PAGENO="0001"
BLOCK GRANT IMPLEMENTATION
~ ~(~D) V-~
HEARINGS*
BEFORE THE
SUBCOMMITTEE ON
INTERGOVERNMENTAL RELATIONS
OF THE
COMMITTEE ON
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
NINETY-SEVENTH CONGRESS
SECOND SESSION
MAY 5 AND 11, 1982
Printed for the use of the Committee on Governmental Affairs
0
U.S. GOVERNMENT PRINTING OFFICE
99-9650 WASHINGTON: 1982
SD2~1~
PAGENO="0002"
COMMITTEE ON GOVERNMENTAL AFFAIRS
WILLIAM V. ROTH, Ja~, Delaware, Chairman
CHARLES H. PERCY, Illinois THOMAS F. EAGLETON, Missouri
TED STEVENS, Alaska HENRY M. JACKSON, Washington
CHARLES McC. MATHIA5, Ja., Maryland LAWTON CHIlIES, Florida
JOHN C. DANFORTH, Missouri SAM NUNN, Georgia
WILLIAM S. COHEN, Maine JOHN GLENN, Ohio
DAVID DURENBERGER, Minnesota JIM SASSER, Tennessee
MACK MATTINGLY, Georgia DAVID PRYOR, Arkansas
WARREN B. RUDMAN, New Hampshire CARL LEVIN, Michigan
HARRISON "JACK" SCHMITT, New Mexico
JOAN M. MCENTRE, Staff Director
IRA S. SHAPIRO, Minority Staff Director and Chief Counsel
SUBCOMMITTEE ON INTERGOVERNMENTAL RELATIONS
DAVID DURENBERGER, Minnesota, Chairman
JOHN C. DANFORTH, Missouri JIM SASSER, Tennessee
MACK MATTINGLY, Georgia SAM NUNN, Georgia
JIMMIE POWELL, Staff Director
JOHN CALLAHAN, Minority Staff Director
RUTH hi. DOERFLEIN, Chief Clerk
(II)
PAGENO="0003"
CONTENTS
Opening statements: Page
Senator Durenberger 1, 59
Senator Danforth 2
Senator Sasser 60
WITNESSES
WEDNESDAY, MAY 5, 1982
Christopher (Kit) Bond, Governor of Missouri, on behalf of the National
Governors' Association 3
Richard D. Lamm, Governor of Colorado, on behalf of the National Gov-
ernors' Association 8
THURSDAY, MAY 11, 1982
Robert J. Rubin, M.D., Assistant Secretary for Planning and Evaluation,
Department of Health and Human Services 60
Diane Ahrens, commissioner of Ramsey County, Minn., on behalf of the
National Association of Counties, accompanied by Ronald Gibbs, associ-
ate director, National Association of Counties; and Angelo Martinelli,
mayor of Yonkers, N.Y., on behalf of the U.S. Conference of Mayors,
accompanied by Laura Dekoven Waxman, assistant executive director,
U.S. National Conference of Mayors - 79
Charles A. Bowsher, Comptroller General, U.S. General Accounting Office,
accompanied by Harry S. Havens, Assistant Comptroller General, and
Gene L. Dodaro, Supervisory GAO Evaluator 101
Alma G. Stallworth, president, Detroit Metro Affiliate of the National
Black Child Development Institute, Detroit, Mich.; and Brenda L.
Russell, legislative analyst for Child Welfare League 116
Paul Hess, Kansas State senator and chairman of the Kansas Senate
Committee on Ways and Means, on behalf of the National Conference of
State Legislatures, accompanied by Gary Falle, staff associate, NOSL~. 147
Delores S. Delahanty, board member of the National Association of Social
Workers, Louisville, Ky., accompanied by Susan E. Rees, director,
NASW, Project Block Grant; and Sandy Solomon, executive director,
Coalition on Block Grants, Washington, D.C., accompanied by Nancy Ebb,
senior staff attorney, Children's Defense Fund 169
ALPHABETICAL LIST OF WITNESSES
Ahrens, Diane:
Testimony 79
Prepared statement 88
Bond, Christopher (Kit):
Testimony 3
Prepared statement 25
Bowsher, Charles A.:
Testimony 101
Prepared statement with attachment 105
Delahanty, Delores S.:
Testimony 169
Prepared statement with attachments 178
Dodaro, Gene L.: Testimony 101
Ebb, Nancy: Testimony 169
Falle, Gary: Testimony 147
(HI)
PAGENO="0004"
Iv
ALPHABETICAL LIST OF WITNESSES-Continued
Page
Gibbs, Ronald: Testimony 79
Havens, Harry S.: Testimony 101
Hess, Paul: -
Testimony 147
Prepared statement with attachment 152
Lamm, Richard D.:
Testimony 8
Letter to Senator Durenberger, June 14, 1982 20
Prepared statement 45
Martinelli, Angelo: Testimony 79
Rees, Susan E.: Testimony 169
Rubin, Robert J., M.D.:
Testimony
State use of block grant transfers (chart) 65
Prepared statement 68
Russell, Brenda L.:
Testimony 116
Prepared statement 139
Solomon, Sandy:
Testimony 169
Prepared statement with attachments 200
Stallworth, Alma G.:
Testimony 116
Prepared statement 124
Addendum to testimony 137
Waxman, Laura Dekoven: Testimony 79
ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD
Letter to Senator Durenberger from Jerry Coursey, metropolitan and
regional planning division, American Planning Association, June 15,
1982 227
Letter to Senator Durenberger from Stanley J. Matek, M.S., president,
American Public Health Association, May 18, 1982 232
Letter to Ruth Doerfiein, chief clerk, Subcommittee on Intergovernmental
Relations, Committee on Governmental Affairs, from Laurence I. Hewes
III, law offices of Wald, Harkrader & Ross, with enclosure, June 1,
1982 233
"Block Grants: A New Chance for State Legislatures to Oversee Federal
Funds," by National Conference of State Legislature, February 1982---- 249
"1982 Governors' Guide to Block Grant Implementation," prepared by
National Governors' Association, Center for Policy Research, Council of
State Community Affairs Agencies, Council of State Planning Agencies,
and National Association of State Budget Officers, February 1982 292
"State CDB4I Program Briefs," Council of State Community Affairs
Agencies, May 1982 421
"Briefing Book on Block Grants and the New Federalism," Coalition on
Block Grants and Human Needs, April 1982 4~2
PAGENO="0005"
BLOCK GRANT IMPLEMENTATION
WEDNESDAY, NAY 5, 1982
U.S. SENATE,
SuBooMMrrrEE ON INTERGOVERNMENTAL RELATIONS,
CoMMrrr1~E ON GOVERNMENTAL AFFAIRS,
Wu$llington, D.C.
The subcommittee met at 9:30 a.m., in room 4232, Dirksen Senate
Office Building, Hon. Dave Durenberger (chairman of the subcom-
mittee) presiding.
Present: Senators Durenberger and Danforth.
OPENING STATEMENT OP SENATOR DURENBERGER
Senator DURENBERGER. The hearing will come to order.
Today, the subcommittee is holding the first of two oversight hear-
ings on the implementation of the 1981 block grants. We will have
only two witnesses this morning: Governor Bond of Missouri and
Governor Lamm of Colorado. They will both be testifying on behalf
of the National Governors' Association. Next week we will hear from
other State and local officials, the U.S. General Accounting Office, and
representatives of several human resources organizations.
Last week this subcommittee held a hearing in Minneapolis on the
subject of the President's New Federalism, with Governor Snelling
and others in attendance. One of the witnesses was a self-described
unreconstructed Federalist. By "unreconstructed" I believe he meant
to say he still doesn't trust the States. By "federalist" I think he
meant to say that only the Federal Government has the capacity to
fulfill his visions of a just society. I hope we are about to find out
whether or not we can trust the States. For me, the answer is in these
hearings.
Last year, under the worst possible fiscal and administrative con-
ditions, the States were asked to assume responsibility for nine new
block grants. The President proposed six new block grants in March
of 1981. By that time, the budget planning cycle was nearly complete
in many of the States. Legislatures were in mid-session, moving to
adjournment. The nine block grants were authorized by the Congress
in the Budget Reconciliation Act which did not pass both Houses
until the end of July. By that time, 48 States were already 1 month
into their fiscal year.
In September, the President's fall budget initiative introduced new
uncertainties. He requested an across-the-board 12-percent cut in block
grant appropriations below the reconciliation level.
On October 1, 1981, States were expected to begin new block grant
implementation, and most of them did. However, October 1 was also
the day on which the bulk of the regulations for the new block grants
were being published.
(1)
PAGENO="0006"
2
It wasn't until mid-December of last year that appropriations for
the block grants were finally made by the Congress. In the end, Con-
gress had merged 57 programs into 9 block grants. Total funding had
been cut 13 percent, from $11.3 billion to $9.8 billion. Although some
new administrative flexibility was provided, many of the mandates
and requirements were left in place.
That is all, of course, last year's news. The surprise is that we won't
be making any headlines with these hearings. Under the conditions I
have just. described, the 1981 block grants should have been a total
failure. We did everything we could, here at the Federal level, to make
it difficult for the States to succeed.
Yet, the record of this and next week's hearing will be, I think,
largely positive on the 1981 block grants. The question is whether this
is a testament to the compassion and the capacity of the Federal Gov-
ernment, to the wisdom of Congressmen here in Washington; or, is
it the best possible evidence that it is time to trust the States? In my
view, 50 State governments have saved our bacon on the block grants,
and they did it despite. countless handicaps imposed by some of the
unreconstructed Federalists here in Congress.
I wish we could make headlines with this story. If the American
public really understood what happened in 1981, we might all be New
Federalists. We could, once again as a nation, find the compassion
and the capacity to fulfill our commitment to a just society.
With that, we will move to our first witness. I will leave his intro-
duction to my colleague, Senator Jack Danforth, who is a member of
this subcommittee.
Jack?
OPENING STATEMENT OP SENATOR DANPORTH
Senator DANFORTH. Mr. Chairman, thank you very much for the
privilege. I am the unofficial chairman of the board of the Kit Bond
Admiration Society of the world. Kit Bond and I started in govern-
ment on exactly the same day-in State government, I might say. He
has served with the attorney general's office. He has served as State
auditor, and he is now in his second term as Governor of our State.
He has viewed our State government, and particularly Federal-State
relations, from three different vantage points over a 14-year-it seems
amazing-over a 14-year period of time.
I know he has thought very deeply about the relationship between
the Federal Government and the State governments. I know he has
had the experience of witnessing Washington using State govern-
ments as almost an administrative arm. He has experienced the fact
that this arrangement has not worked very well. I also think that
Governor Bond, himself, is testimony of the fact that State govern-
merits are very competent, are close to the people, and are able to
discern their needs and serve them.
So often we, in Washington, have the view that State and local
governments just cannot do it unless we tell them precisely how to do
it, when to do it, and what to do. I think that is clearly an erroneous
view of the competence, the character, and the will of State and local
governments.
PAGENO="0007"
3
I am delighted to be here in his presence. I am looking forward to
hearing his testimony.
Senator DURENBERGER. Thank you very much.
Governor Bond, after that, you can take all the time you want to
prove he was right; or, you can speak on the subject [laughter], either
one. Thank you for coming. We welcome you.
TESTIMONY OF CHRISTOPHER (KIT) BOND, GOVERNOR OF MIS-
SOURI, ON BEHALF OF THE NATIONAL GOVERNORS' ASSOCIATION
Mr. BOND. Mr. Chairman, my name is Christopher Bond. I am
Governor of Missouri.
I want to extend my deep thanks to Senator Danforth for those
very kind remarks. I would like to say that they were simple justice
and long overdue, but modesty and some regard for the truth force
me to issue a disclaimer. When Senator Danforth and I both tried to
get into politics in 1968, he was headed for State government and I
was headed toward Washington. Fortunately, the good people of
Missouri had the sense to keep us both in Missouri at that time. I had
the opportunity of working for Senator Danforth as he began central
reforms in State government in the attorney general's office.
As Senator Danforth has stated, I am particularly interested and
concerned about the issue of the Federal-State relationship. It is a real
privilege for me to testify before this subcommittee on behalf of the
National Governors' Association on the subject of block grant imple-
mentation. I would like to note that we, as Governors, do appreciate
the sensitivity of this subcommittee and its long bipartisan commit-
ment to the needs of State and local governments.
Mr. Chairman, your comments on the difficulties caused by the man-
ner of implementing the block grants last year, particularly the un-
certainties, the funding cuts, and their timing, are ones to which we in
Missouri can warmly relate. I will not dwell on those problems of last
year, other than to say we do appreciate the fact that you recognize
them.
I am a very strong supporter of the concept of block grants and other
Federal policies that would return program planning and administra-
tive responsibilities to the States. The States are still constrained by
some 500 separate categorical programs and their attendant regula-
tions, over 1,000 separate mandates on State and local government,
and a paperwork burden estimated in 1977 to have cost some $5 billion.
We did some checking in Missouri to see if we could come up with
an estimate of how much this paperwork burden costs Missouri's tax-
payers. We found that in fiscal year 1981, before block grants really
were implemented, we spent an estimated $8.4 million to comply with
1,400 pages of Federal rules and regulations for health and social
services programs. Some, but not all of these, of course, have been re-
duced. The thing that was most appalling to me was that the Federal
health programs alone required some 2,202 separate reports. Our State
division of health estimated that it took the equivalent of one em-
ployee out of five to comply with all of the Federal reporting, regula-
tion writing, and reading requirements. Certainly this time could
have been better spent in delivering needed health care services to our
people.
PAGENO="0008"
4
We feel the block grant concept is one mechanism that provides the
States some needed relief from the redtape and the inflexibility of
rigid categorical programs; yet, it provides us the resources we need
to deal with high priority areas. The nine block grants approved in
1981 represent only a fraction of the total number of Federal grants-
in-aid to State and local governments. I must say to you that the flexi-
bility originally included in the President's block grant proposals was
sharply compromised in the legislative process, as you have already
noted. Most block grants had their funding substantially reduced.
Moreover, the States had little opportunity to plan for the assumption
of the new responsibility. Nevertheless, a majority of States elected to
assume the available block grants at the earliest possible date.
Mr. Chairman, in order to provide you and the subcommittee with
detailed information on the implementation of block grants in each
*State, with your permission, I would like to. submit a comprehensive
study sponsored by the NGA and the Council of State Planning Agen-
cies.' I think that you will find this to be a most-informative document.
Senator DURENBERGER. Without objection, that report will be made
a part of the record.
Mr. BOND. Thank you very much.
Again, with your permission, I would like to focus the rest of my
testimony on some of our experiences in Missouri, with the thought
that these are probably indicative of the response and the activities in
many other States. To give you an idea of how we approached imple-
mentation, I would like to spend just a few moments to describe the
mechanics of our block grant planning process.
Even before the passage of the legislation we started to develop a
comprehensive, decisionmaking process so we could take on block
grant responsibilities in October 1981. I set up a task force to coordi-
nate the delivery of services. This task force consisted of the heads of
the departments that had jurisdiction over the programs which were
included in the block grants, my director of budget and planning, and
my executive assistant. This group sponsored a series of public hear-
ings across the State. The hearings were conducted by the departments
responsible for the programs in each block.
After those hearings, there was a careful review by advisory com-
mittees made up of service providers and client representatives. Fol-
lowing the reports of these advisory committees, and on the basis of
comments received at the public hearings, tentative program funding
decisions were made.
Next, we took these program decisions and tentative allocations to
our general assembly to work with them in developing an overall pol-
icy for administering the block grants and distributing the funds, with
particular attention to absorbing the funding reductions. I would
say that in Missouri our legislative committees took their responsi-
bilities very seriously. They studied the materials carefully, listened
to their constituents, and offered us helpful modifications in our plans
so that we could implement the block grants in the most effective
manner.
Turning to the individual block grants, let me describe how Mis-
souri expects to receive and handle approximately $26 million in
See p. 292.
PAGENO="0009"
5
Community Development Block Grant funds which we will distribute
to our nonentitlemciit small cities and counties. Actually, because of
multiyear commitments previously made by, the Department of Hens-
in~ and Urban Development, we will have approximately $1~' million
to distribute to new applicants.
Based on our consultations with local officials and other interested
parties, we have designed a competitive program for the distribution
of the funds based on need. We designed the Missouri program to
fund four categories of activities: Economic development, housing
rehabilitation, public facilities, and emergencies threatening health
and welfare. Of the $1'? million to new applicants, 35 percent
will go for economic development; 60 percent will be split between
housing and public facilities, based upon the percentage of dollars
requested in each category; and 5 percent will `be set aside for
emergencies.
In designing our program, we made a concentrated effort tO sim-
plify substantially the applications process in order to take away the
advantages of grantsmanship and make it easier for small cities and
counties to compete.
The criteria for judging applications will balance need with oppor-
tunity for economic developine~nt. Also, we are putting together a com-
prehensive technical assistance program to help local officials partici-
pate in the program.
We would note with some pride that we think we will be able to
run the program more efficiently and in a less costly manner than
HTJD. For example, we plan to administer the small cities program
with only 12 full-time employees; whereas, previously, the Federal
Government required 31 persons working in 2 regional offices to run
its program for the nonentitlement areas.
In a second area, the social services block grant, funding for the
consolidated programs was cut 20 percent by Congress. Our State lost
another 2 percent due to a decline in population in Missouri. On the
good news side, the SSBG eliminated certain costly and time-consum-
ing planning and reporting requirements. As a result, Missouri was
able to make major reductions in staff, equipment and other adminis-
trative expenses. The State achieved substantial additional savings by
consolidating reporting requirements for a variety of programs. The
bottom line was that we were able to cut the cost of administering pro-
grams in this block grant by roughly one-half.
When we turned our attention to improvements in the existing day
care reimbursement system, we found that Federal requirements and
cost-based rates had produced inflationary reimbursements. These were
higher than the amount charged in the private sector for similar serv-
ices. By moving to a standard negotiated rate, we were able to reduce
costs by $1.3 million without curtailing the amount of day care time
urovided. In addition, thanks to the new flexibility provided under the
block grant, we encouraged day care centers to negotiate copayment
arrangements with clients who were able to pay something for their
services.
Finally. we were able to minimize the impact of the SSBG funding
reductions by transferring into the block some~ $4 million of Low In-
come Energy Assistance funds. Through these measures, Missouri suc-
cessfully held overall reductions in client services to approximately
PAGENO="0010"
6
13 percent, whereas the total cuts in funding had been 22 percent for
our State.
In addition to the above program modifications, we made other
economies in our own very tight State budget in order to find addi-
tional State dollars to minimize the impact of Federal funding reduc-
tions on children's programs. Last week, the Missouri General As-
sembly approved partial funding for several new children's initiatives.
These will provide preventive health services and care for abused and
neglected children that will allow them to remain in their home
environment.
I have already mentioned the Low Income Energy Assistance block
grant. I would like to commenf on that third block grant briefly.
In contrast to the funding reductions in other areas. this block
grant actually received a slight funding increase in fiscal year 1982.
Problems with the program in Missouri in fiscal year 1981-including
dissatisfaction of the energy providers because of the redtape and the
difficulty of participating in the program-caused over L000 of the
providers to drop out of the program. In Missouri, in order to attract
these providers back into the program. we developed a new central
service delivery system which guaranteed time reimbursement and
required minimal paperwork.
In addition, we feel we were able to further improve the cost effec-
tiveness of Missouri's LIEA by modifying a benefit formula that in-
*advertently had discouraged energy conservation. These changes and
the appropriation of supplemental funding made it possible for us
to dedicate some $5 million of funds under LIEA. to weatherize ap-
proximately 3,700 homes of the elderly and handicapped in our State.
You will note that many States, including Missouri~ chose to trans-
fer funds from the energy block grant to other high priority programs
in order to distribute funding cuts more evenly among energy assist-
ance and social services programs. We are concerned by the efforts of
a few Members of Congress to use the fact that States had exercised
the transferability option as an excuse for congressional reduction of
LIEA funds. Frankly, we found that transferability offered a prac-
tical solution to one of the major problems of the grants*-in-aid sys-
tem-namely, the inefficient distribution of Federal funds among
categorical programs. In Missouri, had we not been able to transfer
some funds from LIEA, vital protective services for children would
have been stopped for many months.
Moving to a fourth area, the alcoholism, drug abuse, and mental
health block grant, we have found that a reduction in the Federal
regulations has enabled us to make great strides in improving the effec-
tiveness and efficiency of our mental health programs. Prior to the
enactment of our block grant, I must tell you that State mental health
planners were faced with an uncoordinated network of mental health
services. We were unable to effectively implement statewide funding
priorities because we had no authority over the use of Federal moneys.
As a result, a significant amount of Federal money was being spent
for the treatment of short-term episodic mental illness, rather than
chronic illness which is responsible for the major part of the repeat,
long-term mental health care expense in the State~. Basic mental health
services were not available in some parts of the State, while wasteful
duplication existed in other areas. Finally, both State and privately
PAGENO="0011"
7
operated facilities were expending significant amounts of money in
complying with separate State and Federal mandatory service require-
ments, as well as complicated accounting and reporting procedures.
Under the ADA/MH block grant, we are now able to target Federal
resources to chronic illnesses and other mental health problems which
we know are most critical in our State. Mental health centers have been
able to significantly reduce their administrative overhead because they
are no longer forced to comply with two separate sets of regulations.
Finally, as a result of new service area boundaries, wasteful duplica-
tion of services has been eliminated, and mental health services will
now be available to previously underserved areas of the State.
Funding for the maternal and child health block grant was reduced
by 12 percent. This funding reduction required us to reexamine our
spen:ding priorities very carefully. Our first step was to cut funding
for some sub-State specialty projects established under the old cate-
gorical programs on a pilot project basis. Reductions in these proj-
ects raised approximately $800,000, which we passed through to coun-
ties in the form of block grants. Service mandates under these block
grants were limited to an established minimum package of basic pub-
lic health services for children, such as well-baby care and health
screening. In this way, we were able to pass administrative flexibility
on to local governments. For the first time, eight counties in Missouri
that did not have public health offices will provide a significant
amount of child health care services. In fiscal year 1983., we plan to
use State funds to increase the amount of block grant funds available
to the counties.
In summary, I would say that Missouri's block grant implementation
record illustrates that States are competent to assume greater responsi-
bility for identifying and serving the needs of their citizens. During
the past year. we made every effort to use the flexibility provided under
the block grants to set some intelligent funding priorities, to target
funds to previously underserved sub-State regions, to eliminate waste-
ful duplication of services and to abolish unnecessary reporting and
administrative requirements.
By concentrating on staff reductions, other administrative savings
and more efficient delivery systems, Missouri has been able to minimize
the effect of funding reductions on services. Where service cutbacks
could not be avoided, provider groups and clients were closely involved
in setting funding priorities. In addition to developing more efficient
and effective ~vays to use Federal funds, Missouri has increased State
funding for social services and public health services which we feel are
primarily State responsibilities.
As you consider Federal budget proposals for fiscal year 1983, we
hope the activities and the performance of the States during the past
year will encourage you to support further increases in administrative
flexibility.
Thank you, Mr. Chairman.
Senator DURENBERGER. Thank you very much, Governor.
I understand that we are going to go until 10:50 because both of you
are going to be involved in a meeting at about 11. So, we will move now
to Governor Lamm, and then we will go to our questions.
Governor Lamm is the Governor of Colorado. He is a native of
Madison, Wis., and a graduate of the Business School of the University
of Wisconsin and the Law School of the University of California.
PAGENO="0012"
8
He served in the U.S. Army, was with the California Franchise Tax
Board, and was associate professor of law in Denver. He was elected to
the Colorado House of Representatives in 1966, and served as assistant
minority leader of the House for 4 years. In 1974, his Inst year in the
House, he was designated by Time magazine as one of 200 young Amer-
ican leaders-along with Wendy Anderson from my State. In 1975,
Governor Lamm was elected to his first term as Governor; he is now in
his second term. He serves on NGA's executive committee.
We welcome you to this hearing, Governor. Please proceed with your
testimony.
TESTIMONY OF RICHARD D. LAMM, GOVERNOR OF COLORADO, ON
BEHALF OF THE NATIONAL GOVERNORS' ASSOCIATION
Mr. LAMM. Thank you, Senator.
I deeply appreciate the very thoughtful way this subcommittee, and
in particular the two Senators in attendance today, have approached
the block grant issue. You are doing the day-to-day work of govern-
ment, and it is of immense importance. It greatly affects the work of
State legislators, mayors, city council people and Governors. This is
really where so much of the undramatic but immensely important part
of the government takes place.
I think for the block grant concept, which, as you know from
Governor Bond's testimony, has the strong support of the Governors,
this is a time for review. This is the time for consolidation. This is the
time for thoughtful assessment as to how the concept is working out
there. It is working, but with some hiccups, some serious hiccups, that
I think all Governors view with concern.
I would like to summarize my statement and go through it fairly
fast so we will have plenty of time for discussion. I sense that that is
the most important thing for both of you.
Even with the proposed eight new block grants and the three ex-
panded initiatives, just 25 percent of the grants-in-aid would be pro-
vided through more flexible block grants in 1983. This is, of course,
only slightly above the 21 percent level of the previous year. In other
words, aid provided to State and local governments is still largely in
the form of categorical aid, which is often too restri~tive to adequately
meet State needs.
Block grants are an important mechanism for reconciling the prin-
ciples of federalism with the realities of national concern and local
diversity. The Governors believed so firmly in the block grant concept
last year that we~ offered to exchange a 10-percent cut in consohdated
programs for enactment of the block grants. We offered this incentive
in the belief that increased flexibility would provide an opportunity
for administrative savings and retargeting worth a 10-percent funding
reduction. Instead, we got larger cuts and, as you know, more limited
flexibility. I would like, to discuss the magnitude of the budget cuts and
illustrate that the lack of flexibility has caused us a certain degree
of problems.
First of all, there has been a certain amount of damage, not irre-
parable, to t:he whole concept of block grants. The term is an umbrella
under which many different things huddle. To preserve it we must try
to identify exactly what is a block grant. One thing we must clarify
PAGENO="0013"
9
is whether or not a block grant is just a disguised term for reducing
vital services. One human service administrator in another State said,
"Block grants mean more authority to do less." I think that statement
is an illustration of the impact of the budget cuts on the block grant
concept. The two were extricably intertwined.
I have attached to my testimony a table showing the dollar levels
associated with the block grants enacted in 1981 and another table
illustrating the President's fiscal year 1983 recommendation.1 The
tables show that President Reagan's block grant proposals for 1983
expand upon the use of the block grant as a budget cutting tool.
In fiscal year 1982, total funding for newly enacted block grants
was reduced by 13 percent, a total cut of $1.5 billion. These cuts in-
cluded a 19.8-percent reduction in social services block grants, a 24-per-
cent cut in the maternal and child health care program, a loss of 26.4-
percent in the community services block grant and a 21.3-percent cut
in the alcohol, mental health, and drug abuse programs. These cuts
have had a substantial impact upon persons who rely upon these
programs.
The fiscal year 1983 budget proposes new cuts in the block grants.
These reductions are hard to track because it would be confusing to
compare the reconfigured programs from one year to the next. For
example, it appears that the administration has actually budgeted
more money for the women, infants, and children supplemental feed-
ing programs for fiscal year 1982 than was budgeted in fiscal year
1982. Because of the program changes involved, the WIC program-
women, infants, and children-was combined with the maternal and
child health block grant. In fiscal year 1982 the WIC block grant
was funded at $950 million. The fiscal year 1983 proposed funding
for the block grant is $1 billion. For the WIC serviees to be provided
at fiscal year 1982 levels, the maternal and child health care block
grant activities would have to be eliminated under the combined
block. The combined programs are actually slated for a cut of almost
22 percent.
Under the administration's fiscal year 1983 proposed block grants,
the constituent programs proposed for consolidations would be
reduced overall by 16.2 percent from fiscal year 1982 to fiscal year
1983. These same programs suffered reductions of over 21.6 percent
from fiscal year 1981 to fiscal year 1982. Thus, the net reductions under
the President's proposals will be over 34 percent between 1981 and
1983. These reductions reflect cuts in vital programs, such as child
welfare services which will reduced by 18.3 percent from fiscal year
1982 to fiscal year 1983. They represent reductions of 32.6 percent in
rehabilitation service programs for the disabled to achieve self-suffi-
ciency. The most drastic cuts could be in the community services block
grant program, which would be reduced by 71.3 percent.
So the question then has to be raised: Is it any wonder that more
and more people have come to view block grants with concern, as a
subtle way of cutting the budget-maybe not so subtle?
While the Governors have repeatedly supported consolidation to
improve the efficiency and the effectiveness of the delivery of serv-
ices, and the responsiveness to the people, we have not propo~ed using
block grants for substantial budget cutting. In fact, we believe that
~ See p. 55.
PAGENO="0014"
10
the fiscal year 1983 reductions proposed by the President for block
grants and for other programs will weaken the capacity of State and
local governments to assume greater responsibilities in the Federal
system.
In addition to the use of block grants as a budget cutting device,
block grants have been used as a means to propose fundamental
alterations in the character of program funding, by converting pro-
grams for open ended entitlement status to "capped"-or close ended
appropriation. For example, the fiscal year 1983 proposal to combine,
cap and cut State welfare administrative costs in the food stamp,
AFDC and medicaid programs under a "combined welfare adminis-
tration block grant" radically restructures these important programs'
programmatic and policy concepts which `are essential to their ad-
ministration. Open ended funding exists in these programs for a very
good reason. It is difficult to estimate the costs involved and the
level of services to be provided because they rise and fall according
to need, not predetermined levels of funding.
The third problem in the implementation of the block grants has
been the uncertainty of the block grant funding. Congress has funded
the majority of the block grant programs this year under three con-
tinuing resolutions. What is very difficult to appreciate is the damage
this uncertainty causes to the effective administration of the block
grant~ at the State level. One of the primary advantages of the block
grants is the flexibility it affords the Governor to plan a more rational
system of service delivery for the citizens of the State. However, this
planning process could be devalued when the funding level of the
programs remain clouded through two-thirds of the budget year.
In addition to the legislative situation, there have been administra-
tive uncertainties raised regarding the release of moneys and the
granting of awards. A prime example of this extralegislative fiscal un-
certainty affected the community services block grant. At the time of
the First Continuing Resolution, the Office of Management and Budget
apportioned the moneys not on the basis of the congressionally
adopted level of $362 million, but rather on the basis of the adminis-
tration's proposed funding level of $225 million. Similar problems
occurred with each of the subsequent Continuing Resolutions. The
House of Representatives has raised questions of impoundment vio-
lations. Thus, in the States vital administrative decisions as well as
the delivery of crucial services were impaired by the on-again/off-
again funding confusion that occurred at each round of the budget
process for fiscal year 1982.
At the present time, community service grants to the States are not
guaranteed after the third quarter, in spite of the fact that the Con-
tinuing Resolution provides for an appropriation for the remainder
of the year. In a nutshell, if States do not know how much they are
going to receive for the block gritht programs and when they will
receive it. how can they plan and how can they use the intended
flexibility? How can they effectively administer the programs?
A fourth problem in block grant implementation relates to the
transfer provisio~is. During the many years that `the block grants
have been under discussion, a central issue has been whether States
should have increased authority to redirect Federal grants to meet
the needs and priorities identified in those individual States.
PAGENO="0015"
11
An initial step toward limited flexibility was realized in the ap-
nroval of the block grants in 1981. Most of the block grants allow
for the transfer of a small fraction-about 15 percent of the total-
and only, as a rule, to certain identified programs. When Governor
Busbee testified before you last year, he provided an illustration of
how minimal the flexibility provided by the transfer provision really
is. He pointed out that the transfer allowed him to reprogram just
$91,000 of the $3 million in block grant funds available to his State.
In spite of the limited flexibility they offer, the transfers are clearly
filling a need in the States and are being used. It would be a mistake
for Congress to act against the transferability provision of the block
grants, as some members did in the Low Income Energy Assistance
block grant supplemental by exempting $123 million from the trans-
fer clause. These actions show a lack of support for the flexibility
which the Governors believe to be the chief advantage of block grants.
Given that the overall reductions in the block grants is 13 percent.
the transfer provision allows priority setting and should be preserved.
Mr. Chairman, in providing you with a list of the problem areas,
I do not mean to imply that the experience has heen'all bad, although
the funding decisions have, indeed, created serious service problems.
I believe the response of the States in accepting block grants indicates
the success of the concept.
I think the work of the administration in developing regulations
which are as simple and as clear as l)Ossible is another major imple-
mentation success. The regulations represent a strong effort to main-
tain the integrity of the block grants.
Another positive factor is the development under your leadership,
Mr. Chairman, of boilerplate language for the block grants. This is
a very important project and of critical importance to the States.
A structure of this kind would be useful in giving guidance to Con-
gress on future block grant legislation. Such a structure will go far in
rationalizing block grant requirements and will help recipients ad-
minister the programs more effectively.
I thus find much to commend and very little to criticize in the
Durenberger bill. It is carefully crafted to provide great flexibility
to the States while assuring that standards of public participation,
fiscal and program integrity, and minimal Federal agency interfer-
ence are maintained. We are pleased to see strict limits placed on the
authority of Federal agencies to devise administrative restrictions on
grant recipients. It is imperative that the block grant concept be free
from unnecessary redtape and needless problems over minor issues.
The NGA has recently transmitted the boilerplate language to State
officials. We will ask them to evaluate the language and ge.t back to us
with their comments.
In summary, I really appreciate your work.
Senator DURENBEROER. Thank you very much, Governor.
Let me start the dialog with some of the problems and quotes that
have been created on the notion of blocking. I think one of them
Senator Dan'forth and I both experienced in the Senate Finance Oom-
mittee last year where we had three or four of these blocks.
For example, one of them, the title XX social services, was going to
be blocked. Nobody told the folks that it had actually been blocked
about 10 years earlier. The whole notion had been that we are going
PAGENO="0016"
12
to block categoricais, cut out 25 percent of the money-all that was
a waste of some kind on the administrative side-and we will be able
to live with that much less money.
I guess the average reduction for all of the 1981 blocks was some-
thing in the neighborhood of 13 percent. However, the administration
is coming along, in its budget proposal of this year, with another
16-percent cut.
I wonder if either or both of you would react to the issue of how
many administrative dollars are actually saved when we move from
categoricals to blocks. I don't expect a specific percentage, just some
general reactions to the notion that we can save large amounts of
money by blocking categoricals.
Governor Bond?
Mr. BOND. Mr. Chairman, I think when the block grants were ini-
tially proposed, as Governor Lamm has indicated, we felt that at least
10 percent of the cost of the programs could be saved by eliminating
administrative overlap. In the State of Missouri, as I indicated in my
testimony, perhaps as much as 20 percent of the funds in the health
care programs went to administrative Federal-State reporting require-
ments and regulations. In our social services block grant, we were
able to cut administrative costs in half as a result of the flexibility of
the block grants.
I don't think that you can put a precise dollar figure on each area,
but we believe that 10 percent is a realistic amount that can be saved
by eliminating restrictive Federal-State requirements. Obviously,
there is still going to be some administrative expense.
In addition, I would say, as I indicated in my testimony, that we were
able to use the flexibility provided under the block grants to target
some of the dollars so that program payments were more coSt-effective.
We also have changed to different forms of reimbursement which do
not reward inefficiency in `the delivery of day ca.re services or waste in
the use of energy resources.
I suppose 10 percent is the figure we would suggest that can gen-
erally be saved on the administrative side.
Senator DURENBERGER. That is an across-the-board application, then,
to a lot of the categoricals which are under consideration. I judge from
your testimony that we ought to look carefully at each of the areas.
We ought to realize that there will be a different amount of oppor-
tunity in each of the blocked areas-depending on the constituent
groups, the amount of categoricals, and some of the mandates which
are associated with those categoricals. Is that correct?
Mr. BOND. That is correct.
Senator DURENBERGER. There is another kind of savings that I think
is presumed in all of this. Those of us who pass out money through
the categorical-type plans at this end of the governmental system are
aware of the fact that we try to treat everybody the same. We try to
make sure that everything gets into all the district that we represent.
So, we do things like the Low Income Energy Assistance formula
which was really designed to get at high heating bills as a result of oil
decontrol. However, we ended up allocating a substantial amount to
places like Hawaii or American Samoa. I guess last year Hawaii
didn't even apply for its money, which is to its credit.
Looking at that as an area of savings-in other words, changing the
way we make decisions about high priority areas versus low priority
PAGENO="0017"
13
areas, and shifting that decisionmaking to the States-have you any
estimate for us about what savings might be achieved by the blocking
process?
Mr. BoND. I am not sure that major savings can be achieved; but
we definitely feel that we have been able to target priorities. I will
defer to Governor Lamm on that.
Mr. LAMM. The lack of empirical evidence that we have in front
of us suggests that we should approach the question cautiously. I thmk
in federalism we are building a structure which is going to take more
than 1 year. We must do it slowly and thoughtfully. I think the only
number we can offer, as Governor Bond said, is 10 percent. I think all
of us, having seen the effects of last year, will be very cautious about
having too much more thrown at us, until we gain some empirical
evidence.
Senator DURENBERGER. There is a great concern among those who
have propounded and those who have a commitment to the categorical
processes. They are afraid that priorities will get distorted to a degree
at the local level if we give you portability, flexibility, and transfer-
ability. I guess I make the presumption that it is a little early to know
how much use has been made of portability or transferability. Maybe
one of the reasons is because you're not sure how long we are going to
stick with this program, or how much more we are going to cut out
of it.
Is it your view, both of you, that not much use of portability or
transferability, or whatever w~ might call it, has been made so far?
However, to the degree that we commit to a logical blocking process,
that portability can be used as a vehicle for continuing to meet the
highest priorities?
Mr. LAMM. I don't think you should take the first year of utilization
as indicative of what is potential.
Mr. BOND. As I indicated in my testimony, we feel that the child
welfare and protective services funded under the social services block
grant-for which substantial funds were cut in Missouri-was of such
high priority that we had to use the portebility of the Low Income En-
ergy Assistance to address those needs. In addition, we cut other St~te
programs. The general assembly in Missouri went along with appropri-
ating funds to pick up cuts in Federal programs. In the past, this has
been an absolute prohibition for the Missouri Legislature. They have
always said, "We will not pick up abandoned Federal funds." How-
ever, in the children's services area, the cuts would have been so harsh
that if we had not had the advantage of portability, we would have
been forced to take State funds from other vital programs.
We have had problems in Missouri that were different from those in
Minnesota or Colorado. We have had to use a good deal of flexibility
to deal with some of the particular problems that we feel are most
pressing in our State, but may not be as high a priority to other States.
Senator DURENBERGER. That leads us into the perceived problem of
competition-that is, the competition between our constituents and
the varjous needs that they have. We have answered that, here, by
eliminating competition through the categorical grant process. We
have grants for each particular group. Even when their needs overlap,
we tend to focus on the categorical classifications of people out there.
99-965 0 - 82 - 2
PAGENO="0018"
14
The great fear, of course, when we block is that we bring elderly
people into competition with children, and disabled persons into com-
petition with persons who need money for education.
What has been the experience, to date, with regard to the competi-
tion that has been created by the blocking process?
Mr. LAMM. That is no different than what Governors and State
legislatures face on a day-to-day basis. I really think that it is all
within the normal scope of the give-and-take of State politics. I think
that obviously different decisions have been given in different States.
I think that overall, the legislatures and the Governors have stepped
up to the plate and have made their decisions. Sure, there is com-
petition, but there is competition for State tax revenues in the first
place.
I think the block grant allocation process is just a continuation of
the existing decisionmaking process that occurs whenever a State
writes its budget.
Mr. BOND. Basically, we would have to say that our legislators are
extremely close to the needs of our citizens. We are there in the State
worrying about the needs of the elderly, the disabled, the handicapped
and our ghildren. We are making, for our State, the priority judg-
ments that you are making for the Nation as a whole. To the extent
that Federal legislation and regulation allows the State priority-
setting system to operate, we feel it results in better decisions on com-
puting needs within the State, because Missouri has different needs
from those of other States. That, simply put, is the basis on which we
support the concept of federalism.
Senator DURENBERGER. Senator Danforth?
Senator DANFORTH. I can remember fighting this battle on the floor
and doing my best to uphold the position of the Finance Committee.
A stirring argument was made in opposition to my position to the
effect that there are no orphans in the gallery, there are no battered
children in the gallery and so on. It was as though taking a position
in support of block grants as opposed to categorical grants was tak-
ing a position against the needy, the disenfranchised, the weak, the
poor, and the children.
In your view, has it turned out that way? Is it turning out that way?
Would you say that the move from categorical grants to block grants
is a move from sensitivity to insensitivity, from compassion to callous-
ness?
Mr. BOND. Senator, I am offended by the thought that the orphans,
the disabled, and the handicapped can somehow better get to the gal-
leries of Congress than they can get to the legislative halls in our State
capitals.
I wish to point out to you that the major budget initiatives adopted
by the Missouri General Assembly this year related to abused and
neglected children, children in foster care, or children in homes with
real problems where the State can provide some support to assist them.
Of course, the records of some States in meeting these needs are going
to be better; some are going to he~ worse. To say, in this day and age,
that State government is insensitive to those needs is purest fantasy.
T regard it as a slanderous assertion.
Mr. LAMM. Let me give you a political science sort of argument. It
seems to me that you people back here already have such an avalanche
PAGENO="0019"
15
of things coming at you. I would appreciate it if you would solve the
Middle East crisis, get inflation under control, and think about-
Senator DANFORTH. How about getting the budget balanced?
Mr. LAMM. That would be nice. It is laudatory, but I think it is
unnecessary to worry about potholes and other things that are ade-
quately taken care of at the State and local level. There is only so
much time and energy that you have back here. I would hope that you
would address the big issues.
Senator DANFORTIT. That is the political argument. We are all poli-
ticians-you are; we are. That is exactly the political argument.
We had a domestic violence bill on the floor. The issue was whether
or not to create yet another categorical grant program-this was 2 or
3 years ago-for domestic violence. We had already provided for it
under title XX. I can remember making that argument on the floor:
"Look, we have a block grant that allows the States to put money into
domestic violence and into the treatment of alcoholism, drug addiction
or whatever else they want to do in this broad category. Why have a
specifiç~ grant program for domestic violence?" The argument on the
other side was: "But there are people who are being brutalized. We
have to be sensitive toward them. Therefore, if we are going to be
sensitive, we must have a categorical grant. We must have a separate
program for them."
Senator DURENBERGER. Let me briefly make the argument on the
other side-in this case, the "unreconstructed Federalist" whom I
spoke abOut earlier.
A lot of the battered women's programs initially started in Minne-
sota. In fact, I was involved in a cooperative philanthropy effort to
start the first home for battered women. I just watched it grow after
that. We had two successful ones in Minnesota. People around the
country said, "Gee, how did you do it?" So, the Minnesotans started
going around the country speaking on how you do this. Of course,
they were doing it with contributions, free work and that sort of thing.
As the word spread around the country, people would go to their
local communities to try to get local support. They didn't find much
support, so they agreed the best place to go was Washington. We could
design a program here, through the categorical grant process, which
would take the wonderful things done with a little money in Minnesota
and apply them all over the country.
I guess the unreconstructed Federalist would say that if Mississippi,
Colorado, or Missouri haven't gotten the benefit, somehow, of the in-
sight into this problem, or haven't the fiscal ability to respond to it, then
the Federal Government ought to bring Minnesota to the rest of the
country.
Currently, there is a lot of concern as States have difficulty coming
to grips with their own budgetary problems, and with the unwilling-
ness of the taxpayers to meet the needs of the people. The States are
going to pick up on some of these things. I'm sure that you have sensed
that because you listen to the same people we do. I choose to think that
this is a temporary phenomenon. Until we do come to grips with the
budget, people are tightening their willingness to pay taxes all up and
down the line. It doesn't mean, though, that they are insensitive to the
needs of the people.
PAGENO="0020"
16
I think we just need to deal with how believable our Governors are
when they come and say that they and the legislatures can do a better
job of setting priorities with the same or fewer dollars. Right now, that
is a fairly tough sale.
Let me ask another question because I am curious. It may be one of
the reasons we are not able to come to grips with the budget. By some
miracle, we have put off the debt ceiling bill beyond the time we thought
we would have to raise the limit on the national debt. I suspect there
might be a couple of reasons for it. One, there are more revenues coming
into the Federal Treasury than this administration is willing to tell us.
Two, I suspect somebody over in 0MB-and I wouldn't accuse Dave
Stockman of providing leadership on this-is just refusing to commit
funds to the level authorized and appropriated by Congress.
One of you mentioned this, I think, with regard to the community
services grant. We have experienced it with regard to the Low income
Energy Assistance program. I wondered whether or not the~se were just
isolated cases-a $100 million here, a $100 million there-or whether
0MB has a more pervasive impact by holding back money that we have
appropriated and authorized.
Have you seen it in any other areas?
Mr. LA~1~r. I wouldn't know.
Mr. BOND. I would say that the most distressing thing we have run
into-I suppose it comes from 0MB-are the totally unrealistic as-
sumptions that all sociai programs can achieve a 3 percent and then
a 2 percent, 1 percent, zero error rate. These are totally unrealistic
standards, standards which the Federal Government obviously can-
not meet and no government in the real world can meet.
It leadis one to the strong suspicion that the Federal Government
is not interested in saving and making legitimate budgetary reduc-
tions, but is, in fact, weiching on its obligations. It is promising more
than it intends to deliver and is stuffing the States-which are faced
with very tight budgets. We are being forced to pick up the programs
promised by the Federal Government.
We have been concerned about the holdbacks in funding. We are
aTso concerned about some of the proposals to cap expenditures, where
we do not have the ability or the power under existing Federal law
to affect a savings. These particular "budgetary" efforts are most
concerning to us. We do not even feel that these proposals are in good
faith.
Senator DURENBERGER. Let me ask you another question which re-
laites to competition-that is, the competition between local govern-
ments and agencies for grant funds. The question is premised on the
fact that most of our old categoricals are in the nature of project
grants.
I think, Governor Bond, you talked about the Small Cities CDBG
program. When this program was turned over to the States, the
Minnesota Legislature in its wisdom just decided to spread the money
around as though it didn't have the ability to address the needs on
a grant-by-grant basis. They just set up a formula grant and, basi-
cally, distributed the money over the whole State based on population.
The Governor vetoed that bill. I heard you talk differently from a
Missouri perspective.
I am curious to know what the general approach has been around
the country. Do States have, as yet, sufficient experience with the
PAGENO="0021"
17
project grant process, so that we might trust them to use the Missouri
models, rather than the Minnesota models, as we turn back some of
these programs in the form of blocks?
Mr. LAMM. We have a study that shows that of the 34 which have
so far decided to accept the small cities block grants, 33 of them
targeted the money and did the weighing process based on priorities
and needs. They didn't just prorate the money.
We would like to siThmit this report for your consideration.' I do
think that the process you described is the exception certainly not the
rule.
Senator DURENBERGER. Without objection, it will be included in
the record.
Mr. BOND. We think only about two or three States have gone that
route. I am not willing to say with absolute confidence that the process
Missouri has adopted is right and the process Minnesota chose is
wrong. However, when a legislator in Missouri proposed a distribution
formula for the CDBG funds similar to the one Minnesota is using,
it was not adopted. We opposed it very strongly. The local govern-
ment officials generally agreed with us that the amount of dollars
would be so small that they would rather, for the welfare of all the
communities and all of the citizens of Missouri, see these dollars
go to those communities which had some good programs, could dem-
onstrate a need, and could show there would be an impact on eco-
nomic development, housing rehabilitation, or public facilfties.
We will soon have the experience in Missouri to compare with
that in Minnesota. We hope our approach is correct. One good thing
about having laboratories at the State level is that we will see if Min-
nesota may have been in the minority but had the right view.
Senator DURENBERGER. Let me ask you some general questions about
the future of blocking. This year. the administration's recommenda-
tion lays out eight more blocks. We have only seen two specific bills
so far.
I would like to ask you both about the welfare administration block
grant. What is your reaction to that proposal?
I am also curious to know about the blocking of Low Income En-
ergy Assistance with other emergency assistance programs. That is
important to those of us who are on the Senate Finance Committee, be-
cause we are going to have to deal either with that or with the impact.
of the alternative-the impact of the administration's recommenda-
tions to include Low Income Energy Assistance in computing food
stamp benefits. My inclination, for example, is to accept the blocking
notion. I suppose there are savings, as you indicated earlier, in welfare
administration.
With regard to the combining of Low Income Energy Assistance
with emergency assistance and the impact on food stamps, person-
ally, I really hesitate to include the Low Income Ener~v Assistance
in computing the earnings disregard for food stamps. However, my
sense is that we could reduce the total amount of money. If we fought
off that one. we could then reduce. the total amount of money from $1.8
billion that is going into Low Income Energy Assistance, to some-
thing less than that.
I See p. 421.
PAGENO="0022"
18
Do you have any reactions to that thought?
Mr. LAMM. Let me underscore what Governor Bond said in answer
to an earlier question relating to the error rates. I know that some-
body someplace says, "Well, it must be a lot easier to reduce error
rates." But please understand a couple of important concepts. One
is that we get charged with client caused error rates. There are errors
that are completely outside our ability to control. All of a sudden we
get charged for them. Then all of a sudden we find substantial pen-
alties coming from them and from the ever changing regulations.
At the same time, we have to deal with the practical delivery of serv-
ices that we have to administer out there. We have to train, retrain and
then retrain people to this ever changing kaleidoscope of regulations
coming at us. The SSI population is much more stable than the AFDC,
medicaid~ and food stamps population~ in which clients' status is con-
stantly changing. The SSI error rate is above 5 percent. In this con-
text, a Federal regulation, to hold us to 3 percent, is the kind of thing
that scares us.
The reasons for the Governors' opposition to the welfare block
grant are the proposed budget cuts and the unrealistic shifting of some
of these administrative costs to the States. We are on record as oppos-
ing it.
Mr. BOND. That is correct.
Many of our States have already had to cut administrative costs
substantially. This is what we did to achieve at least part of the sav-
ings necessitated by last year's budget cuts. For Congress to come in
now with more program revisions, but hold us to 95 percent of fiscal
1982 administrative expenses, is purely dumping additional costs on
the States, costs that we cannot avoid.
To echo what Governor Lamm has said, in many instances, we are
forced by a Federal mandate to carry out procedures which result in
higher error rates. For example, when we are prohibited by Federal
law from obtaining collateral information on the eligibility of clients,
or when we are required to act on various applications within a lim-
ited time, we have higher administrative costs. We have no way to
avoid a certain level of errors. To suggest that we can cut those ad-
ministrative costs simply because the Congress imposes a limit on the
expenses is not realistic.
We would be far better off if Congress would respond by giving us
the flexibility to institute necessary controls which we think make
sense. Obviously, to the extent that we have the flexibility in block
grants, we will do things such as establish prospective reimbursement
for various services, initiate copayments where it is feasible and take
other steps which will bring costs under control. But to issue a mandate
and says "These expenditures will be held at 95 percent of the exist-
ing level," is totally unrealistic.
Senator DURENBERGER. Let me ask you both to respond, either in
a specific or a general sense, to the problems we have created with the
Low Income Energy Assistance program.
Jack and I were both, consistently, on the prevailing side in sup-
porting the windfall profits tax. We strongly supported a dedica-
tion of much of that tax to relieve the economic burden of those who
were going to have to pay for that tax, and also to move in the direc-
tion of alternative energies and conservation.
PAGENO="0023"
19
However, it was our contemplation, back in the summer of 1979, in
the Senate Finance Committee that the economic consequences of de-
control would last in the neighborhood of 3 years. Therefore, we
would structure a Low Income Energy Assistance program that would
be relatively uncomplicated. We would block it back to the States,
after we had gone through one quick experience with SSI, with the
notion that after 3 years, we would get out of the business.
Well, my sense is that the 3 years are up, but they are up at the
same time that we are in the middle of a recession. People are just
having difficulty in meeting a variety of needs. We may not be
faced with escalating home heating oil prices right now, but we are
faced with escalating natural gas prices and electricity prices as a
consequence of increases in the cost of coal and other items. So we are
in the danger, it seems to me, of making permanent another welfare
program called Low Income Energy Assistance. To a degree, the
administration has recognized this by saying, "Here is another one
you have to factor into food stamps for determining the earnings dis-
regard;" and, at the same time, "We want to reduce the amount of
money that is going into the program."
I guess I need your general observations on this subject since we can
just cut the whole thing out on the theory that its time has ended. We
can go back to taking care of the energy needs of people through cash
assistance programs.
Mr. LAMM. Let me see if I can remember this.
On behalf of the NGA, I met with Senator Hatfield concerning ad-
ditional flexibility. About 85 percent of the money has to be paid for
low income. Is that it under the terms?
Senator DURENBERGER. Yes.
Mr. LAMM. It was an 85 percent figure. We wanted some additional
flexibility to do energy conservation.
Senator DURENBERGER. Weatherization, et cetera?
Mr. LAMM. Weatherization, yes. I passionately believe that one of
the ways to keep heating bills to a minimum is to undertake as much
weatherization and energy conservation as possible.
I sense I am not answering the real thrust of your questions. I will
give them further thought and will send you a more detailed response.
[The material follows:]
PAGENO="0024"
20
STATE OF COLORADO
EXECUTWE CHAMBERS ()0.cózd
Denver, Colorado 80203
Phone (303) 866-2471
Richard 0. amm,
Goc'ernor
June 14, 1982
The Honorable David Durenberger
U.S. Senate Office Building
Washington, D.C~ 20015
Dear Senator Durenberger:
When Governor Bond and I testified before your Subcommittee
on Intergovernmental Relations on May 5, 1982, on behalf of
the National Governors' Association, you raised some very
important questions regarding the Low Income Energy Assistance
Programr Unfortunately, time did not permit a full discussion
of these issues at that time. As a result, I would appreciate
the opportunity to provide this additional information for the
hearing record.
First of all, you asked how Governors feel about the Admini-
stration's proposal to combine the Energy Assistance Block
Grant Program with the AFDC emergency assistance program.
Governors have testified regularly before your subcommittee
and other congressional committees on behalf of maximum flexi-
bility in administering programs where Congress provides funds
to the states to meet human needsr Governors continue to
press for that flexibility and would welcome changes in both
the Emergency Assistance Program and in the Low Income Energy
Assistance Program designed to provide that flexibility. The
Administration has proposed to combine three programs into one,
and at the same time, reduce funding by more than 36%~ The
figures are as follows:
FY82 FY83
Program Appropriation Proposed
Lw Income Energy Assistance $l.875 billion $1.3 billion
AFDC Emergency Assistance 61 million --
DOE Home Weatherization 144 million --
TOTALS $2.O59 billion $L3 billion
These cuts are inappropriate and cannot be accomplished without
major program reductionsr
PAGENO="0025"
21
Senator David Durenberger
June 14, 1982
Page 2
The Administration has provided no factual data to indicate
that the demand for these three programs has declined in any
way or is likely to diminish in the future. To fold them
into one program in the name of flexibility while drastically
cutting federal support does a disservice to the concept of
block grants and federalism, and is unacceptable to states~
Next, you asked about the Administration's proposal to count
Energy Assistance payments as income for AFDC and food stamp
recipients. We oppose this concept because it creates seri-
ous problems for the recipients as well as for the administer-
ing state agencies. For persons receiving both AFDC and food
stamps, the effect would be simply to negate the benefits of
the Energy Assistance Program, causing beneficiaries to lose
almost $1 in AFDC/food stamp benefits for every $1 they re-
ceived in Energy Assistance. While such a manipulation of
programs might give the appearance of federal budget savings,
nothing really would be accomplished beyond reducing benefits
to persons certified to be truly needy and leaving the states
with fewer resources to deal with an undiminished caseload.
States already have sufficient authority to avoid any potential
duplication of benefits.
Finally, you asked about the future of the Energy Assistance
Program, stating that some had expected the program to last
for only three years and asking whether in establishing Energy
Assistance the Congress had, in effect, created another welfare
program.
In the extended debate over decontrol of oil prices, it was
recognized from the outset that there were certain tradeoffs--
that the nation should benefit from allowing energy supplies to
seek their true market levels, which would encourage energy
conservation, for example. At the same time, it was recognized
that persons living on low, fixed incomes would suffer an extra-
ordinary increase in their unavoidable fuel costs--costs which
they would simply be unable to pay unless provided some form of
assistance
In effect, the nation struck a bargain with itself, agreeing to
accept the painful adjustments resulting from decOntrol as long.
as the needy were given some assistance in meeting extraordi-
nary fuel price increases.
In the 1980 Crude Oil Windfall Profit Tax Act, Congress adopted
language stating that 35% of the net proceeds of the tax should
be reserved for Low Income Energy Assistance during this decade.
Although strictly speaking this language is not binding, it is
equally true that appropriations for Energy Assistance have
never come close to the 35% goal.
PAGENO="0026"
22
Senator David Durenberger
June 14, 1982
Page 3
Although there is some tendency today to focus attention on
the recent leveling off of certain energy prices, particularly
gasoline and fuel oil, it must be remembered that these recent
reductions came only after increases which have caused many
home fuel bills to double, triple and quadruple.
Furthermore, prices for electricity and other fuels, particu-
larly natural gas, have continued to increase in recent months~
Testimony at congressional hearings indicates that typical fuel
assistance to a needy family in the recent record-breaking
winter was in the range of $500, and that total fuel bills over
$1,500 are increasingly common. Equally important, neither the
states nor the Federal government have been able to make the
extraordinary adjustments that would have been required to as-
sure that SSI and AFDC benefits were sufficient to meet energy
needs.
Governors strongly support continuation of the federal assist-
ance provided through the Energy Assistance Block Grant program
and are firmly on record that FY 1982 funding levels for block
grants should be continued in FY 1983 and thereafter~ We are,
however, fully prepared to discuss alternative ways in which
that assistance might be provided within a broader examination
of federalism~
If we may provide additional information on these matters, we
would be pleased to do so.
Sincerely,
Rich rd D~ Lamm
Governor
cc: Governor Jay Rockefeller
Senator Gary Hart
Senator William Armstrong
Congresswoman Pat Schroeder
Congressman Tim Wirth
Congressman Ray Kogovsek
Congressman Hank Brown
Congressman Ken Kramer
Steve Farber, Executive Director, NGA
Deirdre Riemer, Staff Director, NGA
PAGENO="0027"
23
Mr. BOND. Mr. Chairman, obviously the problem of natural gas and
the increasing prices imposed on consumers in Missouri is one of the
very real problems that we face. The recent runup of natural gas prices
has been a far more significant burden on our State than heating oil
costs. We feel very strongly that not only is this a problem for low-
income households, but it is also a problem for middle-income house-
holds in our State.
Regarding the proposal to count low-income energy assistance or
AFDC in food stamps, it is the view of our departmental people that
this would hit the poorest the hardest. Those who receive both AFDC
and food stamp benefits would get a double whammy if the Low In-
come Energy Assistance were counted.
Obviously, you have pointed out a real problem: How do we take
care of the needs of our people? The energy costs are ongoing costs
that have to be paid. We don't have any magic solution as to how you
can resolve the issue you have raised, but we can assure you that the
problem still exists. With continually increasing natural gas prices in
Missouri, it is going to be an even more serious problem.
Senator DtTRENBERGER. Of course, the problem for those of us who
are dealing with the New Federalism is: Can we muddle through this
year~ without any difficulty?
I mean, we will cut a little money. We will bite off the administra-
tion's recommendations on AFDC. However, at least on my part,
it is a real concern. We have just created another inkind program to
take care of another need when, at some point, people might make
those decisions better with cash through the AFDC program or some-
thing else.
For some period of time, it seems to me, we have been going the
wrong way. We are diluting the weatherization decidedly and main-
taining the energy payment side of it. I think at some point we need to
address that.
I am conscious of your time. I have one last question I would like to
ask you both. It deals with what we call the crosscutting require-
ments. That is, the 60-some laws and regulations that apply to any-
body and everybody who takes Federal grants-the Davis-Bacon Act,
the Civil Rights Act, the National Environmental Policy Act, archi-
tectural heritage, and all the various regulations and 0MB circulars.
All of these, presumably, have the force and the effect of law. It has
been a little difficult for us to determine whether 0MB really believes
they apply to the block grants.
What is your view as to whether or not they do or ought to apply,
given the role that the courts usually have in the process of deter-
mining the application of these kinds of crosscutting requirements?
Should we just make the decision that all of these requirements are
going to continue to apply to the block grants? Or, should we be more
definitive in that area as we go into the blocking process?
Mr. BOND. I would say that, to the extent that there are basic Federal
policies which should be followed-you mentioned a number of areas
including nondiscrimination-we would understand a Federal corn-
pliance requirement attached to the block grants. On a case-by-case
basis, there may be some requirements that are not appropriate to par-
ticular block grants. I think the first step in addressing this question
is for the Congress to examine the extent of all of these national p01-
PAGENO="0028"
24
icies to assure that they are all still warranted. Then, following on that,
the Congress should make a decision on a case-by-case basis as to
which of the various crosscutting requirements should apply to the
block grant programs.
Mr. LAMM. I support Governor Bond's response and would point
out, in addition, that you have included in your boilerplate bill a pro-
vision to prevent any additional restrictions being imposed by admin-
istrative regulations. Your proposal is a constructive approach to the
problem.
Senator DtTRENBERGER. The time of 10 :öO having arrived, I will
express my appreciation to both of you and to the NGA for youi
contributions.
Mr. BOND. Thank you, Mr. Chairman.
[The prepared statements of Governors Bond and Lamm follow:]
PAGENO="0029"
25
~ National Governors' Association A. elling
* Chairman
Stephen 0. Farber
Executive Director
Testimony of
The Honorable Christopher S. Bond
Governor of Missouri
before the
Subco~ittee on Intergovernmental Relations
Committee on Governmental Affairs
U.S. Senate
May 5, 1982
HALL OF THE STATES ~444 North Capitol Street. Washington, D.C. 20001 (202) 624.5300
PAGENO="0030"
26
Mr. Chairman, my name is Christopher S. Bond, and I am Governor of
Missouri. Thank you for permitting me to appear today on behalf of the
Nation4 Governors' Association to discuss implementation of block grants.
Mr. Chairman, I am particularly pleased to appear before this. subcommittee,
because of its long standing bipartisan sensitivity to the needs of state
and local governments. The nation's Governors are grateful for your
commitment to the federal system of government.
As my old friend and fellow Missourian Senator Jack Danforth can
attest, I have long been an ardent supporter of block grants and other
federal policies that return program planning and administration to the
states. Block grants provide states with the only real flexibility in an
otherwise restrictive grants-in-aid system.
There is a need to continue the process of relieving states from the
constraints of 500 separate categorical programs and their attendant
regulations, which impose over 1,000 separate mandates on state and local
government and a paperwork burden estimated to have cost $5 billion in
1977.
In Missouri, we spent an estimated $8.4 million in FY 1981 to
comply with 1,400 pages of federal rules and regulations for categorical
health and social service programs. Health programs alone required
2,202 separate reports. We estimated that one-fifth of state employees'
time was spent writing proposals and reports to meet federal reporting and
accounting requirements. Under these conditions, it is little .wonder
that many Americans believed that government was not meetiug their needs.
Nor was it surprising Governors felt they must be given greater flexibility
to develop and administer programs.
PAGENO="0031"
27
TheGovernors have welcomed the priority the President has given to
the issue of federalism and the return of greater responsibility for
programs to the states. Certainly the block grant concept is a mechanism
that provides a vital link between rigid categorical programs and needed
reforms. Block grants are an important vehicle for achieving national
objectives while maintaining the flexibility of a federalist system.
Although 1981 provided a good start toward a new federalism, we
still have a long way to go. As you know, the nine block grants approved
in 1981 represent only a fraction of the total number of federal grants-
in-aid to stats and local governments. The flexibility originally
included in the President's block grant proposal was sharply compromised
in the legislative process. In addition, funding for most blocks was
substantially reduced. States had little opportunity to plan for either
the assumption of new responsibility or these funding reductions.
Nevertheless, I feel the states have made real progress in remedying
the problems of the grants-in-aid system.
Mr. Chairman, I would like to share with you some of the improvements
we have been able to make in Missouri as a result of the increased flexibility
provided under the block grants. But first, with your permission, I want to
give you some general information on block grant implementation nationwide.
In view of the attention block grants have attracted, NGA knew that
there would be a demand for information on how the blocks were being implemented.
Accordingly, in January and early February, the National Governors' Association
and the Council of State Planning Agencies sponsored a survey on the status
of the block grants. The survey covered the nine block grants enacted in
the Omnibus Reconciliation Act of 1981 and was circulated to all Governors,
their executive assistants, block grant contacts, intergovernmental
relations representatives and budget and planning officers.
PAGENO="0032"
28
-3-
The survey was coordinated by the Governor's office in each state
and was composed of two parts. Part one was a fourteen-item questionnaire
examining options to transfer funds among blocks; the public participation
process; and the use of increased flexibility to alleviate state financial
and administrative burdens. It also dealt with state matching of federal
funds; the role of the Governor's staff; the enactment of state legislation
concerning block grant appropriation, allocation, and administration; the
use of programmatic and administrative flexibility to improve service
delivery; and initiatives to pass flexibility on to local governments.
Part two asked states to provide a concise description of a planning,
policy or management reform, a program innovation, or problems encountered
by states in implementing block grants.
The culmination of this two-part survey is the 1982 Governors'
Guide to Block Grant Implementation, a 131 page document published in
February and released at the National Governors' Association winter meeting.
All fifty states responded to the survey, providing the most complete and
up-to-date information available on block grant implementation in the states.
A copy of this document is being submitted with this testimony.
The survey provides valuable information on implementation timetables.
Despite the very short lead time for implementation of the block grants, most
states elected to assume the available block grants at the earliest possible
date.
PAGENO="0033"
29
-4-
* The Alcohol, Drug Abuse and Mental Health Block Grant has been
implemented by forty-seven states. The remaining three states
will implement the grant October 1, 1982.
* Forty-six states implemented the Preventive Health Services Block
Grant by January 1982. Officials in one state plan to implement
the grant July 1, 1982, and two s'tates have plans to take this
grant October 1, 1982. One state did not report its intention.
* The Maternal and Child Health Care Block Grant has been accepted
by forty-seven states. One state will assume this grant
July 1, 1982, and two others indicate their willingness to take
over the grant on October 1, 1982.
* All fifty states implemented the Social Services Block Grant
and the Home Energy Assistance Block Grant on October 1, 1981,
as federal legislation required the assumption of both grants
at the beginning of FL 1982.
* Thirty-nine states have chosen to administer the Community Services
Block Grant. Eight states will begin administering the grant
October 1., 1982. In three states a final decision on this
grant had not been made at the time of the survey. States
electing not to implement this block grant in FT 1982 indicated
that the main reasons behind the decision were unfamiliarity
with the operation of the program, which had always been primarily
a federal government-to-local agencies program, with little
state control; lack of planning time because of late passage of
federal legislation; and uncertainties regarding federal funding
levels. One state reported that there was opposition from tihe
local agencies to the state assuming administration of the block
grant before F? 1983.
99-965 0 - 82 - 3
PAGENO="0034"
30
* A variety of implementation dates is being used for the Community
Development Block Grant:.
-October 1, 1981 - eight states
-December 1, 1981 - one state
-January 1, 1982 - one state
- April 1, 1982 -- two states
-May 1, 1982 -one state
-June 1, 1982 - one state
-July 1, 1982 - two states
-August 1, 1982 - one state
-October 1, 1982 - six states
Twenty-six states at the tine of the survey ~iere undecided, and oneT
state had accepted a planning grant but did not list an implementation
date. Most states which delayed acceptance of the Community
Development Block Grant stated they were hampered by delays
in the publication of regulations by the Department of Housing and
Urban Development. States also cited insufficient planning time-
particularly for local input-and state legislatures were not
in session to authorize acceptance of the program.
* The Elementary and Secondary Education Block Grant was forward
funded for July 1982 distribution. Twenty-nine states will begin
administering this grant on Juiy 1, 1982 while sixteen -.
others will implement it October 1, 1982. One state will begin implementation
September 1, and four states were undecided abQut this grant at th.e time
of the survey.
* As you Tatow, the Primary Care block grant does not go into effect
until F? 1983. According to the Hational Governors' Asso~iation survey,
some states have serious reservations about assuming this grant
PAGENO="0035"
31
-6-
because they are not satisfied that federal dollars received
by the state under the block would offset the administrative
burden incurred in operating the program.
In addition to information on the timing of implementation, the
NGA survey revealed the following preliminary trends:
First: In most states the degree of public participation in
the administration of the blocked programs significantly increased,
even though there was short lead time to upgrade the process.
Previously, most programs were administered with a minimum of involve-
ment from the public, the legislature, and local policymak~rs.
A variety of techniques is being used to increase participation:
there has been a marked increase in legislative involvement, more
meetings with citizens, and more attempts to interact with local
units of government. Creative approaches used included' statewide
teleconferencing, televised meetings, task forces, special consti-
tuency groups, and the provision of speakers for groups requesting
information.
In most states, the executive agency administering the particular
block grant took primary responsibility for coordinating public
participation. The Office of the Governor, followed closely by
the state legislature, were the next units of government most
frequently responsiblé.for this activity.
Second: Governors are taking advantage of the increased administrative
authority provided under the block grants to coordinate the use
of federal and state dollars. As part of this effort, Governors'
offices and state legislatures are working to develop new resource
allocation guidelines.
PAGENO="0036"
32
Third: Most state legislatures have t±ied to anticipate the
procedures that would be necessary to carry out the responsibilities
of block grant implementation. In some states, block grants must
be included in the legislative appropriations process. In other
states, agency and block grant program funding must be in the
same proportion as that for categorical grants from the previous
year.
Fourth: As you know, a major benefit of the block grant concept
is the opportunity for administrative simplification. Most states
indicate that there will be efforts to streamline procedures and
to reduce red tape. In Missouri, we expect to achieve significant
savings through administrative simplifications which I will describe
in greater detail later in my testimony.
However, at the time of the NGA survey early last winter, many
states were unsure whether the present block grants would lead to
simplification or complication. Some states actually indicated
a fear of increased administrative burdens, resulting from changes
in contracting and legislative appropriations rules. More than
half the states indicated there would be no effect from liberalized
audit requirements, and six states anticipated an increase in
state audit responsibilities.
Fifth: The Omnibus Reconciliation Act provided limited power to
transfer funds from one program to another to meet state priorities.
The most frequent transfer to date is from the Low Income Energy
Assistance program into the Social Services block grant. We feel
the transfer reflects the fact that funding for the Social Servic~
PAGENO="0037"
33
-8-
block grant was reduced on a national basis by 19.8%, while the
Low Income Energy Assistance block grant, after the aost recent
supplemental, received a slight increase in funding. Many states,
including Missouri, chose to transfer monies from the Energy Block
Grant to other high priority programs in order to distribute funding
cuts more evenly among critical energy assistance and social service
programs.
As block grant implementation progresses, NGA will continue to monitor
activities in each state. We will report to you with any additional information.
With your permission, Mr. Chairman, I would like to turn to Missouri's
experience in implementing the block grants.
First, I would like to take a few moments to describe the mechanics of
our block grant planning process. Anticipating the passage of block grants,
in March of last year we began developing a comprehensive decisionmaking
process that enabled Missouri to assume responsibility for all available
block gra~its on October 1, 1981. To coordinate the delivery of services under
the individual block grants, I appointed a task force that brought together
heads of departments with jurisdiction over block programs, my Director of
Budget and Planning, and my Chief Executive Assistant. The task force
developed a consistent process for developing program adjustments for all
of the block grants. The process began with a series of public hearings across
the State conducted by the department responsible for the programs in each
block. These hearings were followed by careful review by an advisory
committee made up of service providers and client representatives. Following
advisory committee input, tentative program funding decisions were announced.
PAGENO="0038"
34
-9-
Members of my immediate staff and department directors next worked
closely with the General Assembly in developing overall policy for administering
the block grants and distributing funding reduct~ions. Where necessary, the
General Assembly modified FY 1982 appropriations to provide the flexibility
necessary to implement the block grants. For example, the General Assembly
removed language tying spending authority to particular federal categorical
programs, and estimated appropriations to accommodate ultimate block grant
funding levels.
In appropriating block grant funds for FY 1983, the Missouri General
Assembly institutionalized its involvement by creating oversight committees-
consisting of five representatives and five Senators-to oversee each block
grant ares. These committees will be fully informed of all aspects of the
programs funded by each grant. The grants themselves, however, were
appropriated in one lump sum, providing broad administrative discretion
to ensure maximum efficiency and responsiveness in service delivery.
I am especially pleased with the efforts we have made to involve
community groups in our decisionmaking process. I am well aware of the
frequently voiced fear that community interests would not be adequately
consulted in block grant funding decisions because of relaxed program
planning and public hearing requirements. Let me assure you that this
criticism can not be made about Missouri. Each department with jurisdiction
over block grants established special communication channels with state
and local elected officials, service providers, recipient advocacy
groups and the general public.
Activities undertaken in preparation for assumption of the Community
Development Block Grant are illustrative of our consultation process.
PAGENO="0039"
35
-10-
As Chairman of the NGA Committee on Community and Economic Development, I
was particularly concerned with burying once-and-for-all the myth that
state governments are insensitive to the economic development needs of
their local jurisdictions. Even prior to the passage of the Omnibus
Reconciliation Act, my administration undertook preliminary conversations
with local officials to discuss state assumption of the program. Following
passage of the statute, I designated the Missouri Division on Community and
Economic Development (CED) as the lead agency for administering the block
grant and I appointed a twenty member advisory committee composed of
elected county and city officials, as well as professional staffers from
local governments. The committee, which has held four meetings, has
offered valuable assistance in developing our program.
To ensure that all local governments were consulted, we also sent a
twenty page questionnaire to each presiding county judge (county executive)
and mayor in the state, asking them to advise us on a wide variety of
questions including: types of projects that should be emphasized; types
of targeting criteria which should be utilized; kinds of limitations which
should be placed on grants, such as grant ceilings, grant minimums and
multi-year commitments; and type of technical assistance that would be
most beneficial to local officials. Finally, early this year we convened
four regional meetings with local government officals and other interested
parties to ask their advise on how the program should be designed.
I would now like to disucss the specific initiatives Missouri has
taken under each block grant.
Community Development Block Grant
This year Missouri expects to receive approximately $26 million in
CDBG funds to dintribute to its small cities and counties. Of this amount,
about 2% or $6,000 is allowed for administration. Another $9 million
PAGENO="0040"
36
-11-
will come off the top to honor multi-year commitments already made by
HUD. This leaves approximately $17 million to distribute to new applicants.
With nearly 1,000 eligible units of government, we did not deem it wise
or in the best interests of the State to distribute the funds to each
unit of government on a formula basis. Thus, we devised a competitive
grant program.
The Missouri program is designed to fund four categories of activities:
1) economic development, 2) housing rehabilitation, 3) public facilities,
and 4) emergencies that threaten health and welfare. Competition for
housing and public facilities will occur annually. Competition for
economic development and emergencies will take place quarterly. Of the
$17 million left to distribute to new applicants, five percent will be
set aside for emergencies and hhirty-five percent will go for economic
development. The remaining sixty percent will be split between housing
and public facilities based upon the percentage of dollars requested in
each category.
An applicant may apply for a maximum of $500,000 in hou~ing or
public facilities grants and up to $750,000 for economic development grants.
No limitation is set for emergencies since a case-by-case determination must
be made.
We anticipate being able to receive applications for housing and
community facilities funds from June 1 to July 17 of this year. For the
first quarterly ec:onomic development and emergency categories, we will
accept applications between July 1 to August 15. We have already mailed
nearly 2,000 packets to officials of eligible governments which included
details of the Missouri program. We have attempted to greatly simplify
the applications in order to reduce the advantages of "grantmanship"
and make it easier for small cities and counties to compete.
PAGENO="0041"
37
-12-
The criteria for judging applications will balance need and opportunity
for economic development. There is no bias for one part of the state over
another, or for the size of any competing local government entity... In
addition, we are putting together a comprehensive technical assistance
program to help local officials participate in the block grant.
I think it is important to note that we are able to do all this in
a manner which is more efficient and less costly than HOD. For example,
we are administering the small cities program with only twelve full time
employees whereas HOD required 31 persons working in two regional offices
to run its program for non-entitlement areas.
Social Services Block Grant
Funding for the programs included in the Social Services block
grant (SSBG) was cut 20% nationwide. In Missouri, funding was actually
cut by 22% due to a loss in population. As a result, our funding was
reduced by over $13 million, from $65 million in FT 1981 to $51.8 million
in FY 1982. Fortunately, through a combination of administrative cuts,
service delivery modifications and alternative funding sources, Missouri
was able to minimize client service reductions.
As you kiiow, the SSBG eliminated certain costly and time-consuming
planning and reporting requirements. Missouri was therefore able to make
major reductions in staff, equipment and other administrative expenses.
The state achieved additional savings by consolidating and simplifying
reporting requirements for Title XX social service programs with child
abuse and neglect programs and foster care and adoption assistance
services under Title TV-B and E of the Social Security Act. As a result,
we were able to cut the cost:of administering programs in this block grant
by roughly one-half.
PAGENO="0042"
38
-13-
* Once we had achieved all possible administrative savings, we turned
our attention to improvements in the existing day care reimbursement system.
Federal Inter-Agency Day Care Requirements and rates based on estimates
of center costs had produced state subsidized day care charges that
exceeded day care rates in the private market. By moving to a standard
negotiated rate ($8 per day for children and $12 per day for infants),
we were able to reduce costs by $1.3 million without curtailing the
amount of day care time provided.
The third way we absorbed funding reductions was by encouraging
day care centers to negotiate copayment arrangements with their clients.
Prior to the enactment of the SSBG, federal regulations had effectively,
discouraged copayment for day care by reducing federal reimbursement to
states in the amount of the copayment.
Finally, SSBG funding reductions were further offset by transferring
into the block $4 million of Low Income Energy Assistance funds.
* Through these measures, Missouri successfully held overall reductions
in client services to approximately 13%. Unavoidable service reductions
were targeted away from life-sustaining services, such as protective services
for children.
In addition to the above program modifications, my administration
aggressively lobbied for increased state dollars to minimize the effect
of federal reductions on children's programs. Last week, the Missouri
General Assembly approved partial funding for significant new initiatives in
children's programs providing 8or preventive health programs and services for
abused and neglected children that will allow them to remain in their home environment,
The combined effect of the children's budget initiative and changes in
funding priorities has resulted in a social service program in Missouri
which successfully targets available funds to the most critical social
service needs. *
PAGENO="0043"
39
-14-
Low Income Energy Assistance Block Grant
In contrast to deep funding reductions in the Social Services Block
Grant, FY 1982 funding under the Low Income Energy Assistance Block
Grant (LIEA) underwent a slight increase. Our efforts in implementing
this block grant were concentrated in three areas: comprehensive overhaul
of our service delivery system; changes in our benefit schedule; and
use of funds for weatherization activity.
Prior to this fiscal year, utilities participating in Miaaouri'a
LIEA were reimbursed for expenses after heat was supplied. Providers
had to submit bills each month. Payment to utilities was routinely
delayed anywhere from 30 to 90 days. Largely as a result of these factors,
approximately 1,000 providers dropped out of Missouri's program during
the FY 1981 winter season. In order to attract providers back into the
program, we needed to develop a new service delivery system that guaranteed
timely, reimbursement and provided minimal paperwork.
As a result of the Department of Health and Human Services' commitment
to allowing maximum administrative flexibility under all block grants,
we were able to implement a new energy assistance system that addressed
both needs. Under our new system, the Missouri Department of Social
Services determines each eligible applicant's maximum benefit for the
entire winter heating system and advances that amount to the utility
contracting to provide heat for that individual. At the end of the year,
the utility returns any unused funds to the state. Seventy-five to
eighty percent of our utility providers have rejoined our program in
response to this service delivery modification.
We further improved the cost-effectiveness of Missouri's LIEA by
modifying a benefit formula that inadvertently discouraged energy
conservation. Under last year's plan, Missouri paid a percentage (based
PAGENO="0044"
40
-15-
on income) of each eligible person's heating bill, up to a maximum of
50% of the total bill. By comparison, under this year's formOla,
maximum benefit levels are based solely on income. Unlike last year's
calculation, the new formula encourages fuel efficiency because
the benefit amount does not rise with increases in fuel useage. Although
the maximum benefit is lower under the new formula, the average monthly
grant amount available to LIEA recipients has increased by 36%, and
more recipients have received assistance than in FT 1981.
Missouri originally did not plan to exercise the option to use
LIEA funds for weatherization activities. However, the unexpected
appropriation of supplemental funding has made it possible for us to
dedicate $5 million of LIEA funds for this purpose. Weatherization
projects will be carried out by our Department of Natural Resources, and
will emphasize services for the elderly and handicapped. We estimate
that 3,700 homes will be weatherized as a result of the flexibility
allowed under the block grant.
As I mentioned earlier, Missouri exercised the transferability
option provided under the Low-Income Energy Block Grant to transfer
$4 million into the Social Services Block Grant. With your permission,
Mr. Chairman, I would like to make a few brief remarks concerning recent
attempts by some members of Congress to use state exercise of this
transferability option as an excuse for reducing LIEA funding in FT 1983.
The transferability of funds between block grants is essential to the
successful implementation of the block grant concept. Transferability
is the best solution to one of the major problems of the grants-in-aid
system--the inefficient distribution of federal funds among categorical
programs--because it gives states the opportunity to use federal funds
in the most cost-efficient way possible.
PAGENO="0045"
41
-16-
The factors surrounding Missouri's decision to use LIEA funds for
certain social service programs provide a sound example of the importance
of this mechanism to the successful delivery of essential state services.
As I have discussed previously, funding for Missouri's social service programs
was cut by 22%. Although every effort was made to absorb this cut through
administrative reductions and modifications in service delivery systems, it
soon became apparent that the state would have to increase appropriations
to offset funding reductions in vital children's protective services. Although
my Administration worked quickly to enact a children's budget initiative,
these vital services would have been stopped for many months if we had not
been able to transfer funds from the LIEA. Because of the transferability
option, we were able to distribute funds among competing programs in the
fairest and most effective manner.
Alcohol, Drug Abuse and Mental Health Block Grant
Missouri has also been able to use block grant flexibility to make
significant improvements in the delivery of health services. In particular,
the Alcohol, Drug Abuse and Mental Health Block Grant (ADA/MH) reduced
federal regulation to such an extent that we have been able to make great
strides in improving the effectiveness and efficiency of our mental health
programs.
Prior to the enactment of the ADA/MM Block Grant, state mental
health planners were faced with an uncoordinated network of mental health
services. One system of care is comprised of state-operated mental health
facilities--five hospitals and three mental health centers. These facilities
are primarily state-funded. However, because they also receive some
federal funding, the fadilities are subject to both federal and state
laws and regulations. A second "purchase of service" system of mental
PAGENO="0046"
42
-17-
health care is delivered by twenty-one privately operated community
`mental health centers also receiving both state and federal funds and
subject to both Missouri and federal laws and regulations.
Frankly, it is difficult to imagine a service delivery system any
less efficient. We were unable to effectively implement statewide
funding priorities because we had no authority over the use of federal
monies. As a result, a significant amount of federal money was being
spent for the treatment of short-term episodic mental illness rather than
chronic illness, which is responsible for the major part of repeat, long-term
mental health care expenditures in the state.
In addition, poorly defined federal service delivery areas--based
solely on population--did not adequately reflect factors having a
significant effect on availability of health care. Basic mental health
services were not readily ava~lable in some parts of the state, while
wasteful duplication of services existed in other areas. Finally, both
state and privately operated facilities were spending significant amounts
of money in complying with separate state and federal mandatory service
requirements, as well as an unbelievably complicated array of accounting
and reporting procedures.
With reduced federal service mandates and increased administrative
authority provided the state under the ADA/MR Block Grant, we have been
able to make significant inroads into this administrative nightmare. We
are now able to target federal resources to chronic illnesses and other
mental health problems which we know are most critical in our state.
Mental health centers have been `able to significantly reduce administrative
overhead because they are no longer forced to oomnply with two separate
PAGENO="0047"
43
-18-
sets of regulations. Aggressive enforcement of service delivery contracts
between facilities serving the same area has eliminated wasteful duplication.
Finally, as a result of new service area boundaries, federally-funded
mental health services will now be available in previously underserved
areas of the state.
As a result of these changes, we were able to minimize the effect
of federal budget reductions. FY 1982 funding to Missouri for the programs
within the block was cut by approximately 35%. In spite of this major
funding cut, ten of the twenty-one purchase of service areas in Missouri
will experience funding increases--some as high as 40% and 23%.
Three areas will receive constant funding. Funding decreases in the
eight remaining areas will range from 3.9% to 19.7%.
Maternal and Child Health Block Grant
Implementation of the Maternal and Child Health Block Grant also
required a reexamination of spending priorities.
Our first step in implementing this block grant was to significantly
reduce funding for sub-state specialty projects established under the
old categorical programs on a pilot project basis. Funding for the
majority of these projects was reduced as much as 50%. While many of
these programs were meritorious, the limited scope of the projects convinced
us to accept recommendations from community groups to reduce funding.
Reductions in spending for these projects freed-up approximately
$800,000 which we passed through to counties in the form of block grants.
Service mandates were limited to a set minimum amount of basic public
health services for children, such as well-baby care and health screening.
In this way, we were able to pass administrative flexibility on to local
governments which we felt were better able to make effective decisions
PAGENO="0048"
44
-19-
concerning the delivery of public health services. In addition, as a
result of our county block grant initiative, eight counties in Missouri
which do not have public health offices are now receiving a minimum amount
of child health services. In F? 1983, we plan to use state funds
provided under my children's budget initiative to increase the amount
of block grant funds available to counties.
Conclusion
In closing, I believe that Missouri's block grant implementation
record illustrates that the states are fully competent to assume greater
responsibility for identifying and serving needs of their citizens. During
the past year we have made every effort to use the flexibility provided
under the block grants to set intelligent funding priorities, target funds
to previously underserved ;subsrate regions, eliminate wasteful duplication
of services, and abolish unnecessary reporting and administrative requirements.
By concentrating on staff reductions, other administrative savings and
more efficient delivery systems, Missouri has been able to minimize the
effect of funding reductions on services. Where service cutbacks could not
be avoided, community groups were closely involved in setting funding
priorities. In addition to developing more efficient and effective ways
to use federal funds, Missouri has increased state funding for social services
and public health services, which we feel are primarily state responsibilities.
As you consider federal budget proposals for FY 1983, we hope that
the activities of the states during the past year will encourage you to
support further increases in administrative flexibility.
PAGENO="0049"
45
**~~(*
~ National Governors' Association ~chd~e111ng
Chairman
Stephen B. Farber
Executive Director
Testimony of
The Honorable Richard D. Lamm
Governor of Colorado
before the
Subcommittee on Intergovernmental Relations
Committee on Governmental Affairs
U.S. Senate
May 5, 1982
HALL OF THE STATES ~444 North Capitol Street. Washington. D.C. 20001 (202) 624-5300
99-965 0 - 82 - 14
PAGENO="0050"
46
Mr. Chairman, my name is RichardD. Lamm. I am Governor of Colorado
and a member of the National Governors' Association Executive Committee.
I am pleased to have this opportunity to present the views of the
National Governors' Association and the experience of my state on the
subject of block grants. This is an area of great concern to me and to
all Governors, and I wish to thank the subcommittee for the work you
have done to improve the relations between states and the federal government
to the benefit of both program recipients and the taxpayer.
In the interest of time and efficiency, Governor Bond and I have
accomplished our own "sorting out" exercise for this hearing. Governor
Bond, in addition to his discussion of the operation of block grants in
his state, has focused on NGA's recent block grant implementation survey.
I will focus upon the problems states have encountered with the block
grants. The problem areas I will cover in my testimony today are budget
reductions, program design, uncertainty in funding levels, and issues
relating to the transfer provisions.
Last year, the President proposed consolidating 85 categorical
programs into six block grants. Congress approved the merging of 57
programs into nine block grants. The President also proposed more
sweeping state flexibility in the programs than Congress allowed, While
the Administration is to be applauded in its efforts to rationalize and
make manageable the some 500 separate categorical programs and their
attendant regulations, the changes passed in 1981 make only a small dent
in the much larger problem. Even with the proposed eight new block
PAGENO="0051"
47
grants and three expanded initiatives, just 25% of grants-in-aid would
be provided through more flexible block grants in FY 1983, up only
slightly from 21% the previous year. In other words, aid provided to
state and local governments is still largely in the form of categorical
aid, which is often too restrictive to adequately meet state needs.
Block grants are an important mechanism for reconciling the principles
of federalism with the realities of national concerns and local diversity.
The Governors believed so firmly in the block grant concept that we
offered last year to exchange a 10% cut in the consolidated programs for
enactment of the block grants. We offered this incentive in the belief
that increased flexibility would provide an opportunity for administrative
savings and retargeting worth a 10% funding reduction. Instead, Congress
enacted much larger cuts, as we all know, along with more limited flexibility.
Problems in Block Grant Implementation
This brings me to the first problem I wish to outline respecting
the implementation of the block grants: the magnitude of the budget
cuts they represent.
1. Budget Reductions
It would be a terrible shame and would create damage difficult to
repair if the block grant concept becomes known as merely a tool for
reducing vital services. To quote one human services administrator,
"block grants mean more authority to do less". Its an illustration of
the impact of budget cuts on block grants, I have attached to my testimony
a table showing the dollar reductions associated with the block grants
enacted in 1981 and another table that illustrates the President's FY
1983 recommendations.
PAGENO="0052"
48
-3-
As can be seen by these tables, President Reagan's block grant
proposals for FY 1983 expand upon the use of block grants as a budget
cutting tool. In PT 1982, total funding for the newly enacted block
grants was reduced by 13%, a total cut of almost $1.5 billion. These
cuts included a 19.8% reduction in the social services block grant, a
24% cut in the maternal and child health program, a loss of 26.4% in the
community services block, and a 21.3% cut in the alcohol, drug abuse and
mental health programs (ADAMEA).
These cuts have had a substantial impact upon persons who rely on
the programs for vital services.
The FY 1983 budget proposed new cuts for block grants. These
reductions are difficult to track, because it can be confusing to compare
reconfigured programs from one year to the next. For example, it appeared
that the Administration was actually budgeting more money for the women,
infants and children supplemental feeding j~rogram (WIC) for F? 1983 than
in F? 1982 because of the program changes involved: WIC was being
combined with the maternal and child health block grant. The WIC program
was funded at $950 million in F? 1983 and the F? 1983 proposed funding
for the block grant was $1 billion. In fact, however, in order for WIC
services to be provided at FY 1982 levels, the maternal and child health
block grant activities would have to be eliminated under the combined
block. The combined programs were actually slated for a cut of almost
* 22%.
Under the Administration's F? 1983 proposed block grants, the
constituent programs proposed for consolidations would be reduced overall
by 16.2% from FY 1982 to FY 1983. These same programs suffered reductions
of over 21.6% from FY 1981 to FY 1982. The net reduction under the
President's proposal would be over 34% from FY 1981 to FY 1983.
PAGENO="0053"
49
-4-
These reductions reflect cuts in vital programs such as child
welfare services that from FY 1982 to FY 1983 would be reduced by 18.3%.
They represent reductions of 32.6% in rehabilitation service programs
that provide hope for the disabled to achieve self-sufficiency. The
most drastic cut would be in the community services block grant program,
which would be reduced by 71.3%.
Is it any wonder that more and more persons have come to view block
grants with concern? ~`Thile the Governors have repeatedly supported
consolidation to improve efficiency, responsiveness to the people, and
effectiveness in the delivery of services, we have not proposed the use
of block grants for substantial budget cutting. In fact, we believe that
the FY 1983 reductions proposed by the President--for the block grants
and other programs--would weaken the capaeity of state and local governments
to assume greater responsibilities in the federal system.
2. Fundamental Program Redesign
ifl addition to the use of block grants as a budget cutting device,
block grants have been used as a means to propose fundamental alterations
in the character of program funding by converting programs from open-
ended entitlement status to "capped" (or close-ended appropriation)
programs. For example, the FY 1983 proposal to combine, cap, and cut
state welfare administrative costs in the food stamp, AFDC, and Medicaid
programs under a "combined welfare administration block grant" radically
restructures important programmatic and policy concepts that are essential
to the administration of these programs. Open-ended funding exists for a
very good reason in these programs. It is difficult to estimate the
costs involved and the levels of service to be provided because they
rise and fall according to need, not pre-determined levels of funding.
PAGENO="0054"
50
3. Uncertainty in Block Grant Fundinf
Congress has funded the majority of the block grant programs this
year under three continuing resolutions.
Uhat you may not fully appreciate is the damage this uncertainty
causes to the effective administration at the state level of the block
grant programs. One of the primary advantages of block grants is the
flexibility it affords Governors to plan a more rational system of
~ervice delivery for citizens of their states. However, this planning
process is devalued when the funding levels of the programs remain
clouded through two-thirds of the budget year.
In addition to the legislative situation, there have been administrative
uncertainties regarding the release of monies and the granting of awards.
A prime example of this extra-legislative fiscal uncertainty affected the
community services block grant. At the time of the first continuing
resolution, the Office of Management and Budget apportioned the monies
not on the basis of the congressionally adopted level of $362 million,
but rather on the basis of the Administration's proposed funding level
of $225 million. Similar problems occurred with each of the subsequent
continuing resolutions. The House of Representatives raised questions
of impoundment violations. In the states, vital administrative decisions
as well as delivery of crucial services were impaired by the "on again,
off again" funding confusion that occurred at each round of the budget
process for FY 1982. At the present time, community services grants to
states are not guaranteed after the third quarter in spite of the fact
PAGENO="0055"
51
-6-
that the continuing resolution provides for an appropriation for the
remainder of the year.
In a nutshell, if states do not know how much they are going to
receive for a block grant program, and when they will receive it, how
can they plan? How can they use the intended flexibility? How can they
efficiently administer programs?
4~ Transfer Pro~iaiona
During the many years that block grants have been under discussion,
a central issue has been whether states should have increased authority
to redirect federal grants to meet needs and priorities identified in
the individual states.
An initial step toward limited statutory flexibility was realized
in the approval of block grants in 1981. Most of the block grants allow
for the transfer of a small fraction (about 15%) of the total and only,
as a rule, to certain identified programs. When Governor Busbee testified
before you last year, he provided an illustration of how minimal the
flexibility provided by the transfer provision really is. He pointed Out
that the transfer allowed him to reprogram just $9l,00D out of the
$3 million in block grant funds available to his state.
In spite of the limited flexibility they offer, the transfers are
clearly filling a need in the states and are being used. It would be a
mistake for Congress to act against the transferability provision of the
block grants, as Members did in the low income energy block grant supplemental
by exempting the $123 million provided from the transfer clause. The
action signals a lack of support for the flexibility which Governors
believe to be the chief advantage of block grants. Given overall reductions
in block grants of 13%, the transfer provision allows priority setting and
should be preserved.
PAGENO="0056"
52
Block Grant Successes
Mr. Chairman, in providing you with this list of problem areas, I
do not mean to imply that the experience has been all bad, although
indeed the funding decisions have created serious service problems. I
believe the response of the states in accepting the block grants,
indicates the success of the concept.
In addition, I think the work of the Administration in developing
regulations that are as simple and clear as possible is another major
implementation success. The regulations represent a strong effort to
maintain the integrity of the block grants.
Another positive factor affecting block grant implementation is the
development, under your leadership, Mr. Chairman, of boilerplate language
for block grants. This is a very important project and of critical
concern to states. A structure of this kind would be very helpful in
giving guidance to future congressional actions on block grant legislation.
Such a structure will also go far in rationalizing and coordinating
block grant program requirements that will help recipients administer
programs more effectively.
I find much to commend and very little to criticize in the Durenberger
bill. It is carefully crafted to provide greater flexibility to states
while assuring that standards of public participation, fiscal and program
integrity, and minimal federal agency interference are maintained. We
are particularly pleased to see that strict limits were placed on the
authority of federal agencies to devise administrative restrictions on grant
recipients in your bill. It is imperative that the block grant concept
be free from unnecessary red tape and needless problems over minor
issues.
PAGENO="0057"
53
The National Governors' Association recently transmitted the boilerplate
language to state officials who are working on block grants to ask them
to evaluate it based on their current experience. We will be submitting
comments to you as soon as we have collected them.
Block Grant Implementation In Colorado
Before ending my statement, I would like to provide you with some
highlights of my own state's experience in block grant implementation.
Colorado began planning more than six months in advance for the
implementation of the block grants. Public hearings were held throughout
the state, and the involvement of interested citizens was solicited. These
efforts led us to take creative cost containment actions, refinancing
initiatives, and reprogramming changes that helped to mitigate the
effects of the budget cuts. However, we have exhausted most of these
innovative possibilities and will have to pass future cuts through to
recipients in the form of service reductions if Congress were to adopt
the President's proposed domestic cuts for FY 1983.
I am pleased to report to the Committee that the General
Accounting Office (GAO) has recently completed a thorough review of
Colorado's transition to~ the block grants. The GAO team took an in-depth
look at our efforts thus far and gave us a favorable review. The report
stated, "Colorado's transition to block grants has been relatively smooth
despite its assuming some additional administrative and programmatic
responsibilities while also absorbing Federal funding reductions in
many former categorical programs."
PAGENO="0058"
~54
Conclusion
Let me conclude by reiteratins the most important point I can make
today__Congress should impose a two-year moratorium on further domestic
cuts. As you know, states and localities took a disproportionate share
of the F? 1982 cuts, and we no longer have the capacity to absorb
additional federal budget reductions.
We all recognize the urgent need to reduce the prospective federal
deficits in the near future (estimated at $180 billion, $220 billion and
S240 billion before additional cuts in F? 1983, F? 1984 and FY 1985,
respectively). It is these large deficits that are keeping interest
rates so high and damaging our economy so severely.
Thank you for the opportunity to testify this morning on these
important block grant initiatives. We look forward to cooperating with
you to make the concept work. I will be pleased to respond to any questions
~ou might have.
PAGENO="0059"
FY 1932 BLOCK GRANT FUNDING
PROGRA4 DY 1971 DY 1002 1; CHANGE $ CHANGE
81 TO 02 01 TO 02
OCCIAL SERVICES B. 5. 2201.10 2400.00 -19.77 -5O1.~
EDUCA'fION B.G. 535.40 470.50 -12.12 _04.9O
IATEI4NAL & CHILD HEALTH e.G. 457.50 3~7.50 -2~.R4 -112.00
CORlJNITY SERVICES E.G. 472.77 348.00 -20.30 -12~.7O
PREVENTIVE HEALTH 3.G. 99.20 81.RD -17.74 -17.52
ACANHA E.G. 545.68 432.00 -21.25 -11~.79
LO( INCO~tE ENERGY ASS'T * 1850.00 1875.00 1.35 25.00
CONG 4370.08 3395.70 -10.05 -474.30
(INCLUDING UDAG)
TOTAL 11324.50 0050.30 -13.02 -14~4.22
* LDN INCO:48 ENERGY ASSISTANCE INCLUDES $123 MILLION ADDED IN AN E~(ERGE1CY
SUPPLEMENTAL.
PAGENO="0060"
56
-11-
PRESIDENT'S FY 1953 BLOCK GRMYr PROPOSALS
I CHANGE CHANCE
PROGRAM NY 1932 NY 1003 92 TO 23 22 TO 93
3CCIAL SERvICES 2460.23 1974.10 -17.75 -425.90
ADAMUA 432.10 422.22 -.22 -.10
PREVENTIVE HEALTH 81.40 31.60 .20 .06
CO!14U4ITY SERIVICES 348.22 106.20 -71.22 -2~6.68
COMMUNITY DEVELP1ENI 3452.02 3453.Cfl .22 .00
UDUCATION 472.70 431.00 -S.d -37.7(1
LON INCOME ENERGY * 1938.20 1362.82 -32.65 -632.20
PRIMARY CARE 414.80 412.23 .48 2.110
SERVICES FOR WIC 12O1.~6 1668.09 -21.97 -281.20
CHILD WELFARE 495.19 300.10 -18.22 -85.02
CO1BINE WELFARE ADMN. 2292.00 2121.00 -5.01 -115.00
VOC AND ADULT ED. 732.56 502.20 -31.74 -232.52
HANDICAPPED ED. 1042.10 942.06 -10.92 -192.16
TRAINING AND EMPL0YI1E('r 2252.82 1000.00 -22.07 _452.60
SENIAB. SERVICES 925.26 223.50 -32.59 -301.52
TOTAL 18527.72 15524.12 -12.21 -2623.42
* LOW INCOME ENERGY RECEIVED AN ADDITIONAL $123 MILLION IN AN EMERGENCY
SUPPLER ENIAL
PAGENO="0061"
57
Senator DURENBERGER. We will adjourn the hearing until next week.
[Whereupon, at 10:50 a.m., the subcommittee recessed, to reconvene
at the call of the Chair.]
PAGENO="0062"
PAGENO="0063"
BLOCK (~RANT IMPLEMENTATION
TUESDAY, MAY 11, 1982
U.S. SENATE,
SUBCOMMIT'rEE ON INTERGOVERNMENTAL RELATIONS,
COMMIITEE ON `GOVERNMENTAL AFFAIRS,
Wtshimgton, D.C.
The subcommittee met at 9:50 a.m. in room 357, Russell Senate
Office Building, Hon. Dave Duren'berger (chairman of the subcom-
mittee) presiding.
Present: Senator Durenberger.
OPENING STATEMENT OP SENATOR DURENBERGER
Senator DTLTRENBERGER. The hearing will come to order.
We will hear testimony on block grant implementation and on the
issues that have been raised during the first 6 months of implementa-
tion. We have a lot of witnesses today, and their statements are long. I
tried to read them all laSt night. However. it took more time than has
been allocated for this hearing, so I didn't quite make it through.
To make sure that all the witnesses have an opportunity to give
their statements, my questions will be brief.
I will just put my opening statement in the record without reading
it. I will also include a statement from Senator Jim Sasser, who is the
ranking minority member of this subcommittee.
[The statements of Senator Durenberger and Senator Sasser fol-
low:]
PREPARED STATEMENT OF SENATOR DTJRENBEROER
This is our second oversight hearing on the implementation of the 1981 block
grants. This morning, we will hear from representatives of Federal, state and
local governments, as well as witnesses from human resources groups.
Before we begin, I have to say that the testimony on the new block grants
so far has been gratifying. Last week, we heard testimony from two governors:
Richard Lamm of Colorado, a Democrat; and Kit Bond of Missouri, a Republican.
Both men had basically the same message: That Congress did take too long
to act on block grants last year, but even so, the programs generally are success-
ful. The governors also said they appreciate the increased flexibility the states
get from block grants, and they urged the formation of more block grant pro-
grams for Fiscal Year 1983.
This means a lot to those of us who believe in the concept of New Federalism,
of giving more of these responsibilities to the states. Most of the programs are
being successfully picked up by the states. And the majority of state governments
have chosen to administer the grants themselves, rather than letting the Federal
agencies handle them.
Last year, almost half of the state legislatures passed laws increasing their
involvement in the oversight of Federal funds. And that's a lot of funding to deal
with. Federal aid makes up about 25 percent of combined state and lOcal budgets.
As for the recipients of those grants, 30 states have reported little or no change
In eligible recipient groups since the formation of the new block grants. Public
(59)
PAGENO="0064"
60
participation in the programs seems to be on the rise, and most states are encour-
aging local governments to get Involved through advisory boards and public
hearings.
This is not to say there aren't problems. For instance, the consequences of
budget cuts. There are also some administrative issues that need to be resolved,
and I have some proposals for resolving them.
But that's why these hearings are being held. To hear both the positives and
the negatives. To find out just how the states are allocating the block grant funds,
and how this is affecting the recipients. To talk about the proposals for better
managing the new system, and to discuss the relationship of the block grants
to the New Federalism.
That phrase, "New Federalism," has a rather partisan ring to it. And yet, the
creation of block grants as part of that concept is a genuinely bipartisan issue.
We saw that In last week's testimony from the two governors. I think that's
partly because we are reminding ourselves that grant programs are not created
to give politicians something to argue about.
The man who needs to weatherize his house, and the single mother on welfare,
and the person who needs treatment for alcoholism-those people don't care
whether or not we call it "New Federalism." They don't care whether it's the
Democrats or the Republicans backing their grants. They just want help from
a program that's run wisely, efficiently and effectively. We're trying to work
out a system that will achieve that. And that Is why we're here today.
OPENING STATEMENT OF SENATOB SAS5EB
Mr. Chairman, I am pleased to welcome Delores Delahanty, the executive direc-
tor of the Human Services Coordination Alliance for the State of Kentucky, to
testify before the subcommittee.
Her prepared testimony on block grant implementation adds the important
human dimension to the reports the subcommittee has received on this subject.
Block grants have been recommended by experts on management as one means of
constructing more efficient and effective service delivery systems for government
programs. Efficiency and effectiveness are certainly very important considerations.
But we must not lose sight of the real goal which is better delivery of services-
to people.
Ms. Delahanty reminds us of that in her prepared remarks. I commend her testi-
mony to my Senate colleagues for review as we deliberate on various proposals to
change the intergovernmental fiscal system. The National Association of Social
Workers, which Ms. Delahanty represents here today, has always been helpful to
me in the past when I relied upon them for advice about issues before the Con-
gress. So, I certainly intend to take their views into account at this crucial time in
our budget-making history.
Mr. Chairman, thank you for holding this important hearing to asses~ how far
we have come and where we are heading in block grant implementation. Your
work in generic language to make requirements applicable to block grant uniform
is to be complimented.
Thank you very much.
Senator DURENBERGER. I ask the cooperation of all the witnesses in
keeping the hearing on the tight time schedule that we have set. We
have allotted 7 minutes for each witness. I ask that you not read your
statements in full.
With that, I will go to our first witness, who is Dr. Robert Rubin,
Assistant Secretary for Planning and Evaluation, U.S. Department
of Health and Human Services.
Dr. Rubin, thank you for coming.
TESTIMONY OP ROBERT J. RUBIN, M.D., ASSISTANT SECRETARY
FOR PLANNING AND EVALUATION, DEPARTMENT OF HEALTH
AND HUMAN SERVICES
Dr. RUBIN. Thank you, Senator.
I am here to discuss the implication of the health and human services
block grants. As you know, I have been involved closely with both
PAGENO="0065"
61
the design and the implementation of these blocks, having been charged
by Secretary Schweiker to prepare the legislation that was sent to the
Congress and to coordinate the implementation after enactment of
that legislation.
The Department of Health and Human Services administers the
seven health and human services block grants which are consolidated
into 32 categorical programs. Upon enactment of the Reconciliation
Act on August 13, we moved rapidly to implement these blocks, work-
ing closely with the States.
As you know, we issued interim final regulations for all the blocks
on October 1. Most States began operation of the blocks soon there-
after. From our vantage point, the implementation has proceeded
rapidly and smoothly without any major problems other than delays
in funding, which was caused principally by the lack of fiscal year
1982 appropriations.
To refresh your memory, we have summarized the seven HHS block
grants oii charts.1 They also are appended to my formal statement. We
will briefly go over them.
As you know, there is the preventative health and health services
block; the alcohol, drug abuse and mental health block; the ma-
ternal and child health block; and the primary care block, which is not
to begin functioning as a block until October 1, 1982. To go on to the
second chart, the social services block grant; the community serv-
ices block grant and the Low Income Energy Assistance block grant
complete the list of block grants administered by our Department.
The statutes of four of the block grants give States the option to
assume the operation of the blocks in fiscal year 1982 or to have our
Department continue the administration of the categorical programs
which are consolidated into the blocks.
The third chart shows the number of States and tribes participating
in each block. Currently, 49 States have chosen to operate the alcohol,
drug abuse and mental health block; 48 States operate the remain-
ing two health blocks; 40 have opted to assume the community serv-
ices block; all States are participating in both the energy and the
social services block grants.
As you know, we are also making direct grants to Indian tribes as
required in the statutes of four of the blocks.
The administration of the blocks at the Federal level is primarily
the responsibility of the operating divisions of our Department. How-
ever, the Secretary has charged my office with coordinating implemen-
tation and insuring consistency across the various HHS agencies.
The Department issued a single interim final regulation for all seven
block grants. We èonducted regional conferences last August and
September to insure, that State and local governments were completely
informed about and clearly understood the blocks. We provided the
State governments with information on local HHS grantees previ-
ously funded under the categorical programs which were consolidated
into the blocks. Our most difficult and challenging task was taking
over the responsibility for closing out grants for the Community Serv-
ices Administration and implementing the community services block.
1 See p. 76.
99-965 0 - 82 - 5
PAGENO="0066"
62
As of mid-April, our agencies have made grants awarding `75 per-
cent of the block grant funds. Roughly 50 percent of the funds have
actually been transferred to the States.
We have been monitoring the States' implementation of the blocks
through a variety of means, including voluntary and cooperative col-
lection of information by State associations. Our preliminary assess-
ment is that the States have handled the block grants responsively and
responsibly. States have moved quickly to involve a wide spectrum of
people and groups.
In our submission for the current fiscal year, we are proposing some
changes in existing block grant statutes that would consolidate a few
additional programs which can he administered best through the
blocks and that would reduce and simplify Federal requirements.
The existing and pronosed block ~rrants are part of the logical pro-
gression from a federally dominated categorical grants-in-aid system
to the State-oriented system proposed under the New Federalism.
Under New Federalism, all HHS blocks are included in the set of
programs to be turned back to complete State control. Block grants
are clearly a midway point in this necessary transfer of authority and
responsibility from the l~'ederai Government to the States. The admin-
istration hopes to have its New Federalism proposal to the Congress in
the very near future. In the meantime, we will continue to press for
simplification of both the block grants and other departmental
programs.
Since I have just received a draft of the proposed Uniform Block
Manac~ement Act, I will not respond to its contents provision by provi-
sion. I can, however, provide some tentative thoughts. We support
fully its goal of making block grant administrative requirements con-
sistent and have attempted to do this for HHS blocks through our
regulations and our recent legislative proposals.
States understand the requirements in the current statutes apd can
live with most of them. They are well along in preparing for block
operation for fiscal year 1983. We should be careful about making
changes now that add new reciuirements or increase existing ones.
Block grant administration by the States is evolving over this and the
next~several years. There is time to make changes after we have all had
a bit more experience. We would be pleased to work with your staff in
further pursuit of that.
Mr. Chairman, in conclusion, I think within my timeframe, we
believe that the transition from categorical to block operations in our
Department has been both rapid and reasonably smooth. States have
been responsible and responsive to their citizenry. We look forward to
continued efficiencies and improvements in service delivery effective-
ness as a result of the blocks.
I would be happy to answer questions.
Senator DURENBERGER. Thank you very much.
We had two Governors as witnesses last week-one a Democratic
Governor from Colorado, and th~ other a Republican Governor from
Missouri. They certainly left us with the impression that your testi-
mony, in the general sense, is accurate. The States have, despite the
problems, picked up on the block grants. They have tried to do their
best with them. There are some shortcomings, but it is much too early
in the process to come to a final judgment.
PAGENO="0067"
63
However, one of the areas of constant criticism-and I am sure I
was `among the critics last year-was the notion that we could block a
variety of categoricals into a variety of areas of need and come up with
25 percent administrative savings every single time. I am wondering
what information you have relative to the actual administrative sav-
ings that have come about because of the 7 block grants over which
you have jurisdiction.
Dr. RUBIN. We are just in the process of assessing that. As you
know, the blocks obviously have not been in operation for a full year.
One would anticipate that the changes in the governmental struc-
ture in the States, annuaiizing start-up costs might not accurately
reflect State costs over the entire year. We are waiting for the first full
year of operation before we make any firm assessment. However,
preliminary assessments suggest that the States are capable of ad-
ministering these blocks. They have not made any radical changes,
except for perhaps some consolidations. It is unclear to the extent
of the administrative savings across the blocks.
Senator DURENBERGER. In the area of health grants, there has been
a great deal of paperwork; there has been a great deal of regulations;
and there has been a great deal of what you might call "administra-
tive overburden" when things were approached categorically. The
administrative savings from blocking health programs might be
greater, for example, than the administrative savings that would be
achieved in social services or some other area where there is not an
existing set of paperwork.
Do you have some opinion about the judgment with regard to that?
In what program areas might we find the greater amount of savings?
Dr. RUBIN. I think that is a point well made. The social services
block grant and the energy block grant were, in essence, preexist-
ing block grants. The larger the number of categorical programs that
are consolidated, the greater the ability to save money.
So I would agree with you that the greatest percentage savings
would most likely be in the health block grants. Of course, the
primary care grant is not yet in operation.. We would expect to see
large economies of scaie in that operation, as well.
Senator DURENBERGER. Let me ask you a question about the issue
of targeting. We have Federal categorical programs because the
Congress recognizes special populations with special needs. We have
targeted the categoricals to those needs, although we don't always do
a good job.
One often fears that the blocking process will result in Governors
and legislatures just spreading money all over the place and not sen-
sitively reflecting those needs. That is one of the criticisms that I have
heard from my own State. In other words, they put a little bit of
money in every local government area based on its population.
Is there any evidence yet, that you have seen, that this is happening?
Dr. RUBIN. No. We have seen, again in a very preliminary way since
these programs haven't been in operation for a long period of time,
that different States have responded differently in terms of what they
believe are their highest priorities. Some States appropriately have
put greater emphasis into, say, hypertension control in the preventive
health services grant. Other States have emphasized different parts
of the preventive health grants
PAGENO="0068"
64
Concerning the alcohol, drug abuse and mental health block, I
was fortunate enough to appear on a panel with Dr. Stewart Shapiro,
who is the administrator of health for the city of Philadelphia. He was
fairly clear that this block has given him the ability to get people to
work together who hadn't normally worked together before. The alco-
hol group was working on one corner, the drug abuse group was work-
ing on the other corner, and the mental health group was probably in
the middle of the street. You can use this block as a lever to consolidate
these activities into a rational delivery service mode. I think that has
been going on. There has been some consolidation and improvements
in effectiveness. I think also that the States each recognize what their
particular needs are and have reacted in an appropriate and, albeit,
different fashion.
Senator DURENBERGER. Let me ask you about the portability of the
transferability provision that allows Governors to move funds from
one program to another. I know this varies from one block to another.
Your testimony indicated that 33 States have shifted funds from Low
Income Energy Assistance to other areas.
I would be curious to know how many dollars were involved. The
33 States, which is a large number, would seem to be an indication that
we are putting too much money into Low Income Energy Assistance
and not enough money into other social services. Would I be correct in
that?
Dr. RUBIN. Certainly, our request for Low Income Energy Assist-
ance was considerably lower than what the Congress gave us, so we
share that concern. I can't give you the precise dollars, but I can tell
you into what they switched the money. If you prefer, in the interest
of time, we can make that part of the record.
Senator DURENBERGER. Why don't we do that? Maybe my curiosity
about it can also be made a part of the record. I was one of those who
supported the higher number, but I was supporting a greater per-
centage being used for weatherization at the same time.
[The material mentioned follows:]
PAGENO="0069"
65
State Use of Block Grant Transfers
State LIHEAP A~1 Prey. Health CSBG SS~
Transfer To Transfer To Transfer To Transfer To Transfer To
Alabama SS~
Alaska
Arizona
Arkansas SSBG Older Ajter. Act
California SS~
Colorado
Connecticut
Delaware
District of
Columbia
Florida SSBG
Georgia WCH/5533 MCH
Hawaii
Idaho MCH
Illinois
Indiana
I~ia SS3
Kansas SSBG
Kentucky SS~/M2H
Louisiana SSBJ ?~H MCH
Maine
Maryland SSBG
Massachusetts
Michigan SSB~
Minnesota CSB~
Mississippi MCH
Missouri SSB3
M3ntana SS~
Nebraska SS~
Nevada CSB~
New HaTpshire
New Jersey PtCH/SSBJ
New Mexico ACM
New York SS~3
North Carolina MH/PH
North Dakota SS~ Older Amer. Act
Ohio
Oklahctna
Oregon 5533
Pennsylvania Head Start
Rhode Island
South Carolina
South Dakota SSBG
¶I~nnessee tCH/ADM
Texas
Utah 5533
Versont 5533
Virginia 5533
Washington C~BG/SSB3
Nest Virginia 5533
Wisconsin SSB3
Wyuming 5595 flliar Am~r At±
Funds cannot be transferred out of the ~CH block grant.
PAGENO="0070"
66
Senator DURENBERGER. Your testimony indicated that 33 States have
moved money from Low Income Energy Assistance to other areas. My
evidence is that we came up short in Minnesota. By the end of
February, people who were entitled to the Low Income Assistance
program had used up the assistance to which they were entitled. So
Minnesota was out of money while other States were transferring
money out of their programs.
Would that say something to you about the total dollars involved
or about the formula used in allocating moneys among the States?
Dr. Rur~IN. Clearly it is a lot colder in the northern part of the coun-
try than in the southern part of the country. I concur with your
observation.
Senator DURENBERGER. If you can add some information to that
point, it would be helpful. Not only might it tell us something about
the Low Income Energy Assistance program, but it might tell us
something about the way in which we should improve the formula
or the entitlement.
Dr. RtmIN. We have preliminary information which suggests that
about $92 million was transferred out of the Low Income Energy As-
sistance program into the other block grants.
Senator DURENBERGER. $92 million?
Dr. RUI3IN. Yes, sir, but I don't have a breakdown of the other
blocks. Most of the States transferred money into the social services
block grant. The next highest was maternal and child health. The
others were insignificant.
Senator D1JRENBERGER. Good. I promised not to ask a lot of ques-
tions, so this will probably be the last one. I will ask you to persuade
me as to the merits of moving the women. infants, and children
(WIC) program into the maternal and child health block grant.
We were careful last year, in the process of reacting to the admin-
istration's fiscal 1982 recommendations, to avoid pitting persons in
need against each other on the basis of age, sex, or some other criteria.
In the area of maternal and child health, we tried to take a first step
toward developing a focus on what the appropriate Federal role
ought to be.
Since your fiscal 1983 recommendations came outS I have noticed
that a lot of people who have worked with the WIC program have
objected, and quite strenuously, to the proposal to block it with MCII.
A couple of health professional organizations, like the AMACH
and the American Academy of Pediatrics, have not yet taken that
position, although they have stated positions supporting WIC.
:Can you make an argument as to why this special nutritional pro-
gram ought to be moved into the block grant?
Dr. RUBIN. I think, in order to make the argument, one needs to
disaggregate two pieces of the argument. The first is on a program-
matic basis, does the consolidation make any sense? The second
question which, in my own judgment, is the question most peonle are
addressing when they oppose the merger is: Are the dollars that we
are providing for the new block grants sufficient to carry out the pur-
poses as articulated by people who would oppose the transfer?
I think if one does that, it becomes pretty clear that consolidating
these two programs makes a lot of sense on a programmatic basis.
There is a study done by the Research Triangle Institute. They found
that the merging of the two programs-supplemental nutritional
food, education, and preventative health care, as well as maternal and
PAGENO="0071"
67
child health care activities-was something they seemed to find
throughout the country. The two programs have very similar objec-
tives, which is mainly to improve the health outcomes of new mothers
and infants. They serve pretty much the same population.
The idea of linking health and nutrition programs reflects the
fact-which I'm sure you will agree, and I, as a physician, will cer-
tainly agree-that good nutrition is certainly a key to good health,
certainly in prenatal and postnatal care. By combining the MCH
activities into a single block grant, we will give the States the maxi-
mum flexibility to target the resources for health and nutrition serv-
ices to those who require them.
The same providers and ~rantees frequently administer both pro-
grams. So I think a compelling case can be made for combining these
programs, absent any discussion of how many dollars we are putting
into the programs. Clearly, that is the single issue that I think about
which people disagree.
I would remind you only of two things. One is that this program
was proposed for transfer to our Department from the Agriculture
Department. As others in our Department have previously testified
before the Congress, we were unfamiliar with the particulars of the
program. This was a program that grew from around $230 million
2 years ago to around $900 million last year. It doesn't seem unreason-
able to cut it back to the $600-or-so million that we are talking about
for inclusion in the block grant. Obviously, there are a lot of people
across the country who feel differently. I think that the ball, as they
say, is now in your court to make the final decision as to the precise
amount of money that will be available for this program. But, on a
programmatic basis, I have yet to be persuaded that there is anything
wrong with combining the programs.
Senator DURENBERGER. Would you speak also, in that regard, to the
commodity supplemental food program, the predecessor to WIC? It is
still in existence in 21 project areas around the country. I am sure this
is one of those holdovers from the Agriculture Department. The De-
partment is providing Federal aid via commodities to the States
which, in turn, distribute them to low-income agencies, pregnant
women, infants, and children who reside in these areas.
Is this one of the programs that would go in connection with a block-
ing of this process? Or, would we continue the commodity purchase
program as part of meeting the nutritional needs of women and
children?
Dr. RUBEN. I can't answer that question directly. I'mjust not faniil-
jar enough with the specifics of that program to responcL~We will pro-
vide an accurate response for the record.
Senator DURENBERGER. I wasn't familiar with it either until I read
about it. I appreciate your response.
[The information referred to follows:]
While this program is part of the block, the Federal Government will continue
to assist in obtaining commodities. I am not familiar with the specifics of this pro-
gram, but as I understand it, under current law, the Department of Agriculture
arranges for the purchase and transport of food to local projects within States,
which then distribute these commodities to the needy. Under the block grant,
States can request the Department of Agriculture to continue the purchase and
transport of food, but must reimburse the Department for this.
Senator DURENBERGER. Thank you, Dr. Rubin, for being here today.
I apologize that we couldn't start earlier to have more time for
questions.
[The prepared statement of Dr. Rubin follows:]
PAGENO="0072"
68
PREPARED STATEMENT OF DR. ROBERT J. RUBIN, M.D.,
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Mr. Chairman, I appreciate the opportunity to appear before
this Subcomittee on behalf of Secretary Schweiker to discuss
the implementation of the health and human services block
grants. I have been involved closely in both the design and
implementation of these blocks, having been charged by the
Secretary with preparing the legislation sent to the Congress
in 1981, and coordinating implementation after enactment of
that legislation.
On August 13, the President signed into law the Omnibus Budget
Reconciliation Act of 1981 which, among other things, consoli-
dated 33 categorical programs into seven health and human
service block grants administered by my Department. Working
closely with the States, we moved rapidly to implement these
blocks. We issued interim final regulations for all the
blocks on October 1, 1981, and most States began operation of
the blocks soon thereafter. From our vantage point, implemen-
tation has proceeded rapidly and smoothly, without major
problems other than delays in funding. These delays were
caused principally by the lack of a fiscal year 1982
appropriation.
I will discuss some of the highlights of the implementation,
but before proceeding to do that, let me briefly outline the
nature of the HHS block grants.
THE HHS BLOCK GRANTS AND THEIR STATUS
We administer seven block grants, four in the health area, two
that fund social services, and one that provides funds for home
energy assistance for low-income households. Six of these
block grants, at a total funding level of $5.5 billion, are in
operation this year; the primary care block is authorized to
begin operation on October 1, 1982. The seven block grants are --
o Preventive Health and Health Services, which consolidated
categorical programs for Hypertension Control, Health
Incentive Grants, Risk Reduction and Health Education,
Fluoridation, Rodent Control, Emergency Medical Services,
Home Health, and Rape Prevention and Crisis services.
o Alcohol and Drug Abuse and Mental Health Services, which
consolidated five categorical programs, provides mental
health, drug abuse and alcoholism prevention, treatment and
rehabilitation services, and services for the chronically
mentally ill.
o Maternal and Child Health, which consolidated mine programs,
enables States to assist and improve the health of mothers
and children through a State-administered program and also
provides for discretionary funds to support special research
and service programs, principally those addressing hemophilia
and genetic diseases.
PAGENO="0073"
69
o Primary Care, which subsumed the categorical Community
Health Centers program, assists States in providing primary
care services.
o Social Services, which consolidated three programs, provides
funds for social services directed at achieving or maintain-
ing economic self-support or self-sufficiency; preventing or
remedying neglect, abuse or exploitation of vulnerable
children and adults; preventing or reducing inappropriate
institutional care; and securing referral or admission for
institutional care when most apropriate.
o Community Services, which replaced many of the programs
previously administered by the Community Services Adminis-
tration, assists States in providing health, nutrition,
housing, and employment-related services to improve the
standard of living of low-income persons.
o Low-Income Home Energy Assistance, which redesigned the FY
1981 Low-Income Energy Assistance program, provides grants
to States to assist low-income households to partially
offset the costs of home energy, through heating, cooling,
emergency, and low-cost weatherization assistance.
Transition provisions exist in four of the block grants'
statutes: Maternal and Child Health; Alcohol, Drug Abuse and
Mental Health; Preventive Health and Health Services; and
Community Services. In these blocks, States may either imple-
ment the block in FY 1982 or allow the Federal Government to
continue administering the categorical programs.
As I mentioned, the Primary Care block grant does not become
effective until October 1, 1982, at which time a State may
choose to accept the block grant for that and succeeding years,
or allow us to continue administration of the categorical
Community Health Centers program.
Currently, most of the 50 States and the District of Columbia
are operating the HHS blocks. All States are operating the
energy and social services blocks. Forty-nine States are
operating the Alcohol, Drug Abuse and Mental Health block,
and 48 States are operating the remaining two health blocks.
Forty States have opted to administer the Community Services
block grant. In addition, 217 grants have been made directly
to Indian tribes from the four block grants which authorize
such funding this year.
HHS ADMINISTRATION
Responsibilities
Administration of the block grants at the Federal level is
primarily the responsibility of the Department's Operating
Divisions. The Office of Human Development Services manages
the Social Services block grant, the Social Security Adminis-
tration manages the Low-Income Home Energy Assistance block
grant, the Public Health Service manages the health blocks,
and a mew division, the Office of Community Services, was
established to administer the community services block and
handle closeout of Community Services Administration grantees.
PAGENO="0074"
70
To coordinate implementation activities and ensure consistency
across the various agencies administering the blocks within
HHS, Secretary Schweiker established a Departmental task force
under my oversight to identify and rapidly resolve implementa-
tion policy issues. We also have worked closely with the Block
Grant Implementation Task Force established by the Office of
Management and Budget that performed a similar function
across the Federal Government.
Regulations and Information Excha~g~
Immediately after enactment of the blocks, our priorities were
to ensure that all the States, territories and eligible Indian
tribes had accurate information about the blocks, and to issue
the regulations.
We provided States~ basic information on the block grants and on
local grantees funded under project grant programs consolidated
into the blocks. We worked closely with the other Departments
administering block grants, the 0MB, and the White House
Intergovernmental Affairs staff to develop and conduct eight
regional conferences during August and September. At these
conferences, State and local officials were provided with basic
information on the mew block grants and State officials were
given the opportunity to raise issues of concern. Approxi-
mately 4,500 State and local officials attended these
conferences.
We also moved rapidly to issue interim final regulations. On
October 1, 1981, just six weeks after enactment of the block
legislation, the regulations were published.
To ensure consistency among the blocks and flexibility for the
States, we prepared a single rule for all seven HHS block
grants, and limited the regulations to the minimum necessary
for implementation and clarification.
While the interim final rules had full regulatory effect, we
asked for public comment and received over 200 replies.
The interim rules have been revised based on these comments.
The final rules should be signed by Secretary Schweiker
next week, and published in the Federal register soon. There
have been few changes in the regulation itself, but a substan-
tial number of clarifying changes have been made in the preamble.
Funding
As of April 10, 75 percent of the monies available for
the blocks had been awarded to the States. This included
nearly 100 percent of the low-income energy assistance funds,
which needed to be made available quickly for fuel assistance
and weatherization activities during the winter months.
Approximately 50 percent of the funds available for all the
blocks actually have been transferred to the States.
Technical Assistance to States and Localities
We are continuing to exchange information with, and provide
technical assistance to, States and localities concerning the
PAGENO="0075"
71
blocks. We are providing States with results of Departmental
research, arranging for conferences and workshops on practices
of interest to several States, and assisting States in locating
sources of technical expertise in the private sector or in
other States. For example, the National Governors Association,
the National Association of Counties, the National League of
Cities, and the U.S. Conference of Mayors are sponsoring a
series, of conferences through a grant from the Department.
These conferences will provide opportunities for representa-
tives of State and local governments to share information and
ideas about the implementation of the block grants, primarily
the Social Services block. The Social Security Administration
also has held conferences on the Low-Income Home Energy Assis-
tance block grant.
In addition, the health block grant statutes allow States to
request and have detailed to them professional staff of Federal
agencies in lieu of some of their block grant funds. Ten
States are taking advantage of this provision to obtain the
services of the Public Health Service specialists.
Monitoring Implementation
We are monitoring block grant implementation to identify and
help resolve any problems. In line with the intent of the
statutes, we cannot involve ourselves in States' day-to-day
administration of the blocks, take positions on resource
allocation decisions, or require the kind of detailed data
often provided on the categorical programs. Interestingly, the
blocks have stimulated close cooperation between us and organi-
zations of States about monitoring and data collection. For
example, associations of State agencies, such as the National
Governors Association, are collecting data on a voluntary basis
and we are working closely with them.
STATE ACTIONS
Through these voluntary information collection efforts,
discussions with State officials and others, and review of
State applications and plans, we believe we have a fair idea of
what the States are doing, but our data are not complete
nor highly quantitative. I can, however, provide you a summary
of our preliminary assessment of what is happening in the
States in several key areas of block grant operation.
Involvement by State Legislatures and Governors
In general, the governors and State legislatures have been
directly involved in block grant implementation. The governors'
offices have been more heavily involved in the planning and
resource allocation of the block grants than they were in many
Federal categorical programs. About two-thirds of the governors
established task forces or similar groups to study implementa-
tion options and the impact of Federal budget reductions on
State programs. In some States, the governors and their staffs
also took major roles in coordinating block grant implementa-
tion. The governors of several States employed strategies that
included holding public hearings, and preparing analyses of
issues for the legislature.
PAGENO="0076"
72
State legislatures have been involved primarily with establishing
broad priorities for programs and services funded by the blocks.
In several States authority to apply for, accept, or expend
Federal funds resides with or must be authorized by the
legislature. Anticipating the Federal block grant initiative,
several State legislatures passed laws requiring legislative
concurrence with the application for and acceptance of Federal
funds. Many other State legislatures have taken steps to
ensure legislative review of block grant implementation
activities.
State Administration
As expected, the State executive branch agencies continue to
retain authority in planning and administering programs funded
by the block grants, especially since the completion of transi-
tion activities. In most cases, the agencies designated as
responsible for implementing the block grants were those that
administered the corresponding programs prior to the block
grants.
Even though this is the first year of block grant implementa-
tion and States had little lead time in preparing for the
block grant, some organizational changes have been made as a
result of the block grants. For example, in Louisiana the
governor placed the Community services block grant in the State
Department of Labor. In Vermont, the governor assigned a block
grant manager for each block grant. Several States also
made organizational changes within agencies designated to
administer block grant programs.
We believe that States may make more administrative changes as
they have an opportunity to make longer range plans in response
to their own State needs and priorities.
Public Hearings and Public Participation
There appears to have been greater access by the public to
information about the intended use of block grant funds than
was the case with the categorical programs. In accordance with
the Federal block grant legislation,~ all of the States undertook
activities to inform the public of the availability of block
grant pre-expenditure reports for public review and comment.
Most of the States published advertisements in one or more
major newspapers noting the locations where copies of the
reports were available. In a few States, toll-free telephone
numbers were provided and public service announcements have
been used.
In addition, a large number of States sponsored special activi-
ties to inform and consult with the public, local government
officials, service providers, and interested organizations.
These activities generally related to planning for block grant
implementation and establishing service and program priorities.
For many of the States, FY 1982 was the first year that the
public has been involved in the planning process for some of
the block grant programs. While some States did not provide
PAGENO="0077"
73
extensive opportunities for public involvement because of time
constraints, they plan to do so prior to FY 1983. Now that the
States have had-an opportunity to review their processes, there
are indications that the States nay standardize participation
procedures across the block grants and rely more extensively on
public hearings of the legislatures.
Service Delivery
In general, the approaches to service delivery and service
delivery priorities that States described in their block grant
applications and plans appeared to be similar to previous
practices. Few major shifts were planned for the first year
of block operation. -
Inter-Block Transfers
Five blocks allow limited transfer of funds to other blocks.
So far, 36 States have taken advantage of the transfer provi-
sions or are planning on doing so. Thirty-three States are
transferring funds from the Energy block to other blocks,
primarily the Social Services block. Four other States have
transfered funds to Maternal and Child Health from the other
two health block grants. From the Community Services block,
three States are transferring funds to the Older Americans Act
program and one State to the Head Start program. One State
has transferred funds from the Social Services block to another
block grant program.
In sum, we believe that States have handled the block grant
programs responsively and responsibly. States have moved
quickly to expand the involvement of a wide spectrum of
people and groups. But, because Of the short period of time
between passage of the legislation and implementation of
the block grant programs, they have moved slowly in making
changes in the service delivery systems, service priori-
ties and administrative structures.
PROPOSED LEGISLATIVE CHANGES
For fiscal year 1983, we are proposing some changes inexisting
block grant statutes that would consolidate a few additional
programs, and reduce and standardize Federal requirements. We
also are proposing to establish one additional block for child
welfare services. Specifically --
o We are proposing that three additional programs be
consolidated in the Primary Care block grant--Family
Planning, Migrant Health, and Black Lung Clinics--and
that the requirements imposed on the States under this
block be simplified significantly. We also are proposing
that States be required to administer this block after a
one-year transition period. Currently, because of
onerous requirements (such as prohibiting any of its
funds from being used for administrative costs), it
appears that only a few States will choose to operate it
inFY 1983 unless the legislation is changed.
PAGENO="0078"
74
o For the Maternal and Child Health block, we are proposing
that the Department of Agriculture's Women, Infants and
Children's program be combined with it because those
programs are often operated by the same agency at the
local level, and because nutrition and health services
delivered together can improve people's health substan-
tially. We also are proposing simplification and
standardization of administrative requirements and
inclusion of the special grant component of this block in
the State grant portion.
o We are proposing that the Emergency~ Assistance program
authorized by title IV-A of the Social Security Act be
consolidated into the Low-Income Home Energy Assistance
block, thereby creating a mechanism for assisting low-
income families and individuals with emergencies of all
types.
o Finally, the new child welfare block grant would consoli-
date current programs providing funding for foster care,
adoption assistance, and child welfare services under
parts A, B, and E of title IV of the Social Security Act,
providing a more flexible funding rneähanisn for States to
protect the welfare of children. The safeguards for
foster care children created by the Congress in the
Adoption Assistance and Child Welfare Act of 1980 are
maintained.
Proposed amendments to existing block grants to further reduce
and simplify administrative requirements imposed on the States
include changing from annual to biennial audit requirements,
reducing the required content of State applications, and
standardizing interbiock transfer provisions.
THE NEW FEDERALISM AND THE BLOCKS
The existing and proposed block grants are part of a logical
progression from a federally dominated categorical grant-in-aid
system to the State oriented system proposed under the New
Federalism. Under the New Federalism, all ENS blocks are
viable candidates for inclusion in the set of programs to be
turned back to complete State control over several years.
Block grants are a mid-way point in this necessary transfer of
authority and responsibility from the Federal Government to the
States. The Administration is working with the National
Governors Association and other State and local organizations
on specific provisions of its New Federalism proposal, and
plans to have its proposal to the Congress soon for considera-
tion. In the meantime, we will continue to press for simpli-
fication and standardization of the block grants and other
Departmental programs, such as grants for. welfare adminis-
trative costs.
THE UNIFORM BLOCK GRANT MANAGEMENT ACT
Since we just received a draft of proposed "Uniform Block Grant
Management Act," I cannot respond to its contents provision-by-
provision. I can, however, provide some initial thoughts.
PAGENO="0079"
75
First, we support fully its goal of making the block grant
administrative requirements consistent, and have attempted to
do this for HHS blocks through our regulations, and our recent
legislative proposals. Thus, the Act probably would have
little real impact on HHS programs. We view block grant
administration by the States as something that is evolving over
this and the next several years. States understand the require-
ments in the current statutes and are well along in preparing
for block operation for FY 1983. Making changes now that add
new requirements or increase existing ones may slow that
preparation.
Second, concerning some particular provisions of the Act, we
are unclear how they relate to similar provisions in current
law. For example, why does the head of a Federal agency need
to approve State payments for audits and reserve one percent of
the block funds for this purpose? Under our blocks, States can
use block monies for this purpose without prior approval. And
what is the relationship to the transition provision in the
draft bill to transition provisions in current law for the
blocks?
In sum, we suggest proceeding very cautiously in formulating
any legislation that would standardize all administrative
requirements, giving careful consideration to its timing and
potential impact on State operation. It would be useful to
gain more experience with block administration before making
major changes. Regardless, we would be pleased to continue
discussions with this Subcommittee on ways to standardize and
simplify block grant administrative requirements.
CONCLUS ION
Mr. Chairman, in conclusion, we believe that the transition
from categorical to block operation in the health and human
services area has been both rapid and reasonably smooth.
States have been responsible and responsive to their citizenry,
and we look forward to continued efficiencies and improvements
in service delivery effectiveness as a result of the blocks.
PAGENO="0080"
THE FIHS BLOCK GRN~fl'S
F&IRPOSES
PROGHAMS ODNSOLIDP~TED
AppPoE'RLNrIO~I
($ millions)
Preventive Health
and Health Services
Prevent injury, illness
and death and iit~rove
the quality of life.
o Hypertension Control
0 Health Incentive Grants
o Risk Reduction/Health' Education
o Podent Control
o Dser9ency Medical Services
o nape & Crises Services
o Fluoridation
o Ibne Health
81.6
Alcohol, Drug Abuse
Provide mental health,
alcoholism
o Alcohol Project and ~brnzila Grants
Abuse Project and ~brmula Grants
434
and Mental Health
drug abuse &
o Drug
Mental Health Services
.
prevention treatment &
rehabilitation, and
o
.
services for chronically
mentally ill.
.
MATERNAL AND
CHILD HEALTH
Improve health of
rrothers and children.
o Grants for MCII and Crippled Children' s
Services
o Payments for SSI Disabled Children
o Sudden Infant I)sath Syndrcire
o Laad-Based Paint tkisoning
o Adolescent Health
347.5
o Hei~philia
o Genetic Diseases
o Research and Trainim3
PRIMARY CARE
Improve health of
o Catm.inity Health Centers
Met Authorized
until Fl 1983
.
pDpulations in need.
PAGENO="0081"
tURPOSES
PROGRAMS CX)NSOLIDP~TED
APPROPRIATION
($ millions)
SOGIAL SERVICES
.
Prcrrote econcinic self-
support and self-
sufficiency. Prevent
neglect, abuse and
exploitation.
Provide alternatives
to institutional care
as appropriate.
o Social Services
o E~y Care Services
o State and Local Training
.
~
,
2,400
CONMUNITY SERVICES
Prdvide health,
nutrition, housing and
employment-related
services to low-
inccme persons.
o Ccxwrunity Action S
o Discretionary Programs
- Camrunity Developrent Corporations
- Crnminity Facilities
- Youth Sports
- Rural ~busirxg
and Seasonal Farrm~orkers
348
~
- Migrant
IJ~1-INCC(~1E IICME
Provide heating,
0 Low-Incone Energy
1,875
EJ~]ERGY ASSISTANCE
cooling, emergency,
ar~1 weatherization
services to low-
inccine households.
PAGENO="0082"
STATES
IN
BWCK GR~RT STATUS
STATES NOT
IN
TERRITORIES
IN
INDIAN
TRIBES
PRUVERTIVE HEALTH
48
+ D.C.
California
2
2
AM) HEALTH SERVICES
New York
ALCOHOL, DRUG ABUSE
49
+ D.C.
California
4
6
& MENTAL HEALTI.1
.
MATERNAL AND
48
+ D.C.
California
4
NONE
CHILD HEALTH
New York
-
AUTHORIZED
SCXIAL SERVICES
50
+ D.C.
NONE
6
NONE
AUTHORIZED
CONt~TJNITY SERVICES
40
+ D.C.
*
Alaska
California
Colorado
Florida
Georgia
New Mexico
New York
Texas
Virginia
W. Virginia
6
86
LO~7-INCCt1E HONE
50
+ D.C.
NONE
6
123
ENERGY ASSISTANCE
PAGENO="0083"
79
Senator DURINBERGER. Our next two witnesses will appear as a panel.
They are both elected officials of local governments. One is Mayor
Angelo Martinelli of Yonkers, N.Y., who is representing the U.S.
Conference of Mayors. We also have Commissioner Diane Ahrens, of
Ramsey County, Minn., which includes the city of St. Paul and some
of its suburbs. Ms. Ahrens is here representing the National Associa-
tion of Counties. Let's start with Commissioner Ahrens.
TESTIMONY OP DIANE AHRENS, COMMISSIONER OP RAMSEY
COUNTY, MINN., ON BEHALF OP THE NATIONAL ASSOCIATION OP
COUNTIES, ACCOMPANIED BY RONALD GIBBS, ASSOCIATE DIREC-
TOR, NATIONAL ASSOCIATION OP COUNTIES; AND ANGELO MAR-
TINELLI, MAYOR OF YONKERS, N.Y., ON BEHALF OP THE U.S.
CONFERENCE OP MAYORS, ACCOMPANIED BY LAURA DEKOVEN
WAXMAN, ASSISTANT EXECUTIVE DIRECTOR, U.S. CONFERENCE
OP MAYORS
Ms. AHRENS. Chairman Durenberger, I have on my left Ron Gibbs,
associate director of the National Association of Counties (NACo).
I want to say that I have brought with me good Minnesota weather
to Washington. I hope you appreciate that.
I am an elected county commissioner in Ramsey County. I serve as a
member of the Human Services Policy Steering Committee for the
National Association for Counties. I am pleased to appear this morn-
ing on NACo's behwlf to present our views on the effects of the nine
most recent block grants on county government, its operation and its
capacity to continue the services.
As NACo stated before this subcommittee last October, counties sup-
port wider uses of the block grant mechanism. We do not believe, how-
ever, that block grants should be used as a budget cutting tool. In fact,
Mr. Chairman, we passed a resolution at our March legislative confer-
ence which calls for a moratorium of all further budget cuts, including
the fiscal year 1983 proposals. Our solution urges a pacing of the devo-
lution process.
Regarding block grants: It is extremely difficult to provide you with
a clear and accurate record of their impact. Frankly, it is just too early
to assess. As the National Governors' Association report says: "Most
were compromised sharply in the congressional process * * * States
had little opportunity to plan." This and other factors have delayed
the impact. It would also be more misleading to make an assessment
in isolation from the impacts of inflation, of increasing unemployment,
and of the States' fiscal crises. All of these compound the impact on the
procedure and the growing number of distrusts in our communities.
It is our belief, Senator, that the real test will begin under the next
fiscal year. With much tighter budgets, far fewer Federal dollars,
States' assumption of new responsibilities and a year of planning
time, the full effects of the block granting experience will be better
known. In the meantime, however, I can provide you with a few exam-
ples. As you are well aware, not all States operate the same. Some
States will design excellent systems and provide ample opportunities
for local governments to be involved in the planning process. On the
other hand, other States will simply provide local governments with a
plan, fait accompli.
PAGENO="0084"
80
In my State, intergovernmental cooperation involving counties has
been largely window dressing. When done, it is more often than not
done to suit the State's hidden agenda. This becomes more understand-
able when one considers that counties are viewed as an administrative
arm of the State government, particularly the State legislature. Only
500 counties in the country have home rule. We are viewed as that unit
which functions to do State government's bidding.
The following could serve to illustrate that the block grant pro-
grams with reduced funding is ill advised.
In Minnesota, we have labored under a social services block grant
for over 2 years. Our legislature passed the Community Social Services
Act which simply combined the title XX money and the State cate-
gorical money for social services. This one pot was then allocated on
a formula basis according to a county plan. Just what social services
were to be provided was left largely to the county's discretion. Shortly
thereafter, the State imnosed a levy limitation on t.he human services
budget and the title XX program was cut at the Federal level.
Ramsey County was forced to cut social services programs by one-
third. We cut or eliminated 93 purchase of services contracts. We cut
services to the mentally retarded, the mentally ill, and the chemically
dependent by 36 percent. We eliminated all of our support services
for day care, and we cut homemaker/chore services by 35 percent.
These are all services to people within the safety net group.
Prior to the funding cutbacks, this block grant approach might have
worked rather well. It was a good idea. It certainly gave counties a
great deal more control over important decisions. The block grant con-
cept could work, and work well under certain conditions. Those con-
ditions are: A guaranteed pass-throuoh to local units, no reduction in
the appropriations, and a lessening of Federal and State regulations.
In California, the experience is quite different. The State legislature
has a permanent provision for only the social services block grant and
has obtained only a temporary provision for the others. The tempo-
rary provision requires that funding and reductions be passed through
on a pro rata basis to all current providers. It also established a task
force with token county representation.
Many States have developed advisory councils. Not all advisory
bodies are truly advisory. Some have been created because of the man-
dated requirement under CDBGU and not necessarily because of an in-
tense interest on behalf of the States to consult and work with local
governments in the planning process. What we have seen is an in-
crease in State Advisory Commissions on Intergovernmental Rela-
tions, or State ACIRs. We view this as a positive outgrowth.
Let me move quickly to budget cuts. Though the 1983 budget is not
this morning's topic, we believe it is too intertwined with the problem
to ignore. NACo continues to endorse the goal of a balanced budget.
It should not, however, be achieved at the expense of domestic
programs.
Last year, counties sustained over a 15-percent reduction in Federal
funding. The efforts that county governments made to maintain service
levels despite funding cutbacks were tremendous. While the full im-
pact of those cuts have not been totally realized, there is a pervasive
feeling among county governments that all the fat has been eliminated.
Last year's cuts forced many counties to reduce employment, to cut
PAGENO="0085"
Si
back on service hours, and to postpone badly needed investments in
the infrastructure.
Many counties had to raise property or sales taxes. In Ramsey
County, the share of the property tax which the commissioner levied
increased 20 percent this year. The total property tax levy in the city
of St. Paul went up by 40 percent this year.
Counties are facing additional burdens as they strive to support the
needy who are now ineligible for AFDC and food stamps. In our
county, with 11,000 Indo-Chinese refugees, we face the increasing im-
pact on the property tax because of Federal Government cutbacks in
refugee support. Many counties foresee difficulty in maintaining the
fiscal viability of county hospitals.
Because of State cuts in health services for the indigent, our county
had to levy additional funds to provide this care at our public hospital.
Of our local county's increase in the tax levy, 75 percent was attributa-
ble to those cuts.
Mr. Chairman, we do have some recommendations as to what we
would suggest in the written statement. I see my time is up.
Senator DURENBERGER. Whatever recommendations you have will
be included in the record. We thank you for being here.
Mr. Martinelli?
Mr. MARTINELLI. Mr. Chairman, I appear before you today on be-
half of the U.S. Conference of Mayors, where I chair the Subcom-
mittee on Human Services. I have with me Laura Waxman, who is
the assistant executive director of the Conference. We are very pleased
to have this opportunity to discuss block grants because they are a
matter of great concern to my fellow mayors across the country.
Last June at the annual meeting of the Conference of Mayors, we
adopted a comprehensive policy on block grants. While mayors have
supported the concept of block grants and grant consolidation for
many years, there are certain provisions which we feel block grant
legislation should contain.
These include:
1. The granting of funds directly or through the States to local gov-
ernments of appropriate size, with a demonstrated service delivery
capacity, which wish to receive them;
2. The involvement of local governments in the planning and re-
source allocation process so that locally identified needs can be taken
into account;
3. An adequate level of funding;
4. Maintenance of effort requirements and measures to avoid signif-
icant disruption of existing programs;
5. The allocation of funds among and within the States based not
just on population, but targeted to need and the population in need
of service;
6. Eligibility requirements to insure that the people served through
the block grants are in need;
7. Assurances that State administrative requirements will not be
onerous, and a 5-10 percent limit on the administrative costs that can
be incurred;
8. A transition period during which the block grants can be imple-
mented;
PAGENO="0086"
82
9. The collection of data to enable annual monitoring and evaluation
of the block grants by the Federal Government to assure that the funds
are properly spent; and
10. A logical grouping of programs which, at a minimum, combines
programs whose purposes are related and will maintain a Federal re-
sponse to particular national problems.
It is the feeling of the U.S. Conference of Mayors that provisions
such as these will make it more likely that block grants will adeauately
address the needs of urban residents, particularly those in need. Tjnfor-
tunately, the block grants enacted through the Reconciliation Act last
summer contained only a few of these provisions.
The Uniform Block Grant Management Act which you have pro-
posed, Mr. Chairman, does contain a number of *these provisions,
however. We intend to continue working with you on that legislation.
Let me make several comments on your legislation.
While we applaud the consultation requirements in the legislation,
we feel they could be strengthened to assure that local government of-
ficials have an opportunity to take part in the State decisionmaking
process governing the allocation of funds.
There should be direct funding to local governments or strong pass-
through provisions. Funds should be targeted to areas and populations
in need. There should be eligibility requirements to assure that those
people who receive the services are themselves in need.
We support the proposed cap on State administrative costs.
There should be assurances that multiyear funding projects will be
continued for as long as the local government has made a commitment
to the project. This is especially important under the "Small Cities"
portion of the Community Development Block Grant program. The
Housing and Community Development Amendments of 1981 included
carefully-developed transition provisions which reflect the unique his-
tory of the small cities program. These provisions would be superseded
by your bill. We feel that they should be specifically exempted. Indeed,
the 1981 amendments include a number of solid provisions which define
the State-local relationship.
We feel it would be advantageous to exempt the Community De-
velopment Block Grant program entirely from the Uniform Block
Grant Management Act.
What we have been able to learn about the implementation of the
block grants so far convinces us of the need for many of these pro-
visions. In a survey done of 100 cities, by the U.S. Conference of
Mayors in November, we learned that:
Of the cities responding. 55 nercent said that the State had neither
consulted with them nor offered an opportunity to participate in the
State's decisionmaking process. And 38 percent said that they had
not been able to get information from their States about the imple-
mentation of the block grants.
Since November, we have not had an opportunity to get systematic
information from cities on block grant implementation, but we have
a general sense of what has been happening. Things have not been all
that different than they were before block grants. The program cuts
have not been as severe as expected. Differences in funding cycles made
more funds available in the current fiscal year than had been antici-
pafed.
PAGENO="0087"
83
Many city officials had little opportunity to be involved in State
programs, like title XX, prior to the block grants, and have had little
opportunity since their enactment. Cities often had trouble getting
information from the States before, and they still have trouble.
Although the first year of block grant implementation saw little
change, more is anticipated in future years.
The community services block grant is a case in point. The legisla-
tion requires that the States continue to fund designated community
action agencies during the first year of implementation, but then it
opens up the possibilities to other local governments and agencies
for the succeeding years. There was little change recorded during the
first year. Indeed, a survey done by the Institute for Local Self-
Government in Berkeley showed that the local character of community
action agencies is basically being retained. The States are still funding
community action agencies, and are not mandating program priorities
or particular services. There is a definite trend, however, toward dis-
tributing the community services block grant funds throughout the
State, rather than targeting them to needy areas. The requirements
for administration and reporting are still up in the air.
We understand that a number of States are considering legislation,
such as what has been enacted in Montana, which would pass through
the community services block grant to all counties primarily on the
basis of population, but also of economic need. While this does repre-
sent the pass-through which we always call for, it is one that is not
targeted and one that would spread the funds around so thinly that
little could be accomplished with them in any one community.
Our main concern is that the needs of urban residents be met. While
it is still too early to evaluate the block grants which have been
enacted, little has happened to allay our concerns. For this reason, it is
the position of the U.S. Conference of Mayors that action on the addi-
tional block grants proposed for fiscal year 1983 be deferred until the
block grants already enacted can be evaluated. In addition, we feel it
does not make sense to enact another series of block grants until basic
decisions regarding the turnback and trust bond proposals are made. It
would make little sense from either a managerial or a service delivery
standpoint to make major programmatic changes and then make them
again 1 or 2 years later.
Mr. Chairman, the mayors are grateful to you for the significant
effort you have made to try to rationalize our Federal system. We
appreciate the opportunities afforded us so far to take part in this
process. We are anxious to continue to work with you.
Senator DURENBERGER. Thank you for your statement.
Let me ask you both two general questions. One, I am getting
the impression that, if it weren't for many of the Governors and some
other people who got involved in this process. It might have been
facing a real disaster in looking back over block grant implementation.
It seems to me that we, in O~ngress, did everything in our power to
make it almost impossible to adequately implement the block grants.
We pronosed them ba.ck in March; we passed them in July; we made
them effective in October; we appropriated the money in December;
then we changed some of the appronriations. Lord knows how any-
body. did any good with any of it. However, a lot of good has been
accomplished which is evidenced by the fact that, in your testimony
PAGENO="0088"
84
today, both of you can indicate some successes. The Governors' con-
fer~nce report also indicates that some good was accomplished.
Would it be fair to say that, generally, at the State level, sincere,
good-faith efforts were made to do a good job of implementing the
block grants? Or, were people just sitting on their hands? Wasn't there
an awful lot of activity out there, with people trying to do a good job
in implementing the block grants?
Mr. MARTINELLI. I am not going to comment with regards to the
desire to do a good job.
The one thing I can tell you is basically taught from experience.
Our experience has been that, if there aren't these mandated pass-
through requirements by the Federal Government, it is not going to
come down to our level in the proper way.
Now, there may be desires to do a good job, hut by the same token-a
perfect example of this is the Aging money that has come from the
Federal Government to the States. It then passes on to the counties.
In the city of Yonkers, which has almost 200,000 people, we have set up
an office in the agency. We fund that out of our budget. Therefore, the
administrative costs are already included there. Because there is no
requirement to pass it directly through to the city o~F Yonkers, it goes
through the State where administrative money is siphoned off. It then
goes to the county, where administrative money is siphoned off. They
administer the program and dole it out on a target program to the
city of Yonkers.
We would like that money, if it was earmarked from the Federal
Government, passed through the State and the county, without being
touched in regard to administrative money. We have already provided
the administrative money to the local level. We have that money. We
put it into our budget. We can then use the full dollars to be able to help
our elderly.
What we are fearful of is that it is going to operate that way, unless
there are provisions in the Federal law that say, "You must pass it
through." As long as we are adequately the delivery point, we can
assume the delivery of those services. There are certain criteria that
make sure that a local government can handle that money. I think
that should be done.
Senator DURENBEROER. Diane, before you respond to my first ques-
tion, I would like to ask a second one which the mayor brought up.
That is. there is probably a difference between blocking some formula
categoricals and blocking some of the project grant programs. It is my
observation that the States don't have a lot of experience in making
grants to local governments or to anybody else. That experience usually
lies at the county level where you do contracting for services. States do
not have much experience in making grants, so the mayor may be right.
In New York. they don't know how to make a grant to Yonkers or
any place like that.
I would like you-in reflecting on the degree to which a block
grant's success is due to people working very hard to try to make it
a success-to also reflect on the ability of States to take over the re-
sponsibility for making grants to local governments. What faith
would you have in a State like Minnesota, or any other State, being
able to manage project grants and other kinds of grants to local
governments?
PAGENO="0089"
85
Ms. AHRENS. Mr. Chairman, in terms of your first question: yes;
I think we are trying very hard on a local level. We are trying very
hard on the State level. It is not a problem of trying.
The problem comes where the block grant has been promulgated at
a time when many other things are beginning to fall apart-and you
know about the fiscal situation in the State of Minnesota and its im-
pact on the counties. They couldn't levy a limitation on the human
services area in the government, which is over the entitlement pro-
grams. There is a levied limitation on the entitlement programs as
well as on the social services programs. In order to pay our entitlement
bills, we simply had to eliminate vast areas of our social services pro-
grams at the same time we were cutting title XX.
You can't look at any of these in isolation from what is going on
around us. Unemployment is going up. We have 11,000 refugees who
have moved off-not all of them, but hundreds of them-moved off of
AFDC onto GA. The Federal Government-and this is not assured-
will only pay 100 percent of GA for 18 months. Many of our Mon~ol
members will never become job sufficient in that 3-year period
because of their special problems.
You just cannot talk about block grants and their success or failure
in isolation from all of the other things that are happening to us.
I can't think of a period in the history of local governments when we
faced chaos from day to day.
Yes, we are trying to assist at the State level and at the local level
in terms of the whole block grant process. NACo, the U.S. Conference
of Mayors, and the League of Cities have been putting on regional
conferences around the country to help local administrators and local
officials sift through this grant process so that they can do a better job.
Yes, we are trying.
Senator DURENBERGER. What we are trying to do in these hearings,
if at all possible-and it may not be-is to lift the process we are going
through out of the realities of current economics. We are all very fam-
iliar with the unfortunate coincidence of recession, unemployment,
cutbacks, and the resistance on the part of taxpayers at the various
levels to pick up the gap. What I am searching for is what is good
about the process and what needs to be changed.
It strikes me that the other problem we have here is-and here I
certainly reflect maybe on my own State-that the States, in general,
have sort of become intermediaries in a lot of these areas we are talk-
ing about. Generally, they have just become intermediaries between
the Federal Government and the local governments. The local govern-
ments do all the work and really spend the money and meet the needs.
The Federal Government provides the regulations, the financing, the
audits, the paperwork, and all that sort of thing.
The States just sit there, in between, and shuffle things back and
forth. Generally, what the States have long been doing is trying to
address some of the fiscal problems of local governments.
Clearly, when you talk about the levy that the Minnesota Legisla-
ture put on, that levy probably contributed more to the 35 or 36 per-
cent shortfall than did Reaganomics, blocking, or any of that sort of
thing. We didn't cut those programs by that much. A lot of it was
the way the States reacted to their traditional role of taking on more
and more and more of the financial responsibility for running local
PAGENO="0090"
86
government. I suppose our State is ahead of most States. However,
something in the neighborhood of 75 percent of State revenues now
go to local governments.
You come on times of crunch, and you don't have Federal moneys
to spend. You have already indexed inflation out of your income tax,
and inflation is still being reflected in the high cost of services. So,
your real estate tax and your local tax goes up. It isn't going up because
the Federal Government is starting a blocking process for categoricals.
What we are looking for in these hearings from local government
is how we, in the process of making States more responsible again,
can do a better job of blocking programs to or through State govern-
ments. I think your observations on that is that it takes something
like public participation and local government participation. I think
the mayor quoted some statistics which I assume came from your
November study.
Mr. MARTINELLI. Yes.
Senator DtTRENBERGER. I assume things have improved since then,
in terms of local government participation in this whole process. Is
that not correct?
Mr. MARTINELLI. We haven't really determined whether or not they
have improved at this point. We sense that they have improved. All
we are really saying is that, somewhere along the line in the Federal
regulation, we would like direct pass-through. We would like to be in-
volved in the clecisionmaking of at least telling the States to consider
talking to local governments.
Usually you have three stages of development: the State, the
county, and the local governments. Each one is politically different, in
~riost cases. Politics does play an important role in how the funds are
distributed. What we are worrying about is something which you
brought up before, Mr. Chairman. The fact that the States might tend
to say, because they are magnanimous, "We want to provide a little
bit to all the voters of the State." Therefore, they dissipate the little
money we may now have, instead of sending it into areas of real
need. They are dissipating it throughout the State into areas that don't
really need it. That is what we are worried about.
We feel that is why there should be provisions for pass-throughs
and also for local government involvement-whether it be the county,
the city, or such-as to exactly how they are going to work out this
process. We are afraid they may feel that they know how to do it.
Senator DURENBERGER. Just a second.
My point there-and I probably didn't make it clear-is that States
haven't much experience with targeting needs. All they have been
doing is passing through money for federally targeted needs into a
local community. So, they don't have much experience with that.
Our choices are to continue to have us make the targeting decisions;
pass it right through the State into those communities; or develop some
ability on the part of the States to work with local governments to
come up with a way to target needs better than we can under the
present system.
I think what I would ask you to say, if you can, is that you don't
have any faith in the States doing that: or, that you think there are
some changes in the blocking process which would facilitate this ca-
pacity on the part of the States.
PAGENO="0091"
87
Diane, do you want to respond to that ~
Ms. AHRENS. Yes, Mr. Chairman. First of all, there should be some
sort of mandate for an association. We would like that negotiation to
be forced at the State level. It would be very nice to have it at the Fed-
eral level, as well, particularly in the Federal departments. I think the
Department of Agriculture has come up with a 3-percent error rate
regulation for food stamps, with absolutely no input-that we know
of-from the local jurisdictions administering them. It is an absolutely
ridiculous regulation.
In Minnesota, we have a formula that was developed in a legislative
process whereby the CSSA money is distributed to counties. I will
go back to the mayor's point; it is a very good point. That was a
political process. We fought it out with the legislature and with the
rural areas. We didn't come off, we felt, as well as we should have.
Perhaps some kind of a formula relationship developed at the Federal
level, and suggested to the States, would be useful.
We are always going to have problems. My theory is that, given
the political situation with the States, the money will flow out to the
areas where the needs are not the greatest. I don't know how to get
around that, but that is the simple fact of life we have to deal with.
I think in Minnesota we had a good process for that, and we just
fought it out. I think, because we went through it 2 years ago, we don't
want to open it up again. We could end up losers if we were to open
that process up again.
Senator DtTRENBEROER. OK. Thank you.
Mr. MARTINELLI. If you want an answer as to whether we trust the
States: A very loud "No." We don't trust the States. Maybe they
haven't h~d the ability in the past to handle this. We just don't trust
that they are going to be able to do it properly. That is why we are
coming to you and asking you to implement something, somewhere in
the law, which gives us a shot at making it work properly.
Senator DURENBERGER. I just want to say in response to that that I
don't trust the Federal Government. [Laughter.]
The point of this whole discussion is to find a way in which we can
develop the greatest amount of trust wherever we have the greatest
access. I am very frustrated about the refugee problem. I am frustrated
about a lot of other things. It is not Reaganomics, or Stockmanomics,
or anything else.
There have just got to be better ways of doing these things. It isn't
as simple as saying the Federal Government is going to quit, that
we are ~oin~ to diimn it. We nee~l to find a trustworthy relationship
here, so that we aren't just spreading resources around and missing
the target.
I thank you very much for your contributions this morning.
EThe prepared statement of Ms. Ahrens follows:)
PAGENO="0092"
88
National Association of CàUntiPS
Offices * 440 First Street, N.W., Washington, D.C. 20001
Bernard F. Hlltenbrand, Executive Director
Telephone: (202) 393-6226
STATEMENT OF
THE HONORABLE DIANE AHRENS
ELECTED COUNTY COMMISSIONER,
RAMSEY COUNTY, MINNESOTA
ON BEHALF OF
THE NATIONAL ASSOCIATION OF COUNTIES
BEFORE THE
SUBCOMMITTEE ON INTERGOVERNMENTAL RELATIONS
COMMITTEE ON GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
REGARDING IMPLEMENTATION
OF BLOCK GRANTS ~
WASHINGTON, D. C.
MAY 11, 1982
PAGENO="0093"
89
STATEMENT OF THE HONORABLE DIANE AHRENS, ELECTED COUNTY COMMISSIONER,
RAMSEY COUNTY, MINNESOTA, ON BEHALF OF THE NATIONAL ASSOCIATION OF COUNTIES,
BEFORE THE SUBCOMMITTEE ON INTERGOVERNMENTAL RELATIONS, COMMITTEE ON
GOVERNMENTAL AFFAIRS, UNITED STATES SENATE, REGARDING IMPLEMENTATION OF
BLOCK GRANTS, WASHINGTON, D.C., MAY 11, 1982.
CHAIRMAN DURENBERGER, AND DISTINGUISHED MEMBERS OF THIS COMMITTEE, MY
NAME IS DIANE AHRENS. I AN AN ELECTED COUNTY COMMISSIONER IN RAMSEY COUNTY,
MINNESOTA, AND I SERVE AS A MEMBER OF THE HUMAN SERVICES POLICY STEERING
COMMITTEE FOR THE NATIONAL ASSOCIATION OF COUNTIES* (NACo). I AM
PLEASED TO APPEAR BEFORE YOU THIS MORNING ON NACo's BEHALF TO PRESENT
OUR VIEWS ON THE EFFECTS OF THE NINE MOST RECENT BLOCK GRANTS TO COUNTY
GOVERNMENT, IT'S OPERATION AND IT'S CAPACITY TO CONTINUE SERVICES.
AS NACo STATED BEFORE THIS COMMITTEE LAST OCTOBER, COUNTIES SUPPORT
WIDER USES OF THE BLOCK GRANT MECHANISM. WE CONTINUE TO SUPPORT EFFORTS
TO BALANCE THE BUDGET. BUT WE DO NOT BELIEVE THAT BLOCK GRANTS SHOULD BE
USED AS A BUDGET CUTTING TOOL. IN FACT, MR. CHAIRMAN, THE NATIONAL
ASSOCIATION OF COUNTIES PASSED A RESOLUTION AT OUR MARCH LEGISLATIVE
CONFERENCE WHICH CALLS FOR A MORATORIUM ON ALL FURTHER BUDGET CUTS
INCLUDING FISCAL YEAR 1983 PROPOSALS. OUR RESOLUTION URGED A "PACING"
OF THE DEVOLUTION PROCESS TO ENSURE A STABLE AND ACCEPTABLE REALIGNMENT
OF OUR FEt)ERAL SYSTEM. ACCORDING TO THE NACo POLICY, SUCH A REALIGNMENT
MUST PRESERVE NATIONAL EQUITY IN INCOME MAINTENANCE PROGRAMS.
* The National Association of Counties is the only national organization
representing county government in the United States. Its membership spans
the spectrum of urban, suburban, and rural counties which have joined
together for the common purpose of strengthening county government to meet
the needs of all Americans. By virtue of a county's membership, all its
elected and appointed officials become participants in an organization
dedicated to the following goals:
- improving county governments;
- serving as the national spokesman for county governments;
- acting as a liaison between the nation's counties and other
levels of government; and
- achieving public understanding of the role of counties in the
federal system.
PAGENO="0094"
90
EFFECTS OF BLOCK GRANTS ON STATE
PROCESSES, LOCAL INVOLVEMENT
AND SERVICE DELIVERY
REGARDING BLOCK GRANTS, SENATORS, IT IS EXTREMELY DIFFICULT TO PROVIDE
THIS COMMITTEE WITH A CLEAR AND ACCURATE RECORD OF HOW WELL BLOCK GRANTS
ARE FARING THROUGHOUT THE COUNTRY. FRANKLY, IT IS JUST TOO EARLY TO ASSESS.
AS THE RECENT NATIONAL GOVERNORS' ASSOCIATION REPORT SAYS, "MOST OF (THE
GRANTS) WERE COMPROMISED SHARPLY IN THE CONGRESSIONAL PROCESS AND
THE STATES HAD LITTLE OPPORTUNITY TO PLAN FOR THIS NEW ASSUMPTION OF
RESPONSIBILITY. ALL THESE FACTORS HAVE ... REDUCED THE NUMBER OF CHANGES
IN THE FIRST FOUR MONTHS." IN ADDITION, BECAUSE OF THE VARIOUS DELAYS
CAUSED BY BOTH THE CONGRESSIONAL AND REGULATORY PROCESS STATE LEGISLATURES
HAD LITTLE OR NO TIME TO ACT. SOME STATES SIMPLY FAILED TO ASSUME SOME
OF THE BLOCK GRANTS.
IT IS OUR BELIEF, SENATORS, THAT THE REAL TEST WILL BEGIN UNDER THE
NEXT FISCAL YEAR. WITH MUCH TIGHTER BUDGETS, FAR FEWER FEDERAL DOLLARS,
STATE ASSUMPTION OF NEW RESPONSIBILITIES, AND A YEAR OF "PLANNING TIME,"
THE FULL EFFECTS OF THE BLOCK GRANT EXPERINCE WILL BE BETTER KNOWN. IN
THE MEANTIME, HOWEVER, WE CAN PROVIDE YOU WITH A FEW EXAMPLES OF OUR
COUNTIES' ACTIVITIES. WE PREMISE THE REMARKS, HOWEVER, WITH THE CAVEAT
THAT NOT ALL STATES OPERATE THE SAME. SOME STATES WILL DESIGN EXCELLENT
SYSTEMS AND PROVIDE AMPLE OPPORTUNITIES FOR LOCAL GOVERNMENT TO BE INVOLVED
IN THE PLANNING PROCESS. ON THE OTHER HAND, SOME STATES WILL SIMPLY PROVIDE
LOCAL GOVERNMENT WITH A PLAN, FAIT ACCOMPLI. ANY PROCESS FOR CONSULTATION
IS FOR SHOW ONLY, A RUBBER STAMP TO THE STATES' PREDETERMINED GOALS.
PAGENO="0095"
91
HUMAN SERVICES AND HEALTH
BLOCK GRANTS
SENATORS, IT HAS BEEN MY EXPERIENCE THAT THE AMOUNT OF REAL
INTERGOVERNMENTAL COOPERATION INVOLVING COUNTIES IN MY STATE, HAS BEEN
LARGELY "WINDOW DRESSING." WHEN DONE, IT IS MORE OFTEN THAN NOT TO SUIT
THE STATE'S HIDDEN OR NOT SO HIDDEN AGENDA. THIS BECOMES MORE UNDERSTANDABLE
WHEN ONE CONSIDERS THAT COUNTIES ARE VIEWED AS AN ADMINISTRATIVE ARM OF
STATE GOVERNMENT - PARTICULARLY THE STATE LEGISLATURE. ONLY 500 COUNTIES,
NATIONWIDE, HAVE HOME RULE. VIEWED BY STATE GOVERNMENT AS THAT UNIT WHICH
FUNCTIONS TO DO ITS BIDDING, COUNTIES ARE MOST OFTEN IN THE POSITION OF
"REACTING."
IN MINNESOTA, WE DO HAVE A HIGHLY DEVELOPED ASSOCIATION. WE COOPERATE
BETWEEN AND AMONG THE SEVEN METRO COUNTIES THROUGH A JOINT POWERS
AGREEMENT. THE METRO INTER COUNTY ASSOCIATION. UNDER THAT UMBRELLA, SOLID
WASTE, 911, RAIL AUTHORITY, AND VARIOUS ENVIRONMENTAL ISSUES ARE TACKLED.
THIS ASSOCIATION HIRES LOBBYISTS TO ADVOCATE ON OUR BEHALF AT THE STATE
LEGISLATURE.
WITH RESPECT TO BLOCK GRANTS, WE IN MINNESOTA HAVE LABORED UNDER A
SOCIAL SERVICES BLOCK GRANT FOR OVER TWO YEARS. OUR LEGISLATURE PASSED
THE COMMUNITY SOCIAL SERVICES ACT WHICH SIMPLY TOOK THE TITLE XX MONEY AND
ADDED TO IT THE STATE MONEY THAT HAD FORMERLY BEEN GIVEN TO COUNTIES ON A
CATEGORICAL BASIS FOR SOCIAL SERVICES.
THIS ONE POT WAS THEN ALLOCATED ON A FORMULA BASIS AS A BLOCK GRANT
TO COUNTIES FOR SOCIAL SERVICES ACCORDING TO A COUNTY PLAN APPROVED BY THE
DEPARTMENT OF PUBLIC WELFARE. JUST WHAT SOCIAL SERVICES WERE TO BE
PROVIDED WAS LEFT LARGELY TO THE COUNTIES' DISCRETION. UNDER THIS APPROACH
MOST COUNTIES HAD FEWER DOLLARS THAN BEFORE. BUT THEN THE STATE LESSENED
PAGENO="0096"
92
THE DOLLARS EVEN FURTHER THROUGH A LEVY LIMITATION ON HUMAN SERVICE
BUDGETS. OUR TITLE XX PROGRAM WAS CUT. TO PAY OUR INCREASING
ENTITLEMENT BILLS, THE COUNTY CUT SOCIAL SERVICE PROGRAMS BY ONE-THIRD.
WE CUT OR ELIMINATED NINETY THREE PURCHASE OF SERVICE CONTRACTS, CUT
SERVICES TO THE MENTALLY RETARDED, MENTALLY ILL AND CHEMICALLY DEPENDANT
BY THIRTY-SIX PERCENT. WE ELIMINATED ALL OUR SUPPORTIVE SERVICES FOR
DAY CARE AND CUT HOMEMAKER/CHORE SERVICES BY THIRTY-FIVE PERCENT.
HOWEVER, PRIOR TO THE FUNDING CUTBACKS, THIS BLOCK GRANT APPROACH
MIGHT HAVE WORKED RATHER WELL OVER THE LONG HAUL. IT WAS A GOOD IDEA.
ALTHOUGH IT WAS ORIGINALLY THOUGHT BY MANY TO BE DEVISED TO GET THE
VARIOUS ADVOCACY GROUPS OFF THE BACKS OF STATE LEGISLATORS AND ON TO
COUNTY COMMISSIONERS, IT CERTAINLY GAVE COUNTIES A GREAT DEAL MORE CONTROL
OVER IMPORTANT DECISIONS.
DECISIONS TO CUT BACK ARE CERTAINLY NOT EASY, SENATORS, BUT WE
DEVELOPED A SOUND SYSTEM WHICH INVOLVED BOTH CITIZENS AND STAFF. WE
DESIGNED A CRITERIA OF NEED AND POINTS SYSTEM. PARTICIPANTS THEN
ALLOTTED POINTS TO EACH PROGRAN TO RANK ITS IMPORTANCE. IT WAS A
THOROUGH PROCESS. IT SHOULD SERVE TO ILLUSTRATE WHY THE BLOCK GRANT
APPROACH FOR ENTITLEMENT PROGRAMS WITH REDUCED FUNDING IS SO ILL-
ADVISED. WE HAVE ATTACHED A COPY OF OUR RANKING SYSTEM FOR THE RECORD.
RANSEY COUNTY HAS REQUESTED THAT THE STATE USE THIS FORMULA
FOR DISTRIBUTING ANY OTHER "BLOCK GRANTS" THAT THE FEDERAL GOVERNMENT
MAY ENACT. YOU MIGHT SAY IN MINNESOTA WE ALREADY HAVE IN PLACE STATE-
WIDE, A STRUCTURE THAT BLOCK GRANTS CAN "PLUG INTO."
-4-
PAGENO="0097"
93
BECAUSE THE STATE HAS NOT TAMPERED WITH THE SYSTEM ALREADY IN PLACE,
THE EFFECT OF THE FEDERAL BLOCK GRANTS IN MINNESOTA HAVE NOT YET BEEN
FULLY DETERMINED.
IN CALIFORNIA, THE EXPERIENCE IS QUITE DIFFERENT. THE STATE
LEGISLATURE HAS PERMANENT PROVISION FOR ONLY THE SOCIAL SERVICES BLOCK
GRANT AND HAS OBTAINED ONLY A TEMFORARY PROVISION FOR THE OTHER BLOCK
GRANTS. THE TEMPORARY PROVISION REQUIRES ALL OTHER BLOCK GRANT FUNDING
AND REDUCTIONS BE PASSED THROUGH ON A PRO RATA BASIS TO ALL CURRENT
PROVIDERS. IT ALSO ESTABLISHED A TASK FORCE WITH ONLY TOKEN COUNTY
REPRESENTATION TO MAKE RECOMMENDATIONS REGARDING THE DECISION-MAKING
RESPONSIBILITY, COMMUNITY INVOLVEMENT AND METHODS OF ALLOCATING BLOCK
GRANTS.
MANY STATES HAVE DEVELOPED COMMISSION OR ADVISORY COUNCILS. THE
TOTAL NUMBER, HOWEVER, IS MISLEADING IN THAT NOT ALL ADVISORY BODIES ARE
TRULY ADVISORY. SOME HAVE BEEN CREATED BECAUSE OF THE MANDATED REQUIREMENT
UNDER THE CDBG BLOCK GRANT AND NOT NECESSARILY BECAUSE OF AN INTENSE
INTEREST ON BEHALF OF ALL STATES TO CONSULT AND WORK WITH LOCAL GOVERNMENTS
IN THE PLANNING PROCESSES TO DISTRIBUTE BLOCK GRANT DOLLARS.
COMMUNITY DEVELOPMENT
AS WITH THE HUMAN SERVICE AREA, THE STATE EXPERIENCE UNDER THE
"SMALL CITIES" CDBG BLOCK GRANT IS ALSO MIXED. SOME STATES, SUCH AS
NEVADA, HAVE DONE AN OUTSTANDING JOB DESPITE THE ADMINISTRATIVE PROBLEMS
TO HONESTLY INVOLVE LOCAL GOVERNMENTS IN THE PLANNING PROCESS. ON THE
OTHER HAND, SOME STATES SUCH AS UTAH, HAVE SUBSTANTIALLY LIMITED LOCAL
GOVERNMENT INPUT. TWO STATES HAVE NOT AND DO NOT PLAN TO TAKE OVER
THE PROGRAM -- COLORADO AND CALIFORNIA. COLOARDO HAS BEEN HESITANT
BECAUSE IT DOES NOT WANT TO ASSUME THE PROGRAM SHOULD FEDERAL FUNDING
-5-
99-965 0 - 82 - 7
PAGENO="0098"
94
CEASE AND CLAIFORNIA HAS NOT BEEN ABLE TO SUCCESFULLY RESOLVE AN
INTERNAL DISPUTE OVER WHICH STATE AGENCY WOULD BE APPROPRIATE TO ADMINISTER
THE PROGRAM. IN ALL CASES, HOWEVER, THE STATE-ADMINISTERED "SMALL CITIES"
COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM HAS BEEN SEVERELY HAMPERED IN
IMPLEMENTATION DUE TO AN INORDINATELY LONG PERIOD OF TIME IN FINALIZING
REGULATIONS. THIS DELAY HAS RESULTED IN CONSIDERABLE UNCERTAINTY AND
CONFUSION ON THE PART OF LOCAL GOVERNMENTS AND THE STATES WHICH MAY
HAMPER SUCCESSFUL IMPLEMENTATION OF THE NEW PROGRAM.
THE DELAY IN ISSUING FINAL REGULATIONS -- FROM NOVEMBER 1981 TO
APRIL 1982 -- RESULTED FROM A DISPUTE BETWEEN THE ADMINISTRATION AND
THE CONGRESSIONAL BANKING COMMITTEES OVER FUNDAMENTAL PHILOSOPHICAL ISSUES
PERTAINING TO THE PRINCIPLE PURPOSES OF THE ACT. THE ADMINISTRATION TOOK
THE VIEW THAT "MAXIMUM FEASIBLE DEFERENCE" BE GIVEN TO THE STATES TO
IDENTIFY TARGET POPULATION, DEVELOP REPORTING REQUIREMENTS AND PERFORMANCE
REPORTS AND APPLICABILITY OF OTHER FEDERAL LAWS. WHILE SOME ACCOMMODATION
OF CONGRESSIONAL CONCERNS WAS MADE BY THE ADMINISTRATION, IT REMAINS
UNSATISFACTORY TO THE HOUSE BANKING CO~1MITTEE AND ITS VERSION OF THE
ANNUAL HOUSING AUTHORIZATION LEGISLATION CONTAINS A RESTATEMENT OF
CONGRESSIONAL INTENT THAT STATES MUST SERVE LOW AND MODERATE INCOME PERSONS
AND OPERATE UNDER FAIRLY SPECIFIC PERFORMANCE STANDARDS. WE THINK THESE
CHANGES ARE ESSENTIAL
WE ARE HOPEFUL THAT FURTHER DELAYS DO NOT OCCUR IN IMPLEMENTATION OF
THIS PROGRAM SO THAT FUNDING CAN BE QULCKLY MADE AVAILABLE TO MEET THE
PRESSING COMMUNITY DEVELOPMENT NEEDS OF THE NATION'S SMALLER COUNTIES
AND CITIES.
-6-
PAGENO="0099"
95
BUDGET CUTS
MR. CHAIRMAN, THOUGH WE REALIZE THIS HEARING WAS NOT CALLED TO DISCUSS THE
FISCAL YEAR 1983 BUDGET, NEVERTHELESS, WE IN COUNTY GOVERNMENT BELIEVE THAT THE
BUDGET IS TOO INTRICATELY INTERTWINED WITH THE BLOCK GRANT AND NEW FNDERALISN
ISSUES. SOME DISCUSSION IS NECESSARY. NACo CONTINUES TO ENDORSE THE GOAL (`F A
BALANCED BUDGET, HOWEVER, WE BELIEVE A BALANCED BUDGET SHOULD NOT BE
ACHIEVED AT THE EXPENSE OF DOMESTIC PROGRAMS IN FISCAL 1983. LAST YEAR,
COUNTIES SUSTAINED OVER A 15% REDUCTION IN FEDERAL FUNDING. THE EFFORTS
THAT COUNTY GOVERNMENTS MADE TO MAINTAIN SERVICE LEVELS DESPITE FUNDING
CUTBACKS WERE TREMENDOUS. WHILE THE FULL IMPACT OF LAST YEAR'S CUTS HAVE
NOT BEEN TOTALLY REALIZED, THERE IS NOW A PERVASIVE FEELING AMONG COUNTY
GOVERNMENTS THAT ALL OF THE "FAT" HAS BEEN ELIMINATED. LAST YEAR' S CUTS
FORCED MANY COUNTIES TO REDUCE EMPLOYMENT, CUT BACK ON SERVICE HOURS AND
SERVICES SUCH AS DAY-CARE ASSISTANCE AND POSTPONE BADLY NEEDED INVESTMENT
IN INFRASTRUCTURE REPAIRS. MANY COUNTIES HAVE HAD TO RAISE PROPERTY OR
SALES TAXES, A POLICY VIEWED UNFAVORABLY BY CITIZENS WHO RECEIVE, IN
RETURN, A CUTBACK RATHER THAN AN INCREASE IN SERVICES. COUNTIES ARE
FACING ADDITIONAL BURDENS AS THEY STRIVE TO SUPPORT THE NEEDY WHO ARE
NOW INELIGIBLE FOR FEDERAL AFDC AND FOOD STAMPS. MANY COUNTIES FORESEE
DIFFICULTY IN MAINTAINING THE FISCAL VIABILITY OF COUNTY HOSPITALS WHICH
PROVIDE SERVICES TO MANY POOR PEOPLE WHO ARE INELIGIBLE FOR MEDICARE AND
MEDICAID. FURTHER REDUCTIONS IN REVENUES WOULD SERIOUSLY AND NEGATIVELY
IMPACT ON THE ABILITY OF COUNTIES TO PROVIDE BASIC AND VITAL SERVICES
TO CITIZENS.
WHILE WE CONTINUE TO SUPPORT BLOCK GRANTS AND TRANSFER TO THE STATES
OF MANY CATEGORICAL PROGRAMS UNDER THE PRESIDENT'S PROPOSED TURNBACK, WE
PAGENO="0100"
MUST INSIST ON A MORATORIUM OF FURTHER REDUCTIONS IN THE FEDERAL PROGRAMS
THAT AFFECT COUNTIES UNTIL WE CAN DETERMINE WHAT THE IMPACT OF THE CUTS
WILL BE ON OUR CONSTITUENTS. WE HAVE NOT FOUND THAT COUNTIES ARE ABLE
TO MAKE UP THE LOST FEDERAL FUNDS. ALTHOUGH MANY SERVICES ARE BEING
PRESERVED BY JUGGLING FUNDS AND PROGRAMS, IN MANY CASES. HOWEVER, THE
SERVICES ARE JUST DISAPPEARING.
WE WILL CONTINUE TO SUPPORT THE (:ONSOLIDATION OF NARROW CATEGORICAL
PROGRAMS INTO BLOCK GRANTS THAT INSURE THE PARTICIPATION OF COUNTY
ELECTED OFFICIALS IN THE FUNDING AND ALLOCATIONS DECISION PROCESS,
PROVIDED THAT THE FEDERAL FUNDING LEVEL OF THE BLOCK GRANTS IS NOT
SUBSTANTIALLY REDUCED. SPECIFICALLY, WE OPPOSE FURTHER REDUCTIONS IN
THE SOCIAL SERVICES BLOCK GRANT, THE C:OMMUNITY SERVICES BLOCK GRANT,
AND THE LOW INCOME ENERGY ASSISTANCE ILOCK GRANT. FOR THE SOCIAL SERVICES
BLOCK GRANT (TITLE XX), NACo SUPPORTS PROVISIONS OF H.R. 5791, INTRODUCED
BY MR. FORD OF TENNESSEE, WHICH WOULD SET 1983 SPENDING AT $2.6 BILLION,
AND INCREASE TO $3.0 BILLION BY 1985, WHICH IS STILL LESS THAN THE 1983
LEVEL WOULD HAVE BEEN PRIOR TO THE REC:ONCILIATION ACT LAST YEAR.
THE PROPOSED CHILD WELFARE BLOCK GRANT IS ACCEPTABLE, AT 1982 FUNDING
LEVELS FOR THE PROGRAMS CONTAINED WITF:IN IT, AND PROVIDED THAT FUNDS ARE
APPROPRIATED SEPARATELY FOR FOSTER CARE MAINTENANCE PAYMENTS, AS PROVIDED
IN THE ENTITLEMENT LANGUAGE ESTABLISHED LAST YEAR.
BOILER PLATE LANGUAGE
SENATORS, THE NACo POLICY PRESENTED MERE LAST OCTOBER HAS NOT
CHANGED. WE SUPPORTED THEN, AND CONTINUE TO SUPPORT, THE BOILERPLATE
LANGUAGE DEVELOPED BY CHAIRMAN DURENBERGER. WE HIGHLY SUPPORT
LANGUAGE WHICH CALLS FOR THE STATE'S C:ONSULTATION WITH LOCAL GOVERNMENTS
IN PREPARING THE STATE'S PLAN TO EXPEED BLOCK GRANT DOLLARS.
-8-
PAGENO="0101"
97
PASS-THROUGH PROVISION
AS PREVIOUSLY REQUESTED, NACo CONTINUES TO SUPPORT A PASS-THROUGH
PROVISION FOR LOCAL GOVERNMENTS. WE RECOMMEND FOR THE COMMITTEE'S
CONSIDERATION THE FOLLOWING LANGUAGE:
FOR ENTITLEMENT AND CATEGORICAL PROGRAMS THAT ARE WHOLLY LOCALLY
FUN, A 100% PASS-THROUGH SHALL BE REQUIRED. THIS PASS-THROUGH SHALL BE
FULL, DIRECT AND WITHOUT ENCUMBRANCE.
FOR BLOCK GRANT PROGRAMS, SUCH AS CETA AND CDBG, WHERE FUNDING IS
PRESENTLY SPLIT (i.e., ENTITLEMENT, BALANCE OF STATE OR NON-ENTITLEMENT)
OR PASSED THROUGH BY THE STATES TO SOME DEGREE, THE DIRECT FEDERAL-LOCAL
ENTITLEMENT FUNDING ARRANGEMENT WOULD BE MAINTAINED. TFU BALANCE
DISTRIBUTED TO THE STATES WOULD THEN BE PASS THROUGH ON THE BASIS OF A
PERCENTAGE THAT WAS AVAILABLE TO LOCALITIES AS THE AVERAGE OF FISCAL
YEARS 1981 AND 1982 LEVELS IN THAT PARTICULAR PROGRAM.
REPORTING REQUIREMENTS
SENATORS, NACo RECOMMENDS AMENDING THE OMNIBUS RECONCILIATION ACT OF
1981 UNDER "ACCESS TO RECORDS BY THE COMPTROLLER GENERAL" TO INCLUDE A
NEW SECTION DEALING WITH REPORTING REQUIREMENTS. THE NEW SECTION WOULD
REQUIRE UNIFORM REPORTING OF DATA ON SPENDING BY THE STATES. CURRENTLY,
STATES ARE REQUIRED TO SUBMIT DATA IN A FORMAT TO BE SPECIFIED BY THE
SECRETARY~ UNFORTUNATELY, NO SPECIFIC FORMAT HAS BEEN ESTABLISHED. NACo
BELIEVES ACCOUNTABILITY TO CONGRESS ON THE SPENDING OF FEDERAL DOLLARS
CAN ONLY BE ASSURED IF REPORTING AMONG THE STATES IS CARRIED OUT ON A
UNIFORM BASIS.
NACo POLICY ON BLOCK GRANTS
AS WE PROVIDED FOR THE COMMITTEE LAST OCTOBER, THE NATIONAL ASSOCIATION
OF COUNTIES WISHES TO REPEAT OUR POLICY ON BLOCK GRANTS. OUR POLICY
-9-
PAGENO="0102"
98
GUIDELINES SPECIFICALLY CALL FOR THE FOLLOWING PROVISIONS IN ANY BLOCK
GRANT PROGRAMS:
o FIRST, A BLOCK GRANT TO CONSOLIDATE PROGRAMS MUST BE ACCOMPANIED
BY AN ABSOLUTE REDUCTION IN FEDERAL MANDATES AND REGULATIONS.
o THERE MUST BE A REASONABLE TRANSITION PERIOD TO ALLOW STATES AND
COUNTIES TO MAKE THE NECESSARY LEGAL ADJUSTMENTS AND TO CONSOLIDATE
PROGRAMS, SERVICES, AND FISCAL RESOURCES, BEFORE FUNDING IS REDUCED.
FOR MOST PROGRAMS, A MINIMUM PERIOD OF TWELVE TO TWENTY-FOUR MONTHS
IS NEEDED FOR ORDERLY TRANSITION. THE DIFFERING BUDGET CYCLES AND STATE
LEGISLATIVE SESSIONS MAKE IMMEDIATE ADJUSTMENT TO NEW BLOCK GRANTS IMPOSSIBLE.
IN MOST CASES, COUNTIES OPERATING PROGRAMS MUST WAIT FOR STATE ENABLING
LEGISLATION.
o A BLOCK GRANT OR OTHER SPENDING REDUCTION CANNOT SERVE MERELY
TO SHIFT COSTS FROM THE FEDERAL TREASURY TO STATE AND LOCAL TAXPAYERS.
NAC0 WILL VIGOROUSLY OPPOSE ANY SUCH SHIFTING.
o FEDERAL BLOCK GRANT FUNDS SHOULD BE ALLOCATED DIRECTLY TO
GENERAL PURPOSE LOCAL GOVERNMENTS WHERE AN EXISTING SERVICE DELIVERY
SYSTEM IS IN PLACE: AND
o THERE MUST BE PROVISIONS TO ASSURE PASS-THROUGH OF FUNDS TO
COUNTIES THAT OPERATE THE PROGRAMS, IN ORDER TO PRESERVE THE SAFETY NET OF
LIFE-SUSTAINING SERVICES THAT COUNTIES MUST OPERATE. TO FURTHER ASSURE THAT
BLOCK GRANT FUNDS ARE AVAILABLE FOR LOCAL SERVICE DELIVERY, THERE SHOULD
BE A CAP ON THE AMOUNT THE STATES CAN RETAIN FOR ADMINISTRATIVE COSTS,
SUCH AS THE TEN PERCENT LIMIT PROVIDED IN THE SENATE PASSED HEALTH BLOCK
GRANTS.
-10-
PAGENO="0103"
99
o FURTHER, NAC0 POLICY SPECIFIES THAT THERE SHOULD BE NO MATCHING
REQUIREMENTS, MAINTENANCE OF EFFORT, OR EARMARKING OF FUNDS WITHIN BLOCK
GRANTS. MOST OF THE BLOCK GRANT PROPOSALS IN THE RECONCILIATION BILLS
VIOLATE SOME OR ALL OF THESE PRINCIPLES.
o FINALLY, NACo OPPOSES BLOCK GRANTS FOR ENTITLEMENT PROGRAMS SUCH
AS AFDC, FOOD STAMPS, AND MEDICAID, AND BELIEVES THAT THE FEDERAL
GOVERNMENT SHOULD CONTINUE TO MAINTAIN PRIMARY RESPONSIBILITY FOR THE
PROBLEMS OF INCOME MAINTENANCE, WHICH ARE MORE NATIONAL IN CHARACTER.
CONCLUSION
IN CONCLUSION, CHAIRMAN DURENBERGER, NAC0 SUPPORTS FEDERAL EFFORTS TO
INCREASE THE BLOCK GRANT MECHANISM. HOWEVER, AS OUR TESTIMONY HIGHLIGHTS,
WE MUST KEEP IN MIND THE FOLLOWING FACTORS AS WE MOVE TOWARD THIS END:
THE VARIOUS DELAYS IN PASSING BLOCK GRANTS, DEVELOPING REGULATIONS,
COUPLED WITH THE LIMITED STATE PLANNING TIME AND THE STATE LEGISLATURE'S
ADJOURNMENTS, HAS NOT ALLOWED FOR A TRUE TESTING OF THE BLOCK GRANT
EXPERIENCE. THE REAL TEST WILL BEGIN UNDER FISCAL YEAR 1983. COUNTIES
WILL HAVE A MUCH BETTER FEELING OF HOW WELL THIS PROCESS WORKS AFTER THE
`83 BUDGET HAS HAD TIME TO FILTER THROUGH THE SYSTEM. THIS COMMITTEE,
MR. CHAIRMAN, SHOULD CONSIDER HOLDING HEARINGS BY MID Oft LATE 1983.
THE CUMULATIVE IMPACT. OF BLOCK GRANTS, STATE GOVERNMENT FISCAL
DISTRESS, FEDERAL BUDGET CUTS, AND POSSIBLY MORE STATE/LOCAL GOVERNMENT
RESPONSIBILITIES UNDER NEW FEDERALISM, HAS JUST BEGUN TO IMPACT LOCAL
GOVERNMENTS. WE NOW SEE THE RESURGENCE OF 1930 SOUP LINES IN NUMBERS
-11-
PAGENO="0104"
100
AND IN AREAS NOT KNOWN BEFORE. FISCAL YEAR 1983 WILL MOST LIKELY
EXACERBATE THIS PROBLEM.
THE CONSULTATION PROCESSES ESTABLISHED UNDER THE STATES NEED
MORE WORK. SOME STATES MAY NEED ADDITIONAL INCENTIVES TO PROVIDE
MEANINGFUL OPPORTUNITIES TO SEEK LOCAL INVOLVEMENT IN THE ACTUAL
PLANNING STAGES FOR FUND EXPENDITURE.
THE PASS THROUGH OF FUNDS CONTINUES TO BE A PRESSING CONCERN.
BLOCK GRANT LANGUAGE SHOULD AND MUST RECOGNIZE THE ROLE GOVERNMENTS
PLAY AS THE PRINCIPLE SERVICE PROVIDERS AND PROVIDE FOR THE MANDATORY
PASS-THROUGH OF ADEQUATE RESOURCES.
THE CONGRESS MUST RECOGNIZE THE INTENSE FISCAL STRESS ON OUR
INTERGOVERNMENTAL SYSTEM AND AGREE TO A MORATORIUM ON ANY FURTHER
BUDGET CUTS FOR THOSE DOMESTIC PROGRAMS FUNDED THROUGH STATE AND LOCAL
GOVERNMENTS UNTIL THE SYSTEM HAS HAD TIME TO STABILIZE AND ACCESS ITS
RESOURCES.
SENATORS, THE NATIONAL ASSOCIATION OF COUNTIES APPRECIATES THIS
OPPORTUNITY TO APPEAR BEFORE YOU THIS MORNING. WE HOPE AND URGE YOU
TO CONTINUE THIS OVERSIGHT ON BLOCK GRANTS. WE ENCOURAGE THIS COMMITTEE
TO TARE A CLOSE LOOK AT THIS ISSUE WHEN WE ARE WELL INTO THE FY 1983
BUDGET, AND URGE YOUR SUPPORT TO APPROPRIATE FUNDING FOR THE PRESENT
BLOCK GRANT PROGRAMS AT THE FY 1982 BUDGET LEVELS. WE WILL BE HAPPY
TO ANSWER ANY QUESTIONS YOU MAY HAVE REGARDING THIS STATEMENT, AND
LOOK FORWARD TO CONTINUING TO WORK WITH YOU IN OUR COMMON INTEREST TO
BALANCE THE BUDGET AND RESPONSIBLY IMPROVE OUR INTERGOVERNMENTAL
SYSTEM.
THANK YOU.
-12-
PAGENO="0105"
101
Senator DURENBERGER. I would like to introduce our next witness
who is Charles A. Bo~ysher, Comptroller General for the U.S. Gen-
eral Accounting Office. He is used to providing information to us.
Prior to an assignment at the General Accounting Office, he was a
partner in the international accounting firm of Arthur Andersen where
he directed the government service program in Washington, D.C.
Mr. Bowsher, we welcome you. Your full statement will be made
part of the record. You can do whatever you please, as long as you stay
within 7 minutes.
TESTIMONY OP CHARLES A. BOWSHER, COMPTROLLER GENERAL,
U.S. GENERAL ACCOUNTING OFFICE, ACCOMPANIED BY HARRY S.
HAVENS, ASSISTANT COMPTROLLER GENERAL, AND GENE L.
DODARO, SUPERVISORY GAO EVALUATOR
Mr. BOWSHER. Thank you, Mr. Chairman.
I welcome the opportunity to appear this morning. I would like to
submit my detailed statement for the record and just highlight our ob-
servations here.
Shortly after the block grant legislation became effective, we began
monitoring the transition process. We visited 13 States across the
country and talked to over 000 State, local, and Federal officials. The
State transition to block grant administration is progressing as well
as could be expected, considering the short time frame for proceeding
with implementation, the funding reductions accompanying the pro-
grams and the uncertainty surrounding the block grant appropriations.
Because implementation is still unfolding, a complete picture is not
yet available, but certain facts have emerged in the States we. have
visited. One important factor in the transition to most block grants
was a State's considerable involvement in the predecessor programs.
States had already received the vast majority of funds from these
programs. To the extent this involvement existed, administrative
frameworks were in place. Where State experience was not as exten-
sive, more adjustments were made as necessary.
During early implementation, a major concern was coping with the
reduced funding levels. The scope of adjustment to the three health
block grants and the community services block grants, however, was
limited, in part by legislative provisions designed to insure continued
funding for established services and grantees. Moreover, continued
Federal outlays from awards made under the superseded categorical
programs were providing States additional time and resources to
adjust to the reduced funding levels.
In contrast, more changes were made immediately in block grants
which had no ongoing categorical outlays and fewer legislative restric-
tions. For example, to cope with the funding reductions in the social
services block grant, States more frequently altered previously estab-
lished funding patterns and employed options to transfer funds among
the block grants.
Although the scope of the. block grant funding changes varied,
officials in all 13 States we visited complained that planning was corn-
plicated by the uncertainty of block grant appropriations. Also, offi-
cials turned to non-Federal sources-such as awards, liaison officers,
PAGENO="0106"
102
public interest groups, professional organizations, and grantees-to
obtain data for management.
While initially concentrating on obtaining information to handle
budget reductions, certain States have reported~ or contemplate mak-
ing, changes to take advantage of reduced Federal requirements. It
was too early to make any definitive judgments on efficiencies emanat-
ing from the block grants.
The block grants placed great reliance on State oversight processes.
In this regard, State legislatures are expected to become increasingly
involved in block grant decisions. Tn 9 of the 13 States we visited, the
legislatures had enacted measures influencing early block grant imple-
mentation and enhancing their oversight of future block grant
decisions. Additionally, 11 of the 13 States we visited held hearings
for at least one block grant. The views of citizens and local entities
were obtained through a variety of ways. A more definitive picture
will emerge next year because the public hearings requirements will be
in effect and more time will be available to obtain comments on the
block grant program.
Our primary vehicle for assuring accountability and assessing com-
pliance with Federal law is the State audits of block grant funds.
Audit strategies are being developed. Questions have arisen concern-
ing such matters as the scope of audit coverage required and the reim-
bursement of audit costs. To help address these concerns, the Office of
Management and Budget, last month, provided States with a paper
describing a framework for audits of block grants.
We at the GAO believe that a standardized audit provision might
be desirable for future block grants. We are in the process of develop-
ing such a provision which covers both State and local government
audit responsibilities. We will make this legislative language avail-
able to the subcommittee when it is completed. We will be happy, at
that time, to discuss how your proposed Block Grant Management
Act could be modified.
Because efforts to refine block grant audit legislation coincide with
actions to develop the single audit concept, there is a need to promote
effective implementation of this concept. I plan to provide leadership
by forming an audit policy advisory committee consisting of repre-
sentatives from both the public and the private sector audit and user
community.
This committee can focus on problems such as developing a practical
and effective quality review process. We suggest that the provisions
relating to a quality review process be deleted from your Uniform
Block Grant Management Act pending deliberations by the audit
policy advisory committee. We will keep you advised of our progress
and inform you promptly when we can offer definitive recom-
mendations.
I would like to turn now to certain other block grant developments.
The act calls for the Secretary of Health and Human Services to
consult with GAO and t.he States concerning the form and content
of the health block grant annual reports. The Department has decided
it will not prescribe the standard form but will simply require States
to develop annual reports that meet legislative requirements. The
States have been working together to provide consistent information
among the States, but it is too early to tell if this approach will pro-
duce sufficient information needed for national policymaking.
PAGENO="0107"
103
There are a number of crosscutting national policy requirements
which were enacted through legislation other than the Reconciliation
Act. These requirements apply to a range of activities receiving Fed-
eral financial assistance. By and large, the Reconciliation Act is silent
on the crosscutting requirements other than civil rights, and so are
agency regulations.
Given the short time available to implement the block grants, States
are just now considering these issues. Some State officials are uncertain
as to the applicability of these requirements and believe that Federal
advice would be helpful. We believe the administration should clarify
whether these requirements apply to the block grants. If the adminis-
tration considers an applicable requirement to be inappropriate, then
it should propose remedial legislation to the Congress.
For the next few years, I plan to place a special emphasis on various
aspects of the block grant program. As our work progresses, we will
keep this subcommittee fully informed. My colleagues and I would be
pleased to respond to any questions, Mr. Chairman.
Senator DtTRENBERGER. On that last point, are you familiar with the
0MB Circular A-102? That is the basic management circular for the
Federal grant.
Mr. BOWSHER. Yes.
Senator D1JRENBERGER. It seems to me that the adminisfration has
already made a decision: 0MB has exempted block grants from the
provisions of A-102. A-102 is one of the crosscutting requirements that
you mentioned in your testimony.
It also seems that States have been put in a rather difficult position.
The Congress has said that these provisions apply to every recipient of
Federal assistance, but 0MB says that they don't apply to block grants.
We have 63 of these on the books covering everything from civil rights
to environmental issues. I think this is a major issue that needs to be
resolved quickly.
I wonder if GAO has a view on how we ought to go about making the
decision-they either apply or they don't; or some of the 60-plus ought
to apply to certain blocks and not others.
Do you have some advice for us on that ~
Mr. BOWSHER. Mr. Chairman, we agree with you about the confusion.
The fact is that people are out there looking for guidance. They had not
focused on these too much when we were doing our work. However, we
can tell that it was beginning to be a worry. We think it will be.
We believe the administration should look at these individually, and
come up with decisions. Then they should come to the Congress if they
doiiot believe that the requirements should apply, and ask for remedial
language.
Otherwise, we think some guidance, similar to that issued on the
audit requirements, should be put `out. I would think 0MB should be
the focal point.
Senator DURENBERGER. Let me ask you aibout the audit legislation
which you mentioned.
Can you share with us what kinds of changes you are going to rec-
ommend as to the audit requirements for the block grants?
Mr. BOWSHER. I am not sure what we will be recommending. I can
share with you our concerns in what we are looking at in the single-
audit concept and the concept of trying to get auditing done on an over-
all basis rather than on a grant-by-grant basis.
PAGENO="0108"
104
The GAO did some studies a few years back and found that this
grant-by-grant auditing was not getting the job done. A lot of indi-
vidual grants were not being audited, and some of the individual grants
were being over audited. In other words, the States were auditing; the
Federal Government was auditing; and sometimes the OPAs were
auditing.
What we think would be better is that the States would have an
overall single audit done of either the entity-which is kind of the
way I prefer it-or the overall block grant or some of the major de-
partments. Then any additional work-such as the detailed com-
pliance or the program effectiveness and things like that-would be
done, relying upon that single audit work which had already been
done. The State auditors can do that, or a State can have a CPA firm
do it-whichever way they would prefer, just as long as they have an
independent audit performed.
What we are running into are questions on definitions, who should
pay for the audit, and things like that. That is why I would like to
bring together-and I am planning to do it in early June-a group
of people from the States and from the private sector and see if we
can't get some good advice from them. Then we can come back to
you with recommendations.
Senator DrIRENBERGER. You recently testified before the House on
grant reform. If I read your testimony correctly, you reversed the long-
standing GAO position and now oppose the audit title in the grant
reform bill. I think a good legislative history would show that GAO
wrote most of the provisions in that title. I would be curious to know
why you oppose it now.
Mr. BOWSHER. We opposed the legislation at this time just be-
cause we don't think we have enough of the facts and enough read-
ing from the field, you might say. We might later subscribe to those
features in that.
Senator DURENBERGER. So you are available to returning to tradi-
tion? Maybe?
Mr. BOWSIJER. Maybe. That is right.
Senator DURENBERGER. Thank you very much for your testimony.
I appreciate your being here today.
Mr. BOWSHER. Thank you, very much, Mr. Chairman.
[The prepared statement of Mr. Bowsher follows:]
PAGENO="0109"
105
PREPARED STATEMENT OF CHARLES A. BOWSHER, COMPTROLLER
GENERAL OF THE UNITED STATES
I welcome the opportunity to appear this morning to discuss
our observations on block grant implementation.
The Omnibus Budget Reconciliation Act of 1981 assigned
States primary administrative responsibility for nine block
grants, six of which became effective on October 1, 1981. Shortly
thereafter, we began a study to monitor the transition process and
early implementation of these grants.
We visited 13 States across the country and talked to over
600 State and local officials as well as representatives of the
cognizant Federal departments. The 13 States, which are listed
in the attachment to my statement., account for over 45 percent of
the funds and an equivalent proportion of the nations population.
The State transition to block grant administration is pro-
ceeding as well as could be expected considering the short time-
frame between passage of the act on August 13 and implementation
on October 1, the funding reductions accompanying the programs,
and the uncertainties surrounding fiscal year 1982 block grant
appropriations. Because block grant implementation is still un-
folding, a complete picture is not yet available, but certain
trends have emerged in the 13 States we visited.
PRIOR STATE INVOLVEMENT
HELPED EASE TRANSITION
One important factor easing the initial transition to most
of the block grants was the States considerable involvement in
the predecessor programs. States already received the vast
majority of funds from these programs and had various ties with
PAGENO="0110"
106
program recipients. TO the extent this involvement existed, ad-
ministrative frameworks and institutional knowledge were in place.
For example, States were the exclusive recipients and were
heavily involved in administering the programs preceding the
Social Services and Low Income Home Energy Assistance block grants.
Similarly, to varying degrees, States were involved with the cate-
gorical programs which formed the Maternal and Child Health Ser-
vices; preventive Health and Health Services; and Alcohol, Drug
Abuse and Mental Health Services block grants, through direct
program administration, developing comprehensive plans, and con-
tracting for State funded programs with some of the same grantees.
Because of States' previous involvement, few major organizational
or administrative realignments were needed to accommodate the
transition to these block grants.
Where State experience was not as extensive, more adjustments
were made. For example, programs merged into the Community Ser-
vices block grant primarily were funded directly by the Federal
Government to Community Action agencies. Although States had some
program knowledge, those accepting the block grant generally have
had to develop or expand an administrative framework. Such actions
include acquiring personnel and developing monitoring and reporting
systems. Also, to provide more time for making necessary adjust-
ments, 5 of the 13 States we visited deferred assuming responsi-
bility for this program.
The three other block grants--Small Cities Community Develop-
ment, Primary Care, and Education--were not in effect on March 1,
PAGENO="0111"
107
1982, when we completed our- field work. States were determining
what adjustments will be needed to implement these grants and
considering whether to assume the optional Small Cities and
Primary Care grants. A number of States have expressed concern
over accepting the Primary Care block grant because it contains
no allowance for administrative costs, requires funding of exist-
ing community health centers, and includes a matching provision.
SEVERAL FACTORS INFLUENCED THE SCOPE
AND NUMBER OF CHANGES MADE DURING
EARLY IMPLEMENTATION -
During early implementation a major concern was coping with
the reduced funding levels accompanying block grants. Ad just-
ments were made, but factors such as ongoing outlays from pre-
decessor programs and provisiens requiring continued funding of
certain activities limited the scope of initial changes made in
most block grants.
For example, the number and scope of adjustments to the
three health block grants and the community services block grant
were limited in part by legislative provisions designed to ensure
continued funding for established services and grantees. More-
over, continued Federal outlays from awards made under the
superseded categorical programs have provided States additional
time and resources in adjusting to the reduced funding levels.
Almost all of these programs were project grants, or had
a project grant component, funded for at least a 12-month period.
Because they became effective at various times in the Federal
fiscal year, many in the last quarter, these projects are funded
3
PAGENO="0112"
108
well into fiscal year 1982. To illustrate, because States and
local entities often have been able to provide services with
1981 categorical funds, on the average, States we visited had not
yet drawn extensively upon block grant allocations made avail-
able to them during the first half of fiscal year 1982.
For the most part, States were developing plans for making
changes to the three health block grants and the community ser-
vices block grant program. A few States, however, already had
made some adjustments. For example, three States we visited had
developed formulas for allocating funds under the Community Ser-
vices block grant. According to officials, these formulas were
designed to improve targeting of funds and ensure that grantees
did not receive disproportionate funding reductions.
In contrast, more changes were made immediately in block
grants which had no ongoing categorical outlays and fewer legis-
lative restrictions. For example, to cope with funding reductions
in the Social Services block grant, States more frequently altered
previously established funding patterns and employed options to
transfer funds among the block grants. Seven of the 13 States we
visited had authorized or proposed transferring up to 10 percent
of Low Income Home Energy Assistance fundstO the Social Services
block grant. Also, all 13 States used their new option to set
aside up to 15 percent of their Low Income Home Energy Assistance
funds for weatherization.
Although the scope of block grant funding changes varied,
officials in all 13 States we visited complained that planning
4
PAGENO="0113"
109
was complicated by the uncertainty of block grant appropriations.
Also, officials turned to non-Federal sources--such as their
Washington liaison offices, public interest groups, professional
organizations, and grantees--to obtain data for planning.
While initially concentrating on obtaining information and
handling budget reductions, certain States have reported, or
contemplate making, management changes to take advantage of re-
duced Federal application and reporting requirements. For ex-
ample, eight States we visited noted that (1) less time was
required to prepare applications, (2) monitoring activities
could be combined, and/or (3) certain reports could be deleted.
Although preliminary estimates were made, officials believed it
was too early to make any definitive judgments on efficiencies
emanating from block grants.
STATE BLOCK GRANT OVERSIGHT
MECHANISMS ARE EVOLVING
The block grant legislation and regulations place great
reliance on State oversight processes. Also, a fundamental
check on the use of funds is States accountability to their
citizens. Generally, States are required to obtain public com-
ments on intended use reports or plans, hold public hearings on
the proposed use and distribution of funds, and arrange for in-
dependent audits of block grant expenditures.
State legislatures are expected to become increasingly
involved in block grant decisions. In 9 of the 13 States we
visited the legislatures had enacted measures influencing early
block grant implementatiofx and enhancing their oversight of
5
99-965 0 - 82 - 8
PAGENO="0114"
110
future block grant decisions. Such measures ranged from two
legislatures restricting the State from assuming optional block
grants to six legislatures increasing their ability to review
block grant applications and detailed plans.
Public comment was received in a number of ways. Eleven of
the 13 States we visited held public hearings for at least one
block grant, even though the public hearing requirements had
been waived for fiscal year 1982. Also, views of citizens and
local entities were obtained through such means as circulating
intended use reports and'plans and establishing advisory groups.
At the time our field work was completed, States were finalizing
plans for obtaining future public participation. A more defini-
tive picture will emerge next year because the public hearing
requirements will be in effect and more time will be available
to obtain comments on block grant plans.
ROLE OF AUDIT
A primary vehicle for assuring accountability and assessing
compliance with Federal law is State audits of block grant funds.
Audit strategies are being developed and questions have arisen
concerning what would be required to fulfill block grant audit
requirements. These questions included the scope of audit
coverage required and the reimbursement of audit costs.
To help address these concerns, the Office of Management and
Budget last month provided States with a paper describing a frame-
work for financial and compliance audits of block grants. This
document discusses factors in choosing and funding the approach
6
PAGENO="0115"
111
to audit block grants. Also, it states that 0MB will be re-
questing States to send their audit plans to the Inspectors
General so that an early dialogue can begin on the adequacy of
State audits.
While this paper addresses some important concerns, we at
the GAO believe that a more standardized audit provision may be
desirable for future block grants. Our recent work regarding
the block grant transition and developing the single audit con-
cept has prompted us to consider the types of issues which need
to be addressed in such legislation. As a result, we are in the
process of developing a standardized block grant audit provision
which we anticipate recommending that the Congress include in
future grant legislation. It would cover both State and Federal
Government auditresponsibilities. We will make this legisla-
tive language available to the Committee when it is completed.
We will be happy at that time to discuss how your proposed Block
Grant Management Act could be modified to reflect this approach.
Because efforts to refine block grant audit legislation
coincide with actions to further develop the single audit concept
there is a real need for coordination and leadership to promote
effective implementation. I plan to create the mechanism to
provide that broad based leadership by forming an audit policy
advisory committee. It will include representatives from both
the public and private sector audit and user communities such
as the Office of Management and Budget, the Inspectors General,
State Auditor Coordinating Committee, American Institute of
7
PAGENO="0116"
112
Certified Public Accountants, the Municipal Finance Officers
Association, and users from all level.s of government. This com-
mittee can provide the focus needed to address problems such as
developing a practical and effective quality review process.
In the meantime, we suggest that the provisions relating to a
quality review process be deleted from your Block Grant Manage-
ment Act pending deliberations by the audit policy advisory
committee. We will be happy to keep you advised of our progress
in this area, and we will inform you promptly when I am satis-
fied that we are in a position to offer definitive recommenda-
tions.
OTHER BLOCK GRANT DEVELOPMENTS
I would like to turn now to the subjects of annual reports
for block grants and the applicability of crosscutting national
policy requirements.
The Reconciliation Act calls for the Secretary of Health
and Human Services (HHS) to consult with GAO and the States con-
cerning the form and content of the health block grant annual
reports.
The Department has decided it will not prescribe the form
or content of these reports. Instead, HHS expects States to
develop annual reports that meet the requirements of the law.
The States have been working through the Association of State
and Territorial Health Officers to modify that organization's
health data system to meet the reporting requirements and provide
8
PAGENO="0117"
113
consistent information among States. ~there are some indications
that States are working together in developing similar reporting
approaches for other block grants as well. It is too early to
tell if this approach will produce sufficient information needed
for national policymaking.
- There are a number of crosscutting national policy require-
ments which were enacted through legislation other than the
Reconciliation Act. These requirements, such as uniform relocation
assistance, merit personnel systems, fair labor standards, environ-
mental protection, political activities constraints, and various
civil rights statutes, apply to a wide range of activities receiving
Federal financial assistance. There are general references to the
civil rights statutes in all but the Social Services and the Ele-
mentary and Secondary Education block grant statutes. Agency regu-
lations make them applicable to those programs as well.
By and large the Reconciliation Act is silent on the other
crosscutting requirements and so are agency regulations. HHS and
the Department of Education have not clarified the applicability of
these requirements in the regulations. In contrast, the Department
of Housing and Urban Development regulations address the appli-
cability of many crosscutting requirements and indicate that the
Department is deliberating on the applicability of others.
Given the short time available to plan and administer the
new block grant programs, States are just now considering these
issues. Some State officials are uncertain as to the applicability
PAGENO="0118"
114
of these requirements to the block grants and believe that Federal
advice on this matter would be helpful'. We believe the Administra-
tion should clarify for th'e States whether these requirements
apply to the block grants. If the Administration considers an
applicable requirement to be inappropriate, then it should propose
remedial legislation to the Congress.
CONCLUS ION
I have concentrated on what I consider to be the major issues
emerging from ourefforts to monitor early block grant implementa-
tion.
Over the next few years I plan to place major emphasis on
continuing to monitor the transition, reporting on services provided
under the block grants, evaluating the effectiveness of block
grant programs, and reviewing the scope and quality of State and
local auditing coverage. As our work on block grants progresses,
we will keep this Committee fully informed.
That completes my formal statement. My colleagues and I would
be pleased to respond to any questions.
10
PAGENO="0119"
115
ATTACHMENT ATTACHMENT
STATES INCLUDED IN GAO REVIEW
Cal ifornia
Colorado
Florida
Iowa
Kentucky
Massachusetts
Michigan
Mississippi
New York
Pennsylvania
Texas
Vermont
Washington
PAGENO="0120"
116
Senator DURENBERGER. Our next witnesses will be the first of two
human resources panels. Each panel will have two witnesses. The first
panel will be representing advocacy groups and the other will be
representing the services groups. Our first human resources panel will
consist of Brenda Russell from the Child Welfare League of America
and Alma Stallworth from the National Black Child Development
Association.
We will begin with Alma's testimony to be followed by Brenda.
Both of your statements will be made a part of the record. Please
proceed and stay within the 7 minutes allotted.
TESTIMONY OP ALMA G. STALLWORTH, PRESIDENT, DETROIT
METRO AFFILIATE OF THE NATIONAL BLACK CHILD DEVELOP-
MENT INSTITUTE, DETROIT, MICH.; AND BRENDA L. RUSSELL,
LEGISLATIVE ANALYST FOR CHILD WELFARE LEAGUE
Ms. STALLWORTH. Thank you very much, Mr. Chairman. My name is
Alma Stallworth. I am a voter and taxpayer within the State of Michi-
gan. I am currently employed as a policy associate at the High/Scope
Educational Research Foundation, Center for the Study of Public
Policies in Ypsilanti, Mich. I have previously served in the Michigan
House of Representatives, as a county charter commissioner, as well
as a voluntary civic leader and advocate. My 20 years of public service
have been divided equally between governmental and nongovernmental
efforts to support and expand our potential as a society to respond to
the needs of children and families.
I am here today representing the National Black Child Development
Institute (NBCDT) with its 1,000 members and 25 affiliate chapters.
I currently serve as president of the Metro-Detroit affiliate. NBCDI
primarily focuses its efforts within three major policy areas: child care,
child welfare, and education. NBCDI at the national level, as well as
the local level, is composed of a cross representation of persons and
agencies who all share a commitment to the positive development of
black children and families. I wish to share with you some of the grave
concerns of the people of Michigan regarding the New Federalism and
its impact on human services.
The idea of block grants initially had been attractive to Michigan
because many governmental officials and administrators saw this shift
as an opportunity to distribute funds in accordance with need and
with minimal restrictions, without burdensome Federal regulations.
They also anticipate continued levels of funding from Washington.
I will attempt to outline in the brief time allotted me the realities
of this shift to block grants and its fiscal impact on the Michigan De-
partment of Social Services by way of the social services block grant.
My discussion will be advanced within the context of its impact on
children and youth specifically.
In Michigan, the State has already responded to severe revenue
deficits by budget reductions throughout State departments. The De-
partment of Social Services' funding shifts had already occurred with-
in title XX by way of a transfer of adult home help to title XIX,
virtually eliminating family services and reducing day care rates.
Title IV-E and TV-B programs were also strained to funding
limits; any excess beyond a 2-percent cushion in Public Law 96-272
PAGENO="0121"
117
meant a 100-percent State fuuclino~ for foster care and adoption
subsidy. Further cuts in titles XX, IV-E and TV-B programs would
seriously c6~mpromise service delivery to significant numbers of the
Michigan population. The heaviest burden of cuts would affect the
elderly and the children-and I would have to say black children.
since we are disproportionately represented in the system. We feel
that the reforms of Public Law 96-272 were in serious jeopardy with
the proposed block grant. As you know, the act had established Fed-
eral fiscal incentives to preserve families and to move children into
permanency. The act also was cost-effective. It was estimated that
over $4 billion in costs of out-of-home care would result over the next
5 years by reducing 30 percent of the youth in care. Our total esti-
mated loss in funds was $30.4 million.
The Michigan Department of Social Services (MDSS) will lose
$5 million to Public Health for health services, health promotion,
and disease prevention activities. Another change in administrative
responsibility due to block grants is that MDSS will no longer share
the work incentive program with the Department of Labor. It has
been renamed the employment training program, and we wonder what
that means.
In terms of implementation, the State intends to participate in seven
of the nine enacted block grants. We have held hearings to collect com-
ments on the various proposals: alcohol, drug abuse and mental health;
social services; maternal and child health care; preventive health care;
and Low Income Energy Assistance. Hearings on the other two pro-
posals, community services and small cities community development,
will be held this fall.
We have proceeded to implement our block grant proposals as out-
lined in the law. The Michigan Department of Social Services had
already developed and published a proposed plan for utilizing title
XX funds in fiscal year 1981-82. That plan was submitted as Michi-
gan's plan for social services block grant implementation. Michigan
was the only State that implemented the social services block grant
on October 1, 1981, as required by early Federal regulations. I cannot
overemphasize the serious fiscal problems that the State was experi-
encing at that time.
Currently, in Detroit, our unemployment rate is 17 to 21 percent.
So we have realized the options which would offset the cuts from the
Federal Government.
The hearings were held in several locations throughout the State:
Detroit, Alpena, Marquette, Traverse City, and Grand Rapids. They
were conducted by a human services cabinet which coordinated and
worked out the schedule. They represented the heads of the various
departments. I would have to say that in terms of the results of the
hearings, it was found that the competition between advocates for
children and adults and for private versus public agency funding were
split down the middle. Most of the people who testified voiced a con-
cern about day care cuts and adult home help.
We felt that there was not an appropriate representation from the
total need population. Another shortcoming of the hearings is that
there was not enough time for people to be fully informed as to what
kinds of information would be expected and needed. That would have
an impact on the process. I would also have to say that there was a
PAGENO="0122"
~118
wide range of issues presented. This made it difficult to establish spe-
cific categories.
We have received testimony from 242 individuals, representing both
the public and the private sectors. This number includes the executive
branch and the legislators. This is not many for the whole State of
Michigan. In spite of our efforts to publicize, that was the response.
In terms of our recommendations, we feel that the cate~rorical laws,
the regulations, the funding, and the leadership provided by the Fed-
eral Government for these programs-especially Public Law 96-272,
the Adoption Assistance and Child Welfare Act of 1980-should stay
intact.
We should continue to require matching formulas so as to insure
the participation and prioritization of programs at the Federal, State,
and local levels. We support passage of legislation which would re-
store moneys to title XX. .A FDC. and Low Income Energy Assist-
arice, as conceptualized in H.R. 5791.
The only other thing that I would say is that the people of Mich-
igan, particularly southeastern Michigan where I reside, also have a
concern that local units of government have some effective mechanism
where they can have input and feel that they are having some control
and effect on the decisions.
Senator DURENBERGER. Thank you very much for your testimony.
Ms. Russell?
Ms. RUSSELL. Senator Durenberger, I am Brenda Russell. legislative
analyst for the Child Welfare League of America (CWLA). As an
organization that is dedicated to the improvement of the lives of chil-
dren and their families, we are pleased to be invited to speak to you
today regarding various block grant issues of concern to us, issues that
affect the quality of life for the vulnerable children, youth, and fam-
ilies of America.
The League is a privately funded organization whose agencies pro-
vide crosscutting services to children, youth, and families. Members
and affiliated agencies of the League serve several million children
nationally. We also speak for over 6.000 volunteer board members and
several thousand more direct service volunteers. This, then, is the
uniqueness of CWLA: We are not only an advocacy organization, but
our agencies serve children and their families in every State in the
country. In other words, for the past 62 years, our business has been
serving children.
We are pleased and grateful that von, Senator Durenberger, are also
concerned about the health and welfare of our Nation's children, and
that you recognize the importance of protecting our Nation's future by
providing adequate care for our children today. We apnlaud you for
providing this forum to be~gin to examine the issues before us now.
We say "begin" not because this is the first forum that von have pro-
vided, but because issues of national importance recnhire detailed analy-
sis and planning before major shifts in public policy occur. We do
hone this is the start of a thoughtful process.
We know of your genuine concern for rational plannin~ and hope
that von will do everything in your power to see that the action is
slowed down enough so that a deliberative process can take place.
One of the first tasks in that process is to look at what has already been
enacted, how it has been implemented, and see what we can learn from
that experience before we proceed any further. We should also assess
PAGENO="0123"
119
how well State and local governments are implementing current cate-
goricals before we consider whether or not to block those specific
programs.
The League shares your concern that protections for the beneficiaries
of programs are lacking in the nine block grants which were enacted
last year in the Reconciliation Act. We do believe that it is a step for-
ward to mandate certain protections for citizens in all block grants.
However, there are several problematic areas in the draft of the Uni-
form Block Grant Management Act on which we are pleased to have
the opportunity to provide constructive comments.
We recommend that any uniform block grant language drafted
address the basic requirements necessary for the input of citizens and
the effectiveness of the programs. Among others, the following are a
number of critical principles that must be addressed as you consider
block grants, in order to protect the beneficiaries of these programs
and to be responsible to the taxpayers who enable these programs to
be available.
Paramount is the necessity for adequate and stable Federal funding
to meet the needs of our vulnerable citizens, and to allow a rational
planning process to occur so that resources are expended in the most
efficient manner.
Self-determination for the citizenry is involved. In order to guar-
antee that block grant programs are, indeed, more in touch with the
needs of State and local populations, public participation must be
built into the system at all levels. Accountability to the citizenry to
maintain program integrity requires adequate records, auditing, and
oversight.
Federal oversight and enforcement of basic human rights and pro-
tections such as civil rights and due process for beneficiaries must be
provided.
There needs to be a process at the local level which insures that
scarce resources are targeted to those most in need.
Uniform language should not preclude inclusion of additional safe-
guards in any block grant program, nor supersede safeguards pres-
ently in force.
The League is only one of many, many concerned organizations and
citizens who believe that these principles are an absolutely necessary
requirement for human services programs. We are active participants
in the Coalition on Block Grants and Human Needs. As such, we
worked diligently to secure citizen protections through the provisions
of title XVII of the Reconciliation Act.
We have also participated in the grants and contracts task force
for many years. The task force is composed of national voluntary non-
profit organizations concerned with common issues which the volun-
tary sector encounters with regard to government grants and con-
tracts. Currently, the task force is analyzing the draft Uniform Block
Grant Management Act. The specific concerns we have regarding the
language of the proposed act are being drafted and will be submitted
to the subcommittee on behalf of the League and other members of the
task force. The work is almost complete~. We request that the hearing
record remain open in order to include this important assignment.1
Senator DURENBERGER. The hearing record will remain open for
2 weeks.
1See p. 233.
PAGENO="0124"
120
Ms. R.ussEI~I~. Of the nine block grants enacted under the Reconcilia-
tion Act last year, we are the most familiar with the title XX social
services block grant We have extensive experience with this block
grant. If there is one thing we can testify to, it is that you simply can-
not make quick turn-arounds of a major nature. as occurred during
reconciliation. No responsible business would implement major redirec-
tions without adequate assessment, planning, and lead time. Such dra-
matic policy shifts can hurt the very people the program is intended to
benefit.
The original title XX block grant was created as part of President
Nixon's "New Federalism." This block grant was created after several
years of work by service providers, the voluntary sector, public admin-
istrators, the States, and the administration. The result was a good bal-
ance between flexibility with local control and enough program struc-
ture to insure protections for the beneficiaries, and that those most in
need would receive the services. Yet even with this deliberative process
throughout the development of title XX, it took 2 to 3 years before the
States really had their programs in place.
Now is the time to stand back and take a thorough look at what works
or doesn't, and how or why. Under the Reconciliation Act, title XX
was amended to incorporate State and local training and social services
for the territories into a new block grant. Critical provisions developed
over time such as the State matching requirement and the State plan-
ning and public participation requirement were wiped out. Funding
was cut by 23 percent, almost $700 million, for fiscal year 1982. A major
concern of CWLA is that the block granting which took place last year
really amounted to cost-cutting and cost-shifting from the Federal
Government to the States under the guise of increased flexibility.
We are in a position to make some partial assessments about the im-
plementation of title XX since last fall, as we maintain regular contacts
with public and private voluntary nonprofit agencies throughout the
country. We would like to share some of that information with you
now.
We found that the States dealt with the block grants in a varied
fashion. We heard overwhelmingly from the States, with regard to
title XX, that it is not the block grant per se but the cuts in funding
and the lack of lead time that are hurting the States from both the plan-
ning and the service standpoint. States are complaining about the diffi-
culty in planning when faced with the uncertainty of Federal funding
levels.
States are also unable to deal with the block grants as if they existed
in a vacuum. Increased demand for the services offered under title XX
has been experienced now that the impact of the reductions in other
programs like AFDC, medicaid, food stamps, housing, CETA, and
other block grants are being felt. Social services and prevention activ-
ities have given way to meeting basic survival needs. Overwhelmingly,
the States have said that they are reducing purchase of services
contracts.
An overwhelming number of States report that their preventive
services components have been cut as a result of cuts in the XX. How-
ever, the national study of the incidence and severity of child abuse
and neglect reports an increase in substantiated cases of over 17 per-
cent in the last 2 years. The vast majority of protective services are
provided for through the title XX program. Overwhelmingly, States
PAGENO="0125"
121
say the real impact will be felt in fiscal year 1983 and more so, if
additional cuts in title XX go through.
Some of the most cost-effective services are being cut. These types
of cost-effective services must give way in order to assist those in more
dangerous circumstances. The major dislocations that have occurred in
the title XX program-a block grant that was "block granted"-give
only a sample of what may have happened in categorical programs that
were turned into block grants. The transformatjon of categoricals to
block grants is a major policy shift in and of itself. When that is piggy-
backed on top of drastic funding reductions, with limited transition
time and protections for citizens, confusion and waste result, neither
of which is a goal for sound public policy.
The League would be pleased to provide you with any additional in-
formation that would be of assistance to you in your work. We would
like to thank you again for this opportunity and for your willingness
to take the time and effort to include the voluntary sector and other
concerned organizations and citizens in the discussions of these critical
public policy issues.
Senator DIJRENBERGER. Thank you very much for your testimony.
Each of you has provided us with substantial facts and figures about
the implementation of the social services block grants. I think we can
agree on the need to provide programs which address human needs, and
on the need to back those programs up with resources.
In developing the original title XX block grant-and I mean the
original one, not the process we went through last year-your testi-
mony pointed out that we can look at title XX somewhat differently
from some of the other blocks. Not only because of the amount al-
located for the block, but because special care was taken to separate in-
come maintenance from social services when it got put together.
Brenda, you mentioned that in New York, just as an example, they
are exploring the reintegration of income maintenance and social
services activities. The reason is, principally, to reduce costs. In other
words, there is a lack of adequate resources.
Ms. RUSSELL. That is correct.
Senator DURENBEIIGER. When you look at the possibility of turnin
programs over to the States-as the President and some of the rest o
us are proposing to do in the sorting-out process and through the
turnback process-is it fair to say that social services programs can
fare better at the State level than the income maintenance programs
might?
Ms. RUSSELL. I think that is fair to say. We have had some experi-
ence with the effects involving title XX. That is, providing adequate
resources to me~t those needs, as there used to be in title XX.
Income maintenance is of a very different nature. The rise and fall
of that program is dependent upon so many factors outside of a specific
State. We do believe that income maintenance programs are a national
policy issue.
Senator DURENBERGER. However, assuming there is an adequacy of
resources, we might determine that the basic responsibility for the
delivery of social services can be better at the State level. Is that your
testimony?
Ms. RUSSELL. In most instances, yes. However, there are some spe-
cific programs that have service components that we do believe still
PAGENO="0126"
122
need Federal oversight; the Adoption Assistance and Child Welfare
Act is a classic example. We believe that there was overwhelming docu-
mentation in the States that those needs were not being met. We think
the block granting of that law would be just catastrophic for children.
We feel very, very strongly about that.
Ms. STALLWORTH. I would have to say, from my experience in the
State legislature, it is difficult for the legislature to target the money
to the areas where there is need. The urban centers-where you have
a concentration of poor, minorities, and others-have to fight with the
upper peninsula, where perhaps there are fewer people who fit into
those categories. So how do you get equity in terms of distribution?
That would be my problem with the Federal Government removing
itself from that process.
The other thing is that, in terms of the hearings being realistic as
a mechanism for citizens to have input, the citizens who need to be
heard rarely are there. What we have is a lot of information circulat-
ing in a vacuum. It never gets down to the grassroots to the extent that
they can feed back into the system and give a realistic perspective as
to how the system is working. That is the problem with the block
grant, as I see it. We have lots and lots of activity. Everybody is
organizing the coalition. We have lots and lots of workshops~ teach-ins
and so forth. But I am still not sure that people who need to be part
of that process are having input into it.
I don't have the answer. It is a source of frustration at this point.
Maybe `as we move further along, this will resolve itself. I do feel
that the urban centers do need as much support as possible politically.
Senator DrIBENBERGER. In your testimony you made some comment,
Ms. Stallworth, about your concern for the needs of minority children
and families. Is there any evidence, of which you `are aware, that the
minority groups in Michigan, or in the Nation as a whole, have been
disproportionately affected by block grants-other than what you
said in terms of disproportionate representation in the system itself?
* Ms. STALLWORTH. That is a hard question to answer. If you mean
disproportionately represented politically, I would have to say yes.
We don't have near enough people representing us within the process
who could renresent the minority perspective.
In terms of public policy, we have very few groups that `are pro-
féssional advocates. Most of our people have to work, if they are lucky
enough to have a job. Those who are employed do not have the
* sophistication to come to a hearing `and speak to you about their
destiny. I think that this is a learning process for us. Certainly, with
the block grant it becomes an educational one, as well, because we have
to read and study.
Personally, I think that the relationship with the Federal Govern-
ment overseeing these programs as they feed into the States is a good
one. I would like to see your involvement continue.
* I don't know if I have answered your question, but that is how I
see it.
Senator DURENBERGER. One of the issues that may need further ex-
ploration-not here, but in the process-is the role the voluntary sec-
tor plays in the delivery of human services. I am on record many times
as saying that the government is a better purchaser of services than
a provider of services.
PAGENO="0127"
123
Your testimony speaks to the lack of parity between the States and
the voluntary sector in terms of reimbursement of administrative and
other costs.
In your written statement you pointed to the example in Hennepin
County with which I am certainly familiar. The public employee
union and contractors may not lay off State personnel in favor of a
more cost-effective purchase of services from private providers. No-
body wants to lay off workers. Nobody wants to lay off union mem-
bers. As we look to the future, do you have any advice on how we can
show a preference for private providers, especially when it can be
shown that it would actually benefit children and families, as well?
How do we overcome that?
Ms. RUSSELL. I think there could be some language included in the
bill. If you look at title XX, for instance, there is language that
specifically allows, but doesn't mandate, nonprofits to conduct and
provide training programs, which is a first step.
You could put a perference statement in the law that, to the extent
practicable, the State and local governments should opt for pur-
chased service from the voluntary nonprofit private sector. It is more
cost beneficial to utilize the resources of the voluntary sector. The vol-
untary sector uses their resources to build the physical structure and
to provide a lot of additional services for those people for which the
taxpayers do not have to foot the bill.
I think there could he some language drafted in the bill where the
local governments were talking about the need for pass-through of
funding. If so, then it should be considered for the voluntary sector
also in terms of parity in the system.
There is `Circular A-422, "0MB Cost Principles for Non-Profit Or-
ganization", which 0MB has not yet implemented. These principles
were worked on for many years and insured some parity with the non-
profits and the public sector.
I think that parity in the systems through purchase of services con-
tracting is a critical issue that needs to be addressed. It is a sound
policy decision, even more. so in light of diminishing government
resources.
If we want the voluntary sector to do more, we must, in fact, be
very up front about supporting the voluntary sector and enabling
them to do more. The will is there. You have to give them some more
support in order to strengthen the public-private partnership in the
delivery of human services.
Ms. STALLWORTH. I don't want to be redundant. I guess I would see
it as a combination. I don't see the private sector having the capability
to entirely pick up these services, even if you were to pursue it through
the purchase of a contract. I would think that the numbers are still so
great that we don't have the resources. I am speaking of Michigan.
There is the other problem with this, the variety from State to State.
Some States have more resources than others. That is a consideration.
I think that flexibility should be there, if we want incentives. If a
State has that option, they will see where they can make it.
Senator DURENBERGER. Thank you very much for your testimony. I
regret that we don't have more time today.
[The prepared statement, addendum, and table of Ms. Stallworth
and the prepared statement of Ms. Russell follow:]
PAGENO="0128"
124
PREPARED STATEMENT OF ALMA G. STALLWORTH, PRESIDENT,
NATIONAL BLACK CHILD DEVELOPMENT INSTITUTE, INC., METRO-DETROIT
My name is Alma Stallworth. I am a voter and tax payer within the State
of Michigan. I am currently employed as a Policy Associate at the High/Scope
Educational Research Foundation, Center for the Study of Public Policies for
Young Children. I previously served in the Michigan House of Representatives,
as a County Charter Commissioner, as well as voluntary civic leader and
advocate. My 20 years of public service has been divided equally between
governmental and non-governmental efforts to support and expand our potential
as a society to respond to the needs of children and families.
I am here today representing the National Black Child Development
Institute with its thousand members and 25 affiliate chapters. I currently
serve as President of the Metro-Detroit Affiliate. NBCDI primarily focuses
its efforts within three major policy areas: child care, child welfare and
education. NBCDI at the national level as well as at the local level is
composed of a cross representation of persons and agencies who all share a
commitment to the positive development of Black children and families
I wish to share with you some of the grave concerns of the people of Michigan
regarding the new federalism and its impacts on Human Services system.
The idea of Block Grants initially had been attractive to Michigan
because most governmental officials and administrators saw this shift as an
opportunity to distribute funds in accordance with need and with minimal
restrictions, and without burdensome federal regulations. They also antici-
pated continued levels of fi~nding from Washington. I will attempt to outline
in the brief time allotted the realities of this shift to Block Grants
- and its fiscal impact on the Aichigan Department of Social Services via the
Social Services Block Grant. My discussion will be advanced within the
context of its impact on children and youth specifically.
PAGENO="0129"
125
I. State Reaction to Proposed Social Services Block Grant
* In Michigan, state has already responded to severe revenue deficits
by budget reductions throughout state departments.
* In DSS, funding shifts had already occurred within Title XX via
transfer of adult home help to Title XIX, virtually eliminating
family services, and reducing day care rates.
* Title IV-E and IV-B programs were also strained to funding limits;
any excess beyond a 2?~ cushion in PL-96-272 meant l0O~ state funding
for foster care and adoption subsidy.
* Further cuts in Title XX, IV-E and V-B programs would seriously
compromise service delivery to significant Michigan population.
* Heaviest burden of cuts would effect the elderly and children.
* The reforms of PL 96-272 were in serious jeopardy with the proposed
block grant.
1) act had established federal fiscal incentivies to preserve
families and move children into permanency,
2) act was cost effective; estimated that over $4 billion in costs
of out of home care would result over the next 5 years by reducing
3O~ of the youth in care.
* Our total estimated loss in funds was $30.4 million.
* As state's fiscal crises prevented picking up deficit, the following
cuts were made in MDSS.
1) elimination of foster parent, adult foster parent, and day
care provider training,
2) elimination of grants to universities,
3) shift day care to Title lV-A,
4) reduce appropriation to transportation to sheltered workshops,
5) redeploy field services staff in family and basic adult service
programs,
6) close Wayne County BulS Division,
7) reduce donated funds and increase match to 50~.
2
99-965 0 - 82 - 9
PAGENO="0130"
126
* MDSS as administrator for Social Services and Energy Assistance
Block Grant:
1) ILDSS will lose $5 million to Publitc Health for health services,
health promotion and disease prevention activities.
2) another change in administration responsibilities due to block
grants: MDSS no longer shares Work Incentive Program with Labor.
* DSS sole administrator for program re-named Employment Training Program.
II. Implementation of Block Grants in Michigan FY 82-83
* Governor indicated Michigan's intent to participate in 7 of 9 enacted
block grant hearings held to collect comment on all the block grants:
1) alcohol, drug abuse and mental health,
2) Social Services,
3) maternal and child health care,
4) preventive health service,
5) low-income energy assistance.
* August 31, 1981, Reagan signed Omnibus Reconciliation Act, which
reduced entitlement programs by 13.4 billion and other federal pro-
grams by 21.8 billion for FY 82.
* Consolidated 57 separately funded programs.
III. Implementing the Social Services Block Grant
* The reconciliation conference committee worked out the differences
between the Senate and House version.
* Final version consolidated social services programs under Titles I,
V-A, and XX.
* Service programs for families and children under V-A and B and
retained until regulations for Child Welfare Program (96-272) are
rev i sed.
* Transition requirements:
1) states eligible to receive funds under 6 of 7 block grant effective
10/81 (exception is primary care block grant, eff. 10/82).
PAGENO="0131"
127,
2) transition period is FY 82 only,
3) four block grants allowed state to initiate operations under
block grants on 10/1/81 or at beginning of any subsequent quarter,
1~) during period state not funded under block grants, state may
administer existing program,
5) exceptions to transition were social services and low-income
home energy since funds for these programs went directly to
State in past.
IV. Effect of Social Services Block Grant in Michigan, FY 1981-82
* As MDSS had already developed and published a proposed plan for
utilizing Title XX funds in FY 81-82, that plan was submitted as
Michigan's plan for Social Services Block Grant implementation.
* Michigan was theonly state which implemented the social services
block grant October 1, 1981 as required by early federal regulations.
* Public hearings were held in six locations around the state (Lansing,
Detroit, Alpena, Marquette, Traverse City and Grand Rapids) at the
urging of the Coalition for Fair Implementation of Block Grants.
1) Governor requested Human Services Cabinet to coordinate; the
Cabinet membership consists of the directors of state departments:
Mental Health, Public Health, Social Services, Labor, Education
and Office of Management and Budget,
2) the hearings intended to receive public input on how to use the
block grant funds and the proposals contained in Executive Budget.
V. Results of Hearings
* Initial reaction by Cabinet and others in attendance:
1) competition between advocates for children' and adults, and private
vs public agencies for funding,
2) recipients who attended voiced most concern about day care cuts
and adult home help.
* Input received was primarily from same people we hear from at each
hearing, the knowledgeable advocate.
1) concern that they didn't reflect total need of care group,
2) advocates occasionally get too far removed from group they represent.
4
PAGENO="0132"
128
* Governor's office is to make the final decision with Human Services
Cabinet as to how to use block grant funds, and the recommended
implementation.
* Input into process is still being accepted; coninents can be sent
to Governor's office.
VII. Future of Block Grants
* For coming fiscal year, Reagan Administration is again proposing
the inclusion of some programs into block grants:
1) Child Welfare and Adoption Assistant Programs (96-272),
2) Child Welfare Training Programs,
3) Education of the Handicapped (includes kids who are physically,
mentally or emotionally handicapped).
* Also proposes further funding reduction in other programs:
1) 25~ reduction in juvenile justice programs,
2) 36?~ reduction in runaway and homeless youth programs,
3) i8?~ additional reduction in child care,.totalling loss of service
250,000 families in combined fiscal years,
4) terminate WIC, supplemental food program'for women, infants by
folding it into Maternal and Child Health Block Grant funding
than current WIC operating levels.
* Block grants are the first major step towards new federalism.
* Effect of federalism seem in loss of all accountable requirements
* for states.
1) loss of federal fiscal incentives could mean further cuts in
health, special education and child welfare to name a few,
2) end result would be higher cost for state as prime sponsor,
3) more important would be loss of equitable services for
children and families as states pull back resources to
services make up for less federal dollars.
PAGENO="0133"
129
On behalf of the National Black Child Development Institute, its members,
its affiliates and most important the children and families that we serve,
urge you to take some specific steps to help children:
1) retain the categorical laws, the regulations, the funding and the
leadership provided by the federal government for these programs,
especially PL 96-272, the Adoption Assistance and Child Welfare Act
of 1980;
2) continue to require matching formulas, for they insure participation
and prioritization of programs at the state, federal and local levels;
3) support passage of legislation which would restore monies to
Title XX, AFDC, and Low-Income Energy Assistance as conceptualized
in HR 5791.
Ze) let the dust settle on the present structure before considering
cutting any further into various programs affecting vulnerable
children and their families; and
5) join House members and Congressman George Miller in their efforts
to establish a Select Committee on Children, Youth and Families.
I am grateful to your Chairman and the members of this Committee for allowing
me the time today to share my thoughts with you.
PAGENO="0134"
130
The Human Services Cabinet held a series of six public hearings around the state to
gain public input to assist the state in setting priorities for the fair implementation
of block grants.
Testimony was taken from 242 individuals. Members of the public and private
sector testified, including the Executive branch and the Legislature and also
providers and consumers of services.
The issues identified were:
A higher priority should be placed on services for adults. (18)
A need for community access to the decision making and planning process.
(12)
Protective services for adults should be as high a priority as protective
services for children. (11)
Opposition to block grants. (10)
Child care services should be increased. (15)
Handicappers neexiadditional educational, social and housing services. (5)
Low income energy assistance eligibility criteria are too strict. (2)
Community placement should be funded at a higher level. (2)
Funding for mental health services should be at least equal to that of alcohol
and substance abuse.
4C should be funded.
Community mental health consultation and education service programs should
be continued.
* Fear of service cuts.
Belief that there is little concern for continuity of services.
Department directors need to communicate and jointly develop consistent
policies.
Emphasis must be placed on covering service gaps created by block grants.
Block grant reductions are seriously effecting ability to deliver social
services.
Short notice of public hearings impeded meaningful public input.
PAGENO="0135"
131
Need to develop a process for needs assessment that is the same throughout
the state using demographic criteria~in addition to population.
Cuts in Medicare and Medicaid/ADC, health and education cause suffering.
Compensation for staff providing adult PS should equal childrens PS.
More block grant money should go for low income senior housing.
Support for primary health care and migrant programs.
Fear lobbying will effect fund distribution and the developmentally disabled
will suffer.
Genetic disease testing and counseling is an essential service.
Block grants do not address unemployment.
Some school boards will not enforce education for all children. Regulatory
enforcement tools are necessary.
Migrant workers need day care. Bilingual staff must be continued.
Emergency medical services must be funded. Funding should be on a regional
basis.
Only services that have a clear statutory mandate should be continued.
Adult day care centers are necessary for people's survival.
School consultation services are needed.
Prevention services for children must be increased.
Human services should be a priority over defense spending.
Family services are an increasing need.
Spouse and child abuse and prevention services are most needed.
Expand the block grant process so that local agencies and local units of
government are given the same discretion the federal government has given
the states.
Reduce or eliminate unnecessary reports and restrictions required by the
state for the use of these funds.
Encourage the development of human service coordinating councils on the
local level which would be responsible for assessing local needs and for
allocating block grant funds to meeting local priorities.
-2-
PAGENO="0136"
132
Eliminate the duplication of effort which current state laws and policies
force upon agencies. As an example, why do we need several agencies
-~ providing home help services, several agencies Involved in senior nutrition
programs and several agencies doing adult community placement?
Reassess the entire purchase of service contract system and determine which
functions can be done better by local staff and which should be contracted.
Five testified that day care should be a higher priority. Cuts in day care
impact head start, working mothers and those in school. Home health care
should be a priority.
Cut unnecessary regulation.
Indians want reccgnition by the State of tribal government.
Community action agencies want the Department of Labor and Governor to
inform the President that the proposed 70% funding cut would eliminate
these agencies.
Safeguards should be built into block grants for rural areas.
Consumers should be involved in planning.
State should assure that human service funds are used for human services at
the local level.
Outreach services need more consideration.
Include public input in priority setting and consider demographic differences.
Low income people in mortgage default need continued assistance.
Indian tribes should be considered separately. Tribal government should
speak for Indians.
Alcohol and drug abuse programs need increased support as 85% of crimes
committed locally involve substance abuse.
Need .for increased support for in-home care for seniors to keep them out of
institutions.
Transportation should be a higher priority in rural areas.
Make counseling a priority
Consider cash and quality of service when contracting
-3-
PAGENO="0137"
133
Prevention should be a priority
Need rural protections built into block grants
Private agencies need continuing input to priorities setting
Volunteers should continue to be used to make programs cost effective
Support the need for home help services for seniors to allow them to remain
at home
More coordination is needed for Human Service Programs on state and local
level
Prevention of rape and domestic violence programs need to be a higher
priority
Need more home care services for elderly with training for providers (4).
Day care, mental health, substance abuse services needed for seniors.
Need psychiatric care for kids and additional community placement (3).
Control administrative costs at state level (2).
Citizens should provide oversight to grant distribution.
Eligibility for low income energy assistance too restrictive (2).
Need services to keep mentally ill and developmentally disabled persons out
of institutions.
More attention needed for protective services to adults - more staff -24--hour
service (2).
Youth employment programs should be funded.
Job training for developmentally disabled needed.
More AFC quality placements needed. -
Need summer special education programs. : - -~**
DMB should not set priorities. .- -
Public should know services they expect can't be provided.
Housing assistance should be a Priority.
Need more prevention and family supportive services. -
-4--
PAGENO="0138"
134
After care services needed for mentally ill.
Rural communities should not be forgotten.
Day care activity for severely physically handicapped should be a higher
priority.
Indians need their own service system; need n~ore substance abuse service.
Need nutrition services for children.
There should be increased collaborative efforts between public and private
sector.
Partnership of state and county government important. Local coordinating
councils a good mechanism. (8)
Federal government hiding massive cuts with block grants-oppose block
grants. (2)
State must assume responsibility for adequate funding levels.
State cannot tolerate additional human service cuts.
Governor must lobby the president and congress to restore cuts. (4)
Lansing school district cannot maintain minimum education standards or
support services.
Protections previously provided by categorical funding no longer available at
the state level. (2)
Programs should not have to compete for funds.
Public needs access to department plans in developmental stage.
Legislature oversight needed.
Need more hearings.
Creative efforts need to be sustained.
More information regarding specific programs should be made available.
Prioirty should be placed on prevention - HMO's, reduce hospital beds, no
additional nursing home beds for DD/MI, set rates for physician insurance.
Mental health prevention services should be statewide.
-5-
PAGENO="0139"
135
Reduce administrative costs.
Program priorities should be set according to need.
Only fund those programs with a statutory base.
Eliminate low priority programs.
Balance service delivery between public and private agencies.
Civil Service should allow private long term contract when they are more
cost effective.
Adult home help and personal care are needed for physicafly handicapped.
* Community Action Agencies provide needed services.
Con~ider non-profit agencies as a resource.
Weatherization programs are cost effective and valuable.
Diminishing services to older people have put them at risk. Office of
Services to Aging should participate in priority setting.
Migrants need continued services.
Indians should be included in planning for block grant funds. (2)
Aftercare services for mental health needed most in rural counties.
Services should be targeted for need rather than to continue with established
priorities.
CMH services are inadequate.
Housing services need a higher priority. Energy and weatherization programs
are cost effective and should be a state r&ponsibility. (3)
In home services to elderly physically and mentally handicapped needed day
care for elderly also important to avoid institutionalization. (8)
Local government should have control and accountability. (2)
Block grant expenditures rhould be monitored independently.
There are too many forms. Process to obtain government funds is too
complicated; rules too restrictive.
Fathers need equal consideration with maternal and child care funds.
-6-
PAGENO="0140"
136
Infant mortality rate is increasing, more attention needed to health services.
Military spending should be cut to fund human services.
Basic human needs are not being met. (3)
Indians need health care fund from the state.
Fear those able to lobby for funds will be considered rather than those in real
need. (3)
Comprehensive rat control should be a priority. -
Local coordinating councils are needed to avoid duplication. (5)
Standards and regulations should be developed for the fair implementation of
block grants - limit administrative costs. Should be monitored arid evaluated.
Reduced funds should be targeted to high density areas of unemployment.
Day care for children should be increased.
Specific allocations for community economic development are needed.
Substance abuse programs in Detroit are in trouble - problem growing rapidly.
Prevention programs needed. (3)
Employment and training programs need a higher priority.
Services to single mothers should not be cut. -
Citizens should be allowed to assess need.
Federal program protection need to be implemented by state.
Lead poisionirig program should be continued.
Records of each public hearing are available upon request.
-7-
PAGENO="0141"
137
ADDENDUM TO TESTIMONY OF ALMA G. STALLWOBTE
The magnitude of our concern over the continued adequate funding of services
to children and youth is greater than ever before. The current uncertainty of the
negotiation of the 1983 Federal budget and the economic crisis in Michigan,
recently ceased to a degree by the State income tax increase, does little to ease
th~ concern. We have been fortunate in maintaining our services to children and
youth, to date. However, as Federal fiscal participation declines, Michigan finds
it increasingly more difficult to assume the added cost. Michigan's proposed
Executive Budget is based upon projected revenues and upon expected Federal
participation and we are all aware of the varied opinions regarding the legiti-
macy of such projection and expectation. Michigan, even with the approved
income tax increase, is facing a budget reduction of an estimated $630 million
for this fiscal year.
Children and Youth Services have been fortunate so far, when compared to
other State government services, because the Title XX block grant was not cut
as deeply as originally proposed for fiscal year 1981-82 and because Public Law
96-272, the Adoption Assistance and Child Welfare Act of 1980, survived.
Rowever, proposals are currently pending before Congress for an 18 percent.
cut in Title XX, amounting to $426 million, and a 30 percent cut (in block grant
form) in Public Law 96-272 funding amounting to $170 million.
Michigan's budget director estimated that the fiscal year 1982-83 Federal
budget as proposed would result in a net loss to this State of $1.7 billion. Of this
amount, $210 million would be lost by the Department of Social Services in
AFDO, Medicaid, food stamps, SSI, and other programs. In addition, Federal
aid to education would be reduced by $80 million.
Predicted reductions in the Department of Social Services are: AFDC, $78
million; Food Stamps, $66,800,000; Medicaid, $45,100,000.
Reductions in other State departments that would effect children and youth
either directly or indirectly are estimated to be: Trade Readjustment Assistance,
$40,200,000 (directly effecting ADO-U and GA caseloads) ; Education-general,
$53,200,000; Vocational Education, $14,500,000.
It is inconceivable that Michigan can achieve sufficient economic recovery that
would enable adequate supplementation of such a reduced level of Federal funds.
Federal revenues will decline because of the already approved 10 percent in-
come tax reductions in 1982 and 1983 and the growing rate of national unemploy-
ment (9.4 percent). Federal defense spending will accelerate at the expense of
domestic programs. Proposed block grants to States are funded at a lower level.
Michigan continues to experience reduced revenues because of unemployment
(15.4 percent) and the creeping economy of commerce and industry. The malaise
of recession is nationwide and, unfortunately, Michigan appears to be hardest
hit.
The current condition of the economy, when reduced to the human level, con-
tributes to the disintegration of individuals and families and the need for serv-
ices increases as resources decrease. We have experienced a reduction of staff
through attrition and a hiring freeze and this has placed added burdens on field
service delivery staff as client numbers and needs have increased. This can only
result in less service, despite the best efforts of the service providers.
Within the Department of Social Services, Adult and Family Services Field
Staff numbered 1,744 as authorized by the fiscal year 1981-82 budget. Currently
there are 1,532 positions and this current number is recommended in the Execu-
tive Budget for fiscal year 1982-83. Children and Youth Services Field Staff,
administered by Field Services Administration, was authorized at 1,221.5 full
time positions for fiscal year 1981-82. Currently there are 1,112 positions and
this number is recommended for fiscal year 1982-83.
Neither the Federal nor the State budgets for fiscal year 1982-83 have been
acted upon at this time. We must endeavor to maintain the integrity of human
services and to influence the decisions effecting those services by whatever
legitimate means possible.
Following are recommended levels of funding for fiscal year 1983 as compared
to fiscal year 1982 funds and proposed fiscal year 1983 Federal budget cuts.
PAGENO="0142"
1~1+ +~
~gc~cC)
~
~ tC) -)~ -~
z~00~_)c~ - C-4C)J
C,) ~
LU 00 -~
c_) ~ `-~c--J C) -
= ~
-~ C) C) C) C) C) C) C) 00 C) C) C) C) C) C) 0) C) C~4 0) C) C)
Cl) C) C)) C) C) 0000 ~ C) C) a~oo C)
=
C~4 00 CC) C) C) C) CC-J C)4 C) C)) C)4 C) CC) C) C) 0)
C-~ 0~ ~ C)~ - ,- C
~ C) -~
>-
cx~ -~
cY~
L.LJ
- 2
-~ ~
=
C-,
CD
u-i ~- E22
LU. EE
CD E
C 20
:~U
i~i ~
PAGENO="0143"
139
PREPARED STATEMENT OF BRENDA L. RUSSELL, LEGISLATIVE ANALYST,
CHILD WELFARE LEAGUE OF AMERICA, INC.
Mr. Chairman, I am Brenda L. Russell, Legislative Analyst for-the Child
Welfare League-of America's Center for Governmental Affairs. As an organi-
zation that is dedicated to the improvement of the lives of children and their
families, we are pleased to be invited to speak to you today regarding various
block grant issues of concern to us, issues that affect the quality of life
for *the vulnerable children, youth and families of America.
The Child Welfare League of America was established at the request of the
delegates to the White House Conference on Children in 1920. It was the first,
and continues to be, the only national, not-for~prof it, voluntary membership
organization which sets- standards for child welfare services in the United
States. The League is a privately supportea organization comprised of 400
child welfare agencies in North America whose efforts are directed tO the
improvement of care and services for children. Our agencies provide adoption
services, day care, day treatment, foster care, residential treatment, mater-
nity home care, protective services, homemaker services, emergency shelter
care, services for children in their own homes and services for children and
families under stress. The agencies affiliated with the League include all
religious groups as well as non-sectarian public and private nonprofit agen~
cies. Through the Office of Regional, Provincial and State Child Care Asso-
ciations, the Child Welfare League also represents 1,600 child care agencies
affiliated with. 27 State Child Care Associations. This means that members and
affiliated agencies of the League serve several million children nationally.
It also means we speak for over 6,000 volunteer board members and several
thousand more direct service volunteers. This then is the uniqueness of CWL/l:
we -are not only an advocacy organization, but our agencies serve children- and
their families in every state in the country. In other words, for the past
sixty-two years our business has been serving children.
We are pleased and grateful that you, Senator Durenberger, are also concerned
about the health and welfare of our nation's children, that you recognize the
importance of protecting our nation's future by providing adequate care for
our children today. We applaud you for providing this forum to begin to
examine the issues before us now: we say "begin not because this is the
first forum that you have provided, but because issues of national importance
-require detailed analysis and planning before major shifts in public policy
occur. We do hope this is the start of a thoughtful process.
While we would relish the opportunity to engage the issue of new federalism
from the perspective of wh-at the appropriate role of each level of -government
is in a rational and planned manner, the current economic conditions and poli-
tical climate have prevented that from occurring. We know of your genuine
concern for rational planning and hope you will do everything in your power to
see that the action is slowed down enough so that a deliberative process can
take place. One of the first tasks in that process is to look at what has
already beerL enacted, how it has been implemented, and see what we can learn
from that experience before we proceed any further.
PAGENO="0144"
140
The League shares your concern that protections for the beneficiaries of prog-
rams are lacking in the nine block grants enacted last year in the Omnibus
Budget Reconciliation Act. We ao believe it is a step forward to mandate
certain protections for citizens in all block grants. However, there are
several problematic areas in the craft Uniform Block Grant Management Act on.
which. we are pleased to have the opportunity to provide constructive comments.
We recommend that any uniform block grant language drafted address the basic
requirements necessary. for the input of citizens and the effectiveness of the
programs.
Among others, the following are a number of critical principles that must be
addressed as yqu consider block grant programs, in order to protect the bene-
ficiaries of these programs and be responsible to the taxpayers who enable
these programs to.be available:
* Paramount isthe necessity for adequate ~fld stable federal
funding to meet the needs of our vulnerable citizens, and to
allow a rational planning process to occur so that resources
* are expended in the most efficient manner.
* Self-determination for the citizenry is ir~volved. in oroer to
guar~fltee that block grant programs are indeed more in touch
with the needs of state and local populat~ons, public partici-
pation must be built into the system at afl levels. If the
government that is closest to the people-at all levels is to be
truly responsive to local needs, clear pãths~into the decision-
* making process are a minimum requirement. Accountability to the
citizenry to maintain program integrity requires adequate
records, auditing, and oversight.
* Federal oversight and enforcement of basic human rights and
protections such as civil rights and due process for bene-
ficiaries must be provided.
o There needs to be a process at the local level which ensures
that scarce resources are targeted tO those most in need.
* Uniform language should not preclude inclusion of additional
safeguards in any block grant program, nor supercede safeguards
presently in force.
The League is only one of-many, many concerned organizations and citizens that
believe these principles are an absolutely necessary requirement for human
service programs. We are active participants in the Coalition on Block Grants
and Human Needs, and as such worked diligently to secure some citizen protec-
tions through the provisions of Title XVI1 of the Omnibus Budget Reconciliation
Act last year. The League still believes that the citizen partipation in the
planning process of that Title is critical to effective planning and service
delivery. The League maintains its strong commitment to the improvement of
care and services for our nations vulnerable chilaren, youth and tneir fami-
lies, and we welcome the opportunity to work with you and your staff in any
way possible in meeting that goal.
-2-
PAGENO="0145"
141
CWLA has also participated in tne Grants ano Contracts Task Force for many
years. The Task Force is composed of national voluntary nonprofit organiza-
tions concerned with common issues which the voluntary sector encounters with
regard to government grants and contracts. Currently the Task Force is
analyzing the draft Uniform Block Grant Management Act. The specific concerns
we have regarding the language of the proposed Act are being drafted and will
be submitted to the Subcommittee on behalf of the League and other members of
the Task Force. The work is almost complete, and we request that the hearing
record remain open in order t9 include.this im~ortant assessment.
Of the nine block grants enacted under the Reconciliation Act last year, we
are the most familiar with the Title XX Social Services Block Grant. In fact
the Hecht Institute for State Child Welfare Planning, a division of the League,
was created in 1975 to assist in the implementation of the original Title XX
Block Grant. We have extensive experience with this block grant and if there
is one thing we can testify to, it is that you simply cannot make quick turn-
arounds of a major nature, as occurred during the 1981 Reconciliation process.
No responsible business would implement major redirections without adequate
assessment, planning and lead time. Such shifts can hurt children.
When .the original Title XX was created as part of President Nixon's "New Fed-
eralism', social services programs formerly under AFDC and Aid to the Aging,
Blind, and Disabled (Titles I, IV-A, X, XIV and XVL of the Social Security
Act) were consolidated in a single block grant to the states, with a federal
funding level of $2.5 billion. This block grant was created after several
years of work by service providers, the voluntary sector, public administra-
tors, the states and the Administration.
There was tne opportunity for a great deal of give ~an~ take among those con-
cerned through a deliberative process. The result was a gooa balance betwe~fl
flexibility, local control, anc yet enough program structure to ensure protec-
tions for the beneficiaries and that those most in need would receive the
* services. Social serviceswere separated from income maintenance and assigned
* a primary goal of reducing dependency and promoting self-sufficiency. States
were given responsibility for aetermining their own social services needs and
for allocating resources to provide social services, with a condition that
there be broad public participatiqn in the decision-making process.
Citizen involvement includea needs assessment, a state social services plan
that included a public comment process, public hearings and advisory councils
to ensure voluntary citizen access in the decision-making process. Yet even
with this deliberative process throughout, it took two to three years before
the states really had their programs in place. Much confusion accompanied the
major programmatic changes;
Now is the time to stand back and take a thorough look at what, works or
doesn't, and how or why. Looking historically at the Title XX program is use-
ful and provides a lesson we should not ignore. We should be strengthening
our successful programs instead of stripping them of safeguards.
-3-
99-965 0 - 82 - 10
PAGENO="0146"
142
`Under the 1981 Omnibus Budget Reconciliation Act, Title XX was amended to
incorporate state and local training and social services for the territories
into a new block grant program to the states; Critical provisions developed
over time such as the state matching requirement and the state planning and
public participation requirement were wiped out. Funding was cut by 23
percent (almost $700'mill.ion) for F? 198?. The current funding level.for F?
1982 is $2.4 billion as compared to the ~3.O99 billion it would have been
* before Reconciliation.
A major concern of CWLA is that `the bloc~k granting which took place last year
really amounted to cost-cutting and cost-shifting from the federal government
to the states under the guise of increased flexibility. Title XX was already
a' block grant program that the states had been administering for over six
years. The increased flexibility' (loss of citizen protections) given them
under Reconciflation did little to assist in meeting increased demands f or
services with dramatically reduced funding.
CWLA is in a position, to make some partial assessments about the implemen-
tation' of Title XX since last fall. CWLA's Child Welfare Planning Notes is a
newsletter which reports on the latest news from Washington and the states.
We maintain regular contact with public and voluntary nonprof it agencies
throughout the country in order to share information in a timely fashion, and
hopefully, to "prevent the wheel from being reinvented" on a state-by-state
basis. Second, through our State Child Care Associations, we are provided
with information on what is occurring at the State and local level on a
regular basis. Finally, CWLA is conducting a "Survey of Impact of Reduced
Public Funding of Human Services and Local Agencies," otherwise known as the
"Human Fact Sheet." The League worked in conjunction with the Council of
Jewish Federations, the Family Service Association,' and the National Confer-
ence of Catholic Charities to develop the survey form. The responses are
coming in and the results are being tallied. We would now like to share
informationgleaned from these sources with the Subcommittee, and also briefly
run through the results of the American Public Welfare Association's report,
"A Study of the Implementation of the. Social Service Block Grant in State
Human Service Agencies with a Primary Focus on Ten Key Issue Areas."
CWLA found that the way in which states dealt with the block grants varied on
a state-by-state basis. Our "Human Fact Sheet" survey, which went to public
and voluntary nonprofit CWLA members and affiliates, showed that out of a
total of 78 voluntary agency respondents to the question on public participa-
tion, 59 had some means of input to the state's process, and 18 had none.
Most importantly, there were a variety of methods used for the input includ-
ing: the establishment of an association (child care association, b'ock grant
coalition, fair budget coalition, etc.) at the state level, coalition acti-
vities, participation in formal advisory committees, and testifying in state
hearings. None of our respondents had any contact with the Governor's
office. Finally, 40 respondents utilized more than one mechanism for input.
We are hearing overwhelmingly from the states with regard to Title XX that it
is not the block grant per se but the cuts in funding that are hurting states
from both a planning and service standpoint. This was also the bottom line of
APWA's survey. Some additional themes were regularly reported to us that show
the following trends emerging in the states.
-4-
PAGENO="0147"
143
States are complaining about the difficulty in planning when faced with
`the uncertainty of federal funding levels. In order for states to plan
their programs in a responsible manner, stabilization, of federal funding
is needed.
* . States are unable to deal with the block grants as if they existed in a
vacuum. For example, increased demand for the services offered under
`Title XX has been experienced now that the impact of reductions in other
programs like AFDC, Medicaid, food.stamps, housing, CETA, and low-income
home energy assistance is being felt. Social services and prevention
activity give way to basic survival issues:
-- For instance, a child-serving agency in Qklahoma is seeing
children whose parents are able to parent properly, but who
simply cannot feed their children.
-- New York is using Title XX monies to provide housing for
indigent clients under the rubric of prevention services.
-- Day care programs are being curtailed in most states to pay
for more basic, sustenance services.
For state human' service agencies, the issue is money, not New Federalism. So
concludes APWAs report, submitted to the Department. of Health arid Human
Services. The states were polled to obtain information about how they are
dealing with issues related to the implementation of the new social services
block grants `Thirty-three states completed the questionnaire. The study
reports some fascinating, if random, facts:
* ` California has reduced the number of social service programs by
4~0 percent and has modified 30 percent of those remaining.
* Idaho has identified three major service areas and plans to
~TT~inate one in its entirety rather than reduce services in
each.
* Providers in West Virginia will be asked to sustain cuts pro-
* portionate to departmental cuts.
* In Alabama, funds used to purchase services are being shifted to
support in-house departmental programs.
o Many states see a potential for savings in public participation
costs due to the~easing of federal regulations in this area.
o Overwhelmingly states agree that training and staff development
activities will be seriously curtailed.
* New York will explore reintegration of income maintenance and
social service activities.
* Colorado and Florida are considering increased utilization of
contractual service providers.
-5-
PAGENO="0148"
144
* On the other hand, Kentuck~ and North Carolina are cancelling
many service contracts.
Random facts notwithstanding, the study's conclusion is clear:
"The most common and expected trend that appears in the state respon-
ses is the emphasis on how the states are absorbing the budget cuts
in social services. Few comments are specifically directed at the
new block grant mechanism itself.".
* The American Public Welfare Association study found that some states will
increase their use of purchase of service contracts while other states
will decrease use of contractual services. But overwhelmingly the states
reported on in our newsletter have said they are reducing purchase of
service contracts. For example:
-- Hennepin County, Minnesota reports reduced options: although
private provlders may be more cost effective, the county has a
union contract which says it may not lay off state personnel in
favor of purchased services from private providers.
-- In Memphis, Tennessee, dollars for contact services with private
nonprofit agencies were cut ~2 million as.a result of cuts in
Title XX. As a result, 782 people lost services, most 6f whom
were children. For example, the Porter-Leath Children's Center
in Memphis will serve 50 fewer children in its Protective
Service Emergency Shelter (for abused, neglected and dependent
children). Porter-Leath reports that kids and the working poor
are hit hardest. -
* In almost all states, training and staff development have been the first
to be cut out as a result of the Title XX Block Grant and funding cuts.
Loss of these program components will affect the quality of services and
therefore the efficacy of the program.
* In terms of service, an overwhelming number of states report that their
preventive service components have been cut as a result of cuts in Title
XX. An overwhelming number report cuts in day care, cuts in family
support services, cuts in foster care services, and cuts in protective
services. As a result of the Title XX Block Grant and funding cuts:
-- Maryland has reduced foster care staffing and has reduced ser-
vices to children leaving foster care. Maryland reports that
the heaviest impact has been on the preventive component of
their services.
-- The recently completed National Study of the Incidence and
Severity of Child Abuse and Neglect projects an incidence rate
of approximately one million children who are seriously abused
or neglected in this country each year. The number of these
children who are reported to public child protection agencies
for investigation and child protection action continues to
increase, with the rate of substantiated cases increasing over
-6-
PAGENO="0149"
145
* 17 percent in the last two reporting years. The vast majority
of protective services are provided foTtl~rough the Title XX
program.
-- Ohio has reduced foster family special services for children,
~ell as special services to the blind and comunThatively
disabled, psychotherapeutic services, and developmental services
for children. Day care was cut by 15 percent in Ohio.
-- In Washington state, the Bureau of Children's Services reports
cuts in fañffly support services, seasonal day care for farm-
worker families and foster care service funds.
-- In Sacramento County, California, staffing is down 43 percent;
preventive services are out; even the highest priority pro-
* tective services have been hurt; and child day care licensing
ana foster home licensing staffs were cut by 50 percent.
-- Colorado has dropped its child abuse service component for
families at risk, and now service will be provided only after
abuse has occurred. In fact, there is a policy now that any
child 12 years or older who was voluntarily placed will auto-
matically be returned to the parents -- regardless of the home
situation, Colorado has also had to cut day care, homerfaker
services for the elderly, and WIN. Ten private agencies have
closed in Colorado.
-- Texas, like Colorado, has eliminated services to families at
higtl risk of abuse and neglect (i.e., prevention). It has also
had to cut day care (there are now 8,816 fewer children in day
care) and has eliminated services to unmarried and school-age
parents at risk of abuse and neglect.
-- In Alabama, 2,000 children lost day care services. Preventive
services and family counseling services were also cut.
* As a result of cutbacks in staff and cuts in the above kinds of services,
we may see the following trends: longer stays in foster care, less move-
* ment of children into permanent homes, inability to respond to reported
incidents of child abuse and increased incidences of child abuse.
* Overwhelmingly, states say the real impact will be felt in FY 1983 and
more so, if additional cuts in Title XX go throug~i. Some states such as New
York and New Hampshire see themselves having to get a release from. their
statutory responsibifities if additional cuts in Title XX are enacted.
As you can see, some of the most cost-effective services are being cut, such
as protective services in (hopefully) non-life endangering situations, pre-
placement preventive services, and family strengthening services. This is
occurring not because the decision makers are heartless, but because they are
*engaging in "damage control" and "survival techniques." These types of cost-
effective services must give way in order to assist those in more dangerous
circumstances. The major dislocations that have occurred in the Title XX
PAGENO="0150"
146
program -- a block grant that was tiblock granted -- give only sample of what
may have happened in categorical programs that were turned into block grants.
The transformation of categoricals to block grants is a major policy shift in
and of itself. When that is piggy-backed onto d~astic funding reductions,
* with limited transition time and protections for citizens, confusion and waste
result -- neither of which *is a goal for: sound public policy.
The Child Welfare League believes that a mix of funding sources and program
structures is the best way to meet the-needs of our vulnerable children, youth
and families. For example, the original Title XX program allowed the states
complete flexibility in determining what constituted a social service and
which services to provide. That allowed the flexibility to create new service
technologies within the existing social service structure. Some very creative
programs were developed in that context.
Yet there are other areas of service delivery that experience has demonstrated
require specificity. The Adoption Assistance and Child Welfare Act, P.L.
96-272, is just such a program. After five years of intensive work and over-
whelming documentation as to the need, Congress enacted this family strengthen-
ing law in 1980. The cuts in Title XX coupled with the threatened repeal of
this law mean that dollars for system reform and family reunification will, of
necessity, be used for sheer survival.
The authorization level for the block grant would be only $380 million for FY
1983 and thereafter, a sum that. represents a 25 percent funding cut oelow
actual FY 1982 levels and a 47 percent reduction from the full implementation
funding level as recommended in the law. Repeal of this law will create
increased demand for Title XX dollars. . -
The League is opposed to this block grant proposal, as we know children will
not be well served by removing the specificity which took five years to be
crafted into this legislation. A strong federal role is necessary in this
instance to ensure that the.child welfare system receives the systematic
improvements it needs to enable it to-adequately care for neglected, abandoned
and abused children and their families. Joyce Black, President of the CWLA.
Board of Directors, presented extensive testimony on behalf of the League on
March 16,- 1982 before the Senate Finance Committee regarding our intense
support for this cost-effective legislation. Therefore we will not present
you with the detailed analysis at this time of why a block grant would be
inappropriate. This law, being proposed for elimination by the Administration, -
is a classic example of the lack of assessment and thoughtful process that is
absolutely necessary if new federalism is seriously addressed and programs are
appropriately sorted out.
We would be pleased to provide any additional information that would be of
assistance to you in your work, and we would like to thank you again for your
willingness to take the time and effort to include the voluntary sector and
other concerned organizations and citizens in the discussion of these critical
public policy issues.
-8-
PAGENO="0151"
147
Senator DURENBERGER. Our next witness is Senator Paul Hess,
chairman of the Kansas Senate Committee on Ways and Means. He
will testify today on behalf of the National Conference of State
Legislatures.
Senator, we are pleased to have you with us today, all the way from
the State of Kansas. We are looking forward to your testimony on
behalf of the National Conference of State Legislatures and, in par-
ticular, on the subject of block grant implementation.
TESTIMONY OF PAUL HESS, KANSAS STATE SENATOR AND CHAIR-
MAN OP THE KANSAS SENATE COMMITTEE ON WAYS AND MEANS,
ON BEHALF OP THE NATIONAL CONFERENCE OP STATE LEGIS-
LATURES, ACCOMPANIED BY GARY PALLE, STAFF ASSOCIATE,
NCSL
Mr. HESS. Mr. Chairman, I am delighted to be here to spend just
a few minutes with you and the subcommittee. I appreciate the oppor-
tunity. I am here to represent the National Conference of State Leg-
islatures. I am going to simply highlight certain words and phrases
in the testimony and go through the 11 pages very quickly. Then I will
make some personal remarks.
Mr. Chairman, I want to assure you of something that you already
know. State legislators are warm, compassionate, responsive, intelli-
gent, capable individuals just as Members of the 11.5. Senate and the
U.S. House of Representatives are. We are aware of our system of
government.
That not only includesthe Federal Government, but also the local
units of government, which, I might add, we create cities and counties.
I want to assure not only you, Mr. Chairman, but those individuals
and groups that have been represented this morning to whom I have
listened. State legislatures are not in the backwaters of American
policies. We do have computers, staff, and, more important, the will
to make the New Federalism work. We are willing to accept that
responsibility.
I want to say that I have served in the legislature for 12 years. I was
one of those kids who got elected at 21, at the height of the Vietnam
war. I have grown and matured through the process. It seems to me
that, in my present position as chairman of the Senate Ways and
Means `Committee in Kansas-a better name for that would be appro-
priations-I feel like an umpire at a World Series game. It is ex-
tremely delightful for interest groups to realize that all roads do not
lead to Washington. There are roads to St. Paul, Topeka, Sacramento,
Dover, Albany, and other State capitals in the United States.
Mr. Chairman, before I walk you through our statement~-so that we
have some specifics; then I will go through the statement-let me
simply say that in Kansas, concerning the human services area, with
which most of the block grants are involved, we made up two-thirds
of those funds that were lost. We took that responsibility. We didn't
make all of them up. In the area of day care, we replaced every dollar
in the State of Kansas. In some other areas, we decided that those
dollars could be lost and could be better spent.
I want to compliment you and this subcommittee for this sorting-
out, the turnback process as you call it.
The National Conference of State Legislatures has long believed
that the Federal grants-in-aid system needs a serious overhaul. We
PAGENO="0152"
148
are not here lamenting the cuts. We accept them. We don't agree with
all of them. We simply want increased flexibility in the use of funds
at the State level so that we can target and have more efficient use of
those funds.
Let me just touch on the effects of the recently enacted block grants.
We applaud the intent. We are concerned about the timing-you
mentioned that a moment ago better than I can-of the reconciliation
process in August and then of the continuing resolutions. We had a
great amount of difficulty planning. Believe it or not, it still worked in
spite of that. The only thing that we regret is that we did not have the
opportunity to have more time to really get into the different block
grants. Many legislatures were out of session.
I also want to say, concerning the legislation you are working on,
we feel very strongly that there should be as few requirements as
possible. In other words, take the strings off the money and give us
that management flexibility with the funds.
On the top of page 3 of my statement you can see that most States
did accept or did participate with these particular block grants. You
can see some of the processes that were used. In the State of Montana,
they had. to have a specia~l session; and in Iowa, they set up a special
fund. In Kansas, we used our State Finance Council, which is chaired
by the Governor and has eight members of the legislature on it, to
deal with the block grants. The block grants came down in the fall,
when we were out of session.
Mr. Chairman, let me g~ over, our five key points. I will do this in
closing. We have encountered several problems. One is insufficient
leadtime for legislative review. We document that on page 6 of my
statement.
The second item is, "Please, take the strings off of the grants." We
feel that we have the ability to manage them. We have documented
on pages 7 and 8 the different strings there are under the different
block grants. I won't read all of that to you today, but we feel that
they tie our hands. Certainly, they are probably in response to the
fears that have been expressed in this room: That you cannot trust
those rascals in the State capitals because they will not allocate those
moneys where they are needed. Mr. Chairman, I can assure you that,
in most cases-although, you can cite some horror stories-that is not
correct.
The third point concerns the cuts in the block grants. Certainly,
we are not here to chastise you or the Congress for the cuts. We accept
them. We simply hope that if additional cuts are made, we will have
sufficient leadtime to respond.
Our fourth point deals with the uncertainty of Federal funding
levels. I don't need to dwell on that. Fifth is the State matching re-
quirements. We feel that in the maternal and child health, primary
care, and community development block grants those State matching
requirements really are not necessary. It indicates, I believe, that you
feel we will not put sufficient State moneys into those programs. In
most cases, we are doing that.
Mr. Chairman, in summary, I want to compliment you on the Uni-
form Block Grant Management Act that you are working on, and
~vhich is really the reason for these hearings. We strongly oppose the
pass-through. We have established, I believe, many healthy relation-
ships between State legislatures and local units of government. I
PAGENO="0153"
149
think that the Greek Oities-State concept which has developed in
this country is not a healthy concept. We have 50 sovereign States;
and tha't is where the buck really should stop. We should have this
kind of dialog with the local units of government at the State level.
I want to thank you for this opportunity. I will submit myself at
this time to any questions.
Senator DURENBERGER. Thank you very much for your testimony.
What do I do about the fact that, an hour ago, the National Associa-
tion of Counties and the U.S. Conference of Mayors were here basical-
ly disagreeing with what you have just said about the warm, wonder-
fill, compassionate relationships that exist between the State and local
governments in this country?
In a couple of questions, I tried to explore with them the problems
in the relationship. Were they problems of inadequate resources, or
problems that States have had, for the last 10 or 12 years, of just being
a funnel through which Federal money pours into local government?
Or, was it an issue of the States-particularly with regard to project
grants-just not ever having been in that business, so being inept in
this brief period of time they have had to demonstrate an ability in
that area?
I would have to admit that, considering the short time we have had to
demonstrate these new relationships between State and local govern-
ments in these blocked areas, it may be the right of the national as-
sociations to say, "The proof still is in the pudding, and we haven't
seen the pudding yet." Is that correct?
Mr. HESS. Mr. Chairman, I certainly don't want to imply that
everything is sweetness and light. However, I believe that the process
we are going through is a healthy one. I think the only way you are
going to measure whether or not it works is to allow a flexible block
grant program to continue and expand. I think we will be worthy of
the confidence you have, simply by taking these steps. I don't want to
say that there won't be some serious disagreements and problems.
Let me say two things. One is, every State legislature in the United
States, to the best of my knowledge, is apportioned on the basis of
one person and one vote because of Baker v. Carr in the early 1960's.
So to say that the urban centers are not represented-I note that in
your State, in the Minneapolis-St. Paul area, they have proportional
representation in the legislature. In Wichita, Topeka, and Kansas City
in my State of Kansas their representation in the legislature is nearly
45 percent.
I have one of the most urban delegations in a rural State. I chair
the Appropriations Committee. I can assure you that the cities and
counties are not bypassed. It may occur in some States but, by and
large, I think that it is a myth which is continually perpetuated by
local units of government, It is easier to come straight to Senator
Durenberger and ask for money than it is to work with the 6 State
senators and the 18 representatives in Wichita and work out our prob-
lems back home.
I feel very strongly about that. That is the position of our associa-
tion. We are thoughtful about it. We are not, in any way, trying to
be arrogant or saying that we have all knowledge. I think it is a part-
nership. We just want the opportunity to make it work. I think we will
be responsive.
PAGENO="0154"
150
Senator DUBENBERGER. The concern that was expressed, as I read it,
about the adequacy of urban representation goes beyond the issue of
whether or not we have proportional representation. It probably rec-
ognizes the reality that, in some of the major metropolitan areas in
our country, the core city-the Detroit or the Chicago-is underrepre-
sented when it comes to making decisions which affect the unique fiscal
and human problems of that city. The metropolitan area may be well
represented vis-a-vis the rural area, but those suburban interests usual-
ly are quite different from the core city-although they shouldn't be
different. There wouldn't be any suburbs if there weren't a core city.
One of the frustrations people will experience for a couple of years
in this whole process is with the need for State legislatures to come to
grips with metropolitan area representation. They need to recognize
sOme of the common concerns that suburban and urban officials need
to have for the good of the larger area. That is probably one of the
things that concerns people who have to serve the needs of residents of
a core city in a large metropolitan area.
I wanted to ask you about one of the blocks. You indicated some
experience iii Kansas with the Low Income' Energy Assistance block
grant. That is one of the blocks in which we have permitted transfer-
ability up to 10 percent.
Earlier this morning, Dr. Rubin indicated that 33 States pulled out
$92 million of Low Income Energy Assistance for another program.
Your testimony indicated that Kansas was one of those States. You
moved it out for title XX which you felt was a higher priority need.
Was there much public opposition in Kansas to this transfer?
Mr. HEss. Senator, there was not. I think that the title XX consti-
tuencies had much more clout in the legislature and convinced us that
those Were the more primary needs.
I also think the legislature feels that the whole question of energy
is one area in which we are going to have to begin to assume more of
a role in terms of funding. In response to that, in our State-and I
know in a couple of other States-we are getting a little tired of sim-
ply pouring $16 million of your money into houses that leak-in other
words, that don't have insulation.
We did three things. We diverted money to titleXX; No.2, we took
hundreds of thousands of dollars to our energy office from the United
States Department of Energy and said, "We are tired of spending it
on all these demonstration projects. We are going to give the money
to our Department of Social and Rehabilitation Services and use it
for energy audits and weatherization." No. 3, we are going to deal
with the energy area not through our State structures but with
Federal moneys which will be supplemented with State money.
What I am trying to say is that this is an illustration of how we took
the flexibility you gave us and tailored it to a program-not the type
of program that all the solar people wanted or the oil and gas industry
may have wanted, but where we thought the greatest needs were in the
State. We are dealing with the elderly and the poor in terms of their
homes. We thought it was better and cost-wise to try to take some
positive steps, and. to link energy audits up with weatherization, with
money to pay utility bills. We will still be able to divert some of it to
the title XX area.
Senator DURENBERGER. I think this is an initiative we are going to
have to address-if not this year, then next year.
PAGENO="0155"
151
When we designed the Low Income Energy Assistance program, it
was to recognize the economic burden that was being put on people in
this country by decontrol. We decided it was very, very important to
go through decontrol. We had made mistakes 10 years ago in putting
controls on oil. While we recognized the reality of the disruption, we
set up a program that would return the money, for 3 years, to some of
the folks who were paying higher heating or air-conditioning bills.
Now, we have gotten ourselves saddled with some form of a welfare
program.
This Congress, despite the efforts of some of us, has been very ret-
icent to provide flexibility for weatherization, even though it makes
so much commonsense. I can't understand why we resist it. It seems
as though we are now trapped with a new welfare program. As long as
prices continue to rise in the energy area-as I'm sure they will-and
we don't adequately address some of the other income maintenance pro-
grams, we will put ourselves in kind of a box down here. I think that it
will be very~ very difficult to get out of it.
We have put that 10-percent transfer into the block grant, and 33
States have used it.
Then, in January, we did a supplemental and said, "No, you can't
transfer it." In other words, we said to 33 States, "We are smarter than
you are." it is just getting to the point where somebody is going to
have to give us-you Senators and others who are involved in this
process-some advice on where the most appropriate needs can be met
with that portion of the windfall profits tax. If you have any more
advice for us, other than what you have already said, you might as well.
get it in the record.
Mr. HESS. Senator, I think that trying to respond by illustration
sometimes maybe misses the key point. We deeply appreciate the con-
fidence you have placed in us to make those kinds of tough decisions
at the local level. To show you that we are wiley and cunning, in terms
of what you may do in the future, we do recognize that you have gotten
yourself into a box.
We .get $16 million in Kansas for that program. To be honest with
you, we have never been able to quite spend it all. That was one of the
reasons we diverted 10 percent of it. We always had a little left over.
However, we are afraid that, one of these days, the U.S. Congress
may cut back on that money, although you have developed a con-
sistency in our State.. We are afraid that we will then be stuck with
that social problem. However, we recognize that we have a responsi-
bility to those people in need.
What we are doing is shoveling as much Federal dollars as we can
into weatherizing homes. So, if in 1984 or 1986 you say "OK, States,
you assume all or part of that responsibility," we will be putting money
into homes that are insulated. We will not be losing so .much of it out
the window and out the roof. This may be a little simplistic, but we
try to think ahead.
Senator DURENBERGER. That is an appropriate response. I regret
that time doesn't permit more questions. I do appreciate your coming
here on behalf of yourself and the National Conference of State
Le~is1atures. Thank you.
Mr. Hzss. Thank you.
[The prepared statement of Mr. Hess, with attachment, follows:]
PAGENO="0156"
152
National Office of 444 PresIdent
State North Capitol Ross 0. Dayen, President of
Conference Federal Street, NW. The Kansas Senate
Relations 2nd Floor
of State Washington, D.C. Executive Director
20001 Earl S. Mackey
Legislatures 2oV624~540O
TEST I NON?
OF
SFNATOR PAUL HESS
FOR THE KANSAS I EGISLATURE
ON BEHALF OF THE
NATIONAL CONFERENCE OF STATE LEGISLATURES
ON
BLOCK GRANT JMPLENEN1ATION
9:30 AM
357 RUSSLLL SENATE OFFICE BUiLDING
MAY 11~ 1982
SUBLOMMI TTEE ON I NTERGOVERNMENTAL
RELATIONS OF THE SENATE GOVERNMENTAL
AFFAIRS COMMITTEE
PAGENO="0157"
153
MR. CHAIRMAN AND MEMBERS OF THE SUBCOMMITTEE, I THANK YOU FOR
THIS OPPORTUNITY TO ADDRESS THE IMPLEMENTATION OF BLOCK GRANTS
AND TO BRING TO YOU NOT ONLY MY CONCERNS BUT ALSO THE CONCERNS
AND SUGGESTIONS OF THE NATIONAL CONFERENCE OF STATE LEGISLATURES
(NCSL.),
flY NAME IS PAUL HESS, I AM A MEMBER OF THE KANSAS SENATE AND
SERVE AS CHAIRMAN OF THE SENATE WAYS AND MEANS COMMITTEE, I
HAVE BEEN ACTIVE WITH THE NATIONAL CONFERENCE OF STATE LEGISLATURES
FOR SEVERAL YEARS AND NOW SERVE ON THE GOVERNMENT OPERATIONS
COM~ITTEE
NCSL HAS LONG SUPPORTED THE CONSOLIDATION OF FEDERAL GRANT-IN-AID
PROGRAMS, THE CONFEREJ4CE BELIEVES THAT INCREASED FLEXIBILITY
IN THE USE OF FUNDS AT THE STATE LEVEL CAN LEAD TO BETTER
TARGETING AND THUS MORE EFFICIENT USE OF FUNDS, CONSOLIDA-
TION CAN ALSO GREATLY LESSEN ADMINSTRATIVE COSTS THROUGH
SIMPLIFIED FUNDING, REPORTING AND AUDITING PROCEDURES,
IN MY TESTIMONY TODAY I WILL ATTEMPT TO OUTLINE THE EFFECTS OF THE
RECENTLY ENACTED BLOCK GRANTS, INCLUDING STATE IMPLEMENTATION
PROCEDURES AND PROVIDE SUGGESTIONS FOR IMPROVEMENTS TO BE MADE TO
EXISTING BLOCK GRANTS AND TO ANY ADDITIONAL ONES THAT MAY BE PROPOSED
BY REVIEWING THE PROBLEMS ENCOUNTERED BY STATE LEGISLATURES WITH
THE FIRST ROUND OF NEW BLOCK GRANTS, / GREAT DEAL OF MY TESTIMONY
IS FROM A STUDY NCSL DID IN FEBRUARY OF THIS YEAR ENTITLED, "BLOCK
GRANTS: A ~EW CHANCE FOR STATE LEGISLATURES TO OVERSEE FEDERAL
Fut~Ds" I HAVE COPIES OF THIS STUDY WITH ME AND WILL MAKE IT
AVAILABLE TO THE SUBCOMMITTEE MEMBERS,
PAGENO="0158"
154
WITH THE PROLIFERATION OF NARROWLY DEFINED CATEGORICAL GRANTS,
STATE AND LOCAL GOVERNMENTS HAVE BECOME DISENCHANTED WITH THE
FEDERAL GRANT-IN-AID SYSTEM THESE CATEGORICAL GRANTS LACK
THE FLEXIBILITY NEEDED BY STATES TO TAILOR PROGRAMS FOR THEIR
BEST USE) THEY OFTEN INCLUDE - ONEROUS BUREAUCRATIC REQUIRE-
MENT FOR PROGRAM ADMINISTRATION. THESE GRANTS ALSO HAVE THE
TENDENCY TO REMOVE THE AUTHORITY FOR ESTABLISHING PROGRAM PRIORITIES
-FROM STATE LEGISLATURESBYMAKING AGENCY GRANTEES MORE ACCOUNTABLE
TO WASHINGTON THAN TO STATE AND LOCALLY ELECTED OFFICIALS.
STATE LEGISLATURES HAVE FOUND THEMSELVES BY-PASSED BY STATE
AGENcIES AND LOCAL GOVERNMENTS DIRECTLY APPLYING TO THE FEDERAL
GOVERNMENT FOR AID, DUE TO THE REQUIREMENTS ASSOCIATED WITH MANY OF
THESE CATEGORICAL GRANTS, THESE FEDEFAL FUNDS HAVE FUNNELLED THROUGH
STATE BUDGETS WITHOUT A GREAT DEAL OF STATE DISCRETION. IDEALLY,
FROM THE VIEW OF STATE AND LOCAL GOVERNMENTS, ThIE.BLOCK GRANTS FROM
THE FEDERAL GOVERNMENT SHOULD ATTACH FEW REQUIREMENTS OR "STRINGS"
TO THE MONEY SO THAT STATES WOULD BE GIVEN WIDE DISCRETION IN FUND
DISTRIBUTION, -
THE BLOCK GRANTS IN FY 19~2 GAVE. STATE LEGISLATURES A NEW
OPPORTUNITY TO APPROPRIATE FEDERAL FUNDS AND ASSURE PROPER EXPENDI-
TURE. SOME STATE LEGISLATURES ALREADY HAD IN PLACE A MECHANISM FOR
APPROPRIATING FEDERAL FUNDS AND BLOCK GRANT IMPLEMENTATION WAS
EASILY ACCOMMODATED INTO THIS PROCESS. OTHER STATES ARE USING THE
OPPORTUNITY PRESENTED BY BLOCK GRANTS TO TAKE THE FIRST STEP IN
DEVELOPING OVERSIGHT OF THESE FUNDS.
THE MAJORITY OF STATES HAVE CHOSEN TO ADMINISTER THE BLOCK
GRANTS THEMSELVES IN 1~2 RATHER THAN HAVE THE FEDERAL AGENCIES
WHICH WERE RESPONSIBLE FOR THE CATEGORICAL GRANTS MAINTAIN PRO-
PAGENO="0159"
155
(RAM MANAGEMENT. As OF JANUARY 1.. 1982, THE TALLY OF PARTICIPATING
STATES WAS: 149 STATES ACCEPTED THE ALCOHOL, DRUG ABUSE AND
MENTAL HEALTH BLOCK) 148 STATES TOOK OVER THE MATERNAL AND CHILD
HEALTH SERVICES BLOCK) 148 STATES OPTED FOR THE PREVENTIVE
HEALTH AND HEALTH SERVICES BLOCK) AND ONLY 38 STATES ELECTED
TO TAKE THE COMMUNITY SERVICES BLOCK GRANT.
DURING NOVEMBER 1981.. NCSL SURVEYED THE 50 STATES TO FIND OUT
WHAT MECHANISM THE STATE LEGISLATURES HAVE IN PLACE TO IMPLEMENT
THE EXPENDITURE OF BLOCK GRANT FUNDS, THE SURVEY RESPONSES
INDICATED THAT 23 STATES HAD INSTITUTED NEW OR SPECIAL LEGISLATIVE
~?OcF"URES TO DEAL WITH BLOCK GRANTS, ATTACHED TO MY STATEMENT
IS A DESCRIPTION OF LEGISLATIVE PROCEDURES ADOPTED IN RESPONSE
TO BLOCK GRANTS AND/OR FEDERAL FUND CUTBACKS, BY STATE, DURING
1981. MOST COMMONLY, STATES PASSED LEGISLATION REQUIRING
SOME FORM OF LEGISLATIVE SIGN-OFF AS A PREREQUISITE TO THE
EXPENDITURE OF BLOCK GRANT FUNDS. THE SURVEY ALSO SHOWED THAT
THE FOLLOWING ARE THE MAJOR WAYS IN WHICH STATE LEGISLATURES
ARE EXERCISING THEIR RESPONSIBILITIES OVER BLOCK GRANT DISTRIBUTIONS:
* THROUGH THE APPROPRIATION PROCESS)
* BY REQUIRING FORMAL LEGISLATIVE APPROVAL
PRIOR TO EXPENDITURE OF BLOCK GRANT FUNDS)
* THROUGH INTERIM CONTROL OVER THE RECEIPT OR
EXPENDITURE OF FEDERAL FUNDS)
* THROUGH LEGISLATIVE REVIEW OF FEDERAL GRANT
APPLICATIONS) AND
* THROUGH SPECIAL LEGISLATIVE COMMITTEES SET UP
TO MONITOR BLOCK GRANT IMPLEMENTATION,
PAGENO="0160"
156
I WOULD LIKE TO TAKE THIS TIME TO DESCRIBE A FEW OF THE STATE
PROCEDURES USED TO IMPLEMENT BLOCK GRANT FUNDS. FOR THE MOST
PART, STATE LEGISLATURES ARE USING THESE MECHANISMS AS A WAY TO
DEVELOP STATE PROGRAM PRIORITIES AND BECOME MORE INVOLVED IN
THE DISTRIBUTION OF ALL FUNDS AT THE STATE LEVEL.
IN MONTANA, DURING ITS LAST REGULAR SESSION, THE LEGISLATURE
DIRECTED THAT ALL BLOCK GRANT FUNDS RECEIVED PRIOR TO JANUARY 3.
1983 REQUIRE A SPECIAL SESSION OF THE LEGISLATURE PRIOR TO
EXPENDITURE. A SPECIAL SESSION WAS SUBSEQUENTLY HELD IN
NOVEMBER OF 1981 AT WHICH TIME THE LEGISLATURE REVIEWED DETAILED
BUDGET PLANS FOR THE EXPENDITURE OF BLOCK GRANT FUNDS AND
APPROPRIATED BLOCK GRANTS ON AN AGENCY BASIS. IN ORDER TO
MAiNTAiN ITS CONTROL OVER ANY FURTHER BLOCK GRANTS THAT
MIGHT BE AVAILABLE TO THE STATES BEFORE THE LEGISLATURE~S NEXT
REGULAR SESSION, THE LEGISLATURE RECESSED RATHER THAN ADJOURN-
ING AFTER ITS NOVEMBER SPECIAL SESSION.
IOWA PASSED LEGISLATION IN 1~S1 REQUIRING THAT BLOCK GRANTS BE
DEPOSITED IN A SPECIAL FUND SUBJECT TO APPROPRIATION BY THE
LEGISLATURE, AND THAT THE LEGISLATURE RECEIVE NOTIFICATION OF ALL
APPLICATIONS FOR FEDERAL FUNDS AT LEAST Sfl DAYS PRIOR TO SUBMISSION
OF THE APPLICATION.
IN KANSAS, WHERE THE LEGISLATURE APPROPRIATES ALL FEDERAL FUWDS,
WE USED OUR FINANCE COUNCIL (A JOINT LEGISLATIVE/EXECUTIVE BODY)
TO REVIEW THE INITIAL PROPOSALS FOR THE BLOCK GRANTS, ~URING
/ THIS YEAR'S LEGISLATIVE SESSION, THE ENTIRE LEGISLATURE THROUGH
THE APPROPRIATIONS PROCESS PARTICIPATED IN THE FULL REVIEW OF
PAGENO="0161"
157
OUR STATE AGENCY PROPOSALS FOR USE OF THE FUNDS, WHERE ALTERNATIVE
OR DISCRETIONARY USES WERE AVAILABLEJ WE MADE OUR BEST JUDGEMENT
ON THE MOST EFFECTIVE AND EFFICIENT USE OF THE FUNDS, LET ME
ADD THAT WITH THE PRESENT STATE OF THE ECONOMY AND THE SIZE OF
THE REDUCTIONS IN FEDERAL AID, THERE WAS LITTLE DISCUSSION OF
NEW PROGRAMS OR INNOVATIVE SERVICE DELIVERY, WE FOCUSED AS MUCH
AS POSSIBLE ON TRYING TO REDUCE THE IMPACT OF THE FEDERAL CUTS,
IN THE FUTURE, ESPECIALLY AS THE DISCRETION AVAILABLE TO US IN
THE STATE EXPANDS, I'M CERTAIN THAT THESE WILL AGAIN BE POPULAR
TOPICS FOR DEBATE,
KANSAS CHOSE TO PARTICIPATE IN ALL THE BLOCK GRANTS) AND WE ARE
WORKING NOW TO ESTABLISH A PROGRAM FOR THE ADMINISTRATION OF THE
CPBG SMALL CITIES BLOCK GRANT WHICH BECOMES AVAILABLE IN flCTOBER,
WE'RE IN A HOLDING PATTERN AT PRESENT REGARDING THAT FINAL
DECISION, WE DID OPT TO TRANSFER SOME OF THE BLOCK DOLLARS
BECAUSE OF THE IMPORTANCE OF MANY OF THE TITLE XX PROGRAMS IN
OUR STATE, ~!E ALSO SUPPLEMENTED THIS BLOCK GRANT WITH SOME STATE
FUNDS,
BLOCK GRANTS AND STATE LEGISLATIVE INVOLVEMENT IN THEIR DIS-
TRIBUTION HAS ALLEVIATED SOME OF THE PROBLEMS IN THE CURRENT
GRANT-IN-AID SYSTEM, `MOST OF THE IMPROVEMENTS ARE THE RESULT
OF THE INCREASED FLEXIBILITY THAT THE BLOCK GRANTS PROVIDE,
I BELIEVE THAT IT IS SAFE TO SAY THAT THE BLOCK GRANTS HAVE
CREATED A GREATER DEGREE OF PARTICIPATION BY ALL GROUPS, THE
BLOCKED PROGRAMS THAT HAD BEEN DIRECTED TO INDIVIDUAL CON-
STITUENCIES ARE NOW RECEIVING ATTENTION AND REVIEW BY A VARIETY
OF PEOPLE CONCERNED, THE PUBLIC) THE STATES' LEGISLATIVE
AND EXECUTIVE BRANCHES AND LOCAL POLICY MAKERS ARE ALL BECOMING
INVOLVED IN THE PROCESS,
99-965 0 - 82 - 11
PAGENO="0162"
158
BLOCY. GRAMTS ALSO PROVIDE A GREATER DEGREE OF
ADMINISTRATIVE FLEXIBILITY, MOST STATES WILL BE ABLE TO
STREAMLINE PROCEDURES AND REDUCE THE RED TAPE THAT WAS
ASSOCIATED WITH MANY OF THE BLOCKED PROGRAMS, THIS ADMINISTRATIVE
SIMPLIFICATION IS ONE OF THE MOST IMPORTANT POSITIVE RESULTS
OF THE BLOCK GRANTS.
ANOTHER OUTCOME OF BLOCK GRANTS IS THE IMPROVEMENT IN
EACH STATE'S CAPABILITY TO BETTER COORDINATE FEDERAL, STATE
AND LOCAL DOLLARS, IT PROVIDES THE STATES WITH A MEANS TO
INSURE THAT DOLLARS ARE BEING SPENT EFFECTIVELY AND PROGRAMS
AND POLICIES ARE NOT BEING DUPLICATED.
WHILE NCSL ENDORSES THE BLOCK GRANT APPROACH, STATE LEGISLATURES
HAVE ENCOUNTERED SEVERAL PROBLEMS WITH THE FIRST ROUND OF MEW
BLOCK GRANTS. I WOULD LIKE TO SPEND SOME TIME DISCUSSING THOSE
PROBLEMS.
FIRST IS INSUFFICIENT LEAD TIME FOR LEGISLATIVE REVIEW
AND APPROPRIATION, SIX BLOCK GRANTS WERE MADE AVAILABLE
FOR STATE ADMINISTRATION ON OCTOBER 1.. 1981,. THE BEGINNING
OF THE FEDERAL FISCAL YEAR, MOST STATE LEGISLATURES WERE NOT
IN SESSION AT THAT TIME, AND, IN FACT, WERE WELL INTO THEIR FY 1982
FISCAL YEARS. FORTY-SIX STATES BEGIN THEIR FISCAL YEAR ON JULY 1~
SEVEN ~TATE LEGISLATURES W!TH BIENNIAL SESSIONS WERE NOT SCHEDULED
TO CONVENE AGAIN UNTIL 1983 CONSEQUENTLY. STATE LEGISL~TIVE
INVOLVEMENT IN THE FIRST ROUND OF STATE ADMINISTRATION OF THE
~EV BLOCK GRANTS HAS BEEN DIFFiCULT.
PAGENO="0163"
159
SECOND ARE THE "STRINGS" ATTACHED TO THE BLOCK GRANTS, BLOCK
GRANTS WERE INTENDED TO TAKE THE FORM OF FLEXIBLE FEDERAL AID
WITH THE UNDERSTANDING THAT STATES COULD DISTRIBUTE THE FUNDS
ACCORDING TO PROGRAM PRIORITIES SET BY THE STATES, THE FINAL
LEGISLATIVE VERSION ATTACHED NUMEROUS STRINGS TO SOME OF THE
BLOCKS--MAINTAINING THEIR CATEGORICAL NATURE. FOR EXAMPLE:
* THE ALCOHOLJ DRUG ABUSE AND MENTAL HEALTH SERVICES
BLOCK GRANTJ REQUIRED THAT EVERY COMMUNITY MENTAL
HEALTH CENTER THAT WAS FUNDED IN FY 1980 ALSO
RECEIVE BLOCK GRANT FUNDING IN FY 1982, IN ADDITIONJ
THE FEDERAL REGULATION REQUIRE THAT 35 PERCENT
OF THE FUNDS RECEIVED BY THE STATE BE EARMARKED
FOR ALCOHOLISM PROGRAMS AND 35 PERCENT FOR DRUG
ABUSE PROGRAMS THE REMAINING FUNDS ARE DISCRETIONARY.
* THE PREVENTIVE HEALTH AND HEALTH SERVICES BLOCK
GRANT MANDATES STATE FUNDING OF ALL FY 1983 GRANTEES:
THAT PROVIDE EMERGENCY MEDICAL SERVICES. THE GRANT
ALSO STIPULATES THAT: FY 1982 STATE FUNDING FOR
THE HYPERTENSION. CONTROL PROGRAM (ONE OF THE FORMER
CATEGORICAL GRANTS MERGED INTO THIS BLOCK) BE AT
LEAST 75 PERCENT OF THE 1981 FUNDING LEVEL~ FY 1983
STATE FUNDING AT LEAST 70 PERCENT OF THE 1981 LEVEL'
AND FY198'4 STATE FUNDING AT LEAST bU PERCENT OF
THE 1981 TOTAL,
PAGENO="0164"
160
o THE MATERNAL AND CHILD HEALTH BLOCK GRANT STIPULATES
A SET ASIDE OF 15 PERCEJT OF THE AMOUNT APPROPRIATED
FOR 1982. AND 10-15 PERCENT FOR FY 1983 TO BE USED
BY THE DEPARTMENT OF HEALTH AND HUMAN SERVICES FOR
"SPECIAL PROJECTS." THESE ARE IDENTIFIED AS THE
HEMOPHILIA AND GENETIC DISEASE PROGRAMS THAT WILL
BE FUNDED DIRECTLY BY HHS. THE STATES COULD APPLY
TO RECEIVE THE FUNDS BUT WOULD HAVE MINIMAL DISCRETION
IN AWARDING THE SUBGRANTS.
* THE COMMUNITY SERVICES BLOCK GRANT REQUIRED THAT AT
LEAST 90 PERCENT OF THE FUNDS BE DISTRIBUTED TO
POLITICAL SUBDIVISIONS, NONPROFIT COMMUNITY. ORGANIZA-
TIONS OR MIGRANT AND SEASONAL FARM WORKER ORGANIZA-
TIONS. FIVE PERCENT IS ALLOWED FOR PROGRAM TRANSFER
AND 5 PERCENT IS ALLOWED FOR ADMINISTRATIVE EXPENSES.
~ A MAXIMUM CAP OF 15 PERCENT IS SET FOR RESIDENTIAL
WEATHERIZATION PROGRAMS FOR FUNDS RECEiVED THROUGH
THE Low INCOME ENERGY ASSISTANCE BLOCK GRANT.
* UNDER THE EDUCATION BLOCKI AT LEAST 80 PERCENT
MUST BE COMMITTED TO THE LOCAL LEVEL AND 20 PERCENT
CAN BE RESERVED FOR STATE USE.
BLOCK GRANTS WERE INITIALLY CREATED TO PROVIDE BROAD PROGRAM
DISCRETION, IN MAr~Y CASES THEY INSTEAD EARMARK THE FUNDiNG TO
HiGHLY SPECIFIC PROGRAM AREAS
PAGENO="0165"
161
THIRD ARE THE CUTS IN BLOCK GRANT FUNDING LEVELS. STATE GOVERN-
MENT LEADERS OFFERED TO ACCEPT SOME REDUCTIONS IN BLOCK GRANT
FUNDING IN RETURN FOR GREATLY INCREASED STATE CONTROL OVER
THE ALLOCATION OF FEDERAL FUNDS. IT WAS REASONED THAT SUCH A
REDUCTION COULD BE ABSORBED BECAUSE OF SAVINGS ARISING FROM
A REDUCTION IN THE FEDERAL BUREACRACY.
HOWEVER, STATES WERE GIVEN A 22.7 PERCENT REAL REDUCTION WHICH
MEANT CUTTING INTO THE SUBSTANCE OF THE PROGRAMS. MOST STATES
ARE CURRENTLY DEALING WITH BUDGET REDUCTIONS AND REVENUE SHORT-
FALLS AND ARE IN NO POSITION TO SUBSIDIZE PROGRAMS THAT WERE
ORIGINALLY INITIATED ON THE FEDERAL LEVEL AND ARE NOW BEING
SHIFTED TO THE STATES.
FOURTH IS THE UNCERTAINTY IN FEDERAL FUNDING LEVELS. WE DO
NOT KNOW IF THE FY 19~3 FEDERAL BUDGET WILL CONTAIN FURTHER
REDUCTIONS IN BLOCK GRANT FUNDING, UNCERTAINTY ABOUT THE AMOUNT,
TIMING AND AVAILABILITY OF FEDERAL FUNDS MAKE IT DIFFICULT FOR
THE STATES TO PREPARE THEIR OWN BUDGETS.
DIFFERENT BLOCK GRANT FUNDING LEVELS HAVE APPEARED IN THE
RECONCILIATION ACT THAT WAS PASSED IN AUGUSTJ AND THE FOUR CON-
TINUiNG RESOLUTIONS THAT WERE PASSED IN OCTOBER, NOVEMBER..
DECEMBER.. AND MARCH. THIS UNCERTAINTY AT THE FEDERAL LEVEL
CREATES SERIOUS PLANNING PROBLEMS FOR THE STATES AND FORCES THEM
TO GUESS. AT WHAT THE ~FINAL FEDERAL AID FIGURES WILL BE. IDEALLY,
THE STATES SHOULD BE ABLE TO HAVE FEDERAL BUDGET FIGURES AT
OI~E YEAR I~ ADVANCE SC THAT THE STATES COULD ADAPT THEIR
EJDGET~ ACCORDiNGLY.
PAGENO="0166"
162
THE CYCLE WiLL BEGIN AGAIN THIS SUMMER AS MOST STATE LEGISLATURES
COMPLETE THEIR FY 1983 BUDGET WORK BEFORE CONGRESS RELEASES THE
FEDERAL FY 1983 BUDGET.
FIFTH ARE THE STATE MATCH REQUIREMENTS, THREE BLOCK GRANTS RE-
QUIRE A STATE MATCH WHICH HAS BEEN A TYPICAL CHARACTERISTIC OF
CATEGORICAL GRANTS. THE MATCH REQUIREMENTS DETRACT FROM THE
INTENT OF BLOCK GRANTS AND CREATE ADDITIONAL FINANCIAL OBLIGA-
TIONS FOR THE STATES. THE REQUIREMENTS ARE AS FOLLOWS:
I I~lATERNAL AND CHILD HEALTH: THE STATE MATCH REQUIRE-
MENT IS THREE SEVENTHS OF THE FEDERAL FUNDING LEVEL.
* PRIMARY CARE: IN FY 1983~ THE STATE MATCH IS 20
PERCENT OF THE FEDERAL FUNDING LEVEL AND IN FY 198~~
THE STATE MATCH IS 33 PERCENT.
~ COMMUNITY DEVELOPMENT: A STATE MATCH OF 10 PERCENT
IS REQUIRED. (THIS MATCH CAN BE MADE WITH IN-KIND
CONTRIBUTIONS,)
PRESIDENT REAGAN'S ORIGINAL OBJECTIVE IN HIS BLOCK GRANT PROPOSAL
WAS TO CREATE A NEW NATIONAL PUBLIC POLICY INITIATIVE WHICH WOULD
ALLOW STATES TO DIRECT THE ALLOCATION OF FEDERAL AID TO PROGRAMS
IDENTIFIED BY THE STATES AS ESSENTIAL SERVICES. FOR THE STATES
TO DO THIS, FUNDING FLEXIBILITY WAS A CRITICAL ELEMENT, THE
BLOCK GRANT PROGRAM THAT EMERGED FROM CONGRESS FAILED TO PROVIDE
THIS NEW PARTNERSHIP ROLE FOR STATE GOVERNMENTS. THE CONGRESS
PAGENO="0167"
163
INSISTED ON E1~RMARKING A LARGE PERCENTAGE OF THE CLOCK
GRANT FUNDS WHiCH LIMITED THE DISCRETIONARY POWERS THAT WERE TO
BE TRANSFERRED TO THE STATES. NEVERTHELESS) BLOCK GRANTS ARE
A STEP IN THE RIGHT DIRECTiON IN SHIFTING RESPONSIBILITIES TO
THE STATES.
11R.CHAIRMANJ IT IS MY UNDERSTANDING THAT YOUR STAFF AND THE NCSL
STAFF HAVE BEEN WORKING ON MODEL BLOCK GRANT LEGISLATION TO BE
INCLUDED IN EACH AND EVERY FUTURE BLOCK GRANT-PROPOSAL, I ALSO
UNDERSTAND THAT NCSL HAS ALREADY TESTIFIED BEFORE THE SUBCOMMITTEE
WITH REGARD TO THIS LANGUAGE SO I WON'T COMMENT ON THE SPECIFICS.
I WOULD JUST LIKE TO POINT OUT THAT REGULATIONS THAT ARE AS
SIMPLE AS POSSIBLE ARE VERY IMPORTANT TO THE SUCCESS OF BLOCK
GRANT IMPLEMENTATION. YOUR BOILER PLATE LANGUAGE CAN PROVIDE
DIRECTION TO OTHER CONGRESSIONAL COMMITTEES IN ESTABLISHING
THE NECESSARY BASIC RELATIONSHIPS THAT SHOULD EXIST IN ANY
FEDERAL LEGISLATION CREATING BLOCK GRANTS AND CAN SET THE BASIC
RjSPONSIBILITIES AND UNIFORM REQUIREMENTS TO BE FOLLOWED BY THOSE
INVOLVED. THE SUBCOMMITTEE CLEARLY DESERVES PRAISE FOR THESE
EFFORTS.
IN CLOSING, I BELIEVE THAT A BLOCK GRANT APPROACH CAN PROVIDE
STATES WITH THE FLEXIBILITY NEEDED TO PROVIDE SERVICES TO ITS
CITIZENS IN A MORE EFFICIENT AND EFFECTIVE WAY, STATE LEGISLATIVE
INVOLVEMENT IN THE PROCESS DEMONSTRATES THAT THE STATES ARE
WILLING AND ABLE TO ACCEPT THIS GREATER RESPONSIBILITY, BLOCK
GRANTS CAN PROVIDE STATES WITH A MEANS TO BETTER TARGET FUNDS
TO WHERE THEY ARE MOST NEEDED, REDUCE DUPLICATION OF SERVICES
AND ELIMINATE WASTE THROUGH SIMPLIFIED ADMINISTRATIVE PROCEDURES,
AGAIN, THANK YOU FOR THIS OPPORTUNITY TO TESTIFY AND I WOULD BE
HAPPY TO RESPOND TO ANY QUESTIONS YOU MAY HAVE.
PAGENO="0168"
164
Descriotion of Legislative Procedures Adopted in
Response to BlocK Grants and/or Feceral Funo
Cutbacks, During 1981, By State
Alabama. During its 1981 session, the Alabama legislature passed two joint
resolutions which dealt with block grants. SJR 19 created an interim
legislative committee to study federal block grants and SJR 215 expanded the
scope of one of the legislatures select joint committees, `to study the state
medicaid programs so as to provide that said committee shall investigate and
report on the impending impact of federal block grants to operate state health
and welfare programs."
California. Legislation was passed in California which established a joint
legislative-executive advisory committee f or the allocation of block grant
funds, *not to go out of existence until July 1984.
Connecticut. To assure its involvement in the allocation of block grant
funds, Connecticut passed PA 81-449 which stated that, during FY `81-82:
- State funds may not replace cut federal funds without legislative
approval.
- Legislative approval is required before the expenditure of block gran~
funds.
- Any modification of funding for programs necessitated by reduction in
federal funds can occuronly if there is legislation that allows this.
Florida. During 1981, the Florida legislature formed a Select Committee on
Federal STudget Cutbacks and developed a general policy statement and detailed
guidelines which were used by the Senate Appropriations Committee in writing
the 1982 Senate Appropriations Bill.
`Illinois. A legislative resolution directed the Commission on
Intergovernmental Cooperation to hold public hearings during this past summer
to advise the legislature on block grant implementations. The Commission
submitted a report to the General Assembly in October which made the following
recommendations:
- Creating a trust fund for each block grant so that program growth or
decline can be monitored and evaluated.
- Creating a permanent new Block Grant Board to address long-range
programmatic and administrative oversight responsibilities of block
grants.
PAGENO="0169"
165
- For :ne interim, until the oversight board is eStablishec, the
Commission on intergovernmental Cooperation will suomit monthly reports
to :ne General Assemoly on the status of all block grants.
Until these recommendations are acted on by the legislature, block grants will
be handled through the normal appropriations process.
Iowa. In passing SF 563, the Iowa legislature made clear its intention to
an active role in the control of federal block grant funds. SF 563
requires the following:
- Block grants must be depositec in a special fund subject to
appropriation by the legislature.
- The governor must include with the budget a statement of federal funds
not included in the budget for the previous biennium and anticipated
block and categorical grants.
- The buaget must indicate federal fLmnds to be used, tne programs to which
they will apply, and the necessary state match.
- The legislature must be alerted to all federal grant applications at
least 60 days prior to submission of the application.
Kansas. The legislature appropriated ~0 for health and social services block
graiiti. By establishing such a limitation the Kansas Finance Council (a joint
legislative/executive body) can increase expenditure limitations if block
grants occur.
Louisiana. The Louisiana legislature instituted a requirement that federal
funas ~i~eived in the form of blocks be reviewed by the Joint Legislative
Committee on the budget, where federal funds are newly incorporated into the
state budget. The Louisiana House Appropriations Corrrnittee also established a
subcommittee to review block grants.
Maine. In 1981, the Maine legislature enacted a law under which any change
~~feoeral categorical grants to federal block grants cannot be implemented
on the state level without recommendations from the committee having
jurisdiction over appropriations and financial affairs and approval by the
legislative branch of state government.
~ Standing committees in the Maryland legislature have held hearings
on reaeral fund cutbacks and the legislature has been involved in the review
of changes in state regulations resulting from federal funo reductions.
Massachusetts. Unoer a law passed in 1981, the Massachusetts legislature
~y1ncreased its oversight of federal funds. All feceral funds received
by the state must now be deposited in a special General Federal Grants Fund,
Suoject to appropriation by the legislature, exceot under certain
:ir:umstances. Accitionaliy, the legislature must be notified of all feceral
PAGENO="0170"
166
crant apolications at least 30 days prior to submission. Among other things,
the notification must include a aetailed fiscal statement and a aescription cf
the substance of the applications. Finally, the legislation specifies reports
that state agencies must regularly make to the legislature concerning feceral
funds.
Michi an. Three bills were passed last year in Michigan dealing with
egis ative oversight of block grants. 5CR 355 required that all state
agencies inform the legislature of applications for and the receipt of federal
block grants and directed the governor to set forth in detail in the budget
the proposed expenditures of federal block grant funds. Under PA 30, the
department of management and budget must submit to the legislature an annual
report on federal assistance. And PA 18 declared that, if appropriations are
made from feceral revenues, the amount expended shall not exceed the amount
appropriated in the budget act or the amount paia in, whicnever is the lesser.
Minnesota. The Minnesota legislature passed a bill requiring one-quarter of
F'S2bTock grant monies to be allocated according to prior categorical uses,
with the remainder to be appropriated by the legislature when it reconvened.
During the interim, a full appropriations committee meeting was held on
federal cuts and block grant legislation.
Missouri. The 1981 appropriation for the Department of Social Services
i~i~iuoed the following directive: ". . . Federal block grants receivea by the
Department of Social Services shall be administered unoer the oyersight of a
(joint legislative-executive) committee."
Montana. KB 500 passed in 1981, specifically prohibited the expenditure of
i~i~rant funds without legislative appropriation. The bill stated,
"Any feaerai funds received by or allocated to the state of Montana
prior to January 3, 1983, as a block grant as defined by an act of
Congress enacted subsequent to April 1, 1981, and specifically
designated as a block grant shall require a special session of the
legislature for appropriation by the legislature prior to
distribution of these funds among agencies and programs."
Subsequently a special session was held in November at which the legislature
appropriated all block grants. The legislature then recessed but did not
adjourn in order to maintain appropriations control over any additional block
grants that might come to the state before the legislature's next regular
session.
Nevada. SB 619, passed in 1981, required that,
When~ver federal funding in the form of a categorical grant of a
specific program administered by a state agency . . . is terminated
and incorporated into a block grant . . . the agency must obtain the
approval of the interim finance committee in order to allocate the
money received from any block grant."
New Mamoshire. A bill was passed by the legislature requiring the Governor to
notify the presiding officers of the Senate ana House of Representatives of
PAGENO="0171"
167
any block grant awaros ~y the fe~eral government. Any allocation of these
grants must be approvea oy :ne General Court.
New Jersey. The legislature formec a subco~ittee on Feceral Aid and tne
Joint Appropriations or~nittee intensified to oversight of federal funds.
New Mexico. An interim Feceral Funds Reduction Study Comittee was set up by
tne legislature to monitor the federal budget process, determine state and
local impact, and draft legislation.
New York. This state passed a comprehensive bill, the Accounting, Financial
Reporting and Budget Accountability Reform Act of 1981, which revamped the
budgeting and accounting process in New York, giving the legislature greatly
increased control over appropriations and expenditures. The following brief
description of the bill is taken from New Yorks September 1981, "The Ways and
Means Report':
The new legislation requires that no state moneys may be expended except
pursuant to an aopropriation, and generally prohibits transfers of money
between funds unless specifically authorized by statute.
The Governor must alter the budgetary process to provide for the
appropriation of. feceral funds and all other funds that were heretofore
exempt, make substantial changes to the financial plan, begin a new "key
item" reporting system to monitor program performance, and operate
within a more restricted environment as a result of increased
legislative oversight. These changes are designed to parallel the shift
in accounting and reporting practices to conform with GAAP (generally
accepted accounting principles).
North Carolina. Under MB 1392, the North Carolina legislature asserted its
authority tO control the appropriation of block grant monies. The bill states:
- ". . . All federal block grant funcs received by the State between
August 31, 1981, and July 1983, shall be received by the General
Assembly . .
- "There is established the Joint Legislative Corrsnittee to Review
Federal Block Grant Funds. The Cormnittee shall review acceptance
anc use of all feceral block grant funds received by the State
between August 31, 1981, and July 1, 1983. . .
Ohio. HJR No. 39 created a Joint Legislative Cometittee on Federal Funds to
~~Ttor the receipt and expenditure of federal funds and to review all new
federal grant programs. The bill also directed the corrumittee to serve in an
advisory capacity to the Ohio General Assembly in all matters related to
federal grant programs.
Oklahoma. SB 326, passed in 1981, created a Joint Committee on Federal Funds
wltfl authority to approve/disapprove federal fund applications and make
recommenoations concerning feceral funds to the legislature. It also directec
that claims by state agencies for federal funds may not be processed without
PAGENO="0172"
168
written authorization from the president of tne senate and speaker of tne
nouse.
Tennessee. SB 997, passed during 1981, established several new procecures
Tf~Jnrespect to the appropriation and expenditure of state funds, including:
- "In the event federal and departmental revenues . . . are less than
the amount estimated to be available under the allotments then and
to the extent the spending authorizations are hereby reduced; to
the extent that federal or departmental revenues in excess of the
amounts alloted are realized, such excess shall not constitute
increased spending authorizations, except under the conditions
herein specified.
- "No state agency shall establish new programs or expand programs,
including any programs involving federal or other funds . . . until
the program anc the availability of the money is submitted to the
- Finance, Ways and Means Coriinittee chairmen and until said chairmen
have acknowledged in writing receipt thereof . . .
- `The Cormiiissioner of Finance and Administration shall submit a plan
for implementing the federal block grants proposec by the
President."
Texas. The legislature attached a rider to its appropriations bill which
requires that if block grants replace categorical grants, the funds should be
allocated to state departments and agencies as they were under categorical
grants.
Virginia. Under the 1981 amendments to the Virginia appropriations act, the
Governor must produce quarterly reports summarizing the implications of
approvals of federal fund grants. The implications to be identified induce
significant and anticipated budgetary, policy, and administrative impacts of
feceral requirements.
PAGENO="0173"
19
Senator DETRENBERGER. Our next panel is composed of representa-
tives of the human resources community.
We have two witnesses: Delores Delahanty from the National Asso-
ciation of Social Workers and Sandy Solomon who is representing
the Coalition on Block Grants.
We will start first with testimony front Ms. Delahanty.
TESTIMONY OF DELORES S. DELAHANTY, BOARD MEMBER OF THE
NATIONAL ASSOCIATION OF SOCIAL WORKERS, LOUISVILLE, KY.,
ACCOMPANIED BY SUSAN E. REES, DIRECTOR, NASW, PROJ~ECT
BLOCK GRANT; AND SANDY SOLOMON, EXECUTIVE DIRECTOR,
COALITION ON BLOCK GRANTS, WASHINGTON, D.C., ACCOM-
PANIED BY NANCY EBB, SENIOR STAFF ATTORNEY, CHILDREN'S
DEFENSE FUND
Ms. DELAHANTY. Mr. Chairman, my name is Delores Delahanty. I
am testifying today on behalf of the National Association of Social
Workers (NASW), whose 90,000 members and their clients have an
interest in each of the block grants enacted last year and many of the
programs proposed for swap and turnback.
I would like to thank you for this opportunity to testify. We know
that negotiations on the New Federalism are continuing. However,
consumer groups and professional organizations have been excluded
from these discussions, even though we believe~ we have a historical
perspective and a good deal of hands-on experience to contribute. We
appreciate your recognition of that fact. We wish to commend you
for your thoughtful approach to this issue, your commitment to hear-
ing from all sides and for the field hearings which you have conducted.
While NASW supports your efforts to sort out Federal, State, and
local responsibilities, we are concerned about some of the language in
your proposed legislation. To wit, we are concerned about the abandon-
ment, perhaps, of a commitment to national goals and purpose in
favor of flexibility for the States. We feel that some of the language
negates more detailed provisions in the individual block grants. We
also feel that it excludes public interest groups. consumers, and pro-
fessional and provider organizations from consultation on State appli-
cations and commenting on regulations. We hope that the sorting-out
can be done in a way that will make social programs more effective,
helpful to people, and responsive to the needs of local communities.
Our association has long believed in the desirability of locally con-
trolled social services delivery systems. However, there is a great deal
that concerns us about the administration's proposal. Primarily it is
that they are clearly a subterfuge for abandoning the Federal role
altogether. This morning it appeared, and you can see from prior testi-
mony, that the abandonment appears to be fostering an adversarial
relationship among the various tiers of government rather than pro-
moting constructive, intergovernmental collaboration.
The programs we are talking about represent the government's in-
vestment in human capital. From child protection to employment and
training, these programs improve the quality of life of our citizens and
thus the productivity of the Nation. Although these programs can be
simplified and made more manageable, there is a continuing Federal
PAGENO="0174"
170
responsibility in all of them. When we are finished sorting-out, I be-
lieve the product should look more like a marble cake than a layer cake.
It is obvious from the budget which was presented in February that
the administration is planning a phaseout. The transfer proposal is an
even more apparent abandonment, with the constantly declining trust
fund disappearing altogether after 8 years. This is not sorting-out; it
is retreat. You cannot expect creativity from the States and the local
communities when we are under siege.
The contribution of Federal funds, which are raised more efficiently
and progressively than any State or local revenues, is one responsibil-
ity that we believe must be continued. Besides funding, there are other
Federal imperatives which I will discuss in a moment in the context of
your proposed generic language. I also will refer to information
which NASW has obtained from Project Block Grant, a special 2-year
effort by which we are assisting social workers in nine States to
monitor and to encourage the most rational, open and fair implemen-
tation possible under block grants.
Kentucky is one of those project States. We have been heavily
involved in the activities there. Our project is linked to the Kentucky
Alliance for Human Needs in my State, which is similar to the broad-
based coalitions in the other ei~ht States and the Coalition on Block
Grants and Human Needs in Washington.
Events of the last few days; namely, the indication that the National
Governors' Association is ready to accept the notion of State respon-
sibility for AFDO, force me to address the issue. Frankly, it makes it
nearly impossible for the social welfare community to talk about any
sorting-out. We find it more than curious that the administration can
agree to keep SSI, food stamps, and medicaid-programs that either
totally or in large part serve tight~ popular disadvanta~ed groups-
the elderly, blind, and disabled-while throwing off AFDC.
Nearly half of the AFDC families are not white, 69 percent of the
recipients are children, and 85 percent of the families are headed by
women. Why is it so important that the one cash assistance program in
the country wh~ch mainly aids minorities, children, and women be left
to State control?
We know from a study by Martha Ozawa of Washington tiniver-
sity in St. Louis that there is a relationship between low-benefit levels
and the size of a State's minority population. We know that many
States with great wealth have some of the lowest AFDC benefit levels.
Texas, for example, which ranked fourth in tax capacity on the ACIR
index, in 1981 had the second smallest AFDC benefit among all States.
We also know that uniform, national systems like SSI are much more
efficient to administer and less prone to errors than the complicated
State ad'ninistered AFDC program.
NASW believes that health and welfare entitlement programs
should be a Federal responsibility. The needs they address are tied too
closely to the national economy. In times of economic stress, the States
which most need programs like AFDC and food stamps will be least
able to afford them.
We feel that there are some major programs which are impacted
by national policy. Among these are the Low Income Energy Assist-
ance, migrant health, refugee programs, AFDC, foster care and so
PAGENO="0175"
171
forth. I would like to be able to address Low Income Energy Assist-
ance in a response after my prepared remarks.
Finally, we feel that there are six major principles which must be
imbedded in any concept of New Federalism, and particularly in the
legislation which you propose:
1. The Federal Government must insure an adequate, progressive,
permanent funding base for investment in human capital programs;
2. Federal resources must be distributed in a way that takes into
account varying State resources and needs;
3. The national purpose of any block grant must be clearly defined;
4. The Federal Government must insure nondiscrimination in the
use of Federal funds by States;
5. Federal legislation must require planning, reporting and public
procedures that insure accountability at both the State and the na~
tional level. There is no way that one can monitor the State and local
levels for specific programs unless there is basic uniform data avail-
able, not simply for planning but for reporting on the effects of the
block grant legislation. These would include: Information about needs
assessment, objectives, activities, method of distribution, categories of
individuals served, and effectiveness indicators.
6. Some services must be guaranteed to be publicly provided and
universally available. These are not strings which should be attached,
but they are guarantees of an equitable, just and responsive service
delivery system.
Thank you for this opportunity to testify.
Senator DURENBERGER. Ms. Solomon.
Ms. Sor~oMoN. Mr. Chairman, I am Sandy Solomon, executive di-
rector of the Coalition on Block Grants and Human Needs. I have ~for
you a copy of a briefing book on block grants which we will make avail-
able to other members of the subcommittee later.' The Coalition is an
alliance of over 100 national organizations, including a wide range of
constituencies. We work with over 15 similarly diverse statewide coali-
tions.
I know the proponents of the New Federalism like to draw a clear
line between block grants and budget cifts. However, it is an inescap-
able fact that these block grants are inextricably linked to budget cuts
as part of a strategy to eliminate virtually all support for domestic
programs. State governments are discovering that they have been given
responsibility for poverty; and that they now have, to quote Governor
Lainm's testimony last week, "More authority to do less." Nonethe-
less, they continue to suggest that the authority part of the equation is
worth pursuing. I d~ubt, especially in this decade, whether the ques-
tion of resources can ever be separated from that of authority.
The block grant theory assumes that States will draw upon their
own resources to compensate for lost Federal funds, or that they will
continue to contribute the maixthing funds no longer required by Fed-
eral law. It is clear that the latitude States have to make these choices
is diminishing as the demands upon their resources increase.
We are finding that, because block grants were thrown so rapidly
to the States this year, many States have simply imposed straight pro
1 See p. 472.
PAGENO="0176"
172
rata cuts on funded programs. For example, three-quarters of the
States have simply passed along the cuts in the community services
block grants to community action agencies. What we are able to com-
ment upon today, therefore, is only a limited kind of block grant
implementation. Most States did not take the time to rethink relation-
ships between programs or to evaluate program priorities before ac-
cepting the funding. The block grant story this year is essentially a
budget-cut story.
For this reason, we urge the subcommittee to make this hearing just
the first in a series of block grant implementation hearings, and that
in the future you call representatives of community-based organiza-
tions to comment on how block grants look from their perspective.
Good information will be the first thing to disappear as federally man-
dated data collection ceases and funds are channeled to other functions.
As little as we know now, we will know less next year, according to one
researcher who has been studying this problem.
I should note that, at the outset, we are finding the record from
State to State, and from program to program within each State, to
be extraordinarily varied. This year, some States were able to shield
block grants from funding reductions because they had a carryover
from last year, but many States were forced to make service reduc-
tions. Those reductions often came at the expense of people least able
to afford increased fees or of groups excluded from eligibility.
This is a budget story, but it is also a block grant story since the
States must decide to institute a copayment scheme or to try some
other cost-saving strategy. As budget pressures increase, State gov-
ernments are increasingly tempted to use block grant funds for pur-
poses only remotely related to the specific purposes of the block grant
programs. I give an example in my statement of one State in which
the county health department is making a claim for next year's pre-
ventive health care block grant funds. We are in danger of seeing
these once-targeted resources disappear down the gullet of the State
budget deficit.
We are also in danger of seeing targeting lost as more politically
powerful constituencies demand a share of funds once designated ac-
cording to specific need. The most glaring example of this trend is
the example already cited today by Mayor Martinelli about the dis-
tribution of community services block grant funds.
If targeting is in jeopardy in some States because of budgetary
pressures, it is also in jeopardy because of political pressures. One
example comes from New England where a mayor stated that, as soon
as the grandfather clause was removed, he intended to use community
services block grant funds for snow removal. He said maybe he would
hire some low-income people to do the job, but he had to consider the
immediate political necessities.
We can begin to comment on the way in which the public was able
to participate in planning for the use of block grant funds. The Na-
tional Governors' Association is very enthusiastic about the record.
The range of quality in the hearings is worth noting. One study found
that, for the community services block grant, Washington and Min-
nesota appear to be the only States that systematically sought out and
involved the recipients of services in the implementation planning.
Contrast the case of Michigan, which had six hearings in six cities
publicized by a coalition of citizen groups, with the case of Georgia.
PAGENO="0177"
173
There is a letter attached to my statement which notes: 1
Even people who regularly monitor the State's activities on these issues were
unaware there was to be a hearing until 3 days before the scheduled meeting.
Legislators we greeted in the hallway on the day of this "legthlative" hearing.
were unaware that it was about to take place. * * * This was the only hearing
scheduled by the State.
On next year's plan, Georgia will be holding one meeting on May 19
in one city to discuss all the block grants. There will be inadequate time
for the citizens to review the plan because it has not yet been released.
There will be no apparent time for citizen comment.
I have other examples in my statement, including the case of Ohio in
which the citizens first asked the State agency and then had to force the
State legislature to hold a hearing. When the legislature did hold a
hearing, the State agency counted it as its legislative hearing. The
agency representatives both interrogated witnesses and presented testi-
mony. The result of the hearing was that the citizens were able to point
out that the formula the State was using would exclude certain cate-
gories of recipients, categories which everyone agreed were legitimate
recipients of the program. The bottom line is that this kind of exchange
and accountability improved the program.
I will go on to your block grant language very quickly, since I know
we are about out of time. We appreciate the opportunity to comment on
your draft legislation. Our basic commitment is to see that the princi-
ples of targeting and accountability, openness and endorsement of basic
rights and protections which are incorporated in any block grant are
enacted by Congress.
However, we must strongly caution you that any such uniform lan-
guage must be a floor, and not a ceiling, for Federal standards and
guidelines. Title XVII of the Omnibus Reconciliation Act, as inade-
quate as we felt it was, provided minimum, not maximum, standards.
We be.lieve that the Congress must have the discretion to enact tougher
provisions where, in its judgment, those provisions are necessary to
meet the national goals and objectives embodied in particular pro-
grams. In fact, given that many of the specific protections in the block
grants which Congress passed last year are more rigorous than those in
the superseding provisions of your bill-given that even the provisions
of title XVII are more rigorous-we would adamantly oppose this bill
if you were to submit it in its present form.
We are happy to discuss the specific ways in which your proposal can
be improved, but only if its purpose is changed to offer basic minimum
Federal standards for block grant administration. We commend your
desire to provide States with clear and uniform guidelines. We feel that
your goal can best be achieved by offering guidelines so superior to
those already on the books, so inclusive, that Congress will have little
need to amend them in its authorizing committees. If your bill could
reaffirm strong Federal expectations for these principles of accounta-
bility, openness, and enforcement of basic rights and protections, it
would, in fact, become a national model and one that we would be
pleased to endorse.
Our specific comments are attached.
Senator DURENBERGER. Good.
I See p. 223.
99-965 0 - 82 - 12
PAGENO="0178"
174
Thank you very much. Both of your statements will be made part
of the record.
Ms. Delahanty said that we can't expect creativity from State and
local governments when they are "under siege." I will turn that around
and ask both of you whether we can expect creativity from someone
who is not "under siege."
Ms. DELAHANTY. I would like to respond in this way: I think that
the abrupt and radical changes in the responsibility for social services
delivery and other human services programs we have witnessed in the
last 2 years have really placed us in a very difficult position to respond.
I feel that in the last 10 years, we have made considerable progress-
when not "under siege"-in helping to eliminate problems with re-
gard to nutrition, working and striving for better provision of day
care, et cetera. I do think that you can contrast the progress of the last
10 years with the chaos of the last 2 years. You can come to some con-
clusions based on those observations.
Senator DURENBERGER. What conclusions are you talking about?
Ms. DELAHANTY. Our conclusion is this: That there appears to be
the case of throwing the baby out with the bathwater. There was some
need for economy, efflciency, transfer of responsibility. ~nd perhaps, a
restructuring of services. To suddenly say that the Feleral Govern-
ment is going to reduce funds and leave the administration to the
States which are ill prepared to receive it-although State and local
governments have been increasing their management capacity-has
disrupted the delicate ecology of intergovernmental relations. I think
this action has been very disruptive for people, coupled with the econ-
omy and the pressures and strains on American families today.
Ms. SoLoMoN. Times were never better than in the sixties. In recent
history, when the S hates had unrivaled responsibility in most of these
program areas, a lot of needs were going unmet-especially in the area
of civil rights. Today if you ask a black or Hispanic leader in this
country which level of jurisdiction he or she would prefer, the answer
is very clear. The answer would come out of the memory of earlier
State inattention. The answer is not only that federally mandated pro-
grams have made important improvements in the lives of people, but
also that State remedies were not forthcoming before.
Senator DURENBERGER. The issues that were given here are equity
issues. However, we are dealing principally with using the word
"creativity"-creativity in the delivery of a variety of social services,
including health, education, and nutritional programs.
It seems to me that we did not create any unique responses here at
the Federal level. Much of that creativity came from the local level.
Somebody started programs, usually on a nonprofit basis, in States
like my own and eventually got them funded by the State legislature.
Then they brought the programs to Washington as something that
would be good for the rest of the country.
I really am curious to get an honest appraisal from both of you,
who have been involved for some period of time in meeting the needs
of people out there, as to where you believe real creativity lies. Let's
leave out the temporary siege that we are under and deal with creative
responses to human need. Where can we find the most creativity in
this country?
Ms. DELAHANTY. Let me amplify on my previous remarks. I come
from a background of working in the local community. The involve-
PAGENO="0179"
175
ment of churches, the local public sector and the voluntary sector in
the development and provision of human services, which occurs at the
local level, is guaranteed by certain guidelines or national require-
ments for fairness, equity and adequacy.
I think we are not expecting prescriptions from the national level.
We are concerned about the assurance of equity.
There are certain national policies which impact the local level.
Take, for example, what is happening with the refugee problem. The
Governor of Florida is saying, "Go to Minnesota." Let me give you
another example which, I think, is probably illustrative of what can
happen with block grants. You are concerned about Low Income
Energy Assistance. In our State, 10 percent of those moneys were
transferred to local health care without any public hearing, without
any input from local government or anybody at the local level.
There was a 15-percent set-aside for the weatherization program.
The eligibility requirements were so restrictive that individuals were
prohibited from taking advantage of both the fuel assistance pay-
ments and the heating equipment provisions. We, at the local level,
had to add an additional $500,000 of local tax money to help people
with fuel assistance payments. In addition to that, we established a
voluntary program for energy audits and obtained money from the
local utility company to pay for weatherization-materials for caulk-
ing and weather stripping, et cetera.
We are creating at the local level. However, when you don't have
anything at the local level with which to create, sometimes it gets
pretty hard.
Senator DURENBERGER. That gets us to the heart of the problem
here. Whether we are talking about the blocks or about the proposals
for sorting out responsibilities through the New Federalism proposal,
we are dealing with the issues of basic responsibility for economic
access. We are talking about who has the ultimate responsibility and
the principal responsibility for income security. Who has the respon-
sibility for arming people with the ability to make decisions about how
best to meet their needs?
I don't think there is any disagreement among the three of us about
that being primarily a Federal responsibility. We are not doing a very
good job of discharging it at the present time because everybody is
under economic siege. Part of the process of coming to grips with the
New Federalism is addressing, head-on, this whole issue of income
maintenance, income security.
There is another side of it, though, that deals with administering
programs and delivering services. When I asked the creativity ques-
tion, I was not addressing the income security side. I have addressed
that to the administration.
Ms. D~lahanty, when you say that health and welfare should be a
Federal responsibility, I have to put on my Health Subcommittee hat
and say, "Yes; health, in the broadest sense, is a nationai responsibil-
ity." However, I would not trust this Federal Government any farther
than we have trusted them to date to do the kind of job that the people
of this country need in accessing themselves to health care.
Where they have had the opportunity, the States have done a much
better job. This includes the cognizance of home health care which was
in the little illustration you gave us. Where there are economies, where
they are broadening the access to the system, where there is an early
PAGENO="0180"
176
recognition of the needs of long-term care, I have seen a lot of that
in place at the State level.
It seems important, as we go through this discussion, to kind of pull
apart the issues of service delivery from the issues of economic access.
We must keep in mind another important issue that one of you raised
about information. Under our current welfare system, people might
have an average of $12,000 per family of four. Even if we gave them
that in a check-as some people would suggest as an alternative to the
current system, and with which, of course, I would not agree-in this
society, there still are people without information.
Ms. SOLOMON. There are times, Senator, when we wish you were
from a different State. Minnesota is so extraordinary in its level of
citizen participation. I have been working with neighborhood groups
for the last couple of years. I am firmly convinced that the community
is a level at which there is an extraordinary amount of creativity. But
the point that must be made is that, among community groups as well
as among people or among jurisdictions, there is an inequality of
resources, even if the group works on housing or economic develop-
ment issues. If you are in the South Bronx kind trying to put together
a commercial development, there are limits on your ability to achieve
self-help.
I would like to turn now to one block grant we talked about today
quite a bit, the Low Income Energy Assistance block grant, as a dem-
onstration of how poorly this kind of 50-State system works. You
could move across the top of the United States through some cold
States and find a $365 average benefit in Vermont, a $120 average
benefit in Michigan, and a $410 average benefit in Minnesota. The
diversity in benefit levels and in eligibility requirements has been so
extreme in this particular block grant as to be mind-boggling.
Imagine the consequences for the Nation if eligible families were to
take literally President Reagan's charge that they vote with their feet.
As Ms. Delahanty said, the consequences would be quite serious. But
the consequences involved of such a system are also serious for the
people, especially if you are the person trying to make it on $120 in
Michigan. There is no telling what political and fiscal circumstances in
Michigan produced the decision to set the $120 benefit level.
I feel I have to come to the defense of the program itself; States
were in a bad situation on this one. They were taking a really big cut
in title XX social services. There were demands for that money from
providers who had much more clout than the individual recipients of
the Low Income Energy Assistance funds. So they often shifted
money from energy assistance to social services and they were trying
to be responsible. In some instances, they were holding onto the money
because they were expecting a diminished allocation in the coming
year. Some of them held money back, as a result, expecting they would
have higher service requirements on less money in fiscal year 1983.
Now, they are being condemned for trying to plan ahead and husband
their resources and they are being told that shows they really didn't
need the Low Income Energy Assistance money anyway.
The problem with block grants-and this instance is a good
example-is that by removing the targeting, you remove the constitu-
ency for funding. Pretty soon you can pretend that there was no need
for funding at all, and by removing the information, you remove any
PAGENO="0181"
177
ground for demonstrating that need or commenting on what has
happened.
We are entering a year where we are going to be able to say very
little, with certainty, about what has happened in any one of the
States. We can sympathize with the economic circumstances and the
fiscal circumstances in which the States have found themselves. How-
ever, that will not minimize the fact that people are not faring very
well under this new system.
There are innumerable effects of the budget cuts under the block
grants that we didn't mention today because they look like budget cut
stories. In fact, they are both and that is very serious for people in
need.
Senator DURENBERGER. Thank you very much.
I wish I had more time for questions, but our hearing has come to
an end.
[The prepared statements of Ms. Delahanty and Ms. Solomon
follow:]
PAGENO="0182"
178
~
NAT1ONAL ASSOCIATION OF SOCIAL WORKERS ~
.j
1425 H St., N.W., Suite 600, Washington, D.C. 20005 (202) S2~3-3Ci3
TESTIMONY OF
DELORES S. DELAMANTY, ACSW
Executive Director of the Human Services Coordination Alliance,
Louisville, Kentucky
On Behalf of The
National Association of Social Workers
Before The
SUBCOMMITTEE ON INTERGOVERNMENTAL RELATIONS
Of The
COMMITTEE ON GOVERNMENTAL AFFAIRS
U.S. SENATE
May 11, 1982
PAGENO="0183"
.179
Mr. Chairman, members of the subcommittee, my name is Delores
Delahanty and I am testifying today on behalf of the National Association
of Social Workers, whose 90,000 members and their clients have an interest
in each of the block grants enacted last year and many of the programs
proposed for "swap and turnback."
I would like to thank you, Mr. Chairman, for this opportunity to
testify. We know that negotiations on new federalism are continuing,
even as we talk, between the Administration and state and local elected
officials. Consumer groups and professional organizations have been
excluded from those discussions even though we believe we have a historical
perspective and a good deal of hands-on experience to contribute. We
appreciate your recognition of that fact.
Whether or not the Administration soon introduces its federalism
legislation and whether or not the Governmental Affairs Committee
retains jurisdiction, we wish to commend the chairman for his sincere,
thoughtful approach to the issue, his commitment to hearing all sides
and the field hearings he has held. We hope, Mr. Chairman, that you
will continue to play a leading role in whatever legislation may be
developed.
NASW supports your efforts to "sort out" federal, state and local
responsibilities. We hope that can be done in a way that will make
social programs more effective, helpful to people and responsive to the
needs of local communities. Our Association has long believed
PAGENO="0184"
180
2
in the desirability of locally controlled social service delivery systems.
However, there is a great deal that concerns us about the Administration's
proposals. Primarily it is that they are clearly a subtrefuge for
abandoning the federal role altogether.
The programs we are talking about represent the government's investment
in human capital. From child protection to employment and training,
these programs improve the quality of life of our citizens and, thus,
the productivity of the nation. Although these programs can be simplified
and made more manageable, there is a continuing federal responsibility
in all of them. When we are finished sorting out, I believe the product
should look more like a marble cake than a layer cake.
That the Administration is planning a phase-out is obvious from the
budget it presented in February: Between fiscal years 1982 and 1985,
the school improvement block grant would fall from $666 to $335 million;
the social services block grant, from $2.9 to $1.9 billion; the community
services block grant, from $508 to $103 million. The transfer proposal
is an even more apparent abandonment with the constantly declining trust
fund disappearing altogether after eight years.
This is not sorting out; it's retreat. You cannot expect creativity
from the states when we are under seize.
The contribution of federal funds which are raised more efficiently
and progressively than any state or local revenues, is one responsibility
that we believe must continue. Besides funding, there are other federal
PAGENO="0185"
181
3
imperatives which I will discuss in a moment in the context of your
proposed generic, or "boilerplate," language. I also will refer to
information NASW has obtained from Project Block Grant, a special,
two-year effort by which we are assisting social workers in nine states
to monitor and encourage the most rational, open and fair implementation
possible under block grants. Kentucky is one of the project states,
and I have been heavily involved in the activities there. Our project
is linked to the Kentucky Alliance for Human Needs in my state, similar
broad-based coalitions in the other eight states and the Coalition
on Block Grants and Human Needs in Washington.
Events of the last few days, namely, the indication that the
National Governors Association is ready to accept the notion of
state responsibility for AFDC, force me to address the issue that,
frankly, makes it nearly impossible for the social welfare community
to talk about any "sorting out."
We find it more than curious that the Administration can agree to
"keep' SSI, food stamps and Medicaid, programs that either totally
or in large part serve "popular" disadvantaged groups--the elderly,
blind and disabled--while throwing off AFDC. Nearly half of AFDC
families are non-white. Sixty-nine percent of the recipients are
children. And 81 percent of the families are headed by women.
Why is it so important that the one cash assistance program in the
country that aids mainly minorities, children and women be left to
state control?
PAGENO="0186"
182
4
We know from a study by Martha Ozawa of Washington University
in St. Louis that there is a relationship between low benefit levels
and the size of a state's minority population. We know that many states
with great wealth have some of the lowest AFDC benefit levels. Texas,
for example, which ranks fourth in tax capacity on the Advisory
Commission on Intergovernmental Relations index, in 1981 had the second
smallest AFDC benefit among all states. The tax capacity was 22 percent
higher than the national average while the maximum monthly benefit for
a four-person family was only $140. We know also that uniform, national
systems like SSI are more efficient to administer arid less prone to
errors than the complicated, state-administered AFDC program.
The -pattern in western industrialized nations has been for cash
support programs to emanate from the national government. The Administration's
proposal would signal a break from this tradition and head us back in
the direction of the Elizabethan poor laws.
Why, then, does the Administration continue to insist on shifting
responsibility for AFDC to the states? We cannot fathom the irrational
intransigence of some high Administration officials on this point -
and can only conclude that it is based on some ideology that flies
in the face of history. It certainly runs counter to the goals of
equity and efficiency.
NASW believes that health and welfare entitlement programs should
be a federal responsibility. The needs they address are tied too closely
to the national economy. In times of economic stress, the states which
most need programs like AFDC and Food Stamps will be least able to afford
them.
PAGENO="0187"
183
5
them. Furthermore, the nature of an entitlement assures that any
person who qualifies will be treated similarly regardless of which
state he or she is in. In our monitoring project, we have observed
that high levels of unemployment give rise to transciency, even
entire families moving from state to state to find work. Meanwhile, our
members are fearful that archaic state and county residency requirements
will re-emerge as elected officials grapple with budget cuts.
AFDC foster care is also an entitlement that, by its' very nature,
should not be left to state prerogative. Other programs, like refugee
assistance, should not be turned over to states because they arise from
problems created by national policy.
Low-income energy assistance, similarly, was created largely in
response to the national policy of oil de-regulation which simultaneously
resulted in windfall profits for producers and dramatically higher
prices for consumers. Although the program isnow a state block grant,'
the President's proposal to turn financial responsibility over to the
states violates the principle that the federal government must shoulder
responsibility for individual and regional inequities caused by its
policies.
Programs like migrant health should remain a federal responsibility
because their target populations will not be claimed by any single
state. And, finally, the federal government should retain at least
temporary responsibility for programs that strive to establish innovative
approaches to old problems. The Adoption Assistance and Child Welfare
Services Act of 1980, for instance, establishes a system of sticks and
carrots for states to reduce the use of expensive foster care in favor
of adoption or returning children to their natural families aided by
supportive services. Until such a system has a chance to work and
PAGENO="0188"
184
6
become ingrained at the state level, the federal government should
provide direction.
Now, with regard to the devolution of programs to states--whether
via block grants or "new federalism"--I would like to outline six principles
which NASW believes must be adhered to by the federal government.
Mr. Chairman, I hope you will recognize these principles in your generic
language. They are discussed in further detail, along with documentation
from our project, in additional material I would like to submit for the
record.
1. The federal government must ensure an adequate, progressive
and permanent funding base for investment in human capital programs.
We are referring here to all of the current block grants and the
social, health, nutrition, education and training programs proposed for
transfer. It would not be inappropriate for Congress to guarantee to
maintain the current percentage of the federal budget, or GNP, as a
continuing funding base for these programs. The regressive and declining
trust fund proposed by the Administration should be rejected.
I don't want to confuse federalism with funding issues, but the two
are inescapably intertwined since the only way states have been able to
use their new-found flexibility has been in deciding how to allocate
cuts.
We know of only two states--Iowa and Idaho--that made a commitment
this year to make up for lost federal funds. Some, like Florida and
Minnesota, partially filled the gap with tax increases, especially in
the regressive sales tax. Many states, however, are making parallel
* reductions in human service programs, saying that if the feds don't care
neither do they.
PAGENO="0189"
185
NASW's Project Block Grant has observed that states, by and large,
are trying to absorb federal cuts in ways that may not be immediately
felt by clients. However, we know that across-the-board reductions in
personnel, travel and purchase of service contracts are resulting in
fewer inspections of licensed facilities; the inability of child protective
workers to aake as many home visits as before; a greater reliance on
paperwork and crisis intervention rather than counseling and prevention
in dealing with child abuse; the abandonment of information-referral and
outreach services; and the institution of fee scales that may bar some
from needed services. The direct impact on clients may never be discernible
because of the lack of data. But we have begun to see, as in St. Louis
and Milwaukee, what appears to be an increase of child deaths from abuse
or neglect that may be at least partially attributable to case overload.
In Pennsylvania, the number of verified abuse-related deaths has increased
28 percent in the past year.
Most states have cut back on administration, planning and evaluation,
which, we believe, will lead ultimately to wastefulness, inefficiency
and less innovation. We have also found that states and agencies are
spending very cautiously due to the uncertainty of this year's Continuing
Resolution anc~, now, the FY 83 budget. In some cases, for example, fuel
assistance funds have gone unspent as a hedge while poor people have
gone cold in their homes. All of this "absorption," if you wish to call
it that, cannot go on forever. I believe we will reach another telling
PAGENO="0190"
186
8
point this July when many new state budgets go into effect. The toll on
society will become more apparent as time goes by.
All of this is to say that we hope that any federalism legislation
will recognize the need for what the Advisory Commission on Intergovernmental
Regulations has called the "critical mass" of federal funding necessary
to make block grants meaningful. We also hope for provisions that will
help leverage state and local resources. In addition, we believe this
subcommittee could take the initiative in promoting the use of more
progressive tax measures at the state and local level, for example, by
enabling them to use IRS to collect state income tax.
2. Federal resources must be distributed in a way that takes
account of varying state resources and needs.
The current block grant distribution mechanism locks in the historic
patterns and biases of categorical grants. Straight population is also
a poor indicator of special needs and differing state revenue capacities.
NASW believes a formula taking into account poverty and some specific
factors relating to specific block grants (such as indicators of at-risk
population or infant mortality rates) should be developed for each block
grant. Similarly, states should be required, or at least encouraged, to
use such- formulae in any pass-through scheme.
3. The national purpose of any block grant must be clearly defined.
We know that the Administration, for example, has been using Title XX
social services as a sort of dumping ground by suggesting that legal
services, criminal justice and economic development be provided under
it. So far, we have not heard of any such moves in the states. The
potential remains, however, with the broadly written purposes in most of
the block grant legislation and the absence of definitions of allowable uses.
PAGENO="0191"
187
Most of the human service block grants generally prohibit the use of
funds for real estate or improvements. Any federalism bill or generic
language should, we believe, also prohibit the use of what we call human
capital funds for projects that only heighten the competition between
states for new industry and thus, result in no net gain for the nation.
4. The federal government must ensure non-disrlmination in the use
of federal funds by states.
Ultimately, the only systematic way to ensure this is to require
reports of such data as the race, ethnicity, age, sex, handicapping
condition and income level of service recipients. We do not think such
reporting would be unduly burdensome, and it can be recorded in the
aggregate apart from individual client files. This is the only way
that citizens groups, like KAHN in Kentucky, will be able to monitor
this aspect of block grants.
In addition, we believe the non-discrimination section in the
generic language should include protection against discrimination due
to citizenship, residency and political affiliation. Title VI of the
Civil Rights Act, Section 504, Title IX and the Age Discrimination Act
should be specifically stated as applying to the block grants. And,
finally, a procedure should be authorized for citizen complaints to the
Secretary with a specified time period for determination. We also believe
states shbuld be required to provide complaint and impartial hearing
procedures.
5. Federal legislation must require planning, reporting and public
p~rocedures that ensure accountability at both the state and national levels.
Neither Congressional oversight nor grass-roots monitoring can take
place without basic, uniform data. For each block grant, we suggest
PAGENO="0192"
188
10
authorization of a national, unbiased study to identify the minimum
number of data elements required to assess a state's performance against
the stated purpose of the block grant. We think this information should
parallel the data that should be required in each state plan and
report, namely, needs assessment, objectives, activities, method of
distribution, categories of individuals served and effectiveness indicators.
States should then be required to follow this minimum level of planning
and reporting.
Ironically, both Title XVII of the Reconciliation Act and the
proposed generic language require more detail in state plans or applications
than in reports. From our point of view as monitors, a plan is only a
plan, but the report is what will tell us what is actually done. We
suggest that reports be required to relate back to the original plan.
Regarding public hearings, we believe they should be held by the
executive agency responsible for developing the plan. They should be
held at least 30 days prior to the time the plan is to go into effect
with the potential for amendment as a result of the hearing. Prior to
the hearing, the agency should consult with representatives of advocacy,
community and provider groups as well as elected officials and planners.
All of this will be very expensive. And it does not even include
the cost of establishing new mechanisms in state legislatures, many of
which have been part-time, minimally staffed and uneducated in the area
of human services. Some states, like my own, Kentucky, have already set
up legislative study comissions. Ours will take up to one percent off
the top of the block grants to finance its work. The principal purpose
of most of these bodies is to determine the effectiveness, including the
PAGENO="0193"
189
11
cost-effectiveness, of agencies receiving funds. Any of you familiar
with the difficulties of evaluation research will understand the scope
and possible pitfalls of such a task, as well as the fears of many
service providers that they will be judged unfairly.
NASW in the past year has insisted that every possible dollar be
devoted to services to people, even at the expense of administration.
As I mentioned before, however, this is not a sound course for the long
term. We believe that Congress must, if it wants block grants to succeed,
create a new pool of funds for planning, administration and evaluation.
6. Some services must be guaranteed to be publicly provided and
some universally available.
On this final point, I am speaking primarily of the social services
block grant, which perhaps offers more lattitude to states in this regard
than the other block grants. NASW has traditionally held the view that
certain services are a public responsibility and should be carried out by
public agencies. Children's protective services is a prime example because
they have historically represented society's commitment to the health and
safety of our children. This responsibility should not be delegated to
the private sector. We also believe that administration and planning should
be carried out by officials who are accountable to the public.
Block grants, with their reduced level of funding, have posed a
dilemma between the obvious necessity to target funds on those with the
lowest income and the desirability, from a social point of view, to make
some services universally available at no cost. Information and referral,
the starting point for most people with any sort of problem, is such a
service and was formerly mandated under Title XX. Crisis intervention and
99-965 0 - 82 - 13
PAGENO="0194"
190
12
certain public health services are other clear examples. We believe
Congress has a duty to determine which services must be maintained for
all people regardless of income as a public good. We also recommend
concerted Congressional oversight on the impact of changes in eligibility
standards and the inauguration of fee scales, both of which can act to
deny these kinds of services to people who require then.
Mr. Chairman, this concludes my statement on behalf of the National
Association of Social Workers. I reiterate my appreciation for your
affording us this opportunity and would be happy to answer any questions
about my experience with block grants in Kentucky. Staff here with me
from our national office would be glad to answer your questions about
our national project.
PAGENO="0195"
191
NATIONAL ASSOCIATION OF SOCIAL WORKERS, INC.
1425 H St., N.W., Suite 600, Washington, D.C. 20005 (202) 628~6800
Contact: Susan Rees or Al Gonzalez,
NASW Legislative Staff
TO: Subcoimnittee on Intergovernmental Relations of the Committee
on Governmental Affairs, U.S. Senate
DATE; May 11, 1982
SUBJECT: COMMENTS ON PROPOSED UNIFORM BLOCK GRANT MANAGEMENT ACT
The following comments address uniform language regarding the cross-cutting
issues of block grant management drafted by Senator Dave Durenberger,
chairman of the Subcommittee on Intergovernmental Relations. They should
not be regarded as an exhaustive analysis, but as preliminary comments
reflecting the general concerns of NASW.
NASW's primary disagreements with the draft are:
* It negates all more detailed provisions for such
items as applications, hearings, earmarking and
priority services contained in individual block grant
legislation, both current and future (sections 1741
and 17481.
* It subordinates the. goal of achieving national purposes
to the goal of increased flexibility for states
(section 1742).
* It excludes consumer, public interest, professional and
provider organizations, and .the general public, from
consultation on the preparation of state applications
(section 17441 and from commenting on proposed federal
regulations (section 1753).
* It leaves enforcement of non-discrimination requirements
entirely to the discretion of federal agency heads
~~section 17451.
Sec. 1741 Applicability
Uniform language pertaining to management should not supercede provisions
of specific block grant programs.. Langusga in the specific programs
should take precedence because it has had the benefit of the study,
expertise and experience of the Congressional committees which. draftedit
PAGENO="0196"
192
COMMENTS ON PROPOSED UNIFORM BLOCK GRANT MANAGEMENT ACT
Nay 11, 1982
Page 2
(as well as the approval of Congress~ and, therefore, can be presumed
to better reflect what is required to achieve the programst stated
purposes.
The requirements for hearings, applications and other matters in sev~ral
of the block grants are more detailed than those in the draft language.
The Health Prevention and Health Services Block Grant, for example,
requires the application to identify those tpopulations, areas and
localities in the state with. a need for the services't provided under
the program. The uniform language could be construed to eliminate
that requirement.
We believe the uniform language should specify that the Act shall not
supercede any provisions of law authorizing block grant programs.
Sec. 1742 Statement of Purpose
Flexibility, in and of itself, should not be the purpose of the Act.
We believe the purpose should be to "foster sound administration,
including through the provision of greater flexibility to recipients,
in order to better ensure the achievement of national purpose."
Sec. 1744 Application and Coordinatiqp
It is imperative that state applications and reports contain sufficient
data to allow, meaningful analysis by citizens in the states who,
tinder the rationale for block grants, are supposed to replace federal
agencies as the watchdogs and monitors of state performance. This is
truly a bold experiment, since most private citizens lack the expertise,
time and access to state documents to carry out this duty. We believe
the Congress can assist them by assuring the availability of pertinent
information without placing great burdens on state government.
Reports on the actual use of funds must relate directly back to intended
uses stated in the original application. In other words, the report
must report on how' all elements of the plan were satisfied. We recommend
that both annual applications and reports contain the information specified
in Sec. 1742 of the 1981 Reconciliation Act (goals and objectives; types
of activities to be supported, geographic areas served, categories or
characteristics of individuals served; criteria and method for distribution
of funds, including targeting on the basis of need). Furthermore,
we believe that to enable citizens to assess compliance with targeting
and non-discrimination provisions, states should be required to report
in the aggregate the percentage of beneficiaries of block grant funds
by race, ethnicity, religion, sex, age, handicapping conditions and
income level. subsection (c~ regarding applications and reports should
PAGENO="0197"
193
CONNENTS ON PROPOSED UNIFORN BLOCK GRANT MANAGEMENT ACT
May 11, 1982
Page 3
be specifically documented as a response to the goal of citizen participation
and as a guard against the repet~.tion of historic patterns of neglect of
human services and inequities on the part of some states.
In subsection (d), in addition to consulting with elected officials and
planning agencies, states should be required to consult with representatives
of "provider, community and advocacy groups" whose members are the
beneficiaries or potential beneficiaries of block grant programs. No
application should be accepted by the federal agency head unless the
state certifies that such consultation has taken place. To make such
consultation manageable, meaningful and fair, the legislation should
authorize advisory committees which will meet regularly during the
planning process.
In subsection (e) regarding public hearings, legislation must ensure
that notice be published and the application or plan be available
throughout the state at least 30 days prior to the hearing. In addition,
notice should be provided to provider, consumer and advocacy groups
as well as to units of local government. Hearings should be held well
enough in advance that it is possible to amend the application or plan
before it goes into effect. Hearing officers should be required to
make a written response to the major points expressed at each hearing.
Because the public hearing should be an adjunct to the planning process,
we believe it should be conducted by executive agencies or departments.
This does not preclude legislative hearings.
In subsection (g), the agency head should be required to withhold funds
from any recipient who has been shown to have failed to meet the
requirements of this section.
Sec. 1745 Nondiscrimination
"Citizenship, residency and political affiliation" should be added to
the grounds for possible discrimination in subsection (a) (2).
Citizenship and residency were formerly protected under Title XX.
Especially in times of restricted resources, local officials are tempted
to conserve funds by denying services to persons on the basis of
citizenship and residency. This is particularly abhorent to the
public interest when, for example, certain public health and protective
services are withheld. Since these are federal funds, they should be
available to serve all people. With the apparently growing trend of
states to pass block grants through to counties, we are also concerned
that even residents of the state will be denied services by technicalities
regarding their county of residency.
The legislation should require the establishment of a procedure within
the state for the filing and impartial determination of discrimination
complaints from individuals. Individuals should also have the explicit
PAGENO="0198"
194
COMMENTS ON PROPOSED UNIFORM BLOCK GRANT MANAGEMENT ACT
Nay 11, 1982
Page 4
right to bring complaints to the attention of the agency head. The
agency should be required to issue a determination on such complaints
within a limited period of time.
A finding of failure to comply by the agency head should require referral
to the Attorney General, exercise o~ federal non-discrimination laws
and the withholding of block grant funds from the state.
Sec. 1746 Transition Provision
During the first transition year, all projects formerly funded under
federal categorical programs should receive a pro-rata share of the
block grant. The purpose of this provision is to avoid the unnecessary
closing of agencies or disruption of services until proper evaluation
has been made.
Sec. 1747 Agency Reports
The act should authorize and set aside additional funds for a study
attached to each. block grant that will identify and define a minimal
set of data to indicate, the progress of states in meeting national
purposes. Such. study should be conducted by.an independent research
organization and should be reported to Congress within two years.
Based on the results of the studies, Congress.should require states
to report to the agency head annually using the uniform data base.
The agency head's annual report to Congress should be in writing and
available to the public. Oversight hearings should be held annually
by Congress.
Sec. 1748 Use of Funds
Subsection (a), in combination with Sec. 1741 (providing that all
provisions of the Act supercede the individual block grant Acts),
is greatly disturbing in that it allows states to unilaterally abandon
specific services or programs that Congress has already decided must
be maintained, at least to some degree, under block grants. The
Alcohol, Drug Abuse and Mental Health Block Grant, for example,
requires the continued funding of community outpatient services,
including specialized services for children, the elderly, chronically
mentally ill and former mental hospital patients; 24-hour emergency
care services; day treatment of partial hospitalization services;
screening for patients being considered for admission to state mental
health facilities, and consultation and education services.
States formerly did nQt administer community mental health centers.
The Mental Health Systems Act of 1980, after years of study, authorized
a transition to greater state involvement, but established special grant
PAGENO="0199"
195
COMMENTS ON PROPOSED TJNIFORN BLOCK GRANT MANAGEMENT ACT
May 11, 1982
Page 5
programs to encourage the achievement of nationally identified goals
such as the mental health needs of the elderly and other previously
underserved groups. The Mental Health. Systems Act never had a chance to
work, but the ADMH Block Grant preserved some of its priorities by
mandating certain services.
Furthermore, we believe subsection (a) is unnecessary since states are
already able to use block grant funds for any activity or service
consistent with the purpose of the program. The only effect of
this subsection, then, would be to overturn specific provisions, such.
as the one mentioned above, which, only serve to further define the
purpose of Congress in enacting block grants.
The legislation should require that, in all services and programs
funded under block grants, priority address first the needs of low-income
individuals. Hearings should be held by Congress to determine which
services intended to be funded under block grants should be universally
available regardless of income and which should be mandated to be
provided by public authorities. NASW believes that some services, such
as child protection, represent a public good and, therefore, cannot be
restricted by any eligibility standard or delegated to private entities
which are not directly accountable to the public. Planning for the
use of block grant funds is another function which, we believe, must
be performed by a public entity.
Block grants, whose purpose is the improvement of the health, education,
training and social well-being of people, should be restricted from use
in programs (such as economic development) which fail to serve the overall
goal of improving the nation's human capital.
Sec. 1749 Audits
NASW is greatly concerned about the potential for co-mingling block grant
funds with state resources and the possible result that federal dollars
would be diverted to uses outside the parameters of the purpose intended
by Congress. For this reason, we believe any audit should be programmatic
as well as financial.
We are pleased that the draft language recognizes most of the recommendations
of the Comptroller General in his letter to the Subcommittee on
Intergovernmetal Relations dated November 13, 1981. One recommendation
that has not been taken, however, is that audits be required of sub-recipients
as well as recipients. We point out that, in a review of 98 Title XX
contracts with "sub-recipients," the Comptroller General's Office found
12 percent of the value of the contracts in 60 of the 98 contracts to be
"improper and unjustified."
PAGENO="0200"
196
COMMENTS ON PROPOSED 1JNIFQRM ELOCK GRANT 1'5ANAGEMENT ACT
May 11, 1982
Page 6
In subsection (hi, we believe the one. percent, $1 million, earmark for
auditing expenses either be eliminated as arbitrary and unrelated
to actual cost or be funded separately from the block grants..
Sec. 1751 National Policy Assistance Standards
The legislation should specifically permit an individual or group of
individuals to challenge any certification by a recipient or
sub-recipient. Such a challenger should be permitted to be a party
to any hearing or appeal and to submit evidence of non-compliance.
We disagree with the provision that evidence of a recipient's compliance
with requirements under ~gy assistance program~ he considered and given
"great weight" as evidence of compliance with the requirement under
question.
Sec. 1752 Oversight of Funds
This section should be deleted. To say that state and local procedures
should take precedence over any conflicting provision of this Act negates
any reason for the Act and, in effect, gives recipients veto power
over federal requirements~
Sec. 1753 Regulatory Provisions
In addition to recipients, the public should be given advance notice
and the opportunity to comment and submit recommendations on proposed
regulations. Consultation prior to promulgation should be afforded
to national and state organizations representing potential consumers
and providers of the typical services under the block grant in question.
The proposed language's restriction of such input to states, local
governments and former recipients in this section ignores the interest
of the wider public in federal programs. It also systematically excludes
the. ultimate beneficiaries of services from having any voice whatsoever
in the regulation of programs that affect their lives.
PAGENO="0201"
197
NATIONAL ASSOCIATION OF SOCIAL WORKERS, INC. ~ SW
1425 H St, N.W., Suite 600, Washington, D.C. 20005 (202) 628-6800
May 11, 1982 Contact: Susan Rees or Al Gonzalez,
NASW Legislative Staff
INTERIM REPORT ON IMPACT OF BLOCK GRANTS
Through NASW~s Project Block Grant, human service advocates have
been monitoring the implementation of block grants in nine states 1
which represent approximately 33 percent of the nat~onts population.
This summary is based upon the return of questionnaires from project
participants- in five states (Florida, Mississippi, Missouri, Kentucky
and California), informal information from other states and reports
from other national monitoring projects-.
The project will continue through June 30, 1983. This report,
therefore, represents a very preliminary analysis. Because the
Admini~tration has done away wtth most, if not all, uniform reporting
requirements under block grants, and because block grants intentionally
produce great diversity in the way states implement them, we doubt that
any research will ever be conclusive on the impact on clIents nationally.
Findings on the following points indicate that, in the
first seven months of block grants, implementation has
been highly uneven from state to state. Most of the
impact of transition to state control probably will
not become apparent for several years, arguing
against further changes or additions to block grants
until more conclus-ive patterns can be discerned.
We do know that states have not rushed to fill the
federal funding gap and, in fact, are continuing
to withdraw their own resources. They are also
reducing or eliminating services that had been
given priority by Congress before passage of the
2981 Reconciliation Act.
Only two of the five states had enacted comprehensive block grant
legislation. Kentucky established a legislative research~ commission
and block grant oversight process; California, a block grant advisory
task force, consisting of executive and legislative branch appointments,
to study all aspects of the block grants and make recommendations to
the governor and legislature.
~The states are Pennsylvania, Florida, Kentucky, Mississippi, Missouri,
Illinois, Minnesota, Colorado and California.
PAGENO="0202"
198
INTERIM REPORT ON IMPACT OF BLOCK GRANTS
May 11, 1982
Page 2
* In two of the five states, the executive branch held
public hearings. In Missouri, state officials were
ranked as having most influence at hearings that
were largely to explain block grants. In Mississippi,
where some 1,000 persons attended each of seven
hearings around the state, service providers were
ranked as being most influential.
* Three of the five states had legislative branch
hearings as part of the regular appropriations
process. Florida, in additIon, had a special
legislative hearing on block grants.
* Three of the five states (California, Florida and
Missouri) reduced state contributions to programs
funded under block grants.
* One of the five states, Florida, passed a (sales)
tax increase, part of which is to help offset
federal budget cuts. The other four states did not
increase taxes.
* One of the five states, Kentucky, adopted a new
procedure for handling complaints. The rule
establishes a policy for civil rights discrimination
and service complaints in social services programs
and covers procedures for informing clients of
their rights, the filing of complaints and the
conduct of evidentiary hearings and appeals.
* In the Social Services Block Grant, purchase of
service contracts, especially day care, information-
ref erral, adult protective services and alcohol-drug
abuse were mentIoned as having been cut more than
the average by the three states answering the
question.
Generally, states have used two basic methods of allocating federal
funding reductions: across-the-board and priority ranking. Prioritization
appears to have been more prevalent in the Social Services Block Grant,
with which states have prior administrative experience and which has
traditionally provided a wide range of services.
An example of the pro-rata method came in Mississippi where, after
the intention to cut popular elderly programs was announced, the
resulting outcry prompted officials to make across-the--board cuts in
all purchase of service contracts. The public agency, meanwhile,
suffered mainly "paper cuts."
PAGENO="0203"
199
INTERIM REPORT ON IMPACT OF BlOCK GRANTS
May 11,1982
Page 3
Even when states have prioritized, cuts in general administration,
maintenance, travel and personnel have affected services across-the-board.
For example, in California, the state continued to mandate that county
social service offices provide child protective services (which other
states have also recognized as meeting a "life-threatening" need) under
prescriptive state regulations. Nevertheless, due to general personnel
cuts, the state department predicted: "This.will generally result in
increased caseloads and a decreased ability to provide direct services
to clients.,.We will see more paperwork--less services."
California also continued the mandates and regulations for in-home
supportive services and out-of-home care services for children. The
mandate, but not the regulations, continued for adult protective
services, adult out-of-home care and information-referral. Both the
mandate and regulations were dropped for child day care case management,
family planning services and health- and employment-related services.
Texas is another state which gave high priority to protective
services, cutting it only 9.6 percent compared to a 12.4 percent average
for all social services. Nevertheless, traditionally high-risk groups
(unmarried/school age parents, truants, runaways and children in
high risk home situations) were planned to be eliminated as recipients
of contract a~id direct child protective services.
When states rank priorities, preventive services, information-referral
and outreach of all types tend to come out at the bottom. Some CAP
agencies receiving funds from the Community Services Block Grant have
been advised to stop outreach into poor communities they serve. Some
Community Health Centers have eliminated their social service components
which assisted clients in obtaining transportation, food, clothing
and income support as an adjunct to health services,
PAGENO="0204"
200
COALITION ON BLOCK GRANTS*
AND HUMAN NEEDS
PROJECT BOARD
ANDREW MO1T,Ch~i~
C,nt,,f,rCo"~'u'~ityCh~!~ge
ADELE BLONG
~ Sxi~I Welf&~
P~Ii~y ~d L~
JANET CANTERBURY
N,tk~I C~ci1
S~k~ Citi~s
JOHN CARR
A,chdi~c~~ W~hi~gW~
KATE CRAWFORD
Nah~I ~
~ C~IitH~
SHANNON FERGUSON
R~IA'~i~
BOB GREENSTEIN
CeM~ fo~ B~dg~t ,nd
IWicy P,ioñSes
BILL KAMELA
N~t,o~I Uth~ Cc,hscn
Jcb~ Roc,,d~bI&NELP
KATHRYN LAVRIHA
~ Vctc,~
NWo~I Ccc~cil of L~Booo
SARA MORAN 1982 BLOCK GRANTS
NoSoocl U,b,o Loogoo
JANE MOTZ
S tVIFORI BlOCK G~Ab7P I~N~GE
Child,eoo Dcfooco Food
MARA I'ATERMASTER
Notioool Poo,tc Rican 5c,onc
SUSAN BEES
Natianal Anoccialico of
Soci,IWotkotc
JANICE ROBINSON ~ SOI.~~
of moodvHeaShCctaets C~IJITI(1~ (1~ BLOCK ~AI~PS 2~ND HIW~N NEELE
KATHY ROY
UoitndCntnbtal
`cIty Axiation
DEBBIE SISON
National Edocatict"
Aciation
SANDY SOLOMON
Noighbothood Coalition
BUS SYKES
Fact Bodgot AoSo,t
Catttpatg&FRAC
MURIEL VAUGHN
National Black Child
Docolop toot Inntilctto
MELANNE VERVEER
U.S. Catholic Coofotettce
BARBARA WARDEN
Tho Badgot CoaIiIott
JUDY WAXMAN
National H~alth Latc Ptogtattt
SANDY SOLOMON
Ectoctatico Ditocton
1000 Wisconsin Avenue, N.W., Washington, D.C. 20007 (202) 333-0822
PAGENO="0205"
201
Mr. (bainnan, m~ders of the Subcxminittee, I am Sandy Solomon,
E~cecutive Director of the Coalition on Block Grants and Himian Needs.
Cri behalf of the Coaltion I want to cczmiend you for your attention
to the way in which federal authority is being transferred to the
states at a time when the more pressing concern is the devastating
effect the budget cuts are having on our nation's people and on
the state and local jurisdictions that serve then. The questions
you raise in these hearings may be less irrmadiately canpelling,
but they are no less crucial to the fair and equitable distribu-
tion of çublic resources.
The Coalition on Block Grants and Human Needs is an alliance
of over 100 national organizations that includes many religious
denominations; civil rights groups; organizations representing poor
and working people, the disabled, the elderly, watem and children;
atlrEnunity-based employment, housing, education and economic devel-
o~inent networks; any many others. We are working with more than
15 similarly diverse state-wide coalitions, most of them fonr~d out
of a cat~ron concern over the canbined iupact of block grants and
budget cuts.
last year we were deeply concerned that Congress' precipitous
approval of block grants and budget cuts would result in an ill-
conceived transfer of the budget deficit to state and local
government, the indirect elimination of many programs addressing
PAGENO="0206"
202
important national needs, and a threat to accountable, accesible
government procedures. It is as yet too early to offer a systanatic
evaluation of the cxinbined effects of block grants and budget cuts,
but the preliminary indications are that we were right to be
werried.
I should note that we are not opposed to all block grants
nor to aU moves to decentralize public authority, but we strongly
believe that the federal government has a role to play in providing
standards for and oversight of the expenditure of ~federal funds.
The Coalition, in its evaluation of block grants and other `new
federalist" proposals, applies four principles. We look
for: -
* adequate federal funding for human needs and incone
maintenance prcxrarns;
* federal standards to ensure that such funds are targeted
to those people with greatest need;
* federal enforcesent of civil rights and other protections
for Anericans with special circumstances; and
* federal guidelines to ensure that local, state and federal
agencies follcM open, derrocratic decision-making processes
and adhere to basic standards for public accountability,
including adequate record-keeping, auditing and oversight.
Since Andy Matt appeared before this Subccmnittee last March on
behalf of the Coalition, we have begun to gather information on
the nine block grants enacted last year in order to evaluate the
effectiveness with which states are assuming their new responsibilities.
PAGENO="0207"
203
This task is by no neans xitiplete -- we intend to cxntinue and
intensify our efforts through the swrrner - but we want to share
with you sane tentative observations by way of raising again our
concern that these four basic principles guide federal, state
and local practices. For us it is a question of equity ~ng
citizens and ~rong jurisdictions. If poor citizens are the irost
underserved medically, or nest in need of fuel assistance, they
should receive the bulk of the federal assistance which the
Congress approves. If one state has a disproportionately high
nuaber of people in poverty and disproportionately low fiscal
capacity and effort, it is the propert rdle of the federal government to
bridge the disparity between that state and its neighbors.
Links Between Budget Cuts and Block Grants
I know proponents of "ne~i federalism" like to draw a clear
line bet~en the block grants an~ budget cuts, but it is an
inescapable fact that these block grants are one of the principle
devices in a campaign to eliminate virtually all federal support
for danestic programs. State goverrinents are discovering that
they have been given responsibility for poverty, that they i~
have, to quote Governor Lanin's testimneny last week, "sore authority
to do less." Nevertheless, they continue to insist that the
authority part of the equation is ~orth pursuing. I doubt
whether especially in this decade the qj~iestion of resources ~an
every be separated fran that of authority.
States are hardly in an enviable position these days.
A National Council of State Logislatures survey at the end of
last year found that 30 of the 50 ~tates expected either year-end
PAGENO="0208"
204
budget deficits or surpluses of less than one percent of the
general fund. At the same time, as of xnid-~arch, 26 states
were considering legislation to increase taxes by $6.8 billion,
a sum that may, in the end, top last year's ten-year-record~
high increases.
Block grant theory ass~mes that states will draw upon their
a~n resources to compensate for lost federal funds or that they
win continue to contribute the matching funds no longer mandated
by federal law. While there is sane encouragement for this
theory from the fact that many states are continuing their match
for the Social Services Block Grant, it is clear that the latitude
that states have to make these choices is diminishing as the demands
upon their resources increase.
There are many examples of Ixm~i these pressures will build
up, strengthening the already intimate interelationships between
budget cuts and block grants. When,for example, at the beginning
of the 1983 fiscal year sane states assume administration of
canmunity health centers under the Primary Health Block Grant they
will be required to support: a rapidly grc~iing clientele because
cuts in mean-s tested entitlement programs are prompting increasing
numbers of people to use the centers to meet their basic health
needs. Similarly, cuts in the federal irrrrrunization programs
(which have led to a 32 percent drop in vaccine purchases) are
putting increased pressures on the state inmunization programs
funded under the Maternal and Child Health Block. Sane states
-- Michigan and idaho arrong them -- are reporting reductions in
their own programs; Idaho has closed sane of its public health
centers, reduced the hours of those still remaining and discon-
tinued distribution of vaccine to private physicians. There
are similar examples in virtuaily every block grant area.
PAGENO="0209"
205
We are finding that because the block grants were thra~n
so rapidly to the states, and possibly also because this is an
election year, many states simply imposed straight pro-rata cuts
on funded programs. For example, three quarters of the states
simply passed along the cuts in the Carsiunity Services Block
Grant to arumunity action agencies. I~at we are able to carrr~nt
upon today, therefore, is only a limited kind of block grant
implanentation - most states did not take the tire to rethink
relationships between programs or to evaluate program priorities
before accepting funding. The block grant story this year is
especially a budget cut story.
For this reason, we urge the Subcorrmittee. to make this just
the first in a series of block grant inple~entation hearings.
MDst states begin their 1982 fiscal years in July, and there
will be more to report about block grant impleitentation thereafter.
It is especially important that you continue to request this
information into fiscal 1983 since gpod information will be the
first thing to disappear as federally mandated data collection
ceases and funds are channeled to other functions. ~s little
as we know now, wet U know less next year, according to one
researcher who is studying. this problan.
Targeting
We can nonetheless offer certain cbservations about the
crmbined impact of budget cuts and block grants. I should note
at the outset that we are finding the record fran state to state
-5-
gg-965 0 - 82 - 1)4
PAGENO="0210"
206
and from program to program within each state to be extraordinarily
varied. We've been iirpressed with the way sane states have managed
to absorb the block grant cuts this year. We've also learned of
instances in which targeting yielded to political or fiscal exped-
iency. This year sane states were able to shield block-granted
programs fran funding reductions because they had sane carryover
fran last year. Colorado had enough 1981 categorical rroney, for
example, so that it was able to fund its Preventive Health Block
Grant programs at full level. Others made administrative changes;
many states - Illinois, New Jersey, Kansas, Wisconsin, and
Michigan anong then - reduced staff under the Social Services
Block Grant, for exarr~p1e.
But many states were also forced to make service reductions
and those service reductions often came at the expense of people
least able to afford increased fees or of groups who were excluded
from eligibility (as, for exan~le, under the Lew-Incxmie Energy
Assistance Block grant). A survey of roughly 150 public and
private social service agencies conducted by the Missouri Assoc-
iation on Social Welfare found that agencies were using four
methods to iinplanent block grant cuts:
* providing less services/ providing only crises services
* raising eligibility reguiranents/ instituting
or increasing fees for subsidized services;
* extending the waiting time for services
* or eliminating services cxsipletely.
-6-
PAGENO="0211"
207
All of these strategies have potentially harmful effects,
but same are more likely to exclude the poorest recipients.
For exanple, a irother workIng at rnininaim wage has a weekly
take-hone pay of $120. If a day care center institutes a "copayment"
or increased fee systen, the impact on that mother may be significant.
In Missouri, the average payment is $3 per day or $15 per week per
child, more than 10 percent of that mother's wages if she only has
one child. This is a budget story but it is also a block grant
story since states must decide to institute a cq)a~nt sch~ne or
to try some other cost saving strategy. The further point, hc~.iever,
is that as budget pressures increase, state goverments are increasingly
tempted to use block grant funds for purposes only ro~tely related
to the specific purposes of block-granted programs. In the interests
of avoiding elimination of basic public functions, v~ fear that
states quickly come to view block grant funds as supplemental to
general purpose funds, and populations or programs~ of explicit concern
to Congress will of necessity receive that much less support. For
example, one state official predicts a stream of small demands on
block grant funds in the area of health care; his county health
department is r~uestfrg that one-third of its general budget support
be drawn from the Preventive Health Block. Grmnt~ Those block grant
funds, if so designated, will be supporting hypertension or health
education or rape crisis or emergency medical services only indirectly,
if at all. We are in danger of seeing these once-targeted resources
disappear dc~qn the* gullet of* the state budget deficit.
-7-
PAGENO="0212"
208
We are also in danger of seeing targeting lost as more politically
pc~ierful ccnstituencies dEnand a share of funds once desiqnated accord
ing to specific need. The most glaring example of this trend is that
in many instances states are designating counties as recipients of
Ccrsnunity Services Block Grant funds and are using general population
instead of lew-incnrre polulation as a critereon for resource allocation.
For example, for fiscal 1983 the Montana legislature passed a law
transferring all $1.2 million in CSBG funds to the state's 56 counties
under a formula based primarily on total county population; roughly
half of these counties will receive less than $10,000 each. There
are two points to be made here:
1) not only will the state no longer target resources to
areas with high concentrations of poor people, but it
will provide a meaningful level of funding to few areas
at all;
2) with counties involved either as designated recipients
or as intermediaries between the state and designated
recipients, not only will less support reach cairnunity-
based agencies, but county administrative costs will also
drain whatever support does cone to then.
If targeting is in -jeopardy in sane states because of
budgetary pressures it is also in jeopardy becuase of political
pressures. The person who administers the Social Services Block
Grant in one Southwestern state, for example, proposes a 95 percent
cut in Title XX family planning services for fiscal 1983, dcr~in fran
nearly $260,000 to $12,500. If the cut is approved, 4 clinics will close.
PAGENO="0213"
209
This person is on recxrd as being adamantly opposed to family planning
services whatever the budget level. I~nother example cares fran
N~i England where one n~ayor announced that as soon as the grandfather
clause was renoved, he intended to use Carmunity Services Block
Grant funds for snow renoval; he said maybe he would hire low-incx~re
people to do the job, but he had to consider the irrinediate political
necessities.
Ccxrmunity groups with which we work point to the caning year
as a tine of mare extensive change and based on the budget trends
they see now, urge us to watch for the following:
* block grant funds being shifted away fran the poorest
recipients and away fran low-incane camnunities;
* block grant funds being shifted away f ran specific
program areas to support mare general state functions;
* block grant funds being shifted away fran smaller scale,
ccnimunity-based delivery systens and towards larger, established
delivery systens that may actually be less effective at reaching
into the ccrrnunity;
* block grant funds being treated as general revenue sharing to
local governments, thus making available resources mare diffuse
and potentially less effective;
* block grant funds being channeled away fran the specific
program areas because of political pressures.
PAGENO="0214"
210
C~en, Democratic Decision-Making
Qie aspect of block grant isplanentation we can begin to cxxrrnent
on is the way in which the public was able to participate in planning
for use of block grant funds. The National Governor' s Association
has reported:
The decision-making process typically involved the federal
administering agency, a limited nur±er of state administra-
tors, and the target population. In sane of the programa
the federal agency alone made most of the key decisions re-
garding funding allocations and program priorities with
little of no state/ local government or public involvement.
We w~.ild agree on the basis of our preliminary findings, that this
kind of range in quality did exist for the hearings held .on the 1982
block grants. But, the range was enormous, much wider than the
NG~ report would indicate when it claims that "if nothing else,
the data provided by the states clearly and enphatically show that
citizens were provided a multiplicity of opportunities to participate
in the process of human services program development arxl decision-
making."
While Title XVII of the Qunibus Peconciliation Aot provided
that states conduct "a public hearing, after adequate notice, on
the use and distribution of the funds," the Secretary of Health
and Human Services decided that states were exenVt fran those
requirements in fiscal 1982. As a result, what hearings occmred
this year for the HHS block grants occured at state initiative.
The range is worth noting., An Institute for Local Self-Government
study found that for the Cczrmunity Services Block Grant, Washington
and Minnesota appear to be the only states that systematically sought
out and involved recipients of services in irrplernentation planning."
PAGENO="0215"
211
It observed that most states held a one-day hearing, us~ally ~n all
block grants, and that only one fourth of then provided the opportunity
for local governments, agencies and public interest groups to participate.
In Michigan where the block grants went into effect without any
public hearings, pressure fran a state-wide coalition on block grants
praipted the state to hold consolidated hearings in six different
cities on all the block grants. The citizens coalition agreed to
handle public notice and other arrangenents and so was able to reach
out to a variety of constituencies.
Contrast that case with the case of Georgia described in the
attached letter sent to meabers of Congress fran a nuirber of citizens
incleding representatives of the Georgia Poverty Rights Organization
and the League of Wanen Voters. It notes, "Even people who regularly
monitor the state' s activities on these issues were unaware that there
was to be a hearing until three days before the scheduled meeting...
Legislators we met in the hallway on the day of this "legislative"
hearing were unaware that it was to take place... This was the only
hearing scheduled by the State. "Next year the state is preparing
one plan for all block grants to be described at a May 19 hearing
in Atlanta. Participants in a state-wide coalition cxi block grants
were not sure when we spoke with then last week whether they would
have th~ opportunity to testify at that time nor whether they would
be able to see the plan beforehand. Here, then, is an exasple of
a hearing procedure involving one meeting in one city to discuss
all the block grants with inadequate time for citizens to revi~
the plan and no apparent system for responding to citizen cclTrrent.
PAGENO="0216"
212
Fran the reports we have, many other block grant hearings
were held on short notice, with no release of state plans and little
clarity of purpose. The public had less than one week's notice in
Pennsylvania where testimony at the two hearings was by invitation
only and invitations went to only one public interest group per
hearing and to not consuners ô~ programs or services included in the
eight block grants. The public also had one week's notice in Texas.
In North Carolina there were mare than 1,000 people at each of
five out of six regional hearings on block grants, but because the
state agencies had not widely distributed their plans for the
caning fiscal year, few present were able to cairnent on the prcposals.
In Rhode Island, public hearings were held two weeks ago on state
block grant plans approved seven months before, in September.
Participants in the state-wide coalition pointed this fact out to
state officials whe pranise to convene another hearing shortly.
In Tennessee, the state used its hearings mare as. a way to inform
the public of expected cuts than as a way of soliciting crinrnents on
block grant implementation.
These anecdotes are cause for concern about fiscal 1983 planning
and public participation. For citizens groups in Georgia the
the minimal language in Title XVII was a standard against which they
could measure their state's performance. Gengress and the federal
agencies ought to be providing better standards and mare detailed
guidelines.
C~ie mare story, this time fran Ctiio where sane people when to
the Department of Econcnic and Catrnunity Developuent to inquire about
PAGENO="0217"
213
about plans for ~nall cities funding under the Ccxrmunity L~velo~xrent
Block Grant. They knew the agency was soliciting reactions to its
plan, but were told nothing was going on, so they went to the
legislature to request hearings. The appropriate subcarrnittee held
a hearing at which the state agency both testified arid then joined
the panel to ask questions of the withesses. They also requested
and received a full corrmittee hearing which the state later claimed
as its public hearing.
In the case of Chio, as bad as these procedures sound, citizen
involvement forced the agency to focus on aspects of its plan that
needed definition or irrproverrent. Nost important, they got the
agency to correct a proposed formula for eccnonic distress that
weuld have made catrnunities which had always been distressed
ineligible to receive block grant funds. Citizen involvement like
this can substantially improve block grant planning and administration
and that, finally, is the bottan line.
Accountability
The Ohio groups were also successful in getting the state to
establish an evaluation cairnittee caiposed of peeple affected by
the program an~ of representatives of independent grcups. The
cairnittee is charged to use a series of criteria including a break-
down of expenditures and of beneficiaries to evaluate the proqrams
effectiveness. It is worth noting this kind of effort at the
state level since federal regulations on the point of record-keeping
and performance evaluation are so weak as to invite discontinuation
of most data collection.
- 13 -
PAGENO="0218"
214
This laissez-faire stance in the HUD regulations for Small
Cities is repeated in the HHS regulations for the 7 block grants
in its bailiwick. There are no requirextents that any data be
collected on whe was served, what services they received, no
requirenents that there be any data on which to base evaluation
of program effectiveness. Past experience with block grant and
revenue sharing programs has shcx~in the difficulty of tracking
block grant funds in the absence of adequate data. This is one
of the most serious problens inherent in these block grants -
it will be inpossible to trace the expenditure of funds and to
evaluate their impact.
State data collection has historically been none to good.
A recent G.A.O. study on state A. F. D.C. administation found that
three of the fo~ir states studied did not have sufficient data
on which to base valid decisions on program budgets or to assess
c~erational efficiency. Federal data requirenents often make it
easier for the state to conduct its ~n work. For exarrple, though
its record keeping had been improving, the officials in the state
of Maryland did not knci.~i ho~r many children were in state care until
a national law required then to conduct a state inventory in 1980.
Since then, one official notes, the information has provided the
basis for inproved state program planning and evaluation and the
ireans by which resource needs can be justified to the state legis-
lature. The state would not have conducted this inventory on its ovi
initiative. -
PAGENO="0219"
215
We have similar concerns about the application and reporting
requirements, about the anditing and o~plaint procedures and
about the nondiscrimination protections in the federal regulations.
It is too soon to tell hcM well individual states are managing
the block grants this year, given these relaxed guidelines.
The recent G.A.O. report on management and administrative controls
under Title XX in four states found problems canton to all four:
* States financial management and internal controls
had been largely ineffective in protecting against
fraud, waste, and abuse,
* many of the problems appeared to be the "normal way
of doing business",
* sane of the conditions not only violated federal regula-
tions, but also violated the states' ovn policies and
procedures,
* sane states failed to audit all or a vast majority
of their contractor~, and
* aixlits generally failed to meet the G.A.O. yellc~
book criteria for acceptable financial and catpliance
auditing.
The anens do not look good. State plans sukinitted to H.H.S.
foi~ the Lc~ Incane Energy Assistance Block Grant varied fran 2 to
several hundred pages. The least impressive plans merely parrotted
the federal regulations; saying, for exanple, we will do outreach.
If that's all that is required at the outset, then we would hope to
see sane foundation being laid for thorough oversight ~nd performance
review. We have no evidence that this is happening.
PAGENO="0220"
216
Uniform language for Block Grants
Senator Durenberger, we appreciate the opportunity to ~mient
on the draft of your `tUniform Block Grant NanagenEnt Act" because
of our basic ccnuuitment to see the principles of targeting, account-
ability, openness, and enforcement of basic rights and protections
incorporated into any block grant enacted by Congress. But we nn~ist
strongly caution that any such uniform language must be a floor
and not a ceiling for federal standards and guidelines. Title XVII
of the Qnnibus Reconcilation Act, as inadequate as we felt it was,
provided minimum, not maximum, standards. We believe that Congress
must have the discretion to enact tougher provisions where those
provisions are in its judgement necessary to maet the national goals
and objectives embodied in particular programs. In fact, given
that many of the specific protections in the block grants Congress
passed last year are mare rigorous than those in the superceding
provisions of your bill - given that even the provisions of Title XVII
are mare rigorous - we weuld adamantly oppose this bill if you
were to suhnit it in its present form.
We are happy to discuss specific ways in which your proposal
can be improved, but only if its purpose is changed to offer basic
minimum federal standards for block grant administratiOnS We
cxrrinend your desire to provide states with clear and uniform guide-
lines, but we feel your goal can best be achieved by offering
guidelines so superior to others already on the books, so inclusive,
that the Congress will have little need to aimend them. If your
bill could reaffirm strong federal expectations for state targeting,
PAGENO="0221"
217
accountability, openness, and enforcenent of basic rights and
protections, it would in fact becane a national ncdel, and one
that we would be pleased to endorse.
One other general ccmnent before I turn to particular provisions
of this proposal. I could not help thinking as I was reviewing the
draft, where are the people who live in these jurisdictions, the
people who are to receive services funded under these block grants?
Should not the purpose of this legislation also have something to
do with than and their needs? It is finally citizens who will
hold states accountable for their administration of block grants;
insofar as the federal government does so it is only acting on
their behalf. This proposal should begin with than and their
interests: good, accessible information aoout programs states are
administering, meaningful public participation in program planning
and operation, effective citizen caiplaint procedures and civil
rights protections.
Let me turn to the proposal itself and review sane of our
particular concerns.
1. Elimination of targeted funding for special programs
or populations
Last year Congress determined that some programs were too
irportant or sane populations too vulnerable to leave adequate
support for than to state discretion alone, so it explicitly
designated those programs or populations for particular eligibility
under the block grants. For example, rape crisis services under
Preventive Health Block Grant received a set-aside of $3 million
each year to be distributed on a population-based formula.
PAGENO="0222"
218
Or, for example, the Lew-Incane Energy Assistance Block Grant was
limited so that federal funds could be spent only on households
which had a recipient of public assistance, a recipient of certain
veteran's benefits or scineone whose income was beloc*i either 150
percent of the poverty level or 60 percent of the median state
income.
This proposal by superceding earlier legislation, would
allew states "to provide for any activity or serviCe consistent
with the purpose of the program," thereby allowing states to
ignore those national priorities Congress considered worthy of
special attention. We think this is an inappropriate limitation
on Congressional discretion, and we see it as an attack on these
special programs and populations already designated for assistance.
Targeting on the basis of need -- or incane of special
condition - &)es not lend itself to uniformity. Each block grant
should be targeted to be most effective at meeting the most serious
rEeds it addresses, not spread so thinly that it has no impact
at all. For example, primary care funds should be concentrated
on the nedically needy. Without this targeting critics will
legitimately be able to say that block grant serve no .ide~itifiäble
purpose and that their continued existence should be reviewed.
.2. Elimination of targeted funding for former grantees
Not only does Title XVII provide minimal protection for
grantees under block-granted programs by mandating that grantees
with track records of proven effectiveness be considered for
PAGENO="0223"
219
continued funding, but several of the block grants include far
sore specific guarantees for continued support of programs serving
low-incxzne populations or populations with special needs.
This proposal would appear to supercede language on fundIng
guarantees in block grant legislation passed last year and to
limit Congressional discretion to set such guarantees in future
block grants. It would affect such agencies as corrmunity health
centers under the Primary Care Block Grant and mental health
centers under the 14~ntal Health Block Grant -- danand for
their services is dramatically increasing. We think this is an
inappropriate limitation on the authorizing corrmittees and their
ability to identify effective vehicles to deliver program assistance.
3. Weakening of program assurances protecting beneficiaries
Sczne of the block grants passed last year require recipients
to make important program assurances to qualify for federal funding.
For example, the Naternal and Child Health Block Grant (Title V)
reguires assurances regarding fair methods of allocation, substan-
tial provision of health care services to nothers and children,
continuation of special projects crucial to maternal and child
health, reasonable charges, and effective coordination with other
programs on which children depend.
This proposal under Section 1744 (f) would eliminate the
reguir~nent of accountability. Pecipients would be entitled
to federal fund~. so long as their applications assured that
"the proposed use of the funds is consistent with the purposes
of the program." Under thIs proposal a federal agency would
PAGENO="0224"
220
have virtually no information about the fundamental nature.~of :a
recipient's program before ruling on its application. Last year,
authorizing asimittees determined that guarantees and assurances
were essential to certain programs. This language wipes out those
guarantees and assurances wholesale.
4. weakening of public hearing requirements
Even Title XVII centained sane public hearing requireients
giving citizens the right to participate in the design and imple-
nentation of block grant programs. We have already noted hcM groups
in Georgia depended upon its provisions to make their case for
adequate notice, timely prior release of state plans, and other
state outreach efforts.
This proposal ~ould weaken these already irmdest requirements
under Section l~44 (e) by eliminating timely notice provisions.
It should be replaced by a provision assuring public hearings
that give the public an opportunty to assess program needs, revi~1
program priorities and evaluate program effectiveness. As we have
already noted, this process can yield enonr~us benefits. Block
grant theory makes its case for close-to-hane government based
on this kind of citizen insxlvement; public participation sheuld
be explicitly mandated.
5 Presumption of civil rights emmpliance
Recipients of federal funds are subject to civil rights
requirements, including protections for the handicapped, prohi-
bitions against age and sex-based discrimination and Title VI
provisions under the Civil Rights Act of 1964.
PAGENO="0225"
221
This proposal under Section l~5l would make these civil
rights protections virtually unenforceable by presuming that the
recipient is in caupliance with civil rights guarantees and other
cross-cutting requirements. MDreover, a recipient~ s ccatipliance
reports and assurances would be given undue weight in any crmipliance
proceeding. Once the lead agency on a cross-cutting requirement
had certified a recipient to be in ccaipliance the agency administer-
ing the funds would be unable to reverse that certification, even
if an intended beneficiary were to prove the recipient to be in
violation of federal civil rights requirements.
Civil rights protections are only as meaningful as their
enforcement;the provisions of Section l~5l make a irockery of the
vigorous pursuit of civil rights enforcement.
6. Other guarantees needed
Reports
If the public and the legislature are to kncM what impact block
grant\ funds are having they must have access to adequate reports
listing projects funded, their locations, arrount of project grants
and their primary beneficiaries. They must have that inforamtion
at both the beginning and the end of the year in order to evaluate
the effectiveness of that block grant and determine whether changes
ought to be made in its desigu.
Record keeping
~Eb produce such reports and nDnitor targeting, states should
be keeping the necessary data to describe populations and areas served.
99-965 0 - 82 - 15
PAGENO="0226"
222
These reports should be open to public scrutiny in a central
location.
Cczr~laints
Experience with past block grant and revenue sharing programs
has shc~n that the mDst effective, tmbureaucratic way to ensure
~npliance with national legislation is to provide a fair, thorough
hearing for citizen ccxnplaints. Several of last year' s block
grants provide for ca~plaint procedures, in fact they place the
heavy burden of proof on citizens by presuming cxirpliance. We
urge the Subooninittee to set up a process whereby such cceplaints
iray be given thorough hearing.
*** ***
In conclusion, I want to thank this Subcorrrnittee for its
attention to all of these issues. In continuing to examine the
record on state administration of last year' s block grants it is
performing a valuable oversight function, one that is badly wanting
in other quarters. In continuing to encourage discussion about
uniform federal standards for state administration of block grants
it is raising a vitally irr~ortant set of questions.
Finally, Senator Durenberger, I want to express irw appreciation
to you in particular for your open-minded inquiry into these
subjects. Your insistence on a "neW federalism" that recognizes
differenáes in fiscal capacity and effort among states has been
an ixportant contribution to the debate this year, since they
are differences that go to the heart of these proposals.
We think they are differences that make it incurrhant upon
the federal government to continue playing a predaninant role
in addressing national problans like poverty, unaxployment,
and discrimination.
PAGENO="0227"
223
Marôh 8, 1982
We are writing to express to you our dismay and dissatisfaction with the
State of Georgia's record so far in handling the block grants created by Congress.
A rec~nt `public" hearing on the Preventive Health and Health Services Program
and the Mental Health, Alcohol and Drug Abuse Program reflects the State's
apparent unwillingness to give the public a meaningful opportunity to participate in
decision making, or even to know what decisions have already been reached. The
State's actions certainly show contempt for the opinions of the public and possibly
even violate the requirements of the Omnibus Budget Reconciliation Act of 1981.
Titles IX and XVII of the Omnibus Budget Reconciliation Act require the
`State to follow certain procedures in accepting the block grants. According to
Section 1905 of Title IX, Subtitle A, Part A, regarding the Preventive Health and
Health Services Block Grant, the State must submit an application which contains
assurances that the legislature of the state has conducted public hearings (emphasis
added) on the proposed use and distribution of funds. The section further requires
that the chief executive officer of the state furnish, as a part of the application,
information on the programs and activities to be supported and services to be
provided. The description is to have been made public within the state in such
manner as to facilitate comment from any person during the development of the
description and after its transmittal. Part 13, Section 1915 imposes exactly the
same requirements for the Alcohol and Drug Abuse and Mental health Services
Block Grant.
Title XVII, Subtitle C, Section 1741 further requires that each State prepare
a report on the proposed use of block grant funds, including (1) a statement of goals
and objectives, (2) information on the types of activities to be supported,
geographic areas to he served, and categories or characteristics of individunis to be
served, and (3) the criteria and method estttblished for the distribution of the funds,
including details on how the distribution of funds will be targeted on the basis of
need to achieve the purposes of the block grant funds. Beginning in the fiscal year
1983, the report must include a description of how the State has met the goals,
objectives, and needs for the previous fiscal year as identified in the report
prepared for that previous fiscal year. The report must be made public within the
State on a timely basis and in such manner as to facilitate comments from interested
local governments and persons. No State may receive block grant funds for any
fiscal year until the State has conducted a public hearing, after adequate public
notice, on the State's proposal as set forth in the report.
Georgia's response to these requirements has, in our view, been totally
inadequate:
The hearing `was inadequate as to notice, ti in and accessibility to most
Georgians. Even people who regularly monitor the State's activities on these issues
were unaware that there was to be a hearing until three days before the scheduled
meeting. The only notice of the hearing was a legal notice in two newspapers two
weeks prior to the hearing. One of the notices appeared in the obituary section,
and one appeared in the sports section. (Copies of these notices are attached for
your information). Notices were not sent to advocacy groups known to have an
interest in these matters. Legislators that we met in the hallway on the day of this
"legislative" hearing were unaware that it was to take place. In fact, it had been
scheduled for Friday afternoon after adjournment, a time when most of them have
already left the Capitol for the weekend. The result was that only one legislator,
the one who chaired the hearing, attended. This was the only hearIng scheduled by
the State despite the fact that Georgia encompasses a very large geographical area
and that many people concerned about the use of. the block grant funds would be
unable to reach Atlanta for the hearing.
PAGENO="0228"
224
Participation in the hearing was hampered for those lucky enough to learn of
it by the fact that the information alleged in the notice to be available through the
health departments was not, in fact, available. A call to the Fulton County Health
Department the week of the hearing revealed that the Commissioner was not even
aware that such a hearing was to occur and did not have available any information
for distribution to the public. Attempting to obtain the information directly from
the Department of Human Resources, Mrs. Frances Pauley went first to DI-IR's
Budget Officer, who was in a meeting, then to the Director of the Physical Health
Division. She was told by the J)ircctor to go back to the Budget Officer. Upon her
return to that office, she finally received a six-page document. Other advocates
experienced similar difficulties in tracking down the information which had been
prepared.
The information prepared by the St to was insufficient to allow meaningful
comment on its plans. We invite your attention to the attached document. As you
can see, it gives only the sketchiest descriptions of the programs, provides little
information as to exactly what services will be provided, givcs no statistics on
numbers and characteristics of clients served, or actual costs of providing services,
no goals and objectives, and scanty information on the details of how funds will be
targeted on the basis of need. In addition, the budget figures given were
disembodied numbers apparently reflecting a nine-month federal share allocation,
with no information on the numbers of state dollars allocated to each area. The
previous years budget was not given, so the public could not know whether a
greater or smaller share of resources was allocated for an activity in 1983. When
Mrs. Pauley asked for additional information, she was told by the Budget Officer
that there was no other information readily available and that it would take a
computer print-out three feet high to provide what she wanted.
Only two other efforts have been made l)y the State to provide the public ami
opportunity to participate in the decision making on the block grants. One was a
hearing held before the Department of human Resources Board subcommittees in
June of 1981 before there was very much information as to what the block grants
would look like on the federal level. The ether was a meeting held by l)llR in
September of 1981 during which the Department presented only broad outlines of
its plans for use of the funds.
In summary, we believe the State has failed to provide adequate opportunity
for participation by the public in decisions on the block grants. Information has not
been made public in such a manner as to `facilitate comment from any person". In
fact, the State might as well have tried to preclude comment from the public.
Even today, we do not have meaningful information on what the State intends to do
with the funds. We urge you to take action to assure that this abuse is corrected so
that we and our elected representatives can have a voice in the decisions. Thank
you for your attention to our concerns.
Sincerely,
Attachments
PAGENO="0229"
225
[From the Atlanta Constitution, Feb. 5, 1982]
NOTICE OF PUBLIC HEARING
In accordance with the Omnibus Budget Reconciliation Act of 1981, the
public is hereby notified that:
(1) A public hearing by the Georgia General Assembly on the proposed use
of the Alcohol, Drug Abuse and Mental Health Services Block Grant and
the Preventive Health and Health Services Block Grant for Fiscal 1983 will be
held at 1:00 P.M. in Room 341 of the State Capitol on Friday, February 19, 1982.
(2) At such hearing, citizens shall have the opportunity to provide written
and oral comments to members of the Georgia General Assembly concerning such
proposed use.
(3) The Georgia Department of Human Resources has been designated as the
single State agency to administer these programs in Georgia and has prepared
its report on the proposed use of these block grants. A copy of the summary
report on Preventive Health and Health Services will be available in county and
district health offices and the summary on Alcohol, Drug Abuse and Mental
Health will be available in community mental health centers and district health
offices. These reports will be available for review by Wednesday, February 10,
1982.
(4) Citizens desiring to submit written comments may mail such submissions
to:
LEGISLATIvE BUDGET OFFICE,
Atlanta, Georgia.
Senator DURENBERGER. We appreciate all the witnesses who have
made contributions to this hearing.
The hearing is now adjourned.
[Whereupon, at 12:20 p.m., the subcommittee recessed, to reconvene
at the call of the Chair.]
PAGENO="0230"
PAGENO="0231"
ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD
American 77b Pvtdssachusetts Ave. NW
Planning WaThington, DC 20036
Association Phone 202.872.0611
June 15, 1982
Senator David Durenberger
Chairman
Subcommittee on Intergovernmental Relations
Senate Governmental Affairs Committee
Washington, D.C. 20510~
ATTN: `Ms. Velora Washington and Ms. Pam Hess
Dear Senator Durenberger:
We are grateful for the opportunity to comment on the tJniforrn
Block Grant Management Act of 1981, still under review and
consideration.
We are supportive of the provisIons of the Act and wish to make
some recommendations which we believe will strengthen it.
The American Planning Association (APA)is a nationa). organization
of 2l,000~members including city, regional and state planners,
elected and appointed officials at all levels of government,
professional practitioners, educators, interested citizens and
students. Our membership belongs to 46 Chapters covering
virtually every state and Congressional district. In addition,
within APA are fourteen divisions that bring together members with
interest and expertise in particular aspects of planning; such as
the metropolitan and regional planning division, which I head and
on whose behalf I wish to conuhent on the Block Grant Act.
The American Planning Association at its annual meeting in Dallas
last month, adopted a policy statement in regard to New Federalism
which is pertinent to Block Grant programs. The following are
APA's policies on New Federalism:
I.. Framework
The mission of the American Planning. Association is to advance the
art and science of planning and the use of planning procedures at
local, regional, state and national levels. The objective is to
improve the decisions that are made by the many publics which
establish goals to be reached in physical, economic and social
develo~nent of the community, devise means to reach those goals,
and use their resources to implement decisions.
The measures of good planning.are effectiveness in resolving
conflict among goals and reco.nciling competing priorities, the
creativity of plans toward achieving goals, effectiveness of the
means employed and economy in the use of resources.
(~27)
PAGENO="0232"
228
Senator David Durenberger
June 15, 1982
Page 2
Good planning in our democratic societyrequires that necessary public
actions must respect private and individual preferences;: that necessary
state and national actions must respect local decisions; that necessary
action by majorities must respect minority interests; thgt the
necessity of a free market must respect the limited public regulation
that makes it possible. This mission of APA is the foundation for the
foll~zing framework for policy in regard to New Feder4ism:
1. The New Federalism must recognize, require and provide for
the role of planning and new planning initiatives at all
levels of government. These are made necessary by the
reallocation of responsibilities and are essential in order
to ensure a rational process for needs identification and
resource allocation.
2. The enhanced role of states under the New Federalism requires
a strong state planning function institutionalized within
state government and structured for the benefit of the
governor, state agencies, and the legislature. State
plannij~g should provide for a rational framework to deal with
the nation's domestic problems by integrating adopted local,
regional1 state and national gqals.
3. ~Phe New Federalism recognizes the issue of the relative
roles of state and local governments and provides for a pass-
through system to ensure that local governments continue to
have the responsibility for delitrering services ,~n those
states where they had had ~that responsibility. (~`he New
Federalism is silent, however, on the role of metropolitan
and regional agencies in providing an~ important forum for
coordinating planning among various levels and units of
governments, operating authorities and citizen groups~>
Recognition must he extended to metropolitan and regional
planning as well.
4. Federal legislation and regulations to implement the New
Federalism must include requirements that maintain
the Congressional intent o~ programs to be transferred. This
calls for the establishment of standards for health care, for
income maintenance, for public transportation, for housing
and other urban needs to be provided by states and
localities. These standards should be built into the
planning components by Congressional mandates.
II. APA's Policy on the New Federalism
The Board of Directors has adopted Ihe following positions and
recommendations regarding the New Federalism:
PAGENO="0233"
229
Senator David flurenberger -
June 15, 1982
Page 3
1. The planning community is committed to help to define the
appropriate roles of government, inciudi~g:
* a clear and equitable assignment of governmental functions
and of authority to perform them;
* shared responsibilities, duties, and authority;
* interaction to achieve improved functional program
performance as well as overall governmental performance;
and
* interaction to enable programs to meet the needs of
geographic areas and groups of people across governmental
boundaties, economically and effectively.
As much as possible, each level and unit of government should
be allocated sufficient powers and resources to carry out its
responsibilities.
2. The di~vision of governmental responsibilities should he done
in a carefully planned manner, using a well considered set of
criteria establishing the federal role. The New Federalism
must not relieve the Congress and the Federal government from
their responsibility of maintaining the national interest,
including:
* economic and social equity;
* energy and resource development and conservation;
* education;
* employment and a sound economy; and
* preservation and enhancement of the quality of the
environment.
The Federal government mus~t maintain an active role and
continue programs that recognize these issues of national
interest.
3. New Federalism is not a sub~titute for national urban
policy. A strong national urban policy requires long-range,
interrelated national goals and policies in regard to growth,
settlement, land use, energy, environment, transportation and
economic, social and cultural concerns. A national urban
policy is an essential framework for state and local
actions in implementing urban programs under the New
Federalism.
PAGENO="0234"
230
Senator David Durenberger
June 15, 1982
Page 4
4. ~4~uate resources must be provided as an integral part of
the New Federalism to ens~ire ~he capacity of institutions,
state and local, public and private, to cope.with the addeç]
demands for urban services they are now asked to provide.
This is even more essential in light of recent cuts in
Federal funding for such services.
5. The American Planning Association supports Federal
responsibility for all public assistance programs. This is
generally consistent with the concept of Feöeral
responsibility for a sodial safety net, although it would
expand the current Admihistration's own definition of that
net. specifically, food stamps and Aid to Families with
Dependent Children (AFDC) would be added to the list of Fu] l.y
Federal responsibilities, as well as, perhaps, housing
assistance payments to individuals. The welfare system,
today, has become much more than just the traditional
"welfare check." Medicaid, proposed by the President for full.
Federal responsibility under the program swap proposal in the
1982 State of the Union Address, also is part of the social
safety net concept along with basic social security benefits,
supplemental security income, Medicare, unemployment, and
Federal pensions. Nationwide equity among individuals and
the importance of these major income flows in the national
economy make these safety net programs essential national
responsibilities.
6. The Federal aid system has becom~ a major source of revenue
for state and local governments in the United States,
mildly equalizing the capacities among states to undertake
the many programs and meet the many standards established by
the Federal government. As this major source of revenue is
withdrawn, the differences in fiscal capacities among the
states will increase substantially. Thus, in line with its
policy that each level of government should have the
authority and capacity to perform the functions assigned to
it, the American Planning Association supports the concept of
a permanent federalism trust fund designed to help equalize
tax wealth among the states.
From the point of view of metropolitan and regional planning, I wish to
elaborate on the policy statement in two subject matters, the role of
government in block grant management and the issue of block grant
funding:
1. The Role of Government in Block Grant Management
a) The roles of state and local governments in the
administration and financial management of block grants
should be determined jointly by them.
PAGENO="0235"
231
Senator David Durenberger
June 15, 1982
Page 5
b) State and local agreements on block grant~management
should recognize the impOrtant role that ~egionai
councils can play in relating local interest to state
programs. Federal legislation should recognize and
encourage the role of regional councils iii the manaqemont
of block grants.
C) State and local governments should be ez)couraged to
develop cooperative efforts and funding for
interstate metropolitan areas.
d) Federal legislation should give preference to local
general purpose govern~nents and regional councils as the
channels for planning and implementing block grant
programs, in contrast to special agencies not acountahie
to the electorate.
2. Block Grant Management
a) ~p~ss-through or similar formula should be required to
maintain direct federal funding to local governments and
I~egional councils for existing categorical programs.
b) Funding allocations should be determined jointly by the
states, the local governments and the regional councils.
c) The relative size of local governments should be
recognized in albocat~ing block grants to these
governments.
d) Technical assistance should be an eligible activity in
state block grants.
Thank you for the opportunity to comment on this important
legislation.
If the APA can provide additional information, please do not hesitate
to call George T. Marcou, AICP, Director of National Planning Policy.
S~ncerely rs,
J rr A Coursey
Metropolitan and Regional
Planning Division
PAGENO="0236"
232
AMERICAN PUBLIC HEALTH ASSOCIATION
1015 Fifteenth Street N.W., Washington D.C. 20005 * (202) 789-5600
Stanley J. Matek, MS., President
Nay 18, 1982
The Honorable David Durenberger
Chairnan
Subcommittee on Intergovernmental Affairs
Senate Committee on Governmental Affairs
507 Carroll Arms Building
301 First Street, N.W.
Washington, D.C. 20510
Dear Senator Durenberger:
As an organization representing a combined national and
affiliate membership of over 50,000 public health profes-
sionals and community health care leaders, we ask that our
opposition to the "Uniform Block Grant Management Act of
1982" be recorded as part of the testimony for the public
hearing of the Subcommittee on Intergovernmental Affairs
held on Hay 11, 1982.
As members of the Coalition on Block Grants and Human Needs,
we support the testimony given by Ms. Sandy Solomon before
the Subcommittee. APHA concurrs with the concerns expressed
by the Coalition with regard to the use of block grant
funding as a mechanism for indiscriminate reduction of
non-military domestic program funds.
We feel that states should be held accountable to meet federal
performance standards and that local health agencies must
be systematically involved in the development of state plans
for the utilization of federal block grant monies. In addi-
tion, enforcement of basic rights and protections should be
included into any block grant enacted by Congress.
Finally, we are opposed to any effort which would wipe out
in one step the targeting provisions which have carefully
specified needy populations, and have been developed after
much public debate and long Congressional study.
The approach of this proposed legislation is put forth in
the name of increasing state flexibility, but reveals an
ignorance of the complexity of our nation's health and human
problems.. It would contribute to the further blurring of
the specific federal responsibilities for assuring that
critical services meet the needs of those who truly need
them.
Very truly yours,
Stanley J. Matek, MS
President
2
Enc osur'e
PAGENO="0237"
WALD, HARKRADER & ROSS
233
ZACCARS C. FASRAN LEWIS A. COWER CHARLES A. ZIELISSAI
June 1, 1982
Ruth Doerflein, Chief Clerk
Subcommittee on Intergovernmental Relations
Committee on Governmental Affairs
U. S. Senate
Room 507, Carroll Arms Building
301 First Street, N.W.
Washington, D.C. 20510
WASHINGTON, 0. C. 20036-1697
(200 $28-WOO
(R5I) 886333 SALAWG
Re: Statement for the Hearing Record on May 11, 1982
Hearing on Implementation and Management of Block
Grants by the Senate Governmental Affairs Subcom-
mittee on Intergovernmental Relations
Dear Ms. Doerflein: -
This letter is to transmit the enclosed copy of a Statement
on the proposed draft Uniform Block Grant Management Act of 1981
on behalf of the undersigned national private, nonprofit voluntary
human services sector organizations for inclusion in the hearing
record of the May 11, 1982 hearing on implementation and management
of block grants, held by the Subcommittee on Intergovernmental
Relations of the Senate Committee on Governmental Affairs.
As noted, this Statement is being submitted for inclusion in
the hearing record and upon the specific agreement by the Subcom-
mittee Chairman to hold the hearing record open for receipt of
PAGENO="0238"
234
Ruth Doerflein, Chief Clerk
June 1, 1982
Page Two
this Statement in response to the request for this purpose of The
Child Welfare League of America made in its oral testimony presented
at the hearing.
If you have any questions or need any further information,
please do not hesitate to let me know.
~
Laurence . Hewes, III
WALD, HARKRADER & ROSS
Attorneys for Boy Scouts of America,
Boys' Clubs of America,
National Board, YWCA of the USA,
The Child Welfare League of
America,
The Salvation Army
LIH/elg
Enclosure
PAGENO="0239"
235
WALD, HARKRADER & ROSS
300 NINETEENTH STREET,N.w., WASHINGTON,D.C. 20036
(6C~3:
Statement on the Proposed Draft Uniform Block Grant
Management Act of 1981 by the Undersigned Grants and Contracts
PrOject Members for Inclusion in the Hearing Record on
Implementation and Management of Block Grants
Senate Committee on Governmental Affairs
Subcommittee on Intergovernmental Relations
Hearing Held on May 11, 1982 -
Room 357, Russell Senate Office Building
Washington, D.C.
Boy Scouts of America
Boys' Clubs of America
National Board, YWCA of the USA
The Child Welfare League of America
The Salvation Army
By:_________________________________
Laurei'fce ~. Hewes, III
WALD, HARKRADER & ROSS
June 1, 1982
PAGENO="0240"
236
TABLE OF CONTENTS
I. INTRODUCTION 1
II. OVERALL ASSESSMENT OF THE DRAFT UNIFORM
BLOCK GRANT MANAGEMENT ACT OF 1981 3
III. DISCUSSION OF THE BASIC ISSUES IN THE
DRAFT UNIFORM BLOCK GRANT MANAGEMENT
ACT OF 1981
1. Use of Funds 4
2. Public Involvement 5
3. Federal Reporting Requirements 7
4. Audit
5. Administrative Expenses 9
6. Federal Uniform Administrative
Requirements and Cost Principles 10
a. In General 10
b. Enforcement of National Policy
Assistance Standards 11
IV. SUMMARY 11
PAGENO="0241"
237
WALD, HARKRADER & ROSS
1300 NINCTSENTH STREET,N.W., WASHINGTON, DC. 20036
June 1, 1982
ssesg (Ass)
Statement on the Proposed Draft Uniform Block Grant
Management Act of 1981 by the Undersigned Grants and Contracts
Project Members for Inclusion in the Hearing Record on
Implementation and Management of Block Grants
Senate Committee on Governmental Affairs
Subcommittee on Intergovernmental Relations
Hearing Held on May 11, 1982
Room 357, Russell Senate Office Building
Washington, D.C.
I. INTRODUCTION
This Statement is submitted on behalf of the undersigned
national voluntary organizations for inclusion in the hearing
record of the hearing held on Tuesday, May 11, 1982 in Room 357
of the Russell Senate Office Building concerning the implementation
and management of block grants1! and consolidation programs,~! by
the Subcommittee on Intergovernmental Relations of the Senate
Committee on Governmental Affairs. In addition, the Child Welfare
1/ Sec. 1741(b) (1) of the Omnibus Budget Reconciliation Act of
1981, Pub. Law 97-35 (Aug. 13, 1981) defines a block grant. Some
programs popularly called block grants may be interpreted (and
have been by HHS, for example) as not being block grants for
purposes of the Act but of being, instead, consolidation programs.
2/ Sec. 2352(a) of the Act, Pub. Law 97-35 (Aug. 13, 1981)
defines the so-called social services "block grant" as a consolidation
program. Sec. 2192 does about the same thing for programs consoli-
dated into what is now popularly called the maternal and child
health services block grant.
99-965 0 - 82 - 16
PAGENO="0242"
238
WALD. HARKRADER & ROSS
Statement on Proposed Uniform
Block Grant Management Act of 1981
Page Two
League of America, Inc., in its testimony, asked that the hearing
record be kept open for inclusion of this analysis of Sen. Dave
Durenberger's proposed draft Uniform Block Grant Management Act
of 1981. Chairman Durenberger generously agreed to that request.
The undersigned national nonprofit, voluntary, social and
human service organizations have a record of involvement in federal
financial assistance and are deeply involved in a wide variety of
social and human program research and service delivery. These
private, nonprofit, charitable organizations and their members
constitute an important portion- of the voluntary nonprofit sector
("voluntary sector'), have scores of local, community based corporate
members and chapters, and millions of individual members. Many
of the local nonprofit corporate members and chapters operate
grass roots programs which are financed privately and publicly.~/
These national membership organizations are:
Boy Scouts of America
Boys' Clubs of America
National Board, YWCA of the USA -
The Child Welfare League of America
The Salvation Army
3/ Issues and Problems Associated with the Administration of
Federal Financial Assistance Programs by Non-Profit, Voluntary
Social Service Organizations, June 14, 1965 (hereinafter `1976
Report"), p. 1.
PAGENO="0243"
239
WALD. HARKRADER & ROSS
Statement on Proposed Uniform
Block Grant Management Act of 1981
Page Three
The need for the services provided by such organizations is
greater than the funds available. With the retrenchment of govern-
ment, both federal and state, in these areas, it is even more
critical for the voluntary sector, and the rest of the nonprofit
sector, to expand existing programs to meet the increased needs
of the public which are no longer being met by the federal govern-
ment.
II. OVERALL ASSESSMENT OF THE DRAFT UNIFORM
BLOCK GRANT MANAGEMENT ACT OF 1981
We commend the Subcommittee and its Chairman, Sen. Durenberger,
for interest in improving the management and implementation of
block grants and related programs. We believe this subject needs
further study, as shown by the experience with block grants and
consolidation programs thus far.Y
The current draft bill should, and we are sure, will, be
used for discussion purposes with respect to such central block
grant issues as use of funds; public involvement and participation
in the planning, use, management and administration of block
grants and consolidation programs; federal reporting; audit require-
ments; administrative expenses and enforcement matters.
With respect to a number of these issues, the current block
grant management provisions of Title XVII of the Omnibus Budget
4/ See Statements for the hearing record by the Child Welfare
League of America, National Conference of State Legislatures,
U.S. Conference of Mayors, National Association of Counties,
National Association of Social Workers and Coalition on Block
Grants and Human Needs and others on May 11, 1982 before the
Subcommittee. See also GAO Report 8-206864, `Allocation of Funds
for Block Grants with Optional Transition Periods (GGD-82-65)".
PAGENO="0244"
240
WALD. HARKRADER & ROSS
Statement on Proposed Uniform
Block Grant Management Act of 1981
Page Four
Reconciliation Act of 1981, P. Law 97-35 (Aug. 13, 1981) ("Title
XVII" and "The Act") are stronger, clearer and, in our judgment,
more desirable than those in the draft legislation. Implementation
provisions of the block grants and related programs coupled with
Title XVII provide a better system of protection for beneficiaries
of services than does the draft bill. Both, however, need
strengthening.
The Project could not support the draft if it were introduced
in its present form, but understands that the draft is open for
discussion. With this in mind as a starting point, this Statement
deals with some of the basic issues concerning the draft bill.
III. DISCUSSION OF THE BASIC ISSUES IN THE DRAFT
UNIFORM BLOCK GRANT MANAGEMENT ACT OF 1981
In the recent enthusiasm for achieving budget reduction
goals and turning federal responsibilities over to the states,
not enough focus has remained on the critical role of local nonprofit
service providers, needy individuals and the role of the federal
government.
1. Use of Funds
Authorizations and appropriations for the block grants
and consolidation programs, albeit less than needed, should be
used to help solve the problems which gave rise to the categorical
grant programs in the first place. With such a provision added
to the block- grant law, voluntary sector and other nonprofit
organizations which provide these critical services will be able
PAGENO="0245"
241
WALD, HARKRADER & ROSS
Statement on Proposed Uniform
Block Grant Management Act of 1981
Page Five
to continue to function to help meet critical needs. One problem
the draft bill does not address has been the creation of great
uncertainty as to funds to be provided, to whom they will be
provided and who will provide them. The result has been to disrupt
the nonprofit voluntary, human services sector at the very time
it is being called upon to shoulder a greater burden.
2. Public Involvement
Title XVII defines block grants and requires that public
hearings be held by states regarding their plans for use of block
grant funds and program development. However, some of the consoli-
dation programs popularly called block grants, such as social
services, appear to be defined by the Act, and treated by agencies,
such as HHS, as not being block grants and therefore not subject
to the Act's hearing requirement.~/
Title XVII also requires that each state develop and
publish for public comment a report setting forth its proposed
use of block grant funds. This requirement, unlike the public
hearing requirement, is applicable to all the new so-called "block
grants," including social services and other of the Act's consoli-
dation programs.
The draft bill's provisions which purport to deal with
these subjects of hearings and report for public comment are
5/ Sec. l741(b)91), P. Law 97-35 (Aug. 31, 1980); 46 Fed. Reg.
48582 at 48583 (Oct. 1, 1981).
See Comment on U.S. Department of Health and Human Services
Interim Final Rules on Seven Block Grant Programs, Nov. 30, 1981,
on behalf of organizations in the voluntary sector, in HHS's files
submitted in response to request for such comments in HHS's Interim
Final Regulations, 46 Fed. Req. 48582 (Oct. 1, 1981).
PAGENO="0246"
242
WALD HARKRADER & ROSS
Statement on Proposed Uniform
Block Grant Management Act of 1981
Page Six
found in proposed section 1744. These provisions are more general
than those in Title XVII and do not expressly require public
hearings and reports subject to public comment. In one sense the
draft bill's provisions in this regard are superior to Title XVII
in that they apply to all the so-called block grants, including
consolidation programs like social services. Ultimately, though,
the draft bill is weaker in this area than Title XVII because the
draft bill does not expressly require hearings and reports for
comment. Whether or not they occur is up to the states. This is
a deficiency which should be corrected. Testimony at this Subcom-
mittee heating has also demonstrated that tighter federal control
is needed over the hearing process as presently conducted by
states, which in a number of instanc&s has been represented as
being perfunctory and otherwise inadequate.
Public involvement requirements in Title XVII and in
the draft bill should be strengthened to make sure that the voluntary
sector beneficiaries and the public generally are thoroughly
consulted and heard concerning use of block grants and consolidation
funds. This effort should be made to go beyond formal public
hearings and publication of reports for comment, to include formation
of advisory committees from among all those interested and affected
as well as informal, continuous consultations and involvement of
those concerned in planning from the earliest stages.
PAGENO="0247"
243
WALD, HARKRADER & ROSS
Statement on Proposed Uniform
Block Grant Management Act of 1981
Page Seven
These kinds of requirements should be included in Title XVII
(and even if not there,in agency regulations, such as HHS's), and
in the draft bill. State and local officials traditionally rely
heavily on local voluntary sector organizations to deliver the
services financed by the programs in question. Involvement from
the earliest stages on is easy and makes for better implementa-
tion and cooperation.
3. Federal Reporting Requirements
The requirements for reporting by the states to the
federal government on utilization of block grant and consolidation
funds is inadequate in both the existing law and in the draft
bill and should be strengthened. Without solid, detailed basic
uniform reporting requirements, no common, usable data will be
generated and the extent of need and whether and to what extent
the block grant and consolidation program funds meet that need
will not be known.
4. Audit
The audit provision in the draft bill is unnecessarily
long and complex. The provision in Title XVII, sec. 1745, is
somewhat more adequate.
The cost of audits required by Title XVII and by the
draft bill should be allowable, as is the case under normal federal
cost principles in 0MB Circulars A-llO, A-2l and A-l22 (and agency
implementing regulations), government contracting and application
of generally accepted accounting principles.
PAGENO="0248"
244
WALD HARKRADER & ROSS
Statement on Proposed Uniform
Block Grant Management Act of 1981
Page Eight
Because of the uncertainties and weaknesses in this
provision of the draft bill, we urge deletion of it until more
research has been done on the audit issue, including the report
of the new GAO Audit Policy Advisory Committee.
Proposed sec. 1748(b) of the draft bill limits adminis-
trative costs to recipients (states) to 10% of the amounts they
receive (a separate problem discussed below), and then, in proposed
sec. 1748(c), defines administrative costs to exclude the cost of
the proposed bill's required independent audit. Thus, administrative
cost funds cannot be used to pay for independent audits required
by the draft bill. The funds set aside to cover the costs of
such audits by sec. 1749(h) of the draft bill are insufficient
and will be exhausted. When that occurs, the only sources remaining
to pay for such audits will be program funds or other internal
funds of the organization, thus further weakening such organizations
financially.
Although this audit requirement and the associated cost
restrictions are difficult enough problems, subrecipients, many
of whom are members of the voluntary sector and who are given no
voice in the draft bill, can also be asked to undertake and pay*
for audits out of their pockets under the draft bill. While an
audit to be undertaken anyway may be acceptable under the draft
bill, this is an uncertain procedure.
PAGENO="0249"
245
WALD. HARKRADER & ROSS
Statement on Proposed Uniform
Block Grant Management Act of 1981
Page Nine
5. Administrative Expenses
As noted above, proposed sec. 1748(b) of the draft
bill, limits administrative expenses for state and local govern-
ment recipients to 10% of the amounts they receive. We urge that
this provision be removed and replaced with normal, uniform cost
principles provisions or generally accepted accounting principles
concerning administrative costs. If, however, a ceiling is felt
to be necessary, such necessity ought to be justified and, if
justified, an allowable administrative cost ceiling established
of at least 25%, which ought to be fully and separately funded.
Many carefully operated public and voluntary sector and
other nonprofit organizations operate within or close to such a 25%
ceiling. Before deciding on any ceiling, though, it should be
remembered that no such ceilings are imposed on commercial organiza-
tions when doing business with the government and that such organi-
zations usually have administrative costs in excess of 60%.
Experience with the few other federal programs with
arbitrary administrative cost ceilings for states and local govern-
ments and others, such as existed in certain CETA Public Service
Employment programs, shows that such state and local governments
limit subrecipients to the same or lower administrative cost
ceilings, or provide them only with what, if anything, may be
left from the original funds allocated for such costs within the
PAGENO="0250"
246
WALD. HARKRADER & ROSS
Statement on Proposed Uniform
Block Grant Management Act of 1981
Page Ten
original percentage. Administrative costs of the most prudently
and conservatively managed voluntary organizations are more than
10%. Limiting administrative costs to 10% puts public and private
organizations in the position of having to reduce essential manage-
ment, pay inadequate salaries and of not being able to attract or
keep top people. The net result is to weaken management. The
approach of placing a ceiling on administrative costs has a certain
initial cost savings appeal but, in the end, is counter-productive
and should be eliminated from the draft bill, or, if found to be
essential, such ceiling should be increased to at least 25% as
noted above.
6. Federal Uniform Administrative
Requirements and Cost Principle~
a. In General
The block grants and conslidation programs in the Act
should be subject to the basic rules of management and cost found
in 0MB Circulars A-l02, A-llo, A-122 and A-87, among others and
the agency implementing regulations issued thereunder. These
uniform rules, have been worked out over time with state and
local governments and with the voluntary sector and other nonprofit
organizations, are based on experience and reflect a fundamentallY
fair way of operating, under standards that are uniform and predictable.
These circulars and implementing regulations provide basic protection
for all parties and create the basis for sound, uniform and efficient
management. Best of all, they result in less, not more, regulation.
The method proposed in the draft bill (and in the Act and agency
PAGENO="0251"
247
WALD, HARKRADER & ROSS
Statement on Proposed Uniform
Block Grant Management Act of 1981
Page Eleven
regulations) will result in a crazy quilt of differing, incomplete
and conflicting regulations.
b. Enforcement of National Policy
Assistance Standards
Proposed section 1751 of the draft bill presumes recipients
to be in compliance with the range of basic national policy standards,
including those prohibiting discrimination on the basis of sex,
race, handicap, religion, national origin and others.
First, substantial evidence built up over time, led to
enactment of these standards and the need to enforce them by the
federal government. This situation has not changed. The problems
these standards address are truly national problems and should
continue to be dealt with by the federal government, especially
when federal funds are involved. While, in some situations,
private individual or class actions can be brought, it is too
onerous a burden to expect individual citizens to try to enforce
national law to achieve national policy goals.
Second, this sort of provision is not essential to the
draft bill and is likely to create unnecessary opposition to it.
IV. SUMMARY
The undersigned agencies cannot support the draft bill in
its present form for the reasons stated above. However, we wish
to express our appreciation to the Subcommittee for the opportunity
to present our views. As expressed throughout this Statement, we
PAGENO="0252"
248
WALD HARKRADER & ROSS
Statement on Proposed Uniform
Block Grant Management Act of 1981
Page Twelve
believe that effective use of block grant and consolidation programs
must require involvement of the voluntary sector and other nonprofit
service providers and related organizations and affected citizens
from the start. This has not been the case thus far.
We urge the Subcommittee to involve the voluntary sector in
addressing the utilization, effectiveness and efficiency of block
grants and similar programs.
Respectfully submitted,
Laurence I. ewes, III, Esq.
Wald, Harkrader & Ross
1300 Nineteenth Street, N.W.
Washington, DC 20036
(202) 828-1200
Attorneys for Boy Scouts of
America, Boys' Clubs of
America, National Board, YWCA
of the USA, The Child Welfare
League of America and The
Salvation Army
PAGENO="0253"
249
BLOCK GRANTS:
A NEW CHANCE FOR STATE LEGISLATURES
TO OVERSEE FEDERAL FUNDS
Legislative Finance Paper #15
February 1982
Barbara Yondorf, Staff Associate
Karen Beriker, Research Analyst
National Conference of State Legislatures
1125 Seventeenth Street, Suite 1500
Denver, Colorado 80202
303/623 -~66OO
PAGENO="0254"
250
TABLE OF CONTENTS
INTRODUCTION 1
I. CONSOLIDATED FEDERAL AID PROGRAMS (BLOCK GRANTS):
BACKGROUND AND DESCRIPTION 3
A. Background 3
B. Features of Block Grants 6
II. CONSOLIDATED FEDERAL AID PROGRAMS (BLOCK GRANTS)
AND STATE LEGISLATURES 10
A. Legislatures in a Strong Position to Control
Block Grants 11
B. Legislative Mechanism to Control Block Grants 14
C. RecormnendatiOns Concerning Legislative Oversight
of Block Grants 25
III. PROBLEMS STATE LEGISLATURES HAVE WITH BLOCK GRANTS 27
IV. BLOCK GRANT OUTLOOK FOR FY 83 32
Appendix 1 34
Appendix 2
PAGENO="0255"
251
INTRODUCTION
The primary objective of this ~~gislative Finance Paper is to provide a
review of state legislative activity regarding the new consolidated federal
aid programs (commonly called block grants), which were enacted in 1981. The
paper also: 1) reviews the general features and requirements of the block
grants; 2) discusses the present issues and problems that state legislators
have identified regarding block grants; and, 3) outlines the new FY `83
Administration budget proposals consolidating some existing programs into
eight new block grants and modifying other existing programs.
While we prefer to call them consolidated federal aid programs rather than
block grants, we lapse into the more commonly used "block grants" because of
ease of usage. The issues and problems section of this paper explains some of
the reasons why "block grants" may be a misnomer for these programs.
The information in this paper regarding individual state actions about the
1981 consolidated federal aid programs was gathered through two NCSL fiscal
surveys during November and December of 1981. The written survey information
was supplemented by telephone calls as necessary. We did not include actions
by any state executive branch regarding block grants, and 1982 state
legislative action is being monitored and will be reported later.
The NCSL Fiscal Affairs Program staff thank all of the state legislative
fiscal officers and their staffs for contributing the information presented
herein. In addition, we appreciate the assistance of our NCSL Washington,
D.C., colleagues.
PAGENO="0256"
252
We encourage the reacers of this paper, especially state legislators and
legislative staff, to comment on the contents of this paper so that any
further research might better address stats legislative needs. If recent
legislative action has altered what we depict as your state legislative role
regarding block grants, please forward that information to us.
PAGENO="0257"
253
I. CONSOLIDATED FEDERAL AID PROGRAMS
(BLOCK GRANTS):
BACKGROUND AND DESCkIPTION
A. Background
Federal aid to state and local governments has taken several forms over
the past two decades--from categorical grants to general revenue sharing to
block grants. Until recently, whatever the form of federal aid, the amount of
money flowing to the states from Washington, D.C., increased on the average by
15 percent each year. As a consequence, state and local governments became
increasingly dependent on federal resources, especially for the funding of
social programs even though own source income grew significantly and accounts
for about 75 percent of all state government revenues. In the late seventies,
the rate of growth in federal aid to state and local governments began to slow
and in 1982 state and local governments will actually receive less federal aid
than they did in 1981.
The era of rapidly growing federal grants-in-aid began in the l960s with
the proliferation of categorical grants designed by Congress to provide state
and local governments with federal funds earmarked for a wide variety of
narrowly defined programs. Both state and local governments became
increasingly disenchanted with the federal grant-in-aid program, complaining
about: 1) the lack of flexibility to tailor programs to local needs; 2) the
onerous bureacratic requirements of program administration; 3) the federal
government `luring state and local government into starting programs by
providing 100 percent federal funding in the earlier years, but then adding
-3-
99-965 0 - 82 - 17
PAGENO="0258"
254
state match requirements later; 4) increasingly, agency grantees were in the
position of being held accountable to Washington, D.C., more than to state and
local elected officials, 5) state legislatures found themselves by-passed by
state agencies; and, 6) local governments were applying directly to the
federal government for aid.
In an effort to improve state-federal relations the Nixon Administra-
tion, in 1972, introduced General Revenue Sharing (GRS) to provide state and
local governments with federal aid that could go directly into their general
fund and be appropriated at their discretion. State and local government
considered GRS to be the most effective form of federal assistance. In 1980,
however, the program was eliminated for states. -
Coupled with the GRS initiative was the block grant concept. Block grants
can be defined as federal funds which are distributed to state and local
governments to. accomplish a broad range of program objectives. Ideally, from
the view of state and local government, the federal government would attach
few requirements or "strings' to the money so that state and local governments
would be given wide discretion in block grant distribution. HUD's Community
Development Block Grant was one of the first to be formulated, and continues
to be a model of an effective and popular federal grant program.
I. The New Federalism Approach
In ~l98l, the Reagan Administration drafted another alternative f or states
called the "New FederalismTM with the objective to redefine federalism by
providing states with a stronger role in the federal process. Reagan
initially proposed to cor~solidate 85 categorical grants into seven olock
grants, giving the states complete control and responsibility over block grant
PAGENO="0259"
255
expenditures and allowing them the flexibility to identify and address
specific state needs. Nevertheless, block grants are seen by legislatures as
a step backward when compared to the General Revenue Sharing initiative.
2. Federal Aid as a Portion of a State Budget.
According to Census Bureau reports, 1980 combined revenue for the 50
states amounted to $234 billion, and federal aid to state governments was $62
billion. Thus, federal aid to state governments comprises about 25 percent of
a st4te's total budget. This percentage tends to be misleading because it
includes direct payments to individuals, like medicaid and AFDC, and payments
that pass through state governments to local governments. If these
pass-through payments are deducted, federal aid constitutes about 10 percent
of an average state budget. Block grant monies amount to between 2 to 3
percent of that budget, and therefore, represent a very small portion of state
revenue. (However, these percentages vary depending on the fiscal structure
of each state.)
3. Funding Levels.
The National Conference of State Legislatures and the National Governors
Association formulated a policy position that endorsed a 10 percent program
funding reduction f or block grants. This reduction would be acceptable
because federal program administration and overhead would be virtually
eliminated. The actual FY 82 funding level for block grants was reduced
overall by 13 percent, or 22.7 percent if inflation is taken into account.
The original FY `82 funding level designated by the August 13, 1981, Omnibus
Budget Reconciliation Act (P.L. 97-35) was $10.2 billion, which is down from
-3-
PAGENO="0260"
256
the FY `81 level of ~1O.9 billion. However, this amount was changed in
December in the third continuing resolution (P.L. 97-92) to a level of ~.5
billion. This figure may change again when the continuing resolution expires
March 31. It is quite likely that the figure will be lowered since President
Reagan is asking for another ~2.4 billion in cuts in the FY `82 buaget.
(Refer to Table 1 for a block grant sumary.)
3. Features of Block Grants
1. Description
The final block grant product that emerged from Congress and was signed by
the President in August fell short of the expectations of state legislatures.
Reagan's initial proposal was to merge 85 categorical grants into seven
Dlocks, but the final result was the consolidation of only 57 categoricals
into nine blocks. For example, according to OMB's national budget account
system there are 33 categoricals consolidated in one block grant program, nine
consolidatec in another block, and four block grants that each contain only
one program. Three block grants have not yet been handed over to the states
to administer.
The nine block grants are:
1. Alcohol, Drug Abuse and Mental Health
2. Comunity Services
3. Corrmunity Development
4. El~nentary and Secondary Education
5. Maternal and Child Health Services
6. Low tncome Energy Assistance
7. Primary Care
-6-
PAGENO="0261"
Ithie 1
l1CO~K 1310111 SIIMIIAIIY
luck Grant ___________
Alcohol, 11mg Ahusg &
lIental health1
Cuxiiuinity Services1
Coiiuxun ity i)eveiopment
[lementary & Secondary
[dncat ion
liaternal & Child health
Services
low income Inergy Assistance
FY02
Funding
Level
ions)
$ 432.0
$ 3411.0
$3455 ~2
$ 410.4
$ 341.5
$1152.0
.
S Oifference
1081 ~s. FY82
thIlmh)er of
Funding Consolidated
Available Programs
States Par-
ticpating
Match
Required
Expense
Limit
-21.3%
Oct. 1, 1981
3
49
tin
10%
-26.4%
Oct. 1. 1981
I
*
311
thu
5%
late Feb. 19112
1
25-30 est.
Yes
2%
0%
July 1, 1982
33
Sot Yet
Avai table
Ho
Ito limit
0%
Oct. 1, 1981
6
48
Yes
Ito limit
(1%
Oct. 1, 1981
1
AutomatIc
Ho
10%
Transfer-
able
1% to Health
grants
5% to ilmergy.
lead Start &
Older Aver Act
- (.5%
-10.5%
-26.9%
- 5.3%
cJ1
1(10 to (on. Sn
Soc. Svc. I
lea Ith
Primary Care $ 248.4 -23.6% Oct. 1. 19(12 1 Hot Yet Yes Hone 11%
Available Allowed
Prevent ive teal th & (heal Ut 111 .6 - 11.8% Oct. 1 * 191(1 9 411 No 10% 11 to (hat lb
Set vices1
Social Scm ices $2400.0 -19.11% lit. I * 19(11 2 Automatic tin Ho limit hto( to lb~a I tIm
iransfer .01(1 I omrqy
I. A set-as ide is stipulated ranging from IX to ISO of the Iota I block grant funds (percentage rate helmeuls on the block grant) wIt hi will
me mlistributcd by the federal govenmnnt.
2. States cm administer 30% of toi.aI ammnmont provided.
PAGENO="0262"
258
8. Preventive Health and Health Services
9. Social Services
The individual funding level for the nine blocks ranges from $82 million
to $2.4 billion. Six of the blocks are below $500 million, and when that
amount is allocated among the 50 states the final grant to each state is small.
The Reconciliation Act purposely side-stepped specifying which branch of
state government would have administrative authority over block grants,
allowing each state to make that determination.
General features shared by block grants are:
. An annual report or application must be filed by the state with
the appropriate federal agency outlining program objectives and
methods for distribution of funds.
* Public hearings must be held providing input into the state block
grant application prior to submission. This requirement was
waived for FY `82 because of the short notice given to states to
implement the programs.
* Audits must be performed at least every.two years by the states,
ana federal auditors must be allowed access to financial records.
The federal government is not mandating any federal audit
management practices; instead, they are allowing the states to
formulate their own audit procedures.
* A 5 to 10 percent fund transfer is allowed among five of the block
grants.
* A state administrative exoense limit is set for five of the block
grants, ranging between 2 to 10 percent of the funding level. In
the case of the Primary Care Block Grant, no federal monies can be
used to cover administrative expenditures.
2. State Implementation
A significant feature of block grants is that state legislatures have a
new opportunity to appropriate all federal funds. Some state legislatures
already had in place a mechanism appropriating federal funds and block grant
implementation was easily accommodated into this process. Other states are
PAGENO="0263"
259
using the opportunity presented by block grants to take the first step in
developing oversight of federal funds. Few states have been involved in
appropriating categorical monies. Part II of this paper describes state
legislative action regarding block grants to date.
The majority of states have chosen to administer the block grants
themselves in 1982, rather than have the federal agencies which were
responsibile for the categorical grants maintain program management. Two
programs--the Social Services Block Grant and the Low Income Energy Assistance
Block Grant--were automatically transferred to state governments on October 1,
1981, bypassing state program acceptance. The Community Development grant is
expected to be available in late February 1982, and at this point 25 to 30
states have expressed an interest in participation. It should be noted that
of the total funding figure shown in Table 1 for the Community Development
Block, the states can administer only 30 percent of this amount. Two other
programs, the Primary Care and Education Block Grants will not be available
for state implementation until FY 83.
States which did not elect to accept any particular block grant by
October 1, 1981, could take over the programs at the beginning of the three
remaining quarters of FY82--January 1, April 1, or July 1. As of
January 1, 1982, the tally of participating states was: 49 states accepted
the Alcohol, Drug Abuse and Mental Health Block; 48 states took over the
Maternal and Child Health Services Block; 48 states opted for the Preventive
Health and Health Services Block; and only 38 states elected to take on the
Community Services Block Grant.
-9-
PAGENO="0264"
260
II. CONSOLIDATED FEDERAL AID PROGRAMS
(BLOCK GRANTS)
AND STATE LEGISLATURES
During 1981, almost half the 50 state legislatures enacted laws increasing
their involvement in the oversight of federal funds. While most of these
leg~slatures were acting because of federal grant consolidations, (block
grants) legislatures in New York, Massachusetts, Iowa, and Oklahoma moved to
comprehensively strengthen their roles regarding incoming federal funds.*
Even before 1981, many legislatures were involved in some oversight of
federal funds, but only a handful were aggressively active in the
appropriation of federal monies. Clearly, legislatures in 1982 find a new
opportunity for involvement in the consolidated federal grants programs
because of grant discretionand the lack of long-standing procedures developed
by federal agencies and state executive offices.
During November 1981, NCSL surveyed the 50 states to find out what
mechanisms the state legislatures have in place to control the expenditure of
block grant funds. The survey responses indicated that 23 states had
instituted new or special legislative procedures to deal with block grants
(see Appendix 1). Most coimrnnly, states passed legislation requiring some
form of legislative sign off as a prerequisite to the expenditure of block
grant funds.
*The laws enacted in New York, Massachusetts, Iowa, and Oklahoma are
discussed in a limited way in this paper. More details are available from
those legislatures or from NCSL Fiscal Affairs staff.
-10-
PAGENO="0265"
261
The survey also showed that the following are the major ways in which
state legislatures are exercising control over block grant distributions (see
Table 2):
* through the appropriations process;
* by requiring formal legislative "approval' (as opposed to
appropriation) prior to the expenditure of block grant funds;
* through interim control over the receipt and expenditure of federal
funds;
* through legislative review of federal grant applications; an~
* through special legislative corruiiittees set up to monitor block grant
* implementation.
Only four states reported that their legislatures did not use any of these
mechanisms to control block grant distributions.
A. Legislatures in a Strong Position to Control Block Grants
A number of states appear to be in a particularly good position to oversee
and direct block grant distributions. Michigan, Louisiana, and Maine not only
have a tradition of active legislative involvement in the appropriation of
federal funds, but also have recently passed legislation to assure legislative
participation in the block grant implementation process. In 1981, Michigan
passed legislation mandating that the legislature be provided with detailed
information on the application for and receipt of federal funds, and also
directed that expenditures from federal revenues be the lesser of the amount
appropriated in the budget act or the amount paid in. Louisiana established a
process whereby all block grants must be reviewed by a Joint Legislative
Corrznittee on the Budget and set up a subcommittee on block grants. In its
1981 session, the Maine legislature enacted a law under which any change from
federal categorical to block grants cannot be implemented at the state level
without approval by the legislative branch of government. -.
-11-
PAGENO="0266"
262
MAJOR LEGISLATIVE BLOCK GRANT OVERSIGHT MECHANISMS*
__________ ______________ (November 1981) ____________ ___________
Appropriation
of Fed. Funds Requiring Interim Special
State (Other than Legislative Legislative Grant Block Grant
Open-Ended `Approval of Control of Application Oversight
_________ Appropriations) Block Grants Fed. Funds Review Committees:
AMA ________________ _______________ _____________ __________
~KA ____________ ___________ __________ ________
DNA _______________ ______________ ____________ __________
NSAS _______________ ______________ ____________ __________
FORNIA J ______________ _____________ ___________ _________
RADO _____________ ____________ L__________ _________
IECTICUT _______________ x T x __________
I4ARE ______________ x x
IDA j~ - x x
GIA - x _________
II _________________ _______________ ____________
p - _____________ ____________ _________
NOLS I ______________ x __________
ANA ____________ x x
______ ________ x x
AS _____________ x _________
liCK? ______________ x x
SIANA - ___________ ________
_____ x x ____
LAND - - ____________ - -r ________
ACHUSETTS _____________ (F I x
IGAN ______ (F _____
ESOTA _____________ I x _________
ISSIPPI - ] x _________
OURI - _____________ 3 ____________ _________
ANA -- j x ____
ASK.A _______ ______ 3 x x
DA x x x _________
NAMPSM IRE x ______________ ____________ __________
JERSEY _______________ ______________ ____________ x
MEXICO _______________ ______________ j x x
YORK x ______________ 3 (F) x
H CAROLINA x x x _________
H DAKOTA x _____________ ____________ _________
____ .1 ______ _____ x ____
HOMA _______ x x x
ON x ______________ x x
SYLVANIA x _____________ (F) _________
E ISLAND _______________ ______________ ____________ x
H CAROLINA x _____________ x x
HOAKOTA j x ________ _______ ______
ESSEE j _______________ x x __________
S x ____ ___ ___
ONT ______________ _____________ ____________ _________
INIA ______________ _____________ ___________ _________
INGTON I ________________ _______________ x __________
VIRGINIA I ______________ _____________ ____________ _________
ONSIN I _______________ ______________ ____________ __________
ING ~ x ______________ ____________ __________
TOTAL I 36 7 27 16
*For further clarification 01' column headings, see accompanying text.
(F) Full-time legislature
-12-
PAGENO="0267"
263
The Montana legislature has already demonstrated its determination to be a
full partner with the executive branch in the control of federal funds.
During its last regular session, the legislature directed that all olock grant
funds received prior to January 3, 1983, require a special session of the
legislature prior to expenditure. A special session was subsequently held In
November 1981, at which time the legislature reviewed detailed budget plans
for the expenditure of block grant funds and appropriated block grants on an
agency basis. In order to maintain its control over any further block grants
that might be made available to the state before the legislature's next
regular session, the legislature recessed rather than adjourning after its
November special session.
Several states have only recently put themselves In a position to exert a
high degree of control over federal (including block grant). funds. New York,
for instance, passed legislation in 1981 that allows the legislature to make
subprogram specific appropriations of federal funds in a separate federal
funds appropriations bill and requires the state comptroller to publish
detailed monthly, quarterly, and annual reports on the sources and uses of
funds, including federal funds. Massachusetts also passed sweeping
legislation last year dealing with its budget procedures. As a result, for
the first time this year, the Massachusetts legislature Is appropriating
federal funds and has binding review authority over federal grant applications.
Iowa, which has never been actively Involved In the oversight of federal
funds, passed legislation in 1981 requIring that block grants be deposited In
- a special fund subject to appropriation by the legislature, and that the
legislature receive notification of all applications for federal funds at
least 60 days prior to submission of the application. Texas attached a rider
-13-
PAGENO="0268"
264
to its FY `81-83 appropriations bill requiring block grant funds to oe
allocated as they were under categorical grants. And specific appropriations
of federal block grant monies were made to programs by the Washington
legislature during its last regular session, although more flexibility *was
provided to the executive in special session.
Several legislatures that have not passed any special legislation dealing
with their ability to control block grants are nonetheless in a good position
to exercise aggressive oversight. Alaska, Florida, and Oregon are examples of
states that have had a relatively long tradition of legislative involvement in
the oversight of federal funds. All three states appropriate federal funds.
Additionally, the Alaska legislature has, for many years, played a strong
advisory role during the interim with respect to the expenditure of federal
funds, Florida has a statewide accounting system to track and organize federal
funds information, and Oregon's legislative Emergency Board has had the
statutory authority, since 1963, to approve/disapprove grant applications and
appropriate unanticipated federal funds.
B. Legislative Mechanisms to Control Block Grants
The sections that follow look in greater detail at the five primary
legislative mechanisms used to oversee block grant distributions: 1)
appropriation of federal funds; 2) approval/disapproval authority over block
grant expenditures; 3)~ interim control over federal funds; 4) binding review
of grant applications; and 5) special block grant oversight committees.
1. Legislative Appropriation of Federal Funds
The appropriations process can be used by state legislatures as a powerful
-14-
PAGENO="0269"
265
tool to control block grant distributions. Using this mechanism, legislatures
may specify in their appropriations bills or in accompanying documents exactly
how block grant funds are to be spent, or may hold off on appropriating block
grant funds until the executive branch makes specific commitments regarding
expenditure plans.
Unfortunately, uncertainty regarding the nature, amounts, and timing of
block grants because of the Congressional budget process has somewhat
frustrated attempts by legislatures to use the appropriations process as an
effective means of directing block grant distributions. Part-time
legislatures and states with biennial budgets have found themselves in the
position of having to pass major appropriations bills in the absence of
reliable information about how much money their states can expect over the
next year or two, when funds will be available, and for what purposes the
funds may be spent.
Responses to the NCSL survey indicated that 36 state legislatures
appropriate federal funds on either a lump sum or program specific basis; the
other 14 either do not appropriate federal funds or make open-ended
appropriations (see Table 1). To what extent those states with federal funds
appropriations authority will choose to appropriate specific amounts of each
block grant for designated purposes is as yet unknown. Many of these states
have in the past, however, earmarked incoming federal funds for specified
programs and/or prohibited the use of federal funds for certain ourposes.
Presented below are excerpts from the recent appropriations bills of
several states that suggest different ways in which legislatures have used the
appropriations process as a means of directing federal funds expenditures.
California's 1981 appropriations act includes a number of provisions that
-15-
PAGENO="0270"
266
detail legislative directives as to how federal as well as general revenue
funds are to be spent. The following excerpt is from SB 100 (1981), page 239:
518-001--For support of Department of Social
Services 46,130,498
Schedule:
(a) 100000--Personal Services . . . 88,497,668
(b) 300000--Operating Expenses and
Equipment 40,097,733
(c) 443613--Tort Payment (Attorney
Fees) 17,174
(d) For Transfer to the Health Care
Deposit Fund 3,031,136
(e) Amount Payable from the Health
Care Deposit Fund -7,397,334
(f) Reimbursements -839,199
(g) Amount payable from the Social
Welfare Federal Fund (Item 518-
001-866) -76,538,060
(h) Unallocated reduction -738,620
518-001-866--For support of Department of Social Services
to be transferred to Item 518-001-001, payable from the
Social Welfare Federal Fund after transfer from the
Federal Trust Fund 76, 538,060
3. Provided further, that $1,779,558 of $2,372,744 in General
Fund, $4,163,895 of $5,550,527 in federal funds, and
$156,707 of $208,942 in reimbursements appropriated by this
act in support of the Statewide Public Assistance Network
(SPAN) shall not be expended sooner than 30 days after
submission to the Chairperson of the Joint Legislative
Budget Committee and the chairperson of the committee in
each house which considers appropriations . . . of an
amended feasibility study report (FSR) . . . which does
each of the following: . .
d) Contains a detailed plan for recouping the state and
federal share of anticipated savings. . .
Missouri makes specific federal funds appropriation.s to programs and often
includes special directives within its appropriations acts as to how funds are
to be administered. The following is taken from HB 9 (1981), page 50:
-16-
PAGENO="0271"
267
Michi~gan also makes subprogram specific appropriations of federal funds
an~ includes special provisions in its appropriations act. Additional ly,
within each appropriation, line items are separately funded, although federal
funds are not broken out at this level from other sources. The following
excerpts are taken from Act No. 35 (1981), pages 9 and 20.(?):
ASSISTANCE PAYMENTS FIELD STAFF
Full..time equated classified
positions 5,625.0
Salaries and wages..~5,525.o FTE
positions
Longevity and insurance
Contractual services, supplies,
and materials. .
Federal audit adjustment
GROSS APPROPRIATION
For Fiscal Year
Ending Sept. 30, 1982
$106, 979 ,900
7,994,0O0
7,946,000
3,500,000
$1 26,420,000
Section 9.565. To the Department of Social Services
For the Division of Family Services
For the purpose of funding benefits except
hospital and nursing facility care under Title XIX of the Social
Security Act as provided by law and with the intent to adjust fees. to
insure maximum provider participation, including professional fees
for pharmacists of $2.50 per transaction.
federal block 9rants received by the Department of Social
Services, snail be administereø under the oversight of~i
ccnm~ittee composec of five memoers of the House of
Represencat,ve~, . . . five memoers of the Senate .
Director of the Depa~ment of Social Services ana ~e
Director of the Division of Family Services, one of wnich
~1i act as cnairman. (Emphasis ad~ea.)
From General Revenue Fund . . . $36,834,064
From Federal Funds 51 332 952
Total (0 F.T.E.)
PAGENO="0272"
268
Appropriated from:
Federal Revenues:
HHS--social security act (titles IV,
XIX, and XX) 43,341,300
AGR--food and nutrition service,
food stamp program 6,202,900
State general fund/general purpose 76,875,800
Sec. 78. The department of social services shall seek federal
approval to implement a work program for recipients of aid to
families with dependent children in addition to the requirements of
the federal work incentive program. The work program requirements
shall include comunity work projects, education, and job training
programs.
Pennsylvania appropriates federal funds in a separate, federal
appropriations act. In its 1981-82 appropriations act, the legislature chose
to make lump sum appropriations of block grant funds. This can be seen in the
following excerpt taken from HB 1290 (1981), page 50:
VI. Primary Care Block Grant
(1) To the Department of Health - For
planning and determining the applicability of
assuming the administration of allotments and
other health services delivery responsibilities
associated with the Corrmiunity Health Centers,
October 1, 1982 $150,000
VII. Low Income Emergency Energy
Assistance Block Grant
To help lessen the impact of the high
cost of energy on low income families and
individuals.
(1) To the Department of Public Welfare
to help lessen the impact of the high cost of
energy on low income families and individuals . . . . $119,000,000
Ohio also appropriated block grants as blocks in the schedule of federal
grants that was included in HB No. 552 (1981). The example below is taken
from page 102:
-18-
PAGENO="0273"
269
Department of Economic and Community Development.
Administration D Action FY 1980 2,500,000
10-604 `Mini-Computer' MIS 9,168
10-604 Statistical Analysis Center 43,750
10-611 Rome Energy Assistance Block Grant 61,070,800
10-612 Comunity Services Block Grant 9,103,500
10-613 Coimnunity Development Block Grant 20,240,000
10-614 REAP Weatherization 10,777,200
Total Department of Economic and
Community Development $111,173,470
Although the Maryland legislature is constitutionally prohibited from
increasing the Governor's budget recommendations, within this constraint
Maryland has been active in the oversight of federal funds appropriations. In
reducing the Governor's budget, the Maryland legislature details exactly which
programs should be cut and how. An example of this is seen in the following
excerpt from the 1981 `Report of the Chairman of the Senate Budget and
Taxation Committee and Rouse Appropriations Committee," page 85:
32.01 .04.
06--Corrinunicable Disease
GE
1,273
FE
5,759
.09
Supplies and Materials 1,273
Off ice Supplies--Reduction
of funds to FY 1980 actual
plus 10% inflation.
Venereal Disease--Project 606 5,759
Reduction in allowance based
upon lack of justification
f or large increase in
medicine and drugs (agreed
to by the Department).
Total General Fund Reduction
Total Federal Fund Reduction
Total Reduction, All Funds
Total Position Reduction
FE
167,797
15,262
183, 059
3
-19-
99-965 0 - 82 - 18
PAGENO="0274"
270
2. Legislative Approval of Block Grant Expenditures
Seven states passed legislation in 1981 requiring some form of legislative
"approval (as opposed to appropriation) of block grant funds as a
prerequisite to their expenditure. In most states where such legislation was
passed, it passed because of concern about how the executive might distribute
block grant monies received while the legislature was not in session. Where
legislative approval is a prerequisite to the expenditure of block grant
funds, the executive branch is usually being asked to supply the legislature
with a detailed plan for block grant implementation.
Nevada passed SB 619 in 1981, whIch requires Interim Finance Committee
approval before block grants may be allocated. Maine also now requires, under
a law passed in 1981, that any change from federal categorical grants to
federal block grants cannot be implemented on the state level without
legislative approval.
Oklahoma's SB 326 (passed over the Governor's veto in 1981) states that
"the Director of State Finance shall not process any warrants or claims on any
federal financial assistance received by a state agency, board or commission
unless or until the Director of State Finance has received a written
authorization from the Speaker of the House of Representatives and the
President Pro Tempore of the Senate approving the federal financial
assistance. . ."
Louisiana established a procedure whereby all federal funds received in
the form of block grants must be reviewed by the Joint Legislative Committee
on the Budget where federal funds are newly incorporated in the state budget.
Connecticut's PA 81-449 (1981) requires legislative approval for expenditure
of block grants. -.
-20-
PAGENO="0275"
271
North Carolinas MB 1392 (1981) directed that all federal block grant
funds received by the state between August 31, 1981, and July 1, 1983, be
received by the General Assembly. Finally, Tennessee passed SB 997 in 1981,
which requires the Comissioner of Finance and Administration to submit to the
Finance, Ways and Means ConTnittee chairmen a plan f or their acknowledgement
for implementing block grants.
3. Interim Control of Federal Funds
Most state legislatures are part time and a number have biennial budgets.
Thus, the question of control over block grant funds received during the
interim arises, especially where the grant was either unanticipated or came in
an amount significantly above or below that anticipated by the legislature
during its last regular session. Clearly, the seven states discussed in the
previous section have the means to exercise strong oversight during the
interim through the requirement of legislative approval of block grants prior..
to expenditure.
In addition, the NCSL survey showed that ten states have in place
procedures under which the legislature has binding control over the receipt of
unanticipated federal funds. In seven states-..Oelaware, Oregon, South
Carolina, Vermont, Kansas, Mississippi, and Ohio--either a legislative
comittee or a joint legislative-executive committee has approval/disapproval
authority over the receipt of federal funds during the interim.
Iowa's requirement under SF 563 (1981) that all block grants must be
appropriated gives it interim control over block grant funds, as did Montana's
MB 500 (1981), which required a special session of the legislature for block
grant appropriations during the 1981-83 interim. Illinois controls interim
PAGENO="0276"
272
federal funds receipts through a provision that requires an agency to seek a
supplemental appropriation except under specified circumstances.
Ten state legislatures reported in the NCSL survey that tney play an
advisory role during the interim in reviewing the receipt and expenditure. of
federal funds, including Arkansas, New Mexico, Florida, Alaska, Nebraska,
Kentuc~ç~, Washington, Minnesota, Indiana, ar~d ~ (Pennsylvania,:
Massachusetts, New York and Michigan do not have special interim procedures as
they are full-time legislatures.)
Control over the receipt and expenditure of block grant funos during the
interim is increasingly important to legislatures in the face of the
continuing uncertainty about which block grants will oe made available to the
states when and for what purposes.
4. Grant Application Review by the Legislature
Legislative involvement in the review and approval/disapproval of grant
applications can provide state legislators with an `early-warning system"
concerning problems which may arise over the receipt and expenditure of
federal grants. As part of the NCSL survey, state legislatures involved in
grant application review were asked to cite the benefits of such involvement.
Some of the benefits cited were:
"Allows the legislative staff to identify potential problems with
changes in federal funding before they occur.'
"Gives the legislature prior knowledge of any obligations of state
funds."
"Increases awareness by the legislative fiscal officers of where the
money is going."
"Assures the legislature that federal grants are consistent with
state priorities."
-22-
PAGENO="0277"
273
Specific grants objectionable to the legislature have been refused
by the governor.
The continued ability of state legislatures to use grant application
review as an early-warning system in the block grant process will depend on
the level of detail required by the federal government in block grant
applications and/or the kind 0f information regarding expenditure plans
legislatures can require the executive branch to provide curing grant
application review.
Six states reported in the NCSL Survey that they have approval/disapproval
authority-over the federal fund grant applications of state agencies. In
Oklahoma, Oregon, Massachusetts, South Carolina, and Vermont the legislature
has its own committee which approves/disapproves grant applications. In
Delaware it is a joint executive-legislative committee which has this
responsibility. Under an Oklahoma bill passed in 1981, a newly created Joint
Committee on Federal Funds has approval/disapproval authority over federal
fund applications. By law, along with the actual application, agencies must
submit to the committee a one-page notice of intent that details program
objectives, the agencies and/or program(s) affected by the application, the
agencies' intentions should federal funds be reduced or terminated, and what
the state is obligated to do in accepting federal funds.
Other state legislatures have review and comment, but not
approval/disapproval authority over federal funds, including Florida, Iowa,
Indiana, Kentucky, Nebraska, New Jersey, New Mexico, New York, Rhode Island,
and Utah.
-23-
PAGENO="0278"
274
5. Special Legislative Committee Overs~g~
During 1981, ten states created legislative committees or subcommittees
solely for the purpose of monitoring feaeral funds in general and block grants
in particular. Florida set up a Select Committee on Federal Budget Cutbacks;
Louisiana's House Appropriations Committee established a subcommittee to
review block grants; New Jers!y's Joint Appropriations Committee established a
Subcommittee on Federal Aid; and Oklahoma created a Joint Committee on Federal
Funds.
In Missouri, the 1981 appropriations bill for social services included a
directive that block grants received by the Department of Social Services be
administered under the oversight of a joint legislative-executive committee.
Alabama and New Mexico set up interim committees. California created an
advisory committee for the allocation of block grants, and North Carolina
established a Joint Legislative Committee to Review Federal Block Grants.
Finally, Ohio created a Joint Legislative Committee on Federal Funds to
monitor the receipt and expenditure of federal funds and to review all federal
grant programs.
How effective these special committees will be in overseeing and
influencing the distribution of block grant funds will undoubtedly vary from
state to state. What is already clear, however, is that those states which
have established special block grant committees have created for themselves an
opportunity to focus attention, in one committee, on the problems associated
with block grant implementation.
The foregoing review shows that a number of legislatures have
mechanisms/procedures in place to allow them to exercise control over block
-24-
PAGENO="0279"
275
grant expenditure decisions at the state level. It remains to be seen,
however, to what extent legislatures will choose to become active in the block
grant allocation process. Moreover, the ability of legislatures to play a
significant role in the process will be dependent not only upon the
mechanisms/~rocedures they have in place for block grant oversight, but also
on the timing of block grant receipts in relation to legislative sessions, the
access legislators have to detailed information concerning potential block
grant uses, the sophistication of existing in-state systems for tracking the
flow of funds, ano the time available to legislators and their staffs to
analyze and oversee block grants.
C. Recommendations Concerning Legislative Oversight of Block Grants
In the 1980 publication, A Legislator's Guide to Oversight of Federal
Funds, NCSL's Fiscal Affairs and Oversight Committee made a series of
recommendations for state legislative oversight of federal funds. These
recommendations are reproduced in Appendix 2.
The Fiscal Affairs and Oversight Committee recommendations were primarily
designed to address problems associated with legislative control over
categorical grants. In addition to these recommended actions, legislatures
may also wish to consider some of the following alternatives in order to deal
with the special oversight problems raised by block grants:
1. Making six or nine month appropriations which would allow legislators
to appropriate the balance of funds in a subsequent session when they
know exactly what funds are available. (Minnesota did exactly this
in 1981; see Appendix A for discussion of Minnesota's actions.)
2. Passing legislation which requires that where actual program funding
comes in at some given percentage (say 5 or 10 percent) less than
appropriatec, the executive shall receive legislative approVäTfor a
plan for handling such a funding reduction.
-25-
PAGENO="0280"
276
3. Including contingency plans for budget cuts in appropriation bill
footnotes or in other documents expressing legislative intent.
4. Upon receipt of a block, requiring legislative approval of an
expenditure plan for that block, as a precondition to expenditure.
5. Delegating to an interim committee appropriations authority over
block grants that are anticipated but for which federal funding
levels are undetermined, or requiring a special session for the
appropriation of such funds. .
6. Creating joint legislative-executive committees for the administra-
tion of block grants.
-26-
PAGENO="0281"
277
III. PROBLEMS STATE LEGISLATURES HAVE WITH BLOCK GRANTS
The Reagan Administration's original block grant proposal offered the
states more discretion in program administration and fund distribution than
did the blocks actually passed by Congress. Some critics contend that several
of the block grants were misnamed and are in~ fact better termed categorical
grants because of the strings" that remain attached to them.
In the first round of new block grants, state legislatures encountered
several problems. Specifically:
1. Insufficient lead time for legislative review and appropriation
of block grants;
2. "Strings" attached to block grants;
3. Reduced funding levels;
4. Uncertainty in federal funding levels;
5. State match requirements;
6. Redefining the federal-state relationship.
1. Insufficient Lead Time for Legislative Review and Appropriation. Six
block grants were made available for state administration on October 1, 1981,
the beginning of the federal fiscal year. Most state legislatures were not in
session at that time, and, in fact, were well into their FY `82 fiscal years.
Forty-six states begin their fiscal year on July 1; seven state legislatures
with biennial sessions do not convene again until 1983. Consequently, state
legislative involvement in the first round of state administration of the new
block grants tended to be limited or nonexistant. This meant that the door
-27-
PAGENO="0282"
278
was open for the governors to accept the block grants on behalf of the states
and to take the lead in block grant implementation.
2. "Strings' Attached to Block Grants. Block grants were sold to the
states as a form of flexible federal aid with the understanding that states
could distribute the funds according to program priorities ~~et by the states.
The final legislative version attached numerous strings to some of the
blocks--maintaining their categorical nature. For example:
* The Alcohol, Drug Abuse and Mental Health Services Block Grant,
required that every conmnunity mental health center that was
funded in FY `80 also receive block grant funding in F? `82. In
addition, the federal regulations require that 35 percent of the
funds received by the state be earmarked for alcoholism programs -
and 35 percent for drug abuse programs. The remaining funds are
discretionary.
~ The Preventive Health and Health Sevices Block Grant mandates
state. funding of all FY `81 grantees that provided emergency
medical services. The grant also stipulates that: FY `82 state
funding for the hypertension control program (one of the former
categorical grants merged into this block) be at least 75 percent
of the 1981 funding level; FY `83 state funding at least 70
percent of the 1981 level; and FY `84 state funding at least 60
percent of the 1981 total.
~ The Maternal and Child Health block grant stipulates a set aside
of 15 percent of the amount appropriated for 1982, and 10-15
percent for F? `83 to be used by the Department of Health and
Human Services for "special projects." These are identified as
the Hemophilia and Genetic Disease programs that will be funded
directly by HHS. The states could apply to receive the funds but
would have minimal discretion in awardfng the subgrants.
* The Coninunity Services Block Grant requires that at least 90
percent of the funds be distributed to political subdivisions,
nonprofit con~nunity organizations. or migrant and seasonal farm
worker organizations. Five percent is allowed for program
transfer and 5 percent is allowed for administrative expenses.
. A maximum cap of 15 percent is set for residential weatherization
programs for funds received through the Low Income Energy
Assistance Block Grant.
-28-
PAGENO="0283"
279
* Under the Education Block, at least 80 percent must! be committed
to the local level and 20 percent can be reserved for state use.
The examples provided demonstrate the misnomer of block grants: initially
created to provide broad program discretion, they instead earmark the funding
to highly specific program areas.
3. Cuts in Block Grant Funding Levels. State government leaders offered
to accept a 10 percent across-~the..board cut in block grant funding in return
for greatly increased state control over the allocation of federal funds. It
was reasoned that a 10 percent cut could be absorbed because of savings
arising from a reduction in the federal bureacracy.
But states were given a 22.7 percent real reduction which meant cutting
into the substance of the programs. Most states are currently dealing with
budget reductions and revenue shortfalls and are in no position to subsidize
programs that were originally initiated on the federal level and are now being
shifted to the states.
4. Uncertainty in Federal Funding Levels. The President and Congress are
continuing to talk about further reductions in block grant funding.
Uncertainty about the amount, timing and availability of federal funds make it
difficult for the states to prepare their own budgets.
The federal government has not yet passed a final budget bill for FY `82.
Different block grant funding levels have appeared in the Reconciliation Act
that was passed in August, and the three continuing resolutions that were
passed in October, November, and December. The funding level may change again
when the third continuing resolution expires at the end of March. This
-29-
PAGENO="0284"
280
uncertainty at the federal level creates serious planning problems for state
fiscal officers and forces them to guess at what the final feceral aic figures
will be. ideally, the states should be able to have federal budget figures at
least one year in advance so that the states could adapt their budgets
accordingly.
The cycle will begin again this summer as most state legislatures complete
their FY. `83 budget work before Congress releases the federal FY `83 budget.
5. State Match Requirements. Three block grants require a state match
which has been a typical characteristic of categorical grants. The match
requirements detract from the intent of block grants and create additional
financial obligations for the states. The requirements are as follows:
* Maternal and Child Health: the state match requirement is three
sevenths of the federal funding level.
* Primary Care: in FY `83, the state match is 20 percent of the federal
funding level and in FY `84, the state match is 33 percent.
* Community Development: a state match of 10 percent is required.
(This match can be made with in-kind contributions.)
6. Redefining the Federal-State Relationship. President Reagan's
original objective in his block grant proposal was to create a new national
public policy initiative which would allow states to direct the allocation of
federal aid to programs identified by the states as essential services. For
the states to do this,. funding flexibility was a critical element. The block
grant program that emerged from Congress failed to provide this new
partnership role for state governments. The federal government insisted on
earmarking a large percentage of the block funds which limited the
discretionary powers that were to be transferred to the states.
Nevertheless, block grants are a step in the right direction in shifting
responsibility to-~states, but as the block grant program presently stands, it
falls short of a new comprehensive state-federal policy.
-30-
PAGENO="0285"
281
IV. BLOCK GRANT OUTLOOK FOR FY `83
The FY t82 block grant initiative added five newly created block grants to
the four block grants already in existence to form a new public policy on
state-federal relations.
In the Presidents FY `83 budget, changes are proposea in three existing
block grants. In addition, there are eight totally new blocks which
consolidate over 40 categorical grants.
The three block grants that will be consolidating additional categorical
programs are: -
1. Low Income Energy Assistance. (Adds Emergency Assistance.)
2. Primary Care. (Adds migrant health, black lung clinics, and
family planning.)
3. Services for Women, Inf ants and Children. (Formerly Maternal
and Child Health--adds Women, Infants, and Children program
(WIC)).
The eight new proposed block grants are:
1. Child Welfare
2. Combined Welfare Administration
3. Vocational and Adult Education
4. Education for the Handicapped
5. Training and Employment
6. Rehabilitation Services
7. Rental Rehabilitation Grants
8. Food and Nutrition (only available for U.S. Territories)
-32-
PAGENO="0286"
282
The funding level for all 17 proposea and actual block grants was $18.4
billion for FY `82, while the FY `83 proposed funding level is $15.5 billion.
This represents a funding reduction of 15.7 percent, ignoring the purchasing
power lost to inflation.
Just comparing the funding levels of the present nine block grants from F?
`81 prior to Reagan's "New Federalism" to the proposed F? `83 levels, shows a
decrease of 17.4 percent, or 34 percent with inflation factored in. This
means that to maintain current services, states will be forced to supplement
the programs with state revenues~ As a recent NCSL fiscal survey points out,
30 states in F? `82 are facing a balance of 1 percent or less, indicating that
state budgets are in poor shape to be able to pick up new programs.
President Reagan also proposed a "Revenue Turnback' program for the states
which would "turn back" to state governments over 125 categorical and
entitlement programs along with a federal funding source over a transition
period from 1984 to 1991. As it currently stands, block grants would be
included in this transfer. The problem that arises is that all these programs
will face the federal budget axe before being released to state
administration. This will put political pressure on state governments to
maintain the current service levels since prior federal aid practices created
a large constituency for these social programs which now will be inherited by
the states. This federalism proposal could have serious consequences for the
health of state budgets.
.33...
PAGENO="0287"
283
APPENDIX 1
Description of Legislative Procedures Adopted in
Response to Block Grants and/or Federal Fund
Cutbacks, During 1981, By State
Alabama. During its 1981 session, the Alabama legislature passed two joint
resolutions which dealt with block grants. SJR 19 created an interim
legislative committee to study federal block grants and SJR 215 expanded the
scope of one of the legislature's select joint committees, "to study the state
medicaid programs so as to provide that said committee shall investigate and
report on the impending impact of federal block grants to operate state health
and welfare programs."
California. Legislation was passed in California which established a joint
T~j1s1atT~ie-executjve advisory committee for the allocation of block grant
funds, not to go out of existence until July 1984.
Connecticut. To assure its involvement in the allocation of block grant
funds, Connecticut passed PA 81-449 which stated that, during FY `81-82:
- State funds may not replace cut federal funds without legislative
approval.
- Legislative approval is required before the expenditure of block grant
funds.
- Any modification of funding for programs necessitated by reduction in
federal funds can occur only if there is legislation that allows this.
Florida. During 1981, the Florida legislature formed a Select Committee on
Fedei~ãT Budget Cutbacks and developed a general policy statement and detailed
guidelines which were used by the Senate Appropriations Committee in writing
the 1982 Senate Appropriations Bill.
Illinois. A legislative resolution directed the Commission on
Intergovernmental Cooperation to hold public hearings during this past summer
to advise the legislature on block grant implementations. The Comission
submitted a report to the General Assembly in October which made the following
recommendations:
- Creating a trust fund for each block grant so that program growth or
decline can be monitored and evaluated.
- Creating a permanent new Block Grant Board to address long-range
programmatic and administrative oversight responsibilities of block
grants.
-34-
PAGENO="0288"
284
- For the interim, until the oversight boaro is established, the
Commission on Intergovernmental Cooperation will submit monthly reports
to the General Assembly on the status of all block grants.
Until these recommendations are acted on by the legislature, block grants will
be handled through the normal appropriations process.
Iowa. In passing SF 563, the Iowa legislature made clear its intention to
take an active role in the control of federal block grant funds. SF 563
requires the following:
- Block grants must be deposited in a special fund subject to
appropriation by the legislature.
- The governor must include with the budget a statement of federal funds
not included in the budget for the previous biennium and anticipated
block and categorical grants.
The budget must indicate federal funds to be used, the programs to which
they will apply, and the necessary state match.
- The legislature must be alerted to all federal grant applications at
least 60 days prior to submission of the application.
Kansas. The legislature appropriated ~0 for health and social services block
grants. By establishing such a *limitatipn the Kansas Finance Council (a joint
legislative/executive body) can increase expenditure limitations if block
grants occur.
Louisiana. The Louisiana legislature instituted a requirement that federal
funds received in the form of blocks be reviewed by the Joint Legislative
Committee on the budget, where federal funds are newly incorporated into the
state budget. The Louisiana House Appropriations Committee also established a
subcommittee to review block grants.
Maine. In 1981, the Maine legislature enacted a law under which any change
rrom federal categorical grants to federal block grants cannot be implemented
on the state level without recommendations from the committee having
jurisdiction over appropriations and financial affairs and approval by the
legislative branch of state government.
Maryland. Standing committees in the Maryland legislature have held hearings
on federal fund cutbacks and the legislature has been involved in the review
of changes in state regulations resulting from federal fund reductions.
Massachusett~. Unoer a law passed in 1981, the MassachusettS legislature
~iä~tly increased its oversight of federal funds. All federal funds received
by the state must now be deposited in a special General Federal Grants Fund,
subject to appropriation by the legislature, except under certain
circumstances. ~dditional1y, the legislature must be notified of all federal
-35-
PAGENO="0289"
285
grant applications at least 30 days prior to submission. Among other things,
the notification must include a detailed fiscal statement and a description of
the substance of the applications. Finally, the legislation specifies reports
that state agencies must regularly make to the legislature concerning federal
funds.
Michigan. Three bills were passed last year in Michigan dealing with
legislative oversight of block grants. SCR 355 required that all state
agencies inform the legislature of applications for and the receipt of federal
block grants and directed the governor to set forth in detail in the budget
the proposed expenditures of federal block grant funds. Under PA 30, the
department of management and budget must submit to the legislature an annual
report on federal assistance. And PA 18 declared that, if appropriations are
made from federal revenues, the amount expended shall not exceed the amount
appropriated in the budget act or the amount paid in, whichever is the lesser.
Minnesota. The Minnesota legislature passed a bill requiring one-quarter of
~Y~'~»= block grant monies to be allocated according to prior categorical uses,
with the remainder to be appropriated by the legislature when it reconvened.
During the interim, a full appropriations committee meeting was held on
federal cuts and block grant legislation.
Missouri. The 1981 appropriation for the Department of Social Services
included the following directive: ". . . Federal block grants received by the
Department of Social Services shall be administered unoer the oversight of a
(joint legislative-executive) committee."
Montana. HB .500 passed in 1981, specifically prohibited the expenditure of
block grant funds without legislative appropriation. The bill stated,
"Any federal funds received by or allocated to the state of Montana
prior to ,January 3, 1.983, as a block grant as defined by an act of
Congress enacted subsequent to April 1, 1981, and specifically
designated as a block grant shall require a special session of the
legislature for appropriation by the legislature prior to
distribution of these funds among agencies and programs."
Subsequently a special session was held in November at which the legislature
appropriated all block grants. The legislature then recessed but did not
adjourn in order to maintain appropriations control over any additional block
grants that might come to the state before the legislature's next regular
session.
Nevada. SB 619, passed in 1981, required that,
Whenever federal funding in the form of a categorical grant of a
specffic program administered by a state agency . . . is terminated
and incorporated into a block grant . . . the agency must obtain the
approval of the interim finance committee in order to allocate the
money received from any block grant."
New Hampshire. A bill was passed by the legislature requiring the Governor to
notify the presiding officers of the Senate and House of Representatives of
-36-
99-965 0 - 82 - 19
PAGENO="0290"
286
any block grant awards by the federal government. Any allocation of these
grants must be approved by the General Court.
New Jersey. The legislature formed a subcommittee on Federal Aid and the
Joint Appropriations Committee intensified to oversight of federal fujies.
New Mexico. An interim Federal Funds Reduction Study Committee was set up by
the legislature to monitor the federal budget process, determine state and
local impact, and draft legislation.
New York. This state passed a comprehensive bill, the `Accounting, Financial
Reporting and Budget Accountability Reform Act of 1981,u which revamped the
budgeting and accounting process in New York, giving the legislature greatly
increased control over appropriations and expenditures. The following brief
description of the bill is taken from New York's September 1981, `The Ways and
Means Report":
-. The new legislation requires that no state moneys may be expended except
pursuant to an appropriation, and generally prohibits transfers of money
between funds unless specifically authorized by statute.
The Governor must alter the budgetary process to provide for the
appropriation of. federal funds and all other funds that were heretofore
exempt, make substantial changes to the financial plan, begin a ne~ "key
item" reporting system to monitor program performance, and operate
within a more restricted environment as a result of increased
legislative oversight. These changes are designed to parallel the shift
in accounting and reporting practices to conform with GAAP (generally
accepted accounting principles).
North Carolina. Under HB 1392, the North Carolina legislature asserted *its
authority to control the appropriation of block grant monies. The bill states:
- ". . . All federal block grant funds received by the State between
August 31, 1981, and July 1983, shall be received by the General
Assembly . . .
"There is established the Joint Legislative Committee to Review
Federal Block Grant Funds. The Committee shall review acceptance
and use of all federal block grant funds received by the State
between August 31, 1981, and July 1, 1983. .
Ohio. HJR No. 39 created a Joint Legislative Committee on Federal Funds to
~~Ttor the receipt and expenditure of federal funds and to review all new
federal grant programs. The bill also directed the committee to serve in an
advisory capacity to the Ohio General Assembly in all matters related to
federal grant programs.
Oklahoma. 58 326, passed in 1981, created a Joint Committee on Federal Funds
with authority to approve/disapprove federal fund applications and make
recormnenaations concerning federal funds to the legislature. It also directed
that claims by state agencies for federal funds may not be processed without
PAGENO="0291"
287
written authorization from the president of the senate and speaker of the
house.
Tennessee. SB 997, passed during 1981, established several new procedures
with respect to the appropriation and expenditure of state funds, including:
`In the event federal and departmental revenues . . . are less than
the amount estimated to be available under the allotments then and
to the extent the spending authorizations are hereby reduced; to
the extent that federal or departmental revenues in excess of the
amounts alloted are realized, such excess shall not constitute
increased spending authorizations, except under the conditions
herein specified."
"No state agency shall establish new programs or expand programs,
including any programs involving federal or other funds . . . until
the program and the availability of the money is submitted to the
Finance, Ways and Means Committee chairmen and until said chairmen
have acknowledged in writing receipt thereof . .
"The Commissioner of Finance and Administration shall submit a plan
for implementing the federal block grants proposed by the
President."
Texas. The legislature attached a rider to its appropriations bill which
requires that if block grants replace categorical grants, the funds should be
allocated to state departments and agencies as they were under categorical
grants.
Vir~inia. Under the 1981 amendments to the Virginia appropriations act, the
Governor must produce quarterly reports summarizing the implications of
approvals of federal fund grants. The implications to be identified include
significant and anticipated budgetary, policy, and administrative impacts of
federal requirements.
PAGENO="0292"
288
APPENDIX 2
RECOMMENDATIONS FOR IMPROVING STATE LEGISLATIVE
OVERSiGHT OF FEDERAL FUNDS
(The following recommendations were developed by NCSL's Fiscal Affairs and
Oversight Committee and were published in "A Legislator's Guide to Oversight
of Federal Funds,' NCSL, June 1980.)
The Fiscal Affairs and Oversight Corr~nittee of the National Conference of State
Legislatures feels that a stronger state legislative role in the federal
grant-in..aid system will alleviate many . .~ . problems. The following are the
Committee's suggestions for activities which could improve state legislative
oversight of federal funds.
RECOMMENDATION #1:
Necessary Background Info~mation on State Environment. Prior to establishing,
changing, or augmenting mechanisms to oversee federal funds, state
legislatures should conduct a review of:
* the extent of legislative appropriations authority, both in and out
of session;
* existing appropriations practices, including informational flow
between the governor, the agencies, and the legislature;
* existing treatment of federal funds in the legislative budget
process, including any differences in the way revenue sharing, block
grants, and categoricals are treated;
* current legislative involvement in existing review, control, and
reporting processes (such as the A~95 process);
* existing interim mechanisms to deal with unanticipated federal funds,
such as automatic appropriation, gubernatorial approval or action by
body authorized to overview these funds;
* existing technical and accounting processes to identify and track
funds in the state treasury;
* trends and amounts of state expenditures and appropriations; and
* if possible, federal assistance to state agencies by program.
RECOMMENDATION #2
Review and Determination of Appropriate Procedures. The Fiscal Affairs and
-39-
PAGENO="0293"
289
Oversight Committee recornmenos that state legislatures consider various
oversight mechanisms such as: tracking and information activities; grant
application and state plan review; and legislative appropriation of federal
funds to determine which, if any, of these approaches will lead to more
effective legislative oversight of federal funds.
A. TRACKING AND INFORMATION
RECOMMENDATION #3
Tracking and Information on Use of Federal Funds by State Agencies. State
legislatures should procure timely, oetailed, and accurate information about
the amount and use of federal funds by state agencies. This data should be
incorporated into the legislative budget document to provide a total picture
of state/federal program expenditures and estimated future obligations.
RECOMMENDATION #4:
Legislative Utilization of Existing Federal Fund. Information Sources. The
Committee recommends that state legislatures automatically receive all A-95
grant application and TC-1O82 award information data provioed by the federal
government. Legislatures should establish a cooperative agreement with state
executive offices to share and amass such data.
RECOMMENDATION #5:
Budget Display of Federal Fund Information. For all block grant and
categorical assistance receivea oy state agencies for support of agency
operations, the Committee recommends that the budget document display this
information in as detailed a manner as possible (subprogram allocation).
Information should also reflect the number and type of personnel funded by
this federal aid.
RECOMMENDATION #6:
Accounting Procedures.. The Committee recommends that state legislatures, in
conjunction with their executive branch, establish accounting procedures to
identify and track federal funds coming into the state treasury.
RECOMMENDATION #7:
Itemization of In-Kind Sources of State Match. The Committee recommends that
state legislatures require state agencies to itemize both direct and indirect
funding sources for state match required by federal grant programs in the
budget document.
RECOMMENDATION #8:
Information on Federal Reimbursements. The Committee recommends that state
legislatures establish procedures to receive full information on all federal
reimbursement funds received by state agencies.
-40-
PAGENO="0294"
290
B. GRANT APPLICATION AND STATE PLAN REVIEW
RECOMMENDATION #9:
Grant Application and State Plan Review. The Committee recommends that state
legislatures should participate in the review of state plans and grant
applications submitted by state agencies. Legislatures should have a strong
role in determining whether these applications:
* are consistent with state"policy; S
* duplicate any on-going state programs; and/or
* commit the state to future expenditures it cannot or elects not to
support.
RECOMMENDATION #10:
Focusing Application Review Activities. The Committee recommends that state
legislatures establish criteria, such as a minimum funding level or
operational support, to focus their state plan and grant application review
efforts on proposed activities they consider significant to state fiscal
planning.
C. STATE LEGISLATIVE APPROPRIATION OF FEDERAL FUNDS
RECOMMENDATION #11:
State Legislative Appropriation of Federal Funds. The Fiscal Affairs and
Oversight Committee recommends that state legisratures should appropriate
federal funds in the usual manner of state appropriation.
RECOMMENDATION #12:
Coordination with Federal Budget Cycle. The Committee recommends that to the
extent possible, state legislaturej should establish state budgetary
information and hearing processes flexible enough to coordinate with the
federal budget cycle so federal fund information is as comprehensive and
accurate as possible.
RECOMMENDATION #13:
Adjustment of' State Matching Funds to Shortfall or Increase in Federal Funds.
The Committee recommends that. state legislatures establish mechanisms to
reduce the level of state matching funds in the event the federal
participation rate is higher than anticipated; if the amount of federal funds
received is less than anticipated, state mathcing funds should be adjusted
accordingly c~Tstent with federal maintenance of effort provisions.
-41-
PAGENO="0295"
291
~. EXEMPTIONS
RECOMMENDATION #14:
Federal Funds Exemoted From the Legislative Oversioht Process. The Fiscal
~fa~rs arm Oversignt Corrmnttee recormnenas that: indivIdual~ijisfer payment
to recipients; research grants to individuals and institutians of higher
education; and federal/local assistance passed through state agencies for
which there is no subsequent financial obligation for the state, be exempt
from formal and specific legislative oversight. It further recomends,
however, that the legislature receive as accurate and comprehensive
information on these funds as it determines is necessary.
INTERIM ACTIVITY
RECOMMENDATION #15:
Interim Activit~ For those states with legislative interims, the Conrnittee
recorm~enas that the state legislature or its designees review and authorize
the receipt and expenditure of any unanticipated federal funds, the transfer
of federal funds between programs and agencies, and the reduction in any state
programs due to a reduction in federal funds.
The Committee hopes that legislatures will adapt these recommendations to
their unique state environments. This report and these recommendations are a
product of the Fiscal Affairs and Oversight Committees continuing efforts to
stuay and evaluate all the various mechanisms of legislative oversight.
-42-
PAGENO="0296"
292
I -
Federalism Information Center
PAGENO="0297"
293
BLOCK GRANTS
1982 GOVERNORS' GUIDE
TO BLOCK GRANT IMPLEMENTATION
February 1982
Prepared by:
National Governors' Association
Center for Policy Research
Council of State Community
Affairs Agencies
Council of State Planning Agencies
National Association of State
Budget Officers
PAGENO="0298"
294
THE FEDERALISM INFORMATION CENTER is a two-year effort by the National
Governors' Association (NGA) Center for Policy Research and the NGA Office of Research
and Development to track the states activities during the implementation of the new block grant
series--the first round of which was passed in 1981 This effort is in concert with NGA's Office
of State Services, Council of State Community Affairs Agencies, Council of State Planning
Agencies, and the National Association of State Budget Officers.
ThE 1982 GOVERNORS' GUIDE TO BLOCK GRANT IMPLEMENTATION has been
prepared to allow Govemors the opportunity to share what has taken place in implementing
block grants and to assist states in further refining that process. The survey used to gather the
data for the Guide and preparation of this document is a joint effort of the National Governors'
Association Center for Policy Research, Council of State Community Affairs Agencies, Council
of State Planning Agencies and the National Association of State Budget Officers.
PAGENO="0299"
295
FOREWORD
With the enactment of the nine block grants contained in the Omnibus
Reconciliation Act, there have been notable changes in the intergovern-
mental system. During the National Governors' Association (NGA) 1981
summer meeting in Atlantic City, a special workshop was held for Governors
to begin to discuss these changes and share innovative strategies for
state management of block grants. The Council of State Planning Agencies
and NGA jointly published the Governors' Guide to Block Grant
Implementation as a. resource for the workshop. The Guide contained
information on what each state was doing to prepare for administration of
the block grants.
Due to the popularity of both the workshop and the Guide, the NGA
Executive Committee decided to prepare this follow-up report, 1982
Governors' Guide to Block Grant Implementation. While this new report
continues to have a focus on state implementation of block grants, it also
contains information on other innovations that are being used to improve
management in state government. As states assume greater responsibility
for management of their own programs, it is critically important that new
ideas and best practices be shared.
Collection of information for this report is part of a two-year
cooperative effort between NGA, the Council of State Planning Agencies,
the National Association of State Budget Officers, and the Council of
State Community Affairs Agencies to follow state responses to changes in
the intergovernmental system. This report provides information on such
questions as how many states have accepted block grants, how they have
used the option of funding transfer between block grants, in what ways
they have obtained public participation, and what role state legislatures
have assumed in block grant implementation. The report also contains a
series of programmatic and administrative innovations which states
already have undertaken.
As more information is obtained and particular issues become
important, additional reports wil be published. The NGA Center for Policy
Research (202/624-5359) will be coordinating the collection of these data
and will be able to respond to specific information requests that you may
have.
Governor Lamar Alexander Governor James B. Hunt, Jr.
Chairman, Committee on . Chairman, Committee on
Executive Management and Fiscal Affairs Human Resources
1
PAGENO="0300"
296
TABLE OF CONTENTS
FOREWORD
ABBREVIATIONS USED IN THIS REPORT V
EXECUTIVE SUMMARY Vii
FINDINGS OF THE BLOCK GRANT IMPLEMENTATION SURVEY 1
BLOCK GRANT SURVEY HIGHLIGHTS 3
FISCAL IMPACT OF FFY 1982 BLOCK GRANTS 37
STATE NARRATIVES 39
Introduction 41
General Observations 41
State Progress in Implementing Block Grants 41
Conclusions 43
States
Alabama 45
Alaska 46
Arizona 48
Arkansas 50
California 51
Colorado 52
Connecticut 54
Delaware 57
Florida 58
Hawaii 61
Idaho 62
Illinois 63
Indiana 64
Iowa 65
Kansas 66
Kentucky 69
Louisiana 70
Maine 71
Maryland 73
Massachusetts 74
Michigan 75
Minnesota 75
Mississippi 76
Missouri 77
Montana 78
11]~
PAGENO="0301"
297
TABLE OF CONTENTS
lcont inued)
States (continued)
Nebraska 79
Nevada 81
New Hampshire 81
New Jersey 83
New Mexico 84
New York 86
North Carolina 89
North Dakota 91
Ohio 92
Oregon 93
Pennsylvania 96
Rhode Is land 98
South Carolina 99
South Dakota 102
Tennessee 103
Texas 104
Utah 105
Vermont 107
Virginia 109
Washington 110
West Virginia 115
Wisconsin 116
Wyoming 118
APPENDIX A
Block Grant Contacts Designated by Governors 123
APPENDIX B
Organizations Conducting Block Grant Surveys/Studies 129
iv
PAGENO="0302"
298
ABBREVIATIONS USED IN THIS REPORT
ADAMHA Alcohol, Drug Abuse and Mental Health Block Grant
CDBG Community Development Block Grant
CSBG Community Services Block Grant
ESEA Elementary and Secondary Education Block Grant
FFY Federal Fiscal Year
LIEAP Home Energy Assistance Block Grant
MCH Maternal and Child Health Care Block Grant
PHSBG Preventive Health Services Block Grant
PCBG Primary Care Block Grant
SSBG Social Services Block Grant
V
PAGENO="0303"
299
EXECUTIVE SUMMARY
A new chapter in the history of intergovernmental relations in the
United States is being written as states take up the challenge handed to
them late last year by Congress when it converted categorical federal
programs into nine major block grants.
The questionnaire circulated by the National Governors' Association
(NGA) in January and February 1982 provides the first early returns on how
this experiment is working at the state and local levels.
This special publication, prepared for the NGA 1982 winter meeting
contains the answers to that questionnaire, along with special reports
from each state highlighting particularly noteworthy developments that
are accompanying the transition to block grants.
Block grants have stirred great expectations in some and great
concern in others. As a result, there is intense interest in determining,
as quickly as possible, how implementation is proceeding. How are
decisions being made? What is the role of the Governor, the legislature,
the local units of government? Is the voice of the public being heard?
Are the claims of greater flexibility and efficiency a reality? Will
there be less paperwork, or more?
Obviously, conclusive answers to those questions must await the
passage of time. But you will find at least the beginnings of some
interesting answers in the pages that follow. All of the above questions
are, at the very least, confronted, if not resolved; even the tentative
replies contained herein should be of great value to states that wish to
benefit by the experience of other states, and that are concerned for the
future of these programs and their intended beneficiaries.
It should be noted that this publication deals primarily with the
questions of administrative process, as opposed to addressing in-depth
the question of fiscal impact of block grant transition. Most of the
programs discussed in this document have experienced substantial
reductions in federal funding concurrent with the transition to state
administration of block grants. In most cases, these funding cutbacks
themselves have forced major changes in state operations and many sharp
reductions in services provided to target groups. Although a preliminary
glimpse of fiscal impact is provided herein by the National Association of
State Budget Officers (NASBO), this very important issue is being
addressed in a separate survey on which NGA is working closely with NASBO.
vii
PAGENO="0304"
300
FINDINGS OF BLOCK GRANT IMPLEMENTATION SURVEY
The following section of this report describes the findings of the
NGA questionnaire on block grant implementation and is presented in both
narrative and tabular forms. The data contained in this section are based
on information provided by every state.
The first part of this section highlights the major themes that
appear to emerge from all of the information elicited by the fourteen
items in the questionnaire. The second part of the section is a question
by-question presentation of the data provided by the states.
To assist the reader, the original questions precede the narrative
or tabular presentation of materials.
PAGENO="0305"
301
BLOCK GRANT SURVEY HIGHLIGHTS
It is clear from this first comprehensive survey of how states are
administering the nine new block grant programs that many changes in
policy and procedure are underway. But it still is too early to predict
the extent or even the exact direction of those changes.
Although most states have moved quickly to assume the
responsibilities and opportunities in block grants, for various reasons,
some states have elected to delay taking over their administration, and
some of the block grants still have not been made fully available to the
states.
Nevertheless, a number of interesting changes can be identified in
this early survey:
* Public participation in these programs is increasing, and
an interesting variety of techniques is being used to
achieve this participation.
* Legislatures and local units of government also are being
drawn more fully into the program decisionmaking process.
* Administrative flexibility is being tested, with states
indicating so far that they are unsure whether the present
course will lead to greater simplification or
complication.
* Transferability-the limited power in the legislation to
shift funds from one program to another to meet state
priorities-is being used, but not yet on a significant
scale.
The nine block grants approved in 1981 represent only a fraction of
the total number of federal grants-in-aid to state and local governments.
Most of them were compromised sharply in the Congressional process,
thereby limiting the likelihood for dramatic changes in procedure or
policy, and most had their funding substantially reduced. Also, states
had little opportunity to plan for this new assumption of responsibility.
All these factors have tended to reduce the number of changes which have
occurred in the first four months.
99-965 0 - 82 - 20
PAGENO="0306"
302
Participation Increasing
The clearest indication of change emerging from this survey is the
increased involvement in these programs of the general public, local
government officials, and the legislature.
Some of the block grants require public notification, local
government involvement, and legislative hearings. New techniques are
being used to reach potentially interested parties, particularly regional
and statewide meetings and televised conferences. Whether it is required
or not, states seem to be making a determined effort to increase
participation.
Previously, most of these programs were administered with a minimum
of participation from the public, the legislature, and local
policymakers. The decisionmaking process typically involved the) federal
administering agency, a limited number of state administrators who
sometimes dealt with a limited number of local administrators, and the
target population. In some of the programs, the federal agency alone made
most of the key decisions regarding funding allocations and program
priorities with little or no state/local government or public
involvement.
While the increase in involvement on the part of the public, local
officials, and the legislature is documented in the survey, the full
impact of this development remains to be seen.
Administrative Flexibility
One of the greatest theoretical appeals of block grants for states
was the opportunity for increased flexibility in administration.
Although states are moving to utilize this increased flexibility, the
short time span does not permit conclusions to be drawn as yet.
While most states indicate that there will be efforts to streamline
procedures and generally reduce red tape in the future, only a few say
they have seen effective changes at this stage. What is clear is that it
is too early to determine which burdens will be decreased. By Federal
Fiscal Year (FFY) 1983, the states hope to have some idea of what amount
of administrative detail can be eliminated, reduced, or transferred to
local government agencies.
There may be cases of increased administrative burdens as
contracting and appropriations rules change, especially since fewer
dollars are available for programs. There may have to be increased
monitoring of some programs, particularly for those that have been
totally federally-administered in the past.
As one state reports in the survey: "A preliminary review of the
social service reporting system will result in changes that either
complicate or simplify matters."
4
PAGENO="0307"
303
Block grants carry special audit requirements. More than half of the
states do not think that there will be any effect as the audit
requirements are eased. Six of those states say that there may be an
increase in the administrative responsibility as certain programs become
a state focus as opposed to federal. Several states say that there will
be standard auditing procedures for all block grants. These procedures,
as well as the elimination of auditing requirements for federal purposes,
should save the states both time and money.
Intergovernmental Changes
Governors' offices have been expected to play an important role in
the block grant administration process. To date, it appears there has
been little measurable shift in the role of the Governor or the Governor's
staff as a result of the new block grant responsibilities.
There will be more activity in the oversight of how the block grants
are administered, and Governors' staffs will be more involved in planning
and resource allocations. Because of the flexibility of block grants,
Governors' offices and state legislatures will be working to develop new
resource allocation guidelines. At least initially, there has been some
increased interaction between the Governors' offices and Congressional
delegations and executive branch organizations. This may be temporary as
the states become more accustomed to the administration of block grants.
Most state legislatures tried to anticipate the procedures that
would be necessary to carry out the responsibilities of block grant
implementation. Fourteen states thus far have made no special
legislative provisions for dealing with the block grants.
Many of the remaining states will use some sort of advisory group to
review the acceptance and monitor the use of block grants.. These groups
will advise Governors' offices and state agencies and make
recommendations on block grant implementation. In some states, the
advisory groups will have approval authority on block grant allocations.
These advisory groups vary in composition from specially created task
forces to legislative standing committees on appropriations, finance, or
fiscal affairs.
Required legislative action varies among twenty-four of the
responding states. In three states, a state agency must have the
legislature's approval before applying for or receiving a federal block
grant. Some states require that block grants be subject to the
legislative appropriations process, while others mandate that agency and
program funding be the same proportionately as categorical grants from
the previous year. Two states have found it necessary to create
legislation allowing for the application and administration of the CDBG
by a state agency.
5
PAGENO="0308"
304
It is not certain how much increased responsibility there will be for
Governors' staffs and state legislatures or how the relationship will be;
however, in most states the role of each branch has begun to evolve. In
addition, it is apparent that a majority of the states will be increasing
the role of local government in the administration of block grants. More
flexibility to develop programs, as well as the reduction of mandates and
the increase of authority of local government to prioritize funding
needs, will play a part in the effort to return some of the power to the
local level.
Transferability
During the many years that block grants or the "decategorization" of
federal programs has been under discussion, a central issue has been
whether states should have increased "flexibility" to channel federal
grants-in-aid to meet needs and priorities as developed in the individual
states. Congress generally has tended to be rather specific in its
authorization language and appropriations, and often has gone so far as to
earmark funds very strictly for specifically named activities and target
groups. This has been a difficult issue to resolve, as states have made a
strong case for having maximum flexibility and Congress has countered
with the importance of accounting for the use of federal tax dollars.
A very small step toward limited statutory flexibility was realized
in the approval of block grants in 1981. Most of the block grants allow
for the transfer of a small fraction (about 15 percent) of the total, and
only, as a rule, to certain identified programs.
The survey shows that states are taking advantage of this
flexibility, but the transfers so far mainly reflect special
circumstances in the first round of block grants and therefore do not
reveal a lot about the general significance of transferability for block
grants. Transfers presumably will increase as time goes by and as state,
local, legislative, and public involvement increases.
To date, the big winner, in terms of transfers into a program, is the
Social Services Block Grant (SSBG). This reflects the fact that the SSBG
has broad authority with which state and local officials are experienced
thoroughly and meets needs they long have rated as a high priority. It
must be remembered that the SSBG experienced a substantial funding
reduction as the block grant program began; thus the transfers to it can
be viewed as efforts by states to make up losses in their most important
social services programs.
In terms of transfers out of a program, the Home Energy Assistance
Block Grant (LIEAP) was utilized the most. Twenty-seven transfers have
taken place reflecting a number of special circumstances:
* Unlike most of the other block grants, the LIEAP was not
reduced sharply for FFY 1982; also, funds have been
distributed more rapidly than most of the other grants.
6
PAGENO="0309"
305
* Transfers out of energy assistance into home
weatherization, done in at least five states, really are
minor shifts between similar activites.
* Funds have been shifted in some states that have warm
climates and thus do not consider energy assistance as
serious a need.
Once again, while it is fairly easy to document the trend of shifting
funds out of LIEAP into SSBG, it is difficult to forecast the significance
of the trend.
There has been some shifting of funds into the Maternal and Child
Health Care (MCH) Block Grant but the dollar amounts are not large. There
have been comparatively few transfers out of the Coimnunity Services Block
Grant (CSBG) even though it allows transfers to other block grants.
Again, the answer may lie in the fact that the amount available for
transfer is restricted. The CSBG requires that 90 percent of FY 1982
funds be passed on to grantees who received Community Services
Adminsitration funds in FY 1981, and 5 percent of the grant may be used
for state administrative costs.
PAGENO="0310"
306
1. Please indicate the block grants that will be administered
by your state and the implementation date for the grant.
Federal legislation required implementation of the Social Services
Block Grant (SSBG) and the Home Energy Assistance Block Grant (LIEAP) at
the beginning of FF1 1982 (October 1, 1981). The Primary Care Block
Grant (PCBG) is not available until FF1 1983 (October 1, 1982) and the
Elementary and Secondary Education Block Grant (ESEA) was forward-funded
for July 1982 distribution.
The following are the summaries of actual and proposed block grant
implementation dates and numbers of states selecting those dates (see
Table 1 for actual dates by state):
IMPLEMENTATION DATE
BLOCK GRANT 10-01-81 10-01-82 OTHER (sPECIFY DATE)
ADANHA 42 STATES 3 STATES 01-01-82
2 STATES
PCBG N.A. 8 STATES UNDECIDED
2 STATES
PHSBG 42 STATES 3 STATES 01-01-82
2 STATES
MCII 44 STATES 2 STATES 01-01-82
1 STATE
SSBG 50 STATES
CSBG 34 STATES 9 STATES 01-01-82 UNKNOWN
2 STATES 1 STATE
LIEAP 50 STATES
ESEA N.A. 16 STATES 30 STATES NO REPORT
(see Table 1) 2 STATES
CDBG 8 STATES 6 STATES 36 STATES
(see Table i)
2. If your state elected not to implement a particular block
grant in FF1 1982, please give a brief explanation of the
reason.
The preponderance of states electing not to implement certain block
grants in FFY 1982 provided explanations primarily for the Community
Development Block Grant (CDBG), Community Services Block Grant (CSBG),
and Primary Care Block Grant (PCBG).
9
PAGENO="0311"
307
TABLE 1
Block Grant Implementation Dates By State
State
Block Grant
-~
PHSBG
MCH
SSBG
CSBG
LIEAP
ESEA2
Alabama
10-cl
~.
10-81
10-81
10-81
10-81
07-82
10-31
Alaska
10-31
8.8.
10-81
10-81
10-81
j~~1
10-81
10-32
10-82
Arizona
j~~1
NA.
13-81
J~L
~±fi~_
Arkansas__
rn~
NA.
rn-ci
rn-~
10-82
880.
California
rns~
l.A.
10-82
lO-82
jO~1
10-32
Colorado
loni
LA
10-01
10-81
10-01
10-82
10-81
10-32
~jo.
Connecticut
JP~L
UND~.
10-31
10-31
JPL~L
i~Pi
10-82
~ij~
Delaware
JP~li
NA.
1081
10-31
JP~i
10-81
10-81
.
j~~1
Florida
Georgia
L
10-81
ILA.
rn-02
10-81
011
10-81
j~j_
10-81
rn-si
330.
10-82
rn-81
10-81
~4D.
REPORT
~w.
rn-c2
Hawaii
01-82
~.
10-81
10-81
10-81
~7~2
JP~?~
Idaho
~JO~L
JQ~3i.
jQ31
JO~3L
jQ~2
10-31
Illinois__~
3.0.
]~o~
j~
rn-si
io-ci
rn-cl
07-82
rn-cl
Indiana
~o-~i
3.A.
jfl~
~3j
j3~l~
uij.~
Iowa
10-82
J0S3L
Kansas
rn-81
U.A.
J1L~81_
1a~aL
JflOB]
E~31
01~i32
i3iiL
Kentucky
JQ~L
~P?
JQ~Oa_
Jfl,,3j
O-8L
J3~3]~
~~OZ=E2~
j3~1
Louisiana -
LA.
J~~3J
J~3~5j
J~jfl
LQ~31
J0z01
J12z32
iiliD~
Maine
lru~~1
8.A.
Jft~flj~
J3~5l_
J11O81
m5ci_
.jiiin~
Maryland
10-81
J~
JSL5~
Matsachusents
JQZ~L
JQ~8L
rn~ci
Jo~~i~
0732
JIU13a
Michigan
10-82
j~j
JQ~J
J~J
j~L
JQ~3j
10-32
Q~32
Minnesota
JPZ~L
NA.
j~j
JQ~5L
JQ~31
JQ~3J
JQ~3]
OZ~i
Missis~ppi
J.Q.~J_
U.A.
Q,,3~
J1~5I.
~.s3L~
J.D.OO1.
`The Primary Care Block Grant (PCBG) is unavailable until FF81983 (October 1, 1982).
2 The Elementary and Secondary Education Block Grant (ESEA) was forward funded for July, 1982.
NA. - not available
880. - undecided
10
PAGENO="0312"
308
Block Grant Implementation Dates By State (Continaed)
State
Block Grant
~
ADAMHA
PCBG
PHSBG
MCH
SSBG
CSBG
LIEAP
ESEA
CDBG
Missouri
10-81
.8.
10-81
10-81
10-81
10-31
10-81
0782
07-82
Montana
10-32
1.8.
io-oi
10-01
10-81
01-32
10-31
10-32
10-81
Nebraska
10-81
l.A.
10-81
~-~i
10-81
10-81
09-82
04-02
Nevada
5.8.
10-Si
10-Si
10-31
10-82
10-82
New Hampshire
0-82
9.8.
01-82
01-82
10-Si
01-82
10-01
07-82
80.
NewJersey
IIL8~.
10-81
10-01
10-01
10-01
10-81
07-82
l.A.
New Mexico
New York
07-82
07-82
10-81
10-32
10-81
07-82
608.
-
North Carolina
10-81
10-81
1081
1081
10-31
10-81
07-82
880.
North Dakota
~1
10~82
10-81
10-81
10-31
10-81
10-81
07-82
10-31
3~A~
10-81
10-rni
J~L
10-~
07-82
04-82
Oklahoma
l.A.
10-81
10-31
10-81
10-81
10-31
07-82
880.
e~
l.A.
10-81
10-01
10-81
10-81
10-81
10-82
l.A.
Pennsylvania
LA.
10-81
10-81
10-81
10-81
10-81
07-82
8.A.
Rhode Island
LA.
10-81
10-81
10-81
10-81
10-81
.~.
South Carolina
.i~.
10-81
10-81
10-01
10-31
10-81
07-82
10-81
South Dakota
1001
ftJ9~
10-Si
10-81
10-81
10-01
10-81
10-82
UND.
Tennessee
lxi
1
10-81
1081
10-81
10-81
07-82
i081
Texas
13~EL
JLL..
~8L
10-81
10-Si
1032
1031
0782
800.
Utah
.JDwDi_
JLA.
.J.QZ.OL
10-01
iO-81
10-81
10-81
10-82
0682
Vermont
JQ81_
07-82
~0.
Virginia
8118
1081
10-82
SOD.
Washington
10-Si
`~lS
~10-81
10-in
~-81
iO-81
07-82
.
iA.
West Virginia
~1U~~a1
io~sa
~L
lQwDL
108i
2
jQ~i
10
ST
~2
Wisconsin
10-.~.2
-~
J.QwD.2
JQ~
j~i
~2
~2
Wyoming
JQ~51
105i
0702
03-32
American Samoa
Guam
.
5UNK. - unknown
tPlanning grant received
11
PAGENO="0313"
309
Block Grant Implementation Dates By State (Continued)
Block Grant
~
12
PAGENO="0314"
310
Forty-two of the responding states chose not to implement the CDBG on
October 1, 1981. Their reasons include:
* the majority are hampered seriously by the slow pace of
Housing and Urban Development's (HUD's) regulations
process;
* there is a lack of sufficient planning time, particularly
for local input; and
* legislatures have not been in session and therefore have
not authorized the acceptance of the program.
It would appear that the second and perhaps third reasons above could
be related to HUD's regulatory process.
By and large, all twelve states electing to implement the CSBG at
some later date, indicated that the basic driving forces behind that
decision were the facts that the program always has been primarily a
federal government-to-local agencies program, with little state control;
lack of planning time because of late passage of federal legislation; and
real uncertainties regarding federal funding levels. One state reported
that there was heavy opposition from the local agencies against the state
assuming administration of the CSBG before FFY 1983.
There were very few consents about the PCBG. Those consents
generally were: "the state has not decided tO administer the program
yet", or "the net worth of the program, in federal dollars received by the
state, does not offset the administrative burden incurred for operation
of the program".
3. Block grants allow a certaim percentage of funds to be.
tramsferred to other grants or programs. If your state is
utilizing this provisiom, indicate the specific grant(s) or
program(s) to which funds are being tramsferred~.
One of the major positive features of the Omnibus Reconciliation Act
of 1981 is the provision that allows states some latitude in transferring
funds among block grants (see Table 2 for actual transfers by state). Of
the states reporting, twenty-seven have elected not to transfer, funds
during FFY 1982. The majority of these states have indicated that either
there is inadequate time for decisionmaking in this area or that
legislative requirements at this time preclude transfer.
Significantly though, in the first year, a number of states electe~d
to exercise the transferability provision. Twenty states elected to
transfer funds to their SSBG with nineteen of those transferring funds
from LIEAP and one from CSBG. Eleven of those transfers were for the
maximum of 10 percent, with the remainder ranging from 1.4 percent to
9 percent. All of the transfers were made for the purpose of continuing
essential social services to citizens and in many cases were driven by
shortfalls in funds available to the states from the amount previously
available under Title XX in FFY 1981.
13
PAGENO="0315"
311
TABLE 2
State Use of Transferability For Block Grants
States
ADAMHA
PHSBG
SSBG
CSBG
LIEAP
-
Transfer To %
-
Transfer To %
Transfer To %
-
Transfer To % Transfer To
%
Alabama
NA.1 NA.
NA. l.A
NA. NA.
NA. N.
A. SSBG
10%
Alaska
N.A. NA.
t1CH 3%
N.A. NA.
.
NA. N.
A. NA.
NA.
Arizona
NA. N.A.
NA. l.A
N.A. NA.
N.A. N.
A N.A.
N.A
Arkansas
NA. NA
NA. NA
NA. NA.
OLDER
AFIERICANS
ACT 5
SSBG
10%
California
*
NA. N.A
NA. NA.
NA. NA.
NA. N.
A. SSBG
10%
Colorado
NA. N.A
NA. N.A
NA. N.A.
NA. N.
WEATHER-
IZATION
A.
9%
Connecticut
NA. NA.
NA. N.A.
N.A. N.A.
NA. N
A. NA.
NA.
Delaware
NA. ~
NA. NA
NA. NA.
NA. N.
A. NA.
NA.
Florida
NA. NA.
NA. NA.
NA. NA.
NA. N.
A. SSBG
10%
Georgia
11CR 3~
11CR 3%.
*
NA. NA.
MCH
SSBG i3%
% NA.
N.A
Hawaii
N.A. NA
NA. NP
N.A. NA
NA. N.A~
NA.
NA.
Idaho
N.A M.~
N.A. ~
NA. IN.A
NA. ~
MCFI
~iJ~
`NA. - not applicable
14
PAGENO="0316"
312
State Use of Transferability For Block Grants (Continaed)
State
ADAMHA
PHSBG
SSBG
CSBG
-
LIEAP
-- -
% Transfer To %
Transfer To %
Transfer To %
Transfer To
% Transfer To
Illinois
NA. N.
A. NA. ~.
A. NA.
NA. N.A.
N.A. NA. N.A
Indiana
N A~ c.A
N ~A.__ N~A.
.A.
N~A. SLA
NA. N.
A. NA. N
A. N.A.
NA N.A.
NA ~
Kansas
N.A. N.
A. N.A. N.
A. N.A.
N.A. N.A.
WEATHER-
IZATION 11%
NA SSBG 10%
Kentucky
NA. NA.
N.A. NA.
NA.
N.A. NA.
SSBG 9%
PRI MARY
NA CARE 10%
Louisiana
MCH 3% MCH 3~
N.A.
NA. N.A.
N.A. SSBG 10%
Maine
NA. N.
A. N.A. N.
A. NA.
N.A. NA.
WEATHER
NA. IZATION 15%
Maryland
NA. NA.
N.A. N.A.
NA.
NA. -_N.A.
NA. SSBG 8%
Massachusetts
NA. N.
A. N.A. N
A. NA.
NA. N.A.
NA. NA. NA.
Michigan
N.A. N.A
. NA. N
A. N.A.
NA. NA.
NA. NA. N.A.
Minnesota
N.A. N.
A. N.A. N.
A. N.A.
N.A. N.A.
N.A. N.A. NA.
Mississippi
NA. NA
. N.A. N.
A. N.A.
NA. N.A.
NA. N.A N.A.
Missouri
NA. N.
A. NA. N.
A. N.A.
NA. NA.
N.A. SSBG 10%
Montana
NA. N.
A. NA. N.
A. NA.
NA. NA.
N.A. SSBG 10%
15
PAGENO="0317"
313
State Use of Transferability For Block Grants (Continued)
State
ADAMHA
PHSBG
SSBG
CSBG
LIEAP
Transfer Te % Transfer To
-
%
Transfer To
% Transfer To
- -
% Transfer To %
Nebraska
N.A. N
A. NA.
N.A.
NA. 1.
A. N.A.
NA. SSBG 10%
Nevada
N.A. N.
A. N.A.
NA.
N.A. N.
k N.A.
NA. CSBG 10%
New Hampshire
N.A. N.
A. MCH
7%
N.A. N.
A. NA. NA. N. A. NA.
New Jersey
N.A. N.
-
II. N.A.
-
NA.
-~
N.A. N.
- -
MCH 1%
A. N.A. N.A. SSBG 9%
New Mexico
NA. N.
A. NA.
NA.
SUBSTANCE
ABUSE! 1 5%
S.S.D.D. N.A. 1
l.A. NA. N~.
New York
N.A. N.
A. N.A.
NA.
N.A. N.
A.
NA.
NA. SSBG
10%
North Carolina
N.A. N.
A. N.A.
N.A.
N.A. N.
-
A. N.A. N
-
.A. N.A. NA.
N oh 0 k
N.A. N.
A. NA.
N.A.
NA. N.
OLDER
A. AMERICANS 4
WERATHER-
0 IZATION 4%
NA. N~
. NA.
N~.
N~ N~
N.~ N~
A. NA. NA. WEAThER-
IZATION 15%
Oklahoma
N.A. N.
-
A. NA.
NA.
NA. N.
Oregon
NA. N.
A. NA.
NA.
N.A. N.
A. NA. N
A. NA. NA.
Pennsylvania
NA. N.A
NA.
NA.
NA. N.A
NA.
N
.A. NA. N.A.
Rhode Island
NA. N.A
. NA.
NA.
NA. N.A
.
-
NA. N
.A NA. N.A
Soath Carolina
NA. N.A
. NA.
N~.
NA. N.A
. N.A. N
~. NA. N~.
16
PAGENO="0318"
314
State Use of Transferability For Block Grants (Continued)
ADAMHA
-
Transfer To %
PHSBG
-
Transfer To %
SSBG CSBG LIEAP
- - -
Transfer To % Transfer To % Transfer To %
NA.
,
NA.
NA.
N.A.
NA.
.
NA.
NA.
NA.
N.A.
NA.
N.A. N.
NA. N.
A. N.A. N
A. NA. N.
.A. NA. N.
A. SSBG 10%
MCII 6%
WEATHER-
A IZATION 12%
A N.A. NA.
2
A. SSBG NK.
NA.
N.A.
NA.
NA.
N.A. N
NA.
NA.
N.A. N.
A. N.A. N.
NA.
NA.
NA.
NA.
NA.
NA.
NA.
NA
NA.
N.A
NA. N.
NA. N
NA. N
N
NA. N
P. NA. N
.A NA. N
.A. SSBG 1.4%
.A NA. NA.
.A NA. N
A N~
.A NA.
OLbER
AMERICANS
./ ACT
.A NA. N.A
SS8~
NA SSBG 8%
5% 5580 10%
NA.
NA.
~L~_
.
N.A
NA.
N.A
N.A.
N.A
NA.
N.A
NA. N
Samoa
2UNK. - unknown
17
PAGENO="0319"
315
State Use of Transferability For Blotk Grants (Continued)
18
PAGENO="0320"
316
Nine states transferred funds to MCH from ADANHA, PHSBG, LIEAP, and
CSBG. These transfers ranged from 7.5 percent to 1 percent. These
transfers were used primarily to offset shortfalls in critical program
areas. The Community Services Block Grant (CSBG) in particular allowed
for transferability to programs (non-block) under the Older Americans Act
and three states decided to use this provision. Five states moved funds
from LIEAP to their weatherization program, another form of energy
assistance. In the majority of cases, the use of the transferability
provision was from one block grant to another block grant and was not a
"mixing and matching" among and between numerous block grants. The use of
the transferability available in block grants indicates clearly that
states take seriously even the limited flexibility provided to make
decisions that best meet the human services needs of citizens.
4. All nine block grants require some degree of public
`involvement in determining the use of funds.
A. Please provide the requested information on the public
participation process in your state for the various block
grants in the first year of implementation. (The Primary
Care Block Grant, omitted for FFY 1982, will not be in
effect until FFY 1983.)
All states provided information on public involvement processes with
regard to the block grants. In many states multiple approaches were taken
within a single block grant as well as among the various block grants.
Public participation data was gathered in three major categories: the
approach to disseminating information, method of public participation,
and unit of government responsible for the process. Each of these areas
was subdivided further into such categories as newspapers, meetings,
written comment, Governor's office, legislature, etc. The data basically
indicated that:
* the two approaches for disseminating information-public
meetings and newspaper ads-were used almost equally; the
least frequently used method was public service
announcements;
* the two methods for involving public participation-taking
written comment and holding statewide meetings-were
nearly equal in use; conducting regional meetings
throughout the state was the next most frequent choice and
conducting local meetings was the least common method
(although local officials and administrators clearly were
involved in the written comment process and in statewide
and regional meetings); and
* the unit of government taking responsibility for the
public participation process most frequently was that
administrative agency responsible for a particular block
grant; the Office of the Governor, followed closely by the
State Legislature, were the units which next most
frequently conducted the process.
19
PAGENO="0321"
817
Each of the major subdivisions cited previously allowed states to
report other approaches used for public participation in the first year of
block grant implementation. A number of different and creative
approaches were being used by states: statewide teleconferencing,
televised meetings, task forces, special constituency groups, and
speakers for groups requesting information and/or input to the process.
One frequently heard criticism of block grants in the human services
area was that they would allow state government to minimize the
involvement of the public in determining the needs and planning for
programs. If nothing else, the data provided by the states clearly and
emphatically show that citizens were provided a multiplicity of
opportunities to participate in the process of human services program
development and decisionmaking.
B. If this process differs from that used prior to first
y~r implementation of block grants, please describe these
differences (by individual block grants, as necessar~
Twenty-five of the reporting states indicated that the public
participation process varied from the past when the programs included in
the block grants were categorical. The data from these states over-
whelmingly indicate that for all of the programs (except SSBG, Title XX)
this generally is the first year in which the public has been involved so
heavily in the process of program decisions. Most of the states further
indicated that for the first time there was legislative involvement, more
meetings with citizens, coordination among and between block grants for
public participation processes, and more attempts at interaction with
local units of government. Again, the responses to this question, as to
the one above, indicate a higher level of public involvement under block
grants than in the past.
C. Will the public be informed regarding the final first
~~~implementation plans?
The answer was affirmative in all of the states.
D. How will information be disseminated relative to the
first year of operation of block grants?
Forty states advised that the citizens will be informed via one or
more of the following:
* annual reports;
* state registers;
* news releases;
* FFY 1983 planning process;
* public meetings;
* newsletters;
* television announcements; and
* local agency offices.
20
99-965 0 - 82 - 21
PAGENO="0322"
318
Again, the data show that the public will participate on a regular,
ongoing basis in the block grants process-from planning what is to be
done to reviewing reports on what actually was accomplished.
E. Will the public participation process for the second
~ar of implementation differ from that in the first year?
Thirty-five states reported that the public participation process
for FFY 1983 will differ from the process used for FFY 1982. The majority
of these states indicated that the most significant change would be the
institution of public participation under the auspices of the state
legislature. This primarily is a result of requirements enacted in
federal legislation. The other more significant changes would be the
establishment of more formal processes, greater coordination of public
input for block grants, and more meetings. Some states will be having
pre-plan development meetings and block grant review committees, and will
include categorical programs for better coordination.
The eight states indicating that major changes were not being made
did indicate that they would be making some attempts at streamlining the
public participation process. Other reporting states were undecided on
types of future changes.
Finally, the survey clearly indicates a high degree of public
participation through a variety of standard and innovative approaches.
This should be of interest to those persons, in and out of government, who
believe that unless program prescriptions are provided, the states will
not be concerned with services to citizens.
5. In what way has the easing of federal audit requirenefl.!~
for block grants alleviated financial and/or adainistrative
burdens on your state, if at all? Specify any change~~
p~~edure.
Seventy percent of the states (thirty-five) indicated that as yet
they see no effect or that it is too early to recognize the impact of the
easing of federal audit requirements for block grants on state financial
and/or administrative burdens. As a matter of fact, six of the thirty
five indicated that with certain programs (such as CSBG) becoming a major
state reponsibility, there probably will be a direct increase in state
administrative and/or financial burdens due to new auditing requirements.
Some states reported that the Auditor General and/or Comptroller of
Accounts will be designing standard auditing procedures for all block
grants and that this, coupled with elimination of parallel auditing
requirements for federal purposes, should yield a savings to the states.
Overall, the states, as yet, are not seeing or feeling any
alleviation of financial or administrative burdens with regard to audit
and administrative requirements since enactment of the block grants.
21
PAGENO="0323"
319
6. The Primary Care, Maternal and Child Health Care, and
Community Development Block Grants require some form of state
matching of federal funds. (For details, see Table 3.)
Since the PCBG has a delayed effective date, states have not had to
fulfill the match requirements for this block grant as yet. For the
Maternal and Child Health Care Block Grant, forty-five states will
provide sufficient match, eighteen states will overmatch (supplement),
and eighteen will require some amount of substate unit of government
match. To date, approximately one-half of the states indicate that they
will provide sufficient match for the CDBG and very few will supplement or
require sub-state grantee match (see Table 3 for state data).
7. Has the role of the Governor's staff changed as a result of
special provisions concerning the appropriation, allocation, or
administration of block grant funds? If so, please explain.
Major shifts in the operational responsibility of direct staffs of
Governors, to date, have not occured in twenty states. In those states
signifying a change, the role of the Governor's staff included:
* more oversight and direction responsibilities;
* more planning responsibilities;
* more duties because of increased involvement with the
legislature and actions inherent in block grants;
* more resource allocation decisions resulting from
flexibility in use of funds; and
* increased activities with congressional delegation and
executive branch Offices (however, this may be only a
product of first year implementation problems/concerns).
8. Has your state legislature enacted any special provisions
concerning the appropriation, allocation, or administration of
block grant funds? If so, please explain.
Legislative bodies in fourteen states have not enacted any special
provisions for block grants. The vast majority of states have tried to
anticipate the block grant implementation process through special block
grant advisory groups and the legislative appropriations process.
Advisory Groups
At least twelve of the states either have created special advisory
task forces, joint legislative committees, or other special block grant
review committees or have delegated block grant authority to a standing
committee on appropriations, finance, or fiscal affairs. The purposes
and authority of these units vary, but in general, they review the
acceptance and use of block grants, monitor the block grant process and
serve in advisory capacities to the Governor's office and state agencies,
comment and make recommendations on the implementation of block grants,
and in some instances, approve block grant allocations.
22
PAGENO="0324"
1N.A. - not applicable
2UNK - unknown
~UND. - undecided
320
TABLE 3
Provision of State Matching Funds By Block Grant
SO 110
YES
UNK.2
* A.
A.
113K.
l.A.
LA.
UI1K.
l.A.
LA.
YES
YES
YES
YES
U110. ~ UND. UND.
LA.
011K.
State
PCBG MCH CDBG
~[~ul~ Require Provide Supple- Require Provide Supple- Require
Sufficient mont Sub-State Sufficient mont Sub-State Sufficient mont Sub-State
Match Match Match Match Match Match Match Match Match
Alabama
l.A.
l.A.
l.A.
YES
110
YES
YES
YES
hO
l.A.
Alaska
Arizona
Arkansas
110
10
YES
YES
YES
10
110
10
l.A.
YES
Elk).
IA.
10
011K.
110
ONE.
110
YES
YES
California
110
110
YES
110
110
Colorado
110
110
NA.
NO
YES
YES
hA.
YES
YES
NA.
YES
LA.
NA.
YES
YES
Connecticut
Delaware
YES
Florida
YES
YES
13
YES
4)
YES
a.A.
l.A.
l.A.
NA.
v.A.
l.A.
Georgia
Hawaii
YES
30
10
YES
110
10
Idaho
YES
YES
NO
YES
NO
110
Illinois
YES
YES
YES
YES
YES
YES
Indiunu
YES
NO
YES
YES
YES
VARIES
Iowa
NA.
NA.
NA.
YES
10
Kansas
YES
110
YES
LA.
NA.
NA.
Kentucky
Louisiana
YES
110
110
10
YES
USE.
NO
UIIE.
YES
USE.
U11K.
UNK.
UNK.
YES
YES
Maine
NA.
l.A.
NA.
YES
YES
110
YES
110
30
Maryland
sota
l.A.
IA
l.A.
A
l.A.
1A
YES
ES
YES
14
NO
5
YES
A
10
1A
0110.
4A
NA.
NO
NO
l.A.
UED
N. A.
1-l.A.
11 . A.
110
YES
YES
NA.
UND.
UIiD.
N A.
l.A.
l.A.
NA.
10
110
11. A.
UIID.
l.A.
l.A.
N. A.
10
23
PAGENO="0325"
321
Provision of State Matching Funds By Block Grant (Continued)
State
PCBG
MCH
CDBG
Provide
Sufficient
Match
Supp~
mont
Match
Require
Sub-State
Match
Provide
Sufficient
Match
Supple
ment
Match
Require
Sub-State
Match
Provide
Sufficient
Match
~eRe~ire
ment Sub-State
Match Match
Mississippi
N.A.
l.A.
NA.
YES
YES
40
LA.
LA.
l.A.
Missouri
NA
A.
YES
YES
40
YES
NO
NO
-_Montana
LA.
NA.
l.A.
YES
NO
YES
YES
NO
YES
Nebraska
N.Y.
NA.
A.
SO
40
YES
NA.
LA.
LA.
Nevada
NO
NO
NO
YES
YES
10
YES
NO
NO
New Hampshire
NO
NO
NO
YES
YES
NO
LA.
NA.
l.A.
New Jersey
YES
NO
YES
YES
NO
YES
YES
10
YES
NewMexico
NA.
NA.
NA.
YES
NO
140
NA.
l.A.
IA.
New York
N.A.
l.A.
NA.
NA.
NA.
N.Y.
`LA.
NA.
N.Y.
North Carolina
lAiD.
lAID.
UND.
YES
YES
YES
NO
NO
North Dakota
N.Y.
NA.
N.Y.
YES `
110
YES
YES
NO
NO
Ohio
NA.
NA.
N.A.
YES
YES
-
40
YES
YES
140
Oklahoma
YES
UNK.
UNK.
YES
NO
YES
UND.
SlID.
IIND.
Oregon
N.Y.
N.Y.
N.Y.
N.A.
N.Y.
l.A.
N.A.
N.A.
NA.
Pennsylvania
N.A.
N.A.
N.Y.
YES
NO
YES
YES
N.A.
N.A.
Rhode Island
N.Y.
N.A.
NA.
YES
YES
YES
NA.
NA.
NA.
South Carolina
NA.
N.A.
NA.
YES
UNK.
UNK.
UNK.
UNK.
UNK.
SouthDakota
NA.
NA.
N.Y.
YES
NO
NO
NA.
NA.
N.A.
Tennessee
N.Y.
NA.
NA.
YES
YES
YES
10
NO
NA.
Texas
UND.
UND.
UND.
YES
NO
YES
YES
NO
YES
Utah
NA.
N.A.
NA.
YES
NO
NO
YES
NO
NO
Vermont
N.Y.
NA.
NA.
YES
N.Y.
NA.
YES
YES
N.Y.
Virginia
UND.
UND.
UND.
YES
NO
N.Y.
YES
NO
UND.
Waslgington
NA.
l.A.
NA.
YES
NO
NO
UNK.
UNK.
UNK.
West Virginia
NA.
N.Y.
N.Y.
l.A.
N.Y.
NA.
NA.
N.Y.
N.Y.
Wisconsin
NO
NO
NO
YES
NO
YES
YES
NO
110
Wyoming
NA.
N.Y.
N.Y.
YES
YES
NO
YES
NO
YES
~l-lave not applied
24
PAGENO="0326"
322
Provision of State Matching Funds By Block Grant (Continued)
PCBG
MCH CDBG
Provide
Sufficient
Supple
mutt
[~~ir
Sub-State
Provide
Sufficient
Supple-
meet
Match
Require
Sub-State
Match
Provide
Sufficient
Match
ment Sub-State
Match Match
Match
Match
Match
Match
25
PAGENO="0327"
323
Legislative Action
Legislatures in twenty-three states have approved, have pending, or
have proposed one or more special measures specifically related to block
grant implementation. These include:
* retainment by the legislature of full authority regarding
block grants (legislative approval prior to block grant
acceptance; administrative agency assignment; appropria-
tions; assignment of responsibility for conducting public
hearings);
* prohibition of centralization of block grants in one state
administrative agency;~
* requirement that block grant funding to agencies be in the
same proportion as the previous year categorical grants;
* enactment of special provisions for administration of CDBG
and CSBG (establishment of a CSBG distribution formula);
and
* creation of a block grant trust fund and establishment of
a block grant legislative review committee.
Other
In one state, the legislature twice placed language in the state
fiscal appropriations act to approve block grant expenditures. The lan-
guage first was "line-item" vetoed by the Governor and six months later it
was "pocket" vetoed.
9. Have you taken, or do you plan to take, any steps to revise
the authority, or flexibility of local governments umder block
grants? If so, please explain.
Fifteen of the states have not revised the authority or flexibility
of local governments under block grants during the current fiscal year.
Steps Already Taken
One state has reduced mandates; another state has given counties the
flexibility to develop social service programs; two states have increased
the role of local governments in CDBG by allowing then to prioritize
funding needs; in one state, CDBG funds are distributed on a per capita
basis for cities over 5,000 population and another state is providing CDBG
flexibility in selected areas. "Mini" block grants to local governments
are being distributed through the human resources committee in one `of the
states. One state has involved local officials in all aspects of block
grant planning.
26
PAGENO="0328"
324
Steps Pending or Proposed
Flexibility for local governments has been proposed, is under
advisement, or is pending in seventeen states. In two states, proposals
for ADAMHA are pending with a proposal for SSBG also pending in one of
these states. Five other states also have proposals pending; two states
are planning to give increased flexibility in FFY 1983, with one of these~
plans being designed specifically for local health departments. Two
states will emphasize different eligible activities under CDBG, thus
involving local governments, and one state will provide CDBG flexibility
if needed. Two states will strengthen the role of local governments in
CDBG by involving them in funding decisions and in determining areas of
priority needs. One state plans to "re-block" programs that have been
direct federal-local programs in the past. A bill to allow local govern-
ments to establish human services management boards has been introduced
in one state, and in another state a negotiated approach to block grants
will be implemented in the second year for SSBG, with local governments
participating in the negotiation.
10. Are there pending and/or anticipated law suits resulting
from block grants? If so, please describe briefly.
Law suits resulting from block grants are neither pending nor
anticipated in thirty-four states.
The Community Services Block Grant has resulted in law suits in two
states. In one of the states, there is a dispute over the interpretation
of Titles VI and XVII regarding (1) whether or not a public hearing was
required in FFY 1982 and (2) whether the deadline for the filing of the
state plan was timely. In the other state, a suit against the state was
initiated when the state chose to establish a new grantee that would meet
state management/administrative standards for operation of the CSBG
program. Both the state and federal courts ruled in the state's favor,
giving the state the right to determine eligibility for CSBG funds under
certain circumstances.
The cuts in services and personnel stemming from the Social Services
Block Grant have resulted in law suits in one state.
The potential for law suits exists in at least two other states:
(1) as a result of an overall reduction in funds and (2) as a result of
disagreements over equitable services for private school pupils under
ESEA.
27
PAGENO="0329"
325
11. Each block grant, at least to some degree, provides the
state with additional programmatic and administrative flexi-
bility (below, as necessary, specify by block grant).
A. What steps, if any, have been taken to remove or
simplify administrative burdens (e.g, regulations, guide
lines, planning, budgetin~, management control, pro-
cedures, reporting, etc.)?
Twenty-five states indicated that, primarily due to the late passage
of federal legislation, federal funding uncertainty, and delayed
regulations, they were unable to take any major steps to remove or
rimplify administrative burdens for FFY 1982. These states indicated
clearly that they are actively reviewing possible changes that can be made
in FFY 1983 in this area. A variety of mechanisms is being utilized for
this review process: interagency task forces, Governors' offices work
groups, state planning agency efforts, and citizen advisory committees.
For those states that have been able to institute some change in this
area, the major efforts to date have centered around:
* simplifying or reducing report requirements with more
uniformity across block grants;
o simplifying the applications to administering federal
agencies, oftentimes reducing documents as voluminous as
seventy pages to three or four pages;
o attempting to design uniform plan tormats across program
lines;
o reducing the complexity of state planning processes or
requirements; and
* moving to create uniform auditing and fiscal monitoring
for the human services block grants.
A number of the states that have instituted simplification in
administrative burdens clearly have designed these changes to benefit
local government units or providers of purchased services (e.g., mini-
block grants for counties, grants-in-aid to providers of services as
opposed to complicated contracts, and removal of federal regulations
under the SSBG assigned to local level social services offices).
Four states indicated that there may be a slight increase in
administrative burden as they assume programs included in the block
grants that previously were direct federal-local categorical programs.
B. What steps have been taken to modify programs or
p~pgram structures?
Fifteen states currently are reviewing programs to determine what
modifications may result from the implementation of block grants.
28
PAGENO="0330"
326
Ten states reported that no modifications have been made in programs
or program structures. In many of these, modifications would require
legislative action and the legislatures were not in session at the time
block grants were passed. Other states already have administrative agency
structures that encompass the majority of the block grants and thus see no
need for change.
At least seven states described program modifications that allow for
better "targeting" of resources. This resulted from changes in federal
legislation but more specifically from elimination or easing of federal
regulations. Examples of this targeting approach include:
* the ability to extend CSBG coverage to previously
ineligible state areas and citizens;
* an integration of CSBG and CDBG to focus on the objectives
of employment and economic development;
* the utilization of existing community resources such as
school cafeterias and school buses to extend CSBG
services;
o an increase of local opportunities (rural particularly) to
utilize CDBG funds; and
* the integration of certain human services block grants for
more efficient administration and coordination of
services.
The changes brought about by the SSBG have permitted a number of
states to eliminate underutilized mandatory services, establish fee
structures for certain social services, and utilize the SSBG as a base for
the integration of smaller, categorical social services programs.
The health block grants have allowed two states to consolidate a
number of small, less effective health programs into a larger, more
family-oriented approach to health services.
C. Have eligible recipient groups been modified? If so,
which?
Thirty states report that to date there have been no changes or only
minor modifications in eligible recipient groups resulting from passage
of the block grant legislation. The majority of these respondents
indicated that their decision not to modify eligible recipients was based
on either the late date of the passage of the Omnibus Reconciliation Act
of 1981 or on the continued appropriateness of current eligible recipient
groups.
In five states, considerations for modificatinos of eligible
recipients is under review and may result in changes for FFY 1983.
29
PAGENO="0331"
327
The remaining states with modifications in place emphasized that the
majority of these were made as a direct result of reductions in federal
funds (e.g., a number of states made changes in day care eligibility as a
result of the SSBG funding level).
D.Has there been a change in grantees? If so, which?
Thirty-three states have not made changes in grantees under the
block grants. The majority of these stated that it would be premature to
do so the first year because (1) in some instance, the changes would
require legislation and the legislature was not in session and (2) the
current grantees were appropriate, though funds might be reduced, not
eliminated.
Eight states will be studying possible options for changing grantees
and, as previously indicated, are utilizing interagency task forces and
advisory committees to assist in these decisions.
In those states where grantees changed, the change was made for the
following reasons:
* poor performance by previous grantee;
* ADANHA block grant funds going first to counties instead
of directly to mental health centers; and
* insufficient funds to continue the vast number of
purchased social services providers under SSBG,
particularly where services were being utilized
marginally.
E.Has there been a change in providers of services? If
so, which?
Twelve states reported changes in providers and all of these were
under the SSBG. The universal reason was the reduction in federal dollar
amounts as compared with FFY 1981 Title XX dollar amounts.
Twenty-five states indicated that they had made very little or no
change to date. One of these states advised that there will be no need
for change because a single state agency presently administers the
majority of the block grants passed.
The remaining states are studying whether in FFY 1983 they will make
changes in services providers and whether the changes will be based on
expected or anticipated budget redcictions.
30
PAGENO="0332"
328
12. The Governor's office, under the Omnibus Reconciliation
Act of 1981, now has responsibility to assure compliance with
the non-discrimination provisions of the recently enacted block
grants.
A.Has a person on the Governor's staff or an
administrative unit of government been designated as the
contact for non-discrimination compliance issues which
~~ç~pients or providers of services may initiate?
In the twenty-eight states responding "yes", a person on the
Governor's staff or in an administrative unit of government has been
designated the special contact for issues of non-discrimination
compliance that may arise.
B.If no, what plans do you have for establishing an
~pp~priate mechanism for resolving such issues initiated
involving recipients and providers?
In seven of the twenty-two states responding "no" to this question,
existing procedures and mechanisms will be utilized to resolve issues of
non-discrimination compliance. The existing procedures may involve
mandates established by state law, a hearing process, a civil rights
commission, or individual state agency responsibility for equal
opportunity functions. In four states, it is anticipated that a state
agency will be delegated the task of expediting non-discrimination
compliance issues while in four other states, this question is under
review. Two states do not have specific plans for responding to these
issues or indicate that procedures will be established as required. One
state has appointed an interagency task force which is developing plans
for resolving non-discrimination compliance issues and another has
requested that its Lieutenant Governor's Task Force define appropriate
roles.
13. Please provide the name, address, and telephone number of
~~person on the Governor's staff to be used as the contact on
all block grants.
Information is provided in Appendix A.
14. Which state administrative agency has (will have) the
actual implementation responsibility?
ADAMHA: In forty-eight states, administrative agencies charged
with sole implementation of the Alcohol, Drug Abuse and Mental
Health Block Grant can be divided into six categories (list
follows). In three of the states, implementation responsibility is
shared with one or two other departments or agencies.
31
PAGENO="0333"
329
1. Department of Health (and various name combinations
thereof, e.g., Health and Environment, Health and Human
Services, Health and Mental Hygiene, Health and Welfare,
Public Health, etc.)-nineteen states;
2. Department of Mental Health/Hygiene-fifteen states;
3. Department of Human Resources (Social Services;
Rehabilitation; Public Welfare)-seven states;
4. Department of Alcohol and Drug Abuse (Substance
Abuse)-three states;
5. Department of Public Institutions-two states; and
6. Office of the Governor (Executive Office of Human
Resources)-two states.
PCBG: Out of twenty responding states, administration for the
Primary Care Block Grant is as follows:
1. Department of Health-sixteen states;
2. Department of Human Resources-three states; and
3. Governor's Office of Federal-State Programs-one state.
PHSBG: Responsibility for administering the Preventive Health
Services Block Grant in thirty-five states is as follows:
1. Department of Health-thirty states; and
2. Department of Human Resources (Social Services; Public
Welfare)-five states.
MCH: Implementation responsibility for the Maternal and Child
Health Care Block Grant in thirty-eight states is listed below; in one of
the states, the responsibility is shared by two departments.
1. Department of Health-thirty-four states; and
2. Department of Human Resources (Social Services)-four
states.
SSBG: Of fifty states responding, the Social Services Block Grant is
being administered as follows:
1. Department of Human Resources (Social Services; Public
Welfare)-forty-three states;
2. Department of Health-five states; and
3. Department of Pensions and Economic Security-two states.
32
PAGENO="0334"
330
CSBG: The Community Services Block Grant is being administered as
follows:
1. Department or Office of Community Affairs (Services;
Development )-twelve states;
2. Department of Human Resources (Social and Rehabilitation
Services; Public Welfare)-nine states;
3. Governor's Office of Community Affairs (Federal-State
Programs )-five states;
4. Office/Bureau of Planning/Programs-four states;
5. Office of Economic Opportunity-three states;
6. Department of Health and Social Services-three states;
7. Office of Economic Security-two states;
8. Department of Labor-one state; and
9. Department of Natural Resources and Community
Development-one state.
LIEAP: Home Energy Assistance Block Grant implementation is under
the auspices of the following departments in forty-two states:
1. Department. of Human Resources (Social . Services; Public
Welfare)-eighteen states;
2. Department or Office of Community Services
(Development)-nine states;
3. Department of Health and Social Services-five states;
4. Office of Pensions and Security (Economic Security; Family
Assistance)-four states;
5. Governor's Office of Federal-State Relations (Community
Affairs)-three states;
6. Office of Policy Management-one state;
7. Office of Economic Opportunity-one state; and
8. Energy Policy Council-one state.
ESEA: In forty-six states, the responsibility for implementing the
Elementary and Secondary Education Block Grant falls within the
Departments of Education, Public Instruction or Boards of Education,
Elementary and Secondary Education.
33
PAGENO="0335"
331
CDBG: Out of thirty-seven responding states, *responsiblity for
administration of the Community Development Block Grant is as follows:
1. Department of Economic Development (Urban and Community
Affairs; Community Development-twenty states;
2. Department of Commerce-four states;
3. Governor's Office of Federal-State Programs (State
Planning and Development)-four states;
4. Department of Finance-two states;
5. Department of Housing-two states;
6. Department of Energy, Planning and Development-one state;
7. Department of Natural Resources and Community
Development-one state;
8. Office of Consumer Affairs-one state;
9. Office of Federal Aid Coordinator-one state; and
10. Office of State Planning-one state.
34
PAGENO="0336"
332
FISCAL IMPACTS OF FFY 1982 BLOCK GRANTS
Changes in spending patterns caused by the 1982 federal budget and
program initiatives are being tracked by the National Association of
State Budget Officers (NASBO). During the initial phase of this project,
the states were asked to quantify the anticipated impacts of the federal
changes during state fiscal year 1982 (July 1, 1981-June 30, 1982 in all
but four states). Preliminary analysis of data in block grant areas from
twenty-two states reveals the following patterns:
* Aggregate state expenditures will remain virtually
unchanged, with an insignificant drop of 0.05 percent.
The spending in nineteen states is within the range of
+5.8 percent to -3.3 percent from prior year levels.
South Dakota will reduce spending in block grant areas by
28.6 percent, while the State of Washington will increase
spending by 17.3 percent. In these two cases, spending
priorities have been examined carefully and fully
offsetting increases/decreases have been made in human
service programs outside of the block grant categories.
o Federal funds received by the states are expected to fall
by an average of 10.8 percent in the block grant programs.
The difference between the 10.8 percent reduction in state
receipts and the 13.2 percent reduction in federal
appropriation levels represents only a very slight delay
in the fiscal impact of block grant legislation. This
contrasts with some expectations that the impact might be
delayed due to the difference between state and federal
fiscal years and due to the fact that some aid is received
after the fiscal year quarter in which it became due.
o Changes in federal funds compared with the prior year
range from +2.3 percent to -19.8 percent. The range
appears to be explained by the widely varying mix of block
grants and other aid programs utilized by individual
states.
37
PAGENO="0337"
333
1981-83 FISCAL SURVEY
(Preliminary Partial Report from 24 States)
as of February 1, 1982
GENERAL FUND SUMMARY FY 1981-83
(24 STATES)
(in
billions)
FY 1980
FY
1981
FY 1982
FY
1983
Actual*
Ac
tual
Estimate
Estimate
Available Funds
137.3
44.5
46.9
46.5
Expenses
126.0
40.6
45.4
44.3
Ending Balance
11.3
2.6
1.5
2.2
Balance as
Percent of Expenses
9.0
6.4
3.4
*Fiscal Survey of the States 1980-1981
(50 states reporting, published October 1981.)
This table represents sunmiary data on the fiscal condition of
the twenty-four responding states combined into national
totals. The important trends or conditions reflected are:
1. The fiscal year ending balance as a percentage of
expenses continues to decline. From FY 1980 actual
9.0 percent to FY 1981 actual 6.4 percent is a drop of
29 percent.
2. The projected FY 1982 estimated balance as a percentage
of expenses is 3.4 percent. This is a projected drop of
46 percent and may reflect the estimated continuing
impact of the recession on state revenues and actual and
anticipated federal fund reductions.
38
99-965 0 - 82 - 22
PAGENO="0338"
334
STATE NARRATIVES
This section of the publication
contains information provided by states
and is for the purpose of exchanging information
on "what is workingt' in changing
intergovernmental relations.
This material was prepared by and in cooperation with
THE COUNCIL OF STATE PLANNING AGENCIES
PAGENO="0339"
335
Introduction
The narratives which comprise this section of the publication are
the states' responses to a special request made in the survey.
Recognizing the need for national exchange of information and mutual
assistance among states, respondents were asked to describe briefly at
least one of the following:
* a policy change (underway or being contemplated)
associated with human resource and community development
programs folded into the block grants;
* a planning or management practice being applied to block
grant implementation; and
* a major problem encountered during the year about which
states could learn.
General Observations
The responses fall into roughly four types of reports:
* updates on block grant implementation progress;
* descriptions of tactics being employed to absorb sharp
cuts in federal aid;
* discussion of long-term improvements to state government
planning and management systems that are being applied to
immediate concerns; and
* comments about program and policy changes which hold
promise of long-term utility in managing and delivering
human and community services.
State Progress in Implementing Block Grants
Though not specifically requested to do so, many states chose to
report the accomplishments, as well as the barriers they encountered, in
block grant implementation.
The summaries contain many similarities, yet they indicate that
Governors are utilizing approaches uniquely tailored to the needs of
their states. The major similarities are as follows:
* Governors have made use of task forces to bring about
closer executive/legislative cooperation, increase par-
ticipation in decisionmaking by the general public/local
officials, and coordinate inter-executive agency actions.
and
* Governors, wherever possible, have made use of existing
state mechanisms and have established committees to imple-
ment block grants.
41
PAGENO="0340"
336
Descriptions of tactics being employed (and problems encountered) in
absorbing federal funding reductions have been submitted by several
states. It is apparent that current and proposed budget cuts are the
overwhelming concern of state officials. Descriptions of state
approaches to cope with the problem cover a wide range:
* across-the-board reductions for FFY 1982 while preparing
strategies for FFY 1983 with long-term utility;
* priority-setting for more discrete targeting of state
funds;
* acceptance and allocation of all federal funding,
regardless of funding stream; and
* budget processes driven by policies and plans to be tested
against FFY 1982 shortfalls.
orts of improvements to state planning and management systems as
applied to block grant implementation and funding reductions have been
submitted by many states. The summaries describe practices that have been
utilized among key actors in state ~~~j5ionmaking_executive and legis-
lative branches, local governments, citizens, the private sector, and
federal government. Narratives describe practices that are:
* bringing about consensus among executive agencies;
* improving state-local relationships;
* fostering citizen participation in decisionmaking;
* disseminating information on progress and achievements to
the general public;
* involving the private sector in government decisionmaking
and program support; and
* substituting state-developed processes and plans for
federal requirements.
These improvements have long-term implications for strengthening the
state role in achieving local, state, and national domestic goals.
Community and human services policies and program chat~g~~ have been
noted in several state narratives, the features of which include:
* increased program efficiencies and effectiveness;
* shifted resources among client groups;
* new methods of delivering services (new combinations of
services, elimination of services); and
* utilization of federal government waivers.
Several states have approached policy changes from a different
perspective: descriptions of conceptualizing pressing policy issues
contrast with reports of developing innovative policy. One state
describes the necessity for "taking off the program hats" worn by state
officials in efforts to bring about health care reforms. Another
respondent summarizes the need for "investing in human capital".
42
PAGENO="0341"
337
It is interesting to note the program areas in which policy and
program changes are occurring. A number of states discuss approches they
are taking to target state resources and move recipients off welfare roles
into employment and self-sufficiency. Others describe initiatives to
improve the return on public expenditure for education. Still others
outline strategies to target development funds to communities most in
need. One group of states offers approaches for increasing the effective-
ness and efficiency of health care for citizens.
A final observation regarding the narratives must be made. Without
exception respondents are extremely interested in finding out about ini-
tiatives underway in other states. In follow-up telephone discussion
with these state officials, they have commented upon the value of a
national exchange of information and mutual assistance among states in
order to strengthen the states' role in the months and years ahead.
Respondents indicate that the importance of making significant changes is
clear, that each state is thinking through and making changes and improve-
ments appropriate to its needs, and that sharing information and
strategies is essential.
Conclusions
States are interested in and will support the creation of mechanisms
to share information on human resources policy options and
planning/management reforms among the states.
A set of practical approaches has emerged from an analysis of thorny
issues such as states describe in their narratives and it is reflective of
the dynamics of actual state decisionmaking processes.
At a special Governors' work session on block grant implementation
during the National Governors' Association 1981 summer meeting in
Atlantic City, major themes were identified and subsequently have been
refined by the states during their initial stages of block grant
implementation. Those themes are as follows:
* building interagency consensus within the executive branch
of state government;
* developing executive-legislative coordination
* improving state-local partnerships;
* fostering citizen participation in decisionmaking
* informing the public of progress and achievements
* involving the private sector (for-profit, non-profit, and
foundations) in decisionmaking and program support; and
* substituting state-developed processes and plans for
federal requirements.
43
PAGENO="0342"
338
Actions states can and should take, to further strengthen their
management roles in the National Economic Recovery Program and their
administrative roles in delivering essential human and community services
to their citizens, need further attention. In light of this, a framework
for an exchange of relevant information and for mutual assistance among
states in their deliberations and actions is offered. Although it needs
refinement, this framework is essential for the 1980s as this decade
presents an unparalleled opportunity for states to reorder their com-
munity and human service priorities. Central questions to be considered
in the development of these issues are:
* What is the economic and political environment in which
human and community services will be set?
* What will the service needs and demands be in this decade?
and
* What policy and program changes should be made to meet
service needs within economic and political constraints?
The narratives underscore that present economic considerations and
political realities are forcing states more than ever before to confront
the allocation of community and human resources. Furthermore, the policy
changes reported by some states point to priorities that cannot continue
to be advanced through narrow perspectives which pigeonhole human and
community needs according to former funding formulas.
44
PAGENO="0343"
339
ALABAMA BLOCK GRANT POLICY AND MANAGEMENT
The State of Alabama has sought the best possible means to implement
block grants. This has meant searching for unique, innovative, cost-
effective, and workable ways to accomplish this end with minimum effect
from any political pressures from within or without. We believe we have
been successful in devising a policy and a system to achieve both
objectives.
State Inter-Agency Council on Block Grants Leadership Role
In August 1981, Governor Fob James, by Executive Order, created an
Inter-Agency Council on Block Grants. The Council was composed of the
Governor, directors of those state agencies most affected, and other
interested boards or commissions.
The Council studied the impact of the federal changes upon the
various state agencies and programs and worked together in planning for
the impact of those changes. The Council convened and for each block
grant appointed a task force to:
* identify programs included or proposed to be included in
the block grants;
* review present programs to assess the need to continue
them and at what level;
* estimate budget figures for fiscal years 1981-1982 and
compare with previous years;
* identify problems and other issues;
* invite comment and participation from other interested
groups, including representatives of impacted constit-
uents; and
* make recommendations on the distribution of the block
grants, including a narrative explanation and justifica-
tion by individual program.
Each task force submitted its report to the Inter-Agency Council
which, after comparing the results with what other states were doing or
proposing to do (in terms of methodology, membership, targets, etc.),
prepared a State Plan containing recommendations for the Governor and
Joint Legislative Committee.
Task Force Actions
The task forces were most effective in coordinating funding of
programs between agencies and in determining need for transfer of funds.
Each task force negotiated for federal funding with the lead agencies for
various programs, e.g., the Task Force on Home Energy Assistance Block
Grant (LIEAP) agreed to transfer the 10 percent allowable under that
particular grant to the Department of Pensions and Security to support
Title XX Social Service programs.
45
PAGENO="0344"
340
To foster citizen participation, public hearings were conducted in
four geographic areas of the state. Hearings were given newspaper
coverage to encourage citizen participation. The meetings were chaired
by members of the Legislative Committee, with member3 of the State
Planning Office and staff from lead agencies assisting. Both written and
oral presentations were given and ideas for procedural changes and
implementation of the block grants were heard from representatives at the
local, executive and legislative levels. All questions and comments were
recorded, reviewed, and considered by the hearing panels and information
was made available to all know interested parties.
Design and administration of the Community Development Block Grant
(CDBG) program was different. Two working committees were established:
the Technical Advisory Committee (composed of seven members and six
alternates representing all geographic areas of the state) and the Policy
Committee (composed of six members representing city/county government,
state legislature and administration, regional planning and development
agencies, and HUD). The Policy Committee served as principal adviser to
the Technical Advisory Committee which in turn made recommendations to
the Policy Committee for presentation to the Governor and Legislative
Committee. Close working associations on the part of these individuals
resulted in a program which will implement the CDBG and benefit the state
with maximum participation on the part of the public and private sectors.
Success Factors
In summary, the critical success factors in Alabama's implementation
efforts have been: communicating effectively between all participating
individuals and groups; cooperating by sharing ideas and concerns and
coordinating between executive, legislative, and local officials; and,
most importantly, keeping political actions and interactions to a
minimum.
For further information contact:
Audrey Henderson
Governor's Office of State Planning and Federal Programs
State Capitol
Montgomery, Alabama 36130
205/832-6963
ALASKA EVALUATION OF STATE DECISIONMAKING
Transition Planning Effort
The Governor's Office recognizes the need for well-planned,
consistent, and in many cases rapid decisionmaking in response to recent
and future changes in federal policy and the transition to expanded state
responsibility. Such federal policy changes, particularly in the area of
human services, result in a complex set of decisions fot the state
encompassing short-term budgetary issues, as well as long-term planning,
program mangement, and funding alternatives.
46
PAGENO="0345"
341
Therefore, the state plans to evaluate the current decision-making
and planning process with an eye toward a more flexible and integrated
system which will, of necessity, cut across traditional organizational
structures. The anticiDated activities toward this goal include:
* organizing information on the effect of recent federal
policy changes on local, state, and federal programs in
Alaska, including reductions in funding, changes in
program restrictions, and other policy changes;
* identifying decisions facing the state regarding these
impacts, e.g., the administration of block grants; and
* determining the options available to the state in response
to these decisions and developing policy criteria for use
in choosing among identified options.
The Office of the Governor has applied for funds to initiate this
effort, and will form a committee of Governor's budget and policy staff
and affected departments to guide the project.
Problems in Block Grant Administration
The most vexing problem being experienced in block grant
administration is the shortfall between federal promises and delivery.
The President's original concept of much greater state control over
programs has not materialized. Little in the way of genuine new
flexibility in program administration can be found in the FFY 1982 round
of block grants. The blocks generally consist of programs that:
* previously were run by the states as a block
(Title XX/Social Services Block);
* previously were run by the states as a single program
(Home Energy Assistance);
* contain "hold harmless" mandates to continue funding
existing grantees (Mental Health, Preventive Health and
Health Services, Primary Care); or
* set rigid formulas for use of the funds in order to
preserve old federal priorities (Alcohol and Drug Abuse).
Far fewer categorical programs were combined in the blocks than was
expected, based on early rhetoric. Yet, the reduction in federal funding
support of the programs that were blocked greatly exceeded the amounts
that the Governors agreed could be saved under the original consolidation
plan. The net result, from our state's perspective, has been a reduction
in the state's ability to deliver vital health and social services. The
true impact of this reduced capability will be felt as the state enters
the State Fiscal Year 1983 in July 1982.
47
PAGENO="0346"
342
A related problem is the flow of misinformation resulting from
promises of flexibility and discretionary funding that never materialize.
Unrealisitic expectations are created in the community by federal
announcements. It falls to state officials to explain the real picture,
when citizens and organizations request services and a share of the
federal bounty.
Ironically, while releasing little federal control over block
granted funds, the Omnibus Reconciliation Act requires the states to
create appurtenances of local control such as public hearings and even
legislative hearings. This runs up the cost to the state of administering
the funds to little practical effect. The cost of increased coordination
and planning in sparsely populated states such as Alaska ultimately may
exceed the value of the tiny block grant allocations the state receives.
For further information contact:
Carole Burger
Special Assistant
Off ice of the Governor
State Capitol
Juneau, Alaska 99811
907/465-3500
ARIZONA WORK INCENTIVE DEMONSTRATION PROGRAN
Program for Reducing AFDC Costs
Arizona has submitted a Work Incentive Demonstration Program to the
federal government that outlines approaches to reducing government
expenditures for public assistance by training and placing in
unsubsidized employment those persons who receive assistance under Aid to
Families with Dependent Children (AFDC) and food stamps.
Recent research has indicated that lack of job skills, job-finding
skills, access to transportation, child care and employment opportunities
have contributed toward increasing dependency on public assistance. The
Arizona proposal, `which has been approved by the federal government, will
provide training, job-seeking skills, and placement into unsubsidized
employment for a total of 12,000 participants during the three-year
demonstration program. The proposed date of full program implementation
is July 1, 1982. All participants will be trained prior to placement in
the private or public sector. Skills training will consist of a variety
of options based upon labor market needs in Naricopa and Pima counties.
The development of positive work attitudes and habits will be a key
element of the program and will be accomplished through a philosophy
inherent to the program that learning to work is as critical as learning a
marketable skill. The program will enhance the job-seeking skills of the
participants by making them self-sufficient in identifying potential job
openings and effectively applying and competing for jobs, whether it
would be in the public or private sector.
48
PAGENO="0347"
343
Available Job Opportunities
Although Arizona currently is experiencing a slack period of
employment growth, Department of Economic Security economists forecast
that 66,433 new jobs will be created in 1983, and 646,865 new positions
will be created between now and 1990. The majority of these job
opportunities will be entry-level occupations such as salesclerks,
laborers and unskilled workers, general office help, waiter or waitress,
cashier, food preparation, unskilled assembler. These jobs require
minimal or no previous experience, have a high turnover rate, and
represent 20 percent of employment in Arizona.
Program Participants
A preliminary analysis of potential participants for the program
indicates that 42 percent have completed twelve or more years of
schooling, 78 percent are between the ages of 21-44, 95 percent are
female heads of household, and 71 percent reside in Maricopa County. The
average monthly payment per recipient is $63. This analysis would
indicate that nearly half possess a basic education and that the monthly
AFDC payment should not serve as a motivational deterrent to seek
employment. Of the approximately 23,000 AFDC households in Arizona, an
estimated 11,000 will be eligible to participate in the program. Of the
72,000 food stamp recipients in the state, an estimated 5,000.would be
required to participate in work experience. (Most of the AFDC households
are included in the food stamp total.) All new applicants for AFDC or
food stamps, as well as those receiving benefits, will be required to
register and move immediately into the program. Stringent criteria will
be used in determining exemptions. The only exemptions will be for
children under 19 who are attending school full time, people who are ill
or disabled, mothers with children under 3, and the elderly.
Program Components
In order to insure the success of the program, Arizona Department of
Economic Security will implement the following strategies:
* Private Sector Partnership-job placements will be
solicited in the private labor market. Employers who
participate will be eligible for increased tax credits of
up to $4,500 over a two-year period under the Targeted
Jobs Tax Credit programs. Participants referred to the
private sector already will have received appropriate
intensified skills training.
* Government Productivity Program-state government
agencies will be requested to identify entry-level
positions and participants will be trained to compete for
those positions.
* Contractor Incentive Program-contractors with the
Department of Economic Security in the area of day care,
residential homes, maintenance and aid to the elderly will
be encouraged to employ some of the participants in their
operations.
49
PAGENO="0348"
344
* Private Business Development-the Department of Economic
Security will assist community-based organizations in the
development of private businesses which could become self-
support ing with the understanding that these businesses
will employ work incentive participants. Initial efforts
will focus on day care.
* Employment Service Potential-a concentrated training
system utilizing community colleges and existing training
institutions will be developed to prepare a pool of job-
ready individuals in occupational areas identified by
growth industries.
* Job Search Workshops-participants will be provided
classroom training and information on self-help job-
seeking skills, such as how to conduct a job interview,
use of yellow pages to identify potential employers, use
of telephone in obtaining job interview appointments, and
how to complete an application or develop a resume.
* Hard-To-Place Clients-the existing resources of the
Department of Economic Security's Employment and Training
and the Vocational Rehabilitation programs wil be used to
develop a training system for those individuals who have
little or no employable skills and those with other
exceptional problems which will assist them in becoming
self-sufficient, job-ready, or productive in a workfare
situation.
For further information contact:
Mr. Joe Coto
Assistant Director
Divison of Employment and Rehabilitation Services
Arizona Department of Economic Security
1300 West Washington Street (Site Code 9OlA)
Phoenix, Arizona 85007
602/255-4333
ARKANSAS MISCELLANEOUS FEDERAL GRANT ACT
In Arkansas, block grant implementation has made use of existing
mechanisms and government structure to ease the task of transition. Since
all of the affected programs are administered from a state level and
federal monies are appropriated in the normal budget process, it has not
been necessary to develop special strategies for responding to the major
block grant issues experienced across the nation.
Of note to others, however, is state legislation-The Miscellaneous
Federal Grant Act-already in place that allows the state to receive
unanticipated federal funds during an interim between legislative
sessions. Through provisions of the act, the state is able to set up the
Alcohol and Drug and Mental Health Block Grant and the Community Services
Block Grant with no additional legislation needed,' and the Office of the
Governor and the Department of Finance and Administration can review and
act upon the grants.
50
PAGENO="0349"
345
For further information contact:
Linda Garner
Office of the Governor
State Capitol, Room 250
Little Rock, Arkansas 72201
501/3 71-2345
CALIFORNIA INVESTMENT IN HUMAN RESOURCES
Long-term Needs for State Economic Growth
Perhaps the federal budget cuts which will be most harmful for
California over the long-run are those in education and job-training.
Education cuts impede the state's ability to equip its youth for the
increasingly sophisticated economy and society they are entering. Job-
training cuts make it harder to retrain workers displaced by automation
and/or the national recession, to consign welfare recipients and youth
from areas of high unemployment, and others indefinitely to the dole.
California Human Investment Initiatives
California, therefore, is looking more closely at its need to invest
in human capital for a changing economy. Despite a $2 billion shortfall
in revenues needed to keep state spending at an inflation-adjusted 1981-
82 level, the Governor's budget for 1982-83 proposes several new
initiatives and some program redirections designed to enhance
California's investment in education, science, and job-training. The
major components of this effort are:
* $11 million for the California community colleges to
expand employment-based job-training through the
California Worksite Education and Training Act (CWETA) and
to train teachers for the new technical careers of the
future;
* $20 million for training elementary and secondary math and
science teachers and providing instructional materials,
including computers for instructional use;
* $7 million for expanding engineering education at the
University of California and the state university;
* $8 million for intensive job search assistance and job-
training for welfare recipients;
* $2 million for special job placement and retraining for
workers displaced by layoffs and plant closings;
* $1 million to improve business and labor involvement in
vocational education programs.
51
PAGENO="0350"
346
In addition to these new initiatives, existing programs will be
enhanced and redirected. The state's CWETA program has proved highly
successful over the past two years. Building from instructional
resources of the community colleges, CWETA trains companies' existing
staffs for higher skilled jobs, thereby opening up entry-level jobs for
the unemployed. CWETA also provides training for these entry jobs.
Currently, CWETA trains more than 4,000 persons per year.
The CWETA program is just one of the ways in which California is
recognizing the changing structure of the world economy brought about by
high technology. Last year, a Commission on Industrial Innovation was
established, composed of prominent business, labor, and academic leaders.
This commission will point the state toward some of the changes to be made
in adapting to a more technologically advanced economy.
New Partnerships Needed
All of these initiatives are based upon a central
tenet-California's employment needs can be met only through a
partnership of government, industry, and labor. Only in this way can the
skills needed for tomorrow's jobs be developed. Ultimately, it must be
through this investment in our human capital that states find solutions to
today's human resources problems.
For further information contact:
Ben Williams
Chief, Administrative Services
1400 Tenth Street, Room 150
Sacramento, California 95814
916/322-3170
COLORADO STRATEGIES FOR RESPONDING TO REDUCED FUNDING
Many Factors Limit Scope of State-Initiated Changes
To date, Colorado actions to respond to federal block grant
initiatives have been limited by the large budget cuts incorporated into
the block grants, the short time frame allowed for implementation of the
block grants, the generally restrictive nature of the block grants, and
the large budget cuts in related categorical grant programs.
The state, however, has taken advantage of reduced administrative
requirements such as: simplified application procedures, limited planning
requirements, and reduced nonfinancial reporting. In addition, certain
initiatives currently are under consideration: reduction of state
licensing and regulatory requirements; development of needs analyses to
equitably distribute more limited resources; and increased local
flexibility over discretionary services.
52
PAGENO="0351"
347
Broader state/local issues under discussion by the Colorado
Commission on State and Local Government Finance and other forums range
from state assumption of income maintenance and social services programs
to block granting certain funds directly to local governments.
Creative Responses to Funding Reductions
In reality, the block grants, while providing some reduction in
administrative requirements, have acted primarily as a mechanism for
reducing funding to state and local governments. Accordingly, Colorado's
primary response has been in developing creative responses to funding
reductions in order to preserve critical services to the most needy and
disabled populations in the State. Those responses include the
following:
* AFDC-the state moved to adopt the rateable reduction
method of calculating AFDC benefits. This action, coupled
with increasing the state's need standard, was used to
maintain a work incentive in the AFDC program. In
addition, child care services for AFDC recipients formerly
funded under Title XX became an income disregard under
AFDC. This action shifted a portion of the day care
program from reduced Title XX funding to open-ended AFDC
funding.
* Homemaker Services-a Medicaid waiver has been requested
which would allow homemaker services to the elderly and
disabled to be funded under Medicaid home health care
provisions. This initiative will further reduce Title XX
requirements while maintaining services to clients who
otherwise might require more costly nursing home care.
* Medically Needy Program-the Governor has requested the
addition of a Medically Needy program through Medicaid as
a means of refinancing and providing additional services
to the Medically Indigent population in Colorado. The
program would provide essential low-cost services to a
target population of mothers, children, and elderly who
fall just above the Medicaid income eligibility criteria.
Other Medicaid Initiatives-Medicaid waivers currently
are being requested which would allow home and community-
based services to be provided to the mentally ill and
mentally disabled who otherwise would require nursing
facility care.
For further information contact:
Lee White
Executive Director
Office of State Planning and Budget
State Capitol Building, Room 102
Denver, Colorado 80203
303/866-3317
53
PAGENO="0352"
348
CONNECTICUT NEGOTIATED APPROACH TO TUE ALLOCATION OF FFY 1983
SOCIAL SERVICES BLOCK GRANT FUNDS
Need for Innovative Allocation and Priority-Setting Techniques
On March 26, 1981, Governor William A. O'Neill established an
Interagency Task Force on Block Grants. The task force was asked to
recommend methods of administering the new federal block grants and also
to explore innovative allocation and priority-setting techniques. The
task force recommended that a negotiated process be used for block grants
involving multiple state agencies. Because of its comlexity,
flexibility, and scope, the Social Services Block Grant (SSBG) (involving
fourteen state agencies and a host of municipal and private human service
agencies) was singled out as particularly appropriate for a test of this
negotiated approach.
The task force's recommendation was largely due to familiarity with
the Negotiated Investment Strategy (NIS) developed by the Charles V,
Kettering Foundation to implement urban policy. The NIS concept involves
direct negotiation among federal, state, and local teams regarding
investment decisions and regulatory actions by each to serve the needs of
a particular city. The process is supervised by an impartial mediator and
results in a written agreement. The foundation's NIS experiments in the
cities of St. Paul, Columbus, and Gary dealt successfully with a wide
array of complex issues and a wide array of interested agencies and
parties, including the three levels of government and the private sector.
Although the NIS focused on urban policy implementation and on
individual cities, the techniques involved are applicable to a wider
range of intra- and inter-governmental issues. Concurrent with
Connecticut's interest, the Kettering Foundation also became interested
in adapting the negotiation techniques developed through its MIS
experience to a broader variety of subject matter. The foundation
explicitly recognized block grant implementation as a potential
application and thus was extremely receptive when the Connecticut Office
of Policy and Managemet (OPM) approached it for help in the design and
imlementation of a potential negotiated allocation of Connecticut's
Social Services Block Grant for FFY 1983.
Negotiated Investment Strategy Goals and Objectives
The goal of the negotiated process, if undertaken, would be to
improve the techniques of irftergovernmental decisionmaking. The
objectives would include design and testing of an innovative approach for
allocation of limited block grant money which would:
* demonstrate the ability of state government to make
effective use of the authority to the states and provide a
model~process which can be replicated by other states for
a variety of purposes;
* provide an opportunity to place an array of human service
delivery issues on the table and obtain agreement on the
relative importance of each;
54
PAGENO="0353"
349
o provide an opportunity to place individual agency program
requests in the context of overall needs and subject those
requests to scrutiny by peer agencies or claimants;
o permit those claimants to see and understand all of the
other claims on the same limited funding;
* develop a block grant allocation process which permits all
or most of the funding claimants to agree to the result;
and
* develop a more effective allocation of block grant funding
than can be achieved through more conventional procedures.
"Effectiveness" in this case must be judged in terms of
the amount of service to be provided, the extent to which
that service is consistent with the needs which the
participants identify to be the most important, and the
level of consensus achieved through the negotiating
process.
Design and Product of the Negotiated Allocation Process
Design of the negotiated process for the SSBG is being explored. The
description which follows is preliminary, pending further design work by
OPM and the Kettering Foundation and pending selection of and input by the
medi~tor, if the decision is made to proceed. The participants in the
negotiations also would have an opportunity to modify and approve the
procedures.
The product of the negotiation, at least the first time, would be the
executive branch's plan for allocation of the SSBG funding for FFY 1983.
A broader goal would increase the complexity beyond feasibility in the
limited time available. However, to achieve the objective of a "more
effective" allocation, broad policies would have to be agreed upon,
priorities would have to be set, and the relationship of block grant to
other funding sources would have to be considered in the negotiations.
Proposed Implementation Steps
Five sequential steps would be taken to implement the negotiated
approach:
* affected queries would be identified and determination
made of how each would be included in the negotiations,
including state, local, and private agencies; ideally, no
party to the negotiation should be in a position to
contravene it; no party with the ability to contravene it
would be outside the negotiation;
* preparation for negotiation would take place and would
include important tasks as follows:
- selection of a mediator; impartial mediation is a
critical element of the process, and early
availability is desirable to help structure the
negotiations;
55
99-965 0 - 82 - 23
PAGENO="0354"
350
- organization of private and municipal
representation; since it would be unwieldy for every
potential claimant to be represented individually,
steps would be taken by municipal and private service
providers to select representatives to serve,
protect, defend, and negotiate their interests;
- development of proposed ground rules; the scope of
the block grant and range of participants require
much preplanning to assure that the process will not
become unwieldy; an important element is the design
of a tiered process assuring orderly sequence and
reducing the elements for discussion at any given
time to a reasonable scale; and
- provision of training sessions; the Kettering
Foundation would conduct training sessions for the
participants to improve the skills required for
successful negotiation.
* initial public hearings would be held;
* draft plan would be prepared; the planning sequence and
plan content could include the following, but could
develop differently as negotiations proceed:
* - agreement on ground rules, philosophical base, data
base, objectives and priorities;
- determination of appropriate state agency, private,
local government percentages of the available
funding;
- determination of funding for each state agency; and
- development of criteria for determining how much
money each private and local grantee will receive
(and who will decide); and
public hearing and legislative review would take place.
Conc lus ion
The easiest approach to allocation of the SSBG would `be to
accoimnodate the block grant as closely as possible to past practice.
Connecticut instead proposes to use the block grant as an opportunity to
reassess its position, establish its own priorities, actively involve a
grassroots array of claimants, and explore the possibility of new modes of
intergovernmental dec is ionmaking.
For further information contact:
Stephen B. Heintz
Undersecretary
Comprehensive Planning Division
Office of Policy and Management
50 Washington Street
Hartford, Connecticut 06115
203/ 566-4298
56
PAGENO="0355"
351
DELAWARE CITIZEN PARITICIPATION IN DECISONMAKING
Four Citizen Committees Established to Advise on Service Priorities
Governor du Pont has given the Department of Health and Social
Services responsibility for planning and implementing four block grants:
Alcoholism, Drug Abuse and Mental Health; Social Services; Maternal and
Child Health; and Preventive Health Services. Directors of divisions who
plan and/or administer the block grants (Public Health; Mental Health;
and Planning, Research and Evaluation) are establishing three block grant
review committees, composed entirely of citizens, to provide community
participation and involvement in the block grant process. The committees
will advise the divisions on service priorities and funding policiep for
the block grants in a timely manner in order to utilize committee
recommendations in preparing the FFY 1983 block grant plan and
application. The committees also will advise on any significant changes
during the year that may be necessitated by federal funding changes, and
will monitor program outcomes and results.
Committees' Membership
Committees will be comprised entirely of community members-not of
state/private agency staff with which the department contracts. There
will be broad statewide representation.
Staff Support
Divisions of state/private agencies will provide staff support to
committees and division directors will serve as "ex-officio" members.
The staff will provide at the committees' request:
* background and follow-up information and materials;
* suggestions and alternatives;
* logistics information;
* report drafts; and
* assistance in preparing a schedule and work plan.
Committee Responsibilities
The committees are charged with seven major responsibilities:
* to gain knowledge and understanding of:
- division-operated programs, with particular emphasis
on those relevant to block grants;
- federal criteria and funding for block grant
programs;
- FFY 1982 block grant-funded services (either funded
directly or through purchase-of-service), both
state- and federally-mandated; and
- FFY 1982 block grant allocation.
57
PAGENO="0356"
352
* to establish priorities and criteria and make
recommendations for service delivery in the state;
* to recommend overall policies on the issue of contractual
or direct service delivery of specific services;
* to recommend what percentage of available block grant
funds should be spent on various priority services areas~
(not to make specific allocations, but to recommend
policies for making allocations and for "carrying over"
funds to help maintain services in subsequent years;
* to solicit, review, and consider public comments (by
attending public and legislative hearings on block grants)
prior to making its recommendations;
* to review reports on the outcome of block grant programs
throughout the year and to advise their respective
division directors of any necessary major changes.
Through the work of these committees, the State of Delaware expects
to receive valuable community perspective and insight that will guide the
decisionmaking process under block grants.
For further information contact:
Jorene Jameson
Executive Assistant for Operations
Office of the Governor
820 French Street
Wilmingotn, Delaware 19801
302/571-3210
FLORIDA HEALTH CARE POLICY DEVELOPMENT
Policy Capabilities
For the past fifteen years, state governments have made major
strides in developing the institutional capacity to effectively identify
problems, set priorities, and implement responsive and innovative
programs. The policy implications of the Reagan Administration's "New
Federalism" are built on the reality of the states' increased ability to
plan, manage, and allocate resources that meet the unique needs of our
citizens. For state governments, the question is not whether the
institutional capacity to accept more policy responsibility exists, but
whether states have the fiscal capacity to do so. Honest reevaluation of
all programs and creative redesign of current efforts is essential. In
the health area, the challenge is to maximize the programmatic
opportunities now available, in order to craft a more unified cost-
efficient and effective health care system targeted on those most in need.
58
PAGENO="0357"
353
Health Care Is Not Effective
The health care system presently supported by the public sector
needs improvement. In most states, Medicaid represents the largest
financial commitment to health care. Medicaid generally has been focused
on high cost "sickness care" with few opportunities to ensure any
continuum of care designed to maintain the health of our low-income
population. Added to Medicaid, but generally poorly linked, are an
assortment of large and small federal grant-in-aid programs, state-funded
public health efforts and locally-supported services. The result is a
score of programs that have one thing in common-they fund some care
unnecessarily, while leaving gaps large enough to miss significant
numbers of high-risk individuals and families. The long-range
ramifications of the status quo are unacceptable from the perspective of
both the long-term health of the community-at-large and the people in need
of critical services.
Florida Analysis of Health Care Financing Impact
Florida has long recognized that these problems existed.
Unfortunately, due to the speed with which the state has had to respond to
the reconciliation actions, combined with the continued uncertainty over
the specifics of funding levels and program changes incorporated in them,
Florida is in risk of missing the chance to make some needed changes.
Since February 1981, when the federal proposals first were
announced, the Office of the Governor has been working closely with the
Department of Health and Rehabilitative Services (DHRS) in order to fully
understand and act upon these changes. State analysis has focused on
identifying both the policy implications and the fiscal liabilities, the
approach being that policy decisions drive the state "budget
reconciliation". The process has underscored a long-range, comprehensive
analysis of choices. In addition, Florida fully expects this to be an
annual serialization. During the past six months, this exercise often has
appeared to be like shooting at a moving target. It now is clear that
state background work has provided Florida with an essential head start as
the implementation process for block grants begins to settle down.
In the Spring of 1981, the state analysis was geared toward
identifying those aspects of the proposal that were totally unacceptable
and which would require working with the state congressional delegation
to improve. Based upon solid analysis prepared by the DHRS, the Governor
publicly raised strong objection to the proposed "cap" on Medicaid. Work
with other states and national groups was successful in eliminating the
"cap", the results of which take on even larger proportions as Florida
continues to explore the programmatic modifications incoroporated in
Medicaid.
59
PAGENO="0358"
354
Since March 1981, Florida has produced four reports that have
attempted to identify and refine the potential impact on the state of the
Economic Recovery Program. The last in this series was published in
August and is based on the final authorized funding levels for federal
grant-in-aid programs included in the Omnibus Reconciliation Act. The
majority of these programs require further action through Congressional
appropriations bills before actual funding levels for FFY 1982 are known
(with the exception of entitlement programs).
Following final passage of the Omnibus Reconciliation Act in August,
policy analysis efforts moved into high gear. On August 24, the DHRS and
other state agencies submitted an Issue Overview Report to the Governor.
The report provided:
* data on critical federal reductions and revisions in
policy that would have an immediate effect on the state
and require a decision by the Governor;
* identification of issues and policy opoprtunities that
would need further analysis and an eventual decision by
the Governor; and
* information regarding block grant options and recommended
action to be taken by state administration.
Criteria Set for Policy and Budget Decisions
In order to provide agencies with further direction in analyzing
specific issues for the Governor, the following questions were developed:
* What opportunities are available for improving the
administration and delivery of services due to the
a) merging of programs into block grants, and b) added
flexibility in existing federal categorical and entitle-
ment programs? (Specifically, how will the state be able
to direct federal funds to state priority needs?)
* What critical services might be cut back without
significant redirection of existing revenues?
* What organizational, administrative, and inter-
governmental issues are inherent in the block grants and
revised entitlement programs?
* What options are available under the Act for programs not
included in block grants? and
* What would be the implications of:
- absorbing the federal reductions with no additional
state resources;
- cutting back/redirecting state general revenue
programs to provide relief in high priority programs
impacted by the federal funding cutbacks; and
- delaying or phasing in implementation of new and
improved programs included in the state's FT 1981-82
appropriation bill?
60
PAGENO="0359"
355
Long-range Policy Implications
Based on the analysis to date, the state is actively exploring
opportunities to coordinate (through a centralized uniform delivery
system at the local level) the provision of health services to low-income
individuals and families. The options in the Medicaid revisions, to
provide case management services and provide home- and community-based
services to avoid institutionalization, encourage prepaid health delivery
mechanisms and delete restrictive requirements for medically-indigent
programs. This strongly suggests that Medicaid can provide a continuum of
services supported by Maternal and Child Health, block grants, and
related state/local resources for low-income and high-rise populations.
The changes included in the Omnibus Reconciliation Act have required
Florida to take off program hats and look at ways to more effectively link
Medicaid and health services programs. The state is optimistic about the
long-range possibilities but remains concerned about the appropriate role
of the federal government.
For further information contact:
Baldwin Bunkley
Office of Planning and Budgeting
Carleton Building, Suite 311
Tallahassee, Florida 32301
904/487-2360
HAWAII INTEGRATION OF BLOCK GRANT IMPLEMENTATION
INTO STATE BUDGETING SYSTEM
The Hawaii Department of Budget and Finance has been directed by the
Governor to evaluate the possibility of integrating the block grant
process with the state budgeting system. It is anticipated that such an
integration will serve to ensure that adequate state resources will be
budgeted in critical program areas which have been negatively impacted by
block grant implementation. It also is intended that such a system will
foster increased coordination between the administrative agencies
involved in administering the various block grants as well as categorical
grants. -
A major obstacle in achieving the proposed system is the timetable
difference between the state budget preparation cycle and the federal
block grant implementation process. This concern, as well as others, must
be addressed appropriately before policies can be issued.
For further information contact:
Carl Takamura
Special Assistant to the Governor
State Capitol
Honolulu, Hawaii 96813
808/548-2335
61
PAGENO="0360"
356
IDAHO NEW APPROACH TO BUDGET PROCESS
Idaho has made wholesale revisions in its approach to setting the
state budget and has integrated the budget hearing process into the new
approach.
A cabinet retreat was held in May 1981 at which department directors
were asked to assign each of the more than 200 budgeted programs in the
state to one of four categories: contract, expand, maintenance, or
adjusted maintenance. After some massaging in the budget office, these
decisions were formally communicated to departments by the Governor in
the form of budget targets.
In early September (when department budgets are submitted), state
officials reviewed the budget decisionmaking process with the idea of
involving the cabinet and general public by holding budget hearings. The
concept.received mixed reactions as some cabinet members anticipated that
the hearings would attract only negative comment on high taxes and big
government and little in the way of constructive suggestions. Generally,
however, it was felt that the hearings would serve to be productive.
Two approaches were examined in deciding the manner in which the
hearings would be held: a) holding a series of hearings on different
topics, and b) holding a series of general topic hearings in different
geographical areas of the state. Since Idaho is a big state with a small
population, it was decided that eight budget hearings would be held in
various regions during the Month of September.
Publicity for the hearings was handled through a variety of means.
In addition to normal press releases on the subject, the Governor provided
oral material for the state's audio service (radio stations key into this
service for their news programs) and wrote a column-"Scene from the
Statehouse"-for the state's weekly newspapers. Also, departments were
asked to work through their regional and local offices to make sure that
interested people were informed of the hearings. Special interest groups
were contacted directly.
Meetings were conducted by the state budget director and members of
the budget staff attended on a rotation basis to provide technical support
as well as to derive benefit from hearing public sentiment. The meetings
were tape-recorded for the record.
The budget hearings were used as the central theme for the Governor's
budget message which he delivered on prime-time television prior to the
beginning of the legislative session in December. The message received
excellent coverage and contained statistics and quotes garnered from the
budget hearings, forming the framework for the budget process for the
legislature.
62
PAGENO="0361"
357
In summary, Idaho has learned a lot about the potential benefit of
conducting budget hearings, both in terms of substantively impacting the
executive budget and of gaining public acceptance of the Governor's
recommendations. The hearings also has provided the state with a stronger
budget message and has been useful in advancing the Governor's message in
the legislature.
For further information contact:
Steve Seward
Senior Assistant
Office of the Governor
Statehouse
Boise, Idaho 83720
208/334-2923
ILLINOIS CITIZEN TASK FORCE ON BLOCK GRANT IMPLEMENTATION
Governor Thompson has created a twenty-member citizen task force to
oversee the development of state agency management of the block grants in
Illinois. The task force has been meeting since December 1981 and will
report to the Governor in October 1982 after it has held public hearings
on its report. The goals of the task force are to:
* develop a comprehensive priority framework for human
services delivered and funded by the state including
specific recommendations relevant to block grant
allocat ion;
* develop guidelines for the creation of new funding
mechanisms, regulations, and rules to govern grants and
contracts to local service providers under the block
grants; and
* recommend organization changes at the state and local
levels that would facilitate the delivery of services
under block grants.
The Governor's office is staffing the task force and has established
inter-agency working groups to assist in the detailed and technical work.
ILLINOIS PUBLIC AGENCY-PRIVATE GIVING:
SUMMIT CONFERENCE ON HUMAN RESOURCES
Governor Thompson's office is preparing for a high-level summit
conference which will bring together state agency directors, regional
health and human service directors, and foundation directors to develop a
better understanding of the agenda for the eighties. The Governor has
recognized that New Federalism, the reduction of available public
resources, and the demands of the public for reduced government spending
call for new initiatives to bring together organizations which have been
sharing responsibilities without sharing communications.
63
PAGENO="0362"
358
The purpose of the conference is to begin to open communications, and
to sketch a map of an agenda process which recognizes the related roles of
the public-private giving and services system. With a fundamental change
in the system it is vital that private givers and foundations understand
state priorities and that the state not duplicate or overlap the private
philanthropy system. The first of these meetings will be held in the late
spring and will be limited to about fifty persons.
For further information contact:
Tom Berkshire
Assistant to the Governor
202 State House
Springfield, Illinois 62706
217/782-8639
INDIANA BLOCK GRANT MANAGEMENT
In June 1981, Governor Robert D. Orr created a Block Grant Policy
Committee and designated the Director of the State Planning Services
Agency as the state's block grant coordinator. The Policy Committee was
formed to include the leadership from the General Assembly to insure that
maximum legislative input was achieved. In addition to the Governor and
Lieutenant Governor, the Policy Committee is comprised of the President
Pro Tem of the Senate, Senate Finance Committee staff persons, the Speaker
of the House of Representatives, the Chairman of the House Ways and Means
Committee, the Director of the State Budget Agency, the Director of the
Indiana Washington Office, the Director of the State Planning Services
Agency, and all of the Governor's executive and administrative
assistants. It was the task of this twenty-person committee to advise the
Governor on immediate decisions which had to be made and eventually to
make recommendations to the Indiana General Assembly.
The Governor then created four block grant task forces. The
Education Task Force was created along the lines of governing federal
legislation; the other three were designed to achieve a balance of
legislative, local governmental, private, and state agency interests.
All task forces were staffed by the State Planning Services Agency which
also functioned as a clearinghouse for state agencies. Each task force
was comprised of the following:
* three legislative members (chosen in a bi-partisan
manner);
* one representative each from city, town, and county
governments; and
* three-four members from the general community.
64
PAGENO="0363"
359
The task forces held from five to seven public hearings through the
state for the purposes of providing the public with information
concerning block grants and receiving input from the public on their needs
and expectations of block grants. Given the disturbing amount of
misunderstanding and misinterpretation among the public, local officials,
providers, and recipients, the task forces served to dispel
misconceptions and explain the exact nature of the block grants. The
system was organized to insure maximum public participation with wide
news covereage and large-scale mailings to constitutents of the major
programs. The very makeup of the task forces insured participation of all
sectors affected by block grants.
In January 1982, all information compiled by the task forces was
presented to the Governor, at which time the Policy Committee would make
recommendations for action by the General Assembly. None of the task
forces was willing to recommend major changes in the operation of the
system or in determining service priorities until information regarding
federal appropriation becomes more stabilized. Decisions for major
reprioritization would continue through regular state budgetary processes
with the benefit of the information provided by the task forces.
For further information contact:
Susan J. Kannell
Director
State Planning Services Agency
117 State House
Indianapolis, Indiana 46207
317/232-5601
IOWA FEDERAL BUDCET TASK FORCE STRUCTURE
The Federal Budget Task Force for the State of Iowa was established
in February 1981. The task force consisted of the following individual
task groups:
Administration Post-Secondary Education
Human Resources Transportation
Commerce and Industry Public Protection
K-12 and Vocational Education Natural Resources
The primary purpose for creation of this structure was to establish a
dynamic mechanism that could rapidly assimilate and analyze information
leading to assessment of fiscal impacts upon the state, identification of
potentially critical areas, and recommendations for further action. The
impact assessments appeared in a series of reports issued by the various
task groups and the Federal Budget Task Force. The reports highlighted
overall concerns in the areas of federal budget changes, tax reform,
regulatory reform, and block grant development. This information was
forwarded to decisionmakers within state government for further action.
65
PAGENO="0364"
360
The task force was well structured in that it could more effectively
collect data from a variety of sources (including contacts in Washington
and professional/trade associations) and disseminate information to
individuals/groups throughout the state most affected by the various
changes.
With the advent of block grants, two other work groups have been
formed: a Block Grant Committee, consisting of directors of agencies
responsible for administering block grants (this committee functions as a
separately identifiable part of the Federal Budget Task Force) and a
liaison group established by Governor Ray to interface with elected
officials and the legislative branch of Iowa government.
For further information contact:
Doug Gross
Assistant to the Governor
Capitol Building
Des Moines, Iowa 50319
515/281-8318
KANSAS BALANCED BASE BUDGET PROCESS
Among the administrative functions of state government, none is more
important than the budgetary process. The budget is a plan of operation
describing how, during the next fiscal year, the state will use its
limited financial resources to meet the needs of the public. The plan
must include an estimate of all proposed expenditures and the means of
financing each disbursement from the state treasury.
The Governor's fiscal year 1983 budget has been prepared through a
process that is new and substantially different for Kansas. Termed the
balanced base budget process, the new system incorporates three key
features not used previously-base agency allocations, tn-level
expenditure proposals, and a program format.
Balanced Base Allocations
The first phase of the new budget process involves preparation and
announcement of base budget financial allocations to be used by each
agency in preparing its fiscal budget. The allocations formulated by the
Governor are based on a series of issue papers prepared by agencies and
preliminary revenue estimates for the ensuing fiscal year. Through the
issue papers, agencies are able to provide the Governor with information
on critical policy questions facing the state.
The base budget allocations have two essential features. First,
they are balanced; i.e., when all agency base allocations are added
together, the sum is balanced with the preliminary FY 1983 revenue
estimate. Thus, by requiring agencies to submit budgets at the assigned
allocation level, the budget is balanced from the outset.
66
PAGENO="0365"
361
Base allocations introduce revenue constraints at an early phase of
the budget process and they minimize the submission of requests that
simply cannot be accommodated within limited available state revenues.
The timing of balanced based budget allocations have been useful
particularly this past year, in that the problems presented by reduced
federal funding for next year were confronted early and agencies were able
to take steps to minimize the adverse effects on state-administered
programs.
Second, allocations are made at the agency level; i.e., assigned to a
given department Lto be apportioned to various units within its
jurisdiction. Agency managers and governing boards then are responsible
for spreading the base allocation among their programs, thereby making
program adjustments that shift resources from low to high priorities.
Tn-level Expenditures Proposals
The second major feature of the new budget process is the submission
by agencies of tn-level expenditure proposals reflecting alternative
service levels within the base allocations. The proposals are referred to
as A-, B-, and C-level budgets and are submitted in September. Each level
reflects an allocation assigned early by the Governor and is intended to
represent an internally consistent budget request. The B-level or
expenditure proposal is of primary importance because it reflects the
balanced budget allocations. The A-level represents a lesser amount and
is intended to depict the agency's financial plans if it receives a
reduced level of resources. The C-level is intended to reflect new or
enhanced activities that could be undertaken given additional revenues.
This aspect of the new system affirms and reinforces the role of
agency managers in assigning priorities among programs, i.e.,
reducing/eliminating/increasing as allocations afford. Also, the
consequences of funding reductions/increases on agency programs are
readily apparent to the Governor and budget decisionmakers.
Because the B-level is balanced for all of state government, each
addition to an agency beyond this level must be offset with a
corresponding reduction elsewhere. Hence, information contained in A-and
C-levels, together with agency explanations of differences in performance
at each level, provides necessary data in making budget decisions.
Program Budget Format
The third phase of the new budget process is the adoption of a
program budget format, whereby the program-a collection of similar
activities and services that are directed toward a defined goal and are
managed by a single identifiable authority-is the primary budgetary
unit. For each of its programs, an agency is asked to prepare an
operating plan that includes a program description, a statement of
intended areas of emphasis, and measurable objectives (purposes to be
achieved and suggested performance indicators).
67
PAGENO="0366"
362
/ Program format fosters analysis of current program operations and
areas of potential change, forces agencies to relate the activities to
specific objectives, and enables decisionmakers to evaluate state
programs in terms of costs, effectiveness, and performance on the basis of
policy and program issues as opposed to the cost of individual elements of
the program.
Budget Review and Approval
During September and October, the Divison of Budget reviews agency
budget requests for technical accuracy and concurrence between agency
proposals and the Governor's policy. Agency proposals are brought into
balance with the revised estimate of total revenues, and detailed
preliminary budget recommendations are developed for each program and
agency.
During November and December, the Governor makes final decisions on
the budget, taking into consideration updated revenue forecast, program
plans and performance measures, adherence to policy guidelines,
information contained in the tn-level budget submissions together with
agency explanations of the differences in service, and information
derived from the agency appeal process. The Governor's budget message,
comprised of approximately twenty separate appropriation measures, is
submitted to the joint session of the legislature for review and approval.
The new balanced base budget process is a financial plan that offers
several advantages over previous budget systems in that it:
* provides for gubernatorial policy directives in the
initial phases of the budget process;
* confronts inevitable financial resource constraints early
in the process;
* provides a balance of revenues and expenditures and is
reflective of both the Governor's and agency directors'
priorities; and
* provides for better agency management and performance.
For further information contact:
Harley Duncan
Principal Policy Analyst
Divison of the Budget
State House, Room 152 East
Topeka, Kansas 66612
913/296-2436
68
PAGENO="0367"
363
KENTUCKY STATE-CONTROLLED COMMUNITY DEVELOPMENT
BLOCK GRANT FUND DISTRIBUTION
In September 1980, Kentucky and Wisconsin were the only two states
chosen for a HUD demonstration program. The purpose of the demonstration
was to see if greater coordination with state programs could be
accomplished if a state controlled the distribution of HUD Small Cities
Community Development Block Grant (CDBG) funds. The Department of
Community and Regional Development DCRD) was responsible for
approximately $10.5 million and funded twenty-two jurisdictions.
The Reagan Administration has expanded the idea of the
demonstration. Kentucky now receives the HUD Small Cities CDBG in its
entirety. The new Office of Community Development will receive an
allocation of $30.5 million which will allow the office to allocate
approximately $15 million in the next funding cycle (difference is due to
previous multi-year commitments).
Kentucky's success with the demonstration on both the federal and
local levels has put the state in the vanguard of the block grant wave.
Information requests by phone and mail have been answered from more than
thirty-five states. Kentucky has hosted two block grant seminars for
interested parties from sister states. Staff have been asked to testify
before the House Subcommittee concerning the state's role and numerous
invitations have been received to take part in national panels. The state
experience has been the subject of considerable research and reporting,
and a case study has been done by the Harvard Business School.
Kentucky believes its success has been to two distinct program
features: (1) a training seminar involving all potential applicants; and
(2) involvement and consensus of local practitioners in the design phase
prior to issuing a final draft.
HUD's office in Kentucky, which previously administered the program,
estimated that the state-administered program saved taxpayers almost
$1 million, and, after the winners were announced, 91 percent of the
applicants agreed that the state-administered program was more fair than
its federal counterpart.
For further information contact:
Rush Dozier
Assistant to the Governor
State Capitol
Frankfort, Kentucky 40601
502/564-2611
69
PAGENO="0368"
~64
LOUISLAN~ ALTERNATIVES TO INSTITUTIONAL CARE
In the face of federal funding reductions brought about by the
Omnibus Reconciliation Act of 1981, Louisiana resolved to continue its
current level of health and social services to its client population to
the maximum extent possible. To achieve this goal, the state determined
that it must provide essential services in a more efficient and economical
manner.
The act liberalized the Title XIX, Medicaid Program to allow payment
for social services in a home- or community-based program when such
services are alternatives to institutional care. Concomitantly, the Act
reduced the available federal funding for Title XX Social Services which
* provided resources for Louisiana's community-based programs such as adult
day care, homemaker and day developmental centers. These programs were
effective in maintaining individuals in their own homes or in other less
restrictive and less expensive settings than a nursing home.
As a result of the reduction in the Title XX Social Services Block
Grant, it would have been necessary for the State to reduce services to
persons receiving care in their homes or community-based programs. These
persons then would have required nursing home care which is a more
expensive option.
In determining a strategy to maximize resources, Louisiana decided
to request a waiver in accordance with Section 2176 of PL 97-35 to provide
coverage for adult day health services, homemaker services, and
habilitation services under the Louisiana Medicaid Program. The
individuals slated to receive these services otherwise would require
Skilled Nursing Facility or Intermediate Care Facility Services.
By planning and managing the mixture of block grants and categorical
programs, it is anticipated that Louisiana will be able to continue
funding both the most essential long-term care services and c~tnnunity
based alternative services.
For further information contactS.
Jake Canova
Director, Medical Assistance Division
Office of Family Security
Department of Health and Human Resources
P. 0. Box 44065
Baton Rouge, Louisiana 70804
504/342-3911
70
PAGENO="0369"
365
MAINE WELFARE EMPLOYMENT APPROACHES
Maine has undertaken three complementary efforts within the past
year to address welfare employment issues:
* In December 1980, the Commissioner of Human Services, in
cooperation with the Commissioner of Labor and
Commissioner of Educational and Cultural Services,
convened a statewide Work Opporunities Committee to
examine employment, education, and training opportunities
for Aid to Families with Dependent Children (AFDC)
recipients.
* In June 1981, the Maine State Legislature enacted Public
Law 1981, Chapter 512-The Job Opportunities Act-which
establishes and coordinates employment, education, and
training opportunities for AFDC recipients.
* In October 1981, Governor Joseph E. Brennan decided to
participate in the national Work Incentive Demonstration
Program, authorized by Congress in the Omnibus Budget
Reconciliation Act of August 1981.
Work Opportunities Committee
The Work Opportunities Committee is comprised of two-dozen
participants representing a wide range of interests. The work of the
committee is extensive in scope: to analyze Maine's income maintenance
policies; to examine the effectiveness of the WIN and CETA and vocational
educational programs in helping AFDC recipients become employed; and to
study possibilities for creating jobs through economic development
policies and AFDC grant diversion.
The committee's final report-"Women, Work and Welfare"-includes
over forty recommendations for increasing and improving employment and
training opportunities for AFDC recipients.
Job Opportunities Act
The Job Opportunities Act requires Maine to coordinate and make
greater use of "available resources and institutions to provide
education, training and job opportunities to qualified and eligible
recipients of the Aid to Families with Dependent Children Program with the
goal of enabling them to become self-sufficient and to eliminate their
dependence on public assistance".
The act creates an AFDC Coordinating Committee, comprised of the
Commissioners of Human Services, Labor, and Educational and Cultural
Services. Several public agencies are required under the act to work with
and cooperate with the committee: the State Development Office, the Maine
Development Foundation, the Maine Guarantee Authority, the University of
Maine, and the vocational technical institutes.
71
99-965 0 - 82 - 2L~
PAGENO="0370"
366
The act also creates an Advisory Council to the AFDC Coordinating
Committee and is comprised of AFDC recipients, employers and
representatives of organized labor, the Maine Commission for Women, and
at least one organization experienced in addressing needs of low-income
women. The council consists primarily of people who participated in the
Work Opportunities Committee.
Finally, the act establishes a program under the jurisdiction of the
State Apprenticeship and Training Council to develop apprenticeship
agreements exclusively for the training and education of AFDC recipients.
Demonstration Program
The Work Opportunities Committee and the Job Opportunities Act set
the stage for Governor Brennan's decision to participate in the national
Work Incentive program, referred to in Maine as the Welfare Employment,
Education and Training (WEET) program. WEET replaces the former WIN
program throughout the state, and has established the following four
goals:
* to streamline the management of the state's work program
for AFDC applicants/recipients; in Maine, as elsewhere in
the states, the dual administration of the WIN program by
the Departments of Labor and Human Services has not worked
very well; hence, all WEET staff will work for the
Department of Human Services, a factor seen as essential
more than ever given the drastic cut in federal WIN funds
enacted by Congress in December 1980;
* to experiment with new approaches for delivering services
to AFDC applicants/recipients; because staffing has been
reduced by over half, AFDC applicants/recipients will need
to be taught to be self-sufficient, WHET staff will be
required to function more as brokers of service than as
direct providers, and there will have to be much closer
ties between income maintenance and WEET staff;
* to work closely with other agencies and interest groups
that are involved in employment, education, and training
needs of low-income citizens, in order to develop
essential opportunities and resources for these citizens;
and
* to make use of AFDC grant diversion to develop private
sector job opportunities for AFDC applicants/recipients.
The Future
It is impossible to determine precisely what steps the federal
government will take in the coming months. However, it would seem that
there will be some type of AFDC work program. No matter what shape such a
program will take, Maine has decided that it must, through the WHET, put
into place the basic design of an approach that will be most responsive to
Maine citizens.
72
PAGENO="0371"
367
For further information contact:
Diana Scully
Director
Division of Welfare Employment
235 State Street
State House, Station 11
Augusta, Maine 04333
207/289-2636
MARYLAND APPROACH TO FUNDING FORMER DIRECT FEDERAL-LOCAL
GRANT PROGRAMS SUBSUMED IN BLOCK GRANTS
Other than the constantly shifting estimate of block grant
allotments and composition, the most difficult issue has revolved around
the treatment of grantees who formerly received funds from federally
funded programs that since have been incorporated into the blocks. Part
of the problem has been clarifying the nature of the grant and identifying
grant recipients. Of particular concern to grantees has been whether the
state would absorb some of the cuts and their fear that:
* a major source of their revenue now would be funneled
through the state;
* the state, to offset cuts, at best would take an
administrative slice and at worst would divert a
substantial share of local government's entitlement; and
* the state would add new strings to funds passed through.
The Governor decided that Maryland initially would assume management
responsibility only in areas where the state had long-standing program
responsibility. In these areas, the formerly federal-local direct grants
represented relatively small shares of the blocks-generally under
15 percent and not more than 30 percent. The Governor further decided
that, at least in the first year, the state and other grantees would share
the cut in proportion to grant amounts of programs folded into the blocks.
Furthermore, the state neither would take administrative cost nor add
administrative strings other than those necessary for complying with
state law and/or meeting new responsibilities under the block grant.
The Governor and his staff conducted an intensive series of meetings
with local governments and their representatives to communicate the
state's sensitivity to their problems, to communicate proposed action,
and to assuage their fears. The efforts appear to have been successful.
For further information contact:
Ejner Johnson
Staff Director
Office of the Governor
State House
Annapolis, Maryland 21404
301/269-3004
73
PAGENO="0372"
368
MASSACHUSETTS BLOCK GRANT IMPLEMENTATION
In FY 1982, Massachusetts labored under severe time contraints to
begin implementation of the block grant programs by October. Therefore,
comment from consumer organizations, providers, and local government was
limited. However, public hearings were held and notices placed in
newspapers to inform the citizenry that Massachusetts was submitting the
four human services block grant applications to the U. S. Department of
Health and Human Services.
For FY 1982, it was proposed that the appropriated funds be
allocated in proportion to FY 1981 funding levels. In formulating this
method of allocating funds, the state made a commitment to maintain as
many currently existing services as was feasible within the available
funds. The agencies were responsible for reducing their expenditure
levels. This "bottoms-up' approach was favored by the Executive Office of
Human Services (E0HS), because the agency program managers knew best the
services provided.
In December, an Advisory Task Force on Block Grant Implementation,
consisting of twenty-three members of local governments, consumers, and
providers, was appointed by the Secretary of Human Services to prepare
recommendations for FY 1983. The Task Force will meet monthly and
consider issues such as transferability, quality of services, long-term
planning, needs assessment, resources analysis, and priority-setting.
Task force subcommittees have been meeting regularly since December.
In additon, EOHS has established a timetable for development of
block grant applications which must be submitted to the federal
government:
February 1: Administering agencies will submit proposed
criteria for needs assessment, management, and
performance evaluation to the Secretary;
mid-February The Secretary will conduct hearings on the draft
criteria;
March 1 Administering agencies will apply standards and
guidelines, develop proposed applications
(including spending plans), and submit them to
the Secretary;
May 1 The Secretary will conduct hearings on
applications and draft spending'plans; and
June 1 The Governor will submit final applications to
the State Legislature for inclusion in the state
budget.
For further information contact:
Randee Chafkin
Executive Office of Human Services
State House, Room 166
Boston, Massachusetts 02133
617/727-5516
74
PAGENO="0373"
369
MICHIGAN PUBIC HEARINGS
The Governor's Human Services Cabinet is undertaking a series of six
statewide public hearings on the human services block grants which will
allow full public participation in the entire range of programs affected
by the block grants. This information will be channeled into the
departments responsible for each block grant as well as into the
legislative appropriation process. Additionally, at least two of the
administering agencies will be holding special hearings for their own
block grant which will help them make the necessary decisions required
relating to program modifications and service delivery. One department
is conducting a statewide survey of non-public and public schools and
intermediate school districts to solicit their input in setting program
priorities for the coming year.
For further information contact:
Jan Bocskay
Special Assistant to the Governor
Executive Office
State Capitol, Room 1
Lansing, Michigan 48909
517/373-3427
MINNESOTA BLOCK GRAN1~ ACTONS
Prior to final Congressional action, the 1981 Minnesota Legislature
enacted legislation which required agencies to continue funding services
and organizations which previously had received federal funds. Each
program or organization thus was guaranteed fiscal support, subject to a
proportional reduction. This allowed programs to plan and continue to
operate during this period of change.
A task force composed of commissioners of agencies most affected by
the federal budget changes was appointed by Governor Quie. This group has
continued to monitor federal changes and their effect on state policies
and programs, and has kept the Governor and the Legislature informed
through the production of two written reports. Each commissioner also has
appointed an intergovernmental task force designed to involve citizens
and local government officials in the decisions which are upcoming
regarding the administration of the block grants.
Minnesota has only minor changes to make in state law to accommodate
the block grants. In the social services area, existing law provides for
distribution of federal funds on a formula basis to counties; in the
health area, similar legislation exists which could be used. Each agency
is pursuing plans with the legislature to use federal block funds which
are appropriate to their programs in Minnesota's service delivery system
which relies upon local units of government in m~Iy of the block grant
program areas.
75
PAGENO="0374"
370
Changes in programs, shifting of resources to various client groups,
and the utilization of new service providers are items for discussion in
the future for agency heads, the intergovernmental advisory groups, and
the legislature. Dramatic changes are not anticipated in the short term.
For further information contact:
Tom Harren
Office of Local Government
Department of Energy, Planning, and Development
100 Hanover Building
St. Paul, Minnesota 55101
612/296-9001
MISSISSIPPI MULTI-AGENCY COORDINM~ION
With the advent of block grants, the reduction of federal funds, and
decreasing state monies, Governor Winter recognized the need for
coordinating the efforts of the various agencies involved in providing
programs/services in the area of health and human services. It was
realized that, with the limited amount of time available for preparation
on the part of the state to deal with these issues and the number and
variety of the categoricals being blocked, very little uniformity could
exist in the planning and implementation processes used by the agencies
involved.
Interexecutive Task Force Will Coordinate Block Grant Implementation
The Governor established a Block Grant Task Force composed of
directors of agencies administering the blocks, as follows:
* Mississippi State Board of Health
Maternal and Child Health and Preventive Health blocks
* Department of Public Welfare
Social Services block
* Department of Mental Health
Alcohol, Drug Abuse and Mental Health block and
* Federal-State Programs
~Community Services and Home Energy Assistance blocks
The task force was charged with the responsibility of addressing
areas of common concern and arriving at coordinated solutions.
Initially, the task force directed its attention to operational and
mechanical issues which affected the entire group. For example, a series
of public hearings for the purpose of obtaining citizen input were planned
and coordinated by the group. Also, joint resolutions were adopted which
provided for a uniform format for state plans, fiscal audit requirements,
joint eligibility criteria, and state definitions and determinations to
replace those formerly mandated by the federal funding agencies.
76
PAGENO="0375"
371
The task force now is addressing opportunities for interagency
coordination and cross-cutting of programs and services for the purpose
of eliminating duplicative services, filling in gaps in services, and
better allocating available resources. It is~ anticipated that their
efforts will result in a coordinated cross program planning and
implementation process involving the block grants and related categorical
programs.
Advisory Board Created
The Governor also appointed a Health and Human Services Block Grant
Advisory Board of citizens to obtain insight from concerned sources
outside of the state governmental structure. The board is composed of
sixteen representatives from many concerned groups involved in the area
of health and human services, as well as from local governments and local
community action agencies. The board is charged with the reponsibility of
advising on the development of program priorities and policy, assisting
in providing information and education to the public, and adding input in
presenting final state plans to the Governor and the legislature.
As mentioned previously, in order to obtain public input on the
development of guidelines for administering block grant funds, the
Governor's Office coordinated a series of public hearings which were held
in each Congressional district in the state. Individual hearings were
conducted for each of the blocks which provided opportunity for educating
the public on the mechanics of each block as well as for receiving
comments. The hearings were well attended and the agency directors
received significant input from the participants.. Following these
hearings, the state plans were revised and finalized for presentation to
the Governor and legislature.
For further information contact:
Libby Smith
Governor's Office of Planning and Policy
Walter Sellers Building
Jackson, Mississippi 39202
601/354-7018
MISSOURI BLOCK GRANT IMPLEMENTATION
An important step in Missouri's implementation of the block grants
has been close involvement of the General Assembly, the public, and groups
representing providers and clients. The legislature established a "Block
Grant Oversight Committee", chaired by the Director of the the Department
of Social Services and composed of five members of each House and the
Director of the Division of Family Services. The committee had oversight
on the use of all block grants received by the Department of Social
Services (the Health, Social Services, and Community Services Block
Grants). It met during the time the department was developing its budget
requests for FY 1983, and made recommendations which were reflected in
the Governor'sbudget proposals.
77
PAGENO="0376"
372
Both the Departments of Social Services and Mental Health pursued
valuable efforts to ensure public awareness of and participation in the
formation of block grant policy. The Department of Social Services held
public meetings with local providers and advocacy groups in cities
throughout Missouri, conveying information about the block grants and
soliciting questions, comments, and suggestions. In addition, the
department established a "Social Services Advisory Group" and a "Maternal
and "Child Health Advisory Group", for consultation purposes during
development of the FY 1983 bud.get requests. It also produced a block
grants newsletter-Social Services Report-for distribution to the
General Assembly, providers, local governments, and other interested
groups.
The Department of Mental Health used its statewide network of
advisory councils as the primary vehicle for information and public
comment. The advisory councils were supplemented, however, by locally
organized public hearings in various key cities during the period when the
department was preparing its FT 1983 budget requirements. Substantive
issues included both the mental health allocation from the Social
Services Block Grant and use of the Alcohol and Drug Abuse/Mental Health
Block Grant.
The Department of Consumer Affairs, Regulation, and Licensing
similarly established a twenty-member advisory council, composed of local
government officials, to advise the Director of the Division of Community
Development on the process and criteria for allocating funds from the
Community Development Block Grant. For FY 1983, the Governor's budget
recommendations included funds for a twelve-person staff for the CDBG
program.
For further information contact:
Dick King
Executive Assistant
Office of the Governor
State Capitol
Jefferson City, Missouri
314/751-3222
MONTANA INCREASED STATE PARTICIPATION
IN GENERAL ASSISTANCE PROGRAMS
When Montana began to see the outline of program changes that were in
store for the AFDC and food stamp programs, officials began to evaluate
the impact on Montana. It was determined early in the process that it was
not realisitic to consider replacing these program reductions with
equivalent state programs.
78
PAGENO="0377"
373
In Montana, the final base of services is provided by the County
General Assistance Program. Prior to January 1, 1982, each county
administered a welfare program and financed it with a special mill levy
authorized by the county commissioners. If that mill levy reached 13.5
mills, any additional costs were reimbursed by the state. The majority of
the counties levied less than 6 mills for welfare. Given the program
changes in AFDC and food stamps, the state anticipated that there would be
increases in county case loads. Therefore, in order to avoid higher mill
levies, a method of increased state support had to be found. The final
compromise worked out with the special session of the legislature
contained three major elements:
1. The maximum required mill levy to be eligible for state
support was reduced to 8 mills; from 8 to 13.5 mills, the
state contributes half the cost.
2. Counties now are required to implement a "workfare"
program in order to be eligible for state support.
3. The state gained authority to tighten up the rules to
limit eligible county costs.
This program has several advantages. First, the base of services
will continue to be available for the needy; second, the program is
locally administered; and finally, increased state support will limit the
impact on local taxpayers.
For further information contact:
David M. Lewis
Budget Director
Office of Budget and Program Planning
State Capitol
Helena, Montana 59001
406/449-3616
NEBRASKA BLOCK GRANT MANAGEMENT
Advisory Council and Working Committees Appointed
In May 1981, Governor Thone appointed The Governor's Advisory
Council on Block Grants to advise him on issues pertaining to federal
block grants to states. Specifically, the council was to examine issues,
obtain public input~ explore options, and ultimately make recommendations
to the Governor by September 1981. Eleven committees and subcommittees
were formed (each focusing on a specific block grant or ancillary
program):
Social Services Committee, Adult Services and
Children and Family subcommittees
Health Care Committee, Medicaid subcommittee
Natural Resources and Energy Conimmittee, Energy subcommittee
Preventative Health Care
Transportation Committee
Education Committee and
Development Committee.
79
PAGENO="0378"
374
By July, when congressional action on block grants was clearer, the
committee structure changed in order to focus on the emerging block
grants. Of significance was the addition of a separate Child and Maternal
Health Block Grant, a separate Alcohol and Drug Abuse and Mental Health
Block Grant, and a separate Community Services Block Grant.
On August 13, the President signed the Omnibus Reconciliation Act of
1981. The committees had clear guidance at this time to develop issues to
be presented at public forum. Also, Governor Thone appointed an
additional committee to address the implications of the Community
Services Block Grant because this new block grant area did not lend itself
readily to an existing committee structure. Eight public forums on block
grants were held during September in key cities and were attended by
approximately 1500 persons, 200 of whom offered public comment.
Individuals were encouraged to submit written comments to the state.
Using views expressed at public forums and their own research, the several
committees submitted reports to the Governor's council, which in turn,
presented its recommendations to Governor Thone.
Block Grant Resource Center Established
Governor Thone created a Block Grant Coordination and Planning
Office that was to be a resource center for information regarding block
grant legislation. The office responded to inquiries on issues from all
areas of the state_private/public sectors, city/county/state
governments, the legislature, and the general community. In addition,
the office provided staff assistance for the Governor's Block Grant
Advisory Council.
Advisory Commission on Intergovernmental Relations Created
In September 1981, Governor Thone, by Executive Order, created the
Nebraska Advisory Commission on Intergovernmental Relations. The purpose
of this commission was to develop policy recommendations on the
distribution of federal block grant funds from the state to local
government. The commission served as a forum for consultation between
state and local officials and as a clearinghouse for information on
intergovernmental relations. The commission was comprised of five each
of the following: elected city officials, elected county officials,
members of the legislature, members of the executive branch of state
government, and representatives of the general community. Unless
extended by Executive Order, the commission is scheduled to terminate
July 1982.
Human Services Programs Coordinated
Governor Thone has recognized the important inter-relationships of
state and local governments, particularly in the area of long-term
planning and coordination necessary to best serve Nebraska's citizens in
need. In December 1981, the Governor appointed an Administrative
Coordinator for Human Services, thereby bringing under a single
administration the following human services agencies: Department of
Public Welfare, Department of Public Institutions, Department of Health,
Department of Labor, and the Department of Veteran's Affairs.
80
PAGENO="0379"
375
For further information contact:
Ed Schulenberg
Director
Block Grant Resource Center
State Capitol, Room 1326
Lincoln, Nebraska 68501
402/47 1-2091
NEVADA USE OF EXISTING MECHANISMS TO IMPLEMENT BLOCK GRANTS
In Nevada, each apropriate state agency is responsible for working
with cities, counties, and organizations that are interested in the
particular block grant falling under that agency's jurisdictio~i. After
the agency has gathered all necessary input, it submits initial fund
allocation plans to the State Department of Administration for review and
approval. In turn, the department submits the plan to the Interim Finance
Committee for further public review and final approval. Throughout this
multi-step procedure, all interested parties are provided with adequate
opportunity for offering their input in the development of block grant
fund allocation plans.
By implementing the block grant programs within existing
administrative structure, Nevada is able to meet one of the principle
objectives for this new program: reduce administrative overhead and
delay, and more efficiently provide grant money to those people who truly
need it.
For further information contact:
Howard E. Barrett
Director
Department of Administration
Capitol Complex
Carson City, Nevada 89710
702/885-4065
NEW HAMPSHIRE DEPARTMENT OF HEALTH AND WELFARE
MANAGEMENT ACCOUNTABILITY SYSTEM
New Hampshire is taking bold management steps to increase
accountability, program efficiency, and productivity in response to
recent federal cuts and increased opportunities for state control.
Governor Hugh J. Gallen is holding agency heads accountable for quarterly
reporting of financial and personnel data, and progress towards goals and
objectives.
81
PAGENO="0380"
376
The Department of Health and Welfare (DHW) has taken the lead in
responding to the Governor's mandate because of its already developed
Strategic Planning Process (see Governor's Guide to Block Grant
Implementation, Council of State Planning Agencies and National
Governors' Association, August 1981). Commissioner Edgar J. Helms has
directed the development of a monthly manual management reporting system
entitled "The Management Brief".
Elements of "The Management Brief"
The purpose of this management accountability system is to develop a
relatively simple monthly report for the commissioner that can be used as
the basis for regular supervisory sessions with major division heads. For
comparison across division lines the "Brief" contains information in the
following areas: personnel status, funds information, client/service
data, and program/agency sub-unit activities.
The personnel report includes breakdowns, by specific unit for each
agency, of positions authorized, vacant, and filled. These data are
critical for top management to receive on a regular basis in order to
evaluate the relationship between plans, resources, and outputs.
The monthly funds report breaks out federal, state, and other
funding sources by amount appropriated, year-to-date expended, encumbered
(obligated), and balance. It should be noted that the "Brief"
differentiates financial accounting from fund accounting in order to
provide useable management information. Fund accounting principles are
used, measuring deviance from planned expenditures and/or obligations
(encumbrances). The ability to plainly see the difference between
"planned and actual" is important for management for supervision and
evaluation purposes. This comparison, done on a monthly basis, makes it
possible for managers to establish rates and compare them to projected
rates and keep them out of serious "over or under expenditure" problems-a
critical process in the current environment of uncertain and shrinking
resources.
The client and services activities form contains unit and agency
specific data on units of service, caseloads, institutional and
discharges and readmissions, numbers of reported abuses, and other
critical indicators of a unit's successful accomplishment of its goals
and objectives.
Finally, each division and office prepares a monthly narrative
discussing activities of special interest for that month. The narrative
also serves as an exception report for division/office directors to
notify and explain to the commissioner major deviations from goals and
objectives outlined in their annual operational form.
82
PAGENO="0381"
377
All reports are printed in booklet form and used for several related
purposes:
* as a tool for the commissioner and division directors in
providing regular supervision of plan execution, program
effectiveness, and fiscal control;
* as a basis for regular reporting to the executive and
legislative branches of state government; and
* as an internal working document and important additional
communication link within the department.
It is hoped that the "Brief' eventually will substitute for federal
compliance reporting documents in various program areas.
A Management and Planning System
This system is an important management tool that conceptually lies
between planning and supervision. The Strategic Planning and Budget
Process, "The Management Brief", operational planning, and regular
supervision all work together to enable the commissioner and division
directors to measure performance and results. The entire management
system produces information that communicates successes and problem areas
to the Governor, state legislature, and general public.
For further information contact:
Judith Chynoweth
Director
Office of Planning and Policy Development
Health and Welfare Building
Hazen Drive
Concord, New Hampshire 03301
603/271-4601
NEW JERSEY EXECUTIVE BRANCH ROLES IN BLOCK GRANT MANAGEMENT
Policy Role of the Governor's Office
The block grant programs have offered an opportunity for the
Governor's Office of Planning and Management to assume a pivotal,
coordinating, and policy role in managing the transition to block grants.
Under the administration of Governor Kean, this office will continue to
play a leadership role.
Office staff took the implementation initiative in July 1981 by
organizing two inter-departmental meetings on block grants. Information
was funneled through the staff to participating agencies, first as a
result of seminars held during the National Governors' Association summer
meeting, and then by communications with federal agencies.
83
PAGENO="0382"
378
In September, members of the Governor's staff met with officials of
the three New Jersey departments involved in block grant implementation:
Health, Human Services, and Community Affairs, as well as with the
Department of the Treasury. Staff also reviewed department applications,
drafted transmittal letters for the Governor's signature, and wrote
appropriate press releases.
Major policy issues for block grant implementation were determined
by Governor's staff as follows: selection of agencies to administer the
block grants; transfer of funds between grants; and coordination of
programs when two or three departments would share block grant
administration responsibilities.
The Fiscal Management Role of the State Treasury
The New Jersey Treasury has played an important role in block grant
implementation by complementing the responsibilities being carried out by
Governor's staff. Heretofore, the transmittal of federal funds in the
state had not required strong executive presence. Typically, federal
funds had been handled by each state agency which negotiated directly with
the federal government and provided necessary program initiation and
review staff. Prior to the advent of block grants, Treasury recorded
federal funds (mainly to estimate their effects upon the state budget) and
controlled their expenditures. Prior to FFY 1982, Treasury's authority
in resource allocation guidance was conservative.
Currently, with the FFY 1982 budget largely operating on a
continuing resolution and with the constantly changing dollar figure,
Treasury is allowing state officials to spend only 50 percent of their
promised federal aid. If FFY 1982 funds are cut further, then state
program reductions will exceed the figures with which the state is
working. If, however, the appropriatons finally are made at continuing
resolution level, or if they exceed those figures, then state agencies
will have a "windfall" in the last quarters of the federal fiscal year.
For further information contact:
Gary Stein
Director
Governor's Office of Policy and Planning
State House
Trenton, New Jersey 08625
609/292-5403
NEW MEXICO COORDINATION OF PUBLIC ADMINSITRATIVE AND PROGRAM
RESPONSES TO BLOCK GRANT IMPLEMENTATION
New Mexico has developed a comprehensive method of coordinating the
public, executive administration, and agency progratranatic responses to
the formation of block grants. Each of these will be addressed
separately.
84
PAGENO="0383"
379
Public Meetings
Preceded by press releases to local newspapers, each of the state's
seven planning districts held public meetings that were conducted by the
Secretary of the Department of Finance and Adminsitration, the lead
agency in coordinating the state's response to block grants. Public
participation was substantial, and transcriptions of public commentary
were made and broken out by block grant and geographical areas to use in
developing programmatic responses.
Executive Administration
The Governor designated a Federal Funds Task Force to decide which
block grant to administer and to comply with provisions set up by the
Omnibus Reconciliation Act of 1981 in assuming control of the block
grants.
This task force was comprised of key aides to the Governor, including
the director of New Mexico's Washington Office and the Secretary of the
Department of Finance and Administration (the state's counterpart to *the
Office of Management and Budget). The task force analyzed the Omnibus
Reconciliation Act and information from responsible federal agencies to
determine exactly what the state must do to apply for and assume control
of block grants, as well as kept up with the continuous change in funding
levels appropriated for each block grant.
Program Administration
Agencies with prior experience in categorical programs were
designated to administer the same programs in their block grant form. A
subtask force, chaired by the Deputy Secretary of the Department of
Finance and Administration and composed of agency program directors,
produced program plans and assurances necessary for completing the formal
application to assume control of the block grants. The chairman served as
the conduit for the Governor between programmatic people and the main task
force.
Problems Encountered
Four main accomplishments were realized in the above-referenced
operations:
* the public was polled as to the needs to be met by block
grants;
* the Governor's Office was kept abreast of changing
activities in Washington requiring state response;
* program plans for the block grants were designed by
agencies with "hands on" experience; and
* coordination was provided by the Department of Finance and
Administration, the one agency involved in all three
operations, in order that a state response would
incorporate the needs of the public, state government, and
the federal government.
85
PAGENO="0384"
380
Planning for block grant implementation has been extremely difficult
for New Mexico for the sane reasons every other state has encountered:
knowing that there is less money available and that it will decrease
further, but not knowing how much or how soon.
For further information contact:
Kathleen Marr
Secretary
Department of Finance and Administration
421 State Capitol Building
Santa Fe, New Mexico 87503
505/827-2665
NEW YORK BLOCK GRANT IMPLEMENTATION ACTIONS
Conservative Approaches to Block Grant Implementation
Necessitated by External Constraints
As of January 1982, New York has assumed responsibility for three
block grants: Title XX Social Services, Home Energy Assistance, and
Alcohol and Drug Abuse and Mental Health Services.
The general rules drawn from state experience have been that the
"bold and innovative approaches" desired by the federal government have
proven and will continue to prove difficult to implement in the short run
for a variety of reasons:
* short lead time for planning and policy work;
* high degree of continued uncertainty as to future funding
levels;
* continued mandates in the form of program regulations or,
more often, legislative restrictions; and
* lack of clarity about the respective responsibility under
audit of the federal, state, and local governments,
particularly in light of differing versions of federal
program intent from the points of view of Congress,
federal administering agency, and Office of Management and
Budget.
This is not to say that innovative approaches will not be attempted
or that New York State does not possess the capacity to administer block
grants. Rather, a difficult task has been rendered even more difficult as
a result of the nature of the federal approach, particularly the short
planning period involved and the likelihood of future effective funding
reductions.
86
PAGENO="0385"
381
Block Grant Actions
In response to FFY 1982 needs the following actions have been taken
to implement programs contained within the block grant legislation:
SSBG
The major source of funds for services to low-income persons under
the jurisdiction of the state Department of Social Services (DSS) is
Title XX. Accordingly, DSS has been designated block grant administator.
Annual social service plans are no longer required by the federal
government. Title XX funding under the block grant will follow previous
patterns and will be allocated and distributed to the Local Social Service
Districts (LSSDs) through the department's Consolidated Services Planning
Process.
In part, this process requires LSSDs to prepare three-year needs
assessments, plans to address identified needs, and measures to evaluate
service impact. DSS reviews local plans for conformity with state policy
and social services goals. The plans then form the base for fund
allocation decision and program reviews.
Title XX funds are used to provide services (such as child foster and
protective care, day care, adult protection, adoption) to low-income
persons to enhance their quality of life and their opportunity to
participate in the community. DSS will encourage maintenance of current
local staff levels and priority funding of essential services.
Under the Omnibus Reconciliation Act and related regulations, the
state is required to submit an annual program report and a biennial
financial audit to the Department of Health and Human Services. The
requirements will be accommodated as part of routine DSS review and
evaluation activities that include regular on-site monitoring of local
districts by DSS field staff. Additionally, local districts are required
to provide measures of program impact when,requesting Title XX funds.
Home Energy Assistance Block Grant
The Omnibus Reconciliation Act consolidates past energy assistance
and home weatherization programs into the Home Energy Assistance Block
Grant to be administered by the states.
Program benefits will be distributed through LSSDs under DSS
supervision for AFDC home relief recipients and will be distributed
directly for most SSI recipients. Outreach activities, particularly for
eligible elderly and low-income households, will be assisted through the
State Office for Aging (SOFA) network, community action agencies, and the
Department of Labor (DOL).
Weatherization activities will be conducted by the Department of
State through community action agencies. Energy emergency funds will be
administered by counties for regional emergencies, and by DSS for mass
emergenô ies.
87
99-965 0 - 82 - 25
PAGENO="0386"
382
The proposed distribution of New York's share (12.7 percent) of the
$1.4 billion proposed federal appropriation for home energy assistance
will be based upon previous years' funding data and needs assessment.
Allocations to local districts for non-public assistance recipients will
be based on their proportionate share of 1980-81 home energy assistance
applications. Allocation methods for AFDC and home relief clients
currently are under development.
Program evaluations will be conducted annually by DSS, SOFA, and the
Department of State. The Omnibus Reconciliation Act also requires filing
of annual program reports and financial audits.
Alcohol and Drug Abuse and Mental Health (ADANHA) Block Grant
The Omnibus Reconciliation Act requires the state to maintain
funding in proportion to FFY 1980 funding for drug abuse and alcohol
programs and 1981 funding for mental health services levels. At the same
time, however, the state's drug abuse and alcohol programs must each
receive 35 percent of the ADANHA funding. The Governor has assigned
administrative responsibility for the ADANHA grant to the Department of
Mental Hygiene's Inter-Office Coordinating Council (10CC). Program
responsiblity will be shared by the Division of Substance Abuse Services
(DSAS), the Division of Alcoholism and Alcohol Abuse (DAAA), and the
Office of Mental Health (OMH), while the 10CC will assure compliance with
federal regulations relating to block grant application, reporting, audit
and program evaluation requirements.
Based on federal mandates requiring states to allocate ADANHA funds
in proportion to previous spending, New York will use 19.2 percent of its
1982 ADAMHA block grant for mental health services and 80.7 percent for
alcohol and substance abuse programs. The state also will fund ten
community mental health cetners that meet federal requirements for
continued funding.
The amount of ADANHA funding available for distribution to the
states under the continuing resolution is $428.1 million. New York's
share is $36.4 million, and in accordance with the Omnibus Reconciliation
Act, the following minimum program allocations must be maintained:
mental health services, 19.2 percent; alcohol programs, 35 percent; drug~
abuse, 35 percent. The remaining percentage will be allocated to the
Division of Substance Abuse Services.
DAAA, DSAS, and OMH will contract or award grant funds to various
local governments and direct services providers, the method for grant
distribution varies as follows:
88
PAGENO="0387"
383
* DSAS will distribute ADANHA funds primarily to existing
school and community-based treatment and rehabilitation
programs, upstate through county-level Locally Designated
Agencies, and in New York City, directly. Funding
decisions are based on DSAS planning, needs assessment,
and grant applications processes.
* DAAA will distribute ADAMHA funds primarily to existing
alcoholism services including treatment, rehabilitation,
occupational, prevention, and education. Funding
decisions are based on local government plans and
applications processes.
* OMH will fund the ten OHMCs that meet federal eligiblity
requirements according to the Omnibus Reconciliation Act.
Among the performance measures that DSAS and DAA will use in
conjunction with needs assessments to evaluate the use of funds by the
various components of these service networks are:
* compliance with state and federal rules and regulations;
* maintenance of acceptable capacity utilization rates;
* client retention rates and outcome measures; and
* ability to raise third-party revenues.
The Omnibus Reconciliation Act requires OMHto develop review and
evaluative criteria to determine the management and program capacity of
OMHCs to achieve self-sufficiency as a basis for further funding.
DSAS, DAA, and OMH will review local and provider applications and
prepare annual program reports and financial audits.
For further information contact:
Jeff Apfel
* Assistant Director
Office of Development Planning
State Capitol
Albany, New York 12224
518/474-5112
NORTH CAROLINA PUBLICATIONS FOR BLOCK GRANT
AND CATEGORICAL PROGRAM ADMINISTRATION
In October 1981, Governor James 13. Hunt, Jr. requested that the
Secretary of Administration and the Deputy Director of the Office of State
Budget and Management be responsible for statewide coordination and
consistency in the administration of block grants. Such administratic~i
includes procedures for planning, accounting, budgeting, reporting, civil
rights compliance, affirmative action, equal employment opportunity, and
drafting of state administrative regulations.
89
PAGENO="0388"
384
As a response to this request, the Secretary of Administration
established an Interagency Block Grant Task Force composed of
representatives from the Offices of State Budget and Management, Policy
and Planning, the State Treasurer and the State Auditor, the Departments
of Administration, Human Resources, Public Instruction, and Natural
Resources and Community Development. The North Carolina Interagency Task
Force, similar to those formed by other states, has addressed immediate
concerns in the transition from categorical grants to block grants in
state fiscal year 1981-1982. However, recognizing that states will
assume a much greater responsibility in the future for the administration
of grant programs, the task force decided to develop a state procedures
manual for the administration of federal block and categorical grants.
Uniform State Administrative Procedures Manual
The first phase of this effort will focus on the development of
uniform state administrative procedures for all the block grants. The
second phase will involve expanding the manual to cover the
administration of categorical federal programs as well. When complete,
state and local officials in North Carolina will have a single reference
guide for state administation of federal programs. A major component of
the initiative is the development of uniform state assurances in areas
such as civil rights, affirmative action, equal employment opportunity,
and others.
The Interagency Task Force has been collecting information from
state departments concerning the federal laws, regulations, guidelines,
and other procedures they now are expected to follow in the administration
of federal grants programs. The purpose of this study has been to
ascertain the legal basis of federal requirements and determine where
federal guidelines and procedures are overly prescriptive. This
information will be important for the state as it establishes its own
procedures.
The manual will attempt to correct the problem of multiple planning,
reporting, budgeting, and assurance requirements, i.e., procedures
required by one program, grant, or level of government but which seldom if
ever are used to satisfy the requirements of other programs, grants, or
levels of government. Some remaining federal categorical programs
undoubtedly will continue to have some highly detailed and burdensome
administrative requirements that cannot be incorporated into the
procedures manual; nevertheless, the identification of these will assist
in ongoing efforts by the state to simplify and streamline federal
administrative requirements.
Recipient's Guide Book for Subgrantees
In addition to the procedures manual, the Interagency Task Force
will attempt to publish a recipient's guide book for subgrantees. In the
past, many requirements have been imposed on subgrantees by state
agencies and these requirements have been inconsistent with the
requirements of other state agencies. The Task Force is working to
minimize this problem as well as to reduce the number of add-on
requirements by the state.
90
PAGENO="0389"
385
State Register
The Department of Administration has prepared a feasibility study
and management plan and is seeking funding for the establishment of a
State Register, a periodic single source of information about state
regulations.
Result: Simplified Administration of Programs
The development of the above referenced publications will serve not
only to assist local governments and subgrantees, but also to provide
state government with a more simplified and efficient method of
administering federal and state programs. The task force believes that
the increased administrative flexibility afforded by the block grants
should be followed by the development of single and uniform state
procedures for grants administration. The current initiatives in North
Carolina are expected to contribute greatly toward this goal.
For further information contact:
Ted Parrish
Policy Advisor to the Governor
116 West Jones Street
Raleigh, North Carolina 27611
919/733-4131
NORTH DAKOTA BLOCK GRANT IMPLEMENTATION PROGRESS
North Dakota views block grants as an opportunity to benefit state
and local governments and citizens. To this end, the state has elected to
administer the eight FFY 1982 block grants and to date is realizing
success in its efforts toward greater efficiency and effectiveness,
increased coordination with local governments, fewer administrative
burdens, and better targeting of resources to locally-determined needs.
The state agencies which are assigned to administer the block grants
are reporting that the transference ~f skills acquired through those
programs to block grants is occurring without difficulty. With most of
the block grants, the state has gone beyond the requirements in the Act
for obtaining citizen input and a productive working relationship has
been established with the legislature.
In consideration of budget cuts that are accompanying the block
grants, the state's main concern is the critical need for the various
responsibilities of the federal, state, and local governments for public
programs to be sorted out and articulated clearly; turnback of revenue
sources is crucial for block grant and program viability.
For further information contact:
Ronald J. Bostick
Director, State Planning Division
State Capitol Building, 17th Floor
Bismarck, North Dakota 58505
701/224-2095
91
PAGENO="0390"
386
OHIO COMMUNITY DEVELOPMENT PROGRAM
* Governor Rhodes has designated the Department of Economic and
Community Development to administer the Community Development Block Grant
Program for small cities. Some program details have to be worked out, but
the basic approach has been decided which is substantially different from
the way the U. S. Department of Housing and Urban Development (HUD)
administered the program. Ohio's approach seeks to accomplish four
objectives:
* to meet the development needs of a large number of
communities and provide predictable annual funding;
* to ensure that communities with greater needs receive a
larger share of the funds;
* to increase local government control over decisionmaking
and program management; and
* to create a sustained, coordinated development system that
will stimulate public and private investment in Ohio's
cities.
Based on these objectives, CDBG funds will be distributed to all
eligible cities and counties in Ohio according to a per capita formula
that incorporates indicators of distress. Distressed cities and counties
will receive twice the per capita allocation of those that are not.
Distress will be measured by a combination of five factors: unemployment,
growth of employment, population growth, change in per capita income, and
change in assessed valuation of real and personal property. Cities and
counties may work together and pool their funds. A single unit of govern-
ment or a regional organization may administer cooperative efforts.
The state will train grantees in program management and design,
leveraging, commercial rehabilitation, downtown development, and innova-
tive financing. Workshops will be held on real property acquisition,
public improvements construction, housing rehabilitation, and relocation.
This approach to the CDBG program is a better solution to Ohio's
needs and it can be integrated more easily with other state economic and
community development programs.
For further information contact:
David Gehr
Management Analyst
Office of Budget and Management
30 East Broad Street
Columbus, Ohio 43215
92
PAGENO="0391"
387
OREGON POLICY ANALYSIS TO DEVELOP DISTRIBUTION FORMULA
FOR EDUCATION BLOCK GRANT FUNDS TO LOCAL DISTRICTS
One of the most urgent items in need of resolution in the Oregon
educational community is the formula to be used in computing allocations
of Education Block Grant funds to local school districts. To assist the
State Advisory Committee (appointed by the Governor to consider the
funding formula and other issues and to make recommendations to the State
Board of Education), the Oregon Department of Education has developed a
set of policy analysis worksheets which help to sharpen the focus of
allocation and related recommendations by the committee within the
context of pressing policy questions.
Worksheet Designed to Aid Policy Analysis
A policy analysis worksheet is being used for each of many policy
questions. These are being raised around several sets of major issues:
authorized expenditure functions within the block grant legislation,
legal issues which may require state board of education rulemaking, and
operational issues. Each of the worksheets provides background
information on the policy question under consideration, lists preliminary
alternatives and requires development of written recommendations based
upon use of the worksheet data in committee discussion.
The primary policy question under consideration by the committee is
identification of factors that should be included in the funding formula
for distribution of funds to local districts and the weighting to be given
to these factors. The policy analysis worksheet for this important set of
recommendations has been used by the committee to conduct microcomputer
analyses of funding distribution factors and weightings.
For this analysis, the committee also has provided a worksheet
illustrating a sample computer printout that lists twelve Oregon
districts of varying size, geographical area, and economic circumstance.
Three sample factors on this second worksheet are identical to those named
in block grant legislation. While not mandated by law, they are a point
of departure for discussion on how an allocation formula works.
Committee recommendations are as follows:
* Of the total amount of Education Block Grant funds passed
through to local districts, a minimum of $100.00 per
district will be assured.
* 70 percent of the funds will be distributed to districts
on the basis of resident average daily membership (student
average daily membership).
. 30 percent of available funds will be distributed to
districts on the basis of six factors equalized by
students per capita. Three of the factors are those for
which the state has hard statistical student count data:
93
PAGENO="0392"
388
low-income (ESEA Title I census count), geographic
isolation of schools (qualifications established by
Oregon), and handicapped students (handicapped child
census). The other three factors are to be considered
only if the district has a program in place and currently
is serving through those programs students who: have
racial, ethnic, and cultural differences; have limited
English speaking abilities; and are talented/gifted.
Although it has been recommended that these funds be distributed to
districts as reimbursement for higher than average costs related to the
factors identified, the districts are authorized under the Education
Block Grant to spend their allocations according to priorities set
locally.
Other Policy Questions Under Analysis
Legal issues:
* What is the definition of a "Local Educational Agency" for
purposes of the Act?
* Can the state allow block grant funds to be used for a
district program that in the past was supported by local
funds and now would have to be discontinued due to the lack
of an external source of funding?
* Should the state assume a monitoring role to protect
against the potential "misuse" of funds by local
districts?
* How would a state agency discharge its obligation to serve
private school students within its boundaries if the local
educational agency would choose not to accept block grant
funds?
* What, for the purposes of this legislation, is the state's
definition of a "private school"?
* What should be the primary uses of state-level funds?
* What relationship should exist between state and local
uses within the three subchapters of the Act?
* How comprehensive should the state plan for evaluation be
at each level?
Operational issues:
* Is there an advantage to be gained by distributing block
grant funds through the ESDs and county units?
* How extensively and for what purpose should applications
be reviewed by the state?
* What types of data should districts be required to keep
for program evaluation and fiscal accounting purposes?
94
PAGENO="0393"
389
* Should the department encourage districts to pool block
grant funds to increase their impact? If so, how?
Incentives? Through guidelines and training sessions?
Recommendations Subject to Comprehensive Planning and Review
Process
Once the committee has completed the decisionmaking process, the
recommended policies are incorporated into the state plan for the block
grant.
A comprehensive process for review and appro~ral of the state plan has
been developed by the Department of Education with roles,
responsibilities and target dates specified for task completion by the
agencies and parties involved.
Local Involvement in Community Development Block Grant (CDBG)
Planning
Local governments have extensive involvement in CDBG planning,
opportunities which have resulted due to the following components in the
planning process:
* local officials are given the opportunity by the CDBG
Policy Advisory Committee to assist in developing
recommendations for the Governor, as well as to review
draft program design;
* the state is given permission by the Technical Advisory
Committee to tap local expertise;
* city/county officials are given a voice via written
surveys; and
* public hearings are held, as required.
Liability is an issue that merits closer attention. Since CDBG
program requirements are likely to change, successful competitors for
grants also will change. The loser may well be the state. In
anticipation, Oregon is more likely to write complex regulations to
protect itself from expensive lawsuits.
For further information contact:
Marshal Herron
Director
Office of Policy and Program Development
Department of Education
700 Pringle Parkway Southeast
Salem, Oregon 97310
903/378-8378
95
PAGENO="0394"
390
PENNSYLVANIA HUMAN RESOURCES POLICY INNOVATIC)I!~
Governor Thornburgh has established a set of basic objectives for
Pennsylvania's response to the block grants:
o to carefully plan for the assumption of block grants and
for absorption of the federal budget cuts, with the advice
and involvement of citizens, state and local officials;
* to adjust as rapidly as possible to changes in federal
eligibility standards, regulations, etc., with as little
disruption to programs and services as possible;
o to reduce administrative costs and unnecessary
requirements wherever possible to minimize the impact of
funding reductions; and
o to insure that state priorities and needs continue to
receive primary emphasis and attention.
On October 1, 1981, the Governor notified the appropriate federal
agencies that Pennsylvania would assume responsibility for all those
federal block grants in which the state was eligible to participate in
FT 1982.
Human Resources Committee of the Cabinet
Because of the importance and complexity of the task, the Governor
established a Human Resources Committee of the Cabinet to coordinate the
state's response to these new opportunities. This year's efforts
represent only the beginning of a multi-year process of refocusing
programs included in the blocks on the most pressing needs of the state's
communities and citizens. The Human Resources Committee of the Cabinet
held six information forums throughout Pennsylvania in September 1981 to
inform the citizenry of these changes and state activities underway.
Since then, the Committee has continued an outreach effort that has
covered 51 of the state's 67 counties and involved over 200 sessions
throughout the Commonwealth. The Committee is continuing to formulate
additional plans this year, including the development of appropriate
mini-block grants to localities as a component of several of the block
grants-in the spirit of the national government's New Federalism
initiatives-and is working with various Cabinet members to reduce
administrative costs and regulations in light of the replacement of
categorical grants by block grants.
"Mini-Block" Grants to Counties
In the coming year, Pennsylvania will examine the feasibility of
providing "mini-block" grants in several program areas to counties,
permitting local governments the flexibility to set priorities on
services and to design individual delivery mechanisms reflecting the
needs of their areas. In addition, with the advent of the block grants,
96
PAGENO="0395"
391
Pennsylvania's Department of Aging is developing plans to consolidate all
federal funds provided to area agenc~ies on aging (including part of the
Social Services Block Grant along with other federal categorical grants)
into a single Aging Services Block Grant with a single set of state
regulations and reporting requirements designed to maximize local
flexibility and minimize administrative costs. Simplified and
standardized eligibility requirements and local flexibility in the
determination of service and client priorities will maximize the capacity
to target services to the greatest needs as determined by each area agency
on aging.
Choices for Pennsylvanians:
An Intensive Public Participation and Planning Process
Unlike many of the block grants the state will be receiving that have
consolidated existing categorical grants, Pennsylvania (and other states)
will be receiving directly from the federal government two block grant
funding streams-Community Services and Small Cities CDBG-that formerly
were received at local levels. Fortunately, an extensive public
participation and planning effort-"Choices for Pennsylvanians"- had
been initiated in April 1979 by the Pennsylvania State Planning Board.
"Choices" was designed to examine the state's past and future problems and
opportunities in two important areas: community conservation and
economic development. The program included distribution of a Citizen's
Edition (a postage-paid return citizen survey), a 60-minute documentary,
and thirty public meetings to be conducted throughout the state. Through
presentation of the documentary on statewide public television, public
meetings, and presentations to many groups, over 185,000 Pennsylvanians
participated in this effort in the Spring of 1981. The results were used
in preparation of the State Planning Board's Final and Summary reports on
"Choices" in October 1981.
The State Planning Board, which is advisory to both the Governor and
General Assembly, provided a number of suggested policies and actions for
improving the state's communities and economy. Members of the Governor's
Cabinet benefitted from the work of the Board as it was of considerable
value in laying out the objectives of the Commuity Services and Small
Cities Community Development Block Grants. The Pennsylvania Department
of Community Affairs, while providing 90 percent of the CSA Block Grant to
previous community action recipients, was able to focus new priorities on
use of these funds for employment and training, emergency assistance, and
other job development effo~ts. Community action agencies were
encouraged to design programs that focused on these objectives, using
maximum local discretion in making the programs locally-responsive.
In the case of the Small Cities Community Development Block Grant,
plans are being developed through a statewide task force that is
representative of local officials for the purpose of creating local
private-public partnerships, economic development, and community
conservation efforts that are locally-designed but reflective of state
objectives.
97
PAGENO="0396"
392
During a time of limited resources, the 2½-year effort of the State
Planning Board combined with extensive public input has made it possible
for the objectives of the new block grants to be realized sooner and more
effectively. The state's past experience has been one of extreme
frustration in trying to obtain recognition of Pennsylvania's needs and
priorities by federal agencies administering former federal categorical
programs. In the months ahead, the Commonwealth will be developing new
linkages between these block grants and other programs dealing with
community conservation and economic development, in order to make maximum
use of scarce resources and to better accomplish national as well as state
and local objectives.
Conclusion
A watershed year in federalism has been initiated to build
interagency consensus, foster public participation, incorporate state
developed processes and plans, and plan for future utilization of new
types of state-local roles and relationships.
For further information contact:
Charles Lieberth
Executive Director
Human Resources Committee of the Cabinet
Harristown II, Ninth Floor
Harrisburg, Pennsylvania 17120
717/787-6835
RHODE ISLAND A-95 PROCESS
While the A-95 process in Rhode Island has had difficulty as have
other A-95 programs in focusing the attention of federal authorities to
their decisioninaking, the state always has regarded the A-95 process as a
means for review and problem solving within the context of categorical
grants. The A-95 process has been implemented by a state committee, as
well as by a particular committee dedicated to reviewing human service
programs. Rhode Island views this process as an ongoing activity,
particularly in light of the fact that the broad-based membership of the
A-95 committee always draws a variety of interested citizens from all
walks of civic life.
This year, the human services subcommittee was asked by Governor
Garrahy to disseminate block grant information throughout the state and
this may prove to be a vehicle for further block grant deliberation.
The first phase of block grant planning in Rhode Island was to
acconinodate large federal reductions in spending. That phase has not been
completed. The Governor has pledged to name an advisory cemmittee to make
reconinendations for a second year of operation. However, there is a need
to institutionalize a professional planning process that will involve the
citizenry and the difficult choices brought by the block grant process.
98
PAGENO="0397"
393
The Governor's Policy Office is currently reviewing modification of
the A-95 process to accomplish this goal. A-95 review can be refocused
upon its original intent and therefore will have a much greater likelihood
of success in impacting state decisions.
For further information contact:
Alvin N. Johnson
Federal Coordinator
Governor's Policy Office
State House
Providence, Rhode Island 02903
401/277-2214
SOUTH CAROLINA COUNCIL OF GOVERNMENTS MODEL FOR CDBG IMPLEMENTATION
A Council of Governments model is being developed in South Carolina
for the purpose of implementing the Small Cities Community Development
Block Grant program. The process of program development will be
accomplished with maximum input and advice from local officials. Within
the framework and set of tasks established for full-scale implementation,
the roles and responsibilities of the Governor's Office, localities, and
the Council of Governments (COG) have been established.
Sequential implementation tasks have been planned as follows:
* Design and establish criteria for grant application-The
Governor's Office will develop the application package,
including the types of information necessary to evaluate
an application for funding. In addition, criteria will be
established concerning categories of activities such as
economic development, community facilities, housing
rehabilitation, etc., with the corresponding assignment of
points for activities within each category, e.g., newly
created jobs, grant fund leveraging by applicant, or
number of low- and moderate-income persons served.
* Develop regional benchmark figures-Tentative benchmark
figures will be developed once the regional COG Executive
Board has determined a ranking order for applications
generated within regions. The Governor's Office will use
the benchmarks as a guide in ranking all projects
submitted by the COGs. (It should be understood that the
assigning of benchmark figures to each COG does not
obligate the state to award grants in the amount of the
established benchmarks.)
* Establish a set-aside for the Governor's Discretionary
Fund-Ten percent of the total CDBG funds coming to the
Governor's Office will be set aside for special issues and
imminent threat situations.
99
PAGENO="0398"
394
* Conduct regional workshops-Workshops will be held for
eligible applicants in each of the ten planning councils
and will deal with an explanation of the procedure for
applying for CDBG funds and a discussion of criteria
developed for reviewing grant applications.
* Complete applications-All applications will be required
to be completed within a specified time frame
(tentatively, two months). The applicant may complete the
application themselves, request assistance from their
respective COG, or hire a consultant.
* Transmit completed application to COG-All completed
applications will be submitted by locals to their
respective planning councils.
* Receive applications-The deadline for completed
applications is set tentatively for April 1, 1982.
* Review applications for completeness-Once applications
have been received, they will be reviewed and, if
additional information is needed, applicants will be
requested to supply the information within a specified
time.
* Assign points to all applications based on state-
established criteria-Each set of criteria established by
the state will be assigned a certain number of points,
e.g., one criteria for an economic development project
application might be the number of newly-created permanent
jobs, with additional points given for each new job.
Another example might be a community facility project: if
an applicant were applying for funds to install a water
line, the criteria could be the number of low- and
moderate-income families to benefit from installation of
the line; again, additional points would be given for each
benefiting family. The actual assignment of points will
be the responsibility of the staff of the COG within whose
geographic boundary each application originates.
* Review and prioritize applicatons-Each COG Board will be
responsible for reviewing the points assigned by COG staff
for each application and for prioritizing those
applications for transmittal to the Governor's Office. A
COG Board does not have to assign top priority to the
application receiving the most points if it believes an
application receiving fewer points will be of more benefit
to its respective region (a COG does not obligate the
state to fund that application).
e Provide technical assistance to planning councils-A staff
person from the Governor's Office will be assigned to each
planning council to provide technical assistance and
ensure that grant applications are reviewed in a uniform
manner throughout the state.
100
PAGENO="0399"
395
* Receive applications from COGs-All applications will be
transmitted to the Governor's Office by planning councils
within a specified time.
* Review applications and establish threshold figure-The
Governor's Office will review and evaluate all
applications submitted and establish a threshold figure
for applications that will be considered for funding. If
the maximum number of points that an application can
receive were 300, the state may assign a threshold figure
of 150. This, would mean that only those applications
receiving 150 points or more would be considered for
funding. This threshold figure cannot be established
until all applications are received by the state, in order
to fairly evaluate the points assigned to all
applications. This figure will vary from year to year
depending on the quality of the applications.
* Conduct, as appropriate, on-site visits to applicants
meeting the threshold figure-The Governor's office will
conduct an on-site visit with applicants meeting the
threshold figure, to discuss and review information on the
application.
* Forward approved application to Governor for his
approval/disapproval-The Governor's Office will
prioritize the application, taking into account the
priorities set by the COG Boards and benchmark figures for
each region. The prioritized applications will be sent to
the Governor for his approval/disapproval.
* Enter into contractual agreement with each approved
applicant-a model contract will be developed for use of
CDBG funds and will include items such as local match, and
state and federal requirements.
* Make grant awards to approved applications-Once
applicants have signed the contracts, the state will issue
grant awards to applicants so they may incur costs against
the grant.
For further information contact:
Bill Prince
Special Assistant to the Governor for Policy Development
State House
Columbia, South Carolina 29211
803/ 758-3208
101
PAGENO="0400"
396
SOUTH DAKOTA EVALUATION OF BLOCK GRANT EXPERIENCES
South Dakota proposes to develop an innovative demonstration project
to "overhaul" the 1982 block grants. The project will involve three major
activities for FY 1983 block grants that may be of interest to other
states, as follows:
* Conduct an evaluation of this year's block grant proposals
to determine if funding levels and priorities should
change and ensure that needed changes are reflected in the
upcoming block grant report (e.g., that the shortcomings
of FY 1982 block grants are not repeated in FY 1983).
* Develop for the numerous block grant reports a single
innovative format designed to encourage effective
information dissemination, thereby facilitating a process
by which resource allocation decisions are made by the
state.
* Formulate an efficient public hearing process that will
reduce hearing costs yet allow available information to be
presented to as large an audience as possible, thereby
giving the state information sufficient for evaluating
programs and making resource allocation decisions.
An evaluation of South Dakota's response to block grants in FY 1982
is relevant to other states in that they can capitalize on information
gained from reviewing:
* the adjustments made by South Dakota after one year's
experience with the blocks;
* the utility of developing block grant proposals with a
firm idea of future funding (this was not possible in
FY 1982 due to uncertainty of the budget); and
* the advantage of a single innovative format that clearly
presents all information necessary to develop and manage
block grants.
* the process of an efficient public hearing to use as a
prototype.
For further information contact:
Ben Orsbon
Chief Planner
Intergovernmental Relations
State Capitol
Pierre, South Dakota 57501
605/773-3661
102
PAGENO="0401"
397
TENNESSEE HUMAN RESOURCE PLANNING TASK FORCE PROCRAN
The citizen-taxpayer is looking to government to do a better job of
providing basic services. A decade of experience with governmental human
resource programs has led to the general view that better programs can be.
developed through creative federalism at the state and local government
levels. Consequently, more program responsibilty is being given to state
and local governments through such programs as federal revenue sharing,
block grants, and a general decentralization of the federal bureaucracy.
It is to aid in this transition period and to help in the
coordination and consolidation of human service delivery programs, that
the Tennessee Human Resource Planning Task Force project is being
proposed. The task force will:
* develop a one-year comprehensive plan for human resource
service delivery, based on information and substantial
input from all public and private service delivery
programs; the plan will allow the task force to estimate
during `transitional phases" the impact of new programs as
to funding requirements and impact on the service delivery
system; and
* seek out all funding sources for programs and aid program
areas and agencies in the development of coordinated block
grants; it is hoped that the flow of dollars back to
service delivery areas will be increased substantially
without increasing local spending or reducing services to
children and their families.
The information gathered by the task force will be made available to
legislative and executive branches, agency administrators, and other
decisionmakers in order to: plan and deliver needed services at the local
level of government; build effective service delivery and get the most for
the "dollar"; avoid program confusion among service recipients; make the
best use of all human service programs in Tennessee for the betterment of
its children.
Task Force Membership and Staffing
The working task force of deputy commissioners and special
assistants to the Governor will be continued throughout the first and
subsequent years of human services block grant implementation. Although
final plans have not been made, initially the task force has been designed
to consist of assistant commissioners and directors of independent
commissions who have daily programmatic and administrative responsibility
for~the delivery of human service programs.
103
99-965 0 - 82 - 26
PAGENO="0402"
398
The task force will meet weekly, then monthly, to discuss human
service delivery problems and new programs and their effects on the
system. The Tennessee State Planning Office will act not only as staff
for the task force but also serve as its focal point. The structure
should increase state flexibility in handling new approaches to human
service delivery that are being brought about by block grants, as well as
increase the state's ability to deliver a slate of services in a more
efficient and systematized way to children and their families.
Executive Briefing
The Governor's cooperation is imperative before any level of
authority can be expected to be responsive in the operation of Tennessee
government. Therefore, periodic briefings are planned and will be
structured to advise the Governor, his immediate staff, and major
officials of responsibility centers in and out of state government, to
assure complete coordination and implementation of human service delivery
within the state. The briefings reduce the time Governor Alexander and
his immediate staff will need in solving daily problems.
Task Force Target Dates
In order to achieve the primary goal of establishing a well-
balanced, cost-effective delivery system for children and their families,
the following timetable has been developed:
October 1, 1981 Establish Human Resource Task Force
December 1, 1982 Initiate Regional Delivery System
January 1, 1983 Re-evaluate Proposed System After Public Review
April 1, 1983 Regional Delivery System Put Into Operational Mode
July 1, 1983 Reassess Child Welfare Programming/Establish
Fiscal Year 1983 Goals and Objectives
For further information contact:
Steve Norris
Director
State Planning Office
660 Capitol Hill Building
Nashville, Tennessee 37219
615/741-1676
TEXAS HEADSTART ON MAN&GING FEDERAL GRANTS-IN-AID
Shortly after his inauguration in 1979, Governor Clements created a
program called the Texas State Government Program. The results of this
seven-point program over the last 2½ years have been: improved
management, more effective service delivery, and, at the same time,
reduced number of state employees. The improvement of efficiency and
effectiveness of state government has prepared Texas for assuming a
stronger state role in block grant management ~ncf -"New Federalism"
proposals.
104
PAGENO="0403"
399
Well in advance of enactment of the Omnibus Reconciliation Act of
1981, the Governor directed the state agencies and universities to begin
developing operating plans that would anticipate overall reductions in
federal funding and to begin contingency plans by identifying appropriate
reductions in staffing and expenditures. Most state agencies found that
this headstart made it much easier to handle the federal funding
reductions and to comply with new features of the block grants.
During 1981, the state legislature passed a bill requiring all state
agencies to administer federal and state grant funds in accordance with
standards. established by the Governor's Office. In response to this
directive, the Governor asked his Planning and Budget Office to prepare a
procedures manual that would be used in administering block grants and
other federal grants-in-aid. These procedures were to assist in assuring
that the state would efficiently administer the block grants and
effectively account for use of the funds. State agencies, local
governments, and private organizations have been assisting the Governor's
Office in preparing this grant management manual which is scheduled to be
published and implemented in September 1982.
In April 1981, the Governor created a task force on block grants
which tracked the development of the block grant programs, analyzed the
final block grant legislation, and submitted recournendations to the
Governor for implementing block grants for FY 1982. The task force has
been assisting the Governor's Office in developing procedures that will
assure local governments and citizens the opportunity to provide input in
developing intended user reports for FY 1983 block grants. The task force
also has assisted in preparing final reports for legislative and agency
hearings scheduled for the Summer of 1982.
For further information contact:
Paul Wrotenbery
Director
Governor's Budget and Planning Office
Sam Houston Building, 7th Floor
Austin, Texas 78701
512/475-8491
UTAH GOVERNOR'S ACTION PLAN FOR QUALITY ELEMENTARY AND SECONDARY EDUCATION
Utah Governor Scott Matheson soon will be publishing the state's
first gubernatorial public education policy. Historically, the state has
been proud of its strong commitment to education, but whether that
commitment will continue is one of the most presing policy questions
facing the citizens of the state. Because of a birth rate that is double
the national average, school enrollments are exploding. Simultaneously,
the state budget is constrained, urbanization has created new
requirements for public resources, the federal government's role in
education is in transition, and the taxpayer is demanding relief.
105
PAGENO="0404"
400
Recognizing the need for swift action to address these critical
issues, Governor Matheson directed his staff to develop an action-
oriented education policy. The result was "Solving the School Crisis:
Governor's Action Plan for Quality Elementary and Secondary Education",
the purpose of which would be to:
* assist the State Board of Education and local boards to
bring pressing educational issues to the forefront;
* establish a solid decisionmaking framework designed to
strengthen educational leadership at the local level; and
* synthesize the recommendations from three statewide
studies of educational needs and priorities completed
since 1979.
The policy addresses Utah's three priority issues in public
education: establishing basic purposes of public education; financing
public education, and providing facilities for public schools. Given the
state's spartan fiscal environment, quality must be equated with
effective use of resources and doing fewer things, but doing them well.
Promoting the identification of "fewer things", for basic education
purposes, is a major objective the action plan.
The process for targeting resources toward the basic purposes
identified in the plan is community-based educational planning. By
locating and integrating the whole range of a community's assets into the
education effort, an indispensable step can be taken toward achieving
quality education. Local educational planning is also the mechanism for
implementing viable alternatives which will ease the facilities and
financial pressures currently being experienced. To give local aistricts
the flexibility to pursue innovative solutions to these problems, the
policy promotes the idea of a state block grant for education. Inspired
by the "New Federalism" philosophy, this method for allocating school
funds to local districts groups similar categories in Utah's existing
Minimum School Program. This year the Governor recommended to the Utah
Legislature that twenty-nine subcategories be consolidated into eight
block grants. The 1982 Public Education Appropriations Subcommittee of
the Legislature adopted part of the recommendation and agreed to study the
remainder during the interim.
The key to the success of Governor Matheson's action plan lies in the
actions ultimately taken. It is anticipated that the plan will be
received and acted upon swiftly in a spirit of cooperation and shared
responsibility for Utah's most precious resource-young people.
For further information contact:
Anna-Marie Dunlap
Office of the State Planning Coordinator
124 State Capitol
Salt Lake City, Utah 84114
801/553-6084
106
PAGENO="0405"
401
UTAH FRAMEWORK FOR POLICY-BUDGET DEVELOPMENT
Governor Matheson, through his planning/budgeting offices, has
created a framework within which the impacts of President Reagan's
federalism-budget cuts recommendations can be analyzed. In preparing for
the FY 1983 state budget, the process began with a current conditions
analysis, developed policy themes and agency plans, and tracked those
plans through the budget process.
The focus of the current conditions analysis to be presented in
March 1982 will be the position of Utah in the national environment, with
major emphasis on the President's proposals. The state recognizes that it
is coping with unknowns and will have to plan for a range of outcomes.
The kick-off for this year's planning/budget cycle will be a two-day
seminar in March for budget and planning staffs and department heads. The
agenda will include topics such as demographic and economic trends,
federal budget and federalism prospects, and key issues facing the state.
For further information contact:
Emily Charles
Office of the Governor
State Capitol
Salt Lake City, Utah 84114
801/533-5231
VERMONT APPROPRIATIONS ACT
In April 1981, the Vermont Legislature included as a section of the
Annual Appropriations Act a provision for executive-legislative
interaction concerning potential federal block grants. The Governor was
given the prerogative to accept a block grant if, in his judgement, it was
in the best interest of the state.
The approval of the Joint Fiscal Committee, as agent for the
Legislature, was required for allocation of the funds for purposes
consistent with the basic appropriations in the Act.
The provision maintains legislative oversight while giving the
Governor power to determine its value to the State and to accept it
unilaterally. A similar expanded provision is being drafted for
inclusion in this year's Appropriations Act.
For further information contact:
John Simson
Director, State Planning Office
Pavilion Office Building
Montpelier, Vermont 05602
802/828-3326
107
PAGENO="0406"
402
VERMONT CONSOLIDATED PLAN FOR HUMAN SERVICES
In June 1979, the State Planning Office (located in the Governor's
Office) and the Agency of Human Services contracted with the Department of
Health and Human Services (DHHS) to begin the Planning Requirements
Reform Project. One of the purposes of the project was to link federally-
mandated plans to the state's existing planning and budgeting processes.
Six DHHS-funded programs were selected for this linkage and three DHHS-
funded programs were added the second year. The resulting consolidated
plan document successfully met federal plan requirements for all these
programs, while providing a base and process for planning and managing
human services on the state's own terms. The plan also provided an
explicit, holistic view of the state's human services programs that
linked program and fiscal planning processes. The plan was used by the
legislature, the Governor's Office, and the Agency of Human Services in
their efforts to foster true coordination of program management and
service delivery.
The Agency of Human Services has developed an effective management
approach by standardizing and consolidating the state's planning and
budgeting cycles. This approach has weathered two budget cycles, several
crisis budget reduction exercises, and initial responses to the Omnibus
Reconciliation Act of 1981. The flexibility of this approach has:
* enabled the agency to respond to shifting conditions
without developing a new budget each time circumstances
change;
* helped synchronize executive and legislative planning
cycles, thus increasing the coordination of top-level
management in the state; and
* had areachdown effect, enabling management and technical
staff in the departments to influence the shape and
substance of consolidated planning, a process supported by
the development of close working relationships between
central planning staff and managers and planners in the
departments and offices.
*The consolidated plan resulting from the Planning Requirements
Reform Project was used by Vermont as the application for the Social
Services Block Grant. The Agency of Human Services will review the
requirements and regulations that pertain to all six block grants and the
state will submit the consolidated plan to the appropriate DHHS agencies.
Vermont expects the review will result in further streamlining of the plan
and a clearer relationship between funding and services.
For further information contact:
George Coppenrath
Agency of Human Services
103 South Main Street
Waterbury, Vermont 05676
802/241-2227
108
PAGENO="0407"
403
VIRGINIA STATEWIDE TELECONFERENCE
In November and December 1981, the Office of the Secretary of Human
Resources sponsored two statewide teleconferences to engage the general
public and human resource service providers in the decisionmaking process
associated with block grants.
The basic idea behind the teleconferences was to bring top
government officials into a "face-to-face" meeting with interested
individuals through the use of telephone and television facilities.
During the first half of the programs, the Governor, the Secretary, and
six human resource agency heads presented the concept of block grants and
related their impact. In the second half of the programs, viewers were
encouraged to call in questions via a toll-free number. Questions were
relayed to appropriate officials for a live response. Questions not
answered on the air received a written response.
The first teleconference-Directions `82: A Teleconference for
Human Resource Providers-aired on November 25, 1981 and was targeted for
social service professionals. The second teleconference-Money and Human
Services: Virgi~nia's Plan-aired on December 10, 1981, focused on the
impact of recent federal actions, and was directed to the general public.
Both programs were produced by state public information personnel with
the help of the Virginia Department of Telecommunications. Utilizing the
facilities of WCVE-TV in Richmond, the programs were transmitted via
satellite to each of Virginia's five public televisions stations. An
interpreter for~the hearing disabled was provided on-air. It is estimated
that approximately 40,000 viewers (including human service providers,
local government officials, and advocacy groups) participated in the
program.
VIRGINIA ASSESSMENT OF BLOCK GRANT FUNDING
WITHIN THE CONTEXT OF TOTAL FEDERAL FUNDING
Federal Budget Impact (FBI) reports are developed by the Virginia
Department of Planning and Budget at key points in the federal budget
process to assess the likely impact on state programs of projected and
actual changes in federal funding, including block grants. The data is
obtained by a series of survey instruments sent to state agencies that
receive federal funds. Believed to be a significant policy and management
innovation, the objective of these reports is to provide the Governor,
cabinet secretaries, state legislators, and administrators with the best
information available for effective planning and policy resource
allocation decisions used in the development of the state biennial budget
and amendments to the budget. The reports contain:
* detailed financial data;
* summaries of significant impacts on policies, levels of
program activity, and public programs; and
* state agency recommendations for alternatives dealing with -
revenue change.
109
PAGENO="0408"
404
Methodology
The current FBI report is the fifth in a series examining the impact
of "New Federalism". It represents an estimation of likely federal
revenue changes as of the Third Continuing Appropriations Resolution
signed by the President on December 15, 1981. Where final congressional
appropriations bills were passed by that date, estimates are based on
those funding levels. Key information, generated partially by a survey of
state agencies, is contained in tables measuring anticipated revenues as
compared with continuing the programs at "present level" (federal
revenues received by the program in FY 1980-81).
The report is organized in two parts: (1) figures summarized as
statewide totals and (2) figures broken out by federal program and
individual reporting agency.
The FBI reports are part of an extensive effort by the Commonwealth
of Virginia to monitor and evaluate changes in federal funding levels and
their, impact. Additional information, copies of the reports, and sample
copies of survey forms are available upon request.
For further information contact:
Ray Sorrell
Deputy Director for Operations
Department of Planning and Budget
9th Street Office Building
Richmond, Virginia 23219
804/786-8755
WASHINGTON STATE COMMUNITY SERVICES BLOCK GRANT FUNDING REDISTRIBUTION
Inherent Equity and Statewide Coverage Issues
A major issue confronting the State Planning and Community Affairs
Agency, when it began planning for implementation of the Community
Services Block Grant (CSBG), was the distribution of diminished resources
to all areas of the state. The agency decided that distribution should be
based upon these principles: equity and statewide coverage.
At the time of CSBG enactment, eleven of the state's thirty-nine
counties (35.02 percent of the population) were served neither by a
Community Action Agency, nor by a Limited Purpose Agency serving as a
Community Action Agency. It was decided that the new program would evolve
into one serving all counties, with the first year to serve as a transi-
tion year and used by the most appropriate neighboring grantees to develop
relationships and acceptance in those unserved areas. These agencies
were allotted funds designated for the unserved counties.
110
PAGENO="0409"
405
The resulting and potentially much more difficult problem was
allocation of funds among the grantees. The agency found that the
Community Services Administration had demonstrated a strong urban bias in
its distribution of* funds (e.g., a county had two community action
agencies_-one serving a large central city and the other serving the
largely rural remainder of the county; while the difference in the poverty
population was only 124 persons, the urban agency received $640,000 and
the rural agency received only $220,000). Conversely, many counties of
the state were quite rural, with small populations but high incidences of
poverty. If funds were distributed solely on the basis of poverty popula-
tion, many of the rural agencies (which often are the primary service
deliverer) would not receive sufficient funds to maintain administrative
integrity, let alone provide services to poor people.
Working Group Established
Faced with a difficult decision and wishing to tap the experience and
ideas of those who ultimately would be impacted by that decision, the
agency assembled a special group to work with staff on the development of
the community services plan and allocation formula. The working group
consisted of agency directors representing rural/urban, large/small, and
minority service-oriented agencies. Recognizing that equitable redistri-
bution of funds would result in major funding losses for most urban
programs, and that each agency, large or small, had similar operating
costs (salaries, space rental, goods and services), the working group
decided that each agency should receive the same base amount to cover
common costs. Remaining funds would be distributed according to each
service areas share of the state's poverty population, thereby, address-
ing both rural and urban needs.
Full-scale implementation in one step would have resulted in
devastating, unanticipated funding reductions to some large agencies.
The group decided that the agency should phase in full redistribution.
Hence, it was decided that in 1982 no agency would suffer any funding
reduction in excess of 30 percent of its 1982 basic funding level. This
would provide agencies with one year to plan for the further reductions.
Because of the thought given to these issues and because representatives
of the affected agencies participated in the planning process, the
decisions achieved a remarkable consensus among the local agencies. The
decisions, while hurting some and helping others, generally were
recognized as fair.
For further information contact:
Art Cantrall
Planning and Community Affairs Agency
9th and Columbia Building
Olympia, Washington 98504
206/753-4979
111
PAGENO="0410"
406
WASHINGTON STATE DEPARTMENT OF SOCIAL AND HEALTH SERVICES
STRATEGIC PLAN TO REDUCE EXPENDITURES
The Washington State Department of Social and Health Services (DSHS)
made several decisions when it undertook the task of developing a
strategic plan to reduce expenditures in order to offset the anticipated
loss of federal funds:
* the process would be an open one with considerable
opportunity for public involvement;
* service reductions would be made where they would have the
least adverse impact upon clients; and
* no program would be exempted from the review, and funds
perhaps would be shifted from a totally state-funded
program to one that lost federal funds, depending upon
priorities.
In other words, the department's plan for absorbing federal budget
cuts would not simply mirror federal actions, but would be developed in
accordance with state-established priorities.
Steps in the Open Review Process
The department could have chosen the relatively easy approach of
simply applying the federal cuts to the affected programs. Another
approach would have been to apply a percentage reduction to all
departmental program budgets. Instead, the department chose to adopt a
process that allowed for a critical analysis of existing programs, public
input on the relative importance of DSHS services, and the formulation of
an expenditure reduction plan reflecting the basic mission and service
priorities of the department.
Program Perspectives
Each program director developed a program perspective (describing
clients, services, and priorities) that was reviewed by agency groups
related to those programs and by DSHS management. These perspectives
provided the basis for identifying issues related to funding requirements
for each program.
Department Perspective
The department then synthesized program perspectives into a
document-"Department of Social and Health Services Perspective on
Implementation of Federal Budget Reductions and Block Grants"-that
contained a mission statement and categories of service priorities plus a
list of specific program issues. Comment was invited on the draft before
it was given general distribution.
112
PAGENO="0411"
407
Public Review and Comment
Meetings were held in each DSHS region (attendance totaling
approximately 1500) for the purpose of allowing the pubic to comment on
the departmental perspective. In addition, nearly 1,000 individuals and
organizations submitted written comments on the perspective. Staff also
met with service providers and client advocacy groups to explain the
budget problem, examine options, and solicit constructive suggestions.
Involvement of Other Federal, State, and Local Officials
Early in the process, the DSFIS Secretary established an Interagency
Task Force to ensure that the department's planning for anticipated
federal budget reductions was coordinated with federal, state, and local
agencies. DSHS representatives also met with legislators to explain the
process and to respond to their questions.
Decision Packages
The DSHS programs developed decision packages on the issues listed
in the departmental perspective. Each of these identified options for
change, impacts on clients, potential cost savings, projected
implementation dates, and any required changes in federal or state laws or
regulations. The six DSHS regions reviewed and commented on more than 200
decision packages.
Priorit ization
Drawing upon a wealth of public comment and reaction and program
director recommendations, department managers conducted a detailed review
of all decision packages and ranked them in priority order. These
priorities provided the basis for the expenditure reduction plan.
Prioritization of Services
Within the general framework of the DSHS mission, major service
types wre grouped into three priority categories:
* Basic Life Support Services-those services designed to
ensure provision of essential food, shelter, clothing,
medical care, and physical safety for persons unable to do
so for themselves (such as protective services, financial
assistance, food stamps, residential 24-hour care, acute
medical care, and infectious disease control);
* Services to Avoid/Reduce the Need for Basic Life Support
Services-such as employment counseling and training,
independent living for the disabled, crisis intervention,
community outpatient care for the mentally ill and
substance abusers, preventive and restorative medical
care, and family planning; and
* Services Designed to Improve Access to the Service
Delivery System-such as information and referral,
advocacy for the elderly and disabled, volunteer programs
for the institutionalized, demonstration projects, and
outreach.
113
PAGENO="0412"
408
Application of Priorities to Decision Packages
In all of the deliberations, an effort was made to minimize the
adverse impact of possible budget reductions on clients. Some federal
cuts would occur in programs considered high-priority by the department.
To avoid major service reductions in these programs and offset at least
partially the loss of funds, the department chose to generate funds from
less critical programs. Among these high-priority programs are Maternal
and Child Health, Vocational Rehabilitation, Family Planning, Refugee
Assistance, and AFDC administative staff training. Certain Title XX
programs were maintained at current levels or reduced less than the full
percentage amount: chore services, child protective services, and foster
care staff services. In addition, the department proposed to transfer
funds to cover potential deficits in the state's mental hospitals. This
approach is reflected in the following list of changes:
* a technical adjustment reflecting lower than expected
caseloads in income and medical assistance programs;
* elimination of some regulatory activities and reduction of
administrative and support costs; and
* collection of fees for a variety of services and
client/parent participation in the cost of services.
Legislature's Role in Carrying Out DSHS Expenditure Reduction Plan
It is only after considering all of the aforementioned savings
plans, that the Department of Social and Health Services will have to
consider further reducing client services. The department could
implement some of the planned expenditure reductions with the authority
it currently possesses, however, many require changes in the Washington
Administrative Code. Implementation of other options depends upon the
department's obtaining waivers from federal regulatons. A number of the
most important changes depend upon action by the Legislature.
Legislative support for specific proposals in the expenditure reduction
plan is essential if the department is to achieve expected savings. If
necessary legislation is not passed to increase fees, facilitate
additional collections, or transfer funds, the department will be forced
to cut back further on direct services to clients.
For further information contact:
Judy Merchant
Special Assistant
Office of the Secretary
Department of Social and Health Services
Olympia, Washington 98504
206/754-1138
114
PAGENO="0413"
409
WEST VIRGINIA PRIMARY CARE BLOCK GRANT PLANNING
First State Planning to Sign Primary Care Block Grant
Cooperative Agreement
West Virginia is planning to assume the Primary Care Block Grant
(PCBG) when it is available in October 1982, in spite of the stringent
federal requirements associated with this block. In October 1981, West
Virginia became the first state to sign a cooperative agreement with the
Bureau of Community Health Services (BCHS), Department of Health and
Human Services to work together during this, the transition year, to
provide a smooth transition to state control. Under this agreement, BCHS
will continue its statutory responsibility to administer the Community
Health Center (CHC) program throughout FY 1982, but decisions concerning
the operation of the CHC program in West Virginia will be made with the
"active advice, consultation and understanding" of the West Virginia
Department of Health. The state will participate in resource allocation,
grant reviews, monitoring and technical assistance. Under that
agreement, two federal regional office assignees currently are working
with the health department and they will act as project officers for the
state's twenty-nine community health center grantees. The state recently
has completed the first round of joint federal/state reviews of community
health center applications held at the state capitol. This activity will
enhance greatly the state's ability to administer programs under this
block grant in the coming year.
Staffing the Planning Process
West Virginia has assigned one full-time person, Director of Primary
Care, to work on the transition to the state's assumption of the PCBG.
The project also requires 1.5 FTE secretaries and portions of the time of
the Director and Assistant Director of the Office of Community Health
Services. These resources, in addition to the federal assignees
mentioned above, provide adequate staffing to shepherd the development of
policies and programs associated with this block.
Planning Partnership with State Health Department
Another important aspect of this activity has been the establishment
of a formal State Health Department/Primary Care Liaison Committee under
a Memorandum of Understanding with the West Virginia Primary Care Study
Group (the interest group representing the interests of non-profit
primary care providers in the state). To the maximum extent possible, the
liaison committee is to be involved in the health department's
development of policy as it relates to primary care. By working openly in
this planning and policy development process, the state hopes to relieve
some of the anxiety brought about by~ the rapid changes in health care
funding, and to ensure the valuable input from those actually working in
the field into the development of plans and policies.
115
PAGENO="0414"
410
Benefits of Accepting the Primary Care Block Grant
Perhaps the most important question to be addressed by West Virginia
has been "Why accept the Primary Care Block Grant at all?" In spite of
the many disincentives in this block, including matching funds
requirement, the continuation of federal regulations, and the requirement
to continue to fund existing centers at current levels, the state believes
that the citizens of West Virginia will be better served by a community
health center program administered out of the state capitol rather than
from a distant federal regional office. The state will be better able to
effect integration with categorical programs which it now controls and,
if the experience of community mental health centers is any indication,
funding by the state legislature for primary care should be a stabilizing
factor for programs around the state. Community health centers are an
important state resource and if federal stewardship of these programs is
on the decline, it becomes the state's responsibility_-a responsibility
West Virginia readily accepts.
For further information contact:
L. Clark Hansbarger, M. D.
Director of Health
1800 Washington Street East
Charleston, West Virginia 25305
304/348-0025
WISCONSIN COMMUNITY DEVELOPMENT BLOCK GRANT SMALL CITIES PROGRAM
Goals
As a part of a demonstration project sponsored by the U. S.
Department of Housing and Urban Development (HUD), Wisconsin was selected
last year to administer the Small Cities preapplication process. In its
proposal to HUD, the state established the following program goals:
* to encourage communities to participate in the entire
array of eligible CDBG activities, particularly economic
development;
* to develop a comprehensive set of need indicators based on
both federal and state data;
* to assess the capacity of the applicant to undertake CDBG
activities prior to award of the grant;
* to promote coordination of CDBG with other federal and
state housing and community development programs; and
* to encourage use of CDBG money as timely execution of CDBG
programs through better technical assistance and
administration.
These goals were embodied in a rating and ranking system designed to
match federal resources with state objectives and local needs.
116
PAGENO="0415"
411
How Needed Changes Were Accomplished
When notified of Wisconsin's selection, the Governor designated the
State Department of Development (DOD) as the responsible agency. An
advisory committee was assigned to work with the DOD and included
representatives from the HUD area office, the League of Municipalities,
the Wisconsin County Boards Association, the Wisconsin Towns Association,
and the Wisconsin Council of Regional Planning Organizations. DOD sent
copies of the proposed program to over one hundred local governments for
review and comment. These suggestions were considered and, when
appropriate, were incorporated in the final drafts of Guidelines and
Instructions. To acquaint local officials and staff with the program,
training sessions were held in four geographic areas of the state.
Revised Indicators of Community Need
Prior to its 1980 revision of the Small Cities selection criteria,
HUD relied solely upon substandard housing and poverty persons as
indicators of community need. Wisconsin replaced this system with six
indicators designed to give a more comprehensive picture of distress:
two fiscal-full value per capita (1979) and net mill rate (1979);
three economic-per capita income (1977), percentage of persons
in poverty (1979), and average unemployment rate (1978-1980);
one housing-percentage of households in need of housing assistance
(1979).
The Department of Development, in cooperation with the Department of
Revenue, compiled the data for each unit of government. An applicant's
score on each indicator depended upon its "need" in relation to all other
potential applicants. Each community was assigned a value for each of the
six indicators. The communities then were ranked in order of need and
assigned a score. Each community's total score was a result of the
scoring procedure being applied to each indicator. No calculations were
required by the applicant. The score for a given community was available
upon request.
Applicants also were scored on the impact of the proposed program.
Proposals were submitted in the areas of economic conditions, housing and
related conditions, and serious deficiencies in public facilities. On
comprehensive applications, the points for each area were added and
divided by the number of problem areas. Within each program area, there
were several components, and within each component, several point scores
available. For example, a community received maximum points for its
economic development strategy if it documented significant needs and the
proposed activities directly addressed those needs. If needs and
activities were not strongly linked, the application received fewer
points. Although certain components were peculiar to individual program
areas, common components of all program areas were: strategy (the extent
to which proposed program met the need); cost as compared with other
applications; benefits to low- and moderate-income persons (LMI); and
concentrated effort (extent to which proposed program combined with other
activities to meet community needs).
117
PAGENO="0416"
412
It was the state's belief that communities should receive some
credit for their capacity to plan and implement programs. For this
reason, points were awarded to applicants who demonstrated successful
community development activities.
Procedures for Processing Preapplications
In 1981, the procedures for processing preapplications were
established with the assistance of the HUD area office. Once
preapplications were ranked, DOD made recommendations to the area office
on funding and submission of full applications.
For FY l982,~ the point amounts for various criteria have been
changed somewhat, based upon a review of last year's program and upon
further consultation with local officials. Because the state will
administer other aspects of the program, statewide administrative rules
have been formulated and are being published. One goal of the program
remains the same, however, to provide the optimal blend of state
development objectives and local discretion.
For further information contact:
Paul J. Swain
Legal Counsel and Assistant to the Governor for Policy
State Capitol, 115-East
Madison, Wisconsin 53702
608/266-1212
WYOMING BROKERING OF PEER ASSISTANCE
AMONG LOCAL EDUCATIONAL AGENCIES
Since 1980, the Wyoming Department of Education examined its service
delivery system seeking more comprehensive use of department resources
and better ways to provide systematic contact with school districts. It
was determined that all department activities should focus on services
that strengthened instruction and that these services should reflect
department priorities, statutory program and fiscal responsibilities, and
the districts' needs.
Federal funding cutbacks affecting eighteen state educational agency
positions provided the final impetus to adopt a new concept in 1981.
Although agency staff continued to offer "expertise" and consultation in
the curricular areas, they were reassigned a primary role as brokers to
the districts. They visited designated districts regularly and offered
assistance in identifying needs, arranging workshops, and evaluating
programs. They asked district staff to assist the department in designing
regulations and assessing department effectiveness.
118
PAGENO="0417"
413
District superintendents were appointed to work with the brokers and
were given the opportunity to periodically evaluate services and
resources available to local districts. The first two primary tasks for
brokers were: to assist districts in determining and fulfilling
recertification needs and to request local agency assistance in
formulating state-level Title I regulations.
Other tasks and priorities have been determined as brokers and
district staff have worked together in the newly structured system.
For further information contact:
Audrey Cotherman
Deputy State Superintendent
Wyoming Department of Education
Hathaway Building
Cheyenne, Wyoming 82002
307/777-7673
99-965 0 - 82 - 27
PAGENO="0418"
414
APPENDIX A
BLOCK GRANT CONTACTS DESIGNATED BY GOVERNORS
Bob A. Davis
State Administrations Officer
State Capitol
Montgomery, Alabama 36130
205/834-3572
Carol Burger
Special Assistant to the Governor
Pouch A
Juneau, Alaska 99811
907/465-3500
Andrew D. Hurwitz
Chief of Staff
Office of the Governor
1700 West Washington, 9th Floor
Phoenix, Arizona 85007
602/255-4331
Linda Garner
Legislative Aide
Office of the Governor
State Capitol, Room 250
Little Rock, Arkansas 72201
501/371-2345 or 370-5712
Roger Carrick
Deputy Progra~ns and
Policy Assistant
Office of the Governor
State Capitol
Sacraisento, California 95814
916/445-2841
Lee White
Executive Director
Office of State
Planning and Budgeting
State Capitol, Room 102
Denver, Colorado 80203
303/~866-3317
Stephen B. Heintz
Under Secretary
Comprehensive Planning Division
Office of Policy and Management
80 Washington Street
Hartford, Connecticut 06115
203/566-4298
Jorene Jameson
Executive Assistant for Operations
Office of the Governor
820 North French Street
Wilmington, Delaware 19801
302/57 1-32 10
John T. Herndon
Director
Office of Planning and Budgeting
Office of the Governor
State Capitol
Tallahassee, Florida 32301
904/488-7810
Jack Burns
Director, Office of
Intergovernmental Relations
State Capitol, Room 106
Atlanta, Georgia 30334
404/656-3804
Carl Takamura
Special Assistant to the Governor
State Capitol
Honolulu, Hawaii 96813
808/548-2335
Lawrence C. Seale
Administrator
Division of Financial Management
Office of the Governor
State Capitol, Room 122
Boise, Idaho 83720
208/334-3900
123
PAGENO="0419"
Tom Berkshire
Assistant to the Governor
for Policy Analysis
State Capitol
Springfield, Illinois 62706
217/782-8639
John Hammond
* Executive Assistant
Office of the Governor
State Capitol
Indianapolis, Indiana 46204
317/232-4583
Doug Gross
* Administrative Assistant
to the Governor
State Capitol
Des Moines, Iowa 50310
* 515/281-5211
Harley Duncan
Chief Policy Analyst
Division of the Budget
Department of Administration
State Capitol, Room 152-E
Topeka, Kansas 66612
913/296-2436
Rush Dozier
Assistant to the Governor
State Capitol
Frankfort, Kentucky 40601
502/564-2611
Dennis Daugherty
Director, Federal Relations
Office of the Governor
State Capitol
Baton Rouge, Louisiana 70804
504/342-2791
Kirk Studstrup
Administrative Assistant
Office of the Governor
State House -
Augusta, Maine 04330
207/289-3531
415
Ejner Johnson
Staff Director
Office of the Governor
State House
Annapolis, Maryland 21404
301/269-3004
Lucy Flynn
Director, Office of
Federal-State Relations
Commonwealth of Massachusetts
444 North Capitol Street, Suite 307
Washington, D. C. 20001
202/638-1065
Jan Bocskay
Special Assistant to the Governor
Program Unit, Room 1
State Capitol
Lansing, Michigan 48909
517/373-3427
Vic Vikmanis
Director of Policy Research
Office of the Governor
State Capitol, Room 130
St. Paul, Minnesota 55155
612/296-3838
Dick Molpus
Coordinator, Office of
Federal-State Programs
2000 Walter Sillers Building
Jackson, Mississippi 39202
601/354-7575
Janice Gentile
Deputy Executive Assistant
Office of the Governor
State Capitol
Jefferson City, Missouri 65101
314/ 751-3222
David M. Lewis
Director, Office of
Budget and Program Planning
State Capitol
Helena, Montana 59601
406/449-5616
124
PAGENO="0420"
416
Ed Schulenberg
Administrator of Block Planning
and Human Services Coordinator
Office of the Governor
State Capitol, Room 1326
Lincoln, Nebraska 68509
402/471-2091
Howard E. Barrett
Director
Department of Administration
209 East Musser, Room 205
Carson City, Nevada 89710
702/885-4065
Tama Hamilton
Director, Citizens Services
Office of the Governor
State House
Concord, New Hampshire 03301
603/271-2121
Steven A. Clark
Policy and Planning Specialist
Governor's Office of
Policy and Planning
State House
Trenton, New Jersey 08625
609/984-6877
Bill Giron
Administrative Aide
Office of the Governor
State Capitol
Santa Fe, New Mexico 87503
505/827-2221
Roger Vaughn
Deputy Director
Governor's Office of
Development and Planning
A. E. Smith Building, 17th Floor
Albany, New York 12225
518/474-3152
Paul Essex
Special Assistant to the Governor
for Intergovernmental Relations
116 West Jones Street
Raleigh, North Carolina 27611
919/733-4131
Ted Parrish
Policy Advisor to the Governor
116 West Jones Street
Raleigh, North Carolina 27611
919/733-4131
Ronald J. Bostick
Assistant Federal Aid Coordinator
Office of the Governor
State Capitol, 17th Floor
Bismarck, North Dakota 58505
701/224-2095
Edward J. Thomas
Deputy Assistant to the Governor
State House
Columbus, Ohio 43215
614/466-8706
Cindy Rambo
Director
Department of Economic
and Community Affairs
4545 North Lincoln, Suite 285
Oklahoma City, Oklahoma 73105
405/528-8200
Bob Montgomery
Administrator, Intergovernmental
Relations Division
Office of the Governor
155 Cottage Northeast
Salem, Oregon 97310
503/378-3732
Charles J. Lieberth
Executive Director
Governor's Human Resources
Committee of the Cabinet
Harristown II, 9th Floor
333 Market Street
Harrisburg, Pennsylvania 17120
717/787-6835
Alvin N. Johnson
Federal Coordinator
Office of the Governor
State House
Providence, Rhode Island 02903
401/277-2214
125
PAGENO="0421"
417
William A. Prince
Special Assistant to the
Governor for Policy Development
State House
Columbia, South Carolina 29211
803/758-3208
Ben Orsbon
Deputy Commissioner
State Planning Bureau
State Capitol
Pierre, South Dakota 57501
605/ 773-3661
Stephen H. Norris
Director
State Planning Office
1800 James K. Polk Building
505 Deaderick Street
Nashville, Tennessee 37219
615/ 741-1676
Paul Wrotenbery
Director
Office of Budget and Planning
P. 0. Box 13561, Capitol Station
Austin, Texas 78753
512/475-6156
Emily Charles
Administrative Assistant for
Constituent Affairs
State Capitol, Room 210
Salt Lake City, Utah 84114
801/533-5231
John Sinison
Director
State Planning Office
Pavilion Office Building
109 State Street
Montpelier, Vermont 05602
802/828-3326
Timothy J. Sullivan
Executive Assistant
for Policy and Planning
Office of the Governor
State Capitol
Richmond, Virginia 23219
804/786-2211
Fred Helberg
Assistant Director
Program Development Division
Office of Financial Management
House Office Building, Room 109
Olympia, Washington 98504
206/753-5297
Larry Beckett
Assistant Commissioner for
Planning and Special Projects
Governor's Planning Reform Project
State Capitol, Room W-14O
Charleston, West Virginia 25305
304/348-2400
Paul J. Swain
Legal Counsel and Assistant
to the Governor for Policy
State Capitol, 115-East
Madison, Wisconsin 53702
608/266-1212
W. Don Nelson
Administrative Assistant
Office of the Governor
State Capitol
Cheyenne, Wyoming 82002
307/777-7930
126
PAGENO="0422"
418
APPENDIX B
ORGANIZATIONS CONDUCTING BLOCK GRANT SURVEYS OR STUDIES
ADVISORY COMMISSSION
ON INTERGOVERNMENTAL
RELATIONS (AcIR)
Contact:
Jean Lawson
1111 20th Street N.W.
Washington, D. C. 20575
202/653-5536
AMERICAN ASSOCIATION OF
SCHOOL ADMINISTRATORS (AASA)
Contact:
Joseph Scherer
1801 North Moore Street
Arlington, Virginia 22009
703/528-0700
AMERICAN PUBLIC WELFARE
ASSOCIATION (APwA)
Contact:
Dr. Toshio Tatara
1125 Fifteenth Street N.W.
Washington, D. C. 20005
202/293-7550
FLORIDA ADVISORY COUNCIL ON
INTERGOVERNMENTAL RElATIONS
(FLORIDA ACIR)
Contact:
Robert Bradley
Suite 400
Lewis State Bank Building
Tallahassee, Florida 32304
904/488-9627~
As part of an existing monitoring
process, a survey of four "study"
states was conducted and the results
were published in an ACIR Information
Bulletin on block grants in September
1981. ACIR plans to re-examine these
four states, as well as conduct a
similar survey on the local level in
April or May 1982.
A telephone survey focusing on
education block grants was conducted
of each state to obtain the following
information: date of implementation;
schedule of public meetings; applica-
tion forms for local districts; status
of Governor's Advisory Council; and
whether any transfers were made to ESEA
from other blocks.
Implementation issues related to the
Social Services Block Grant (SSBG)
were examined in a mail survey of
states and included the following:
planning, MIS, auditing, purchase of
services, public participation, staff
training, service delivery methods,
outcome evaluations, and state
legislation.
A mail survey on block grants (except
ESEA) was sent to local elected
officials; the survey centered on
local input to block grants, impact on
local budgets and questions specific
to each block grant. A more detailed
survey on the sane subject was
conducted of local administrators.
129
PAGENO="0423"
419
FORD FOUNDATION
Contact:
Frank Logue
173 Livingston Street
New Haven, Connecticut 06511
203/776-2282
INTERGOVERNMENTAL HEALTH
POLICY PROJECT (IHPP)
Contact:
Peggy O'Kane
Suite 505
1919 Pennsylvania Avenue N.W.
Washington, D. C. 20006
202/872-1445
NATIONAL ASSOCIATION
OF STATE BUDGET
OFFICERS (NASB0)
Contact:
Jim Mallory
Suite 328
400 North Capitol Street
Washington, D. C. 20001
202/624-5322
NATIONAL ASSOCIATION OF
STATE LEGISLATURES (NcSL)
Contact:
Karen Benker
Suite 1500
1.125 17th Street
Denver, Colorado 80202
303/623-6600
OFFICE OF MANAGEMENT
AND BUDGET COMB)
Contact:
Frank Lewis
New Executive Office
Building, Room 5236
Washington, D. C. 20503
A survey of nine states was conducted
to assess the capacity of states to
carry out block grant implementation.
It addressed such issues as govern-
mental structure, state revenue capa-
cities, planning, and accomplishments
to date.
A telephone survey of all but two
states was conducted to examine health
block grants. The predominant focus
was on state executive/legislative
relationships, lost federal funds,
method for state-level cuts, and
implementation plans.
A mail survey of states was conducted
to determine the impact of federal
funding and to what extent federal
funds would be supplemented with state
funds, whether state funding reduc-
tions would parallel federal. reduc-
tions, and what changes in programs
have taken place as a result of block
grants in seven major categories.
A mail survey and telephone follow-up
was conducted of all state legislative
fiscal staff to examine how many legis-
latures were appropriating federal
funds under the nine block grants, and
if there was an emerging pattern of
more legislative appropriations than
in the past.
The 0MB Task Force on Regulatory Reform
continues to examine policy and policy
coordination for opportunities to fur-
ther reduce unnecessary regulations.
Field work on block grant implementa-
tion activities is being considered.
130
PAGENO="0424"
420
U * S. GOVERNMENT
ACCOIJNTING OFFICE
Contact:
Gener Dodaro
GAO Building, Room 3350
441 `G' Street N.W.
Washington, D. C. 20548
202/275-6169
UNITED WAY OF AMERICA
Contact:
Pat Barrett
801 North Fairfax Street
Alexandria, Virginia 22314
703/836-7100
URBAN INSTITUTE
Contact:
Gene Durman
2100 `N' Street N.W.
Washington, D. C. 20037
202/223-1950
1~)ODROW WILSON SCHOOL OF
PUBLIC AND INTERNATIONAL
AFFAIRS, Princeton University
Contact:
Richard Nathan
Princeton University
Princeton, New Jersey 08450
609/452-4866
A field study of thirteen states to
examine transition to the nine block
grants was conducted and focused on
federal management of the transition,
state legislative involvement, role of
the Governor's Office, and changes in
mode of operation. The purpose of the
studywas to assist Congress in deter-
mining what modifications to existing
blocks are needed and in considering
future blocks.
A telephone survey of individuals and
organizations representing the United
Way was conducted to gather data on
advisory councils, the role of state
legislatures in block grant implemen-
tation, targeting of cuts, and changes
in eligibility, and to stimulate ideas
on block grants in general.
A site-visit study was done in eleven
states to examine block grants as part
of a larger study of federal grants-in-
aid programs. The study focused on
state! local governmental relation-
ships, changes in levels of expendi-
ture, and programmatic adjustments.
A field research study will be
conducted in selected geographic areas
of the United States to examine the
impact of block grants and changes in
federal domestic programs.
131
PAGENO="0425"
`~421
STATE CDBG PROGRAM BRIEFS
A Series of Summaries on the Individual
State Community Development Block Grant Programs
Council of S tate C omm tan ty A ff airs A genci n
Hall of the States
444 North C apitol S treet, Suite 251
W~lñngton, D.C. 20001
May 1982
Volume I
PAGENO="0426"
422
ACKNOWLEDGEMENTS
CCSCAA acknowledges and thanks the 15 state community development
coorthnators who provided information to this first volume in a series of iixlividual state
CDBG program summaries. In most cases, they were asked to organize and forward
massive amounts of information in a short period of time. They also had the monumental
patience to answer numerous inquiries and review the drafts to ensure their accuracy.
The Council of State Community Affairs A gencies (COSCAA) is the national
organization representing state executive level agencies responsible for a variety of local
assistance functions in financial management, community devel opm ant, economic
development, housing, hum an resources, planning, training, and management capacity
building.
Additional copies of Volume I of this series is available from COSC4A at a cost of
$25.00.
PAGENO="0427"
423
STATE CDBGPROGRAM 3R~FS
Preface
In August of 1981, Congress enacted major revisions in the Housing and
Community Development Act of 1974 which provided states with the option of
administering the HTJD Small Cities Community Development Block Grant Program.
Since last August, a number of states have been debating whether to take the program in
FY 82 or in later years. This decision-making process has included numerous meetings
between state and local officials, the establishment of state-local technical and policy
advisory committees, and the development of many different program designs and
selection procedures.
During the past few months, COS CAA has been closely monitoring the State
Community Development Block Grant Program and providing technical assistance and
information to states preparing to implement the program in FY 82. As of March 8,
1981, the effective date of the State CDBG Program regulations, approximately 32-35
states have decided to administer the program in F Y 82, with the balance of the states
coming into the program in FY 83. Of the 32-3 5 states entering the program this fiscal
year, approximately 20 states have designed their programs and are prepared to accept
applications for the program.
In an effort to evaluate and understand the thrust of the new program, COSCAA
has prepared a series of brief program summaries of the new individual state CDBG
programs. These summaries will be used to assist other states as they prepare to gear up
for the program and provide CC~ CAA with an opportunity to examine the State CDBG
Program from the national perspective.
The data for the sum m arias came from the pro gram design documents which
states have prepared in conjunction with their local officials. Each state program
summary, is divided into four~ areas: (1) Program Preparation, (2) Program Design, (3)
Selection Criteria aixl (4) Other Provisions.
COSCAA has included the following fifteen states in this first volume: Alabama,
Arizona, Georgia, Idaho, Illinois, Kentucky, Maine, Massachusetts, Nebraska, North
Daketa, Ohio, South Carolina, West Virginia, and Wyoming. Additional state briefs will
be available as states com~iete their program designs and can be subsequently added to
this volume.
PAGENO="0428"
424
ALABAMA
ADMINISTERiNG AC~NCY: Office ofState Planning and Federal Programs
STATE CDBG ALLOCATION: $31,727,000
PREVIOt5 MULTI-YEAR COMMITMENTS: $12,757,000
Program Prepsxatiaz
The State of Alabama established a Technical Advisory Committee and a Policy
Committee composed of local CD practitioners and representatives local interest
groups. The state also sponsored a series of regional workshops to familiarize elected
and other local officials with the design of the new program. Approximately 550 local
officials attended these four regional meetin~.
Program Desigi
The Alabama Community Development BlockGrantProgram diff era significantly
from the HUD-administered program. The state will administer a competitive program
with six separate funding categories and will have overall goals which are similar to the
HUD administered program. The three primary goals of the program are listed below:
o Provide essential community facilities such as water aisi sewer through
correction of deficiencies which affect health and safety.
o Promote economic development to create new johe, retain existing
emil oyment and expand local tax baa e
o Provide decent housing, especially to families of low aixi moderate
incomes, by improving the condition of the existing housing stock.
In accordance with these goals, Alabama designed its pro gram with a ntnn her of
obj ectives in mind. First, funds will In awarded on a competitive basis to a larger
number of applicants by lowering the grant ceiling and eliminating multi-year
commitments. Second, the seection of more economic development proj ects should be
facilitated by setting aside a certain portion of CDBG funds and distributing them on a
quarterly basis. Finally, the new system should allow for a more equitable competition
byletting small cities, large cities, and counties compete in their respective groups.
Alabama will distrib.ite its CD funds through six separate funding categories:
Except for the Economic Development Fund, the Planning Fund, and the Discretionary
Fund, which may be applied for by all ron-entitlement governments, funds will he divided
into three allotments - one for counties, one for large cities, and one for small cities.
Any community competing for the E conomic D evelopn ant and/or the Planning Fund will
not be exduded from competing for applicable Counties, Large Cities, or Small Cities
fund. Listed below is a brief summary of each fund:
State D iscretionaryFuni.
Approximately 10 percent of the state funds will be available to address dismters,
imminent threats, and urgent needs to areas in the State with identifiable needs which
have not received an equitable share of funds, and to react quickly to opportunities
where an exceptional economic development project may be lost if money is not
PAGENO="0429"
425
available to provide necessary public facilities.
Economic Development Fund.
The state will set-aside approximately $2, 500, 000 million to fund activities
necessary for economic develo pinent proj ects. Eligible j urisdi ctions are invited to submit
applications continually. Awards will be made on a cparterly basis. To enswe maximum
flexibility, applications may be submitted at any time up to three weeks prior to the date
of the award. The maximum g?ant amount will be $150,000; however, the state may
waive the limit if the applicant has exhausted all other resoi.n~ces.
In order to q~a1ify fcr such funds, the applicant mtet meet the following threshold
re quirem ents
o The proposal mtat be associated with an economic development proj act
creating and/or retaining permanent jots.
o The state CD dollars mtst leverage private investment.
o The project must not involve intrastate relocation of an industry.
o Applicants mtEt have a firm private commitment and funds m~t be used fcr
capital investment.
Selaction Criteria fc~ the Economic Development Fund. The following criteria will be
used to competitively rate the proj ects
o CDB G Dollars per permanent job 12.5%
o Leveraging ratio (CDBG dollars vs all other 12.5%
dollars)
o Proj acted increase in local revenues 12.5%
o Number of permanent jots created/retained 12.5%
o Distress factors 33%
a. unem~ioyment (annual average for the
past two years)
b. % of low-moderate income persons
(based on 80%of State median income)
o Other factors 17%
a. Timetable
b. Potentialforspin-off
c. ~IzxIirect benefits
d. Job diversification
e. Urgency
Planning Fund.
Approximately $150,000 will be available to assist communities having a need fcr
community planning. The maximum grant has been set at $7,500 with the applicant
matching the grant on a dollar for dollar basis through non-CDBG funds or in-kiixl
contributions. The following considerations will be taken into account in the rating
process: size of the community, amount of fund re qiested, type and ur gency of planning
activity proposed, applicant~s previous planning efforts and their adherence to previous
plans, and qualifications of personnel preparing the proposed activity.
PAGENO="0430"
426
County Fund.
A set aside of $2,158,031 will be available on a competitive basis for non-
entitlement counties in the state.
Large Cities Fund.
A reservation of approximately $5,268,134 will be allocated to cities of 5,000 or
more population. These funds will be awarded on a competitive basis.
Small Cities Fund.
Approximately $5,268,134 will be reserved for cities under 5,000 in popilation.
Eligible applicants under 5,000 will compete for CD dollars in this fund.
Types of Grants. Two types of wants are available under the County, Large
Cities, and Small Cities Funde (1) Singie Ptrpose Grants and (2) Comprehensive
Grants. In both categories, localities are eligible to apply for funds in the areas of
housing and community facilities.
Single Purpose Grants. Designed for communities to address to specific
community development needs (e.g., housing, deficiencies in public
facilities). The grant ceilings for single purpose grants are listed below:
Counties LargeCities Small Cities
$350,000 $350,000 $300,000
Comprehensive Grants. Designed for recipients to address a substantial
portion of the identified community development needs of an area. A
comprehensive grant should involve two or more activites related to each
other that will be carried out in a coordinated manner. The grant ceilings
or comprehensive grants are listed below.
Counties Large Cities Small Cities
$500,000 $750,000 $500,000
Selecticri Citeria
All applicants will compete for funds in their respective categories. Under each
of these categories, single purpose applications proposing a housing activity will be rated
against other single purpose housing applications, single purpose applications proposing a
public facility will be rated against other single purpose public facility applications, and
comprehensive pro gram applications will be rated against other comprehensive pro gram
applications. Those applicants with relatively high scores will c~ialify for a site visit
which will be made to verify information provided in the applications.
PAGENO="0431"
427
Listed below is an overview of the selection a-i ten a.
Singe Comprehensive
Pu pose
o NEED FACTORS SOpts.(27%) Sopts.(17%)
- Absolute #of low-
and moderate-income
persons 40 25
- Percent of low- and
moderate-income persons 40 25
o PROGRAM VALUE FACTORS 170 pts.(57%) 200 pts.(67%)
- ratio of dollars to
beneficiaries 50 60
- nature of benefits 100 120
- edditional efforts
necessary to complete
proposed activity 10 10
- prior commitments or
efforts taken by applicants
to address same activity 10 10
o OTHER PROGRAM FACTORS 50 pts.(l7%) 50 pts.(17%)
- leveraging 20 20
- localmatch 20 20
- equal opportunityin
local government
employment 10 10
TOTAL POINTS 300 300
Other Provisic~is
Preapplications. The state program eliminates preapplication requirements. Instead, the
state will ask for a letter of intent from communitias desiring to compete for the state
CDBG funds.
Housing Assistance Plans. Housing assistance plans will not be required under the states
CDBG pro gram. Only those applicants who propose housing activities will provide
verifi abi e housing data on a standard housing form.
Citizen Participation Plans. Citizen participation jians will not be required. Instead,
the state program will require a certification that the applicant recognizes the
responsibility for dealing with local public opinion concerning the merits of the proposed
proj ect, and that if public input is not solicited in proj ect sal ecti on and design, local
officials should answer all citizen questions arising concerning the project salection and
design.
Use of Substate Districts. During the design process, representatives of substate
districts were inciuded on the Technical Committee. The substate districts will also play
a m~or role in the proyision of technical assistance to localities applying for the funds in
the State CD Program. The state will be sub-contracting with the substate districts to
provide technical assistance under the 107 program.
PAGENO="0432"
428
Estimate of A dministrative Costs and S taffing N eeds. The state intends to appro~ ate
$450,000 to cover the administrative cost of the program. The state ~1ans to use a staff
of between 10 and lZto run the program.
STATE PROGRAM CONTACT: Bill Matthews
Office of State Planning and Federal Programs
3734 Atlanta Highway
Montgomery, AL 36130
205 /832 -6400
PAGENO="0433"
429
ARIZONA
ADMINISTERING AGENCY: Office of Economic Planning and Development
STATE CDBGALLOCATION: $5,998,000
PREVIOUS MUIJfl-YEAR COMMIT MENTS: $2,400, 000
Pro~am Pze~rafian
Under the Arizona plan, regional councils will play a m~or ne in the selection
and distrilxition of community development funds in the state. The Office of E cnnomic
Planning and Development will be responsihie for preparing the grant selection process,
implementing and ensthng grantee compliance with all applicable federal program
requirements, and monitoring grantee pro gram and financial performance.
Program Desi~i
A m~or objective of the Arizona CDBG Program is to promote a strong local
government role in the grant selection process through the representation of its elected
officials on the statds regional councils. In an effort to attain this goal, the regional
councils will play an integral role in the selection of the state's CD proj ects.
Under the Arizona system, CD funds will be distributed using two methods (1)
Regional Funding Allocation and (2) the S tate Special Proj ects Account.
Regional Funding Allocation
Under Arizona!s Regional Funding Approach, approximately 90 percent of the
state community development funds will be allocated by region on a formula basis. Each
regional council will review applications and recommend new grant reciplents and their
corresponding funding levels to the state for review and approval.
Under this system, each of the five non-entitlement regional councils will in
provided an account of CDBG funds, from which both multi-year and new grants will be
drawn. This allotment is based on a formula which includes both population and poverty
indicators.
Regional council recommendations mtst be based on a state-approved regional
funding strategy. State approval of regional funding strategies will be based on the
fullowing guidelines:
(1) The regional strategy includes a provision that preferential treatment is
provided eligible applicants submitting'leveraged' grant~ and
(2) That the regional strategy includes a provision that preferential treatment
be provided "leveraged' grants in a manner commensurate with the degree of
`leveraging' incorporated within the grant application.
A leveraged grant is any grant application which contains a firm public and/or
private commitment. Each regional council will determine any and all eligible costs and
activities which com prise from public and/or private commitm ents.
99-965 0 - 82 - 28
PAGENO="0434"
430
Under the Regional Funding Approach, the following categories are eligible fcr
funding
o Acc~iisition or D~pDsition of Real Property
o Public Facilities andlmprovements
o Rehabilitation and Preservation
o EconomicDevelopment
Regional Planning C ests. Each regional council can sprnd up to ~30, 000 from
their regional account to fund eligible CDBG comprehensive planning activities to be
undertakan by the COG. Note that these funds oust be drawn from each region~s set-
aside and inserted in grantees funded with the consent of the Regional Council and grant
reciplent (locality).
Grant Amounts. Under the Arizona plan, the state will not acce~ any multi-year
funding commitments in FY 82. For FY 82, the state encoorages a maximum grant level
of $400,000 and a minimum grant level of $100,000.
State Special Projects Account
The state will set-aside approximately 10% of its- funds to a Special Projects
Account in which eligible applicants can compete for funding directly from the state.
The Executive Director of OEPAD will make all want selection decisions based on
recommendations from the State Economic Planning andDevelopment Board. The Board
will make recommendations baa ed on a set of selection cri ten a which emphasizes
"leveragecf' economic development grant activities. The state will not fund more than
one CD grant per eligible applicant in one year, therefore, a locality receiving a grant
from the Regional Funding Approach is not eligible to receive a grant under the state
Special Projects Account.
Under the Arizona plan, the state has established certaln threshold criteria or
minim urn levels which each grant reciplent from the State or Regional Account must
meet bef ore they are funded. These thres hold re qiirements are crucial to the An anna
program since they establish minimum levels associated with all grants. The minim urn
threshold criteria fall into the following categori es, with the state staff determining
compliance:
Grant Administration and Financial Reqtirements. To ensore compliance all want
activities, projects, and costs must be eligible given federal and state guidelines.
All g~ant costs should be realistic given the natire and type of grant activity. The
state will not fund grants with inherent cost overrun problems. Finally, all
applicants oust have the capacity to complete their programs. Communities are
assumed to have such a capacity until evidence to the contrary becomes apparent
via monitoring visits.
Federal Compliance R eqiirement. All applicants mist comply with the applicable
federal rules and regulations at the time of application.
Congressional Intent Recpirements. Each activity in every grant mist meet at
least one of the three congressional ol~ectives.
PAGENO="0435"
431
Sdecticzi Cstteria
The State Economic Planning and Development Board will examine each
application on a case-by-case basis and utilize the following selection cri ten a:
o Employment Impact. This variable will be measured by the net increase in
employment opportunities generated by the grant for residents within the
target areas.
o Physical Impact. This factor will be measured by such factors as the
improvement in the applican~s housing stock, public facilities, or
commercial and industrial facilities, and the extent to which other public or
private facilities and services exist or will be provided to support the
prqject.
o Degree of Grant L everaging. This factor will be measured based on the
degree to which the applicant has incorporated firm public and/or private
commitments within the grant application.
The OEPAD Executive Director will make the selection of applicants to be funded
from the Special Projects A ccount prior to the transmittal of formal Regional Council
recommendations to the state concerning applicants to be funded from regional accounts.
Other Provisicns
Definition of Low-Moderate Income Citizens. Eighty percent of median family income
(concurrent with the HTJD Section 8 guidelines).
C iti ann Parti cipati on R eqiirements. The state encourages the applicant to hold a publi c
meeting on the proposal. They also recommend that the applicant publicize the meeting
of its geverning body when it approves a resolution to apply for CDB G funds.
Housing Assistance Plans. HAPs are not requirel, but detailed documentation of
compliance with the state's low and moderate income re qzirement is mandated.
Estimate of Administrative Cost and Staffing Needs. Arizona expects to use the
maximum amount of funds available to administer the program. The state will staff the
program with one coordinator, three professional monitors, and one accountant clerk.
Indirect activities will be undertaken by the existing administrative division.
Ii~Behalf-of Applications. Such applications are not allowed in the Aii anna program
given the simplification of the grant application process, the regional funding approach,
and the ability of localities to subcontract grant administration out.
STATE CONTA cr PEPSON: Rich Crystal
Governor'sOffice of Economic
Planning andDevelopment
1700 W.Washingtcxi, #505
Phoenix, AZ 85007
602/255-4920
PAGENO="0436"
432
C~ ORGIA
ADMINISTERING AGENCY: Department of Community Affairs
STATE CDBG ALLOCATION: $36,376,000
PREVIOUS MULTI-YEAR COMMITMENTS: $15,886,348
Pro~am Preparatias
Since the legislation was passed last summer, the Department of Community
Affairs has teen preparing for the imilementation of the block grant. In order to solicit
local input, the Governor established two committees to examine the program: the
Community Development Block Grant Policy Advisory Committee and the Community
Development Block Grant Planning Committee. The state has also sponsored a series of
regional meetin~ to explain the new system.
Pro~am D~i~i
Program Focus. The G eor gi a CD Pro gram will address four major areas of
concertu (1) Housing, (2~ flsblic Facilities, (3) Economic Development, and (~
Community! Neighborhood Revitalization. All four areas are considered of equal
weight. Localities applying for the grants will have the option of establishing their own
priorities.
The program competition will be divided into two separate components: (1)
Single-Activity and (2) Multi-Activity.
(1) Single-Activity Grants are designed to allow communities to address a specific
comm unity development problem within one of the following three areas: housing,
economic development, or psblic facilities.
(2) Multi-Activity Grants are designed to address two or more needs. This also
includes activities in the `Comm unit y/N eighborhood Revitalization" category.
Grant Amounts. Georgia has established the following manimum grant amounts:
Single Activity Multi-Activity Multi-Activity
Program Program (lyr.) Program (Zyrs.)
(minimum of 20% (minimum of 20% $1,400,000
will be reserved) will be reserved) (up to 50% can be
used)
$400,000 $700,000 $1,400,000
Please note that no new two year grants will be made inFY 82.
Selecticzi Cñteria
Georgia's selection system is based upon two overriding directives: (1) the promotion of
broader participation, and (2~ the distribition of funds to applicants with the greatest
need, greatest benefit to low- and moderate-income persons, and greatest project
PAGENO="0437"
433
impact. Applicants will have the choice of submitting either a single or multi-activity
project for consideration. The two categories will be judged separately, but based upon
the same hasic rating system. The criteria and their relative impDrtance are:
PovertyConditions 20%
Benefit to Low- and M oderate-Iixome Persons 25%
Projectlmpact 55%
Single A ctivi ty Program Appli ca on Rating System
a. PovertyConditions Oto 120 Pcints
(1) TotalNumber ofPoverty Persons Oto 40
(2~ Percent of Popilation inPoverty 0 to 40
(3) Per Capitalncome 0 to 40
b. Benefit to L ow- and M oderate-Income Persons 0 to 150 Points
(1) Housing Applications Oto 150
51 Percent Minimum Benefit Reqtired
75 Percent Benefit Receives Ma ,dm um P oints
(2) PiiblicFacilities Applications 0 to 150
51 Percent Minimum Benefit Required
100 Percent Benefit Receives Maximum P cints
(3) Economi cDevelopment Applications 0 to 150
25 Percent Minimum Benefit Reqsired
51 Percent Benefit Receives Maximum P aints
c. Project Impact 0 to 330 Points
(1) ProjectFeasibility Oto 110
(2) Impact onNeed Oto 110
(3) ProjectStrategy Oto 110
TOTAL PC~S1BLE POINTS 600 Points
Multi-Activity Program Application Rating System
a. PovertyConditions 0 to 120 Points
(1) Total Number of Poverty Persons 0 to 40
(2) Percent of Population in Poverty 0 to 40
(3) PerCapitaincome Oto4O
b. Benefit toLow- and Moderate-Income Persons 0 to 150 Points
-60 percent Minimum Benefit Reqiired
-90 Percent Benefit Receives Maximum Paints
c. Program Impact 0 to 330 Points
(1) Program Feasibility 0 to 110
(2~ ProgramStrategy Oto 110
** (3) Relationship toObjectives Oto 110
TOTAL PCSS~LE POINTS 600 Points
PAGENO="0438"
434
** Each applicant must address three (3) of the following six (6) State Obj ectives:
Supports comprehensive comm unit y/neighborhood conservation, sta bib zation,
and/or revitalizetion.
Removes or Irevents slums or blighted conditions.
Addresses a deficiency in a community~s public facilities.
Expands or retaira porm anent jots.
Resolves a serious threat to health or welfare.
Supports new or imFoved housing opportuni ti ~ for low- and moderate-income
families.
Other Provisiciis
Housing Assistance Plans. The state will not require local recijients to submit a housing
assistance plan.
Citizen Participation Plan. The state will not reglire a written citizen participation
plan, however, they will require that the local government hold two public hearing on
the proposed proj ect to inform the public. The first piblic hearing is to be held prior to
the submission of the application and the second is required when the grant award is
announced.
Use of Substates. While the substate districts will not have a direct role in the selection
of projects, locaijurisdictions will not be preduded from using them.
Estimate of Administrative Cost and Staffing N reds. The state will use approximately
$400,000 to administer the program in FY 82. This is well below the two percent
maximum. A staff of twelve full time employees will run the Fo~am.
STATE CONTA CT PERSON: David Plaisted, Chief
CDB GA dministraticn
Department of Community Affairs
40 Marietta Street, NW 8th Floor
Atlanta,GA 30303
404/656-3872
PAGENO="0439"
435
IDAHO
ADMINISTERIN GA GENCY: Division of Economic and Community Affairs
STATE CDBGALLOCATION: $6,280,000
P REVIO tS MULTI-YEAR COMM]T MENTS: 2,48 5,000
PamPieinrati~
In preparation for the State CDBG Program, the Division of Economic and
Community Affairs established the P dicy A dvisory C ommittee. The P dicy Advisory
Committee, which consists of state and local officials, decided early to keep Idahds
method of distrihittion similar to HUD's to eliminate confinion. U pen the com~1 etion of
the draft selection system, the state held a series of six regional meetings to discuss the
competitive program.
Program Desi~i
The ol~ectives of the Idaho CD Block Grant Program are quite similar to the
objectives of the HUD-admiristered program. The state program encourages projects in
three areas economic development, housing and public facilities. Also, the program is
intended to provide greater opportuniti re principelly fcr low- and moderate-income
citizens.
Eligible Activities. Eligible activities incline clearance; acqtisition of property~
demolitior relocation payment~ acquisitior constructior~ or rehabilitation of public
facilities; historic preservation activities; economic development; removal of
architectural bariier~ and jianning, design and administration.
Types of Grants. Idaho will have three types of grants available under its
system: (1) Single Purpose Grants which address one or more eligible activities in one of
the three catego ri es - economic developei ent, public facilities, or housing. (2) Multi-
Ptr pose Grants address more than one problem area. In communities of 2,500 or more,
and (3) an Imminent Threat Grant set-reide will in available fcr emergency situations.
Both types, single-purpose and multi-purpose applications, may request single-year
or multi-year funding up to three years.
Funding Allocation. In the allocation of state CD funds, Idaho will reserve two
percent for administrative costs, ten percent for the imminent threat set-aside, and an
even s1iit fcr the remaining portion between multi-year grants and single year grants.
Grant Amounts. Single-purpose grants will be funded to a maximum of $350,000
per year while multi-pirpose grants will in funded to a maximum of $500,000 per year.
For e,mm~ie:
Single- (1 yr) ~350, 000 Multi - (1 yr) $500,000
Single- (2 yr) $700,000 Multi- (2 yr) $1,000,000
Single- (3yr) $1,050,000 Multi- (3yr) $1,500,000
PAGENO="0440"
436
Sd~tias Cnteria
The Division of Economic and Community Affairs (DECA) will accept the
applications and begin assigning preliminary points to each application. These
preliminary point assignments will be totaled and forwarded to the Division Advisory
Council (DAC) which is the local advisory body for the DECD. The members are
appointed by the Governor.
The A dvisory C ~uncil will review the applications, assign final points, and rank the
applications. The top ranked applications will be recommended for funding based upon
the funds available. The DAC will forward its recommendations to the Governor for
final approval.
Proj act Selection C uteri a The following van abl as are considered for both single or
multi-year funding. These factors are assigned points. The maxim urn number of points is
575.
oProgram Impact (35% or 200 pts.)
- Previous A ctions. Examines the previous efforts made by the applicant to
increase the effectiveness of the project.(50 pts)
- Additional Actions. Describes the additional resources and activities needed
to complete the project.(30 pta)
- Environmental Considerations. Looks at the impact of the project on the
environment.(20 pta)
- D~placement of Irdivithals or Busiassses. Actions taken to minimize
displacement.(20 pta)
- Results from Funds Req.iested. Examines the cost effectiveness of the
project.(50 pts)
- Number of People to Benefit. The ratio of the people benefitted.(30 pts)
o Economic Development (17% or 100 pta.)
- Total of Jots Created or Retained.(25 pts)
- Percentage ofPrivateFundslnvestei.(Zopts.)
- Commitment of New Busizess to Locate in Proj act Area.(20 pts)
- ReasonableTimeFrameforthelmpact ofthePrograrn.(Zopts)
- UseofaLoanProgram.(lopts)
o Public Facilities (9% or 50 pts.) Examines how the project will correct a
deficiency in or lack of a communit ~ public facility.
o Improve Housing Stock (9% or 50 pta.) Analyzes how the project will improve
the existing housing stock of the community.
0 Benefit to Low- and Mcrlerate-Income Persons (9% or 50 pts.) Looks at the
total number of low and moderate income people that will benefit from the
project.
o Prevention of Slum and Blight (9% or 50 pts.) Examines how the project will
reduce existing areas of durn and blight in a specific area.
o High Growth Communities (6% or 35 pta.) An applicant, to receive these points
must be experiencing or expect to experience rapld growth within the grant
year.
PAGENO="0441"
437
o Funding From Other Sources (4% or 25 pts.) All applicants will ha ranlssd by
the percentage cI community development funds requested by divided by total
project costs.
o D~tressed Communities (3% or 15 pts.) Pcints in this category will ha given to
comm unifies experiencing high unem ~o yment, loss of m ~ businesWem jioyers
or declared an economic disester area.
Other Provisic~is
Citizen Participation Requirement. The state does not require a written citizen
participation plan but it does require that one public hearing be held to discuss the
pro posed project.
Housing Assistance Plan. The state will not require a housing assistance plss~ under the
pro gram.
Use of Substates. The state will not presc~he a fcrmal role fc~ substate districts bit
communities will be free to request their assistance.
Estimate of Administrative Crets and Staffing Needs. The state will i~e the two percent
maximum plus match to administer the program. Idaho expects to staff the program
with three full-time professionals and four part-time em~ioyees.
STATE PROGRAM CONTACr: KariTuefler
Division of Economic and CommunityAffairs
State House
Boise,ID 83720
208/334-3416
PAGENO="0442"
438
ILLINOIS
ADMIN]STERIN G AGENCY: Department of Commerce and Community Affairs
STATE CDBG ALLOCATION: $33,713,000
PREVIOUS MULTI-YEAR COMMITMENTS: $18,005,000
Program Preparatiosi
The State of Illinois will administer the State CD Block Grant Program in FY 82.
During the last few months, the Depertment of Commerce and Community Affairs
(DCCA), the administering agency, has been engaged in a dialogue with local officials
regarding the design of the program. The DCCA has workad closely with the Governor~s
Local Government Block Grant Advisory Committee and has established its own CDBG
Technical Advisory C ommittee to review the ranking system. The S tate has also
scheduled a series of regional meetings to exFiain the system to local officials.
Program D~i~i
The state will retain the competitive nature of the program, although the criteria
and areas of emphasis will be changed to a significant degree. Proj ects will be ran1~sd in
one of the following areas of neecli economic development, housing and public
facilities. Each area will have specific criteriafor ranking purposes. Infundingprojects
the state cites the limited amount of dollars and emphasizes the need to leverage the
state CD dollars with other sources of funding.
The Illinois State CD Program will emphasize three major areas of concerm (1)
economic devel opa ent, with an emphasis on commercial and iixlustri al
retentio~expansion and job creation; (2) deficiencies in housing; and (3) inadequate
public facilities or services. Local governments are free to apply for projects under
more than one pro blem area within the same application.
Eligible Activities. Listed below are some typical e~m pies of eligible activities in each
area:
(1) Economic Development. Land acquisition; public facilities and
improvement~ acquisition, construction, rehabilitation, or installation of
commercial and industrial facilities. DCCA will encourage the use of loans
by localities to businesses to allow for recapture of grant funds for use in
other community devel opn ant activities.
(2) Deficiencies in Housing. Real property acquisition; rehabilitation,
clearance, demolition, and/or removal of buildings and improvements;
rehabilitation of publicly-owned or acquired properties for use of resale in
the provision of assisted housing; provision of public facilities to increase
housing opportunitie~ financing the rehabilitation of privately-owned
residential or mixed-use properties through either loan or grant programs;
and provision of housing for the physically and/or mentally disabled.
PAGENO="0443"
439
(3) Inadegiate Public Facilities or Services. Water and sewer facilities,
including storm sewers, but excluding sewage treatment works and
interceptor sewers; solid waste disposal facilities; flood and drainage
facilitie~ non-residential senior centers non-residential centers for the
handicapped, such as a sheltered worksho~ neighborhood facilities designed
to provide health, social, recreational or similar community services for
residents of a particular target area or neighborhood; street improvements,
and ramping for the handicapped; public facilities other than water and
sewer that meet certaln recpirements; and accpisition of real property
necessary to install or improve public facilities.
Sdecticxi Criteria
Applicants will compete for a total of 1,000 possible points in the ranking
system. The ranking system will be divided into two parts: (1) Community N eeds and (2)
Project Evaluation.
CommunityNeeds. (325 points) This area will soamine the characteristica of the
community itself to help assume that needy localities are funded. Applicants whose
figures are the highest for six of the seven need iixlicators will receive the maximum
number of points. Scores for other applicants will be determined by calculating what
percentage their statistirs are of those of the applicant with the highest amount, and
then multiplying this percentage by the maximum score.
Community N eed Factors:
- Fiscal Distress Indicator (per capita tams 75 pta.
per capita income)
- County Unemployment Rate 50 pta.
- Num her of Poverty Persons 50 pta.
- Percent of Poverty Persons 50 pta.
- Number of SubstandardHousinguthts 25pts.
- Percent of Substandard Housing Units 25 pta.
- Number of Houses Built Pre-1940 25 pta.
- Percent of Housing Built Pre-1940 25 pta.
Project Evaluation. (675 points) The factors are intended to ensure that the best
designed and most effective proj acts will be funded. Specific proj ect evaluation criteria
will be used in the areas of economic development, public facilities, and housing.
Applicants may propose multiple activities which will be ranked separately in each of the
problem areas. Points in each of the problem areas will be awarded on the following
basis:
Maximumlmpact 350 Points
Moderatelmpact 200 Points
Minimallmpact 100 Points
Insignificant Im pact 0 Points
Project Evaluation Factors:
- Impact on CommunityNeeds. (350 points)
* o economic development
o publiefacilities/services
o housing
PAGENO="0444"
440
- Benefit to Low and Moderate-Irxome People (200 points)
- Reso~xc e Leveraging (100 points)
- Energy Conservation (25 points)
Grant A mounts. Illineis has propesed different grant maximums based on
population ranges. The state notes that the ceiling amount for a local project is not
always appropriate. In determining appropriate iixlivithal grant amounts, the Slate will
consider population factors, needs, type of activities, applicant~s ability to carry out the
proposed program, and previous fundinglevels. Listed below are the grant maximums.
Population Grant Maxim um
2,500 $400,000
2,501- 10,000 $600,000
10,000 - 50,000 $750,000
EconomicDeveloixnent/Nattral Disaster Set-Aside.
The state will reserve five percent of its block grant funds in order to respond to
`severe economic pro hems, unique job creation opportunities for low and moderate
income people, and natural disasters." A grant ceiling of $250,000 has been placed on
awards from the ~Economic Development/Natural Disaster Set-Aside.' Illinois has
established a detailed procedure for applying fcr the set-aside funds. While certain
thresholds must be met in order to apply for the funds, the state will use similar
competitive program procedures for distri biting the set-aside funds.
Other Pxovisims
Definition ofLow-Moderatelncome Citizens. Eighty percent of median familyincome.
Grants Management Plan. Illineis has instituted a new and comprehensive "grants
management plan which seeks basic information on the project. The plan seeks data on
the staff, the fiscal contact person, the name of the engineer running the proj ect if one
is available, a list of consultants whose services will be used on the project, and the
identification of any citizen advisory committees.
Citizen Participation. The citizen parlicipation plan will be part of the grants
management plan plus the state will also recpire that one public hearing be held on the
proposed project.
Housing Assistance Plan. Illianis has formally replaced the HAP with a one page
"Housing Needs Form", which is an overview of a comm unit~s housing stock. This will
izElurie data on the housing needs of the community, the condition of the existing housing
stock, an overview of special population grou~a, a brief analysis of the commurdtP
public housing, and plans for addressing the localit~s housing problem. The "Housing
Needs Form" will only be required for housing applications.
Role of Substates. The six state regional planning commissions will provide technical
assistance and training to localities applying for state CDBG funds. The state will
contribite a portion of their 107 funds to the technical assistance effort.
Estimate of Administrative Costs and Staffing. The state expects to use the full two
PAGENO="0445"
441
percent to administer the program in FY 82. The state will staff the program with
approximately 12 full time professionals. It is im portent to note that the Department of
Commerce and Community Affairs has sub-contracted with the Illinois Environmental
Protection Agency to perform the local environmental reviews and engineering
approvals.
Environmental Review P rocedures. In an eff cst to save time and m anpewer the state has
implemented an environmental review pre-certification. The pre-certification was
developed by the D epariment and consists of a checklist which easily determines whether
the locality needs to perform an environmental review.
STATE CONTACT PEPS ON: Bill Pluta
Department of Commerce and Community Affairs
222 S. College Street
Springfield, IL 62706
217 /785 -4336
PAGENO="0446"
442
XENTUCKY
ADMINISTEPJN GA GENCY: Office of Comm unity Development
Department of E conomic D evel opm ent
STAYE CDB G ALLO CATION: $30,639,000
PREVIOUS MULTI-YEAR COMMITMENT: $l4~594,023
Program Preparatiai
The Commonwealth of Kentucky was one of two states selected in HUIYs Small
Cities Demonstration Proj ect in F Y 81. Therefore, the state had an excellent
opportunity to gain some experience and prepare for the actual administration of the
State CD Block Grant Program in FY 82. Kentucky retained their Policy Advisory
Committee and Techrñcal Advisory Committee to help them design the State CD
Program for FY 82. The Department also sponsored a series of worI~ho~, throughout
the state for local government officials to explain the new program.
Program Desigi
The 1982 Kentucky Sm all Cities C DB G Pro gram has ado pted the following goals
and objectives to promote community and economic developnent.
1) To improve local economies and the economic well being. The state will
encourage private investment, discourage the outmigration of
business and help maintain and improve existing or growing
economic centers.
2) To improve the condition of beusing and expand fair housing opportunities
especi ally for persona of low and moderate income. The state will
encourage the rehabilitation of existing housing units, the creation of new
housing units including adaptive reuse of suitable structures, and the and
purchase and preparation of sites for construction of new housing units for
low and moderate income persons. Another objective of the program will be
to eliminate blighting conditions in residential areas through demolition,
code enforcement, and related activities.
3) To provide public facilities to eliminate conditions which are ha zardous
to public health and safety and whicth detract from further community
develo~rnent. Kentucky will seek to improve existing public facilities
and provide new facilities when warranted by recent population growth, or
when essential needs exist.
Under the Kentucky State CD Program, communities will be allowed to submit
applications in three categories
1) EconomicDevelopnent
2) Housing
3) PublicFacilities
A Special Projects Fund will be availatie for innovative or emergency activities.
Funding Allocation. While Kentucky will not fund any new multi-year grants in
PAGENO="0447"
443
FY 82 or FY 83, they do intend to honor HUD's previo~is multi-year commitments. This
reduction for multi-year commitments leaves approximately $15,432,197 available for
distrilrntion among the three program categories. The funding allocation is listed below:
%ofTotal TotalDollars
Program Category Allocation Available
Housing and P.iblicFacilities 55% $8,487,708
EconomicDevelopment 35% 5,401,269
Special Projects 10% 1,543,220
Note that the dollar split between Public Facilities and Housing Projects will be
determined by the proportionate volume of CDBG dollars requested by applicants scoring
at least 700 in those pro gram categories.
Grant Amounts. Keetucky has established seporate grant amounts of different
program categories. For instance, Housing ant Public Facilities projects will have a
grant ceiling of $500,000 while E conomi c Development proj ects will be limited to
$750,000. There will be no limits in the SpecialProjects category.
Finally, applicants are free to apply for several Housing or Public Fnilities
projects as long as the total amount requested does not exceed $500,000. In turn,
applicants may apply for a number of E conomi c Development proj ects, but the total
amount of dollars cannot exceed $750,000.
Seiectiai Criteria
The selection process will be competitive within the three program areas with
different rating criterion. For iratance, only Public Facilities applications will compote
with other Public Facilities applications. Listed below are the separate selection
criteria
Selection Process for H ousing and Ribli c F aciliti es P roj ects. In the case of H ousing and
Public Facilities Projects, applicants are free to choose the program area(s) in which
they wish to compete. Applicants are free to apply for these funds at one time during
the year. The point system is briefly described below:
C atego~~ Maximum Points
o Comm unity Need (To be determined 150 points
by the State. Includes data on
the percentage of poverty and the
number of poverty persona.)
o Project Need 300 points
o Project Effectiveness 200 points
o Reasonable C osts 150 points
o Financing 200 points
Total 1000 points
In each category, qualifying words are used for comparison of each application, (e.g.,
substantial, moderate, minimal, insignificant).
Selection Process for Economic Development Projects. Communities can apply for
Economic Development grants during an right month period between March 15, 1982 and
November 1, 1982. This lssigthly application period is intended to give communities time
PAGENO="0448"
444
to fully develop economic development opportunities and resolve any difficulties.
However, as opposed to the Housing aixi Public Facilities grants, where applicants will be
allowed to have several ~.ant applications in the review process simultaneously,
applicants will not be allowed to have more than one economic development application
in the review process at any one time.
All Economic Development proposals mist include the fc&lowing principles: G ) the
retention or creation of permanent employment, (2 ) the use of private investment and
(3) the maximum utilization of funds through recaptire when appropri ate. The more
detailed components of the selection criteria are listed below:
1) Permanent jots created or retained:
o the number of types of jots
o the certainty of jobs as supported by letters of commitment
from the prospective employer
o ~~eratjoofCDBGdollarSperjob.
2) The stimulation of private capital investment:
o a letter from the involved private parties which provides
an assurance of commitment to invest if CDBG dollars are
available
o an iixli cation of the amount and certainty of the private
investment
o the ratio of committed private dollars to CDBG funds
3) The maximization of the CDBG funds:
o evidence that the CDBG funds will In recaptired through
loans, revcIving acco~ts,lease back arrangements, or sale,
o the CDB G funds are leveraged in conjunction with other
local, state, or federal funds.
Approximately two weelis after the application is received, the state will set up a
meeting to discuss the project with the applicant. Staff review will be continuous.
Meetings with applicants and requests for additional data may occur several limes during
review. The staff will see kinformation on the nature of the publi c/private commitment,
the ratio of leveraging, the success of the project, and the need for CDBG ~sistance.
After the procedure hss been completed, the staff will submit the proposal to the Project
Selection Committee which is made up of experts in the fields of ithustrial and economic
development. The panel will meet on a monthly basis to review Economic Development
proposals. State staff will In available to answer spocific questions alnut iixlivithal
projects. The Committee will compare projects based on the selection criteria and make
recommendations to the Commissioner of the Department of EconomicDevelOPmeflt.
In some instances a project will be eligible for partial funding. In those instances, the
Committee will negotiate with the applicant to ascertain whether the project can be
reduced in size.
Economic Development funds will be distrilasted during three allocation periods. If funds
remain after the third period, they will be pooled for stand-by applications in housing and
public failities.
Selection Process for Special Projects. The Commonwealth of Kentucky has set aside
PAGENO="0449"
445
approrimately ten percent of its state CD allocation or $1,543,000 for Special Projects.
This category indudes two types of projects:
1) Emergency Projects which pose an immediate threat to the health and safety
of its citizens, or
2) Innovative Proj ects, which were unanticipated at the regular deadline
date, depend upon immediate funding, and includes unique financing
m echanism~.
To apply for such funds, the community miet submit a letter to the Department with
their request. The state will review the request and meet with the applicant to discuss
the project. The community will learn of the state's decision no more than two weeks
after the meeting. These funds can be applied for at any time.
Othar Provisiaas
Citizen Participation. One public hearing must be held by the community before the
application is submitted to the state, and another public hearing m~et be held prior to the
execution of the agreement with the state.
A-9 5 Review. The S tate Cl earl nghouse will conduct the A -95 review of applicaons.
Re~onal Clearinghouses will review the CDBG applications in their areas, but this
review is for comment only, not approval. No funding decisions will be made until all
Clearinghouse comments are considered or 45 days have elapsed.
Role of Substate Districts. The Area Developnent Districts in Kentucky played a m~or
role in the design of the State CDBG Program. The state h~ provided $300,000 to the
substate districts from their administrative fund to assist local jixisdictmons with the
State CDB G Program. The Department of Economi cDevelopment will contract with the
ADDs to (1) provide technical essistance and training, (2) assist in the monitoring of
CDBG reduients, and (3) act as a broker for the state in solving local pmUems in the
administration of the prog~am.
Estimate of A dministrative Cost and S taffing N eeds. The state will ~ee approsimately
2% or $300,000 to administer the program. As mentioned previously, the state plans to
appropriate another $300,000 to the ADDs to help administer the pro~am.
Appro dmately, nine to eleven full time employees will be assigned to administer the
pro~am.
STATE CONTAC]~ PEl~ON: SallyHamilton, ExecutiveDirector
Department of Economic Develo~anent
Office of CommunityDevelopnent
Capitol Pla za Tower
Frankfort,KY 40601
502 /564-2382
99-965 0 - 82 - 29
PAGENO="0450"
446
MAINE
ADMINlSTER]NGAC~NCY: State PlanningOffice
STATE CDBG ALLOCA~flON: $10,090,000
PREVIOtE MULTI-YEAR COMMiTMENTS: $4,298,000
Program Prejaraticxi
With the assistance and guidance of an ad hoc Community Development Advisory
C ommittee, the M sine S tate P lanning 0 ffice has developed a program which is somewhat
similar to the HUD administered pro gram.
Program Dasigs
The State of Maine will try to meet the following three objectives in
administering the S tate C ommunity D evelopment Block Grant Program: (1) the provision
of decent, affordable, energy efficient housing for low and moderate income residents;
(V the creation of gislityjobi and opportunitias for low and moderate income residents;
and (3) the revitalization of deteriorated residential and commercial areas.
In meeting these objectives, the state set up broad guideliass to administer the
program. Fir~, the state will distribute the funds competitively and structure the
program so that no intivithal area of activity - housing, economic developnent, public
facilities - is favored over another. The state will set up an extensive technical
assistance fund to encourage sm aller, rural communities to participate in the program
and finally, the granteas will be encouraged to leverage community development grants
with other public and private resources.
The M sine State CD Pro gram will be divided into three categories:
Raserved Grants. Approximately $l~2 million will be set fund communitias
with previous multi-year commitments.
General Competition Grants. Nearly $5.69 million will be used to fund
projects which are similar to projects funded under the HUD administered
pro gram.
Technical Assistance Grants. Approximately $150,000 will be available for
CDBG technical assistance grants.
The General Competition Grants and the Technical Assistance Grants are
described in detail below:
General Competition Grants.
Most of the state CD funds will be allocated to the General Competition
Account for projects in housing, public facilities and economic development. Although
the grant program may be structured similarly to HUD's program, the scoring system has
been significantly revised to eliminate the previous bias against economic development
and public worl~a grants.
The paperwork reqiirements for the grant have been considerably reduced. In
PAGENO="0451"
447
order to apply fcr the grants, communities are aslwd to submit the following data:
(a) A statement of overall community developmentobjectives which includes a
description of the housing, economic development and capital improvement
needs of the community.
(b) A description of the proposed pro~am and its projected impact. This would
indude a budget, a description of other resources and a management jian.
(c) A statement on how the project will benefit low and moderate income
residents or the degree to which the project will prevent or eliminate blight.
(d) A certification that the views of the communitias' citi ssns have been
solicited and reviewed in making the proposal. This indudes evidence that
the application has been approved by the commutht~s gverning board.
Grant Amounts. Projects can be singe activity or multi-activity, based upon the
proUem to be addressed. Multi-activity proj ects should involve activities whi cli are
mutually related, either by function or by geographic area. The maximum grant amount
will be $~00,000 with no minimum grant size. Project length cannot soc eed 18 montla,
however a limited number of two-year grants will be availahie. M ul ti-year grants are
availableupto $1.6millicnfcx l8montle.
Sdectirn Criteria
The selection criteria for the General Competition Grants will be judged and
scored by the State PlanningOffice staff with the assistance of Maira Housing Authority
staff and State Development Office staff. Also, a team of local officials, selected by
the Maine Municipal Association will be invited to review the process and to submit their
comments to the administering agency.
The scoring system fcr the General Competition Grants inclixles certain threshold
determinations and e~mines the following three factors (1) Community Need, (2)
Project Impact and (3) Benefit to Low/Moderate Iisome People or the Prevention or
Elimination of Substandard Conditions.
(1) CommunityNeed (20 points).
- Number of people under poverty level 10
- State's community distress rating io
(2) ~p~pact (60 pcints).
Applications will be scored within functional areas in order to rate their
impact housing, economic development, public facilities.
- Severityof problem 20
- Project effectiveness 20
- Leveraging 10
- Management iian 10
(3) Benefit to Low/Moderate Ircome People
Prevention or Elimination of Substandard
Conditions 20
PAGENO="0452"
448
Tahnical Assistance Grants.
Maine will allocate $150,000 inTechnical Assistance Grants to regional ron-profit
organi zations, such as regional planning commissions, for the pix pose of assisting
communities unfamiliar with the State CD Program. Of the $150,000 available in the
fund, $50,000 will come from the CD program and the state will contribute $100,000 to
the program.
Grants will be awarded competitively on an annual tasis. Grant amounts will be
set by region through a predetermined formula invulving population and number of
communities. In order fcr the or gani ration to apply, it mtat des cr1 be the strategy to be
used and provide evidence of support from local offidais. Technical assistance activities
should intiude: holding regional workihope on the program for local officials, making a
preliminary inventory of all potential CD projects, assisting interested communities in
surveying needs, identifying CD strategies, coordinating area resources in advance of CD
application, reviewing community applications for adequacy and completeness, and
assisting successful new applicants in starting up their programs. Applications will be
reviewed and assessed by the State Planning Office staff.
Other Provisiccis
Citizen Participation Requirements. The State of Maine will require that each
community applying for state CD funds, hold one public hearing on the proposed
project. The certification must indude verification that the views of low and moderate
iocome citizens are solicited during the citizen participation process.
Hortaing Assistance Plans. The state will not require that a HAP be submitted under the
pro gram.
Rde of Substates. The state has appropriated $150, 000 over a two year period to fund
the substate districts within the state to provide technical assistance to local
jurisdictions. Dialer the program, the state will contract out with the regional planning
organizations, to provide technical assistance and training. This could indude the
provision of tasic information on the CD program, application assistance, and an
assessment of the ~ommunity~s needs.
Estimate of Administrative C oat and S taffing N eeds. Maine plans to allocate the full
two percent for the administration of the pro gram. The state also plans to run the
program with a staff of five full-time professionals.
STATEPROGRAM CONTAC7: JaniceHird
State Planning 0 ffice
184 State Street
Augusta,Maine 04333
207/289-3261
PAGENO="0453"
449
MASSACHUSEI'TS
ADMINISTERIN GA GENCY: Executive Office of Communities andDevelopment
STATE CDBGALLOCATIQN: $26,542,000 /
P REVIO t~ M ULTt- YEAR COM Mfl~ MENT: $11,542,000
Program Pre~iratiasi
In preparation for the implementation of the State CDBGPro gram, the Executive
Office of Communitias and Development, the administering agency, established a Small
Cities Advisory Task Force which induded representatives from local gsvernments as
well as from community development and planning interests. Alan, members of the State
Legidature were invited to attend the meetings of theTaskForce.
As the pro~am is finalized, the state has planned a sen as of six technical
assistance training sessions throughout the state to explain the new program in detail.
Appronimately, 300 local officials attended the one day sessions.
Pro~am Deaigi
Massachusetts will run a competitive State CD Program which is significantly
different from the HUD administered program. While the program reqlires that the
activities by communities must meet at least one of the three national objectives the
state has established the following five preliminary obj ectives for the pro~am:
o Support projects which will have a substantial and identifiable impact and
which will respond to the perceived needs of residents and/cr b.isirassas
in a defined area.
o Support communitias which have developed comprehensive solutions to their
CD problems, and which have the capacity to implement those solutions.
o Encourage reinvestment in distressed neighborhoods in order to stabilize
the neighborhoods and avcid displacement.
o Stimulate economic development which will assist in the creation or
retention of permanent job opportunities and expansion of the community's
tax base.
o Encourage communitias to maintain open policias towards both subsidized
and private market housing to ease restrictions on the development of
affordali e housing in general.
Using the national and state objectives as a guide, applicants can submit proposals
under one or both of the following two major headings, as long as only one complete
application is submitted by the community.
(1) Neighborhood Preservation. The stabilization of declining neighborhoods by
addressing the problems which influence neighborhood vitality.
economic growth and development which creates or retains jots in the
community and strengthens the local economy
(2)Economic Development/Commercial Revitalization. The stimulation of
economic growth and development which creates or retains jobs in the
PAGENO="0454"
450
community and strengthens the local economy.
Eli~ble activities in both categories indud~ property acquisition, improvements,
and dispesition; private housing rehabilitation loans, grants, or interest write downs,
housing counseling, and historic preservation; rehabilitation of existing public housing or
acc!sired property to provide permanent public housing units or residential facilities;
public infrastructure improvements to leverage private investment; acquisition,
construction, or rehabilitation of commercial cr industrial facilities, and appropriate real
property improvement~ business development assistance and loans and activities in
stqDport of the development of low or moderate income housing including ci earance, site
assemblage, provision of site and public im provements and certain housing
preconstructi on costs.
Selection Criteria
Massachusetts will retain the two-step application process used under the HIJD
administered program, but it will be considerably shorter and simpler. Diring the pre-
application phase, communities will be asked to briefly (seven typewritten pages) provide
information covering the five following areas: justification of need, project description,
project impact, management capacity, and a housing policy statement.
Communities will compete in the pre-appli cation phase based on the iixlivithal
merit of their proposals, as well as on how they compare with applicants proposing
similar projects. For ezamiie, Neighborhood Revitalization proposals will compete
against other Neighborhood Revitalization proposals and Economic/Community
Development proposals againat other Economic/Community Development proposals.
Only those cities and towns which have successfully completed the pro-application phase
will be allowed to submit final applications
The final application will reqlire the same type of information but in greater
detail. The format for final applications consists of seven categories justification of
need, proj ect des cri pti on, local commitments, proj act impact, m anagement capacity,
housing policy statement and certifications to meet federal and state requirements.
Dthng the final application phase, proposals will receive a numerical score that
will be used in determining the eventual grant recipients. The numerical score will
mess ~re:
Overall CommunityNeed 150 points
Projectlmpact (induding the
Community~s ability to implement
the project and housing policy
practices) 300 points
Amount of Local Commitment 50 points
500 points
Grant Amounts. Grants will range from a minim urn of $10 0,000 to a ma aim um of
$700,000. Communities may apply for funding for one or two years, making the highest
total grant award possible $1,400,000, over a two year period. Considering previous
multi-year commitments, the Commonwealth expects to award 20 to 25 new grants.
PAGENO="0455"
451
Other Provisiczis
Housing Policy Statement. Applicants are required to prepare a Housing Policy
Statement which inc1~xles the community's subsic~zed housing polides and plans for
increasing the availability of affordable private market housing. The statement will be
recpired fcr all fimding recpests regard1~s of whether the community is applying for
economic development or housing related activities.
Citizen Partidpation Plans. While the citizen participation reqlirements have been
reduced from the requirements under the HUD administered program, the state will
reqiire applicants to hold a "community meeting" before a pre-application is submitted
and a public hearing batore a final application is submittel.
Definition of Low-Majerate Income. Families whose incomes do not e~eed 80% of
median familyincome.
Financial and A dministrative R eqli rements. EOCD will be adopting the regulations and
guidelines promulgated by the federal government in 0MB circularsA-87 and A-102.
Use of Consultants. The state has established a comprehensive set of guidelizes on the
use of consultants in the State CD Program. Of noteworthy interest is the limit placed
on the amount of state CD money whi di can be used for consultants. A maxi m~.rn of
$2,000 is allowed for this ptrpose. Any cost over $2,000 will have to be paid by the
community from sources other than Small Citi~ funds.
Joint Applications. Joint applications from two or more communities will be encouraged
by the state's administering agency. However, the applicants must desigiate a "lead"
community. The grant maximum for the joint aplication will lxi $700,000 per year.
Loans to "F or Profit" Entities. Due to modifications in the federal statute, the State is
allowing program funds to be used to benefit profit making enterprises provided that such
loans are clearly in support of the public policy objectives of the Small Cities Program.
These loans will only be allowed in relation to Economic Development/Commercial
Revitalizaticxi projects. In order for private for-profit entities to receive loans, they
must meet the following criteria:
o There exists a proportionately larger private financial commitment to the
project than the public financial commitment requested.
o Reuse of proceeds derived from the repayment of the loan are clearly
defined.
o Documentation exists that conventional or other financing is not available
and/or that prevailing interest rates would render the proposed project
fioanciallyunfeasible.
o The project benefits must directly assist low and moderate income people.
Role of Substates. The regional planning agencies in Massachusetts played a m~or role
in the desigi oU~he State CDBG Pro~am, however the issus over their involvement in
the actual program will be determined by the individual localities.
PAGENO="0456"
452
Estimate of State Admithstrative Cost and Staffing Needs. The state will ~obahly use
the full two percent in administering the program. Also, twelve full-time professionals
will be assigned to administer the program.
STATE PROGRAM CONTA Cr: Byron Matthews, Secretary
Executive Office of Communities and Development
100 Cambridge Street
Bosta~, M assacht~etts 02202
617f727-7765
PAGENO="0457"
453
NEBRASKA
ADMINISTEpj~G AGENCY: Department of Economic Development/ljjvision of
Community Affairs
STATE CDBG ALLOCATION: $12,101,000
PREVIOUS MULTI-YEAR COMM]TMENTh: $3,343,000
Prog~amPre~auan
In preparation for the State Community Development Block Grant Program, the
Department of Economic Development has worked closely with the Governor's Block
Grant Task Force and the locally oriented Small Cities CDBG Committee to establish a
fair and equitable distribution system. The Department has also sponsored a series of
regional meetings to seek comments on the proposal.
Pn~am Design
Nebraska~s proposal consists of six competitive development finance programs for
eligible local applicants: Community/Neighborhood Revitalization, Water and
Wastewater Systems, Industrial Development, Special Projects, Community Development
Planning and Programming, and CommtmityDevelopment Capacity Building.
The State!s broad program goals reflect the diversity of community development
needs: to encourage the most of limited funding; to target areas of greatest need; to
minimize competitive grantsmanship; and to award moos, and therefore am aMer grants.
The six development finance programs are listed below:
Community/N eighborhood Revitalization.
This program will provide grants to eligible communities for revitalization
activities and assist them in developing and implementing a wide range of neighborhood
revitalization activities.
Eligible activities include rehabilitation of private property (residential and
commercial), code enforcement, historic preservation, property acquisition and
disposition, relocation, clearance activities, water system improvements, wastewater
collection facilities, street improvements, solid waste disposal facilities, planning
activities and economic development activities.
Applicants will be competitively ranked and may receive a maximum of 200 points
100 points for Community Need Factors and 100 points for Target Area Need Factors.
Community Need Factors include the following; population change, per capita income,
absolute number of poverty persons, percent of poverty persons, absolute number of
substandard housing units, percent of substandard housing units, absolute number of
housing units hailt befor.e 1940, and percent of bousing units built before 1940.
Target Area Need Factors include concentration of low-income families, the
extent of blighting conditions, and urgent needs.
Approximately $7,502,620 or 62 percent of the funds will be available for these
grants. Of that amount, approximately $3,343,000 is reserved for existing multi-year
PAGENO="0458"
454
commitments. The maximum grant amount will be $350,000 for one year. The State of
Nebraska will not fund any multi-year projects.
Water and Wretewater Systems.
This program is intended to supplement community financial resources in meeting
water and wastewater system needs. Non-entitlement cities and counties which receive
a priority rating from the N elraska Department of Health or Department of
Environmental Control are eligible to apply for the grants. Eligible activities include
water wells, water storage, water distrib.ition system improvements or new construction,
and wastewater collection system improvements or new construction.
The application procedure is six-f oldi (1) the Department of Health develops a
priority for water systems; (2) the Department of Environmental Control develops a
priority list of wastewater systems; (3) communities are given one year to apply, (4) the
community is required to charge reasonable user rates; (5) water meters are required;
and (6) consolidation of systems, where appropriate, receive a priority rating.
Applicants will be competitively ranked and may receive a maximum of 300
points:
CommunityNeeds Factors 100 points
PiiorityRatingFactors 150 points
Proj ect Impact F actors 50 points
Comm unities applying for the funds must spend at least one percent of median
family income for debt service on improvement of system for which funds are being
re quested.
Approximately $2,178,180 or 18 percent of the funds will be allocated to this
function. There will be a maximum grant limit of $350,000.
Industrial Developnent.
In an effort to create jots and diversify the economic base of Nebraska, the state
has established the Industrial Development Program. It is intended to promote local
economic development through development and promotion of isxlustrial sites and
buildings.
The program provides deferred loans to assist in the financing of iwiustrial site
development and industrial buildings which can be expected to result in creation of new
jots in distressed communiti~.
Eligible activities include the payment of interest coats (for up to three years) on
money borrowed to develop an industrial site or to construct an industrial building on
land owned by a municipality, county, or local development corporation.
Eligible applicants are communities under 50,000 population that are eligible for
the Urban Development Action Grant (UDAG) program. Applicants will be compotitively
ranked and may receive a maximum of 250 points - 100 paints for Community Needs
Factors and 150 points for Proj eat Impact F actors.
A match requirement states that local development corporations would be
responsible for payment of the loan principle, t a~s, and m arts ting costs. By providing
deferred loans, it is believed that new jots in distressei (UDAG) areas will result. To
PAGENO="0459"
455
apply, local governments submit on behalf of local development corjxrations. Merits to
be considered are the potential of the community to carry out a successful industrial
development program, site suitability, and the impact funding will have in allevi sting
economic distress.
Approximately $726,060 or six percent of the funds will be available for the
projects. No maximum or minimum funding level has been established. Funds would be
provided for a maximum period of three years. Upon sale or lease of the infustrial site
or building, the full amount of funds provided through the program would be returned to
be made available to other communities.
SpecialProjects Fund.
In the N eli~asl~ program approximately $847,070 or seven percent of the funds
will be set aside for special projects to confront special needs of health and safety
affecting low- and moderate-income people. Eligible applicants are non-entitlement
municipalities and counties. Funds will also be available for special developmental
opportunities. A maximum grant amount of $300,000 is available for applicants
Applicants will be rated and scored on the following six Project Impact Factors:
(1) Benefit to low- and moderate income families, (2) Aid in the prevention of slums or
blight, (3) Meeting an urgent need, (4) Cost benefit to the community in terms of impact
on the local financial base, (5) Innovative solution to a CD need or a unicpe opportunity
for CD, especially in relation to housing and economic development, (6) Leverages
private sector investment or generates other financi al resources.
Community Development Planning and Programming.
Appxo ximately 2.5 percent of the funds or $302,525 have been set aside to assist
communities in the preparation and! or implementation of specific plans and programs.
Eligible applicants are non-entitlement municipalities and counties, which may in turn
subcontract with general purpose governments (e.g., development districts and councils
of government), and non-governmental organizations (e.g., development corporations,
chambers of commerce, housing authorities and community action agencies). All
subcontractors are subj ect to approval.
Eligible activities are plans and programs that identify needs/solutions and are
im plem ented in the areas of dev elo pm ent plans/studies, such as com prehensive plans and
special plans (e.g., land use, housing, community facilities, transportation, business
district development and/or improvement, population, economic base, and
eflvironmental) implementation plans! programs (a .g., capital improvements, zoning
regulations, subdivision regulations, economic action plans, housing/building codes); and
community development capacity building, e.g., implementation and/or administration of
plans/programs - start-up funds for one year of staffing, but not to supplant existing
staff, and development of administrative procedures and/or training.
Applicants will be competitively ranked and may receive a maximum of 225 pcAnts
-100 points for Community Needs Factors and 125 points for Proj act Impact Factors.
Comm unityDevelopment Capacity BuildingFuixl.
Approximately 2.5 percent of the funds or $302,525 has been reserved to enhance
the capability of communities to determine and meet their CD needs through technical
assistance provided by the regional councils. The match requirement is 25 percent of the
PAGENO="0460"
456
local share. In order to participate in the program, a local g3vernment mtat submit an
application on behalf of a regional council in their district. Only one regional council in
each of Netrasl~'s nine districts will receive funds under this element of the program.
Each district in Nebraska will receive funds on a form ula basis totaling (a) base amount
per district - $11,111, (b) amount per region served - $4,000, and () amount per local
government served - $164.04.
Eli glue activities include: (1) continuation of the substate activities of the
Nebraska Rural Development Program, analysis of development needs in the ares of
community facilities, housing and economic development and encouragement of
coordination among agencies in meeting those neecis, arxl (2) provision of technical
assistance to communities to analyze and imj~ement programs meeting identified needs
inducing, but not limited to, preparation of applications for development finance
programs and technical ~sistance in administering such programs.
Other Provisicms
Citizen Participation, Housing Assistance Plans, A-95 Requirement. The State of
Nebraska will not require A-9 5, housing assistance hans, or a citizen participation ~
Estimate of Administrative C oats and S taffing N eeds. The state intends to appro~iate
the maximum two percent to administer the program, but is uncertain whether they will
use the full amount. The Division will ~ae six full time em~ioyees to administer the
pro gram.
STATE PROGRAM CONTAC7: Sheppard Perkins
Department of Economic Development
POBox 94666
301 Centennial MallSouth
Lincoln, NE 68509
402/47 1-3111
PAGENO="0461"
457
NORTH DAKOTA
AD MINISTERIN GA GENC Y: Federal Aid Coordinator 0 ffice~S tate Planning Division
STATE CDBG ALLOCATION: $5,704,000
PREVIOUS MULTI-YEAR COMMITMENTS: $988,000
Program Preparation
While the State Planning Division will directly administer the State CDBG
Program, two locally oriented committees will play a m~or role in the selection of the
potential block grant recipients. When the state announced that they were going to
administer the S tate CDB G Program, the governor established a Policy Advisory
Committee to assist the state in preparing for the program. The committee assisted the
Division in developing the applications, establishing the procedures for the program, and
formulating the policies of the program. The state also intends to involve the two local
government committees in the selection of the grant recipients. Finally, the state
sponsored two public hearings with local officials to solicit comments on the new
program.
Program Dei~i
Goals and Objectives for the Program. In the formulation of the North Dakota
State CD Program, the State PlanningDivision established the following objectives:
o To encourage local governments to use the entire array of community
development activites funded through the CDBG program.
o To promote the coordination of CDB G with other state and federal programs.
oTo encourage the use of CD dollars as a lever for private sector involvement.
o To target resources to those applicants with the greatest amount of need and
benefit to low and moderate income persons.
oTosimplifythe CDBG goals,objectives,and procedures for local governments.
o To contribute to the timely execution of CDBG programs through better
technical essistance and administration.
Areas of Need. Under the North Dakota State CDBG Program, applicants can
apply for funds to address a community developnent need in one of the fcLlowing three
areas:
(1) Housing.
(2) Local economic conditions which principally effect persons of low and
moderate income.
(3) Deficiencies in local infrastructures which effect the health and safety of the
public or some other essential need.
There will be no formal percentage of funds allocated to the three m~or
categories.
In deciding which program area to apply for, an applicant should address its needs
through its proposed activities and those activities which represent at least a majority of
the funds reqiested. While the project may consist of one or several activifi~, those
other activities must he incidental to and in support of the principal activity. In
applications proposing more than one activity, the entire program will he rated as a
whole and not separately. Funds allocated to the recipients must he sufficient to
PAGENO="0462"
458
complete the program within twelve to eighteen monthi.
In an effort to fund a larger number of small communities, the state will establish three
separate funds for communities based on their pa pal aft on size. The three "pots' of
money will be set up according to the following population ranges
1980 Popilation Rangos Total # of Eligilie Applicants
0-500 257
501-5000 118
5001 and over 41
The state allocation between the three ranges will be based on the percentage of poverty
persons statewide in each population range and with the previous multi-year
commitments subtracted from the communities of `5001 and over" allocation. The
resources will be distributed in the following manner~
Popilation % of Persons in Total Dollar
Poverty Statewide Allocation
0-500 23 $1,285,682
501-5000 40 $2,235,968
5000 and over 37 $1,080,270
Grant Amounts. The state will establish a different grant ceiling for each
population range.
Popal ati on R ang~ Grant C ellj~g
0-500 $250,000
501-5000 $375,000
5001 and over $500,000
Application Procedure. In an effort to shorten the previous HUD application
process, the State Planning Division has shortened the procedure to one submission. In
order to apply, the locality m~t submit a community needs assessment, a strategy to
address the identified needs, a cost analysis of the CD strategy, a determination of
benefit to low and moderate income persons, an analysis of the communit3~s housing
stock in terms of condition and quantity, relevant mapa of the target area, and a
certification of compliance signed by members of the governing hoard.
S~ecticzi Cñteria
Under the North Dakota rating and ranking procedure, localities are raked to
submit their applications to the State Planning Division for an initial review and ranking
of the project. The Division will screen the applications for completeness and check to
make sure that certain standards are maintained. For ixstance, the Division will ezemi ne
the communit~9s CD strategy, perform a threshold check for environmental factors on
the proj ect, and e~amine the completeness of the applicant's previous funding
commitments. The recommendations of the State Planning Division will then go to the
Policy Advisory C ommi ttee for final review. The applications will ha sorted according to
population size group and m~or activity~ (1) Housing and Related Conditions (2) Local
Economic D evel opment, and (3) Public Infrastructure I mprovement. The applications will
then be rated under the selection criteria established by the state and will be re-
ezemined by the Policy Advisory Committee for its final review. These
recommendations will then be submitted to the Governor for approval.
PAGENO="0463"
459
After the minimum reqlirements are met, the state will look at the "Program
Impact Factors" of the proposed program. The evaluation of program impact will be
based upon how well proposed activities address the documented needs. The relationship
between the needs and the proposed activities must be described in specific, measuratie
terms. In evaluating program impact, consideration will be given to the amount of funds
requested, the results to be achieved, previous actions taken to address the identified
needs and the relationship of the program to the eli~ble activities selected.
The variables for the `~Program Impact Factor" differs with each program area.
The total amount of points in each area will total 250 points. All points addressing the
same m~or area will be evaluated in terms of impact on the identified major subject
area, as follows:
(1) The project will have substantial impact;
(2) The project will have moderate impact;
(3) The proj ect will have minimal impact;
(4) The application does not meet the minimal impact standards and will
receive points in this category.
A listing of the `?rogram Impact Factors" in each area is listed below:
Housing and Related Proj ects
o Housing Strategy- (S0points).
The housing needs of the community have been identified and documented and the
proposed activities address, to some extent, the identified needs.
o Costs- (25 points).
This variable examines how reasonable the cost of rehabilitating a unit as
compared to other projects.
o Concentrated E ffcrt - (20 points).
This factor analyzes how other activiti~ integrate with and support other
activities to alleviate the housing problem.
o Targeting- (15 points).
Lool~s at how the proj ect is directed toward a distressed area or low to moderate
income persons.
o Expanded Opportunity- (15 points).
Assesses how the proposed activity expands housing opportunity far low and
moderate income families.
o Low and M aderate Income Benefit - (125 points).
Examines how the project will benefit low and moderate income families.
Local H conomi c D evel opm eat C onditi aria.
o L ocal E conomic D evel opa eat Strategy - (50 points). -
The applicant has documented economic development needs and has prepared a
strategy to address the needs.
o Costs- (Z5pnints).
Examines the cost of the proj ect and compares them with the costs of similar
PAGENO="0464"
460
pro ~ams.
o RedevelopmentArea- (Z5points).
In N orth D abeta, a redevel opn ent area is defired as an area in whi di buildin~, by
reason of age, obsolescence, or physicaL deterioration, have become economic or
social liabilities; in which such conditions impair the economic value of the area; in
which it is diffictit and uneconomic for individual property owners independently to
undertal~ to remedy such conditions; and in which it is necessary to create, with
proper safeguards, inducements and opportunities for the employment of private
investment and ecpity capital in the rehabilitation of such buildingo. This variable
examines how the proposed activities will improve economic conditions in the
designated redevelopnent area.
o ConcentratedEffort - (25 pants).
Assesses how the application integrates with and supports other activiti~.
o Low and Moderate Income Benefit- (125 points).
Examines how the proj ect will be directed toward low and moderate income
persons.
Communitylnfrastructtre Improvement Conditions.
o Communitylnfrastructixe Strategy - (50 points).
The community infrastru~ure needs have been identified and a strategy h~ been
designed to try to meet those needs.
o ConcentratedEffort- (25 points).
The actvities integrate with other efforts to alleviate the problem.
o OtherEfforts- (25 points).
Examines the eatent to which the community has investigated other sources of
funding and documented previous efforts in resolving the problem.
o Costs - (25 points).
Loola at the reasonableness of the cost of the project as compared to similar
projects.
o Low and M oderate Ixxome Benefit - (125 points).
Assesses how the project will assist low and moderate income citizens.
OtI~rPzovisicms.
Citizen Participation Requirement. There are no specific C' requirements in the State
CDB G Pro~am hit N crth D ale.ta state law authori nsa the mayor or governing heard of a
community to approve any local project and to publish any plans for a project
beforehand.
Role of Substates. The state has not formally established any role for substate distrids
in the pro gram but it does not preclude a locality from wor Icing with substate districts in
the provision of technical essistance or the administration of the grant.
Site Visits. Site visits will be made at the discretion of the state. The visits will be
made to verify data and to acqiaint the state staff with the community.
PAGENO="0465"
461
Housing Situation Analysis. The housing analysis will be required when the community
proposes a housing proj ect. The applicant will be required to analyze the communit y~s
housing stock in terms of condition and quantity.
Definition of Low and Moderate Income Families. Incomes do not exceed 80 percent of
the median income of the families resi ding in non-metropolitan areas.
Estimate of Administrative Costs and S taffing N eeds. The state will use the two percent
maximum to administer the program. The state also expects to staff the program with
the ecpival ant of four full time professionals.
STATE PROGRAM CONTACr: Allen Merta
Federal AidCoordinator 0 ffice
State Planning Division
17th Floor -State Capitol
Bismarck, NorthDakota 58505
701/224-2818
99-965 0 - 82 - 30
PAGENO="0466"
462
OHIO
ADMINISTERING A GEN C Y: Department of Economic and Corn unity Development,
Office of Local G overnment S ervi ces
STATE CDBG ALLOCATION: $44~040,000
PREVIOUS MULTI-YEAR COMMITMENTS: $24, 174,000
Program Drii~i
The State of Ohio has elected to administer the State Community Development
Block Grant program for FY 1982 utilizing a per capita formula with distress aiteria
included. Considerin gO bids situation of high unem plo ym ent, economic development will
be the m~or o1~ective of the state program. The Ohio program calls for an eg.iitable
distribution of available funds to each of the statds 213 eligible non-entitlement
communities. In essence each eligible city will be guaranteed an allocation of the state's
funds. To insure that communities with greater economic needs receive a greater
allocation of funds, the DE CD will utilize a distress factor in determining community
allocation' figures.
Selectia~ Criteria
Ohio will use a formula to distribute the funds in order to maximize the number of
communiti~ which can benefit from the program.
Those cities and counties which are highly distressed will receive appro ximately
twice the per capita allocation as l~s-distressed cities and counties of like population.
The population for eligible counties is the total county population minus the population
for citira, and prior multi-year HUD commitment citi ~.
The CDBG allocation is determined for each eligible city or county in the
following manner:
1. A per capita all ocati on is computed by adjusting the state average per capita
allocation according to the average of the area's standardized scores on income
and unemployment rate. The state average is found by dividing the total
amount available for disbursement by the total eligible population.
2. The total allocation for an area is determined by multiplying its per capita
allocation by the eligible population.
C iti ~ and counties will red eve funds directly from the state. However, they
must hdd a public hearing on the proposed use of funds prior to submitting an application
to the state. Counties are allowed to make subgrants to villages and townshipe or may
administer the program at the countylevel.
Imminent Threat S st-A ride. The state will reserve 5 percent of its funds to
alleviate imminent threats and emergencies. The emergency funds will be approved by
the legislattre'sState Controlling Board upon the recommendation of the Depurtment of
Economic and Comm unity Devdopment.
PAGENO="0467"
463
Other Provisicxis
Citizen Participation Requirements. Each participating locality is required to hold one
public meeting on the proposed community development prc~ect.
Housing Assistance Plan. Local jwisdictions are not required to prepare housing
assistance plans in order to receive funding.
Estimate of Administrative Costs and StalfingNeeds. The state will appro~riate the two
percent ma ~dm urn for administrative expens~ but will pro be bly use a lesser amount.
Because of the large number of participating communitios, the state plans to utilize a
staff of approximately 28-32 full time employess.
STATE PROGRAM CONTACr: Jane Schoedinger
Department ofEconomic and Community Development
30 East BroadStreet, Z5thFloor
Cthnnb~,OH 43215
614/466-7610
PAGENO="0468"
464
SOUTH CAROLINA
ADM]NISTER]N G A C~NCY: Division of Comm unity and Intergovernmental Aff airs
STATE CDBG ALLOCATION: $26,938,000
PREVIOUS MULTI-YEAR COMMiTMENTS: $10,927,000
PamPzeparati~i
The State of South Carolina will administer a competitive program inFY 82. The
state established the Policy Advisory Committee and the Technical AdvisoryCommittee
in helping to design the program. The state also sponsored a series of wcrkihops to seek
comments on the program.
Pro~ramD~igo
In the design of the South Carolina CD Program, the ten Councils of Government
(COG's) play a substantial role in the selection of local community development
projects. According to the South Carolina plan, local applications are filed with both the
COG serving the applicant's region and the Division of Community and Intergovernmental
Affairs.
Program Focus. The program has been divided into two categories: (1) Economic
Development aixl (2) Comm unity Revitalization.
Eligible activities in the economic development category include: assistance to
new or existing businesses through loans, interest supplements, or other forms of
financial assistance; acciiisition, construction, reconstruction, rehabilitation, or
installation of commercial or industrial buildingo and structures; capitalization of local
development corporations and small busizess investment corporations to initiate a
specified project; acquisition of real property for economic development pirposes and
construction or extension of public worki.
Eligible activities in the area of community revitalization include: rehabilitation
of public or private housing units; acquisition, construction, or rehabilitation of certain
publidy-owned facilities such as senior centers, neigiiborhood facilities and parki; street
improvements; dearance activities; replacement of housing subsidies for d~placed
persons; construction or extension of jxibli c wor ki such as water and sewer; and
preservation or restoration proj ects.
Selection Process. Once the applications have been received at the COG level,
the COGs will begin the rating and ranking process besed on the selection criteria
desigoed by the state-local committee. State officials will monitor each rating session
at the COG level to ensure uniformity. The COGs will then rank their applications and
forward them to the state.
At the state level, CD staff will utilize the same criteria used by the COGs to
rate and rank all applications. The state agency will rate all of the number one ranked
applications from each COG to determine the application having the maxi mum impact.
That application shall become the statds number one ranked application.
PAGENO="0469"
465
The ne~ round in the competition will be between the remaining nine number one
ranked applications and the second ranked application from the region previou~y
f~nded. The application e~thibiting the maximum impact shall be deemed the state's
number two ranked application. This process will continue until the ava,ilaUe funds are
e~thausted.
Selecticzi Calteria
In their effort to rate and rank the applications, the COGs and the state will
utilize a uniform selection system. Under the system, each applicant is recpired to
address four of the seven selection criteria outlined in the program. Questions are listed
under each criteria to facilitate the evaluation of the projects.
1. Benefit to low- and moderate-income persons ~n absolute numbers and
percent of total popilation)
2. Supports conservation or expanshtiofi.esidential properties.
3. Permanent job creation or retention which will occur.
4. Supports creation or retention of industry, business or services.
5. The leveraging of public and private commitments.
6. Elimination or prevention of thims or blight.
7. Resolves a serious defidency in public facilities affecting the health, safety,
or local economy.
Points will be assigned to each of the four selection criteria chosen by an
applicant. A maximum of 50 points is availalAe for any one criteria for an overall total
of 200 points. Points will be assigned in the foilowing manner:
Level ofPrqjectlmpact Pta.
No significant impact on the identified proli em 0
Minimal impact on the identified pro 1~em 15
Substantial impact on the identified proliem 30
Maximum impact ontheidentifiedpzouem 50
All applicants will be separated into their respective categories and ranked.
Grant Amounts and Match Requirement. The maximum grant amount availahie
for all projects is $500,000. There is no minimum grant amount. The applicant is also
req.iired to provide a 10 percent program match (5% in kind, 5% cash).
Otl~r Provisiczis
Definition of Low-Moderate Income Citizens. The low-moderate income index is defined
as 80 percent, of median family income.
Site Visits. On-site visits are made by state officials to e~mine projects which are
ran ked high during the COG review
Citizen Participation Plans. Each applicant is reqiired to hold one public hearing before
their application is submitted to the state. Such information must be clearly
documented.
Housing Assistance Plan. The state will ant recpire that the applicant submit a housing
assistance nan.
PAGENO="0470"
466
Estimate of Administrative Cost and S taffi Nee4~ The S tate of South Carolina has
allocated $350,000 for running the program. This amount will be split evenly between
the state and HUD under the two percent administrative match rule. The state has hired
four full time em plo yees and one part- time em ployee to administer the pro gram.
STATE PROGRAM CONTACr: HaroldHenn
Division of Community and Intergvernmental Relations
1205 Pendleton Street -
Suite 308
Cnlumtia,SC 29201
803/758-3306
PAGENO="0471"
467
WEST VIRGINIA
ADMINISTERING AGENCY: Office of Economic and Community Development
STATE CDB G ALLOCATION: $1 8,714, 000
PREVIOUS MULTI-YEAR COMMITMENT: $4,482,750 -
Program Preparaticzi
In West Virginia, the Community Development Division of the Governoz's Office
of Economic and Community Development has elected to administer the State CD Block
Grant Program in FY 82. The State will also sponsor a series of worl~hope to explain the
application procedure to local officials.
Program Desigr
The West Virginia State CD Program will continue to meet the three national
o1~ ectives and have divided their program into two m~or areas with fror funtional
categories.
A. Development Program
1) Housing
2) CommunityFacilities
3) Economic Development
B. Comprehensive Planning
Additional details on the two programs are listed below
Development Program.
Approximately $13,669,000 or 87 percent of the available funds will be set aside
for community development grants to eligible units of local government. Under the
Development Program, applicants can submit proposals to the state at anytime during
the year in three m~or functional categories - housing, community facilities, and
economic development. Proposals determined to be complete shall be reviewed on a
quarterly basis.
In designing a local development program, local applicants are reqiired to assess
their comm unity and economic development needs and design a pro gram to overcome the
identified problems. Funds requested for the project mt~t be spent within a 24-month
period.
Development programs may be funded up to $500,000 without a commitment of
local funds. Requests in excess of $500,000 up to $750,000 will require a local
commitment of funds on a 50/50 basis for funds requested in e~ess of $500,000. In no
case shall more than $750,000 of state CD func~ be committed to a singie project.
The guide for determining eligibility is found in Section 105 of the Housing and
CommunityDevelopment Act.
Comprehensive Planning Program.
Approximately $1 87,140 or one percent of the State CD funds will be available on
a quarterly basis for comprehensive planning grants. Grants will be made available for
purposes of preparing or updating long-range comprehnsive plans and capital
PAGENO="0472"
468
improvement programs, and land use regulations. Comprehensive planning programs will
be limited to a maximum of $40,000 of state funds, and will require a local cash match of
10 percent.
Local officials can use the planning grant to prepare documents, which provide
them with a well-defined statement of policies and objectives for guiding the physical
developnent of their communities. Specific activities which may be funded include the
preparation or revision of com prehensive plans, the preparation or updating of local
zoning and subdivision regulations or the preparation or updating of long-term capital
improvement program and budgets.
Local recipients are specifically prohibited from using planning funds to prepare
or administer the State CD Program or any other local planning and code enforcement
program.
Ot1~r Provisictis
Citizen Participation Plans. Applicants must publish a notice providing citizens the with
infcrmation concerning the amount of funds hung repeated and the proposed activities
to be undertaker hold at least one public meeting and give citizens the opportunity to
ezamine the proposal and submit comments which the applicant must take into
consideration.
Housing Assistance Plans. HAPs are not reqiired under the state plan. However, an
applicant must complete needs assessment, which includes a survey of housing conditions
and the identification of housing assistance needs of low and moderate income
households.
Administrative Costs. Local administrative costs are limited to 10%.
Role of Substat e D istii cts. Under the West Vir gi ala pro gram, the Regional Planning and
Develolxnent Councils will have two madatory and two optional roles. First, West
Virginia officials have opted to have the regional councils perform the A-95
clearinghouse function to ensure that the proposed CDBG proj ects are consistent with
existing regional and local development plans. As part of the state selection process,
each suhstate district will be asked to establish regional priorities for the applications
submitted from their member agencies. The two optional functions relate to the ability
and capacity of eligible communities to apply for and and implement CDBG programs.
The substatds can provide technical assistance and assist in the actual administration of
the program upon the consent of the local jurisdiction.
Estimate of Administrative Cost and Staffing Needs. The state will run the program
with one coordinator, four representatives, and one program support person. The staff
will also reci eve some assistance from the Community D evel oiin ant Division' a p1 zoning
staff.
STATE PROGRAM CONTAC1~: Fred Cutup, Director
Community Develojxnent Di vision
GovernorsOffice of Economic and
Community Development
State Capitol Complex, ~silding 6, Room B-553
Charleston, WV 25305
304/348-4010
PAGENO="0473"
469
WYOMING
ADMINISTERING AGENCY: Department of Economic Planning and Development
STATE CDBG ALLOCATION: $2,921,000
PREVIOUS MULTI-YEAR COMM]TMENTh: $1,155,000
Program Preparation
The Department of Economic Planning and Development designed their program
with input from local officials and in discussions with the Local Government
Coordinating Committee. The state has also sponsored a series of public meetings to
obtain additional comments on the program from local officials.
Program D~igi
The basic design of the Wyoming State CD Program is quite similar to the HUD
administered CDBG program. The state will continue to stress HUD's three national
objectives and will retain all of the activities which were eligible under the HUD
program. Despite these similarities, the state has made a num ber of maj or modifications
in the application process, the selection criteria, and the type and size of grants.
Application Process. The Wyoming submission requirements will be quite simple,
and brief. The state will ask for basic information on the community and a narrative
describing the problem to be solved, a description of the proposed proj ect designed to
solve the problem, the extent to which the proposal constitutes a completed project, a
map of the project location, an expected time frame, a detailed budget, and a resolution
from the communitls governing board approving the plan.
Type and Size of Grants. Wyoming will only award single year grants for a
maximum grant size of $400,000. The state has also placed a match requirement on
those applicants proposing revenue-~i.oducing projects other than in the area of housing.
Communities are required to provide funds for the project in the ratio of one dollar from
the applicant to every ten dollars of HUD funds. The match cannot be from state or
federal grants.
Sdection Criteria
The Planning Division of DEPAD will assume the responsibility for rating and
ranking applicants and forwarding their recommendations to the Governor. The final
review and announcement of grant recipients will be made by the Governor.
The selection criteria will be made up of four program variables. The maximum
total will be 315 points.
1) Program Assessment 200 points
2) Integrated Effort 50 points
3) Fiscal Analysis 40 points
4) Costs 25 points
315 points
PAGENO="0474"
470
Additional details on the selection criteria are discussed below.
Program Assessment - 200 points.
Applicants will be asked to document their needs and to describe how well
proposed activities address those needs. This may include the amount of funds
req~iested in relation to the benefits of the expenditures, and previous actions
taken to address the identified needs.
Integrated E ffort - 50 points.
Applicants will be asked to describe how well their projects are combined with
other programs to solve a specific problem area. Emphasis will be ~iaced on
utilization of funds from other sources to combine with State CD funds.
All paints addressing the first two variables will be assessed in terms of impact
on the identified m~or project area as follows:
1) The project will have subetantial impact
2) The proj ect will have moderate impact
3) The project will have minimal impact
4) The proj ect will have an insignificant impact
Fiscal Analysis -40 points.
Applicants must be able to demonstrate a sound fiscal management system. The
state will examine:
o The ratio of total bond ixxlebtedness to total bonding capacity (20 points)
o Whether the applicant is levying the optional 1% sales tax or can
indicate the issus passed in the applicant's jurisdiction, but not
in the county as a whole (10 points).
o Whether the applicant is levying no less than one mill under the
maximum mill levy (10 points).
Costs- 25 paints.
Administrative costs incurred in carrying out the program must not exceed 15%
of the total project cost. However, the state will accept an administrative cost of
up to 20% far housing rehabilitation projects. The state will closely ezamine the
applicants ability to keep administrative costs at an appropriate level.
Other Pzovisicz~s
Housing Assistance Plan (HAP). A HAP, as defined under the HUD administered program
is not recpired during the application process. However, applicants who include housing
in their proposals must submit a brief narrative describing how they arrived at the
number and type of housing units involved, and why the type of program was selected.
Citizen Participation. Applicants are required to solicit citizen input through a properly
publicized public hearing befcre submission of an application. The hearing must inform
citizens of the dollars available and the range of allowed activities.
Financial Recpirements. The State recommends that grantees follow 0MB Circulars A-
PAGENO="0475"
471
102 and A-82 procedures or eq~.iivalent procedures. The state notes that the State
Examiner will be used for all audit procedures.
Rde of Substates. There are no plans in the FY 82 program to include substate districts
in the selection procedure. Locaijurisdictions are free to request their assistance.
Estimate of Administrative Cost and S taffing N eeds. Wyoming will utilize the entire two
percent administrative money to implement the program($58,420). Three panple will be
working directly with the program. I~riphersi support will be supplied by the other
mem bers of the Planning Division staff.
STATE CONTACT PERS ON: Dan Perdue
Department of Economic
Planning and Development
Barrett Building
Cheyenne, WY 82002
307/777-7284
PAGENO="0476"
472
* * Briefing Book
on Block Grants and
* the New Federalism.
Coalition on
Block Grants
and Human Needs
April, 1982
PAGENO="0477"
473
~BLE a?
i. n~ri~ix~ria~
For~ord
Letter vi
Block Grants and the "New Federalism':
A Strate3y of Abardonirent 1
Past Experience Overview 3
BY 1982 Block Grant Sursary 5
II. NFW BLOCK (~WP AND BUD(ET P1~)K)SAlB
BY 1983 Block Grant Proposals 9
Child Nutrition 10
Maternal and Child Health/NIC 14
Primary Care 17
Child Welfare 20
Low Incai~e Energy and flnergency Assistance 21
Education 25
Education for the Handicapped 28
Rehabilitation Services 32
Enployment and Training 34
Rental Housing Rehabilitation 37
Proposed Changes in BY 1982 Block Grants 38
Cctrniunity Develop-rent/Urban Develop-rent Action Grants 38
Catuiuinity Services 40
Social Services 41
BY 1983 Budget Proposals 42
Aid to Families With Dependent Children 42
Food Stamps 48
Medicaid 55
BY 1984 "Swap/Repeal Proposal 57
BY 1984 "Turnback' Proposal 63
III. IPN~'r (P ThE BLOCK G~AN1'S 67
Irrpact on States 68
Impact on Cities 72
Impact on Rural Areas 74
Impact on Other Vulnerable Constituencies 77
IV. ~Y ISSt~ 81
Neglecting the Truly Need 82
Accountability 84
The Fiscal Situation of States 87
PAGENO="0478"
474
-2-
V. F~ 1982 BLOC~ (~N~ SPECIFICS * 91
Ccixrnunity Developxent Block Grant ~ 92
Health Prevention and Services Block Grant 93
Alcohol Abuse, Drug Abuse and Hental Health
Block Grant 94
Primary Care Block Grant 95
Maternal and Child Health Block Grant 95
Education Consolidation Program 96
Social Services Block Grant 97
Lot, Incare Energy Assistance Block Grant 97
Catimunity Services Block Grant 98
Title xvii Requiret~nts 100
Block Grant Regulations--HHS BLOCK GRANTS 102
Block Grant Regulations--CDBG Soall Cities 107
vi ~ crir.PE 110
A~er~iix A - l~ Federali~n: Every State a h)ser 130
Ajçen5ix B - PAST EXPERIE1~E 134
Overview 135
LEAA 136
Camtunity Developtent 139
CxvA 142
General Revenue Shariog 145
Partnership for Health 148
Title XX 150
PAGENO="0479"
475
INI~Ux~rI~
This Briefing Book on Block Grants and ~New Federalism' was prepared by
the Coalition on Block Grants and Htnnan Needs, an alliance of national
organizations sthich are deeply concerned about the devasting implications of the
Administration's "New Federalism" proposals for the truly needy in America. Our
menber groups include many of the national church ~denaminations, civil rights
organizations and groups representing poor and ~orkirng people, disabled
Americans, the elderly, children and other vulnerable groups.
The Coalition was formed early in 1981 sthen it became clear that the Reagan
Administration' s block grant proposals ware designed to reduce and finally
eliminate federal support for dozens of programs that are crucial to the
well-being of millions of Americans. Since that time, we have focused on the new
block grant proposals, the basic entitleient programs and the cost recent "New
Federalism" proposals.
The ramnbers of the Coalition are united by carson carsiitrnent to five central'
principleè in relation to the Administration's initiatives in these areas -
- the need for edequate federal funding for hunan needs and incane
maintainence programs;
-- the need for federal standards to ensure that such funds are targeted
to those people wl-o have the greatest needs;
- the need to ensure that there is federal enforcanent of civil rights
laws and other crucial protections ~ich have resulted fran decedes of
struggle to improve the lives of Americans with special needs;
- the need for federal standards to ensure that local, state and federal
agencies follcw open, detocratic decision-making processes and are bald
to basic standards of public accountability, includimj requirenents that
there be edequate records, auditing and oversight; and
- the need for a careful, deliberative process, with case-by-case
consideration of each program sthich is proposed for decentralization,
~thether it should be operated by the federal, state or local goverrinent,
or the voluntary sector, and ~hether continuing federal resources,
standards and oversight are useful.
Much of the debate about "New Federalism" has missed the central point. The
"New Federalism" proposals are not simply a trove tcwards "sorting out" of federal
and state roles and a decentralization of those federal programs r~thich the states
can administer better. If the issue for the Administration really were such a
rational "sorting out," the Administration would cot propose turning over
virtually all darestic programs to the states witbout federal standards and,
in time, withDut federal resources. It ssould insteed:
PAGENO="0480"
476
o seriously examine ~that programs must continue to .be
administered nationally because they relate to national
needs;
o continue federal support, standards and oversight for those
prograna which require such involvet~nt;
o set forth a role for local goverrinents in operating those
prograiTe which they can administer better than states or
the federal governoent; and
o set forth substantial guarantees that private citizens,
civic organizations and others will have an opportunity to
be inforrerl about aad involved in the process of assessing
needs and priorities for the use of funds, as well as the
performance of the agencies responsible for administering
the programs.
The Administration proposals are curiously silent on these
issues, focusing exclusively on a wholesale shift of responsibility
and temporary resources fran one level of government to another --
fran the federal goverrirent to the states.
The `New Federalien" proposals are, clearly, as the President
has stated, interim steps tosaird the withorawal of all federal
support for over 100 programs. The issue is not block grants at
all - it is instead terminal grants.
As the Administration keeps changing its proposals, constantly
proposing new canbinations of prograrm and features, it is essential
that the public and the Congress not lose sight of the fact that the
Administration's constant, overriding goal is to find a way out -- to
find a way to gain congressional acquiescence in the abandonment of
much of the national goverrirents responsibility for dealing with the
the national problems of unemployment, poverty, inadequate education
ar-ri inadequate services. If the Administration ware to achieve this
goal, the consequences would be devasting for the ?merican people and
for the state governtents which would assume new responsibilities.
The original edition of this Briefing Bcok was developed in the
Spring of 1981 in response to the Reagan Ad~iiastrations proposals
for block grants in the areas of health, education, social services,
cannunity development and emergency assistance. At that time, the
Coalition saw the need to fill an information gap about the
implications of the Administration's block grant proposals, and rrore
than 100 national organizations joined together to raise basic
questions about then.
Coring the 1981 debate on block grants, the Coalition
unfortunately failed to achieve one of its primary goals: to
separate the block grant proposals fran the 1981 Qimnibus Budget
Reconciliation Act -- a rrmove which would have permitted full and open
debate on the merits of the proposed block grants. Along with other
1]~
PAGENO="0481"
477
advocates, however, the Coalition did persuade Congress to ex~pt
many key, targeted programs fran the block grants and to add minimal
protections and federal requirsa~nts to the new block grant programs.
These achievenents are now newly threatened by the Reagan
Administration' s proposals for seven new block grants for the
upcanimg fiscal year, FY 1983. Even core fundamentaliy, they are
threatened by the Administration's proposal to transfer another 43
federal programs to the states beginning in FY 1984, and to allow
states to drop those programs at-ri instead receive "super revenue
sharing funds" ~hich could be reallocated for any legal purpose.
Furthermore, the proposal for state takeover of AFDC and Food Stanps
in return for federalization of Medicaid -- the so-called "Swap" --
threatens the continuation of the cost basic survival programs for
poor people.
This edition of the Briefing Book contains descriptions of the
Reagan Mmir~istration' s cost recent block grant proposals and its "New
Federaliam" proposals, as s~ll as descriptions of the block grants passed
by Congress in 1981 and their regulations, and descriptions of pest
block grant programs. This Briefing Book also contains analyses of key
issues associated with "no strings" block grants and their likely
consequences for a number of constituencies. We lope these materials
will continue to provide needed information and stimulate discussion
of current and future block grant and "New Federalisn" programs.
Among the many individuals and organizations that contributed to
the production of the two editions of the Briefing Book are the
following:
Arclxliocese of Washington, D. C. John Carr
Center on Budget and Folicy Priorities Bob Greenstein
Center for Ccmrnunity Chaoge Paul Bloyd
Rosa Colbert
Woody Ginsburg
Yolanda Green
Sandi Greene
Ronnie Kweller
Andy t'btt
Children's tefense Fund Mary Lee Allen
Nancy 82Db
Carol Golubuck
Sara Rosenbaum
Judy Weitz
Human Services Information Center Jule Sugarman
Gary Bass
:iii
99-965 0 - 82 -~ 31.
PAGENO="0482"
478
League of Wxnen Voters Kathryn Lavriha
National Association of Social Wz)rkers Sudan Bees
National Center for Policy Review Bill Taylor
National Consumer Law Center Carol Werner
National Council of La Raze Bamiro Calvo
Lizanne Flaming
Bud Kanitz
Litia Cna
Tanas Saucedo
Janet Schroyer-Fortillo
National Education Association Debbie S1mn
National Health Law Program Judy Waxman
National Lc~i IncaTe Bousing Coalition Kate Crawford
National Boral Center Alice Hersh
Public Strategies Decker Anstran
Rural America Shannon Ferguson
U.S. Catholic Conference Melanne Verveer
u.s. Conference of Mayors Joan Bannon
Laura Waxoan
Consultants Cindy BrcMn
Fran Eizenstat
Harlcy Frankel
Abigail Ravens
Bonnie Kweller of the Center for Cairnunity (I~ange wes largely
resjx)nslble for updating the new edition of the ~f Book, as
well as for coordinating production of and editing both v~Tons.
iv
PAGENO="0483"
479
The Coalition expresses its gratitnde to the fr)1lc~4ng
organizations, wlxse nonetary contributions helped make pssible
publication of this revised Briefing Book on Block Grants and `~New
Federalism'
American Federation of State, County and Municipal flnployees
American Friends Service Camnittee
Budget Coalition, AFL-CIO
Center for Camnunity than~e
Children' s Defense Fond
Displaced Haoenakers Net~ork
Fair Budget Action Center
League of WaTen Voters of the United States
National Association of O:mnunity Health Centers
National Association of Social Wcrkers
National Black Child Develc~ent Institute
National Center for Social Welfare FkDlicy and Law
National Council of La Baza
National Council of Senior Citizens
National Education Association
National flr~loyn~nt Law Project
National Health Law Program
National Puerto Rican Forum
National Urban Coalition
National Urban League
Rural America
U. S. Catholic Conference
-v-
PAGENO="0484"
480
COALITION ON BLOCK GRANTS AND HIJMeN NEEDS
1000 Wisconsin Avenue, NW.
Washington, D.C. 20007
(Same letter sent to President Reagan) February 25, 1982
Dear Member of Congress:
We the undersigned 77 organizations are deeply concerned about the devastat-
ing consequences of the Administration's new dmrestic proposals. it is absolutely
clear that the combination of block grants, "new Federalism" initiatives and proposed
deep cuts in vital income assistance programs will have one over-riding effect:
abandonment by the Federal goverrxrE.nt of responsibility for helping to proonte the
general welfare of our people. We strongly believe that the Federal goverrsrent
has an affirmative duty to carry out this task.
The proposals to drastically cut food starrps, Aid to Families with Dependent
Children, and Medicaid will deepen further the gap between rich and poor families
in America. The sorry fact is that these programs have not kept pace with in-
flation during the past decade. These proposed cuts, on top of the ones enacted
last year, will not reduce waste -- but they will deny food to hungry children,
nedical care for sick old people, and other critical services no decent society
should deny the poor, low income workers and the unaigloyed.
The proposals to "swap" Medicaid for food stanps and AFDC and to "tumback"
40 programs to the states will have equally serious consequences for those in
need. The "swap" plan would shift to the states the cost of financing the Food
Stamp program and the Aid to Families with Dependent Children program. But, it
does not mandate continuation of these programs. States would have the option
of maintaining then, but they may also cut benefits or even transfer these funds
to finance highways or other services, or to reduce their deficits. Swapping
Medicaid for food stamps and AFDC would also be a huge financial drain on the
states. It will cost states $1 billion in 1984 alone. The "turnback" proposal,
which is really a repeal of 40 federal programs, would also be costly, about
$5 to $16 billion the first year.
To help states meet the cost of these programs, the Administration proposes
to return excise taxes and a portion of the windfall profits tax beck to then.
But, the windfall tax expires in 1990, and few states have oil they could tax on
their own. Moreover, excise taxes are not only regressive, but also inelastic
and do not grow with the economy.
The conclusion seems inescapable that millions of low income Americans would
eventually have their already low standards of living reduced if the transfer
proposal becomes a reality. In some places, the reductions could be dramatic and
the types of hunger and malnutrition problems found in this country only 15 years
ago could return.
In addition to the draconian budget cuts, we continue to oppose the Adminis-
tration's block grant proposals. Turning money over without clear priorities,
direction or strategy to the states will undermine national goals in housing,
employment and training, education, rehabilitation, social services, health and
nutrition. These proposals will mean twa things: less assistance to those in
genuine need and a brutal political struggle at the state level where the oust
vulx~erable and those without clout are alirost certain losers.
-vi-
PAGENO="0485"
481
February 25, 1982
Page two
It should also be clear by na~ that these block grants are, in the President s
own wards, an "interim step" toward total abolition of Federal support for vital
domestic needs. ~bt surprisingly, last year's block grants have already been
subject to deeper cuts and are prominent candidates for termination and "turnback"
to the states. While sane state officials any think they gain flexibility with
these block grants, they will find that the funds for then will be eliminacsd
and they will be faced with raising their own onney to keep programs operating.
We reject the idea that the Federal goverrmeslt has no role or responsibility
for helping meet domestic needs. Indeed, many problens such as unemployment,
poverty and discrimination are the direct result of inadequate national policies.
We don' t believe that the Federal government should abandon the poor or place
the full burden on states and carrnwnities for investing in the future with programs
for job training, education, housing, decent health care and other needs. But
that is the program that has been advanced. If it passes, it will mark a retreat
from the nation's caimituent to justice, decency and opportunity. It will also
shift enorrnsus new tax burdens to states and carn]unities. And it will spark a
"new Feudalism," in which every state will have to fend for itself, not a new
Federalism. For these reasons, the undersigned organizations believe this
radical program trust be defeated.
American Association of University Women
American Baptist Churches, USA,
Office of Governmental Relations
American Council of the Blind
American Federation for the Blind
American Federation of Teachers
American Friends Service Commnittee
American Health Planning Association
American Public Health Association
Americans for Deancratic Action
Association of Ccsmniunity Organizations
for Reform Now (ACORN)
Association for Retarded Citizens
Center for Conirunity Change
Child Welfare League of America
Sincerely,
Children's Defense Fund
Children's Foundation
Coalition for Legal Services
Coalition of American Public Employees
Camunity Nutrition Institute
Congressional Black Caucus
Consumer Coalition for Health
Consumer Energy Council of America
D. C. Conmnission for Women
Deafpride, Inc.
Disability Rights and Education Defense
Fund, Inc.
Episcopal Urban Caucus
Federal Education Proj ect of the Lawyers'
Corrmnittee for Civil Rights Under Law
-vii-
PAGENO="0486"
February 25, 1982
Page three
482
Food Research and Action Center (FRAC)
Friends of VISTA
Gray Panthers of Metropolitan Washington
Housing Assistance Council
Information Center for Handicapped
Individuals, Inc
Jobs Roundtable
League of WcxrEn Voters of the
United States
ü.itheran Council USA, Office for
Governrrsmtal Affairs
National Anti-Hunger Coalition
National Association of Social Workers
National Black Child Developmant Institute
National Center for Urban Ethuic Affairs
National Congress for Carm~inity Economic
Deve1o~nt
~National Congress of American Indians
National Congress of Neighborhood Women
National Cons~zner Law Center
National Council of Churches
National Council of Cormrunity Mental
Health Centers
National Council of Jawish War~n
National Council of La Raza
National Council of Senior Citizens
National Low Incai~ Housing Coalition
National Network of Runaway Youth and
Youth Services, Inc.
National Office of Jesuit Social
Ministries
National Rural Housing Coalition
National Society for Children and
Adults with Autism
National ~Urban Coalition
National Urban League
National Woman' a Conference Corrmittee
National Wonan a Health Network
National Women's Law Center
National Women's Political Caucus
Neighborhood Coalition
Older Woman's League
Proj ect on Equal Education Rights, NG~1
Legal ~fense and Education Fund
Rural America
Rural Arrerican Women
Rural Coalition
SANE
Service flriployees International Union
Southeast Women' s Employment Coalition
United Auto Workers
United Cerebral Palsy Association, Inc.
United Church of Christ, Office of
Church and Society
-viii-
PAGENO="0487"
February 25, 1982
Page four
483
United Food and Cam~rcia1 Workers,
Intl. Union, AFL-CIO
United Methdist Church, Depar~nent of
Human Welfare, Board of Church and
Society
United Presbyterian Church, Washington
Office
Wider Opportunities for Waran
Waren' s Equity Action League
Working Group cn Camunity Developrrent
Reform
Young Woman's Christian Association of
the USA, National Board
-ia-
PAGENO="0488"
484
~OQ( ~M1~S ~ i~ "N~ F~AIJ~:
A ~RA~FEGY ~
"I have a dream of my own. I think block
grants are only the intermediate steps. I
dream of the day when the federal govern-
ment can substitute for base the turning
back to local and state goverrrnents of the
tax sources ws ourselves have preampted here
at the federal level so that ycxi wnuld have
those tax sources."
President R~mald Reagan
March 1981
During 1981, while much of the nation's attention wss focused on the
debate in Congress and around the country over the Reagan budget, an
equally significant battle wss shaping up over the Administration's plan
to kill dozens of federal programs and replace tham with a series of
"block grants" to be administered by the states with virtually no national
priorities, standards or oversight. Duder the guise of "increased flexi-
bility" and "econanic restraint," the Administration wss advocating a
redical program designed to reduce and finally eliminate federal involve-
max-it in health, education, social services and other major areas of
national need.
Ironically, the Reagan Administration, which wss making rhetorical
carinitmants to "the truly needy' and `the social safety net," wsnted to
replace targeted programs with unfocused block grants that set no
priorities.
The Administration wsnted to consolidate dozens of federal programs,
reduce their funding by 25% and establish a series of state-administered
block grants. In the process, a nuither of key targeted programs wnuld
have been repealed, including the Child Welfare Act, the Child Abuse and
Neglect Act, the Education for All Handicapped Children Act, the Rehabili-
tation Act, the Waxen' s Educational Equity Act and laws establishing
federally funded carrnunity and migrant health centers, arrong others.
The Administration justified the proposed 25% funding cuts for the
block grants by claiming that substantial administrative savings s~ould re-
sult frcm program consolidation. Available data, however, suggested that
the estimated savings ware greatly exaggerated.
Many of the programs that the Administration wanted to eliminate or
consolidate ware established by Congress after documented neglect and
abuse at the state level. In many cases, states had a history of being
unwilling or unable to meet the needs of hczneless children, black lung
victims, migrant farmwnrkers or the econanically disadvantaged, to name
just a few. It seamed unlikely that the continuing needs of these and
PAGENO="0489"
485
-2-
other vulnerable groups would be met by turning over less ironey to states,
with no requiraments for accountability and no federal direction or over-
sight.
The Administration' s block grant proposals contained virtually no
requireTents to target assistance on the basis of need, no citizen partici-
pation mandates, no civil rights protections, no program quality standards
ard no federal oversight or evaluation. There was no prohibition against
substituting federal for state or local funds and no requiranent for "main-
tenance of effort." The proposals included no role for state legisla-
tures, no application or planning process and no basic accountability pro-
cedures.
Fortunately, Congress was persuaded to retain as distinct, categori-
cal programs the key targeted programs mentioned above. Nevertheless, by
consolidating many other programs into block grants, and slashing funds by
up to 25%, Congress did set the stage for reduced services, diminished
accountability ard increased canpetition arrong needy constituencies.
With many essential features of federal programs rarovar1 ard avail-
able funds drastically reduced, the new block grants mean less assistance
to needy individuals, families ard camaunities, as well as a brutal polit-
ical struggle at the state level, ~tiere the poor and others witi-out polit-
ical clout will often be the losers. Not only is the process for allocat-
ing block grant funds at the state level far rare likely to respond to
political clout than to human needs, but it alan pits one needy group
against another -- older citizens against poor families, children's advo-
cates against the handicapped -- in a desperate political battle over re-
duced resources.
In short, the Reagan block grants ware not a step towards a new
federal-state parthership, but a step towards abardoreent of federal
responsibility for meeting human needs.
The block grants passed by Congress in 1981 have set the stage for
even deeper cuts and less accountability in the future, as the Reagan "New
Federalien", "Swap", "Turnback" and FY 1983 block grant proposals clearly
denonstrate. Again under the guise of giving states nore flexibility in
their use of federal funds, these proposals ~ould actually eliminate
federal support, over several years, for both the 1982 block grants -- and
for other targeted programs that w~uld be put into these or new proposed
block grants -- and for vital incane maintainence and nutrition programs
that the states cannot possibly maintain at adequate levels without
drastically increasing taxes. These proposals demcrnstrate the Reagan
Administration's intention to eliminate virtually all federal support for
human needs programs.
PAGENO="0490"
486
-3--
PAST I~tfl?~CE (WERV1E~
A recurrent public policy debate has concerned the trade-of fs between
categorical and block grant assistance programs. Since the l940s,
consolidating categorical programs into broad block grants has been
suggested as a way to streamline federal assistance programs. In 1949,
the first Hoover Ccemission recanmended that "a systes of grants be
established based upon broad categories - such as highways, education,
public assistance and public health." Through the l950s and early l960s,
several block grant programs were proposed.
Congress enacted five block grant programs between 1966 and 1974: the
Partnership for Health Act of 1966 (314(d)); the Osnibus Cries Control and
Safe Streets Act of 1968; the Cciriprehensive E~nployment and Training Act
(CETA) of 1973; the Cctrrnunity DevelopTent Block Grant Program (CDB3) in
1974; and, in 1975, the Title XX amendrients to the Social Security Act.
These programs were either consolidations of many smaller categorical
programs into one large grant, as in the partnership for Health, CDBG and
CETA, or an entirely new program, as in the Safe Streets Act of 1968.
The arguments in favor of block grants are familiar:
* Efficient delivery of services at the
state and local level and reduced red
tape and service duplication.
* Improved accountability and access-
ibility.
* More responsive and innovative programs
that meet the needs of the citizens at
the local level.
The experience with the five block grant programs, however, does not
support these arguments.
The Law Enforcement Assistance Administration's block grants were
considered ineffective and, as a result, the program was abolished by
1980.
The state-administered Title XX Social Services programs has had
significant problams, with lack of accountability a major concern. Cover-
nors have resisted an evaluation that could have answered the cost basic
questions about the programs effectiveness and impact, and advocates have
charged that it has not met the needs of poor people.
The CalTnunity DevelopTent Block Grant program has also been heavily
criticized, with evaluations concluding that local governments have been
PAGENO="0491"
487
-4-
unable or unwilling to achieve major congressional objectives with their
CDBG funds.
There is also substantial evidence that program effectiveness and
public accountability do not improve with block grants. The Canprehensive
flnployment and Training Act provides an example. It is well documented
that until eligibility standards were tightened, many local governments
passed over minorities and the long-term unamployed and brought less
disadvantaged -- and in some cases even ineligible -- people onto CETA
payrolls.
In fact, previous experience with block grant programs shows that
they have achieved only minimal impact on the substance and effectiveness
of services and have provided no real impetus for states and localities to
develop innovative programs. In short, block grants have not yielded the
results vthich their supporters prcmised: increased efficiency, responsive-
ness and innovation. Instead, they have illustrated the problws that
occur ~then federal funds are transferred to states and localities without
direction, accountability or specific objectives. Ironically, a General
Accounting Office report called for new and tighter controls on CDBG at
the very mar~nt that the Reagan Administration was acting to eliminate the
program's safeguards and accountability tools.
We must learn the lessons of our past experience, not coupound the
errors.
PAGENO="0492"
488
-5-
F~ 1982 BL(X~ GENif SIIWRY
The n~ block grants represent a middle ground between the original
no-strings' Reagan propDsals and the meaningful federal oversight and
direction sought by advocates. Fewer programs than the Administration wented
were consolidated into the nine block grants; and minimal targeting, citizen
participation and oversight provisions were included in the block grant
legislation.
In brief:
o The changes in the (kzmiinityDeVelCplEflt Block
Grant program rerove the stringent ap~i~ioii
and citizen participation features of the
original program, but do reguire one public hear-
ing on a jurisdiction' a plan. The requireTent
that the funds principally benefit lv and rroderate
incare areas is stressed less by the new Adminis-
tration. States have the option of administering
t~ie Small Cities (non-entitlerent jurisdiction)
program or allying the federal government to
administer it.
o There are four block grants in the health area.
Excluded froit the blocks, and retained as cate-
gorical programs, are immunization, tuberculosis,
black lung, venereal ~3isease, developilental dis-
abilities (prcpitsed for inclusion in the Social
Services block grant), migrant health centers~
and a new adolescent pregnancy program.
o The Health Preventia~i arxl Services Block Grant
includes hare health services, rodent control,
fluoridation, health education/risk reduction,
health incentive grants, arergency medical ser-
vices grants, rape crisis services and hyperten-
sion programs. A public hearing on the state
plan is required beginning in FY 1983, and states
must establish criteria for evaluating the per-
formance of grantees.
o The Alcc*x1 AbJse,Dru9Ab1Se!~!~~4
Services Block Grant includes mental health cen-
ters and alcohol and drug abuse programs. Pre-
viously funded mental health centers are to re-
ceive funds in FY 1982, 1983 and 1984. A public
hearing and grantee performance evaluation criteria
are required.
o The Prinary Care Block Grant includes only one
program, cainunity health centers, ~~nith are
PAGENO="0493"
489
-6-
operated on a categorical program basis this
year, FY 1982. States may administer the
centers beginning in FY 1983, or they may
choose to have the federal government continue
to do so. The state must set criteria for
evaluating the health centers and, beginning
in Fl 1983, hold a public hearing on its plan.
* The Maternal and thud Health Block Grant in-
cludes a number of programu for mothers and
children, including services for crippled and
disabled children, lead-based paint poisoning
prevention, Sudden Inf ant Death Syndrose pro-
graam, hemophilia diagnosis and treatment,
adolescent pregnancy and genetic diseases. No
public hearing is required.
* Education Consolidation has two parts: Title
I replaces (and largely waters down) the pro-
gram for disadvantaged children under Title I
of the Elementary and Secondary Education Act.
Title II consolidates other ESEA programu,
Teacher Corps, teacher training, career educa-
tion and alcohol and drug abuse education.
State education agencies must pass through 80%
of their funds to local education agencies.
* The Social Services Block Grant consists of
only Title XX of the Social Security Act, thich
provides a range of services such as child and
adult day care, protective services, employment
services, counseling, preparation and delivery
of meals and health support services. While
Title XX was fon~erly targeted to low income
persons, the new block grant does not include
inccrne eligibility criteria. It does, however,
retain the original program goals ~thich include
helping recipients achieve and/or maintain
economic self-sufficiency.
* The Low Inccix~ Energy Assistance Block Grant
provides funds to help low income people pay
their fuel bills. ~t includes incczne criteria,
requires equitable treatment of renters and
prohibits counting energy assistance as income
in detenriining other benefits. A public hear-
ing on the state plan is required, beginning in
Fl 1983.
* The Carnunity Services Block Grant continues
the local community action program, with con-
tinued funding in Fl 1982 for existing CAP
PAGENO="0494"
490
-7-
agencies. Congress did not go along with
the Reagan prop~sa1 to include this pro-
gram in the Social Services Block Grant.
A public hearing is required beginning in
FY 1983. Funded CAPs or other nonprofit
organizations nust have boards canprised of
at least one third of dexocratically
selected representatives of the por in
the area.
Block Grant Regulaticz~s.
Regulations for the seven block grants administered by the Department of
Health and Human Services (all except camsunity developnent and education
consolidation) are minimal, failing for the cost part to elaborate on or
interpret the language of the statute. In every pessible instance, HHS has
left maximum discretion to the states in administering the block grants --
fran determining that public hearings are not required this year (despite a
general provision, in Title XVII of the act, requiring hearings every year),
to allowing states to be the primary auditors of their programs, to stating
that the department will ordinarily defer to a state' s interpretation of the
law unless it is clearly erroneous, to allowing states to determine the form
and, to some extent, the content of their block grant plans.
Federal oversight is minimal, with no requireisots for data collection
by derographic characteristics. Civil rights requiranents are minimal and
achiguous. The "interim final" regulations were published in the October 1,
1981, Federal Resister.
A similar situation exists with regard to the propesed regulations for
the CDBG Seiall Cities program, ~iich were published in the Federal Register
on Novmeber 20. Publication of proposed regulations for CDBG entitlaTent
jurisdictions has been delayed until Congress approves the Soall Cities regs.
Again, maximum discretion for interpreting the law is left to the
states, with no prescribed application, recordkeeping or program evaluation
forms or standards. The regulations do not address citizen participation and
dcwnplay the prmnecy of the CDBG program' s primary objective -- to
principally benefit lv and rroderate incare people.
State arx~ Local Strategies
Ccrnmunity groups are using a variety of strategies for gettipg involved
in block grant palicy caking and implamentation. Hest are ~orking in
state-wide coalitions that include labor unions, religious organizations,
groups that advocate for minorities, wa-rem, children, and handicapped, etc.,
service providers, professional associations, neighbortood and grassroots
organizations and, in sate cases, individuals.
PAGENO="0495"
491
-8-
Strategies include building relationships with state officials,
bureaucrats and legislators so they are aware that camiunity groups and
their allies want to be involved in the block grant process; holding educa-
tional fonims on block grants for both constituents and representatives of
state governmsnt; pushing for representation on state block grant advisory
bodies; holding "people's hearings" in the absence of state-sponsored pub-
lic hearings; collecting data (beyond what is required in the law) and
documsnting service reductions caused by block grants and federal budget
cuts; pranoting news stories about the impact of block grants and budget
cuts; and proposing state legislation and regulations that reinstate tar-
geting, oversight, public participation, etc., that are now lacking in the
federal law.
If your group is working on block grant issues, you should contact:
The Coalition on Block Grants and Human Needs
1000 Wisconsin Avenue, N.W.
Washington, D.C. 20007
202/333-0822
PAGENO="0496"
492
-9-
II. New Block Grant and Budget Proposals
Following are sunTnaries of the Reagan Administrations new block
grant proposals for F? 1983; proposed changes in block grants that were en-
acted in F? 1982; proposed budget cuts in safety net entitleosnt pro-
grairs for F? 1983; the proposed "Swap" of AFDC and food stamps for Medi-
caid in F? 1984; and the proposed "Turnback" of 43 additional federal pro-
graos to the states in F? 1984.
PAGENO="0497"
493
-10-
II. FT 1983 Block Grant Proposals
(bud Nutrition Block Grant
The Reagan Administration is proposing to cut the school breakfast
and child care food prograirs by about one-third and then merge than into a
block grant. These cuts would be on top of cuts of 30% last year in the
child care food program and nearly 20% in the school breakfast program.
Most of those affected would be low inccine children.
Backgrc*ind on the School Breakfast Program
* The school breakfast program provides a
nutritious breakfast each school day to
about 3.6 million children in about 33,000
schools; 88% of these children are poor or
near-poor (ccming from families below 185%
of the poverty line). Many of. these children
are from families in which there is only one
parent, who leaves home early to work.
* Studies have found that the program has an
important nutritional impact. A major Con-
gressional Budget Office study issued in 1980
found that except for the WIC program, the
breakfast program is the roost nutritionally
effective of the child nutrition prograrrs.
Compared to the school lunch program and the
special milk program, the breakfast program was
"the roost beneficial" in tenis of nutritional
effectiveness, according to CBO, which added
that "its cost-effectiveness is high." CBO
found that children participating in the break-
fast program have improved diets and a higher
concentration of hemoglobin (indicating less
anemia) due to the program.
* Studies have consistently shown that many of
the low income children participating in the
breakfast program cane to school without eat-
ing breakfast and would have no morning meal
if the program were not available. A substan-
tial body of evidence shows that children who
do not eat breakfast not only have poorer
nutrition, but also do not learn as well.
* Last year the breakfast program was cut nearly
$80 million, or nearly 20 percent; over 800
fewer schools offer breakfast compared to last
99-965 0 - 82 - 32
PAGENO="0498"
494
-11-
year. The percentage of schools that have left the breakfast
program is alrrost as large as the percentage of schools that
have dropped out of the lunch program.
* As a result of last year' s lopislation, there are also over
400,000 fewer children participatiog in the school breakfast
program. This is as large a decline (in percentage te~ins) as
has occurred in the school lunch program. About 70% of the
decline is in free or reduced-price breakfasts served to poor
or near-poor children.
Badcgrcund on the thud Care Food Progran
* The child care food program helps provide rreals to children of
~orkiog parents (principally children of working rrothers in
one-parent families) ~nile they are cared for in day care
institutions. It is targeted principally at lcw incane
children. About 75% of the children in the program are poor
or near-poor, and over 90% of the program's funds support
ireals for poor or near-poor children.
* The program was cut by nearly $130 million, or 30%, last year.
These cuts, ccrrhined with the major reductions in fundiog for
social services programs that support day care institutions
for lo~ inccrre ~orkiog families, are haviog a major irpact on
these institutions. Scxne institutions closed. ~`bst reiiain
open, but are beiog forced to raise fees charged to lcw incane
parents, reduciog the nunber of children ~tho are cared for
and/or reduciog the quality of care.
* The principal group adversely affected is the w~rking poor --
the same group that bore the brunt of many of last year's
cuts.
The N~ Pr~osals
* If no cuts had been made last year, these tr~ programs ~ould
have cost $950 to $975 million in fiscal 1983. As a result of
last year's cuts, the programs are expected to cost about $735
million next year if rx further cuts are made. The new
proposal is to cartmine then in a block grant at $488 million,
a new cut of 33%, aed an overall reduction of 50%.
* The cuts ~odld gro~i in subsequent years, because the
Administration is proposiog that the new block grant be
permanently funded at the $488 million level, with no ad-
justment in future years for risirm~ food prices. By the end
of the decede, the programs s%ould have declined by
PAGENO="0499"
495
-12-
about two-thirds fran ~there they would have been without last
year s cuts or the new proposals. Schools and child care
centers could not make up for this loss. There will be no way
around the fact that food will cost mare than it does today.
* A likely result of the new cuts is that a substantial nunber
of additional schools will drop the breakfast program, as
there would be no way for schools to replace the lost funds.
Mast children in the program are poor and cannot pay mare for
the breakfasts. Large parts of the breakfast program would
simply disappear. Hundreds of thousands (perhaps several
million) of poor and near-pxr children would no longer be
able to eat breakfast at school, and many would start the
school day with no breakfast at all.
* The new cuts would work equal if not greater hardships on day
care centers. Day care institions are not as wall organized
politically as schools, and they will probably fare badly in
the ccrnpetition for funds at the state level.
* In efdition, in some states the child care food program would
probably terminate. In about 12 states, the U.S. Dapartrnent
of Agriculture -- rather than the state -- now runs this
program. In sare of these states, the state Education
Dapartinent is prohibited by law fran disbursing funds to
private institutions -- and mast child care institutions are
private, non-profit institutions. The new proposed block
grant would end US[lk operation of the program in these 12
states, so it is likely that in some of thmn, low incarie day
care centers would be cut off entirely.
* Probl~ns would also be very severe for family and group day
care hares, as scxre states would likely provide funds only to
day care centers and terminate family and group day care
hares. The haies are mare difficult to handle fran an
administrative standpoint, yet it is there that an increasing
nurrber of 1cM-incczne children are cared for because they are
generally less expensive than centers. Many of the persons
providing family hare day care are thsoselves low incarie
~nen.
* The biggest losers would be the working poor. The cuts in
support for low incane day care institutions would make low
cost child care harder to find. These parents would generally
have to pay mare for child care at the sane tine that their
benefits in other programs (such as PF1X~ and food stamps) are
being cut. Increased child care costs reduce the gains fran
working at low-wage jobs; and the sharp reductions in the
child care food program would be one mare
PAGENO="0500"
496
-13-
factor contributing to the erosion of work incentives for
low incone working mothers.
The Concept of the Block Grant
* There is no logic in ccxnbining the school breakfast and
child care food prograns into a block grant. The program
with which the breakfast program is most closely allied is
the school lunch program, not the child care program -- but
school lunch would not be in the block grant, while the
child care program would be. The breakfast program and the
child care food program are run by different institutions
at the local level, and in some places they are even ad-
ministered by different departments at the state level. It
is hard to envision how any efficiencies or econanies could
result frcm the block grant.
* The school breakfast/child care block grant was an `11th
hour" proposal, hurriedly thrown together by the Administra-
tion in late January as an alternative to further cuts in
reimbursements for non-poor students in the school lunch
program. After planning for months for further school
lunch cuts, the Administration wisely backed off that idea
at the last minute -- but then sutwtituted this equally un-
wise block grant proposal instead. The Administration nay
have concluded that because most families in the breakfast
and child care programs are poor, these programs are more
vulnerable than school lunch.
Prepared by:
Bob Greenstein
Center on Budget and Policy Priorities
202/544-0591
PAGENO="0501"
497
-14-
II. FY 1983 Block Grant Proposals
Maternal and Child Health /WIC Block Grant
Congress passed the Maternal and Child Health (MCH) Block Grant as
part of the Qanibus Budget Reconciliation Act of 1981. It builds on the
only federal health program targeted on methers and children, the Title V
Maternal and Child Health and Crippled Children's Program, passed by Con-
gress 46 years ago, and it replaces this program and six others which
provide health services for riothers and children: Lead-Based Paint
Poisoning Prevention Program, Sudden Infant Death Syndrome funds, the
Supplemental Security Income program of support services for disabled
children, adolescent pregnancy services, Genetic Disease Program and a
program for the development of hesophilia diagnosis and treatment centers.
Under these programs, almest 17 million pregnant women and children
receive services ranging from prenatal care, checkups and immunizations to
the mest sophisticated types of medical care for crippling childhood
diseases and intensive infant care for newborns. These programs also
support a network of clinics in most counties across the country to which
Medicaid-eligible families and poor families not eligible for Medicaid can
go for routine health care for their children.
The MCH block is currently federally funded at $348 million, a 30.1%
cut, including inflation, from FY 1981 levels.
The Special Supplemental Food Program for Women, Inf ants and Children
(WIC) was enacted by Congress in 1972. It provides prescription food
packages (iron fortified infant formula, milk, eggs, cheese, cereal,
juice), nutrition education and access to health care to over 2 million
low income pregnant and nursing methers, infants and young children who
are medically certified to be at nutritional risk. WIC is entirely
federally financed. About $950 million was appropriated for WIC for FY
1982. It is one of the few social progracs that Congress did not cut last
year, although the President had proposed a 30% cut.
The. Reagan Administration is now proposing to end the WIC program and
expand the Maternal and Child Health Block Grant to provide the prescrip-
tion food packages and nutrition services now available through WIC. How-
ever, the funds added to the MCH Block Grant to compensate for terminating
WIC would be 30% below current WIC operating levels.
If funding for nutritional services for low-income women and children
now provided through WIC is cut by 30%, hundreds of thousands of wxr~n,
infants and children will suffer the effects of nutritional deficiencies.
Already, WIC is unable to reach all who need it. Tens of thossands of
methers and children are on waiting lists or are turned away because there
PAGENO="0502"
498
-15--
are insufficient funds to serve them. Not unrelated is the fact that in
the U.S. today, one out of every 81 infants and one out of every 47
non-white infants dies each year.
To block grant WIC will shortchange nothers and children. Pregnant
and nursing wa~n need to eat adequately and receive necessary medical
care to have healthy babies. Inf ants and children need to eat adequately
and receive necessary medical care to stay well. Less of either will re-
duce the chances children have to live and to grow up healthy. Anything
short of a full and focused canmitznent to both is detrimental to methers
and children.
To block grant WIC and the !NiI program will n~an fewer overall
federal and state dollars going to affect naternal and child health:
* Congress is mere likely to provide ade-
quate funds for maternal and child health
and nutritional services if WIC and MCH are
kept as separate programs. Both MCII and PlC
currently have bipartisan support in their
respective authorizing and appropriations
subcawnittees. If jurisdiction for WIC is
shifted to the authorizing and appropriations
subccrsnittees which handle the MCH block, the
two programs will be forced to ccmpete for
the sanm limited funds.
* If WIC and MCH are merged, state health de-
partments will lose noney. WIC requires no
state matching funds, but the MCII block re-
quires $3 in state matching funds for every
$4 in federal funds. Any WIC matching re-
quimsiont which calls for new state expendi-
tures will mean financially-strapped states
will decline federal dollars and provide
less food and health care for nothers and
children. If the MCII state match is reduced
or eliminated to accamTodate the WIC merger,
further cutbacks in an already minimal program
will be assured.
To block grant WIC n~ans to end one of the nxst effective federal
progran~ on the bocks:
* A study at the Harvard School of Public
Health found that participation in WIC is
associated with a marked reduction in the
incidence of low birth weight infants. (Low
birth weight is one of the leading causes of
death in the U.S. and is associated with higher
rates of disability and retardation.) WIC
PAGENO="0503"
499
-16-
infants averaged 128 more grace at birth
than infants fran a control group. The
study determined, conservatively, that each
$1 spent on the prenatal component of WIC
averts $3 in hoepitalization ccets after
birth.
* A study conducted by the Massachusetts Depart-
ment of Public Health, in ~thich births to
4,000 WIC mothers were n~tched with 4,000 compar-
able non-WIC births, concluded that the neonatal
mortality rate for the WIC births was only one-
third the rate for the non-WIC births.
* t~ta collected by numerous states and by the
Center for Disease Control shows that WIC
results in n~rked reductions in anemia.
Prepared by:
Judith Weitz and Sara Rosenbaum
Children's Defense Fund
202/483-1470
800/424-9602
PAGENO="0504"
500
-17--
II * FY 1983 Block Grant Proposals
Priuaiy Q~re Block Grant
Ccmmunity and Migrant Health Centers are private, non-profit programs
which provide primary medical care to persons who live in areas with too
few or no physicians and high infant rrDrtality rates.
In F? 1982, federal funding for Cctnmunity Health Centers was cut by
25% and funding for Migrant Health Centers by 18%. Coniriunity Health
Centers were placed in their own Primary Care Block Grant, and states were
given the option of taking over the program beginning FY 1983. Congress
required states which want to take over the program to provide 20% state
matching for FY 1983 and 33% in F? 1984. The Department of Health and
Human Services (HHS) has urged states to take over the Primary Care Block
Grant. It has told states not to worry about the required state match.
HHS has also attacked Ccrnmunity Health Centers in other ways. On
Detober 18, 1981, the Department issued a list of 1,500 areas no longer
considered medically underserved, an action which threatened the loss of
federal funds for 95 to 100 clinics. The "designations" were based on
extremely faulty health planning data. For example, parts of Harlem and
Watts and East Oakland, California -- impoverished ccmmunities with high
infant mertallty rates and few physicians -- were considered by HHS as no
longer medically underserved. After a great deal of political pressure
directed against HHS and data frcm camnunity health centers, the Depart-
ment is reconsidering its action. HHS is also threatening clinics with
loss of funding because they have not met "perfoi~nce criteria." Sane
clinics have received notices which do not even specify which criteria
have not been met.
Congress continued Migrant Health Centers as a federal program in F?
1982, fearing that states would be unwilling to provide health care to
migratory workers who cross state lines.
For F? 1983, President Reagan proposes including Black Lung Clinics,
Migrant Health Centers and Family Planning prograirs in an expanded Primary
Care Block Grant. F\mding would remain at F? 1982 levels, with no
increases to cover inflation.
As a direct result of the F? 1982 budget cuts, 40 ccmmunity health
centers have closed. By the end of the year, 120 carrnuriity health centers
and 14 migrant centers could close, resulting in the loss of medical care
to 1.3 million people in medically underserved areas and 50,000 migrant
and seasonal farmworkers. The 772 Carimunity and 128 Migrant Health Cen-
ters serve 6 million people living in rural and urban medically under-
served areas. These health centers provide medical care for the "truly
needy":
PAGENO="0505"
501
-18-
o 80% of all center users have incates below
150% of the pDverty line ($12,675 for a
family of four).
o Health centers each year provide care for
559,000 migrant and seasonal farm~orkers
and their families
o 80% of health center users are mLnorities.
o Health centers care for 400,000 elderly
eadi year. The nunber of elderly receiving
care at health enters has doubled in the
last three years.
Ccrnmunity and Migrant Health Centers have increased access to health
care for millions of Americans and have in~o7ed the health status of
their carrnunities:
o Three-fourths of health cefiter users
receIve preventive care. Health centers
enphasize preqancy care and care for
children.
o In one southern canmunity, infant deaths
decreased 50% followir~ establislirrent of
a health center. OntiTrunity clinics in
Baltirrore decreased the incidence of
rheumatic fever by 60%.
Ccxmnnunity and Migrant Health Centers provide quality care:
o In a study of Catinunity H~alth Centers
between 1968 and 1976, New York' s Albert
Einstein School of Medicine found that
these centers provided care "generally
equal to and in same instances superior to
that of other established providers of
health care."
Ccxrununity and Migrant Health Centers are (~st-Effective.
o They reduce the use of expensive hospital
energency roatis and cost 33% to 60% less
than hospital outpatient departnents and
energency roans. Studies have shown that
these centers reduce hospitalization rates
by 25% to 66%. The amount of money thus
PAGENO="0506"
502
-19--
saved exceeds the cost of the entire $248
million program. A recent independent
study showed that last year alone, health
centers saved the Medicaid program $580
million.
Prepared by:
Judy Waxrran
National Health Law Program
202/232-7061
PAGENO="0507"
503
-20-
II. FY 1983 Block Grant Prcxosals
thud Welfare Block Grant
Tn its FY 1983 budoet the Administration has ororosed, once aoain, to
include the child welfare oroorarns in a block orant that ~ould include the
Title IV-B Child Welfare Services and Trainino Procrams and the Titles
IV-A and IV-E Foster Care and Adontion Assistance Proorams addressed by
P.L. 96-272. Fhndino for the block crrant ~ould be limited to $380 million
for F~ 1983 and thereafter -- at least 18 oercent bela~, the current
fundino levels for these oroorarns and 46 oercent below the fundina levels
orioinallv anticinated in P. L. 96-272 for F'! 1983. Adeouate fundiro of
these oroarams is essential to trove toward the family Dermanence homeless
children need.
Passaae of the block orant ~ould effectively reoeal P. L. 96-272.
States ~ould no lot-icier have fiscal incentives to develno orotections for
individual children-i in care, such as case olans and ceriodic case reviews.
or to ensure that children receive aualitv care and oerrranent families.
Incentives for the states to develoo cost-effective oroorams to keeo
families tooether and to reunify families that are seoarated ~sould be
eliminated, as ~ould incentives for the adootion of soecial needs
children. This ororosal ianores findinos that oublic dollars used to keeo
families toaether or to trove children into oermanent adootive families are
core cost-effective in the loom run than olacino or leaviro children in
out-of-ho*rie care.
At the same time, other orotosed cuts of at least $2 million in the
state orant rxjrtion of the child abuse orooram, $1.2 billion in AFJX~ and
over $400 million in the Social Services Block Grant ~ould also undermine
basic family suororts, forciro core and core families to turn to the child
welfare svstam as a last resort. Wno ~ould oav? The cost vulnerable
children in our society and American taxoavers.
Preoared by:
Mary Lee Allen
Children's L~fense Fund
202/483-1470
800/424-9602
PAGENO="0508"
504
-21-
II * F! 1983 Block Grant Prcço6als
L~ Iso~ie Energy and ~rgency 2~ssistance Block Grant
The Reagan Administration's FY 1983 budget proprses numerous, and
very substantial, changes in the lc~ incane energy assistance program, one
of the 43 programs the Administration wants to turn over to the states as
part of its `New Federalism" venture. The changes presented in the F~
1983 budget include:
* Consolidating the energy assistance program
with the arergency assistance program.
* Cutting the funding level by one-third fran
FY 1982 levels (fran $l.875 billion in FY
1982 to $1.3 billion in FY 1983). This
is even lover than ~that the Administration
sought last year.
* Counting energy assistance benefits as incane
in determining eligibility and benefit levels
for both AFIX and food stan~s.
* Providing states "added flexibility in deter-
mining incare eligibility requirarents and
payment levels."
* Changing the state allocation formula "to
target funds to states nost in need" by
focusing on heating costs in the winter
(rather than annual lmcne energy costs).
* Eliminating "unnecessary restrictions...
~shich currently prevent states fran de-
livery of effective energy and energency
assistance to tbose ~-io need it the nost."
The lv inccme energy assistance program was established to help lv
incare housebolds offset the huge increases in hare energy costs resulting
fran actions taken by OPEC and by the federal goverroent to decontrol the
price of oil and to ~ase in deregulation of natural gas prices. Since
1973, fuel oil prices have increased over six-fold; natural gas prices
have nore than quadrupled; and the cost of electricity has nearly tripled.
These costs are expected to clirrib even higher -- with the encouraganent
and suppcrt of the Administration. t'bre and core lv incare households
PAGENO="0509"
505
-22--
simply cannot afford to pay their utility bills, and many literally face
the day-to-day choice of "heat or eat."
Last year the Administration proposed essentially the same kind of
program consolidation, but at a proposed budget level of $1.4 billion
rather than the $1.3 billion being proposed for F? `83. Congress rebuffed
that effort and instead passed a three-year authorization for the Low In-
cm's Energy Assistance Program, authorizing funding of $l.875 billion per
year. The mrsrgency assistance program was maintained as before. About
half the states participate in the emergency assistance program, a 50-50
federal-state match program, for which the federal share was $61 million
last year. The program assists families with children facing a wide range
of emergency situations, of which energy is one.
The energy assistance legislation enacted last year was made "looser"
in its requirements than the expiring statute, but it contained 16 assur-
ances that states Sust meet in their program designs, and it contained
definitions, provisions for ensuring canpliance and so forth. The Adminis-
tration `s proposal would gut these requirements. In fact, the Department
of Health and Huiran Services virtually abdicated its responsibility for
the program at the outset and gave the states tremendous discretion.
For example, the law requires program outreach, public participation
in the development of the state plan, equitable treatment of renters and
targeting of benefits to those most in need, among other requirements.
But HHS made no attempt to define what was meant by adequate outreach, for
example, or what factors should be considered in targeting of benefit
levels. Instead, whatever a state did -- as lon~ as it said it would do
scsiething -- was deemed acceptable. The result is that 11115 has very
little knowledge of how the program is running, how well the intent of the
law is being met and how adequately energy assistance needs are being met.
The existing situation -- with specific assurances in the statute --
suggests that the sweeping changes proposed by the Administration would
wipe mit any means of holding either IIFIS or the states accountable to any
kind of standard, no matter how minimal.
Although the Administration has not yet submitted the specifics of
its proposal, it appears that the following will be included as part of
the effort to remove any "burden" fran HHS and to provide the utmost dis-
cretion to the states:
* deletion of mandatory outreach;
* elimination of targeting of highest
benefits to those with lowest inca's
in proportion to energy costs;
* changes in eligibility language;
* deletion of the "income disregard" pro-
vision (which has prevented energy
PAGENO="0510"
506
-23-
assistance fran being counted as incctne
for other programs);
* elimination of HHS s respansibility for
data collection;
* elimination of the energy crisis
assistance reserve requiranent;
* elimination of lIFTS's respDnsibility to
investigate ccrnpliance with the Act;
* elimination of the state independent
audit requirenent;
* deletion of the fair hearing require-
ment;
* deletion of the definition of median inccme
(which required HHS to provide certain data
to the states);
* deletion of the 15% limit on use of
funds for ~eatherization activities.
These changes s~ould be accanpanied by a change in the formula to
target funds to states with the highest winter heating costs, along with a
one-third bidget reduction (the rationale is that the budget request is
adequate if "targeted' appropriately) and consolidation with the energency
assistance program.
Inpact of Proposed thanges
Consolidation ~ould result in diffusing suppnrt for energy
assistance, as the block grant ~ould suddenly be available for a broad
range of energency situations, not just energy. Nearly half the states
had not even participated in the small energency assistance program (which
required a 50% match) before; and energy assistance was started
specifically because of huge increases in energy costs.
The changes listed above wnuld tear the essence out of existing legis-
lation: they eliminate standards and measures that have been found
essential in the past; they eliminate protections for the intended "safety
net" beneficiaries; and they eliminate any method of bolding HHS and the
states accountable for ensuring wall-run programs, equitable distribution
of assistance and knovledge of whn is served and hov adequate the help is
in relation to the need. Ebr an Administration that talks about "waste,
fraud, and abuse," it is a real contradiction to reiove investigation,
audit and repnfting requirenents.
PAGENO="0511"
507
-24-.
The energy assistance legislation was simplified greatly last year;
left in were minimal requirements necessary to ensure that the funds were
used to meet congressional intent. By stripping out such standards, the
funds almost become "general revenue sharing" funds, and there is no way
to insist that low-income households are treated fairly and that their
needs are recognized. Without national standards, the variance among
states would become much greater, even though the program originated
because of the severe national energy problem.
Under the new proposal, one greatly diminished "pot" would be
expected to do everything. For example, the Administration has justified
its request to eliminate the Energy Department's weatherization program by
deleting the existing 15% limit on the use of energy assistance funds for
weatherization. In fact, Administration-led opposition to supplemental
appropriations for the energy assistance block grant argued that no
additional funds were needed, since some states had exercised their op-
tion to transfer 10% of their funds to certain other block grants. (The
Administration had argued hard for the adoption of the 10% transfer option
last year.)
The Administration's proposal to count energy assistance as income in
deteimining eligibility and benefit levels for AFDC and food stamps would
be devastating. Qirrently, participants in those programs are categori-
cally eligible for energy assistance. The proposed change would be a
"dollar-for-dollar" trade-off for AFDC recipients, effectively cutting of f
energy assistance for those families. Those receiving food stamps would
have their benefits cut $3.50 to $5.25 for every $10 of energy assistance.
This change would hit the elderly especially hard, as they comprise 35% to
40% of current energy assistance recipients.
The Administration's proposed one-third budget cut for this block
grant would mean a drastic cut in benefits and/or the number of households
served. This, too, would be at state discretion. Less than 8 million of
the 20 million eligible households were served in FY 1981, with an average
benefit level of $225, at a funding level of $1.85 billion. At $1.3
billion, if half the eligible households were served and a state exercised
the existing transfer options (15% for weatherization, 10% for other block
grants), the average benefit would be $85. Over the past year, gas prices
rose 20% and oil prices increased over 11%; oil prices increased 30%
during the last 15 months.
What will happen to people who cannot pay their energy bills if funds
are cut back and then diffused further through the changes proposed by the
Administration?
Prepared by:
Carol Werner
National Consumer Law Center
202/543-6060
PAGENO="0512"
508
-25-
II. FY 1983 Block Grant Prcçosals
B~ucatiai Block Grants
Title I of the El~iEntary ani Secmlary Education Act
Five million children who live in poor neighborhoods and who are
behind in school will becane victims of the budget ax as a result of
reduced funding for Title I of the Ele~entary and Secondary Education Act.
Title I is the largest federal education aid program and last year was
rraintained as a separate program, entitled Chapter I of the Education Con-
solidation and Improvaiient Act, and kept out of the block grant, Chapter
II.
The cuts are estimated at $1.9 billion for FY `82 and $1.5 billion
for FY 83, as ccmpared to the current funding level of $3.1 billion. In
many instances, current Title I funding is not adequate to help as many
children as it did last year. At present, estimates shcei that only 45% of
the 11 million eligible Title I children are being served.
Under the Title I program, coney is used to provide extra help in
reading and math for elanentary school children who are not performing at
the level of other children their age. Teachers and classrocm aides who
~enrk with small groups of educationally disadvantaged children also rely
on Title I funds for their salaries. Special programs to help children of
migrant werkers and suamer school programs for high school students depend
on Title I funds as well. Recent studies shcw that students who partici-
pate in various Title I programs do better in school than catiparable
students not in Title I programs. Cne study conducted by the Stanford
Research Institute found that Title I children make core than a conth' s
gain in reading for every conth they spend in the program.
Even though Title I was kept out of the block grant and maintained as
a separate program last year, it was severely weakened. Title I conies
will still be distributed to local education agencies (LEA~s) using a
formula based on poverty, but the funds no longer will be targeted to
those children cost in need. Other restrictions on education conies were
also weakened. L&A.s are only required to continue funding programs at
90%, not 100%, of the level that they did in previous years. And even
though LE1~s are not permitted to use federal coney to replace or
"supplant" state and local coney, the bill includes no enforcament for
these provisions. Parental consultation and involvement in the design and
implementation of education programs is nci~i optional.
State Education Block Grants
The education block grant, Chapter II of the Education Consolidation
and Improvement Act, consolidates all other programs contained in the
Elementary and Secondary Education Act, including: Grants for the Disad-
PAGENO="0513"
509
-26--
vantaged; Career Education Incentives; Consumer Education; Teacher Corps;
and the Alcchol and Drug Abuse Act. For FY 1983, $433 million is
authorized for the block grant.
Under the block grant, states are raguired to share 80% of the
funding with the tEAs. To assist in parcelling out the funds, a state, in
conjunction with the state education agency, must consult with an advisory
canmittee. The casnittee, appointed by the governor, rrust offer broad
representation of the educational interests and the general public in the
state. States xm.ist also provide t~inely public notice and public dissenina-
tion of information. It is left to the discretion of state and local
education agencies to determine which of these educational activities to
fund.
Vocatiaial aud Adult Educaticxi
These programs are proposed for consolidation into a state block
grant of vocational and adult education.
Inçiact Aid
This program canpensates local school districts whose revenues are
reduced because the parents of school-aged children live or wDrk on
tax-exanpt federal property. Payments are made directly to the local
school districts, and funds may be used for operating expenses and sate-
tines for construction. In FY 1983, assistance will be made only to
districts on behalf of children whose parents both live and ~ork on
federal property.
Pefl Grants
This program provides financial aid directly to undergraduate stu-
dents, and the grants are the baseline for other financial assistance.
Giaranteed Student Loans
In addition to funding cuts, eligibility requirenents for guaranteed
student loans will be stricter and the arount of loans to each applicant
will be limited.
Prepared by:
Kathryn Lavriha
League of Wzxnen Voters of the United
States
202/296-1770
99-965 0 - 82 - 33
PAGENO="0514"
SELECTED EDUCATION BUDGET CUTS
[All levels are expressed in millions]
FY 1982
level
*will be incorporated into a block grant
TOTAL FY 1983 BUDGET AUTHORITY FOR ALL EDUCATION PROGRAMS: $10,266
($2,800 M less than proposed for FY 1982.)
Pro gram
Proposed
FY 1983 level
Proposed
FY 1984 level
CHAPTER I, EDUCATION AND CONSOLIDATION IMPROVEMENT
ACT
Title I,
Aid to the Disadvantaged
$2,978
$1,942
$1,500
CHAPTER 2, EDUCATION AND CONSOLIDATION IMPROVEMENT
ACT
State Education Block Grant
471
433
305
Vocational & Adult Education
634
500
500
Impact Aid
453
289
289
Pell Grants
2,188
1,400
1,000
Guaranteed Student Loans
3,061
2,485
2,515
-27-
PAGENO="0515"
511
-28-
II * F~ 1983 Block Grant Prcçosals
Educzticn for the Haix3ica~ed Block Grant
President's Reagan' s proposed FY 1983 budget w~u1d cut spending for
the education of handicapped students by nearly 30 percent and change
existing law to create tw education of the handicapped block grants which
~uld amend P.L. 94-142, the Education for All Handica~ed Children Act,
to "reduce federal restrictions and regulations." Fran all indications,
the proposed changes in the law ~xuId be tantarrount to repeal of the sub-
stantive protections and quality assurances contained in P.L. 94-142.
The tv~ block grants wDuld be:
* State Block Grant -- Would ccmbine P .L.
94-142, P.L. 89-313 (state-operated programs
currently under Chapter I of the Education
Consolidation and Irnplarentation Act of
1981 -- formerly Title I of the Elenentary
and Secondary Education Act) and Preschool
Incentive Grants (currently under P.L. 94-142).
The arrount of noney for the block represents a
30 percent cut in current funding. Significant
changes to P. L. 94-142 are to be proposed.
* ~ Pu~poseB1odc Grant -- All of the
Education of the Handicapped Act (EllA) dis-
cretionary programs (everything but P.L.
94-142) s~uld be repealed and merged into one
fund to be kept at the federal level and re-
duced by 15 percent. There is ro indication
of how this xnnney is to be spent. Rssibly
all applicants for federal grants for re-
search, deronstratiori, and dissenination in
special education ~xuld be canpeting rather
than having discreet categories of funding,
i.e., severely handicapped, regional resource
centers, parent information centers, etc.
The current discretionary programs are "ear-
marked" in the budget for funding of projects
in the following areas:
* an early childhood irodel and daronstra-
tion program;
* a program of research in education of
the handicapped;
PAGENO="0516"
512
-29-
* a program of regional resource centers;
* severely handicapped projects;
* a deaf-blind program;
* regional education programs -- a pro-
gram of vocational, adult and post-
secondary education for handicapped
youth; and
* a program of instructional media ser-
vices and captioned films.
With the Administration calling for severe budget cuts, substantive
amendments to P.L. 94-142 and repeal of P.L. 89-313 and the EHA discretion-
ary programs in favor of block grants, it is inportant to recall s~kiy this
legislation came into being. Fran at least the late l950s, the federal
goverrinent assuned an increasing seed and catalytic' role in the educa-
tion of handicapped children; thus the EllA discretionary programs vere
inaugurated over time. These programs must continue their vital "seed and
catalytic role," along with the additional role of support for the larger
mission of P.L. 94-142.
P.L. 94-142 itself ~s by no means enacted in haste -- it ss~s the
result of at least four years of intensive deliberation by the Congress.
In the end, Congress decided that tw~ objectives rrnst be achieved: a lar-
ger federal fiscal partnership in the education of handicapped children,
and the establishment of a `mininun floor" of educational rights guaran-
tees for handicapped children and their parents.
Surveys of Special Education administrators nationwide conducted by
the National Association of State Directors of Special Education (F~St~E)
and the Council of Administrators of Special Education (CASE) (a division
of The Council for Exceptional thildren) have docunented the following
devastating results that vould likely occur if the Reagan Administration' s
proposals are adopted by the Congress:
* Severe budget cuts and substantive changes
in the law ~uld drastically affect services
to handicapped children. Local and state
efforts will not be able to cczrpansate for
the lack of federal funds. A result ~ould be
decreases in services to preschool-aged and
18-21-year-old students.
* Sate districts reported that 20 to 50 percent
of exceptional students wDuld lose services.
* Evidenced by state legislative activity last
year under sinilar threat, states ~sould con-
PAGENO="0517"
513
-30-.
sider weakening their own special education
mandates.
* Personnel would be reduced.
* Teacher/pupil ratios would worsen as class
size increased.
* While the nation is in need of at least
64,000 new special education teachers, the
budget proposals cosld effectively bring
teacher training to a standstill.
* Reductions in special education opportunities
will eventually n~an greater social and tax-
payer costs.
In sum, the Administration is proposing to discard some 15 years of
negotiation and agre~nt respecting the federal role in special education
and respecting the relative size of the federal fiscal ccriinitment in meet-
ing specific education needs of handicapped children.
Prepared by:
Barbara &i~ith
The Council for Exceptional (lildren'
703/620-3660
PAGENO="0518"
514
-31-
Fl 1982 and FT 1983 Budz~t Request'
1982 Third Coot.
AdministratiOn'8
Administration's
P 1981
Appropriation
Resolution (FL.
97-92; Empires
March 31, 1982)
1982 Revised
Rescission
Request
1983
Budget
Request
Education of the Handicapped Act (ERA)
* State Grants (P.L. 94-142) $ 874.5 $ 931.008 9672.436
s Preschool Incentive Grants 25.0 24.0 24.0
* Deaf-Blind Centers 16.0 15.36 15.36
* Severely Handicapped Projects 4.375 2.88 2.88
* Early Childhood Education 17.5 9.6 9.6
* Regional, Vocational, Adult 2.95 2.832 2.832
and Postsecoodary Programs
* Innovation and Development 15.0 7.2 7.2
* Media Services and Captioned Films 17.0 11.52 11.52
* Regional Resource Centers 7.656 2.88 2.88
* Recruitment and Information .75 .72 .72
* Personnel Development 43.5 33.6 33.6
* Special Studies 1.0 .48 ~
EHA Total 81,025.231 $1,042.08 8783.508 -
* State Special Education Block - - - $771685
Grant (Includes P.1. 94-142,
Preschool Incentive Grants
and Pt. 89-313)
* Special Purpose Block Grant - - -
(Includes all ERA Discretionary
Programs)
Olock Grant Total - - $845.668
Education Consolidation and Improvement
Act (ECIA)
* Handicapped State Operated Programs $ 152.625 $ 146.52 $ 116.16 -
(P.L. 89-313)
* Education for the Disadvantaged 3,104.317 2,885.969 2,474.4 1,942.0
(Chapter 1, ECIA)
* Dchool Improvement Block Grant 537.485 483.84 470.4 432.0
(Chapter 2, ECIA)
Rehabilitation Services
* State Grants $ 854.259 $ 863.04 $ 771.869 $ 579.536
Vocational and Adult Education
* Vocational Education (Includes $ 681.639 $ 653.266 $ 549.445 -
State Grantsand Other Services)
* Adult Education State Grants 100.0 86.4 84.48 -
Total $ 781.639 $ 739.666 $ 633.925
* Vocational and Adult Education - - - $500.0
Block Grant
In millions of dollars.
Prepared By
THE COUNCIL FOR EXCEPTIONAL CHILDREN -
DEPARTHENT OF GOVERNMENTAL RELATIONS -.
February 8, 1982
PAGENO="0519"
515
-32--
II. F! 1983 Block Grant Proposals
Rthabili~ticm Servi~
R~ABILITATI(~ S.~VIC~ AI1[NI~~K1~IQI (~A) (in millictis)
F! 1983
P.L. g7_35 Pr~id~it's
~nthoriza- Proposed
F! 1981 F! 1982 tiori PT 1983
Basic State Grant $854 $863 $943.9 block grant
Service Projects 29.860 23.9 30.11 block grant
Training 21.7 19.2 25.5 block grant
Independent Living 18 17.28 19.4 block grant
Total of Rehab.
Services Block Grant - - $637
For 1983, the President is proposing that Rehabilitation Services pro-
grans be transferred fran the Department of Education to the Depar1n~nt of
Health and Huxran Services. Moreover, these categorical prograns would be
consolidated and funded at a total level of $637 million for FY 1983. (Jan-
bined, these prograns are presently being funded at $923.6 million. This
is a $286.6 million reduction. In addition, the Administration proposes a
recission of $91.1 million for the vocational rehabilitation stats grant
program in PY 1982. These prograzan ~uld be terminated as part of the
"turnback" initiative in F? 1984.
PAGENO="0520"
516
-33-
~OCATICNAL RE2IABILITATICII SERVICES
FW~ ThE SOCIAL SECXJHflY ThL~r FIN)S
Pr~1dent's
Proposed
FT 1981 F! 19821 F! 1983
Fran the Old-Age Survivors $11.5 million $264,000 $924,000
Insurance Trust Fund
Fran the Social Security 75.6 million 1.7 million 6.1 million
Disability Insurance
Trust Fund
1Effective October 1, 1981, by P.L. 97-35, the vocational rehabilitation
services mechanim~i under the OASI and DI trust funds was changed. The
present law provides reimburs~nent to states for rehabilitation services
!~X after they have shown disabled beneficiaries to be successfully
engaging in "subetantial gainful activity" (SGA) for nine continuous
months, and that the vocational rehabilitation services contributed to the
successful return to SGA. Determinations will be handled on a case by
case basis. This reimbursesent after SQA has already drastically reduced
expenditures and will continue to do so.
Prepared by:
Kathy Roy
United Cerebral Palsy Association, Inc.
202/842-1266
PAGENO="0521"
517
-34-
II. F~ 1983 Block Grant Proposals
&ployn~nt and Training Block Grant
In the face of the highest unenployment levels in the country since
before World War II -- over 10 million individuals out of work -- the
Reagan Administration wants to shirk federal responsibility in this area
and turn the problam over to the states. It is preparing to capitalize on
the Septamber 30, 1982, expiration date of the Canprehensive Buployment
and Training Act (CETA), which has provided federally directed amployment
and training services for the disadvantaged since 1973. The CE'r~3fprogram
is no stranger to the block grant issue: It is one of the niajor prograsm
enacted under former President Nixon's "New Federalism." Fraud and
program abuse during CETA's early experience, before new federal regula-
tions tightened the program in the late l970s, undermined public and
political support. But the CETA experience shows hc~v quickly we forget -
we now otserve the Reagan Administration asking for a return to the
no-strings approach that hurt CETA in its early years.
The first step in the Administration's strategy is to eliminate
CETA's effectiveness through severe funding slashes. Specifically, in FT
1982, the Reagan Administration and Congress:
* Eliminated 80% of the funding for prograsm
under the Youth E~ployment and Desonstra-
tion Projects Act (YEDPA), eliminated Title
VIII of CETA (the Young Adult Conservation
Corps) and cut 20% fran the Title IV Suniier
Youth Buployment Program.
* Ccmpletely eliminated the Public Service
Ebiployment (PSE) prograzrs, which in 1981
funded approxisr~tely 310,000 jots for over
500,000 people during the year. In addi-
tion to providing job experience and skill
training to long-term unamployed adults,
the PSE progress financed much-needed
ccsmunity services that facilitated a variety
of prograns for nrniy constituencies, in-
cluding the elderly, the handicapped and
local schools.
* Reduced by 64% the funding for CETA Title
III national prograns which provided special
services for specific groups of disadvantaged
jots seekers, such as displaced hanemakers,
the elderly, migrants and welfare recipients.
PAGENO="0522"
518
-35-
These funding reductions may contini.~ through the re~ainder of FY
1982, under the Continuing Resolution sthich expires on Harch 31. Congress
rruist pass legislation to provide funds for the rarainder of this year, and
the Administration is likely to propose further cuts and perhaps even
rescissions.
The Administration and several mambers of Congress have offered
proposals to replace CETA with a rrore nodest program. Three bills, in
addition to the Administration proposals, are important: S. 2036, intro-
duced by Sens. t~n Quayle (R-Ind.) and Edward M. Kennedy (D-Hass.); H. R.
5320, introduced b~' Rep. liugustus Hawkins (D-Calif.); and H. R. 5461, intro-
duced by Rep. James Jef fords (R-Vt.). Each of the four proposals ~~ould
shift responsibility for coordination and oversight of targeted training
prograira to states, localities and the private sector. All contain fewar
federal protections for equitable service to minorities, opportunities for
citizen participation and input, non-discrimination and grievance
processes. Smite of the critical federal responsibilities and protections
that the bills ~uld waaken are:
Fundiz~ Level. Proposals range fran a high of $5 billion (Hawkins)
to a lv of $2.4 billion (The Administration).
Plannir~ Process. CETA requires local plans outlining the services
that will meet local enployrrent and training needs, review and caurrent by
interested citizens and casrainity based organizations and several advisory
councils with broad representation. Each of the four proposals structures
planning input through only one advisory body, a Private Industry Council
(Plc), which ~uld have a majority of business representatives, though
representation of other local interests -- labor, camnunity based
organizations, the eligible population, etc. -- is also mandated. The
Administration and Jeffords proposals do not require public review and
camnent on proposed plans.
hInthistraticn of ILx~l Services. CETA was administered by local
"prime sponsors,~~ usually local goverrrrent officials, wbo ware presunably
sanewhat accountable to the pdblic. All of the new proposals except
Hawkins' ally the governor to designate the Private Industry Council as
the administrator of enployment and training services for the disadvan-
taged; and they do not require citizen input, except minimal representa-
tion of consuners and local citizens on the council.
Grievance aM Qixplaint Procedures. Program reguiraments and
procedural protections are only e~fecUve if there is a means of
enforcenent other than self-enforcenent by the egency administering the
program. CETA mandated an administrative grievance procedure available to
all program participants and other interested individuals. Of the new
bills, only the Hawkins proposal continuss the CETA grievance procedure.
The Administration' s proposal lets the governor set canplaint policy, and
the others rely solely on continued self-policing through the Ccnptroller
General or Inspector General.
PAGENO="0523"
519
-36-
W~e aed A1lc~rice Payn~nts. The Administration proposal and the
Quayl~7R~nnedy bill prohibit the payment of training allowances or wages
to individuals in subsidized jobs. It is ironic that the twn proposals
~thidi seek the least federal role and the nost flexible design propose a
strict federal regulation s~kiich nay have a significant adverse affect on
the ability of the rrost disadvantaged individuals to participate in
employment and training services.
Both the Senate Labor and Human Resources Camdttee and the House
Education and Labor Carunittee expect to report bills in early May to meet
the May 15 deadline for FY 83 appropriations. The fact that the Adminis-
tration is suboitting its own bill, rather than ~orking through Senator
Quayle, the Republican chair of the Senate Ebployment Subcatunittee,
indicates that it will push strongly for block granting of employment and
training responsibilities to the governors and to private industry.
The Reagan Administration's CETA proposals wnuld do away with
important safeguards, obliterate the benefit of the several years' exper-
ience with CETA block grant operations and return the anployeent and
training system to its situation prior to the 1976 and 1978 CFTA
amendments. Vital national policy objectives once again will be endan-
gered, with the same state officials responsible for operating programs
also in charge of nonitoring perforurance and securing caupliance.
Abdication of federal responsibility to assist the jobless, by inade-
quately funding enployment programs and sharply reducing federal standards
and oversight, is incanpatible with current crisis levels of joblessness
and is a shDrtsighted approach to cost cutting. Our society gains a great
deal nore by helping the jobless obtain a means to a livelilood than by
paying the extremely high social costs of keeping them on welfare or
dealing with the law enforcement, health and bousing problems caused by
leaving them destitute.
Prepared by:
Larry Glantz.
National flnployment Law Project
202/544-2185
PAGENO="0524"
520
-37-
II. FY 1963 Block Grant Propoeals
~ztal Bc*ising R~iabi1itatiCn Block Grant
As part of its plan to eliminate virtually all federal housing
subsidies for lv and rroderate incane people, the Administration proposes
to replace the Section 8 rroderate rehabilitation program and the Section
312 rehab loan program with a Rental Rehabilitation Block Grant.
These grants se~uld go to state and local governzrents to cover up to
50% of the cost of rehabilitating multi-family rental properties. Local
goverr~nts or building ~ners ~uld be required to natch the block grant
contribution dollar for dollar. The rehabbed units ~.ould be available to
lv incave families with housing certificates, a second form of subsidy.
This proposal further cuts federal support for housing rehabilita-
tion. It substitutes grants averaging $5, 000 for the Section 8 program
~fnich provided an average subsidy twice that high, and it ties those units
to people who will receive an inadequately subsidized housing certificate.
Unlike current housing vouchers, these n~t certificates would no longer
limit the percentage of incczTe which poor people ~uld devote to rent.
Many certificate holders ~ould wind up spending 30, 40, even 50% of their
incares on shelter.
~t the sana time, the Section 8 substantial rehabilitation program --
~iich is especially useful for lv incare housing suffering frco very
serious deterioration -- and all new construction subsidies wyild be
halted. Rents on existing public housing and subsidized housing ~ould
also be raised drastically.
Prepared by:
Andy ~.btt
Center for Careunity Change
202/338-3134
PAGENO="0525"
521
-38-
II. Prcçosed tharwjes in FY 1962 Block Grants
O3imlnity I~velcpIEnt Block Grant/Urban DevelcpvEnt Action Grants
The Administration' s F? 1983 proposals for Catrrtunity Developrent
Block Grants ((leG) and Urban Develcpnent Action Grants (ULWtG) are
basically unchanged, in b~get and prograintatic tenns, fran the legisla-.
tion and appropriations in effect for F? 1982. Budget authority for both
years is $3.456 billion for CE~G and $440 million for Ut7~G.
But (leG and UflkG are inclnded among the 40 programs which the
Administration ~ould turn back to the states beginning in F? 1984. Such a
transfer ~ould certainly be the final blov against any efforts to ensure
that these funds are targeted to needy people. Interposing the states
between the federal and local governments is likely to lead to several
deleterious results:
* a further weakening of federal standards
on crucial targeting, citizen participa-
tion, civil rights, displacement and basic
performance issues, similar to the weakening
which is already occurring for the `&nall
Cities" CC8G program which wes turned over
to the states in 1981;
* eventual elimination of all federal funds for
these activities; and
* the building of 50 new state bureaucracies
to administer these programs, with which
most states have had no experience at all.
HUD' s proposed regulations governing the state-operated "&nall
Cities" program are not yet final, and they may face* a congressional reso-
lution of disapproval which could further delay their implementation until
as late as mid-June. Nevertheless these regulations are important,
because they reflect what FlU]) ~ould likely propose for an urban (lEG
program as well.
The deficiencies in the proposed regulations are:
* they fail to define lv and moderate
incane;
* they dilute the emphasis on the law' s require-
ment that the program principally benefit lv
and moderate incane persons, and they do not
provide a means for monitoring campliance with
this requirement;
PAGENO="0526"
522
-39-
* the proposed performance reporting require-
rrents provide no uniformity of reporting and
no correlation with stated activities or na-
tional priorities/objectives as spelled ait
in the law;
* they make no provision for citizen canplaints,
such as to whan such carplaints should be
addressed or tin~etables for response.
The Administration's Ct~G proposals have another major drawhack.
They drop separate funding for several other programs, saying that CI]3G
will substitute for all of then, while adding other pressures as veil.
Arrorq these pressures are the folloving:
* the proposed FY `83 phase-out of veatheriza-
tion funds fran the Department of Energy;
since this activity is also eligible for CDBG
funding, it is likely to place an additional
denand on CD funds, hot without aLditional
rroney to support it;
* Enterprise Zone legislation which gives priority
to applicants that s1x~i a high level of infra-
structure and public service (police, fire, sani-
tation) camnitments to their proposed zones; these
denands, again, are likely to lead zone applicants
to CDBG as a resource for providing these services
at the expense of other CD canmitnents, especially
to existing lov/nrxlerate carunumity needs;
* proposals fran the President's Housing Carrnission
that housing construction be made an eligible
activity under CDBG; given the proposed drastic
curbs in other federally subsidized housing con-
struction, this proposal alone could quickly and
totally drain any local CDBG entitlenent and still
not make a dent in the urutet need resulting fran
the loss of the other housing programs.
Prepared by:
Paul Bloyd
Center for Carrrtunity Change
202/338-6382
PAGENO="0527"
523
-40-
II. Prop~sèd tharxjes in FY 1982 Block Grants
O:minity Services Block Grant
Funded at $336.5 million in BY 1982, the Carinunity Services Block
Grant wnuld be reduced by nearly 70%, to $112.5 million, in BY 1983.
While official budget documents project that between 295 and 520 Cainiunity
Action Agencies and Limited PurpDse Agencies ~ould close down during FL
1982, unreleased documents reveal that closer to tsso-thirds of the
existing 900 CMs ssould close.
The $112.5 million ~ould be used as follows:
* $100 million to be made in nrrithly payoents
to the states -- a 67% reduction fran funds
available this year.
* $12.5 million for administration, including
$6.2 million for close-out activities of
grantees.
The Cepartment of Health and Human Services is considering three
alternatives on the funding of carniunity econanic developent, carrnunity
credit unions, rural loans and rural buusing, migrant detonstrations and
youth spDrts programs provided for in the Secretary' s Discretionary Fund
of the Cairunity Services Block Grant: take no action assuming Congress
will provide specific direction to HHS in the next Continuing Resolution
for FY `82; offer $20 million for the programs in FY `82; or fund discre-
tionary programs at the full level of $32 million in BY `82. With alloca-
tions already made to states under the Caiimunity Services Block Grant, any
increase in the discretionary fund ~ould reduce state allocations.
HHS has decided that in the 11 states ~iich do not yet use the block
grant, the eligible BY `82 grantees will include CM and limited purpose
agencies that received Sec. 221 funds under program accounts 01 and 05; or
under rural housing and rehabilitation (Sec. 222); and conduit or dele~te
agency organizations for migrant and seasonal farim~ork programs. J~b~ver,
HHS rerorts that no Sec. 222 grants were made in BY `81, and, therefore,
that rural ~using and rehabilitation agencies are not eligible.
Prepared by:
Jule Sugarman
Human Services Information Center
703/527-1634
PAGENO="0528"
524
-41-
II. Prcçosed thar~es in FY 1982 Block Grants
Social Services Block Grant
The Social Services Block Grant is currently funded at $2.4 billion.
For FY 1983, the Mministration is proposing to decrease funding to $1.97
billion and include services nn~i provided under the ~`brk Incentive Pro-
gram, currently funded separately at $245.7 million.
PAGENO="0529"
525
-42-
II * FY 1983 Budget Prcçosals
Aid to Families With Dependent Children
The President' s bu:Iget for BY 1983 proposes drastic changes in the
program of Aid to Families With Dependent Children which ~uld directly
cit AFDC benefit pants to needy children by alnnst $2 billion. There
WDuld also be other reductions in federal funding for A~)C which would
stimulate states to reduce benefit levels or rrnke other cuts to adjust for
such losses. The AFEC Work Incentive Program ~uld also be eliminated.
The AFEC cuts will irr~x)se severe hardships on the poorest ~xren and
children in the country, who at best receive only enough for a bare
subsistence budget under the program. O~rer seven and a half million
children in 3.8 million families currenti~receive AFDC, and, f~U~e
majority, it is used as a targrrary stopap d~ing pthEiods when there are
no other means available to then. !~breover, these benefit cuts cane on
top of last year * s cuts which eliminated the supposed "high-incane"
families fran the rolls. Benefits to those AFEC families who manage to
obtain jobs were drastically reduced by those cuts, so that a ~orking
family that is still eligible has no itore net incane beyond the AFIX~ bene-
fit after four rronths of arployment, and has very little "extra" inccrne
fran ~rking during the first four rronths.
It is thus even clearer this year than last that the proposed reduc-
tions ~ould cit into the basic food, shelter and clothing needs of
desperately poor children. In a8dition, for many families, the loss of
AFIJC also means loss of Hedicaid. Moreover, these sane families would be
the victims of proposed cuts in other programs such as food stamps and
housing assistance, so that their overall loss would be even rrore than the
arrount of lost AFEC benefits.
The President has also proposed repeal of A~)C as part of "Nw Federa
liam.N. He has proposed that in BY 1984, the federal government establiih
a wholly federally funded medical assistance plan to replace the current
federal/state Hedicaid program, and repeal the current AFDC and food stamp
programs, leaving it to the states to determine what, if any, replacenent
programs they wish to establish. This proposal also includes the "turn-
back" of 43 other programs to state governments.
It is certainly much too soon to know whether the swap of food stamps
and AFDC for Medica~ will receive serious legislative consideration.
Lbwever, the mere fact that the proposal has been made means that those
concerned about the AFDC prbgram rrnist both deal with the proposals for
immediate bodget cuts and keep a watchful eye on the further develcpnent
of the "swap" and "turnback" proposals.
The Administration' s AFIX2 budget proposals for BY 1983 include the
following cuts in direct benefits:
99-966 0 - 82 - 3L~
PAGENO="0530"
526
-43-
0 States ~x~ld be req~4red to pay less than fuil benefits ~&ienever
an AFOC recipient lived in a ~s~ld with others.
For example, benefits s.xuld be reduced or "pro-rated" when tw
A~1X families live together, or when the children's grandirother or older
sister lives with then and their rrother, whether or not those relatives
had any incane, were rraking any contributions to the IWEC recipients, or
were thanselves receiving assistance. It appears that at least 800,000
families ~uld be affected by this proposal (families living with "others"
other than stepparents). Also, 389,000 of the "other" individuals living
with ~FDC recipients receive sane form of cash public assistance.
The Administration claims that there are econatiies frcm shared
living expenses in shared households and that they are often not taken
into account in AFDC. Hovever states are already permitted to "pro-rate"
the shelter portion of the grant when non-recipients in the household have
incare above their needs. Furthernore, 14 states, including California,
Michigan, New York, Oregon and Verrront, already take account of any
reduced shelter costs attributable to sharing, by determining aid on the
basis of the family's actual shelter payments. ~twenty-three of the
retaining 36 states pay benefits belcw full needs, so that a family
receives less than what the state believes it reguires to rreet its shelter
needs. Of course, states raist also count all incare that is actually
contributed to the family, and, since last year, must count all inccnie of
a stepparent, whether or not any is contributed. (-$174 million)*
* States ~x~ld a1sobel~!~i.l~eI t cx ut the i1XXI~E of a~y wire
lat~ ~i1t liv zig in the 1x~ldas ir~m to the AFDC -
thildren.
This proposal, like the one discussed above, ~uld cut benefits
regardless of the arrount of incate that wes actually available to the
children, and regardless of any evidence of reduced costs as a result of
the presence of the unrelated adult. It seams to be aimed simply at a
return to the era of "nan-in-the-house" rules, when states denied benefits
by assuniing that visitors were living in the house and contributing their
incane to the family, and then made midnight raids to find such visitors.
(-$69 million)
* AFDC benefits ~i1d be redtx~ed if AFDC recipients received
~rgy Assista~e.
~The figures in parentheses after each item are the CMB projections of the
federal "savings" fran the change. In the case of the direct benefit
cuts, the amount of lost benefits as a result of the change ~uld be
significantly higher and could be twice as much as this figure.
PAGENO="0531"
527
-44-
Energy assistance is provided as a supplenent to AFLX~ and other
inccne in recognition of a poor family's inability to meet soaring energy
costs out of its incane. States consider incane, inclixling AF]X~ payments,
in determining a family's eligibility for energy assistance. Counting
energy assistance back against AETX simply deprives families receiving
AFDC of energy aid, while it goes to other families with the same anx)unt
of incane fran a different source. (-$175 million)
o Family benefits axild be reduced ~i~t the ~~xingest dnild readies
~j~r resoving the nother's needs fran the grant; e.g., a nother
ar~1 t~ diildren ~ild receive a grant for t~.
The Administration says this is because the parent is no longer
needed to care for the children and therefore should be seeking work.
However, the incate loss to the family cannot be net by the rrother' s
simply seeking work -- she mast be able to find a job. If she does find a
job, there is no reason to treat her children any less favorably than the
needy children of other working parents i.e., to do other than continue
to provide for her needs and count her inccxre in determining the anount of
aid payable. (-$47 million)
o ~1icents for AFOC ~ild be required to jc* seard~ for a fixed
period before they aed their diildren ccxild receive AFDC, uc
nmtter 1~ pressing their need ~s at the tinie they a~li~
Recipients ~to are deaned to be ettployable are required to job
search under current law. Under this proposal, applicants would be
required to job search before their applications could be acted on. It is
inhuman to impose a veiting period on children who are in dire need,
especially when states already take nore than 30 days to make decisions on
over 25% of the applications received. F\irtheriaore, the Administration' s
savings figures suggest that the fact of obtaining a job during job search
would be a disqualification for aid -- that the $30 and 1/3 earnings
disregard might not be applied to earnings received fran any such job. If
the mother doesn't find a job, her family suffers fran the prolonged delay
in getting assistance; if she does find a job, her family suffers during
the period in which they are witbout incane and also loses the
suppleiiental AFDC and attached Medicaid coverage to which they would
otherwise be entitled. (-$145 million)
o States ~ild be r~ired to establish ~k relief pxogr~ ar*1
to limit a~vernge ueder their AFDC-U pr~ra~~ to families of
u~iplc~ed parenth ~ ~re wozting in a ~rk relief assigrmie~t.
All states would have to have sai~ work relief programs. States
that wish to aid needy unenployed workers would have to establish large-
scale statewide programs, since inability to provide a work relief slot
for the unanployed parent would necessitate denial of aid to the family.
Individuals assigned to work relief would not receive salaries,
but would simply labor for a public or private non-profit eiiployer in a
second class or ssorse status, without any eiployee rights - Social
Security coverage, collective bargaining, advancenent to other jobs -- or
PAGENO="0532"
528
-45-
fringe benefits - sick leave, vacation, health insurance, pensions.
Since they wnuld not receive a salary, they ~ould not benefit from the
earnings disregard, and thus could not be better off by ~orking; but they
would be ~orse of f unless all their expenses were paid for. It is not
even fruitful to debate whether or not these projects could be turned into
useful training programs, since there is no funding provided for such a
purpose.
The projected savings are puzzling, since families ~sould con-
tinue to receive their AFDC benefits while in wrk relief, and there are
increased administrative costs. Wnere then does the Administration find
savings? Is it assuming that erecting new hurdles to the receipt of aid
will insure that there will be some otherwise eligible families who wan' t
clear the hurdles? (mandate ~,ork relief: -$49 million; limit AFDC-U: -$86
million)
* Mirxr diildren, other than SSI recipients, ~X) have ii~e of
r ~n, seth as Social Seoiri~b~fits bes~I on the
____ ~sed ~rent, ~i1dbe frrced to ccntril~ite
ix~neto neet the needs of their siblir~s.
This proposal s~ould deprive children living with half, full or
step sisters and brothers of sane of their personal income, even if it is
no nore than they personally need. Fbr exan~le, a child receiving Social
Security benefits se~uld not have an opportunity to try to save sane of
that rroney for ed~ational needs, even though she can no longer receive
either Social Security benefits or AFIX for that purpose. Similarly,
where the child's incate cares from a personal injury award designed to
make up for sane damage caused by a tragic accident, she nay well need the
full arrount to rreet her increased needs as a result of the accident.
(-$63 million)
* thildrenofabeent servicanei ~xild be denied b~fits,desp~~
the fact poverty.
The current Administraticn first tried to cut off benefits to
children of servicenen during its California tenure but was blocked by a
United States Suprarre Court ruling that a parent whD was absent from the
home because of military service was as absent as any other, and therefore
that his children could not be denied aid if they were otherwise needy.
The Administration n~i argues that denying aid to such children wnuld stop
"military personnel" from shifting their support responsibility to the
publid. F~ver, denying aid to the children will not insure that the
absent parent will, or can, provide then with adequate support. Indeed,
the California children in the aforenentioned case ~re receiving
allotxrents from their absent parents, but these arrounts were far bela.'i
their needs because of their parents' l~ pay. (-$16 million)
PAGENO="0533"
529
-46-
* The program of E~g~cy Assistance for Families ~i1dbe
e]~.
Supposedly the energy assistance program vould be broadened to
allow aid for the types of anergencies that are now met under EAF.
I~wever, there ~.ould clearly be no reguiranent that the energy assistance
program pay any specific anount of aid for these iteis to poor families
with children under 21, the current sccpe of E1\F. Even if there were such
a requirsnent, there s~ould nonetheless be a diminution of the aid
available to such families, since the Administration is proposing that
funds for the energy assistance program be cut over $500 million below
1982 outlays. (-$60 million)
* States ~xild be required to round benefits to the next lc~st
cbllar aM ~Id be barred fran payiz~j benefits for an~eriod
prior to the date of a~licaticn.
Currently, states are permitted to pay benefits back to the
first day of the nDnth of application, and a few states do so. Families
do not show up at the welfare center the day after they becare poor, and
paying back to the first day takes this into account: The family gets at
least a full xronth' s grant to help deal with the bills they accumulated in
that first rronth. (round benefits -$10 million; date of application -$14
million)
The Administration is also proposing the following reductions in
federal funding:
* Federal natdiing ~uld be reduced if state error rates exceed
3%, aM this tolerance level ~xild decline 1% a year to 0 in F~
1986.
This is simply a straightforwerd reduction in federal matching.
There is no wey in which errors can ever be totally eliminated, and there
is a point at which the noney spent to further reduce errors is rrore than
the cost of such errors. ~t~ying a reduction in federal matching to error
rates is particularly pernicious, since it encourages states to take any
action necessary to avoid overpayments and payments to ineligibles,
including risking erronsous denials and terminations, and underpaynents.
(-$234 million)
* Federal natdiirxg for the Wrk Incentive Program ~*ild be
eli~ated.
Despite the Administration' s repeated eo~iasis on w~rk require-
ments for AFtC recipients, it is proposing to eliminate the only federally
funded auployment and training program specifically earmarked for AFtC
recipients. Admittedly, the program has had only limited success in pro-
PAGENO="0534"
530
-47-
viding oppDrtunity for training and in finding jobs for recipients, but
that seams the inevitable result of the fact that it has never been funded
above $365 million. Simply eliminating the program without providing any
federally funded replacaneñt obviously is not going to provide any irore
training or find any rrore jobs. (-$245 million)
Prepared by:
~ele Blong
Center on Social Welfare Tholicy arid
Law
202/347-5615
PAGENO="0535"
531
-48-
II. FY 1983 &idget Proposals
Fbod Staips
The Administration is proposing $2.8 billion in new food stamp cuts
in fiscal l983.* These cuts ~sould be in addition to nore than $2 billion
a year in food stamp reductions enacted last year. The canbined total of
nearly $5 billion in reductions fran last year's cuts and fran the new pro-
posals approximately equals the dimensions of the cuts proposed last year
by Senator Jesse Helms (R-N. C.).
The new proposals would hit particularly hard at the elderly and
disabled, the working poor and state and local governrrents. The Cbngres-
sional budget Office (CBO) estimates that 92% of all elderly and disabled
food stamp households (or nearly 2 million households) would have benefits
reduced or terminated; 26% of the elderly and disabled households -- or
560,000 households -- would either be terminated or would have benefits
cut to such lcw levels ($l-$5 a month) that CR0 expects then to drop out
of the program. An additional 66% - or over 1.4 million eldeily and dis-
abled households -- would still receive sane food stamps but would have
the amount of stamps cut back. Overall, CBO estimates that 25% of all
food stamp benefits nc~ provided to elderly and disabled households would
be wiped out.
According to CR0, 95% of the working poor would be terminated or
reduced, and 23% of working households would either be terminated or would
drop out because their benefits would be reduced so much. An additional
71% would renain in the program but have their benefits reduced. Working
families would lose an average of $684 a year in food stamps. Overall,
41% of all food stamp benefits provided to working households would be
eliminated.
CR0 estimates show that 85% of the entire food stamp caseload -- or
6.35 million households with about 17 million persons -- would be
terminated or have their benefits reduced.
*The Administration budget shcMs a net reduction in food stamp costs of
$2.3 billion, rather than $2.8 billion. This is because benefit cuts the
Administration is proposing in other programs -- such as the Aid to
Families with t~pendent Children program (AFtC) -- would reduce families'
inccrres and thereby make then eligible for sais additional food stamps.
The Administration estimates that the cuts it is proposing in programs
such as AFD2 and SSI would result in $500 million nore in fond stamp bene-
fits for affected families. As a result, the net change in the. food stamp
budget is $2.3 billion.
PAGENO="0536"
532
-49-
~`bst of the families and elderly individuals ~fro ~e~uld be affected
have very lcw inccmes. The rrost recent USIY~ survey data shows that about
90% of food stamp households have gross incctres below the poverty line
during the period they receive food stamps. The average tousebold has a
gross incane of $325 a nonth and average cash assets of $66 while it re-
ceives stamps. The average food stamp benefit is now 43 cents per person
per neal.
The new proposals also have severe impacts on state and local govern-
rrents. Proposals to bill states for all errors over 3%, to reduce the
federal share of state costs in administering the program and to end
federal funding for state costs in administering food stamp ~ork require-
merits ~ould shift about $700 million in food stamp costs fran the federal
goverrnient to state and local governments in FY 1983, and ~uld shift
larger arrounts in succeeding years.
The Administration s specific proposals for achieving budget cuts in
the Food Stamp program are as follows:
* olishir~ the earned inc~x~ deducticzi.
This ~ould cut benefits schstantially for the ~orking poor. Cur-
rently, 18% of gross earnings are deducted in figuring food stamp benefits
in order to carpensate for taxes and ~ork-related expenses. The Adminis-
tration is now proposing to abolish this deduction altogether and use
gross earnings in figuring food stamp benefits. This arrounts to assuming
that funds withheld for taxes are actually available to buy food.
As a result, ~orking families will get fewer food stamps than fami-
lies who have the same level of disposable inccine but do rot w~rk. At pre-
sent, if tao families live next to each other and one gets $5,000 a year
fran welfare or unemployment canpensation, while the other family s~orks
and receives $5, 000 in talce-hczme pay, both families get about the sane
anount of food stamps. Under the new Administration proposal, however,
the family that works will get $300 to $400 a year less in stamps than the
family on welfare or unemployment insurance, because the ~orking family' s
benefits will be tied to its gross wages, with no consideration given to
the fact that a portion of its wages are withheld as taxes or consumed by
wjrk-relat&1 costs
This proposal will result in a $606 million-a-year benefit reduction
-- with the entire reduction concentrated in that 17% of all food stamp
families who york.
* Pals t~E "benefit reducticn rate" fran 30%
This ~ould cut benefits by $978 million a year. !kst families wDuld
lose same portion of their benefits.
Currently, a tousetold is expected to use 30% of its disposable in-
came for food. The difference between the cost of the Thrifty Food Plan
PAGENO="0537"
533
-50-
(the USflk' s minisnum diet plan) and 30% of the household S s incare after
deductions is provided in food stamps.
Under this proposal, a household ~uld be expected to spend 35% of
its disposal incane on food. Food stamps wDuld r~i equal the difference
between the cost of the Thrifty Food Plan and 35% (rather than 30%) of the
household' s incane after deductions. In other ~sords, hc*ise1~1ds s~xild
have their food stanp benefits cut by an anix~nt equal to 5% of their dis
posable incxines.
This ssould result in a major across-the board benefit cut. !~tst
families s~ould have their benefits reduced, and in sate cases the propor-
tion of benefits lost ~ould be extranely large. This r~ould be especially
true where elderly persons are involved. For example, an elderly couple
on Social Security or SSI with a total incane of $5, 000 a year r~ould lose
57% of its food stamp benefits -- its benefits would fall fran $336 to
$144 a year.
In addition, this proposal ~ou1d further reduce benefits for the wrk-
ing poor. The carbined impact of this proposal and the proposal to
eliminate the 18% earned incane deduction ~ould be massive. A three per-
son family whose breadwinner earns the minimum wage (which is less than
$7, 000 a year, and is belov the poverty line) ~ould lose nearly $700 a
year in food stamps, as its benefits were cut fran $66 to $9 each nonth.
The proposals to raise the benefit reduction rate and eliminate the
earned incctre deduction ~xuld also increase "marginal tax rates" on the
working poor. For each additional dollar earned by a working irother on
AFIJC and food stamps during her first four nonths on a job, between 85
cents and one dollar would be taken away (through reductions in AFEC and
food stamp benefits, arxl throu~i increases in Social Security taxes and
incane taxes). After her fourth rronth on the job, she would actually lose
nore than $1 throu~h benefit reductions and tax increases for each addi-
tional dollar she earned -- and would be worse off if she worked harder
and increased her earnings. Her marginal tax rate would exceed 100%.
(The distinction in the marginal tax rates between nothers in their first
four nonths on the job and nothers who have worked sore than four nonths
is due to an AF1X~ provision enacted last year that treats these two cate-
gories of working rrothers differently.) By contrast, wealthy individuals
in The highest incane brackets lose no sore than 50 cents of each
additional dollar in incatie -- a feature of the tax code designed to main-
tain incentives.
There. can be little question that these new food stamp proposals will
exacerbate disincentives to work for lc*-incare families.
* Eliminating the $10 inininun benefit for one
aod t~ persm ~sd~1ds.
Currently, one and two person households who ireet the food stamp
eligibility tests receive at least $10 a rronth in food stamps. This
provision primarily benefits elderly and disabled persons and was designed
PAGENO="0538"
534
-51-
(the USI)\' s minimum diet plan) and 30% of the housebold' s incai~ after
deductions is provided in food stamps.
Under this proposal, a housebold would be expected to spend 35% of its
disposable incane on food. Food stamps would rx~~i equal the difference
between the cost of the Thrifty Food Plan and 35% (rather than 30%) of the
housebold' s inccxne after deductions. In other words, hous~ldS ~ild have
________ cut ~ an au~mt equal to 5% of their s~
This would result in a major across-the board benefit cut. Mast
families would have their benefits reduced, and in sai~ cases the proportion
of benefits lost would be extrenely large. This would be especially true
where elderly persons are involved. For example, an elderly couple on Social
Security or SSI with a total inccrne of $5, 000 a year would lose 57% of its
food stamp benefits -- its benefits would fall fran $336 to $144 a year.
In addition, this prcçosal would further reduce benefits for the working
poor. The carbined inpact of this proposal and the proposal to eliminate the
18% earned incane deduction would be massive. A three person family whose
breadwinner earns the minimum wage (which is less than $7, 000 a year, and is
belc~ the poverty line) would lose nearly $700 a year in food stamps, as its
benefits were cut fran $66 to $9 each itonth.
The proposals to raise the benefit reduction rate and eliminate the
earned incaTe deduction would also increase "marginal tax rates' on the
working poor. For each additional dollar earned by a working rrother on M'EC
and ,food stamps during her first four nonths on a job, between 85 cents and
one dollar would be taken away (through reductions in AFDC and food stamp
benefits, and through increases in Social Security taxes and incare taxes).
After her fourth rronth on the job, she would actually lose rrore than $1
through benefit reductions and tax increases for each additional dollar she
earned -- and would~ be worse off if she worked harder and increased her
earnings. I~r marginal tax rate would exceed 100%. (The distinction in the
marginal tax rates between nothers in their first four rronths on the job and
nothers who have worked nore than four nonths is due to an AFtC provision
enacted last year that treats these two cate3ories of working rrothers
differently.) By contrast, wealthy individuals in the highest incane
brackets lose no nore than 50 cents of each additional dollar in incane -- a
feature of the tax code designed to maintain incentives.
There can be little question that these ne~ food stamp proposals will
exacerbate disincentives to work for lov-incare families.
* ~ $ ~mthinuu benefit for cne
_~~m) person 1~us~iolds.
Currently, one and two person households who rreet the food stamp
eligibility tests receive at least $10 a nonth in food stamps. This
provision primarily benefits elderly and disabled persons and was designed
PAGENO="0539"
535
-52-
to assure that elderly and disabled households who are poor enough to qualify
for stamps receive at least a $10 rronthly benefit.
The ?~3ministration is now proposing to repeal this provision and thereby
to reduce benefits an edditional $138 million a year. Under its n~i
proposal, virtually all households who now receive the minimun benefit ~uld
lose all their stamps and be terminated fran the program. t~bst of those wtio
would be drcpped would be elderly or disabled households. Sane of those
dropped ~sOuld be elderly persons living alone on a Social Security or SSI
check of as little as $285 a rronth, or less than 80% of the poverty line.
Overall, the majority of those terminated by this proposal appear to be
elderly wanen living alone.
Several hundred thousand additional households would have their benefits
reduced to less than $10 a nonth by the carbined impact of the increase in
the benefit reduction rate and the repeal of the miniinun benefit provision.
~`bst of these households, too, are elderly or disabled.
* Reducing fcxd staip b~fits if a fanily
receives ~rgy assistance pa~nts.
The ~dniinistration is proposing to count low incare energy assistance
payments as though they vere regular incane. The result is that food stamp
benefits ~#xuld be cut up to $5.25 for every $10 a family receives in low
incane energy assistance payments, and food stamp families would lose $231
million a year in stamps. This would work particular hardship on households
in the northern part of the country.
The 2\dministration contends that energy assistance payments are dis-
cretionary payeents that are available for food, and therefore food stamp
benefits should be cut if a family gets energy payments. This contention is
rot correct. The energy assistance program ~s initiated in 1978 to help low
incane families offset the steep increases in energy bills resulting fran the
deregulation of oil prices and fran OPEC price hikes. Ebergy Department data
show that fran 1977 to 1980 alone, energy costs incurred by low incane
households increased by $6 billion a year. The energy assistance program,
funded at about $1.75 billion a year, offsets less than a third of the price
increases. It doss rot provide additional rroney to buy nore food. ~breover,
in a large number of states, the energy payments are sent directly to utility
car~,anies to apply against a family's bills, and the family never so much as
handles the rroney.
Under this proposal, all families receiving energy payments will lose
saie food stamp benefits. Sate families will even be made ineligible for
food stamp benefits in the winter rronths `~then the energy payments are pro-
vided -- because ~then the energy payeents are added to their regular incane
(as the .ndministration prc~osal reguires), they would be lifted over the food
stamp incane limits.
This proposal will have a particularly sharp impact on elderly and
disabled persons, since about 40% of the recipients of low inccne eneroy
PAGENO="0540"
536
-53-
assistance are elderly or disabled. Sate of these persons se~uld be rei~ved
fran the food stamp program in winter rronths.
This proposal will -- in a very real sense -- place sate poor families
in the dilamna of having to choose between adequately feeding thettselves or
adequately heating their apartments.
* (gi.ng fxd st~ip inding rules.
The Administration is proposing to save $117 million a year fran changes
in rounding rules used in canputing food stamp benefits. The current
rounding rules are based on the standard rounding rules used by the Internal
Revenue Service and rtost other institutions. Qmttputations yielding a result
of 1-49 cents are rounded down to the next lc~st dollar ~Atile results fran
50-99 cents are rounded up.
The Administration is preparing to change the rounding rules so that
recipients always lose. In canputing the basic food stamp allotment (~thich
is based on the Thrifty Food Plan), as wall as the food stamp standard and
shelter deductions, all cents would be dropped. For example, if the cost of
the Thrifty Food Plan was $249.90, the food stamp allotment would be $249
rather than $250. In addition, w~-ien each individual household * s benefits are
canputed, the cents would again be dropped. A household qualifying for
$50.95 would receive $50 rather than $51.
However, an exception would be made in canputations involving household
incane -- because in this case dropping all cents would benefit recipients.
The general rule in the new proposal is to select for each stage of the
canputation `~thatever rounding rule produces the lowest benefits. The end
result is that this prcçosal anounts to a loss in benefits of $1 to $2 a
nonth for nest households. This proposal essentially is an across-the-board
cut on a small scale.
* ~ over 3%.
In 1980, Congress enactei a provision under which states with high error
rates must steadily reduce their error rates or be subject to fiscal
sanctions. States are required to reduce their error rates by roughly
one-tenth each year. Recently, T~SUk issued $16.5 million in sanctions
against 14 states for failing to achieve sufficient error rate reductions.
The Administration is proposing to replace the provision enacted in 1980
with a new provision that would result in virtually every state in the
country being sanctioned. The Administration is proposing that states
reimburse the federal goverrutent for all errors over 3% in FY 1983. States
would be fined an estimated $600 million next year. In FY 1984, states would
be sanctioned for all errors over 2%. In F~ 1985, states would pay for all
errors over 1%, and in subsequent years for all errors over zero. The
Administration is suthtitting similar proposals in the AFIX~ and Medicaid
programs.
PAGENO="0541"
537
-54-
tiallv i~ore difficult for states to achieve the extr~sielv lr~, error retee
needed to avoid sanctions.
In addition. states exoeriencino caselo~1 increases due torisina
un~nmlovment ~ould also face serious oroblei~s, Administrative costs ~ruld
rise in these states as their marticination climbed due to the rise in the
number of jobless mersons, but the states ~ould receive no additional
federal funds to helm defray any Dart of these increased costs.
o E]iminatirba funds for a&d.njstratjon of ~rk
~[stratjc,n and i~ saarcth reau rE~tts 1w
state snr)1ovn~t servjc~ a~icjes.
The Administration is mromsirri to end the allocation of funds to
state enolovment aaencies for the administration of food sterno ~s~rk recis-
tratiori and lob search reouirsoents, In F? 1982. $65 million `~as orovided
for this ourcose. It is unclear s~hether state velfare soencies ~ould take
over this function or ~iether state snolovsent service offices ~ould con-
tinue to carry it out. This decision ~ould evidently be left uo to the
individual states -- but in either event, the states ~uld have to assume
100% of the costs of administerino these reauirenents,
o Job searob at a~x,ljcatjci~.
The Administration is orocosino to reQuire enolovable food sterno
amolicants to search for jobs durino the oeriod their food sterno aoolica-.
tioris are beino orocesse(j, rather than (as at oresent) after they are
certified as elicible for food stanos, The current recuiraiients are
desianed so that administrative costs do not have to be exoended in
administerina job search reauireoents for aoolicants ~io are found to be
ineliaible for other reasons, and wh never receive stamos. The n~ oro-
nasal -- by reaujrjna states to administer job search recuirenents for
such mersons -- could increase administrative costs and oaoer~ork,
The n~i recuirsoents ~ould be added at the same time that fundina for
state enolovment service aaencies 1~uld be terminated, and that federal
oarticioation in any n~i administrative costs borne by state ~lfare
aaencies ~uld be ended throuah innasition of a "caomed" block arant for
state administrative costs. All administrative costs of irnoleoentina this
~ reaujr~~t ~x,uld thus have to be borne by the states. The oror,osal
is exoected to have a very minor fiscal imoact, The Administration budaet
assun~s a savinczs of $15 million for the federal aoverrnent, but it does
not indicate bow much additional administrative cost ~ould be incurred by
sthtes~
Preoared by:
Bob Greenstein
Center on Budaet & Policy Priorities
202/544-0591-
PAGENO="0542"
538
-55-
II. F~ 1983 Bañget Prop~eals
Medicaid
The Reagan Administration is proposing to reduce the federal spending
for Medicaid another $2.2 billion in FY 1983. Including the states * share
of reductions, this v~uld mean a 10% overall cut. The proposed cut is on
top of a 4% cut in federal dollars for Fl 1982.
Specific proposals:
1. Pbniatory co-payme~ts for all r~ipients -
o $1.00 payment for office visits or in-
patient care day for the poorest recipients.
o $2.00 per in-patient day and $1.50 per out-
patient visit for people with incanes
slightly above cash assistance levels.
Studies have shown co-payments discourage people fran seeking needed
care. People will postpone less expensive preventive care and be forced
to consune nore extensive and itore expensive care. For example, an
expectant nother may not have the cash to obtain nine nonths of prenatal
outpatient care, wbich is less expensive for the ~dicaid program than the
intensive hospital care that a newborn baby who received no prenatal care
could need.
Th exceptions are proposed for essential services or for energency
services. The sickest families ~ould pay the nost because of proposed
ceilings.
For families with low inccrnes, however, the burden of. co-payments can
be devastating. In Texas, for example, a nother with tao children
receives a rrnxinurn AFtC payment of $116 per nonth. If one child is
hospitalized for a week, co-payments for each physician visit, for each
in-patient day, and for each out-of-hospital prescription drug could
easily consune 50% of the family s meager income.
2. A 3% c~it in federal uatdiing f~u1s for all services to the
medically needy aed for optional services
This proposal merely shifts the burden of funding to the state. It
says "do the sane job and we will pay you less."
As a result, states ~ould reduce or eliitinate their medically needy
programs for the working poor. Without ~dicaid, these people may be
forced back on cash assistance programs.
PAGENO="0543"
539
-56-
States also are likely to eliminate the so-called "optional services"
which are not "optional" to persons who need then. These services include
such basic care as prescription drugs, eyeglasses, dental services, out-of-
hospital clinic visits and institutional care for the mentally retarded.
3. 1~lative res!x~nsibiity for nursing Irne residents
This provision ~ould allci~r the states to require adult children to
pay part of the nursing hoiie costs of their parents.
Medicaid patients already often have difficulty in being admitted to
nursing homes. Discrimination against Medicaid recipients ~ould be
exacerbated by creating a category of recipients who have children who can
pay, and a category of recipients who do not have children. Individuals
may have to beccine dependent on their adult children and have their
eligibility for nursing hrne care jeopardized if their relatives do not
pay. Children of nursing hctte residents are theiiselves often elderly,
often on fixed income and unable to contribute.
Prepared by:
Judy Waxman
National Health Law Program
202/232-7061
PAGENO="0544"
540
-57-
FY 1984 ~SwapN/Repea1 PropoBal
The Peagan Administration has proposed a "transfer" of food stanps and
ABTC to the states, with the federal govermnent picking up the states share
of Medicaid costs in return. Unfortunately, this proposal -- upon close
examination -- poses serious problans.
o The prcpDsal does r~yt continue food
stanps and AFIX~ and simply shift the
cost of financing these programs to
the states. It terminates food stamps
and AFJX as we know then today. 1*iile
final details of the plan have not been
~orked cot, and it is possible that scoe
tenporary "maintenance of effort" pro-
vision could be included, it seams clear
that states s~ould not have any obligation
(at least not after the first several years),
to fully utilize the state funds foxTrerly
spent on Medicaid for the subsistence needs
of low inccire families. States ~ould even-
tually be able to shift scoe of these funds
to highways, to re&x~ing the state's deficit
or to any other purpose.
o It is extranely likely that many states (prob-
ably cost states) ~ould shift ~ne of these
funds away fran low incare families. The states
face major budgetary pressures and canpeting de-
mands fran many other, core powerful constituencies.
The experience of the past 15 years illustrates
that AFDC and food stamp recipients do not fare
well under state funding decisions, and that they
~ould be in particular jeopardy under the new
Administration prqposal.
o In a nunter of states -- especially in the South
-- AF~ benefits ranain extrarrely low today. In
Mississippi, a rrother and t~o children with no
other incane receive a maximun AFEC grant of $96
a nonth ($1,150 a year), or 16% of the poverty
line. In Texas, a cother and tw~ children re-
ceive $116 a nonth. In all but tao southern
states, the ireximun payment to a three-person
family with no other incare falls below $200 a
rronth, and in half the southern states it is
less than $150 a nonth.
o low benefit levels are not limited to the
southern states; 22 states provide maximrxn pay-
ments of less than $285 a rronth (or less than
50% of the poverty line) to a rather and t~
PAGENO="0545"
541
-58--
children with no other incate. Ten of these 22 states are
outside the South.
o t~spite the widely heralded gains fran the Voting Rights Act
and the reported evolution in attitudes at the state level,
AF1X~ grants are actually lc~r today (when inflation is taken
into account) than they wsre 10 years ago. A study conducted
at the Department of Health and Human Services found that when
inflation is taken into account, AFDC benefits nationwide
declined 24% between 1969 and 1980. Since 1970, only tvo
states have increased AFDC benefits as much as the inflation
rate, while over half the states failed to increase benefits
to reflect even half of the increase in the cost of living.
o The situation is nov ~orsening as state budgets tighten. A
Congressional Research Service analysis shows that fran 1980
to 1981, over 40 states failed to increase benefits enough to
reflect even half of the rise in the cost of living, over 30
states failed to provide for any increase at all, and six
states actually reduced benefits despite double-digit
inflation.
o The AFEC experience is of great concern, because numerous
states have kept AFDC benefits extramely lv, despite the fact
that over half of these benefits are federally funded, and
that each dollar in state noney brings in at least one dollar
in federal noney. If AFIX~ and food stamps are 100% state
funded (as the new proposal. envisions), and each state dollar
spent brings in no additional federal dollars, then the
pressure to shift substantial sure to other state functions
with core poserful constituencies will be overwhelming.
o The history of the food stamp program in the l960s is also
instructive. At that time, states set their ovn incane limits
for food stamps, even though food stamp benefits vere entirely
federally funded. Many states -- especially those in the
South -- set very lv inccrre limits. South Carolina * s incane
limit, for example, ses not much above 50% of the poverty
line.
o Even ssorse, in the late l960s, several hundred counties did
not operate a food stamp program. Sate of the px)rest
counties in the country declined to run the program, even
though the federal goverruent paid the full costs of food
stamp benefits.
o Dee in significant part to this state and local reluctance to
count adequate food assistance efforts, major problene of
hunger and malnutrition existed anong the poor. They came to
public attention in the late 1960s and shocked the
99-965 0 - 82 - 35
PAGENO="0546"
542
-59-
natiOn at that tine. In sara parts of the South, doctors
~rking with HEW' s "Ten State Nutrition Survey" found that
1CM incane children were suffering fran nutritional
deficiency diseases at rates canparable to the rates in
underdeveloped countries. ~en doctors returned to the same
areas 10 years later, they found poverty-related malnutri-
tion to have been dramatically reduced. The doctors
credited the food stamp program as the major reason for
this progress, and they called the food programs the sost
successful of all anti-poverty programs of recent years.
o The rrost imjx)rtant steps in alleviating the alarming degree
of hunger and malnutrition found in the 1960s were taken by
a Republican President, Richard Nixon. It wes President
Nixon ~tho ended state incane limits and benefit levels in
the food stamp program and instituted national standards.
President Nixon took these steps because state and local
goverrirants were failing to meet the need. If states
failed to meet the need then -- s~nen the federal goverrinent
paid the bill -- sst~at reason is there to believe they will
meet the need in the future, ~then they ~uld have to use
state dollars to fund these efforts, and s~en they are
facing severe budget crunches?
o This problen is made even sore serious by the fact that vir-
tually no state ~ould nount a food stamp program of its
own, due to the administrative problens of trying to run a
food stamp program at the state level. Fbr a state to set
up its own food stamp program, the state s~uld have to
print its own stamps, autlorize and police its food stores,
safeguard the stamps fran counterfeiting, arrange for their
destruction after use, etc. All of these tasks are now
performed by USIIk on a national scale, and. the
* administrative costs and ~irdens for an individual state to
take then on are prohibitive. As a result, rather than run
their own food stamp programs, states w~u1d be likely in-
stead to increase welfare checks enough to partially offset
the loss of food stamps. HDwever, less food ssould probably
be consuned.
o This problen w,uld be exacerbated over time as food prices
rose. Unlike AFIJC benefits s,A~iith are set at the state
level, food stamp benefits have been regularly adjusted by
the federal goverrinent to keep pace with the cost of food.
This has been done to assure that food stamps continue to
provide the same level of food purchasing power. Fev if
any states wDuld be likely to retain this feature if the
food stamp program were ended. The consolidated cash
benefits that w~uld replace AFDC and food stamps ~vould
likely fall far behind inflation, just as AFUC grants have
in the past decade. This means, quite simply, that as the
PAGENO="0547"
543
-60-
years go by, lo~ incate families will have less and less to
eat.
* The end of food stamps as a separate program -- and its
likely incorporation into states cash welfare systens --
raises a number of additional concerns. Can states be ex-
pected to provide benefits to persons with incares above
their current limits for welfare (which in a number of
states are at or belcw 50% of the poverty line)? If not,
millions of persons -- especially the s~orking poor -- will
lose their food stamps and receive nothing in return.
* Can states be expected to provide benefits to those types
of families and individuals whan they have up until now
refused to include in their welfare programs? In about
half of the states, twn parent families with children iray
not receive welfare, no matter how poor they are. Can we
be sure these states will now change course and provide
benefits to those families? If not, these families, too,
will lose food stamps and receive nothing in return.
* Shat about childless couples and non-elderly individuals
who live alone? In many states they receive no welfare and
can now get only food stamps. ~hat will happen to then?
Will 55-year-old widows be able to receive any support?
* Behind all the questions lies a simple fact -- the food
stamp program is the only program in America that is
available to all who are poor -- regardless of age, sex or
family capnsition. The food stamp program is the rrost
basic safety net now provided by any level of government.
It assures that all who have low enough incaras may at
least be able to secure a minimum diet and avoid hunger and
malnutrition. The food stamp program has been described by
sane (including former Nixon Administration welfare expert
Richard Nathan and Republican Senator Robert Dnle of
Kansas) as the nost important social program since Social
Security. If the program is ended, this safety met will be
taken- away -- and it is virtually inevitable that any state-
funded replacerent programs will contain gaps throu~ which
many poor families and individuals will fall.
* The problan is likely to be especially severe in the South.
Southern states now provide the lc~st AFEC benefits and
the imnst restrictive AFDC coverage. They also had the
lc~st food stamp incane limits in the l960s and the
highest degrees of hunger and malnutrition at that time.
Yet southern states are also the poorest states in the na-
tion in per capita incare and the least able to finance
adequate subsistence programs for their low incarre popula-
tions. This is of particular concern in a state like
Mississi~i -- which has the snallest revenue base and the
PAGENO="0548"
544
-61-
lowest per capita incae in the nation, and in ~shich one in
five residents now receives food stamps.
* If southern states significantly reduce benefits and cover-
age, ha~Qever, this will have extremely undesirable effects
on all states. Currently, one of the ntst important func-
tions played t~ the food stamp program is to help "fill the
gap" between states with low AFJX~ payrrerits and states with
higher payments. Since food stamp benefits are tied to in-
care, recipients in states with low AFDC benefit levels re-
ceive rrore food stamps than do recipients in higher payment
states. As a result, the disparity in total benefits
between recipients in different states is lessened. If,
however, the food stamp and AF]JC programs as they now exist
are ended, and southern states sharply reduce benefits,
then the disparity anomg states will grow significantly.
This, in turn, is likely to spur renewed migration of low
incczre, unskilled persons fran the South to northern urban
areas. At a time ~hen many northern cities and a nurrber of
northern industrial states are in econanic decline, they
~ould receive an influx of nec~r recipients dependent on
state support. This could pose severe probiets for these
cities and states, especially since they seuld r~ have to
support these n~ arrivals entirely with state dollars.
* The problems wDuld be exacerbated during periods of high
unet~ployment. Currently, s~en uneirployrrent rises in a city
or a state, nore persons in that area enroll in the food
stamp program. This serves t~ purposes: it allows un-
employed families to obtain adequate food witbout further
draining state or local tax revenues, already depressed
because of the ecoixinic downturn; and it also brings rrore
federal noney into the depressed local econany. However,
under the n~i Administration proposal, there ~ould be no
federal response to rising unemployment, because the
federal* gcrverrinent ~ould no longer be financing a food
stamp program. This means that ~then unemployment rises,
state and local goverrinents ~uld have to cut bad~ on
assistance rather than expand it -- because the state
revenue base to finance these programs s~ould be contract-
ing. This ~ould not only adversely affect low incane recip-
ients of the programs, but could also result in sane fur-
ther depression of already weak state and local econanies.
* Finally, the Administration' s proposal to federalize Medi-
caid could, in sate states, further intensify the problems
created bj the turnback of AF1X~ and food stamps. In Medi-
caid, there is great variation anong states in the incane
limits used, in the medical services provided, and in
thether various categories of persons (t~x>-parent families,
persons living alone, childless couples, families just
above the AFDC incare limits) receive Medicaid coverage.
PAGENO="0549"
545
-62-
It will not be feasible (either politically
or legally) for the Medicaid program to be
financed entirely by the federal government
and to maintain the vast disparities in cover-
age and benefits nov provided. It is virtually
inevitable that in states nov providing a rrore
extensive Medicaid program, significant aspects
of the current program will not be supported
when the federal goverri~nt takes over. If
these states choose to maintain existing Medi-
caid standards, they will have to use state
dollars to bridge the gap between their current
Medicaid program and a amaller scale federal
program. This would reduce (in same cases by
a very substantial anount) the funds available
to the state to replace AFDC and food starp
benefits -- and would thereby lead to further
reduction in ti-ose benefits. Of course these
states could decide not to maintain current
Medicaid standards -- but then, many lv incaile
families and individuals (especially the work-
ing poor) would lose some or all of their Medi-
caid benefits. Either way, lv incaie persons
end up the losers.
Oxxlusion
The conclusion seams inescapable that millions of lv income Ameri-
cans would eventually have their already lv standards of living reduced
if the "transfer' proposal becanes a reality. In same places, the reduc-
tions could be dramatic, and the types of hunger and malnutrition problams
found in this country only 15 years ago could return to some extent. The
gap between poor Americans and those in higher incate brackets -- already
increased by last year's bndget and tax bills -- would be expected to
widen further.
Prepared by:
Bob Greenstein
Center on Budget and Policy Priorities
202/544-0591
PAGENO="0550"
546
-63-
II. F! 1984 ~TUrnback" Prc~xsal
The Reagan Administration' s "New Federalism" proposal to shift 43
federal programs to the states beginning in Fl 1984 drastically
accelerates the trend -- begun with the Fl 1982 and 1983 block grants --
to elininate federal responsibility for human and caanunity needs. The
list of programs to be "turned back' to the states inclndes those in exist-
ing and proposed block grants, as well as a number of key, targeted pro-
grams that advocates were able to save fran block grants last year.
Clearly, the block grants proposed for FY 1983, in ccmbination with
the proposed deep cuts in funding for social programs, wDuld set the stage
for this radical withlrawal of federal responsibility for human needs.
The Administration' s plan wDuld first hold constant, then decrease and
eventually elininate federal funding for the 43 programs between Fl 1984
and Fl 1991.
While the Administration' s Fl 1984 `New Federalism' initiative should
not be all~ed to divert attention fran the inrnediate threat of proposed
bndget cuts and block grants for the caning fiscal year, it is ~orthy of
attention and concern. In reality, the tao issues are interdependent: if
further bndget cuts go through -- even if ODngress does not go along with
all of thsm, as early bipartisan reaction indicates nay be the case -- the
states' financial liability for the 43 programs ~sould be reduced
correspondingly, making the proposal rrore attractive. Cbnversely, if the
proposed cuts do not pass, the entire `turnback" program could be in
jeopardy.
Another concern is that this radical proposal could make last year' s
block grants look rrcderate and acceptable by cat~arison, setting thsm up
as rrodels for a "canpranise" this year, despite criticisms that they lack
sufficient funding, targeting and civil rights and accountability
protections.
The program shift ~ould begin in Fl 1984, `~then federal funding for
the 43 separate programs s~ould be replaced by a "trust fund" of $28
billion. The trust fund ~uld be canprised of revenues fran excise taxes
on gasoline, alcohol, telephone service and tobacco, plus part of the wind-
fall profits tax on oil.
Apparently last year' s block grant debate influenced the design of
the new proposal: The Administration announced it mcre than a year prior
to its proposed implsmentation, thereby avoiding criticism that states
wuld not be prepared for their new responsibilities; and the trust fund
clearly is an attonpt to reassure states that they will get the funds to
pay for their new responsibilities.
A close look at the trust fund proposal, however, reveals its
deficiencies. The $28 billion is 15% belcM current funding levels for the
43 programs, and well belc~i their 1980 funding levels. In addition, the
PAGENO="0551"
547
-64-
trust fund wauld reosin at $28 billion per year for four years, with no
increases for inflation or need. ~ch state could draw on the fund to
suppart as many of the 43 programs as it chose, with on requirmient that
funding for various programs reflect previous patterns.
A %hite House release explains the program this way:
"Ebring a transition period of four
years, FY 84-87, the states can use
their trust fund noney in either of
twa ways. If they want to continue
receiving amse or all federal grants
that are designated for turnback,
they can use their trust fund noney to
reiichurse the federal agencies that
make these grants and .abide by federal
corniltions and rules. Or, to the ex-
tent they choose to forego the federal
grant programs, they can receive their
trust fund noney directly as super
revenue sharing, to be used for these
or other purpases. There will be a
nandatory pase-throi4~ of part of the
~.çer revunue sharing funds to louni
goverrzi~sta. (B2nphasis added.)
"Beginning in Ff `88, the core than 40
federal turnback programs. . .will cease
to exist, and the states will be in
canplete control of their osn
priorities."
At that paint, too, both the trust fund and the federal excise taxes
supparting it will phase out at the rate of 25% per year, until they
disappear in FY 1991. As federal support declines, states could choose
anorng several options -- ingxsing their owa excise taxes, using other
state revenues or cutting programs.
The programs to be transferred to the states beginning in Fl 1984
inclode (lxam.nity Developsent Block Grants, ~thich have not only channeled
funds to lo,, inccxre neighborhoods, but s~tiith have also provided excellent
rallying paints around chich cassunity groups have coalesced. Thus, the
repeal of this program, anong others, wauld be a dramatic sethack for the
neighborhood rrovesent.
The programs to be eliminated are the follcs~ing:
Blod~ Grants/Rev&iue Sharing Prograi~
General Revenue Sharing
Ccmmnity tavelqxsent Block Grants
PAGENO="0552"
548
-65-
trust fund ~uld retain at $28 billion per year for four years, with no
increases for inflation or need. Each state could draw on the fund to
support as many of the 43 programs as it chose, with no requir~Tent that
funding for various programs reflect previous patterns.
A %`~ite Fbuse release explains the program this way:
`During a transition period of four
years, F? 84-87, the states can use
their trust fund rioney in either of
twD ways. If they want to continue
receiving soue or all federal grants
that are designated for turnback,
they can use their trust fund itoney to
reinburse the federal agencies that
make those grants and abide by federal
conditions and rules. Or, to the ex-
tent they choose to foreo the federal
grant programs, they can receive their
trust fund noney directly as super
revenue sharing, to be used for these
or other purpDses. There will be a
mandatory pass-through of part of the
super revenue sharing funds to local
goverrs~nts.
TMBeginning in FY `88, the sore then 40
turth~ prcgra~...~fl c~se
to exist, az~ the states will be in
cxuplete c~ztxc~ of their c~i
iiiorities. (E~r~asis added.)
At that Foint, too, both the trust fund and the federal excise taxes
suççx)rting it will phase out at the rate of 25% per year, until they
disappear in F? 1991. ~s federal support declines, states could choose anong
several cptions -- impsing their ~n excise taxes, using other state
revenues or cutting programs.
The programs to be transferred to the states beginning in FY 1984
include Ccmnunity Developnent Block Grants, ~ith have not only channeled
funds to lcw incane neighborhoods, but `~thich have also provided excellent
rallying pints around ~thich ccmnunity groups have coalesced. Thus, the
repeal of this program, anong others, ~uld be a dramatic sethack for the
neighborhood novanent.
The programs to be elininated are the follc~.iing:
B~ Gra~s/Rev~ ~ri~
General Revenue Sharing
Caiun~nity Duvelc.pnent Block Grants
PAGENO="0553"
549
-66-
Ccmprehensive flsployxrent ar~ Training Act
Social Services Block Grant
Ccsrrnunity Services Block Grant
Los Incane Ruergy Assistance
Prinary Care Block Grant
Maternal ars~ Child Health Block Grant
Alcobul, Mental Health and Drug Abuse Block Grant
Crime Prevention Block Grant
State Fdocation Block Grants
Preventive Health and Health Services Block Grant
O~r Pro~
Legal Services
Child nutrition
Cnild walfare
Adq~tion assistance
Foster care.
Runaway youth
Primary care R&D
Black lung clinics
Migrant health clinics
Family planning
WIC
Vocational rehabilitation
Vocational and adult edocation
WIN
Urban sass transit construction
Urban sass transit operating expenses
9 other transpmrtation programs
4 water, sewar, waste treatment arel camiunity facilities
programs
Occupational safety ars~ health state grants
Urban Develoçsnent Action Grants.
(See Appendix A, page 131, for a chart s}xs~ing individual states'
losses that would result fran the "Swap" and "Turnback" proposals.)
Prepared bj:
Runnie Kweller
Center for Camunity Change
202/33B-64B4
PAGENO="0554"
550
-67-
III. IMEw~'r (P `flIE BLOCK G~AN1'S
The test of block grants is not b~i they look on paper or hov
they sound in principle, but hw they affect real people and real
catraunities. The ne~~i block grants are likely to have a ntuther of
devastating consequences for individuals and canmunities in need.
The following pages describe sate of these likely consequences for
states an5 their governors, cities and local officials, rural areas
arKi vulnerable constituencies, inclnding local carinunity
organizations.
PAGENO="0555"
551
-68-
III. J14~r ~ ~fl1E EW~ c~P~VrS
]1~r (11 6~FA~
The new block arants have confronted states and their oovernors with
the followina problenm:
1. O~sist~eitlv declinirri levels of federal su~art
About one-third of the $35 billion cut in federal soendirm to
date, or $13 billion, has case fran programs run by states, accelerating a
reduction in the federal government's supnx)rt of state and local govern-
ments. In 1978, nearly tso-thirds of federal aid sos directed to state and
local governments, a percentage that will decrease to around 50 percent in
1984. This pattern, chich is likely to continue, reflects the impact of the
"New Federalien" on states.
t'breaver, it is clear that the Reaqan Administration's plans for
FY 1983, 1984 and 1985 will significantly reduce, and rassibly eliminate,
funding for block grants. President Reagan told the National Association of
County Officials on March 9, 1981, that his real agenda sos to eliminate the
federal tax base for danestic expenditures, i.e., eliminate financial
suppart for thase prograsm propased for inclusion in the block grants.
The President's determination to control federal spending, main-
tain the large 1981 personal and corperate tax cuts, rapidly accelerate de-
ferise spending and not cut Social Security have forced him to focus sore
cuts on the remaining entitlement and discretionary programs. This means
that fran 1983 through 1985, block grants will be subjected to cuts below
their already reduced 1982 levels, and that the Administration mic~ht even
seek to canpletely terminate block grants due to the pressure of canpetimsg
fiscal objectives.
As a result, it is no surprise that Governor Richard A. Snellinq
(R-Vt.), chair of the National Governors' Association, has described the
Reagan program as an "econmmiic Bay of Pigs."
2. Elimineticxi of natimal ~stitu~x!ies for federal. ~
The elimination of catsoorical pronrarm has also eliminated na-
tional constituencies for federal financial supcort. Interest groups now
turn their attention to near-tens allocation decisions at the state and
local levels, and to remaining categorical programs. Conseguently, gover-
nors have became the sole constituency supcortirxn block grants with the
Congress and Executive Branch, making it easier to continue reducing federal
funding for major damestic programs. This ithenamenon has already been
observed with the new education block grant, ~ich has been cut sub-
stantially since it sos enacted just a few rmnnths ang.
PAGENO="0556"
552
-69-
3. Int~ise political ~ressure abc*xt allocation dxxices
The block grants decentralize not only program authDritv, but also
political catpetitiOn for resources. O:xnpetinq qroups that have vied for
federal appropriations will na~i devote their attention to allocation
decisions by state and local officials. Ocopetition will be especially in-
tense, as the block grants include 20 to 25% funding cuts, and many groups
will have to fight simply to maintain services they believe are essential.
As a consequence, sitting governors are being placed in numerous
no-win situations. In being forced to make very unpopular choices they will
becate the "bad guys," unable to blans federal bureaucrats for cutting or
eliminating local programs. This situation will becane even core difficult
and politically dangerous for governors if President Reagan and the Congress
keep cutting the block qrants until all federal appropriations are
terminated. This will leave states with a Hobson' s cboice bet~en dropping
basic services or raising taxes.
4. Severe staffime nrdlen~
Many state goveranent staff rositions have been funded in whole or
in large part with federal funds allocated to the states throuc~h categorical
programs. As these categorical programs are eliminated, and available
resources cut, the support for many staff positions lessens or disappears.
At the same time, block grants have made it necessary for state
goverriTents to assure many program responsibilities forrrerly performed by
federal staff. Fbnctions shifting to the states include program direction,
auditing, grants managei~nt, planning, rule-making, evaluations and grants
allocation. In order to handle these new responsibilities, governors must
establish effective and credible planning, allocation and evaluation systens
that will enable then to defend their decisions, especially in the face of
the intense canpetition for funds airong local groups. This will require
strong, sophisticated and wall-staffed state agencies, precisely when
federal support for state staffs is diminishing.
5. State financial limitations
Governors will be under treoendous pressure to find additional
state resources for both programs and staff. In many instances, qovernors
will request core funds fran state legislatures, but it is doubtful that the
political climate in cost states will support increasing taxes in order to
continue services slated for reduction or elimination.
State staffing needs will be especially urgent at the beginning of
the block grant programs, when states confront major start-up and in-
planentation issues at the same time that f~erally funded staff positions
disappear. Unless a governor wants to risk charges of fraud, waste and
miamanaganent, he or she will be forced to request larger state appropria-
tions to meet staffing requireTents.
PAGENO="0557"
553
-70-
C~ the program side, federal bndqet cuts associated with the block
grants have left large gaps in such vital services as day care, community
developsent, community mental health, vocational rehabilitation and
amergency energy assistance at the same time that service needs have
increased due to growing jx~mulations, inflation and increasing uneeplowient.
As a result, many governors will have to request additional supoort fran
their state legislatures simply to meet the mast basic needs. Progressive
governors, sensitive to the social and economic needs of disadvantaqed con-
stituencies, will feel particularly pressed.
These state fiscal pressures will cane at an especially difficult
time for both governors and state legislatures. State and local revenues
will decrease because of:
* the federal badget cuts described
earlier.
* the effect of the new federal tax
reductions. (r4nny state personal
and corporate taxes are tied to the
federal tax structure, so federal re-
ductions will lead to state reduc-
tions. Sane estimate that the 1981
tax law will result in a net revenue
loss to states in excess of $40 billion.)
* decreased gasoline tax revenues caused
by reduced gas consuiption, which,
coupled with increased highway main-
tenance costs, is shrinking state highway
fends.
Ithile state revenues are decreasing, the nation's ~thysical in-
frastructure - roads, bridges, water systems -- is rapidly deteriorating.
The cost of rehabilitating or replacing these facilities during the next
decade will ran into hundreds of billions of dollars and will compound
states' fiscal difficulties. ~`breover, despite interest rates double what
they were in 1977, the federal government and corporations are croedinq
states cut of financial markets, limiting their ability to borrow.
Finally, the nation's recession will foster increased unemployment
and industry cutbacks, further reducing state revenues and increasing costs
like welfare sal unemployment insurance.
As a consequence of all these factors, states will be extremely
hard pressed to meet earlier responsibilities, let alone asstme new fiscal
burdens.
PAGENO="0558"
554
-71-
6. Extensive liticzaticn
Constituencies frustrated by service cuts, inadequate state staff
to manage the new block grant proqrams aid delays or chaos associated with
implenentinq the programs may turn to the courts for relief. Wnile it is
obviously difficult to forecast accurately whatthe courts niqht do aid in
which areas, it is reasonable to predict that advocates will seek
court-imposed ranedies in such areas as:
* preventing precipitous service cut-of fs
(if advocates succeed in their litigation,
states will be forced to appropriate the
dollars to nake the transition fran federal
categorical to block grant programs);
* ensuring adequate public participation and
administrative due process in the planninq
aid allocation processes: if successful,
these efforts could establish case law as
detailed as federal regulations; aId
* prohibiting discrimination against minorities,
wanen, the handicapped aid the elderly; these
protections, guaranteed under federal law,
will also constrain aid possibly lenqthen
the allocations process.
These suits will also generate process-related administrative
costs, in addition to the potential proqranrratic costs already described.
Prepared by
Decker Anstran
Public Strategies
202/828-8493
PAGENO="0559"
555
-72-
III. IMPPC~ cP ¶J!IE &ocK ~ANIS
iw~r ~ crri~
~xrorm the early concerns of city officials reaarcljng the Reaoan ~d-
ministration's block qrant proposals sos their failure to qjve city
officials a role in block grant planning or resource allocation. City
officials also feared that they sould not have access to information on
block grant programs.
More specific worries sore that if the law did not mandate that funds
be passed through or allocated directly to cities, their needs would be
noglected; and if funds sore not targeted on the basis of need, governors
would allocate block grant zanies uniformly throughout the states, a~hout
rogard to where they sore cost needed or ~there they would be used zosi
effectively.
J~ccording to the U.S. Conference of Mayors (USrm), these fears sore
realized during the early stages of block grant imnplmrmntation. City
officials have, in fact, had difficulty obtaining even the cost basic in-
formation on the new block grants, frcm either the state or federal qovern-
ment. Only a handful of city officials sore inclmxled in the eight reaional
briefings held by the federal departments administering block grants, and
there has been little casnunication fran the federal level to local
goverranments.
At a recent meeting of the U.S. Conference of City Fkmmn Service
Officials, only representatives fran Virginia and South Carolina - out of
approximately 50 people in attendance -- had been able to obtain fran the
state regousted block grant information. Similarly, city officials have had
difficulty participating in block qrant decisiormmakinq aix! in registering
their concerns about the service needs of their constituents.
2\dding to these problem in F~ 1982 are the uncertainty over funding
levels and the fact that cost states -- with the blessing of federal
officials -- did not hold poblic hearings on block grant plans.
~ccordirg to USC'l, a few states have made efforts to involve local
goverrinents in block grant planning and implementation. Early in FY 1982,
Virginia set up a series of task forces to plan block grant programs, and
several local officials sore included. Florida surveyed local qoverrinents
to obtain their views on issues surrounding block grant planning and imple-
mentation. Other states have appointed advisory committees which include
local officials.
But a recent SOy! survey of 100 cities, conducted in early Bovmther
1981, gives further evidence that the early fears of city officials sore
realistic. Of those responding to questions on block grants, 55% said their
states had neither consulted then nor offered an opportunity to participate
in block grant decisiorrnakinq; 38% said they sore unable to get information
fran their states on block grant implementation; and 58%
PAGENO="0560"
556
-73--
sain they expected to lose funds as a result of block grants. Only one city
expected to receive rrore funds under block grant programs.
With regard to the anall Cities Program under the Catsiunity Develomient
Block Grant, 42% of the respondents said the state was opting to administer
the program; 27% had cannlaints about the process ~herebv the state was
assuting control or tiought the state. was doina a naor lob. Fifty-three
percent were not informed as to hov the state was carryina out the
transition.
Many cities, in states as diverse as California, Tennessee, Nebraska
and Maine, reported that they were consulted only after decisions had been
made and the Bnall Cities program was already designed. In many cases,
ccmnunication was initiated by the city, not the state; in others, states
did not respond `~then city officials souqht information.
PesporKients attributed these difficulties to confusion at the state
level over block grant programs and state responsibilities; historic bad
vx&dbllqoclps between the state and the city; and the strona pro-rural/
dgbl3erban bias of many state legislatures.
Many cities surveyed strongly doubted that states ~e~uld qive the same
attention to their needs that %~~shington had. This dcobt was based largely
on the belief that states will attanpt to provide services in every part of
the state in order to please a range of constituencies, particularly the
strong rural/suburban contingents ~Mch daninate many state legislatures.
This will inevitably mean drastic reductions in the share of funds going to
urban areas, especially in light of the deep funding cuts that accanpanied
the block grants.
Prepared by:
Laura ~xman
U.S. Conference of Mayors
202/293-7330
PAGENO="0561"
557
-74-.
III. 1M~f ~ THE BTJX~ G~AN1'S
11~N7P CW R1RAL A~S
Before discussina the imoact of block qrarits on rural cazeunities, it
is important to clarify what is meant by `rural." Rural refers here to
ccmaunities of up to 50,000 residents, or all non-metropolitan areas.
"Rural" and "non-metropolitan" will be used interchangeably.
It is also important to stress that within this browS definition, there
is great diversity. Son-metropolitan areas differ by qeoorathy, size,
population, density, ethnic sake-up, ecorrinic base, level of development and
dagree of poverty. Sbr example, rural areas inclrxle a ski resort in
Vernont, a coal town in Fantocky, a community of large farms in Fansas, a
black sharecropping community in Alabama, a boar town in Wyoming and an
unincorporated community of Hisoanics in Texas.
Rural areas abound with contradictions. While agriculture is a major
econanic factor in rural America, less than 10% of the jobs in rural areas
are in faxmnincr. The nutber of private sector lobs is orowiro at a faster
rate in rural than in non-rural areas. While there has been a turnaround in
migration back to non-metropolitan areas, the rural "renaissance" is
extrenely uneven. Base areas are qrcs~in~ very rapidly, while mare than 400
counties -- for the mast part predanintely minority and/or agricultural -
continue to decline.
The mast vulnerable rural Americans are the puor and minority popula-
tions. The problan of rural poverty is little understood and too often
ignored. The rural population is disproportionately poor, inclndinq 40
percent of the nation's poor, but only 32 percent of the ca'ulation. The
average annual income for a rural poor family in 1978 was $3, 394, incltniinq
earnings and public assistance payments. While the majority of the nation's
rural poor are white (7 out of 9 million), rural black families are three
times as likely to be poor as rural white families. The rural poor are less
educated than their urban counterparts. And finally, the majority of the
rural poor live in the South, where public assistance programs are
particularly insiequate.
What will block grants mean for rural residents, and particularly the
rural poor? Severe problems. There are several reasons why.
First, faced with the budqet cuts which accammany block grants as well
as with their own boSqet crises -- and lacking the luxury to deficit spend
-- mast states will have no choice but to pass on thase cuts in the form of
decreased services. Unfortunately, the rural poor will have little chance
to fare well in the resulting battles between legitimate but ccmipetinq
interests which will be waged at the state level for a piece, of the
decreasing pie.
99-965 0 - 82 - 36
PAGENO="0562"
558
-75-
The nDst organized, sophisticated and visible groups and programs with
the stropoest political power bases are the must likely to ~et the lion's
share of the dollars. The rural poor, however, are not generally well
orqanized, visible to the general public (and the nedia) or politically
sophisticated and powerful. The rural poor are usually anall in absolute
numbers and qeoqraphically dispersed, and thus easily ignored. In short,
the rural poor have little or no political clout.
The second reason why the rural poor are likely to lose out under block
grants is that they are not well represented in state and local qovernnents,
particularly in state legislatures where many of the allocation decisions
will be made. While many legislatures may be dczninated by manbers fran
rural ccrmuinities, few state legislatures adequately represent the rural
poor or i~orkipo person. The rural banker may not share the sane interests
as the rural tenant farmer. Similarly, the coal operator and coal miner
probably do not share the sane views. Rural state leqislators are, in fact,
traditionally very conservative and often opposed to public programs which
provide services to the poor. Furtherriore, state legislators are often
extraniely vulnerable to the kinds of political pressure that the rural poor
are unable to muster.
A third problan facing rural minorities, in particular, under block
grants is that racial discrimination and insensitivity to minority orouns
continues to be a significant problant in many states, especially in the
South where must of the rural poor live. Under the block grants, which give
total discretion to the states to decide which services will be provided to
whoa, minorities are likely to have a difficult - if not impossible -- task
in canpetipo for the limited dollars. l'aad, witlKut federal targeting, they
lack an~ recourse.
Fourth, rrost poor rural camnunities lack the human and financial re-
sources needed to canpete in the fundraisiro and qrantmakiro orocess -- to
ioentifv a problea, develop a solution, write a proposal and imolenent a
program. With decreasiro funds and increasiro canpetition for those limited
dollars, the ability to raise money fran both the public and private sectors
will bec~e more and more crucial. The problen for the rural moor will be
exacerbated by the dwindling support for the kinds of programs which have
been able to provide such assistance in the past, such as cams~uiity based
organizations, legal services attorneYs and human service agencies.
Finally, rural people will be at a disadvantage in fighting for limited
funds because of the econaaics of providiro services in non-netrooolitan
areas. Given the decreased dollars, state officials will be increasinaly
conderned with spending their money "efficiently." ~rbo often that
translates to: provide the most services to the greatest number of oeoole at
the lowest cost, regardless of need. Programs serving ron-metropolitan
residents must be flexible and designed to meet unique rural conditions, rot
scaled-do~mn urban conditions. t~velgeing appropriate and creative solutions
may require a disproportionately large investment of staff time and effort.
Furthermore, because of population sparcity, ecormanies of scale do not exist
in rural carrnunities as they do in urban areas. For both of these reasons,
PAGENO="0563"
559
-76-
services in rural areas amy cost sore per capita. In other words, there
will be less bang for the political beck.
Clearly, it is too soon to bios for sure how each state will administer
block qrants. Flistorv can orovide amne clues, however.
First, cost of the cateporical programs slated for extinction were
develcged because the states would not -- or could not -- fund or directly
provide the services. There is no reason to believe that in hard econanic
tines ars3 with federal resources declining, states will choose to devote
sore resources to programs they did not suocort in the oast.
Second, the record of public assistance orograms, sthich give states
considerable flexibility to establish eligibility and benefit levels, is
enlightening about how the rural poor nay fare under block grants. The
southern states s~ere cost of the rural poor live have the cost limited
welfare benefits of any re~ion of the country. Stir example, in 1980, the
national average payment per AF1X~ (Md to Families with Deoendent Children)
recipient was $93.39 per month. In the South, payments ranged fran a high
of $64.25 in ibrth Carolina to a low of $29.34 in Mississiooi.
For all of these reasons, block grants are likely to spell disaster for
cony of the nation's 69 million rural residents, and particularly for the
nine million poor oeoole livino in non-nmtrcsx,litan ccmtnunities.
Preoared by:
Alice Hersh
National Rural Center
202/331-0258
PAGENO="0564"
560
-77-
III. IMP~~ ~ `fliE BLO~ ~ARI'S
I~ O~fl~D~
The Reagan Administration' s bloclc grant program will have
serious consequences for many segments of 1~merican society.
1. Fbr thildren, poor people, the baz~1icapped, t~ elderly aixi
other gr~çs that need tha services x~ pixwided t1ux*4~ ~t~ric~l
~zograse, block grants will have tha frllowing edverse cos~es:
o The deep cuthacks in federal support
associated with the block grants will
deny many needy people essential services.
Of the sore than $35 billion total cut,
nearly $10 billion fell on families with
incones bel~i $10, 000 a year.
o Groups will be forced to fight one another
for the linited retaining resources at
the state level. This conflict will be
bitter, will result in extraordinary
political tensions within the ccmnunity
and will foster fragmented, rather than
coordinated, hun~n service approaches.
o They will face administrative chaos. The
Reagan Administration' s determination to
imple~tent the block grants as soon as possible
guaranteed that states and caamunities ~e~uld
be unable to plan for an orderly transition
to the ne~ programs. Confusion and tunioil
resulted, and in many ccs~nunities service programs
have nearly ground to a halt.
o Citizens nc~, guranteed protection against
discriminination will be unprotected.
The block grant legislation severely
~akened federal prohibitions on dis-
crimination and federal requiranents to
target funds to econcinically depressed areas
and disadvantaged people. People in central
cities and r~rote rural areas can be expected
to suffer at the expense of sore politically
potent state-level constituencies in suburbs and
mediun-sized cities and tcMns.
PAGENO="0565"
561
-78-
2. kbr n~*,~s of O:zxWeas and taxpsyers, tiw block grants will:
* Reduce accountability for federal funds.
States will be free to spend funds with-
out prior federal oversight or citizen
participation in determinirs~ priorities
and needs. They will not be subject to
throuqh, reqular federal audits, site
visits and evaluations. Experience with
earlier block grants srxqests that it will
be difficult to determine after the fact
hew the rroney ~ms spent.
* Minimize their ability to eddress truly
national needs. Inherent in the block
grant leqislation is the assr.srrption that
there are no national needs in the areas
of health, education, social services,
cczrirrunity devel~znent, asergency assistance,
etc. Nhile states and localities will have
increased program flexibility, they will
also have the flexibility to decide not
to fund services that (Inperess has deter-
mined darand nationwide attention. These
services include child day care, health
services for crippled children, carmrrziity
mental health services and respiratory
treatment for coal miners. National needs
such as these will be eddressed only if
states and localities decide to &Idress their
and have sufficient resources to do so.
* Substitute federal funds for state and
local rroney. Since states will no longer
be required to provide ratchipe funds in
order to receive federal block grant ironies,
they may not continue providing their own
funds for the programs being consolidated.
Rather, they might use their funds for other
purpses and substitute the federal block
qrant ironey for their past expenditures.
* ~ke it difficult to target federal funds
efficiently. States will be able to set
irtiatever eligibility requirarrents they
wish for services provided by block grant
funds. States nay cheose to serve middle
class individuals whe do not really need
services or itho could pay for than, rather
than truly needy families and individuals.
States nrust also decide to allocate funds
PAGENO="0566"
562
-79-
to prosperous carinunities rather than to
econanically depressed central cities or
remnte rural areas. If these sorts of
allocation choices are made, federal funds
will be wasted on unnecessary services
and activities.
* Lead to increased administrative costs in
many areas. The Reagan Administration
says block grants will cut waste and
duplication and eliminate unnecessary
federal staff. Yet the General Accounting
Office, Congress * official watchdoq, claims
administrative costs could actually in-
crease, as 50 state bureaucracies are
established to administer each block grant
and to assune the functions nc~i carried out
by only one federal aqency.
3. Ebr private, r~n-izofit local service delivery aa&~cies, block
ararits will tose several n~jor issm~s:
* Funding, already strained by infla-
tion, will becarme tighter, as federal
cuts associated with block grants are
replicated at the local level. r4anv
private agencies that are heavily de-
pendent on federal funds -- caminunity
action aqencies, canmunity health
centers, day care proqrams, rehabilita-
tion facilities, etc. -- may be forced
to close, as private non-profit aqencies
lose $27 billion fran 1981-84 due to
federal budget cuts. In addition, per-
sonal incare tax cuts are expected to
shrink personal charitable contribu-
tions by over $18 billion durian this
period. In all, the recent budget and
tax cuts will cost private non-profit
agencies nearly $46 billion fran
1981 to 1984.
* Pressure will develpe about who should
be served. As resources vanish and
federal eliqibility requirenents are
abolished, local service delivery agencies
will be forced to make rrore decisions,
based on their own criteria, about who
gets served. Within the tight budqet
environment that will exist, these de-
PAGENO="0567"
563
-80-
cisions will be subject to intense
scrutiny and criticism.
* States may shift funding to public agencies,
and state agencies may create or strengthen
regional or district service offices. In
the face of raducaf resources, such shifts will
allow states to increase their control over
service providers and their staffs and to de-
fine nore specifically ~k~at services should be
providef. For the same reasons, states might
also nove towards using private, for-profit
vendors. As a result, many private non-
profit agencies will be forcef to close or to
change their traditional focus dramatically.
* Furxlraising activities will assuma greater
prceinence. Private agencies will have to
increase their efforts to obtain private sec-
tor contributions -- efforts that have already
been expandef to address inflationary derands.
Those activities will reduce both the re-
sources and staff tirre available for agencies
service duties.
Prepared by:
Decker Anstran
Public Strategies
202/828-8493
PAGENO="0568"
564
-81-
Iv. ~y ISsLFS
Aside fran specific issues pertainir~ to individual prograrra proposed
for block grants, the Reagan AdministrationS s block qrant proposals raise a
number of carrron concerns. These include the lack of tarqetiog aixi
accountability rrechanisms, as ~ll as the fiscal difficulties that states
will experience in tryirx~ to administer block grants without sufficient
resources. The follcwinq pages discuss these issues.
PAGENO="0569"
565
-82--
IV. KEY ISSL~
F~rI~ ~ ~LY NE~JY
One of the ironies of the debate surrounding the original Reagan block
grant proposals was the contradiction between the budget discussion, with
its talk of the "social safety net" and helping the "truly needy," and the
ram~val of all targeting and need-related requirsoents in human service
programs proposed for block grants. The Administration wanted to replace a
variety of programs focused on disadvantaged or needy constituencies with
general grants of coney that included no requiranents that services be
provided on the basis of econcznic need, handicap, etc.
For example, the proposed social services block grant co~letely
raroved the incaTe eligibility criteria associated with the original Title
XX program (the Title XX block grant passed by Congress also eliminates
these criteria). The Administration wanted to recove targeting requiretents
fran the proposed energy/energency assistance block grant, but Congress
reinstated targeting in the final 1CM incane energy assistance program. The
Administration' s proposed education and health block grants -- which
included programs specifically enacted to assist disadvantaged and
handicapped children -- had no targeting requirenents, no eligibility cri-
teria based on need and no priorities for whan ~uld be served. While Con-
gress refused to abolish many of the cost crucial targeted categorical pro-
grams that the Administration wanted to consolidate into block grants, the
block grants that did energe substantially weaken targeting requirenents.
One does not need to be c~ical to predict that the process by which
states allocate block grant funds will respond to the priorities of con-
stituencies that are predaninantly middle class or affluent, organized and
vocal -- and whose rrentbers vote. The less powerful and less numerous indi-
viduals wl-o have pressing but not politically popular needs are likely to
lose out in statewide catpetition for reduced resources. Thus, the block
grants -- particularly in their original form, which the Administration has
threatened to revive, but also in the codified versions enacted by Congress
-- have turned the allocation of federal tax dollars into a brutal political
struggle at the state level, where the cost vulnerable and least powerful
are alrrost certain to be the losers.
Besides pitting the poor against middle class and affluent con-
stituencies, the block grants also set one disadvantaged group against
another in canpetition over a small pie. Rural areas will fight inner
cities, elderly will fight cothers and children and energency medical ser-
vices will canpete with preventive health services. In this way, the block
grants have greatly increased the politicization and brutalization of the
allocation of scarce dollars.
Recent accanplishnents in preventing discrimination, and the resulting
gains in securing equal opportunity, were also seriously imperiled by the
Reagan block grants. The proposals were dangerous because they can-
PAGENO="0570"
566
-83-
mitted to the ultimate discretion of states and localities the provision of
progrens and services that Congress had devised to meet specific needs of
victims of discrimination, deprivation or neglect.
Much of the rhetoric about safeguards and accountability offered by the
Administration during the block grant debate was an ecbo of statenents made
by a previous administration when the State and Local Fiscal Assistance Act
of 1972, which established General Revenue Sharing, was first proposed. The
Reagan Administration seened to have forgotten -- or boped others had
forgotten -- that actual experience with revenue sharing and block grants
discredited many of the original assertions.
Even when civil rights issues are viewed in the narrower context of a
need to prevent discrimination in the use of funds, however they are
allocated, both the Administration's proposals and the final block grants
are woefully deficient. They simply apply boilerplate civil rights lan-
guage, without any consideration of the ~Erticular enforcetent mechani~ii5
needed when funds are distributed through block grants.
PAGENO="0571"
567
-84-
IV. KE~ ISSt~
~
"Any block crant trooosal is inevitably cauaht
in a dilemta: the goal of providing maxiznun flexibility
and minimal restrictions to the recipient (state or
locality) in the uses of the federal funds conflicts
with the goal of ensuring that federal funds are
effectively used for the attainnent of national ob-
jectives and for the provision of additional.. . ser-
vices to federally-defined populations.
"The question, then, is ~that to recuire of the
(state or local agencies) that receive these block
grants. Tb specify the precise purposes and activ-
ities for ~?nich they will use the funds? Tb ~rooose
criteria by ~hich to measure progress? To evaluate
thenselves or sulniit to external evaluation of their
performance? To subject their plans and performance
to scrutiny by a higher level of qovernrnent (or by
sane kind of carrnunity review group)? To ally
aggrieved persons who feel that the federal our-
ngses are not being fulfilled, or that their needs
are not being net, to a~~eal to Washington? Ul-
timately, to be denied future block orant funds
(or to have the arrounts reduced) because of un-
willingness or inability to use the funds in vevs
envisioned in the federal authorizing statute?"
-- The Stockman "Black Book"
At a t~n~ ~hen the American people are darnandinq nore accountable, nore
effective qoverrinent, the Reagan Administration' s "no strings' aooroach to
block grants greatly reduces the accountability and effective- ness of many
qoverrinent programs. Daspite the clear, balanced presentation of account-
ability issues in Office of Manaaenent and Budget Director David Stockman's
"Black Book," the Administration's proposals ianored accountability issues
and ~ould have qiven virtually unfettered discretion to state aovernments.
The Reagan Administration' s aooroach to block orants provides no
assurance that states will administer the programs in an open, accountable
manner. The CC~G and social services block orants, for example, simply re-
auire that states suhoit brief reports stating ~enerallv hov they intend to
spend their funds. Citizens have a chance to review and canment on these
rerrorts and the state rrnist hold a public hearing on the planned use of
block grant funds -- thouch not until fiscal veer 1983, accordina to HHS.
The federal qoverrunent receives the reports and is to cattoare then.
PAGENO="0572"
568
-85-
with subsequent reports describirrt what was done. Each state will also
audit its expenditures under the block grants.
This approach to block grants raises a nunber of accountability issues:
* It does not require the involvement
of state legislatures in assessino
needs, settino priorities or evaluat-
inn performance.
* It does not provide assurance that
citizens will have access to the in-
formation they need to monitor and
assess the state * s plans or perfor-
mance.
* It does not provide for any evalua-
tion of performance by local citizens
or the federal qoverrinent, or, in
sate cases, even the state govern-
ment itself.
Thjrthernore, because the renorts that states sutrait at the beoirinina
and end of each year are brief and nonspecific, it will be virtually
inpossible for citizens, local goverrinents or state legislative cantittees
to track block grant funds. The nev block grants are sublect to the most
serious problems that have plagued past block grant and revenue sharing
programs -l the virtual impossibility of tracino how the funds have been
spent, whether they have been spent legally and what their impact has been.
The importance of reportino as the most fundamental steP towards
accountability has been underscored in several recent reports fran the
General l½ccounting Office and by the Inspectors General of various federal
departments, arromo others.
Former HUD Assistant Secretary Robert flnbrv expressed concern about
this issue when he stated: "Most mayors dont have the slightest idea how
CDBG funds are spent."
The "decision mero" on the social services block orant which HHS staff
prepared for Secretary Richard Schwaicker also discussed this issue:
"One consideration in choosino whether
to renuire anythim beyond minimal Federal rost-
expenditure oversiqht is that in many states it
is impossible to determine fran publicly avail-
able docunents which sources of funds are planned
for what services, and hence for normal political
involvement to influence state priorities.
PAGENO="0573"
569
-86-
"Furthernnre, without such detail avail-
able to HHS, there would be no basis for describ-
mm or assessing current and near-tens state
Priorities in testifying to the Congress, con-
sidering legislative changes and the like.
"The specific aroument for reouirinq a
state alan that is to be ao~roved by the
Secretary of HHS is that it provides a basis
for assuring that states plan to achieve key
requiraments, and/or to correct previously
identified deficiencies, such as failure to
prevent waste or to target sufficient funds
to preventive services."
Despite the clear analysis in this neil), Has -- after extensive cOn-
sultation with Ct'IB -- chose not to propose measures which would adeouatelv
ensure that state governments would be accountable to their citizens, their
lepislatures or the federal goverrsi~nt for their expenditure of block orant
funds. Under Ct4B pressure, HUD and the Department of Education made similar
decisions. In designing block orant programs, they all failed to orovide
Procedures and safeguards which folla~, any of the six routes to
accountability suoaested by Mr. Stockiran in the "Black Book":
* To specify the precise purposes and
activities for block orant funds:
* To propose criteria for measuring
progress;
* To evaluate performance;
* To sublect Plans and performance to
scrutiny by a higher level of govern-
ment or cczripunity review groups,
* To a1lc~i aggrieved persons to appeal
to Washington,
* To deny or reduce funds because of
unwillingness or inability to cariolv
with the statute.
Prepared by:
andrew H. Mott
Center for Carffnunity Coame
202/338-3134
PAGENO="0574"
570
-87-
Iv. KEY ISSUES
FIS(W-. Sfl'UATIC~ (F STM!~S
The fol1c,~iina analysis, ~thich appearel in the May 10, 1981, Washinoton
Ikat. reviews the fiscal nliaht of states and raises n&or guestions about
states' ability to cone with the malor loss of f~eral funds that
accamDaniel the new block grants.
PAGENO="0575"
571
*~Ijc tt~a~ington ~o~t
Sauday. May 10. lOS!
State Governments Face crunch
4.6 percent, and may be forced to
raise taxes to stay even in 1982.
Ohio temporarily raised sales and
income taxes this year to weather its
crisis.
Wisconsin has made sizable apend-
ing cuts.
Missouri cut its budget 10 percent
By Dan B8IZ in January, and expects no increase
WaahlsetosPosSsSaTfWrs& next year.
Michigan is perhaps in worst shape From Oregon to Connecticut and
overall. It will spend about 6 percent from Michigan to Alabama, the state
less this year than last, and has cut governments are undergoing a fiscal
state employment by about 4,300 retreat brought on by the national tax
jobs. revolt and the sluggish U.S. economy.
Minnesota faces a $500 million rev- State legislatures have been forced
enue shortage in the upcoming bien. to slash spending, in some cases acroes
nium. the board, and, for the first time since
Iowa cut its fiscal 1981 budget by
- TTTTITION
1960
1965
7.0
168
10.9
177
Slack Economy,
Tax Revolt Cited
AS
FISCAL
1955
03.2 11.8%
1970
24.0
22.9
1976
:1977
1978
49.8
59.1
65.4,
77.9
82.9
29.1
31.)
31.0
31.7
30.9
35 STATES 22 STATES 9 STATES [18TA'T'~i
1980
~::1981tST.i
1982 EST
91.5
94.4
86.4
31.7
29.5
24.3
PAGENO="0576"
572
-89-
Victor Atiyeh her proposed a package wants to cap further federal ncreeeol~
Proposition 13 fever swept thee cram- of cuts totaling $260 million, along g 5 peromt, and at their winter
try three years agn, higher state taxes with new taxes of $240 million. meeting in February, the governors
are becoming ccmmonp1ac~ In Mlnneaota~ where Gov. Al Quie protested that they could not take up
The headlines have gone in renest came into office with a pledge to cut the elaclL
weeks to President Reagan's budget tazea~ voters fam a reduction in see- Many states have cut benefits end
cuts at the federal level, but these vices and about $400 million in new tightened eligibility atandar~ Ken-
pale by coenpareron with ~ ~ ef. taint Laginlators worked on a solution tucky, for example~ I considering
ready going on acrme the country in all l~ seek, and Qule I fighting to changes that would eliminate 57,000
atlis. and localities, prevent erosion of hI tax canterpieoe, people from the program. Benefits in
And the federal cuts, whim will hit indexatiolL Wesbingtcsm state will be cut front
the states In f~caI 1982, will make IndereetionIana$toime~ $458to$4l6forafamilyofthree.
niditers even worse, cateing further taxpayers from the effects of inflation, Mirumesota and Georgis, among oth-
spending arts and more tax increases, but a number of states that have tried era, are ceraidering charging Medicaid
Any expectation that the states will it now find themselves in financial patients nominal sums to slow the
take over responsibilities now being trouble. groweh of the program. Other states
jettisoned in Washington I belied by State politicians elsewhere are doing may limit the amount they pay dec.
the weak fiscal condition of many all they can to head off even more tore for treating Medicaid patients.
stats governmenta The only hope I drastic arts, and are dipping into re- Budgets fir elementary and second-
that Reegs&s economic program will serve funds at an unprecedented rata amy schools have been squeezed, a par-
produce the kind of results he so con. Stats governments expect to spend tiwlar problem became state govern-
fidently predicte. about $6 billion more than they get in meat in now tha primary funding
The fiscal wreckage can be found revenues in the current fIscal year, source for the schoo~
all ~ose the country, although many according to a forthcxsning study by Kentucky's reductions have affected
midwestern states appear hardest hit the National Governors Aseociation school supplies, new texthooln, teach-
because of the depseasion in the au- (NGA). This will cut sharply into the er-pupil ratios in kindergarten clewea
tosnobile industry, balances states maintain became of and varioon support servims~ Wash-
Connecticut faces a $110 million restrictions on deficits. Only one stats, irrgtcn's legislature put a lid on teach-
rewnue shortage in fiscal 198~ Some Vermont, allows deficits er salaries, Iowa teachers face layoffs
state agencies in Alabama have been Moat states try to achieve a year- and Mimouri teachers protest thst the
t~d1meywillreceivelessmoneythI endbalanoeof5to6percentofex- new budget will force Ibsen to lose
year than called for in the Inalget pendituree. For fiscal 1981, the aver- further to inflation.
approved by the legislature. age will be well below 4 percent, down To prevent deeper cuts in higher
~(entucky her gone through repeat- from about 9 percent in Becal 1980, education, college tuitions are rIing~
ecl,,rounds of cuta ilhimin Gov. James acoording to NGA eetimatnt Students in Washington stats face
R. Thompson recently proposed $220 Those averages also mask a disper- incresees of 70 percent, while a 25
million in cuts from the 1982 budget ity between the few healthy states and percent hikein Nevada I likely
he proposed in March. the many that are suffering. Famergy- Other programs, from parka to po-
Closer to horns, only Virginia asenee rich states like Alaska, Team, Load- lice, have been slashed by legIslatures
healthy, while Maryland and the DI- smana and Montana, whose revenues with their backs to the walL Idaho,
trict of Columbia continue to suffer have been swollen by higher oil prices whose budget I slightly larger thin
from a shortage of revenue that may and varicese severance tax~ are Bean- year than last, h dosed parks to
cause program cuts or layoffs daily healthy. But for most other hold down costa.
And in Massachusetts, where voters states, financial conditions have tight- The financial squeeze has made
approved a drastic property tax lim- ened since l~ year, and are expected higher taxes a nscaeasty in some
itation measure lest November, pol- to become worse in facel 198K statnt `You can cut the budget just so
itidans are bracing for a stzu~le over `A good number of states are at far,' said J. William Buns, deputy
how to slice ups smaller pie. zero or 1 percent (in their bslancesj' secretary of the Office of Policy Man-
The mess there I how much the said Joe McLsoghlin of the NGA. agemant in Connecticut, where a host
state should attempt to help out "They're cutting it very thin.' of tax increases I likely. `We're in the
towne and cities whose revenues will At least 33 states project year-amid tasiness of delivering semvi~ You
be cut drastically by Proposition 2½. balances of below 5 percent, compared can't eliminate anowpiowing. You've
Other states which have done that, or with 20 a year ago, according to pre- got to keep the adamol open.'
have provided their own property tax liminary findings by the NGA. Pro- The Tax Foundation estimates that
relief, now find themselves in financial jections for fiscal 1982 show that legislation proposed thin year by the
trouble. year-end balances may fall to the natioefs governors would rains state
`It's partly self-inflicted." Robert range of 2 percent taxes by $3 billion, asotinuing a trend
StnitI~ Oregon's chief budget officer, Nothing appears sacred when the begun last year, when tax increases
said of the problems in his state, statebudgetsxbeginstofalLlnMin- outpeced tax cuts for the frost time
where efforts to subsidize property tax neeota, the budget crisis and a deci- since 1978, the year California voters
payments have diverted money front siorm not to sell construction bonds approved Proposition 1K
other programs until interest rates drop may eliminate Between 1977 and 1980, 18 states
Many states might have been able funding for a new building to house enacted tax or spending limits, 36
to get through the tax revolt with only the Hubert IL Humphrey Institute of states cut their income taxes, 22 states
a little belt-tightening had it not been Public Affairs slashed sales taxes and 9 states in-
for the receeeioet "Die states have In Michigan, Thomas A. Clay, di- dexed their tax systems But those tax
been hit by a double whamnmy,' said rector of the state budget office, said, cuts have since come home to roost
Jim Mallory, deputy director of the `There hasn't been an important area The National Conference c~ State
National Association of State Budget of our budget that hasn't been cut Legislatures, using Census Bureau fig-
Officers - -. We're retrenching rather dramat- urea, reports that tax revenues in-
In many states, the only choices are icsliy.' creased faster than inflation in nine
deep redtsctioes, higher taxes or both. Among the programs hardest hit states in fiscal 1980, all but one in the
In Oregon, a state hurt not only by MedicakL State costs have risen 84 West and South. State tax receipts
the tax revolt but also by a slump in percent since 1977 to an estimated rose 9.6 percent In Vermont and
the timber induetry, Republican Gov, $14.2 billion in fiscal 198K Reagan Michigan, tax revenues declined.
PAGENO="0577"
-90-
573
THE WASHINGTON POST
As a result, state governments have
been forced to raise taxes. In 1980, 18
states enacted 29 tax increases, in-
cluding seven states that boosted ei-
ther sales or income taxes, according
to the NGA.
Even more states are considering
tax increases this year, and the mood
of the legislatures is best symbolized
by a non-binding straw vote last
month in the House of Representa-
tives in notoriously anti-tax New
Hampshire. By 2 to 1, members of
the House there said they would favor
enactmg the state's first income tax.
Most states are trying to avoid
higher sales or income taxes because
of the political consequences. "The
one that separates the men from the
boys is to go after income or sales
taxes," said John Shannon of the Ad-
visory Commission on h~tergovem.
mental Relations.
But many states are raising less
visible taxes, such as those on ciga-
rettes or alcohol, or increasing user profound effect on the role of state
fees, to bring in more revenue. And and local governments, whose share of
higher gasoline taxes are being con- the gross national product has de.
sidered in nearly two dozen states to dined from a peak of 15.1 percent in
visors up highway maintenance funds. 1975 to 13.5 percent in 1980.
Still, the tax revolt has not com- And when Reagan finishes his work
pletely died down. Michigan's Repub- on the federal budget, the effect on
lean Gov. William C. Milliken is sup- the states will be nearly as dramatic.
porting a ballot proposition to cut In fiscal 1980, federal aid for the
taxes on homes by 50 percent, while states accounted for 31.7 percent of
raising the sales tax from 4 to 5.5 state-local receipts. By fiscal 1982,
percent and cutting state spending an that will decline to 24.3 percent, sc-
additional $250 million. He is trying cording to the Advisory Commission
to head off a more drastic tax cut on Intergovernmental Relations.
plan favored by conservatives. Steven Gold of the National Con.
In Nevada, Gov. Robert F. List ferenee of State Legislatures said,
signed legislation that cut property "That is the next body blow that's
taxes by 50 percent but boosted the going to hit the states."
sales tax from 3.5 to 5.75 percent. Staff writers Art Harris, Jay Ma-
Public attitudes may change, how- thews ond Loretta Tsfoni, staff re-
ever, because those state surpluses are searcher Maralee Schwartz and spe'-
disappearing, and local voters will riot correspondents Jim Borrows,
have to decide if they are willing to Terry Ganey, Ca,sivn Gotz, Laura
live with fewer police, parks and Parker, Carin Proit, Austin Wehr-
teachers, or raise local taxes, wein and David Y'pson contributed
This tax revolt has already had ~ to this report.
99-965 0 - 82 - 37
PAGENO="0578"
574
-91-
V. FT 1982 BLOCK G~N1~ SE~CIFICS
Following are descriptions of the nine n~i block grant programs: Can-
nunity Develqrnent, Health Prevention and Services, Alcolxl Abuse, Drug
Abuse and Mental Health Services, Primary Care, Maternal and Caild Health,
Education Consolidation, Social Services, Low Incane Energy Assistance and
Ccrrrnunity Services.
Also included are a description of the general block grant requiraments
found in Title XVII of the 1981 Cenibus Bedget Beconciliation Act; an
analysis of the t~partment of Health and Human Services regulations for the
health, energy assistance and cairnunity services block grants; and an
analysis of the Hepartment of Ibusing and 2Urban Develcpnent regulations for
the Soall Cities Program under the Ccmnunity Developnent Block Grant.
PAGENO="0579"
575
-92-
V. FY 1982 BLOCK (~AN~ SL~CIFICS
(X~UUTY ~P?4~7~
The Department of fkusinq and Urban Developaent' s caruTlunity develojrnent
program has always been a block grant, but the new legislation n~ves that
program in the direction desired by the Administration by rmsoving many
protections such as stringent application and citizen participation
requiranents. Within the CDBG program, separate funds are nov earmarked for
Urban Developnent Action Grants (UIF~G). CDBG funds are split 70%/30%
between urban entitlament jurisdictions and small cities, rather than the
former 80%/20% split.
Under the revised CDBG program, neither entitlament nor nonentitlament
(small cities) jurisdictions are required to sutmit applications for
approval. They only need to sutxnit a statament of their propDsed canmunity
developnent activities and projected use of funds. The statament must be
available for public examination and caument and must include information on
the anount of honey available for propesed casmunity developrent and housing
activities and the range of activities to be undertaken.
The grantee must hold at least one public hearing and, in preparing its
final sttniission, is to consider public carments received. If appropriate,
the grantee is to ruodify its proposed statenent, and the final statmrent
must be made available to the public.
The grantee's projected use of funds is to be `developed so as to give
maximum feasible priority to activities `~thich will benefit lv and rroderate
ncare families or aid in the prevention or elimination of slurre or blight,"
according to the congressional rerort on the legislation. The funds may
also be used for activities s~hich meet urgent carmunity developaent needs
because "existing conditions pose a serious and irrusediate threat" to the
caiTnunity's health or welfare.
Entitleiient jurisdictions are still required to submit a housing
assistance plan (HAP) to HUD, but small cities need not prepare a HAP. The
HAP came under considerable attack during carrnittee hearings on CDBG, and it
is likely that the Administration and sate meibers of Congress will try to
eliminate it entirely in 1982.
HUD will conduct annual reviews and audits of the performance of en-
titleiuent jurisdictions and has authority to reduce annual grants if its
review suggests that this is appropriate.
~ rrore than 10% of a jurisdiction's CD grant may be used for public
services, but there are no restrictions on ~there such services can be pro-
vided. Energy conservation measures will not count against the 10% ceiling.
For the first time, the legislation permits for-profit econanic developnent
as an "eligible activity" under CDBG.
PAGENO="0580"
576
-93-
The reconciliation act folds into the CDBG program, without providing
additional funds, activities previously authorized by the Section 701
cariprehensive planning aid program and the Heighborhood Self-Help Develop-
ment program. The Section 312 rehabilitation loan program is authorized,
but no na, funds are provided. Future loans will be made with funds avail-
able fran repayment of past loans.
While the 011kG program is separately authorized, with its own funding
for fiscal years 1982 and 1983, it is core limited than before. Econcrnic
develqinent activities are strongly enphasized, there is no longer a re-
quiren~nt for a balance between neighborhood and other types of projects and
citizen participation is reduced. A public hearing and an after-thefact
analysis of the programs impact on neighborhoods are required, however.
Congress adopted provisions governing the amall cities program largely
fran the core advantageous Senate bill. States now have the option of
running the amall cities program thenselves but they must pass through all
funds, plus 10% additional state conies, to localities. Alternatively they
can allow HOD to administer the program. States may use up to 2% of their
federal funds to administer the program, provided the acount used is matched
with state funds. Where states do not opt to administer the amall cities
program, HOD will accept proposals directly fran non-entitlacent
jurisdictions.
HFAL~
Congress cut funding by 25% for about 20 health programs included in
four block grants: health prevention and services, alcohol and drug abuse
and mental health services ; primary care (ccrcrnunity health centers); and
maternal and child health.
Excluded fran the blocks are programs for irmrninization, tuberculosis,
black lung, venereal disease, developrental disabilities and family plan-
ning, as well as migrant health centers and, for fiscal 1982 only, primary
care research and developiient. In addition, Congress established a new
adolescent pregnancy program ~thich partially duplicates an existing program
that was included in the maternal and child health block grant.
In general, thanks to House ccmmittee insistence, the health block
grants provide opportunities for public hearings on the state-run programs
and require states to establish criteria for evaluating grantees' perform-
ance. In sa~ cases, states are required to justify their decisions on use
of the block grant funds. Required reports and audits are to be available
for public inspection.
HFAL~ PREV~IC~1 AND SERVICFS ~ ~AN~
This includes hare health services, rodent control, flunridation,
health education/risk reduction, health incentive grants, a continuation
PAGENO="0581"
577
-94-
of existing anergency medical services grants, rape crisis services (with a
$3 million set-aside each year and funds distributed according to a popu-
lation-based formula) and hypertension programs (with set-asides of 75% in
FY 1982, 70% in FY 1983 and 60% in FY 1984). The state may shift up to 7%
of these funds to other health block grants. Administrative costs are
limited to 10%.
Beginning in F? 1983, the state legislature oust told `public hearings
on the proposed use and distribution of funds" for this block grant. The
state is also reguired to submit an application ~thich includes certification
that the state will cake grants for fiscal 1982 to each entity within the
state ~thich received a grant or contract in fiscal 1981. The application
also includes the states agreetent `to establish reasonable criteria to
evaluate the effective performance of entities ubich receive funds. . .and
procedures for.. . independent state review of the failure by the state to
provide funds for such entity." Other requiraments include:
* identification of those "populations,
areas and localities in the state with
a need for the services" provided by
this block grant;
* agreenent that the block grant funds
will supplenent, and not supplant, state
and local funds for these programs;
* making available for public canment a
report that describes the intended use
of the block grant funds; submission of
an annual report on the activities fund-
ed by this block grant; and an annual
audit of expenditures.
AI~(KL A~E, r~ A~EE A~) ~~AL HEALTh SERVICES HtOQ( (~AN~
This block grant includes caraiunity mental health centers and drso and
alcd-iol abuse programs. The Secretary has a 1% set-aside for grants to
public and non-profit private organizations to provide training and re-
training to enployees "adversely affected by changes in the delivery of
mental health services and for providing such anployees assistance in
securing anployment."
Previously funded mental health centers must receive continued support
in fiscal years 1982 through 1984, but the Secretary has authority to
approve defunding of existing grantees.
The legislation earmarks specific percentages of the funds for the
three programs included in the block and allovs shifting of up to 7% of the
funds to other health blocks. No sore than 10% of the federal funds may be
used for administration.
PAGENO="0582"
578
-95-
The sane requiretents for public hearings and criteria for evaluating
grantees performance apply here as in the health services block. In addi-
tion, ccirmunity nental health centers are required to provide specific types
of services to specified types of people. Federal funds must not supplant
state arid local funds for these services. The state must make available for
public caanent its description of the intended use of the funds and,
annually, sutmit a report arid conduct an audit.
~I~RY (ARE BW~ ~r
This "block qrant' actually continues canmunity health centers as a
separate program, with separate funding, and gives states the option of
whether eventually to administer the centers or ally the federal goverrinent
to continue doing so. The centers are operated on a canpletely categorical
basis, as in the past, in fiscal 1982, while states use planning grants to
prepare for their eventual takeover of the centers. In fiscal 1983 and 1984
states may administer the centers but must fund existing grantees for one
year. If a state does not wish to assurre this responsibility, federal
administration will continue.
Beginning in FY 1983, the state legislature must hold public hearings
on the proposed use and distribution of the block grant funds. The state
must "establish, after providing reasonable notice and cppDrtunity for the
suthiission of casrents, reasonable criteria to evaluate the fiscal, mana-
gerial and clinical performance of canmunity health centers."
~E~L AND QUID HFALTh BW~ ~ANF
This block grant consolidates Title V of the Social Security Act
relating to maternal and child health arid services for crippled children,
the Supplerental Security Incane (SSI) program for disabled children, the
lead-based paint poisoning prevention program, the Sudden Infant Death
Syridrare program, funding for canprehensive herophilia diagnostic and
treatment centers, an adolescent pregnancy program and the genetic disease
program. ~> funds may be transferred out of this block.
The legislation deletes a provision of the House version that required
states to pass throuqh one-third of their allotmen~:s to counties arid
municipalities. This is "to avoid creating difficulties" in states where
local health departments are not active in providing maternal and child
health services, according to the House-Senate conference repDrt. Sot, the
report adds, "it is the intention of the conferees that states maximize the
erount of funding available for the direct delivery of services, and that
local health departments (Where they exist) and other local public health
entities receive at least the same proportion of funding in future years as
they have in the past" for these services.
The legislation also states that retoval of the 15% administrative cost
ceiling is not intended to encourage states to spend core than that on
administration arid other "nonservice expenditures." Rather, states are
PAGENO="0583"
579
-96-
expected to econanize even beyerñ the current 7.5% administrative cost
average.
The state must submit an annual repart on the maternal and child health
block grant to the Secretary, stating the intended use of the funds,
including consideration of the needs of the state for services, a statament
of goals and objectives for maetinp those needs and information on the types
of services to be provided and the categories of individuals to be served.
An audit is required every tao years and a repart on activities undertaken
is required each year.
~ U~TIC~ P~X~M
The education consolidation program consists of tao parts: one con-
tinues Title I of the Elar~ntary and Secondary Education Act (ESEB) which
supparts programs for disadvantaged students (but in severely restricted
rm; the other consolidates into a block grant 28 small elamentary and
secondary education programs.
Bilingual education and the Wzxnen s Educational Equity Act are r~t
included in the block grant.
While the n~'i legislation states that programs are to be operated in
school "attendance areas" with "the highest concentrations of lcw incane
children," this is a substantial dilution of previous language which pro-
vides for very specific targeting of funds within school districts.
The n~ block grant also eliminates major provisions that delineate
state responsibilities for auditing and enforc~ant; ~akens maintenance of
effort, supplament not supplant and canparability requireiients; and
eliminates a variety of accountability provisions, such as those requiring
public access to information and those establishing canplaint procedures and
rionitorimp require~ants.
Finally, the ne~, Title I block grant eliminates parent advisory
councils and other forms of parental involvai~nt, requiring only that pro-
grams be "designed and implamented in consultation with parents and
teachers" of children served by Title I programs.
The second portion of the education block grant consolidates all other
ESRk programs (except bilingual education and the Wanen `5 Educational Equity
program), as ~ell as Teacher Corps, teacher centers, precollege science
teacher training, the Career Education Incentive Act and the Alcohol and
Drug Abuse Education Act. It also phases the Follcw Through program into
the block grant over three years. State education agencies are required to
pass through 80% of their funds to local education agencies.
PAGENO="0584"
580
-97-
SOCIAL SERVICES &O~ ~
Wriile the President had proposed consolidation of 11 programs into a
massive social services block grant, Congress simply atiended the existing
program under Title XX of~ the Social Security Act into a block grant that
includes social services and staff training. Anong the crucial programs
left out of the block grant are child welfare, adoption assistance and child
abuse and foster care.
The new legislation no longer targets services on the basis of incane,
and it eliminates requiratuents for states to match a portion of the federal
funds. However, it does not retain the original goals of the Title XX
progran, which include helping recipients achieve or maintain econcrnic
self-sufficiency and preventing or ramedying neglect, abuse or exploitation.
The legislation permits training of social services staff through con-
ferences and ~orkshops and through grants to nonprofit organizations or to
individuals with social service expertise.
Before spending their social services funds, states must develop and
make public a report on hcw the funds will be used, including information on
the types of activities to be funded and the characteristics of those to be
served. Reports on hov the funds were spent, as well as audits, are
required every tse~ years.
States nay transfer up to 10% of their social services funds to any of
the health block grants or to the lcw incare energy assistance block grant.
IA~1 flW ~Y ~SSI~E B1Q(~ ~ANT
This program, which wes basically a block qrant to beqin with, cane out
of the reconciliation process in extratnely good shape. Congress did not go
along with the Administration * s proposal to include artergency assistance in
the block grant with energy assistance, nor to eliminate incaire criteria for
receiving assistance.
of all the new block grants, this one has the must stringent require-
cents for outreach and targeting of services to lv inccrre people. It also
includes a crucial "incane disregard' provision which prohibits counting
this assistance as inccrre in determining other govermrent benefits, and it
limits administrative costs to 10%.
Funds for lo,.i incane energy assistance are targeted to households with
the la~st incares and the highest energy coats in relation to incare, and
renters are to receive equitable treatment. While states may set their vn
eligibility criteria, federal funds may be used only for households that
include a public assistance recipient or a recipient of certain veterans'
benefits, or whose incare is belv either 150% of the poverty level or 60%
of the median state inccrne.
PAGENO="0585"
581
-98-
The state s plan must be made available to the public in such manner as
to facilitate public ccrnment; and the state may not receive funds after the
first year of the program unless it conducts public hearings on the propDsed
use and distribution of the energy assistance funds. The legislation states
that the governor is expected to fully inform the state legislature about
the state plan and assist and encourage the legislature to conduct
independent oversight hearings on the operation of the program. There is no
provision sthereby the Secretary may disapprove a state's plan, however.
States are also required to provide the oppDrtunity for "a fair ad-
ministrative hearing to individuals ~those claims for assistance. .are denied
or are not acted upnn with reasonable prcpptness." An independent audit of
the program is required annually.
To the extent that it is necessary to designate local administrative
agencies to carry out this program, states must give special consideration
to local public or private nonprofit agencies that are currently receiving
federal funds for any low incare energy assistance or weatherization pro-
gram. States may use up to 15% of their block grant funds for weatheriza-
tion or other energy-related hare repair; and they must reserve a reasonable
arrount, based on past experience, for crisis intervention.
States may transfer up to 10% of their low incare energy assistance
funds to any of the other block grants except education or carrmunity
develo~xrent, allowing then to partially offset the funding reductions in
other program areas.
Q~H~fly SERVICE B1O~( ~Nr
Corrrress enacted a separate block grant for carwnunity services,
thwarting the Administration' s plan to fold this program into the Social
Services Block Grant. The legislation repeals authority for the Ccmmunity
Services Administration and places the block grant under the jurisdiction of
the Department of Health and Husian Services (HHS).
In FY 1982, states are to make grants to previously designated
canmunity action agencies or to organizations serving seasonal or migrant
farrraorkers. Beginning in FY 1983, funds may be administered directly by
çolitical subdivisions of states, by private nonprofit carrrnunity organiza-
tions or by migrant and seasonal farrms~rker organizations.
A carounity action agency or nonprofit organization that receives funds
must have a board whose marnbership is constituted as follows: onethird,
chosen darocratically, to represent the çoor in the area served; one-third
elected public officials; and one-third msebers of business, industry,
labor, religious, welfare, education or other major groups and interests in
the careunity.
The state legislature is to hold a public hearing, beginning in FY
1983, on the propased use and distribution of funds. The state may trans-
PAGENO="0586"
582
-99--
far up to 5% of its funds fras this block grant to services under the Older
Americans Act, Head Start or energy crisis intervention. State
administrative costs are linitef to 5%.
As pert of its application, the state must certify that it will use the
carmunity services funds "to provide a range of services and activities
having a maasurable and potentially major inpact on causes of poverty in the
carrnunity or those areas where poverty is a particularly acute problan."
Activities are to help 1CM incane persons, including the elderly poor, to
secure anployrnent, education and housing and to obtain anergency assistance,
among other prposes.
The HHS Secretary may use up to 9% of the funds appropriated for this
block grant for discretionary projects, carried out directly or through
grants to states or public and other organizations and agencies. Eligible
projects include assistance to "private, locally initiated ccanunity
developeent programs which sponsor enterprises providing eiiployment and
business developnent opportunities for 1CM incare residents of the area"
Rural Development Loan Fbnd revolving loans and guarantees; ccmnunity
developient credit union programs, technical assistance and training pro-
grams in rural housing and carinunity facilities develc~xnent; assistance for
migrant and seasonal farneR~rkers; and national or regional recreational
programs for 1CM incana youth.
Prepared by:
Ronnie Kwaller
Center for Canmunity thange
202/338-6484
PAGENO="0587"
583
-100-
BIIXK ~ANP S1~X~IFI~~S
TITLE XVII RECXJIRI~1FNTS
Sections 1741-1745 of the budget reconciliation legislation include
minimum public hearing, targeting and auditing requiregents for several
block grants.
The EMucation Consolidation Program is specifically exenpted fran Title
XVII requiranents, as are the Maternal and thild Health and Primary Care
Block Grants. (As noted above, the Primary Care Block Grant includes its
own public hearing requir~nt.)
The Department of Health and Human Services (HITS) has further deter-
mined that both the Social Services and Low Thccine Energy Assistance Block
Grants are also exenpt fran Title XVII, because they ware formerly block
grant programs in ~nich federal funds flowed to the states. As such, they
do not fall under the Title XVII requireilents for nev block grants.
Public Hearings
Title XVII says: `Th state may receive block grant funds for any fiscal
year until the state has conducted a public hearing, after adequate public
notice, on the use and distribution of the funds propased by the state."
HHS ruled, however, that this requir~nent was not in effect in FY 1982,
because several individual block grants require hearings beginning in FY
1983.
Transitian
Title XVII allc~d states to wait until the third quarter of FY 1 `J2
(July 1, 1981) to certify that they had canplimi with block grant planning
requirenents and ware ready to use block grant funds. Until that time, the
federal agency with jurisdiction over the block grant wauld distribute the
funds on a categorical program basis, with pro-rata reductions to reflect
the spending cuts adopted by Congress in the budget reconciliation act.
These transition provisions did not apply to the Social Services or Low
Inccms Energy Assistance Block Grants. Because they had been block grant
programs prior to FY 1982, and the n~ legislation wnuld require few
administrative changes on the part of states, all states ware required to
implenent then on October 1, 1981.
PAGENO="0588"
584
-101-
While advocates considered Congress's adoption of these transition
provisions as a great victory, it turned out that few states took advantaqe
of then. According to data canpiled by the National Governors Association,
the over~thelming majority of states chose to implanent sost or all of the
block grants on Cotober 1, 1981. New York and California were the notable
exceptions to this trend, California having adopted a state law that delayed
implenentation of all block grants until July 1, 1982, the latest date
permitted by Title XVII.
TarqeLi~
Each state must develon a public recort on its proposed use of funds
for individual block grants. The report must include: a stateaent of coals
and objectives; information on the types of activities to be supported,
geographic areas to be served and categories or characteristics of
individuals to be served; and the criteria and mettod established for the
distribution of the funds, including details on hc~i the distrib.iticzi of
fun~1s will be tarceted ~i the basis of need to achieve the nurouses of the
block urant.
Beqinning in FY 1983, the report must include a description of how the
state has out the goals, objectives and needs set in the previous year. The
report and any changes to it shall be made public "on a timely basis and in
such manner as to facilitate caliounts fran interested local governments and
persons."
~its.
Title XVII requires states to perform financial and canpliance audits
of their block grant funds every tao years.
In contrast to its decision on public hearings, HHS ruled that this
provision supersedes the reguir~nt in an individual block grant -- in
this case the rrore lenient reguiranent for an annual audit of the Caiirnunity
Services Block Grant.
~s to Records
In order to evaluate and review the use of the block grant funds, the
Ccmptroller General is to "have access to any books, accounts, records,
correspondence or other documents" relatinq to such funds.
Prepared by:
Ronnie Kweller
Center for Canmunity Change
202/338-6484
PAGENO="0589"
585
-102-
~ ~r ~ia~
In sharp contrast to past federal regulations, those for the new block
grants are deliberately minimal, failing to elaborate on or clarify the
satetiires vague provisions of the legislation. This is true of the
regulations prcmulgated by the Department of Health and Human Services (HHS).
and by the Department of Housing and Urban Developi~nt (HUE)).
The HHS regulations cover four block grants in the health area as ~ll
as block grants for social services, canmunity services and lcw inccrne
energy assistance. HHS published these "interim final' regulations in the
October 1 Federal Register (pp. 48581-48598), allying a 60-day carment
period.
De Nowsnber 20, HUE) published interim regulations for the State Program
(~nall Cities Program) under the Cannunity Developimnt Block Grant, with
casoents permitted until January 19. The propased regulations are on pages
57255-57261 of the Federal Register.
~~Re!~4ccr1~lth, Social Services, Ccimuni Services ar~i Lcw
~
HHS itself has described these regulations as "bare bones minimum" and
in every possible instance has given maximum discretion for interpreting the
law to the individual states. The regulations clearly indicate that HHS
will exercise little if any judgment as to the adequacy of state block grant
administration, beyond technical concerns such as ~nether the state has
sutmitted a casplete application.
Despite statutory language stating that the BBS Secretary will pre-
scribe the form of state applications for block grant funds, the regulations
do not dO so. They merely state that the application must canply with Title
XVII requiranents for a report that includes the goals, activities,
geographic areas and types of individuals to be served, and the "criteria
and rnetbod" for distributing funds, including bow funds will be targeted on
the basis of need. The reports are to be available for public ccnmnnt.
The preaichle to the regulations states: "The Department will review the
suhnissions to determine that they are canplete and in accordance with the
statutory reguiranents. Fbnds will be made available to any state filing a
canplete suhnission." This language strongly suggests that HHS will not
exercise judgment on the adequacy of the plan. It semus unlikely, for
instance, that HHS s~ould reject a plan because it ~ms not going to address a
need identified by a ccrnmunity group at a public hearing or in wd,tten
carinents. -
PAGENO="0590"
586
-103-
Because HHS apparently will not exercise such judgosnt, governors are
under no pressure frcm the federal level to pay attention to ccirir~nts on
their block grant plans, nor does HIIS do anything to make them feel
obliged to justify any failure to trodify their plans on the basis of the
caTUThE~nts.
Record-Keeping; Reports
Again, the regulations fail to carry out the statutory provision
stating that the Secretary will prescribe the form and content of states'
annual administrative and fiscal reports on block grant expenditures. The
preamble to the regulations osrely directs states to keep records "suff i-
cient to permit the preparation of reports required by statute and to
permit the tracing of funds to a level of expenditure adequate to insure
that funds have not been spent unlawfully. . . .Except for these provisions,
the Secretary is not prescribing any data collection requirements and is
not prescribing any format or content of any information that the act re-
quires the state to collect." The regulations do not define any of the
vague terre in this statement, such as "adequate" or "sufficient."
These minimal requirements for record-keeping, plus those for after-
the-fact reporting, seriously curtail a state's accountability for its use
of the funds. Other than in the preamble, the regulations themselves do
not even address reporting requirements, allowing the vague statutory
language to stand on its own.
The law requires a report, beginning in FY 1983, describing how the
state has net the goals, objectives and needs identified in its previous
report. There are no requirements for data on who was served by sex,
race, age, handicap, incaro, etc., nor on what services they received, nor
for any data that would facilitate evaluation of program effectiveness.
Past experience with block grant programs, including General Revenue
Sharing and Title XX, has shown the difficulty of tracking block grant
funds in the atsence of detailed data reporting. The minimal requirements
for the new block grants will continue and intensify this unacceptable
situation.
Federal Oversight and Monitoring; Audits; Ccmplaints
The preamble to the HITS regulations leves no doubt as to where the
department stands on the issue of federal oversight: "A basic purpose of
the block grant legislation is to simplify state grant administration and
minimize federal involvement by placing far greater reliance on state
government. Accordingly, the block grants will be exempt frcm the usual
departzrental grant administration requirements. . . .We are establishing a
fiscal and administrative standard providing maximum discretion to the
states and placing full reliance on state law and procedures. Under this
standard, a state will not lock to Part 74 (of the Code of Federal Regula-
PAGENO="0591"
587
-104-
tions) for such matters as property procurement standards or what is an
allowable or unallowable cost. Rather, the state's laws and procedures
governing the expenditure of its own revenues will govern."
The regulations theaselves do not even address oversight or auditing,
simply leaving it to the preamble to describe how HHS is interpreting the
statutory requirements.
The law requires annual audits for the Low Income Energy Assistance
Block Grant and for three of the health block grants: Preventive Health
and Health Services, Alcohol and Drug Abuse and Mental Health Services and
Primary Care. Audits are required every two years for the Maternal and
Cnild Health, Social Services and Cctnmunity Services Block Grants.
In the case of ccninunity services, the regulations state that the
Title XVII requirement for an audit every two years supersedes the lan-
guage of the block grant itself, which requires an annual audit.
Audits are to be conducted by an "entity" that is "independent" of
the agency administering the block grant, according to the statute. Here
again, however, HHS gives the states maximum discretion for self-regula-
tion.
The preamble states: "The block grant programs are intended to confer
great discretion on the states, which by statute are the primary auditors
of their own expenditures. The fundamental check on the state's use of
block grant funds is the state's accountability to its citizens, which is
implemented by public disclosure within the state of infonriation concern-
ing use of the funds. Accordingly, when an issue arises as to whether a
state has complied with its assurances and the statutory provisions, the
Department will ordinarily defer to the state's interpretation of its
assurances and the statutory provisions. Unless the interpretation is
clearly erroneous, state action based on that interpretation will not be
challenged by the Department."
The preamble adds that "the Department will rely on state audits if
the audits have been conducted in accordance with the Ccnptroller
General's standards. . . .Any additional auditing by the Department would
build upon the state's work."
Regarding both ccmplaints and audits, the federal role, once again,
is minimal. According to the regulations: "In resolving any issue raised
by a complaint or federal audit, the Department will defer to a state's
interpretation of its assurances and of the provisions of the block grant
statutes, unless the interpretation is clearly erroneous."
The next sentence, however, mndifies the extent to which the state
will judge its awn conduct: "The Department will provide copies of
complaints to the independent entity responsible for auditing the state's
activities under the block grant program involved. Any detexmination by
the Department that a state's interpretation is not clearly erroneous
PAGENO="0592"
588
-105-
shall not preclude or otherwise prejudice the state auditors considera-
tion of the question."
Regulations for ccmplaint and hearing procedures are somewhat ambig-
uous and may be clarified when the regulations are published in final
form, according to an HITS official. %Tnile not explicitly providing for a
hearing when a complaint is received, the HITS official said the depart-
ment's intent is to allow the agency receiving the complaint to bring the
parties together on an informal basis to discuss the complaint, before the
agency determines whether funds have been misspent.
Complaints may be filed when the state is deemed to have failed to
use its block grant funds in accordance with the block grant legislation
or the assurances and certifications required by law and included in the
state's plan. The regulations identify in brief the contents of the com-
plaint and say where they should be addressed for specific block grants.
The Department will "promptly" furnish the state with a copy of the
complaint and the state will have 60 days (or longer if the Departrrsnt
agrees) to cawrsnt on the complaint. "The DepartlTsnt will conduct an in-
vestigation of complaints where appropriate" and will provide a written
response to the complaint within 180 days of receiving it.
Before a state can be ordered to repay funds that the Department has
determined were spent improperly, the state is entitled to a hearing. The
state may appeal the decision resulting from the hearing to the Depart-
ment's Grant Appeals Board (for which regulations were published in the
Federal Register on August 31, 1981).
The preamble to the regulations states that HHS "has provided for a
comparatively informal hearing procedure rather than a formal hearing be-
fore an administrative law judge... .The flexible procedure adopted is de-
signed to resolve questions in a fair and expeditious manner."
Thus, the regulations state that "participation as parties in the
hearing by persons other than the state and the Department is not per-
mitted" -- though an HITS official said the complaining party could be
called as a witness by either side -- and that "the use of interrogator-
ies, depositions and other fonrs of discovery shall not be allowed." It
remains to be seen whether states comply with the intended informal spirit
of the hearings, or whether they use these regulations to thwart a fair
airing of the complaint.
The regulations further state that the hearing shall .be public,
except when the Secretary or the presiding officer decides otherwise. The
presiding officer is to be an HITS employee, designated by the Secretary,
who is to be "free from bias or prejudice and may not have participated in
the investigation or action that is the subject of the hearing or be
subordinate to a person, other than the Secretary, who has participated in
such investigation or action." All parties to the hearing may be advised
and accompanied by counsel.
PAGENO="0593"
589
-106-
Nondiscrimination
The statute prohibits discrimination on the basis of age, handicap,
race, color, national origin and sex for the four health block grants and
those for cctrrriunity services and energy assistance.
While the Social Services Block Grant does not include explicit non-
discrimination language, federal laws prohibiting discrimination on the
basis of sex, race, age, religion and handicap apply. These prohibitions
will be clarified in the final version of the block grant regulations,
according to an HITS official.
The regulations do not elaborate on these provisions. The preamble
states that, with one minor exception, the Secretary will rely on existing
nondiscrimination regulations, rather than developing new ones for the
block grants. (The exception is that nondiscrimination assurances re-
quired by the law are to accanpany states' applications for block grant
funds.)
It should be noted that up until now, all enforcement against dis-
crimination on the basis of race and handicap has occurred at the federal
level. Advocates, therefore, are concerned that the block grant regula-
tions fail to address meaningful enforcement of basic nondiscrimination
protections.
Further, the regulations fail to clarify that the ccxiiplaint proce-
dures do not apply to investigations of alleged violations of federal
civil rights laws. This suggests that the vague and unspecific block
grant ccinplaint procedures supersede the mere carefully drawn procedures
for investigating violations of basic federal civil rights protections,
such as Title VI of the Civil Rights Act and Section 504 of the Rehabilita-
tion Act, which pertains to handicapped persons.
It is unfortunate and dangerous that the block grant regulations do
not specify that they do not supersede the enforcement procedures set
forth by federal civil rights laws and their own regulations, especially
as it can be argued that the legislation establishing the block grants
clearly deionstrates Congress's intent that enforcement and couplaint pro-
cedures of the various federal civil rights statutes apply fully to the
block grants.
Prepared by:
Ronnie Kweller
Center for Carrnunity thange
202/338-6484
99-965 0 - 82 - 38
PAGENO="0594"
590
-107-
&CCK ~AN~ RE~AT~
Ccminity Develcçztent Block Grant - ~ll Cities Program
Interim regulations for the Small Cities (non-entitlalent jurisdic-
tions) program under the Canraunity Developoent Block Grant are in a hold-
ing pattern, pending ccrnpletion of a mandatory 30-day congressional re-
view. As the 30 days must occur while Congress is in session, the holiday
recess, which lasted until January 25, delayed caripletion of the review.
BUD published the Snail Cities regulations in the Hovad~er 20 Federal
Register (pp. 57255-57261), but apparently is delaying publica of Ct~G
entitlanent jurisdiction regulations until the status of the Small Cities
regulations is resolved.
In the meantime, there are several issues of concern in the proposed
Small Cities regulations:
Princi~nl Benefit
The primary objective of the CDBG program -- that funded activities
principally benefit low and coderate incate persons -- is considerably
downplayed in the new regulations. Indeed, the Department of Housing and
Urban Developrent' s original draft of the Small Cities regulations did not
even mention this objective. Citizen and congressional objections to this
anission led to develorxnent of the currently proposed regulations, which
state that the primary objective can be achieved through activities that
carry out one or core of three national objectives, including aiding in
the prevention or elimination of slums or blight and meeting urgent
caamunity developoent needs.
Besides diluting the enphasis on low and noderate incane benefit, the
regulations decline to set a uniform definition for low and rrcderate in-
cane, allowing states to use their own definitions, based on either
federal standards "or upon state conditions or determinations consistent
with the intent and objectives of the act.'
The prean~ble to the regulations notes that in administering entitle-
ment CL~G programs or non-entitlenent programs that individual states
choose not to run, BUD will continue to use the incare eligibility stan-
dards of the Section 8 program. "The Department believes, however, that
other definitions may be equally consistent with congressional intent."
This approach raises serious questions of equity and effectiveness.
If states are free to set their own definitions for low and iroderate in-
cane, what will ensure that the national goals of the program are
achieved? In this time of declining budgets at all levels of governrrent,
moreover, it is of maximum importance that funds that are meant to be
targeted by incare are, in fact, so targeted. A uniform incare standard
wnuld be a significant step toward this goal.
PAGENO="0595"
591
-108-
Record-Keeping and Grantee Perfoni~ince Evaluation
Like the regulations for the HHS-administered block grants, HUT) 5
regulations explicitly state that the Department will give a great deal of
discretion to the states for interpreting the law. In the case of the
Small Cities program, the proposed regulations state that "In exercising
his obligation and responsibility to review a state's perfonnance, the
Secretary will give maximum feasible deference to the state's interpreta-
tion of the statutory requiresents consistent with the Secretary's obliga-
tion to enforce compliance with the manifest intent of Congress as de-
clared in the act.'
This intention canes through clearly in the regulations pertaining to
record-keeping: `Each state shall establish and maintain such record-keep-
ing requirements as the state shall deam appropriate in order to facili-
tate review and audit by the Secretary of the state's administration of
grants. . .and shall establish record-keeping requiraments for units of
general local government receiving assistance which shall be suffiáient to
facilitate such reviews and audits of such recipients as may be necessary
or appropriate to determine whether they have carried ant their activities
in accordance with the requirarsnts and the primary objectives of the act
and other applicable laws."
The regulations do not define the terms "necessary" and "approp-
riate," leaving this, too, to the states. Similar language is used with
regard to performance reports. This is particularly disturbing, as both
Congress and the Administration have placed great eaphasis upon "back-end
review" of the CDBG program since the front-end application process has
been largely eliminated, according to the preamble to the regulations.
Nevertheless, "the Department.. .is not atteapting in these regulations to
prescribe in detail the manner in which states are to report their activi-
ties to the Secretary."
Not only is this troublesome in terms of HIJD's receiving sufficient
information on which to base performance review, but it flouts congres-
sional intent, as stated in the Senate committee's report on the Ct)BG leg-
islation: "The canrnittee `s proposal re-~hasizes the post-grant review
and audit process as the proper point in time to determine consistency and
appropriateness of local CD programs." It is difficult to imagine any de-
gree of consistency within a process that permits 50 different methods of
record-keeping and reporting.
Civil Rights
In this area, too, HUD seena to be downgrading the importance of an
important area of federal concern. While prior CDBG regulations spelled
out the exact civil rights obligations of grantees, the new proposed regu-
lations refer only to conformity with the Civil Rights Acts of 1964 and
1968 and other applicable law. The regulations do not, however, describe
gmantees' responsibilities under these laws.
PAGENO="0596"
592
-109-
Citizen Participation
The regulations do not address citizen participation, giving states
no guidance as to how citizens can cciament on the state's published state-
rnent on its intended use of ~DBG funds, nor do they address public access
to program infonTation.
Citizen participation and public canrrnnt beccne meaningless tenns
when there are no guidelines for making it a reality and when public
access to information is not guaranteed.
Multi-Year Ccmniti~nts
Here, pressure fran city officials caused HOD to revise its original
regulations, which did not require honoring of multi-year funding caamit-
ments made prior to passage of the new (DBG legislation. The proposed
regulations do require that states honor multi-year ccinmitnEnts made in F?
1980 and 1981, providing the funded localities request it and that HUD
determines they have performed adequately. HUD is to be responsible for
administering funds that it distributed under such ccniTlitrrnnts, while the
state will administer funds that it distributed.
1~tching Funds
Under the Small Cities legislation, states that choose to administer
the program must provide a 10% match fran their own funds for carmunity
development activities. Such activities do not have to relate directly to
activities undertaken with CDBG funds, nor must they take place in ccarnun-
ities receiving nonentitlement funds. The regulations allow activities
that improve distressed areas or benefit low and mederate income house-
holds, as well as housing and ccninunity development activities that are
not eligible under the act, such as construction of new housing and rent
subsidies.
A~ninistrative Funds
States may not use CDBG discretionary grants to cover administrative
costs, which mist be paid out of state funds.
Prepared by:
Paul Bloyd
Center for Canriunity Change
202/338-6382
PAGENO="0597"
593
-110-
VI. I~tFSS (LIPS
The following pages include sane of the news coverage and editorial
ccenent during the debate on block grants and the early block grant imple-
nentation period.
PAGENO="0598"
Lost month. President Reagan talker
with five reporters about his concept of
federal-state relations. Colunnesiat Peirce
is a specialist in that field.
One has to credit President Reagan for
taking a sincere interest in the US. federal
system and elivating it to ila most promi-
nent position in American debate in over a
half century. Heeven tooktheunuaualstep
of denignating federal questions as the sole
thime for our briefing.
Yet as I walked out of the Oval Office, I
felt no small measure of despair. Reagan
had come close in the interview toconfirna'
lag the view of skeptim who say his "new
federalism" announts to little more than
shipping programs down to the statea as
fast as ponuible.
I tsked him what should be the federal
government's "domestic functions"? His
sole snswera "national security" - and
then, later in the interview, "interstate
commerce" as well,
Mr. Reagan had spoken out fur raising
and spending taxes at the same level of
government, for block grants over smaller
categorical granla so often associated with
"that entra layer" of bureaucracy.
He hod poieted with pride to his edwin-
istratioo's removal of hundreds of regula-
tions, his personal consultations with hun'
deeds of state and local officials during his
first 10 months in office,
He had discusaed his hope to identify
sources of pevenue. that could be turned
back to the states
Why, then, the dismay?
FIRST, because Mr. Reagan seems not
to appreciate folly the turmoil into which
his ropid budget-cutting has thrown state
and local budgets.
The,.atote.locol sector absoebesl 113 bil-
lion in cats is the fast budget rouiid. In
September the president sought to cut
another 12 percent
Now he would give no guarantee that
state-local aid - even general revenue
sharing and the new block grants-might
not suffer still more cuts in thenect bud'
get
Mr. Reagan pointedly ignored the alarm
voiced by the nation's governors in early
November before the Senate Intergosern'
mental Relatisns Subcommittee, chaired
by Sea, David Durenberger of Mmnews
te,
The governors had warned of "disarray
and chaos" instate capitels because of the
federal cuts. Richard Snelling (R-Vt,), Na.
tionat Governors Association chairman,
had cited one Congressional Budget Office
scenario that aid testate and local govern'
meets cooldvirtuallydisappearby 1984, so
great are the presaures on the budget
So the governors had said Washington
simply must trim the so-fur sacrosanct
"entitlements," ranging from Social Secs'
city to veterans-benefits us Medicare, the
defense budget, even Reagan tax cots.
But Reagan, in the interview, dismissed
Snelling's urgent call for a two-year mora'
terians an further cots in aid to stotesand
localities, so thattheymight institutesome
rational budgeting and planning.
"It would be great if we could afford it,"
he said.
The president gave no prospect of major
budget cuts other than in aid to states and
totalities - even though that aid accounts
for only 15 percent of the federal budget
and isdwarfed byentitlementsand defenses
pending.
THE PRESIDENT brushed aside one
goal of the governors - a sorting out of
roles, with welfare and Medicaid becoming
federal responsibilities and such fields as
~`: ~E1R~
education and transportation pasnuog to-
tally to the states.
Ide simply reiterated his long-held epic.
ion that wetfacs costa are best cnntrolied
locally, He showed no interest in negatiat'
`trig such questions
The presideat also scorned a resolution,
pa.saedbythewrstern guvernorsin Arizona
Nov. 7,gppoaing furthercuts in thedomes'
tic budget absent "a significant sortlng,out
of functions between the federal govern'
ment and the slates."
Said Reagats "Most of those western
governors are Democrats-" to aict, seven
are Democrats, six are Republicans.
What the president fails to grasp is that
the protests by the governors, and the
demands to be acknowledged as constitu
tionally equal partners, are bipartisan.
broad-based and growing - a develop'
ment that may mark s historic turn in
federal-state relations.
FINALLY, the president demonstrated
almost no sensitivity te the great new
differencesin wealthdeveloping among the
states - the gulf between the energy.pour
states and those in the South and West
with vast reservoirs of oil, gas, and coal
which they can tax heavily.
Sen. Darenbercer has asked how these
differencesjibe with Reagan's plea to puuh
vast program areas to the state level. He
questions whOther it's "fair to expect the
states and localities that suffer from a
declining economy to provide the santo
level of publicservicesas those states float
with elsergy-nelated revenues?"
The president was askedDurenbergen's
questionduringthe interview. Hisresponse
was that an energy-rich state enjoys no
greater taxing advantage than, fur exam-
ple, California with its multi-billion dollar
fruit andvegeteble crops. Guvernmeuts tax
everything they can touch, he suggested;
energy severance taxes are no different
Even if one agrees that some level of
state energy severance taxes is justifiable,
the sweep of that argument is startling.
It ignores the fact thatenergy-rich states
are pulling itt billions of dollars, based on
the spiraling prices of energy, and can
easilyabsorbthe Reagan badgetcula,while
the energy~paor states, especially those
with declining industrial bases, are pushed
to the wall,
Any interstate disparities in weatth, said
the president are strictly the states' own
problem. "The built-in guarantee of free'
dam is our federalinm. That makes us
unique.Thatis, therightofacitizeutevote
with his feet." Any inequalIties should be
taken care of by "the marketplace."
He apparently feels that the federal gov-
ernment has no obligation to people or
slatesorplacesdeultcripplingbloss bythe
economic vagaries nf the times.
Abeent in this, to coy mind, is the maen~
tint sense of nationhood and nationwide
interdependence sod mutual responvibilit3
that ought to underpin any federalist phil.
osophy. Thus my feelings of despair at the
close of the Reagan interview.
Peirce wrileu a syndicated column or
state and local goiersmesto..
594
N ~ ~nse oi ~
in Reagan's federalism
PAGENO="0599"
595
-112-
THE WASHINGTON POST. SUNDAY, NOVEMBER 8, 1981
Vernon E. Jordan Jr.
What Are the Poor Supposed to Do?
The Reagan auministration Where can the poor turn, then, if tribations to charities, job cam- percent far same time now, and
steadfastly persists in its refasal ta not to state and local governments? paigns and greater corporate activ- there is littlereason to assume that
answer the basic qarstion its policies Some suggest the basiness cam- ism. the maximum will he reached in the
raise: "What are poor people sup- munity kill step in and increaseila But it in not realistic to expect future.
posed to do while their survival pro- job creation and social responsibility much relief from the business sector. What about prioate ettuntarism,
grams are cut back and before the efforts. Doubtless some companies Corporations have been allowed to then? The president correctly
promised prosperity takeseffeco?" will. Enlightened business leader- donate up tob percent of taxable is' stressed the American tradition of
Even if the Reagan program ship has come out forthrightly for come, and the new tan law doubles voluntary support for community
works-and it shows every sign of jastsuch an activist role. Many have that to 10 percent But corporate needs. Individuals have always been
failing-it will take years before it called for increased corporate con- contributions have averaged about 1 generous with their contributions
results in sharply increased employ- and their time.
ment and a tolerable inflation rate. But there are limits to entuntor-
In effect, the federal government - ~._ .._~__.._- mm that the administration refuses
is telling poor people to wait until to acknowledge. Recent studies mdi-
happy days come back again. And cats that the voluntary sector will
until they do, it seems tobe suggest- lose some $27 billion in federal aid
ing that other institutions should fill between 1981 and 1984, and it is un
the gap between the little that poor likely that private donations can
people have and what they need to . plug the gap. Most private giving is
survivo. to religious organizations, and the
Prime among those institutions social welfare institutions, currently
are state and local governments, most dependent on federal monies,
The idea behind the misguided . represent a shrinking sector of the
block grants is that local officials charitable pie.
can choose to support the programs Conceptoally, too, the stress on
that benefit theircommunities. votuntarism is muddled. We should
A finr idea, but not for the real be well beyond the morally primi-
world of limited resources, political live stage of believing that the basies
domination of local governments by of human existence-jobe, income,
those least interested in the plight of fond, shelter and health care
the poor and forced competition should be provided by individual
among worthy caases for diminish- charity and not by government act-
ing dollars. tag on behalf of a shared community
Esperience demonstrates that few sense of human rights.
state and local governments will Some state and local govemments
continue key programs at adequate will try to fill the gaps as best they
levels. Barely a few monks into the can, Some parts of the private sector
new fiscal year, we already see day. will step in to create job and train-
care centers closed, welfare grants ing opportunities and support
reduced, school lunch programs cut worthwhile community projects.
back and oihee social services Some individuals and nonprofit
trimmed, as local officiats refase to agencies will stretch their efforts to
makeup for the lost federal dollars. the limits to try to help those io
There is a lot more that is wrong need.
with the block grants idea, or to use But taken together, all of those
the phrase that more accurately de- worthy efforts wilt be unable to re
scribes its thrust, states' rights, place the gnveroment's resources or
But the overriding reality of block its fundamental responsibilities.
grants is that they are a means of The question: "What are the poor
shifting national responsibilities to supposed to do?" remains anon-
localities ill-equipped to deal with swered.
them. They virtually emure the end
The writer in preoident of the
0 ght gt t Iscatco t to 9
PAGENO="0600"
596
-113-
"I HEREW( PECLARE `fl'~IS COR1IERSTOH~%~
4-
M)*~.f c'.3T t~4qifr/
PAGENO="0601"
597
-114-
The `New Federalism' Looks
Good - From Washington
IT wasn't so surprising that when the National League
of Cities gathered in Detroit last week, President Rea-
gan's "new federalism" came in for plenty of flak.
What was surprising perhaps was the intensity of the
bipartisan attack. New York's Democratic Mayor Koch
said the Administration's program to give local govern-
meñts responsibility for scores of programs once super-
vised and largely underwritten by Washington was a
"sham and a shame." But many officials, some once re-
garded as influential supporters of the President, also
complained bitterly about the financial strains on local
governments. The League's departing president, Mayor
William H. Hudnut 3d of Indianapolis, regarded as a Rea-
gan ally not long ago, said "too much has been asked of
cities and otherrecipients of these Federal programs."
Gov. Richard A. Snelling of Vermont, a conservative
Republican who heads the National Governors Associd-
tion, emerged as a leading critic of the "new federalism"
as practiced so far. He said it was leading the nation to-
ward "an economic Bay of Pigs." (As an example of the
effects, Pennsylvania, on Dec. 12, was to begin trimming
welfare aid to families with dependent children in accord-
ance with new Federal guidelines.)
B. DrummondAyres Jr., a Washingtoncorrespondent
of The New York Times, conducted separate interviews
last week with GovernorSnelling and with theAdministra-
tion's chief defender of the program, Richard S. William-
son, White House assistant for intergovernmental affairs.
He first asked each how the "new federalism" seemed to
be working.
Richard A. Snelling
Answer. I assume that by the `new federalism' you
meansomesortingoutoftheseveralresponsibilitiesof the
Federal, state and local governments, and some conscien-
tiouseffort toaccomplish theconstitutional role-making
surethat equal justice and opportunltydid not stopat state
borders.
One of the ways to do that, certainly, is toprovide equal
opportunity and capacity through block grants and the
like, forthe simplereason that that's thewaythat the Fed-
eral Government could adjust the very distinctly different
capacityof different states and local entitles and establish
fairly clear goals of national interest in such a program.
And then allow the states to allocate those funds and,
within broad guidelines, to developprograrns whichwould
be specific to the priorities of these states in implements-
tlonofthegoals.
What we've really had so far is simply budget cutting.
There has been avery small, minute movement towards
reallocation and redesign of grant programs. There are
some 59 programs out of nearly 600 categorical grants
-whichhavebeenpackaged into9 so-called blockgrants.
However, moat of those have strings attached which, to
all intents and purposes, prohibit the states from making
real priority decisions. So to me the most important thing
to communicate is (that so far there has been) no test of
thenew federalism.
People Are Talking Shorthand
Q. Is there a danger that the Administration has over~
slmpllfiedtheproblems that face thenatlon?
A. I don't like to characterize the views of anotheras too
simple. Maybe what is happening is that people are talk.
log in shorthand and shorthnnd can bea representation of
averycomplex subject.
I think it's very clear that-the Federal Government has
intervened in many areas where theyneed not intervene in
order to assure people of their constitutional rights and to
promotethegeneralwelfare.
Now, on the other hand, it depends a great deal on what
the President means and I am eager to have him explain.
If he literally means that there is no cause forgovernmen-
tal support of programs at the Federal level to assure
equality of opportunity and of capacity across the state
borders, then I would say simply that I see no Constitu-
tional justification forthat.
That view was absolutely rejected by the Federalist
papers. The lengthy dialogue between Mr. Hamilton and
Mr. Jay and Mr. Madison made it quite clear that they
were not advocating the Constitution in the sense that
everyboat was on itsown bottom and each state had onlya
responsibilltyforthecommondefense to others.
Q. Have the states, cities and counties been asked to
sbouldertoomuchoftheburden?
A. Certainly, in my judgment. The total budget which
goestonon-Federal agencies is modestly more than lOper-
centofthetotalnationalbudget. -
tn essence, the game plan has been that there will no
changes on the revenue side from the Initial victory in tax
cuts, that defense is not to be discussed and that entitle-
ments cannot be discussed, but at the same time, there's
great concern about a projected 70-, 80-, 90-billion-dollar
deficit.
And so I think that if the only source for a budget cut is
that which Is accessiblebecause it's undercontrol andyou
may not bring under control that which is not under con-
trol- so-called entitlements - that that requires a much
greater burden for state and local governments than is
fair, appropriate or for that matter likely to stand the test
of time.
The Government's Obligations
Q. The President, In a recent interview on federalism,
indicated that he would not look favorably upon a sorting
out that had the Federal Government picking up most of
the cost of welfare. Can there be a new federalism if the
Government doesn't pick up the cost of such big-dollar
items?
A. There are really twodifferent ways tosort things out.
One would be to say the Federal Government will do all of
certain things and state and local governments will each
doall ofcertalnotherthings.
PAGENO="0602"
598
Andthere's anotherwayentiely,Whhlsthatace~15 ~
degree of Federal interest would be defined In each~of A.Thamarel~t~~n~lfoneIna stateorleea
those areas that are descrthed In the Declaration of Inde- ~icial, becausetheyfaceakind ofeconomicuncertainty.
pendenceasbeingOfnationalconcorn. Congress still hasn't passed the appropriation bill so they
CongresswoUld state a national interest ineachof these don'thavethefundinglevelsforthiscomlngyear.
areas and stand willing to augment the capacity of both ~~nmily, the state and local officials face problems be-
states and local governments to the ~ent that that ~ cause you're in an era of strained public resources tore-
pacity was inadequate, with reasonable effort, to afford shadowed by the adoption of Proposition 13 In California
the constitutional level of aid and comfort to those who and P ition 2'/~ in Massachusetts, and in the election
wereinseed. last year of Ronald Reagan and many conservative Re-
And that, I believe, could be accomplished in a way publicansinthesenate.
which would reduce the Federal expenditures; which Thirdly, there aredislocations any time you change the
would provide much greater flexibility to states and local way Government does business. And Ronald Reagan Is
governments in determining how they would implement leading a quiet revolution. It's not only his economic pro-
programs. gram but also the component parts which devolve respon-
~ sibilitieabechtostatoandincalofficials.
ignoretheplightofpeOPleonthebmisofthectworstatem All of those things, coupled with the fact that we'rein a
which they resided and in many cases were born and are recession now, malte it a tough job to be a state or local
reallyunabletoleave. elected official. These are understandable political con-
QIn conclusIon, what would be your recommendation cents.
ootbe PresldentabOUttheflwfederatwm? Unfortunately, one does not have the luxury of making
A.ToproceedalOllga middle ground; to approach fiscal the structural changes, of devolving responsIbilities hack
stability by a mederate reduction in taxes, a niederate re- to state and local officials, in a perfect world. You get the
duction in entitlements, and to proceed year after year to world as you're given it. Ronald Reagan inherited, as he
turnover to the states, alongwiththeir shareof this fiscal mid during the campaign and when he was first elected,
restraint, a greater and greater responsibility for design- the worst economic mess the nation has faced since the
ing the programs necessary to assure In their states that G~t Depmssion. He told the American people what he
~ pl~ed to do about that during the campaign: he was
Toaverygreat extent, theproblems inMiami tedayare going to make significant budget reductions, significant
the result of Federal actions, by way of immigration pelt- reductions in the marginal tax rate, regulatory relief and
cy. I don't see how we could Ignore the consequences of trytostabilizethemoneta17P0liry.
~
Sol franklybelievethatthe Constitution's call forpower (~)nf'JsI~fl Is Inevitable
to Implement the Bill of Rights, with respect to the corn- Q. There were a number of complaints in recent weeks
mon welfare, requlres the Federal Government to assist ~ ~ of federalism as it comes from the White
the states when the states do not have the capacity to at- House is rather contradictory. Is any thought being given
fordthecitizenstheirconstitutiotmi rights. by~ idenjfederaliPeech?
A. First, I think there Is some confusion. To paraphrase
Richard \~Ii11iarnson sometiting Winston Churchill once said, There are two
thingsyoushould neverwatchbeingmade: one is sausage
andtheother is legislation. And I thinkthesamethingcan
Answer. I think theaccomplishments have been signifi- be said about any substantial effort tochange thewaythe
cant.One,thepublicdebateonhowAmericalsgovernedIs Federal Government is doing business. So there are at
louder,discussedwith moreenergyand clarity, than inre- timescontradictions, there aresome contusions, thereare
centmemory. I thlnkallpartieswill concedethat, because somefailurestohavetheclarityweallwould like.
Ronald Reagan has made It clear to the American people Secondly, the President made a majorspeech to theNa-
he wants to change bow America Is governed and a large tionalLeagueofCitiesinMarchonthefederallsmissue. In
part of that is redistributing responsibilities and authority late July, he addressed the National Conference of State
amongtheunitsof government. Legislators onthe federalism issue. Many of his speeches,
Second, the budget cuts themselves addressed his view from his remarks in Yorktown celebrating the Bicenten-
of what national priorities are, such as the budget shsuld nial to speeches before the National Business Alliasce,
deal with national concerns and get out of the business in have had themesin them and paragranhs in them dealing
certain other areas. He made [Inc proposals and they wert withfederalismquestions.
adopted, in large part, both by the Republican Senateand As to whether or not there should be a speech devoted
theDemocratic-controlledHouse. solelyonfederalism in the near future, it's a possibility. I
Third, the President proposed dramaticconsolidationof would suggest, however, that what we'll probably see is
categorical grants, and while he was not as successful as some of those themes elaborated on t more detail early
he would have liked either in number or in providing as nextyear,
much flexibllty as he wanted, he din get 57 categorical Q. ~ you tell us what the President meant by his re~
grants combined into block grants. And, as a National cent statement to the effect that those who find theirlife
Governors Association publication said, it was the mont m~lnle In one place as a result of the new federalism
dramatic shift in the grant process the Federal Govern- alwayshavetheoptlonofvoolngwlththeirfeet?
menthashadinthelastli0years. A. I think he endorses what Louis Brandeis once mid,
Fourth, in theregulatoryrelief area, the Vice President that the states should be laboratories of experiment, and
has made substantial progress in over one-third of the diversity Is good. And too degree, (judging) what is done
initiatives he's taken to provide greater relief to stateand ~Consecticutasopposedtowhat'sdoneinNewYork, peo-
localgovernments. plc have the opportunity, through the political process, to
So all those thlngshavebegun, and the President has en- particlpateinthonedeclslons. lndeed,theycanpartiCipate
tablished a vehicle both for a higher participation-the more actively and effectively inmost cases at the local or
Advisory Commission on Intergovernmental Regulations statelevelthanattheFederallevel.
- greater consultation with state and local officials - Now the question of whether that means that there's no
1,350 in the first 11 monthsinoffice-and the formation of commitment to a bare minimum for the truly needy, no, I
a Presidential Advisory Committee on Federalism to ad. don'tthlnkhe'ssayingtbat.Ashe made clearinsettinghis
dressthesensatters. . budget priorities early this year for 1982, he was commit-
So I think there has heels progress. Clearly not as much tedtowhathecaliedasocialsafetynet.
as we'd like, but there has been progress- that seems ir- A mistakein Washingtonls a mistake for alls0states; a
refutable. Withrespecttotheimmediategoals,wewant to mistake In Springfield, Ill. or in Salem, Ore., nm state
go more aggressively and further on block grants. We capitals_Albany,N.Y._onlyaffectsthatstateandthey
want to address, and hopefully comeup with a formula on canlearnfromeachother.
the revenue return issue. We want to proceed with oven
greater vigor the regulatory relief area. And wehopethat
someoftheseotherissues-such as sorting out thesever-
ancetaxissues-canbedebated freelyandthere canbea -115-
development of consensus and guidance on where we
shouldgo.
PAGENO="0603"
Ct4
CCI,
CD
~
CD
CD~
-to,
- -
-
-to,
0)
I
I
I
PAGENO="0604"
-LIT-
PAGENO="0605"
. .UO1~U!qSgM ~q pa~!flb~ ~ SU*.~~4(S
spnq puts ~ -od jj~s ~iuu-j~nj U~ZO~ ~ 2flO~2~M OP 02 ~
.noq2 Jo ~dno~ ~ jo nq ~ ~ ~U~~jOOj ~ .103 Sjj!~ ~11 ~Ed jiM UO~2U~qS~M u~aui ~q ~q~~ui sia~ua~ qflEaq.j~u~w XIS S~~S
PU? ~~~tdSOq oq~ o~ sao2 pu~~ p~s s~2 pp~ s~uaw~d ~2;~~qEs~p waa~-2uoj uo sajtu ~ ~ ~ s~n~ ~ ium~s p~.xn.z cja~i~
aILL UOSItM *.1W s~ces `~o Pi~'J~ ~ ia~q2j~ pu~ M~t~I S~~S O~ .I~Mod 2u~uzn~ I ~ ~ u~ i~~~aq ~!J 02 sw~i.8oxd pa~ua~o
2rnv:~ S ~ ~3UE1flSU~ p!~o!p~~W ~ ~iOJ -a.i ~noqi~ ~jj~ s.u~2~a,i ~z o~~ds~p ~.Ia~q2!l ~ c~t~ 2uuo~~ icq saiuiouo~ auios a~w u~
X2I[tqT2~j~ asoj os~ PIflOM ~J~Jj~M asol oqM u~q~ iaq~i 1~!veaq 2u~~ si ptr~q suo~ ç~ ~ ~ oo~ `s~~;j;o 2UOWJ9A
280W ~ *icauow sa~~M~s-j~!oos r~iap~j -2u~qs~~ sM~s S~TJflS ~I~t `~ai~ ~uo u~ s~~p~sqns ai~-~p ~so1 01 ~j~Afl~U3~
UI S~fl3 JO ~SffC3~ aazj 2a2 ~ou ~tr~ ~n *MOU op ~ ~ ~ptsqns ~JapaJ ~;o ~ aido~d ~j aq~ 2uow~ ar~ sa~.z2ap
aJE~ pjU~3 .10J ~d oi p~ioj aq ~ ~WOS ss~~ 2uq~2 ~q ~ hUM SJ~2U~ ~41 ~ ®q~s-~np~u2 ~u!nsind ~ oq~ s~uait
20H 0010333~ 042 30 2.lod in 0230W 3pm 2di~ioq~ woos oqm ojdood .I033O3.003~ 042 ptry ~no~ nip o~dwnxo .203 010023 20QL 01130004
dw pooj 0 031 0% 3 130% OW ~ ~ ~ ~ 2 p 1401 2 01 232101 0B~23
33 01 0000 010 030131330 0,300UUIOA `ulooo2 01
301300 30 I0003SSIUIWO3 S,03020 0232 `0003!M s~ooq41 020032nd 2010001 .IOWIOJ `03!lOlpdSd ooous ~ 30 uoI2OjndOd 0 13200 `POOPUl
p!Aoa s2oo ,`2uppom 2mb 02.101420W 042 .203 42030 `00003 A300210W0-,,O3dOOd 2004310 2320013133o 010W .2000W 010.20(1
aopoq oq 3330% 23 S0003 0S0131 30 211000 UI,, 042,, .c~oo 20120001 .103 P0P10014 04 02 0/024 002 oso o~ s.2oio puq 1203 00320 poo ojdoad
5020.1 0.00 3320% .200001 S000W 20132 p00 `4~0Z 203 20304 043 02 200033 010 S30!31330 0203S 30141 00210
S,0013011S3U3WP0 0020001 043 40P00 1030143 010 sponj 0313 0.205 1000I00101W03 0241 `lIPS 003)10 00.20001 .2p000 0241 103 0.103003 0.20
01033001 2031202 00032003 02 43001 001 0.100 .230050300 0,12 -poj jo ~oowuopuoqo 00 P120 524211 .001020
0S0142 30 0021 P020W32S0 110 P00 `s2330120q osopm 5042 00012 02 0413 loop o3dood 30303 30 s.211p 0132 03 010301 0 01) 01242 01001000P 030
0103300 130142 03 00323pp0 03 sqol 0/014 W003 poo `.Olonlqo,(1 P00 .210000f UI doop 22201(1 -10~fl 002020 043 01 10/0 0010120.1(1 0103300%
jo 0026 2001W `200W10A u~ soooldpol P10 202 5000U0 0131 200WIOA 0320132 2.200 SOII0S *30130S 2010103 .lq 20001010002 30.10p03 0132
.2330103 000'.2 23132001 0142 103 200 14100% ~pm ~ ~nq `.1313 410.2 0200) 03 osoas opow 0/014 2003U114S p100102 daIs 2S113 0 10 W042 005
solp3sqns 0103'p33143 P00 P1031P002 01033002 lOW 00041 `s102003 42300420200W S,02025 oo200)J 200P1001d `.2S100012003 034010P2S003
`sdWo2s P003 03 5303 00014 50200)4 .2pOqOl.3 0131 30 spiooq 0131 103 S203200W .1314100W 30 1031001 0 0004 0/013 110012 2330314 013,3
~L2UO7SS?ULWO3 adD/JaM 002200
`s~j3q 3003 dn 003103 102030% 010/000 .30 3001 0,, 53303 023 20110. 00433 503105 `~ .010/02 01025 (1118 20131 oooo(1sno 0132 P00
33 10 (00.L201(1 p30.3003 o01333q 625 0142 03 0)03 `030331430 01033002.301301 02020 001003003 0143 52303301 .22010210300 1104.2 `200
10241103 103 013S0~ S,200P1SO1d 0141 01 5p301A dO-OW 103 s102100bP0014 SO 00/1000.00 030 24100% 33101 .2041 01014 OOPI onloo 0 23110 00014
`00012003 31 0032030003 02 p033(1(10 0(4 10A00 033330 01 ~0210A003 3021(10014 0141. 2 030131330 200W10A `100.2 303113 0.00 0142 30
20W `10/002013 `5103 0S0141 W013 s8oi.oS 430323 0 02 P02100003 ~00 P0h4001S 20104 2omlo2oq 0231 `2 `230 00 SW0l20ld 000231 20w
`sosoqo 01 P03143030. 101030% SI 20142 W01201d 1423001430200 22. -001 012013 03 010(101(1 .20141 50 00/0 10.2.
0002001(1 013100 0142 103 p30(1 0(4 1431042 03 30103)03 0 2q 210(1 03 o2o 0100.2 1000 00402 001
20123(1(10 soos~od 20141 pol!nbOl 0012u114s042 50.0. 10141 3021(15014 30300W 02020 10111123 0 03 .2041042 01013 001 .23.2001103 01000 20141 103~
`.210003/old `220/323001101 p30 3003 103 201 033330 100103 0 0014 0031OS .1000325022W03 `11050 0103.p3043 pun 020001.2nd 0300201500
i2~dd s2 O-~ 001415503/429 .LdUO1SS4ULWO3 ~IflD~H ~v~uatj P 14230 23102 ~W2 p 3 0 512101201(1
03003 010833 040433330 0102S 10141 01014 .2233)0W `120W 00141 S30131330 02025 0/22 3320% 5200.12 000131
`0103 30332001(1 0 `p000. 14210% 20014 01401 000142 010103 .241001 0131 30 02030 1010033 0 00014 `000
01 103 4206 0233000(4 2032203 1q 510000,20(1 p30 .20W S10200W10A `Ws31010p0d 02042 0200 OI0IP0WWI 103 034032000 020012 023230011 330
.3003 00 0Z3W00030 01 0003(1 0030 200U110A 0132 00 31030 P0014 .230141 14010% 2013 6963 .1014 103 002803130042 UI 00210311(1(10 30W103 0313 02
.22S00300l(1 pos0d013 002203240042003120 0013 -WOIdOS 032030032014 100.2 3W143S 0141.23030W 0102020113 0242 0W030(4 400/0 0012 p210 .520012
0142 .2q p0223W10d 0004 0/014 1,0P3000. 20131 230430 `03(120000 103 `p30 3001431 03 10041 23303~,, .000 0,002000) `142 30 0WW 10/0 02403
`s0W014 130141 30 OWOS 02310142000% .212000000 .30p00) `5143U001 103 10033 eq 2,000% 0103 0231 02 04100(0 103 2023100% 0004 0014 300W10A
.10(103 P002003.2000W 0141000 P00 `.23)0000242 30 130330 00W014 3303 0141 00103 .200W 01 `001300 0142 03
103 233323203100142nd o~ POSO .21.2001103 .looow `22333430011 032133 .1.200 050(4 1422001130200W 0203S p0503003 20004 0242
- 30 4202 01 do 1b003p 01 ~~2d 2000200A P10 4206 30 1203 0100% 202 .20141 201442 `22133q 0(4 0224800 503125 `142 `10014 0203 S1142 2V
520012 430314 `10033 30 103 0 202 002020 pop300l(1 500I230P01 ,,`oo(1
031410033 30 133000(4 0 S3 110 (0 dnlp3d .200 031/100 010000 20014230. 00101200(1 .200W 03 .doq 02 20102 0.101301 no.2 3101 02 0120(4 00/0
00303/00 003 014S 10142 3303 01422014 .2042000. 420230 5203 P0(4100140 0/014 p3003 502020 20141 3 003 3,, `10001051WW03 1423001430200W 1,02020 -
0142 P00 00012003 00 201 0 poodop 3330. 20232 5020W3250 0012033050V 5100100032 300031042 0133 `503105 P1043101 s.los `20141 p00.205
0005 `14200W 0 S0W214 0/1 02 021 sd01410(1 .0141 `p050dW3 023 5203 doop 0241 103 do OPOW `2oIl0500co
01 23250poW 0031303011(1 p00(15 P00 0004100. 0/014 2,0p1003 001025 0142 103 2142000 lOOP 311101133.25(1 103 010W .20(1 lll'Y~ .23300200/0
00100 24304 01314 01 sodo14 `W01201d 0202S `bOld 014230142 0P023201 0P30% 0241 09/0105 otdood 2uo310M 0W0301-0004 00100 500002 cjq
20142 50001000 0140. `001~U1O3~ 00~3 01111003 `0303(101 .20142 5000 0142 000803120 3010 -oqoid 20142 S102003 1413001430200W 0,200W10,\
`033/lOS 0013 041 -poj .200W 502200130 0/01 nuioi2oid 0.00041 20 ~00 `230002 2000 230330 0)301 5103 202p014
104 .233300b 01 420000 IIOWS soW03o3 00014 30 0W00 P00 `1421001 oo3333q 3.2$ .2pzo 3)0/01(1 s,oo2o 0003,4-'-- `IA `X244fl8'4I2,LVM
S300d0330 050140. 200'02 014230 `p011320142000% -do 55022003 105 `020012 2430314 01 P02100 -iis02 orooc 03'1'(o,o 001. I'~~O(~0d10Im010
0100% 50121014 002 .2200 `03(100(1 00 200(40 02 `003 SW0120.I(1 001.002223140042 3033100 sosoivç soooo~ .2~
00.OP S00. 100W203dW0 `14100W 2S0'I 1420001 `0103,, 30 00333314 0925 P020002 100p350Id
0 5001014 006 .231000 01 P303 0143200 2043005 0141 `pip 21 00141 .221pq1xo13 010W 143001 501015
500% P00 04(150(1 00320100 po.lO3dWa ouo.z2 ,ooi.2 o~ sso12003 P02100 002000) 1U0P300Id UOI402IJ34I~0112~&A, .IOJ )jZP13~4~~
Old ,,003200310142000.,, 0242 `03(330 14001 002 `PTV 302
`003,4 `142 0W32 0141 p00010 `1423014 S23 IV `0'~1 200W.IOA 30 1023013p .2lndop 0141 2035042
`0001200(1 23V 203 23303 s.los `p03303 2S01 20142 00025.20 332(105 A~ipq4xa~~j M12N Pfl~"I 4"~1
`010.21 P00 10000202(1005 0A3000I401dW03 0142 0 14330% 2310(1 10330.11 0,010141 0(1015 1)40 0 on
30 200W1302103 .2q 10WW00 0142 2031np p03103 UIOIO1WOPOO3 .21000 W013 S043W 001132 1000(0 Apaa~ ioj spunj jo )poO'J
s33o.203 .2q 103 23(110140 0100% S0.013 2(1042 cl3onsfl,, `42/3 10 `61925 .2q 0201000 300031
`302013 0 0( P002010 0014 S102000110A 10100(1 `00 0142 0.010(4 SI 1433140. `100,2 2S01 66425 0002 Aioaj S113331JJ0 `4UOUIi~A UI
30 SOWO14 P1° ilIJOIp 0141 2031020103 ~00 2133 oosiod 10(1 0W0303 020100V `540(1 ~00 s(1oqs
`2(3503 30 2(100% 0141 201 `0W03 02 014100W ~3O3 524013 `SIIOSOI 12(0 2002 023 OlidSop `2pooo
014230 02502 .2334143 0 2o31q 5214203 0141 P00 30 310140 533 00142 3101.21 S004 IUOW1OA ~ M~~lli -~N 1~T
- `S100(4001014 S0302000W 0143 03142200 P00 p01 SIOAO'l 94110304 .i0~-qfl$ -
.LOJVUOp200Q 0104) VZUdlJ)VdM 010142 ~01 042 SI ~ j~?Z) 1g1r'I s~s
`p0P10201 2330200W .210100 104 52S0nb01 0,002030) luoplsold 02 03)103.2 I ~ S4fl~j) 4~P"~I S'~T
00 0141 103 0103 0140% 0S0241 30 `/0 2542000 30 soo,x2003 34 `5154304) p30 3010p03 03 0203
042031403(102 ~ ~14 ~ X~7 dl~ .~UiJV4lZfl~UV
S0310S `11132 1431140% `S100320(1 30200W 100.03 250P0W 0132 los 010333340 200WIOA 1004
T09
PAGENO="0606"
602
Mr. Wilson plans evening counseling ses-
sions for affected welfare southern, to help I
them evaluate their shrinking choices. But -119-
he says he can't predict how many will quit
wurking. `This stuff is Incredibly complex.
Four years, and I don't know it yet," he
says.
Mr. Wilson fears the federal cuts will
too deep to bear. "We may have to come up
with some stale dollars" to fill the gap, he
says.
The Governor
Coy. Richard Snelling, a Republican,
says he hasn't any Intention of raising state
taxes to make up for lost federal aid. In
fact, he intends to allow the state income
tax, which is pegged at 23% of the federal
income tax, to be pulled down next year by
President Reagan's federal tax cut.
Tax cuts and budget cuts are necessary
to revive the economy, he insists. He pleads
that they be put in perspective. Focusing
only on the human effect of the cuts Is like
asking a heart-surgery patient how he likes
being sliced by the surgeon's scalpel, the
governor says, ecltninc Mr. Reagan's own
arguments.
Yet the prospect of carrying out some of
Mr. Reagan's cuts clearly doesn't sit welt
with Gov. Snelling, for all his eagerness to
be among the first to seize the new block
grants. The cuts "have gone too far, too
fast," he says. He complains that the Presi-
dent's men, chiefly Budget Director David
Stuckman, have engaged only In "pseudo'
consultation" with governors before propos-
ing cuts. And he nays the President "gave
up" on his demands for broad block grants
and allowed Congress to grant very little
new flexibility to states,
Indeed, before the new block-grant legis-
lation, abeut 18% of all formal* grants to
state and local governments allowed some
degree of flexibility, according to the Na'
tional Governors' Association. With the new
legislation, the portion Increases only to
20%.
Gov. Snetling, the head of the association,
says he will keep' pressing Congress for
more diocretion. H~ would like to try reining
in galloping Medic~eid costs by paying fans!'
lies to take care if aged relatives in their
own homes, ratha)' than sending them to cx'
pensive nursing homes. He would also like
more subsidized day care to take place in
private homes, where it costs an average of
16 cents per hour per child In Vermont,
rather than using day-care centers, which
cost an average of $1.14 an hour. Rural
mothers frequently find the centers Incas'
venlent to reach anyway, he says.
U. Gov. Madeleine Kunin is a Democrat
who was elected independently of Guy.
Snelling and who some think could possibly
be governor herself one day. She liken the
budget csts even less than Guy. Snelling and
fears that other slates (not Vermont) might
use their new block-grant authority to short'
change their poor.
But she doesn't see serious political back'
lash from the cuts. "I don't think It will be
lack of day care that will topple any admin-
lstration... regrettably."
PAGENO="0607"
CD `1
;31g)
:a' o
C,
0
,z~3
t* Pt)
~fl
(bE
C
CC
U')
a
PAGENO="0608"
604
-121-
~ ~ GOvernors'Will Fight
By Bruce~Babbitt. given ws~' to ambivalence and a sorting out of governmental respond.
aessse of miorslculation. The im- buttes is a two-way street And they
The nation's governors are quietly mediate effect will be more pressure are en record advocating.that Individ-
sitting on the sidelines as the presi- on state and local budgets. None- cal income security programs, euch as
dent and the Congress repeal the theless, many of cia believe the fed- welfare and Medicaid, eught to be at
Greot Society and remake the fed- eral government eaght to withdraw the core of national program reeponsis
oral system The reason fur this from some areas of primary state bility. Whether as a nation we spend
bench-sitting diffidence is not hard and local responsibility anti have more or less money on welfare is not
to diacern~ `the president has simply
ósitsvitted tire governors a~ their se- supported tire president even es ha the central issue'iasthis context; the
game of block grants reshapes the block grant as a tuol for basic point is that decisions about the
The governors have traditionally phasing out federal programs of so- size and scope of tntitlement pm-
del services, education, health aeon- grams ought to bemade by national
been etrong advocates of block ices and community development, government on an uniform,. nation.
grants. They have long dreamed of a wide basis,Wel,fare and Medicaid are
block grant program that wosild give _____________________
tue states the best of both worlds, , as much a part of thenational "safety
net" as Social Security, a program
crestipg an inter-gavemnmentsoi Perspectives that even President Reagan does nat
candy store in which the Congress
eupplied the goods and allowed the prapooe to turn over to the states.
states to hind them out to grateful However, even the `advocates now The president has made known his
recipieista. fear that the president is going tao intention to abdicate federal reoponsi.
President Reagan has suddenly far, biity and to damp welfare and
changed tue game by using block To date, the president has set no Medicaid programs onto the states,
grants for a very different purpose: to discernible limits to hig agenda for Perhaps sensing the putential for
close up the candy store. lllsck grants clasiog down the federal govern- widespread opposition, he has wisely
are nosy a tactical weapon to cut the ment atid handing programs back to delayed welfare and Medicaid block
federal bvdgeto while deputizing the ` the states, His strong opinions about grant propesalsuntil next year;'lf and
governors to hand eut the bad nesvs. : state responsibility are not balanced ` when such proposals are advanced,
The administration candidly ecinsits by any thaughts about federal rq- the governors will not be sitting on
thattIsis year's 25 perc~nt block grant sponsibility. We are beginning Cs the bench. They will be on the geld,
reductions are merely the entering sense the president has no philoso- ready to fight for a federal system of
wedge in a scheme to shrink and then phy about federalism. If he believes logically divided program responsibli-
eliminate federal support for.ansny of the federal government has any role' ties.
the social service programs included beyond raising armies and minting
in the blocks, coinage, we have yet to hear what it
Wills this change of direction, the is. `Tue writer,' a Demo&ä't, ia
enthusiasm in the state capitols has' Must governors believe that the the governor of Arizona,
PAGENO="0609"
c,,1
~°~~ii ~
;~d: ~
~ ~
`~11~ ~
~ili ~
li~ ~
it.
~ ~` 1~8r
tI'~~Q t~5~ .tlo~ ~
hj~i2t I
~S/J~ 1b0
Itt
C,)
PAGENO="0610"
606
-123-
" YOUR FEPE~AL PUP
BUNNY
&OES ~W
HAT
I ~AY THE MA&IC WORDS-
sLash!
-- AMP THE ,*?~
t~ BLock GRant
S?ELL 5 £
CAST
~
PAGENO="0611"
607
The Food Stamp Dilemma
States Are Not Capable
Of Handlincr Distribution
~pMti
tiy Dr. ean Mayer
ru HE REAGAN administration's
* proposal to transfer responsi.
I bility for food-stamp payments
~. to the states is a serious mis-
take. With the cutbacks in other fed-
eral feeding programs, it could well
lay the groundwork for a return to
the disastrous situation of the 1960s,
when 20 to 30 million Americans did
not have enough money to buy a
minimally adequate diet for them-
selves and their families.
In 1967, a medical team sent by
the Field Foundation found areas of
hunger and malnutrition in every
part of the nation, rural and urban
alike, and in every ethnic group. The
worst cases were those who are al-
ways the moot vulnerable: infants
and young children, pregnant and
nursing women, the elderly. Follow-
ing that and similar findings of a
10-state nutrition survey, the White
House Conference on Food, Nutri.
Commentary
tion and Health in 1969 recommend.
ed an expansion of America's large-
scale nutrition programs.
Over the next three years, these
programs raised the number of food-
stamp recipients from 500,000 to 12
million and eventually to over 16
million. In 1977, another Field Foun-
dation team, which included many
of the same physicians who participated
in the original study, retraced their steps.
While in many areas (such as Appala-
chia) the facts of poverty had cot
changed, they found no medically de-
monstrable cases of malnutrition. In their
findings, the doctors escribed this elim-
ination of malnutrition to the federal
food programs.
Food stamps, in particular, have
proven to be our prime bulwark against
the hunger due to poverty. It is the pro-
gram needy people depend on for three
meals a day. Now, President Reagan
would turn the program over to the
states. -
Despite all the insults heaped on it in
the last few years, the federal govern-
ment is much better equipped to deal
with such massive, complex programs as
s°ood stamps than are most state govern-
ments. Very few have the strict financial
procodures, the computerized record-
keeping and the trained civil service
needed to administer the program effec-
tivelv.
By contrast. there is general agreement
that the Department of Agriculture has
been doing a very good job of managing
the program equitably and efficiently.
Although there have been charges ot lax-
ity and abuse - and some can he sub-
stantiated - the fact is that less than 5
percent of total spending goes to ineligi-
ble recipients or is over-issued. The rate
of fraud is much lower than with income-
tax returns. Incidentally, the major
frauds generally have been perpetrated
not by poor recipients, but by crooked
caseworkers in collusion with disreput-
able retailers and hard-core criminals.
This record of abuse could be improved,
but not by iragmenting the program.
Overall, the states are the weakest link
in our system of government. There is far
more corruption, waste and favoritism at
the "grass-roots" level than in the federal
establishment. While the fact that some-
thing did not work in the past does not
necessarily mean that it will not work in
the future, we do not want to find our-
selves once again in the situation where,
as in the 1960s, eligibility for assistance
might depend upon whom you know and
even, in some cases, whether or not you
are willing to wash the sheriff's floor.
It is by no means certain that the poor
svoutd receive equal protection under the
law in every state. In the last 10 years,
only two states increased welfare benefits
enough to keep up with inflation.
The transfer of funding and adminis-
tration raises the specter of bewildering,
discouraging and expensive labyrinths of
federal and local regulations for the dif-
ferent programs. It could well lead to a
disparity in benefit levels like the ones
that spawned the migrations from the
South and from Puerto Rico after World
War II and created the urban ghettos -
and riots - in New York, Washington
and Los Angeles in the l960o.
The most cogent reason to keep food
stamps in the federal government is the
nature of the program and the inability
of the individual states, no matter how
competent or willing, to assume the bur-
-124--
den. Food stamps are basically an income
supplement - targeted specifically to
food - in an effort to ensure every
American the ability to purchase an ad-
equate diet during periods of economic
distress.
The program has functioned well. For
example, during the recession of 1973-74
the number of people on food stamps
rose from 16 to 19 million, then fell back
to 17 million with the recovery. As the
present recession has deepened, the num-
ber has risen once again, this time to over
21 million.
Thus, in contrast to the costs of pro-
grams like Medicaid, which will rise pre-
dictably with escalations in the costs ot
health care, the cost of the food stamp
program fluctuates with the health of the
national economy.
Unlike the federal government, the
states cannot maintain an operating def-
icit. Throwing the food-stamp program
and the cost isf its administration back to
the states will mean that Michigan, for
example, will face the highest cost at the
very time when it is least able to pay for
it. Unemployment there is running at
14.4 percent, well above the national av-
erage; tax revenues have dropped. Be-
cause there is relatively little federal
spending in the Great Lakes region,
Michigan gets back only 76 cents on
every dollar sent to Washington.
Thou far, the food stamp program has
been protected from such disparities. It is
a national answer to a national need. It
works. The middle of a recession that
features high unemployment is not time
to "fix" it.
Dr. Jean Mayer, ieho organized and
chaired the White House Conference on
Food, Nutrition and Heatth, is a nation-
ally syndicated health columnist,
PAGENO="0612"
Take away the 55 seats in those nine
atatea, and yea find that anly 115 diatrict
linea have really been drawn for the 1980s.
And almoat one-third of them--those ia
Colorado, Illinoio and Missoari-were drawn
by federal roorta, after the legislatoreo and
goveroors were ooable to agree on any plan.
The whole process haa been marked by the
naked appliratisa of political muscle: vetoes
and threats of vetoes, retribution against
mavericks and, of course, some wonderfully
creative partisan gerrymandering.
The claim that the legislatures are sensi-
tive to the interest or needs of the powerless
-whether those minorities are political or
racial-is hard to prove from the redistrict-
ing record. It is lbs courts that have been
protective of center-city black representa-
tives, particularly in Illinois and Missoori.
The Justice Department rejected the fiml
North Carolina plan for drawing a fishhook
around Durham County, wherw blacks have
significant voting strength, in order to ac-
commodate a nervous congressional incum-
bent. It sent the Texas plan hack because it
diluted Hispanic voting strength in the Ris
Grands Valley, and it blocked the Georgia
plan for diminishing black voting strength.
Black organizations have complained that
the districting plans passed in Alabama,
Louisiana and Mississippi will reduce the
chances of electing any black congressmen
from those states in the 1980s. The Georgia
plan was rejected lust week by the Justice
Department fur diminishing black influence,
and the other three are still under scrutiny.
`she same Arkansas legislature that passed
the law mandating the teaching of "creation-
ism" (recently overturned in court ass viola-
tion of the "establishment" clause of the
Constitution( also passed a districting plan
that the federal cssrt threw out for failing to
meet the 20-year-old population-equality
standards. It leads you to suspect that
whereas the Arkansas legislature cannot read
the Constitution, neither can it count in
thousands.
Come on, folks. You're making it tough to
take federalism seriously.
608
-125-
David S. Broder ~ co
The States Drop the Ball
; I ri/t~-~
Ever since President Reagan made his fed-
eralism initiative the centerpiece of his Slate
of lbs Union address, a dew topic has been
added to she agenda of the palitical hot-stove
league: can you trust the stales to meet their
responsibilities if you give them the pro-
grams Reagan wants them Is rsin?
I like the affirmative in that debate, in
part because it is the unfashionable minority
view among the Washington-oriented jour-
nalists, politicians and bureaucrats with
whom I spend my time. They look with win-
piciun, if not contempt, on lesser breeds omit-
side the Beltway.
The other reason for Inking the affirms.
tive on state responsibility is less frivolous.
Over the years I have traveled the political
beat, I think there has been a steady and, at
times, dramatic improvement in the compe-
tence and character of slate government.
But recently, I have gone through a re-
porting enperience that has made me wonder
about that intpressisn. With Wavhimmglon
Post researcher Morales Schwartz, I did
detailed rsview of the way the slates have
been handling mine of their more serious con-
stitutional responsibilities: redrawing the
lines for the congressional districts to reflect
the population changes in thol980 census.
The picture that emerges is not an enno-
bling one. It is, instead, a performance that
hands ammunition to those who would argue
that you better keep a federal hand on the
controls of government, because you can't
trust the states.
It is, perhaps, an unfair example, because
nothing else in government is vu crassly
political-sn subject ts logrolling, horse-trad-
ing and manipulation-as the process of
drawisg district lines.
Still, it is 20 years since the Supreme
Coon, in its first affirmation of the principle
of one-person, sos-vote, compollod the
Tennessee legislature to redraw its grmooly
malapportioned districts. And the "reappor-
tionment revolution" is cited by Reagan and
lot nf us lessor federalism freaks as one
major reason why state government in now
ready for new responsibilities.
The first thing we found was that the
states are being almost casually laggard
about their responsibilities. Au of last week-
`md, with all of 1981 past and the campaign
year of 1982 six weeks old, only 174 of the
435 members of the Hoene of Representa-
tives knew what the lines would he for their
apring and summer primaries and the gen-
eral election in Nsvember.
The first two primary states-Illinois and
Texas-both had to extend their filing dead-
lines, because the districts were not not.
Others face the name threat as partisan bick-
ering delnys their decisions.
The record of the ntate governments is ac-
tually worse than the nsked numbers sag-
gout. About sne-quarter of the state legisla-
tures have not passed a plan. Another cjuar-
tsr have their plans under challenge or have
had them rejected by their governsrn or the
courts.
Of the 27 slates whore lines are set for
1982, six have only a single at-large repre-
sentative and two-Maine and Montana-
have simply postponed the process nntil next
year. California's 1982 linen won a temporary
okay from the stats Supreme Court, hut may
have tabs redrawn for 1984 and later years.
PAGENO="0613"
609
States Unable or Unwilling to Shoulder
By Jay Mathews ~/t 1'
~
Fl 1 *
reaerahsm Burden
cuncellos the stocky, mustachioed
chairman at the California Assem-
dy s Ways and Means Committee,
Ronald Reagan's "New Federalism"
has come at the worst possible tinie.
`I lie state is short $2 tuItion for next
year aiid its creative hudgeteers are
riiiiiiing 1)01 of tricks,
Flue Reagan ptaiu to transfer fed-
exit Jurograins to tte states has a
"nice appeal to local hi)iue rote and
sell determination," said Vascoucel-
us, a l)emocrat from Santa Ctara
`
(sooty, hut we are in the red, on
the verge of bankruptcy, and there s
nothing we could pick up.
Across the cu)sintry, in nine scat-
tered slates with varied eciiniimies
surveyed tiy `ike Washington Post,
the New Federalism has produced
only a few scattered cheers in state
legislatures, and a list of moans and
sharp words
Tii them, New Federalists means
- - .
5 us service in os n-
geles, an end to federal benefits for
9000 A fu~or i e Wash ngto
I th d M' I' St p. t
P as -
In the must economically crippled
states legislators can see only two
unhappy outcomes from the presi-
de t' I ~- f ` k
If d f I ` P g ihe
tete eh~O, to e tumps to c~it
- . .` ~.
- a e services, espite I eir past
P sOp pp t t m g
governnient closer to the people,
statehouse lawmakers heading - into
an election year fiiid that a chilling
prospect now.
- `We don't have enough money to
live sip to the state's responsibility,
let alone step in where the tederal
government has pulled out, said
.
Harry Stehen, a Democrat and Mm-
nesuta's speaker of the , House,
"What we're facing is an anti-
government movement, not a pick'
up, or even a do.as.much-as-you-
did.before movement."
That is not' a prospect that both-
em the Republican majority leader
of Colorado's Senate, Fred Ander-
son. "A lot of these programs we will
have Ihe option of picking up or let-
ting go. I think that's a good deal fur
us," said Anderson, whose state has
low unemployment and relatively
few recent deficit problems. "The
whole system was overloaded to the
tederal side There was so much pe- In New Jersey, state administra-
peneork it almost wasn't worth- torn were hit with questions about
while." - the new Reagan cuts only days after
How much Reagan's scheme will taking iiffice in Kean's new admin-
alter the shifting scenery of local pot- stration. The new environmental
tics in a key election year seems to commissioner, Robert Hughey, said
depend on how shaky the local neon- its just unacceptable to think that
y is and how deep the deficits are we would reduce' air and coastal
h stat protection programs threatened by
In Washington State, svhere on- federal cuts, but he acknowledged
employment is now higher thaii it being too new in his job to know just
was during the Great Depression, ow much his, programs night lose.
Democratic state Sen. James McDer- Democratic Sen. Don Kilpatrick,
mutt, the party's unsuccessful can- vice chairman of Oklahoma's Senate
didate for governor in 1980, said of Appropriations Committee, said
. "we're getting i-ontlictmg stories"
th Reagan cots: "Killing the econ from Washiogtoii. And Oklahoma
omy is the out difficult cut to oh- state Rep. Clete l)eatherage said
sorb. We don't have a tax structure "We have no imisirmation for `83 and
Ii' deal with it, We don t have an a shortage at intirmatiun for `82. We
economy ieft. - can't appropriate money when we
Charies ltoyer, the Democratic don't know how much we're going to
mayor of Seattle, oaid he figures ted- tote."
Cual programs turnec~ over ta the Several large ripples are washin
states will cost $75 billion by 1991,
. , - -~V~r t e states rum the budgetary
iso I ,on y , ,,1i ion in revenue roks dropped into Congress by the
óf~b2 ~ annually for the local z~S~ht~ Thes~ o~nd n ate
~overnmenta to pu e -
In New Jersey, facing an esti- legislatures and in news accounts of
mated loss of $700 million in federal the process.
aid because of the Reagan program, First came a series of cuts in fed-
even newly elected Republican Guy, orally funded programs such as job
Thomas H, Kean is worrying P - training and welfare for the working
licly. about what it will do to his poor which already have forced
stktg and party Ph human mp ct states to cut ser ice ev a the
of tlys budget is severe and it dis- weakened economy has lowered their
turbo me greatly," he said, - - tax revenues and cut their ability to
State leg lators a d adm 15 t a e s me p g m w th th w
tars say the lack of hard information funds
~tout the Reagan program, which Next come more budget cuts fur
the ,ptesident has said must be 1983, forcing states to find their swim
worked out over several years, adds funds if they are to keep spending at
no their sense of unease. previous levels on programs such as
"The whole idea is such a blue'sky Medicare, Medicaid, fond stamps,
`pipe dream we haven't really tried to job training, welfare and education,
do anything with it yet," said Cal- Finally comes the president's
iforrpa's Vasconcellas, "The style "New Federalism" proposal to swap
seems to be to do something with so major programs with' the states.
little detail that no one can really States would pick up food stamps
tell what it means." and Aid ta Families with Dependent
Kentucky's Democratic Gsv. John Children, while the federal govern.
y, Brown Jr. has born deluged with ment would take over full responsi.
suggestions for more revenue, such bility for Medicaid health care. Sev.
`ad an increased tax on mined coal or eral other programs-including non-
a nenl tax on unmined minerals, but interstate highways, mass transit,
he said, "I'm hesitant to push the sewage treatment, day care centers,
parSe' button." He told the state community development, downtown
~hamber of commerce he preferred renewal and general education-
not to deal with Reagan's proposals would he turned over ta the states,
in this legislative session, waiting to to be financed with a federalism
- calls special session after the dimen- trust fund from federal excise, taxes
aisno of the Reagan cuts, as and part of the oil windfall profits
amended by Congress, are known. tax.
PAGENO="0614"
In the states with the worst eco
nomic problems, such as Washing-
ton, none of this appears to help
much. Last fall Washington was five
days from bankruptcy when Repub-
lican Gnu. John Spellman borrowed
$400 million from a group of New
York banks to pay state lulls. The
state had lost $382.5 million in fed-
eral binds, mostly fur transportation
and public employment. In Novem-
ber, the state legislature reluctantly
raised the sales tax one cent to poy
hack the loans.
Now Washington lawmakers have
discovered the state will have a $220
million deficit by October. Because
states, unlike the federal govern-
ment, cannot incur permanent debts
to pay their deficits, Spellman has
proposed filling the gap by raising
state college tuition (already in-
creased 70 percent last year), ex-
tending the sales tax to gasoline, and
requiring large industries to turn in
sales tax receipts early for a one-
time gain of $95 million.
In Oklahoma, fat with oil and gas
revenues and enjoying the lowest
unemployment rate in the country
(3.9 percent in December), the sit-
uation could not he more ytifferont.
Last year the state legislature had a
$326 million surplus. During Dem-
ocratic Guy. George P. Nigh's three
years in office there have keen 16
tax cots.
Oklahoma officials estimate they
will lose $40 million in federal funds
in fiscal 1982, much less than earlier
estimated, and perhaps $50 million
in fiscal 1983. George Hnmphreys,
director of the House fiscal division,
said cuts in the state budget lost
year "weren't. all that substantial."
`Fhe Human Services Department
shifted funds from unappropriated
accounts, bitt also ordered an in-
crease in the price of school lunches
to make up for federal cuts.
Despite their relative economic
strength, the moderate to cisnserva-
tive Democrats who control the
Oklahisma legislature are nut eager
to rush into programs the Reagan
administratiisn has abandoned.
"We Can afford to pick up all the
cuts," Humphreys said, "but I don't
think anybody wants to. For exani-
pIe, there are programs like CETA
public service jotis provideit under
the Comprehensive Employment
Training Act! that the legislature is
not committed t(i."
Deatherage, who chairs the House
Appropriations Committee, said her
legislative colleagues are inclined to
think "if the feds aren't going to
fund it then we shouldn't fund it
either."
If one of the nation's wealthiest
states takes that attitude, there ap-
pears little chance that less-endowed
legislatures will pick up federal pro-
grams abandoned by Washington.
State lawmakers report few irmova-
tive propesals to make up for the
loss of federal services. Only pets-
grams that receive some isf the fed-
eralisni trust fund money-which
may he less than expected-appear
to have a chance of continuing.
Neither do large corporations
seem very concerned sii far that state
legislatures might restore corporate
taxes or expensive regulations that
has'- been cut by the federal govern-
mciii; iii expectsd increase in cisc-
porate tiihhying staffs in state cap-
itals to burestall such a development
has sis tar not occurreit.
Many l)emocrats decry the de
cline of services, hut Republicans say
voters have clearly expressed their
desire to make do with fewer ser-
vices in exchange tsr paying less
taxes.
"Shy etectiog Ronald Reagan to the
presidency, the voters have already
given their mandate-less govern-
oient and lower taxes," said Califor-
nia state Sen. William Campbell, the
Republican miniirity leader. "If the
state carries out the voter mandate,
the voters will praise the state."
To eliminate a projected $2 billion
deficit for fiscat 1983, California
Guy. Edmund G. Brown Jr. and his
advisers have projected cuts of about
$1.4 billion and propuised a series of
complex revenue gymnastics which
would raise more than $600 million.
These include accelerated collection
st taxes on iiicome, insurance and
sales, increased interest on delin-
quent taxes and a change in the way
taxes on oil companies are com-
puted.
Some Sacramento veterans said
they were reminded of the days
when Brown's father was governor;
he svas knosvn as a master of accel-
erating collections in order ta fore-
stall geiseral tax iiucreases. `l'he idea
is to avoid voting for a tax rise in a
year when most legislators are nm-
ning for reetectiumii arid Brown is ron-
oiiig for the U.S. Senate.
Eveiitsially, Catifisriiia otticiats
say, new taxes will be necessary.
Also, the iteficit iii Catitoriiia as in
niau,y other states wilt he much
greater if the oatiimnal economy does
not retisaud later this year as Rea-
gan has predicted--anit as, ironic-
ally, anti-Reagan I)emocrats like
Brown have assumed in their own
budget projections.
In states such as Catifmsrnia, which
still have relatively healthy econo-
mies, a series of comparatively small
budget adjustments are being pro-
posed to handle the current deficits,
with the threat of much larger rev-
comic gaps fruim the New Federalism
left for another itay.
lii Cuslorado, Democratic Gee.
Richard D. Lamm said the Reagan
plan to transfer misre thou 40 grant
progranys tim the states woatd put
Cmilorado $121) million in the hole is
1984. Fisr now, however, the state is
grappling svith a mere $12 million
deficit for fiscal 1982.
Some Cotisradii officials have sug-
gested delaying capital expenditures
aiid limiting the griiwth if suime pro-
grams to avoid that iteficit. The leg-
islatiire also is considering raising
the state's :1 percent sales tax suit
increasing amitii regfstratiiiii and
tither lies.
Armzimiiaiis. uvhose em'iiiiiiisiu- proh-
teiiis are similarly small, greeted the
ness Reagan irmspuisal with some en-
thusiasm. Bruce Babbitt noted
proudly that he was the Democratic
governor Reagan quoted as saying
"the national government should be
worrying about arms control, not
potholes," but he added that he
would prefer that all entitlement
programs and not just Medicaid be-
come a federal responsibility.
Arizona had a record fiscal year-
end surplus of $234 mihliuin in mid-
1980, hut a deficit of $143 million is
projected for 1983. Babbitt has pro-
posed a procedure similar tis the Cal-
ifornia revenue-juggling, in which
businesses would remit state income
tax withholding payments musnthly
instead of quarterly to bring in an
additional $47.4 million before the
end of this fiscal year. Increases in
excise taxes on liquor and tobacco,
and an increase in some state fees,
also have been discussed.
In Missouri, Republican Gov.
Christopher S. (Kit) Bond welcomed
the chance to administer federal
fetal stamp and welfare programs "sus
long as we are provided with equi-
table funding."
The state's budget is in some dis-
array, however, hmecause if the tailed
economy and federal cots. Itmund's
government is $100 milhiisn in ar-
rears in aid tim schools, forcing some
districts to borrow to pay teachers.
A proposal to raise the gasoline
tax from seven tq 11 cents a gallon
received initial approval in the
state's Hoase of Representatives, but
only after an amendment was added
putting the issue on the ballot for
voters to decide.
610
PAGENO="0615"
611
The Democratic House speaker,
Bob Griffin, has proposed a complex
tax package, including a graduated -128-
corporate income tax, new sales
taxes on cable television, heauty and
barber shops, laundry and shoe re-
pair and radio, television and furni-
ture repair. He also wants to in-
crease taxes on cigarettes and liquor,
and raise some state fees, but most
legislators consider the package
doomed because of the governor's
opposition to any tax increase and
because most legislators are up for
reelection this year.
In states with much more severe
economic problems, such as Minne-
sota, tax increases seem more likely.
The Democratic-controlled legisla-
tore in Minnesota passed a package
of tax increases and spending cuts
last month to erase a record $778
million deficit. But before they ini-
tiate further cuts or new taxes, they
want to see a new revenue forecast
from Republican Gov. Al Quie,
whose revenue-projection blunders
in the past helped lead to his an-
nouncement that he will not seek
reelection.
Minnesota officials, however, in-
cluding Senate majority leader Roger
Moe, have estimsted that Minnesota
would gain under the proposed Rea-
gan swap of Medicaid for food
stamps and welfare, because it
spends more on Medicaid than it
does on the two welfare programs.
In Oklahoma, that swap looks to
Democratic State Sen. Finns Smith
like one of the most astute political
moves in a long time. "If you are
going to cut entitlement programs,
why not turn them over to the states
and let them cut them? Then they
will get the blame," Smith said.
But Oklahoma's strong economy
and great potential for tax increases
should cushion any blows.
"We argue here about how we are
going to upend the money," said
Dian Copelin, assistant press secre-
tory to Guy. Nigh, "not about wheth-
er we are going to have it to spend."
PAGENO="0616"
612
-129-
.~ .~5' / `~? 33
"Sony, liii all my pommm'r'm imm'm'n turned back to time ~
PAGENO="0617"
613
-130-
A~ç,erx1ix A
N~Federa1iffln: Every State a Loser
The fol1c~qir~ charts, prepared by The American Federation of State,
County and Municipal E~np1oyees, show the net loss for each state that
~u1d result fran the President * s "Turnback" and "Swap" proposals.
PAGENO="0618"
614
-131-
PRESIDENT REAGAN'S NEW FEDERALISM: EVERY STATE A LOSER
(Figures in Millions of Dollars in FY 1984)
- TURNBACK PROGRAM - - SWAP PROGRAM - Total
Public Cost to
Trust fund Turnback Net Medicaid assistance Net States
allocation 1 programs2 difference3 savings4 cost5 difference5 in FY `84~
Ala. $ 713 $ 725 $ -12 $ 140 $ 431 $ -291 $ -303
Alaska 188 239 -51 32 65 -33 -84
Ariz. 463 441 22 0 194 -194 -172
Ark. 345 441 -96 137 215 -78 -174
Calif. 2,144 3,804 -1,660 2.524 2,503 21 -1,639
Cob. 331 516 -185 161 165 -4 -189
Conn. 283 562 -279 277 208 69 -210
Del. 107 152 -45 38 49 -ii -56
D.C. 333 562 -229 141 104 37 -192
Fla. 1,433 1,661 -228 348 774 -426 ...654
Ga. 819 972 -153 285 531 -246 -399
Hawaii 145 192 -47 94 130 -36 -83
Idaho 151 189 -38 31 63 -32 -70
iii. 1,547 2,257 -710 857 1,033 -176 -886
ltd. 552 882 -330 336 339 -3 -333
Iowa 330 513 -183 166 173 -7 -190
Kan. 225 392 -167 141 116 -27 -140
Ky. 690 734 -44 186 453 -281 -325
La. 634 813 -179 309 467 -158 -337
Ma. 240 316 -76 81 126 -45 -121
Md. 507 816 -309 342 349 -7 -316
Mass. 732 1.417 -685 669 515 154 -531
Mich. 1,147 1,710 -563 914 1,078 -164 -727
Mint. 236 771 -535 501 249 252 -283
Miss. 563 546 1-7 109 361 -252 -235
Mo. 700 1,940 -240 247 365 -118 -358
Mont. 128 190 -62 43 48 -5 -67
Neb. 185 291 -106 77 74 3 -103
Nev. 58 140 -82 70 37 33 -49
N.H. 110 182 -72 57 49 8 -64
NJ. 907 1,497 -590 557 525 32 -558
N.M. 251 271 -20 57 148 -91 -111
N.Y. 789 4.496 -3,707 4,002 2,063 1,939 -1,768
N.C. 820 1,041 -221 277 462 -185 -406
N.D. 83 154 -71 45 25 20 -51
Ohio 1,406 1,925 -519 744 1,005 -261 -780
OkIa. 249 479 -230 228 180 48 -182
Ore. 393 513 -120 128 203 ~75 -195
Pa. 1,658 2,523 -865 967 1,079 -112 -977
RI. 124 203 -79 95 96 -1 -80
S.C. 553 575 -22 128 348 -220 -242
S.D. 124 177 -53 32 41 -9 -62
Tent. 702 818 -116 267 494 -227 343
Tex. 1.352 2,102 -750 833 895 -62 -812
Utah 182 264 -82 61 74 -13 -95
Vt. 118 140 -22 32 65 -33 -55
Va. 617 835 -218 250 355 -105 -323
Wash. 493 724 -232 248 296 -48 -280
W,Va. 429 487 -58 65 192 -127 -185
Wis. - 235 825 -590 633 365 268 -322
W,yo. 75 iii -36 17 17 0 -36
TOTAL $27,600 $43,538 5-15,938 $18,976 $20,200 5-1,225 $-17,151
PAGENO="0619"
615
-132-
NOTES ON THE AFSCME "NEW FEDERALISM" TABLE
This table shows that President Reagan's New Federalism would cost states over $17 billion in FY84.
It corrects inconsistencies and mistaken assumptions made in a similar table published by the White
House which purports to show that the Reagan program is a "wash" for states in fiscal year 1984,
1. This column reflects White House estimates of the revenue that states will receive from the new
"Federalism Trust Fund" to be set up under President Reagan's proposal.
2. White House state-by-state estimates adjusted upwards by 44.2% to reflect the true FY 84 cost
to the states of maintaining FY82 levels of service under the turnback programs. The New York
State Washington office has reported that the turnback programs cost $37.5 billion in FY82.
Adjusting for inflation based on the latest economic forecast by DRI (CPI increase = 7,8% in
FY83 and 7.7% in FY84) gives a FY 84 current service cost of $43.538 billion, $43,538 billion
is 44.2% greater than the White House cost assumption of $30,194 billion.
3. After adjustments, the net difference between the turnback program costs and the trust fund
allocations are considerably larger than the White House projects.
4. 0MB estimates of the state cost savings from federalization of Medicaid. (The original White
House version of the chart is internally inconsistent in that its cost estimates for the turnback,
AFDC & Food Stamp programs assume enactment of the Administration's further cuts in
FY83 while its Medicaid estimates ignore these cuts, AFSCME's chart corrects this error by
stating all figures on a consistent current-services basis.)
5. White House state-by-state estimates adjusted upwards by 23.3% to reflect the true FY84 cost
to the states of maintaining FY 82 levels of service under the Al-DC and Food Stamp programs.
The Administration's cost figure of $16,382 billion understates this cost because it assumes
enactment of new FY 83 Administration cuts in these programs, 0MB reports that without
these cuts (that is on an FY82 current services basis) these programs would cost the states
$20200 billion in FY84.
6. Again, after corrections, the net effect of the swap program is much more unfavorable to the
states than the White House suggests.
7. The real total costs to the states in FY84 is shown in the last column. Far from being "held
harmless" by New Federalism, the states will be faced with a loss of over $17 billion in federal
aid in the first year of the Reagan program. Moreover, every state in the nation will be a loser.
AMERICAN FEDERATION OF STATE, COUNTY AND MUNiCIPAL EMPLOYEES, AFL-CIO
PAGENO="0620"
2 ~ 000ZZZZZZZZ Cl)
~ F. F. ~ ~. ~ 3 £
g~ ~<5~o ~ ~ :30O~. ~ ~
3 ..~x33 .) ~ ~<
* ~~j* ~s~q -. F.
0)
C
~,
~ `-J
3 -. -. ~3 -~ ~) C.) 0) (.3 F.) (0-j -~ ~J ~ -~ (31 -~ C~) F.) F.) -4 (31 C.) -~ C.) C.) -~ -~ (.303 (.30) -~ F.) -~0) -~ -~ ~ D w --i
0 ~ o~ ~ (0(31.~&0)C.)-4-J03O ~
: -~ ~
~m>~ -i-I
~-<~ I>
mX
zI ~L
gg~ m ~T1~
~Cl) mc!)
~j
0 -& -. -. ~
0) /) 3 0 ~ - -~ 0 F.) F.) 0 F.)F.)-J ~ CO -~ 0) - F.) -. ~03C31 C.) (.~)CO -~ ~ F.)- ~ < m
o~ -n b 0)03 -.4 -. 0 C.) -` (0 0) C.) (o CO -& ~- (0 0 0) 010) (31 ~-) C.) COb 0)03 cx~ Iii 1-) 03(0 CD -400) ~ -.4 0) -J ~ 0 -. 01 -.4 -4(0 ~ (31 (.3 -~ 0) 6 ~ o
_Wm 01 ~
0 0)(.)(.)(Ø0)D)COC.)4((04C3100~0C.)00000~0~°°
5~
D
~ c. m
3 C)~
-4
0122
cco' -. -. -- -. -. --- -~ - -~ -. -.
01 OlO)0C31.JC.)CO4C))01(0~0303~0)~000)(0%U.)
~o b. ~
01 ~
~g 030)
PAGENO="0621"
617
-134-
A~çerkitx B
P~ EXPERI~
The block grant idea is not new. It has been discussed and tested
over rrany years. ~ that it is beiog pressed with such vigor, it is
essential to look back at the nation s experience with block grants in
areas includiog health, crime prevention, camsunity developrent, social
services and enployment. That experience sheds light on the problens that
are likely to arise with new block grants.
Included here are brief descriptions of past block grant programs, as
well as a caru-nentary fran the New York Tines on some of then.
PAGENO="0622"
618
-135-
THE NEW YORK TIMES - Friday, March 20, 1981
WASHINGTON - In addition ~ local and state government control.
seeking a cut of spore than $40 billion ~B1oc1~. -~ They' were develoised after it became
.lndomestlc programs intheflscal 1982 `~- ~ .* *- absolutel)'clear that local and state at-
budget, President ~eagan i~ 9~-o- . flclals were not addressing fundamen-
posed a large-scale shift to theus~ of C'ránts tal education, health, and social needs.
block granta~ He bold shift responsl- ~- ` `~ ` . Included is the Reagan proposals are
bility for. more .th~an $15 billion ~ , energy assistance to low-income peo-
education, social,'snd health services . .~. :, . ~.. pIe, the remainder of the "war on pov-
testate andlocalgovernments. - ~` erty,"famllyplannlng, communityand
Argurssenta for 4ecentrallzlng pro- By Andrew H. Mott mental health SesYlCes, and clinics for
grams are familiar; The Government . migrants and black-lung victims.
has grown too large, inefficient, unrè- that Federal offidaiscould not answer Education block grants would wipe out
sponsive. Because local andstate goy- even the most baslc'questions about the theemphasisos schools that serve poor
eroments are closertothe people, they $3 billion program's effectiveness and children, and eliminate special treat-
are familiar with local seeds, can do- impact, because governors have stead- mentforbillngual education and deseg-
velop responsive programs, and are fastly.reslsted an evaluation of the pro- regatingochools.
more accessible and accountable to gram, apparently.fearing it WOUld th11 Considering local politics, toe likeli-
the citizens thasiare Federalagencies. cover questionable spending, effective- hood of few Federal regulations, and
But before agreeing to a further ness andaccountabilitlr. the competition for new block-grant
shift to block grants, the country The $4 billion Comns'snity Develop- fundithatwould,is realdollars, becut
should look at the last decade's expert- ment Block t~rast program also has almost 40 percent, how responsive is
ence with `four block-grant programs been heavily criticized. After evaluat- Tesms likely to be to migrants' health
- experience that is enough to make log 38 jurisdIctions, the Working Group ~d bthngual niucation needs? How
anyone skeptical about C greater shift for Community Development Reform, fairly would Mississippi address
Inthis direction.,' a coalition of 75 organIzations, con- blacha' needs? Os Kentucky likely to
State adminla'tation of the first clOded that' many local governments support black-lOng clinics? Will ChI-
block-grant progrpns- Law Enforce- are unable to plan and implement pro. cago suddenly become responsive to
mentAssistanceAdnllflistratlon grants grams to achieve the primary obj~o- the' üeeds of desegregating schools?
to the states - was often criticized by tivés set byCongress~ The group identi- wrn theMichlgan and New York legis-
minorities and coosservative institu. tied several constraints `to the block- laturesloOkWithflew nensltlvltyon the
lions `as wasteful, ineffective, sore- grant approach: Overseeing a massive needs of Detroit and New York City?
sponsive. When Jimmy' Carter abel. decentralized program without en-site, What state is lIkely to give priority to
ished it in 1980, therewas little regret independent performance monitoring legal services and energy assistance
among résldentsO~crlme-rldden neigh- is difficult; the distribution of fwsds hi)' for the poor in the face of middle-in-
borhoods. formula, rather than competition, comedemandsand vested interests?
The early problemsof the ,Compre- creates a sense of entitlement among
henaive Employment and Training Act local officials, causing them to resent If there are no national stanaaros,
are well-known. `Many `local govern. eventhe mostbasic Federalstsndards the fuhds willbe dIverted from the na-
monte passed oveF minorities and the the stress on local flexibility strength, tion's most-pressing needs, and there
long-term unemployed, and instead ens this resistance to national stand- will be major problems of program ef.
brought ineligiule people onto city and ards and priorities, leaving the pro fectivess5sandptbllc accountability.
county CETA payrolls until Federal gram vulnerable to pressure agalnsl
standards and enforcement were spending funds to benefit politically AfldrewH.MOitisViCepTeSldent.o!tlte
strengthened. weaklower.inCOmePeople. Center Jar Commanily Change, which
The (Titie XX) state social services Theprograiss thatPresident Reagan provides technical assistance to corn-
block grant also-suffers severe prob- . proposes to decentralize are the very resnity groups representing low-mo.
lenin. The Reaean transitioo staff found. ones thatwould be most endangered by come people.
PAGENO="0623"
619
-136-
PA~~ E~PERI~E
The Law Enforcement Assistance Act (LEAA), the first block grant pro-
gram for criminal justice, was enacted by Congress in 1968 to reduce crime
and improve the criminal justice system in the wake of pnlitical assassina-
tions, urban unrest and canpus disorders. It was the first block grant to
be started fran scratch, not fran the consolidation of previous cata3or-
ical programs.
States ware given LEAA block grant funds to suppDrt the three can-
pnnents of the state criminal justice system -- pDlice, courts and correc-
tions. Block grant allocations, based strictly on papulation, want
directly to State Planning Agencies (SPAs) once the Justice tapartnsnt
approved the state's carprehensive plan for law enforcement.
In general, LEPA was heralded as a virtually unconditional aid pro-
gram sthich wauld help states and localities address criminal justice prob-
lens without interference fran the overly bureaucratic, inflexible, out-
of-touch federal government. By receiving funds directly, it was thought,
states wDuld be able to pullrtogether the traditionally fragrnsnted ele-
ments of the criminal justice system. Wnile many observers believe that
LEAP made a contribution to law enforcenant by bringing together represen-
tatives of the different canponents of the criminal justice system, there
is no dispute that the program did little to reduce crime in the United
States.
Initially, the key assurption was that the core funds available, the
greater the pDssibility of reducing crime. This did not prove true.
Crime increased dramatically during LEAP's history, suggesting that crime
is a deep-rooted carrnunity and social problem that cannot be solved with
government financial intervention alone. A statistical analysis prepared
by the Congressional Budget Office (CBO), based on data for 1960 through
1976, indicates that the level of crime is closely related to the size of
the youth (ages 16 to 24) labor force and associated unanploysent.
As LEAP funds made up only aboct 5% of a state' s entire criminal
justice budget, LEAP provided little leverage to influence broader state
actions. LEAP might have made a substantial contribution to the criminal
justice area, however, by conducting and encouraging innovative research,
experimentation and evaluations. Unfortunately, LEAP seems to have failed
in that regard. The Justice Department estimates that less than 3% of
1978 block grant funds supparted innovative programs.
If innovative programs to reduce crime and establish state criminal
justice systems ware not the crux of LEAA block grant funding, what was
the benefit fran the millions of federal dollars given to the states? The
cities received only 52% of block grant funds, even though they had 83% of
all reparted crimes. Conversely, the counties received 48% of funds with
PAGENO="0624"
620
-137-
only 17% of all rejx)rted crimes. Although the Idvisory Carnission on
Intergoverrznental Relations (I~CIR) reports that high crime areas got a
higher share than other areas, this was costly dt~ to the federal guide-
lines ~thich established specific crime reduction programs in high crime
areas, rather than to state action.
Ccrnxrents by many state and local officials docunented in a 1978
report by the 20th Century Fund confirm their prob1~ with LEAA red tape
and bireaucracy at the federal and state levels. This block grant,
designed to provide flexibility, acquired a reputation of being less flex-
ible than categorical programs. Critics report that the main product of
LEAA was the establishment of a rigid bureaucracy - 4,000 people at the
Justice Department and within the SPAs and Regional Planning Units (RPUs)
-- ~thith caused nut~rous administrative probl~ns. Fbr example, even
thDugh states had the freedan to establish their own funding processes
within certain parameters established by the federal office, delays were
constant. MDreover, changes in leadership and policy at the federal level
-- LEAA had five administrators within seven years, each with his own
philosophical and administrative approach -- contributed to changes at the
state level.
Local goverrinents were required to participate in the planning pro-
cess, so nt)st SPAs set up Regional Planning Units (RPU5), and by 1975,
there were 445 regional planning units in 43 states. lbwever, RPU5 made
planning subgrants to localities in only 11 states, and the Justice Depart-
ment never provided significant national direction to the RPU5.
RPUs were required to operate under the supervision of a board male
up of local goveranent officials, criminal justice agencies and the pub-
lic. According to the 1977 ACIR report, police constituted the largest
grcop on these ~oards, and the public imsnbers were ~he "least represented"
and the "leastftnfluential."
~&reover, it is evident that throughout the history of this block
grant, SPAS maintained control of the LEAA funds. Only rarely did citizen
organizations obtain grants fran SPAS, and then the funds received were
small. AS LEAA regional offices and SPAS became core sophisticated, there
was a general tendency to place core specific guidelines on RPUs. This
sophistication also led to increased representation of criminal justice
agencies on regional planning boards, thus diluting the influence of
elected officials.
Another problan was that Congress constantly changed priorities for
the LEAA program. In 1971, corrections was the main concern; in 1973,
crime control; and by 1974, juvenile justice. As seans endanic to block
grant efforts, there has been little evaluation, and thus little
measuranent, of the successes and failures of these program efforts.
It is clear, however, that the federal priorities did little to en-
courage states to establish innovative approaches. On the average, states
used alnost half of their annual block grant appropriations to continue
PAGENO="0625"
621
-138-
ongoing programs, rrakirzj it very difficult for the SPAs to respDnd to
changing local needs or federal pDlicy direction.
Throughout this process, as the states consolidated their control,
the Justice Department failed to provide sufficient direction or leader-
ship. In 1978, CBO recamrended that Justice place greater ~tphasis ulxn
building evaluation into programs and projects before they were started,
but little changed.
It wes partially in reaction to this maze of problans and difficul-
ties that Congress established changing priorities (as mentioned above)
and began to eaxmark funds for different purpases. This atterpt to attain
greater accountability, however, did not produce discernible results.
In conclusion, the LEAA block grant wes beset b~r a large* number of
administrative and prograienatic difficulties, and there is little evidence
that this block grant made a difference. For the cost cart, funding went
to very traditional sources, and states spent limited resources on innova-
tive solutions to local problens. In addition, little attention was given
to citizen participation or to the all-impDrtant area of civil riqhts. In
fiscal year 1981, no funds for LEPA grants were included in the federal
budget.
99-965 0 - 82 - 40
PAGENO="0626"
622
-139-
PAST ~P~I~IE
C~4D~nY ~o~r ~ ~A~r P~M
The Carrnunity Developient Block Grant (CDBG) program was enacted into
law in 1974, as Title I of the Housing and C irminitytevelq~ent Act of
1974. It replaced several HOD categorical programs -- including urban
renewal, Mndel Cities, open space, water and sewer grants and code enforce-
ment -- with a large, flexible block grant to local governments.
The program represented an uneasy catpranise between the Ford Adminis-
tration, which had sought a revenue sharing approach with virtually no
federal controls, and the Congress, which was determined to enforce cer-
tain federal priorities and safeguards. The result was a statute which
left local governments with broad discretion in prograinning, but which
also established certain federal priorities and safeguards.
The Ccmnunity Develqment program includes a number of important
provisions and safeguards:
* all funds must be spent on specifi-
cally eligible activities;
* all funds must be spent on projects
which benefit lower incaie people,
address slum or blight conditions or
meet other urgent needs; and the
principal beneficiaries of CDBG spend-
ing must be lower inccme people;
* local governments must ccinply with
civil rights, relocation and other
federal standards;
* there are citizen participation
standards (which were weakened in
1981) and an administrative cam-
plaint procedure.
Under the program, all cities over 50,000 people and all counties
with populations over 200,000 (excluding their larger cities) are entitled
to receive an annual block grant for an acount which is set on the basis
of a jurisdiction's population, poverty and other factors. Cotil the law
was amended in 1981, however, release of the funds was contingent upon HOD
approval of a relatively detailed application. Furthenrore, unlike the
bigger cities and counties, smeller jurisdictions and rural areas had to
ccxnpete for funding under the "&iiall Cities" CDBG program. They had to
sutinit applications which HOD evaluated on the basis of a rating system
which took local needs and the potential of the proposed program into
account. The size of a &i~all Cities C1~G grant was not set by formula.
PAGENO="0627"
623
-140-
Co the basis of probl~ra which ~rged during the first several years
and a number of program evaluations, including General Accounting Office
studies, there were a number of changes in the program during the period
fran 1977-1980. These included statutory changes with regard to the tar-
geting of funds to benefit lower-inccme people and strengthened citizen
participation standards. They also included clarification of the
statute s housing assistance requir~i~nts and citizen participation and
other federal safeguards.
Then, in 1981, follcx~ing the Reagan Administration's initiative, the
Congress reversed its direction and greatly increased local discretion.
First, it eliminated the CDBG application and review by A-95 agencies and
HUD. Secondly, it reduced citizen participation standards, eliminating
the participation plan and the multiple public hearings.
C~inions vary on ho~ well this block grant has reconciled local
priorities and national objectives. The Brookings Institution rronitoring
repart of 1980 argues that local preferences have daninated program plans
in the CDBG program, but does not att~ipt to judge the program in terms of
its econanic or social success. The National Citizens' ft)nitoriag Project
on CDBG repnrts that many jurisdictions have written off their cost
severely blighted and lo,q-incctre areas for CD projects and have had severe
capacity and performance problams.
General Accounting Office studies, including one issued April 30,
1981, argue that greater federal oversight and guidance are needed to
ensure that national goals are net and that fraud, waste and abuse are
minimized. The cost recent GAO study specifically painted to the need
for:
* better targeting to geographic area;
* a narrower definition of what projects
are eligible for CDBG funds;
* the need for core specific information
and greater verification of whether the
funds are, in fact, being used to bene-
f it the incane groups and areas which
are cited in the applications;
* the need to strengthen federal nonitor-
irng to minimize fraud, illegality and
ineffective progranuning; and
* the need to improve local governrrents'
fiscal rrenagenent and reparting of
block grant expeoditures.
In its August 30, 1978, repart ~ and Evaluaticri of the Qin
minity I~e1c3i~nt Blod Grant Program Need to be Strer~thened), GAO
PAGENO="0628"
624
-141-
peinted to the importance of the application, the Performance Pepert and
HUt)' s on-site nonitorimg and technical assistance.
The Wc)rking Group for Ccrrvounity Developient Reform s evaluation of
CE~G in 43 jurisdictions stressed similar concerns:
* CDBG applications should have sufficient
information to provide an adequate basis
upen ~hich city and county councils, local
citizens and the federal goverrment can
understand and evaluate hov the funds are
to be spent and ~that their likely impact
is;
* similarly, repDrts on performance should
provide sufficient information to enable
council n~ribers, citizens and HUH to
understand hcw funds have been spent and
to assess hov well a jurisdiction has
performed under the program and ~thether
it has ccrnplied with statutory require-
nents;
* the federal governnent should develq
technical assistance, rronitoring and
evaluation systams ~4iich help strengthen
the capacity of local governmants to
set goals, pursue those goals and
evaluate their owe progress; and
* the federal oversight respensibility
should include sufficient repertimg,
auditing and on-site rronitoring to
guard against mismanagerent, fiscal
irregularities and illegal use of
CI~G funds.
It is in light of these findings that the Coalition is concerned
about the 1981 Arrendrrents rrentioned abo~, as well as the replacarent of
the canpetitive "Reall Cities" program with a very loose block grant to
the states for rural areas and smaller municipalities.
Prepared by:
Andre~i H. F'btt
Center for Ccmurrunity ~range
202/338-3134
PAGENO="0629"
625
-142-
PAST EXPERtENE
~TA
The Ccxnprehensive flnployment and Training Act (CETA) enacted in 1973,
consolidated federal categorical amployrrent and training programs admin-
istered by the Labor Department into a special revenue sharing program
administered by state and local officials, called prirre sponsors. S'~hile
providing funds to prime sponsors to design their own programs, CETA
retained basic federal standards and directives.
CETA is a goa5 example of a block grant approach that proved too
loose, causing Congress to intervene and impose further restrictions and
federal standards. Many of CETA' s problarrs resulted fran this identity
crisis, as well as the Labor Department's unwillingness to enforce CETA's
numerous federal strings.
CETA was to have been a major step towards decategorization of
federal ei~loyment and training efforts. The program got off to a poor
start, however, as the Department of Labor (DOL) assumed such a flexible
role that it provided little federal guidance or technical assistance.
Fran the beginning, [DL seamed core than willing to bend its regulations
in order to get resources to prime sponsors. According to studies by the
Advisory Canmissiom on Intergoverrinental Relations (ACIR), [DL regional
offices approved all prime sponsor plans in the early stages of the pro-
gram and returned few for changes.
A further problam was [DL' a inconsistent policy vis-a-vis prime spon-
sor autonany. At tines, the department adopted a hands-off policy ta~erd
prime sponsor decisions; at other times, it damanded specific responses to
federal initiatives. Car~ined with the lack of technical assistance, this
led local goveranents to go of f in their own directions. With the country
in a severe econcrnic recession in EY 1975 -- unenploynent had jurrped fran
5.5% to 9% -- DOL and Congress increased CETA funds and expected quick re-
sults fran the localities. But the etphasis on short-teim goals precluded
effective planning and coordination.
By 1978 it was clear that DOL's lack of control was causing major
managament problams, as Congress received extensive reports of fraud and
abuse in local CETA programs. There also was evidence that the original
intention of serving those "cost in need" had been thwarted.
In enacting the 1978 CETA reauthorization, Congress sought to
ameliorate sane of the program's problens. In some cases, such as the
tightened eligibility and wage standards and the tine limit on an
individual' s participation in the program, the changes did alter the pro-
gram for the better. In other areas, however, such as the extensive pub-
lic participation provisions, Labor Department enforcament continued to be
lax. In addition, CETA' s public image was sufficiently marred by 1978
PAGENO="0630"
626
-143-
that the real improve~ants in the program were never fully recognized,
making CETA an easy target for the Reagan budget-cutters. CETA funding
peaked at over $10 billion in 1978 and then began a decline that left the
program at around $4 billion in fiscal 1982.
CETA s original targeting language was very weak. Because costly
white, educated males were benefitting fran the program, particularly the
public service anployment canlx)nent, Congress, in the 1978 reauthoriza-
tion, strengthened CETA s pDverty focus by adopted amendments targeting
program services on the long term unanployed fran lcw-incare families.
These changes also follo~d reported abuses such as patronage hiring
of ineligible ~orkers in sass large cities, as well as estimates that
40-50% of CETA funds were being substituted for state and local funds. So
in addition to the tighter targeting and eligibility criteria, the 1978
amendments included stricter requiranents that CETA jobs and services be
in addition to, and not in place of, local efforts. Other 1978 changes,
such as the time limit on CETA participation and requiranents that public
service aTrployment prograrrs include a training canpnnent, were aimed at
improving participants ability to nave into unsubsidized anplo~aent.
According to a General Accounting Office (GAO) report, IX)L auditors
were overruled 83% of the time by the Baployment and Training Administra-
tion, and tX)L din not attarpt to uncover large abuses. It was necessary,
by 1979, to create an Office of Special Investigation to lock into the
CETA program. Of the 450 prime sponsors, however, only 70 were canpletely
audited by late F? 1981.
CETA was the first block grant to anphasize citizen participation,
requiring prime sponsors to establish planning councils that were broadly
representative of the canmunity. The councils were to advise the prime
sponsors as to which projects were to be funded and `~fro should be served.
ACIR reports that planning councils were fairly representative in
cost areas -- about 35% of the maibers were fran client groups or can-
munity based organizations, 25% fran business and labor, 15% fran educa-
tional institutions, 15% fran local officials and 10% fran other groups --
though there is little documentation on the sex, race, handicap or age
makeup of councils. What is unclear, however, is the extent to which the
councils actually participated in the CETA planning and funding process.
Reports fran canmunity organizations indicate that the councils usually
"rubber stamped' decisions already made by prime sponsors and CETA staff
-- decisions all too often made for political reasons.
Citizens and ccmnunity organizations have had especially severe
difficulty gaining access to the planning and implaTentation of CETA pro-
grams in "Balance of State" prime sponsorships, particularly in rural and
less pqulated areas. These problans are caused by a ccsbination of geo-
graphical distance and lack of political clout at the state level, and
they reflect the difficulties typically encountered with state-adminis-
tered block grant programs.
PAGENO="0631"
627
-144-
In the area of civil rights, even the original CETA legislation con-
tamed ~equivocal standards prohibiting inequities in selection or treat-
cent on the basis of race, color, national origin and sex. In this area,
too, hDwever, WL resolved conflicts in favor of a core limited federal
role and greater local discretion, and local officials have not been
effective in enforcing nondiscrimination. In the 1978 amendments, Con-
gress adopted provisions to protect equity of enplo~ient conditions and to
assure affirmative action.
In evaluating local prime sponsors, DOL appears to have been inconsis-
tent, with field staff scp-iasizing different issues in different jurisdic-
tions. As indicated above, despite the clear statutory mandate to rronitor
canpliance with the law and regulations, DOL has basically avoided over-
sight and has not denanded strict adherence to federal standards.
~Ib suiimarize, DOL has viewed CETA as a block grant program ~fnich
limited the federal role and eaphasized local discretion and control. As
a result, many feel that DOL bears respDnsibility for seriously undermin-
ing the standards and requirenents contained in the law and regulations.
Prepared by:
Melanne Verveer
U.S. Catbolic Conference
202/659-6797
RDnnie Kweller
Center for Camiiunity Change
202/338-6484
PAGENO="0632"
628
-145-
P7~ST EXPERIEWE
L ~
General Revenue Sharing was created by Congress under the State and
Local Fiscal Assistance Act of 1972. PeauthDrized in 1976 and 1980, this
program has appropriated billions of dollars to 39,000 state and local
goverrments. Until 1981, states received one-third of the federal funds
and localities tao-thirds. In 1980, Congress reauthDrized only conies for
localities through 1983 -- approximately $4.5 billion each year.
GRS was originally created with several broad restrictions on the use
of federal ironey. Under changes made in 1976, eligible goverriTents con-
tinue to receive revenue sharing payments autaiiatically and may use then
for virtually any purpase. Such a broad mandate to local jurisdictions
seams to have stretched the decentralization of the federal government to
its limit.
Although much broader in scope than the other block grant programs
established by Congress since 1966, the General Revenue Program shares
many of their problens.
Originally GRS was vie~ev1 as a catalyst for state and local changes.
Although General Revenue Sharing at its peak constituted only 3.14% of
state and local general conies, the program was seen as the answer to the
fiscal inibalance that existed on the state and local levels. But, accord-
ing to the Congressional Research Service (CRs), the snall arrount of noney
available and the lack of incentives prevented GRS fran inducing state and
local governments to coge with fiscal problems such as declining tax
bases, under-funded pension systems, wasteful uses of land and energy and
fragmented governmental structures.
Studies conducted by local, state and national monitoring groups
since 1972 clearly document that localities instead used GRS funds to up-
grade floundering programs and facilities. State and local governrrents
spent fran half to tao-thirds of revenue sharing funds on prthlic goods and
services. Approximately 30% was used for tax reduction and debt retire-
ment and only about 5% was used to add to cash balances and services. Nn
reliable study exists, according to CRS, to suggest that GRS has stim-
ulated spending by state and local governments with `inadequate levels of
services.
The initial legislation required local governments to prepare planned
and actual use reparts, but, according to G?~0, these have proven inade-
quate, this is because once GRS funds are entered in the general accounts
of state and local governiients, they becaTe indistinguishable fran other
funds. Since 1972, the federal government has played a minor role in
holding states and localities accountable for the GRS expenditures. The
Office of Revenue Sharing (ORS) has constantly taken a noninterventionist
pasture on GRS. It was not until civil rights groups forced ORS to
PAGENO="0633"
629
-146-
respond to major civil rights caiplaints that it took a core active role.
Not until 1976 was there a major effort to expand the nondiscrimination
clause of GRS and set up specific timetables for ORB action.
The 94th Congress enacted amendments to GRB that established exten-
sive hearing and caiipliance procedures to deal with discrimination. In
order to dmronstrate canpliance with the nondiscrimination provisions of
the Act, a recipient goverrn~nt must denonstrate by "clear and convincing'
evidence that the program or activity over `~thich an allegation of discrimi-
nation has been made is not funded in wbole or part with revent~ sharing
funds. AlthDugh little data exists on the results of this expanded
effort, it has been reported that there has been a sharp iliproveTent in
ORB' a administrative procedures for dealing with discrimination can-
plaints.
After 1976, all priority expenditure categories were eliminated.
Recipient goverrrrents were simply required to report to the Secretary of
the Treasury on how funds were spent. respite other tight federal require-
merits concerning the timetable for use of funds, auditing requireients and
accounting procedures to be follc~ed by states and localities, the federal
goverrsrent did not aggressively oversee the ORB program.
It has been stated that ORB too often relied on carplaints fran citi-
zens about the use of funds and adherence to ORB provisions, rather than
building its ~n capability to conduct canpliance reviews in the field.
Not until 1977 did ORB conduct reviews in caisnunities and significantly
expand its canpliance staff. The national policy environment permitted
state and local officials to establish their owa approaches.
Citizen participation has always been recognized as an important
aspect of the ORB program. The original act required recipient govern-
ments to inform citizens about uses of shared revenue by publishing re-
ports in a local newspaper. In the 1976 reauthorization arrendnents, the
importance of the citizen participation process was enlarged. Recipient
governrrents were required to bold tao public hearings on ORB unless there
was a specific waiver fran the Treasury Secretary. Ci~e hearing, which
took place before the locality's budget was presented to the legislature,
was on the proposed use of the ORB funds. The other hearing gave citizens
the opportunity to caruent on the proposed uses of ORB funds in relation
to the government' s entire budget.
According to cost knovledgeable sources, citizen participation had
sare irpact on ORB allocations, but it was not nearly as important as
other factors in the local budget process. Although ORB encouraged citi-
zen participation, it made little atte~t to enforce this provision. Re-
ports done by The Brookings Institution and the Survey Research Center in-
dicated that cities holding ORB hearings were just slightly core prone to
fund health and social service programs than those that did not, whereas
counties that held hearings allocated less for health and social services.
Not all of the active citizens desired core social services, nor were
social action groups active in many ccmnunities. It is clear that despite
citizen involvenent, state and local officials determined whether citi-
zens' suggestions s~ould be irrplerented.
PAGENO="0634"
630
-147-
In conclusion, it is evident that the General Revenue Sharing Program
has been the itost decentralized block grant program ever enacted by Con-
gress. Throughout the years, federal oversight arx~ canpliance require-
ments have been mininal, and this has made it difficult to assess the
success or failure of the program. It is apparent, however, that the
General Revenue Sharing Program has done little to change the fiscal
inequities that exist at the state aiaf local levels or the setting of
program priorities by elected officials.
Prepared by:
1\bigail Havens
202/965-0066
Woody Ginsburg
Center for Camiunity Change
202/338-6977
PAGENO="0635"
631
-148-
PAST ~CPERIENE
314(d) PARI1~IE1~1IP FOR H~L![H
Congress' original intention in rierging nine health programs
into the Partnership for Health Act in 1966 wes to assist the
develcpiient and expansion of public health services at the local
level. Unfortunately, there is very little evidence that this
attenpt at giving flexibility and control back to the states ssorked.
The enabling legislation placed very few restrictions on the
states on the use of this block grant rroney. The act required only
that at least 15% of a state's allotnent be made available to the
state rrental health authority, and that at least 70% be made avail-
able for "services to carrnunities." Congress predicted that 314(d)
would be a rrodel program with increased funding levels at the state
level.
Many factors contributed to the denise of 314(d) as an
innovative health plan. With administrative decentralization caine a
lack of national interest and funding. Because the program never
received a large funding increase fran Congress, 314(d) funds
accounted for no core than 3% of total reported state health
department spending. Throughout its history this block grant barely.
kept pace with inflation, and funding areas cut its last few years.
All indications are that the flexibility that states received
with the block grant funds did not prczrote changes in the services or
administration of health programs. &nialler state needs could be
addressed, but there ~sas little roan for broader, core innovative
approaches. As reported by ACIR, the available data imply an absence
of significant departures fran previous federal categorical programs.
Bather, funds served to fill small gaps in federal funding.
Nevertheless, 30 of the 44 state administrators of 314(d)
surveyed try ACIR preferred the flexibility of this approach, although
they cited the follovirig disadvantages: (1) lc~er and uncertain
funding; (2) difficulty in obtaining political support; and (3) an
inability to make major changes in funding patterns. Interestingly,
there were no evaluations that indicate s~iether or not the recipients
of health servic-as believed that they were better served.
Poor performance try HEW resulted in little or no improveient as
a result of 314(d). Regional offices qerated independently, and
there was alnost no direction fran the central office except in
interpreting policies and regulations. Federal efforts to
carinunicate the evolving direction of the program were minimal and
were reduced further sthen a simplified state plan was introduced in
1970. This lack of oversight was reinforced by an HEW regional
office awareness that state financial
PAGENO="0636"
632
-149-
ability to transfer funds between budget categories made
accountability provisions virtually unenforceable.
Along with the lack of control over state plans, technical
assistance, rronitoring, auditing and program evaluation also
diminished. The accamtability mechanisms of the legislation became
all but buried. The lack of available detailed data continued. The
only ramaining check and balance systen was the state budget process.
Forty-three states reported to ACIR that block grant funds were
included in the regular budget review process. It was not evident,
tcwever, that interested parties at the state level were sufficiently
aware of or involved in this budget process to influence health
departments in the use of 314(d) funds. The first ccznplete data on
uniform program reporting revealed little shifting of priorities fran
the 1960s categorical programs. t~spite the congressional hopes for
innovation and local flexibility, state health directors maintained
alrrost total control over the block grant funds.
Evaluations were rarely conducted. In the first seven years of
the program, only one evaluation was done. There has never been an
evaluation of service delivery, nor any way to track funds through
the states. The 314(d) administration has never been subjected to an
audit, and very few state programs have been audited. Even in thnse
instances when states were found to be out of ca~1iance, the central
office never permitted withbulding of funds.
This lack of accountability and evaluation, and the alrrost total
state discretion with these funds, made it difficult to gauge the
local irpact of 314(d). The legislation mandated that funds be used
to "make a significant contribution" toward providing and
strengthening public health services" in localities, and that they be
made available to other egencies to secure "maximum participation" of
local agencies and groups. However, there is little evidence that
this happened, and the regulations failed to define what s'~ou1d be a
significant contribution to or achievetent of maximum local
participation. In conclusion, national, sstate and local health
agencies dkl not s~ork together on the 314(d) program. As the block
grant program continued, state health departments established
bureaucratic control, and the national and local goverrtrents lost
interest or found few ways to influence state health programs. There
is rx evidence that recipients were better served as a result of this
block grant.
Prepared by:
Abigail Havens
202/965-0066
PAGENO="0637"
633
-150-
PAST EXPERI~E
Title )CC
Title XX of the Social Security Act was an approximately $3
billion federal program that reimbursed states for costs incurred in
providing social services to lv incane persons. The program
operated as a block grant to states, with broad federal guidelines
and maximum decision-raking authrity at the state level. Title XX
consolidated and replaced the autlorizations for services to welfare
recipients previously found in Titles IV and VI of the Social
Security Act.
Althugh Title XX did not create a n~ program, it both rrade
significant changes in the way social services were provided to lv
incane persons and expanded eligibility for social services. The law
required at least half of each state s federal expenditures to be
used for services to AFJX~, SSI, or Medicaid recipients. H~ver, the
reiainirxg funds could be used to provide services to anyone wiose
incane was belv 115 percent of the state' s rredian inccme for a
family of four, adjusted to actual family size. Three types of
services -- information and referral, family planning and protective
services -- could be provided to anyone needing the services,
regardless of incane.
Title XX established five broad goals (which are `retained in the
new Social Services Block Grant):
o achieving or maintaining econanic
self-support to prevent, reduce or
eliminate dependency;
o achieving or maintaining self-
sufficiency, including reduction
or prevention of dependence;
o preventing or ranedying neglect,
abuse or exploitation of children
and adults unable to protect their
owa interests, or preserving, re-
habilitating and reuniting families;
o preventing or reducing inappropriate
institutional care by providing for
camnunity-based care, hane-based
care or other forms of less inten-
sive care; and
o securing referral or admission for
institutional care when other forms
of care are not appropriate, or pro-
viding services to individuals in
institutions.
PAGENO="0638"
634
-151-
All services provided by a state were to be tied to at least one
of these goals, and at least one service for each goal was to be be
provided. Further, Title XX required states to offer at least three
services for eqed, blind or disabled people receiving 551; and to
provide family planning services to all AFDC recipients W1o requested
tham. Beyond these reguiraments, states were free to determine their
own mix of services based upon a needs assessnent and a mandatory
planning process which, at the tine of Title XX' s enactment, was
heralded as one of the mast significant aspects of the nev law.
One of the major innovations of the Title XX program was the
option for states to serve not only low incare persons vfro were
already receiving federal assistance (Ssi, AFOC and Medicaid), but
also individuals and families with inccnes within state-established
limits, but below 115% of the state's median incane for a family of
four. States ware required to impose reasonable fees for persons
whose inccme exceeded 80% of the state' s median incane, and states
had the option of imposing fees for persons with lower inccires.
Wnen Title XX was enacted in early 1975, it inherited a $2.5
billion ceiling that had been adopted by Congress in 1972 in response
to a trenendous increase in federal spending for social services
during the previous five years. For statOs not yet at their Title XX
ceiling, the availability of federal funds served as a catalyst to
develop and expand their programs.
As mare and mare states spent all of their Title XX funds,
pressure was exerted on Congress to raise the Title XX ceiling.
Congress responded by authorizing a series of increases in the Title
XX ceiling.
Still, Title XX appropriations did not keep pace with inflation.
The $2.5 billion cap on Title XX imposed in 1972 weuld equal about
$5.2 billion in inflated 1981 dollars. States increased spending for
social services fran $600 million in FY 1972 to $1.5 billion (est.)
in FY 1981, a real increase of about $244 million, or only about 10%
of the federal loss.
In its six years, the Title XX program experienced a variety of
problans that raise serous questions about the effectiveness and
efficiency of a block grant as the primary vehicle for the provision
of social services. These problars include a critical lack of data
about what Title XX funds actually purchased, unrealized expectations
of how citizens would participate in the Title XX planning process,
inadequate program and administrative accountability and serious
issues of equity relating to the distribution of funds. All of these
problams were canpounded by the $2.5 billion funding ceiling, which
received no allowance for inflation between 1972 and 1979. The $2.9
billion appropriation for Fl 1981 was cut by 17%, to $2.4 billion,
under the 1982 Budget Reconciliation Act, which also established the
mew Social Services Block Grant.
PAGENO="0639"
635
-152-
The lack of hard data on exactly ~fnat was bought for the Title
XX yearly expenditures plagued the program fran its inception. At
the national level there was a continuirr need for inproved reporting
of the ways in which federal dollars ware spent, who received `which
services, how much was spent for administrative costs, etc. Equally
serious was the lack of data useful to the states. A 1978 National
Govercors' Association study on Title XX repeatedly aiphasized that
state agencies need tighter and rrore accurate data."
Che of the fundamental assunptions of the Title XX legislation
was that citizen participation `would serve as a means of
accountability. The vehicle for citizen participation was the
Canprehensive Annual Services Plan (CASP) which spelled out what
services ware to be provided, to whan and in what parts of the state.
Citizens ware to be given at least 45 days to sttrnit their canments
regarding the CASP; however, there was no mandate that the final
state plan incorporate or reflect the citizen input received by the
state agency.
An analysis of citizen participation in Title XX programs
conducted in 1978 found that while the overall level of participation
ranained above the pre-Title XX levels, public participation. declined
sharply after the first year of iinplanentation. The fact that nost
states ware spending all of their Title XX funds -- and therefore
were unlikely to fund new services -- probably discouraged citizens
fran trying to influence service priorities.
Title XX decision-making within the states became increasingly
controlled by the state budget offices, the single state
administering agency and the state legislature, further limiting
citizen input. An Urban Institute study expressed doubts that public
participation experienced under Title XX was representative of either
consuners or the general public. This study found that menbers of
the public who participated in Title XX priority-setting generally
represented the special interests of providers or particularly
articulate pipulation groups.
When Title XX went into effect in October, 1975, it placed major
aiphasis on developing irrproved planning and managament systans at
the state level. It gave states the flexibility, within available
funding, to rsorder existing programs and reallocate resources to
create a canprehensive social services systan.
The pranise of caliprehensive planning through Title XX never
materialized. The NG~ study concluded that experience with Title XX
raised questions about a state's ability to conduct a caaprehensive
assessment of the need for services. HHS `s own 1980 report supported
this conclusion, noting that states found needs assessments costly
and thrdenscrne, particularly in view of funding limits.
The lack of canprehensive planning at the state level was
matched, if not exceeded, by a lack of evaluation of Title XX
expenditures. The NG~ study reported that state officials viewed the
PAGENO="0640"
636
-153-
inability to evaluate program results as one of the major stuhnling
blocks to better programs. Fk~ver, allocation of staff and
resources to program evaluation did not always catch the abstract
canrnitment to evaluation, despite the fact that the. states had
considerable discretion to expand their staffs dewted to this
function. A 1978 survey indicated that core than half the jurisdic-
tions administering Title XX neither ccs~leted nor undertook a single
study of the effectiveness of the programs they ware ailministering.
Allocation of funds and/or services at the state level raised
concern that individuals and/or groups cost in need of service ware
not, in fact, receiving their fair share. In a recently canpleted
exploratory study of the substate allocation of Title XX services,
the National Association of Social 1~brkers found that rural areas,
blacks and pDverty papulations generally receive less than their
propartionate share of service dollars.
As an example of a block grant, the Title XX program raises
serious questions about the willingness and capability of the states
to plan, evaluate and manage canplex social service systams. While
Title XX served as a conduit for federal funds and brought increased
services to our irost vulnerable families, it did not fulfill its
patential as a vehicle for improved social service delivery at the
state level.
The much heralded needs assesanent process and related mandate
for citizen participation did not, in reality, significantly change
the decision-making process within the states, nor alter the
traditional allocation of resources. While the services ware
theoretically being delivered `closer to the people," the funding
source of the programs (the Congress) has little useful data on the
extent to ~hich the conies being expanded have met the five program
goals specified in the legislation.
Prepared bj:
Pram Eizenstat
Mary Lee Allen
children' s tbfense Fund
202/483-1470
800/424-9602
0