Grant Program Consolidations: Lessons Learned and Implications for Congressional Oversight
Released: 2014-12-12T00:00:00

Letter

Background

Grants constitute a form of federal assistance consisting of payments in cash or in kind for a specified purpose, allocated to a state or local government or to a nongovernmental recipient.state and local governments, grants are an important tool used by the federal government to achieve national objectives. When taken as a whole, federal grant programs are extremely diverse and complex. They vary widely in numerous ways, including size, the nature of the recipients, and the types of programs they fund. For example, grants range from relatively small dollar amounts, such as a research grant from the National Science Foundation for less than a couple of thousand dollars, to By providing funding to much larger dollar amounts, such as Medicaid grants to individual states, with outlays of about $265 billion in fiscal year 2013. Grant programs also vary in two important dimensions: (1) the amount of discretion given the recipient in determining how the funds will be used, and (2) the way they are allocated (or awarded).

Grants generally are described as either block grants or categorical grants. Block grants are less restrictive and permit the use of funds for broader categories of activities, such as community development or public health. Block grants generally give greater discretion to recipients in identifying problems and designing programs to address those problems using grant funds. In contrast, categorical grants are the most restrictive, permitting funds to be used only for specific activities related to their purpose, such as for nutrition for the elderly.

While the distinction between “block” and “categorical” grants is useful, it is important to recognize that in practice, the labels represent the ends of a continuum: in the middle range, the two types overlap considerably. The degree of discretion represented by the identified types of grants enables a different balance to be struck between the interests of the federal government —that funds be used efficiently and effectively to meet specified national objectives—and the ability of grant recipients to use funds for those (approved) activities that best fit local priorities while also minimizing administrative burdens associated with accepting the grant.

Grants Play a Significant Role in Funding and Advancing Federal Priorities

Over time, grant program funding has increased steadily, as Congress and federal grant-making agencies have created greater diversity and complexity in federal grants management. According to OMB, federal outlays for grants to state and local governments increased from $91.4 billion in fiscal year 1980 (about $224 billion in 2013 constant dollars) to about $546 billion in fiscal year 2013, (see figure 1).

Overview of the Federal Process for Grant Program Consolidations

Consolidation rationale: Prior research by the former U.S. Advisory indicated that Commission on Intergovernmental Relations (ACIR) there are two instances where it may be suitable to consolidate categorical grant programs: when categorical programs are too small to have much impact or to be worth the cost of administration; and when multiple programs exist in functional areas (including health, education, and social services) that have a large number of programs, or are in functional areas (including justice, natural resources, and occupational health and safety) where there is fragmentation.

The proliferation of grant programs can increase problems related to fragmentation, overlap, and duplication (see figure 2 for our definition of these terms, based on our related framework). As we have previously reported, program consolidations may help address these problems.

Consolidations also have the potential to improve the effectiveness and performance of federal assistance programs by simplifying grant administration and facilitating coordination among grant recipients.

Approaches for consolidation: For purposes of this report we classified consolidations as employing either a block grant approach or a hybrid approach.

A block grant approach is generally broad in scope. It is intended to increase state and local flexibility and generally give recipients greater discretion to identify problems or to design programs addressing those problems using funding from the grant. Block grants funds are provided through less restrictive, broader categories of activities, such as community development or public health.

Hybrid approaches can consolidate a number of narrower categorical programs while retaining strong standards and accountability for discrete federal performance goals. Hybrid approaches may also include Performance Partnerships, offer additional flexibility in using funds across multiple programs but are held accountable for meeting certain performance measures. They do so by giving grantees the flexibility to pool discretionary funds across multiple federal programs (or agencies) serving similar populations and communities, in exchange for greater accountability for results. The pooling of discretionary funds is also referred to as “blended” funding.

Legislative authority: These grant program consolidations require legislative authorization. Federal agencies do not have inherent authority to consolidate grant programs or to enter into grant agreements without affirmative legislative authorization. In authorizing grant programs, federal laws identify the types of activities that can be funded and the purposes to be accomplished through the funding. Frequently, legislation establishing a grant program will define the program objectives and leave the administering agency to fill in the details by regulation. Grant programs are typically subject to a wide range of accountability requirements under their authorizing legislation or appropriation and implementing regulations: this is done so that funding is spent for its intended purpose. In addition, grant programs are subject to cross-cutting requirements applicable to most assistance programs (see table 1 for more information).

Characteristics and Lessons From the 1980s Grant Program Consolidations

The Omnibus Budget Reconciliation Act of 1981 (OBRA) consolidated several dozen categorical grant programs (and three existing block grants) into nine block grants covering health and human services, education, community services and development, and energy assistance. These block grants from the 1980s were designed to be more detailed in their reporting and auditing provisions but had fewer kinds of planning and spending restrictions than earlier block grants. For example, OBRA provisions of general applicability impose reporting and auditing requirements, and require states to conduct public hearings as a prerequisite to receiving funds in any fiscal year.the OBRA programs include such items as limitations on allowable In addition, several of administrative expenses, prohibitions on the use of funds to purchase land or construct buildings, “maintenance of effort” provisions, and anti- discrimination provisions. Applicable restrictions are not limited to those contained in the program statute itself—other federal statutes applicable to the use of grant funds must also be followed. In turn, these additional restrictions may impose legal responsibilities on grantees. Thus, the block grant mechanism does not totally remove federal involvement, nor does it permit the circumvention of federal laws applicable to the use of grant funds. In this latter respect, a block grant is legally no different from a categorical grant.

As a result of the 1981 block grants, the states’ role in grants administration changed in a number of ways. As we previously reported, four themes capture these actions (see text box).

Lessons Learned from States’ Experience of 1981 Block Grants Fiscal strategies. States used block grants to adopt fiscal strategies in response to federal funding changes. These strategies included the ability to continue using prior categorical grant funds, to transfer funds among certain block grants, and to use their state funds to help offset federal cuts. Programmatic discretion. Block grants reduced the federal role in several domestic assistance areas and gave states discretion to determine needs, set priorities, and fund activities within broadly defined areas. Prior involvement in the categorical grant programs provided an administrative framework for absorbing the new responsibilities. Managerial improvements. An objective of block grants was to promote management improvements by reducing federal requirements. Many management improvements were reported, including reduced time and effort preparing applications and reports, changed or standardized administrative procedures, improved planning and budgeting practices, and better use of staff. Accountability considerations. Monitoring the expenditure of block grant funds to achieve stated national objectives—a theme throughout the block grant reports—has been (and is) a central federal accountability function under past and present block grant legislation. Tracking federally supported activities, recipients, and dollars is a major evaluation function. Whether federal funds support activities that advance national objectives is historically of central interest to Congress.

Description of Consolidated Programs Selected for Studies

Transportation Alternatives Program

The Moving Ahead for Progress in the 21st Century Act (MAP-21) restructured existing highway programs by eliminating or consolidating numerous programs and establishing a revised, core formula program structure. As part of this major restructuring, a new program–the Transportation Alternatives (TA) program–was authorized under MAP- 21 in 2012; in fiscal years 2013 and 2014 the TA program had authorizations of $809 million and $820 million, respectively. TA program provides a single source of funding generally replacing separate funding for individual programs, including the former Transportation Enhancement (TE) activities (renamed the Transportation Alternatives activities), the Safe Routes to School (SRTS) Program, and the Recreational Trails Program (RTP). However, RTP continues to be separately funded through a set-aside requirement under the TA program. Not all formerly eligible activities may be funded through the TA program, though, as MAP-21 also eliminated some eligible activities formerly included under TE activities. Funds for the TA program—like funds for other federal-aid to highway programs—are annually apportioned to the states through a formula.flexibilities regarding how they administer the programs: for example, each state develops its own process to solicit and select projects for funding. The TA program funds are awarded at the state or metropolitan planning organization (MPO) level through a competitive process, but the authorization does not establish specific standards or procedures for how this should be done. The TA program added new requirements that did not previously exist: for example, 50 percent of a state’s apportionment must be suballocated based on population; states and MPOs must solicit and select projects through competitive processes and only eligible entities may sponsor projects, MPOs, and nonprofit entities are not eligible entities.

Continuum of Care Program

ESG funds are allocated by formula to metropolitan cities, urban counties, territories, and states for select outreach, emergency shelter, homelessness prevention, rapid re- housing assistance, and homeless management information systems. 42 U.S.C. §§ 11371-11378. providing funding opportunities through the CoC program to nonprofit organizations and state and local governments that use those funds to quickly rehouse homeless individuals and families.

The McKinney-Vento Homeless Assistance Act, originally passed in 1987, was the first major federal legislative response to homelessness. In 2009, Congress passed the HEARTH Act, which significantly amended Title IV of the McKinney-Vento Act. The amendments are intended to increase the efficiency and effectiveness of coordinated, community- based systems that provide housing and services to the homeless.Under the CoC program, most of the program components and eligible costs continue to be the same as those funded under the predecessor programs. However, they are consolidated so that applicants only need to apply for CoC program funds, rather than for one of three programs based on the type of assistance provided. Applications for CoC program funds are made by a collaborative applicant, which is an organization that has been designated by the Continuum of Care to submit a joint grant application to apply for CoC program funds on behalf of all applicants for funding in a community.

CoC program grants are awarded competitively and HUD awarded nearly $1.7 billion to projects in fiscal year 2012. Grant recipients are nonprofit organizations, states, local governments, and state and local government instrumentalities (such as public housing agencies) that are designated by the local Continuum of Care to apply for HUD’s competitive CoC program grant funding. Continuum of Cares are local groups of providers and key stakeholders in a geographic area that join together to design the housing and service system that will prevent and end homelessness within their geographic area.

National Environmental Performance Partnership System

The National Environmental Performance Partnership System (NEPPS) is a performance-based system of environmental protection designed to improve the efficiency and effectiveness of the partnership between states and the U.S. Environmental Protection Agency (EPA), as both share responsibility for protecting human health and the environment. According to EPA documents and state officials, NEPPS is designed to direct scarce public resources toward improving environmental results, allow states greater flexibility to achieve those results, and enhance accountability to the public and taxpayers.

We have previously reported that EPA has had long-standing difficulties in establishing effective partnerships with the states, which generally have the lead responsibility in implementing environmental grant programs. To address these problems and to improve the effectiveness of program implementation, a state may receive funds in individual environmental program categorical grants; alternatively, a state (or interstate agency) may choose to combine funds from two or more environmental program grants into a single grant—a Performance Partnership Grant (PPG). PPG funds can be used for any activity that is eligible under at least one of nineteen environmental programs. PPGs streamline administrative requirements, give states greater flexibility to direct resources to their most pressing environmental problems, and make it easier to fund efforts that cut across program boundaries. Closely affiliated with PPGs, Performance Partnership Agreements (PPA) are designed to complement PPGs, with states free to negotiate agreements (or grants) or to decline participation in NEPPS altogether.

While Few Grants Have Been Consolidated Since 1990, Hybrid Approaches Are Being Pursued

The Number of Federal Grant Program Consolidations Is Difficult to Identify and Approaches for Consolidation Have Shifted

Our research identified few grant program consolidations over the last two decades. We identified a total of 15 consolidations from fiscal year 1990 through 2012, (see figure 3 and appendix I). Most of these consolidations either combined a number of grant programs used for specific activities (such as Shelter Plus Care), known as categorical grants, into a broader categorical grant, such as the CoC program, or established a Performance Partnership, which offers additional flexibility in using funds across multiple programs but is held accountable for meeting certain performance measures.

The grants we identified in figure 3 are likely not an exhaustive list and determining a definitive number of grant program consolidations is difficult for two reasons. First, our research did not identify an authoritative, government-wide compendium or source that provides an accurate tally of enacted grant program consolidations. The inability to identify an authoritative comprehensive source is consistent with prior work reporting on difficulties associated with determining a definitive number of federal grant programs. Efforts to accurately identify grant program consolidations are further complicated by the fact that different entities have counted grant programs differently for decades, rendering it difficult to get a count of the number of grant programs, let alone consolidations.Second, there is no commonly accepted definition of what constitutes a grant program consolidation.

While we were not able to identify a definitive number of grant consolidations, we were able to generally identify two different approaches by which these grants were consolidated. The consolidations from 1990 to 2012 shifted more to hybrid approaches from the earlier block grant approach.

Block grant approaches: Previously, Congress showed a strong interest in consolidating narrowly defined categorical grant programs intended for specific purposes into broader purpose block grants. Consolidating closely related categorical programs into these broader purpose grants was intended to improve grant administration, which involves the federal government awarding a grant to a state or local government. While block grants generally delegate primary responsibility for monitoring and overseeing the planning, management, and implementation of activities financed with federal funds to state and local governments, they also can create—and have been designed to facilitate—some accountability for national goals and objectives. One such program—Temporary Assistance for Needy Families—consolidated a number of social service programs which provide families with assistance and related support services.

Hybrid approaches: In more recent years, we have noted a rise in hybrid approaches—possibly the result of concluding that the traditional devolution of responsibility found in a block grant may not be the most appropriate approach. Hybrid approaches can provide state and local governments with greater flexibility in using federal funds, in exchange for more rigorous accountability for results. Hybrid approaches vary in the degree to which programmatic flexibility is enabled—in order to balance between or among programs—and in the degree to which grant administration, reporting, and accountability requirements are changed. One grant program consolidation enacted in 2009–HUD’s CoC program— was created by consolidating multiple categorical grant programs. EPA’s Performance Partnership System takes a slightly different approach. It provides states the opportunity to voluntarily enter into agreements with EPA to use funds from two or more environmental categorical grant programs in a more flexible and streamlined manner, while enabling states to delineate which environmental priorities (such as air, water, or waste) are most important to their needs.

Each of these hybrid approaches can strike a different balance between the interests of the federal grant-making agency—that funds be used efficiently and effectively to meet national objectives and the interests of the recipient—that funds meet local priorities and that the administrative burdens associated with accepting the grant are minimized.

Hybrid Approaches May Increase Opportunities to Achieve Program Outcomes, but Challenges Exist

Grants consolidated through hybrid approaches can provide opportunities to achieve improved program outcomes for both categorical and block grants. While block grant approaches to consolidation combine programs for broad purposes, hybrid approaches allow for consolidation by combining programs that have a narrower scope and may provide flexibilities. Hybrid approaches can improve the efficiency of grant administration and may reduce fragmentation, overlap, and duplication. For example, in 2012 we reported on Department of Justice (DOJ) grants that provided a range of program areas that were consolidated using These grants provided a range of several different hybrid methods.program areas such as crime prevention, law enforcement, and crime victim services. At the time, DOJ officials told us that the most comprehensive way to reduce overlap is by consolidating two programs with similar purposes into one and by creating unified management.

The use of hybrid approaches to consolidate grants continues to evolve. The Departments of Labor, Health and Human Services and Education and Related Agencies Appropriations Act for fiscal year 2014 provided authority for those entities receiving funds under the act to establish up to 10 Performance Partnership pilots designed to improve outcomes for Under the pilot authority, a state, local, or tribal disconnected youth.government may enter into a Performance Partnership agreement with a lead federal agency, which will allow the pooling of grant funds received under multiple federal programs as well as the additional waiver of requirements associated with the federal programs contributing funds. This pilot is a model and is designed to promote better education, employment, and other key outcomes for disconnected youth and to ease administrative burden. The legislation directs OMB to designate the lead federal agency that will enter into and administer the Performance Partnership agreement on behalf of that agency and the other participating federal agencies. OMB is coordinating across multiple federal agencies to facilitate the design and planning of the Disconnected Youth Performance Partnership pilot.

OMB Memorandum M-11-21, Implementing the Presidential Memorandum “Administrative Flexibility, Lower Costs, and Better Results for State, Local, and Tribal Governments” (Washington, D.C., April. 29, 2011) and OMB Memorandum M-13-17, Next Steps in the Evidence and Innovation Agenda (Washington, D.C., July 26, 2013). encourage innovation and participation. Organizational culture and an organization’s ability to perform a joint activity (one intended to produce greater public value than could be produced acting alone), can significantly affect interagency collaboration efforts. In addition, resources and the structure of an organization’s decision-making process affect the design and implementation of hybrid consolidation initiatives. OMB also noted the significant amount of effort needed from multiple stakeholders across different levels of government. In addition, our prior grant work concluded that administering similar programs in different agencies can create an environment in which programs may not serve the grant recipients as efficiently and effectively as possible.

Measuring and tracking outcomes: The use of Performance Partnerships, such as the pilot previously discussed, involves multiple funding streams across federal programs and agencies. Agencies, recipients, and subrecipients lose the ability to track program performance for individual categorical grants when multiple funding streams are combined in a Performance Partnership. Performance Partnership initiatives may put additional requirements on agencies to measure and track outcomes. For example, before states can enter into a Performance Partnership grant, they must first negotiate a work plan with EPA that includes expected outputs and outcomes. When designing hybrid consolidations, agencies can mitigate certain challenges because they provide an opportunity to consider new performance measures aligned with the intended consolidation outcome. We previously concluded that establishing measurements across agency and federal programs may be difficult to accomplish due to challenges associated with coordination and agencies reaching agreement on a common outcome and as a result, this may be a challenge in implementing the Disconnected Youth Performance Partnership pilot.

Managing administrative challenges: When DOJ used several hybrid approaches to consolidate grants in 2012, officials told us that the statutory creation of grant programs with similar purposes can create administrative challenges. They said that in many cases, DOJ must seek statutory authorization to discontinue or consolidate enacted programs that it believes may be overlapping. In addition, EPA officials told us for the NEPPS, categorical grant programs within a partnership have their own statutory and regulatory requirements, which may create an administrative challenge when states try and focus on achieving program results.

Consolidation Design Influenced State and Local Implementation and Dictated Impact on Any Existing Fragmentation, Overlap, or Duplication

State and Local Governments’ Consolidation Implementation is Similar to 1980s Block Grant Implementation

State and local officials we interviewed are taking some actions to implement the selected grant program consolidations. In general, the actions taken are similar to the 1980s era of block grant actions because in both instances, state and local governments in the three case study consolidations relied on existing grant management structures and established relationships to facilitate implementation of the selected grant program consolidations. These actions include relying on the existing grant management structure, identifying the existence of carry-over funds from predecessor grant programs, and integrating program requirement changes. In addition to these actions, state officials reported to us that the TA program and NEPPS case study grant program consolidations provided them with flexibility in administering the programs. For example, Delaware officials stated the TA program provides certain flexibilities, such as choosing which recreational trails projects it funds.

Grant management structure and established relationships: The HEARTH Act changed neither the eligible recipients nor the delivery structure for administering the CoC grant program. Funds for the CoC grant program, like those from the three predecessor homeless grant programs before it, are distributed to the same eligible recipients, as illustrated in table 2. Under the CoC program, an eligible applicant (known as the recipient to whom HUD awards the project and with whom HUD enters into a grant agreement for the project) must be designated by the Continuum of Care to apply for a grant from HUD on behalf of the Continuum that the collaborative applicant represents. The Continuum of Care is responsible for developing a grant application through a collaborative process and approving the submission of grant applications to HUD, among other things.

For example, the Homeless Planning Council of Delaware, a private nonprofit organization in one of our selected states, serves multiple roles in the state, including serving as the collaborative applicant for the statewide Continuum of Care and coordinates the submission, ranking, and application for the federal CoC grant funding through HUD. Delaware state officials reported that because there was no change in the structure of the grant funding stream—meaning the state is not the primary recipient of the three predecessor homeless grant programs— the CoC program consolidation has had little or no impact on the state.

Existence of carry-over funds from predecessor grant program: States reported to us that the budget impact of the TA program consolidation was delayed because they relied on carry over funds from predecessor grant programs while these funds were still available. For example, both Massachusetts and Delaware are spending down federal SRTS funds authorized in the 2005 Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU). Until these previously apportioned SRTS funds are obligated or rescinded, they will continue to be available for their specified period of availability, under the same terms and conditions in effect prior to the effective date of MAP-21. Delaware state transportation officials told us at the time of our interview that funds apportioned under the predecessor program provides a 12- to 18-month period before the consolidation will affect them.

In our prior work we found that most federal funds for highway projects require a 20 percent match from state and local governments. In addition, grants with federal matching requirements may promote relatively more state and local spending than non-matching grants, thus reducing the likelihood that states will use the federal funds to replace, rather than supplement, their own spending. GAO, Federal Grants: Design Improvements Could Help Federal Resources Go Further, GAO/AIMD-97-7 (Washington, D.C.: Dec. 18, 1996) and Safe Routes to Schools: Progress in Implementing the Program, but a Comprehensive Plan to Evaluate Program Outcomes is Needed, GAO-08-789 (Washington: D.C.: July 31, 2008). responsible for providing matching funds. State and local transportation officials in Delaware and Florida and local transportation officials in Colorado, also stated that at the time the consolidation was enacted, decisions regarding federal transportation funding were already made (through the statewide transportation planning process) and for this reason, the TA program consolidation had little immediate impact on them.

Performance Accountability Challenges Continue and Opportunities Remain to Mitigate Fragmentation, Overlap, and Duplication in Grant Program Consolidations

In our past work, we concluded that there are various ways to design grants to encourage performance accountability and that effective performance accountability provisions are of fundamental importance in determining if grant program goals are being met. Two factors that we have previously concluded as important for effectively reporting on grant performance are high-quality performance measures and performance data. Adding to the complexity of grants management, grant programs are typically subject to a wide range of accountability requirements (under their authorizing legislation or appropriation) and implementing regulations so that funding is spent for its intended purpose. Congress may also impose increased reporting and oversight requirements on grant-making agencies and recipients. In addition, grant programs are subject to crosscutting requirements applicable to most assistance programs.

Performance accountability challenges persist in the selected case studies, in part because of statutory, regulatory, or administrative program requirements were present in the predecessor programs, and that continued unchanged in the consolidation implementation. These performance accountability challenges identified by federal, state, and local officials include lack of central oversight in the states, lack of or inaccurate performance data, and conflicting reporting requirements, as illustrated in table 3.

OMB staff told us that they are identifying opportunities to design grant program consolidation authorizations with greater flexibility. Through its Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), OMB has consolidated its grants management circulars in an effort to promote consistency among grantees and to reduce administrative burden, such as, eliminating unnecessary and duplicative requirements, on nonfederal entities. OMB officials said this may provide greater flexibilities to address some of these accountability challenges.

State officials reported that these identified accountability challenges existed prior to the consolidation and that it is unclear how (if at all) consolidations affect them. The experiences of state and local officials responsible for grant accountability and consolidation implementation suggest opportunities for Congress and the executive branch to improve the development and the implementation of accountability mechanisms when designing grant program consolidations. For example, building accountability into newly proposed grant program consolidations is an important but difficult task—one requiring trade-offs between federal and state control over program finances, activities, and administration. Designing accountability provisions provides an opportunity to consider the potentially conflicting objectives of increasing state and local flexibility, attaining certain national objectives, and improving reporting,—which together, leads to better outcome and impact evaluations. Depending on their focus, evaluations may examine aspects of program consolidation (such as performance measurements or program reporting) or factors in that program’s environment that may impede or contribute to the consolidation’s success. Alternatively, evaluations may assess a consolidation’s effects beyond its intended objectives, or may estimate what would have occurred in the absence of the consolidation, in order to assess the net impact. Striking a balance will inevitably involve philosophical questions about the proper roles and relationships among the levels of government in our federal system.

We have previously cited examples of how fragmentation and overlap can lead to inefficient use of resources. We have previously concluded that consolidation may also provide an opportunity to reduce fragmentation, overlap, and duplication. For the three selected program consolidations we reviewed as case studies, federal, state or local officials identified opportunities to either reduce fragmentation, overlap, and duplication. For example, state or local officials in three states (Colorado, Florida, and Massachusetts) identified duplicative reporting requirements for homeless assistance grants. In addition, multiple homelessness grants are available from multiple federal agencies: each offers similar services to similar beneficiaries, and each has its own grant life cycle (i.e., separate grant awards, applications, and reporting requirements).fragmentation of services and overlap is partly a result of a program’s statute and partly result of programs evolving to offer services that meet the varying needs of recipients. More specifically, we have found the following;

We have previously concluded that fragmentation, overlap, and duplication in the homeless grant programs may be reduced by grant program consolidation. By authorizing the consolidated CoC grant program, the HEARTH Act helped mitigate this duplication in HUD’s homeless assistance grant programs but does not fully address it because of the underlying structure and operations of providing federal homeless services and grant programs to low-income people remains fragmented. This is because federal programs may not always include service providers with expertise and experience in addressing the needs of homeless people and because these programs may lack incentives that encourage mainstream service providers to serve this population. Also, the fragmented nature of federal mainstream programs can create barriers to providing a coordinated set of services that addresses the multiple needs of homeless people. HUD officials told us that they are working to decrease fragmentation in homelessness grant programs through regulations and by working with other federal stakeholders.

GAO, Homelessness: Barriers to Using Mainstream Programs, GAO/RCED-00-184 (Washington, D.C.: July 6, 2000).

The ad hoc nature and fragmentation of federal grant program authorization contributes to fragmentation, overlap, and duplication. In the case of the NEPPS program, EPA officials reported three areas where fragmentation, overlap, and duplication exist, and interfere with the ability to achieve the NEPPS goals to promote efficiency and effectiveness. The three areas are: (1) multiple competing reporting guidance, regulations and individual grant reporting requirements, (2) duplication in performance measurement requirements, and (3) grants with similar purposes administered by multiple federal and state agencies. In some instances—such as when a state receives multiple categorical water grants—a PPG may provide opportunities for the state to reduce overlap and duplication by managing the funding streams available from multiple programs with the flexibilities afforded by the PPG. However, fragmentation may be exacerbated by the silo effect (i.e., across multiple federal agencies) of program implementation.

Lessons Learned Can Inform Both the Design and Review of Grant Program Consolidations

Ambiguity of Consolidations’ Goals May Create Grant Management Challenges

The key to any consolidation initiative is identifying and agreeing on the goals of the consolidation, regarding grant administration and changed programmatic outcomes (if any) and designing and planning for successful implementation, according to findings from the case studies and our prior GAO work. Grant consolidations offer the opportunity to improve administration by enlarging the limits of narrowly targeted grants and by reducing fragmentation, overlap, and duplication. In addition, consolidations may be undertaken to improve the programmatic outcomes associated with national goals by designing the consolidation with consideration of the effects on other closely related grant programs excluded from the consolidation. This awareness of consolidation purposes can provide the federal, state and local recipients of the consolidation the opportunity to develop an implementation plan against a realistic expectation of how the consolidation goals can be achieved.

While grant program consolidation goals can be compromised by the complexity and number of grant programs affecting a national goal, and by the fragmented structure of authorizing new program initiatives across multiple Congressional committees and subcommittees, OMB officials told us that building a shared understanding of the consolidation goals and outcomes among the affected federal, state, and local program officials can build a strategy for achieving the identified goals. As federal policy makers consider future grant program design—including consolidating categorical grant programs or authorizing performance partnerships—it is important that leaders consider what the consolidation is trying to achieve and what its impact might be on simplifying grant administration and improving the effectiveness and performance of federal assistance programs. Without first identifying goals, a consolidation may not achieve the desired outcome, such as reducing the number of programs while still funding the same original program or activity.

Leadership-Driven Engagement May Increase the Likelihood of a Successful Implementation

Implementing consolidations is not a simple endeavor and may require concentrated efforts of both leadership and employees to accomplish new organization goals. Whether consolidations originate from within an agency in response to changing conditions or from outside pressures, or from the most senior levels of government, it is essential that top government and agency leaders are committed to the consolidation and play a lead role in executing it. Lessons learned from prior work on mergers and transformations have shown that, leadership must set the direction, pace, and tone, as well as provide a clear, consistent rationale to agency staff in order to increase the likelihood of a successful consolidation. For example, states and EPA are jointly responsible for implementing NEPPS program requirements, conducting strategic planning, and setting priorities that identify optimal ways to leverage available federal resources alongside state resources. Federal and state officials involved in implementing EPA’s PPAs or PPGs told us that strong senior leadership plays an important role in ensuring these responsibilities are met. Furthermore, they stated that broad adoption of PPGs requires effective coordination across programs and within EPA program offices, as well as ongoing senior leadership support.

Our prior work has shown that communication plays a role in grant management reform. We have concluded that communication is not just “pushing the message out,” but should facilitate a two-way, honest For exchange and allow for feedback from relevant stakeholders.example, HUD officials responsible for managing the CoC program consolidation told us that establishing a help desk to answer questions from grant recipients and other community stakeholders enabled HUD to understand consolidation implementation challenges and to update guidance accordingly in real time.

Congress and Agencies Could Help Program Consolidations Through Legislative Action and Program Consolidation Evaluations

In our prior work, we concluded that given the potential benefits and costs of consolidation, it is imperative that Congress and the executive branch have information to help them effectively evaluate grant program consolidation proposals.requirements and congressional oversight can contribute to successful achievement of national goals in grants and to improve the efficiency and effectiveness of grant programs.

Legislative action: Our body of grant consolidation work has identified areas where Congress should consider taking legislative action to consolidate certain programs in the education, housing, welfare, and justice areas. When Congress is considering grant program consolidation proposals it is important, that the proposals be supported by analysis: agencies’ responses to key questions could help inform such proposals (see text box). Such questions would not necessarily be exhaustive, nor would it be necessary to consider all questions in every proposal.

Key Questions to Consider When Evaluating Grant Consolidation Proposals

What are the goals of the consolidation? What opportunities will be addressed through the consolidation and what problems will be solved? What problems, if any, will be created? Is there a way to track and monitor progress toward the short-term and long-term goals? Does the consolidation proposal include a feedback loop? Does the feedback enable officials to identify and analyze the causes of the program outcomes and how this learning can be leveraged for continuous improvement?

What will be the likely costs and benefits of the consolidation? Are sufficiently reliable data available to support a business-case analysis or cost-benefit analysis?

How can the up-front costs associated with the consolidation, if any, be funded?

Who are the consolidation stakeholders, and how will they be affected? How have the stakeholders been involved in the decision, and how have their views been considered? On balance, do stakeholders understand the rationale for consolidation? If the proposed consolidation approach does not include all programs with similar activities or that address similar goals, how will the new structure interact with those programs not included in the consolidation? To what extent do plans show change management practices will be used to implement the consolidation?

Evidence of thinking through some of these considerations may indicate that agency officials have developed a strong grant program consolidation proposal. Conversely, the absence of consideration of these questions could indicate that agency officials have not adequately planned their consolidation proposal.

Program consolidation evaluations: Executive branch agencies could conduct and report program evaluations that would assess how well federal programs are working and identify steps that are needed to improve them. Program evaluations typically examine processes, outcomes, impacts, or the cost effectiveness of federal programs. Evaluation can play a key role in program planning, management, and oversight by providing feedback on both program design and execution to program managers, legislative and executive branch policy officials, and the public. However, as our prior work found few executive branch agencies regularly conduct in-depth program evaluations to assess their programs’ impacts or to learn how to improve results. Program evaluations that use the key questions identified are also important when programs are being considered for consolidation. Such analysis is likely to result in more effective and improved outcomes of a consolidation. Annually, through the President’s budget process and congressional budget justification, agencies have the opportunity to present Congress with the rationale for a program consolidation proposal, such as a business case analysis. The congressional budget justification can be used to support a grant program consolidation proposal. For example, the fiscal year 2012 DOJ congressional budget justification recognized the potential for consolidation by stating that “whenever possible, the President’s Budget proposes to consolidate existing programs into larger, more flexible programs that offer state, local, and tribal grantees greater flexibility in using grant funding and developing innovative approaches to their criminal justice needs.”

In carrying out its mission, OMB provides general guidance to federal agencies, assesses the effectiveness of programs, and ensures that budget requests are consistent with regulations and presidential priorities. OMB, as the focal point for overall management in the executive branch, plays a key role in improving the performance of federal grant programs and has developed or contributed many tools to encourage improvements to federal grants and program performance. Therefore, in OMB’s capacity to provide agency guidance, OMB could help agencies identify consolidation opportunities and conduct program consolidation evaluations. OMB staff stated there is a need for improved guidance relative to grant program consolidation opportunities. Agencies and, the Congress—as well as grantees—can benefit from guidance, which currently does not exist, to assist with identifying consolidation opportunities, particularly those requiring statutory changes and developing consolidation proposals. In conducting reviews of prior agency budget justifications, we have found opportunities for federal agencies to improve information that could aid congressional stakeholders in resource decision making and program oversight. For example, when proposing a grant program consolidation, all agencies could include a program consolidation evaluation (or business case) in their budget justification review that among other things clearly identifies the consolidation goals, benefits, and stakeholders that will be affected by the consolidation.

GAO-12-542. been consolidated) and are therefore unable to identify a benefit for consolidating the predecessor categorical grant programs.

EPA’s PPG has elements which illustrate the benefits that can occur when agencies must present facts and supporting details for a consolidation. For instance, states first elect whether to participate in a PPG: if they decide to do so, they identify environmental priorities and determine which eligible grant programs to potentially include in the PPA—which illustrates a degree of intentional and rationale decision making that is consistent with elements of a program consolidation evaluation (or business case analysis). Finally, to design a PPG, states and EPA develop and negotiate a grant work plan consistent with applicable federal statutes; regulations; circulars; executive orders; and EPA delegations, approvals or authorizations. The work plan documents how grantees intend to use federal funds and what they will accomplish. Details included in a work plan include the commitments for each component and a time frame for their accomplishment, a performance evaluation process and reporting schedule, and the roles and responsibilities of the state and EPA in carrying out the work plan commitments.

Conclusions

The federal government plays an important role in delivering federal grant-in-aid to state and local governments. Numerous agencies administer fragmented programs, and recent assessments have shown that some programs overlap (that is, provide similar products or serve similar populations). Consolidating programs carries certain implications for recipients (e.g., changes in eligibility, process or procedures for eligible applicants), existing programs, personnel, and associated information systems. Consolidations can reduce, have no impact on, or even increase fragmentation, overlap, and duplication of related grant programs that are not included in the consolidation. In seeking to avoid increasing unnecessary fragmentation, overlap, and duplication, it is critical that federal policy-makers consider what other programs or funding streams exist in related areas and what the impact of the consolidation on these is likely to be. Even if no changes in these other programs are undertaken, design of the consolidation can affect the interaction with other programs and funding streams.

As we have previously reported, consolidation initiatives can be complex, costly, and difficult to achieve. For this reason, a case-by-case analysis—one that evaluates the goals of the consolidation against the realistic possibility of the extent to which those goals would be achieved— is important to ensure effective stewardship of government resources in a constrained budget environment.

Considering grant program consolidation design features and their implications can help policymakers ensure that accountability and information are adequately provided for, whatever type of consolidation approach is selected. Our findings suggest that the design of a grant program consolidation involves choosing among policy options that, in combination, establish the degree of flexibility afforded to states or localities; prioritize the relevance of performance objectives for grantee accountability; designate whether accountability for performance rests at the federal, state, or local level; and identify prospects for measuring performance through grantee reporting. The design may also allow for an evaluation of program consolidation performance, an overall assessment of whether the program works, and identification of adjustments that may improve the results. The availability of guidance on evaluating grant program consolidation opportunities could assist agencies’ efforts to identify such opportunities. Seeking out the interests and concerns of Congress and key program stakeholders in advance can help ensure that agency evaluations provide the information necessary for effective management and congressional oversight of program consolidations. The experiences of federal, state, and local officials suggest opportunities for Congress and the executive branch to improve grant program consolidation design. These opportunities include, evaluating the delivery of services with a clear national objective across multiple agencies and leveraging lessons learned through feedback from implemented consolidations. Using those lessons can support continuous improvement in future grant program consolidations.

Recommendation for Executive Action

To assist federal agencies seeking to streamline and improve the efficiency of grant programs and improve their outcomes, we recommend that the Director of the Office of Management and Budget (OMB) develop guidance that presents a range of potential consolidation methods, such as performance partnerships, and other hybrid approaches. This guidance should assist agencies in identifying consolidation opportunities, including those that require statutory changes, and in developing sound consolidation proposals. The guidance should include questions agencies are expected to include in any consolidation proposals such as,

What are the goals of the consolidation? What opportunities will be addressed through the consolidation and what problems will be solved? What challenges, if any, will be created? Is there a way to track and monitor progress toward the short-term and long-term goals? Does the consolidation proposal include a feedback loop? Does the feedback enable officials to identify and analyze the causes of the program outcomes and how this learning can be leveraged for continuous improvement?

Who are the consolidation stakeholders and how will they be affected? What will state, local, or nonprofit entities have to do differently?

What statutory or regulatory changes are needed to support the consolidation? If the proposed consolidation approach does not include all programs with similar activities or that address similar goals, how will the new structure interact with those programs not included in the consolidation?

Agency Comments and Our Evaluation

We provided a draft of this report for review and comment to the Administrator of the Environmental Protection Agency, the Secretaries of the Departments of Housing and Urban Development and Transportation, and the Director of the Office of Management and Budget (OMB). OMB did not comment on the recommendation but provided technical comments, as did each of the other agencies. We incorporated these technical comments as appropriate. Additionally, we provided excerpts of the draft report to state and local officials in the four states we interviewed for this study and incorporated their technical comments as appropriate.

We are sending this report to relevant agencies and congressional committees. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.

If you or your staff members have any questions or wish to discuss the material in this report further, please contact me at (202) 512-6806 or irvings@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff making key contributions to this report are listed in appendix III.

Appendix I: Summary of Grant Program Consolidations, Fiscal Year 1990 through 2012 (Text for Interactive Fig. 3)

Appendix I: Summary of Grant Program Consolidations, Fiscal Year 1990 through 2012 (Text for Interactive Fig. 3)

Table 4 lists the 15 consolidated grants we identified during the time period of fiscal years 1990 through 2012 along with selected characteristics for each. There is no single resource that maintains a list of grant consolidations; therefore, this list may not be exhaustive.

Appendix II: Objectives, Scope, and Methodology

As part of our ongoing body of work associated with improving grant design and management across the federal government, we were asked to identify what federal grant programs have been consolidated in the past and asked to examine whether overlap and duplication may be reduced by consolidating several federal grant programs, and to identify outcomes that have occurred from prior consolidations in terms of savings or improved performance. To accomplish this, we answered the following objectives: 1. Describe approaches taken to grant programs that have been consolidated from fiscal year 1990 through 2012. 2. Examine federal, state, and local actions taken to administer the selected case study consolidated grant programs. 3. Analyze the lessons learned for future consideration of grant program consolidations.

For our first reporting objective, we conducted a literature review which consisted of reviewing the federal government websites USAspending.govGrants.gov, the Catalog of Federal Domestic and Assistance (CFDA), and prior presidential budget submissions and conference reports. We also reviewed our prior grant management reports, along with reports from the Congressional Research Service, the Congressional Budget Office, and the Federal Funds Information for States (FFIS) database. We reviewed public laws to clarify when we had identified a potential consolidation through one of these sources. The list we developed represents our best effort to comprehensively identify all grants consolidated from fiscal year 1990 through fiscal year 2012. However, it is possible other grants were consolidated during this time that our methodology did not identify. We selected 1990 because federal, state, and local officials working in these program areas may be more aware of the consolidations that happened at or after that time than before it. During our review, we identified that some of the grants on our list were consolidated using hybrid approaches, and we interviewed officials at OMB to learn more about these approaches. In conducting this research, we intentionally excluded grant waivers: while we have previously reported on them, for this engagement we concluded they were generally for narrow administrative purposes or specific grant waiver cases were unrelated to our scope.

Further, for our second and third objectives, we conducted three case study reviews in four states (and selected localities) to examine how selected consolidated grant programs were administered. The selected locations and grant program consolidations are not generalizable, but they provided important insights about grant consolidations.

Selected grant consolidated programs: We selected two grant programs—the Department of Housing and Urban Development (HUD) Continuum of Care (CoC) program and the Department of Transportation (DOT) Transportation Alternatives (TA) program—in part because they were both consolidated in the past 6 years, thus increasing the likelihood of receiving sufficient program information (programs consolidated more than 6 years ago are less likely to have sufficient information in part because there are fewer agency officials in the appropriate positions who oversaw the program). We selected the Environmental Protection Agency (EPA) National Environmental Performance Partnership System (NEPPS) because the approach used to consolidate it was different than the other approaches; in addition, at the time we selected our programs, it was the only performance partnership established we identified. For purposes of this report, we considered these three to be consolidated grant programs because they were identified as such through our literature review. We reviewed federal data for each program—such as state population and state grant award amounts—and considered other factors, such as geographic dispersion, agency documents, our prior reports, and likely travel costs. For each of the selected programs, we conducted either in- person or telephone interviews with state and local grant officials. To interview the federal officials involved with these programs, we developed a semi-structured data collection instrument to ensure uniform data collection. Furthermore, the Departments of Labor, Health and Human Services and Education and Related Agencies Appropriations Act for fiscal year 2014 provided authority for those entities receiving funds under the act to establish up to 10 Performance Partnership pilots designed to improve outcomes for disconnected youth. During our case study review, we learned that OMB is leading this initiative and we met with OMB officials to better understand this pilot.

Selected states and entities: After selecting the programs, we chose four states—and local entities in each—to conduct a case study review of how the programs were being implemented. The four states we selected were Colorado, Delaware, Florida, and Massachusetts. To select the states, we conducted interviews with subject matter specialists seeking location recommendations for each of the selected programs, including interviews with federal officials who oversee the grant programs and relevant national associations. We also reviewed federal agency documents and data for each program which contained either state specific participation or funding and we reviewed prior reports we have issued on the selected programs and we considered other factors such as states where we have previously conducted prior grant work. To select localities in each state, we used a similar method.

Table 5 provides details about the states and selected entities included in our review.

Lessons learned. For objective 3, to analyze lessons learned for future consideration of grant program consolidations, we reviewed existing literature pertaining to grants management and identified key questions to consider when evaluating grant program consolidations, and attributes for conducting a program consolidation evaluation. In addition, we interviewed agency officials and reviewed legislation and best practices developed in our prior reports and OMB memos.

Appendix III: GAO Contact and Staff Acknowledgments

GAO Contact

Susan J. Irving, (202) 512-6806 or irvings@gao.gov.

Staff Acknowledgments

In addition to the contact named above, Stanley J. Czerwinski, William J. Doherty (Assistant Director), and Sandra L. Beattie (Analyst-in-Charge), supervised this review and the development of the resulting report. Alicia P. Cackley, Steven L. Cohen, James Cook, Deirdre Duffy, Karin K. Fangman, Susan E. Iott, Donna Miller, Cynthia Saunders, and Paul J. Schmidt made key contributions to this report.

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