S. 2479 is similar in purpose to S. 2035, i.e., consolidation of Federal assistance programs. A review of these two Bills, however, indicates some differences which may require changes to achieve uniformity. 1. Federal assistance programs, as defined in the Intergovernmental Cooperation Act of 1968 and applicable to S. 2479, excludes shared revenues, payment of taxes, payments in lieu of taxes, repayable advances and payments under certain research and development contracts or grants. However, the definition in S. 2035 specifically includes these items. 2. Section 1006 of S. 2035 has provisions relating to the effect on other laws and regulations. Since S. 2479 does not have such provisions, it is suggested that consideration be given to include comparable definitive provisions. 3. Section 803 of S. 2479 and Section 1005 of S. 2035 both have provisions for the effective dates of the plans. However, Section 803 provides that a Federal assistance consolidation plan shall become effective on the first day of the month following the end of the first period of ninety calendar days of continuous session of the Congress after the date on which the plan is transmitted to it, whereas, Section 1005 provides for sixty calendar days. From the standpoint of uniformity and consistency, it may be preferable that the number of days be the same. In summary, we believe that the provisions of S. 2479 and S. 2035, with certain changes, are necessary steps toward the efficient and economical management of Federal assistance programs. The FGAA is appreciative of the opportunity to furnish its views. We wish you and your Subcommittee every success in this matter. Sincerely yours, JAMES A. ROBBINS, Executive Director. REPORT ON STATE EXECUTIVE REORGANIZATION, 1967–69 (Prepared by the Council of State Governments for the National Governors' Conference Committee on Executive Management and Fiscal Affairs) FOREWORD There has been considerable recent state activity in reorganizing executive agencies, ranging from study commission reports and governor's messages to the enactment of major reorganization plans. The National Governors' Conference Committee on Executive Management and Fiscal Affairs, observing this activity, requested the staff of the Council of State Governments to prepare this report on recent developments. Information for this report was gathered largely through correspondence with state budget officers. The respondents completed a checklist questionnaire and sent copies of reports, statutes and other materials which explained developments in their States. The Council greatly appreciates the excellent hel pprovided by the budget officers in sending the material necessary for us to understand the developments and their significance. The report was prepared by C. Michael Buxton, Research Assistant, with the direction and assistance of George A. Bell, Director of Research. STATE EXECUTIVE REORGANIZATION 1967-69 The administrative weakness of the average state executive is a central theme found in nearly all studies and texts on state government over the last fifty years. A report prepared for The National Governors' Conference in 1967 states that "The structure of state executive departments is better suited to the conditions of a century or more ago than to the multi-service state of today." Weaknesses include the fragmentation of authority among a number of elective officials, allocation of activities among many separate agencies, and many agencies operating with virtual autonomy with heads not responsible to the chief executive. Recommendations made by study groups seeking to bring about better administration of state affairs center on the basic principle of strengthening the Governor's administrative powers so that he can be held responsible for government management and the accomplishment of state programs. Recommendations normally include eliminating the electoral method of selecting most state officials other than the Governor allowing the Governor a four-year term with eligibility to succeed himself, eliminating most administrative boards and commissions, grouping state functions into a relatively small number of major agencies, and agency heads to be appointed by the Governor and serve at his pleasure. Exercise of administrative authority requires the Governor to have control of the planning and budgeting process and to have staff adequate to assist him in exercising his administrative and other responsibilities. A recent addition to the list of desirable elements of the Governor's administrative authority is his power to initiate and install reorganization plans subject to legislative veto. This report is concerned with only certain aspects of state administrative improvement as outlined above. It deals with activity concerned with the reorganization of state agencies and with the authority of the Governor to initiate and install reorganization plans, and covers activity to mid-1969. Activity of the Governors Governors have been active in promoting state executive reorganization, often in the form of messages to the legislature. Twenty States report that their Governors made recommendations to the legislature concerning executive reorganization during 1967-69. The Governors of several States made extensive recommendations to the legislature regarding reorganization along broad functional lines. In 1967 and 1969 messages, the Governor of Maine, in addition to asking for creation, abolishment, or reorganization of various departments, requested that the legislature: authorize the Governor to submit reorganization plans effective subject to legislative veto; provide for election of Lieutenant Governor (new) on the same ticket as the Governor; and provide for appointment by the Governor of the Secretary of State, Attorney General, and State Treasurer. Similar constitutional changes were recommended by the Governor of Kansas in 1969: legislative veto of gubernatorial reorganization proposals; election of Governor and Lieutenant Governor on the same ticket; and appointment of other executive officers now elected. The Governor also recommended extension of the Governor's term of office to four years with eligibility for re-election, and that the executive branch be reorganized into sixteen departments. The Governor of Oregon proposed the creation or reorganization of nine departments or agencies including new departments of revenue, transportation, environmental quality, and social services. In a special message to the legislature in 1969, the Governor of Minnesota proposed the creation of seven new departments (personnel, health and social services, planning and intergovernmental affairs, public safety, commerce and consumer services, natural resources, and transportation), and also reorganization, consolidation, or strengthening of various other executive agencies. He recommended a cabinet form of government with all department heads serving at the pleasure of the Governor. 1 "Report to the National Governors' Conference by the Study Committee on Constitutional Revision and Government Reorganization," Page 1. |
