lines of departments and agencies." S. 2035 embodies the President's recommendations with regard to the consolidation of Federal assistance programs which is a key element in the Administration's program of achieving greater simplification of Federal assistance to States and local communities. Accordingly, the Department of Transportation urges the enactment of S. 2035. The Bureau of the Budget has advised the Department that there is no objection to the submission of this report to your Committee and that enactment of the proposed legislation would be in accord with the program of the President. Sincerely, (Signed) CONNEY JOHNSON THE GENERAL COUNSEL OF THE TREASURY, Hon. JOHN L. MCCLELLAN, Chairman, Committee on Government Operations, Washington, D.C. DEAR MR. CHAIRMAN: Reference is made to your request for the views of this Department on S. 2035, "To amend title 5, United States Code, to authorize consolidation of Federal assistance programs, and for other purposes." In his message to the Congress of May 1, 1969, the President urged the enactment of legislation to give the President power to initiate consolidation of closely related Federal assistance programs, and to place consolidated programs under the jurisdiction of a single agency. S. 2035 would carry out the recommendations of the President with regard to consolidation of Federal assistance programs. Accordingly, the Department recommends that S. 2035 receive favorable consideration. The Department has been advised by the Bureau of the Budget that there is no objection to the submission of this report to your Committee and that enactment of the proposed legislation would be in accord with the program of the President. Sincerely yours, PAUL W. EGGERS, [From the Congressional Record, June 24, 1969] S. 2479-INTRODUCTION OF THE INTERGOVERNMENTAL COOPERATION ACT OF 1969 Mr. MUSKIE. Mr. President, I introduce, for appropriate reference, a bill entitled the "Intergovernmental Cooperation Act of 1969." This measure is a followup to last year's legislation-Public Law 90-577-the first ever enacted in this critical field. I ask unanimous consent that the text of the bill and a sectionby-section analysis be printed in the RECORD following my remarks. The PRESIDING OFFICER. The bill will be received and appropriately referred; and, without objection, the bill and section-by-section analysis will be printed in the RECORD. (See exhibits 1 and 2.) Mr. MUSKIE. Mr. President, this new bill focuses on specific and sometimes controversial ways of strengthening the operations of the Federal grant-in-aid system. It is preeminently a modern management measure-a critical need of contemporary American federalism. Mr. President, developments during recent years have produced growing concern over the administration of Federal assistance programs to State and local governments. These programs now constitute the principal tool of fiscal and functional federalism, and they have had a near-explosive growth in recent years. From 1962 to 1966, the number of separate grant authorizations more than doubled, rising from 161 to 379. During the 90th Congress, at least 42 new broadgrant programs involving well over this number in separate authorizations were enacted. As of that moment the total is well above the 420 mark. No one can tell us the exact figure with any certainty. In dollar terms, Federal aid experienced a nearly fourfold increase between 1957 and 1967, with an average annual hike of over 14 percent. During the past 5 years alone, grant outlays have more than doubled, jumping from $10.1 billion in 1964 to an estimated $20.8 billion for the current fiscal year. According to the latest Bureau of the Budget projections, Federal grant expenditures for fiscal year 1970 will soar to the $24.5 billion mark, or more than 31⁄2 times the 1960 figure. These grant outlays now provide nearly 18 percent of State and local revenue. Their matching requirements have generated Ŝtate and local expenditures in the order of one for every two Federal grant dollars. At the same time, State and local matching represents only about 10 to 14 percent of general expenditures from their own revenue sources. Bureau of the Budget projections for 1970 indicate that these matching funds will rise to an estimated $10 to $13 billion or nearly $5 to $8 billion more than the 1966 amount. These findings clearly indicate that grants-in-aid are one of the major supports of our Federal system. At the same time they have generated great difficulties. Since its creation in 1962, the Subcommittee on Intergovernment Relations has undertaken a continuous study of problems of the relationships that comprise our complex federal system. In our studies of "The Federal System as Seen by State and Local Officials" and "The Federal System as Seen by Federal Aid Officials," as well as in our hearings on the Intergovernmental Cooperation Act in the 89th and 90th Congresses and on "Creative Federalism" in the last Congress, we have ample evidence that public officials at all levels are acutely aware of the adverse consequences that the profusion and excessive fragmentation of Federal assistance programs produce. Some of them follow: First. There is an "information gap" concerning what programs, who administers them, how closely related grants differ, and the proper approach for assembling a proper application. Title II of the Intergovernmental Cooperation Act of 1968 partially fills this gap. Second. There is a "communications gap" between top management officials and middle management program administrators at all levels-with the latter being directly strengthened by the program fragmentation and the former weakened by it. Very little has been done to close this gap, although title IV of last year's legislation, if properly implemented, could begin to close it. Third. There is the phenomenon of "grantsmanship," a game which has attracted private consultants and others who, for a fee, guide applicants through a maze of bureaucratic procedures and complicated catalogs of available assistance programs. This game is far from over. Fourth. There is the "promise-performance gap," where funding uncertainties, the major hurdles facing attempts to package Federal aids on a multifunctional basis, and duplicating financial management requirements have generated significant disillusionment and distaste among recipient State local officials. Fifth. There is the matter of overlapping and duplication among various grants and a resulting situation where eligible applicants may play off two or more Federal agencies against one another, especially when grants have differing matching ratios. Sixth. There is the gap in understanding arising from the fact that department heads, the Executive Office of the President, and relevant standing committees of Congress do not periodically receive analytical information on the operations, interrelationships, and program performance of the various grants-in-aid falling under their respective jurisdictions. Comparable, if not more severe, problems face Governors, State legislators, county executives, and mayors. The Subcommittee on Intergovernmental Relations has identified these and other administrative problems that arise as a result of the excessive complexity and categorication of the grant-in-aid system. Moreover, the Advisory Commission on Intergovernmental Relations, of which the senior Senator from North Carolina (Mr. Ervin), the senior Senator from South Dakota (Mr. Mundt), and I are members, has thoroughly corroborated the extent of these difficulties, most notably in its authoritative report on "Fiscal Balance in the American Federal System." Since its inception, the Subcommittee on Intergovernmental Relations has sought and achieved Senate passage of measures that would come to grips with various aspects of this management morass. In the 88th Congress, we developed and the Senate passed a measure to provide for periodic congressional review of future grant-in-aid programs. In the 89th Congress, we developed and successfully urged Senate enactment of the Intergovernmental Cooperation Act of 1965, a measure designed to achieve the fullest cooperation and coordination of activities among the levels of government. In the last Congress, the Congress enacted the Intergovernmental Cooperation Act of 1968. In the last Congress, we also reported and achieved Senate passage of the Intergovernmental Personnel Act. In this Congress, we have again considered legislation that will help fill the manpower gap at the State and local levels (S. 11). The proposed Intergovernmental Cooperation Act of 1969 constitutes another attempt on our part to develop meaningful solutions to clearly identifiable problems in the critical field of grant management. In sponsoring this and earlier legislation, I have sought to underscore the significance of achieving reform within the context of the grant system. Reform is our goal, because we recognize the essential wisdom of the grant-in-aid approach. Grants are both a symbol and a system of cooperative federalism, as the report to the President of the Kestnbaum Commission on Intergovernmental Relations noted over 13 years ago. They have revealed their ability to adapt to rural, depression-rooted, and urban growth problems. For these and other reasons, the categorical grant system-while in need of reform-is still deserving of support. The measure I introduce today seeks to strengthen and improve the management of Federal assistance programs. It deals directly with immediate and pressing problems. Specifically, it comes to grips with four basic difficulties that plague grant administration: First, the overlapping and duplication in grant auditing, accounting, and fiscal reporting; second, the complicated application procedures that impede the packaging of Federal assistance by recipient jurisdictions; third, the excessiqe fragmentation of grant authorizations and categories; and fourth, the problem facing the committees of Congress, Congress as a whole, departmental heads, and the President in obtaining on a meaningful and periodic basisadequate information regarding the operation, interrelationships, and effectiveness of grants-in-aid over which they have oversight responsibilities. Each of these problems has been fully documented in the subcommittee studies that I have cited, as well as in the Advisory Commission's "Fiscal Balance" report. The proposed legislation implements three specific recommendations advanced in this ACIR study and another from its earlier report on "Periodic Congressional Reassessment of Federal Grants-in-Aid to State and Local Government.' Three of the titles-relating to financial management, Federal assistance consolidation, and joint funding simplification-were considered at length in subcommittee hearings last year. In their present form, they incorporate many of the suggested changes advanced during these earlier proceedings. In addition to the Advisory Commission on Intergovernmental Relations, several major associations representing public officials throughout the Federal system-the National Governors' Conference, Council of State Governments, National Association of Counties, National League of Cities, and the U.S. Conference of Mayors-have endorsed all of or a majority of the bill's provisions. Mr. President, I have spoken many times during the past 5 years about the management problems connected with grant administration. The Intergovernmental Cooperation Act of 1968, the intergovernmental personnel bill, and the National Intergovernmental Affairs Council legislation underscores the continuing efforts of the Subcommittee on Intergovernmental Relations to strengthen the basis of intergovernmental administration. The proposed Intergovernmental Cooperation Act of 1969 is another manifestation of this perenial concern. By focusing on the need for more uniform and less duplicative financial management, the desirability of facilitating the packaging of grant-in-aid applications, the paramount problem of achieving additional grant consolidations, and the pressing question of beefing up congressional and executive branch oversight, this omnibus measure comes to grips with well documented sources of tension and turmoil in the administration of Federal assistance programs. Intergovernmental relations today are more intricate, and more involved, than they have ever been in our entire history. To succeed, this system must be governed by a spirit of cooperation. Yet, conflict and confusion seem to be the order of the day. To curb this conflict and to reduce the confusion, top policymakers at all levels-the President and the Congress, the Governor and the legislature, the mayor and the council-must be in a position to plan, pass, implement, fund, and review the vital public programs this generation of Americans demands. Effective public management is crucial to both the executive and legislative branches. Efforts then to strengthen it on an interbranch, interagency, and intergovernmental level must be examined, debated, and-where worthy-enacted and executed. The proposed Intergovernmental Cooperation Act of 1969 addresses itself to these pivotal questions. I do not overstate the case by asserting that the future of federalism depends on how well we, at the Federal level, provide meaningful answers to the critical issues dealth with by this legislation. The bill (S. 2479) to improve the financial management of Federal assistance programs; to facilitate the consolidation of such programs; to provide temporary authority to expedite the processing of project applications drawing upon more than one Federal assistance program; to strengthen further congressional review of Federal grants-in-aid; and to extend and amend the law relating to intergovernmental cooperation, introduced by Mr. Muskie, was received, read twice by its title, referred to the Committee on Government Operations, and ordered to be printed in the Record, as follows: EXHIBIT 1 Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act be cited as the "Intergovernmental Cooperation Act of 1969." TITLE I-DEFINITIONS SEC. 101. Title I of the Intergovernmental Cooperation Act of 1968 (82 Stat. 1098; Pub. L. 90-577) is amended by adding at the end thereof the following new sections: "FEDERAL ASSISTANCE CONSOLIDATION PLAN "SEC. 111. The term 'Federal assistance consolidation plan' means any plan involving a consolidation of two or more Federal assistance programs in the same or closely related functional area(s) and with separate statutory authorizations. "JOINT PROJECT "SEC. 112. The term 'joint project' means any undertaking which includes components proposed or approved for aid under more than one Federal assistance program or appropriation or one or more Federal assistance programs or appropriations and one or more State programs, if each of those components contributes materially to the accomplishment of a single purpose or closely related purposes." TITLE II-ACCOUNTING, AUDITING, AND REPORTING OF FEDERAL ASSISTANCE FUNDS SEC. 201. Such Act is further amended by adding at the end thereof the following new title: "TITLE VII-ACCOUNTING, AUDITING, AND Reporting of FEDERAL ASSISTANCE FUNDS "STATEMENT OF PURPOSE "SEC. 701. It is the purpose of this title to encourage simplification and standardization of financial reporting requirements of Federal assistance programs, to promote among Federal agencies administering such programs accounting and auditing policies that rely on State and local financial management control systems meeting certain 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 Accounting Office with respect to such programs. "MORE UNIFORM FINANCIAL REPORTING "SEC. 702. Notwithstanding any other provision of law, the President shall have authority to promulgate rules and regulations simplifying and, to the extent feasible, unifying the financial reporting required of recipients under requirements of Federal assistance programs. "RELIANCE ON STATE AND LOCAL AUDITS "SEC. 703. (a) Federal agencies administering Federal assistance programs shall adopt accounting and auditing policies that, to the maximum extent feasible, reply on evaluation of internal or independent accounting and audits of such programs performed by or for States and units of local government without performing a duplicate audit unless deemed necessary. "(b) Heads of such agencies shall determine the adequacy of the internal financial management control systems employed by recipient jurisdictions, including but not restricted to a determination of (1) whether accounting records are maintained, and reports are prepared, in accordance with generally accepted accounting principles applicable to such programs and such recipient jurisdictions; (2) whether audits are carried out with adequate coverage in accordance with generally accepted auditing standards; and (3) whether the auditing function is performed on a timely basis by a qualified staff which is sufficiently independent of program operations to permit a comprehensive and objective auditing performance. "(c) Where such control systems are found to be acceptable, heads of such agencies shall, in the absence of substantial reasons to the contrary, authorize an evaluation of audits performed under such systems to determine their acceptability in lieu of audits which otherwise would be required to be performed by such agencies. Where the agency does not accept audits performed under such systems in lieu of its audits, such agency shall make whatever audits are necessary to assure that the Federal funds are expended for the purposes of the Federal assistance program involved. "(d) Periodic review and testing of the operations under such control systems shall be undertaken by such agencies to verify the continuing acceptability of the systems for the purposes of subsection (c) of this section. “(e) Each Federal agency administering a Federal assistance program shall encourage greater cooperation with the personnel operating the internal financial management control systems of recipient jurisdictions by maintaining continuous liaison with such personnel, collaborating in accounting systems development and the interchange of audit standards and objectives and collaboration in the development of audit programs. "(f) Each such agency administering more than one Federal assistance program shall, to the extent feasible and permitted by law, coordinate the auditing requirements of such programs. "(g) Each Federal agency administering a Federal assistance program shall, to the extent feasible, establish cross-servicing arrangements with other Federal agencies administering Federal assistance programs under which one such agency shall conduct the audits for another. "(h) The Bureau of the Budget, or such other agency as may be designated by the President, is hereby authorized to prescribe such rules and regulations as are deemed appropriate for the effective administration of this section." TITLE III-CONSOLIDATION OF FEDERAL ASSISTANCE PROGRAMS SEC. 301. Such Act is further amended by adding after title VII, as added by section 201 of this Act, the following new title: "TITLE VIII-CONSOLIDATION OF FEDERAL ASSISTANCE PROGRAMS "STATEMENT OF PURPOSE "SEC. 801. (a) The President shall from time to time examine the various programs of Federal assistance provided by law and shall determine which consolidations are necessary or desirable "(1) to promote the better execution and efficient management or individual Federal assistance programs within the same functional areas; "(2) to provide better coordination among individual assistance programs within the same functional areas; or "(3) to promote more efficient planning and use by the recipients of Federal assistance under programs within the same functional areas. "(b) The Congress declares that the Public interest demands the carrying out of the purposes of subsection (a) of this section and that such purposes may be accomplished in great measure by proceeding under this title, and can be accomplished more speedily thereby than by the enactment of specific legislation. |
