Senator DANFORTH. The next witnesses are Ms. Riemer from the National Governors' Association and Mr. Cronson, who is the Auditor General of Illinois, who is representing the State Auditor Coordinating Council.

Also we have Mr. Gaciala, who is associate director of the Council of State Governments.

TESTIMONY OF A PANEL CONSISTING OF DEIRDRE RIEMER, STAFF DIRECTOR FOR THE COMMITTEE ON EXECUTIVE MANAGEMENT AND FISCAL AFFAIRS OF THE NATIONAL GOVERNORS' ASSOCIATION; AND ROBERT CRONSON, AUDITOR GENERAL OF ILLINOIS, ACCOMPANIED BY JONATHAN GACIALA, ASSOCIATE DIRECTOR OF COUNCIL OF STATE GOVERNMENTS, ON BEHALF OF THE STATE AUDITOR COORDINATING COUNCIL

Ms. RIEMER. I am Deirdre Riemer; I am here representing the National Governors' Association.

I will start off by briefly telling you of the longstanding interest of the Governors in improving the management of the Federal grant-inaid system.

I have brought three reports which I will leave with you. These outline some problems the governors have identified in Federal grant procedures.

Representatives of local governments have indicated that many of the same problems we chronicled in our reports are applicable to them. So you may find the reports of interest as you study how to aid small communities.

Ms. RIEMER. Governor Snelling, who is the chairman of the Subcommittee on Management Improvement of NGA, was unable to be here, but he has submitted a statement for the record. Governor Hunt, who is chairman of the Subcommittee on Small Cities and Community Development, has also expressed a very strong interest in the bill we are discussing today.

Senator DANFORTH. We will include Governor Snelling's statement in the record.

[The statement follows:]

OFFICE OF THE GOVERNOR,

STATE OF VERMONT, Montpelier, Vt., July 28, 1978.

Hon. JOHN C. DANFORTH,

U.S. Senator, Russell Senate Office Building,
Washington, D.C.

DEAR SENATOR DANFORTH: I appreciate the opportunity to express my views on the Small Communities Act of 1978 (S. 3277) to the committee. This bill and its companion S. 3267 represent very positive steps in a direction long advocated by governors, and municipal officials.

Vermont is a state of small communities. Every one of our 246 cities and towns could be positively affected by the provisions in the Act. Although small by comparison Vermont's communities are nonetheless interested in participating in federal public works, community development, transportation, education and environmental programs. However, there is uniform dissatisfaction among mayors and boards of selectmen in Vermont over the cost and frustration involved in grants management. One problem of course is the lack of full-time professional help. Only 50 of Vermont's municipalities employ a manager or administrator; only a handful have additional help. The current federal rules and regulations, voluminous reports, duplication of requirements and overly

complex categorical programs have served as barriers to cost effective participation by Vermont communities.

In recognition of the problem, Vermont's Department of Community Affairs has applied to HUD for a grant to provide staff for technical assistance to municipalities participating in HUD programs. Although I am pleased that we may be able to offer our municipalities some assistance through this program, I must say it is symptomatic of the kind of stifling federalism the Small Communities Act seeks to correct when HUD's answer to complaints about confusing regulations, excessive paperwork and the high cost of grantsmanship is to launch a $15 million technical assistance program rather than simplify the grant process.

I support most of the provisions of the Act. The standard rules and regulations provision, exemption of communities with less than 2500 population. self certification for all others under 50.000 population, and funding formula changes would be very welcome measures. The financial management provisions hold promise as well. Finally, I am pleased that this Act addresses the issue of consolidation of federal assistance programs. The National Governors' Association Committee on Executive Management and Fiscal Affairs of which I am a member has long advocated consolidation of federal grant programs and other NGA committees have made specific proposals in Economic Development and other areas. You have my enthusiastic support for this legislation.

Sincerely yours,

RICHARD A. SNELLING,

Governor.

Ms. RIEMER. I will go on to discuss some of the specifics of this legislation and be here, of course, to answer any questions you may have. First, I would like to echo

Senator DANFORTH. Could you speak up just a little bit ?

Ms. RIEMER. If I am closer, does that help?

Senator DANFORTH. I think a little more projection may be necessary. Ms. RIEMER. First, I would like to echo the comments of the Advisory Commission on Intergovernmental Relations on the question of grant consolidation. NGA fully supports the provisions in the Small Communities Act on this issue.

We also are in full agreement with the act's provisions on advance appropriations and regulatory reform, which you discussed earlier in this session

The second point I would like to make is that we feel very strongly that a problem-solving mechanism must be built into many of the provisions of the Small Communities Act, particularly the selfcertification procedures, the auditing improvement provisions, the standard guidelines, and the waiver procedures.

We have found, and the Roadblocks report that I will leave with you indicates, that interagency problems, especially interagency discrepancies on policy and administrative requirements, are among the most thorny intergovernmental problems that States face.

The normal channels for problem solutions-that is, negotiating with agency representatives-simply don't work. We have several examples in the report interagency problems that persist even though we have tried for a long time to resolve them.

So I would like to suggest that the section 707, the proposed amendment to the Intergovernmental Cooperation Act, be strengthened, and I have submitted some language for your consideration.

Senator DANFORTH. Good.

Ms. RIEMER. Also, I suggest that the strengthened section 707 apply not only to the standard regulations as it now does in the Small Communities Act, but to the self-certification process, the waiver provisions, and the auditing improvement issue as well.

The third point that I would like to make is that we do strongly support the self-certification provisions in this bill and, as you might be able to predict, we would like to see them extended to larger jurisdictions as well. We face the same problems in States-and so do large communities-that these provisions address.

The fourth point I want to make is that we would like to see the administrative simplification provisions for grants under $50,000 extended to State governments and to larger jurisdictions in general regardless of the total amount of Federal aid which these jurisdictions receive.

We feel that it's unacceptable if a grant is consumed in large measure by administrative requirements, regardless of the size of the recipient government.

The final point I would like to make relates to the block grant provision contained in the legislation.

My feeling is that there should be some minimal compliance requirements attached to these grants. I am concerned that, because block grant recipients are exempt, from all requirements, the provision will run into a great deal of opposition. So I respectfully suggest that you may want to retain some very minimal compliance requirements for block grant communities.

That concludes my comments.

Senator DANFORTH. On the last point you are talking about what? Ms. RIEMER. I am talking about the block grant provision, the cash setaside proposed at title X of the Small Communities Act.

Senator DANFORTH. OK. Thank you.

Mr. Cronson.

Mr. CRONSON. Thank you, Mr. Chairman.

First of all, I would like to present Mr. Greathouse's apologies. He is the chairman of the State Auditor Coordinating Council and had planned to be here today but was called home.

We have prepared a statement which we filed with the committee on his behalf, and the chairman has already indicated that that will be incorporated in the record.

Senator DANFORTH. Yes.

Mr. CRONSON. I would like to take a few minutes to address some of the points contained in that statement.

The State Auditor Coordinating Committee is the coordinating body for the post-audit functions of the 50 States. These functions are comparable roughly to the role which is discharged by the United States General Accounting Office as a post-audit agency and are not internal audit agency activities.

On behalf of that organization we should today like to express strong support for many of the provisions not only of Senate bill 3277, the Small Communities Act, but 3267, the Federal Assistance Paperwork Reform Act, which addresses some of these same matters.

There are three specific issues addressed in 3277 upon which the State auditors have no consensus, perspective, or position, and they are, respectively, title XI, which is Small Community Representation on ACIR, title VII which is the flexible allocation formula, and title X, the set-aside provision.

The State auditors, however, have long supported the need to bring increased rationality to the intergovernmental fiscal system and to