U.S. GOVERNMENT PRINTING OFFICE

62–841 CC WASHINGTON : 2000

H.R. 2376, GRANT WAIVERS AND STREAMLINING

THE PROCESS

JOINT HEARING

BEFORE THE

SUBCOMMITTEE ON NATIONAL ECONOMIC GROWTH,

NATURAL RESOURCES, AND REGULATORY AFFAIRS

AND THE

SUBCOMMITTEE ON GOVERNMENT MANAGEMENT,

INFORMATION, AND TECHNOLOGY

OF THE

COMMITTEE ON GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED SIXTH CONGRESS

FIRST SESSION

ON

H.R. 2376

TO REQUIRE EXECUTIVE AGENCIES TO ESTABLISH EXPEDITED REVIEW

PROCEDURES FOR GRANTING A WAIVER TO A STATE UNDER A

GRANT PROGRAM ADMINISTERED BY THE AGENCY IF ANOTHER

STATE HAS ALREADY BEEN GRANTED A SIMILAR WAIVER BY THE

AGENCY UNDER SUCH PROGRAM

SEPTEMBER 30, 1999

Serial No. 106–88

Printed for the use of the Committee on Government Reform

(

Available via the World Wide Web: http://www.house.gov/reform

(II)

COMMITTEE ON GOVERNMENT REFORM

DAN BURTON, Indiana, Chairman

BENJAMIN A. GILMAN, New York

CONSTANCE A. MORELLA, Maryland

CHRISTOPHER SHAYS, Connecticut

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

STEPHEN HORN, California

JOHN L. MICA, Florida

THOMAS M. DAVIS, Virginia

DAVID M. MCINTOSH, Indiana

MARK E. SOUDER, Indiana

JOE SCARBOROUGH, Florida

STEVEN C. LATOURETTE, Ohio

MARSHALL ‘‘MARK’’ SANFORD, South

Carolina

BOB BARR, Georgia

DAN MILLER, Florida

ASA HUTCHINSON, Arkansas

LEE TERRY, Nebraska

JUDY BIGGERT, Illinois

GREG WALDEN, Oregon

DOUG OSE, California

PAUL RYAN, Wisconsin

HELEN CHENOWETH, Idaho

DAVID VITTER, Louisiana

HENRY A. WAXMAN, California

TOM LANTOS, California

ROBERT E. WISE, JR., West Virginia

MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

PATSY T. MINK, Hawaii

CAROLYN B. MALONEY, New York

ELEANOR HOLMES NORTON, Washington,

DC

CHAKA FATTAH, Pennsylvania

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

ROD R. BLAGOJEVICH, Illinois

DANNY K. DAVIS, Illinois

JOHN F. TIERNEY, Massachusetts

JIM TURNER, Texas

THOMAS H. ALLEN, Maine

HAROLD E. FORD, JR., Tennessee

JANICE D. SCHAKOWSKY, Illinois

———

BERNARD SANDERS, Vermont

(Independent)

KEVIN BINGER, Staff Director

DANIEL R. MOLL, Deputy Staff Director

DAVID A. KASS, Deputy Counsel and Parliamentarian

CARLA J. MARTIN, Chief Clerk

PHIL SCHILIRO, Minority Staff Director

SUBCOMMITTEE ON NATIONAL ECONOMIC GROWTH, NATURAL RESOURCES, AND

REGULATORY AFFAIRS

DAVID M. MCINTOSH, Indiana, Chairman

PAUL RYAN, Wisconsin

BOB BARR, Georgia

LEE TERRY, Nebraska

GREG WALDEN, Oregon

HELEN CHENOWETH, Idaho

DAVID VITTER, Louisiana

DENNIS J. KUCINICH, Ohio

TOM LANTOS, California

PAUL E. KANJORSKI, Pennsylvania

BERNARD SANDERS, Vermont

HAROLD E. FORD, JR., Tennessee

EX OFFICIO

DAN BURTON, Indiana HENRY A. WAXMAN, California

MARLO LEWIS, JR., Staff Director

BARBARA F. KAHLOW, Professional Staff Member

GABRIEL NEIL RUBIN, Clerk

ELIZABETH MUNDINGER, Minority Counsel

Page

III

SUBCOMMITTEE ON GOVERNMENT MANAGEMENT, INFORMATION, AND TECHNOLOGY

STEPHEN HORN, California, Chairman

JUDY BIGGERT, Illinois

THOMAS M. DAVIS, Virginia

GREG WALDEN, Oregon

DOUG OSE, California

PAUL RYAN, Wisconsin

JIM TURNER, Texas

PAUL E. KANJORSKI, Pennsylvania

MAJOR R. OWENS, New York

PATSY T. MINK, Hawaii

CAROLYN B. MALONEY, New York

EX OFFICIO

DAN BURTON, Indiana HENRY A. WAXMAN, California

J. RUSSELL GEORGE, Staff Director and Chief Counsel

RANDY KAPLAN, Counsel

CHIP AHLSWEDE, Clerk

TREY HENDERSON, Minority Counsel

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C O N T E N T S

Page

Hearing held on September 30, 1999 ..................................................................... 1

Text of H.R. 2376 ..................................................................................................... 5

Statement of:

Callahan, John J., Assistant Secretary and Chief Financial Officer, Department of Health and Human Services; Samuel Chambers, Jr., Administrator, Food and Nutrition Service, Department of Agriculture;

and Raymond L. Bramucci, Assistant Secretary, Employment and

Training Administration, Department of Labor ......................................... 68

Green, Hon. Mark, a Representative in Congress from the State of Wisconsin ............................................................................................................. 22

Scheppach, Raymond C., executive director, National Governors’ Association; and William T. Pound, executive director, National Conference

of State Legislatures ..................................................................................... 40

Letters, statements, et cetera, submitted for the record by:

Bramucci, Raymond L., Assistant Secretary, Employment and Training

Administration, Department of Labor, prepared statement of ................. 133

Callahan, John J., Assistant Secretary and Chief Financial Officer, Department of Health and Human Services, prepared statement of ............ 71

Chambers, Samuel, Jr., Administrator, Food and Nutrition Service, Department of Agriculture, prepared statement of ........................................ 127

Green, Hon. Mark, a Representative in Congress from the State of Wisconsin, prepared statement of ...................................................................... 25

Horn, Hon. Stephen, a Representative in Congress from the State of

California, prepared statement of ................................................................ 3

Kucinich, Hon. Dennis J., a Representative in Congress from the State

of Ohio, prepared statement of .................................................................... 20

Pound, William T., executive director, National Conference of State Legislatures, prepared statement of ..................................................................... 55

Ryan, Hon. Paul, a Representative in Congress from the State of Wisconsin:

Prepared statement of ............................................................................... 11

Prepared statement of Governor Tommy Thompson .............................. 35

Scheppach, Raymond C., executive director, National Governors’ Association, prepared statement of .......................................................................... 43

Turner, Hon. Jim, a Representative in Congress from the State of Texas,

prepared statement of ................................................................................... 17

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H.R. 2376, GRANT WAIVERS AND

STREAMLINING THE PROCESS

THURSDAY, SEPTEMBER 30, 1999

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON NATIONAL ECONOMIC GROWTH, NATURAL RESOURCES, AND

REGULATORY AFFAIRS, JOINT WITH THE SUBCOMMITTEE

ON GOVERNMENT MANAGEMENT, INFORMATION, AND

TECHNOLOGY, COMMITTEE ON GOVERNMENT REFORM,

Washington, DC.

The subcommittees met, pursuant to notice, at 2:04 p.m., in room

2247, Rayburn House Office Building, Hon. Stephen Horn (chairman of the Subcommittee on Government Management, Information, and Technology) presiding.

Present from the Subcommittee on National Economic Growth,

Natural Resources, and Regulatory Affairs: Representatives Ryan,

Terry, Vitter, and Kucinich.

Present from the Subcommittee on Government Management, Information, and Technology: Representatives Horn, Biggert, Ose,

Ryan, Turner, and Owens.

Staff present from the Subcommittee on National Economic

Growth, Natural Resources, and Regulatory Affairs: Marlo Lewis,

Jr., staff director; Barbara F. Kahlow, professional staff member;

Gabriel Neil Rubin, clerk; and Elizabeth Mundinger, minority

counsel.

Staff present from the Subcommittee on Government Management, Information, and Technology: J. Russell George, staff director and chief counsel; Randy Kaplan, counsel; Bonnie Heald, director of communications; Chip Ahlswede, clerk; P.J. Caceres and

Deborah Oppenheim, interns; Trey Henderson, minority counsel;

and Jean Gosa, minority staff assistant.

Mr. HORN. A quorum being present, the subcommittees will come

to order.

The purpose of today’s hearing is to examine the process Federal

departments and agencies follow when considering State requests

to waive statutory or regulatory requirements associated with Federal grants.

Billions of dollars each year flow to State and local governments

through Federal grants. Currently, Federal departments and agencies award these grants through nearly 600 categorical block grant

and open entitlement programs. In 1998, Federal grants amounted

to more than $267 billion. Thinking back to 1965, that is what Lyndon Johnson spent to run the Great Society and the Vietnam war.

Although 23 agencies award Federal grants, the U.S. Department

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of Health and Human Services handles nearly 60 percent of all

Federal grant money.

Several grant programs, including Medicaid and Temporary Assistance for Needy Families, allow States to circumvent certain

statutory or regulatory requirements of the programs through

waivers. In large part, States apply for these waivers to give them

greater flexibility to find alternative ways to achieve more effective

program results.

Federal agencies generally approve these State requests. However, the cost, complexity, and delays experienced during the application process often impede a State’s ability to implement a program designed specifically for the needs of its residents.

For example, in 1994, officials in my home State of California

wanted to lower the State’s welfare benefits to new residents. At

that time, California’s welfare payments were more generous than

those offered by many other States. However, this change in California’s welfare reform project required a Federal waiver.

California applied for the waiver on August 26, 1994. It was approved, but not until August 19, 1996, a full year and 9 months

later, almost 2 years.

We have with us today a number of knowledgeable witnesses

who will assist us in identifying the problems within the grant

waiver process, and who will offer proposals to make the process

more efficient.

First, we will hear from Representative Mark Green of Wisconsin, who has introduced H.R. 2376, a bill designed to streamline

the application process and increase the availability of waivers to

State governments. It is a freshman bill. The bill specifically would

require Federal departments and agencies to establish expedited

review procedures for granting a State waiver if the same agency

had previously granted a similar waiver to another State.

In addition, we will hear from representatives of the National

Governors’ Association and the National Conference of State Legislatures. They will provide a State perspective of the grant waiver

process.

Finally, we will hear from representatives of three of the largest

grant-awarding departments, the Departments of Health and

Human Services, Agriculture, and Labor. These witnesses will provide the Federal perspective of the grant waiver process as it applies to their agencies.

I welcome all of you witnesses today and look forward to the testimony. I now yield to the co-chair of today’s hearing, the National

Economic Growth, Natural Resources, and Regulatory Affairs Subcommittee vice chairman, Paul Ryan, for an opening statement.

[The prepared statement of Hon. Stephen Horn and the text of

H.R. 2376 follow:]

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Mr. RYAN. Thank you, Mr. Co-Chairman. I appreciate it. I thank

everyone for coming.

Today we are here to discuss an issue that may seem largely procedural. However, it has implications for many, many States.

States are often the ones which take the initiative for major reform

efforts. They often end up being the experimental laboratories of

democracy, as Justice Brandeis once referred to them. For the rest

of the country, the States are out there putting together programs

and reforms that are leading the country.

These reform efforts, performed on a small scale, often lead to a

nationwide overhaul of outdated systems. In recent years, we have

seen examples of this in the area of welfare and health care systems. Currently, some States are exploring options for bringing the

disabled into the work force and providing long-term care coverage,

just to name a few, and that is something we are working on in

my own home State of Wisconsin, as well.

It is important for the Federal Government not only to encourage

these social experiments but also to provide an environment that

will foster these types of initiatives. State and local governments

often understand the needs of their constituents and the problems

they face better than the Federal Government does. They are more

familiar with the unique problems that must be addressed in implementing any new system.

The focus of today’s hearing will be on ways in which we in the

Federal Government can create an environment that will encourage State and local governments to explore alternative solutions to

social problems. Today we will examine agency processes for the review of State requests for waivers of statutory and/or regulatory requirements of Federal grant programs, agency track records in

processing such State requests, and ways to streamline the agency

processes for the States.

This hearing will allow the sponsor of H.R. 2376, a bill intended

to streamline the processing of similar State requests, the two

major organizations representing State elected officials, and three

major Federal grantmaking agencies, to discuss State experiences

and suggestions for streamlining the grant waiver process for the

States.

I want to welcome my freshman colleague, Mark Green, the author of H.R. 2376, who also, as you may not know, represents

Green Bay who just won over the Minnesota Vikings last week, so

I just wanted to get that inserted in the record if I could.

I would also like to welcome the National Governor’s Association

executive director, Raymond Scheppach—please forgive me if I

didn’t pronounce that correctly—and the National Conference of

State Legislatures executive director, William T. Pound, who will

ably represent the States’ views today.

I also want to mention that the USDA’s Under Secretary for

Food, Nutrition and Consumer Services, Shirley Robinson Watkins,

has an illness, so we have somebody filling in for Shirley.

I would also like to welcome the Assistant Secretary and Chief

Financial Officer for HHS, John J. Callahan, and the Labor Assistant Secretary for Employment and Training Administration, Raymond Bramucci, who will represent their agencies and present the

Federal agencies’ views today.

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Currently, the Federal department and agency processes for reviewing State waiver requests are time-consuming and costly, diverting time and dollars from program delivery of services to those

in need. President Reagan’s federalism policies recognized the partnership between the Federal Government and State and local governments in the implementation of certain Federal programs. His

federalism policies were premised on recognition of the competence

of State and local governments and their readiness to assume more

responsibility. I believe that we should focus on these federalism

principles, keeping them in mind during today’s hearing.

H.R. 2376, ‘‘to require executive agencies to establish expedited

review procedures for granting a waiver to a State under a grant

program administered by the agency if another State has already

been granted a similar waiver by the agency under such program,’’ will be considered today. This bill provides expedited consideration

if a second State applies for a waiver similar to that already approved for another State. Mr. Green will discuss the specific problem which resulted in the bill’s introduction.

Currently, Federal agencies make awards to State and local governments under almost 600 categorical block grant and open-ended

entitlement grant programs. In 1998 these awards totaled $267.3

billion, which is more than all Federal procurement for goods and

services.

Although 23 Federal departments and agencies make grant

awards, six departments account for 96 percent of all grant award

dollars. HHS carries the brunt of the burden with 58 percent;

Transportation, 11 percent; HUD, 9 percent; Education, 8 percent;

Agriculture, 7 percent; and Labor, 3 percent. The top 20 programs

account for 78 percent of all grant award dollars. The top 27 programs, all programs over $1 billion each, account for 87 percent.

Several of these programs allow waivers of key statutory and/or

regulatory requirements, including Medicaid, which is the largest

grant program, accounting for 39 percent of total dollars; welfare,

which is the third largest grant program. And Food Stamps, which

is the 21st largest Federal grant program; however, the grant

award only covers the administrative expenses for State administration of the program. If both the administrative expenses and

benefit portions are included, the grant program would rate between the second and third largest grant program in size.

Besides considering H.R. 2376, the hearing will also consider

other ideas for improving agency grant waiver processes, such as

setting deadlines for agency review of State waiver requests; providing broad flexibility to waive many statutory requirements for

States; allowing State certification of compliance with certain statutory requirements; and, for accountability, requiring quarterly

publication of all waiver activity. Finally, this hearing will also consider ways to ensure budget neutrality for the open-ended entitlement programs.

On August 3rd of this year, this subcommittee wrote all of the

departments and agencies with Federal grantmaking programs

where States are eligible recipients, to identify their statutory and

regulatory waiver processes and to review their track record in responding to State waiver requests, including those that are similar

to another State’s already approved request.

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The Department of Defense did not provide any of the requested

information. The Department of Transportation, which is the second largest grantmaking agency, only provided some of the requested information. One of the questions that we want to find out

from this committee is what, if anything, are these departments

hiding, and why aren’t they giving us all of the full information

that we have been asking for?

Sixteen of the 24 departments and agencies had any statutory

waiver provisions. Twelve of the 24 had any regulatory waiver provisions. Over the last 3 years, 12 of the 17 agencies with any statutory or regulatory waiver provisions received waiver applications

from the States. Five of the 12 agencies—the Departments of Energy, Justice, Treasury, the Appalachian Regional Commission, and

the Corporation for National Service—approved all such requests.

This leaves us with seven agencies—the Departments of Agriculture, Education, HHS, HUD, Labor, Transportation, and the Environmental Protection Agency—that denied some waiver requests.

Of the 1,801 waiver applications Government-wide which were reported to the subcommittee, only 5 similar applications, or less

than one-third of 1 percent, were denied.

We would like to hear from the witnesses the considerations that

arose in reviewing waiver applications, including ensuring budget

neutrality in the open-ended entitlement programs such as the

HHS, Medicaid, and the Food Stamp Program from Agriculture.

The bottom line is that 85 percent of all State waiver requests

during this period were approved. Two agencies, the Departments

of Labor and Agriculture, both of which will be testifying today,

had the highest proportion of denials, 29 percent and 13 percent,

respectively. We would like to hear from them why their track

record differs from other agencies. We would also like to hear from

Labor and Agriculture why Republican Governors received a higher

proportion of denials, 31 percent and 16 percent, respectively, than

Democratic Governors, 23 and 8 percent, respectively, a coincidence

which sounds very interesting.

Statutory waiver provisions are very diverse. For example, some

allow waivers relating to program financing, such as both the

grantee matching funds and maintenance of effort requirements for

State pollution control agencies implementing the Clean Air Act;

the maintenance of effort requirement under certain Education programs; and the grantee matching funds requirements under the

Corporation for National Services’ Learn and Serve and AmeriCorp

programs.

Besides program financing, some statutory provisions allow waiver of programmatic provisions. For example, the Social Security Act

authorizes the Secretary of HHS to waive compliance with certain

program requirements for an experimental, pilot, or demonstration

program under Medicaid and the former Aid to Families with Dependent Children welfare program.

I welcome an open discussion today about the ways to streamline

agency processes for waiver requests by the States, since States, as

partners of the Federal Government in implementing many of the

Federal programs, deserve a simpler process.

The States and local governments are our laboratories of democracy. It is up to us to try and make sure that they are flourishing,

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and that our waiver program is one that doesn’t hold them back

but lets them go into experimenting with programs that work for

their people, so that government which governs closest to the people can govern the best.

With that, I yield back the balance of my time.

[The prepared statement of Hon. Paul Ryan follows:]

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Mr. HORN. Thank you very much. We now call on the gentleman

from Texas, Mr. Jim Turner, the ranking member on the Government Management, Information, and Technology Subcommittee.

Mr. Turner.

Mr. TURNER. Thank you, Mr. Chairman. This is a very important

hearing. Having served in the Texas House and the Texas Senate

for 10 years, as well as chief of staff to a former Texas Governor,

I know how frustrated State officials can be with the Federal agencies once they have applied for waivers. This bill is designed to try

to encourage an expedited procedure in cases where a State has

been previously granted a waiver for a program.

As we look at this issue, it is important to keep in mind that

while the concept of an expedited waiver is good, it should not

mean an automatic waiver. There are differing circumstances for

each application that always must be considered. So I look forward

to hearing the testimony of our witnesses and the concerns that

they may have regarding this bill. I think all of us can concur at

the outset of this hearing, that anything we can do to improve the

efficiency of our Federal agencies in dealing with our State governments would be a step in the right direction.

So, thank you, Mr. Chairman, and I look forward to our testimony.

[The prepared statement of Hon. Jim Turner follows:]

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Mr. HORN. I thank the gentleman, and now ask the gentleman

from Nebraska, Mr. Lee Terry, if he would like to make an opening

statement.

Mr. TERRY. I have no opening statement.

Mr. HORN. And the gentlewoman from Illinois, Mrs. Biggert, the

vice chairman for the Government Management, Information, and

Technology Subcommittee, if you would like to make an opening

statement.

Mrs. BIGGERT. Thank you very much, Mr. Chairman. Today’s

hearing is a particularly important one. We are focusing on efforts

to streamline and improve the Federal Government’s processes for

granting State waiver requests.

Having served several terms in the Illinois State Legislature, I

can certainly understand the negative consequences constraints

can have on State efforts to serve the unintended populations. It

has been said many times before, but each State is unique demographically. What practices might work on one State, might not

necessarily work in another.

As such, I believe the Federal Government should make every effort to accommodate waiver requests made by the States in order

to help those in need. It is for this reason that I am a co-sponsor

of Representative Mark Green’s legislation to require executive

agencies to establish expedited review procedures for granting

State waivers in cases where another State has granted a similar

waiver. I think this is what we did in the State of Illinois when

school districts came forward with waivers, that then other school

districts came in and received the same waivers, so I am glad to

see that this bill is being talked about here today.

So I commend you for holding the hearings and look forward to

hearing from the witnesses.

Mr. HORN. Thank you very much. I see the gentleman from Ohio

has just come in.

Mr. KUCINICH. Hello, everybody.

Mr. HORN. Would you like to make an opening statement?

Mr. KUCINICH. I sure would.

Mr. HORN. Well, you have excellent timing.

Mr. KUCINICH. It is part of being here, I guess.

Mr. Chairman, I am always appreciative for a chance to join you,

having had the honor of serving with you on the Government Management, Information, and Technology Subcommittee, and I also

pay my regards to the rest of the members on this committee. I

want to thank you for holding this hearing on H.R. 2376 and the

waiver process.

Agencies have the discretion to waive statutory and regulatory

program requirements applicable to the States in a variety of circumstances. With these waivers, States are able to tailor the program to meet the unique needs of their individual populations.

Waivers also serve as testing grounds for innovative solutions

which could be adopted nationwide. Therefore, I welcome the opportunity to learn how we can streamline the process by which

agencies review waiver applications.

However, it is important to remember that waivers can exempt

States from the eligibility requirements, terms, conditions and

guidelines for important programs such as Medicaid, welfare, Food

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Stamps, and employment training. Waivers could jeopardize whether or not intended beneficiaries ultimately receive the help and protections our laws are intended to guarantee. Therefore, the decision

to grant a waiver should not be taken lightly.

For instance, I believe that we need to ensure that potential opponents of the waiver have notice and opportunity to comment on

the waiver before it is considered. I also believe agencies should

evaluate the benefits and drawbacks of any similar waivers that

were granted in the past.

Furthermore, the granting of waivers should not become an automatic exercise. Each State is unique and each waiver application

needs to be considered on its own merits. If a particular requirement merits a waiver on every occasion, the requirement itself, not

the waiver process, should be reevaluated.

In conclusion, we should investigate ways to streamline the process without jeopardizing a thorough review of each application.

I look forward to hearing the testimony, and I again thank the

Chair for his leadership.

[The prepared statement of Hon. Dennis J. Kucinich follows:]

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Mr. HORN. Thank you very much, and we now go to panel one,

which is the Honorable Mark Green of Wisconsin, and we are delighted to have you here, Mark.

STATEMENT OF HON. MARK GREEN, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF WISCONSIN

Mr. GREEN. Thank you, Mr. Chairman, members of the subcommittees. I want to thank you. I am very grateful that you are

holding this hearing here today. I am grateful for the opportunity

to testify on the Federal waiver process in general, and specifically

our proposal, H.R. 2376.

According to information supplied to this committee, from 1997

through August 1999, my home State of Wisconsin applied for some

70 waivers from Federal agencies. Now, as has been alluded to previously, these waivers were not because Wisconsin couldn’t or

wouldn’t meet Federal policy objectives, but like so many other

States, Wisconsin has wanted to try new innovative approaches to

meeting long-standing policy challenges.

Each of these waiver requests required extensive paperwork and

man-hours to meet burdensome application requirements. Even

after the necessary forms were filled out, the response and processing time from the agencies added further burdens, burdens of

uncertainty and suspended policymaking. In some instances, it

took over 18 months to get approval of a waiver request.

Now, of course not all of Wisconsin’s waiver requests were approved, but the burdens and costs Wisconsin encountered, regardless of whether they were approved, were as great either way. Let

me give you an example of the burdens Wisconsin has faced in the

waiver process, and I know that other States can tell similar stories.

In 1997 Governor Tommy Thompson sought to implement a program known as BadgerCare. This innovative proposal, which

passed our State legislature on a very wide bipartisan vote, aims

to ensure access to health care for low-income children and families. According to Wisconsin’s projections, BadgerCare is expected

to cover an additional 46,200 uninsured low-income residents, including 23,900 children and 22,300 parents.

Even though the Wisconsin legislature endorsed BadgerCare in

1997, and even though both Republicans and Democrats from our

own congressional delegation repeatedly asked for swift consideration of the waiver request, it took HHS until 1999 to finally approve this request. The great shame in this was that during that

delay, those thousands of low-income families lost out on access to

health care, health care that they so desperately needed.

I would like to reemphasize at this point that there are really

two separate issues. One, of course, is whether or not a waiver

should be granted. In most cases I am one of those who would come

down on the side of allowing a State to experiment, to be creative,

to be entrepreneurial in their policymaking.

However, what I am more concerned with here today are the unnecessary costs, time, paperwork, manpower, which the waiver

process itself entails, often regardless of the eventual results. Those

costs are not reflected in the numbers the agencies have supplied.

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Their numbers deal with the eventual outcome, but they don’t truly

reflect the burden, the costs, that States have to bear.

Now, I have a poster here which I would like to show you, and

we will make handout copies of this and supply them to the committee afterwards. This was a poster put together called ‘‘The

Waiver Game,’’ which is designed in a somewhat humorous way to

show the Federal waiver process and the headaches that States

have to go through.

And what it does, this particular poster uses welfare reform as

the example. First, the State has to pass welfare reform. Then they

have to submit a 150-page waiver request. The agency responds

with 10 pages of questions. Once the State answers those questions, the agency submits terms and conditions. Negotiations take

place, there is a 6-month delay, and so on and so forth.

It really is a game, although probably to neither party terribly

humorous at the time. Every time a State takes a step forward on

this board game, they seem to take a step back. The delays and the

red tape are unreasonable, and I think we all agree should be

greatly reduced.

Last week I attended a hearing held by the Budget Committee.

I heard in that hearing Governor Jeb Bush of Florida testify on

some of his new education proposals. One thing really stuck out for

me. According to Governor Jeb Bush, 40 percent of the man-hours

at the Florida Department of Education, that is 40 percent, are

spent wholly on filling out Federal paperwork. Surely we can find

more productive uses for their time and taxpayers’ money. Clearly

this is a case in point for simplifying the waiver process and setting

up expedited procedures.

And that of course brings me to my legislation, H.R. 2376. This

bill, in a very modest, common sense way, would help streamline

the complicated and time-consuming Federal waiver process. Simply put, it directs Federal agencies to establish an expedited review

procedure for State-requested waiver if the agency previously authorized a similar waiver for another State.

The inspiration for this bill came out of an effort that I, along

with a number of my freshman colleagues, several of whom are

here today, have made to reach out to Governors, both Democrat

and Republican. In fact, the most recent response we received was

from a Democratic Governor, the Governor of Kentucky. We have

asked them, we have tried to find out from them what steps we

could all take as a Congress to help them be innovative and creative in their policymaking.

The Governors have told us that the costs and burdens of the

waiver process restrict them in their efforts to meet their constituents’ needs in innovative ways. This bill I think is a first small step

in a larger effort to offer a helping hand, or at least help get government out of the way where its restrictions are unnecessary or

overly burdensome.

This legislation would allow any State to take advantage of the

creative policymaking in another State, and to obtain a Federal

waiver under an expedited, streamlined review. Should my legislation pass, I hope and believe that States would be more active in

taking those opportunities, in borrowing from other States. Where

they see a success story, hopefully that success story can serve as

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a benchmark. After all, it is the State and local leaders who know

best, perhaps, what is best for their immediate constituents.

Thank you for the opportunity to be here today, and I would be

pleased to take any questions you might have. Thank you, Mr.

Chairman.

[The prepared statement of Hon. Mark Green follows:]

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Mr. HORN. Well, thank you, and let me first yield time on our

side to the ranking minority member. Oh, Mr. Turner went out.

Well, let’s go to the vice chairman of the Regulatory Subcommittee.

Mr. RYAN. Thank you.

Mr. HORN. Let me say there is a 5-minute questioning limit on

all these. It will come back to him. We alternate between parties.

Mr. RYAN. Thank you. Thank you, Mr. Co-Chair.

Mark, let me ask you this: What do you see as the biggest problem, based on your Wisconsin experience, as a Wisconsin legislator

prior to serving in Congress, with the waiver process for States?

Mr. GREEN. I was in the Wisconsin Legislature for 6 years, actually during the height of welfare reform, the experimentation that

really became a national model, and I think it was the uncertainty

that the waiver process created.

Again, legislation, the welfare reform movement in Wisconsin

was completely nonpartisan, passed on wide bipartisan margins,

and then once the waiver process started, it was as if the State was

in suspended animation, not quite sure how to meet evolving needs

because there was no predictability. I mean, we didn’t know if a

waiver was going to be granted, if it would be granted in part; if

it was granted only in part, would the part granted be sufficient

to carry out the intent of the legislature; what to do if it wasn’t

granted.

That was very burdensome to our policymaking. I think the administration would tell you that their problem was literally the

costs of having employees fill out all those forms and trying to stay

in touch with whatever agency they were applying to, again to try

to find out what was going to happen and when.

Mr. RYAN. So it is not just granting one waiver for one

BadgerCare initiative. There are several waivers included in getting BadgerCare implemented, something like that. Is that not correct?

Mr. GREEN. Yes. In the case of BadgerCare, it was actually

lumped into one waiver. Maybe a better case would be FamilyCare.

We all have very catchy names. FamilyCare is the latest program

for which a waiver has been requested, and there are over 40 requests for that.

In the past, and I am sure other States are the same way, you

will get a percentage of your waiver request, particular waiver provisions granted, and again that brings you back to this whole idea

of whether or not sufficient to fulfill the legislative intent.

Mr. RYAN. What are some of the waivers that Wisconsin has applied for in recent years, in addition to those two?

Mr. GREEN. Well, there have been some in the education area,

but the original BrideFare; LearnFare, which required welfare recipients to attend school, the children to attend school; really the

whole gamut of welfare reform. And like many States, in the health

care area there have been a number of waiver requests.

Mr. RYAN. I assume you have had a chance to look at some of

the written testimony of other witnesses. After reviewing the other

testimony, are there any other recommendations you would have

from some ideas you have heard for streamlining the waiver process?

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Mr. GREEN. Well, the National Governors’ Association is suggesting that we need to undertake a full-blown study. I think a

step that would be very helpful, and I would be interested in working with the committee, is to add a provision to this bill which

would require agencies to publish periodically, quarterly, whatever

period we choose, the status of waivers. In other words, how many

waiver request applications they have received, how many have

been denied, how many have been granted, how long that they

have been hanging out there. I think that would help all of us really find out what the States are facing. So I think that is an excellent one in particular. I think that is a good idea.

Mr. RYAN. I want to go back to the partial waiver approval

again. You spoke about waivers being approved in part. Is that a

common problem that we are seeing, that you get maybe threefourths of your waivers for a program? And what kind of problems

is that going to create? Are we going to be unable to go forward

with a program if we only get, say, three out of four of the waivers

approved? Is that something that you see as a common problem

that we are experiencing?

Mr. GREEN. I don’t know if it is a common problem. It is a hard

one, based on my limited experience, to comment. But what I will

say is it does create tremendous uncertainty. I think agencies,

State agencies plan on the success of their waiver in terms of designing their program and, again, oftentimes they are waiting with

bated breath to get this reaction from whatever Federal agency is

involved.

They get the decision back, and then it takes them a long time

to study the full impact and to make a calculation. In some cases

they have to go back to the legislature. But they have to make a

calculation as to whether or not the program can even work. Can

they meet the original objectives that everyone has agreed to? And,

again, I think that creates tremendous uncertainty, and it can

handcuff State leaders in many ways.

Mr. RYAN. Thank you, Mr. Chairman. I yield.

Mr. HORN. Thank you. We now turn to the gentleman from Ohio

for 5 minutes of questioning.

Mr. KUCINICH. I just have a comment, and then I would be glad

to yield any time to Mr. Owens.

I wanted to first of all congratulate Congressman Green for his

presentation, and also for the creativity of the Waiver Game.

Mr. GREEN. No pride of authorship. It didn’t come from me, but

I kind of like it, too.

Mr. KUCINICH. What I was wondering about it is if you have to

roll the dice to play the game, or do you roll the dice when you

don’t play it?

Mr. GREEN. Chutes and Ladders, looks like.

Mr. KUCINICH. We will have to think about that. But anyhow,

you know, I am still interested in hearing more about this, and I

appreciate you taking the time to come here.

Mr. GREEN. Thank you.

Mr. KUCINICH. I will be glad to yield any time to Mr. Owens.

Mr. OWENS. Two questions I think were asked on the previous

occasion when this was being considered. If there is an attempt to

further streamline the waiver process, do you feel it is important

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that the opponents of the waiver have an opportunity to express

their views?

Mr. GREEN. Yes. I don’t think that waiver requests should be

made in the dark of night. I actually agree with what a number

of people have said. I don’t believe that where in my case it is a

similar waiver, I don’t think that the granting should be automatic,

because I think States do have differing local conditions. I think

there needs to be an opportunity to review those conditions.

That is why in this bill I think we have given maximum flexibility to the agencies. We have asked them to create an expedited

waiver review process. We didn’t mandate precisely what it had to

be, because we understand that there isn’t a one-size-fits-all solution here. I think they do need the opportunity to examine both

pros and cons.

Mr. OWENS. Do you think it is in order for an agency to evaluate

similar waivers that have already been granted before granting

some new waiver in the same area?

Mr. GREEN. Well, I mean, I think that if an agency receives a

similar—a waiver request that is similar to a previous one, presumably since that previous one was the first blush, they will have

performed a lot of review and scrutiny of the waiver request. I

would assume that they would rely upon at least some of their previous work. I think that is appropriate.

Mr. OWENS. Thank you. I yield.

Mr. HORN. I thank the gentleman. I now yield time to the vice

chairman of the Government Management, Information, and Technology Subcommittee, Mrs. Biggert of Illinois.

Mrs. BIGGERT. Thank you, Mr. Chairman. In my opening remarks I spoke briefly about the State of Illinois having a waiver

procedure which for a while caused us a couple of problems, and

I want to see if this is something that has been addressed in this.

No. 1, at some point we felt like we were the school board, sitting

at a large school board, overseeing what various local school boards

were doing when they came in for their requests. You know, I just

have—will these agencies have the background and everything to

really look at the different conditions in each of these States, really

have the background, because it is not one-size-fits-all.

But when we sat, we had to approve the waivers after they had

made the request, or disapprove them, and so we felt like we were

making decisions for a local level that we at the State would not

be doing. How did you work that out so that the Federal agency

doesn’t feel like they are really involved too much into the State

situation?

Mr. GREEN. Well, we don’t deal with that directly. Again, we do

provide a lot of discretion and flexibility to the agencies. I think

there is always a risk, and I think you are right, I think it is Federal versus State and State versus local, to pass judgment on what

the ‘‘lower’’ elected body has done. I think that is inappropriate unless you have a clear conflict and preemption.

We don’t deal with that directly. I would certainly be willing to

work with you to find ways to address that, but we don’t deal with

that directly.

Mrs. BIGGERT. Then the other thing was that once we had granted a waiver for one school district, while we thought that, you

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know, we would look at the others, it became almost automatic

that we then granted the waivers to other school districts, and in

effect really kind of abolished the law on the books for that.

And I am thinking of a couple of issues, and the only one I can

think of is really one that we didn’t grant because it was a couple

of school districts came in and asked for waivers on, they call it the

sprinkling system, when they were building an addition and they

didn’t have the money to finish that up for the year, so they wanted a waiver for the rest of the year to do that.

And I think the first time we granted that and then really worried that we had really created an unsafe situation, and other

school districts started pouring in, saying, ‘‘Well, we don’t have the

money, either.’’ So we had to go back and really kind of change

that. But I think you have to be careful that an agency doesn’t

think, if they granted that waiver for one, then they have to do it

for another.

Mr. GREEN. Yes, and that is why, again, the idea of making it

an automatic approval, I would be a little hesitant about that. But

a least I think if we have the expedited review process, what I am

hoping it will do is encourage States to borrow from each other.

I think you are going to hear the agencies testify that they actually get very few similar waiver requests, and they have actually

used that as logic for saying this bill may be unnecessary. I actually look at it the other way. I think that is a bad thing.

We want States to borrow from each other. I mean, if we see

California putting into place an innovative health care plan that

meets the needs of an impoverished segment of society, I would

hope that my State of Wisconsin would say, ‘‘What are they doing?

Can’t we do this?’’

I would like that to happen more and more and more. So I am

hoping one of the long-term consequences of this will be that there

will be many more requests, and I don’t think they should be

granted automatically, but hopefully the expedited review will be

so much less burdensome in costs and time that it will encourage

States to borrow from each other.

Mrs. BIGGERT. Thank you.

Thank you, Mr. Chairman.

Mr. HORN. Thank you. Does the gentleman from New York have

any questions he would like to ask at this point?

Mr. OWENS. No questions.

Mr. HORN. Well, I think everybody has been satisfied at this

point. Let me just ask one question.

I recall in the Department of Agriculture testimony that will

occur later this afternoon, they say your bill is unnecessary because

‘‘while waiver requests may appear to be similar, each State situation is unique,’’ and therefore requires individual attention. How

would you respond to this statement?

Mr. GREEN. I would respond by saying that our legislation preserves enough flexibility for the agencies that they can take into

account the fact that you have different conditions. I mean, again,

California is quite dissimilar to the State of Wisconsin, my home

State, and I don’t think that because something has been done in

California, it should automatically be granted.

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The agencies, if I may expound upon it a bit, have also suggested

that this is unnecessary because of Executive orders which have directed a streamlined review process. I would point out that all of

the data that I testified and supplied, including the frustration that

Wisconsin had with welfare reform, all occurred subsequent to the

most sweeping Executive order directing that there be an expedited

waiver process.

So while I think agencies are trying, I think we need to give

them a bit of a nudge in moving in the direction of streamlining

and lowering those burdens, and I think we can do this through

this bill in a way that allows them to maintain the needs to or the

flexibility to look at individual conditions.

Mr. RYAN. Mr. Chairman.

Mr. HORN. Yes, Mr. Ryan.

Mr. RYAN. If I could add to that, I notice that the agencies claim

that they have a new Executive order which streamlines the waiver

application process and approval process.

Looking at the Executive order that has been cited as that

streamlining proposal, it goes back to the President’s Executive

order on October 26, 1993, where it said ‘‘each agency shall, to the

fullest extent practicable and permitted by law, render a decision

upon a complete application for waiver within 120 days,’’ and it

goes on from there. Well, that was the Executive order in 1993, but

since 1993 we have a whole rash of slowed down, delayed waiver

processes, waivers that have either been denied or have been

slowed, or maybe not applied for at all because of the process.

Well, the new Executive order which a lot of the agencies claim

fixes this, basically says the same thing. It says ‘‘each agency shall,

to the extent practicable and permitted by law, render a decision

upon a complete application for a waiver within 120 days of receipt

of such application by an agency.’’ So it doesn’t seem as if this new

Executive order fixes the problem.

Since 1993 we have had these problems getting waivers approved, getting them approved in an expedited manner. This new

Executive order is really no different than the prior one, so I think

that is, of all things, a very important justification for the need for

this type of legislation.

With that, I yield.

Mr. HORN. I thank the gentleman, and I thank the gentleman

from Wisconsin. It is a very creative effort that you and your colleagues have undertaken.

Mr. GREEN. Thank you.

Mr. HORN. So thank you for coming, again.

Mr. GREEN. Thanks very much, again, for the opportunity to testimony.

Mr. HORN. You are quite welcome.

We now go to panel two, which is Mr. Raymond Scheppach, executive director, National Governors’ Association, and Mr. William T.

Pound, executive director, National Conference of State Legislatures. So, if you gentlemen will come in, we will swear you in. This

is an investigative subcommittee of the Government Reform Committee, and we swear in all witnesses but Members.

[Witnesses sworn.]

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Mr. HORN. Both witnesses, the clerk will note, have affirmed the

oath, and let’s start with the National Governors’ Association.

Mr. RYAN. Mr. Chairman, if I could, at this point I would like

to ask unanimous consent to include in the record a statement

from Governor Tommy Thompson, the Governor of Wisconsin, on

behalf of the Council of State Governments, for which he serves as

the president.

Mr. HORN. Without objection, so ordered.

Mr. RYAN. Thank you.

[The prepared statement of Mr. Thompson follows:]

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Mr. HORN. Let’s start in with the National Governors’ Association, just in the order on the agenda.

STATEMENTS OF RAYMOND C. SCHEPPACH, EXECUTIVE DIRECTOR, NATIONAL GOVERNORS’ ASSOCIATION; AND WILLIAM T. POUND, EXECUTIVE DIRECTOR, NATIONAL CONFERENCE OF STATE LEGISLATURES

Mr. SCHEPPACH. Thank you, Mr. Chairman. I appreciate being

here on behalf of the Nation’s Governors to both talk about our recent waiver experiences as well as H.R. 2376. I would like to submit my full statement for the record, and I will summarize it in

a few minutes.

Mr. HORN. I might add that every witness’s statement is immediately put in when we introduce them.

Mr. SCHEPPACH. Thank you, Mr. Chairman.

Overall, the purpose of waivers is essentially twofold. No. 1, it allows States to tailor specific programs to the needs of the citizens,

but perhaps more important, it is to stimulate innovative approaches, which is really key.

If we look back at what has happened over the last 6 to 7 years,

we would probably say when President Clinton took office there

was a very important meeting in the White House in 1992 with the

50 Governors that focused essentially on this waiver issue. Over

the next several years, our sense was that the administration was

quite good in terms of pushing the envelope with respect to waivers.

In the welfare area, they approved 90 waivers for 44 States; in

the Medicaid area, 21 waivers that helped to hold down the rate

of increase in spending. I would argue that to some extent those

particular waivers, particularly in welfare, led to the welfare reform bill. I think more recently, in the last several years, we’ve had

more trouble in the waiver process.

I’m going to talk a little bit about some of the specifics because

I believe you actually have to get into some of the major waivers

in order to get a sense of the substance. The first are the so-called

1115 waivers, which are the Medicaid demonstrations. These are

the large ones that are very, very important to States.

These are normally approved for 5 years but you have a 1-year

renewal period, and if you look around, you’ll find that some States

have had these for 10 or 15 years, which means once they’re approved, every single year you come back for renewal. I would argue

that these often take the longest amount of time to approve because they are the most significant waivers. It is not unusual to

have them take a year, a year and a half, or even 2 years.

The second waiver is the so-called 1915(b), which are the managed care waivers. These, initially get approval for 2 years but they

are a 2-year renewal process. I would argue the progress here is

more mixed, although I think the Department has been getting better recently. These take normally several months to approve, they

could be up to a year, but I would put those as sort of medium responsiveness to the Department.

The third category is the so-called 1915(c) which are the longterm care waivers for home and community-based care. These are

5 years with a 1-year renewal. I would compliment the agency on

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these. They have done a rather good job in this area. Most of those

are probably approved within a 30-day period. When these get

hung up, I would argue that it’s over the whole question of budget

neutrality, and I’ll come back to that in a minute.

The other area I’d like to mention is Food Stamps. What has

happened at the State level is that States have moved to integrate

services for low-income individuals, and I think the stimulus for

this essentially was welfare reform, the so-called TANF, and it has

changed the culture in States, as States have gone from welfare

subsidies to employment and training programs.

States would like to integrate Food Stamps into that general approach. You’d like to go to case management, so that when the person comes in to a welfare office, one person can talk about child

care, employment and training, TANF, Medicaid, as well as Food

Stamps, all at one place.

The Food Stamp progress is not very good. First off, the basic underlying legislation does not allow a lot of flexibility for waivers.

Second, I would argue that this agency is probably one of the worst

in terms of their willingness to work with us, because I think they

look at it as a Federal program, as a stand-alone program, as opposed to something that should be integrated into welfare reform.

If you get into the children’s health area, specifically I think the

legislation built-in the possibility of 1115 demonstration waivers. A

number of States had interest in doing that but we’re told it could

not be done for a year, so essentially that one has been shut down.

I have included in my testimony a couple of pages from Wisconsin Governor Thompson on his experience with BadgerCare. We’ve

included in the testimony some of the State of Massachusetts’ experience in some of the 1115’s which took 21⁄2 years to approve. I

would, however, argue that the problems with the waivers are both

congressional and administrative; that Congress often-times does

not provide enough flexibility in the authorizing legislation.

A perfect example: the old AFDC programs needed waivers while

the TANF block grants provide the States with a lot of flexibility

to tailor the programs. Essentially when Congress enacts flexible

legislation, they don’t need to have a detailed waiver process. Second, a lot of the requirements built into the legislation with respect

to waivers are overly restrictive, so at times the agencies’ flexibility

is curtailed.

The second problem, however, is the agencies. Some do a relatively good job. Others are much more difficult to work with.

For suggestions, we don’t have a detailed policy, but we’d be

happy to get a couple Governors together, even with a couple of

State legislators, to come back to the committee with some fairly

detailed recommendations. But some suggestions are as follows.

One problem is this whole question of budget neutrality; when

OMB looks at it, they look at it with respect to a specific program

for a specific year. So, if we’re coming forward with a Medicaid

waiver, there may be long-run savings in the next 4 years that

would offset the increase in that particular year, but it’s ruled out

because you’re essentially looking at a 1-year timeframe.

Similarly, a Medicaid waiver might have savings for Medicare,

but again, any time we have any impact on Medicare, we’re automatically declared out of order. So on this issue of budget neutralVerDate 11-MAY-2000 15:20 Mar 15, 2001 Jkt 066706 PO 00000 Frm 00047 Fmt 6633 Sfmt 6602 E:\HEARINGS\62841 pfrm09 PsN: 62841
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ity, we feel it should be expanded in a couple of ways—in terms

of the timeframe and looking at offsets with respect to other programs.

Second, when I look at the various waivers, you’ll find that some

of them are for 3 years, some are 5 years, with a 5-year renewal,

some a 1-year renewal, some a 3-year renewal. It seems to make

a certain amount of sense in moving toward some kind of a consistent renewal basis, perhaps even including where it’s a standard

renewal and putting it in a State plan, as opposed to doing it

through a normal waiver process.

Third, we need to find some way of changing the incentive mechanism for agencies and how it’s coordinated with OMB. It has to

become a higher priority within the Federal Government. Whether

that can be done by saying waivers automatically go into effect unless people take positive action to stop it, and has to be the Director of OMB, or some way of changing that incentive, which will

force people to the table.

I agree with some of the previous comments that a lot of the cost

is waiting, and it’s the uncertainty. Particularly when talking

about demonstration waivers; it means the State legislation can’t

go into effect because it is dependent upon a waiver. Legislatures

sometimes only meet every 2 years, so if you miss that cycle, you’ve

got a very substantial long-term problem.

With respect to H.R. 2376, it obviously would be helpful. It is

consistent with the Executive order. The new one has been adopted

only a couple of months. We don’t yet know whether they are working on an implementation process.

However, I would say that the particular bill here is relatively

narrow. It deals only with discretionary grants, and I would argue

that 80 to 90 percent of our problems are in the entitlement areas

of Food Stamps and Medicaid. And we’ve got to find a way, again,

to look toward integrating Federal programs with State programs.

There is really a revolution out there with respect to integration of

services, and if the Federal Government continues to look at funding stovepipes Food Stamp Program where you can’t integrate it,

we’re going to have continual problems in providing good programs

for low-income individuals.

I’d be happy to answer any questions.

[The prepared statement of Mr. Scheppach follows:]

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Mr. HORN. Does the gentleman from New York have any questions on this? Oh, excuse me, we need Mr. Pound’s opening first.

Then we’ll question both and have a dialog between the two of you.

William T. Pound is the executive director of the National Conference of State Legislatures. Mr. Pound.

Mr. POUND. Thank you, Chairman Horn and members of the subcommittee. First of all I would like to begin by saying thank you

to the House and the Government Reform Committee for everything they have done this year in moving toward improving the

State-Federal partnership through this whole area of which the

waiver activity is, I think, but one aspect. Not only the House but

the full Congress and the administration, in the Executive order

and the changes and the attempt to move in the right direction, we

think, on an expedited waiver process and other aspects of this.

My remarks are in the record. Let me just summarize a couple

of things.

First of all, this may seem to be primarily an administrative

issue. Obviously the administrative branch of State government is

where waivers generally originate, but frequently they originate

there because of action the legislature may have taken or may be

considering as it tries to conform itself or improve Federal-Statelocal programs.

So there is a significant legislative interest at the State level in

this whole problem, and it is one that we frequently hear about,

particularly the frustration of the timeliness of the waiver process,

and in many cases the difficulty of obtaining in one State what appears to have been granted in another State or in a very similar

situation, but having to go through all the same hoops over and

over again.

It seems to me that there are several things we should look at

in this; that we clearly want to maximize opportunities for State

flexibility in these programs, and particularly to provide benefits

and deliver services; that we ought to maximize the use of limited

resources, particularly so that they go to the services as much as

possible, and perhaps to the administration of them in a lesser proportion.

We need the waiver process streamlined to the maximum extent

possible, and we need one that will create productive, collaborative

State-Federal partnerships, not adversarial ones, if we can. I think

one of the problems is, all too often this process may breed rubbing

the cat’s fur backward occasionally as we go through it, rather than

trying to more forward collaboratively.

We need to keep people accountable for their actions at both the

Federal and the State level, and I think we need to encourage duplication to the extent that we can. As we look at what we might

do in this process, it seems to us in our discussion with State legislators that we need to make program waivers available across as

many discretionary and mandatory State-Federal programs as possible, again in the remarks Mr. Scheppach just made.

It would be ideal if we could maximize program flexibility by

statute in the actual legislative process, and I hope you will do

that. But, realistically, the waiver process will always be a very important part of this procedure.

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If we could simplify, some modifications that might simplify this

process would be perhaps to make waiver modification self-certifying when States comply with all application requirements. This

assumes that this is a collaborative process across the FederalState lines.

A second would be to place time limits on the waiver application

review process. The 120 days that has been mentioned and is in

the Executive order, and I believe is also in NGA recommendations,

is certainly something that we support. It is obvious that there

may be exceptions to that rule, and it seems to me that an exception process could be developed where circumstances do not permit

the realization of a 120-day timetable. In addition, to the extent

feasible we should make waiver application forms uniform across

the agencies and move toward greater technology, particularly electronic application processes, in this relationship.

Third, waivers granted for one State we would recommend be

automatically approved for other States whenever they are similar.

Obviously, there is difficulty probably in the definition of ‘‘similar,’’ but I think those are things that could be worked out.

To the extent possible, waiver periods should be uniform and renewal processes ought to be the same across agencies. I think from

the legislative standpoint, again, one of the great difficulties is an

understanding of this process a lot of the time on the part of people

who are in it, even when they’re working closely with their State

executive branch people through the process.

Too often, the waiver process appears to be idiosyncratic. When

you talk to legislators, you hear that it all depends on who so often

rather than on a procedure; who reviews it, their sympathy, their

understanding in State government.

And I guess last I would say that on the Federal side, we think

that intensive participation from the regional and State offices of

Federal agencies is essential. Several witnesses have brought up

the subject of the differences between States. That is one way to

deal with that, with a sense that the regional office should have

a greater understanding of the individual needs of States, even

within a region, and sharing similar conditions.

Thank you, Mr. Chairman.

[The prepared statement of Mr. Pound follows:]

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Mr. HORN. Thank you very much. I will now yield to the vice

chairman of the National Economic Growth, Natural Resources,

and Regulatory Affiars Subcommittee, Mr. Ryan, for 5 minutes of

questioning. Then we will go to the minority.

Mr. RYAN. Thank you. Thank you, Mr. Pound and Mr.

Scheppach. I apologize if I mispronounced your name.

Mr. SCHEPPACH. That’s fine. Scheppach.

Mr. RYAN. Both of you said something that was very interesting,

and it seemed to come down to this: that there is discretionary decisionmaking in these agencies. It doesn’t matter which agency as

much as it matters who you call.

Can you expand on that a little bit? Have States been discouraged by Federal agencies from filing waiver requests, by people at

the other end of the telephone in certain agencies? If so, which

agencies are doing this kind of thing? Also, have States been asking for quid pro quos, meaning alter the waiver in this way and

we will do that? Could you expand on those areas?

Mr. SCHEPPACH. Well, I don’t know whether it’s agency or program specific. I think the areas where we’ve had the greatest problems are in Food Stamps and in CHIP, there’s been a reluctance

there. You know, the word gets around pretty quickly when two or

three States submit waivers and they’re turned down, and people

aren’t willing to negotiate. And so the message goes around and the

rest of the 47 other States saying, you know, they’re not interested

in waivers it’s not worth our time.

So those program areas tend to be the bigger areas. I think HHS,

where the big ones are concerned, is somewhat mixed. They do a

very good job on the home and community-based. It’s more mixed

in the managed care area, and more difficult on the broad demonstrations.

But I’d also concede that those areas where you’re talking about

fairly major restructuring of programs, where the innovation

comes, and they are sometimes restricted by the budget neutrality

question. But it does depend on the culture of the agency and the

people you’re dealing with.

Mr. RYAN. Mr. Pound.

Mr. POUND. I would concur with that. I think that the Food

Stamp Program is an area and the Department of Agriculture is

an area where there have been problems with that, particularly in

some of the experimentation or waiver requests around the broad

area of welfare reform. There are I think several instances that

we’re aware of where the—what we hear is, you pass a bipartisan

program in a State legislature that envisions certain experimentation, and that there has been a very difficult time obtaining the

waiver, particularly where it relates to some of the Food Stamp aspects, and in one case at least being successful only upon the intervention of the President.

Mr. RYAN. Well, what do you think is the primary reason, if you

can? I know this may be difficult to answer, but what would be the

primary reason for waiver denial, across the board? What is the

driving reason?

Mr. SCHEPPACH. Probably the budget neutrality.

Mr. RYAN. The budget neutrality?

Mr. POUND. Yes.

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Mr. RYAN. What about the time line? Have the States estimated

on average what the average processing time has been for the Federal agencies to review the State request for a waiver, to get an answer? Do you know the average time for, say, Food Stamps, or

waivers from HHS or Labor, Medicaid? Have you calculated that?

Mr. SCHEPPACH. Again, my sense on the demonstrations, the big

ones, the average is probably a year or more.

Mr. RYAN. So over the 120-day level—— Mr. SCHEPPACH. Yes.

Mr. RYAN [continuing]. That the Executive order strives to

achieve?

Mr. SCHEPPACH. That’s right, but again, those are the big ones.

I think the long-term care ones probably average less than 30 days,

you know, because a lot of those are very, very quick. And managed

care is probably 4 to 6 months, in that ball park. Now, Agriculture,

I’m not sure, since I’m not sure we’ve had any approved.

Mr. RYAN. Mr. Pound.

Mr. POUND. I don’t know the specifics of that. I would suggest,

though, that this is a good reason why the study or the cooperative

effort on a program in the future might be built into this legislation, where we would look and see what kind of a model can we

develop here and what are the obstacles, working together between

Congress, the agencies, the executive and legislative branch and

State government. And I would second Mr. Scheppach’s remarks

about our willingness to actively participate in that.

Mr. RYAN. OK, so let me just go beyond just H.R. 2376. What are

some other ideas you think we ought to include in a model, in a

waiver-expediting process? What do you think about a statutory

deadline for processing a waiver request application from a State,

or giving more broad statutory flexibility to more statutory provisions, something like the Ed Flex bill which I am sure you are very

familiar with, that process? What do you think of, you know, a provision allowing State certification for financial requirements like

maintenance-of-effort, matching funds set-asides, cost caps? Or a

requirement requiring quarterly publication, like HUD does, for

waiver applications or denials or the status of waiver applications?

What do you think of things like that?

Mr. SCHEPPACH. Well, I think a lot of those could be helpful, but

again we’ve got to remember that for the most part those go to discretionary programs, and our major problem continues to be in the

entitlement area.

I know it’s not under your jurisdiction, but perhaps a package of

amendments that comes forward from this committee, that’s recommended to the other committees, might well be helpful. Also

some guidelines in terms of future legislation, of the areas where

waivers make sense and what are some guidelines, so that when

new legislation comes forward, people can look to it.

I’d have to argue that well over 80 percent of our problem is in

the entitlement area, and again, it’s the ability to sort of combine

and integrate these programs.

Mr. RYAN. That is very helpful. Thank you.

Mr. HORN. Yes. Thank you. We now yield to the gentleman from

New York, Major Owens.

Mr. OWENS. I have no questions, Mr. Chairman.

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Mr. HORN. OK. Mrs. Biggert, do you have any? The gentlewoman

from Illinois.

Mrs. BIGGERT. Thank you, Mr. Chairman.

Mr. Pound, did you say that you thought that there should be in

the law a definite period of time by which waiver requests should

be—I guess what I am driving at is that in this, the bill that we

have in front of us, it really is that each of the—each agency will

establish the rules and regulations. Do you think that there should

be uniform rules and regulations across the board for Federal agencies, or that each agency should promulgate its own rules?

Mr. POUND. I think uniformity is desirable. I do think you need

a possible safety valve procedure.

Mrs. BIGGERT. Would that be like a model, or would that be an

absolute within this law?

Mr. POUND. Well, if you’ve got a safety valve, it seems to me you

have not an absolute but a way for exceptions.

Mrs. BIGGERT. For exceptions. Then what is involved in a waiver.

States make a request. Is it a lot of paperwork? Right now, is there

applications, or is it a definite way to fill out, or is it just something that each State must decide when they’re making that waiver, that they kind of make up their own application?

Mr. POUND. Ray.

Mr. SCHEPPACH. Well, generally there’s a procedure and a form,

but oftentimes it’s an intricate type of thing because you’ll submit

the form and then you get a list of questions back, and then you’ve

got to answer those questions, and then you get another list of

questions, and then you go back and forth for a period of time. And

then there’ll often be negotiating sessions where a number of people will come in from the State and try to sit down with perhaps

people from the regional office as well as people from the agencies

here, to see whether they can work it out.

Mrs. BIGGERT. Do you think, then, to maybe try and expedite

this would be, one way would be to have an application that would

have the questions that would usually come up in a request for a

waiver, or is that too hard to do?

Mr. SCHEPPACH. I think it’s kind of hard, because the questions

come out, I mean, there are legitimate questions with respect to it,

and the agencies do provide what information they need. It’s just

that it gets stretched out because it’s an iterative process over a

fairly long period of time, and at times I don’t know that there’s

enough incentive to get closure on it, and it’s the length of time

that tends to be the problem.

Mr. POUND. We could overreach by trying to overstandardize

some of this, because there are enough differences in enough things

that I think you could——

Mrs. BIGGERT. Well, that was my concern with what you said,

Mr. Pound, about having kind of a uniform rules and regulations,

that in some respects it appears to be that some of these different

areas, some are much more complex than others and much more

detailed. That might cause problems with that. I think that’s something that we will have to look at.

But looking at the requests for waivers from the different States

and looking at Illinois, it doesn’t seem like we have made that

many requests, actually. I have—in the Department of Agriculture

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and in EPA seem to be the most, and most of these have been—

well, in the one area have been granted. In another there has been

like 7 percent denials, so that doesn’t seem to be such a problem,

but it doesn’t give the amount of time.

Mr. SCHEPPACH. Well, again, you’ve got to be careful with just

looking at the numbers because, as I say, if an agency has turned

down seven other States and Illinois wants to do that, they’re not

going to submit a waiver when the feeling is they’re just not going

to get it. So it’s hard to just look at the actual numbers.

Mrs. BIGGERT. Thank you.

Mr. HORN. The ‘‘more questions’’ routine that you two had a dialog on sort of reminded me of Lucy and Charlie Brown and the

football, where an agency just keeps sort of holding it out there

that he might kick it this year, and there are just more questions,

more questions. And that kind of bureaucracy does not impress me,

I must say.

In your testimony, Mr. Scheppach, you discussed the problem of

budget neutrality and how multiple year waivers might cause problems with OMB’s budget process. Just so we can get a feel as to

what reality is in this regard, could you sort of make up an example of how we—one, how it overlaps on the multiple year, and then

the Federal year and the State year and all that, and what suggestions you would have to how we could deal with that?

Mr. SCHEPPACH. Well, you know, sometimes what happens is

that the State may want to make an investment. Let’s assume that

they want to make an investment in child care that helps a welfare

person get off welfare. Therefore there’s an increase in child care

but there are savings in TANF in the next 4 years, so there’s an

offset. I think under the general rules you can’t do that kind of

thing. In other words, they’re looking at a specific program for a

specific year.

Or there may be a Medicaid change that may have some savings

to Medicare. I mean, we have significant overlap in the so-called

dual eligibles for low-income people between Medicare and Medicaid, and those two programs are getting increasingly interwoven.

It’s possible that whatever policy change at the State level might

save the Federal Government money in totality, although it might

cost more in Medicaid, and lower the costs in Medicare.

And all I’m suggesting is a little more flexibility on netting all

Federal programs, perhaps, and looking at a broader 5-year timeframe as opposed to that 1 year. It’s just worthwhile looking at and

perhaps experimenting with, because right now a very high percentage of these do get kicked out because of the budget neutrality

question, and yet there may be long-run budget savings.

Mr. HORN. Mr. Pound, do you want to add anything to that discussion?

Mr. POUND. No. I would agree with what he said. I think it is

a frustration at the—the whole Federal budget process is a frustration at the State level a lot of the time, but——

Mr. HORN. You can add the national to it.

Mr. POUND. I know, but to the extent that you can consider the

longer run horizon savings and the tradeoffs in programs, it would

only be beneficial to this process.

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Mr. HORN. I think you have got a good point there. Let me ask

if there are any other points you would like to make, because if

there are not, well, we will move to the next panel. Well, the gentlewoman from Illinois.

Mrs. BIGGERT. Thank you. Just from your point of view or from

the State’s point of view, what are the reasons usually given for a

denial of a waiver, or why do you think they are denied?

Mr. SCHEPPACH. Well, as I said, I think the reasons are often the

budget neutrality reasons.

Mrs. BIGGERT. Well, I guess the reason I am asking this, do you

think that politics get into this at all?

Mr. SCHEPPACH. Not in a big way, in all honesty, from what I’ve

seen.

Mr. POUND. It depends. It relates to the idiosyncratic nature of

some of this, I think. I think the answer is sometimes yes, but

maybe frequently no.

Mrs. BIGGERT. And with some of these denials, are sometimes a

partial waiver given to a State? I mean, is there somewhere that

the Federal Government says you can do this but the other part

is——

Mr. SCHEPPACH. Yes. I mean, there is negotiation and sometimes

there is a partial, and the question is whether the partial works.

Sometimes it just doesn’t work, so the State says, you know, ‘‘I

need to integrate the entire thing. If you give me part of it, it

doesn’t work, so it’s not helpful to me.’’ Mrs. BIGGERT. Thank you.

Thank you, Mr. Chairman.

Mr. HORN. Thank you. Well, unless you have any additional comments you think we ought to ask about and didn’t, let us know. If

not, on the way back to your offices, feel free to write us a note

and we will put it in the record.

Mr. SCHEPPACH. Thank you.

Mr. POUND. Thank you.

Mr. HORN. Thank you for coming, very much.

And so we will now move to the agencies, and that is panel

three. Mr. Samuel Chambers, Jr., the Food and Nutrition Service

Administrator, is testifying in the absence of Under Secretary for

Food, Nutrition and Consumer Services Shirley Robinson Watkins

of the Department of Agriculture. Mr. Raymond L. Bramucci, the

Assistant Secretary, Employment and Training Administration, Department of Labor. Mr. John J. Callahan, Assistant Secretary,

Chief Financial Officer, Department of Health and Human Services.

And gentlemen, if you will, just stand, raise your right hand. If

you have any staff back of you that is also going to give you advice,

I want them under oath also. Anybody stand up who is going to

advise them. OK. One, two, three, four, five, six. That is about the

Pentagon ratio.

[Witnesses sworn.]

Mr. HORN. OK, the six supporters and the three principals are

fine. I am going to have to turn over now to Mr. Ryan a bit for this,

because of other commitments, and Mr. Ryan will be the Chair of

the meeting. And I don’t know if you want to preside from here or

preside from there, whatever you would like.

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Mr. RYAN. This is fine.

Mr. HORN. You seem very comfortable there.

So, gentlemen, if we could just proceed then as the agenda is

with Mr. Chambers, and just work our way through, we have the

statements. We would like you to sort of spread it over between 5

to 8 minutes and get it on the record. It is automatically in the

record, but get the high points from it so there is more chance for

a dialog by the various members of the committee on both sides.

So with that, I am going to have to leave for another meeting.

Mr. RYAN [presiding]. Why don’t we start with Mr. Callahan? I

think that is the way we had it on the panel. That is probably the

way you expected it, so we will just get started with Mr. Callahan.

STATEMENTS OF JOHN J. CALLAHAN, ASSISTANT SECRETARY

AND CHIEF FINANCIAL OFFICER, DEPARTMENT OF HEALTH

AND HUMAN SERVICES; SAMUEL CHAMBERS, JR., ADMINISTRATOR, FOOD AND NUTRITION SERVICE, DEPARTMENT OF

AGRICULTURE; AND RAYMOND L. BRAMUCCI, ASSISTANT

SECRETARY, EMPLOYMENT AND TRAINING ADMINISTRATION, DEPARTMENT OF LABOR

Mr. CALLAHAN. Thank you very much, Congressman Ryan. Congressman Ryan, Chairman Horn, Congresswoman Biggert, Congressman Owens, thank you very much for inviting the Department to testify here today about our review waivers of Federal law

and regulations.

We believe the HHS waiver process has been successful in approving nearly 684 waivers in the time of the Clinton administration. These include State-wide research and demonstration Medicaid waivers; 1915(b) Medicaid program waivers; 1915(c) Medicaid

waivers; welfare reform waivers; child welfare waivers; refugee assistance waivers; and child support waivers.

Every State in the Union; every State, I repeat, has applied for

a waiver and received at least one HCFA and ACF waiver during

the current administration. Indeed, I might add as a note, under

the Medicaid 1115 State-wide demonstration authority for waivers,

which has been in existence since 1960, during the Reagan administration starting in 1980, one State-wide waiver was approved. In

1988 under the Bush administration, during the time he was in office, there were no waivers approved. And there were 20 waivers

approved under the current administration.

We believe that the waiver process is one of constructive engagement between Federal and State governments. Our goal at the Federal level is to work with States as partners, emphasize State flexibility, and work with States to develop a smooth implementation

process.

Indeed, as part of that effort, as you know, the Department and

the National Governors’ Association reached agreement in 1994, in

a Federal Register notice that is part of my formal testimony. This

agreement indicates first that there will be a collaborative effort in

the waiver process in order to help States develop research and

demonstration waivers in areas consistent with the Department’s

policy goals; second, the Department will consider proposals that

test alternatives that diverge from those policy goals; and finally to

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consider a State’s ability to implement the research and demonstration project.

The NGA agreement also stated principles related to evaluation,

duration of waivers, budget and cost neutrality, and State notice

procedures, so that all the constituencies in the State would be

aware of the waiver that was being submitted to the Federal Government. This agreement is also contained in my formal testimony.

Prior to the enactment of national welfare reform, HHS used

waiver authority broadly to give States flexibility to run their welfare programs. Most welfare reform waivers were approved within

4 months, many within 2 months.

And in 1995 the Administration on Children and Families developed and announced an expedited 30-day review and approval process for waiver proposals that helped States address five major

areas of helping welfare recipients become self-sufficient. Copies of

this guidance are also included in my testimony.

In HCFA the length of review time differs according to the type

of waiver that is requested. Approvals and renewals for program

waivers and home- and community-based waivers are time limited.

They have to be acted on within 90 days, and our indication is that

in these particular waivers—these are 1915(c) waivers, I believe— that they are generally approved within a period of 60 to 75 days.

The longer-term demonstrations which are the complex ones, the

State-wide Medicaid demonstration waivers, do take a longer time.

Indeed, I have some information, I believe, which has been supplied to me by the HCFA administration, that of 18 States we averaged about 10 months to approve these waivers, and in 7 States

they were approved in 6 months or less.

And I might also add, as a point of reference vis-a-vis Mr.

Scheppach’s testimony, that with regard to budget neutrality, we

do not do budget neutrality on a 1-year basis. We do it on the basis

of the duration of the demonstration. So in the case of the demonstrations that are forwarded to us from the States, they’re generally 5 years in length, so the budget neutrality calculations are

for 5 years, not for 1 year. And indeed they’re renewed for 3 years:

the budget neutrality calculation will continue for the full length

of the demonstration. So budget neutrality is not calculated on a

year-by-year basis.

Throughout this process, as I have indicated, the administration

works cooperatively with a State, and provides technical assistance,

urges the State to provide a public notice process to all its citizens,

when it submits a waiver request; negotiates budget neutrality, et

cetera.

Let me just say that there are a couple of principles that guide

our waiver process. Waivers are in fact like contract negotiations.

They are not easy, but there is a mutual desire, I believe, on both

sides, on the Federal and the State side, to attain a mutual goal

of creating program innovation and flexibility.

But we must realize we have to protect program integrity, and

oftentimes the entitlement nature of the program. Medicaid is an

entitlement as well, as some of the other programs that we’re talking about. And we have at the Department a fiduciary and programmatic responsibility to do two things. One is to make sure

that the demonstration is fiscally prudent, that is, it fits within the

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budget neutrality concept which was agreed by us and NGA; and

the other is to ensure that we protect vulnerable populations.

In the Medicaid demonstrations that we have dealt with over the

years, we have added 1.1 million new eligibles to the Medicaid population. These are cooperative efforts, again, between the Federal

Government and the State. We have also moved 4 million Medicaid

beneficiaries to managed care. We believe this is positive, as well.

But we have to be concerned also in the area of managed care,

because in some cases people have indicated that individuals, and

adults and children with special needs, may not always get the appropriate treatment under managed care. This is something that

we have to be very careful about, because if the beneficiaries are

Medicaid-eligible, they should receive appropriate care under either

a current program or a revised program. So we have to deal with

cost neutrality and, at the same time, make sure that the beneficiaries are protected.

So those are the basic concepts that we use in our demonstrations. We feel we do approve them within a reasonable period of

time, and we believe that our record indicates, with the 700 waivers we have approved, that we have a process that works and will

continue to work over time.

Thank you very much. I would be pleased to answer any questions.

[The prepared statement of Mr. Callahan follows:]

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Mr. RYAN. Mr. Chambers.

Mr. CHAMBERS. Good afternoon, members of the committee. I am

Samuel Chambers, Jr., Administrator of the Food and Nutrition

Services at the U.S. Department of Agriculture. I am pleased to

speak to you this afternoon about how the Food and Nutrition

Service [FNS] manages the Federal grant funds for the Nation’s

Federal domestic nutrition assistance programs, as well as how

FNS implements grant waivers. I would also like to share the Department’s comments on the bill before you.

The Food and Nutrition Services administers 15 domestic nutrition assistance programs. We believe that these programs form a

nutritional safety net for America’s low-income families, providing

the Nation’s children and their families with access to a more nutritious diet and encouraging better eating choices.

Each of these 15 programs is targeted at populations with specific nutritional needs, and all of these programs operate under

Federal assistance awards to States who agree to operate them

under requirements established in the authorizing legislation and

through regulations, formal instructions, policies and procedures.

The largest nutrition assistance program FNS administers is the

Food Stamp Program. Currently, approximately 18 million Americans receive nutrition assistance in the form of Food Stamp coupons or electronic benefit transfer [ebt] payments in order to purchase their food.

The Food Stamp Program consists of two parts: benefits provided

to households, and an administrative grant that provides funding

to State agencies for administering the program. Benefits, of

course, are 100 percent federally funded, while most administrative

expenses are at a 50–50 match ratio.

Now, our agency has authority granted for three types of waiver

situations in the Food Stamp Program. The first, of course, is program administration. The second is with regard to work requirements, and that is the one that probably gets the most attention.

And then, of course, demonstration projects.

In the first area, administrative waivers, our regulations allow

us to waive Food Stamp Program requirements so long as such a

waiver is consistent with the provisions of the Food Stamp Act, and

of course does not result in material impairment to participants or

applicants.

Now, to give you an example, we recently approved a waiver for

the State of Maryland concerning when a household must report

income changes. Under the new procedure, a household will be required to report new employment within 10 days of the start of employment, instead of 10 days after the household is aware of that

new employment. This waiver we believe will help households better understand when they need to report a change in earned income due to a new job, and will also make it easier for caseworkers

in that State to determine when a household should report a

change and whether that household is complying with the change

report requirements.

Now, in this area as well as the other two areas, our standard

for responding to waiver requests, once they are filed with one of

our seven regions, is 60 days—not 6 months but 60 days.

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In the second area, the one that I referred to as being probably

the one that’s most popular, that having to do with work requirement waivers, the Personal Responsibility and Work Opportunity

Reconciliation Act of 1996 restricts participation in the Food Stamp

Program to 3 months during any 3-year or 36-month period for certain able-bodied adults between the ages of 18 and 50. FNS may

waive this requirement when an area has an unemployment rate

greater than 10 percent or insufficient job opportunities. Currently,

FNS has approved 39 State requests for such waivers.

Again, we currently act and our standard for acting on these

waiver requests is also 60 days. When a State agency can certify

data from the Bureau of Labor Statistics showing an unemployment rate above 10 percent in a specified area, FNS actually allows

those States to operate under that waiver starting at the time that

they actually request the waiver, so that those happen in a much,

much shorter period of time than the 60-day standard that we normally provide.

The third category, which is, of course, demonstration grants, allows us to permit States to conduct pilots or experimental projects.

Currently, 13 States are operating demonstration projects so that

they can test new techniques to increase the efficiency of the Food

Stamp Program or to improve delivery of benefits to eligible households.

Under this authority, FNS is required by statute to respond to

waiver requests, again within 60 days from receiving the request,

by either approving or denying the request or by requesting clarification of a particular request. If we fail to respond within that 60-

day timeframe, the waiver is approved unless its approval is specifically prohibited by statute. So again, you’re talking about the

same 60-day span that is applied across all three categories of

waivers.

The Food and Nutrition Services uses its waiver authority appropriately, giving prompt and careful consideration to each State’s

proposed changes in program requirements. Because the Food

Stamp Program and other programs that we administer comprise

a nutritional safety net for millions of low-income families and are

national in scope, each change in program rules has the potential

to affect the health and well-being of millions of Americans. Recognizing this, the Department approves many waivers each year, allowing States to experiment with changing program requirements

in the interests of improving the effectiveness of program administration and service to our Nation’s families.

As an aside, I don’t know if Mr. Scheppach has left, but he mentioned during his testimony that he was not aware that our agency

had approved any waiver requests, and I think we’ve submitted information to the committee already but I’d like to at least clarify

for his benefit, if not others, that for the year 1999 we approved

116 requests, waiver requests, for 47 States. For 1998, the year before, we approved 163 waivers for, again, 47 States.

Mr. RYAN. How many denials?

Mr. CHAMBERS. In both of those years, in 1999 we denied 17, and

in 1998 we denied 25, so overwhelmingly the great majority of the

waiver requests that we received in each case from the majority of

States, 47 States, were responded to in the affirmative.

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On occasions, different States may seek waivers from our agency

to test a familiar programmatic change, which is something that’s

been referred to here. FNS believes it is necessary to test the waiver of a program requirement first in a particular geographic area

or in a limited population, so that its effects can be thoroughly

evaluated before additional waivers are granted.

You heard previously numerous individuals testified that no

State is created entirely equal to another, and that is one of the

reasons that we try to be very judicious in our review of waivers,

to make certain that the externalities, if you will, or spillover effects of a particular waiver that is proposed in one particular State

and approved, is tested thoroughly and documented as being not

only in support of the programs mission goals and objectives, but

that it does not create an undue hardship on either the State that

is administering that change or the individuals who are in fact the

recipients, intended recipients of those benefits.

The committee is considering a bill today which would require

agencies such as ours to expedite its review of a State’s waiver request. The Department believes that this proposed legislation is

unnecessary, and I don’t think I need to say anything more about

that except to reiterate that the—that has already been indicated.

While the waiver requests FNS receives from States may appear

to be similar, again, each State situation is unique. In giving each

waiver request prompt and careful consideration, FNS must not

only consider the requesting State’s particular circumstances, but

we believe we must also, if the proposed change is already being

tested and evaluated elsewhere, under what circumstances.

In this way, we are able to support State innovation while at the

same time providing the necessary oversight to ensure that programmatic changes are effective and beneficial. When an approved

waiver unexpectedly results in problems for a State or its recipients, the impact is limited in scope, and the Department and other

States are able to learn from that test case.

Mr. Chairman, this concludes my prepared remarks, and I would

be pleased to answer any questions that you or other Members may

have at this time. Thank you very much.

[The prepared statement of Mr. Chambers, Jr., follows:]

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Mr. RYAN. Thank you, Mr. Chambers.

Mr. Bramucci.

Mr. BRAMUCCI. Mr. Chairman, members of the subcommittee, my

old friend Major Owens, I am pleased to be here to talk about Federal grant waivers. I will summarize my testimony and it’s pretty

straightforward. We believe in waivers. We are using waiver authority to the maximum in terms of sound policy, and we are pushing the envelope whenever and wherever it is sound to do so, actively looking for ways to grant waivers rather than reject them,

or to work with States to help them accomplish their goals in other

ways.

We are doing business in a new way at the Department of Labor,

and it’s very much in keeping with the spirit of the Workforce Investment Act. This act was unique, in that it brought members of

both parties together in agreeing that the best job training or worker assistance programs are those that are designed at the local

level.

Mr. Chairman, since we responded to Chairman McIntosh’s August 3rd request, we’ve continued to analyze, and my formal testimony provides you with more detailed information, but it boils

down to this: Under the Secretary’s waiver authority for 1997 and

1998, 40 States and one Territory requested and were granted

waivers of JTPA and Wagner-Peyser requirements. We approved

423 waiver requests; 26 other requests were not needed because

States could do what they were requesting. We didn’t have the

legal authority to waive 98 requests, and we disapproved 54 requests. So we were approving about 9 out of 10.

My written testimony describes in detail our use of waiver authority, with a special emphasis on waivers under the JTPA program. With due respect to that law, it’s history.

I became Assistant Secretary of Labor for Employment and

Training the day the Workforce Investment Act was passed. Before

that, I spent 4 years as New Jersey’s Commissioner of Labor, and

I know how important it is to partner with States and with local

communities to make good things happen, and I witnessed firsthand the wariness of State officials to Federal officials, and I witnessed also the wariness of local officials to State officials and Federal officials.

We are working hard to ensure that our actions reflect the spirit

of partnership and the flexibility that is inherent in the act, and

the best way the States can ensure they have the flexibility they

need is to take the authority to set their own course that the Workforce Investment Act gives them by moving expeditiously to write

a State WIA plan and submit it.

Our current policy on waivers is grounded in the work started by

Senator Mark Hatfield of Oregon. He worked on one State waiver

authority with Oregon State and local officials, and we worked with

them to try to figure out how to help them improve job training

and employment programs. When Senator Hatfield expanded the

waiver authority under JTPA, he agreed that certain key features

of the program, such as eligibility, allocation of funds, and labor

protections, should not be waived. I wholeheartedly support the

Hatfield doctrine.

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One of the principles of the President’s ‘‘GI Bill for American

Workers’’ which evolved into and was enacted as the Workforce Investment Act, was State and local flexibility. Accordingly, the administration proposal included a codification of Senator Hatfield’s

waiver authority that has been contained in annual appropriation

bills.

Under Welfare-to-Work, the Secretary has the authority to waive

the statutory requirement that programs at the local level be administered by the Private Industry Council if the State shows that

designating an alternative agency would improve service. In 1998,

a total of 20 requests from 5 States was received for waivers, and

they were approved.

Getting back to the Workforce Investment Act, one of its key

principles is State and local flexibility. The form and substance of

the interim final rule for WIA reflects our commitment to regulatory reform and to writing regulations that are user-friendly, and

in a question and answer format to make them easier to use. And

to provide greater flexibility, the regulations do not include all of

the procedures mandated under JTPA. As a result, they were only

half the length that JTPA’s were, as they were published in the

Federal Register, and we used far more ‘‘mays’’ than ‘‘shalls.’’ Under WIA, 90 percent of the waivers granted in the past won’t

be necessary. Since WIA is inherently more flexible than JTPA, we

won’t get as many waiver requests and the ones we get will be handled faster. But there are limitations to what we’ll allow. We won’t

allow waivers of the basic purposes of title I of the act: establishment and functions of local areas and local boards; review and approval of local plans; and worker rights, participation and protection.

Mr. Chairman, I thank you for the opportunity to present the Department of Labor’s point of view, and stand ready to answer any

of your questions.

[The prepared statement of Mr. Bramucci follows:]

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Mr. RYAN. Great. Thank you, Mr. Bramucci.

Let me start with you, Mr. Callahan, and then the other two witnesses. With the letter you sent here to the subcommittee, you stated, ‘‘Waiver applications are highly individual, in that each embraces matters grounded in the specifics of the State’s current

plans, demographics, needs, resources and priorities. Therefore,

each application is considered individually and not in comparison

with other applications.’’ I think that is a very valid point and it is a very noteworthy

point, but does HHS streamline its review process in any way for

a State waiver application which is similar to that approved of another State? If not, can you explain that more fully? I mean, aren’t

there some cases where some of these things do resemble other

cases, other States, or is every single one clearly and distinctly different.

Mr. CALLAHAN. Well, I think there’s always differences in probably virtually every State waiver that comes in. I think your point

may be correct that there’s not major differences in every

application—— Mr. RYAN. Right.

Mr. CALLAHAN [continuing]. And that’s a valid point. But I think

one of the things that probably ought to be kept in mind here is,

when the waiver is finally approved, it is for a rather long period

of time.

So, for example, on the major demonstrations that you’re concerned about, the 1115’s, when a State waiver is approved, it’s approved for 5 years. It’s also renewed for 3 years. And the other ones

that we’re talking about, they’re generally approved for 2 or 3 years

and renewed for 2 or 3 years.

So the key thing here is, aside from the streamlining that you’re

concerned about, is to have a constructive process so that you get

a good, solid waiver, and once it’s agreed to, it’s locked in for a long

period of time. So I guess our feeling on this would be, the important thing is the end goal, which is to get to the approval of a waiver that both sides——

Mr. RYAN. A quality waiver.

Mr. CALLAHAN. A quality waiver. That’s a good point.

Mr. RYAN. Sure.

Mr. CALLAHAN. And I think the record would indicate, again

given the number of waivers, we’ve achieved that.

Mr. RYAN. Well, and I think you will find no disagreement on the

fact that we want to achieve a quality waiver so it is a program

that can be locked in, but aren’t there similar quality waiver requests coming, and aren’t there some coming in 1 day, and then

a few days down the road or a year down the road, very similar

waiver requests that are structured the same way because another

State got them in just as quickly?

Mr. CALLAHAN. Undoubtedly that may occur. Obviously, not having sat in front of those 685 waivers that have been approved, I

can’t give you a very specific answer. But I do think we are mindful

of time. Not only are the State people, the State officials that deal

with us are mindful of time, we’re mindful of time as well.

But we want to make sure, when we approve that waiver, that

we do the two things that I talked about earlier. It has to be budgVerDate 11-MAY-2000 15:20 Mar 15, 2001 Jkt 066706 PO 00000 Frm 00156 Fmt 6633 Sfmt 6602 E:\HEARINGS\62841 pfrm09 PsN: 62841
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et-neutral, and that was agreed with us by the National Governors’ Association. They signed on to that agreement. And, second, we

have to make sure that the people that are served under these programs are well served, and that’s the thing that we’re aiming at.

Mr. RYAN. Well, and that is our question with Wisconsin. Had

BadgerCare been approved a year earlier, we could have served all

those extra low-income people, had it been approved earlier. So the

consequences of not acting, not granting approval, are fairly dire as

well.

Have you estimated a ball park timeframe as to what the average approval process is at HHS?

Mr. CALLAHAN. We will supply that for the record in detail, but

let me say it’s my general understanding that in the area of the

major demonstrations, which are the 1115’s, there have been some

that have taken a long time. The New York case was a long time.

I think you’ve already eloquently stated that the Wisconsin case

took a long time. Some of the other major demonstrations took as

little as 3 months, sometimes more, in the 6 or 7 month timeframe.

Mr. RYAN. Well, as you know, the Executive order says 120 days

is the goal.

Mr. CALLAHAN. Right, but again, these are the most complex

ones because they deal with revisions in the Medicaid program. It

is very clear, because the Medicaid program is an entitlement program, we’re not going to push people who are entitled to Medicaid

out of it.

And, second, we do have to do these budget neutrality calculations, which are complex, which apply to a 5 year period, and we

work with the States to determine what we call the ‘‘without waiver baseline’’ which is the projection of what we believe a normal

projection of Medicaid expenditures without the waiver would be

for 5 years.

So these are more complex, and I would suggest that I’m not

sure you’d want to do those in 90 or 120 days, because if you set

a very arbitrary standard, saying, ‘‘OK, we’ve got to conclude it in

90 days,’’ and we agree to say, ‘‘OK, we’ll either approve it or deny

it within 90 days,’’ you might get more denials.

I guess my point here is, it’s better to keep the parties at the

table, and that’s what we’re aiming for.

Mr. RYAN. Sure, but wouldn’t you agree that it could be done a

little faster? I mean, given the fact that the administration’s own

Executive order says we want to do this within 120 days? I agree,

an arbitrary date may increase the possibility of denials, but can’t

progress be made.

Mr. CALLAHAN. Yes, I don’t deny that progress can be made, and

we have on our part put out a lot of technical assistance guidelines

to the States to indicate the things that we’re concerned about

when we come to the table. We would hope that sort of technical

assistance will create a situation where we’ll come to the table as

quickly as possible and get these things approved as quickly.

Mr. RYAN. We will go to another round of questions, but I would

like to ask my colleague, Mr. Owens, if he would like to ask any

questions at this time.

Mr. OWENS. Yes. Thank you very much. I hate to sound like an

old-fashioned Democrat liberal, but the assumption is being made

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that the more freely waivers are granted, the more improved government, and I think that both the White House and the Republican majority in the Congress agree with that assumption and are

pushing very hard, and your record demonstrates that. I think

you—had we been talking about this 10 years ago, the record

would be quite different in terms of the kind of waivers, number

of waivers and kind of waivers granted.

But I really have some problems with the assumption that automatically things are done better at the State and local level. You

know, we have a scandal in New York where a clerk for the last

7 years has been taking bribes to marry people without making

them follow the proper requirements, and some folks are wondering

whether they are married or not, you know, appropriately. We have

a situation where 20,000 kids were forced to go to summer school

because there were blunders on the testing, the process of scoring

the test. We have a Governor of the State of New York under investigation and scrutiny because of some ethical questions, ranging

from his fee, the fees he collects for his speeches, to the way they

let contracts.

And on and on it goes. Corruption at the local level, you know,

I know we are all familiar with. I think, Mr. Bramucci, you were

with State government. I know that local government is the same

thing. You would concede that it isn’t the most efficient and the

cleanest form of government. We had a situation recently where

the mayor of New York had to be ordered by the Federal court to

stop abusing potential welfare recipients and Food Stamp recipients.

So, I just wonder, in this process of rushing to grant waivers and

place our faith in the State governments, do we have some safeguards? And can we have more safeguards and some stringent penalties for people who violate the law because the waivers give them

a situation where nobody will be watching, monitoring, holding

them accountable?

We have large amounts of money not being spent, that we think

ought to be spent for job training, day care. We have a situation

where large amounts of money are being saved by adopting certain

policies, because the Federal share is part of it and there is a State

and local share, and therefore these waivers give the government

a chance to save a lot of money on the backs of people who are in

great need, and they are being denied things that they really are

due according to the legislation and they are eligible for.

So I wonder if you would comment on any safeguards that we

might need, like penalties in the law which really put people in jail

for violating the law. After they have been given all this freedom,

if they are caught violating the law, they really have to pay a price.

Or some other means of making certain that while we give this

greater flexibility and freedom, we don’t undermine the real purpose of the laws, mostly the safety net laws that people want to

push for waivers with. And I just wonder if you want to, each one

of you might want to comment on that?

Mr. BRAMUCCI. Since the Workforce Investment Act envisions the

greatest transfer of authority and initiative to the local level under

State auspices, remember I said in my testimony that notwithstanding that transfer and that new partnership from the bottom

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up, we would not give waivers on eligibility for benefits and for programs, allocation of funds, nor labor protection. We’ll be watching

that very closely, because what we’re not trying to do here is have

an excuse for less people being trained, but for more, and to do it

more expeditiously, however, by having fewer rules and regulations

and more flexibility on the part of local communities to design the

kind of programs they need for the local citizens.

But the aim is to expand the availability of training and education to people who direly need it in our economy. We’d be sweeping things under the rug to take that—to take a point of view that

we’re trying to save money here on services. We’re trying to save

money on red tape. We’re trying to extend the availability of the

service to eligible workers, Congressman.

Mr. OWENS. Now I would like to see about that waiver for truck

drivers in New York City.

Mr. BRAMUCCI. Yes. You asked me about that before.

Mr. CHAMBERS. I’d like to make a few comments in response to

that question. I’ve had 31 years of experience in government, all of

that time in human services, working with Food Stamps and similar programs, TANF, the old AFDC program. I’ve been a caseworker, a child welfare worker. I’ve been a supervisor, manager.

I’ve done constituency services. I’ve been a county director, I’ve

worked at the county level, I’ve worked at the State level. I’ve only

had 1 year of experience at the Federal level, and I can tell you,

I’ve seen in that 31 years some of everything. I think when I’ll retire I’ll write a book and call it ‘‘Anything You Never Want To

Know About Government, And Then Some.’’ But, at the same time, I’ve seen some absolutely wonderful, creative work done at every level of this American government, and

I have to believe that my collective experience over that period of

time at the three levels of government, at least in the human services, suggests to me that in the main the people who are managing

these programs and who are carrying out the directives of the administration and Congress really are people of good will and intent

and tremendous talent and expertise.

I believe, and I think it would be my—hopefully my colleagues’

perspective also, that the waiver authority that we currently have

granted to us allows us a lot of opportunity to do real partnership

and collaboration with our peers. And by virtue of the fact that we

have been able to do waivers, I think, and meet many of their requests, in fact, in the majority of cases, their requests for innovation and creativity, I think we pretty much feel that we’ve got our

hands pretty well firmly on the throttle here.

I think in terms of situations where experiments go awry or perhaps the results that are achieved are not precisely what others or

individuals might have hoped, I think there are means that we

have at our disposal for addressing that, both in terms of negotiating with those States that have gotten the waivers, changes in

those provisions so that the problems can in fact be corrected and

the results can in fact be improved.

So I think as long as we can maintain a spirit of collaboration,

partnership and cooperation in this regard without the rancor that

sometimes pervades discussions between advocate groups and

States as well as the Federal agencies, and then even our customer

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constituents, as long as we can somehow get past all that, I think

we have a real opportunity for real success here in terms of reinventing government and making a positive step for quality of life

for all of our citizens, the ones that we represent who are here as

well as those that are not here, that need our services. So, thank

you, that’s my perspective.

Mr. OWENS. Thank you.

Mr. CALLAHAN. I think with regard to the waiver process, your

point is a correct one. These are waivers, these are time-limited

waivers, so it is incumbent upon all the agencies that have the

waivers, including our own, to look at and evaluate these waivers

not only to see whether they made improvements in the program,

but clearly that there were no adverse effects on the beneficiaries

of the program. And that’s the basic philosophy that we use in

dealing with the waivers, so your point is a correct one.

Mr. RYAN. Mr. Owens, let me respond. As an old classical liberal,

I guess as a young classical liberal, I just think it is important to

quote Winston Churchill at this time, who said that democracy is

the worst possible form of government except for all other forms of

government. It is a sloppy process. You do have graft and corruption. You do have unintended results.

But the foundation of democracy, from my perspective, is the

idea that government which governs closest to the people, governs

best. That way you have those who are right there in the streets,

in the schools, in the hospitals, on the front lines of the fight for

reviving our society, helping make the decisions on how to improve

the conditions in our society.

And I think what we’re trying to achieve here is a good cooperation, not a Federal Government hunkering down on top of the State

governments or the local governments. And, Mr. Chambers, I think

what you said was a wonderful statement, which is, we are not trying to achieve finger-pointing, we are just trying to achieve results.

I think everybody that works at all of these departments and in

these State governments, and here in Congress for that matter, are

well-intentioned people trying to achieve good results for their citizens, their fellow citizens. Our constituents, your constituents, are

all citizens of the United States of America.

But, having said that, we do have this wonderful thing in America, and that is, we have these institutions of democracy, State and

local governments, all over the country who have a good, in most

cases better perspective on how to help and care for people in their

areas. The whole purpose of waivers is to try and get those tools

in the hands of those local governments, those State governments.

Mr. OWENS. Would the gentleman yield?

Mr. RYAN. I would be happy to yield.

Mr. OWENS. I have to run, but I just want to say I have served

at all three levels of government, and I don’t agree with you at all.

Mr. RYAN. Well, thank you, Mr. Owens. I appreciate that. I think

we are just going to agree to disagree on some of these things.

Let me go to you, Mr. Callahan. I wanted to ask you a few specific questions, because we were going down the path on the some

of the health care programs that you administer, and in NGA’s

written testimony they explain that Texas and Michigan’s applications to combine waivers under Section 1915(b) managed care and

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Section 1915(c) long-term care, to create managed long-term care

programs under Medicaid, required more paperwork and more staff

resources than if they had requested separate waivers for each section.

Why was this the case? I mean, why did HHS require more paperwork for a combined application than for separate applications?

Mr. CALLAHAN. Well, I haven’t had the benefit of seeing Mr

Scheppach’s testimony, and I will have to supply that answer for

the record.

Mr. RYAN. If you could, please.

Mr. CALLAHAN. Yes, sir.

Mr. RYAN. Let me go on and let me ask you, maybe you can do

this in written followup, but later in their testimony they said,

‘‘Currently many States are interested in pursuing coordinated care

options for individuals who currently have a fragmented health

care delivery system’’—that is something we are experiencing here

in my home State of Wisconsin—‘‘those frail seniors eligible for

both Medicaid and Medicare. Several States have engaged in protracted negotiations with HCFA’’—the Health Care Financing Administration within HHS—‘‘but have ultimately, and for several

years in some cases, withdrawn their application.’’ The goal of State experimentation, State improvement in my

State is to try and get at all slices of society, to make sure no one

is slipping through the cracks. We do have different health care

policies, different health care services out there that people can at

the same time qualify for, yet it is sort of a stovepipe viewpoint

from the Federal Government.

Mr. CALLAHAN. I understand the concerns that you have raised

about the seamlessness of care. However, we do have to acknowledge the fact that Medicare and Medicaid are two very different

programs.

Mr. RYAN. Clearly.

Mr. CALLAHAN. In Medicare, there are concerns that we have to

deal with vis-a-vis the trust fund on Medicare, in terms of, for example, if there were a basically a waiver that was designed just hypothetically, say, to save Medicaid funds but expand Medicare

funds. That has an impact on the Medicare trust fund. I think

that’s something that actually the Congress would have to consider,

as well.

Mr. RYAN. Are the budget neutrality——

Mr. CALLAHAN. If I could just finish——

Mr. RYAN. Oh, sure.

Mr. CALLAHAN [continuing]. There are a couple of other things,

too. There are differences in the Medicare and Medicaid beneficiaries, in eligibility rules. For example, in Medicaid programs we

have permitted waiving freedom of choice in providers of programs.

That is, States as part of their demonstrations have put a lot of

Medicaid beneficiaries in managed care programs.

A Medicare beneficiary is free to choose. A Medicare beneficiary

is free to choose as to whether he or she wants to be in fee-for-service or whether he or she wants to be in managed care. That’s part

of the basic statute.

So those sorts of things have to be weighed in these matters, and

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gitimate concerns we’d have to deal with before we resolve the

problem along the lines that have been suggested.

Mr. RYAN. Do you have any thoughts on how we can resolve that,

any statutory changes or anything like that?

Mr. CALLAHAN. Well, I think you’d have to look at changes in

both the underlying authorizing statutes, both Medicaid and Medicare. I think one of the points that your colleagues made here

which is a good one, if these things become so routine and accepted

over time, maybe what we have to do is, go back and change the

basic underlying statute. And insofar as this committee can look

into that and can suggest that, then I think that’s something you

should—— Mr. RYAN. Yes, I think that is a very—that is what we did with

welfare reform.

Mr. CALLAHAN. Right.

Mr. RYAN. I think it is a very, very valid point.

The CHIP program, I know the CHIP program is relatively new

and waivers have been set aside for a year.

Mr. CALLAHAN. Right.

Mr. RYAN. What is the status of that right now?

Mr. CALLAHAN. As you know, in the CHIP program, I think it’s

within the last 4 to 6 weeks we had the last two States finally

come in and have their CHIP programs approved, so all States now

have either a separate CHIP program or, as you know, what they

call the M–CHIP program, where they cover the children under

Medicaid expansion as opposed to the CHIP program per se, the S– CHIP program.

And, as you know, we estimate that somewhere in the order of

1.3 million children are now covered under the CHIP program. The

President has asked and directed our agency to go out and actually

visit all 50 States, right now which we’re finishing up, to see why

we aren’t getting more kids that are Medicaid eligible and/or CHIP

eligible, enrolled in Medicaid and CHIP. I’m sure some of your

State legislators have talked to you about that.

So I think we want to be in the process of getting this overall

program up and running at a fairly high rate before we get back

into the waiver process. I think we will get into the waiver process

at some point.

Mr. RYAN. Do you have any idea what the time line is?

Mr. CALLAHAN. I’d like to supply that for the record, because

I——

Mr. RYAN. Because I think the legislation had some requirements

within it that——

Mr. CALLAHAN. Oh, I understand.

Mr. RYAN. A specific time line.

Mr. CALLAHAN. Right. I understand, but I’d like to confer with

the HCFA administrator on that.

Mr. RYAN. If you could, I would appreciate that.

Mr. Bramucci, I just wanted to ask you a quick question. I was

intrigued with your testimony, but I also notice that, looking at the

statistics that the Department supplied the subcommittee and the

other departments supplied the subcommittee, that the Department of Labor has the highest denial rate of any other department

in the Federal Government, a 29 percent denial rate.

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Could you—you briefly touched on some of the denial reasons,

but could you go into a little more specific why your Department

is the highest, has the highest denial rate, and what are the reasons for the bulk of these denials?

Mr. BRAMUCCI. Well, statutorily we have—the biggest number

that you saw in our graph. By the way, this has been added to our

testimony. You’ll notice that the biggest number on negativity are

the ‘‘no authority to waive.’’ That isn’t a denial, it’s simply a denial

of authority under the statute.

We simply—54 cases are all that we denied over those years, and

in most instances we’re eager—I mean, some of the things talked

about here, when we have a request for a waiver, for instance,

that’s on our website. We publish not only the request for a waiver

but the answer, so that States can pick up information as to what

is OK and what isn’t, in order to facilitate discussion.

We have detailed meetings with our partners all over the country

on these issues. And, you know, I’ve been around the country now.

I’ve been on this job 14 months. I have traversed hundreds of programs out there with all kinds of officials. I’ve never heard an official, Republican, Democrat, or a Ventura-ite, ever question our

waiver objectivity. I have never—— Mr. RYAN. Jesse Ventura has never questioned your waiver?

Mr. BRAMUCCI. No, he has not.

Mr. RYAN. OK.

Mr. BRAMUCCI. No, they have not questioned our—in all the time

I’ve been in this office, 14 months, not one person has accosted me

or said to me, ‘‘Bramucci, the Labor Department is not doing its job

properly.’’ Mr. RYAN. Let me ask you about the 54 discretionary waiver denials or the 54—I just saw your chart for the first time here— where the waiver was disapproved. Is there a pattern there? Is

there a systematic pattern? Is there a reason why those were disapproved? It sounds like those were disapproved by discretionary

decisionmaking within the Department of Labor.

Mr. BRAMUCCI. Basically it’s commingling of funds or requests to

waive outcomes or performance data that we found we couldn’t live

with. It would just not be proper under our stewardship of the law.

You know, Congress just didn’t say, ‘‘Here, send the money out and

there are no requirements,’’ and so we’re the referee. We have to

call it.

And we would like to say yes because we have an active partnership going. But I will point out to you, Congressman, that most of

that is all moot because we have moved to a new era. We’re out

of the business of doing—— Mr. RYAN. With the new law?

Mr. BRAMUCCI. With the new law. Ninety percent of the requests

and approvals we made would not be germane today.

Mr. RYAN. I think that’s a very good point. The new law hopefully will take hold, and hopefully we can take care of this experimentation.

Mr. BRAMUCCI. We’ve got to get the States to file their plans, and

we’ve got I think 16 in the house now, because this is a massive

enterprise of passing authority and initiative out to the States and

to the local communities. And we think it’s going to work, and

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there is an enormous push for it, and it will remove a tremendous

amount of frustration at intergovernmental relations.

Mr. RYAN. Well, let me ask each of the three of you this: To get

a better handle on the 85 percent approval rate reported by the

agencies to the subcommittees, 85 percent of the waivers being approved, were any State waiver requests only partially approved by

each of your agencies? And if so, what percent of your agencies’ approvals were partial approvals, and can you give me the nature of

the partial approval process? Let’s just go down the line. Mr. Callahan?

Mr. CALLAHAN. In terms of partial approval, I suppose the question may be a definitional one. And you’ll forgive me for a moment,

but if a State comes in and puts in a waiver request, and then we

negotiate with them and we come out with a different product in

the end, is that—do you determine that to be a partial waiver?

Mr. RYAN. I would think so.

Mr. CALLAHAN. Well, why?

Mr. RYAN. Well, the input is, the State legislature passes a program. Let’s take BadgerCare, our own program back home. It requires so many waivers. The output is something that looks different than what the State government passed.

Mr. CALLAHAN. So in essence, then, if I may, in that case I’d

have to give you precise information as to whether the initial waiver was not approved in its entirety, as opposed to whether a different waiver was approved, and we’d have to do that. That would

take quite a bit of work.

Mr. RYAN. I think a better question would be, in the approval

where it ends up becoming a partial approval, are there cases

where with other States they did get approval, and another State

did not get approval, for very similar provisions or waivers that

were being requested?

Mr. CALLAHAN. Well, that would require a detailed examination

of all these 684 waivers that we’ve approved.

Mr. RYAN. Just off the top of your head, as an administrator.

Mr. CALLAHAN. I would say by and large for a lot of these waivers, the 1915 (b)’s and (c)’s, a lot of them were probably approved

in very close conformance with the original submissions. The

1115’s, which are the more complex waivers, probably under your

definition would be viewed as ‘‘partial’’ waivers. They’re very complex and—— Mr. RYAN. Do you think there is, do you have, are you applying

a consistent application of scrutiny to waivers coming in, regardless

of the States.

Mr. CALLAHAN. Yes, absolutely.

Mr. RYAN. Mr. Chambers.

Mr. CHAMBERS. Unfortunately, the information that I have available to me here today does not include that breakout, so I’m going

to have to get back to you for the record.

Mr. RYAN. OK.

Mr. BRAMUCCI. I don’t think so. Generally we get a package of

waiver requests, and to the extent that we would approve—that a

State did 40 requests and we approve 35, if we find—that would

be partial in terms of their package of requests. But what our practice has been, Mr. Chairman, is to take a look at the ones that are

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borderline and negotiate that with the State, to say, ‘‘If you do this,

we will be able to do this,’’ or ‘‘If you change these words or that

word, we will be able to do it.’’ We don’t believe that there is an

issue on the part of our partners in the States in that regard.

And to the argument about whether or not we have ever denied

a State a waiver where we had granted a similar waiver previously, the answer is yes, in one case. That involved the State of

Florida. The then-Governor was Lawton Chiles, and we had an ongoing dispute with them on their JTPA review process, and we

were not, because of the legal nature of the dispute, we were not

capable of approving that request. That’s the only request I know

of where we have taken a similar request, granted it in one State

and denied it in another.

Mr. RYAN. Well, let me ask the three of you gentlemen this, and

then we’ll close. Do you think that denials or the negotiations that

are entered into to restructure waiver requests can serve or are

serving as disincentives for other States to go under the same process? Or let’s say three States give you a waiver for a program, they

are denied, do you think, as the NGA testifies, that that is a disincentive to other States to go down the complicated, expensive and

timely task of looking for a waiver?

Mr. CALLAHAN. I would say emphatically not.

Mr. RYAN. Why?

Mr. CALLAHAN. And the reason is 684 waivers that are approved

over the last several years. That’s a lot of waivers that are approved, and I think when our colleagues at the State level or at the

local level want to do something innovative and constructive and

they believe in it, they’re going to pursue it.

So, for example, even in the case of Wisconsin where we did have

differences, we kept working and working and working. And the ultimate result was that the kids, under the ultimate BadgerCare

demonstration that was approved, were approved under the M– CHIP program for an enhanced match for services; and the families, the adults, were approved under the Medicaid program, the

State Medicaid program.

Mr. RYAN. Yes.

Mr. CALLAHAN. So in the end, the people were served. So I would

believe, my feeling is that for those waivers where there is strong

State support for their waivers to serve their constituents and our

common constituents, that they will pursue the waiver process.

Mr. RYAN. Well, for the record, in the end they were served 2

years after the legislation passed, but I appreciate your comment.

Let me ask just this quick question. We have talked about some

different ideas, different ideas for streamlining the waiver process.

What are your thoughts on these ideas? A statutory deadline, I

think, Mr. Callahan, I got your impression on a statutory deadline

for processing waiver requests. What about broad statutory flexibility to waive most statutory provisions, like the Ed Flex bill?

I don’t know, given that that doesn’t necessarily affect each of

your agencies, you may not have a clear opinion on that one, but

what about statutory provisions allowing State certification for financial requirements like maintenance of effort, matching funds,

set-asides, cost caps, or a statutory requirement for quarterly publication of approvals and denials and a processing time for each, like

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what HUD does with its waivers? What are your thoughts on reforms like that? We will start with Mr. Bramucci.

Mr. BRAMUCCI. Well, built into the Workforce Investment Act is

a requirement that we turn around these requests in 90 days.

We’ve done better than that most of the time. Our record with Welfare-to-Work, a highly—an extensive program, $3 billion over 2

years, we had 20 requests, we turned them around in weeks, for

waivers. I don’t see, and this isn’t—— Mr. RYAN. So you like the statutory deadline, or—— Mr. BRAMUCCI. No. I think that—I think things in our Department are running fine. I think we’re very attuned to the need to

turn around decisions and to work closely with State and local

partners. And the old philosophy, ‘‘If it ain’t broke, don’t fix it,’’ ours ain’t broke, and I’m confident that we’re doing the right thing

and we have excellent lines of communication with our partners.

Mr. RYAN. So you don’t think there is anything we can do to further streamline the waiver process?

Mr. BRAMUCCI. I’m talking about the Labor Department, and in

the Labor Department, with the change of legislation which is dramatic in that, it is an enormous transfer of authority and discretion

to local and State governments. Therefore, the whole issue becomes

moot in terms of how you treat us. Our rules are different, because

our rules now are to approve the State’s mechanism for taking

clear title to this power and authority, so our relationship changes.

Waivers are now less and less important. Maybe that’s the answer.

Mr. RYAN. Very good point. Thank you.

Yes, Mr. Chambers.

Mr. CHAMBERS. Let me say that I really need to think more

about the substance of your question, but I will say this much.

After my review of this whole situation, I think—I have a couple

thoughts.

One, I think we have adequate, if you will, direction within the

statute and regulations, that we are required to conform to the 60-

day standard that we apply, we meet in the majority of cases, except in a few cases where because of lack of information or the

timely receipt of that information, deliberations may go on, negotiations may go on somewhat longer. But I think that our overall

track record is one that would support the fact that the system is

not broke, it is functioning.

If I would make any recommendation at all, and this is based on

my work both at the State and county level as well as now at the

Federal level, and being able to compare relationships across those

three levels, I would say that the one thing that we could do that

would help our overall administration of these programs, regardless of where you happen to sit, in which part of the king’s court

you happen to sit, would be if we could somehow dispel the notion

that, one, the States are intimidated by the Federal agencies. My

experience of 31 years is that there are very few elected or appointed people in State governments who are intimidated by Federal agencies. My experience over the last years is certainly anything less than that.

Second, I believe we need to encourage and support, as I think

the committee is trying to do today, the negotiation, the ongoing dialog, and the collaboration between all levels of government, with

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the understanding that we can achieve more working together than

we will ever be able to achieve taking cheap shots at one another.

I think, unlike the testimony, at least my review of some of the

testimony that’s been given here by at least one individual, that

the environment that we exist in is a much healthier one than

some would suggest. There is ongoing dialog. Our agency continues

to have dialog with multiple constituencies about our programs, including State representatives, people who are members of and participate with the American Public Human Services Association

[APHSA], for example.

We will have staff at their national meeting this next week in

Park City, UT, there not for the purpose of engaging in conflict but

for the purpose of showing support for the States’ efforts as regards

the Food Stamp Program, which is our flagship program, but at the

same time hopefully responding to some of the issues that the

States have been discussing with us over the last year, particularly

in the area of program integrity and access to program benefits, so

on and so forth.

So I think there is in fact a healthy dialog that we need to support and reinforce and fuel wherever we possibly can.

Mr. RYAN. Mr. Callahan.

Mr. CALLAHAN. I would say in general four things. One, some of

the time deadlines that are in some of the statutes and regulations

are helpful. Second, I think the agreement that we have with the

NGA is a helpful guideline to evaluating these waivers.

And then the last two things is, I think it is very important that

we maintain fiscal stewardship along the lines of cost neutrality;

and, second, that we basically uphold the congressional statutes

that have been passed, especially vis-a-vis the entitlement status

for the individuals under these programs, whether it’s Medicaid or

welfare or child welfare.

Mr. RYAN. It seems like each of you are more or less saying that

statutory changes may be necessary as well. I think clearly, Mr.

Bramucci, that is what you were saying. That is just an observation. I am not necessarily asking you a question.

Are there any other statutory requirements that you think would

add to that, to addressing those needs that you just mentioned, Mr.

Callahan?

Mr. CALLAHAN. I’m sorry. Vis-a-vis what, what statutory

changes? Vis-a-vis the process, or——

Mr. RYAN. Yes.

Mr. CALLAHAN. Well, I just—I would respectfully say that I don’t

think the process is broken. I’ve maintained in my testimony, both

the oral and the written testimony, that I believe what we have is

a process of constructive engagement.

Now, maybe this chart is an oversimplification, and none of us

likes complication, whether it’s in our daily life or what have you.

But you all know, both members and staff, that government is complicated. People come to this with a lot of different views.

And we at the Federal level have an obligation to uphold the

Federal laws as they are passed, which you pass and we have to

administer, and we have an obligation also to be prudent fiscal

stewards in this regard. And I think the waiver process that we

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have put into effect, which has approved these 685 waivers over

these last several years, has tried to meet those two goals.

Mr. RYAN. Well, I think what I would like to have the three of

you leave with is basically this, that there is another side to this

story; that the Governors are frustrated, that the State legislatures

are frustrated. The NGA, through their testimony, I would ask you

to read their testimony, are frustrated; that they see other States

getting waivers, they are coming up with similar waivers, and it

still takes a heck of a long time, longer than the 120 days as called

for in the Executive order.

So all I am asking is, please think it through a little bit. This

legislation will continue to move down the tracks, and the intent

here is not to undermine existing Federal legislation. The intent is

to get good answers at good, reasonable pace of time, to better

serve the very people we are trying to serve.

BadgerCare is a good example. We would like to have had

BadgerCare in law in 1997 when we passed it and conceived of it

in Wisconsin, but it is just now becoming implemented. Meanwhile,

thousands of people were without health care in the low income

part of the State.

So it is frustrating, and there is a lot of frustration out there

from the other levels of government, specifically the Governors and

the States. So I just ask you to take a look at that. We will submit

everybody’s questions and statements in the record.

With that, the hearing is adjourned, and I want to thank everybody for coming.

[Whereupon, at 4:25 p.m., the subcommittees were adjourned.]

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