financial mng mt

7/29/2019 Financial Mng Mt

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Questions I'm Attempting toAnswer

What is an unfunded mandate?

What is the cause of unfunded mandates?

What impact has the Unfunded Reform Acthad?

What are the effects of mandates on localgovernments?

Are unfunded mandates a necessary evil?



Unfunded Mandate

Regulations or conditions for receiving grantsthat impose costs on state or local governmentsor private entities for which they are not

reimbursed by the federal government. Any one of many federal legislations such as the

Clean Air Act, and the Clean Water Act that requireprograms to be sponsored by the governments of

the states, without providing any funds for thoseprograms.

The provisions in the Americans with Disabilities Act that require nearly all American business

owners to make their business premises availableto disabled customers without providing any funds



Causes of Unfunded Mandates

Mandates were an outgrowth of fundamentalchanges in the nature of the policy makingprocess

Congress changed its institutional structure to openmore opportunities for all members to assert policyleadership

Congressman became policy entrepreneurs to

gain electoral visibility, embracing new policyproposals allowed them to garner nationalrecognition

Far-reaching, non-incremental policy reformsbecame commonplace



Causes of Unfunded Mandates

The cost of interest group formation decreasedmeaning there would be more groupsproposing and trying to influence legislation

The chronic federal deficit also caused thefederal government to pass on the costs of legislation to state and local governments



The Shift

Prior to the 70's, members of Congress owedtheir nominations to state and local partyleaders and could be depended on to protect

the institutional and fiscal integrity of states andlocalities

Around 1970, governors and mayors beganlosing their influential positions in the

nomination process for presidential andcongressional offices

By 1983, only 18% of Congressman had previouslybeen elected to a local office (ACIR, The

Transformation of American Politics. 1986)



Unfunded MandateReform Act



What is it?

Primary purpose is “to end the imposition, in theabsence of full consideration by Congress, of Federal mandates on State, local, and tribal

governments without adequate Federalfunding.”-2 U.S.C. § 1501(2)

Any mandate with an uncompensated state andlocal cost greater than $50 million a year (CBO)

could be stopped by a point of order raised onthe House or Senate floor

A majority could override the POI and pass themandate

Pro osed le islation containin rivate-sector



Mandates Excluded From UMRA

enforces constitutional rights of individuals;

establishes or enforces any statutory rights thatprohibit discrimination on the basis of

race, color, religion, sex, national origin, age,handicap, or disability;

requires compliance with accounting and auditingprocedures with respect to grants or other money or

property provided by the Federal Government; provides for emergency assistance or relief at the

request of any State, local, or tribal

government or any official of a State, local, or tribalgovernment;



Point of Order

A way for members of Congress to raise thepoint that the proposed legislation violatesUMRA

When it is used, a simple majority must vote tooverride the POI. If done, the legislation can bepassed

Argued that it is the most influential part of UMRA



Impact of POI's

POI's became a political tool

Congress became more concerned with howmuch the bill would cost states and less

concerned with the social problems or benefitsaddressed by the proposed mandates

Enabled states and localities to potentiallycreate new allies in the business communitythrough shared opposition to legislation, thoughfor different reasons

Gave businesses more influence in Washington

Risk-averse and consensus-seeking behavior



Use of POI

Since UMRA was enacted, a point of order hasbeen raised 12 times in the House, and never in the Senate



Impact of UMRA

Primary impact came not from blockinglegislation but from UMRA's effect as adeterrent to mandates during the drafting and

early consideration of legislation Bills that had estimates which exceeded the $50

million threshold were often revised by its sponsors'to bring the figure below that line

Bills would also be modified to extend the lengthstate and local governments had to implement themso the cost was still the same to state/local govts.,but just over a longer time

Congress began treating state and local



Impact of UMRA

Praised as a responsible attempt toinstitutionalize congressional self-restraint onmandates, but its success of UMRA relied onCongress enforcing it upon themselves

Did nothing to pre-existing unfunded mandates



2 Real Main Goals of UMRA

Reduce the instances of unjustifiable unfundedmandates

Ensure that the legislature considers the full

costs of proposed legislation



Practice

Between 1996 and 2004,5 pieces of legislationwith intergovernmentalmandates exceeding thestatutory cost threshold

have enacted In the same time, 26

pieces of legislation withprivate-sector mandatesexceeding the statutory

cost threshold have beenenacted

National Conference of State Legislaturesidentified $29 billion infederal cost shifting thatwas still passed on

3 Political Forces Responsible for



3 Political Forces Responsible for Continuing Mandates

Valence Politics

Partisan Politics Interest Group Politics



Valence Politics

Issue that is uniformly liked or disliked amongthe electorate

Megan's Law (registering/notifying of sexoffenders) easily exceeded the $50 million pricetag but you could not raise a point of interestbecause it would look like you support sexoffenders

Drug testing state and local prisoners/paroles. If you're against it you are “soft on drugs”



Partisan Politics

Republicans Support National Welfare

Moral Policy

Immigration Business

Democrats Support Labor Issues

Housing Issues



Interest Group Politics

Interest groups exert their influence over Congressman regarding legislation theysupport

Big businesses and labor unions supportmandates that benefit them

State and local governments have troublefighting unfunded mandates that are publiclycompelling

Arguments for Unfunded



Arguments for UnfundedMandates

Fully funding mandates can reduce cost-effectiveness,as sub-national governments then have no incentive tominimize costs in implementation.

Requiring full funding of mandates would make

regulation more difficult to pass

The threat of unfunded mandates can lead subnationalgovernments to act earlier in the process to stave off national action; eliminating unfunded mandates would

allow state and local governments to not act withregards to important issues

These arguments address what seems to underliemuch of the debate on unfunded mandates – a sense

by opponents of unfunded mandates that government



4 Main Criticisms of Mandates

Preempt local authority and restrict the ability of local officals to respond to local problems

Obscure the lines of accountability by removing

decisions from elected officials who have closecontact with constitutents

“One-size-fits-all” policies rarely achieve their objective in an efficient or effective manner

Heavy financial burden passed on because of them



Other Criticisms

State and local government interest groups andproponents of federalism argued that unfundedmandates undermine political accountability.

By separating regulations from thefundingsource, these groups argue, unfundedmandates reduce accountability by confusingcitizens about which level of government is

responsible. Proponents of UMRA also contended that

unfunded mandates distort policy makingbecause federal legislators who lackinformation do not consider the costs of a

UMRA:



UMRA:Success or Failure

It has been successful inreducing the number of mandates, though many arguethis isn't really true because of the narrow scope of the act.

“[The] very threat of a CBOreport has engendered efforts toreach out to state and localleaders before the fact –instead of after. It has changedthe nature of our intergovernmental discussion ina very positive way”-RaymondScheppach (Director, Nat'lGovernors Assoc.)

Provisions not contained inauthorizing bills or notreported by an authorizingcommittee are not subjectto CBO review beforegoing to the floor.

The Act doesn't requireautomatic review of provisions added after

CBO's initial review The narrow definition of an

unfunded mandate stillallow the passage of

unfunded mandates

S f f



Suggestions for Reform

Eliminate minimum thresholds so that anymandate can trigger a point of order becausethe cumulative effects of mandates that areunder the minimum threshold can createproblems for subnational governments

Require a supermajority vote to override a pointof order which would make passing unfunded

mandates more difficult Extend the point of order to apply to bills that

pertain the private sector

P bl t th l l l l



Problems at the local level

Local govts had to suffer from having to spendmoney according to state guidelines whilehaving their local taxing authority restricted

Some states have laws requiringreimbursement, but it is up to the state toreimburse the local government and they havebeen very hit or miss

Problems are not exclusively financial Some local officials feel as if they are being micro-

managed

S l ti



Solutions

Create a dialogue between levels of government that allow search side to see their common goals as well as the variation in their constituents' policy priorities

Use of local government networks to developcost estimates, periodic review of mandatesinitiated by local governments, mandate

explanations that provide a clear rationale for the mandate and an explanation of theappropriate role for each level of government

Local governments often speak out againstmandates but their actions make them seem



State and local governments must rely on their own political resources and prowess, not theconstitution, to protect their prerogatives andcosts from federal encroachments-JusticeBlackmun's majority decision in the Garcia case

I t l l t



Impact on local governments

Local governments have been forced to forminterest groups to lobby Congress

Because the members of these interest groups

are elected officials, it is difficult for them toachieve the internal cohesion needed toeffectively formulate and communicate grouppositions on the important intergovernmental

issues of the day. -80 Internal consensus is a prerequisite to the groups'

articulation and advocacy of positions.-80



A federal mandate helps state officials achievepolicy goals by presenting controversialpositions as federal decrees.

Progressive states with stronger environmentalregulations or public welfare would haveinterest in putting a floor under intergovernmental competition by pressing for

national mandates.-83 State policy activism can prompt federal mandates

every bit as muc as can state policy inaction

Benefits of mandates are often immediatelyvisible whereas the costs are often va ue and

State legislatures are becoming



State legislatures are becomingincreasingly “congressionalized” State political leaders rely less on party labels

and gubernatorial coattails

Have become more like policy entreprenuers

running candidate-centered campaigns insearch of visibility, campaign financing, andvotes.-219, Posner

Same can be said of Governors in their

gubernatorial campaigns

Conclusion



Conclusion

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