Partnering to Reform Federal Grants

This past weekend, President Obama met with governors from around the country to talk about ways the Federal Government and the States can work together toimprove outcomes for the American people while lowering costs for government at all levels. Over the past year, the Administration has engaged in a number of new, innovative partnerships on key programs that are leading to real benefits for state, local, and tribal governments, as well as the American people. For more information on these efforts, please see this report released by the White House this week. 

As part of this effort, the Office of Management and Budget has been working to improve the accountability and performance of Federal grants, while at the same time reducing administrative burden for grant recipients. This effort got underway one year ago, when President Obama directed his Administration to work with Federal agencies and other stakeholders to strengthen accountability for taxpayer dollars and reduce unnecessary regulatory and administrative burdens, in order to focus resources and get more bang for our buck.  

In response to the President’s charge, OMB and Federal agencies have worked hand-in-hand with State, local, tribal, and other stakeholders to develop a set of ideas for reforming our grantmaking processes. Our guiding principle has been to focus resources on targeting high-risk areas in order to eliminate waste, fraud, and abuse in Federal programs, while increasing flexibility and reducing burden for grant recipients wherever possible. This week marked a critical step in this process, as OMB published a set of potential reform ideas in the Federal Register to solicit public feedback. 

Our reform proposal includes a range of ideas that we feel will strengthen the oversight of Federal grants and make them more effective and efficient. For example, we are proposing to both hone and streamline audit requirements, known as the “Single Audit”, to strengthen our focus on detecting and reducing waste, fraud and abuse, while reducing the burden on grantees.  Specifically, we are considering a shift in our audit activities to higher dollar awards while further instructing auditors to ask more in depth questions on the bottom line issue of whether taxpayer funds were used correctly. We are also considering ways to provide States and other grantees with the option to eliminate significant bureaucracy in how they administer Federal awards. 

These are significant potential reforms, and are indicative of the depth of the President’s commitment to working collaboratively with States, localities and tribes to improve outcomes for us all. As part of the President’s Campaign to Cut Waste, we are committed to strengthening oversight of every taxpayer dollar while eliminating wasteful inefficiencies caused by unnecessary administrative burdens. Over the next few months, we encourage the public to take a close look at the reforms we are considering and provide feedback. We plan to digest this feedback, incorporate it into our proposals, and then issue a new set of potential reforms for additional public comment later this year. 

Danny Werfel is Controller of the Office of Management and Budget