GAO

United States General Accounting Office

A

Testimony

Before the Subcommittee on Technology, Information 

Policy, Intergovernmental Relations and the Census, 

Committee on Government Reform, House of 

Representatives

For Release on Delivery 

Expected at 10 a.m. EDT

Tuesday, April 29, 2003

FEDERAL ASSISTANCE

Grant System Continues to 

Be Highly Fragmented

Statement of Paul L. Posner, Managing Director

Federal Budget Issues and Intergovernmental Relations,

Strategic Issues

GAO-03-718T
While the Federal Financial Assistance Management Improvement Act of 

1999 (FFAMIA) offers promising opportunities to improve the federal grant 

system, there remain over 600 different federal financial assistance programs 

to implement domestic policy. Federal grant recipients must navigate 

through a myriad of federal grant programs in order to find the appropriate 

source of funds to finance projects that meet local needs and address local 

issues. 

Despite the process reforms initiated under FFAMIA, the federal grant 

system continues to be highly fragmented, potentially resulting in a high 

degree of duplication and overlap among federal programs. Since the 1960s 

the number and dollar amount of federal grant programs has grown 

substantially (see figure below). Growth in both the number of grant 

programs and the level of funding have created a high level of complexity in 

the system. 

While the act seeks to improve the effectiveness and performance of federal 

assistance programs by simplifying grant administration and facilitating 

coordination among grant recipients, Congress could also consider 

consolidating grants that have duplicative objectives and missions. 

Consolidation can be achieved through a variety of ways including 

combining multiple programs into block grants, establishing performance 

partnerships, and providing for waiver authority of federal funding 

restrictions and program rules when requested and sufficiently justified by 

state or local governments. Each of these alternatives has implications for 

accountability that Congress will face as it considers improvements to the 

federal grant system. 

Total Outlays for Grants to State and Local Governments (Fiscal Years 1940-2008). 

Grants to state and local governments for payments to individuals

All other grants to state & locals

0

50

100

150

200

250

300

350

400

1940

1944

1948

1952

1956

1960

1964

1968

1972

1976

1980

1984

1988

1992

1996

2000

2004 estimate

2006 estimate

2008 estimate

Billions of constant (1996) dollars

Source: Budget of the United States Government, FY 2004, Office of Management and Budget.

The Federal Financial Assistance 

Management Improvement Act of 

1999 is one of the most recent in a 

series of efforts to reform the 

federal grants management system. 

The act seeks to improve the 

effectiveness and performance of 

Federal financial assistance 

programs; simplify application and 

reporting requirements; improve 

delivery of services to the public; 

and facilitate greater coordination 

among those responsible for 

delivering such services. GAO has 

a responsibility to evaluate the 

implementation of this Act by 2005 

and will soon begin developing an 

approach and methodology for the 

study. This testimony describes 

the problems fostered by 

proliferation and fragmentation, 

which the Act addresses indirectly. 

We do not make any 

recommendations in this 

testimony; however, if Congress 

chooses to address fragmentation 

in the federal grant system more 

directly we have provided several 

options. Fragmentation of the 

grant system could be addressed 

through consolidation of programs 

with overlapping missions and 

objectives by (1) combining 

multiple programs into block 

grants, (2) establishing 

performance partnerships, and 

(3) providing for waiver authority 

of federal funding restrictions and 

program rules when requested and 

sufficiently justified by state or 

local governments. 

www.gao.gov/cgi-bin/getrpt?GAO-03-718T.

To view the full report, including the scope 

and methodology, click on the link above. 

For more information, contact Paul Posner at 

(202) 512-9573 or posnerp@gao.gov. 

Highlights of GAO-03-718T, a report to the 

Subcommittee on Technology, Information 

Policy, Intergovernmental Relations and 

the Census, Committee on Government 

Reform, House of Representatives 

April 29, 2003

FEDERAL ASSISTANCE

Grant System Continues to Be Highly 

Fragmented 
Page 1 GAO-03-718T 

Mr. Chairman and Members of the Subcommittee:

I appreciate the opportunity to be here today to discuss issues relating to 

the management of the federal grant system. The Federal Financial 

Assistance Management Improvement Act of 1999 is one of the most recent 

in a series of efforts to reform the federal grants management system 

extending back to the mid-1960s. Like most of the earlier reforms, the act 

seeks to:

• Improve the effectiveness and performance of Federal financial 

assistance programs;

• Simplify federal financial assistance application and reporting 

requirements;

• Improve delivery of services to the public; and 

• Facilitate greater coordination among those responsible for delivering 

such services.

As such, the act seeks to address many of the administrative burdens that 

confound the nation’s many grant recipients. As the 106th Congress found, 

there are still more than 600 different federal financial assistance programs 

to implement domestic policy—in fact, OMB’s latest count in 2001 found 

668 different grant programs. On the one hand, the administration’s efforts 

to implement the act seek to streamline the flow of information on the 

various grants and develop uniform application and reporting procedures. 

On the other hand, federal grant recipients must still navigate through a 

myriad of federal grant programs in order to find the appropriate source of 

funds to finance projects that meet local needs and address local issues. In 

many cases, numerous grants from several different agencies support 

similar purposes and activities, giving rise to the potential for 

fragmentation in service delivery. 

In testimony this morning you may hear about the administration’s efforts 

to implement this act. GAO has a responsibility to evaluate the 

implementation of the act by 2005 and will soon begin developing an 

approach and methodology for the study. This hearing provides valuable 

information to help us understand the progress made and helps us better 

understand congressional oversight interests. We look forward to working 

with your subcommittee as well as other congressional clients as we 

develop our approach and methodology for this study.
Page 2 GAO-03-718T 

Today, I would like to provide a broader perspective on the structure of 

federal grants to state and local governments in general and the kinds of 

management and service delivery problems fostered by the proliferation of 

federal assistance programs and the fragmentation of responsibility among 

different federal departments and agencies. In my statement this morning, 

I would like to offer a short history of grant management reform efforts, 

describe the current profile of federal grants to states and local 

governments, and discuss GAO’s recent work on these issues. Using the 

homeland security grants as an example, I will explain how the system 

continues to be highly fragmented, potentially resulting in a high degree of 

duplication and overlap among federal programs. Finally, I would like to 

suggest a range of alternatives available to Congress as it weighs reforms of 

the nation’s homeland security grant programs. 

This testimony draws upon our wide-ranging ongoing and completed work 

on federal grants management issues, grant reform efforts, homeland 

security, and performance management initiatives. We conducted our work 

in accordance with generally accepted government auditing standards.

Trends in Federal 

Grants

In 1862, Congress enacted the Morrill Act to help states establish and 

maintain land-grant colleges. The act carefully specified the grant’s 

objectives, placed conditions on the use of revenue derived from the sale of 

the granted lands, and required annual reports. This established the 

pattern of categorical grants—providing needed resources for specific 

purposes in exchange for acceptance of minimum national standards. In 

the 1960s, the number and dollar amount of federal assistance programs 

grew substantially. (See fig. 1.) During this timeframe, major steps were 

taken to broaden elementary, secondary, and higher education 

opportunities; promote development in economically depressed areas; to 

help finance health services and medical care for the indigent; launch a war 

on poverty; and attempt a comprehensive physical, social, and economic 

program to transform slum and blight-ridden cities into model 

neighborhoods. 
Page 3 GAO-03-718T 

Figure 1: Total Outlays for Grants to State and Local Governments (Fiscal Years 1940-2008)

Growth in the both the numbers of new grant programs and the level of 

funding created greater complexity. During the 1960s and into the 1970s, 

various reforms were begun to address the complexity in the grant system. 

In 1968, Congress passed the Intergovernmental Cooperation Act of 1968 

that sought to improve the cooperation and coordination of activities 

among levels of government. From 1969-1973, the President initiated the 

Federal Assistance Review—a government-wide effort with a goal to 

streamline, simplify, and speed up the flow of federal assistance and 

improve the federal government’s responsiveness to its state and local 

partners. In addition, Federal Management Circular 74-7, issued in 1974, 

provided for standardized administrative provisions across grant programs. 

The Joint Funding Simplification Act of 1974 permitted grantees to 

streamline federal assistance by enabling them to combine funding from 

several grants administered by one or more federal agencies. 

As previous congressional committee reports have noted, these 

administrative simplification initiatives, while useful in addressing certain 

administrative burdens associated with grants, did not address the more 

fundamental challenges stemming from the fragmented nature of the grant 

system. For example, the House Government Operations Committee, the 

Grants to state and local governments for payments to individuals

All other grants to state & locals

0

50

100

150

200

250

300

350

400

1940

1942

1944

1946

1948

1950

1952

1954

1956

1958

1960

1962

1964

1966

196819701972

1974

1976

1978

1980

198219841986

1988

1990

1992

1994

1996

1998

2000

2002

2004 estimate

2006 estimate

2008 estimate

Billions of constant (1996) dollars

Source: Budget of the United States Government, FY 2004, Office of Management and Budget.
Page 4 GAO-03-718T 

predecessor to the House Government Reform Committee, noted that the 

legislative consolidation of closely related categorical programs into 

broader purpose grants and the placement of similar programs in a single 

federal agency have more potential for significantly improving grant-in-aid 

administration. 

Over the years, Congress at times has acted to improve the grant system 

through consolidation. The Omnibus Budget Reconciliation Act of 1981 

consolidated a number of social service programs into nine block grants 

which allowed for greater state and local autonomy and flexibility in the 

fashioning of local strategies to address federal objectives. More recently, 

in 1996 the 104th Congress consolidated a number of welfare-related 

programs into the Temporary Assistance for Needy Families block grant. 

Notwithstanding these efforts, as figure 2 shows, over the last 20 years each 

period of consolidation was followed by a proliferation of new federal 

programs. Moreover, some of the block grants were later recategorized, as 

Congress added new set-asides and cost-ceilings to address national 

programmatic concerns, thereby limiting the grants’ flexibility.

Figure 2: Trend in the Number of Federal Grant Programs to State and Local Governments 1980-2001

200

0

250

300

350

400

450

500

550

600

650

700

1980198119821983198419851986198719881989199019911992199319941995199619971998199920002001

Year

Number of grants

Source: OMB analysis.
Page 5 GAO-03-718T 

A sizable increase in the number of grant programs could be justified and 

simply be an indication that as society evolves the nation’s needs also 

change and we need new tools—in the form of new programs—at our 

disposal to address those needs. As such, program proliferation may be an 

indication that there is heightened congressional interest in ensuring that 

federal funds are directed in such a way as to meet specific—more 

narrowly defined—national goals and objectives. Nonetheless, the 

problems associated with a proliferation of federal programs are 

compounded when multiple grants are available for the same or similar 

purposes, forcing grant recipients to package different programs with 

potentially conflicting requirements to address common problems. 

Moreover, the total funds available for many of these programs are quite 

small. As figure 3 shows, the vast majority of available federal funds—78 

percent—are concentrated in 20 large grant programs. Stated differently, 

Mr. Chairman, in 2001 169 federal grant programs were funded at less than 

$5 million. Cumulatively, these small programs receive less than 1 percent 

of all federal funds provided through the grant system. 

Figure 3: Grant Fragmentation: Many Grants Were Funded At Less Than $5 Million 

in 2001

Source: OMB analysis.

258.7

20

66.8

191

5.6

456

0.4

169

Largest

grant

programs

Programs of

$50M or more

(not in top 20)

Programs

between $5M

and $50M

Programs 

less than $5M

Obligations (in billions)

Number of programs
Page 6 GAO-03-718T 

As you can imagine, at the recipient level, the funds available can be quite 

small, particularly—as you may hear in the statements of members of the 

second panel—in relation to the administrative effort and costs incurred in 

applying for and managing the grant. For example, FEMA’s Hazardous 

Materials Assistance program provided grants from “a few dollars to 

$20,000” per applicant, according to the Catalog of Federal Domestic 

Assistance. FEMA’s State Fire Training Systems Grants ranged from only 

$25,000 to $30,000 per state. While these funds undoubtedly served 

important purposes, the question is whether the funds could have been 

provided through more efficient means.

Continuing 

Fragmentation in the 

Structure of Federal 

Grants

Many of the same grants management challenges from the past are still 

with us today. GAO’s work over the years has repeatedly shown that 

mission fragmentation and program overlap are widespread in the federal 

government and that crosscutting program efforts are not well 

coordinated. As far back as 1975, GAO reported that many of the 

fundamental problems in managing federal grants were the direct result of 

the proliferation of federal assistance programs and the fragmentation of 

responsibility among different federal departments and agencies.1

 While 

we noted that the large number and variety of programs tended to ensure 

that a program is available to meet a defined need, we found that 

substantial problems occur when state and local governments attempt to 

identify, obtain, and use the fragmented grants-in-aid system to meet their 

needs.

More recently, GAO has addressed mission fragmentation through the 

framework provided under the Government Performance and Results Act 

(the Results Act). The Results Act's key stages include defining missions 

and outcomes, developing a strategy, measuring performance, and using 

performance information. For example, we reported in 2000 on the 50 

programs for the homeless that were administered by 8 federal agencies. 

Housing services were provided under 23 programs operated by 4 agencies, 

and food and nutrition services were under 26 programs administered by 6 

agencies.2

1

 U.S. General Accounting Office, Fundamental Changes are Needed in Federal Assistance 

to State and Local Governments, GAO/GGD-75-75 (Washington, D.C.: Aug. 19, 1975).

2

 U.S. General Accounting Office, Managing for Results: Continuing Challenges to 

Effective GPRA Implementation, GAO/T--GGD-00-178 (Washington, D.C.: July 20, 2000).
Page 7 GAO-03-718T 

We recently identified 44 programs administered by 9 different federal 

agencies that provided a range of employment and training services.3

 In the 

late 1990s, the Congress tried to bring some unity to this fragmented 

employment and training system by requiring states to provide most 

federally funded employment-related services through a centralized service 

delivery system—one-stop centers. Two years earlier, welfare reform 

legislation provided states with the flexibility to focus on helping needy 

adults with children find and maintain employment. Despite the similar 

focus, the welfare program was not required to be a part of the new 

workforce investment system. We recently reported4

 that nearly all states 

report some coordination of their welfare and workforce systems services 

at the state and local level, but that several challenges remain. For 

example, different definitions of what constitutes work as well as complex 

reporting requirements under both programs hamper state and local 

coordination efforts. Though some states and localities have found 

creative ways to work around these issues, the differences remain barriers 

to coordination for many others. Each of these programs is operated out of 

a different federal agency; the welfare program is administered from the 

Department of Health and Human Services (HHS), and the Department of 

Labor (Labor) administers the workforce investment program. We found 

that HHS and Labor have not addressed differences in program definitions 

and reporting requirements. 

Fragmentation in 

Homeland Security 

Grants for First 

Responders

It falls to the 108th Congress to redesign the nation’s homeland security 

grant programs in light of the events of September 11, 2001. In so doing, 

Congress must balance the needs of our state and local partners in their 

call for both additional resources and more flexibility with the nation’s 

goals of attaining the highest levels of preparedness. This goal is too 

important, and federal resources too scarce, to worry about holding our 

partners accountable after they have already spent the funds.

3

 U.S. General Accounting Office: Multiple Employment and Training Programs: 

Funding and Performance Measures for Major Programs GAO-03-589 (Washington, D.C.: 

Apr. 18, 2003.)

4

U.S. General Accounting Office, Workforce Investment Act: States and Localities 

Increasingly Coordinate Services for TANF Clients, but Better Information Needed on 

Effective Approaches, GAO-02-696 (Washington D.C.: July 3, 2002).
Page 8 GAO-03-718T 

Funding increases for combating terrorism have been dramatic and reflect 

the high priority that the administration and Congress place on this 

mission. These increases bring an added responsibility to ensure that this 

large investment of taxpayer dollars is wisely applied. We recently 

reported on some of the management challenges that could stem from 

increased funding and noted that these challenges—including grants 

management—could impede the implementation of national strategies if 

not effectively addressed.5 

GAO testified before this subcommittee last year on the development of 

counter-terrorism programs for state and local governments that were 

similar and potentially duplicative. We have identified at least 16 different 

grant programs that can be used by the nation’s first responders to address 

the nation’s homeland security. These grants are currently provided 

through two different directorates of the new Department of Homeland 

Security, the Department of Justice, and HHS and serve state governments, 

cities and localities, as well as counties and others. Multiple fragmented 

grant programs can create a confusing and administratively burdensome 

process for state and local officials seeking to use federal resources for 

pressing homeland security needs. This is illustrated in figure 4 which 

shows the complex delivery structure for these 16 preparedness grant 

programs. 

5

 U.S. General Accounting Office, Combating Terrorism: Funding Data Reported to 

Congress Should Be Improved, GAO-03-170 (Washington, D.C., Nov. 26, 2002).
Page 9 GAO-03-718T 

Figure 4: Web of Federal Homeland Security Grant Programs

To illustrate the level of fragmentation across homeland security programs, 

we have shown in table 1 significant features for the major assistance 

programs targeted to first responders.6

 As the table shows, substantial 

differences exist in the types of recipients and the allocation methods for 

grants addressing similar purposes. For example, some grants go directly 

to local first responders such as firefighters, others go to state emergency 

management agencies, and at least one goes to state fire marshals. The 

allocation methods differ as well—some are formula grants while others 

involve discretionary decisions by federal agency officials on a project 

basis. Grant requirements differ as well—DHS’ Assistance to Firefighters 

Grant has a maintenance of effort requirement (MOE) while the State Fire 

Training Systems Grant has no similar requirement. 

Department of Homeland Security Department of Justice Department of Health and Human Services

State 

Border and

Transportation 

Security 

(ODP)

Emergency

Preparedness

and Response

(FEMA) 

Office of 

Community 

Policing 

Services

Center for

Disease 

Control and

Prevention 

Health

Resources

and Services

Administration

Office of

Justice

Programs

City/County

Law

Enforcement Fire EmergencyMedical Service

Public Health/

Hospitals

Source: GAO analysis.

6

 This table is not meant to be all-inclusive; there are other—broader purpose—grants which 

may also be used for first responder preparedness. 
Page 10 GAO-03-718T 

Table 1: Selected Characteristics of Homeland Security Grant Programs 

Grant Federal Agency Grantee Match MOE

Funding Formulas And Cost Sharing 

Provisions

State Domestic 

Preparedness 

Equipment 

Support Program

ODP/DHS State and local units of 

government

The funds are allocated to the States on the basis 

of a formula that provides a base amount to each 

State, with the balance of the funds distributed on 

the basis of population. 

Local Law 

Enforcement Block 

Grants Program 

(LLEBG)

Bureau of Justice 

Assistance in the 

Office of Justice 

Programs, DOJ

Local units of 

government

• • The federal funds may not exceed 90 percent of the 

total costs of a program. 

Federal funds may not be used to supplant state 

and local funds.

Emergency 

Management 

Performance 

Grants (EMPG)

FEMA/DHS State and local units of 

government

• For each state, a target allocation is derived by 

calculating the same proportion of available funds 

as the State received the prior year. 

A matching requirement is calculated for each 

State. Each recipient's cost share percentage will 

increase by 1 percent over the prior year until the 

50/50 level is reached.

Edward Byrne 

Memorial State 

and Local Law 

Enforcement 

Assistance (Byrne 

Formula Grant 

Program)

Bureau of Justice 

Assistance in the 

Office of Justice 

Programs, DOJ

State and local units of 

government

• • Each participant state receives a base amount of 

$500,00 or .25 percent of the amount available for 

the program, whichever is greater, with the 

remaining funds allocated to each state on the 

basis of the state's relative share of total U.S. 

population. 

Match for the formula grant programs will be 

provided for on a project-by-project basis, statewide basis, unit-of-government basis, or a 

combination of the above. 

The Act restricts the use of funds for supplanting 

state and local funds and land acquisition.

State Homeland 

Security Grant 

Program (SHSGP)

ODP/DHS State and local units of 

government

FY2003 allocations determined by using a base 

amount of .75 percent of the total allocation to the 

states (including DC and the Puerto Rico) and .25 

percent of the total allocation for the territories, with 

the balance of funds being distributed on a 

population-share basis. 

State and Local 

Domestic 

Preparedness 

Training Program

ODP/DHS Providers of Training, 

States, and local units 

of government

none

State and Local 

Domestic 

Preparedness 

Exercise Support

ODP/DHS Providers of Exercise 

Support, States, and 

local units of 

government

none
Page 11 GAO-03-718T 

State and Local 

Domestic 

Preparedness 

Technical 

Assistance

ODP/DHS Providers of Techincal 

Assistance

none

First Responder 

Counter-Terrorism 

Assistance

FEMA/DHS Fire & emergency first 

responders; law 

enforcement 

personnel with 

operational and/or 

incident mgt 

responsibilities

none

State Fire Training 

Systems Grants 

(National Fire 

Academy Training 

Grants)

FEMA/DHS Representatives from 

the 50 State Fire 

Training Systems

none

Hazardous 

Materials 

Assistance 

Program

FEMA/DHS States, locals, tribes, 

US territories, State 

Emergency Response 

Committees, and 

Local Emergency 

Planning 

Commissions

none

Assistance to 

Firefighters Grant

FEMA/DHS Fire departments in 

the States. An EMS 

unit can apply if the 

unit is under the 

auspices of a fire 

department as defined 

above. 

• • Applicants who protect a population of 50,000 or 

less must provide a nonfederal cost-share of not 

less than 10 percent of the total award. Applicants 

who protect a population of 50,000 or more must 

provide a nonfederal cost-share of not less than 30 

percent of the total award. 

This program also has a maintenance-of-effort 

requirement.

Edward Byrne 

Memorial State 

and Local Law 

Enforcement 

Discretionary 

Grants Program

Bureau of Justice 

Assistance in the 

Office of Justice 

Programs, DOJ

State and local public 

safety entities.

• Federal funds may not be used to supplant state 

and local funds.

Public Safety 

Partnership and 

Community 

Policing Grants 

(COPS)

Office of 

Community 

Oriented Policing 

Services, DOJ

State and local units of 

government

• Some grants, such as for hiring and the Schools 

Grant Program, require no local percentage match 

required. Other awards generally are made for 75 

percent of allowable project costs. 

(Continued From Previous Page)

Grant Federal Agency Grantee Match MOE

Funding Formulas And Cost Sharing 

Provisions
Page 12 GAO-03-718T 

Source: Catalogue of Federal Domestic Assistance, December 2002.

Table 2 shows considerable overlap in the activities that these programs 

support—for example, funding from both the State and Local Domestic 

Preparedness Exercise Support Program and the State Domestic 

Preparedness Equipment Support Program can be used for planning and 

conducting exercises. 

CDC - 

Investigations & 

Technical 

Assistance

CDC/HHS States, political 

subdivisions of States, 

local health 

authorities, and 

organizations with 

specialized health 

interests may apply.

none

Public Health and 

Social Services 

Emergency 

Fund—

Bioterrorism 

Hospital 

Preparedness 

Program

Health Resources 

and Services 

Administration/

HHS

Federal agencies, 

State and local 

governments, and 

other service 

providers in areas 

impacted.

none

(Continued From Previous Page)

Grant Federal Agency Grantee Match MOE

Funding Formulas And Cost Sharing 

Provisions
Page 13 GAO-03-718T 

Table 2: Overlap and Duplication in Homeland Security Grant Programs

Source: Catalogue of Federal Domestic Assistance, December 2002.

The fragmented delivery of federal assistance can complicate coordination 

and integration of services and planning at state and local levels. Homeland 

security is a complex mission requiring the coordinated participation of 

many federal, state, and local government entities as well as the private 

sector. As the National Homeland Security Strategy recognizes, preparing 

the nation to address the new threats from terrorism calls for partnerships 

across many disparate actors at many levels in our system. Within local 

areas, for example, the failure of local emergency communications systems 

to operate on an interoperable basis across neighboring jurisdictions 

reflects coordination problems within local regions. Local governments are 

starting to assess how to restructure relationships along contiguous local 

entities to take advantage of economies of scale, promote resource sharing, 

and improve coordination on a regional basis. The complex web of federal 

grants depicted in figure 4 suggests that by allocating federal aid to 

different players at the state and local level, federal grant programs may 

continue to reinforce state and local fragmentation.

Grant Equipment Training Exercises Planning

State Domestic Preparedness Equipment Support Program • • •

Local Law Enforcement Block Grants Program (LLEBG) • • •

Emergency Management Performance Grants (EMPG) • • •

Edward Byrne Memorial State and Local Law Enforcement Assistance 

(Byrne Formula Grant Program)

• • • •

State Homeland Security Grant Program (SHSGP) • • • •

State and Local Domestic Preparedness Training Program •

State and Local Domestic Preparedness Exercise Support • •

State and Local Domestic Preparedness Technical Assistance •

First Responder Counter-Terrorism Assistance •

State Fire Training Systems Grants (National Fire Academy Training Grants) •

Hazardous Materials Assistance Program • • •

Assistance to Firefighters Grant • • • •

Edward Byrne Memorial State and Local Law Enforcement Discretionary 

Grants Program

• • • •

Public Safety Partnership and Community Policing Grants (COPS) •

CDC - Investigations & Technical Assistance •

Public Health and Social Services Emergency Fund—Bioterrorism Hospital 

Preparedness Program

• • •
Page 14 GAO-03-718T 

Some have observed that federal grant restrictions constrain the flexibility 

state and local officials need to tailor multiple grants to address state and 

local needs and priorities. For example, some local officials have testified 

that rigid federal funding rules constrains their flexibility and cannot be 

used to fund activities that meet their needs. We have reported that overlap 

and fragmentation among homeland assistance programs fosters 

inefficiencies and concerns in first responder communities. State and local 

officials have repeatedly voiced frustration and confusion about the 

burdensome and inconsistent application processes among programs. We 

concluded that improved coordination at both federal and state and local 

levels would be promoted by consolidating some of these first responder 

assistance programs.7

 

Potential Alternatives In addressing the fragmentation prompted by the current homeland 

security grant system, Congress has several alternatives available. Actions 

taken by federal agencies under the rubric of the Federal Financial 

Assistance Management Improvement Act of 1999 will help to streamline 

the process for obtaining aid across the myriad of programs and 

standardize administrative requirements. These initiatives promise to 

reduce administrative burdens at all levels and promote a more efficient 

grants management process in general. 

Going beyond these initiatives to address the underlying fragmentation of 

grant programs remains a challenge for our federal system in the homeland 

security area, as well as across other program areas. Several alternatives 

have been pursued in the past to overcome problems fostered by 

fragmentation in the federal aid structure. I will discuss three briefly here—

block grants, performance partnerships, and grant waivers. 

Block grants are one option that Congress has chosen to consolidate 

related programs. Block grants currently are used to deliver assistance in 

such areas as welfare reform, community development, social services, law 

enforcement, public health and education. While such initiatives often 

involved the consolidation of categorical grants, block grants also typically 

devolve substantial authority for setting priorities to state or local 

governments. Under block grants, state and local officials bear the primary 

responsibility for monitoring and overseeing the planning, management, 

7

 U.S. General Accounting Office, Combating Terrorism: Selected Challenges and Related 

Recommendations, GAO-01-822 (Washington, D.C., Sept. 20, 2001).
Page 15 GAO-03-718T 

and implementation of activities financed with federal grant funds. 

Accordingly, block grant proposals generally call for Congress to make a 

fundamental decision about where power and authority to make decisions 

should rest in our federal system for a particular program area. 

While block grants devolve authority for decisions, they can and have been 

designed to facilitate some accountability for national goals and objectives. 

Since federal funds are at stake, Congress typically wants to know how 

federal funds are spent and what state and local governments have 

accomplished. Indeed, the history of block grants suggests that the absence 

of national accountability and reporting for results can either undermine 

continued congressional support or prompt more prescriptive controls to 

ensure that national objectives are being achieved. For instance, the block 

grants enacted as part of the Omnibus Reconciliation Act of 1981 were not 

implemented in a manner that encouraged consistent reporting of program 

data. These block grants have been subject to at least 58 subsequent 

congressional actions, many of which served to recategorize the programs 

by tightening program requirements and limiting the grantees’ flexibility.8

The consolidation of categorical grants, however, need not be structured as 

a block grant. In fact, federal funding streams can be combined while 

retaining strong performance oriented accountability by state and local 

governments for discrete federal goals and objectives. State and local 

governments can be provided greater flexibility in using federal funds in 

exchange for more rigorous accountability for results. One example of this 

model involves what became known as “performance partnerships,” 

exemplified by the initiative of the Environmental Protection Agency 

(EPA). Under this initiative, states may voluntarily enter Performance 

Partnership Agreements with their EPA regional offices which can include 

major federal environmental grant programs. These agreements delineate 

which problems would receive priority attention within a state and how the 

state’s performance will be measured. Congress provided states with 

flexibility to use funds from two or more environmental program grants in 

a more flexible and streamlined manner. 

The benefits of the EPA performance partnership system are ones that 

should also be helpful for other areas such as homeland security. EPA 

partnerships (1) allowed states to shift resources to address priority needs 

8

 U.S. General Accounting Office, Block Grants: Increases in Set-Asides and Cost Ceilings 

Since 1982, GAO/HRD-92-58FS (Washington, D.C., July 27, 1992).
Page 16 GAO-03-718T 

and fund crosscutting efforts that are difficult to support with traditional 

grants, (2) provided a way to support innovative or unique projects, (3) 

increased the focus on environmental results and program effectiveness, 

and (4) fostered reduced reporting burden and improved information 

management.

But we reported some significant implementation issues for the 

performance partnership approach as well. In 1999, we reported9

 that the 

initiative was hampered by an absence of baseline data against which 

environmental improvements could be measured and the inherent 

difficulty in quantifying certain results and linking them to program 

activities and the considerable resources needed for high-quality 

performance measurement. 

The challenge for developing performance partnerships for homeland 

security grants will be daunting because the administration has yet to 

develop clearly defined federal and national performance goals and 

measures. We have reported that the initiatives outlined in the National 

Strategy for Homeland Security often do not provide performance goals 

and measures to assess and improve preparedness at the federal or 

national levels. The strategy generally describes overarching objectives 

and priorities, but not measurable outcomes. Lacking such measures and 

outcomes at the national level will surely encumber the federal, state, and 

local partners’ ability to establish agreements on what sort of goals are 

expected of our state and local partners, much less how they could be 

measured. 

A third approach to overcoming fragmentation could be to provide in law 

for waivers of federal funding restrictions and program rules when 

requested and sufficiently justified by state or local governments. In the 

homeland security area, legislation has been introduced to provide waivers 

for states to use funds from one category of federal assistance, such as 

equipment, to support other homeland security activities such as training. 

This approach could help recipients adjust available federal funds to 

unique needs and conditions in each state. Unlike full grant 

consolidation—which is legislated—each waiver must be approved by 

federal agency officials before grantees could have the kind of flexibility 

9

 U.S. General Accounting Office, Environmental Protection: Collaborative EPA-State 

Effort Needed to Improve New Performance Partnership System, GAO/RCED-99-171

(Washington, D.C.: June 21, 1999).
Page 17 GAO-03-718T 

they desire. Some might view the approval requirement as an additional 

administrative burden while others consider the federal role essential to 

ensuring accountability. 

Conclusions Mr. Chairman, we are eager to work with your subcommittee and others to 

improve the efficiency and effectiveness of our federal grant system. 

Improving the grant partnership among federal and nonfederal officials is 

vital to achieving important national goals. The Federal Financial 

Assistance Management Improvement Act of 1999 offers promising 

opportunities to help those officials achieve their mutual goals through the 

use of federal assistance programs. We look forward to reviewing the 

activities undertaken pursuant to the Act with an eye toward both 

highlighting progress as well as identifying further improvements that can 

be made at all levels of our federal system. We are also ready to assist 

Congress in identifying the problems stemming from the underlying nature 

of the grant system and in sorting through the tradeoffs Congress will face 

in resolving these problems. 

This concludes my prepared statement. I would be pleased to answer any 

questions you or the members of the subcommittee may have at this time.

(450211)
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