Performance partnerships, as we reported in December 2014, are a type of hybrid approach to grant consolidation in which grant recipients can obtain flexibility to use funds awarded across multiple federal programs in exchange for greater accountability for results. Figure 1 provides an overview of the performance partnership model. Grant consolidation can create opportunities to eliminate federal programs that are overlapping or outdated, or for which the balance between costs and benefits received either do not (or no longer) justify federal spending. According to prior research by the former U.S. Advisory Commission on Intergovernmental Relations, grant consolidations are generally suitable when categorical programs are too small to have much impact or to be worth the cost of administration, or when multiple programs exist in functional areas that have a large number of programs (including health, education, and social services), or where there is fragmentation (including justice, natural resources, and occupational health and safety). Grant consolidations generally take either a block grant or a hybrid approach. A block grant approach is usually broad in scope, 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 block grant. A hybrid approach, such as a performance partnership, can consolidate a number of narrower categorical programs while retaining strong standards and accountability for discrete but related federal performance goals. Since the 1990s, the federal government has taken steps to explore and establish performance partnerships. For example, the National Performance Review (NPR) identified performance partnerships as a tool for helping federal agencies reform the existing federal grant system, which it stated, among other issues, featured too many funding categories, an emphasis on remediating rather than preventing problems, and no clear focus on measurable outcomes. It noted that performance partnerships could improve federal grant making in situations in which the federal government intends to deliver services at the state or local level, agrees with state or local partners on goals and objectives, and progress toward goals and objectives can be measured. In February 1995, the President’s Budget for fiscal year 1996 proposed 6 performance partnerships spanning 7 federal agencies—the Departments of Agriculture, Education, HHS, HUD, DOL, and Transportation, and EPA— that it stated were aimed at combining funding streams, eliminating overlapping authorities, and turning agencies’ focus to outcomes as the basic measure of success. In 1996, Congress provided EPA authority to create PPGs. More recently, the Performance Partnership Pilots for Disconnected Youth were authorized in January 2014. For our December 2014 report, we determined that EPA’s PPGs and the disconnected youth pilots were the only 2 existing federal performance partnerships, and for this report we confirmed that they remain the only ones authorized to date. According to EPA, the relationship between EPA and the states has long been complex, due in part to the division of roles and responsibilities under federal environmental statutes. Prior to EPA’s creation in 1970, states provided the majority of environmental management controls, such as establishing standards for the amount of pollutants that can be released into air or water and developing public health and natural resources regulations. Subsequently, EPA became a partner with states and localities in environmental management. Most major federal environmental statutes, including the Clean Water Act, permit EPA to allow states under certain circumstances to implement key programs and to enforce their requirements. Several efforts to explore and improve relationships between EPA and the states led to the creation of NEPPS and PPGs. In 1993, EPA and the states convened the Task Force to Enhance State Capacity to generate ideas for improving their partnership. The task force reported that new federal environmental statutes had increased the environmental management responsibilities being borne by states at a time when they were facing declining resources. In addition, the task force reported that EPA and the states faced difficulty in working together on issues of day- to-day program management, which strained their relationship. The task force made a number of recommendations, including that EPA and the states establish a new framework and policy for their relations and a joint process for strategic planning and the integration of both sides’ priorities. In May 1995, EPA and the states established NEPPS to address the task force’s recommendations. As we reported in December 2014, NEPPS is a performance-based system 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. A key element of NEPPS, upon its establishment, was EPA’s commitment to give states with strong environmental performance greater flexibility and autonomy in running their environmental programs. percent of the $1.08 billion in environmental program grants EPA awarded in fiscal year 2016. As we reported in February 2008, while most youth successfully transition to adulthood, some become disconnected from school and work, and experience challenges in making this transition. Their disconnection may result from incarceration, aging out of foster care, dropping out of school, or homelessness. Some of these youth are more likely than others to remain low-income and lose jobs during economic downturns, and to engage in criminal activity, antisocial behavior, and teenage parenting. Direct services intended to assist youth in transitioning to adulthood are provided at the local level with the support of federal, state, and local governments, and private funding sources. A range of local entities, such as community-based organizations—which are generally non-profit entities that provide social services—and charter schools, in urban and rural communities nationwide, help to provide such services. Multiple federal agencies play a role in providing funding and assistance to local programs that serve disconnected youth, which can create challenges for local service providers. In February 2008, we reported that the White House Task Force for Disadvantaged Youth identified 12 federal agencies that funded over 300 programs to assist local communities in serving disadvantaged youth in fiscal year 2003. In conducting that work, we also interviewed the directors of 39 local programs serving disconnected youth, and those whose programs received multiple federal grants from multiple federal agencies told us they experienced difficulties in working across varying reporting requirements, funding cycles, and eligibility requirements. The directors also reported experiencing challenges working across varying program goals and sharing information about their clients that participate in multiple federal grants. The Performance Partnership Pilots for Disconnected Youth seek to identify cost-effective strategies for providing services that can address these types of challenges and achieve better results through making better use of budgetary resources. Although implementation of the first round of pilots began in 2015, their genesis dates back to early 2011. Figure 2 identifies key events in the development and implementation of the disconnected youth pilots. According to federal officials involved in the pilots, the concept for the disconnected youth pilots came in response to a February 2011 Presidential memorandum. It directed federal agencies to work with state, local, and tribal governments to identify and develop strategies for eliminating administrative, regulatory, and legislative barriers to achieving results in federally funded programs and increase access to flexibilities needed to produce the same or better outcomes at lower cost. Officials from Education, HHS, and DOL told us that following the memorandum’s issuance, representatives from their agencies met with representatives from state, local, and tribal governments to discuss policy areas in which they thought additional flexibilities could improve outcomes. They identified programs for disconnected youth as an area that would benefit from such flexibilities. In 2012, the Administration and agencies took several steps aimed at better coordinating and integrating programs focused on disconnected youth. In February 2012, the President’s Budget for fiscal year 2013 requested authority for a new performance partnership pilot initiative to test approaches to improve outcomes for disconnected youth. Shortly thereafter, in March 2012, OMB, Education, HHS, HUD, DOJ, and DOL established the Interagency Forum for Disconnected Youth with the goal of improving outcomes for disconnected youth through enhanced interagency and intergovernmental collaboration. In June 2012, Education published a request for information in the Federal Register seeking ideas and information on effective approaches for improving outcomes for disconnected youth. The Interagency Forum on Disconnected Youth used the responses to the request for information to develop initial design considerations for the disconnected youth pilots, according to documentation of the design considerations. The first round of the Performance Partnership Pilots for Disconnected Youth was authorized in the Departments of Labor, Health and Human Services and Education and Related Agencies Appropriations Act for fiscal year 2014. Enacted in January 2014, it authorized federal agencies appropriated funds thereunder to select and implement a round of up to 10 pilots designed to improve outcomes for disconnected youth that may run for 5 fiscal years (through fiscal year 2018, which ends September 30, 2018). The act defines disconnected youth as individuals between the ages of 14 and 24 who are low-income and either homeless, in foster care, involved in the juvenile justice system, unemployed, or not enrolled in or at risk of dropping out of an educational institution. The pilots are to involve 2 or more federal programs administered by 1 or more federal agencies. The act provides agencies authority to use discretionary funding made available in the act and waive statutory, regulatory, or administrative requirements related to the use of that funding. The agencies involved in the first round of pilots—Education, HHS, DOL, CNCS, and IMLS—issued a request for public comment on the pilot application process in July 2014 that sought feedback on information applicants should include in their applications, criteria agencies should use in evaluating applications, and technical assistance for entities preparing applications. Officials from Education told us that the agencies incorporated public comments from the request in a notice inviting applications, which they subsequently issued in November 2014. The federal agencies designated 9 pilot locations as finalists for the first round in September 2015 and publicly announced the locations in October 2015 (see fig. 3). Subsequent appropriations laws authorized 2 additional rounds of disconnected youth pilots and broadened the scope of the effort. Second Round.