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S. 88, the Local Empowerment and Flexibility Act of 1995 : hearing before the Committee on Governmental Affairs, United States Senate, One Hundred Fourth Congress, second session on S. 88 ... December 5, 1995 online

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KS. Hrg. 104-586
\x. S. 88-THE LOCAL EMPOWERMENT AND

FlEXIBILin ACT OF 1995



Y 4. G 74/9: S. HRG. 104-586

S. 88-The Local Enpouernent and Fie... LING

BEFORE THE

COMMITTEE ON
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE

ONE HUNDRED FOURTH CONGRESS

SECOND SESSION

ON

S. 88

TO INCREASE THE OVERALL ECONOMY AND EFFICIENCY OF GOVERN-
MENT OPERATIONS AND ENABLE MORE EFFICIENT USE OF FEDERAL
FUNDING, BY ENABLING LOCAL GOVERNMENTS AND PRIVATE, NON-
PROFIT ORGANIZATIONS TO USE AMOUNTS AVAILABLE UNDER CER-
TAIN FEDERAL ASSISTANCE PROGRAMS IN ACCORDANCE WITH AP-
PROVED LOCAL FLEXIBILITY PLANS.



DECEMBER 5, 1995



Printed for the use of the Committee on Gnvpmmpnt^^, , .^.tui -wu. ^.u.



*•%»




NOV 2 7 J93g



'-OT/jK^



U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON : 1996



For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402
ISBN 0-16-053568-9



S. Hrg. 104-586

55 \ S. 88-THE LOCAL EMPOWERMENT AND

FLEXIBIUn ACT OF 1995

Y 4. G 74/9: S. HRG. 104-586

S. 88-The Local Enpouernent and Fie... LING

BEFORE THE

COMMITTEE ON
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE

ONE HUNDRED FOURTH CONGRESS

SECOND SESSION
ON

S. 88

TO INCREASE THE OVERALL ECONOMY AND EFFICIENCY OF GOVERN-
MENT OPERATIONS AND ENABLE MORE EFFICIENT USE OF FEDERAL
FUNDING, BY ENABLING LOCAL GOVERNMENTS AND PRIVATE, NON-
PROFIT ORGANIZATIONS TO USE AMOUNTS AVAILABLE UNDER CER-
TAIN FEDERAL ASSISTANCE PROGRAMS IN ACCORDANCE WITH AP-
PROVED LOCAL FLEXIBILITY PLANS.



DECEMBER 5, 1995



Printed for the use of the Committee on Governmenteilo




NOl^a? 1996



?0 d jf.\^?*»^



U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON : 1996



For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402
ISBN 0-16-053568-9



COMMITTEE ON GOVERNMENTAL AFFAIRS

TED STEVENS, Alaska, Chairman
WILLIAM V. ROTH, Jr., Delaware JOHN GLENN, Ohio

WILLIAM S. COHEN, Maine SAM NUNN, Georgia

FRED THOMPSON, Tennessee CARL LEVIN, Michigan

THAD COCHRAN, Mississippi DAVID PRYOR, Arkansas

JOHN McCAIN, Arizona JOSEPH I. LIEBERMAN, Connecticut

BOB SMITH, New Hampshire DANIEL K. AKAKA, Hawaii

HANK BROWN, Colorado BYRON L. DORGAN, North Dakota

Albert L. McDermott, Staff Director
John E. Mercer, Counsel
Leonard Weiss, Minority Staff Director
Michal Sue Prosser, Chief Clerk

(II)



CONTENTS



Opening statements: Page

Senator Stevens 1

Senator Glenn 2

WITNESSES

Tuesday, December 5, 1995

Hon. Mark O. Hatfield, U.S. Senator fi-om the State of Oregon 4

Judy A. England-Joseph, Director, Housing and Community Development
Issues, U.S. General Accounting Office, accompanied by Paul Posner, Direc-
tor, Budget Issues, and Susan Beekman, Senior Analyst, Community Devel-
opment Issues 17

John A. Koskinen, Deputy Director for Management, Office of Management

and Budget 26

Susan A. Cameron, Administrator, Tillamook County Health Department,
Tillamook, OR, on behalf of National Association of Counties 36

Gail Phillips, Speaker, Alaska State House of Representatives 38

R. Scott Fosler, President, National Academy of Public Administration, Wash-
ington, DC 40

Charles Griffiths, Director, Intergovernmental Liaison, Advisory Commission
on Intergovernmental Relations, Washington, DC 42

Alphabetical List of Witnesses

Cameron, Susan A.:

Testimony 36

Prepared statement 253

England -Joseph, Judy A.:

Testimony 17

Prepared statement 247

Fosler, R. Scott:

Testimony 40

Prepared statement 287

Griffiths, Charles:

Testimony 42

Prepared statement 289

Hatfield, Hon. Mark O.:

Testimony 4

Prepared statement 77

Koskinen, John A.:

Testimony 26

Prepared statement 251

Phillips, Gail:

Testimony 38

Prepared statement 286

(III)



IV

Page

APPENDIX

Page

S.88 47

Prepared statements of witnesses in order of appearance 77

Block Grants — Issues in Designing Accountability Provisions (GAO Report) .... 80
Welfare to Work — Measuring Outcomes for JOBS Participants (GAO Report) . 101
Multiple Employment Training Programs — Conflicting Requirements Hamper

Delivery of Services (GAO Report) 145

JOBS and JTPA — Tracking Spending, Outcomes, and Program Performance

(GAO Report) 179

Job Training Partnership Act — Inadequate Oversight Leaves Program Vulner-
able to Waste, Abuse, and Mismanagement (GAO Report) 198

Responses to Posthearing Questions by Senator Levin Regarding the Local

Empowerment and Flexibility Act of 1995 250

Letter dated Dec. 1, 1996, with attachment, to Senator Stevens from Douglas

Bovin, President, National Association of Counties 284

Letter to Ms. Susan Beekman, Senior Evaluator, GAO from Howard Glaser,
Deputy Assistant Secretary for Operations, HUD 294



S. 88— THE LOCAL EMPOWERMENT AND
FLEXIBILITY ACT OF 1995



TUESDAY, DECEMBER 5, 1995

U.S. Senate,
Committee on Governmental Affairs,

Washington, DC.
The Committee met, pursuant to notice, at 9:34 a.m., in room
SD-342, Dirksen Senate Office Building, Hon. Ted Stevens, Chair-
man of the Committee, presiding.

Present: Senators Stevens and Glenn.

OPENING STATEMENT OF CHAIRMAN STEVENS

Chairman Stevens. Good morning. I am constrained to say that
my good friend and our colleague Senator Hatfield startled us all
by his announcement last week. Mark, as I told you, it took me
back so many years.

Senator Hatfield and I met at General Eisenhower's farm in
about September of 1962, when he was Governor of Oregon, and
later, fate brought me here, and I caught up with him in 1968, and
I have been standing in his shadow since then. It is a large shad-
ow, and I would just as soon stand in it for the rest of my time
in the Senate, as a matter of fact. But I do welcome you. Senator.

This hearing this morning is on S. 88, your Local Empowerment
and Flexibility Act. Every Member of Congress has heard com-
plaints from our State and local governments about the bureauc-
racy involved in using Federal funds. We have heard that Federal
rules and regulations stifle creativity and effectiveness. Each local
government and each state is unique. They are unique in the exact
nature of their specific problems, and they are unique in their own
particular capabilities. But Federal grants and programs are de-
signed primarily for the Nation as a whole and rarely recognize the
uniqueness of our system.

We have a one-size-fits-all approach that wastes money and ef-
fort and minimizes effectiveness, due in large part to the fact that
the programs are generally structured to focus on the process and
not on performance.

Senator Hatfield, I believe you have initiated a very commend-
able effort to reverse the focus. You propose in S. 88 to allow local
governments to restructure their Federal assistance and emphasize
performance and results rather than uniform procedural require-
ments.

Your legislation encourages much greater coordination of Fed-
eral, State, local and private sector efforts and focuses on the prob-
lems of each community rather than on the Nation all at once.

(1)



In Alaska, we live under Federal rules and regulations written
in Washington, DC that are particularly trying. For instance,
under Federal housing rules, a flush toilet and a bathtub must be
in every home financed by HUD; but 95 of our communities have
no running water, and there is no water source to hook them up
to, particularly in wintertime.

Although some villages have been creative and use their tubs to
butcher game or to store fish, it is not a smart use of Federal funds
to put a bathtub in a house that does not have plumbing.

Giving local communities the flexibility to either use the money
that would otherwise be used for useless plumbing fixtures, to in-
crease insulation in a harsh climate, or to build fewer homes and
provide the money to establish and start a water system would
make a lot more sense.

Partnering State and Federal funds seeking to accomplish the
same goal will allow us to better marshal resources to address com-
plex issues in the local area, such as we face with water and sewer
in Alaska.

Congressman Clinger has introduced a companion bill in the
House. There is bipartisan interest in this legislation, I believe,
and like unfunded mandates, which we enacted earlier this year,
I think this is an important reform that could and should be en-
acted by this Congress if we have the support of both parties.

We will be hearing fi'om administration witnesses shortly, but let
me thank Senator Hatfield for his leadership in this area, and I do
believe, Mark, that this would be an excellent capstone to your out-
standing legislative career.

Senator Glenn?

OPENING STATEMENT OF SENATOR GLENN

Senator Glenn. Thank you, Mr. Chairman. I will be just a mo-
ment here.

Senator Stevens said he met you at the Eisenhower Farm. I was
not invited to that meeting, I do not believe, but that does not
mean that I do not share a sense of loss in your announcement to
retire. You are going to be missed. You have been a voice of reason
and accommodation in trying to work things out. We see a lot of
things going in the other direction around here these days, and I
think that is to the detriment of the Senate, and while I can under-
stand your decision, I do not agree with it, and I am sorry to see
you leave, Mark.

I look forward to hearing testimony from our witnesses on legis-
lation introduced by our colleague. Senator Hatfield, to provide
greater flexibility to local governments.

When local officials look to the Federal Government for funding
and assistance, they are conft"onted with a dizzying array of Fed-
eral grant programs. According to ACIR, the Advisory Commission
on Intergovernmental Relations, there are currently more than 630
different Federal grant programs to State and local governments —
630. In just one budget sub-fiinction, elementary, secondary and vo-
cational education, there are 78 different Federal grant programs.
So I can certainly sympathize with local officials who are frustrated
with the red tape, regulations and procedures that inevitably ac-
company such a large number of Federal programs. It is a tough



job just to keep up with what the programs are, let alone being
able to get in and make some use of them.

We have made some progress in this Congress, however, in sim-
plifying and rebuilding the intergovernmental partnership. Earlier
this year, we enacted the Unfunded Mandates Reform Act, which
was a big step forward — this Committee worked on it for several
years — and the Paperwork Reduction Act, which goes beyond just
paperwork reduction and also covers the computerization of Gov-
ernment. I am proud to have coauthored both of those bills. More
recently, the Senate passed welfare and job training reform legisla-
tion which block grants and simplifies dozens of Federal programs.

Of course, turning responsibility for national programs over to
the States and localities is not without its risk. That is why I be-
lieve we should insist on what some call "accountable devolution,"
the key word being "accountable." It is a version of the old concept
that comes, I guess, out of the cold war: Trust, but verify.

In order for accountable devolution to work, we must have in
place strong governmental information and evaluation systems so
we can assess how these programs are implemented. We can then
see what approaches work, what approaches do not, which States
and local governments are succeeding and which ones are not.

Further, we must have strong financial systems to ensure that
Federal funds are not misused or wasted. These are Federal tax-
payer dollars, and we are under an obligation to see that they are
not wasted at any of the three levels of Government.

I commend my colleague Senator Hatfield for his long-time advo-
cacy of this bill. I also thank him for building some accountability
provisions — that magic word again — into his legislation by requir-
ing the development of specific goals and performance measure-
ment criteria as part of any local flexibility plan.

I certainly want to work with him and the administration to
strengthen these provisions, particularly as they relate to financial
accountability. I do have some concerns about the overly broad
scope of the bill. As the bill is currently drafted, a locality could get
a waiver, for example — and granted, it would have to run back
through the Flexibility Council — to shift Federal education funds
into highway construction, or Alzheimer grant funds into rural
housing, even though Congress may have stipulated in the law that
those funds are only to be spent for their stated purpose. As I see
it, that is an enormous amount of authority to grant to the Flexibil-
ity Council, which would be the authority that would grant such
waivers.

And if the Council does not oversee these waived laws and rules
and combined programs, who will? Will the Department of Edu-
cation really be able to oversee how its education money is being
used to build a local highway project — and granted, it has to come
back through the Council.

But from the local point of view, I also think there are some
questions. The bill sets up a performance-oriented planning proc-
ess — and I understand that 0MB has some ideas about strengthen-
ing that process. In an ideal world, that would be great, but it
looks like an awful lot of work for localities.

Right now, many of the 600-plus Federal grants are made di-
rectly to local governments. When you add in the local planning re-



quirements and the need to coordinate with State governments, the
goal of flexibihty, I hope, does not get buried under red tape and
new procedures. I think that is something we need to discuss fur-
ther.

The goal of a balanced budget means less discretionary domestic
spending, so we do need to think about creative ways for serving
local needs. I like the concept behind this bill. I believe we want
to work on its mechanics a little bit. As I said earlier, I would like
to work with Senator Hatfield and my colleagues on the Committee
to work these problems out and produce bipartisan legislation out
of this Committee.

I do not think we should move to a markup until we have had
a chance to discuss some of these things and decide where we are
going; it might be counterproductive to move too soon. But I look
forward to hearing from the witnesses on how the bill might work
and how some of the problems I have raised might be addressed.

Thank you, Mr. Chairman.

Chairman Stevens. Thank you, and I look forward to such a dia-
logue and conferences with Senator Hatfield and perhaps Members
of the House who are similarly interested to see if we cannot work
out a bipartisan bill. I am sure that is our colleague's goal.

Senator Hatfield?

TESTIMONY OF HON. MARK O. HATFIELD, U.S. SENATOR FROM
THE STATE OF OREGON

Senator Hatfield. Thank you, Mr. Chairman, Senator Glenn.

First, I appreciate your kind remarks and would indicate to you
that as I look forward to a new career, I shall miss you as people,
as fi'iends, and I will have many fond memories as I leave the Sen-
ate, with great respect for the Senate, especially as made up of
quality leaders like Senator Stevens and Senator Glenn.

Mr. Chairman, I would like to submit my written statement for
the record and highlight my statement and then be responsive to
your questions.

Chairman Stevens. Without objection, it will be printed in full.
Senator.

Senator Hatfield. As all of us know, we have been through the
reconciliation process; at least, we have moved measurably upon
the accomplishment of those goals in the reconciliation process. But
I do not believe that the reconciliation process or the general budg-
et act, or rather, the budget resolution, is going to solve our prob-
lem of trying to balance the budget by the year 2002.

I think, if we are going to continue to do business as usual, that
that goal will elude us because of the tremendous costs in admin-
istering the hundreds of categorical grants that Senator Glenn has
referred to. And I think, unless we do provide localities with a cer-
tain flexibility and stimulate creativity, rather than stultify it as
we do now, that we are going to fail. Because there is such esca-
lation of costs of administering these programs, of bureaucrats
talking to bureaucrats, you also exclude the opportunity to really
deal directly with the constituents whom you are targeting.

I feel very strongly that there are many ways to analyze this,
and I am happy to say that Speaker Gingrich and Majority Leader
Dole sent a letter to President Clinton last December, urging the



President to consider the flexibility factor, and Vice President Gore
has sent a letter indicating that the administration has been en-
couraging the State and local governments into innovation and en-
trepreneurship. So it appears that we have a fairly bipartisan, top
leadership support for the concept.

Mr. Chairman, Senator Glenn, I want to also say that it seems
to me that many of the problems we face today have failed to recog-
nize that diversity is a strength, and that this Nation was founded
on the principle of pluralism, of great diversity amongst our people,
and therefore, with diversity and pluralism, we have to entertain
and exercise flexibility. There are competing thoughts. There are
competitive ideas of how this Government should operate, and we
have created a very, very marvelous framework to be able to exer-
cise that diversity.

I might also say that the creativity factor that goes with diver-
sity is paramount. When we begin to look at some of these pro-
grams that we today take as national programs, we fail to recall
that they really were experimented with in the laboratory of the
States. Social Security, progressive income tax, workmen's com-
pensation, unemployment compensation, women's rights, child
rights, civil rights, and many, many more, were all experimented
at the State level. And we have increasingly shut off the States' op-
portunity to experiment and to be innovative.

So I offer this bill with a little background as a Governor for 8
years, and my frustration at feeling, in the — that was in the late
fifties and sixties, before we had a lot of the new regulations — but
I recall that it seemed to me that we ought to try to encourage the
able-bodied people on welfare to engage in some productive con-
tribution for their communities. So, as a Governor, I put together
a proposal that was approved, and we put it together in a way that
incorporated participants and local officials.

We took three counties out of our State of 36 countries, and we
said every able-bodied man shall labor in some community program
for his welfare check — work fare, it came to be known. I think we
were the first State, or one of the first States, to try this.

We worked with the labor unions, we worked with the county
commissioners, the city mayors and councilmen. We wanted to get
to those projects not to make work, but to have a specific contribu-
tion that they did not have the resources to budget. So it was not
competing with other labor.

What we targeted was county roads, which needed a lot of brush
removal and better vision through the brush removal; we created
county parks and local parks to expand recreational opportunities
for people. And we embarked upon that, providing the work
clothes, providing the equipment, and under supervision, to get the
able-bodied out there, contributing back to the community some-
thing they were receiving on a temporary basis, hopefully.

Now, that worked very well in those three counties until we were
knocked in the head by the feds. The Federal Government sent a
very, I would say, excited letter to me — they were very excited
about this situation, but negatively so — 'Tou cannot do this. You
are adding State requirements to welfare criteria. You are pre-
empting the Federal Government's rights." And they said, "Cease
and desist."



Well, we did, but we also went out and made a very careful study
of the recipients of that welfare check who were contributing back
to the community, and we found 90-some percent of those recipi-
ents welcoming the opportunity to maintain their dignity, to main-
tain their status as contributing members of society and not as
wards of the State. We were very, very pleased to be able to prove
that in our State, at least for a brief period of time.

I only use that as an example. I think we also have to realize
that there has been not only steady growth of the number of pro-
grams, as Senator Glenn has referred to, but let me say that we
now have 202 volumes of Federal regulations, 202 volumes total-
ling more than 130,000 pages. We have 16 volumes alone on envi-
ronmental regulations. We have 20 volumes alone on agricultural
regulations. And we could go on and on and on.

Now, the crux of the Federal-State-local government relation
today in these programs is one objective: Compliance — compliance,
compliance, compliance with the regulations — not whether the pro-
grams are working, not whether you have been able to measure a
success reaching a certain goal in these programs, but compliance,
compliance, audits, filling out the annual reports, interviews, et
cetera, et cetera — bureaucrats talking to bureaucrats. That is what
the programs have now come down to in most or many instances.

Why not find a way to set goals that these programs were origi-
nally intended to achieve and have benchmark reviews as to
whether they are achieving those goals and having some oppor-
tunity or incentive to be more innovative, again, going back to the
pluralism of our society, the diversity in our society, and let the
local people say: Hey, we have a better way to do this. We have
agreed to the goal. We are going to have the progress of that goal
reviewed in benchmarks. But at the same time, let us conduct us
on this basis that we have created.

Now, when we talk about waiving Federal regulations, remember
that that is with the exception of civil rights — no civil rights regu-
lation waiver and no health and safety regulation waiver.

Taking education as an example, I believe that all of these things
should be tried out, proven, and not have these massive national
changes thrown at us. I cannot help but cite the Kerr-Mills ap-
proach to Medicare. When we had Kerr-Mills, it was to give every
State an opportunity first to establish the base of need, an inven-
tory of need, and an assessment of ability to meet that need. I am
happy to report that Oregon was the first State to adopt the Kerr-
Mills approach. I called together all of the various representatives
of agencies of delivery, agencies like the medical association and all
of those others involved, and we began to set up the whole base on
how we felt Medicare would be required.

But no, that approach was overridden by the King-Anderson,
where the Congress said, "We know all the answers. We know how
it is going to work. It will never cost more than $10 billion at the
most in 25 years." And by the way, instead of $10 billion, it was
$60 billion.

But nevertheless, we abandoned the approach of proving the
case, demonstrating and experimenting, and we adopted national
criteria which ended up costing us extraordinary amounts of
money.



When I was able to get the Congress to agree to flexibihty in the
Goals 2000 program — that was adopted by both Houses and signed
by the President — Secretary Riley set up five States where he
would start the flexibility program. Oregon was selected as one of
them. Now, bear in mind that there are more state regulations
today governing our public education than there are Federal regu-
lations; so in that, the State was going to have to lift its regula-
tions as well as the Federal Government, and in turn, the State of
Oregon, with a contract with the Federal Government, said we are
going to pick so many school districts across our State — not the
whole State — so many school districts that show an interest in
wanting to apply this flexibility factor.

So out of these 5 States, out of the 10 districts within my State,
we are beginning to build an experiment, a trial, to prove the the-
ory, and I think that that is how flexibility should be approached —
make it prove itself. It is easy for us to talk about theory here in
this area of the Congress, but let us get out there where it is actu-
ally being applied and the people say, "We have a better way to do
it."

Now, by giving those waivers and waiving those regulations, they



Online LibraryUnited States. Congress. Senate. Committee on GoveS. 88, the Local Empowerment and Flexibility Act of 1995 : hearing before the Committee on Governmental Affairs, United States Senate, One Hundred Fourth Congress, second session on S. 88 ... December 5, 1995 → online text (page 1 of 25)