the role of municipal council, not just State legislature, over much of this period.

The Congress should look at the appropriateness of the role. This committee is doing it. But the hurdles are huge, the interests you are contending with are inordinately powerful, both in and out of Congress, and the support for this kind of effort comes through a kind of a "good government" sense, which is the weakest form of reform effort historically. Yet I am personally firmly of the conviction that unless this is understood in terms of practical program impacts on people, or of the absence of any impact on people, which is a hypothesis in certain programs that ought to be raised, then we are wasting inordinate amounts of money, we are giving a lot of administrators at all levels jobs, but the effectiveness of the system is seriously in question.

Mr. STENBERG. Senator, I think it is important to recognize that no program has been immune from the red tape and overregulations that you have noted in your introductory remarks.

Block grants have a history of what we have called "creeping categorization," as they age, new conditions and restrictions are added. The 1976 amendments to general revenue sharing in the view of some contain a number of onerous requirements that recipients will have to comply with. As you have pointed out, these actions reflect a desire to assure Congress that moneys are well targeted and that recipients will be accountable for proper use of these funds. To an extent this is desirable and appropriate.

The question is the cumulative effect of the various rules, regulations, requirements, and conditions on recipients. We have heard in recent testimony that there are disincentives to participate in grant programs as a result of these requirements. We have heard about the difficulty in exercising oversight of various programs for the same purpose but going to different jurisdictions and different agencies within those jurisdictions on different terms and conditions and reporting back to different Federal agencies and congressional subcommittees.

It is incredibly confusing and somewhat ironic in the final analysis that from the standpoint of achieving these goals of targeting and accountability, the movement toward greater specificity in program structures and greater conditioning of the grants has made it even more difficult for Congress and for those such as CBO, GAO, ACIR, and others who attempt to examine implementation of these programs to really get a clear picture of what is going on.

We certainly feel that the approaches to reducing paperwork that are contained in the Smaller Communities Act and in the Paperwork Reduction Act are very important.

But we also feel that the need for fundamental surgery of the system cannot be overlooked.

Senator DANFORTH. I agree. I think we spent a lot of time treating symptoms or talking about treating symptoms and the disease is exactly as you describe it.

Let me ask you one other question.

Have you thought about the concept of averaging past years' categorical and block grant receipts and electing on a local basis to cash them in?

Mr. WALKER. We have thought about it.

Senator DANFORTH. It is a different title but

Mr. WALKER. Staff has thought about it. The Commission has not dealt with that per se. This is an informal staff response to the question.

The dilemma, I believe, is that the bulk of the moneys that we are talking about are discretionary project grants which vary from time to place, depending upon the muscle of the local jurisdictions involved. This would make averaging difficult.

If we are talking about a State where the bulk of the moneys are formula grants, where a greater element of predictability could be injected, this is another matter.

But that is where the bulk of their moneys come and that is why it makes it difficult to package or mold these things based on a 2- or 3-year period previous to that.

This, I think, is a practical consideration that would have to be looked at here.

Senator DANFORTH. Thank you, very much, gentlemen, for your excellent presentation.

Mr. WALKER. It is a pleasure to be with you, sir.

[The prepared statement with attachment of the panel follows:]

STATEMENT OF THE ADVISORY COMMISSION ON INTERGOVERNMENTAL RELATIONS by David B. Walker, Assistant Director; Carl W. Stenberg, Assistant Director; and Michael C. Mitchell, Federal Relations Associate

Mr. Chairman, Members of the Committee, we appear before you today

to discuss S. 3277, the "Small Communities Act of 1978." Our statement

will focus on Title V of the proposed bill, "Consolidation of Federal Assistance Programs." This testimony, our second presentation before your Subcommittee

in three weeks, affords us the opportunity to explore one more facet of the broad strategy for grant reform that the Commission has endorsed. We commend the Committee for its continued willingness to focus on grant system improvement and we thank you for permitting us to comment on these issues.

As we view the manifold problems generated by Federal grants, program consolidation must be part and parcel of a larger, interrelated strategy of federal assistance reform. By attacking statutorially based ills of this non-system, the consolidation mechanism complements other efforts to improve administrative practices related to federal assistance. This approach, then, reinforces other Congressional attempts to resolve problems inherent in the contemporary grant system--including the Intergovernmental Personnel Act, Joint Funding Simplification Act, Federal Program Information Act, Federal Grant and Cooperative Agreement Act, and the proposed Federal Assistance Paperwork Reduction Act (S. 3267). Like the paperwork reduction proposal, this grant consolidation title is fully consistent with efforts to strengthen Congressional oversight of agency administration of grant and other programs, as reflected in the "sunset" measure sponsored by the Chairman and other members of the Committee.

In its recently completed assessment of the intergovernmental grant system, ACIR probed the new tripartite aid system, composed of categoricals,

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block grants, and general revenue sharing. Categorical grants still

occupy,

of course, the largest and most important position in this network. The number of categorical grants grew rapidly over the last fifteen years with over 240 new programs enacted during the Johnson Administration and at least 120 additional ones approved during the Nixon-Ford years. Estimates of the total number of federal grants to state and local governments range widely, but according to ACIR staff calculations, 442 such programs existed at the end of 1975 and preliminary figures indicate that this figure rose to 481 programs as of January 1, 1978. The figure no doubt will increase when the new Catologue of Federal Domestic Assistance figures are verified. The importance of categorical grants and the implications that they hold for federal assistance recipients can only be understood fully when the dollar figures involved are considered.

The absolute dollar amounts

for categoricals increased by more than one and one half times between 1961 and 1968, rising from $7 billion to over $18 billion.

During the subsequent

eight years, a 150 percent increase occurred, with the total reaching $45.6 billion in 1976. Despite the advent of general revenue sharing and block grants, categorical aids continue to account for the bulk of federal grant outlays, amounting to 79 percent of total assistance to state and local governments in FY 1979.

Categorical proponents offer a variety of arguments in support of this funding mechanism. The "targeting" capability afforded by categorical grants permits the federal government to compensate for difficiencies in the fiscal capacity of regions, states, and local governments when attempting to

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equalize resources and service levels. The heavily conditional character of categoricals assures funding for the stimulation and support of programs designed to meet national goals--programs which might not materialize without the Federal level impetus. Categoricals also are supported on the basis of the higher degree of recipient accountability that they assure, relative to either block grants or general revenue sharing. Above all, categoricals are wholly in harmony with the heavily pluralistic, interest group base of American and especially Congressional politics. Categorical grants, then, are a justifiable and needed part of the Federal aid system.

Yet, in the Commission's view, this instrument has been overworked, especially during the past decade. Improper and excessive use of categoricals

has undermined effective program management and the efficient delivery

of services. It has resulted in program overlap and even more in unnecessary, excessive, and intrusive specificity. Overlap is evident in the seven different highway safety grants, each for some particular activity such as bridge replacement or incentives for seatbelt laws; a half-dozen grants for forest-related programs; 23 for pollution control and abatement; 36 for social services; and 78 for elementary, secondary, and vocational education. Illustrative of their excessive specificity are the highway beautification grant for the control of junkyards and the program for special projects for crippled children who are mentally retarded.

Bordering on the ludicrous were bills introduced into the 93rd Congress to renew the funding programs for the control of jellyfish and for authorizing a formula grant for the spaying of dogs and cats.

To some observers, there are too many recent cases of Congress playing