October 14, 1966
Page 26774
INTERGOVERNMENTAL RELATIONS AND THE FEDERAL ACCOUNTANT
Mr. ERVIN. Mr. President, no Member of this distinguished body has cast a more penetrating eye on the performance of Federal grant-in-aid programs than the chairman of the Subcommittee on Intergovernmental Relations, the junior Senator from Maine [Mr. MUSKIE]. It has been both an honor and a privilege for me to serve on the subcommittee under the leadership of a man so dedicated to the cause of good government under our Federal system. His wide-ranging studies of problems of cooperation between the Federal, State, and local levels of government have resulted in legislative proposals which will produce the kind of high-level performance among our civil servants that is necessary if our federal system is to be preserved. He has, at the same time, endeavored to bring his message to as many interested groups as the busy schedule of a Senator allows.
Last evening, he addressed the Federal Government Accountants' Association here in Washington. His message to that group was an invitation to join with him in the important work he has so diligently pursued -- to make the Federal system as efficient and as productive as it should and must be. I congratulate Senator MUSKIE for this address and commend it to my colleagues.
Mr. President, I ask unanimous consent that the text of this speech, entitled "Cooperative Federalism and the Federal Accountant," be inserted at this point in the RECORD.
There being no objection, the address was ordered to be printed in the RECORD, as follows:
COOPERATIVE FEDERALISM AND THE FEDERAL ACCOUNTANT
(Address by Senator EDMUND S. MUSKIE, Democrat, of Maine, Chairman, Subcommittee on Intergovernmental Relations, Before the Federal Government Accountants' Association, Presidential Arms Hotel, Washington, D.C., October 13, 1966)
I am delighted to have this opportunity to speak to such a distinguished and important
group of public officials. Your interest in "cooperative federalism" is encouraging. It is a subject of great concern to me, and one which needs more discussion and understanding among public administrators and officials of all levels of government.
There is no one more indispensable to the policy-making team administering Federal grant-in-aid programs today than the Federal accountant, and there is nothing more important to the success of these programs than top-notch financial management. There was a time, not too long ago, when the Federal administrator would show up on Capitol Hill with one expert by his side -- a lawyer. Today, when he comes to visit us, another key associate joins him: his accountant -- with facts and charts and performance records -- obviously a key man on the administrative team.
To understand the future role of the government financial manager, we must understand the direction in which our Federal system is heading.
THE EMERGENCE OF A NEW FEDERALISM
When our Constitution was drawn up, only 5 percent of our population was urban. We were a sparsely populated country of less than 4 million. Today, over 70 percent of our total population of 195 million live in urban areas. By the year 2000 we will reach 300 million people, and 85 to 90 percent of them will be crowded into metropolitan areas comprising a total land area of less than 15 percent of the nation.
The response to this population explosion has been, and will continue to be, more governmental funding and more programs. Twenty years ago, the Federal government spent less than $1 billion annually to assist State and local development. Ten years ago, that figure had risen to $4 billion. Today, there are over 173 Federal aid programs (as of October 11, 1966), administered by over 21 Federal departments and agencies, involving an annual outlay of over $14 billion.
Projected to 1975, the Federal contribution could reach the $50 billion mark. However, the lion's share of the financial burden for public services continues to be borne by the State and local governments. In 1946, they spent a total of $11 billion to help meet public needs, and this year their combined outlay will reach $84 billion. Projected to 1975, State and local jurisdictions may well have to increase their annual expenditures to over $120 billion.
And when you spend more money, and create more ways of servicing the increasing needs of an essentially urban society, you have to expand the public workforce, which makes program accountability and the evaluation of cost-effectiveness all the more difficult.
State and local public employment has risen from 3.3 million in 1946 to 8 million in 1966. The Federal government, on the other hand -- despite the popular myth that its rolls, too, are expanding -- has the same size workforce it had in 1946: 2.6 million employees. While total Federal employment has remained remarkably stable, there has been a substantial shift from blue collar to white collar occupations, providing a more complicated manpower mix, and greater problems of coordination and policy implementation at the middle management level.
But the complexities of size in programs and in administrative personnel are modest compared with the near-chaos that exists in planning and coordination between local units of government.
There are over 92,000 local governing units, most with independent powers of taxation, planning, financing, and operation. There are, then, too many local governments doing too many separate things on their own hook. There is too much waste and duplication of public effort. There is too little comprehensive planning and orderly development. And there is serious inequity in the administration of public services, where the poor and the minority groups for years have been shut off from good government while the more affluent sectors of the nation enjoy maximum protection and public services.
THE REAL CHALLENGES TO CONTEMPORARY FEDERALISM
Congress has responded to the challenge of public development. The tensions and impatience of millions of people which are building in the city ghettos and in the rural slums have done much to trigger this response. During the past five years, we have passed more grant-in-aid programs and appropriated more money for State and local assistance than in all the Congresses going back to 1789. Projections for this session, and for the sessions ahead, show no letup in this effort.
But the success of this legislation is only as good as the machinery which carries it to the people -- in the fastest, most effective way possible. Where we formerly had to concentrate on the substance of programs, the spotlight is now being turned on the procedures -- the administration of government. Here is where the new challenge lies.
This is why more and more we hear talk of a "new federalism" to meet the challenges of the last half of this century and of the new century ahead. Some call it "cooperative federalism," others "creative federalism," even "dynamic federalism"; but it all adds up to the same thing: a working partnership between federal, State, and local governments through modern management techniques, more professional manpower, and more money.
Even the politician is beginning to admit that the age of professionalism and planning in government has arrived, and he knows that there is political mileage in seeing that the job of public development is done well and efficiently.
President Johnson has defined this new federalism as developing "the diversity of our institutions to fulfill the dreams of the American people." In his budget message this year, the President said:
"The success or failure of [Federal aid] programs depends largely on the timely and effective communication and on readiness for action on the part of Federal agencies in the field and State and local governmental units. We must open channels of responsibility. We must give more freedom of action and judgement to people on the firing line. We must help State and local governments to deal more effectively with federal agencies."
In these important words, the President is reflecting what some of us in Congress have been urging for some time: better intergovernmental relations; a cooperative approach to the management of public development programs; and greater coordination and collaboration: first, horizontally among Federal programs and administration, then vertically from Washington to the regional offices to the State agencies and to the local units.
In a nutshell, the age of competition and conflict -- of suspicion and distrust -- between Federal, State, and local managers is over. It has to be. There is too much to do, and too little time in which to do it.
YOUR CONTRIBUTION TO CREATIVE FEDERALISM
But what can the Federal accountant do to expand and promote the concept of creative federalism? More specifically, what can this organization do to exert a maximum effort toward modernizing our intergovernmental relationships? There are many things to be done. I'd like to share a few suggestions with you.
First, as I stated in my message to your Minneapolis symposium last June, you should give special priority to developing ties between FGAA and counterpart organizations at State and local levels. I know you are giving serious thought to this, but I want again to put in a plug for an intergovernmental association because I feel it is critical to effective fiscal management of joint-action programs.
Consideration might be given to broadening your admission standards to include State and local government accountants and auditors. This could provide a medium for information sharing, a forum for discussing latest joint accounting methods, a chance to better understand the problems of your State and local colleagues, and in general create a better atmosphere of respect and friendship in your profession as a whole.
The National Association of State Budget Officers regularly invites Federal Bureau of the Budget and Federal department officials to their meetings, and this organization (along with the Council of State Governments, The National League of Cities, and The U.S. Conference of Mayors) is making an effort to promote the planning-programming-budgeting concept beyond the Federal level. FGAA could render a real public service in expanding its activities to the State and local area. What I have in mind are regional conferences on a continuing basis, with joint workshops where Federal, State, and local accountants and auditors can relax, express their gripes, and confront each other in the spirit of professional discussion. This could help to overcome the traditional, and ofttimes petty, conflicts and misunderstandings that have developed.
There is no better way of breaking down barriers and apprehensions among intelligent people than by getting them together and giving an opportunity for all sides to be heard. Their problems, after all, are some of your problems. There has been too much of a void -- too great a bridge -- between the Federal administrator and State and local officials -- and this distance, this division, is particularly noticeable among government accountants.
There is no room for hostility and conflict in the joint administration of Federal aid programs. The priority of FGAA must be focused on reducing and, if possible, eliminating this problem. This could be a real contribution to creative federalism.
Second, you must continue to support and promote an intergovernmental program for upgrading
the professional caliber of government auditors and accountants, particularly at State and local levels. The FGAA has done an excellent job of upgrading the professional capabilities of its own members. It is doing a good job in cooperating with the Bureau of the Budget, the General Accounting Office, The Civil Service Commission, and other Federal agencies in their efforts to develop educational and training programs for Federal personnel. But, again, what about your State and local colleagues? What can we do to help them? How can their output be improved?
The Subcommittee on Intergovernmental Relations, which I chair, has completed a three-year survey of Federal, State, and local officials on the major problems of our Federal system. One of the most serious complaints by Federal officials was that State and local administrators (and this includes financial managers and accountants) were understaffed, lacking in quality, unimaginative, and too subject to negative political and bureaucratic pressures.
Good professional people are just not being attracted to State and local jobs. We found a variety of reasons for this. There is the stigma of being considered a "political hack.." Working conditions are unfavorable. Budgets for equipment and office space are limited. Personnel development programs, including the opportunity for job mobility, in-service training, and promotions, are frequently weak. Merit systems are often lacking, resulting in the overloading of State and local agencies with incompetent, uninspiring, and often indifferent personnel. Finally, inflexible rules for hiring and firing frustrate efforts to develop effective staff support.
But the most serious deterrent to improved manpower is the pay. We found hundreds of thousands of critical positions at State and local levels (including auditors and accountants), requiring college and even graduate degrees, offered at maximum salaries of between $5000 and $8000.
How can we ever expect to develop administrative competence and efficiency at State and local levels with marginal working conditions, inadequate career personnel systems, and such low pay? Something has to be done, now.
My concern for this problem prompted me to introduce S. 3408, the proposed Intergovernmental Personnel Act, which among other things is directed to putting a responsibility on the Federal Government to stimulate and help the State and local agencies modernize their personnel systems. I want to say that I was particularly gratified and deeply impressed with the testimony of your association in favor of S. 3408. You made a valuable contribution to the record, and your support will be extremely helpful in getting the legislation passed.
Now, what about S. 3408? What would it do?
First, title I of the bill authorizes the President to extend merit system requirements to additional Federal grant-in-aid programs. There is nothing especially radical about this proposal, since 37 grant programs already have this provision.
Title II would provide Federal grants to enable each State to strengthen and improve its present system of personnel administration; to provide State personnel services to non-metropolitan local governments; and to develop projects for the improvement of personnel administration in metropolitan units of local government. State and local resources for public personnel administration have not kept pace with the programs they administer: with few exceptions, State and local personnel agencies have not been equipped or given additional support for new workloads. Title II will help correct this deficiency.
Title III would permit attendance of State and local employees at Federal training courses, and authorize Federal agencies administering grant programs to conduct training programs for State and local professional, administrative, and technical personnel. It also provides funds for educational leave or comparable arrangements for salaries and training expenses of merit system employees, to permit them to attend university or other training courses related to their programs.
Title IV establishes a grant program for in-service training of State and local employees. Such assistance would be available only in personnel areas where comparable aid is not already provided under other Federal statutes. The States will be given the primary responsibility for developing training programs at that level.
And finally, title V authorizes the U.S. Civil Service Commission to cooperate with State and local governments on a shared cost basis in cooperative recruitment or examinations.
Improved merit systems, improved State and local personnel management, and improved in-service training programs -- these are the three basic concerns of the Intergovernmental Personnel Act. Greater career competence is the paramount theme of this legislation. Through a combination of grant funds, technical assistance, and new devices for intergovernmental cooperation in the personnel area, we will be able to strengthen the professional standing and prestige of administrators working at the critical levels of State and local government. In his Princeton University speech, President Johnson called for a program of assistance to "State and local governments seeking to develop more effective career services for their employees."
The proposed Intergovernmental Personnel Act constitutes such a program.
The continued support of the FGAA will be needed if this program is to become a national policy.
Third, as accountants you must push forward with the job of coordinating and unifying accounting and auditing methods among Federal agencies, both in Washington and in the field, and encourage similar coordination with State and local agencies.
The effort to modernize financial management of Federal programs -- budgeting, accounting, reporting, and auditing practiceson a government-wide basis got underway almost 20 years ago under the impressive aegis of the Joint Program for Improving Accounting in the Federal Government. The program name was later changed to the Joint Financial Management Improvement Program to stress the broad scope of its activities.
Shortly thereafter, stimulated by the first Hoover Commission report, Congress placed its imprimatur on the need to coordinate program accounting with program budgeting and planning, through passage of the Budgeting and Accounting Procedures Act, and its amendments. Among other things, the heads of agencies were specifically instructed to take action to achieve:
1) consistency in accounting and budget classifications;
2) synchronization between accounting and budget classifications and organizational structure; and
3) support of the budget justification by information on performance and program costs by organizational units (70 Stat. 782; 31 U.S.C. 18c).
The President was also directed to "evaluate and develop improved plans for the organization, coordination, and management of the executive branch of the government with a view to efficient and economical service." And the Bureau of the Budget was to be the President's operating arm in seeing what this coordination in financial management was accomplished.
The reasons for this emphasis on a marriage between accounting and programming are clear.
Congress and the Chief Executive wanted to be able to assess Federal grant and other programs on the basis of performance. How do individual programs fit into larger program categories and national goals? How balanced is this picture? What is the relationship between program cost and the priorities Congress and the Administration have set? The answers to these and a host of other questions lie within the province of accountants and auditors. It was the intent of Congress that they be equal partners on the administrative team which develops and funds the grant program. It was further the intent of Congress that accounting and auditing systems in the agencies be coordinated and streamlined.
But the tragedy is -- and I want to be frank about this -- that while Congress went on to accelerate the number of its grant programs and to appropriate vast increases in Federal funds, it -- along with the Administration -- did not put sufficient pressure on the agencies to carry out its intended modernization of accounting systems at the agency level. GAO's progress in developing an effective post-audit system is exemplary, but the effort to build modern financial management procedures at the budgeting and operating stage -- where they were very much needed -- somehow got lost in the shuffle.
It is not my intention here to place any blame over the inaction of the past ten years with respect to development of approved accounting systems. That is behind us now. What I want to do is to look to the future. I want to voice my support for the "renewed joint effort" that is now being made by the Budget Bureau, the Comptroller General, Treasury, and the Civil Service Commission to accelerate the progress of agency accounting and internal controls.
As President Johnson stated to the Cabinet when he launched the planning-programming-budgeting system: "It is important to remember one thing: no system, no matter how refined, can make decisions for you. . . . Our judgment is no better than our information. This system will provide us with alternatives and the information on the basis of which we can, together, make better decisions. The people will be the beneficiary."
Some progress, I am told, has been made in recent years. HEW, Interior, and Agriculture have consolidated their auditing systems and upgraded their standards. Labor and HUD are in the process of centralizing. Other agencies, such as the Atomic Energy Commission, have combined some of their accounting and auditing functions into a single system. But much more must be done, and members of the FGAA have a major responsibility in promoting this effort at the national level.
Fourth, coordination between accounting and programming at the Federal level -- although critical -- is only a part of the total financial management picture in the joint administration of Federal aid. Cooperation with State and local accounting officials is also fundamental. Even greater problems exist in this area. Sound Federal practices must find their way down to these levels.
In its Circular No. A-73, August 4, 1965, the Bureau specifically instructed the Federal agencies to collaborate with State and local audit groups in exchanging audit standards and objectives, in developing schedules, and other procedures. The intention here is to minimize the audit cost and prevent unnecessary duplication of effort. The "primary objectives," says the Bureau, "are to promote improved audit practices ... and achieve more efficient use of manpower through improved coordination of the efforts of Federal, State, and local government."
However laudatory the Bureau's objective in promoting this intergovernmental relationship in accounting and auditing, the disturbing fact is that the Federal accountant is not moving fast enough to carry out this objective. He has not yet received the message, and perhaps the Bureau can be criticized for not pushing harder on its mandate.
A circular is one thing; a program is another. This is an intergovernmental relations problem, and it is your problem. I assure you, Congress is becoming increasingly aware of the need for action on this front, and I have instructed the staff of the Subcommittee on Intergovernmental Relations to give me a continuing report on the progress of the Bureau of the Budget and Federal agencies are making in helping the States and local agencies upgrade their accounting and auditing procedures.
IN CONCLUSION
To sum up, the Federal Government accountant must assume a more positive role in the administration of public development programs. He must recognize that his efforts can facilitate or hinder the implementation of programs that will help to clean up our rivers and our air, bring better education to our underprivileged, provide work and dignity to our discriminated minorities, rebuild our cities, and establish better health facilities for all of our citizens.
He must try to develop a better understanding of the goals of our Great Society and the workings of our federal system.
The role of the accountant and auditor is no longer primarily a bookkeeping operation. It has expanded greatly to overall financial-management-budgeting, planning, assessing programs in terms of cost, and auditing management effectiveness.
In this new role, he must broaden his professional horizons and concern himself with program goals as well as improved management techniques. Above all, the Federal accountant must help to strengthen the spirit of creative and professional purpose among his counterparts at the State and local levels.
This is a tough assignment. But it is a worthy one for you -- as individuals -- and you -- as an Association -- to assume. If you succeed, you will have made a major contribution to implementing the ideal of cooperative federalism.