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ADVISORY (13341351011 01! UTISROOVEHRNHIAL RrILstTIONS
Washington, D. C. 20575
Statoacnt of
Advisory Commisnion on Intergovernmental Relations
by Fonz! 3710.3. Gluten...
bntorc the
Intergovernmental Relationn Subcommittee
Committee on Covornmont Operations
House of Representatives
June a.
on the proponed
"Intergovernmental Cooperation Act of 1969
(mil. 7366)
Hr. Ch:irnan and Hrmbers of the Committee:
He npyrcciate this opportunity to testify on behali of H.R. 7366.
the pruyaavd 'lntorgovcrnmEntal Cooperation Act of 1969'. we agree with
you. Mr. Chairman, that this mennurc faces squarely the hey administra-
tive d-iirirnci.o at the national level that must be corrected ii
federalism today is to meat and overcome the divisive challenges confront-
ing it and the American people." The legislation implcmntn certain
recoxmtndallons adopted by the Advisory Commission on Intergovernmental
Rolation: in its rcpnrt of too years ago on Fiscal Balance in the
gaggigxg_§odural System and its earlier 1961 report on Periodic
Connrcuninual Roaqggggnggt_gg;§gdgggj Grunts-in~nid to State and Local
92335993535. Ue utrongly endorse the legislation then and urge it:
early enactment.
.8. 7333 huilds on the sturdy foundation established by the
Intergovernmental Cooperation Act of last year-~PL 90-577--and provides
additionwl tool: to tboac at the national level uho are grappling with
the onerou;-ii not "oraery"--a55ignmunt of achieving more effective
administration of Federal assistance programs to States and localities.
Each of the bill's substantive titles is geared to this overriding
objective. and this is as it should be.
when vicuod from the perspzctivc of nearly three-quarters of
a century's develonucnt. the grantvin-aid device has served the nation
and our federal system well. As this Subcommittee noted in its 30th
Report more than ten years ago:
ore unfriendly to departmental or non rfiurtc to consolidate programs
falling within their respective jurisdictiona. Special incarnate which
usually attach thrusolvos to grant programs {toquenLly set up major
ohctarlcs to Congressional and administrative efforts to upset the grant-
in~nid 553:33 ggg. Ihoan and other factors then cambine to hinder
meaningful slant consolidations via the regular logislntivo route.
1hr approach ombodicd in Title 111 of .R. 7366 is designed to
overcome some of then: obstacles. Under it, tho President is authorixod
to ouhnlt to Congress cannulidation plnno involving combinations of two
or more functionally related aid prograus, along in each instance, with
a declaration indicating his finding that a proponod plan will further
tho improved nanngument and coordination objectives of thin title.
Such a plan would hocrno effective at the end of 90 calendar days of
continuous uranium of Congress following its transmittal, unless either
noun: paused n resolution diurpprnviug tho orOponcd consolidation. Each
plan would involv~ the merger of individual programs within the some
functional area, place responsibility in a single Federal agency {or
odminintrntion of the [used program, opociiy a single matching iormulo
and an apportionmuut formula--uhcru the individual progrmnn being
comblnod have such, and doucribo the differencen betucon thono formulae
and thonv of uach of the provioucly coparate programs. Bach plan must
also provide for transfer or other disposition of records, property,
and pnrsonnnl of programs cifoctnd by the consolidation and of the
uncircndud halancon in their approprintlons. A plan may call for the
termination of the affaira of an administrative unit whose programs
have been transferred on a consequence of consolidation. For the
sake of clarification hero, it night be proper to insert the phrase
".11 of before tho word "whose" on page 9, lino 21. Moreover, to
{11113809 in this title, we urge-insertion of the following nov
subsection at the bottom of page 11 (and the appropriate renumbcring
of subsequent subsections):
"(b) ?ot the purposes of suction: 803 and 804 of this
title, 'resolution' noanc only a resolution of either house
of Counters, the mottor after the resolving clause of which
is as follouc: 'Ihat the does not
favor the consolidation plan numbered tranrmittcd
to Congrcan by the Prouidant en l9 __.',.thc
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first blank space therein being tilled vith the neon oi the
resolving house and the other blank spaces therein being
eppreeriately tilled; but does not include a resolution
uhich specifies more then one consolidation plan.
He uelccmn the Administration's endorsement oi the Inorgenlca-
tien Plan approach" as reflected in n.l. 10954. while there are oiner
differences hetueen this measure and title 111. we are convinced they
can be really reconciled.
Sane opponents of this "Reorganization Plan approach" have
contended that it invelvee an unconstitutional delegation of
legislative authority to the executive branch. we are convinced--
and Various authorities support ue--thnt the iosues involved in this
argue-n: differ in no respect (run these applied to the Reorganisation
Act. Thus far, the latter has been voted by Congress on eight dilierent
occasion and its rencual this year demonstrates congressional sanction
of the constitutionality of this device.
Ihe Advisory Connieaion in its comprehensive study of Iiscgl
nlsncn in the Arcticcn Federal slurru rcceouended a drastic decrease
in the number of separate authorizations for Federal grants and
specifically recommended the method set forth in thin title as a
lean: of furthering thin abjectiVe. we are aware oi the tough
opposition that thia title laces. At the sane tune, ue are convinced-
sad the Administration clearly concurs in this-athat the suthority it
providca is neconasry to give the President the necessary extra nargin
of initiative in a field where successful initiatives have been all too
Infrequent.
geiet reading sigglificdtigg
Title 1V e! the proposed legislation is geared to making the
existing grant-in-ald cystcu more flexible sod adaptable to the needs
of recipient jurisdictions. Here and more States and localities vent
to use or are sctually adopting a oulti-functiensl. "packaging"
approsch to meeting their varying physical and social dcvolotnrntsl
problems. This is especially true uith reference to sctivist jurisdic-
tions seeking to mount a real sttsek on problems facing urban and rural
America.
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Yet at prc-nuor, a State or local governumnt in annrmhling n
combined program must apply separately for each of the required cum-
ponenta. Keeping the neparnte applications moving along at about the
Same pace and with the some prospect of approval, frequently becomes an
exerciso in administrative futility and place: a high premium on playing
the expensive game of grantamanship nxccptionally well. Ibo applicant
State or local jurisdiction may find coma of its components approved;
othern turned down; and still others caught in a labyrinth of fiscal
and odminiutrative doubt due to competition among grant agencies for
appropriation funds, widely varying application procedures, and
differing agency approaches to dnlczating approval authority to field
offices. Purthcnnorc, even if all the components are approved and in
a timely fashion, the widely varying planning, financial reporting,
auditing, and othnr adminintrativc requirements relating to each of
the individual gronta coalesce to make administration of the combined
project an intricate, time consuming, and extensively troublesome
undertaking.
lhe Joint Funding Simplification title of the pending legiala-
tion seeks to remove or simplify administrative and technical requiro~
aunts in a way that permits a more flexible, "packaging" approach to
the consideration, processing, approval, and administration of Fodoral
assistance programs. This is accomplished by authorizing at the
doparbucntel end, to a lesser extent, the interdepartmental levels the
waiver or modification of certain statutory procedural requirements;
by permitting cstnhliuhmnnt of special joint funds_for financing approved
conbincd applicationa; by describing ways in which Federal agency bonds,
with respect to grants falling uithin their respective jurisdictions and
the President with runpcct to the entire range of these programs, can
foster joint projects; and by authorizing the President to establish
implementing standards and procedures.
Unlike R.R. 6656 (Qist Congress), which has been the subject
of hearing: before tho Subcommittee on Executive and Legislative
Reorganization, and its predecessor legislation, 3.8. 12631 (90th
Congress, this title seeks to facilitate development of joint
projects and joint funding arrangements at the national level by
focusing primarily on these arrangements that are necessary to
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achieve an effectiVo departmental program and by placing interdepartmental
joint projects and funds on a wholly experimental and limiteddemonstration
basis. A careful examination of the hearing record on R.R. 12631 has
convinced us that this is the wiser course to adopt. Hany of the
feasibility questions raised during these earlier proceedingn are recognized
in the changes appearing in the pending lcaislation.
By differentiating between interdepartmental and
interdepartmental joint projects and management funds,
thin title, in our view, provides I more realiotic and
relevant approach to problems of packaging and would appear
to the greater promise of real results.
my authorizing-indced by expecting-~the development of
a comprehensive, ongoing joint funding effort within the
Various departments, this measure recognizes that no joint
funding approach will ever-succeed without effective action
at the secretarial level.
It also recognizes that the individual secretaries--for
more than an interagoncy committee or the Bureau of the
Budget-~aro more likely to be able to unke meaningful ute
of the powers unsigned to them under this kind of legialation.
In focusing on interdepartmental projecto, it avoids
placing heavy reliance on the voluntary cooperation of depart-
nontnl heads and the coordinating capability of the nureeu of
the Budget-~unlike the octoso-the-boerd approach embodied
in h.R. 6656 and 8.R. 12631.
It else recognizes that, despite the very great need for
Joint funding on a governmentvide basis, it is best to
recognize at the outset the difficulty of achieving a
community of interest among the separate departments and
agencies involved; hence, efforts in this area are placed
on a limited-demonstration basis.
Quite clearly, interdepartmental rivalries along with the
heavy burden of the other responsibilities of the Executive
Office of the Yresident-eapecially those of the Bureau of
the hudget--eake it difficult to conceive of a situation
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uhare numerous joint funding applications involving programs
of two or more department could be effectively and expeditiously
processed, approved, jointly funded, and subsequently monitored.
For all these reasons, we believe the interdepartmental phase of
the program should begin a: a relatively nodes: venture. This is achieved
by limiting the number of approved interdepartmental projects to no more
than 100 in any one year and no more than 250 during the three year
duration of this section. lhcso numbers, however, are completely
arbitrary and, it this general approach is taken, the Conaittoe might
wish to raise or lower the ceilings. he also feel the experimental
nature of this type of ccmplitetod effort should be acknowledged and
this is done by limiting the President's authority under section 902
to three years. lhis interdepartmental portion of the title also
centronts squarely the fact that most departmental heads are not
likely to relinquish voluntarily their project approval authority to
another agency. hence the President is authorized to mandate the
tranafer of such authority from one department to another.
In endorsing this tun-level approach to achieving joint
funding oimplificution, we are sanguine about the prospectively exten-
sivc experience that will he gained within departments and the more
limitcd~-but none the less Valuabloo-cxporicnco within the Executive
Office of the Preuident level. Re are confident that, in time, this
experience will permit a broadening of the interdepartmental phase of
the program. At the moment, however, given the bearishneos of cxint-
in; bureaucratic life, we believe that the proposed title will provide
ample challenge to both the departments and the Kxecutive Office of
the President, but not a challenge so great that it will mornorize
either of these parts of tho chcrnl executive branch.
It night he noted at this point that in order to clarify the
definition of Joint Project, consideration night be given to
section 112 (appearing on page 2) and substituting the following in
lieu thereof:
"Joint project" means any undertaking which includes
components proposed or approved for aid under more than
one Federal assistance program or appropriation, or one
or more Federal assistance programs or appropriations in
crmbination with one or more State or local programs, it
each of these components serves as an integral part of a
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comprehensive effort by the applicant to meet the
interrelated program needs of a specified age or
income group, labor or occupational category, or
geographic area that falls within the applicant's
juriadiction.
To sum up, like all of the other provisions of 8.. 7366, this
title is geared to upgrading the management of Federal assistance
programs to State and local goVernnents. By encouraging the develop-
ment of a more flexible "packaging" approach to the aministtotion of
these probramc, it seeks to circumvent many of tho negative by~producto
of grant-in-aid fragmentation. In the final analysis, however, there
in no subutitntc [or aggressive action on the more basic and more
difficult problem dealt with in the previous title: the need for
grant consolidation. At the same time, this title is still a signifi-
cant mnunh of reforming the existing syntcm and its effective implementa-
tion in all likelihood will produce a number of well thought-out
consolidation proposals.
Congtggsinnal rod Executive Ovegginht of
Federal Anointonco Yroggtmn
The final title of the proposed lntergovernmental Conperntion
Act of 1969 focuses on the pressing need on the port of Congress,
Federal department heads, and the Pronident to acquire n more ccnprohen~
sivo and systematic view of the operations of Federal assistance
programs. Title VI of the Intergovernmental Cooperation Act of 1968,
vhich mandated o syatcmntic Congressional review of future grant-in-
eid progrmn3,providod an excellent beginning in this area, but only-o
beginning.
There is a need to extend the review procedures stipulated in
last year's legislation to cover future programs having a termination
date. once, the first section of thin title otipulatoa that during
the year yreceding the date on which a programs authority is
slated to expire, the relevant substantive committees of Congress--
either separately or jointly-~vill conduct studies of the grant and
advise their respective Houses of their findings. Grants with
termination dates, of course, recoiVe fairly careful Congressional
scrutiny before being renewed. But the procedures new applied do not
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aluayn court the intergovernmental implication: of the program. This
'proviaion in the final title of H.R. 7366 is designed to correct this
deficiency.
There in a problem of staffing with respect to Congressional
oversight of grunt~ln~aid progrann. Section 502 focuses on this problem
by authorizing establishment of the position of review specialist on
each of the standing roomitreea of the Senate and house responsible for
review, study and oversight of Federal anaistance programs. lhis
additional professional staff member would be selected and appointed
by the chulrwnn of thc standing committee with prior approval of the
ranking minority number. he would serve on a permanent basin without
regard to political affiliation end'in recognition of his professional
competence. His basic responsibility would be to assist tho committee
in its performance of the functions assigned under Title V at the
intergovernmental Cooperation Act of 1968, as amended by thin legislation.
There is also a need to strengthen executive branch overnight
with renprct to Federal naniwtance programs. Hence, a third basic
provision of thin title requiree heads of departments and agencies
administering more than on: grant program to submit annually 3 report
to Concrnis and to the President on the operations of their programs
beginning with the first fiscal year following the date of enactment.
Each departmental report, among other things, would describe the
progress and offeccivenoaa of dopattmnntal efforts to implement their
programs statutory gials; the arrangements used under each program to
afford recipient governments an opportunity to review and comment on
proposed adminintrarive regulations and basic program changes; the
variousrmchaninna utilized for achieving proper headquarters-field
coordination oi program activities; departmental ctIorts to simplify
and make more uniform application forms and procedures as well as fiscal
reporting and auditing requirements; the practicality of consolidating
functionally-related assistance programs falling within the department's
jurisdiction; the feasibility of delegating more administrative
authority to departmental field offices; and finally whether the
purpose, managcmcnt, administrative procedures, and requirements in such
ptogrcuu should be changed and whether--ln light of rapidly changing
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...ln annual. the beau-dun (lads tin grant a mini
devic- (or banning combative mom-mu! cort in
the couplth oi a national legislative We.
the opportunity to: cooperation between the levels oi
emu-ant for tho attaimmt of coma: objective.
nhauld ho [atomized u I "name at our i'cdnrnl Iyttom.
In sum circumtmcu tho use of a grant my be the note
punctual and ninth uthod of cant-amch an
activity than cunning capiete namihility to no,
one law! a! mu...
Yet lieutenant: in meat you: tun taunted mt; comm
u to tho olicctivonau of the categorical grant an a noun: oi further-
iu intorcovt'tmenial collaboration. At this point in tilt. the aunt
in bacon: u tnlt o mutiny-u it is a coauthor-c! coop-"tin
minowmaui "mini.
WWW
Galloping; urbanisation, soaring population figures. a thing
I: of nfwoco, and the continuing can: in out core cities and in
tin cmuynidc-othou law has tin Ind: Into" that how muted
pnistmt duundo (or can and not: public unites tu- mtmt.
Md novormcnt-oail govermntuuhavo sought to ag to this challenge.
In tum oi civilian-imam: uptmdituru. tho total outlay incraaud
out. than (our titan during the gut two mm. in term of tin:
aunt gunman! lmls. han Wham it: civil gown-
mt during tiu period 19 to I? increased at. than two and m-
h" .28 (teaching the 43.5 Milieu figure in 1967); State outlay:
non than quadruple! during this sum period (renal-ins 3%.: billion
in 1957); and iced pendant unitiplicd can that (in than
(passing the 59 billion oath in 1%)). lion a! not. the. an mi
of World in: :1 am! especially during the put tit you. "an!
podium: in this sector have tuba the (on oi grants-iconic.
other gauged by amber. donnr umitodcu. or iapoct on taut-3mm-
mtc! tau-tum. than: ction! nuisance man-n m constitute
the out Want tingle tool 0! (but (Monti-n In! the tonic
coalition: of ohinistntiw Multan.
In dollar amounts, "dual aid has mane-d non than a
(our-told intone between 19 and GS-with an average annual Mite
0! mt it. punt. Darin; the put (in yam aim. gust anti-y:
in: not. than mm. mm (m 0.! um. :- 1 (o n
(I-ICOJ $19.; billion (or m must that you d. according to
Ian: loan at (to Np: "twang, laden! um captain-tn (at
than! 1970 will mood tho 816.5 Milton auto-or non than than and
cue-lull the: the mo can.
1: tuna at gunk-n. ch um 08 mun put Mutt
Ill than doubted bum 1962 to Im-mm tr- lt to J. Mo.
mt. dating the 10 Was. at In 2 not. heal gnu: mt-
wu enacted News; won over [Mu number In update aothodsnumn.
A thm 'pnulhwte" than u to a 3nd tom 1: the Mt mid
plan an up" at but no. Mun-censu- .ml um
an 0.7 tum, hem of III. (110111 a! mum mud, in:
continue: a punt. pro-gun. lb should my tn and that w on
Malina here only with uni: mum:- to Stats and 1M! newsman and
not ham. alum" or mu to sumamu.
II (can a! Maryann! Input. ti: haul autumn
was an mu- anti, 1! mm a! Suu and but an d
um: urchin; Inquimta m put-ate upumo by than jun:-
uam an the chin! of m tot awry two Mann! grant-moan! doth".
5: an an: as. w an a: dun point I. um um on Ian-loot. unplu-
uy. u varying than! and pun-n! MIMI: at than a
ma- nun scum mum cunt-Ila than china. 0: hols
o! a property (auctioning (can! qua.
5.1mm
Ibo ma lawman-nu! Coop-tutu an of ma u
Output to uon and W do w 0! ultra! mum
mt. A. ands. It cases to [up with (out tank damn!!! M
yuan contouponry pnt-in-nu oblnutntlom I! much a! m-
1mm and neonatal-1n: ung. commas, and mu) porting
aunties; the amumm lulu. than all; to 'yuluy gnu:
mutations; on (a but 0! with; ch ":0qu mutua- of
gum umamum all CICBW!OIS and the pubic- ! Ichtll; not.
focth caquts" and lesbian warsth with tum: to than
math: .
lggroved Fiscal Management
1he first auLntentivu title of n.n. 7335 is geared to reforming
the financial management of Federal stance-invaid. do you know, Federal
agencioa administering such programs are charged by Congress with sour-
ing the proper and legal use of grant funda and only a few have relied
on Star: and local auditn in fulfilling this mandate. Horeover, the
General Accounting Office in chnrgod with necertoinlna the effectiveness
of agency audits of Federal expenditures of grants-in-nid to State and
local lcvrls. do with the agencies, the GAO has relied chiefly on its
own pernounzl to petfouu the necessary audits, although in at least
one lnntanco, it hon accepted those of a State agency.
It goes uithout saying that adequate fiscal and program controls
are an isscntiol [nature of any assistance program and the governnent
providing such assistance~~ohuthnr it be State or Federal-mutt be able
to assure itself that such funds are being legally npont for the per
pone: intended. Quite clearly. adequate auditing procedures and
financial reporting requirements are essential for this purpose. Yet,
tmnpoucr considerationa, the high incidence of double paper work. the
fact that some agencies already are exocrinentins with the use of State
and local nuditu, and the need to'ntrcngthon tho haniu of collaboration
in the lineal management field--all indicate the toad for a broad
federal LulSIQtIVC uandatu for innovative action in this area.
A atudy conducted by the Rational Association of State hodget
Officer: nearly tuo years ago revealed that the detailed, burdennmne
and slow auditing and reporting procedures required by Federal grant:-
in-oid canoe considerable difficulty at the State level. 1he varia-
tion hetuuon Federal and State requirements and among Federal require-
ments rodnrdlng the frequency. classification syntnna, and methods of
accounting were cited on creating particular problemo. The excessively
detailed reports on some programs were singled out by one State official.
who indicated that 55 individual fiscal report: had to be prepared and
filed regarding expenditures of funds under the Vocational Education
Act at the State and local levels, taking weeks of ataff time. Another
official complained that the breakdown: requested were almost endless.
An earlier study, prepared by the ataff of the Senate Jubecrnittce
on Intergovernmental Relations. found that half of the State and lecal
respondents to its questionnaire indicated that the variations among the
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fiscal reporting and accounting requirements and differences between
Federal and State rcquirenenta had caused considerable difficulties in
administering grant-in-aid progress. A: on: governor-stated:
Hnny Federal agencies ignore the Statea' basic
accounting ayatcm and tho controls therein, making
it aeceaaary for State operating agencies to keep
double eat: of hooks for Federal audit purposes.
Some Federal agencies 50 to the extent of almost
complete voucher~bydvoucher audit and at times de-
mand that accounting he done by a 'Pederal standard
which in oastnte is not Pcderal as such but peculiar
to the needs of the opecific agency concerned.
Overall. an chruhclntnc number of the State and local officials
indicated that legislation was needed to achieve more uniform accounting
and auditing precedurea among Federal grant programs. 0n the other hand
in a anhacqueut Subcoemittee study entitled The Federal System on Seen
§1_Egdglal Aid Officialg, it was reported that a majority of Federal
program nduiniatrators polled felt that the variations in auditing rc-
quircvent: cnuuod no difficulties in the State and local administration
of their respective programs. A sizeahla majority rejected the proposal
that the poet-audit of aid program: might be diapenaed with where a
Stato'n post-audit ayrtem not standard: the Comptroller Cen:rnl set
down. In addition, a cmparablc proportion disputed the need for more
uniform auditing and accounting procedures for all grant-io-aid
program. a: understand that the lnteragency Task Force new reviewing
intoruovcrnmeatal fiscal management problems haa found further evidence
to corroborate many of the earlier findings.
Admittedly, the differences in the objectives. scope. and ad.
ninlatratlvt arrangements of the more than 420 separate grantoin-aid
programs can hardly be expected to yield completely to uniform fiscal
reporting. accounting, and auditin; requirements. Yet, there remain
the questions of whether existing requirements are reasonable and effec-
tive, and uhethor the pace of inprovenent in this area is satisfactory.
those State and local officials that have expressed themselves on this
issue any they are not and some Federal fiscal manageueat people agree.
It teens clear that legislation is needed to speed reform in
this long neglected area. Title II of the proposed Intergovernmental
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Cooperation Act of 1969 is geared to achieving three basic objectives:
First, it gives the President authority to promulgate rules
and regulations designed to achieve greater consistency, sin-
plicity and order in the area of srant-in-aid financial
reporting-an area, we might add, that is only beginning to
be recognized as a serious intergovernmental administrative
problem.
Second, this title (via sections 702 and 703) requires
Federal agencies administering grant programs to adopt
accounting and auditing policies that. to the greatest extent
possible, rely on accounting and auditing performed at the
State and local levels. Federal agency heads would determine
the adequacy of the internal financial management systems
utilized b, recipient jurisdictions. Such determinations would,
as a ninitumh involve ascertaining (1) whether accounting
records are maintained and reports are prepared in accordance
with generally accepted accounting principles, (2) whether
audits are carried out in accordance with commonly accepted
auditing standards, and (3) whether the auditing function is
performed on a timely basis by qualified staff whose position
is sufficiently independent of program operations to permit a
couprchensiVC and objective audit. Where such control systems
are found acceptable, heads of agencies would authorize accept-
ance of audits performed under these systems as a substitute for
their own. Periodic sample testing would be used to verify
the continuing reliability of accepted State and local systems.
A mandate is also given to each Federal grant agency to
strengthen the cooperation between and among financial manage-
nent personnel. this is done by requiring a continuous liaison
with counterpart State and local officials, by exchanging
auditing standards and objectives, and by joining together in
the development of auditing schedules. In addition, each
grant'disbursing agency is authorized, to the extent feasible
and permitted by law, to coordinate and make uniform the
auditing requirements of its programs and to join with other
such agencizs in cross-curvicing arrangumuntu for the conduct
of one anothcr's audit. The Bureau oi the Budget, or such
other agnncy as may be designatcd by tho Troaidcnt, is authorized
to prescribe such rulcn and regulations as are considered
nvccnsary for the affective administration of section 703.
The Commission in fully anarc that those last three provisions
fall far short of the proposal advanced by some that a single
unit should he established within the xucutch Office of'thc
irtsidcnt to dcvulop and monitor uniform accounting and audit-
ing procedures and requirements for all Federal agenciQS. At
the 9am: timz, we halicvu that those provisions of R.R. 7366
are much more in harmony with the realities facing us now in
the financial managcuant field vithin the Federal :xccutivc
branch and we are hopciul that they will accelerate efforts to
dcvrlop accounting systems within the agencies that meet 650's
standards.
Third. this title (section 70a) authorizes the Comptroller
Gun-rnl to prescribc rules and regulations whereby the GAO
Would accept the postoaudits of aid programs performzd hy
recipinnt States and political subdivisions. hut only where
thuy arc patiormcd under financial managemant nyntcus whose
procedurvs meat generally accepted auditing standards and whose
personnvl are qualified and in a position to perform an adequate
and objective audit. An in the case of the Federal agency
hands, periodic sample testing is authorized to vcrliy the
continuing reliability of such systems.
Criticisms of thin title have been and continue to be divergent
and acm~tinos difficult to receive. Sane skeptics claim that assigning
the Prcsidvnt authority to simplify financial reporting requirements will
lead to nothing, unless the Bureau oi the Budget and departmental comp-
troller: are willing and able to cmunit themselVes to this objective.
Some argu: that Federal agency head: will be unwilling to substitute
State and local audits for their own, given the very different manage-
ment purpOics th:£c departmental audits serve. Some state critics
contend (Al no Federal agency head chauld be empowered to evaluate
their audits since only a minority of the agency auditing systems have
been accepted by the General Accounting Office. Some argue that Congress
would be unwilling to accept State and local audits for its fiscal
accountability purposes and this, in turn, would reduce any real agency
interest in utilizing the authority granted here. Some claim that the
GAO would never certify certain State and local post-audits for their
own purposes, since this would lead to invidious comparisons among the
varying financial management systems of States and localities and would
ambroil the GAO in controversy. CAO's report on this bill, we understand,
tends to bear out this argument. Finally, some critics allege that many
State and local governments will oppose this legislation on grounds that
their financial control systeos night not most accepted auditing and
accounting standards and these deficiencies would be highlighted to their
sister States by the mechanics of the substitution process.
Despite these various criticisms, the Commission is convinced
that financial management needs greater communication and collaboration
among the personnel at various levels of government. The present
intergovernmental fiscal control system is certainly something less
than perfect and many believe it to be far, far from satisfactory.
The manpower gap facing this sector of the public service is recognized
by most people familiar with the field. Enactncnt of this title would
conserve manpower, infuse greater flexibility, stimulate greater
simplicity, and enhance the basic goal of fiscal accountability at all
levels. For those reasons, we strongly support it.
Consolidation of Federal Assistance Programs
Title 111 of the proposed Intergovernmental Cooperation Act of
1969 as well as H.R. 10954 authorize the President to submit grant
consolidation proposals to Congress under procedures generally comparable
to those laid down in the Reorganisation Act recently enacted by Congress.
lf consolidation of existing categories is a major nanagenent problem-v
and we believe it is--lcgislation along the lines outlined here is a
necessary-~if not indispensable--moans of achieving a significant break-
through in this area. As was noted earlier, the proliferation of
Federal grants has created serious fiscal and administrative problems
at all levels. It has generated such difficulties as a lack of
interaction concerning sources oi available iunda and an overlapping
and duplication among grant prograna. In addition, the inflexibility
e! nany separrte funds and administrative requirements have capped the
capacity of both administrators and elected oiiicialn to execute,
coordinate, and evaluate effectively grant-in-aid programa.
Consolidation then has beeone a top priority item on practically
everyboey's list on how to atrcncthen tho grant-in-aid oyatan.
Regretfully, conuolidation is (at easier to talk about than to achieve.
Horoover, and despite sane apparent breakthroughs on this front,
recent developmenta are for from encouraging. hany believed that the
passage of the Partnerehip and unalth Act in 1966 night begin a trend
toward consolidation and combination of categorical grant programs.
otly eroded by Congressional
for migrant workers, aleoholiee, and
l968 rrcsidant Johnson transmitted
pond and modernize federal aaeistanee
lhis proctor, hw-ver, van aubac
categorization of health progrnn
drug addicts. BorneVrr, early i
to Congress draft legislation to
ior vocational education. In a tioo to increasing dollar authoriza-
tions and making Federal aid av able in a nunber of new broad areas,
the proposed legislation would b consolidated nnny vocational
education categories into a gone 1 grant. During the course of
Connrezsionel hearinga, iull co deratinn vac opposed by various
a defeat, at leaot (or the time being,
s field. The final neasure estab-
progran force; and the result v
for proponent: of this goal in
liahnd seven new authorizations d three separate oarnarkings vhile
renter State discretion in older
be Commissioner of Education to
bility of consolidating vocational
achieving lone consolidation an
program area. the law direete
cenduct another study oi the to
education programs and to repor to Congress this year.
To date then, grant con lidatlon baa followed the normal
and the reault has been very
(or this approach is that ceubining
ecurse of the legislative proce
uninpressive. A najor rational
grants involvea changing Varyin legislative requirements concerning
allocation iornulaa, catching r ion, as veil as the basic responsibility
irection of Federal fund: to achieve
The principal defects o! this method
i a more practical nature. Middle-
the State and Federal levels usually
oi Congress for determining the
special and national objectives
quite clearly are political and
tonaneeent adoinistrators at be
9.
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