18

Mr. Horn. We can make a copy and return it to you, so—

Mr. MarTIN. The—I have the OMB letter, as well, Mr. Chair-
man. The OMB letter says that they concur with the objectives and
intent of the bill; however, we're already doing it, and if you make
us do more, it’s too much paperwork.

[The information referred to follows:]


38

PREFACE

‘The purpose of this directory is to provide a primary reference source for
national policy requirements and administrative management standards
("crosscutting requirements") that applied to Federal financial assistance
Programs at the time of publication. This volume is an update of the
directory first published by the Office of Management and Budget (QB) in
1982.

‘As used here, national policy requirements are those prescribed by statute,
Executive Order, or other authoritative source, which apply to the assistance
programs of two'or more agencies. Administrative management standards are
those "good management" policies and procedures prescribed for implementing
assistance programs throughout the Executive Branch. ‘The policies and
standards included in this inventory are listed because they subject either
Federal agencies or assis ents to their provisions. Same of the
policies and stangards-appiy: 10 ey every Federal assistance program,
while others apply to only a few, selected programs.

In the pages following this preface, there are several pages of information
designed to assist the user:

A. An alphabetical listing of relevant statutes, Executive Orders, OW
cireuarss and other dh rectives, cross-indexed to the appropriate
directory entry, by reference nunber, and showing. the page nunber(s)
of the entry.

B. A listing of directory entries, by reference number, cross-indexed to
Statute or other authority, and showing the page number(s) of the
entry.

Amatrix showing the applicability of each requirement and standard.

A brief summary of several major requirements frequently found in
specific assistance programs, and which express or reflect national
Policy objectives, but which are not included in the directory.

The main body of the directory contains separate entries for each o(68)+4
crosscutting requirements. AS an aid to the user, these entries have been

divided into five sections, by subject area: 1. SOCIAL POLICY TREVENTS ,
11. ECONOMIC POLICY TREMENTS, 111. ENVIRONVENT/ yy IV.
ADMIN TVE cy TREVENTS, and V, ADMINISTRATT

STANDARDS. “Each entry contains a description of the applicable policy
Fequirement, statutory and regulatory references, major court case citations,
and other summary information. This descriptive material was prepared by the
Federal agency principally responsible for the implementation.of a given
policy, and each entry also includes the name, address, and telephone nunber
of @ responsible official, so that further information can be obtained,



Pep?

7. specifications in areas of secretarial discretion;

©. charifiemtion of voles (sume practice provaits in Snuncis! management and auditing, i. OMB
(Clreatar A-$7 is waived,

9. sleet ia ether meapects % permit mas to make their own inserprestions of the setes snd
edminister the program appropriate wo their own woods (Sec: afermation Coltecsion Budge. FY

. {942, Exsouve Ontrof te rein, CBR, pgs 17 2082, and

10, exemption for civil rights is presumed. -

‘The roles are used for the origina! nine block grants of 1961 and 1962, except where specificelly

‘changed by Congrens, such os in the Alcohal, Drug Abuse, and Mental Health Biock Grant. which is

0 severely changed with earmarks and semsides that i is « biock grant in name oniy.

Without specitic dinection by Congress, the exter of regulations for ail fodera! funds is the
Gacrtion of the executive branch, beginning with thess T) or more cross-cutting regulations.

sachment

[eumject: common nites.

}. Union Relocation Assistance - however, after leuance & pursuant to legistation,
‘common rule was converted to a " “

government-wide nde
Grarta Mdanagernant Common Pale - which inchuded requirements on State & local

2
‘govemments formerly in OMB Circular A-102

‘3. Nonprocurement Suspension and Debarment

4. Drug-Free Worlplace Act

S Sydersicting

Amendment Act
Protection of Human Subjects in Research


43

other issues—government management, year 2000 and so on. It’s
been very constructive work.

And I want to congratulate you and Mr. Kucinich, your ranking
member—ranking today?

Mr. Horn. No, ranking in perpetuity.

Mr. PorRTMAN. Congratulations. He might not like that.

Tm here to testify in favor of the legislation that you have before
you. I think this is just pretty common-sense legislation. It’s been
introduced in the Senate, as you know, by Senators Thompson and
Glenn. It has been reported out of the Senate Governmental Affairs
Committee. It’s the Federal Financial Assistance Management Im-
provement Act, and as its name indicates, its purpose is to simplify
grant applications to make the process of participating in grant
programs a lot less burdensome and costly.

It builds on past efforts. As you know, this subcommittee has
been involved with such legislation as the Government Perform-
ance Results Act to reduce Federal burdens and, of course, the Pa-
perwork Reduction and Unfunded Mandates Reform Act, which
went through the subcommittee also. It will make the government
work more efficiently for the people it serves.

I’m sure you’ve heard from your own constituents. I've heard
from mine, and I think you have just heard from some representa-
tives of State and local government. Nonprofit organizations have
come to me, and so on, and they just talk about the frustrating
process of going through applying for Federal assistance, and in
participating in programs.

Applying is often too consuming; it’s too costly. Organizations
that can afford it now turn to grant writers, and there’s a whole
business out there of writing grants to be able to comply with the
Federal requirements in the process, and then once you get the
grant, to be able to monitor it.

Those that don’t have the resources to do that have to do it
themselves, and it takes them away from their own activities.
Again, there are nonprofits that are doing good out there, but are
spending a lot of their time working with paperwork.

I’ve had recipients come to me and say, you know, it really
wasn’t worth the effort in the end. If I knew that going in, I prob-
ably wouldn’t have even applied for your Federal grant, thank you
just the same. So the idea here is to try to reduce those burdens.

There’s a group in my district who just hired a part-time staff
just to comply with additional reporting requirements imposed by
particular programs. The Ohio Association of Nonprofit Organiza-
tions has informed me that the biggest problem in administering
the more than 600 different financial assistance programs is that
the Federal agencies lack sufficient coordination with each other
and the recipients are often subject to duplicative reporting re-
quirements. This should come as no surprise to us when you con-
sider the multitude of Federal grant programs out there that pro-
vide funds to State and local governments, nonprofit groups, al-
though many are in the same functional area.

For instance, there are more than 80 in the education area—ele-
mentary, secondary, vocational—and more than 80 in social serv-
ices. There are also separate application reporting and administra-


10

funds, transfer stuff. We want to mention there are some examples
of excellent Federal, State cooperation that we can buildupon in
this regard. And to me, the bill before you is the logical continu-
ation of some of these past successes.

The Federal and State governments worked together very suc-
cessfully to implement the Single Audit Act; the General Account-
ing Office and a lot of State stakeholders participated in that. I
think about the Cash Management Improvement Act, and the U.S.
Treasury and OMB, together with a lot of State agencies, and we
got that done. More recently, I think about the electronic benefits
transfer and the—under the leadership of OMB, there was a Fed-
eral task force created, very specifically involving State interests,
and the result is nationwide deployment of electronic benefits
transfer.

So in the spirit of these past successes, we would urge for your
consideration of legislation that would keep the ball rolling, get
into the domain of Federal grants, Federal assistance programs,
and as I’ve talked about today, specifically the funds transfer or
payment aspect.

Thank you very much for this opportunity. I hope I haven't over-
stay ed my 5 minutes, and I will be pleased to entertain any type

f dialog or questions, if you would please.

o Mr. Horn. Well, automatically once we introduce—your full
statement is put in the record, and then we appreciate the 5-
minute summary.

[The prepared statement of Mr. Kilmartin follows: ]


53

Mr. PoRTMAN. I’m sure it’s your experience——

Mr. Horn. I thank the gentleman for raising it.

Mr. PorTMAN [continuing]. Mr. Kucinich, as well as Mr. Horn,
there are in your district certain communities that more aggres-
sively pursue these grants and go to your office and look for help.
They’re the ones that tend to get the grants, because you can pro-
vide them with some expertise. Not that you’re doing anything at
all improper in terms of getting the grants, just providing them the
expertise as to what’s out there and then how to apply, how to go
through the process.

Some of my smaller communities do that with our office on a reg-
ular basis, and the more aggressive tend to have more success. But
the vast majority of our smaller communities just throw their
hands up and don’t even access it.

I would say just as a general comment—and I know Mr.
Kucinich may have other questions—I looked at the OMB concerns
about the legislation. And I understand that they’re going to have
to administer this; we want to bring them into the process. But I
think we can err on the side of not doing enough here. I mean, if
anything, this bill doesn’t go far enough in terms of really getting
at the problem Mr. Kucinich has raised and Mr. Horn has com-
mented on, which is this plethora of programs out there that most.
smaller communities and smaller nonprofits, just as a practical
matter, can’t access. So this is, I think, a modest first step in that
process.

Mr. Horn. On that point, what do you suggest might be done?
Apparently you're dissatisfied with that part. What should we add?

Mr. PORTMAN. Well, if this subcommittee wanted to take it on as
a task over the next 2 or 3 years to go look at the all the grant-
making, I think it would be great. It’s a difficult process, it’s so
huge. I gave you some data in my testimony about the 600 dif-
ferent Federal system programs that are out there right now. Real-
ly, the Congress would be well served, I think, to roll up its sleeves
to get into these. .

GAO can perform certainly an effective role. I assume that——

Mr. Horn. Well, Education and the Workforce has presumably
done, this. They’ve consolidated 300 programs, worker-training kind
of thing.

Mr. PorTMAN. And again that’s a good step forward, the one-stop
shopping that some States have, including Ohio, I think is a good
step forward. My only point is, I don’t view this as a radical pro-
posal. I think it’s common-sense stuff and modest, and we can go
even much further over time. And we aren’t in a position to do that
without having the hearings and so on.

But I think—it’s difficult for me not to respond to some of these
OMB concerns by saying, this is the least that we can do. We at
least need to be sure there’s not overlap. We at least need to be
sure that there’s a streamlined process, that there are goals, and
that there is involvement from nonprofits, local and State govern-
ment in the setting of the goals and in measuring the progress.

Mr. Horn. Do you have any more questions?

Mr. Kucinicu. I yield back the balance of my time. Thank you,
Mr. Chairman.


51

can do this right, if there indeed is less duplication—fewer trees
being cut down, as you said—less overlapping requirements, and if
OMB takes an active role in coordinating this.

I know one of their concerns is, they don’t have the resources and
ability to do too much coordination. They have to be involved in
this because there has to be an overarching coordination of it.

It will result in the end in a cost savings to the Federal Govern-
ment, I believe; if you add the recipients in there, I think there will
be a net—a great cost savings. And the point here is to try to get
the § funds or the resources or services out to people that are in
need.

That’s the whole point of this, and that’s got to be our objective.

Mr. Horn. OMB has suggested that the timeframe to develop
and implement the bill needs to be doubled from 18 to 36 months.
Do you believe that extra time is necessary?

Mr. PoRTMAN. We don’t see why the 18-month goal can’t be met.
The Senate, again, held hearings on this. It was reported out of the
full committee after some discussion of this timeframe issue. It
may be possible to compromise by requiring that the plan be in
place within a year and then implemented in the next 12 months
or something like that, and maybe this committee needs to hear
further testimony from OMB or agencies on that issue. But I don’t
see why 18 months is not an adequate time to put this in place.

Mr. Horn. It probably could be done in a couple of weeks if we
really put our minds to it.

Mr. PoRTMAN. It can be done certainly in less than 18 months
if it is a priority and a focus.

Mr. Horn. I now yield to the gentleman from Ohio, the ranking
member. I know he has many questions.

You dealt with these grants, I’m sure, when you were mayor and
realize the problems that exist there.

Mr. KucInicH. Thank you very much, Mr. Chairman. I want to
apologize to the Chair for being so late. Like probably a number
of our Members, my day yesterday ended about 2 a.m., and from
there, it’s just been——

Mr. Horn. Gee, you got a good night’s sleep.

Mr. Kucinicu. I don’t want to say that’s what I’ve been doing.

Tm glad to be here. And I’m also very pleased to work with Mr.
Horn and Mr. Portman on this legislation. It’s true that my experi-
ence with Federal grants goes back many years. As a city council-
man in the city of Cleveland, I was familiarized with the plethora
of grant programs, and at the same time, there seemed to be so
much confusion about not only how to apply for them, but once the
grants came in, how to maintain the supervision of them.

And simplification, I think, would lend itself not only to improv-
ing the application process, but I think could also lend itself to a
correspondingly appropriate simplification of the administration of
the program, because the complexities, once they’re put in—there’s
an architecture of complexity and it starts right from the beginning
with the process of application itself.

And so I’m particularly appreciative of Mr. Portman’s and Mr.
Horn’s work on this.

And, you know, I saw in Cleveland how we had so many grant
programs that it was very tough for some administrations to be


57

Mr. Horn. OK, gentlemen, do you want to get back to work here?

Mr. PorTMAN. Now, you can hear from the real pros. Well, you’ve
heard Mr. Portman, the author, and some comments from both of
us here. Do you have some other suggestions you’d like to work
into this legislation that you think we can strengthen it?

Mr. Martin. Mr. Chairman, you asked the question about section
5 and what changes might seem appropriate—

Mr. Horn. This is Duties of the Director?

Mr. Martin. Right, yes, sir.

Mr. Horn. Starting on page 5 and——

Mr. Martin. I have here a copy of, I guess, your first draft with
some dark markings on it that I assume is OMB’s, what they
would take out. And if this—and I don’t know where the final bill
stands, if it includes these OMB omissions, taking things out or
not.

But I would strongly suggest that in this language—the OMB
adds a bunch of words, and there are two, in particular, that would
assist OMB in not changing its behavior, not doing anything, say-
ing, “Yes, Minister,” and the two words are “model” and “appro-
priate.” Those are fuzzy enough that they can—and then they
knock out all the reporting requirements in the end.

Those two words, “model” and “appropriate,” are in here; “model”
is in here about 10 or 15 times. And when I talk about this list,
this 168-page list, just an index of all of these, just the common
rules, they have model rules for those 168. But that’s what’s wrong
with them, they’re just a model. Every agency then changes it to
fit their specific thing that they want.

We need the common rules. A common rule is a rule where OMB
tells a lead agency—for example, in the relocation assistance, most
of the money came from HUD. OMB directed HUD to write a com-
mon rule for relocation assistance. And every agency that was in-
volved in giving money or had laws related to relocation assistance,
even without money, was one of HUD’s—a HUD task force to de-
velop the common rules on relocation assistance.

They all agreed that they would all use the same rule and let
HUD be the lead agency to interpret any misconceptions about it
from any grantee. So that every grantee in the Nation, when they
get to relocation assistance, they—that the same procedure applies
to every Federal agency.

Now, we don’t need a model relocation assistance rule that is dif-
ferent for every agency; we need the common rule.

Drug-free workplace, you can imagine the chaos if there was a
model drug-free workplace, rather than a common rule where the
agencies are forced to agree on one rule for a drug-free workplace.

We have a common rule for a drug-free workplace, relocation as-
sistance, suspension and debarment with regard to procurement
practices, so that any procurement of Federal goods, there’s the
exact same suspension and debarment rules for every department
and agency that is clear to everybody in the procurement business.

We have a common rule for the protection of human species in
research that every agency understands. And circular 102 is a com-
mon rule; as I mentioned earlier, circular 102 is not followed very
often.


61

One of the things that I have done as a member of the Appro-
priations Committee, Mr. Chairman, is to talk to, in particular,
Secretary Shalala, Secretary Riley and Secretary Reich, and the
new Secretary of Labor, Secretary Herman, with reference to the
coordination of their services.

There are other agencies, of course, such as Transportation and
HUD and Justice, and you can, as a matter of fact, name almost
every department, including the Department of Defense.

The local folks are confronted with an incredibly complicated
myriad, numbers of ways to get to efforts to help local people,
which, of course, is why we adopt the program. But the bureau-
cratic difficulty that confronts our local governments is overwhelm-
ing sometimes, and to the extent that they can coordinate, we be-
lieve that they will have a better chance.

But we also believe that we need to put pressure on the Federal
Government to coordinate itself, because now there is very little
discussion, relatively speaking, among the providers of different
programs, which are nevertheless very closely related, but come
from different departments.

The Federal Financial Assistance Management Improvement Act
directs the Director of OMB to establish interagency coordination
of the collection of information and sharing of data so that we do
not multiply the requests for data from the Federal Government.
If we can have just one request for data that can then be shared
by the Federal Government, it seems to me that will, frankly, con-
tribute to the ease in both the local and Federal structures.

Agency heads must develop a single information release form, in
my opinion, to facilitate the sharing of information across multiple
Federal programs, essentially what I have been saying as one of
the goals of my bill. While this does not allow for consortia to effec-
tively coordinate services, it is an important step in the right direc-
tion.

I would also like to highlight the approach that the Portman-
Hoyer bill takes to fix federally created problems. In my opinion,
the Federal Government has the responsibility of fixing the prob-
lems it has created. Under the legislation, the OMB is responsible
for overseeing the efforts to eliminate regulations and simplify re-
quirements. I think that is critically important.

One of the reasons I think that the COPS program has worked
pretty well, if you talk to my local law enforcement agency, they
will tell you it is a simple form and it is turned around quickly.
And that has made a big difference for them. We ought to apply
such criteria for all programs.

I believe that the interdisciplinary nature of this bill will add a
much-needed focus on the coordination of program requirements
both within and across Federal departments.

Before I close, Mr. Chairman, I would like to mention that I
strongly support this bill in its current form. This legislation has
been developed over a significant period of time by a bipartisan
group of Members of Congress.


49

Mr. Horn. Do you have time for a few questions?

Mr. PoRTMAN. You bet, sure.

Mr. Horn. What Mr. Kilmartin was saying as you came in, that
he thought we ought to take—and I think it’s a good idea—out of
section 6, Duties of Federal Agencies, and put them in also under
section 5, Duties of the Director. And he was specifically pointing
to point 7, where the language is, “in cooperation with State, local
and tribal governments and qualified organizations, establishes
specific annual goals.”

Now, some of that is in the Director, like “specific annual goals
and objectives to further the purposes.” The important point is to
involve themselves with the people that live with the problems
every single day, which is your State, local, tribal governments and
various qualified organizations.
it So essentially, I think that’s a good suggestion, just listening to
it.

I remember, oh, about 3 or 4 years ago—California has its own
environmental protection agency and does a very fine job. And they
let the people that have the impact on them give them a proy ,
even the computer codes as to how you could engage in dectroni¢
filing. This system works marvelously.

I happened to have one of the Assistant Directors or Administra-
tors of national EPA on a few weeks later, and they said, gee, yeah,
they would very much like to do this. To my knowledge, they
haven’t done it yet.

It seems to me that the States have been very creative in the last
20 years, and the Federal Government could frankly learn a lot
from what the States have been doing, particularly on electronic fil-
ing, as well as a number of other innovations. So I think we ought
to look at that.

Mr. PorTMAN. I think that makes good sense.

I will be honest with you, I had not seen that particular issue
until you pointed it out, but we’ve got that in section 5.

Mr. Horn. It’s just a reinforcement of what people should do if
they’re going to do it right. And we might as well put it into law.

Mr. PorTMAN. I think, you know, Steve, we have learned this re-
cently with regard to the federalism Executive order. And there’s
disagreement as to how much consultation was attempted, but we
know consultation did not take place, and therefore, we've got a big
problem on our hands.

Mr. Horn. Well, a couple of questions I would just like to ask.
The Office of Management and Budget has stated in its comments
to the subcommittee on the draft bill that many of the require-
ments of the legislation are already being fulfilled through OMB
circulars.

Do you agree with the OMB’s position? If so, what would this bill
add; if not, where do you see differences between this legislation
and current OMB guidance?

‘Mr. PORTMAN. Well, No. 1, OMB, are they going to be before you
today?

Mr. Horn. They aren’t. They simply filed comments.

Mr. PorTMAN. I understood that they——

Mr. Horn. They were invited by us. Mr. DeSeve, the acting Dep-
uty Director for Management, was invited.


21

Sec. 1. Short tite

This Act may be cited as the “Federal Financial Assistance
Management improvement Act of 1998".
Sec. 2. Findings

This section finds that there are over 600 Federal financial
‘assistance programs designed to implement domestic policy, and that some
of the administrative requirements of these programs may be Impeding the
cost effective delivery of services at the local level; further, Stato,

local and tribal governments and non-profit organizations are dealing
with increasingly complex problems, and simplifying the procedures and
reporting requirements of Federal aid programs will improve the delivery

‘The purposes of this Act are to improve the effectveness and
parfrmance of Federal ad programe, simply appfoafon and reportng
Fequirements, improve the delivery of services to the public, and

facilitate greater coordination among those responsible for delivering
services.

Sec. 4. Definitions

* 5 noF
financial assistance program —

(FROM MAY 26 VERSION (May 28 version had no definitions)

(RENUMBER 2-8 as 1-5)

{2 BEIDIRECTOR- The term ‘Director’ means the Director of the Office of
‘Management and Budget.

——#?) BAIFEDERAL AGENCY- The term scederal agency means any agency defined
under section 554(1) of tite 5, United States Code.

(0 RIFEDERAL FINANCIAL ASSISTANCE PROGRAM The torm " Federal

(8) ERLOCAL GOVERNMENT: The term ‘local government’ means—

A) a political subdivision of a State that is a unit of general local government
(a8 defined under section 6564{40) {EUMMMINaEL of ttle 31, United States Code);


39

1. STATUTES, EXECUTIVE ORDERS AND OTHER DIRECTIVES
AUTHORIZING
NATIONAL POLICY REQUIREMENTS AXD
ADMINISTRATIVE MANAGEMENT STANDARDS

CROSS -REPERENCE. Listinas (jwDEX)

Ms ye OF INDEX


70

We're going to thank the staff now that prepared this hearing
and then we will close it out. We have J. Russell George, the staff
director and chief counsel; Dianne Guensberg, who’s to my left, is
a detailee and a very able auditor from the General Accounting Of-
fice, and has worked with us for the last, what, 6 months, 9
months. It seems like 10 years, I realize, but we keep them busy,
that’s for sure. Matthew Ebert, our clerk; Mason Alinger, our staff
assistant, and we’ve had a lot of eager beaver interns to help out
this summer: Betsy Damus, Mark Urciuolo, Solomon Bartel, David
Graff and Frank Cruz.

And for the ranking member’s staff, we have Brian Cohen, pro-
fessional staff member; Jean Gosa, a staff assistant for the minor-
ity; and Cindy Sebo, the court reporter. Very good.

OK. We thank you all. And with that, this hearing is adjourned.

[Whereupon, at 3:24 p.m., the subcommittee was adjourned.]

eo)


H.R. 3921, FEDERAL FINANCIAL ASSISTANCE
MANAGEMENT IMPROVEMENT ACT OF 1998

THURSDAY, JULY 30, 1998

House OF REPRESENTATIVES,
SUBCOMMITTEE ON GOVERNMENT MANAGEMENT,
INFORMATION, AND TECHNOLOGY,
COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT,
Washington, DC.

The subcommittee met, pursuant to notice, at 2 p.m., in room
2154, Rayburn House Office Building, Hon. Stephen Horn (chair-
man of the subcommittee) presiding.

Present: Representatives Horn and Kucinich.

Staff present: J. Russell George, staff director and chief counsel;
Matthew Ebert, clerk; Mason Alinger, staff assistant; Jean Gosa,
minority clerk; and Brian Cohen and Julie Moses, minority profes-
sional staff members.

Mr. Horn. The Subcommittee on Government Management, In-
formation, and Technology will come to order.

State, local and tribal governments, as well as nonprofit organi-
zations, provide various services to the public with the help of Fed-
eral grants. Currently, there are over 600 different Federal grant
programs. Many of these grant programs serve similar purposes,
but are administered by different Federal agencies.

In fiscal year 1995, for example, 15 different Federal agencies op-
erated 163 Federal employment training programs with a total
budget of $20.4 billion. Each Federal agency has different forms
and rules that must be followed by grantees to apply for and report
on grants received. The result is a maze of overlapping programs.
It is difficult for even experienced State, local, tribal and nonprofit
program administrators to navigate this maze.

Some administrative requirements are duplicative, burdensome
and even in conflict with each other. Further, the rules governing
the application for use of, and reporting on, various grants across
government are confusing and burdensome. This hinders cost-effec-
tive delivery of services by State, local and tribal levels and by non-
profit organizations.

We are here today to consider reforms to grant management in
the executive branch of the Federal Government. H.R. 3921, the
Federal Financial Assistance Management Improvement Act of
1998, was introduced by Representative Rob Portman of Ohio. The
bill is designed to improve the Federal grant management process.
It would improve the effectiveness of Federal financial assistance
programs by streamlining the application, administration, and re-
porting requirements for grant recipients.

e})


32

free workplace, non-procurement suspension and debarment, relocation assistance, executive
branch lobbying, protection of human species in research, and Circular A-102.

[All grantees appreciate and support these “common rules” for their time, cost, and interagency
hassle-free administration. Each of the other seventy-one cross-cutting rules should be evaluated
and changed to a “common rule” unless explicit reasons are given for divergent agency rules.
‘This will not happen unless OMB is directed by Congress as required in H.R. 3921.

‘Your continued focus on regulatory reform is very important. There are now more than ten bills
moving through Congress to address long-overdue problems of federal agency rules, regulations,
procedures, and assessments. The enactment of H.R. 3921 would be a welcome and significant
addition to these reforms.

‘Thank you again for this opportunity to discuss these issues.

Attachment


19

EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET
WASHINGTON, D.C. 20503

DeUTy oiRecTOR JUL 1 998

The Honorable Stephen Hom
Chairman

Subcommittee on Government Management,
Information, and Technology
Committee on Government Reform and Oversight
Washington, DC 20515-6143

Dear Mr. Chairman:

‘Thank you for the opportunity to review and comment on H.R. 3921, the Federal
Financial Assistance Management Improvement Act of 1998. The Office of Management and
Budget (OMB) has reviewed the bill and believes that its objectives can be accomplished under
current statutes by OMB and the Federal agencies. The bill is identical to S.1642, introduced by
Senator Glenn, to which OMB has recommended revisions to make the bill workable and reduce
the costs to Federal agencies and OMB of complying with the bill’s provisions. The
recommended revisions and a revised bill are enclosed for your consideration. OMB also offers
the following comments.

Overall, OMB concurs with the general objectives and intent of the bill, particularly as
they relate to improving the effectiveness and performance of Federal financial assistance
programs by simplifying the Federal financial application and reporting processes. However,
many of the bill’s provisions already exist within the current framework of OMB Grant
Management Circulars!. A standard government-wide grant application form (SF- 424,
Application for Federal Assistance), a standard financial report (SF- 269, Financial Status
Report), and a “common rule” for administrative requirements already exist and are described in
OMB Grant Management Circulars. It is our belief that this legislation is not likely to further
improve the administration of Federal assistance programs.

Additionally, the bill’s requirements, as described in Sections 5 and 6, for Federal
agencies to develop and implement a formal plan to improve the administration of Federal
financial assistance programs, and for OMB to coordinate the agencies’ effort and to submit a
report to Congress, will add unnecessary costs and administrative burdens to agencies and OMB
during a period of limited Federal resources.

* OMB Grant Management Circulars applicable to all non-profit grantees include A-102, “Grants and
Cooperative Agreements with State and Local Governments,” “Grants Management Common Rule,” and A-110,
“Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and
Other Non-Profit Organizations.” These and other related documents and forms are available on OMB's Internet
Homepage at http://www. whitehouse. gow/WH/EOP/omb under “Grants Management circulars and related documents.”


‘Sec-6. IMMEffective date and sunset

‘This Act shall take effect on the date of enactment and shall cease
to be effective five years after such date.

F,\work\wp\s1642.1v2


20
OMB welcomes this continued opportunity to work with you in improving the
effectiveness and performance of Federal financial assistance programs.
Sincerely,
Gj AwmeL ke

G. Edward DeSeve
‘Acting Deputy Director for Management

Enclosures


an Ts
Governor of Ohio coordi
=<

Matt eS
Teme apt Str Cp Some
Panty al ane Bessa
vwoume Tae ances

Regardless of the levels of flexibility pramed wo sate and local government officials in 1995
legislation through block grants, ‘performance parmerships, all of these funds will
still be subject to over 77 cross-cutting rules, Executive Orders, and OMB circulars. OMB has
‘identified these 77 rules as applicable to all grant funds, and the executive branch agencies would be
expected to continue their enforcement on new block grants, etc. The extent of information reporting
on grant funds received, including the form and content of reports, the degree of terms and conditions,
and the specification of terms as defined in the statute, are all at the discretion of the executive
branch,

Only a few of these 77 rules have been standardized, wth inl lead agency o°govenment-wide
common rule for by federal form relocation

drug-free workplace, and debarment. Many of thse es ut arngly spp! ty nam ond tel
government officials, such as those for civil rights and those with common rules and lead agencies for
simplified implementation. These 77 rules probably will be applied to current and future laws, with
‘wide flexibility for federal agencies to prescribe reporting requirements.

‘Agency regulations that were used for the 1981 block grants, which have not been questioned as to
their effectiveness, should also be the primary guidelines for new block grants. As published by
OMB on November 20, 1981, block grant regulations were limited by the following:

kept to minimum;

freestanding from other federal regulations;

minimum of paperwork and reporting requirements (specifications for grant applications,
intended use reports, and form and content of performance reports),

‘without prescriptions;

‘5. without cross references;

formal yet simple due process;


15

Mr. Horn. I call on Mr. Martin. His full statement is now in the
record. We will have his 5 minutes, and then we will throw it open
to a dialog between the three of us, unless we have a little com-
pany up here.

So Mr. Martin, we’re glad to see you.

Mr. MartTIN. Thank you, Mr. Chairman. I have a four-sentence
summary in the beginning. But there really is just a three-word
summary, and that’s, “Do it now.” It’s long overdue. And it’s our
experience, unless Congress takes on or does some of these things,
they won’t be done.

Mr. Horn. I can assure you they will be done in the House of
Representatives.

r. MARTIN. Well, the bill in the Senate—.

Mr. Horn. Now, with the other body?

Mr. MarrTIN. I have a letter here signed by the presidents of all
of the organizations of State and local government of elected offi-
cials: the legislatures, the mayors, the counties, the managers and
the Governors, to Senator Lott, telling him to please move this bill
to the floor of the Senate; it’s out of the committee, it has. strong
bipartisan support.

And your bill is the same. It’s something that can happen this
year and should be done.

And so why do all of the Governors and mayors and legislatures
support this bill——

Mr. Horn. If we might have that letter for the record, we will
put it in the record at this point, without objection.

Mr. MaRrtTIN. Yes, sir.

[The information referred to follows:]


59

letter to you, suggesting what to take out and put in; and in the
back of it is their version of the bill that they want, with all of the
“maybes” and “mays” and “models.”

And models aren’t going to do us any good; we have our own
models.

Mr. Horn. Well, I appreciate that. And believe me, we’ve noted
those points, and they will be taken care of.

We now have the other coauthor of this legislation, the Honor-
able Steny Hoyer of the State of Maryland, and we thank you for
coming. We know this has been a very tragic and busy day for you,
Mr. Hoyer.

We will patch all of this up in the hearing so there’s some con-
sistency here, and Mr. Martin’s and Mr. Kilmartin’s testimony will
be lumped after the two Members from the House.

STATEMENT OF HON. STENY HOYER, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF MARYLAND

Mr. Hoyer. Thank you very much, Mr. Chairman, for allowing
me to proceed at this time. And I know I’ve interrupted your hear-
ing; I was offering an amendment in the Appropriations Committee
and was arguing that amendment, and it was just voted upon and,
therefore, I was late. I apologize.

But, Mr. Chairman, Mr. Horn, I am pleased to be here with you
and Mr. Kucinich, my good friend and hall-mate, whose office is
next to mine. I would like to begin by thanking——_

Mr. Kucinicu. If I may, Mr. Chairman, before Mr. Hoyer begins,
I would like to welcome him and indicate to him, I’m going to have
to leave in a couple of minutes for a meeting with Mr. Stokes that
has been scheduled for a long time. And I appreciate your being
here.

Mr. Hoyer. I thank the gentleman for making sure that I do not
conclude that it is the quality of my statement that impels him to
leave. Thank you.

I am pleased to join your conversation today about ways to make
our Federal programs work better and more efficiently. Over the
years, Congress has created hundreds of categorical programs to
help communities and families deal with the many issues confront-
ing them. Each of these ‘programs was created with its own rules
and regulations to deal with a particular problem. The Federal
Government has created hundreds of different taps through which
assistance flows and communities’ programs and families must run
from tap to tap with a bucket to get the help they need.

I appreciate your leadership, Mr. Chairman, in holding this hear-
ing on H.R. 3921, and I am very pleased to join my good friend,
Rob Portman, who has worked so diligently on this issue and many
others—the IRS reform being the most recent effort in which he
has been so successful. So I am pleased to be working with him on
this issue.

I believe that a concerted Federal effort to rationalize and coordi-
nate programs for children and families and others is long overdue.
This effort should help to eliminate Federal red tape, which we all
talk about, but have such difficulty getting at, and unnecessary
regulation.


ee com eee ae
Sse" —Congress of the United States ae
— Joouse of Representatives ae
Ed COMMITTEE ON GOVERNMENT REFORM ANO OVERSIGHT =

noe a 2187 Ravaunn House OFFICE BULOING ‘Soon towne nee

aa Wasraror, OC 20516-6143 a

HLR. 3921, the “Federal Financial Assistance
Management Improvement Act of 1998”

July 30, 1998

OPENING STATEMENT
REPRESENTATIVE STEPHEN HORN (R-CA)

Chairman, Subcommittee on Government Management,
Information, and Technology

State, local, and tribal governments, as well as non-profit organizations provide various
services to the public with the help of Federal grants. Currently there are over 600 different
Federal grant programs. Many of these grant programs serve similar purposes but are
administered by different Federal agencies. In fiscal year 1995, for example, 15 differeat Federal
agencies operated 163 Federal employment training programs with a total budget of $20.4
billion.

Each Federal agency has different forms and rules that must be followed by grantees to
apply for, and report on, grants received. The result is a maze of overlapping programs. It is
difficult for even experienced State, local, tribal, and non-profit program administrators to
navigate this maze.

‘Some administrative requirements are duplicative, burdensome, and even in conflict with
each other. Further, the nules governing the application for, use of, and reporting on various
grants across Government is confusing and burdensome. This hinders cost-effective delivery of
services by the State, local, and tribal levels and by non-profit organizations.

‘We are here today to consider reforms to grant management in the Executive branch of
the Federal Government. H.R. 3921, the “Federal Financial Assistance Management
Improvement Act of 1998,” was introduced by Representative Rob Portman of Ohio. The bill is
designed to improve the Federal grant management process. It would improve the effectiveness
of Federal financial assistance programs by streamlining the application, administration, and
reporting requirements for grant recipients.


30

‘Summary

‘The National Governors’ Association and other national organizations of elected state and local
government leaders support enactment of legislation that would direct the Office of Management
and Budget (OMB) to develop “common rules” for the 77 cross-cutting regulations that govern
grant funding to state and local governments. State and local governments support a requirement
that OMB establish lead agencies to develop “common rules” for these cross-cutting regulations.
Legislation is needed to authorize OMB to coordinate new procedures for the electronic filing of
most state-federal paperwork. OMB should also be directed to develop “boilerplate,” or basic
uniform grant information, that a city, county, or state could use for all grant agreements with
federal agencies. Filing should also be possible via electronic mediums. H.R. 3921 (S. 1642), the
Grants Management Improvement Act, would direct OMB to act on these policies and to bring
more uniformity to federal rules, better implementation by state and local governments, and
electronic grants management.


66

Mr. Horn. Well, thank you for staying and sharing your
thoughts with us. We appreciate your hard work.

Mr. Hoyer. Thank you. Thank you.

Mr. Horn. OK. Gentlemen, return to the table, and we will patch
your testimony up so it looks like you never left it. But what is
your thinking now? You’ve heard the two authors of the bill. Any-
thing else for the good of the order that would help us improve the
legislation?

Mr. KILMARTIN. I would offer a couple more thoughts, Mr. Chair-
man. Let me tell a couple of stories that help illustrate the point
and I think are instructive to the task that we're trying to accom-
plish here. Recently—all of these Federal grant programs have to
do a single audit and last year the Census Department said they
would create a data collection form going on top of your single
audit.

They created this collection form without consultation or any ad-
vice from any of the grantees. It is my understanding that in the
first year over 90 percent of all the submissions have been rejected,
because people didn’t fill out the form correctly. Well, that suggests
to me there are two things: Either 90 percent of the State and local

tees are unintelligent, or there’s something wrong with the
form. I would like to think it’s the latter.

And I Point that out as a simple anecdote that illustrates the
failure of having the framework to communicate. Another story
which perhaps is relevant to your thinking here as well. When we
were implementing the Cash Management Improvement Act a few
years ago, which is to exchange your Federal moneys back and
forth in a timely way, I decided in Massachusetts that we would
centralize and automate our end of the deal.

So we spent about $1 million and I reduced, I had roughly about
80 full-time equivalents and reduced that down to 6, by centraliz-
ing and automating our half of the Federal funds exchange, which
saved us slightly in excess of $1 million a year. I spent $1 million
of the capital investments, or a 100 percent recapture of invest-
ment in less than a year and the rest is all profit.

Now, in the Federal side, at that stage they had 12 Federal pay-
ment programs. The U.S. Treasury came forth. They were going to
do the automated system application for payment. All the States
said great, the Feds are going to move from, you know, 12 payment
systems to one. Well, instead, the Treasury couldn’t get the Federal
agencies to use that system. They actually asked us in the States
to help them persuade Federal departments to use the central
treasury payment mechanism, because I think that they were try-
ing to promote the same type of economy and efficiency that my
anecdote on the State side illustrated.

If I had a 600 percent ROI on just my half of the deal, imagine
what the Feds would have had, had they done a similar thing. This
anecdote is not determinative to your question, but I think it is in-
sightful to this notion of cost-benefits. There’s over hundreds of bil-
lions of dollars exchanged; according to the Census Bureau, $1.3
trillion in 1995 in Federal assistance programs. I don’t know how
much of that goes into administration, and all I’m talking about is
simply the funds transfer aspect. But if we can improve that by I/
10 of 1 percent, that’s tens of millions of dollars of a cost savings,


68

Mr. Horn. Along the line of the ranking member’s comment on
getting the views from other perspectives, are there any you can
think of, other than the one that was just mentioned, the actual
recipient of the grants?

ir. MaRTIN. There are at least 12 bills on regulatory reform cir-
culating on the Hill right now, and all of them are active, not to
mention the hassle over the federalism Executive order. Our orga-
nizations are supporting almost every one of those bills, the may-
ors, the Governors and legislators. They have gone through and
have been scrubbed already by bipartisan groups of elected offi-
cials, Governors, mayors on behalf of other Governors.

And the only reason we can be here today, and even be here, we
never testify and couldn’t get a Governor today, is that they've al-
ready told us that we can come and say that they want what you’re
doing and much more. On a regulatory reform, they want paper-
work reduction, they want consultation. They want a standardized
auditing and accounting; that’s another bill that’s floating.

They want to get rid of these advisory committees. You’ve got al-
most 1,000 of them, with 37,000 people serving on them that cost
$180 million a year, and none of us can figure out why you need
any of them. There’s a bill in the Senate that sunsets them all. We
love it.

Mr. Hokn. This is advisory committees to Federal programs, I
take it?

Mr. Martin. Right. All the friends of the program create advi-
sory committees and get the Federal Government to pay them to
come in and talk about what they like about it and they get paid
two ways and they never—you don’t need all of these advisory com-
mittees. Governors don’t want to be on any of them. They give you
their advice without being paid.

Mr. Horn. Well, I understand their concern. But I also under-
stand the national government’s concern to get input from people
that reflects various areas of the constituency. Now do the Gov-
ernors say, hey, just call us, don’t call anybody else?

Mr. Martin. No, no. But my suggestion is you don’t have to pay
people to get their advice.

Mr. Horn. I’ve been on a number of boards where they’ve paid
you nothing, except they did pay your airplane fare to get here, in
my case 3,000 miles away.

Mr. MartTIN. That’s fine. If you’re——

Mr. Horn. Frankly, every board I’ve been on I found a very con-
structive thing. It wasn’t just a toady for the administration. In
fact, one I helped write the law on it; we selected the director, ulti-
mately; we gave three recommendations to the Attorney General.
If he or she didn’t like it, fine, they could have us go back to it.
But it never happened. They picked one of the three each time.

Mr. MartIN. The Senate bill wouldn’t actually require all of that,
it would at least give them a good scrubbing.

Mr. Horn. Well, it’s, as I say, hard to tell on that, which ones.
That’s why I think we ought to be looking at what were the rec-
ommendations they made, did anybody carry them out, that kind
of thing. And I did raise that question a few months ago when we
had the advisory committee issue before us, that I’d like to see spe-
cific recommendations. What happened to them, did they make a


69

difference in public policy, did they make a difference in people’s
lives, et cetera. And you’re right on that. And we need to pursue
that much further to see if we’ve got some that are just wasting
time.

Any last comment, Mr. Kilmartin?

Mr. KILMaRTIN. Well, I think the point you just raised is a good
one. I’m not sure if the answer can be legislated, but somebody
needs to think about it. And the question was like who from the
stakeholder community ought to be involved in the consultation
process and you don’t want to get so tied up in this Federal Advi-
sory Committee Act stuff. You know, this FACA thing that takes
you at least 2 years to have the first meeting. But on the other
hand, you don’t want to leave out people as well.

So obviously the Governors, the budget officials, the auditors, the
comptrollers, the treasurers, the counties. These would be obvious
people to consult with, and there would be others as well. I guess
I don’t really have an answer for you, other than I think that’s an
area that needs to be thought about. If we do create the framework
whereby we have the input, how do you select the invitees, I guess
is one way to frame the question.

Mr. Horn. Well, we would welcome the views of the auditors, the
Governors, and I know you're all organized, the lieutenant gov-
ernors are organized, the secretaries of State, the attorneys gen-
eral, the treasurers, on and on and on. In a sense, I’m sure the
Governor some days comes out of his office and wonders where are
all of his people have gone. Well, they’re in Washington having a
meeting.

When I was a university president, we found there were 60 dif-
ferent national associations to which people on the campus be-
longed and we were paying the dues to. And I remember one presi-
dent going outside his door and he couldn’t find a soul in the ad-
ministration building. All the high level people were elsewhere, at
either cherry blossom time or what else. But that’s when the hotel
rates go up, by the way, in this town.

Mr. Martin. Mr. Chairman, if I may, one of the most important
sections of UMRA, the Unfunded Mandate Reform Act, is the ex-
emption of elected officials at all levels of government from FACA.
I know no Governor, no mayor, no elected official that wants to
serve on some FACA committee and be governed by all of those
rules and regulations.

They don’t need—they make these views known free of charge on
the 9 o’clock news every other night, and they do not want to be
covered by FACA. I think FACA is very important if you have sci-
entific committees and other committees, but not to deal with elect-
ed officials.

Mr. Horn. Well, as I say, we would welcome the views of the
Governors on that. I know you conduct these committees with bi-
partisanship; both Democratic and Republican Governors cochair
them usually. Just ship up their views to us so we can be aware
of these things. We would appreciate it.

Mr. MartTIN. Thank you, sir.

Mr. Horn. We thank you gentlemen for the time and have a safe
trip home.


27

Sec. 7. Effective date and sunset

This Act shall take effect on the date of enactment and shall cease
to be effective five years after such date.

F:Awork\wp\s1642.fin


3

(8) State, local, and tribal governments and private, nonprofit organizations
are dealing with increasingly complex problems that require the delivery and
coordination of many kinds of services; and

(4) streamlining and simplification of Federal financial assistance adminis-
trative Procedures and reporting requirements will improve the delivery of serv-
ices to the public.

SEC. 8. PURPOSES.
The purposes of this Act are to—
1) improve the effectiveness and performance of Federal financial assist-
ance programs; . . . . .
(2) simplify Federal financial assistance application and reporting require-
ments;
(3) improve the delivery of services to the public; and
(4) facilitate greater coordination among those responsible for delivering
such services.
SEC. 4. DEFINITIONS.
In this Act:

(1) COMMON RULE.—The term “common rule” means a government-wide
uniform rule for any generally applicable requirement established to achieve na-
tional policy objectives that applies to multiple Federal financial assistance pro-
grams across Federal agencies.

(2) DirEcToR.—The term “Director” means the Director of the Office of
Management and Budget.

(3) FEDERAL AGENCY.—The term “Federal agency” means any agency as de-
fined under section 551(1) of title 5, United States Code.

(4) FEDERAL FINANCIAL ASSISTANCE PROGRAM.—The term “Federal financial
assistance program” means a domestic assistance program (as defined under
section 6101(4) of title 31, United States Code) under which financial assistance
is available, directly or indirectly, to a State, local, or tribal government or a
qualified organization to carry out activities consistent with national policy
goals.

(5) LOCAL GOVERNMENT.—The term “local government” means—

(A) a political subdivision of a State that is a unit of general local gov-
ernment (as defined under section 6501(10) of title 31, United States Code);
(B) any combination of political subdivisions described in subparagraph

(A); or.

(C) a local educational agency as defined under section 14101(18) of the

Elementary and Secondary Education Act of 1965 (20 U.S.C. 8801(18)).

(6) QUALIFIED ORGANIZATION.—The term “qualified organization” means a
Private, nonprofit organization described in section 501(c\3) of the Internal

venue Code of 1986 that is exempt from taxation under section 501(a) of the
Internal Revenue Code of 1986.

(7) STATE.—The term “State” means each of the 50 States, the District of
Columbia, Puerto Rico, American Samoa, Guam, and the Virgin Islands.

(8) TRIBAL GOVERNMENT.—The term “tribal government” means the govern-
ing entity of an Indian tribe, as that term is defined in the Indian Self Deter-
mination and Education Assistance Act (25 U.S.C. 450b).

SEC. 5, DUTIES OF THE DIRECTOR.

(a) IN GENERAL.—The Director, in consultation with agency heads, shall direct,
coordinate, and assist Federal agencies in establishing—

(1) a uniform application, or set of uniform applications, to be used by an
applicant to apply for assistance from multiple Federal financial assistance pro-
grams that serve similar purposes and are administered by different Federal
agencies;

(2) ways to streamline and simplify Federal financial assistance administra-
tive procedures and reporting requirements for grantees;

3) a uniform system wherein an applicant may apply for, manage, and re-
port on the use of, funding from multiple Federal financial assistance programs
across different Federal agencies;

(4) a process for applicants to electronically apply for, and report on the use
of, funds from Federal financial assistance programs;

(5) use of common rules for multiple Federal financial assistance programs
across different Federal agencies;

(6) improved interagency and intergovernmental coordination of information
collection and sharing of data pertaining to Federal financial assistance pro-
grams, including the development of a release form to be used by grantees to



2

H.R. 3921 proposes a common-sense approach to grant manage-
ment. It seeks to create order by simpliving the current chaotic
and uncoordinated grant processes that grantees must face when
dealing with the staggering array of Federal financial assistance
rograms. This bill builds on past efforts to improve program per-
formance through the Government Performance and Results Act.
Both the Paperwork Reduction Act and Unfunded Mandates Re-
form Act were also designed to reduce the burden on grantees. Fur-
ther, the bill recognizes the Federal Government’s growing reliance
on electronic information and the internet by emphasizing the use
of electronic reporting in the grant application and management
process.

The subcommittee will examine the specific provisions of this leg-
islation. Witnesses will address the process of obtaining, applying
for and reporting on grants from the U.S. Government. They will
also inform us on the problems that are commonly encountered as
well as the opportunities for greater efficiency and economy.

[The text of H.R. 3921 and the prepared statement of Hon. Ste-
phen Horn follow:]

105TH CONGRESS
2D SESSION

H.R. 3921
To improve the effectiveness and performance of Federal financial assistance pro-

grams, simplify Federal financial assistance application and reporting require-
ments, and improve the delivery of services to the public.

IN THE HOUSE OF REPRESENTATIVES
May 20, 1998

Mr. PorTMAN (for himself, Mr. HovER, Mr. Horn, Mr. Mora of Virginia, Mr. SEs-
SIONS, Mr. ConpIT, Mr. Davis of Virginia, Mr. KUCINICH, Mr. SHAYS, Mr. McGov-
ERN, Mr. TALENT, Mr. SANFORD, Ms. DELAURO, Mr. SUNUNU, Ms. KILPATRICK, and
Mr. WEYGAND) introduced the following bill; which was referred to the Committee
on Government Reform and Oversight

A BILL

To improve the effectiveness and performance of Federal financial assistance pro-
grams, simplify Federal financial assistance application and reporting require-
ments, and improve the delivery of services to the public.

Be it enacted by the Senate and House of Representatives of the United States
of America in Congress assembled,

SECTION 1. TITLE.

This Act may be cited as the “Federal Financial Assistance Management Im-
provement Act of 1998”.
SEC, 2. FINDINGS.

Congress finds that—

(1) there are over 600 different Federal financial assistance programs to im-
plement domestic policy;

(2) while the assistance described in paragraph (1) has been directed at crit-
ical problems, some Federal administrative requirements may be duplicative,
burdensome or conflieting, thus impeding cost-effective delivery of services at

e level;




5

(1) COMMENT.—Each Federal agency shall publish the plan developed under
subsection (a) in the Federal Register and shall receive public comment on the
plan through the Federal Register and other means (including electronic
means). To the maximum extent practicable, each Federal agency shall hold
public hearings or related public forums on the plan.

(2) CONSULTATION.—The lead official designated under subsection (a)(4)
shall consult regularly with representatives of State, local and tribal govern-
ments and qualified organizations during development of the plan. Consultation
with representatives of State, local, and tribal governments shall be in accord-
ance with section 204 of the Unfunded Mandates Reform Act of 1995 (2 U.S.C.

4).

(d) SUBMISSION OF PLAN.—Each Federal agency shall submit the plan developed
under subsection (a) to the Director and Congress and report annually thereafter
on the implementation of the plan and performance of the agency in meeting the
goals and objectives specified under subsection (a7). Such a report may be included
as part of any of the general management reports required under law.

SEC. 7. EVALUATION.

(a) IN GENERAL.—The Director (or the lead agency designated under section
5(c)) shall contract with the National Academy of Public Administration to evaluate
the effectiveness of this Act. Not later than 4 years after the date of enactment of
this Act the evaluation shall be submitted to the lead agency, the Director, and Con-

Ss.
ere (b) CONTENTS.—The evaluation under subsection (a) shall—
(1) assess the effectiveness of this Act in meeting the purposes of this Act
and make specific recommendations to further the implementation of this Act;
(2) evaluate actual performance of each agency in achieving the goals ani
objectives stated in agency plans; and
(3) assess the level of coordination and cooperation among the Director,
Federal agencies, State, local, and tribal governments, and qualified organiza’
tions in implementing this Act.
SEC. 8, EFFECTIVE DATE AND SUNSET.
This Act shall take effect on the date of enactment of this Act and shall cease
to be effective on and after 5 years after such date of enactment.


22

—18) BHITRIBAL GOVERNMENT- The term ‘tibal government means the-governing
——eniityef an indian tribe, as that term is defined in the-ndien-Gelt Determinatior-and
Educator Assistance ACH 251H6.G-450b)
(MAY 28 RESUMES)
‘Sec. §6. Duties of Federal agencies
Ulin General —Not lator that +8- SEmonths after enactment of this Act,
that—

don BORE Ste.
(4) designates a lead agency official;
(6) allows applicants to apply for, and report on the use of,

(b) Plan Consistent With Statutory Requirements. Each plan
developed and implemented under this section shall be consistent with
etary requirements relating to any applicable Federal program.
(©) Comment and Consuttation on Agency Plat
een
ister for comment and-hold public hearings onte plan.

(@) Submission of Plan. ~Each agency shall submit ts plan to
Congress and the Director of OMB and report annually on its
ieplementation and performance. Such report may be included as part of
any other required general management report.


H.R. 3921, FEDERAL FINANCIAL ASSISTANCE
MANAGEMENT IMPROVEMENT ACT OF 1998

HEARING

BEFORE THE

SUBCOMMITTEE ON GOVERNMENT MANAGEMENT,
INFORMATION, AND TECHNOLOGY

OF THE

COMMITTEE ON GOVERNMENT
REFORM AND OVERSIGHT
HOUSE OF REPRESENTATIVES

ONE HUNDRED FIFTH CONGRESS
SECOND SESSION
ON

H.R. 3921

TO IMPROVE THE EFFECTIVENESS AND PERFORMANCE OF FEDERAL
FINANCIAL ASSISTANCE PROGRAMS, SIMPLIFY FEDERAL FINANCIAL
ASSISTANCE APPLICATION AND REPORTING REQUIREMENTS, AND IM-
PROVE THE DELIVERY OF SERVICES TO THE PUBLIC

JULY 30, 1998

Serial No. 105-206

Printed for the use of the Committee on Government Reform and Oversight

ae

U.S. GOVERNMENT PRINTING OFFICE
56-025 CC WASHINGTON : 1999

2

For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402
ISBN 0-16-059564-9



45

So I want to thank you again for giving me the opportunity to
testify today. I apologize for not being as timely as I wish I could
have been. I appreciate you looking at this carefully, and I hope we
can move it forward.

[The prepared statement of Hon. Rob Portman follows:]


8

Mr. Horn. We will have two panels today that we are going to
merge into one. Panel one includes the author of the bill, Rep-
resentative Rob Portman, a Member of Congress from Ohio, and
his colleague, the Democratic sponsor, Representative Steny Hoyer,
Member of Congress from Maryland.

And we also have with us on panel two, Mr. William Kilmartin,
comptroller of the State of Massachusetts and an executive commit-
tee member of the National Association of State Auditors, Comp-
trollers and Treasurers. And with him is Mr. James Martin, legis-
lative counsel, Office of State and Federal Affairs, National Gov-
ernors Association.

Gentlemen, our tradition here, since this is an investigative com-
mittee, is to swear in all witnesses, but not Members. So if you
would stand and raise your right hands.

[Witnesses sworn.]

Mr. Horn. The clerk will note that both witnesses have taken
the oath, and we will begin. We might have to put aside your testi-
mony. But without objection, we will combine all the testimony, fol-
lowing the Members’, when they finally get here.

And we are going to start with Mr. Kilmartin. We thank you for
coming down here. You represent an active and powerful group of
people in State government, and we welcome your thoughts on this
legislation.

So, Mr. Kilmartin, please proceed.

STATEMENTS OF WILLIAM KILMARTIN, COMPTROLLER, STATE
OF MASSACHUSETTS, AND EXECUTIVE COMMITTEE MEM-
BER, NATIONAL ASSOCIATION OF STATE AUDITORS, COMP-
TROLLERS AND TREASURERS; AND JAMES L. MARTIN, LEG-
ISLATIVE COUNSEL, OFFICE OF STATE AND FEDERAL AF-
FAIRS, NATIONAL GOVERNORS’ ASSOCIATION

Mr. KILMARTIN. Thank you, Mr. Chairman, Congressman Horn.
And it is a pleasure to offer some comments on behalf of my col-
leagues in the 50 States.

Mr. Horn. I don’t think that microphone is picking you up. You
are going to have to be very close to it. Push it right toward you.

Mr. KILMARTIN. Is that better?

Mr. Horn. Yes, thanks.

Mr. Horn. I appreciate the opportunity to share some comments
and some observations from my colleagues in the 50 States. We are
the members of the National Association of State Auditors, Comp-
trollers and Treasurers, and we do exactly what the title implies,
we try to manage the financial affairs of the 50 States.

Within the group, which is often referred to by its acronym,
NASACT, there is a committee which is called the Intergovern-
mental Fiancial Management Improvement Committee. Its mission
is perfectly dovetailed with the purposes of this act, which are to
promote efficiency, effectiveness and productivity improvements, as
it relates to matters of joint Federal-State financial management.
Members of the committee include Bob Childree, the comptroller of
Alabama; Larry Alwin, auditor of Texas; Bill Holland, auditor of II-
linois; Jan Sylvis, comptroller of Tennessee; Shirley Moses, comp-
troller of Kansas; Paul Sylvester, the treasurer of Connecticut;
Janet Rzewnicki, the treasurer of Delaware; Kurt Sjoberg, the


LR. 3921 proposes a common-sense approach to grant management. It seeks to create
order by simplifying the current chaotic and uncoordinated grant processes that grantees must
face when dealing with the staggering array of Federal financial assistance programs.

This bill builds on past efforts to improve program performance through the Government
Performance and Results Act. Both the Paperwork Reduction Act and the Unfunded Mandates
Reform Act were also designed to reduce the burden on grantees. Further, the bill recognizes the
Federal Government's growing reliance on electronic information and the Intemet by
emphasizing the use of electronic reporting in the grant application and management process,

‘The subcommittee will examine the specific provisions ofthis legislation. Witnesses will
address the process of obtaining, applying for, and reporting on grants from the United States
Government. They will also inform us on the problems that are commonly encountered as well
as the opportunities for greater efficiency and economy.


58

Now, there are 71 other rules in this index that I showed you.
I don’t think you were here, Mr. Kucinich, but I left a copy for the
committee. The last time it was—they updated it in 1989 and
found there were 68, and they found 9 more, so now we have 77.
The last time we even looked at the list was 1989. This was the
last overall report, 1985, the last time they’ve looked at all of these.

These are just the 77 rules that apply to every nickel of Federal
money. And when we're dealing with financial reporting, it’s not a
matter of morals and who’s right and who's wrong, the facts of the
case; these are—we’re dealing with facts when you're talking about
administrative management. And there’s no—there’s not a lot of
room for debate and argument there, the facts are the facts, that’s
why they can be standardized and made common.

So in this section 5, I would delete every time it said “model” and
“appropriate.”

And I noticed down in No. 7, they want to say “may” instead of
“shall”; as long as they “may,” they don’t have to tell you anything.

And then down in No. 2, 7—it’s—let me see, (c)2, (c)2 says—now
(c)2, all of us in State and local government, that’s our section.
That’s the only section we get specifically in the whole thing, and
they crossed out the whole section.

And I don’t know what their problem is with us, but it says “lead
agency official designates to consult with appropriate State and
local officials.” Is that the “appropriate” ones, only the ones they
want to talk to, or does that mean me, who I have to report to, both
Republican and Democratic Governors? And I can’t tell one official
one thing, and the other something else, or I’m fired in a few sec-
onds. And I can only tell a Republican Governor and a Democratic
Governor the same thing at the same time. So when I say some-
thing, it can’t be my thoughts; it has to be what they both agreed

on.

And that’s true of the mayors, the county organization and the
city organization. And, Mr. Kucinich, I’m sure you participated in
the city organization, and you know they work. And they crossed
out—it says, “consultation with us shall be according to the proce-
dures outlined in UMRA, the Unfunded Mandates Reform Act.” We
worked with you all and with your leadership, we got major
changes in UMRA, and consultation process is one of the most im-
portant; and they want it crossed out.

I would suggest not only UMRA, but the Paperwork Reduction
Act, that your directions to OMB—and this must be consistent with
UMRA for State and local government, UMRA, Paperwork Reduc-
tion Act, the President’s Executive order on regulatory reform and
review, and the current Executive orders on federalism, both Rea-
gan’s and Clinton’s—not the proposal, the current ones. OMB is
supposed to be coordinating all of this. So maybe they should be
told to make them all consistent, especially when it comes to con-
sultation with the elected officials that I work for.

Mr. Horn. You’re showing me in the air, that draft. Is that from
OMB, or is that your interpretation of OMB? Because I would love
to have a Xerox of it.

Mr. MartIN. You can. You can have it. I don’t know where I get
these things, but they come in off the western edition of the Village
Voice at Union Station at about 2:30 p.m. This is a copy of OMB’s


41

‘A. INDEX BY TYPE OF DIRECTIVE

‘Reference
STATUTES - Listed atphubeticaty - cunber Page
Age Discrimination Act of 1975, as amended 30-6 cy
‘Antal Welfare Act of 1966, as amended 80-20 63
Archaeological Resources Protection Act of 1979 EN-10 106
Architectural Barriers Act of 1968, as amended - S04 n
Budget and Accounting Act of 1921, as amended MB-11 165
Budget and Accounting Procedures Act of 1950 (AD-7; MS-1 127, 137
thru MS-7 thro 156

Cargo Preference Act of 1954 -2 70
Civil Rights Act of 1964, Title VI 30-2 6
Civil Rights Act of 1968, Titte ITI, so a
Clean Air Act of 1955, as amended ‘EN-5; EN-6 96, 98
Coastal Zone Management Act of 1972, as amended EN 93
Carprehensive Alcohol Abuse and Alcoholism

Prevention, Treatment and Rehabilitation Act

of 1970, as amended SO-9 4a
Consolidated Federal Funds Report Act of 1982 ‘AD-9 13
Contract Work Hours and Safety Standards Act

of 1962, as amended - ‘EC-6 8
Copeland “Anti-Kickback" Act of 1934 4 at
Davig-Bacon Act of 1931, as amended Bs 1%
Dedt Collection Act of 1982, as amended MS-11 165 +

Deficit Reduction Act of 1984 wen Ci OPS
on

Cities and Vode! Deve lopment DEX T
6 AD-10 133 INDEX

‘Drug Abuse Office and Treatment Act of 1972, 168
‘as amended S0-8 “ .

a7
ToTA Ge,


29

If it’s done electronically, it could be easily pulled up by individ-
uals, done once, and pulled up and referenced. So the electronic
push is very important in today’s age.

Second, you—the base data, electronic filing and the base data.
The base data is also very important, so that agencies can use the
same information.

OMB _has—he mentions this fellow from OMB—what’s his
name—Mr. DeSeve, he says that they have a circular A-102, which
is a common rule. We agree; we strongly support OMB’s circular
A-102. Circular A-102 says that Federal departments and agencies
should rely on State and local jurisdictions own laws and proce-
dures for the administration of grants, not Federal rules and regu-
lations.

We love that circular. It just never is implemented, because
agencies don’t pay much attention to it; they issue their own spe-
cialized rules and regulations.

So you tell them to work on these common rules. We think that
they ought to. OMB should be directed to develop a lot more com-
mon rules. But a summary is attached to my testimony.

I brought with me a copy of the—1985, the last time this thing
was updated, there are 77 cost-cutting regulations in here. And
this is—this document is about three-quarters of an inch thick, and
it is only the index of the cost-cutting regulations that apply to
every dollar that every State, city and county gets from the Federal
Government. And of the 77 cost-cutting regulations that are com-
mon for every dollar, only 6 have a common rule.

These six common rules were developed primarily by the push of
the National Governors’ Association, six common rules, and I list
them in an attachment to my testimony. The first big one we did
was, we did relocation assistance as it applies to business and gov-
ernment, when the Federal Government started relocating other
things in inner cities; that is a uniform common rule. And the word
“common” is very important because it defines a specific procedure.

OMB should be required to produce common rules for the vast
majority of these rules. The way they operate now, 72 of the—71
of the 77, there is a base rule that OMB approves, but then every
agency attaches to it its own specialized requirements; therefore,
when you’re using—there’s no such thing as a common rule.

For most of these rules and regulations, you have to do a dif-
ferent Davis-Bacon form for each department and agency. You have
to do a different form, fill out different forms, different papers; and
they can’t be electronically done when you have to do that.

So they should be directed to specifically get after these common
rules. I think that’s the strongest recommendation we can make,
is to implement OMB circular 102 and to develop common rules for
these laws and procedures.

We urge you, Mr. Chairman. It is a bipartisan bill. It’s something
that the State and local focus and OMB obviously needs to be im-
proved a little, given the recent exercise we've been through on the
federalism Executive order. If, at the top, there’s problems with
communications, there are problems all the way down the line.

Thank you, Mr. Chairman.

[The prepared statement of Mr. Martin follows:]


46

Honorable Rob Portman
July 27, 1998

Mr. Chairman, I am pleased to testify today in support of
H.R. 3921, the Federal Financial Assistance Management
Improvement Act of 1998, legislation I introduced with my
colleague, Mr. Hoyer. As you know, this bill is a companion to
8.1642, legislation introduced by Senators Thompson and Glenn
and recently reported out of the Senate Government Affairs
Committee.

The purpose of this legislation is to simplify grant
applications and make the process of participating in a grant
program less burdensome and costly. The bill builds on past
efforts to improve program performance, such as the
Government Performance Results Act, and to reduce federal
burdens, such as the Paperwork Reduction and Unfunded
Mandates Reform Act. It is common sense legislation to make
our government work more efficiently for the people it serves.

We have all heard from our constituents, non-profit
organizations and local and state governments who have been
through the very frustrating process of applying for federal
assistance and participating in these programs. Applying for a
grant can be a very time consuming and costly process. In fact,
organizations often hire grant-writers to do the work for them.
Many people do not have the resources to hire anyone and have
to work through the process themselves. Once they obtain the


28

Mr. Horn. Yes, well, I would expect that reply.

Did you ever see the British BBC film, or videotape show, “Yes,
Minister”?

Mr. MartTIN. No, I’m going to see that.

Mr. Horn. Well, everybody that has anything to do with any gov-
ernment anywhere ought to see it.

Mr. Martin. “Yes, Minister”?

Mr. Horn. Because that answer from OMB is the kind of thing
that shows up in “Yes, Minister.” When the permanent career civil
servants says to the politically appointed minister, oh, yes, min-
ister, we agree with that in principle, but we’re going to need this
study, this study, that study, this legal opinion. You know, by this
time everybody is on Medicare, and they forget what they've done.

So, yes, we'll worry about that one later.

Mr. Martin. It sounds like the kind of movie my wife and I can
agree to watch together and really have a’good time watching.

Mr. Horn. That’s right. You can probably get them in the video
store. The book is terrific too, it’s even funnier than the series. The
Cabinet Minister becomes Prime Minister of England.

Mr. MaRTIN. Our experience with OMB is not that everything is
OK, and they don’t need any direction; our experience is not that.

Several things. I know they are trying to enter into the electronic
age, and they are trying to move in that direction. And they have
already told the Senate committee they welcome the congressional
support for all their efforts in the electronic age. But our concern
is that they move into the electronic age with State and local gov-
ernment as well, not just the electronic age for OMB and for what-
ever they're interested in, but they do the things that Mr.
Kilmartin has said, that we simplify and have much less than 13
separate financial reporting systems.

We don’t need that. There are over 650 categorical grants—no-
body seems to have a definitive number, and that’s not insignifi-
cant all by itself—and you cannot get an accurate number of how
many Federal grant aid programs there are. They—we need elec-
tronic filing.

We need—of the thousands of local governments that apply di-
rectly to the Federal Government for community development, eco-
nomic development grants, and many of them to help redevelop
inner-city neighborhoods that need rapid action before situations
even change rapidly again. They have to submit the same informa-
tion to every different agency. And there’s no reason why a govern-
ment’s base data—population, economic data, employment data,
housing data—cannot be electronically filed once and used by any
Federal agency or Congress or anybody else that wants to see that
base data on any government in the country that they want some
base data on.

That ought to be codified, and you need to direct OMB to move
in that direction to get the boilerplate base data for grantees, so
they don’t have to repeat that for every piece of paper they get
from the Federal Government. And most of the time, we have to
submit multiple copies of everything because they don’t have time
to copy them, and they want us to submit the multiple copies so
that they can pass them out.


65

Mr. Horn. Do you have a couple of minutes? I would like to ask
you a question if you do.

Mr. Hoyer. Sure.

Mr. Horn. I know you’re pressed.

Mr. Hoyer. We're voting in the committee, so I will get back
soon.

Mr. Horn. It’s just one question. I think we need to do some-
thing about it. In reference to the costs to implement the bill, we
have a Congressional Budget Office estimate of the short-term cost
over the next 5 years. This estimate ranges roughly from $5 to $10
million over this 5-year period.

I wonder whether there is any estimate that you’re aware of that
gives a range of cost increases or decreases to the grantees, not just
the Federal Government? It’s possible there may be savings to
grantees, which I think we all agree, if this was adopted, even in
the current form, this would still happen. And is the Federal Gov-
ernment in the long run, through streamlining grant management
processes and taking advantage of technological advancement,
going to, in a sense, have to pay less for the Federal coordination
when we're simplifying these forms? I would think it works to
everybody’s benefit in your legislation.

Mr. Hoyer. Mr. Chairman, I don’t have specific costs analysis on
that, maybe the staff does. I don’t know whether we do or not. But
certainly we will look at that, and I know your staff will as well.
And we will work with them on that because I think that is very
important. But certainly my presumption is, as yours is, that both
the local and the Federal—and when I say local I’m including State
and local governments—and the Federal Government will ulti-
mately save significant sums.

Frankly, we can look at whether or not—for instance, Head
Start, Title 1, Even Start, Healthy Start, all of the other programs
which essentially are looking at early childhood education of eco-
nomically deprived children. They all have a similar focus, but are
not—dysfunctional to the extent that they are not integrated as
fact. As you know, some of those programs are run by the Depart-
ment of Education, some run by the Health and Human Services
Department, and not necessarily articulated together.

if they were, clearly, it seems to be that the local school system
or community organization that tries to access resources for those
programs has got to save money. The group that I referred to that
was set up in the 1994 legislation to look at these urged local
groups to form consortia so that you put a Head Start up to-
gether with an Even Start. That might be in the Board of Edu-
cation in the Community Action Committee running a Head Start.
If they work together, they would save money, and the Federal
Government presumably would save money, because they would be
dealing with one organization, the consortia.

But I think your premise is correct. But we need to pursue so
that if it does cost to implement, it would I think clearly be offset
by the savings that would be affected and we ought to have that,
and I don’t have it right now.

Mr. Horn. Well, we thank you. Does my colleague have any
questions?

Mr. KUCINICH. No.


4

facilitate the sharing of information across multiple Federal financial assistance

programs;

(7) a process to strengthen the information resources management capacity
of State, local, and tribal governments and qualified organizations pertaining to
the administration of Federal financial assistance programs; and

(8) specific annual goals and objectives to further the purposes of this Act.
(b) ACTIONS CONSISTENT WITH STATUTORY REQUIREMENTS.—The actions taken

by the Director under subsection (a) shall be consistent with statutory requirements
relating to any applicable Federal financial assistance program.

(c) LEAD AGENCY AND WORKING GRouPs.—The Director may designate a lead
agency to assist the Director in carrying out the responsibilities under this section.
‘The Director may use interagency working groups to assist in carrying out such re-
sponsibilities.

(d) REVIEW OF PLANS AND REPORTS.—

(1) IN GENERAL.—The Director shall—

(A) review agency plans and reports developed under section 6 for ade-
quacy;

(B) monitor the annual performance of each agency toward achieving
the goals and objectives stated in the agency plan; and

(C) ensure that each agency plan does not diminish standards to meas-
ure performance and accountability of financial assistance programs.

(2) REPORT.—Not later than 3 years after the date of enactment of this Act,
the Director shall report to Congress on implementation of this section. Such
a report may be included as part of any of the general management reports re-
quired under law.

(e) EXEMPTIONS.—

(1) IN GENERAL.—The Director may exempt any Federal agency from the re-
quirements of this Act if the Director determines that the agency does not have
a significant number of Federal financial assistance programs.

(2) AGENCIES EXEMPTED.—Not later than November 1 of each fiscal year,
the Director shall submit to the Committee on Governmental Affairs of the Sen-
ate and the Committee on Government Reform and Oversight of the House of
Representatives—

(A) a list of each agency exempted under this subsection in the preced-
ing fiscal year; and
(B) an explanation for each such exemption.

(f) GUIDANCE.—Not later than 120 days after the date of enactment of this Act,
the Director shall issue guidance to Federal agencies on implementation of the re-
quirements of this Act. Such guidance shall include a statement on the common
rules that the Director intends to review and standardize under this Act.

SEC. 6, DUTIES OF FEDERAL AGENCIES.

(a) IN GENERAL.—Not later than 18 months after the date of enactment of this
Act, each Federal agency shall develop and implement a plan that—

(1) streamlines and simplifies the application, administrative, and reporting
procedures for each financial assistance program administered by the agency;

(2) demonstrates active participation in the interagency process required
the applicable provisions of section 5(a);

(8) demonstrates agency use, or plans for use, of the uniform application (or
set of applications) and system developed under section 5(a) (1) and (3);

(4) designates a lead agency official for carrying out the responsibilities of
the agency under this Act;

(5) allows applicants to electronically apply for, and report on the use of,
funds from the Federal financial assistance program administered by the agen-

cy;

(6) strengthens the information resources management capacity of State,
local and tribal governments and qualified organizations pertaining to the ai
ministration of the financial assistance program administered by the agency;
an

(7) in cooperation with State, local, and tribal governments and qualified
organizations, establishes specific annual goals and objectives to further the
purposes of this Act and measure annual performance in achieving those goals
and objectives.

(b) PLAN CONSISTENT WITH STATUTORY REQUIREMENTS.—Each plan developed
and implemented under this section shall be consistent with statutory requirements
relating to any applicable Federal financial assistance program.

(c) COMMENT AND CONSULTATION ON AGENCY PLANS.—


19

EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET
WASHINGTON, D.C. 20503

DEPUTY DIRECTOR J - | 168
FOR MANAGEMENT

The Honorable Stephen Horn

Chairman

‘Subcommittee on Government Management,

Information, and Technology

Committee on Government Reform and Oversight
Washington, DC 20515-6143

‘Dear Mr. Chairman:

‘Thank you for the opportunity to review and comment on H.R. 3921, the Federal
Financial Assistance Management Improvement Act of 1998. The Office of Management and
Budget (OMB) has reviewed the bill and believes that its objectives can be accomplished under
current statutes by OMB and the Federal agencies. The bill is identical to S.1642, introduced by
Senator Glenn, to which OMB has recommended revisions to make the bill workable and reduce
the costs to Federal agencies and OMB of complying with the bill’s provisions. The
recommended revisions and a revised bill are enclosed for your consideration. OMB also offers
the following comments.

Overall, OMB concurs with the general objectives and intent of the bill, particularly as
they relate to improving the effectiveness and performance of Federal financial assistance
programs by simplifying the Federal financial application and reporting processes. However,
many of the bill’s provisions already exist within the current framework of OMB Grant
Management Circulars!. A standard government-wide grant application form (SF- 424,
Application for Federal Assistance), a standard financial report (SF- 269, Financial Status
Report), and a ‘common rule” for administrative requirements already exist and are described in
OMB Grant Management Circulars. It is our belief that this legislation is not likely to further
improve the administration of Federal assistance programs.

Additionally, the bill’s requirements, as described in Sections 5 and 6, for Federal
agencies to develop and implement a formal plan to improve the administration of Federal
financial assistance programs, and for OMB to coordinate the agencies’ effort and to submit a
report to Congress, will add unnecessary costs and administrative burdens to agencies and OMB
during a period of limited Federal resources.

“102,
Cooperative Agreements with State and Local Governments,” “Grants Management Common Rule,” and A-110,
“Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and
Other Non-Profit Organizations.” These and other related documents and forms are available on OMB’s Internet
‘Homepage at http://www. whitehouse. gov WH/EOP/omb under “Grants Management circulars and related documents,”


56

Improvement Act of 1998" will help solve these problems. The legislation
would streamline the application and reporting process for federal grants,
promote the establishment of consistent procedures for financial assistance
programs, and encourage the use of electronic application and reporting
process.

This is bipartisan legislation that has the support of politicians, state
and local governments, and non-profit organizations across the spectrum.
Simply put, this is good, common sense government. This bill will provide a
valuable service by simplifying the process of applying and administering
federal grants.

Some non-profit organizations have urged that we simplify the process
even further. | would like to place into the record a letter of support from
OMB Watch. This letter expresses their support for the legislation, while
noting that there is still unfinished business to be done by simplifying the
different application and reporting requirements that non-profit organizations
face from state, local and federal government. Perhaps this committee can
take up this issue at a later date.

| support this legislation, and commend Chairman Horn for holding this
hearing. The Senate has already acted on similar legislation, and | believe
this committee should continue to move the legislation forward. This bill will
let local governments and non-profit organizations spend less time on
paperwork, and more time doing the work that improves people’s lives..


63

T would like to begin by thanking Chairman Hom and Ranking Member Kucinich for
inviting me here today. I am pleased to join your conversation about ways to make our federal
programs work better and work more efficiently.

Over the years, Congress has created hundreds of categorical programs to help
communities and families deal with the many issues confronting them. Each of the programs
was created with its own rules and regulations to deal with a particular problem.

In some areas, where local needs don’t fit the problems covered by our categorical
programs, our services for children and families are vastly inadequate. In other areas, services
overlap and duplicate each other.

Case workers spend far too much time dealing with red tape and paperwork, juggling
multiple programs with multiple eligibility criteria, application processes and service
requirements. The federal government has created hundreds of different taps through which
assistance flows ~ and communities, programs and families must run from tap to tap with a
bucket to get the help they need.

I appreciate your leadership in holding a hearing on H.R. 3921 because I believe that a
concerted federal effort to rationalize and coordinate programs for children and families is long
overdue. This effort should help to eliminate federal red tape and unnecessary regulation. It
should give local programs the flexibility they need to address local problems. It should create
incentives for program coordination which serves kids and families better while making more
efficient use of our resources.

My wife, Judy, worked for the Prince George's County School system. She used to tell
‘me about children in her program with certain problems. She felt very strongly that the staff
shouldn’t have to run around figuring out which programs that child qualifies for and how to
make the child’s needs fit the money coming from the federal government. The programs should
provide money which is flexible enough to allow program staff to concentrate on what they
know best: taking care of children.

As an appropriator, I am particularly concerned that our tax dollars be spent efficiently
and effectively. In 1994, I asked the Department of Education to convene a working group on
coordinated services to make recommendations for such a federal effort. The working group was
headed by Jeanne Jeb from the San Diego public schools, who is here in the audience today and
whom I would like to thank for her outstanding work.

The working group, which met through 1995, included federal employees and people
from state and local governments and organizations across the country. In response to the
recommendations of that working group, I introduced "The Family Services Improvement Act"
in the 104” and the 105 Congress.

As you know, H.R. 3921 was originally introduced in the Senate by Senator John Glenn.
His staff spent a year seeking the views of non-profit organizations on how to provide greater


36

zeatace 1984
In 1985, OMB issued the second edition of the Diractory of
. The purpose of this publicaticn vas sce 8 a

the crosscutting
requirements which vere included aa the 1985 directory, but have
since been updated, revised or rescinded.

Zach entry Soneaing = descriptive ovarviey of the policy
requirenent, statutory and references, whan
applicable, citations of major court cases, and other summary
information. Each entry sontaine a sopersibie for iri
it the Federal agency dpally or inplexent
the policy if more extensive int ration is is required.

Considerable effort has been put inte completing this
Supplement, but additional crosscutting Zequiresenxts do exist.
pagre of she Supplement and ie ate
additiona refeTenents te attention of! Finane: 2 Management
Division, Office of Management and Budget, Room 10235 New .
Executive Office Building, Washington, DC 20503, 202-395-3993.
Comments on the Supplement are velcone.

TOTAL 771


37

DIRECTORY OF POLICY REQUIREMENTS
AND ADMINISTRATIVE STANDARDS FOR
FEDERAL AID PROGRAMS



52

able to even keep a handle on them. And, also, when you have com-
plicated applications and administrative procedures, you end up
with technical violations of the handling of grants, which then in-
volves other divisions of the Federal Government and creates even
more problems in trying to just get the end result.

Whether it’s a grant for a youth program or a grant for a seniors
program or hundreds of areas that we give Federal grants to, to
provide services, there has been a clear need to have some uniform-
ity and simplicity in the process.

So I can—the one thing that I would ask, Mr. Portman, though,
would you agree that, you know, that this might help to simplify
oversight?

Mr. PorTMAN. Absolutely. One of the challenges you have on this
subcommittee I know—and I’m on the Oversight Subcommittee on
Ways and Means, which has the IRS, among other agencies—is the
inability to provide oversight efficiently because of all of the com-
plexity in the current law—in our case, the tax laws, and in your
case, the various rules, regulations that the agencies live under
that you’re monitoring or providing the oversight for.

So I think it has downstream benefits, as you say, beyond the ap-
plication process. One is for these nonprofit, State and local entities
in terms of the administration. I couldn’t a; with you more.

When you talked about the technical violations, that is a tremen-
dous cost to the State and local, as well as the Federal side—and
any cost analysis that Mr. Horn was talking about earlier would
have to include that—but also for oversight, it’s going to make it
simpler for us to provide oversight.

I look at the Drug-Free Communities Act just as one quick exam-
ple that again came through the subcommittee. You're really in a
position, I think maybe through the other subcommittee, to do
oversight on that.

But it’s very difficult to do oversight when you have the complex
kind of application process that they put in place, because it’s dif-
ficult to know whether in this case the Justice Department and
ONDCP are doing the right thing. If it’s simplified, it’s going to be
easier to know whether the program is working.

Mr. Kucinicu. Mr. Chairman, another thing that occurs to me as
we consider this proposal is that there are many people who would
like to know if they would be eligible for participation in a grant

rogram; but the complexities of grantsmanship, which really has

ecome an art in itself over the years, has made it very difficult
for all but a few to really participate, and if you don’t have grant
specialists who work in various departments who may do nothing
but that, it might be difficult to—given the current structure of
grant programs, to even be able to get into the game.

Mr. Horn. If the gentleman would yield for a minute, he’s abso-
lately’ correct. And he’s picked the weak spot in all of government,
which is how do the smaller cities, the small towns in this country,
access some of these programs, particularly in rural areas, such as
rural Ohio, rural California? Because if you’ve got to pay big mone;
to get somebody that’s sophisticated, that knows their way through
the labyrinth, a lot of these little towns and villages that maybe
need some help don’t have that kind of money easily available. And
we ought to make it so you’ve got a very simple process here.


25

Sec. 1. Short tite

‘This Act may be cited as the “Federal Financial Assistance
Management improvement Act of 1998",
Sec. 2. Findings

‘This section finds that there are over 600 Federal financial
programs designed to implement domestic policy, and that some
of the administrative requirements of these programs may be impeding the
cost effective delivery of services at the local level; further, State,
ocal and tribal governments and non-profit organizations are dealing
with Increasingly complex problems, and simplifying the procedures and
reporting requirements of Federal aid programs will improve the delivery
of services to the public,
Sec. 3. Purposes.

‘The purposes of this Act are to improve the effectiveness and
performance of Federal ald programs, simplify application and reporting
Fequirements, improve the delivery of services to the public, and
faciitate greater coordination among those responsible for delivering
services.

Sec. 4. Definitions

(1) DIRECTOR- The term ‘Director means the Director of the Office of
Management and Budget.

(2) FEDERAL AGENCY- The term ‘Federal agency’ means any agency as defined
under section 551(1) of ttle 5, United States Code.

(3) FEDERAL FINANCIAL ASSISTANCE. The term ‘Federal
financial assistance’

"has the same meaning as defined in section 7501 (a)(S)of tile 31, United States
Code) under which federal financial assistance Is provided, directly or indirectly, to a non-federal entity
defined in section 7501 (a)(13) of tle 31, United States Code.

(4) LOCAL GOVERNMENT- The term ‘local government means a political subdivision of a State that
unit of generat local government (as defined under section 7501 (a)(11) of tile 31, United States Code);

(3) TRIBAL GOVERNMENT- The term ‘tribal government means an indian tribe, as that term is
defined in Section 7501 (a)(9) of tite 31, United States Code.

(MAY 28 RESUMES)
Sec. 5. Duties of Federal agencies
(@) in General Not later that 36 months after enactment of this Act,
190ch Federal agency shall develop and implementa plan that
(1) simplifies the application, administrative, and reporting
procedures for Federal awards as defined in section 7501 (a) (4), tile 31, United States Code,
administered by the agency;
‘demonstrates appropriate agency use of the’, model common application and reporting system.
developed under section 8(a)(1) ;
(3) demonstrates appropriate participation in the interagency process under section 6(a)(2) ;

@) designates a lead agency official;
(©) allows applicants to apply for, and report on the use of, Federal funds electronically,


55

OPENING STATEMENT OF
THE HONORABLE DENNIS J. KUCINICH
GOVERNMENT MANAGEMENT, INFORMATION, AND TECHNOLOGY
HEARING ON
THE FEDERAL FINANCIAL ASSISTANCE MANAGEMENT ACT OF 1998

July 30, 1998

There are over 600 federal programs that provide financial assistance
to State, local, and tribal governments, and non-profit organizations. These
funds - and the organizations that use them - provide vital services to help
solve real problems faced by the American public. Unfortunately, unwieldy
administrative barriers often reduce the effectiveness of these services.

The federal government provides significant financial assistance in a
number of areas. Twenty billion dollars in federal funds support 163 different
job training programs; the federal government supports over 90 early
childhood programs.

Unfortunately, even experienced state, local and non-profit
administrators often have trouble navigating the complex federal support
system. Similar programs are often administered by numerous different
agencies, and administrative requirements can be complex and duplicative.
As a result, the programs run with federal funds by state, local, and tribal
governments, and non-profit organizations, are forced to waste time, effort
and money that could be better used to provide vital services to the public.

H.R. 3921, the “Federal Financial Assistance Management
1


64

flexibility in federal financial management programs while improving or maintaining program
performance. The bill requires the Office of Management and Budget (OMB) to work with other
federal agencies to establish a uniform application for financial assistance from multiple
programs across multiple federal agencies, ways to simplify reporting requirements and
administrative procedures, and electronic methods for applying for and reporting of federal
financial assistance funds. Agencies are also required to establish a process for consultation with
state, local and tribal governments and non-profit organizations over their implementation of the
bill’s requirements.

I would like to spend the remainder of my time focusing on two areas on which H.R.
3921 focuses. First, and most importantly, I applaud the interdisciplinary nature of the
legislation. The primary message of the working group is that no effort to make services to
families more effective and efficient will succeed unless the programs which meet different
aspects of family needs are coordinated with each other.

"The Federal Financial Assistance Management Improvement Act", H.R. 3921, directs
the Director of OMB to establish inter-agency coordination of the collection of information and
sharing of data. For example, OMB, in coordination with agency heads, must develop a single
information release form to facilitate the sharing of information across multiple Federal
programs, as is one of the goals of my bill. While this does not allow for consortia to effectively
coordinate services, it is an important step in the right direction.

I would also like to highlight the approach that the Portman/Hoyer bill, H.R. 3921, takes
to fix federally created problems. In my opinion, the federal government has the responsibility
of fixing the problems it has created. Under the legislation, the OMB is responsible for
overseeing the effort to eliminate regulations and simplify requirements. I believe that the
interdisciplinary nature of this bill will add a much needed focus on the coordination of program
requirements both within and across federal departments.

Before I close, I would like to mention that I strongly support the Portman/Hoyer bill,
H.R. 3921, in its current form. This legislation has been developed over a significant period of
time by a bipartisan group of Members of Congress.

Finally, I would like to thank Congressman Portman for his leadership on this important
piece of legislation. It has been a pleasure to work with him and his staff.

1 appreciate the bipartisan spirit in which this subcommittee is proceeding and thank you
for your invitation to testify before the subcommittee this afternoon. I look forward to working
with you in the future, and will be happy to answer any questions which you may have.




44

tive requirements for many of these programs even within the
same area.

Most recently, there were a lot of concerns with the Drug-Free
Communities Act, and this legislation went through the committee.
We were all very excited about it. I’m still excited about it.

And the act itself clearly sets forth the criteria that a coalition
would have to meet in order to qualify for a matching grant, and
we tried to keep that, as you know, as streamlined as possible. But
the application itself is extremely lengthy. It’s a complicated instru-
ment, and even some of the more sophisticated community coali-
tions have not been able to work with it. As a result, I think the
program has not been as accessible to many of the coalitions that
otherwise would have been able to take advantage of it and that
are in desperate need of financial support.

We're trying to deal with that on an individual case basis. And
I think we're having some progress with ONDCP and the Justice
Department.

But there’s a larger issue here, and we’ve got to be able to
change this process. That’s why we have this legislation before us
to address these concerns. It requires the Federal agencies with
oversight from OMB, which is very important, to develop the plans
within 18 months of that, No. 1, streamline application, adminis-
trative and reporting requirements; No. 2, have a uniform applica-
tion for any related programs; and, No. 3, expand the use of the
electronic applications and reporting via the internet, again con-
sistent with what we're trying to do at the IRS electronic filing.

Fourth, it demonstrates—they have to demonstrate interagency
coordination to simplify the reporting requirements for those pro-
grams that are overlapping; and fifth, set annual goals to further
the purposes of the act.

They must also work closely with the State and local govern-
ments, the nonprofit community, in the setting of the performance
measures to achieve the goals that are set out, the annual goals
that are required under the bill. It does set out 5 years, and the
notion there was to—we don’t want to have this going into perpetu-
ity, and that there be a review by the National Academy of Public
Administration at the end of the 5-year period. I really think it will
help make Federal grant programs more user friendly and less bur-
densome.

It’s not the silver bullet, but I think it will help. It has been en-
dorsed, as you know, by some of the organizations who will testify
here today—State and local groups, the National Conference of
State Legislators, National Governors Association, NACO, National
League of Cities.

It’s a good government measure, making it easier for people to
interact with their Federal Government. And I think it’s going to
result in a significant cost savings for grant applicants and Federal
agencies alike, notwithstanding the—what you've gotten, I think
from OMB as to the costs of this, in the end, it should save every-
one money.


42

Mr. Horn. Let me go back to Mr. Kilmartin.

In your statement, Mr. Kilmartin, you discuss the need to involve
the State, local, tribal governments and the development of the
agency plans called for in the bill. Do you think that the provision
calling for the consultation of these groups by Federal agencies
goes far enough to ensure that the affected parties are heard?

Mr. KILMARTIN. Yes, Mr. Chairman. In regards to section 6, as
it relates to the responsibility of the Federal departments. And
that’s helpful because it creates a framework by which this dialog
and communication can transpire. What we think is missing is a
similar section, a similar pr vision in section 5, which specifies the
duties of the Director of OMB. Again, this all ‘relates to the point
where cross-boundary coordination and communication is the name
of the game for government improvement projects, what’s missing
is a framework by which Federal and State people can share ideas
and productively engage in a partnering-type exercise.

That framework needs to exist, not only as it relates to the doz-
ens of Federal granting agencies as contemplated in section 6, but
we also think at the leadership level; namely, the Director of OMB
in section 5.

Mr. Horn. Do you and your colleagues, and that would be the
same for Mr. Martin, have any specific language you’d like to insert
in section 5, Duties of the Director, on page 5 of the bill, H.R.
3921?

Mr. KILMARTIN. I guess—I’m not a lawyer, but in section 5(a),
where it talks about the duties in general and it goes 1 through
9, you might think about inserting—excuse me, it goes 1 through
8—you might think about inserting a 9 and the 9 might be wording
similar to what appears over in section 6 as 6(a), paragraph 7
which talks about “in cooperation with State, local” and so forth;
and then the similar language, “in consultation,” which appears on
the next page—later on, I guess, in section C.

So we think just repeating similar-type 1: age—

Mr. Horn. This is at the top of page 10 of the bill? I would tell
you, I appreciate you giving us some detail on that.

Mr. Portman, the author of the bill on the House side has ar-
rived, and if you gentlemen just stay where you are, we will have
Mr. Portman come forward and make his opening statement.

We also have the arrival of the ranking Democrat, Mr. Kucinich
of Cleveland and former mayor, so he appreciates these problems
in particular.

And we will start with Mr. Portman.

STATEMENT OF HON. ROB PORTMAN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF OHIO

Mr. PoRTMAN. Thank you, Mr. Chairman. I appreciate your in-
dulgence. The situation today is much like the last couple of days,
things get kind of off schedule, and I apologize. I know Steny Hoyer
wanted to be here, but he’s also involved with the funeral, so he
was unable to be here apparently.

I was on the subcommittee not too long ago—

Mr. Horn. That’s right, we haven’t forgotten you.

Mr. PoRTMAN. I want to commend you, not only what you’re
doing here today, but what you’ve done with the IRS and so many


67

most of which I think is going to be in the Federal side and a fair
amount will be on the recipient side as well.

So the opportunities for a huge cost savings would be here. I
haven’t done the study. It’s not my job. But I’m sure if somebody
did, one would entertain huge savings, which I guess takes me to
my final comment, if I may.

I did get a quick read oft the OMB testimony and I sort of charac-
terized it as the traditional statement, if it’s not broken, don’t fix
it. Well, I think as you hear from folks in this room and most peo-
ple in the street, if this Federal grant domain isn’t broken, it sure
can be improved.

And I would not take advantage of the opportunities for improve-
ment. And I really think that that takes leadership, which is why
I was suggesting before what we need to do is build the framewor!l
where we have the communication from the stakeholders, and at
the leadership level as well as the agency level, which is the sug-
gestion about paragraph 9.

Mr. Horn. Any comments on that, Mr. Martin?

Mr. Martin. If they’re made to coordinate with the Paperwork
Reduction Act, maybe they can use the specific performance meas-
ure of how much paperwork is reduced, and that will be a measure
of—if they have to coordinate it with the Paperwork Reduction Act,
maybe they can have a specific performance measure, which they
like to give us, would be how much paperwork is reduced through
electronic filing. And that would be a direct cost savings for every-
body involved, including the multiple copies that you don’t want.

Mr. Horn. That’s correct. Yeah, I think we will remedy that situ-
ation, to say the least.

Let’s see. Go ahead. Do you have any further questions?

Mr. KucINicH. I want to thank the gentlemen for appearing.
And, you know, I think it’s obvious that this is an issue or a subject
which has the potential of making a contribution to making the
government work more efficiently, not only from the standpoint of
administration, but from those that are participating in the pro-
grams. I think it would be interesting also, Mr. Chairman, if we
had a means of reaching out to various grant applicant commu-
nities and getting their input, as far as an assessment almost—you
know, both of us having worked in universities, at the end of var-
ious semesters, the professors will have to distribute to the people
in the class assessments—

Mr. Horn. Student evaluations.

Mr. KucInIcH [continuing]. Student evaluations, and you would
have to—and then they evaluate you. And it would be interesting
to have the people who are involved in these grants have an oppor-
tunity to evaluate the performance of the grantors.

Mr. Horn. Yes, that’s a good suggestion. That happened to be
one of my first reforms, by the way.

Mr. MarTIN. That’s the only reason why they have the Cash
Management Act. That’s the only reason why they have the com-
mon rules for debarment, lobbying the Federal Government, debar-
ment and procurement, relocation assistance. They were strongly
pushed by the National Governors’ Association, and the National
Association of State Budget Officers and the Comptrollers, Treasur-
ers and Auditors, I’m sure have a million ideas for you.


i

Statement of
William Kilmartin
Massachusetts State Comptroller
On Behaif of the National Association of State Auditors,
Comptrollers and Treasurers

Before the
Subcommittee on Government Management,
Information, and Technology

Of the
Committee on Government Reform and Oversight

U.S. House of Representatives
July 30, 1998

Mr. Chairman and members of the subcommittee, my name is William Kilmartin and I
am the State Comptroller of Massachusetts. I also serve on the Executive Committee of
the National Association of State Auditors, Comptrollers and Treasurers (NASACT). As
part of my duties within NASACT, I am a member of our Intergovernmental Financial
Management Improvement Committee (IFMIC). I offer this testimony on behalf of the
state of Massachusetts, the financial policy officials of the 50 states who are members of
NASACT and the committee. This committee is dedicated to improving financial
management at the federal, state, and local political subdivision levels of government. I
thank you for your invitation to appear here today for this hearing and provide comments
from the perspective of state financial policy officials.

The stated purpose of the Federal Financial Assistance Management Improvement Act of
1998 (ELR. 3921) is “To improve the effectiveness and performance of Federal financial
assistance programs, simplify Federal financial assistance application and reporting


54

Mr. Horn. Well, we thank you very much for coming. We appre-
ciate your thoughts and your hard work on this, just as the other
efforts you’ve done as a Member of this House. Thank you.

Mr. PorTMAN. Thank you, Mr. Horn.

Mr. Horn. Now, would the gentleman like to read an opening
statement?

Mr. Kucinicu. If I can ask that the statement be included in the
record.

Mr. Horn. It is. It will be included after mine as just read.

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


60

I would be ungrateful to the administration if not observing that
they have done a lot to reduce red tape and to reduce very substan-
tially, as you know, Mr. Chairman, the Code of Federal Regula-
tions. But obviously, there is still a long way to go. It should give
the local programs the flexibility they need to address local prob-
lems. Reform should create incentives for program coordination
which serve kids, and families, and communities better, while mak-
ing more efficient use of our own resources.

ly wife Judy, Mr. Chairman, when she was alive, worked for the
Prince George's County School System. She used to tell me about
children in her program with certain problems, and she felt very
strongly that the staff shouldn’t have to run around figuring out
which programs that child qualifies for and how to make the child’s
needs fit the money, as opposed to the other way around. Programs
should provide money which is flexible enough to allow program
staff to concentrate on what they know best, taking care of chil-
dren, or serving communities.

As an appropriator, I am particularly concerned that our tax dol-
lars be spent efficiently and effectively. I know that Senator John
Glenn shares that view and, of course, this legislation is his legisla-
tion in the Senate. And he has been involved with this, along with
Senator Hatfield, for some years, as you know, Mr. Horn.

Mr. Horn. Yes.

Mr. Hoyer. In 1994, I asked the Department of Education to
convene a working group on coordinated services to make rec-
ommendations for such Federal effort. The working group which we
appropriated $500,000 in the Labor, Health Appropriations Sub-
committee. It met through 1995, and included Federal employees
and people from State and local governments and organizations
across the country. In response to the recommendations of that
group, I introduced the Family Services Improvement Act, H.R.
1480, in the 104th and the Tosth Congresses.

As you know, H.R. 3921 was originally introduced in the Senate
by Senator Glenn. His staff spent many years seeking the views of
nonprofit organizations on how to provide greater flexibility in Fed-
eral financial management programs while improving, or at least
maintaining, program performance. The bill requires the Office of
Management and | Budget to work with other Federal agencies to
establish a uniform application for financial assistance from mul-
tiple programs across multiple Federal agencies, ways to simplify
reporting requirements and administrative procedures and elec-
tronic methods for applying for and reporting of Federal financial
assistance funds.

Agencies are also required by this legislation to establish a proc-
ess for consultation with State, local and tribal governments and
nonprofit organizations over their implementation of the bill’s re-
quirements.

I would like to spend the remainder of my time briefly focusing
on two areas on which H.R. 3921 focuses as well. First, and most
importantly, I applaud the interdisciplinary nature of the legisla-
tion, which I think is critical. The primary message of the working
group is that no effort to make services to families more effective
and efficient will succeed unless the programs which meet different
aspects of family needs are coordinated with each other.


18

many federai agencies have their own proprietary payment systems to administer their
‘grant programs. State governments, their agencies, and other grant recipients must be
able to request and receive funds using the protocol established by the respective federal
agency. Consequently, a state that centrally manages these grants must use several
methods to draw down funds from the federal government. Typically, a single state must
accommodate ten to twelve federal disbursement systems. This is an example of financial
management than can be easily improved.

Recently, the Chief Financial Officers Council (CFO Council) endorsed a plan to reduce
the number of payment systems in use by the federal government from more than 12 to
three, over the course of the next few years. NASACT had been seeking to reduce the
number of payment systems to one within one year. We applaud the direction taken by
the CFO Council, but believe they can move farther and faster. Three systems are better
than 12, but not as efficient as one. A solution in 2002 is good, but one in 1999 would be
better.

I mention the recent CFO Council recommendation for several reasons that illustrate the
need for true partnerships, not paper partnerships, between the states and the federal
government. First, state involvement in that decision-making process was openly sought,
and the leadership of the Office of Management and Budget is commended for their
efforts. However, the state involvement was not effective because the CFO Council’s
recommendation was mostly completed before the states’ participation. If states were
involved earlier in the process in analyzing the problem, pointing out the strong and weak
points in the different programs, a better result would have been achieved. I urge you to
strengthen language in the bill to ensure that grantees be given maximum ability to
participate in changing the existing system.

Second, strike while the iron is hot. When a decision is reached on what new procedures
to implement, it should be acted upon quickly and decisively. Transition periods should
be as short as reasonably possible to effectively prepare for the intended changes, not as
temporary safe harbors for those who fear change.


CONTENTS

Hearing held on July 30, 1998
Text of H.R. 3921

Statement of:
Hoyer, Hon, Steny, a Representative in Congress from the State of Mary-

Kilmartin: William, comptroller, State of Massachusetts, and executive
committee member, National Association of State Auditors, Comptrol-
lers and Treasurers; and James L. Martin, legislative counsel, Office
of State and Federal Affairs, National Governors’ Association ..

Portman, Hon. Rob, a Representative in Congress from the State ‘of

Letters, statements, etc., submitted for the record by:
Horn, Hon. Stephen, a Representative in Congress from the State of
California, prepared statement of

Hoyer, Hon teny, a Representative in Congress from the State of Mary-
statement of ...
illiam, comptroller, State of Massachusetts, and executive

committee member, National Association of State “Auditors Comptrol-
lers and Treasurers, prepared statement of ...
Kucinich, Hon. Dennic J.” resentative in Congress from ‘the State
of Ohio, prepared statement of
Martin, James L., legislative counsel, Office of State and Federal Affairs,
‘National Governors’ Associat

ition:
Letter dated July 1, 1998
Letter dated July 30, 1998 ..
Prepared statement of ...
Portman, Hon. Rob, a Representative in Congress
, Nhio, prepared statement of

(ql)

59


Pinancial Management Bivisies
Gffice of Management ent Butget


‘Soc. BS. Dutes of the Director Bete

(@) in General. The of the Office gf Management and Budget
cg e eedrtr
-aseist federatag ‘establishing

SHERRCapply for KANE

Federal ‘serve similar purposes and are administered by different Federal agencies; iid
we norm eyaorn wherein ereppicent GHESENTANSE a eppty fr

manage, and
report on the use of funding multiple Federal programs HRHEiifiacross different
Federal agencies;

— #2 process by which applicants car-apply-forand-reporton-the—

Speer
‘to streamline administrative Ee eg ant opening

requirements
[El E}mproved interagency and intergovemmental coordination of
wfornsion colecion, ncuig CEA Ro AE aER
(SRETRERE EEE IO the deveiopmentote-release-form-to-
—faciitate information sharing:

Fe: procese-te strengthen the information eos managem

—programs:end _
—8y- specific annual goats end-ebjectives-to-further-the- purpesesof 1 ~~
this Act:
(b) Action Consistent With Statutory Requirements. —Actions taken
by the Director must be consistent with the statutory requirements of SANS.
‘any eppliceble Federal program
(©) Lead Agency and Working Groups. ~The Director may designate a
lead ‘and use interagency working groups to Eiliifessistin-carrying out

(@) Review of Plans and Reports.—

(©) Exemptions.

—(#)1rrgeneral—The Director may exempt any Federal agency HEEHIMIAEE he
determines it does not have a significant number of Federal sik¢—


COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT
DAN BURTON, Indiana, Chairman

BENJAMIN A. GILMAN, New York HENRY A. WAXMAN, California
J. DENNIS HASTERT, Illinois TOM LANTOS, California
CONSTANCE A. MORELLA, Maryland ROBERT E. WISE, JR., West Virginia
CHRISTOPHER SHAYS, Connecticut MAJOR R. OWENS, New York
CHRISTOPHER COX, California EDOLPHUS TOWNS, New York
ILEANA ROS-LEHTINEN, Florida PAUL E. KANJORSKI, Pennsylvania
JOHN M. McHUGH, New York GARY A. CONDIT, California
STEPHEN HORN, California CAROLYN B. MALONEY, New York
JOHN L. MICA, Florida THOMAS M. BARRETT, Wisconsin
THOMAS M. DAVIS, Virginia ELEANOR HOLMES NORTON, Washington,
DAVID M. McINTOSH, Indiana DC
MARK E. SOUDER, Indiana CHAKA FATTAH, Pennsylvania
JOE SCARBOROUGH, Florida ELIJAH E. CUMMINGS, Maryland
JOHN B. SHADEGG, Arizona DENNIS J. KUCINICH, Ohio
STEVEN C. LATOURETTE, Ohio ROD R. BLAGOJEVICH, Illinois
MARSHALL “MARK” SANFORD, South DANNY K. DAVIS, Illinois

Carolina JOHN F. TIERNEY, Massachusetts
JOHN E. SUNUNU, New Hampshire JIM TURNER, Texas
PETE SESSIONS, Texas THOMAS H. ALLEN, Maine
MICHAEL PAPPAS, New Jersey HAROLD E. FORD, JR., Tennessee
VINCE SNOWBARGER, Kansas —
BOB BARR, Georgia BERNARD SANDERS, Vermont
DAN MILLER, Florida - (Independent)

RON LEWIS, Kentucky
KEVIN BINGER, Staff Director
DANIEL R, MOLL, Deputy Staff Director
Davin A. Kass, Deputy Counsel and Parliamentarian
JuprrH McCoy, Chief Clerk
Putt ScHILIno, Minority Staff Director

SUBCOMMITTEE ON GOVERNMENT MANAGEMENT, INFORMATION, AND TECHNOLOGY
STEPHEN HORN, California, Chairman

PETE SESSIONS, Texas DENNIS J. KUCINICH, Ohio

THOMAS M. DAVIS, Virginia PAUL E. KANJORSKI, Pennsylvania

JOE SCARBOROUGH, Florida MAJOR R. OWENS, New York

MARSHALL “MARK” SANFORD, South CAROLYN B. MALONEY, New York
Carolina JIM TURNER, Texas

JOHN E. SUNUNU, New Hampshire
RON LEWIS, Kentucky

EX OFFICIO

DAN BURTON, Indiana HENRY A. WAXMAN, California
J. RUSSELL GEORGE, Staff Director and Chief Counsel
MATTHEW EBERT, Clerk
BRIAN COHEN, Minority Professional Staff Member
JULIE Moses, Minority Professional Staff Member

ap


aT

grant, some recipients wonder if it was really worth the effort
because the reporting requirements and administrative burdens
are significant. In one case, I was told that someone had to hire
part-time staff simply to comply with the additional reporting
requirements imposed by a particular grant program.

In my own state of Ohio, the Ohio Association of
Nonprofit Organizations has indicated that the biggest problem
in administering more than 600 different financial assistance
programs was that federal agencies often lack sufficient
coordination with one another and, as a result, recipients are
often subject to duplicative reporting requirements.

This is no surprise when you consider that there are over
600 federal grant programs that provide funds to State and local
governments and nonprofit groups. Although many of these
programs are in the same functional area (more than 80 are in
elementary, secondary and vocational education; and more than
80 are in social services), there are separate application,
reporting and administrative requirements.

Most recently, I have heard concerns expressed from
around the country about the implementation of the Drug-Free
Communities Act, legislation I sponsored that was enacted last
year. The Act itself clearly set forth the criteria a coalition
would have to meet in order to qualify for a federal matching
grant. The application itself, however, was an extremely
lengthy, complicated instrument that even some of the more
sophisticated coalitions could not understand. As a result, this
program has not become accessible to many of the coalitions


31

Good moming, Mr. Chairman and members of the committee. Thank you for this opportunity for
the National Governors’ Association to express its strong support for enactment of H.R. 3921, the
Grants Management Improvement Act.

Office of Management and Budget (OMB) officials recently told the committee that they do not
think new legislation is necessary. However, experience tells a different story. Legislation
directing OMB to act within specific timetables on reporting to Congress on the performance
results of federal officials is exactly what is needed. OMB prefers model rules with options for
each agency to adopt its own specialized additional rules. State and local governments prefer
uniform application procedures and “common rules” for regulations.

Most agencies still require grantees to repeatedly provide basic data with each new grant
application that has already been supplied many times. This is certainly true if one must deal
with more than one federal agency on the same project. This base data, or uniform information,
could be electronically referenced for each grantee for repeated use by any agency.

Most agencies also require multiple copies of grant information. All of this information should
be submitted once, in an electronic format, for interactive dialogue and updating.

OMB has never vigorously pursued an effort to standardize the cross-cutting rules and regulations
that apply to all grant funds. Of the seventy-seven in existence, only six have a “common rule”
that is used by all federal agencies for all grantees. This is a long overdue reform that would save
significant administrative costs and time for taxpayers and grantees. It would also minimize
interagency hassles over jurisdictional and funding procedures.

OMB says that a “common rule” for state and local government grants administration exists in
OMB Circular A-102. Certainly for state and local governments, there is little proof that the
“common rule” is used for very many cross-cutting rules. More federal agencies are not deferring
to state and local laws and procedures rather than specific federal requirements as requested by
Circular A-102.

Thave attached a partial list of cross-cutting regulations for your information. Only six have a
“common rule” and all of these were developed only after strong pressure from the National
Governors’ Association and the National Association of State Budget Officers. These are: drug-


A.

B.
c
BD

40

Index by Type of Directive...

Index by Reference Number..........ccceceeeeseeeeceees,
Applicability of Requirements and Standards...........

Requirements not included in Directory.

Il. REQUIREMENTS AND STANDARDS

A

SOCIAL POLICIES

- Detailed Description of Social Policy
Requirements.....-.-.s0.6-

ECONOMIC POLICIES

- Detailed Description of Econamic Policy
Requirements

ENVIRONMENTAL POLICIES

- Detailed Description of Environmental Policy
Requirements...

ADMINISTRATIVE POLICIES,

- Detailed Description of Administrative Policy
Requirements

ADMINISTRATIVE MANAGEMENT STANDARDS

- Detailed Description of Administrative Management
Standards

8
4
21

24

seeeee 137


26

Fequiremer
(€) Comment and Consuttation on Agency Plans.— Px

Implementation and
‘any other required general

‘Sec, 6. Duties of the Director
lth iB General. ~The Director of the Office of Management and
‘appropriate

model
‘common applications wherein a non-federal entity can apply for federal financial essistance from

muttiple
Federal programs that serve similar purposes and are administered by different Federal agencies; and
{B) & model common system wherein @ non-federal entity can apply for, manage, and
report on the use of funding muttple Federal awards across different

‘with the Privacy Act of 1974;
(®) Action Consistent With Statutory Requirements. —Actions taken

by the Director must be consistent with the statutory requirements of related to

‘any Federal award.
(©) Lead Agency and Working Groups. ~The Director may designate a

Jead agency and use interagency working groups to carry out his responsibilities this Act.

@ Review of Plans and Reports.—

Agencies shall submit to the Director, upon his request and for his review, information and other reporting
regarding thelr implementation of this Act.

(©) Exemptions. — The Director may exempt any Federal agency from this Act if he
determines it does not have a significant number of Federal awards. The Director shall maintain a fist of
exempted agencies.


9

auditor of California, and myself, the comptroller of the Common-
wealth of Massachusetts. That gives you a sense of the nature of
the group on whose behalf I am going to convey these comments.

We would urge your favorable consideration to the bill. We be-
lieve that the domain of Federal assistance programs has many op-
portunities for improvement. We specifically urge that the opportu-
nities for stakeholders, such as State governments, to be involved
in the determination of administrative procedures be expressly pro-
vided for within the bill. We see such reference in section 6 as it
relates to the respective Federal agencies, and we urge your consid-
eration to possibly including a similar reference to section 5, where-
in the duties of the Director of OMB are specified so as to cement
in, if you will, a rule of State consultation or other stakeholders’
consultation, be it at the leadership level, as well as at the depart-
ment level.

Within the domain of Federal assistance programs, there are
many opportunities for improvement as it relates to the application
process, the notice of award and supplemental award process; and
some efforts have taken place in that regard. I would specifically
like to draw out for your consideration today the funds transfer as-
pect of the programs of Federal assistance.

I will use Massachusetts as a typical example. And you may ex-
trapolate from my example to the other 50 States because we are
more or less similarly situated.

Massachusetts is approximately the 10th largest State, with total
annual revenues of around $30 billion; and $5.7 billion of that
would be Federal assistance programs, or roughly 16 or 17 percent
of our total operations is Federal grants. There’s over 400 Federal
grants that we deal with each year that emanate from about three
dozen Federal granting agencies; and we have to deal with the 13
Federal funds transfer systems.

It’s our position that one Federal funds transfer system would be
optimal. It used to be 12; the 13th was recently added, and we also
heard that a 14th Federal payment system is in the pipeline as
well, which would strike us as a movement in the wrong direction.

We think that your bill would provide the opportunity for us to
work together with our Federal colleagues to effectuate a signifi-
cant simplification on something as relatively straightforward as
how we exchange the funds back and forth between the respective
jurisdictions. We notice that the CFO council, under the leadershi,
of OMB, has taken an action in this regard which we commend;
however, their proposal is to go from 13 systems down to 3 and to
get that done in 5 years, namely 2002.

We would advocate that we go from—I guess I will say it this
way: 3 systems, rather than 13, is good, but we think that 1 sys-
tem, rather than 18, is even better. And furthermore, we think that
we can get there in a year, not 5 years. So by working together
with the CFO council or otherwise, the legislation would provide
opportunities for our involvement and interaction. We think that
we could work cooperatively to the benefit of all parties and move

juickly and move decisively to effectuate the types of efficiencies
that we have knowledge—that we know we know how to do them.

We've done many of these projects inside of our own jurisdiction,
and we know how to do business-to-business, web-enabled-type


62

Finally, I would like to thank Congressman Portman for his lead-
ership, as I did at the beginning on this important piece of legisla-
tion. It has been a pleasure, I want to say, to work with him and
with his staff. I appreciate the bipartisan spirit in which this sub-
committee is proceeding, and thank you for this invitation to share
my views with you.

[The prepared statement of Hon. Steny Hoyer follows:]


48

that are in desperate need of financial support. This process
must change.

To address these concerns, we introduced H.R. 3921. The
bill requires the Federal agencies, with oversight from OMB, to
develop plans within 18 months that: 1) streamline application,
administrative and reporting requirements; 2) have a uniform
application for related programs; 3) expand the use of electronic
applications and reporting via the Internet; 4) demonstrate
interagency coordination to simplify reporting requirements for
overlapping programs; and 5) set annual goals to further the
purposes of the Act. Agencies would work closely with state
and local governments and the nonprofit community in the
setting of performance measures to achieve the bill's goals. The
bill sunsets in 5 years following a review by the National
Academy of Public Administration.

Mr. Chairman, I feel this legislation will help make federal
grant programs more user friendly and less burdensome. It has
been endorsed by state and local organizations such as the
National Governors Association, the National Conference of
State Legislators, the National Association of Counties, and the
National League of Cities. This is a good government measure
that will make it easier to interact with our federal government,
and will result in cost savings for grant applicants and federal
agencies.

I thank the Chairman and this Committee for taking an
interest in this legislation and for conducting this hearing today.


50

Mr. PoRTMAN. Well, I wish they were here. And obviously they
should have a crack at answering that certainly, but I just feel
strongly that it’s not getting done.

I mean, I understand there is an OMB circular out there. As you
know, in dealing with the agencies, you have to write this into
mandatory language, sometimes it has to be legislation, rather
than an Executive order or a circular. And I think the proof is in
the pudding.

I mean, I know you get calls from frustrated constituents. I do.
If there was not a problem out there among the States, localities,
the tribes and nonprofits, we wouldn’t be here. So it’s great that
OMB is beginning to take steps in this regard, but they aren’t
bearing fruit yet. So this is, unfortunately, the necessary step to

Mr. Horn. Before you came in, I cited my favorite British com-
edy, “Yes, Minister,” where the ranking career servant says, “Oh,
yeah, we agree with you completely in principle, but nothing ever

ippens.” And we can profit a lot from that, and that’s what we
want to do.

We don’t want to micromanage overly, but we do want to get a
basic framework there; and I think that’s the spirit that you and
Senator Glenn on the other side have both had behind this, that
there’s no need to have all these different forms and different com-
puter processes and all the rest of it. That’s just common sense.

And one of the things, little things, and you may—your prede-
cessors here who work with the State government and the Gov-
ernors and the auditors, I look at the bills that come from GSA,
which is under this committee’s jurisdiction, we’re the oversight
committee for it, and you buy something from their St. Louis sup-
ply depot and you get five copies of it. And as I’ve told two GSA
administrators now, I don’t know why you don’t just give us one
copy. If we need another copy, because of some House bureaucracy
here, fine, we'll Xerox it. But why are we wasting—I mean, they’re
cutting down probably 20,000 trees a year just for the GSA billing
system.

Now, we will have to check and see if they’ve taken our advice,
humbly given, but it won’t be so humbly next time. But it’s just
crazy to have all of that paper floating around when it isn’t needed.
And that’s why I think your move for electronic filing is very help-

Mr. PoRTMAN. It makes sense.

Mr. Horn. And in reference to the costs to the bill, we have the
CBO estimate of the short-term cost over the next 5 years. They
estimate $5 to $10 million over this time period. Are there any esti-
mates that you’re aware of or that give a range of costs, increases
or decreases, to grantees, and is it possible that there may be sav-
ings to grantees and even the Federal Government in the long run
through streamlining the grant management process and taking
advantage of technological advancements?

Mr. PorTMAN. As I mentioned in my testimony, I’m convinced
that there will in the end be net cost savings when you include the
grant recipients and the government, I wish I had better data,

steve, I just don’t; and I don’t know that the Senate does either.
But I can’t help but think that even within the government, if we


12

requirements, and improve the delivery of services to the public.” The Committee that I
chair within NASACT has a mission statement that reads “To coordinate state inpwt and
focus representation for efficientiy and equitably improving intergovernmental financial
management with Federal parmers.” {tis clear that improving the current system is a
common goai, the achievement of which would benefit both levels of government, and,
ultimately, the taxpayer. Working together will help us do that.

Tens of billions of dollars are transferred between the Federal government and the states
each year. States participating in Federal grant programs are often subject to different
rules and procedures dependent upon which Federal agency is administering the program.
We recognize that each program is different, but administering certain common financial
functions such as the payment request and disbursement procedures does not have to be
different for each federal agency. The money and resources dedicated to facilitating the
transaction itself wouid be better spent on programmatic activities rather than
administrative expenses.

We endorse the simplification of the existing federal financial assistance program
application and reporting requirements. The Office of Management and Budget is the
appropriate federal entity to oversee the process. The active participation of federal
assistance recipients is essential to the success of any action that is taken. There is no
greater resource available to identify burdensome or unnecessary regulation than those
Subjected to it. There is also no greater resource to identify the solutions. These are the

governments to be consulted during the development of these plans. If enacted,
NASACT intends to be an active participant in the process and we hope that our input
and that from other user groups is incorporated into the final product.

One example of where federal-state financial relations can be improved is in the area of
federal payment systems used to make funds transfers to state governments. Currently,