The key to sensible government reform is refocusing the system around results.
Suppose you were writing a new initiative to modernize the American system of intergovernmental relations. And suppose you wanted to escape the old tactics and arguments and get down to a strategy for an effective federal system in the age of information. How would you go about it?
Since the Bush administration happens to be engaged in such a project right now, these are more than just academic questions. Let me see if I can offer a few tentative answers.
One thing not to do is resurrect the ageless debate about "sorting out" government functions. This has long been like the medieval search for the philosopher's stone: It assumes a mystical vision of just which level of government ought to perform which functions, and a corresponding flow of both money and power.
But it's a quixotic quest. There never was a time when Americans clearly sorted out which public entities ought to do what. Even if they had, the "sorting out" approach is a poor match for 21st-century burdens. Rigid roles and functions won't fit new problems that insist on spilling over every boundary.
Another thing not to do is focus on the old debates about cash and formulas. Except for Medicaid and a few other entitlement programs, federal aid to states and localities topped off in the Carter administration. The crucial issues these days are regulatory, not fiscal.
The real dilemma is that state and local problems vary enormously around the country, and uniform federal policy has rarely taken this into account. Congress and the president expect national policies to be applied nationally, when in fact this has frequently become almost impossible.
That's a brief outline of strategies to avoid. Here's a list of better ideas that need to be considered:
1. Use federal aid to fund results, not programs. Too much of the intergovernmental aid system is hung up on formulas and inputs, not outcomes and benefits. Bush's education proposals stirred a host of battles, but at least they were over the right issue: How can we use the funding to achieve national goals without undermining local flexibility?
2. Employ performance measurement to cement cross-agency partnerships. The Government Performance and Results Act requires federal agencies to measure their progress in achieving outcomes. The Office of Management and Budget could use its powers of review to insist that federal agencies break out of their "stovepipe" mentalities and work together.
3. Use the federal "bully pulpit" to galvanize action. The Federal Emergency Management Agency has quietly transformed itself from a bureaucracy that arrives after a disaster to write checks into one that tries to reduce or eliminate the damage in advance. It's better, FEMA officials smartly reasoned, to work with homeowners and builders to keep roofs from blowing off in a hurricane than to deal with the consequences after a storm. More of this could reduce costs and improve service.
4. Create the presumption of "yes." One of the big irritants for state and local officials is the presumption of federal officials that the feds know best in every situation. Whenever states or localities propose new ideas, the burden of proof is placed on them. What if that burden were reversed--and federal officials decided that they would approve any plausible request as long as state and local officials could promise performance gains?
5. Launch "Reverse RFPs." Most federal aid programs work by putting out the money and setting forth the rules. Instead, Congress could earmark a percentage of current aid money for state, local and regional governments to devise their own innovative rules and solutions to problems that cross existing boundaries.
6. Transform federal regional offices into service coordination centers. Although they have long been a backwater in federal management, beefed-up federal regional offices could be the places where functionally organized federal agencies link their programs to make effective place-based action. This step, however, requires that top federal officials make regional offices important players in the management system.
7. Create real incentives and consequences for partnership. Everyone salutes the intergovernmental flag, but the system imposes few penalties for failing to live up to the principles. OMB could use the performance measurement law and the annual budget process to enforce coordination.
8. Develop a new navigation principle to guide the partnerships. This means a change of focus at the very top, from managing programs to producing and assessing results. It means a federal government committed to steering the system instead of controlling it. Someone will have to be at the helm. It makes the most sense to build and operate the system within the OMB.
No doubt a federalism strategy such as this one would attract substantial flak from many different quarters. But if we're serious about crafting federalism for the information age, this is roughly what it will have to look like. It's time to shift from inputs and formulas to outcomes and results.
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