a

GAO

United States Government Accountability Office

Testimony

Before the Subcommittee on Oversight of Government 

Management, the Federal Workforce and the District of 

Columbia; Committee on Homeland Security and 

Governmental Affairs, U.S. Senate

For Release on Delivery

Expected at 10:00 a.m. EST

Thursday, April 14, 2005

UNFUNDED MANDATES

Analysis of Reform Act’s 

Coverage and Views on 

Possible Next Steps

Statement of Orice M. Williams, Director

Strategic Issues

GAO-05-533T
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

www.gao.gov/cgi-bin/getrpt?GAO-05-533T.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Orice M. 

Williams, (202) 512-5837, 

williamso@gao.gov. 

Highlights of GAO-05-533T, a testimony 

before the Subcommittee on Oversight of 

Government Management, the Federal 

Workforce and the District of Columbia; 

Committee on Homeland Security and 

Governmental Affairs, U.S. Senate 

April 14, 2005

UNFUNDED MANDATES 

Analysis of Reform Act's Coverage and 

Views on Possible Next Steps 

The identification and analysis of intergovernmental and private sector 

mandates is a complex process under UMRA. Proposed legislation and 

regulations are subject to various definitions, exceptions, and exclusions 

before being identified as containing mandates at or above UMRA’s cost 

thresholds. Also, some legislation and rules may be enacted or issued via 

procedures that do not trigger UMRA reviews. In 2001 and 2002, 5 of 377 

statutes enacted and 9 of 122 major or economically significant final rules 

issued were identified as containing federal mandates at or above UMRA’s 

thresholds. Despite the determinations under UMRA, at least 43 other 

statutes and 65 rules resulted in new costs or negative financial 

consequences that affected nonfederal parties might perceive as unfunded or

underfunded federal mandates. 

GAO obtained information from 52 knowledgeable parties, who provided a 

significant number of comments about UMRA, specifically, and federal 

mandates, generally. Their views often varied across and within the five 

sectors we identified (academic/think tank, public interest advocacy groups, 

business, federal agencies, and state and local governments). Overall, the 

numerous strengths, weaknesses, and options for improvement identified 

during the review fell into several broad themes, including, among others, 

UMRA-specific issues such as the act’s coverage and enforcement, and more 

general issues about the design, funding, and evaluation of federal mandates. 

UMRA’s coverage was, by far, the most frequently cited issue by parties from 

the various sectors. Parties across most sectors said that UMRA’s numerous 

definitions, exclusions, and exceptions leave out many federal actions that 

might significantly impact nonfederal entities and suggested that they should 

be revisited. However, a few parties, primarily from the public interest 

advocacy sector, viewed UMRA’s narrow coverage as a strength that should 

be maintained. Another issue on which the parties had particularly strong 

views was the perceived need for better evaluation and research of federal 

mandates and more complete estimates of both the direct and indirect costs 

of mandates on nonfederal entities. The most frequently suggested option to 

address these evaluation issues was more post-implementation evaluation of 

existing mandates or “look backs” at their effectiveness. 

Going forward, the issue of unfunded mandates raises broader questions 

about assigning fiscal responsibilities within our federal system. The longterm fiscal challenges facing the federal and state and local governments and 

the continued relevance of existing programs and priorities warrant a 

national debate to review what the government does, how it does business, 

and how it finances its priorities. Such a reexamination includes considering 

how responsibilities for financing public services are allocated and shared 

across the many nonfederal entities in the U.S. system. 

The Unfunded Mandates Reform 

Act of 1995 (UMRA) was enacted to

address concerns about federal 

statutes and regulations that 

require nonfederal parties to 

expend resources to achieve 

legislative goals without being 

provided funding to cover the 

costs. UMRA generates 

information about the nature and 

size of potential federal mandates 

but does not preclude the 

implementation of such mandates. 

At various times in UMRA’s 10-year 

history, Congress has considered 

legislation to amend aspects of the 

act to address ongoing questions 

about its effectiveness. 

This testimony is based on GAO’s 

reports, Unfunded Mandates: 

Analysis of Reform Act Coverage

(GAO-04-637, May 12, 2004) and 

Unfunded Mandates: Views Vary 

About Reform Act’s Strengths, 

Weaknesses, and Options for 

Improvement (GAO-05-454, March 

31, 2005). Specifically, this 

testimony addresses (1) UMRA’s 

procedures for the identification of 

federal mandates and GAO’s 

analysis of the implementation of 

those procedures for statutes 

enacted and major rules issued in 

2001 and 2002, and (2) the views of 

a diverse group of parties familiar 

with UMRA on the significant 

strengths and weaknesses of the 

act as the framework for 

addressing mandate issues and 

potential options for reinforcing 

the strengths or addressing the 

weaknesses. 
Page 1 GAO-05-533T 

Mr. Chairman and Members of the Committee:

I am pleased to have the opportunity to provide testimony today on federal 

mandates and the Unfunded Mandates Reform Act of 1995 (UMRA).1

 As 

you know, UMRA was enacted to address concerns expressed by state and 

local governments about federal statutes and regulations that require 

nonfederal parties to expend resources to achieve legislative goals without 

providing funding to cover the costs.2

 Many federal programs and 

initiatives, in areas ranging from homeland security to health care and 

environmental protection, involve shared responsibilities—and benefits—

for the federal government, state, local, and tribal governments, and the 

private sector. Determining the appropriate balance of fiscal responsibility 

between the federal government, state, local, and tribal governments, and 

the private sector in carrying out these federal mandates is a constant 

challenge. As the budgets of federal, state, and local governments become 

more constrained, balancing the costs of legislative actions with 

increasingly limited fiscal resources has brought this debate to the 

forefront. 

Mr. Chairman, my testimony today focuses on the findings from two 

reports we issued over the past year at your request.3

 We believe that both 

are important to this committee in the context of considering possible 

revisions to UMRA. The first report, issued in May 2004, focused on 

UMRA’s procedures for identifying federal mandates and our analysis of the 

implementation of those procedures for statutes enacted and major rules 

issued in 2001 and 2002. Building upon the work of the first report, the 

second report, which is being released publicly today, focuses on the views 

of a diverse group of parties from the academic/think tank, business, 

federal agency, public interest advocacy groups, and state and local 

governments sectors on the strengths and weaknesses of UMRA and their 

suggested options for reinforcing the strengths or addressing the 

weaknesses. While the information gathered for this second report reflects 

only the perspectives of those individuals who participated in our review, 

1

Pub. L. No. 104-4.

2

Pub. L. 104-4 pmbl. As in the act, we generally refer to the identification of federal 

mandates, rather than unfunded mandates, in this statement.

3

GAO, Unfunded Mandates: Analysis of Reform Act Coverage, GAO-04-637 (Washington, 

D.C.: May 12, 2004) and Unfunded Mandates: Views Vary About Reform Act’s Strengths, 

Weaknesses, and Options for Improvement, GAO-04-454 (Washington, D.C.: Mar. 31, 2005).
Page 2 GAO-05-533T 

this information comes from organizations and individuals recognized as 

being knowledgeable about the implementation of UMRA and/or federal 

mandate programs. 

In summary, our May 2004 report concluded that while information 

provided under UMRA about potential mandates may have helped to 

discourage or limit federal mandates, proposed legislation and regulations 

must pass through multiple steps and meet multiple conditions before 

being identified as containing mandates at or above UMRA’s thresholds. In 

2001 and 2002, the period of our review, we found that 5 of 377 statutes and 

9 of 122 major or economically significant rules were identified as 

containing federal mandates at or above UMRA’s thresholds. Despite the 

determinations made under UMRA, we found that some of the statutes and 

rules that had not triggered UMRA’s requirements appeared to have 

potential financial impacts on affected nonfederal parties similar to those 

of actions that were identified as mandates at or above UMRA’s thresholds. 

For example, at least 43 statutes and 65 rules issued in 2001 and 2002 

resulted in new costs or other negative financial impacts that affected 

parties might perceive as unfunded or under funded mandates even though 

they did not meet UMRA’s definition of a mandate.

In our most recent report, we found a wide variety of views and 

perspectives on UMRA specifically and federal mandates more generally. 

Not surprisingly, the comments provided fell into several broad categories 

or themes, specifically, (a) UMRA coverage, (b) UMRA enforcement,

(c) other UMRA issues including the use and usefulness of the information 

generated under the Act and consultations with state and other 

governments, and (d) broader issues involving federal mandates included 

the design and funding of federal mandates and evaluating those mandates. 

Those issues discussed most frequently were UMRA’s coverage, 

enforcement, and the evaluation of federal mandates. While there was 

some broad-based support by parties across most sectors that these are 

issues that warrant review and reconsideration, there was less agreement 

about suggested options for dealing with them. 

Identification of 

Mandates Under 

UMRA Is Complex

The procedures under UMRA for the identification and analysis of 

intergovernmental and private sector mandates are very complex. 

Moreover, some potential mandates are enacted through procedures that 

never require them to be reviewed under UMRA. For example, UMRA does 

not require the automatic review of potential mandates contained in 

appropriation bills, nor does the act cover rules that were issued as final 
Page 3 GAO-05-533T 

without having been preceded by a notice of proposed rulemaking. Even if 

proposed legislation or regulations are reviewed under UMRA, those 

provisions are subject to various definitions, exclusions, and exceptions 

before being identified as containing mandates at or above UMRA’s cost 

thresholds. For example, UMRA does not apply to legislative provisions 

that cover constitutional rights, discrimination, emergency aid, accounting 

and auditing procedures for grants, national security, treaty ratification, 

and certain parts of Social Security. As figure 1 illustrates, a provision in 

legislation must pass through a multiple step process before the 

Congressional Budget Office prepares required statements identifying and 

estimating the costs of mandates in legislation that meet certain criteria 

and determines whether or not those estimated costs meet or exceed 

UMRA’s thresholds.4

4

UMRA has several titles. Title I requires congressional committees and the Congressional 

Budget Office to identify and provide information on potential federal mandates in certain 

legislation. Similarly, title II of UMRA requires federal agencies to prepare a written 

statement identifying the costs and benefits of federal mandates contained in certain 

regulations and consult with affected parties. For legislation, the thresholds are direct costs 

(in the first 5 fiscal years that the relevant mandates would be effective) of $50 million or 

more for intergovernmental mandates and $100 million or more for private sector mandates, 

while the threshold for regulations is expenditures of $100 million or more in any year. The 

dollar thresholds are in 1996 dollars and are adjusted annually for inflation.
Page 4 GAO-05-533T 

Figure 1: The Multistep Process Necessary for CBO to Identify Federal Mandates in Proposed Legislation

Based on UMRA’s requirements, we found that few provisions in statutes or 

rules are considered mandates as defined by UMRA. As mentioned 

previously, in 2001 and 2002, the period of our review, only 5 of the 377 

statutes enacted and 9 of the 122 major rules issued contained federal 

mandates at or above UMRA’s thresholds. All 5 statutes and 9 rules 

contained private sector mandates and only one final rule—an 

Environmental Protection Agency standard on arsenic in drinking water—

contained an intergovernmental mandate. 

Source: GAO.

CBO issues UMRA statement stating

legislation does not contain a mandate 

under UMRA 

CBO specifies type of mandate contained in the 

legislation

Is provision an enforceable duty on state, 

local, or tribal governments or the private 

sector, and is it not subject to exceptions?

Definition Yes No

Is cost estimate feasible? CBO conducts direct cost estimate

Cost estimate Yes No

Does direct cost estimate for all 

provisions in legislation meet or exceed 

thresholds?

Cost threshold Yes No

Not subject to automatic CBO 

review

Is provision contained in authorizing Subject to automatic CBO review

legislation reported by an authorizing 

committee and not added after initial 

CBO UMRA review?

Procedures Yes No

Automatic CBO Review

CBO issues UMRA statement stating

reason for exclusion and does not 

make any statement regarding mandates

Is provision not excluded? CBO analyzes provision based on UMRA’s definition

Exclusions Yes No

CBO issues UMRA statement specifying

type of federal mandate contained in the 

bill and that costs cannot be estimated 

or are uncertain

CBO issues UMRA statement specifying

type of federal mandate contained in the 

legislation and that it is below the 

applicable cost threshold

CBO issues UMRA statement 

specifying type of federal mandate 

contained in the legislation and 

that it meets or exceeds the 

applicable cost threshold
Page 5 GAO-05-533T 

Despite the determinations made under UMRA, nonfederal parties affected 

by federal actions viewed many more federal actions in statute and 

regulation as containing unfunded or under funded mandates. When we 

explored this issue, we found that some of the statutes and rules that had 

not triggered UMRA’s requirements appeared to have potential financial 

impacts on affected parties similar to those of actions that had been flagged 

as containing mandates at or above UMRA’ s thresholds. Specifically, we 

identified at least 43 statutes and 65 rules issued in 2001 and 2002 that 

resulted in new costs or other negative financial impacts on nonfederal 

parties that the affected parties might perceive as unfunded or under 

funded mandates even though they did not meet UMRA’s definition of a 

mandate or did not meet or exceed UMRA’s thresholds. For these statutes 

and rules, CBO or federal agencies most often had determined that the 

estimated direct costs or expenditures, as defined by UMRA, would not 

meet or exceed the applicable thresholds or that one or more of the other 

definitions, exclusions, or exclusions applied. These findings raised the 

question of whether UMRA, given its procedures, definitions, and 

exclusions, adequately captures and subjects to scrutiny federal statutory 

and regulatory actions that might impose significant financial or other 

burdens on affected nonfederal parties. To begin to address this question, 

you asked us to obtain the views of a diverse group of parties 

knowledgeable about UMRA and federal mandates.

Views of Parties 

Regarding UMRA and 

Unfunded Mandates

Parties from the various sectors provided a variety of comments but they 

generally fell into several broad themes. UMRA’s coverage was the most 

frequently cited theme, with comments provided by all the sectors 

(academic/think tank, business, federal agencies, public interest advocacy 

groups, and state and local governments). Issues involving enforcement 

were the second most frequently cited but with far fewer parties providing 

comments. Other themes that emerged from the comments included the 

use and usefulness of the information generated under UMRA, UMRA’s 

analytic framework, and consultation under UMRA. Finally, issues 

involving the design and funding and evaluation of federal mandates also 

emerged as themes.

UMRA Coverage Generally 

Viewed as a Weakness but a 

Few Parties Disagree

Given the findings from our May 2004 report, it’s not surprising that UMRA’s 

coverage, including its numerous definitions, exclusions, and exceptions, 

was the most frequently cited issue by parties from all five sectors. Most 

parties from the state and local governments, federal agency, business, and 
Page 6 GAO-05-533T 

academic/think tank sectors viewed UMRA’s narrow coverage as a major 

weakness that leaves out many federal actions with potentially significant 

financial impacts on nonfederal parties. However, a few parties, from 

public interest advocacy groups and academic/think tank sectors, 

considered some of the existing exclusions important or identified UMRA’s 

narrow scope as one of the Act’s strengths. 

The comments about weaknesses in UMRA’s coverage ranged from general 

to specific. For example, some parties commented, in general, about the 

number of exclusions and exemptions. Others provided more specific 

comments, including points regarding issues with the exclusion of indirect 

costs and UMRA’s cost thresholds for legislative and regulatory mandates, 

which result in excluding many federal actions that may significantly 

impact nonfederal entities. Others raised more fundamental concerns 

about the exclusions for appropriations and other legislation not covered 

by the Act and for rules issued by independent regulatory agencies, which 

are also not covered by UMRA but can result in provisions that contain 

mandates. CBO estimates that in 2004, 5 of the 8 laws containing federal 

mandates (as defined by UMRA) that it did not review before enactment, 

were appropriations acts.5

 Finally, parties from the state and local 

government sector also identified concerns about gaps in UMRA’s coverage 

of federal preemption of state and local authority.6

 Although some 

preemptions are covered by UMRA such as those that preempt state or 

local revenue raising authority, they are covered only for legislative actions 

and not for federal regulations. According to CBO’s 2005 report on 

unfunded mandates, “Over half of the intergovernmental mandates for

5

CBO, A Review of CBO’s Activities in 2004 Under the Unfunded Mandates Reform Act 

(Washington D.C.: March 8, 2005).

6

Preemption refers to the power of the federal government to enact statutes that override 

state laws. This power derives from the supremacy clause of the United States Constitution, 

which states that “The Laws of the United States...shall be the supreme Law of the 

Land...any Thing in the Constitution or Laws of any state to the Contrary notwithstanding.” 

U.S. Const. art. VI, cl. 2. For example, the Internet Tax Freedom Act prohibits states from 

enacting a tax on Internet access or multiple or discriminatory taxes on electronic 

commerce between October 1998 and November 2004 and preempts any state or local laws 

enacted during this period. Pub. L. No. 105-277, Div. C, Tit. XI, § 1101 (1998) (amended 2004). 

Title I of UMRA only applies to legislation that prohibits states from raising revenue, such as 

the Internet Tax Freedom Act. 2 U.S.C. § 658(3)(A)(i). Other preemptions of states’ 

regulatory authority are not subject to UMRA’s enforcement scheme. 
Page 7 GAO-05-533T 

which CBO provided estimates [in 2004] were preemptions of state and 

local authority.”7

Despite the widespread view in several sectors that UMRA’s narrow 

coverage leaves out federal actions with potentially significant impacts on 

nonfederal entities, there was less agreement by parties about how to 

address this issue. The options ranged from general to specific but those 

most frequently suggested were:

• Generally revisit, amend, or modify the definitions, exceptions, and 

exclusions under UMRA and expand UMRA’s coverage.

• Clarify UMRA’s definitions and ensure their consistent implementation 

across agencies to ensure that all covered provisions are being included.

• Change the cost thresholds and/or definitions that trigger UMRA by, for 

example, lowering the threshold for legislative or executive reviews and 

expanding cost definitions to include indirect costs.

• Eliminate or amend the definitional exceptions for conditions of federal 

financial assistance or that arise from participation in voluntary federal 

programs.

• Expand UMRA coverage to all preemptions of state and local laws and 

regulations, including those nonfiscal preemptions of state and local 

authority.

As I mentioned previously, while most parties thought UMRA’s narrow 

coverage was a weakness, a few parties from academic/think tank and 

public interest advocacy groups sectors view UMRA coverage differently. 

They viewed UMRA’s narrow scope as one of its primary strengths. In fact, 

rather than expanding UMRA’s coverage, these parties said that it should be 

kept narrow and that the exceptions and exclusions are needed. Between 

1996 and 2004, CBO reports that of 5,269 intergovernmental statements, 

617 had mandates and of 5,151 private sector statements, 732 had

7

CBO’s March 2005 UMRA report.
Page 8 GAO-05-533T 

mandates.8 Of the mandates identified by CBO, about 9 percent of the 

intergovernmental mandates and almost 24 percent of private sector 

mandates had costs that would exceed the thresholds. As discussed at our 

January 26, 2005, symposium on UMRA and federal mandates, some parties 

also identified a number of suggestions that they could not support, namely 

any attempt to expand UMRA to cover constitutional or civil rights or 

excluding private sector mandates. 

UMRA Enforcement Issues involving UMRA enforcement were the second most frequently cited 

issue but with far fewer parties from each sector commenting. Parties 

across and within sectors had differing views on both the enforcement 

mechanisms provided in the law itself and the level of effort exercised by 

those responsible for implementing UMRA’s provisions. Many of the 

comments focused on the point of order—one of the primary tools used to 

enforce UMRA requirements in title I of UMRA. Although the point of 

order provides members of Congress the opportunity to raise challenges to 

hinder the passage of legislative provisions containing an unfunded 

intergovernmental mandate, views were mixed about its effectiveness. 

Those representing state and local government and federal agency sectors 

said that the point of order should be retained because it has been 

successful in reducing the number of unfunded mandates by acting as a 

deterrent to their enactment, without greatly impeding the process. 

Conversely, some parties primarily from academic/think tank, business, 

and federal agency sectors did not believe the point of order has been 

effective in preventing or deterring the enactment of mandates and 

suggested otions to strengthen it. Moreover, others commented about its 

infrequent use.9

 

8

According to CBO’s 2005 report, the numbers represent official mandate statements 

transmitted to Congress by CBO. CBO prepared more intergovernmental mandate 

statements than private-sector mandate statements because in some cases it was asked to 

review a specific bill, amendment, or conference report solely for intergovernmental 

mandates. These numbers also exclude preliminary reviews and informal estimates for 

other legislative proposals. Finally, mandate statements may cover more than one mandate. 

Similarly, CBO may address a single mandate in more than one statement.

9

In the last 10 years, at least 13 points of order under UMRA were raised in the House of 

Representatives and none in the Senate. Only 1 of the 13, regarding a proposed minimum 

wage increase as part of the Contract with America Advancement Act in 1996, resulted in 

the House voting to reject consideration of a proposed provision. 
Page 9 GAO-05-533T 

Some parties said the point of order needs to be strengthened by making it 

more difficult to defeat. One suggested revision was to require a threefifths vote in Congress, rather than a simple majority, to overturn a point of 

order. This change was believed to strengthen the “institutional salience of 

UMRA” and to ensure that no mandate under UMRA could be enacted if it 

was supported only by a simple majority. As you know, on March 17, 2005, 

the Senate approved the fiscal year 2006 budget, which included a 

provision that would increase to 60 the number of votes needed to overturn 

an UMRA point of order in the Senate. 10

A few parties from the federal agency and academic/think tank sectors 

commented on another enforcement mechanism for regulatory 

mandates—UMRA’s judicial review provision, which subjects any agency 

compliance or noncompliance with certain provisions in the Act to judicial 

review. Most felt that this mechanism does not provide meaningful relief or 

remedies if federal agencies have not complied with the requirements of 

UMRA because of its limited focus. Specifically, judicial review is limited to 

requirements that pertain to preparing UMRA statements and developing 

federal plans for mandates that may significantly impact small government 

agencies. Furthermore, if a court finds that an agency has not prepared a 

written statement or developed a plan for one of its rules, the court can 

order the agency to do the analysis and include it in the regulatory docket 

for that rule; but the court may not block or invalidate the rule. The few 

parties commenting about judicial review suggested expanding it to 

provide more opportunities for judicial challenges and more effective 

remedies when noncompliance of the Act’s requirements occur. A few 

parties primarily from the academic/think tank and public interest 

advocacy groups sectors said that efforts to limit or stop implementation of 

mandates through legal action might be unwarranted, because UMRA was 

not intended to preclude the enactment of federal mandates. They were 

primarily concerned about litigation being used to slow down the 

regulatory process.

Commenting parties from business, federal agency, and state and local 

governments sectors questioned some federal agencies’ compliance with 

UMRA requirements and the effectiveness of enforcement mechanisms to 

address this perceived noncompliance. They mentioned the failure of 

some agencies to consult with state, local and tribal governments when 

10As of April 11, 2005, the fiscal year 2006 budget was in conference negotiations with the 

House of Representatives.
Page 10 GAO-05-533T 

developing regulations that may have a significant impact on nonfederal 

entities. Likewise, at least one party of each of the three sectors expressed 

concerns about the lack of accurate and complete information provided by 

federal agencies, which are responsible for determining whether a rule 

includes a mandate and whether it exceeds UMRA’s thresholds. The 

perceived lack of compliance with certain UMRA requirements generated 

several suggested changes to UMRA. However, the only suggestion that 

had support across parties from multiple sectors was to replicate CBO’s 

role for legislative mandates by creating a new office within OMB that 

would be responsible for calculating the cost estimates for federal 

mandates in regulations. 

Parties Across All Sectors 

Raise Other Issues 

Regarding UMRA, but Little 

or No Consensus Emerges

Parties from all sectors also raised a number of other issues about the use 

and usefulness of UMRA information (in decreasing the number of 

unfunded mandates), UMRA’s analytic framework, and federal agency 

consultations with state, local, and tribal governments, but there was no 

consensus in their views about how these issues should be addressed. The 

parties provided mixed but generally positive views about the use and 

usefulness of UMRA information. Some parties commented that the Act 

does increase awareness of unfunded mandates but thought more could be 

done to increase its usefulness. However, the only option that attracted 

multiple supporters was a suggestion for a more centralized approach for 

generating information within the executive branch similar to the 

suggestions mentioned about improving enforcement. Parties also 

provided a number of comments about the provisions of UMRA that 

establish the analytic framework for cost estimates, which generated a few 

suggested options aimed at improving the quality of information generated 

such as including indirect costs for threshold purposes and clarifying 

certain definitions (e.g. “federal mandates” and “enforceable duty”). 

UMRA’s consultation also emerged as a recurring theme within and across 

certain sectors. The comments generally were about a perceived lack of 

consistency across agencies when consulting with state and local 

governments.

Sectors Also Raise 

Concerns About Federal 

Mandates in General

Parties from all sectors also raised a number of broader issues about 

federal mandates—namely, the design and funding and evaluation of 

federal mandates—and suggested a variety of options. While most of the 

comments were about the evaluation of federal mandates, some parties 

also raised concerns about the design and funding of mandates, which 

varied across sectors. Issues raised include: (1) costs for mandates may 
Page 11 GAO-05-533T 

vary across different affected nonfederal entities, (2) mismatches between 

the funding needs of parties compared to federal formulas, and 

(3) effects of the timing of federal actions and program changes on 

nonfederal parties. Most often, the comments focused on a perceived 

mismatch between the costs of federal mandates and the amount of federal 

funding provided to help carry them out. Others raised issues about the 

need to address the incentives for the federal government to “over 

leverage” federal funds by attaching (and often revising) additional 

conditions for receiving the funding. 

Parties, primarily from the academic/think tank sector, suggested a wide 

variety of options to address their concerns, but there was no broad 

support for any option. For example, while some parties across four 

sectors suggested providing waivers or offsets to reduce the costs of the 

mandates on affected parties or “off ramps” to release them of some 

responsibilities to fulfill the mandates in a given year if the federal 

government does not provide sufficient funding. Others said that 

compliance with federal mandates should not be made contingent on full 

federal funding and off ramps and waivers can introduce other issues. The 

option of building into the design of federal mandates “look back” or sunset 

provisions that would require retrospective analyses of the mandates’ 

effectiveness and results was also suggested.

About half the parties, representing most sectors commented on the 

evaluation of federal mandates and offered suggestions to improve 

mandates, whether covered by the Act or not. Not surprisingly parties in 

the academic/think tank sector, who felt that the evaluation of federal 

mandates was especially important because there is a lack of information 

about the effects of federal mandates on affected parties, provided most of 

the comments. The issues raised included concerns about the lack of focus 

on evaluating the effectiveness (results) of the mandates; the questionable 

accuracy and completeness of cost estimates, particularly ones prepared 

by federal agencies, and the lack of evaluation of the impact of mandates. 

All of these issues are related and the concerns expressed touched upon 

the need to adequately evaluate mandates in the context of costs, benefits, 

impacts, and effectiveness of the mandated actions to achieve desired 

goals. Parties across the sectors suggested that various forms of 

retrospective analysis are needed for evaluating federal mandates after 

they are implemented. Some suggestions for retrospective analysis 

focused on costs and effectiveness of mandates, including comparing them 

to the estimates and expected outcomes. Others from the state and local 
Page 12 GAO-05-533T 

governments sector also suggested focusing on the cumulative costs and 

effects of mandates—the impact of various related federal actions, which 

when viewed collectively, may have a substantial impact although any one 

may not exceed UMRA’s thresholds. Finally, parties primarily from the 

academic/think tank sector suggested examining local and regional 

impacts of mandates and analyzing the benefits of federal mandates, when 

appropriate, not just costs.

Observations 

Regarding Next Steps 

As Congress reevaluates UMRA on its 10-year anniversary, the information 

we provided over the past year provides some useful insights. First, 

although parties from various sectors generally focused on the areas of 

UMRA and federal mandates that they would like to see fixed, they also 

recognized positive aspects and benefits of UMRA. In particular, they 

commented about the attention UMRA brings to potential consequences of 

federal mandates and how it serves to keep the debate in the spotlight. I 

also found it notable that no one suggested repealing UMRA.

Second, when considering changes to UMRA itself, UMRA’s narrow 

coverage stands out as the primary issue for most sectors because it 

excludes so many actions from coverage under UMRA and contributes to 

complaints about unfunded or under funded mandates as discussed in both 

of our reports. Even with an issue such as coverage on which there was 

some general agreement across most sectors, the variety of suggested 

options indicates that finding workable solutions will require including all 

affected parties in the debate. 

Third, one of the challenges for Congress and other federal policy makers 

is to determine which issues and concerns about federal mandates are best 

addressed in the context of UMRA and which are best considered as part of 

more expansive policy debates on federal mandates and federalism. On 

broader policy issues concerning federal mandates, various parties 

recognized that UMRA is only part of the solution and the issue raises 

broader public policy questions about structuring and funding mandates in 

general. These parties made it clear that retrospective analysis is needed to 

ensure that mandates are achieving their desired goals, which could help 

provide additional accountability for federal mandates and provide 

information that could lead to better decisions regarding the design and 

funding of mandate programs. 

Finally, as we move forward in an environment of constrained fiscal 

resources, the issue of unfunded mandates raises broader questions about 
Page 13 GAO-05-533T 

the assignment of fiscal responsibilities within our federal system. 

Reconsideration of such responsibilities begins with the observation that 

most major domestic programs, costs, and administrative responsibilities 

are shared and widely distributed throughout our system. Part of this 

public policy debate includes a reexamination of the federal government’s 

role in our system and a need to sort out how responsibilities for these

kinds of programs should be financed in the future.11 If left unchecked, 

unfunded mandates can weaken accountability and remove constraints on 

decisions by separating the enactment of benefit programs from the 

responsibility for paying for these programs. Likewise, 100 percent federal 

financing of intergovernmental programs can pervert fiscal incentives 

necessary to ensure proper stewardship at the state and local level for 

shared programs. 

Mr. Chairman, once again I appreciate the opportunity to testify on these 

important issues and I would be pleased to address any questions you or 

other members of the committee might have.

Contacts and 

Acknowledgements

If additional information is needed regarding this testimony, UMRA or 

federal mandates, please contact Orice M. Williams at (202) 512-5837 or 

williamso@gao.gov or Tim Bober at (202) 512-4432 or bobert@gao.gov. 

Other key contributors to the work which was associated with this 

testimony were Tom Beall, Kate Gonzalez, and Boris Kachura.

11For a broader discussion of our work on 21st century challenges see, 21st Century 

Challenges: Reexamining the Base of the Federal Government, GAO-05-325SP 

(Washington, D.C.:February 2005).

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