S. 878, the Federal Assistance Reform Act and S. 904, the Federal Assistance Reform and Small Community Act of 1979

Interrelationships among federal, state, and local governments have become more complex as federal funds going to state and local governments have grown to more than $80 billion annually. The assistance system has become an array of conflicting activities and initiatives which place major strains on the intergovernmental management system. Proposed legislation would increase efforts to rationalize the grant system, make grant requirements more uniform, and provide general management relief within the federal assistance programs. Both bills under consideration instruct the President to designate a single federal agency to establish standard regulations for implementing one or more of certain crosscutting requirements applicable to federal assistance programs. The bills also provide an effective and practical means for progress in the consolidation of federal assistance programs, but the following two limitations need further consideration: (1) the President would be limited in assembling a consolidation plan by the range of terms and conditions included in the programs being consolidated; and (2) the deadlines for transmitting consolidation plans to Congress, imposed by the bills, would limit the useful life of the legislation. The use of advance appropriations, encouraged in the proposed legislation, is only one method in which Congress can provide funding for federal assistance programs and reduce uncertainty to recipients. GAO has generally favored the use of funding that best fits a particular program. More flexibility is needed in the proposed legislation with respect to auditors roles to allow for judgment as to whether federal or nonfederal auditors should perform the various audits. GAO supports the proposed revisions to strengthen and simplify the federal assistance programs by providing state and local governments information on the funds received. GAO opposes the provision dealing with small communities because it would target funds based on the size of governments without regard to the need for funds.