a

GAO

United States Government Accountability Office

Report to the Chairman, Subcommittee on 

Oversight of Government Management, 

the Federal Workforce and the District of 

Columbia, Committee on Homeland Security 

and Governmental Affairs, U.S. Senate

March 2005 UNFUNDED 

MANDATES

Views Vary About 

Reform Act’s 

Strengths, 

Weaknesses, and 

Options for 

Improvement

GAO-05-454
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

www.gao.gov/cgi-bin/getrpt?GAO-05-454.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Orice M. 

Williams at (202) 512-5837, or 

williamso@gao.gov. 

Highlights of GAO-05-454, a report to the 

Chairman, Subcommittee on Oversight of 

Government Management, the Federal 

Workforce and the District of Columbia, 

Committee on Homeland Security and 

Governmental Affairs, U.S. Senate 

March 2005

UNFUNDED MANDATES 

Views Vary About Reform Act’s 

Strengths, Weaknesses, and Options 

for Improvement 

The parties GAO contacted 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, 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 UMRA-specific issues such as coverage and enforcement, among 

others, and more general issues about the design, funding, and evaluation of 

federal mandates. First, UMRA coverage was, by far, the most frequently 

cited issue by parties from the various sectors. Parties across most sectors 

that provided comments said UMRA’s numerous definitions, exclusions, and 

exceptions leave out many federal actions that may significantly impact 

nonfederal entities and should be revisited. Among the most commonly 

suggested options were to expand UMRA’s coverage to include a broader set 

of actions by limiting the various exclusions and exceptions and lowering 

the cost thresholds, which would make more federal actions mandates under

UMRA. However, a few parties, primarily from the public interest advocacy 

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

maintained. 

Second, parties from various sectors also raised a number of issues about 

federal mandates in general. In particular, they had strong views about the 

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 

issues was more post-implementation evaluation of existing mandates or 

“look backs.” Such evaluations of the actual performance of mandates could 

enable policymakers to better understand mandates’ benefits, impacts and 

costs among other issues. In turn, developing such evaluation information 

could lead to the adjustment of existing mandate programs in terms of 

design and/or funding , perhaps resulting in more effective or efficient 

programs. 

Going forward, the issue of unfunded mandates raises broader questions 

about assigning fiscal responsibilities within our federal system. Federal and 

state governments face serious fiscal challenges both in the short and longer 

term. As GAO reported in its February 2005 report entitled 21st Century 

Challenges: Reexamining the Base of the Federal Government 

(GAO-05-325SP), the long-term fiscal challenges facing the federal budget 

and numerous other geopolitical changes challenging 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 as well. 

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 federal funding to cover 

the costs. UMRA generates 

information about the nature and 

size of potential federal mandates 

on nonfederal entities to assist 

Congress and agency decision 

makers in their consideration of 

proposed legislation and 

regulations. However, it does not 

preclude the implementation of 

such mandates. 

At various times in its 10-year 

history, Congress has considered 

legislation to amend various 

aspects of the act to address 

ongoing questions about its 

effectiveness. Most recently, GAO 

was asked to consult with a diverse 

group of parties familiar with the 

act and to report their views on 

(1) the significant strengths and 

weaknesses of UMRA as the 

framework for addressing mandate 

issues and (2) potential options for 

reinforcing the strengths or 

addressing the weaknesses. To 

address these objectives, we 

obtained information from 

52 organizations and individuals 

reflecting a diverse range of 

viewpoints. GAO analyzed the 

information acquired and organized 

it into broad themes for analytical 

and reporting purposes. 

GAO makes no recommendations 

in this report. 
Page i GAO-05-454 Unfunded Mandates

Contents

Letter 1

Results in Brief 5

Background 7

UMRA Coverage 9

UMRA Enforcement 14

Parties Across All Sectors Raise Other Issues, But Little or No 

Consensus Emerges 17

Sectors Also Provide More General Concerns About Federal 

Mandates 20

Observations 22

Appendixes

Appendix I: Objectives, Scope, and Methodology 27

Appendix II: Parties Providing Input to GAO’s Review 31

Appendix III: Participants in GAO Federal Mandates Symposium, 

January 26, 2005 34

Appendix IV: Parties’ Feedback on UMRA and Federal Mandates 36

Appendix V: Summary of Parties’ Suggested Options 37

Appendix VI: Results of Federal Mandates Symposium Balloting Process 46

Table Table 1: UMRA Themes with Highest Frequency of Comments 9

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Page 1 GAO-05-454 Unfunded Mandates

United States Government Accountability Office

Washington, D.C. 20548

A

March 31, 2005 Letr

The Honorable George V. Voinovich

Chairman

Subcommittee on Oversight of Government Management,

the Federal Workforce and the District of Columbia

Committee on Homeland Security and Governmental Affairs

United States Senate

Dear Mr. Chairman,

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. To aid in the implementation of 

these programs and initiatives, and to share their costs, federal statutes and 

regulations often require nonfederal parties to expend their resources in 

support of certain national goals. For example, the Pipeline Safety 

Improvement Act of 2002 included intergovernmental and private sector 

mandates that, among other things, required operators of natural gas and 

hazardous-liquid pipelines to adhere to minimum safety standards, create 

an employee qualification program and conduct facility risk analysis.1

Similarly, the Environmental Protection Agency issued regulations in 2001 

setting new enforceable standards for the maximum level of arsenic in 

drinking water that affected both publicly-owned and privately-owned 

water systems.2

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. As we 

move forward into the 21st Century, we have observed that the federal 

government will be pressed by its own long-term fiscal challenges to

1

 Pub. L. No. 107-355.

2

 “National Primary Drinking Water Regulations; Arsenic and Clarifications to Compliance 

and New Source Contaminants Monitoring,” 66 Fed. Reg. 6976 (Jan. 22, 2001).
Page 2 GAO-05-454 Unfunded Mandates

engage in a serious reexamination of what the government does, how it 

does business and how it finances its priorities. Such a reexamination can 

also usefully consider how responsibilities should be allocated and shared 

across state and local governments as well.3

As we rethink the federal role, many in the state and local governments and 

business sectors would view unfunded mandates as among the areas 

warranting serious reconsideration. 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 federal funding to cover 

the costs.4

 UMRA generates information about the nature and size of 

potential federal mandates on other levels of government and the private 

sector to assist Congress and agency decision makers in their 

consideration of proposed legislation and regulations. However, it does not 

preclude the enactment of such mandates. As we approach the 10-year 

anniversary of the enactment of UMRA, questions about the effectiveness 

of this legislation have been raised by affected parties.

In May 2004, at your request, we reported on the identification of federal 

mandates in federal statutes and rules under UMRA. On the basis of our 

review of the act’s provisions, and an analysis of statutes enacted and final 

rules published during 2001 and 2002, we noted that UMRA appears to have 

indirectly discouraged or limited mandates in some cases. Our report, 

however, also raised questions about the various types of mandates that are 

not covered by the act but may have potentially significant fiscal impacts 

on affected parties.5

 Similarly, the Congressional Budget Office (CBO), 

which plays an important role in implementing UMRA provisions regarding 

statutory mandates, has reported on the narrow scope of the act’s coverage 

and difficulties in implementing UMRA.6

 Nonfederal observers, including 

parties affected by federal mandates, also increasingly have expressed 

3

 GAO, 21st Century Challenges: Reexamining the Base of the Federal Government, 

GAO-05-325SP (Washington, D.C.: February 2005).

4

 Pub. L. No. 104-4, 2 U.S.C. §§658-658g, 1501-71.

5

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

(Washington, D.C.: May 12, 2004).

6

 CBO is charged with estimating the costs of intergovernmental and private sector 

mandates in certain legislation.
Page 3 GAO-05-454 Unfunded Mandates

concerns about the fiscal burdens of federal mandates and the difficulty of 

accurately assessing the true impact of mandates.

You asked GAO to provide more information and analysis regarding these 

and other issues related to federal mandates. Specifically, you asked us to 

consult with a diverse group of knowledgeable parties familiar with the act 

and to report their views with regard to (1) the significant strengths and 

weaknesses of UMRA as the framework for addressing federal mandates 

issues, including why the parties believed the issues they identified were 

significant, and (2) potential options suggested for reinforcing the 

strengths or addressing the weaknesses.7

 This report discusses those 

objectives for each of the broad themes that emerged from our 

consultations with the parties. Specifically, this report focuses on 

(a) UMRA coverage, (b) enforcement, (c) other UMRA issues, including the 

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

analytic framework, and consultations with state, local and tribal 

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

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

As requested we also report for each of those themes, to the extent 

possible, on the level of agreement or disagreement among the parties 

concerning the perceived strengths and weaknesses and the suggested 

options for reinforcing the strengths or addressing the weaknesses. We also 

provide observations on the broader implications of the unfunded 

mandates issues raised by our sources for the allocation of financial 

responsibilities in our intergovernmental system.

To address the objectives, we used a two-step data collection process to 

obtain input on UMRA and federal mandates’ issues and options from a 

diverse and extensive set of organizations and individuals that were 

knowledgeable about federal mandates and UMRA.8

 First, we obtained 

feedback from participating parties about UMRA strengths and weaknesses 

and options using a structured data collection approach. We analyzed the 

information obtained from those parties and organized it into broad 

themes. Second, we supplemented our initial round of information 

collection with a symposium on federal mandate issues held at GAO on

7

 Throughout this report, we simply use the term “issues” when referring to strengths and 

weaknesses in the aggregate.

8

 In all, there were 52 organizations and individuals responding to our request for views, and 

they are referred to collectively as “parties” throughout this report.
Page 4 GAO-05-454 Unfunded Mandates

January 26, 2005.9 The purpose of this symposium was to have a more indepth discussion about the issues most frequently raised during our initial 

data collection effort. The three themes discussed at the symposium were 

coverage, enforcement, and funding and design. Twenty-six individuals 

representing all five sectors attended.

For purposes of structuring our examination of agreement or disagreement 

in the views of participating parties on specific issues and options, we 

classified each participating party into one of five sectors—academic 

scholars and think tanks (20 parties), business (5 parties), federal 

(10 parties including executive and legislative branch agencies), public 

interest advocacy group (6 parties), and state and local governments 

(11 parties).10 Although most of the parties providing input represented a 

larger set of organizations within their related sector, the information 

gathered represents just the views of those parties who chose to participate 

in this review. As such, the information provides only a rough gauge as to 

the prevalence of opinion about a given issue or option or the extent to 

which there is agreement among and within particular sectors. We 

conducted our review from August 2004 through February 2005 in 

Washington, D.C., in accordance with generally accepted government 

auditing standards. (Appendix I provides a more detailed description of our 

objectives, scope, and methodology. Appendices II and III identify, 

respectively, the parties who contributed to our review and those who 

participated in the symposium. Appendix IV, which is available as an 

electronic supplement, provides a comprehensive list of the comments and 

suggested options provided by the parties.)

9

 Forty-nine of the 52 parties provided responses in the initial data collection effort and the 

three other parties who were unable to participate in the first round of data collection were 

able to participate in the subsequent symposium.

10 Despite our efforts to solicit a comparable level of input from the different sectors, fewer 

identified parties from some sectors chose to participate in our review than others. 

However, some parties who chose not to participate recommended contacts whom we 

classified in another sector, which allowed us to partially mitigate the extent of nonparticipation. For example, business associations recommended parties in the 

academic/think tank sector as persons knowledgeable about private sector perspectives on 

mandates issues.
Page 5 GAO-05-454 Unfunded Mandates

Results in Brief Parties from the five sectors—academic/think tank, public interest 

advocacy, business, federal, and state and local governments—identified a 

number of issues about UMRA and its implementation that warrant 

examination. Issues involving UMRA’s coverage were the most frequently 

raised, by the parties we contacted. Parties across most sectors thought 

UMRA’s narrow coverage was a significant weakness that should be 

addressed. Many suggested broadening UMRA’s coverage including 

reconsidering UMRA’s definitions, exclusions, and exemptions such as 

conditions of federal financial assistance and preemptions of state and 

local authority. However, a few parties, primarily from the public interest 

advocacy sector, said many of the exclusions were important and that the 

act’s narrow coverage should be maintained or reinforced by adding 

exclusions for mandates regarding health and environmental protection. 

Two suggestions—excluding private sector mandates and excluding civil 

rights-related mandates—were strongly opposed by parties from several 

sectors.

UMRA establishes various responsibilities and enforcement mechanisms 

for Congress and federal agencies. While mentioned by far fewer parties 

than coverage, issues involving compliance with and enforcement of 

UMRA requirements were the second most frequently cited across all 

sectors. Generally, the Congressional procedures were viewed as having a 

greater impact on mandate decision making than those applying to federal 

agencies. UMRA sets out rules for both the House and Senate that prohibit 

consideration of mandate legislation unless certain conditions are met. The 

primary enforcement mechanism for legislative action is the point of 

order—a procedural mechanism that can be used by a member of Congress 

to challenge a mandate during the legislative process. Parties from various 

sectors had mixed views about the deterrent value of the point of order in 

the enactment of certain mandates, but most suggested maintaining or 

strengthening it, including a suggestion to increase the number of votes 

needed to overcome a point of order from a majority to a supermajority. 

UMRA also sets out requirements that federal agencies prepare written 

statements that identify, among other things, mandates that exceed UMRA’s 

threshold for regulations. Unlike the Congressional process, however, 

there is nothing comparable to the point of order to deter agencies from 

imposing mandates at or above the UMRA threshold. Finally, a few parties 

commented about the ineffectiveness of UMRA’s judicial review provision, 

which they said does not provide meaningful remedies even if a court 

determines that federal agencies have not complied with UMRA. Although 
Page 6 GAO-05-454 Unfunded Mandates

the parties suggested numerous options to strengthen UMRA enforcement, 

none received broad-based support from parties within and across sectors.

The other themes that received a significant number of comments were the 

use and usefulness of information (e.g. has it helped decrease the number 

of mandates?), UMRA’s analytic framework, and the agencies’ consultation 

with state, local, and tribal governments. All the sectors provided mixed, 

but generally positive, comments about the use and usefulness of UMRA 

information in policy debates. Comments about the information provided 

by CBO were generally positive and parties from the academic/think tank 

and state and local governments sectors suggested creating a single entity 

within the executive branch to determine if there are covered mandates in 

proposed federal regulations, instead of leaving this determination to the 

agency alone. Second, parties from all sectors commented about UMRA’s 

analytic framework, including concerns about how UMRA defines costs 

and the inherent difficulty in estimating certain mandate costs. To address 

their concerns, some suggested broadening mandate cost estimates to 

include indirect costs and others suggested including benefits, where 

possible, along with cost estimates. Lastly, parties from all sectors 

commented about the inconsistent application of UMRA’s consultation 

requirements by some federal agencies.

In addition to comments provided about UMRA, parties from most sectors 

raised a number of broader policy issues concerning design and funding of 

federal mandates and the evaluation of those mandates. While views about 

the design and funding varied across sectors, most of the comments 

focused on perceived funding gaps between costs of federal mandates and 

the amount of funding provided to carry them out. Many observed that 

there is a lack of evaluation and research on federal mandates and 

generally agreed that retrospective evaluation of federal mandates was 

needed to ensure that mandates were achieving their intended goals and to 

better measure the actual costs incurred by nonfederal entities.

As we move forward, the issue of unfunded mandates raises broader 

questions about the assignment of fiscal responsibilities within our federal 

system. Federal and state governments face serious fiscal challenges both 

in the short and longer term. As we reported in our report on 21st century 

challenges, the long-term fiscal challenges facing the federal budget and 

numerous other geopolitical changes challenging 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
Page 7 GAO-05-454 Unfunded Mandates

priorities.11 Such a reexamination includes considering how responsibilities 

for financing public services are allocated and shared across the many 

nonfederal entities in our system as well.

Background The Unfunded Mandates Reform Act of 1995 was enacted to address 

concerns expressed about federal statutes and regulations that require 

nonfederal parties to expend resources to achieve legislative goals without 

being provided funding to cover the costs. Although UMRA was intended to 

curb the practice of imposing unfunded federal mandates, the act does not 

prevent Congress or federal agencies from doing so. Instead, it generates 

information about the potential impacts of mandates proposed in 

legislation and regulations. In particular, title I of UMRA requires 

Congressional committees and the Congressional Budget Office (CBO) to 

identify and provide information on potential federal mandates in certain 

legislation. Title I also provides opportunities for Members of Congress to 

raise a point of order when covered mandates are proposed for 

consideration in the House or Senate. 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. It also requires action of the Office of Management and 

Budget (OMB), including establishing a program to identify and test new 

ways to reduce reporting and compliance burdens for small governments 

and annual reporting to Congress on agencies’ compliance with UMRA. 

Title III of UMRA required the Advisory Commission on Intergovernmental 

Relations to conduct a study reviewing federal mandates.12 Title IV 

establishes limited judicial review regarding agencies’ compliance with 

certain provisions of title II of the act.

UMRA generally defines a federal mandate as any provision in legislation, 

statute, or regulation that would impose an enforceable duty on state, local, 

or tribal governments (intergovernmental mandates) or the private sector 

(private sector mandates) or that would reduce or eliminate the funding

11 GAO, 21st Century Challenges: Reexamining the Base of the Federal Government, 

GAO-05-325SP (Washington D.C.: February 2005).

12 This statutory requirement was not completed. Although a preliminary report was 

completed in January 1996, a final report was not released. Congress terminated funding for 

the commission in 1996.
Page 8 GAO-05-454 Unfunded Mandates

authorized to cover the costs of existing mandates. However, some other 

definitions, exclusions, and thresholds in the act apply and may vary 

according to whether the mandate is in legislation or a rule and whether a 

provision imposes an intergovernmental or private sector mandate. For 

example, UMRA includes definitional exceptions for enforceable duties 

that are conditions of federal financial assistance or that arise from 

participation in a voluntary federal program. UMRA also excludes certain 

types of provisions, such as any provision that enforces Constitutional 

rights of individuals, from its application. When, in aggregate, the 

provisions in proposed legislation or regulations equal or exceed UMRA’s 

thresholds, other provisions and analytical requirements in UMRA apply. 

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.13

GAO has issued two previous reports addressing UMRA and federal 

mandates. In our May 2004 report we provided information and analysis 

regarding the identification of federal mandates under titles I and II of 

UMRA.14 In that report, we described the complex procedures, definitions, 

and exclusions under UMRA for identifying federal mandates in statutes 

and rules. For calendar years 2001 and 2002, we also identified those 

statutes and rules that contained federal mandates under UMRA and 

provided examples of statutes and rules that were not identified as federal 

mandates but that affected parties might perceive as “unfunded mandates” 

and the reasons these statutes and rules were not federal mandates under 

UMRA. In February 1998, we reported on the implementation of title II.15 In 

that report, we found that UMRA appeared to have had little effect on 

agencies rulemaking and most significant rules promulgated were not 

subject to title II requirements. Both of these reports had relatively 

consistent findings—that only a limited number of statutes and rules have 

been identified as federal mandates under UMRA.

13 The dollar thresholds in UMRA are in 1996 dollars and are adjusted annually for inflation.

14 GAO-04-637.

15 GAO, Unfunded Mandates: Reform Act Has Had Little Effect on Agencies’ Rulemaking 

Actions, GAO/GGD-98-30 (Washington, D.C.: Feb. 4, 1998).
Page 9 GAO-05-454 Unfunded Mandates

UMRA Coverage UMRA’s coverage, which includes its numerous definitions, exclusions, and 

exceptions, was the issue most frequently commented on by parties from 

all five sectors (see table 1).16 Most parties from the state and local 

governments, federal, business, and 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. 

Conversely, a few parties, from the public interest sector and 

academic/think tank sector, considered some of the existing exclusions 

important or identified UMRA’s narrow scope as one of the act’s strengths. 

While there was no clear consensus across sectors on how to address 

coverage, some suggestions designed to expand UMRA’s coverage had 

support from parties across and within certain sectors.

Table 1: UMRA Themes with Highest Frequency of Comments

Source: GAO.

Note: Comment frequency is provided only as a rough gauge of the relative prevalence of themes 

addressed by participating parties comments.

16 Coverage issues were also raised in other literature regarding federal mandates that we 

reviewed.

Theme Number of comments provided

Themes focused specifically on UMRA

Scope of UMRA’s coverage of federal actions 52

UMRA enforcement 42

UMRA analytical framework 23

Uses and usefulness of information UMRA 

generates

25

UMRA consultation requirements 14

Themes focused on federal mandate issues 

and programs in general

Design and funding of federal mandates 24

Evaluation and research needs regarding federal 

mandates

23
Page 10 GAO-05-454 Unfunded Mandates

Parties from Most Sectors 

Shared Concerns That 

UMRA’s Coverage Was Too 

Narrow, but Had Mixed 

Views on How to Address It

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.17 CBO estimates that about 2 percent of the bills that it reviewed 

from 1996 to 2004 contained provisions that fit within UMRA’s exclusions. 

All sectors other than the public interest advocacy sector said they viewed 

UMRA’s narrow coverage as a significant weakness because it precludes an 

official accounting of the costs to nonfederal parties associated with many 

federal actions. This issue was described by one party who noted that any 

of the exclusions, as well as the exemptions, in UMRA may be justified in 

isolation, but suggested that it is their cumulative impact that raises 

concerns.

Some parties from the business, academic/think tank, public interest 

advocacy, and state and local governments sectors made general comments 

on the clarity of certain UMRA definitions and exemptions and whether 

this results in different interpretations across agencies. One party who said 

UMRA’s coverage was narrow often cited UMRA’s definitional exceptions 

for mandates, including conditions of federal financial assistance (such as 

grant programs) or that arise from participation in voluntary federal 

programs, saying some laws enacted under these exceptions imposed 

significant mandates. A prominent example of a grant condition excluded 

from UMRA cited by parties in the state and local government sector is the 

No Child Left Behind Act of 2001, which places various requirements on 

states and localities, including that their schools measure the progress of 

students through annual tests based on challenging academic standards 

and that teachers are highly qualified as defined in the act. Other parties 

commented about various other definitional issues involving the exclusion 

of certain types of costs (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.18

17 UMRA contains additional definitional exceptions, exclusions, or other restrictions 

applicable to the identification of federal mandates in legislation and 14 such restrictions 

applicable to the identification of federal mandates in rules. Often, more than one of these 

applicable restrictions applies. See GAO-04-637.

18 We discuss cost definitions and cost thresholds in greater detail in the analytic framework 

section of this report.
Page 11 GAO-05-454 Unfunded Mandates

Other parties cited the general 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. CBO estimates 

that 5 of the 8 laws containing federal mandates (as defined by UMRA) that 

it did not review before enactment, were appropriations acts.19 A few 

parties from academic/think tank and state and local government sectors 

commented about UMRA’s lack of coverage for certain tax legislation that 

may reduce state or local revenues. Even though federal tax changes may 

have direct implications for state tax revenue for the majority of states 

whose income tax is directly linked to the federal tax base, these impacts 

are not considered as mandates under UMRA because states have the 

option of decoupling their tax systems from federal law. 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.20 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 which CBO provided estimates were 

preemptions of state and local authority.”21

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

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

20 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. 

21 CBO’s March 2005 UMRA report.
Page 12 GAO-05-454 Unfunded Mandates

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 its 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 from beyond direct to cover indirect costs as 

well.

• 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.

The level of agreement for each suggested option varied across sectors. 

The first option came from parties in every sector except public interest 

advocacy. Although parties representing businesses did not comment on 

preemption during our data collection, the business sector has generally 

been in favor of federal preemptions for reasons such as standardizing 

regulation across state and local jurisdictions. (See appendix V for a more 

complete list of suggested options by theme.)

The results of our January symposium confirmed support for generally 

revisiting and expanding UMRA coverage. See appendix VI for a list of the 

symposium results. The symposium participants also raised a cautionary 

note about potential consequences of some of the suggested options. For 

example, if UMRA coverage were expanded by changing exclusions and 

limitations or lowering or eliminating UMRA thresholds or including 

regulations issued by independent agencies, the workloads of CBO and the 

regulatory agencies would increase substantially.
Page 13 GAO-05-454 Unfunded Mandates

Another issue raised by a few parties that evoked some reaction at the 

symposium was whether private sector mandates should be included in 

UMRA. Some parties, from the federal agency, academic/think tank and 

public interest advocacy sectors, questioned whether private sector 

mandates should be included in UMRA. According to one party, the 

inclusion of the private sector seems contrary to the intent of the action, 

which they viewed to be intergovernmental mandates. Parties from the 

state and local government and academic/think tank sectors indicated 

during our symposium that they would not support dropping private sector 

mandates from UMRA. They pointed out, for example, that 

intergovernmental and private sector mandates can be interrelated, in 

particular that businesses, which can be affected by private sector 

mandates, are a key revenue source for state and local governments.

Some in the 

Academic/Think Tank and 

Public Interest Advocacy 

Sectors View UMRA’s 

Coverage as a Strength and 

Take Issue with Certain 

Recommendations to 

Expand or Change Coverage

Contrary to the view that UMRA’s coverage was too narrow, some parties 

from academic/think tank and public interest advocacy sectors viewed 

UMRA’s narrow scope as one of its primary strengths. Rather than 

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

narrow. One party expressed concern that eliminating any of UMRA’s 

exceptions and exclusions might make the identification of mandates less 

meaningful, saying, “The more red flags run up, the less important the red 

flag becomes.” Between 1996 and 2004, CBO reports that of the 

5,269 intergovernmental statements, 617 had mandates; of the 5,151 private 

sector statements, 732 had mandates.22 Of the mandates identified by CBO, 

9 percent of the intergovernmental mandates and 24 percent of private 

sector mandates had costs that would exceed the thresholds.

Specifically, these parties argued in favor of maintaining UMRA’s 

exclusions or expanding them to include federal actions regarding public 

health, safety, environmental protection, workers’ rights, and the disabled. 

Unlike the parties that viewed UMRA’s exclusions as too expansive, some

22 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.
Page 14 GAO-05-454 Unfunded Mandates

parties from the public interest advocacy sector and the academic/think 

tank sector focused on the importance of the existing exclusions, 

particularly those dealing with constitutional and statutory rights, such as 

those barring discrimination against various groups.23 During our January 

symposium, parties from multiple sectors took issue with any suggestion 

that the constitutional and statutory rights exclusions in UMRA be 

repealed. One party stated that the concept of unfunded mandates should 

not apply to laws intended to protect such fundamental rights. Another 

party suggested that the narrow scope of UMRA was generally useful, 

noting that, “One of the strengths of UMRA has been that it doesn’t try to be 

more ambitious than it needs to be.” Conversely, parties from most sectors 

opposed further limiting UMRA’s coverage.

UMRA Enforcement Enforcement of UMRA’s provisions was 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 mechanisms 

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

responsible for implementing the provisions. With regard to Congressional 

procedures, some parties observed that the opportunity provided for 

lawmakers to raise a point of order had a deterrent effect, while others 

described it as ineffective or underutilized. With regard to federal 

regulations, some questioned the agencies’ compliance with the provisions 

of the act. Finally, parties had mixed views about the judicial review 

provision under title IV, which provides limited remedies against agencies 

that fail to prepare UMRA statements, among other things. Parties from 

various sectors also suggested options to strengthen the issues raised 

about UMRA enforcement, but none was suggested by parties from a 

majority of sectors.

Mixed Views About the 

Usefulness and Need to 

Change Point of Order 

Mechanism

One of the primary tools used to enforce UMRA requirements in title I is the 

point of order—a parliamentary term used by a member of Congress in 

committee or on the floor of either chamber of Congress to raise an 

objection about proceeding to vote when a rule of procedure has been or 

will be violated. Once raised, an UMRA point of order prevents legislative 

23 UMRA does not apply to any provision in legislation or rules that enforces Constitutional 

rights of individuals or establishes or enforces any statutory rights that prohibit 

discrimination on the basis of race, color, religion, sex, national origin, age, handicap, or 

disability.
Page 15 GAO-05-454 Unfunded Mandates

action on a covered mandate unless overcome by a majority. The point of 

order, which provides members of Congress the opportunity to raise 

challenges to hinder the passage of legislative provisions containing an 

unfunded intergovernmental mandate, was the most frequently cited 

enforcement issue with varying views 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. One 

party commented that the threat of a point of order against a legislative 

proposal has caused members and staff to rethink and revise many 

proposals that would have likely imposed unfunded federal mandates on 

the states in excess of the threshold set in the law. This is consistent with 

the information presented in our May 2004 on UMRA, which quoted the 

Chairman of the House Rules Committee as saying that UMRA “has 

changed the way that prospective legislation is drafted...” We also reported 

that “although points of order are rarely used, they may be perceived as an 

unattractive consequence of including a mandate above cost thresholds in 

proposed legislation.”24

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

federal sectors did not believe the point of order has been effective in 

preventing or deterring the enactment of mandates. Moreover, others 

commented about its infrequent use. 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.

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 three-fifths 

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. 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 

24 GAO-04-637.
Page 16 GAO-05-454 Unfunded Mandates

point of order in the Senate. As of March 28, the fiscal year 2006 budget was 

in conference negotiations with the House of Representatives.

Parties Question Agencies’ 

Compliance with UMRA, 

But Cited Solutions Lacked 

Broad-Based Support

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

agency 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 

developing regulations that may have a significant impact on nonfederal 

entities, which is discussed later in the report. Likewise, at least one party 

of the business, federal, and state and local government sectors each 

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 to address this problem. 

The only suggestion that had support across parties from multiple sectors, 

however, was to create a new office within OMB to calculate the cost 

estimates for federal mandates in regulations. They suggested that this 

office have responsibilities similar to the State and Local Government Cost 

Estimates Unit at CBO. However, the parties did not specify whether the 

office should exist as an office within OMB’s Office of Information and 

Regulatory Affairs or exist separately.

Parties Who Find Judicial 

Review Provision Too 

Limited Support Revision

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

that UMRA’s judicial review provision does not provide meaningful relief or 

remedies if federal agencies have not complied with the requirements of 

UMRA because of its limited focus. In general, title IV subjects to judicial 

review any agency compliance or noncompliance with certain provision in 

the act. Specifically, the judicial review is limited to requirements that 

pertain to preparing UMRA statements and developing federal plans for 

mandates that may significantly impact small governments. However, 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.
Page 17 GAO-05-454 Unfunded Mandates

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. However, 

one party from the public interest advocacy sector said that a benefit of the 

existing judicial review is that the remedy for noncompliance is to provide 

the required statement versus impeding the regulatory process. Similarly, 

when this issue was discussed at the symposium, a few parties primarily 

from the academic/think tank and public interest advocacy sectors said 

that efforts to limit or stop implementation of mandates through legal 

action might be unwarranted, because as noted earlier, UMRA was not 

intended to preclude the enactment of federal mandates. They were 

concerned about legal actions being used to slow down the regulatory 

process through litigation.

Parties Across All 

Sectors Raise Other 

Issues, But Little or No 

Consensus Emerges

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

usefulness of UMRA information (e.g., has it helped decrease the number 

of 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; the only option that attracted multiple 

supporters was a suggestion for a more centralized approach for generating 

information within the executive branch. Parties also provided a number of 

comments about the UMRA provisions that establish the analytic 

framework for cost estimates, which generated a few suggested options. 

UMRA’s consultation provision generated the fewest comments, which 

focused primarily on a general concern about a perceived lack of 

consistency across agencies when consulting with state and local 

governments.

Parties in Most Sectors Had 

Mixed but Generally 

Positive Views About the 

Usefulness of Information 

Generated under UMRA and 

Suggested Few Changes

Parties from all sectors commented about the use and usefulness of 

information generated by UMRA. While most of the comments about 

information generated under title I were positive, some parties raised 

concerns about the quality and usefulness of some of the information and 

suggested improvements. While many of the comments were about UMRA 

information in general, most of the positive comments from a majority of 

the sectors were specific to the usefulness of information generated under 

title I by CBO in particular. For example, one party, who characterized 

UMRA as a success, credited the act with bringing unfunded mandates to 
Page 18 GAO-05-454 Unfunded Mandates

the forefront of Congressional debates and slowing down the enactment of 

new unfunded mandates. Parties from several sectors praised the value and 

quality of CBO’s analyses of mandates and the attention that CBO’s cost 

estimates under UMRA bring to the fiscal effects of federal legislation.

However, some parties from academic/think tank, public interest advocacy, 

and state and local governments sectors had more mixed views about the 

usefulness of information generated under UMRA. One party characterized 

the information as “marginally effective” in reducing costly and 

cumbersome rules and a few parties shared similar views about legislative 

mandates. Specifically, some of these parties commented that while the 

information may increase awareness of unfunded or under funded 

mandates, UMRA has been less successful in actually changing legislation 

to reduce the number of mandates.

The parties from various sectors suggested several options to improve the 

use and usefulness of information under UMRA, but there was no 

agreement across or within sectors on any particular option. Only the 

suggestion to provide for a centralized review of regulatory mandates was 

suggested by more than two parties. (As discussed previously, this was also 

suggested as a way to improve UMRA enforcement.)

Parties Cite UMRA’s 

Analytic Constraints

Parties from all sectors agreed that UMRA’s provisions work to constrain 

the analysis of mandate costs, which may impact the quality of the 

estimates. For example, parties from the academic/think tank, federal, and 

state and local governments sectors commented that the act excludes the 

consideration of the indirect costs of mandates, which can be significant 

for regulated entities. Moreover, others commented that certain definitions 

under UMRA are not clearly understood or easily interpreted, which can 

impact estimates. For example, some parties said that terms such as 

“federal mandates” and “enforceable duty” are not clearly defined and thus 

open to interpretation by the agencies.

Others noted that there can be differences in the cost analyses for 

legislative and regulatory mandates in areas such as making determinations 

about whether a mandate exceeds UMRA cost thresholds when ranges are 

used. For example, CBO has developed its own criteria for applying the act 

and has extended its general practice of providing point estimates for 

mandates rather than ranges when possible, as it does for its federal budget 

estimates. The federal agencies are left to their own discretion in deciding 

whether to use estimate ranges for costs and how to apply them to the 
Page 19 GAO-05-454 Unfunded Mandates

threshold. In one case, which we observed in a prior report, the U.S. 

Department of Agriculture (USDA) appeared to have developed a range of 

costs associated with implementing its rule on retained water in raw meat 

and poultry products. However, USDA provided only a lower bound 

estimate of $110 million, but did not quantify median or upper bound cost 

estimates. Because the lower bound was so close to the inflation adjusted 

threshold of $113 million, it is reasonable to assume that the median or 

upper bound estimate would have exceeded the threshold and been a 

mandate under UMRA.

Some parties expressed frustrations with the inherent uncertainties of 

estimating mandate costs. In particular, some parties commented that cost 

estimates are sometimes difficult or not feasible to calculate because they 

rely on future actions. That is, CBO sometimes finds that cost estimates for 

legislative mandates are difficult or not feasible to prepare, which can 

happen because CBO’s analysis is generally done before bills are approved 

and regulations needed to implement them have been developed. For 

example, in 2004, CBO reported that of the 66 intergovernmental mandates, 

2 could not be estimated; of the 71 private sector mandates, 10 could not be 

estimated. In many of these cases, CBO reported that the costs could not be 

determined because it had no basis for predicting what regulations would 

be issued to implement them.

The parties offered a variety of suggested options to address their concerns 

about estimation, but only a few had support across or within the sectors. 

There was, however, some overlap between options suggested addressing 

UMRA coverage and enforcement issues and options to address estimation 

issues. For example, some parties suggested revising UMRA’s cost or 

expenditure definitions and thresholds, including revisiting the exclusion 

of indirect costs from UMRA estimates, which may affect both the actual 

estimation process and whether a legislation or regulation will be identified 

as containing a federal mandate at or above UMRA’s thresholds. Parties 

from several sectors suggested examining or monitoring the 

implementation of UMRA’s estimation process for federal agencies’ 

regulations through an independent agency.

Sectors Had Few Comments 

and Suggested Options 

Regarding UMRA 

Consultation Provisions

A few parties had comments regarding UMRA’s requirement that federal 

agencies consult with elected officers of state, local and tribal governments 

(or their designees) on the development of proposals containing significant 

intergovernmental mandates. Parties from all five sectors commented on 

the consultation provisions, and these comments generally focused on the 
Page 20 GAO-05-454 Unfunded Mandates

quality of consultations across agencies, which was viewed as inconsistent. 

A few parties commented that UMRA had improved consultation and 

collaboration between federal agencies and nonfederal levels of 

government. A few commenters also raised concerns that UMRA’s 

consultation provisions focus on state, local and tribal governments, but 

exclude other constituencies that might be affected by proposed federal 

mandates. While several parties primarily from the state and local 

government sector suggested options for improving consultation, the only 

one mentioned by more than 2 parties was a suggestion for agencies to 

replicate CBO’s consultation approach for legislative mandates, which 

some parties characterized as collaborative.

Sectors Also Provide 

More General 

Concerns About 

Federal Mandates

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.

Several Potential Design 

and Funding Issues 

Surfaced, But No Options 

With Broad Appeal to 

Address Them

Specific comments about the design and funding of federal mandates 

varied across sectors. 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. Some parties from several sectors 

suggested that the problem they are concerned about is not so much 

unfunded federal mandates as underfunded mandates. When this issue was 

addressed at the symposium, a few parties pointed out that this issue is 

broader than UMRA, dealing with such issues as how to address the 

imbalance between mandate costs and available resources, how to 

generate the resources to meet these needs, and how to address the 

incentives for the federal government to “over leverage” federal funds by 

attaching (and often revising) additional conditions for receiving the 

funding. Some parties also raised concerns about the varying cost of some 

mandates across various affected nonfederal entities, mismatches between 

the funding needs of parties compared to federal formulas, and the effects 

of the timing of federal actions and program changes on nonfederal parties.

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. Parties across four sectors suggested providing 

waivers or offsets to reduce the costs of the mandates on affected parties 
Page 21 GAO-05-454 Unfunded Mandates

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. However, when this was discussed at the symposium, 

parties said that compliance with federal mandates should not be made 

contingent on full federal funding. They said, for example, that it is an 

appropriate role for the federal government to require compliance with 

certain mandates even if they are not fully funded. These parties also said 

that state and local governments do not always comply with mandates 

under existing laws. Some of the symposium participants also pointed out 

potential pitfalls of “off ramps” noting that they could actually provide an 

incentive to under fund mandates and that it might be difficult to manage 

who would determine that federal funding does not cover the costs of a 

mandate in a given year and how that determination would be made. 

During the symposium, 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 discussed.

Most Sectors Commented 

on Evaluation and Research 

Needs Regarding Federal 

Mandates Sectors

About half the parties, representing all sectors except federal agencies, 

commented on the evaluation of federal mandates and offered suggestions 

to improve mandates, whether covered by the act or not. This issue 

received the most focus from 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.

Four issues emerged from the comments provided by the various sectors 

concerning evaluations. First, parties from four of the five sectors 

commented about the lack of evaluation of the effectiveness (results) of 

mandates and the implications of mandates, including benefits, non-fiscal 

effects and costs. According to some parties, if mandate-related 

evaluations were conducted more often, policy decisions regarding 

mandates, both specifically and collectively, could meaningfully consider 

mandate costs, benefits and other relevant factors. Second, they expressed 

concerns about the accuracy and completeness of mandate cost estimates. 

This concern was raised primarily by parties in the public interest advocacy 

and business sectors. While they agreed that estimating costs was difficult, 

they felt examining the quality of the estimates was necessary. Third, 

parties primarily from the academic/think tank and state and local 

governments sectors raised issues about the impacts and costs of federal 

mandates. They noted that while much attention has been focused on the 

actual costs of mandates, it is important to consider the broader 
Page 22 GAO-05-454 Unfunded Mandates

implications of federal mandates on affected nonfederal entities beyond 

direct costs, including a wide range of issues such as opportunity costs, 

forgone revenues, shifting priorities, and fiscal trade-offs. Finally, a few 

parties were concerned about whether some agencies have compromised 

the effectiveness of certain regulations by designing them to ensure that 

their costs do not meet or exceed UMRA’s cost threshold.

Parties across the sectors suggested that various forms of retrospective 

analysis are needed for evaluating federal mandates after they are 

implemented. First, parties in all sectors except the federal sector 

suggested retrospective analyses on the costs and effectiveness of 

mandates, including comparing them to the estimates and expected 

outcomes. Second, parties in the state and local sector suggested 

conducting retrospective studies 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. Third, parties in the academic/think tank 

sector suggested examining local and regional impacts of mandates. 

According to one party, mandate costs could have a significant effect on a 

particular state or region without exceeding UMRA’s overall cost threshold. 

Finally, parties in the academic/think tank sector suggested analyzing the 

benefits of federal mandates, when appropriate, not just costs.

Observations As Congress begins to reevaluate UMRA on its 10-year anniversary, some of 

the issues raised by the various sectors we contacted may provide a 

constructive starting point. While the sectors provided a wide variety of 

comments, their views were often mixed across and within certain sectors. 

Given the wide-ranging view of opinions, it will be challenging to find 

workable solutions that will be broadly supported across sectors that often 

have differing interests and perspectives.

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. We 

also found it notable that no one suggested repealing UMRA. One challenge 

for Congress and other federal policy makers is to determine which issues 

and concerns about federal mandates can be best addressed in the context 

of UMRA and which ones are best considered as part of more expansive 

policy debates.
Page 23 GAO-05-454 Unfunded Mandates

When considering changes to UMRA itself, one issue stood out, UMRA’s 

narrow coverage. This was clearly an issue for certain parties within all 

sectors based on the comments. The various definitions, exceptions, and 

exclusions were a source of frustration for many who responded to our 

review, especially those most affected by federal mandates. Although the 

parties in most sectors generally agreed that UMRA’s coverage should be 

expanded given its narrow focus, parties in the public interest advocacy 

sector disagree. Even among those that believe that UMRA’s coverage is too 

narrow, identifying suggested options that had broad-based support was 

challenging. Most parties simply suggested revisiting, amending, or 

modifying UMRA to expand coverage. Others provided more specific 

suggestions, including expanding UMRA to cover conditions of financial 

assistance, such as grants, and all preemptions of state and local authority. 

However, certain proposed changes were strongly opposed by certain 

parties in the public interest advocacy and academic sectors, such as 

dropping the exclusions for civil rights-related provisions. Likewise, parties 

from the business and state and local governments sectors opposed any 

further narrowing of UMRA.

On broader policy issues concerning federal mandates, most parties 

supported the need for more evaluation and research on federal mandates. 

More retrospective analysis to ensure that mandates are achieving their 

desired goals could enable policymakers to better gauge the mandates’ 

benefits and costs, determine whether the mandates are providing the 

desired and expected results at an acceptable cost and assess any 

unanticipated effects from the implementation of mandate programs. Such 

analysis could be done not only for individual mandates but also for the 

cumulative, aggregate costs and other impacts that major mandates may be 

having for the budgetary priorities of regulated entities, such as state or 

local governments. Such information could help provide additional 

accountability for federal mandates and provide information which could 

lead to better decisions regarding the design and funding of mandate 

programs. Some suggested that the design of mandates could incorporate 

“look back” or sunset provisions that would require retrospective analyses 

of mandate results periodically.
Page 24 GAO-05-454 Unfunded Mandates

As we move forward, the unfunded mandates issue raises broader 

questions about the assignment of fiscal responsibilities within our federal 

system. The federal government, as well as states, faces serious fiscal 

challenges both in the short and longer term. In February 2005, we issued 

our report on 21st century challenges. Given the long-term fiscal challenges 

facing the federal budget as well as numerous other geopolitical changes 

challenging the continued relevance of existing programs and priorities, we 

called for a national debate to review what the government does, how it 

does business and how it finances its priorities.25 Such a reexamination 

should usefully consider how responsibilities should be allocated and 

shared across the many nonfederal entities in our system as well.

As we rethink the federal role, many in the state and local or business 

sector would view unfunded mandates as among the areas warranting 

serious reconsideration. Unfunded mandates potentially can weaken 

accountability and remove constraints on decisions by separating the 

enactment of benefit programs from the responsibility for paying for these 

programs. Similar objections, however, could also be raised over 100 

percent federal financing of intergovernmental programs, since this could 

vitiate the kind of fiscal incentives necessary to ensure proper stewardship 

at the state and local level for shared programs.

Reconsideration of responsibilities begins with the observation that most 

major domestic programs, costs and administrative responsibilities are 

shared and widely distributed throughout our system. The fiscal burdens of 

public policies in areas ranging from primary education to homeland 

security are the joint responsibility of all levels of government and, in some 

cases, the private sector as well. As we reexamine the federal role in our 

system, there is a need to sort out how responsibilities for these kinds of 

programs should be financed in the future. Sorting out fiscal 

responsibilities involves a variety of considerations. Issues to be 

considered include the fiscal capacity of various levels of government to 

finance services from their own resources both now and over the long term 

as well as the extent to which the benefits of particular programs or 

services are broadly distributed throughout the nation. Moreover, 

consideration should also be given to the fiscal capacity of various levels of 

government and other entities to finance their share of responsibilities in 

our system, both now and over the longer term.

25 GAO-05-325SP.
Page 25 GAO-05-454 Unfunded Mandates

The following kinds of questions can be raised as part of this reexamination 

of fiscal responsibilities

• What governmental activities should fall entirely within the purview of 

the federal or state/local governments and what activities should be 

shared responsibilities?

• If the federal government “mandates” activities to be undertaken by 

state/local governments, under what circumstances is it appropriate for 

the federal government to finance them and what share of the costs 

should be borne by federal and nonfederal sources?

• Are the potential revenue sources available to the various level of 

government adequate to finance their responsibilities?

Because issues involving UMRA and unfunded mandates are part of a 

broader public policy debate to be had by Congress, we are making no 

recommendations in this report.

As agreed with your office, unless you publicly announce the contents of 

this report earlier, we will not distribute it until 30 days from the date of 

this letter. We will then send copies of this report to the Ranking Member, 

Subcommittee on Oversight of Government Management, the Federal 

Workforce, and the District of Columbia, Committee on Homeland Security 

and Governmental Affairs, U.S. Senate; the Chair and Ranking Member of 

the Government Reform Committee, House of Representatives; the 

Directors of OMB and CBO and others on request. It will also be available 

at no charge on GAO’s Web site at http://www.gao.gov.
Page 26 GAO-05-454 Unfunded Mandates

If you or your staff have any questions concerning this report, please 

contact me or Tim Bober at (202) 512-6806 or williamso@gao.gov or 

bobert@gao.gov. Key contributors to this report were Tom Beall, Kate 

Gonzalez, Boris Kachura, Paul Posner, and Michael Rose.

Sincerely yours,

Orice M. Williams

Director

Strategic Issues
Page 27 GAO-05-454 Unfunded Mandates

Appendix I

Objectives, Scope, and Methodology ApApenednxidexiIs

For this report, you asked us to provide more information and analysis 

regarding the Unfunded Mandates Reform Act of 1995 (UMRA) and federal 

mandates in general. Specifically, you asked us to consult with a diverse 

group of knowledgeable parties familiar with the act and to report their 

views on (1) the significant strengths and weaknesses of UMRA as the 

framework for addressing federal mandates issues, including why the 

parties believed the issues they identified were significant, and 

(2) potential options suggested for reinforcing the strengths or addressing 

the weaknesses. For both of those central objectives, you also asked that 

we report, to the extent possible, on level of agreement among the various 

individuals and organizations, which we refer to as “parties” throughout the 

report.

To address our objectives, we primarily used a structured data collection 

approach to obtain feedback from a diverse set of organizations and 

individuals knowledgeable about the implementation of UMRA and/or 

federal mandate programs. To identify prospective parties, we first built 

upon our recognition of knowledgeable parties based on our past work on 

unfunded mandates by conducting extensive literature reviews on federal 

mandates issues. Second, as we contacted the individuals, we asked each 

of them to recommend other knowledgeable parties for us to contact. In 

total, 52 individuals and organizations participated in the review. 

(See app. II for the list of organizations and individuals who provided 

information responding to our research questions.)

The parties provided us their input through a variety of means, including 

group meetings, individual interviews, and written responses. We sought 

and obtained viewpoints from organizations and individuals across a broad 

spectrum of interested communities that we classified into five sectors for 

purposes of structuring our analyses. These sectors were: academic 

centers and think tanks; businesses; federal agencies (including executive 

and legislative branch agencies); public interest advocacy groups; and state 

and local governments. (For a comprehensive list of their comments and 

suggested options, see appendix IV, which is available as an electronic 

supplement to this report.)

We reviewed all the information provided by those various parties and 

organized it on the basis of the topics they addressed. To facilitate analysis 

and discussion of the considerable amount of information provided by the 

sources, we first itemized the input, to the extent possible, into a set of 

discrete separable points. In some instances, if a party’s comments were 

part of a more lengthy discussion addressing a larger issue, we kept the 
Appendix I

Objectives, Scope, and Methodology

Page 28 GAO-05-454 Unfunded Mandates

material together to avoid losing the context of the input. Next, we 

identified seven broad topical areas or themes, which we used to classify 

the specific comments, observations, issues, and options that were 

provided:

1. uses and usefulness of information UMRA generates,

2. UMRA coverage of federal actions,

3. UMRA enforcement,

4. UMRA’s analytic framework,

5. UMRA consultation requirements,

6. design and funding of federal mandates, and

7. evaluation and research needs regarding federal mandates.

These themes were further characterized as falling into one of two sets. 

The first five themes captured input specifically on UMRA and its 

provisions, and the remaining two themes captured input that was focused 

on issues about federal mandates in general.

We then analyzed and independently coded the resulting master table on 

the parties’ input using the themes listed above.1

 Any differences in the 

coding were discussed and a team consensus code determined. If the 

party’s input touched on more than one theme (for example, options might 

have been suggested regarding both enforcement of UMRA and how to 

improve estimates), we assigned multiple codes. Therefore, items with 

multiple codes are repeated under each relevant theme subsection in this 

document. This coding into themes was not intended to be precise or to 

limit suggested options to only certain topics. The coding was simply 

intended to help group together items that included input relevant to a 

given topic.

To ensure that our organization and characterization of the information 

that the parties provided accurately reflected their views, we provided each 

1

 Some of the parties’ feedback did not fit within any of the seven more distinct themes. 

We coded that information as “other”.
Appendix I

Objectives, Scope, and Methodology

Page 29 GAO-05-454 Unfunded Mandates

contributor an opportunity to review our summary of their input. They 

generally concurred with the accuracy of our characterization of their 

views and, in a few instances, supplemented or clarified their original 

comments by providing additional information, which we incorporated into 

our master list of parties’ responses. (Again, see app. IV, which is an 

electronic supplement for a complete list of the information provided by all 

of the contributing parties.)

We supplemented the information obtained through this broad data 

gathering effort with a half-day symposium held at GAO on January 26, 

2005, involving 26 experts from across all five sectors. (See app. III for a list 

of the symposium participants.) The overall objectives of the symposium 

were to provide an opportunity for the participants from different sectors 

and viewpoints to engage each other, to discuss in more depth the issues 

and options previously identified, to identify additional options for 

augmenting strengths or addressing weaknesses, and to elaborate on the 

relative priorities of the options suggested. To meet these objectives in the 

limited time available, the discussions at the symposium were structured to 

focus mainly on the three themes that appeared to attract the greatest 

number and/or variety of comments during our initial data collection, as 

well as to address themes from both the UMRA-specific and general 

mandate sets: UMRA coverage, UMRA enforcement, and the design and 

funding of federal mandate programs.2

 To encourage open and candid input 

from the various parties, we are not attributing any input from either our 

general data collection effort or the symposium to specific organizations or 

individuals.

While our initial data collection effort and the symposium collectively 

yielded information of considerable breath and depth on UMRA and 

UMRA-related issues and options, the information we gathered only 

represents the views of those organizations and individuals who chose to 

participate in this review. For this reason and related issues, this 

information provides only a rough gauge as to the prevalence of opinion 

about given issues or options or the extent to which there is agreement 

among and within particular sectors about those issues and options. 

Despite our efforts to solicit a comparable level of input from the different 

sectors, fewer identified parties from some sectors chose to participate in 

our review than others. When parties who chose not to participate 

2

 We also provided time for an “open forum” to give participants an opportunity to discuss 

any other UMRA or mandate-related issues and options they wished to raise.
Appendix I

Objectives, Scope, and Methodology

Page 30 GAO-05-454 Unfunded Mandates

recommended other contacts that they considered as knowledgeable about 

UMRA and mandates issues, we sought the participation of the 

recommended contacts, which allowed us to partially mitigate the extent of 

non-participation.

Also, given the variety of methods and sources used to collect the views, 

we structured our analyses of prevalence and agreement to avoid double 

counting the same response provided by different representatives of an 

organization at different points in time. We did this by categorizing the 

input on an identified issue or option that we received from a specific 

entity, whether it came from multiple sources or a single source, as the 

view of a party. To illustrate this categorization process, a reference to “one 

party” may represent the views of many representatives of a given 

organization obtained through a number of meetings or interviews, while 

another such “one party” reference may represent the views of one person 

through a single written response.3

 Similarly, in examining the comments 

classified each theme, if the same issue was identified as a strength by one 

party and a weakness by another party, we counted the comments as 

applying to the same issue. While these steps help address some of the 

difficulties in examining the prevalence of views and agreement between 

parties, it is a very imprecise assessment.

We conducted our review from August 2004 through February 2005 in 

Washington, D.C., in accordance with generally accepted government 

auditing standards.

3

 Unless noted otherwise, our reported “counts” in the body of this report refer to the 

number of parties who gave a particular response. However, we do report all responses by 

all representatives of an organization in appendix IV. 
Page 31 GAO-05-454 Unfunded Mandates

Appendix II

Parties Providing Input to GAO’s Review ApendxiI

Organizations Note: Multiple officials and/or staff members of these organizations may 

have contributed information for our review.

1. American Association of People with Disabilities (AAPD)

2. American Federation of State, County, and Municipal Employees 

(AFSCME)

3. American Public Power Association (APPA)

4. The Arc of the United States

5. Association of Metropolitan Sewerage Agencies (AMSA)

6. Center on Budget and Policy Priorities (CBPP)

7. Congressional Budget Office (CBO)

8. Congressional Research Service (CRS)

9. Council of State Governments (CSG)

10. Federal Funds Information for States (FFIS)

11. International City/County Management Association (ICMA)

12. Mercatus Center

13. National Association of Counties (NACO)

14. National Association of Protection and Advocacy Systems (NAPAS)

15. National Association of State Budget Officers (NASBO)

16. National Conference of State Legislatures (NCSL)

17. National Governors Association (NGA)

18. National League of Cities (NLC)
Appendix II

Parties Providing Input to GAO’s Review

Page 32 GAO-05-454 Unfunded Mandates

19. Natural Resources Defense Council (NRDC)

20. Office of Advocacy, Small Business Administration

21. Office of Management and Budget (OMB)

22. OMB Watch

23. Regulatory Brown Bag (regulatory staff from the Departments of 

Justice, Labor, Transportation, and Veterans Affairs, the Environmental 

Protection Agency, and the Federal Communications Commission)

24. U.S. Chamber of Commerce

25. U.S. Conference of Mayors (USCM)

Individuals 1. Bob Adler, University of Utah

2. Katherine Baiker, Dartmouth College

3. Bob Behn, Harvard University

4. Richard Belzer, Regulatory Checkbook

5. Neil Bergsman, State of Maryland (former Maryland Budget Director)

6. Howard Chernick, Hunter College, CUNY

7. Timothy Conlan, George Mason University

8. David Driesen, Syracuse University

9. Michael Greve, American Enterprise Institute

10. Thomas Hopkins, Rochester Institute of Technology

11. Elizabeth Keating, Harvard University

12. Cornelius Kerwin, American University
Appendix II

Parties Providing Input to GAO’s Review

Page 33 GAO-05-454 Unfunded Mandates

13. John Kincaid, Meyner Center for the Study of State and Local 

Government

14. Greg Lashutka, Nationwide

15. Bill Leighty, Virginia Governor’s Office

16. Mark Ragan, Nelson A. Rockefeller Institute of Government

17. Andrew Reschovsky, University of Wisconsin-Madison

18. Brian Riedl, The Heritage Foundation

19. Stephen Slivinski, Cato Institute

20. Claudio Ternieden, American Association of Airport Executives

21. Jim Tozzi, Center for Regulatory Effectiveness

22. Edward Zelinsky, Cardozo Law School
Page 34 GAO-05-454 Unfunded Mandates

Appendix III

Participants in GAO Federal Mandates 

Symposium, January 26, 2005 ApendxiI

1. Keith Bea, Congressional Research Service

2. Richard Belzer, Regulatory Checkbook

3. Neil Bergsman, State of Maryland

4. Richard Beth, Congressional Research Service

5. Jay Cochran, III, Mercatus Center

6. Timothy Conlan, George Mason University

7. Curtis Copeland, Congressional Research Service

8. David Driesen, Syracuse University

9. Patrice Gordon, Congressional Budget Office

10. Teri Gullo, Congressional Budget Office

11. Thomas Hopkins, Rochester Institute of Technology

12. Cornelius Kerwin, American University

13. Greg Lashutka, Nationwide

14. Iris Lav, Center on Budget and Policy Priorities

15. Bruce Lundegren, U.S. Chamber of Commerce

16. Paul Marchand, The Arc of the United States

17. Alysoun McLaughlin, National Association of Counties

18. Eric Olson, Natural Resources Defense Council

19. Scott Pattison, National Association of State Budget Officers

20. David Quam, National Governors Association

21. Mark Ragan, Nelson A. Rockefeller Institute of Government
Appendix III

Participants in GAO Federal Mandates 

Symposium, January 26, 2005

Page 35 GAO-05-454 Unfunded Mandates

22. Molly Ramsdell, National Conference of State Legislatures

23. Amy Scott, Council of State Governments

24. Robert Shull, OMB Watch

25. Claudio Ternieden, American Association of Airport Executives

26. Yvette Tetreault, Federal Funds Information for States
Page 36 GAO-05-454 Unfunded Mandates

Appendix IV

Parties’ Feedback on UMRA and Federal 

Mandates ApendxiIV

This e-supplement is available on our Web site at http://www.gao.gov/cgibin/getrpt?GAO-05-497SP.
Page 37 GAO-05-454 Unfunded Mandates

Appendix V

Summary of Parties’ Suggested Options ApendxiV

Once the strengths, weaknesses and options were identified and reviewed, 

GAO developed a thematic framework for classifying and organizing this 

information.

Below is a summary list of the options provided by participating parties 

organized by theme. The list of options presented under each theme is 

intended to be a complete accounting of the suggested options associated 

with that theme. The lists are not in any particular order and do not to 

reflect the relative frequency with which participating parties identified the 

same or similar option. Options appear on these lists if mentioned by even 

one participating party. See appendix I for further information about the 

procedures followed in the organization of this information and associated 

qualifications concerning its use. See appendix IV e-supplement for a 

detailed listing of options as suggested by participants as part of their 

response to perceived strengths and weaknesses.

1: Uses and Usefulness 

of Information UMRA 

Generates

• Provide for more centralized review of regulatory mandates.

• Analyze benefits, as well as costs, of mandates.

• Apply the Data Quality Act criteria to information generated under 

UMRA

• Congress should track “unfunded mandates,” defined broadly.

• Congress and OMB should develop more expertise on regulations and 

how to govern them.

• The most important point is to clarify in advance what consequences 

federal actions will have.

• Although additional program evaluation of federal mandates would 

help, this was not the initial intent of UMRA.

• Research into the scope and scale of unfunded mandates will not be 

informative unless and until the law has adequate incentives for 

compliance and accounting.

• It would be useful for the GAO to provide an annual report documenting 

the total budgetary shortfall of unfunded mandates.
Appendix V

Summary of Parties’ Suggested Options

Page 38 GAO-05-454 Unfunded Mandates

• Make the potentially affected nonfederal parties aware when there is a 

finding that proposed legislation contains a mandate.

• Enhance the work of CBO’s State and Local Government Cost Estimates 

Unit by providing the unit more timely access to bills and joint 

resolutions that may impose unfunded federal mandates.

2: UMRA Coverage of 

Federal Actions

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

exclusions under UMRA and “close loopholes.”

• Eliminate/amend exceptions for conditions of federal financial 

assistance and participation in voluntary programs.

• Expand UMRA to cover appropriations bills and other legislation 

currently not covered.

• Expand UMRA to cover changes in conditions of existing programs.

• Cover rules issues by independent agencies.

• Amend UMRA to include federal tax actions that reduce state revenues.

• Amend UMRA to include federal preemptions.

• Amend/eliminate the national security exclusions.

• Amend/eliminate the civil rights exclusions.

• Change cost thresholds and definitions for purposes of identifying 

mandates that trigger UMRA’s threshold.

• Expand the definition of an unfunded mandate to include all open-ended 

entitlements, such as Medicaid, child support, and Title 4E (foster care 

and adoption assistance) and proposals that would put a cap on or 

enforce a ceiling on the cost of federal participation in any entitlement 

or mandatory spending program.

• Expand the definition of mandates to include those that fail to exceed 

the statutory threshold only because they do not affect all states.
Appendix V

Summary of Parties’ Suggested Options

Page 39 GAO-05-454 Unfunded Mandates

• Broaden the definitions in UMRA to apply to federal processes that do 

not result in published rules but have the effect of a mandate. A wider 

definition of UMRA’s applicability is needed to address such processes.

• UMRA hasn’t been as successful in dealing with previous mandates as in 

discouraging new mandates, but I am not sure how UMRA could be 

changed to address that.

• UMRA should authorize CBO to identify and estimate the costs of 

potential mandates in final agency rules. This would be a purely 

informational function.

• UMRA should authorize CBO to identify and estimate the costs of 

potential mandates in U.S. Supreme Court rulings. The information 

provide by CBO analyses of judicial intergovernmental mandates would 

allow the Congress to provide compensatory funding to state and local 

governments and/or to amend statutes that produce unintended judicial 

mandates.

• Under title II, amend the limitation of UMRA not applying to rules 

without a notice of proposed rulemaking.

• The Joint Committee on Taxation, responsible for performing costs 

estimates of tax legislation, should provide additional information on 

the costs of mandates outside of UMRA’s strict definition, as CBO 

endeavors to do.

• Establish an institutional entity whose responsibilities include analysis 

of federal policies and actions that affect state and local governments.

• [Require] substantive reporting on legislative, government-sought 

judicial and regulatory preemptions regardless of cost thresholds.

• Don’t expand UMRA’s coverage; keep it narrow.

• Retain the current rights exclusions.

• Add new exclusions.

• Drop or differentiate coverage of private sector mandates.
Appendix V

Summary of Parties’ Suggested Options

Page 40 GAO-05-454 Unfunded Mandates

• Clarify definitions under UMRA and ensure consistency of 

implementation.

3. UMRA Enforcement • Maintain the current point of order mechanism.

• Strengthen the point of order mechanism.

• Reconsider the usefulness of the point of order mechanism.

• Require roll call votes for legislation imposing an unfunded federal 

mandate.

• Put some backbone into the UMRA requirements that committees 

provide. information, e.g., set up a hurdle for consideration of legislation 

if committees leave out required information.

• Open the CBO methodology for comment, perhaps through the Federal 

Register or by requiring an independent examination of the process 

used by CBO.

• There may be a need to “toughen up” UMRA. Making the “roar” of 

UMRA a little bigger might at least increase attention to these issues. 

However, it is not certain one could get Congress to pay more attention 

legislatively, nor can you legislate Congress from imposing mandates. In 

short, it is not certain that there are any procedural fixes that could 

address the problem of unfunded mandates.

• It is not certain that fixing or simplifying UMRA’s procedures would 

address the underlying purposes of the act.

• Generally strengthen enforcement of agency compliance with title II.

• Reassign oversight responsibilities for agencies’ compliance with title II.

• Apply the Federal Data Quality Act to agencies’ UMRA analyses.

• Create more accountable means of estimating mandate costs.

• Improve title II, including enhanced requirements for federal agencies to 

consult with state and local governments and the creation of an office 

within the Office of Management and Budget that is analogous to the 
Appendix V

Summary of Parties’ Suggested Options

Page 41 GAO-05-454 Unfunded Mandates

State and Local Government Cost Estimates Unit at the Congressional 

Budget Office.

• Revisit the provisions of title II.

• The Office of Information and Regulatory Affairs should return a rule 

that is not in compliance with UMRA to the agency from which it came. 

If an agency is unsure whether a rule contains a significant mandate, it 

should err on the side of caution and prepare a mandates impact 

statement prior to issuing the regulation.

• Expand judicial review provisions

4. UMRA Analytical 

Framework

• Implement some form of third-party, independent review of the UMRA 

estimates, data, and processes.

• Revisit the exclusion of indirect costs from UMRA estimates.

• Expand the title II definition to include more than just expenditures for 

purposes of triggering the UMRA threshold.

• Consider new approaches to address uncertainties in the estimation of 

potential effects of mandates.

• Analyze the benefits, as well as the costs, of federal mandates in UMRA 

estimates.

• Examine/monitor the implementation of the UMRA estimation process 

and mandate determinations by different agencies.

• Amend UMRA so that Federal regulatory agencies would not be allowed 

to avoid congressional mandates by mischaracterizing the cost of a 

rulemaking.

• Congress should amend UMRA to lower the fiscal impact threshold for 

federal agency intergovernmental mandates from $100 million to 

$50 million.

• UMRA estimates should be done on a regional/local level basis also, not 

just at an aggregate national level.
Appendix V

Summary of Parties’ Suggested Options

Page 42 GAO-05-454 Unfunded Mandates

• Federal agencies should look into the cost-benefit ratio of their 

mandates.

• Other agencies should consider emulating CBO’s approach of more 

centralized reviews of statutes and direct contacts with state and local 

governments when preparing estimates.

• Enhance the work of CBO’s State and Local Government Cost Estimates 

Unit by providing more timely access to bills and joint resolutions that 

may impose unfunded federal mandates.

• Require UMRA-like estimates when major changes in grant conditions 

and/or formulas occur.

• Clarify what constitutes a mandate and whether a bill’s effect on the 

costs of existing mandates should be counted as a new mandate cost 

when the bill itself contains no new enforceable duty.

5. UMRA Consultation 

Requirements

• Replicate on the regulatory side approaches CBO uses for reviews of 

statutory mandates.

• Bring more uniformity and consistency to the consultation process.

• Do more to involve State and local governments early in the rulemaking 

process.

• Provide more training and education to agencies’ regulatory staffs and 

their contractors who prepare many of the rulemaking studies and 

materials, such as regulatory impact analyses.

• State and local governmental authority to reject mandates or litigate 

based on noncompliance with clear statutory criteria would 

dramatically improve states’ ability to ensure that federal agencies take 

seriously their duty to consult.

• More parties may need to be covered by the consultation provision (e.g., 

not just focused on state, local, and tribal governments).

• Intergovernmental communications should be documented and made 

part of the rulemaking proceeding while deliberation about the proposal 

is still going on. If not, the decision making process is opaque.
Appendix V

Summary of Parties’ Suggested Options

Page 43 GAO-05-454 Unfunded Mandates

• To avoid elevating the position of one particular voice in the debate, 

amend the consultation provisions of UMRA so the act does not require 

federal agencies to consult with state, local and tribal governments 

before a regulation is proposed.

6. Design and Funding 

of Federal Mandates

• Ensure sufficient federal funding for mandated services

• Provide state and local governments waivers, offsets, etc.

• Compliance with federal mandates should not be made contingent on 

full federal funding.

• Cap the costs of mandates on state and local governments.

• Provide more flexibility in the design of mandate programs.

• Design federal mandate programs with sunset provisions.

• Restrict the preemption of state laws.

• Something bigger than just amending UMRA is needed to address this 

policy issue. Question whether an entitlement approach and model for 

federal funding (as with the Medicaid program) makes sense as public 

policy for providing federal assistance. An eligibility-based system 

becomes an entitlement program under which costs are hard to control. 

In contrast, a block grant model lets states experiment with flexible 

approaches and cap some costs. However, it is questionable whether 

there would ever be a way to modify the federal model for these 

programs so they weren’t entitlements.

• This dilemma can’t be solved by just another federal statute or 

amendment to UMRA. Discipline is the only real solution to curbing the 

practice of Congress adding, and often changing, lots of conditions that 

come with federal programs and funding.

• Most states have created a budget that is dependent on the federal 

funding, and measures need to be taken to wean the state system off the 

federal revenue.

• The federal government should consider using a “zero-based budgeting” 

approach to funding for federal mandates. Such an approach would flip 
Appendix V

Summary of Parties’ Suggested Options

Page 44 GAO-05-454 Unfunded Mandates

the usual arrangement so that states would get no federal funds (e.g., 

federal highway funds) until they do what is required under federal 

statutes.

• There hasn’t been sufficient consideration of user fees. For example, if 

there is a permitting program that is delegated to the states, the 

applicants should bear the cost of the permitting process, not the states.

• Incongruous to require cost-benefit analysis for regulations but only 

require cost estimate for legislation. Address the incongruity of 

requiring cost-benefit analysis for regulations but only requiring cost 

estimates for legislation.

• Cost-effectiveness of UMRA has not been explored. Explore the costeffectiveness of UMRA.

7. Evaluation and 

Research Needs 

Regarding Federal 

Mandates

• Do retrospective analyses of the costs and/or effects of mandates.

• Do a study/provide data on the cumulative impact of federal mandates.

• Do studies/provide data on the local/regional impacts of mandates.

• Analyze benefits, as well as costs, of federal mandates.

• Federal agencies should look into the cost-benefit ratio of their 

mandates.

• It might help to provide more training and education to agencies’ 

regulatory staffs and their contractors who prepare many of the 

rulemaking studies and materials, such as regulatory impact analyses.

• A first step in getting states to do what laws mandate is simply to report, 

in a straightforward way, what states are or are not doing (e.g., have a 

“national scorecard” or central point of contact where one could go to 

get such information).

• GAO’s report on UMRA should try to bring a little more clarity to the 

mandates issue. It would be valuable to discuss conceptually what an 

unfunded mandate is and identify the associated federalism issues.
Appendix V

Summary of Parties’ Suggested Options

Page 45 GAO-05-454 Unfunded Mandates

• Do research on whether the statute [UMRA] has changed agencies’ 

regulations.

• Help Congress and the general public to recognize that these numbers 

[the UMRA estimates] are soft.

• We question whether the federal agencies that are imposing the 

mandates should also evaluate the mandates. We advocate third-party 

review of the benefits of agency mandates, and their cost estimates or 

some similar mechanism to have someone look at the agencies’ 

mandates, estimates and data./
Page 46 GAO-05-454 Unfunded Mandates

Appendix VI

Results of Federal Mandates Symposium 

Balloting Process ApendxiVI

GAO conducted two information collection efforts to arrive at our findings 

regarding UMRA and federal mandates’ strengths, weaknesses and options. 

The first was an effort focusing on 52 organizations and individuals that are 

knowledgeable about UMRA and federal mandates. We solicited 

information from these parties regarding the strengths, weaknesses and 

options. On the basis of our analysis of the information provided by these 

parties, we identified seven major themes.

The second information collection effort was a symposium held on January 

26, 2005. All the parties we contacted during our initial data collection 

phase were invited to attend. In addition, we sent each of them a discussion 

draft presenting all of the issues (strengths and weaknesses) and options 

suggested to address those issues. The symposium was divided into four 

sessions with three of the four sessions focused on the themes most 

frequently cited. Sessions 1 and 2 focused on UMRA-specific themes 

(coverage and enforcement, respectively), Session 3 dealt with broader 

federal mandates issues (design and funding), and Session 4 was an open 

session for other issues that participants wanted to raise.

Each session was opened with a brief overview provided by GAO and was 

followed by an open discussion among the participants. To obtain a general 

sense of which suggested options had the greatest or least amount of 

support among the symposium participants, we used a balloting process at 

the end of each session. We provided the participants a ballot that was to 

be completed at the end of each session. Each ballot listed the options 

suggested for that theme collected during our initial information collection 

effort. Second, the participants were asked to review the ballot and provide 

any additional options during the course of the discussion that they wanted 

to be added to the ballot and considered in the balloting process. At the 

conclusion of a session, we asked each participant to identify (a) the three 

options having their greatest support and (b) the three options they could 

not support.

The results of that balloting for the symposium sessions are presented 

below. As mentioned previously, all the suggested options on the ballot 

were provided by the parties we contacted during the initial data collection 

phase or added by participants during the symposium. In accord with the 

voting instructions, we present for each session the top three options 

getting the most votes. These results reflect the views of symposium 

participants only and are provided to convey a general sense of their 

preferences. Due to variation in vote tallies for each of these options, these 
Appendix VI

Results of Federal Mandates Symposium 

Balloting Process

Page 47 GAO-05-454 Unfunded Mandates

results should not be construed as showing options achieving a consensus 

among symposium participants.

Symposium Session 1: 

UMRA Coverage

Options that participants indicated had their greatest support:

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

exclusions under UMRA and “close loopholes.”

• Amend UMRA to include federal preemptions.

• Move to definition of whether it will cost state and local governments 

money to comply-so as to include federal tax changes that affect state 

revenue system, requirements that are a condition of federal fiscal 

assistance and similar issues.

Options that participants indicated they could not support:

• Don’t expand UMRA’s coverage; keep it narrow.

• Amend or eliminate the civil rights exclusions in UMRA.

• Add new exclusions for mandates regarding public health, safety, 

environmental protection, workers’ rights, and disability.

Symposium Session 2: 

UMRA Enforcement

Options that participants indicated had their greatest support:

• Create an office within the OMB that is analogous to the State and Local 

Government Cost Estimate Unit at CBO.

• Require program legislation to contain mandate cost authorizations; 

provide that a mandate (including mandate pursuant to regulations) not 

funded at the authorized level for a fiscal year is held in abeyance unless 

the funding or obligations are altered to remove the inconsistency.

• Add processes for accounting for cumulative effects of regulatory 

activities in similar fields, (e.g., environmental regulations) including a 

requirement to collect data on actual costs.
Appendix VI

Results of Federal Mandates Symposium 

Balloting Process

Page 48 GAO-05-454 Unfunded Mandates

Options that participants indicated they could not support:

• Maintain the current point of order mechanism (i.e., keep the status 

quo).

• Empower the states to either reject mandates on their own authority or 

litigate congressional and/or agency noncompliance with clear statutory 

criteria.

• Cap the magnitude of actual state and local outlays at a level equal to the 

Congress’s or an agency’s prior estimate of those burdens to eliminate 

incentives to underestimate the impacts and provide a level of discipline 

to determinations of whether proposals contain significant unfunded 

mandates.

Symposium Session 3: 

Design and Funding of 

Federal Mandate 

Programs

Options that participants indicated had their greatest support:

• Restrict the preemption of state laws.

• Consider the effects of the timing of federal actions and program 

changes on state governments. Recognize that states (and the 

populations served by federal-state programs) are very diverse.

• Create a mechanism, similar to section 610 of the Regulatory Flexibility 

Act, where agencies would evaluate the effectiveness of a mandate after 

a certain period of time (e.g., 5 or 10 years).

Options that participants indicated they could not support:

• As an option for addressing the funding of mandates, consider waivers 

or swaps. Amend UMRA so that, if a mandate is legislated, then state 

and local governments gain certain waiver rights or a regulatory “off 

ramp” when faced with costly mandates.

• Remind states that participation in some of the federal mandate 

programs is voluntary and, therefore, states can opt out of the programs 

if participation is considered too costly.
Appendix VI

Results of Federal Mandates Symposium 

Balloting Process

Page 49 GAO-05-454 Unfunded Mandates

• The federal government should consider using a “zero-based budgeting” 

approach to funding for federal mandates. Such an approach would flip 

the usual arrangement so that states would get no federal funds (e.g., 

federal highway funds) until they do what is required under 

federal statutes.

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