Title: Accountability and Federal Mandates: Unfunded Mandates Reform Act
1Accountability and Federal MandatesUnfunded
Mandates Reform Act
- Presentation for
- The Government and Nonprofit Sector of the
American Accounting Association and - The Kennedy School of Government
- April 1, 2005
- Joseph Santiago
- Senior Analyst, Strategic Issues,
- U.S. Government Accountability Office
2Accountability and Federal MandatesUnfunded
Mandates Reform Act
- Background
- The Unfunded Mandates Reform Act of 1995 (UMRA)
was enacted to address concerns about federal
statutes and regulations that require nonfederal
parties to expend resources without federal
funding to cover the costs - UMRA generates information about the nature and
size of potential federal mandates in proposed
legislation and regulations It does not
prohibit unfunded mandates - Federal mandates can be intergovernmental (on
state, local, and tribal governments) or private
sector (on other parties, including individuals) - Title I of UMRA focuses on the legislative
process, and title II focuses on the regulatory
process
3Accountability and Federal MandatesUnfunded
Mandates Reform Act
- Objectives of the May 2004 GAO report for Senator
Voinovich - Describe the general procedures for identifying
federal mandates under UMRA - Identify statutes and rules that were identified
as containing federal mandates under UMRA - Provide examples of statutes and rules that were
not identified as containing federal mandates,
but affected parties might perceive as such
4Accountability and Federal MandatesUnfunded
Mandates Reform Act
- Figure 1 Steps Proposed Legislation Must Pass
Through
Provision is contained in authorizing legislation
reported by an authorizing committee and not
added after initial CBO UMRA review.
Automatic CBO Review
Provision is not one of seven UMRA exclusions.
Provision is an enforceable duty on state, local
or tribal governments or the private sector, and
it is not an UMRA exception.
Direct cost estimate is feasible.
Direct cost estimate for all provisions in
legislation meets or exceeds threshold.
5Accountability and Federal MandatesUnfunded
Mandates Reform Act
- Procedures for Identifying Mandates
- There are two main ways provisions would not be
identified and/or trigger UMRAs requirements - Some statutes and rules may be enacted or issued
via procedures that do not trigger UMRA reviews - Legislative examples include provisions in
appropriations bills or bills going directly to
the floor and also amendments added after the
initial CBO UMRA review - Regulatory examples include provisions in rules
issued by independent regulatory agencies or in
final rules issued without a prior proposed rule - Even if reviewed, UMRA exclusions, definitional
exceptions, or cost estimation limitations and
thresholds may apply
6Accountability and Federal MandatesUnfunded
Mandates Reform Act
- Exclusions and Exemptions in Coverage
- Examples include provisions that
- Enforce constitutional rights of individuals
- Establish or enforce statutory rights that
prohibit discrimination - Are necessary for national security
- Impose enforceable duties that are conditions of
federal financial assistance - Impose enforceable duties that arise from
participation in other voluntary federal programs - Additional restrictions in coverage of rules
e.g. rules issued by independent agencies,
exclusion of actions reducing revenues
7Accountability and Federal MandatesUnfunded
Mandates Reform Act
- Triggers
- Direct costs in legislation must meet or exceed
UMRAs thresholds (in 1996 dollars, adjusted
annually for inflation) - Intergovernmental 50 million in any of the
first 5 fiscal years the mandate is in effect - Direct costs include any amounts that governments
are prohibited from raising in revenues - Private sector 100 million in first 5 fiscal
years - For regulations to trigger UMRA, the potential
mandate must require 100 million or more in
expenditures in any 1 year
8Accountability and Federal MandatesUnfunded
Mandates Reform Act
- Mandates covered by the Act in 2001-2002
- Few statutes and rules were identified as
containing federal mandates at or above UMRAs
cost thresholds - CBO identified 5 of the 377 statutes enacted
during 2001 and 2002 - Federal agencies identified 9 of the 122 major
final rules published during 2001 and 2002 - Each of the 5 statutes and 9 rules contained
private sector mandates, and 1 rule (arsenic in
drinking water) also contained an
intergovernmental mandate - There was some evidence that UMRA had an indirect
effect helping to hinder mandates in legislation
9Accountability and Federal MandatesUnfunded
Mandates Reform Act
- Other Statutes and Rules With Nonfederal Impacts
- At least 43 other statutes and 65 other rules
from the 2-year period resulted in new costs or
other negative financial impacts on affected
nonfederal parties - For 24 of those statutes and 26 of the rules, the
estimated direct costs/expenditures did not meet
or exceed UMRAs thresholds - The remaining statutes most often did not trigger
UMRA because UMRA did not require a CBO review
prior to their enactment - The remaining rules most often did not trigger
UMRA because they were issued by independent
agencies - Figures 2 and 3 illustrate the breakdown of our
findings
10Accountability and Federal MandatesUnfunded
Mandates Reform Act
- Figure 2 How Certain Statutes Were Treated Under
UMRA
Source CBO
11Accountability and Federal MandatesUnfunded
Mandates Reform Act
- Figure 3 How Final Rules Were Treated Under UMRA
10 were or should have been identified as
containing federal mandates at or above UMRAs
threshold
28 did not contain federal mandates at or above
UMRAs threshold but imposed significant impacts
on nonfederal parties
84 did not contain federal mandates at or above
UMRAs threshold and did not impose significant
impacts on nonfederal parties
Source GAO
12Accountability and Federal MandatesUnfunded
Mandates Reform Act
- Analysis of Statutes and Final Rules
- Some statutes and rules that did not trigger UMRA
appeared to have potential financial impacts on
nonfederal parties similar to those that
triggered UMRA - Among 10 such examples of statutes in the report
- 3 imposed new requirements and standards on state
and local governments (e.g., Help America Vote
Act of 2002) - 2 preempted state and local laws and/or
restricted their authority in some fashion (e.g.,
USA PATRIOT Act of 2001) - 1 potentially impacted tax revenues (Economic
Growth and Tax Relief Reconciliation Act of 2001)
13Accountability and Federal MandatesUnfunded
Mandates Reform Act
- Analysis of Statutes and Final Rules (continued)
- Among 29 such examples of rules in the report
- 5 reduced the level of federal payments to
nonfederal parties by more than 100 million in
any year (e.g., HHS final rule on revision to
Medicaid upper payment limit requirements) - 2 included voluntary options that might increase
Medicaid costs to states by over 125 million in
some years (e.g., HHS final rule on new
provisions regarding Medicaid program and managed
care) - 1 rule had estimated indirect costs of 103
billion over 50 years for actions that might be
taken based on its standards (EPA rule on
dangerous levels of lead in housing and
child-occupied facilities)
14Accountability and Federal MandatesUnfunded
Mandates Reform Act
- Conclusions
- In certain circumstances, UMRA may have served to
highlight mandate costs and may have helped to
discourage or limit federal mandates - However, many actions with significant costs were
not covered. - Raises the question of whether UMRAs procedures,
definitions, and exclusions adequately capture
and subject to scrutiny federal statutory and
regulatory actions that might impose significant
financial burdens on affected nonfederal parties.
15Accountability and Federal MandatesUnfunded
Mandates Reform Act
- Senator Voinovich requested additional work by
GAO on federal mandates issues - Consult with a diverse group of knowledgeable
parties familiar with the act and report on the
most significant strengths and weaknesses of UMRA
as the framework for addressing federal mandates
issues. - For the strengths and/or weaknesses most
frequently identified report, to the extent
possible, on - The level of agreement on the significance of the
issue - Potential options for addressing the weaknesses
and reinforcing the strengths, and - The level of priority for action.
16Accountability and Federal MandatesUnfunded
Mandates Reform Act
- To address the objectives
- GAO sought input on UMRA and federal mandates
issues from organizations and individuals
representing a variety of viewpoints within the
academic, business, federal agency, public
interest advocacy group, and state and local
government. - GAO hosted a symposium on UMRA and federal
mandates issues on January 26, 2005. - The report is currently being drafted.
- The final product will be delivered to Senator
Voinovich shortly.
17Accountability and Federal MandatesUnfunded
Mandates Reform Act
- Contact information
- The full May 2004 report (report number
GAO-04-637) can be found at www.gao.gov - For more information contact Orice Williams,
Acting Director, Strategic Issues, at (202)
512-5837 or williamso_at_gao.gov or Tim Bober,
Assistant Director, Strategic Issues, at (202)
512-4432 or bobert_at_gao.gov