Grant Consolidation Plans Recommendation No. 2 The Commission recommends enactment of legislation by the Con- a period of 90 days. This proposal calls for Presidential authority to submit grant consolidation plans to the Congress under a procedure similar to that used for administrative reorganization plans. This approach to consolidation has been incorporated in Title VI of the proposed Intergovernmental Cooperation Act of 1967. Each plan would involve a consolidation of individual programs within the same functional area. It would place administrative responsibility in one Federal agency, specify the formula or formulas for making grants, and describe the differences between the new formula and those under each of the programs being merged. It would become effective at the end of 90 calendar days of continuous session of Congress after the date of transmittal unless either House passed a resolution opposing the plan. The Commission favors grant consolidation by Presidential submission of a proposed merger because it would: Allow development of grant proposals within the Executive Facilitate elimination of conflicting, overlapping and Encourage development of programs incorporating broader Preserve congressional discretion to determine major pro- Be no different in terms of the constitutional principle of Since the political difficulties in grant combination are high, the Commission believes that it is in the interest of the Congress, the President and the people-at-large to lessen these difficulties somewhat through the adoption of the "reorganization plan approach." Undoubtedly, were Congress willing to grant the consolidation authority, more consolidations would take place than under the normal legislative process. Special interests opposed to consolidation would be less able to exercise negative influence through delay and other tactics. If the goal is consolidation, then this approach is the most effective means of achieving it. Reduction in Number of Federal Grants- The Commission recommends that the Congress and the President The Commission believes that it is both desirable and feasible to reduce the number of separately authorized Federal grants by at least a half, without sacrificing the essential controls associated with a so-called functional grant. The Commission does not concede that protection of the Federal interest requires specification in advance of the amounts to be expended within precise categories. This is not to say that it is inappropriate for Congress and the administering Federal agency to indicate general areas of desired priority. The Federal agency, through the process of project approval or plan review, is able to "blow the whistle" if the proposed usage of funds departs too far from congressional or executive intent. In brief, the Commission believes that major consolidation is a must if intergovernmental administrative chaos is to be avoided. In the Commission's view, two functional groupings--vocational education, and water and sewer facilities--offer compelling opportunities for immediate action. Vocational Education The vocational education program has been characterized over the years as one of increasing categorization, accompanied, it is true, by some increasing flexibility in recent years for the transfer of funds among categories at the State level. As long as ten separate categories exist--ranging from the early Smith-Hughes and George-Barden programs to the new authorization added by the major legislative revisions of 1963--unnecessary complexity is created for the States, and an unnecessary and unwarranted degree of Federal specification of category priority will remain. The Commission believes that a single vocational education grant should be created with the usage of the grant limited to specified occupational fields deemed to be in short supply or otherwise of national concern. It should be up to each State to weigh the priorities among fields and make appropriate determinations. These determinations would be subject to negotiation in general policy terms in the course of the submission of the State vocational education plan. Water and Sewer Facilities Of all the grant programs enacted by Congress, those most criticized for their overlap, conflict and duplication have been to support water and sewer line construction, both in urban and rural areas. Two separate programs are administered by the Departments of Housing and Urban Development and Agriculture (Farmers Home Administration). Consolidation of these two grants raises problems of interdepartmental jurisdiction that are not present in consolidating vocational education grants. Separate authorizations for water and sewer facilities grants stem in part from the congressional committee jurisdiction pattern. Urban problems are the concern of one committee and rural problems the concern of another. Separation on the basis of rural or urban location seems highly dubious from the point of view of applicant, engineering considerations, and economical grant-in-aid administration, particularly when the "rural" applicants are frequently in urbanizing areas. Administrative difficulties are inevitable in a situation where two different Federal departments provide grant assistance for essentially the same type of facility. The two departments have attempted through interagency agreement to avoid duplication and assure that applicants are directed to the program that suits their needs and do not "play off" one agency against another. They have developed a standardized preliminary application form to coordinate their application and approval procedures. Their efforts have succeeded only partially in reducing confusion and delay in getting projects on the way. The Commission believes that the case for consolidating these programs into a single grant is compelling. The problem here is not so much the consolidation of the substantive aspects of the grants but rather the question of which agency should administer the combined program and indeed, whether or not it is administratively and politically feasible for a single agency to carry on this function in view of the essentiality of water and sewer services to many different program objectives pursued by different agencies of the Federal Government. The internal organization of the Executive Branch of the Federal Government is ordinarily not within the proper concern of this Commission. Yet, the water and sewer grant situation has been fraught with so much intergovernmental difficulty that the Commission here ventures an organizational suggestion for the consideration of the President. It should be possible for a single agency--the Department of Housing and Urban Development--to administer all of the funds and make all of the grants with respect to water and sewer lines. These utilities are basically a community facility and although an increasing number of grants are being made in rural areas, most of these are to urbanizing portions of the countryside. The Commission believes that present requirements regarding certification of adequate sewage treatment availability are appropriate and that responsibility for all grants for sewage treatment works as defined in the Federal Water Pollution Control Act (in contrast to sewer lines) could appropriately be centered in the water pollution control agency in the Interior Department. Simplified Federal Grant Applications and The Commission recommends enactment by the Congress of legis- States enact similar legislation where necessary. Federal grant assistance increasingly has to assume "interdisciplinary" characteristics as the problems of urban society to which the grants are directed become more interrelated and interdependent. Today, the interdisciplinary approach encounters practical administrative difficulties when the necessary funds stem from several different authorizations. All of this is symptomatic of what the Commission considers to be the principal administrative problem associated with the present system of categorical grants--the extreme proliferation in numbers of separate statutory authorizations and resulting appropriations. A State or local government in putting together an integrated program must apply separately, for example, for the educational component, welfare component, job training component, urban renewal component and so on. Keeping the separate applications moving in tandem through local, State and Federal bureaucracies becomes nearly an exercise in administrative futility. Inevitably, the competition within certain funding sectors is less intense than others so that the applicant State or local community may find part of its components approved and the other suspended in a morass of administrative and fiscal uncertainty. This situation represents a case in support of a more flexible mix of Federal aid techniques. Pending real progress in achieving Federal aid flexibility as recommended earlier, the Commission supports the Administration proposal to have Congress authorize joint application and joint funding of grant components as a means of rendering the existing aid system more workable. The proposal seeks to remove or simplify administrative and technical impediments to consideration, processing, approval and administration of "package" projects. It would do this by (1) authorizing removal or modification of certain statutory requirements; (2) authorizing agency heads to delegate the approval and administration of Federal assistance programs to other agencies; (3) providing for a special fund in each agency to finance joint projects; (4) describing ways Federal agency heads can foster joint projects; and (5) authorizing the President to set implementing standards and procedures. Yet, with certain exceptions, the proposal would not change substantive provisions of law governing assistance programs, such as eligibility criteria, matching ratios, and apportionment formulas. Depending upon the dedication to cooperation and the departure from narrow functional interests on the part of many program administrators, this joint funding approach is workable--assuming it is reinforced with strong direction at the highest administrative levels in the Executive Branch. Standardizing Matching Ratios and Apportionment The Commission recommends to the President that the Bureau of the Budget initiate an aggressive program to simplify and sys tematize the varied matching and apportionment formulas for existing Federal grant-in-aid programs. Among the present total of 379 grants, the Commission identified 25 different matching ratios ranging from 20 percent to 100 percent Federal contribution. A widening of the range has been particularly pronounced with the multiplication of grants in recent years: in 1962, grants were established at nine different ratios; in 1963, 11; in 1964, 10; in 1965, 18; and in 1966, 9. The Commission has attempted to determine the specific reasons for congressional decisions to use particular matching ratios and apportionment formulas in 180 grants administered by the Department of Health, Education, and Welfare. In checking congressional committee reports, documented explanations were found for only 21 of 180 matching ratios and for only 4 of 64 apportionment formulas. The wide variation in these matching ratios and apportionment formulas casts doubt as to whether there is any rationale behind each program. It raises the question whether the differences among programs accurately reflect consciously determined differences in the degree of national interest. The lack of documentation in the legislative process suggests a negative answer. Widely varying ratios and allocation formulas complicate an already difficult job of coordination at the recipient level. The disparity among allotment and matching ratios also exercises a strong policy pull upon the extent and manner of State and local utilization of the Federal grants involved. Inevitably, State and local executives and fiscal officers search for the most advantageous combination from a matching point of view. This gives substance to the saying that "grant money drives out loan money" in State and local utilization of Federal aid. Similarly, 90 percent money will drive out 50 percent money, and 100 percent money will drive out all other kinds of alternate financing that might otherwise be available. Acknowledging the sound policy and program reasons for variations in matching and apportionment, it is clear to this Commission that the variety of different levels and requirements is excessive. Reducing the number of grant categories as we have recommended would itself reduce inconsistencies, but additional action is needed to rationalize matching ratios and apportionment formulas; a conclusion reached by this Commission and others who have looked at the problem even before the recent expansion of categorical grants. In a 1961 report the Commission concluded that the "review and redirection of grants has proceeded on a sporadic and uncoordinated basis and there has |