In October 1992, the Congress established SAMHSA to strengthen the nation’s health care delivery system for the prevention and treatment of substance abuse and mental illnesses. SAMHSA has three centers that carry out its programmatic activities: the Center for Mental Health Services, the Center for Substance Abuse Prevention, and the Center for Substance Abuse Treatment. (See table 1 for a description of each center’s purpose.) The centers receive support from SAMHSA’s Office of the Administrator; Office of Program Services; Office of Policy, Planning, and Budget; and Office of Applied Studies. The Office of Program Services oversees the grant review process and provides centralized administrative services for the agency; the Office of Policy, Planning, and Budget develops the agency’s policies, manages the agency’s budget formulation and execution, and manages agencywide strategic and program planning activities; and the Office of Applied Studies gathers, analyzes, and disseminates data on substance abuse practices in the United States, which includes administering the annual National Survey on Drug Use and Health—a primary source of information on the prevalence, patterns, and consequences of drug and alcohol use and abuse in the country. In fiscal year 2003, SAMHSA’s staff totaled 504 full-time-equivalent employees, a decrease from 563 in fiscal year 1999. Thirteen of the employees were in the Senior Executive Service, and the average grade of SAMHSA’s general schedule workforce was 12.5—up from 11.7 in fiscal year 1999. In addition, 25 of the employees were members of the U.S. Public Health Service Commissioned Corps. SAMHSA’s program staff are almost evenly divided among its three centers (see fig. 1), and all are located in the Washington, D.C., metropolitan area. SAMHSA’s budget increased from about $2 billion in fiscal year 1992 to about $3.1 billion in fiscal year 2003. SAMHSA uses most of its budget to fund grant programs that are managed by its three centers. (See fig. 2.) In fiscal year 2003, 68 percent of SAMHSA’s budget funded the Substance Abuse Prevention and Treatment Block Grant ($1.7 billion) and the Community Mental Health Services Block Grant ($437 million). The remaining portion of SAMHSA’s budget primarily funded other grants; $74 million (2.4 percent) of its fiscal year 2003 budget supported program management. SAMHSA’s major activity is to use its grant programs to help states and other public and private organizations provide substance abuse and mental health services. For example, the substance abuse block grant program gives all states a funding source for planning, carrying out, and evaluating substance abuse services. States use their substance abuse block grants to fund more than 10,500 community-based organizations. Similarly, the mental health block grant program supports a broad spectrum of community mental health services for adults with serious mental illness and children with serious emotional disorders. In December 2002, SAMHSA released for public comment its initial proposal for how it will transform the substance abuse and mental health block grants into performance partnership grants. In administering the block grants, the agency currently holds states accountable for complying with administrative and financial requirements, such as spending a specified percentage of funds on particular services or populations. According to SAMHSA’s proposal, the new grants will give states more flexibility to meet the needs of their population by removing certain spending requirements. At the same time, the grants will hold states accountable for achieving specific goals related to the availability and effectiveness of mental health and substance abuse services. For example, SAMHSA has proposed that it would waive the current requirement that a state use a certain percentage of its substance abuse block grant funds for HIV services if that state can show a reduction of HIV transmissions among the population with a substance abuse problem. The Children’s Health Act of 2000 required SAMHSA to submit a plan to the Congress by October 2002 describing the flexibility the performance partnership grants would give the states, the performance measures that SAMHSA would use to hold states accountable, the data that SAMHSA would collect from states, definitions of the data elements, obstacles to implementing the grants and ways to resolve them, the resources needed to implement the grants, and any federal legislative changes that would be necessary. In addition to the block grants that SAMHSA awards to all states, the agency awards grants on a competitive basis to a limited number of eligible applicants. These discretionary grants help public and private organizations develop, implement, and evaluate substance abuse and mental health services. In fiscal year 2003, the agency funded 73 discretionary grant programs, the largest of which was the $98.1 million Children’s Mental Health Services Program. This program helps grantees integrate and manage various social and medical services needed by children and adolescents with serious emotional disorders. Discretionary grant applications submitted to SAMHSA go through several stages of review. When SAMHSA initially receives grant applications, it screens them for adherence to specific formatting and other administrative requirements. Applications that are rejected—or screened out—at this stage receive no further review. Applications that move on are reviewed on the basis of their scientific and technical merit by an initial review group and then by one of SAMHSA’s national advisory councils. The councils, which ensure that the applications support the mission and priorities defined by SAMHSA or the specific center, must concur with the scores given to the applications by the initial review group. On the basis of the ranking of these scores given by the peer reviewers and on other criteria posted in the grant announcement, such as geographic location, SAMHSA program staff decide which grant applications receive funding. Center directors and grants management officers must approve award decisions that differ from the ranking of priority scores, and SAMHSA’s administrator approves all final award decisions. SAMHSA’s oversight of its block and discretionary grants consists primarily of reviews of independent audit reports, on-site reviews, and reviews of grant applications. SAMHSA’s Division of Grants Management provides grant oversight, which includes reviewing the results of grantees’ annual financial audits that are required by the Single Audit Act. In general, these audits are designed to determine whether a grantee’s financial statements are fairly presented and grant funds are managed in accordance with applicable laws and program requirements. Furthermore, SAMHSA is statutorily required to conduct on-site reviews to monitor block grant expenditures in at least 10 states each fiscal year. The reviews examine states’ fiscal monitoring of service providers and compliance with block grant requirements, such as requirements to maintain a certain level of state expenditures for drug abuse treatment and community mental health services—referred to as maintenance of effort. In addition, SAMHSA project officers—grantees’ main point of contact with SAMHSA—monitor states’ compliance with block grant requirements through their review of annual block grant applications. For example, in the substance abuse block grant application, states report how they spent funds made available during a previous fiscal year and how they intend to obligate funds being made available in the current fiscal year; project officers review this information to determine if states have complied with statutory requirements. For discretionary grants, project officers monitor grantees’ use of funds through several mechanisms, including quarterly reports, site visits, conference calls, and regular meetings. The purpose of monitoring both block and discretionary grants is to ensure that grantees achieve program goals and receive any technical assistance needed to improve their delivery of substance abuse and mental health services. SAMHSA has partnerships with every HHS agency and 12 federal departments and independent agencies that fund substance abuse and mental health programs and activities. For example, within HHS, the Centers for Disease Control and Prevention and the Health Resources and Services Administration have responsibility for improving the accessibility and delivery of mental health and substance abuse services, and the National Institutes of Health funds research on numerous topics related to substance abuse and mental health. The Departments of Education, Housing and Urban Development, Justice, and Veterans Affairs fund substance abuse and mental health initiatives to help specific populations, such as children and homeless people. In addition, the White House Office of National Drug Control Policy is responsible for overseeing and coordinating federal, state, and local drug control activities. Specifically, the office gives federal agencies guidance for preparing their annual budgets for activities related to reducing illicit drug use. It also develops substance abuse profiles of states and large cities, which contain statistics related to drug use and information on federal substance abuse prevention and treatment grants awarded to that state or city. SAMHSA has operated without a strategic plan since October 2002. Although agency officials are in the process of drafting a plan that covers fiscal years 2004 through 2009 and expect to have it ready for public comment in the fall of 2004, they do not know when they will issue a final strategic plan. As part of its strategic planning process, which began in fiscal year 2002, SAMHSA developed three long-term goals for the agency—promoting accountability, enhancing service capacity, and improving the effectiveness of substance abuse and mental health services. SAMHSA’s management has also identified 11 priority issues to guide the agency’s activities and resource allocation and 10 priority principles that agency officials are to consider when they develop policies and programs related to these issues. (See table 2 for a list of SAMHSA’s priority issues and priority principles.) For example, when SAMHSA develops grant programs to increase substance abuse treatment capacity—a priority issue—staff are to consider the priority principle of how the programs can be implemented in rural settings. To ensure that the priority issues play a central role in the work of its three centers, SAMHSA established work groups for all the priority issues that include representation from at least two centers. The work groups are to make recommendations to SAMHSA’s leadership about funding for specific programs and to develop cross- center initiatives. Although SAMHSA officials consider the agency’s set of priority issues and priority principles a valuable planning and management tool, it lacks important elements that a strategic plan would provide.