III—
Shared Governance:
The Developing Uneasy Partnership in Federal Social Programs

Two factors dominate federal spending patterns in the post—World War II period: (1) the relative shift from defense to domestic expenditures generally and to social programs for the disadvantaged specifically, and (2) the increasing importance of federal grants-in-aid to states and localities. In 1955 at the end of the long World War II/Korean War period, six out of every ten federal budget dollars went for defense. Twenty-five years later the actual outlays on defense had more than doubled, but defense claimed just a little more than a fourth of the budget. Social expenditures—the biggest being Social Security payments—have come to dominate the federal budget, and now take two out of every three dollars.

Federal grants-in-aid, which link federal agency administrative responsibilities with local operations, first became important in the 1950s for physical investments such as highways. Then, in the 1960s, grants-in-aid became the main means of funding the new social service delivery programs. These changes, as we shall see, were both large and rapid in the social service delivery areas. That's important for appreciating the implementation problems in shared governance.

The Second Social Program Revolution^[1]

Twice in this century—in the middle years during both the 1930s and the 1960s—a president and Congress produced in relatively short order a host of new social programs which dominated the years that followed. From the earlier period came the Social Security Act of 1935 establishing both what we commonly call "social security" and the federal/state public welfare programs. Interestingly, more important at the time were a number of temporary programs now only vaguely remembered initials, such as WPA (Works Progress Administration), PWA (Public Works Administration), and the CCC (Civilian Conservation Corps). The latter were the ancestors of the Great Society programs, particularly in the areas of employment and business aid. And as in the Great Society programs, the federal government was not organized to manage large numbers of projects scattered throughout the United States.^[2]

As World War II wiped out unemployment and returned prosperity, these 1930s programs disappeared. There was roughly a thirty-year hiatus when the nation pursued few social goals through federal social service programs. In the 1960s when the nation turned to the problem of the disadvantaged, whatever had been done in social service delivery programs was only a vague memory.

The 1960s found the nation at the apex of the postwar confidence. There seemed few doubts that wars on poverty and discrimination could be launched and fought successfully. After nearly three decades of social program dormancy,^[3] President

[1] An Appendix provides readers with the terms used in this and subsequent sections in discussing the federal budget and classes of federal funding.

[2] For an account of the management issues written during that period, see James W. Fesler, "Executive Management and the Federal Field Service," in The President's Committee on Administrative Management (Washington, D.C.: Government Printing Office, 1937).

[3] For our purposes the one key piece of legislation passed just prior to the outburst of Johnson legislation was the Manpower Training and Development Act of 1962, originally aimed at problems of high unemployment but later amended to become an important Great Society program.

Lyndon Johnson worked with Congress to enact the Economic Opportunity Act of 1964, the Elementary and Secondary Education Act of 1965, the Public Works and Economic Development Act of 1965, the Housing and Urban Development Act of 1965, Medicare and Medicaid in 1965, the Civil Rights Act of 1964, and the Voting Rights Act of 1965. The Great Society had arrived.

Today it is difficult to believe that "federal expenditures on grants for social programs amounted to only about $1.3 billion in 1963"^[4] But after that, expenditures for social service delivery programs became the fastest growing category in the federal budget. Between 1965 and 1977, what Schultze has labeled "social investment and services" grew from about $5 to $41 billion.^[5] There was, it should be noted, some change within these social programs among the relative amounts going strictly to the poor, with the poor losing ground somewhat in the Nixon-Ford years.^[6] However, the overall shift was clear—in a handful of years the United States went from most limited spending for social service delivery programs to an effort approaching $50 billion, of which a good part went to programs for the disadvantaged.

These new social service delivery programs were funded through grants-in-aid. Although such grants could be traced to the eighteenth century, federal aid to state and local governments was limited until the post Korean period. These grants to state and local governments fall into two categories. First are payments to individuals (called transfer payments), of which the largest are public assistance, Medicaid, and housing assistance. In these

[4] Edward R. Fried, Alice M. Rivlin, Charles L. Schultze, and Nancy H. Teeters, Setting National Priorities: The 1974 Budget (Washington, D.C.: The Brookings Institution, 1973), p. 180.

[5] The most useful review of federal expenditures over time can be found in Charles L. Schultze, "Federal Spending: Past, Present, and Future," in Setting National Priorities: The Next Ten Years, ed. Henry Owen and Charles L. Schultze (Washington, D.C.: The Brookings Institution, 1976), pp. 323–369.

[6] For a succinct account, see Henry J. Aaron, Politics and the Professors: The Great Society in Perspective (Washington, D.C.: The Brookings Institution, 1978), pp. 4–15.

programs a subnational government may be an intermediary entity, but basically it serves as a pass-through mechanism for getting funds directly to people. All other grants-in-aid, broadly speaking, go to state and local organizations to be used for investment (e.g., highways) or for providing services. The essential feature of these grants for investments and services is that subnational organizations have the primary role in running the programs.

Total grants to state and local governments rose from slightly over $2 billion in 1950 to almost $78 billion in 1978. In that period transfer payments went from about $1.5 billion to almost $25 billion. Grants for investment and services show even more dramatic gains going from slightly over $800 million in 1950 to over $53 billion in 1978. By 1978 grants for investment and services alone (thus excluding transfer payments) represented almost one-fifth of all state and local outlays.^[7]

One final aspect of grants-in-aid is important—the receipt of federal support by localities without major state involvement. Historically, the state has stood as intermediary between federal and local governments, but as a team of Brookings researchers observed:

The share of federal aid given directly to local governments has risen to about one-third of all federal grants, and the dollar amounts have increased sharply. If welfare grants (AFDC and Medicaid), which go to the states, are eliminated from consideration—as we would argue they should be for these purposes—half of all remaining federal grants to states and localities in 1978 go to local governments. This trend toward increased direct federal-local grants represents a fundamental change in American federalism.^[8]

[7] The information in this paragraph is taken from Special Analyses, Budget of the United States Government, Fiscal Year 1980, United States, Office of Management and Budget (Washington, D.C.: Government Printing Office, 1979), pp. 212–246. This special analysis provides an excellent review of the dollar changes in grants-in-aid.

[8] Paul R. Dommel and others, Decentralizing Community Development , Second Report of the Brookings Institution Monitoring Study of the Community Development Block Grant Program, (Washington, D.C.: Government Printing, Office, 2 June 1978), p. 56, italics in the original.

The emerging partnership has two interrelated but separable aspects: the total or partial federal funding of programs operated by subnational organizations, and the shared programmatic responsibilities for these grants-in-aid programs. The rapid sweep in this section concentrates on the broad dimensions of fiscal federalism indicating both the magnitude of federal grants-in-aid, other than transfer payments, and their direction.

In a number of the social service delivery areas both partners came in with limited experience generally, and almost no experience in dealing with disadvantaged persons specifically. And the different levels of government had had precious little experience in dealing with each other in a setting of shared responsibility. We need to explore what such sharing means beyond its fiscal dimensions. What happens when two active partners try to implement social service delivery programs?

A Case in Point:
The New Federalism and Beyond^[9]

To see what happens in the field when the federal government attempts over time to implement major legislation on social service delivery programs. I will draw mainly on my own research. The focus will be on the efforts over time by the Department of Labor (DOL) and the Department of Housing and Urban Development (HUD) to implement the Comprehensive Employment and Training Act (CETA) and the Community Development Block Grant (CDBG) program. What follows concentrates on the New Federalism period that started in the Nixon administration and ended with the Ford administration, the period in which the initial legislation was enacted. We also will look briefly at the early Carter administration attempts to change CETA and CDBG. This longer time frame is extremely useful. It emphasizes both that the implementation of an initial major

[9] This section is a somewhat modified version of a previously published paper by Walter Williams and Betty Jane Narver, "The Uneasy Federal-Local Partnership: Experiences with CETA and CDBG," Washington Public Policy Notes , Institute of Governmental Research, University of Washington, Winter 1978.

change is likely to be a long and involved process and that new implementation problems keep coming up, as major and minor decisions both alter the implementation setting for the original decision and themselves require implementation.

Background

The Great Society programs were based on the national belief in the superiority of the federal government—both morally and technically. State and local governments were seen as part of the major social and economic problems the country faced. The hope of solving these problems seemed to lie in strong federal policies that would carry from Washington the firm message of the nation's intent to end poverty and provide equal opportunity. There ensued an outpouring of categorical programs that often were highly specific, telling the "locals" not only what they should do but how they should do it. However, since these specific cures did not necessarily solve the major problems, new categorical programs were developed and added on, directed toward different approaches or recipients. The federal government's shotgun response came to be perceived as complicating the situation and increasingly as part of the problem. Local government considered itself trapped in a welter of narrow, often overlapping or contradictory categorical programs. The high goals of social policy envisioned in the months before the Vietnam buildup and the urban riots were not reached in the turmoil of the 1960s.^[10]

Discontent about the highly centralized federal role began to develop during the Johnson administration. What came to be called the New Federalism was introduced by Nixon in 1969 as a philosophical and practical approach to the delivery of social programs. Its avowed goals were to simplify procedures, to give localities more program flexibility and to shift power over federally funded programs toward the local level. The new cry was that locals know best. The initial legislation of the New Federalism was the State and Local Fiscal Assistance Act of

[10] I am not trying to assess these programs in any long-term sense but to convey the chain of events and perceptions that fostered program changes in the 1970s.

1972, popularly entitled "General Revenue Sharing," which provided federal funds to subnational governments for support of general purpose activities.

The second phase of the New Federalism was intended to decategorize several programs in a broad funding category such as education. Block grants combined funds from these several programs in a single grant to provide more power and flexibility at the local level for the planning and development of a program mix than had existed under the plethora of categorical programs. The first two block grants were in the broad areas of employment and training and community development. It should be emphasized that despite these changes, the bulk of federal grants-in-aid for social programs continued to come through categorical programs.

The Legislation

CETA and CDBG were compromises reflecting the tension between Nixon's "no federal strings" approach and the desire of Congress to retain some federal control over use of federal funds, although less than in categorical programs. At issue was how this uneasy partnership between federal and local governments was going to evolve in these complex, controversial programs run by local governments but with the federal hand still in the game.

The Comprehensive Employment and Training Act of 1973 combined programs from the Manpower Development and Training Act, the Emergency Employment Act of 1971 (a public employment program), and portions of the Economic Opportunity Act. CETA, now amended several times, remains the basic piece of federal manpower legislation. Its stated purpose is "to provide job training and employment opportunities for economically disadvantaged, unemployed, and underemployed persons, and to assure that training and other services lead to maximum employment opportunities and enhance self-sufficiency by establishing a flexible and decentralized system of Federal, State, and local programs."^[11]

[11] U.S., Public Law 93-203, 93rd Congress, S. 1559, 28 December 1973 (87 STAT 838) p. 1.

Title I, the key provision for our purposes, provided funds to state and local governments, labeled "prime sponsors," to offer comprehensive manpower services including training, employment, counseling, testing, and placement. Prime sponsors include units of general local government in areas with populations of 100,000 or more; combination of units of local government which includes at least one unit in an area where the population is 100,000 or more (called a "consortium"); a state; and special areas designated by the Secretary of Labor. Most prime sponsors are either local governments or consortia.

The overall CETA legislation combined a broad block grant program with several categorical programs. Title I decategorized the Manpower Development and Training Act and portions of the Economic Opportunity Act. Further, the prime sponsors were given much more authority than in the past over the most important of the categorical programs, the two public service employment titles in the legislation. This shift to local government was referred to as decentralization.

The most basic change under CETA was the provision of block grants to local units of government. The prime sponsor had to submit a comprehensive plan on manpower services for approval by the Secretary of Labor. However, prime sponsors were empowered both to determine the mix of manpower services offered in their communities and the organizations that would deliver these services. The prime sponsor had the option either of providing manpower services directly or of contracting with outside organizations for such delivery.

The original CETA legislation in 1973 brought basic changes in institutional relationships. First, rather than dealing directly with well over 10,000 grantees for specific manpower projects, DOL would administer slightly over 400 grants to prime sponsors. These prime sponsors in turn administered and/or operated the specific manpower projects. DOL was now one more layer removed from actual project operations. Second, local manpower projects had to negotiate directly with local governments rather than with DOL regional and area offices or headquarters. Prior to CETA, national organizations such as the National Urban League

had been able to negotiate directly with Washington for the funding of their organization's local projects; CETA now meant that local organizations had to work out their own arrangements at the local level. Finally, manpower funds no longer would go directly to local nongovernmental organizations, such as Community Action Agencies, that represented geographic areas. The major thrust of the 1960s to get funds to poor neighborhoods was weakened.

The Community Development Block Grant program—Title I of the Housing and Community Development Act of 1974–decategorized the following programs: urban renewal under Title I of the Housing Act of 1949 and the Neighborhood Development Programs, which were made part of the urban renewal provisions in the Housing Act of 1968; public facilities loans under Title II of the Housing amendments of 1955; open space land grants under Title VI of the Housing Act of 1961; rehabilitation loans under Section 312 of the Housing Act of 1964; water and sewer facilities grants under Section 702 of the Housing and Urban Development Act of 1965; neighborhood and facilities grants under Section 703 of the Housing and Urban Development Act of 1965; model cities under Title I of the Demonstration Cities and Metropolitan Development Act of 1966.^[12] A major initial result of the decategorization was simplified requirements, as this HUD statement indicates: "CDBG regulations printed in the Federal Register total 25 pages as compared to about 2,600 pages of regulations in HUD handbooks for categorical grant programs."^[13]

The legislation states that the primary objective of CDBG is "the development of viable urban communities, by providing

[12] For a summary of the decategorized programs as originally passed, see Evolution of Role of the Federal Government in Housing and Community Development: A Chronology of Legislative and Selected Executive Actions, 1892–1974 , Subcommittee on Housing and Community Development of the Committee on Banking, Currency and Housing, U.S. House of Representatives, 94th Congress (Washington, D.C.: Government Printing Office, October 1975) pp. 25–26, 51–52, 79–80, 98–99, 114–119, and 135–136.

[13] U.S., Department of Housing and Urban Development, Community Development Block Grant Program: First Annual Report (Washington, D.C.: Government Printing Office, December 1975), p. 3.

decent housing and a suitable living environment and expanding economic opportunities, principally for persons of low and moderate income."^[14] CDBG is a most tangled and complex piece of legislation, but this summary statement by Frieden and Kaplan captures its essence: "The important news is: (1) there is less Federal red tape than in the older categorical programs; (2) hardware expenditures and public works are back in fashion; (3) poor people and minorities are no longer in fashion."^[15] Although the program as finally enacted ended up placing far more restrictions on local governments than Nixon intended, CDBG through its decategorizing and decentralizing thrusts still altered the basic federal-local power arrangement in roughly the same way CETA had a year earlier.

The Agency Structure

Social agencies are huge, multilayered organizations. It is useful to discuss briefly what one looks like and how it relates to the local partner. Chart 1 offers a simplified version of the uneasy partnership which can be used to consider the structural relationships of the Department of Labor (DOL), the Department of Housing and Urban Development (HUD), and the local organizations in the implementation of CETA and CDBG.

At headquarters both agencies have similar structures with an assistant secretary as the political appointee responsible to the agency secretary for the entire (CETA or CDBG) program. Below are various organizational layers staffed by career civil servants. Both agencies have regulation and guideline writers who "translate" the legislation for the field, and separate offices responsible

[14] U.S., Public Law 93-383, 93rd Congress, S. 3066. 22 August 1974, p. 1.

[15] Bernard Frieden and Marshall Kaplan, "Community Development and the Model Cities Legacy," in Toward New Human Rights, ed. David C. Warner, (Austin: Lyndon Baines Johnson School of Public Affairs, University of Texas, 1977), pp. 294–295. Also see Community Development: The Workings of a Federal-Local Block Grant , (Washington, D.C.: Advisory Commission on Intergovernmental Relations, A-57, March 1977). This ACIR study is an excellent summary of prior legislation, the development of the CDBG legislation, and provisions of the act.

Chart 1
The Uneasy Partnership Between Federal Social 
Agencies and Local Governments

for the field effort. The latter are the main contact points for headquarters-field interaction.

In the field are regional and area offices. The latter are the operating arms of the agency with direct contact with the local grantees. Regional offices are intermediate level entities charged with supervision (management) of area offices and the provision of technical support. In DOL all area office staff are located in the regional office city. For example, area office staff responsible for dealing with prime sponsors in Washington, Oregon, Idaho, and Alaska are based in Seattle (Region X). HUD area offices, in contrast, are located throughout the region. There is another difference. DOL staff work with prime sponsors (local governments) which in turn contract out most employment and training projects to a variety of governmental, nonprofit, and profit organizations. Local governments are much more likely to operate directly their CDBG projects. As we turn to findings, it must be disturbingly obvious, even from this much simplified presentation, how many layers of organizations in different political jurisdictions stretch between top-level decisions and service delivery.

The Findings

This brief summary of findings is intended to point out some issues involved in implementing and administering a new federally financed, locally operated social service delivery program. It is based mainly on a study under my direction conducted by the University of Washington's Institute of Governmental Research (IGR) in which the implementation of CETA and CDBG was followed over several years.^[16] Implementation in the field was the primary target of the study. The detailed IGR field investigation centered on federal agency regional offices with specific attention focused on their relationships with local government. "Regionalism" was the term used by the federal government

[16] The work on this study was supported in part by a grant from the National Science Foundation; however, the views expressed are solely those of the author. The findings are reported and discussed in detail in Walter Williams, Social Agency Governance (New York: Academic Press, forthcoming).

to designate its attempt to move federal decision making down closer to the point of local implementation. Regional offices in the rhetoric of the New Federalism appeared to be institutions of growing importance in the social agencies with more independence from headquarters in their dealings with local government. The IGR team wanted to find out if commensurate power had been shifted, along with the responsibilities, from Washington to the regional level of the federal government and to local jurisdictions.

Interviews were conducted with regional office staff, local elected and appointed (e.g., CETA and CDBG administrators) officials, local project operators, agency headquarters staff, staffs in the Executive Office and the Congress, and others who had had a direct involvement in the formation and monitoring of the programs, particularly the so-called "Public Interest Groups," such as the National League of Cities and the National Association of Counties. Three of the ten federal regions were visited in the study.

In this summary I am trying to capture significant changes over a period of years (mainly during the last years of the New Federalism period, from 1973 to the end of the Ford administration). Several key themes emerge which are introduced by an italicized sentence at the beginning of a paragraph.

Real power did get shifted from Washington to local governments. The original legislation in the cases of both CETA and CDBG was unclear and in some places contradictory in regard to the intent of Congress in passing the legislation. Was Congress trying to address national problems—that is, unemployment in CETA, and housing and community development aid to low and moderate income people in CDBG? Were these national goals the primary intent of Congress or was sharing responsibilities and power with subnational governments—so-called decentralization—the major thrust of the two pieces of block grant legislation?

Added to internal congressional confusion was the strong stand of President Nixon that funds should be given to local government with virtually no strings attached. There was considerable congressional opposition to releasing so much power over national programs. The themes of both local flexibility and federal control

ended up in the legislation. CETA is a classic example of unclear legislation, with its call for local autonomy and at the same time its litany of specific charges to the Secretary of Labor, a strong interpretation of which would leave local CETA administrators barely able to buy pencils without a direct call to Washington.

Both pieces of legislation, however, resulted in a basic shift of power to local governments. In particular, local governments got more power over the allocation of funds to specific projects at the expense of the federal government. A casualty over time in this shift has been the regional office, which was originally seen as an entity gaining power from the decentralization process. Instead, local elected officials and appointed administrators took over some of the regional offices' administering duties and these offices were left with a reduced set of functions never clearly specified by the agencies in Washington. Nongovernmental and quasigovernmental groups, such as model cities agencies and housing authorities, definitely lost power. With decentralization of authority from the federal government downward, there was a new centralization of power in city hall. In some cases this meant a loss of power for citizen and community groups.

The social agencies had severe organizational and communications problems in implementing and administering the new block grant programs. HUD in particular was an organizational nightmare with such severe jurisdictional problems among program assistant secretaries, regional office directors, and other regional staff that communications breakdown was the rule rather than the exception. Most of the time, HUD simply could not get out a clear directive that was not soon contradicted by another one. But organizational structure was not the only problem. As the HUD Organization Assessment Group set up in the early Carter administration observed: "Many of the problems that have surfaced are more managerial than structural in nature."^[17]

DOL clearly was much better organized than HUD and far better able to communicate clearly with its own field staff and with local

[17] Report on Organization Assessment , (Washington, D.C.: U.S. Department of Housing and Urban Development, October 1977), p. 50.

government. However, DOL was slow and ponderous compared to the public interest groups, such as the National League of Cities, which service local government. Part of the problem was bureaucratic in that communications passed slowly through organizational layers of a federal agency. But it also appears that the public interest groups simply were more competent than the federal bureaucrats in developing working sources of information. This seems especially true in the case of regional offices whose staffs often were forced to go to fund recipients to get the most current information.

During the Republician administration HUD had an organizational structure with one administrative level too many—an intermediate regional office that stood between headquarters and area offices that dealt directly with grantees. This so-called three-tier arrangement led an external management team to argue that regional offices were "managerial impossibilities" and should be eliminated.^[18] If there was one point of agreement among HUD internal and external critics of agency management, it was that the regional office created major—probably the major—problems of communication and authority during the New Federalism period.

Agreement about the weakness of structure did not mean that all agreed as to how to proceed. The big problem was staff morale. After pointing out that "staff morale is at an extremely low level," the HUD Report on Organization Assessment went on to observe:

Since 1970 there have been frequent reorganizations in the field. Following the 1970 decentralization, which was extremely traumatic, there have been further reorganizations including regionalization of some functions, the reallignment of the Area Offices and the creation of full service housing offices. These have resulted in RIFs [reduction in force], forced relocations and changes in job status, all of which have had an adverse effect on morale.

[18] See Coopers & Lybrand, Recommendations for HUD Organizational Structure , (Washington, D.C.: U.S. Department of Housing and Urban Development, March 1976). The internal report cited in the previous footnote was also critical of the three-tier structure.

Frequent changes in the overall philosophy of the Department, unrealistic goal setting, program procedures that appear geared more to assuring failure than success, rapid turnover in top staff (particularly Housing), downgrading actions, and Inspector General audits perceived as searches for intentional personal wrongdoings have also affected morale in a negative way.^[19]

Reorganizations almost always are unsettling and frequently threaten status, turf, and/or job itself. In the case of HUD, reorganizations had come so fast and agency morale was so low that Coopers & Lybrand recommended postponing major changes in the near term to avoid continued trauma for agency staff.

However, the incoming Carter administration immediately undertook a full-scale HUD reorganization aimed at solving the big structural problems all at once. And as predicted, morale came tumbling down. A January 30, 1978 Washington Post article by Kathy Sawyer entitled "Federal Staffs Are Fearful of Shake-up Plans," which treated the administration-wide reorganization efforts, quoted a HUD employee as saying: "We keep saying around here that things can't get any worse—but things keep getting worse. . . . The gloom is so thick you can amost see it, and people are walking around like zombies." Nor did the big changes occur that were expected. Here is a classic illustration of the appeal of structural change, its limits and its dangers.

The social agencies did not get the right kind of information to provide help in local management of programs. One of the main complaints local government has leveled against the federal government has been the excessive demands for reporting. Under the categorical programs, the major effort of fund recipients was expended on the applications. With the block grant, however, application acceptance has been almost assumed but constant requests for reporting after the fact has driven some local governments to distraction. This has been true particularly for smaller jurisdictions that had not previously been involved in large-scale federal programs and that lacked the necessary information and management systems. Most frustrating of all in the information

[19] Report on Organization Assessment , p. 33.

requirements from both HUD and DOL has been that local fund recipients feel they receive no useful feedback from the reports. Few administrative or programmatic benefits accrue from the reams of paper sent back to Washington.

In addition to failing to obtain information that could be used to improve programs, the agencies did not even obtain the kinds of information necessary to ensure compliance with requirements. The Coopers & Lybrand study observed: "Headquarters makes no effort to assemble information that will allow it to gain an understanding of what goes on programmatically in the field."^[20] HUD did little monitoring of CDBG projects to see if they were complying with federal regulations and congressional intent. DOL was more likely to check, but its monitoring efforts frequently did not address programmatic substance and often seemed nit picking or obstructionist.

Technical assistance provided by regional offices to local governments generally was of low quality and focused mainly on procedural issues. Neither HUD nor DOL furnished much technical assistance on programmatic substance and organizational viability or on raising the capacity of grantees to monitor and evaluate projects. A National Academy of Sciences study of CETA put the matter succinctly in observing that DOL had a "preoccupation with procedure instead of program substance. "^[21]

Regional office staff claim they have been helpful and can point to instances where their technical assistance was used. Help from both DOL and HUD was probably most useful at the outset in jurisdictions that had never operated manpower programs or that had not had substantial involvement in federal community development and housing programs. Often the help for these communities seemed to be answering questions concerning which line of which form should be filled out. The more experienced local administrators seemed to feel that regional office technical assistance was a waste of time. In one large city, the prime sponsor staff member

[20] Coopers & Lybrand, p. 42.

[21] William Mirengoff and Lester Rindler, CETA: Manpower Programs under Local Control (Washington, D.C.: National Academy of Sciences, 1978), p. 261, italics added.

who had made the biggest boner for the month was given the "A — of the Month Award" which carried with it the honor of mandatory attendance at the regional office's next technical assistance session.

Competent staff is a problem at all levels of government, particularly in the field. One of the most common themes emerging from our study was that able people are in short supply. Some of the implementation problems of CETA and CDBG no doubt were the result of inevitable staff adjustments when new programs were being put in place. But staff problems were not just a temporary phenomenon.

One of the things that struck me was the weakness of the federal field staff, with notable exceptions. Moreover, federal structure tends to perpetuate this weakness of staff in the field by assigning most of the high rank, high status positions to headquarters.^[22] Even worse, the field often is the place where headquarters dumps it losers.

In the IGR study we sought out local organizations with good reputations so as to be able to discuss in depth with knowledgeable people problems as perceived from the field. Hence, we tended to see unrepresentative local staffs, the best of which did seem much superior to federal field staffs. But a lot more often local staffs are run-of-the-mill needing the most basic kinds of help. As the National Academy study observed: " . . . local staffs still lack technical knowledge of the substance of manpower programs, a serious weakness that also applies to federal staff assigned to supervise local programs."^[23]Staff capability is a major problem across-the-board.

Regional-local staff relations often were strained with animosity and bad mouthing on both sides. The conflict between regional offices representing the federal government and local officials is not surprising. Experienced federal bureaucrats were often frustrated in their efforts to break in a new program with inexperienced (and frequently changing) local staffs. Legiti-

[22] Coopers & Lybrand, p. 10.

[23] Mirengoff and Rindler, p. 263.

mately, regional staff charged that certain local government complaints should be directed to Congress either because allocated funds were inadequate or legislation was unclear. Many of these people reflect the view held at headquarters (particularly DOL) that the locals did not have the capacity or desire to carry out national programs. Even officials at fairly high levels in DOL believed that CETA was not intended as a block grant. In their eyes this was federal money to solve national problems and the locals could not be trusted to spend it properly. Washington officials point to the obvious cases of local government misusing CETA and CDBG monies. The claim that certain cities would virtually close down without CETA and CDBG funds has a base in truth.

These complaints, however, while perhaps justified, also point dramatically to a previously mentioned failing of the regional office. Misuse of funds must be viewed in part as a condemnation of one of the prime responsibilities of the regional office—monitoring of program implementation. Poor planning and inadequate response to community needs can also be laid at the door of the regional office, charged as it is with providing technical assistance and capacity building.

From the standpoint of local officials, the frailties of the regional office are legion. Paramount perhaps is the feeling that the drive for standardized program and performance works contrary to differences that exist because of regional variation or individual initiative. Local officials sense that rewards come from picking low numbers for performance levels and meeting them, rather than from serious assessment of needs. Attempts at innovative use of resources by leveraging of funds or coordination of programs are met by rigid interpretation of rules. When regional offices are irritated by what they consider lack of cooperation or blatant disregard for regulations, they do not punish directly by defunding for fear of political repercussions, but instead harrass by nit picking or delays. Local officials complain bitterly about the inability to get information from the regional office, or answers to important questions. Many local people feel that the regional offices end up more as a barrier than as an aid to

them in trying to put CETA and CDBG programs in the field.

No finding is much more discouraging than the level of distrust between the feds and the locals, which seemed to grow rather than abate as we followed the programs. Indeed, DOL often seemed paranoid, with headquarters staff distrusting almost everyone below including their own field staffs. And surely ears burned when prime sponsors spoke of DOL.

There are growing efforts by the federal government to recentralize and recategorize. At the end of the Ford administration both regional office staffs and local officials were claiming clear indications that the federal government was trying to relocate in Washington some of the power that local governments received in the initial round of block grant legislation. Federal staff in the regions read "deregionalization" into the shift of decision-making authority back to agency headquarters. The Carter administration went further. In discussing what they saw as a "tilt toward Washington" in the early Carter administration, the Advisory Commission on Intergovernmental Relations stated: "Of even greater concern to some observers was the action by the Secretaries of HEW, HUD and Labor to strip their regional offices of any real authority over grant decisions. . . . These decisions, which for the most part were made without consultation with state or local officials, suggested a recentralization of authority at the national level."^[24]

The HUD reorganization very much represents the direction of the Carter administration efforts. HUD attempted to centralize authority as much as possible in headquarters through its two assistant secretaries responsible for housing and for community development. The design was to get the regional office out of the program picture as much as possible with a direct link between these assistant secretaries and the area offices.

[24] Intergovernmental Perspective , Advisory Commission on Intergovernmental Relations, Winter 1978, p. 6. The entire issue of Intergovernmental Perspective bears the title, "A Tilt Toward Washington: Federalism in 1977." In it ACIR is pushing the thesis that on balance the Carter administration is trying to undo much of the New Federalism. Although the ACIR statement is much overdone, the recentralization effort is clear.

Beyond the structural changes, there has been a tightening up on rules and regulations with much greater stress on uniformity. The National Academy of Sciences study caught the changes in observing that "the stream [of regulations over time] has become a torrent ."^[25] Congress seems to be joining the agencies in this direction putting more and more requirements in block grants or else coming up with "new" categorical programs. In our final field interviews in December, 1978 some people in the field including HUD's staff were going so far as to claim that CDBG was tighter than the old categorical programs and that most of the flexibility and discretion of the New Federalism was being written out of the legislation through guidelines. Moreover, we found a growing animosity in the HUD programs between the feds and the locals that had not been so prominent in the earlier period.

The extent of discretionary program changes at the local level has been most limited, with little evidence of broad programmatic innovations. The IGR study did not investigate local projects in depth, and even studies that did—such as the National Academy of Sciences (NAS) study of CETA—looked at a limited number of projects. However, what evidence we do have in no way indicates that local governments used their newfound discretion to make major program changes. The NAS study summarized its findings with the observation that "there has been little change in basic program design. Sponsors were inclined to continue the kinds of programs they inherited. Few of the sponsors had the necessary expertise to improve existing models. "^[26]

The NAS study, again with limited data, tried to see if CETA programs were doing better than pre-CETA programs on outcome standards such as placement in unsubsidized jobs. Comparison is difficult because CETA emerged in a period of growing unemployment. However, here too CETA looks about the same or a little worse than the earlier efforts (the NAS study calls the CETA record "disappointing").^[27]

Dramatic program innovations or big gains in program per-

[25] Mirengoff and Rindler, p. 88, italics added.

[26] Ibid. , p. 253, italics added.

[27] Ibid. , pp. 11, 221, 239–240.

formance simply did not appear. There were some important changes as will be discussed shortly. There also are a number of explanations for the lack of change as we shall see in later chapters. Indeed, a major theme will be that we had far too high expectations in terms of the capacity of institutions to adjust. Still, it must be underscored that any hope that giving local governments the ball would bring forth rapid positive changes was not fulfilled in the New Federalism experience.

The power shift to local government appears to be a permanent one with these institutions gaining political, organizational, and technical capacity over time in the social service delivery areas. The New Federalism period was particularly interesting because it was such a key point in the evolving federal-local partnership as more and more localities were drawn into the governance of the federally funded social service programs. What we saw was a continuing growth, started in the Great Society categorical programs, of local government involvement in social service delivery programs. The New Federalism period was a time when many localities already heavily involved in the federal social programs gained more experience and others got their initial on-the-job training in managing federally funded social programs.

This intense experience with social service delivery programs has brought increasing local political, organizational, and technical capability. Make no mistake, the foundation is political power. William Mirengoff, who was study director for the National Academy of Sciences Committee on Evaluation of Employment and Training Programs, put it clearly by observing pointedly: " . . . if it came to a critical struggle, I think the political clout of the local [CETA] prime sponsors would probably prevail."^[28]

The change is not purely political, however. I think the NAS committee makes a valid judgment in claiming that on balance "CETA, in terms of organization, delivery of service, and local participation, is a more effective way of handling the nations's employment and training programs than earlier centralized and

[28] Block Grants: A Roundtable Discussion , (Washington, D.C. Advisory Commission on Intergovernmental Relations, ACIR-A-51, October 1976), p. 15.

categorical arrangements."^[29] In the final chapter the NAS committee brings together the conflicts in the field with this judgment:

[The NAS study] has found that local control of programs has resulted in tighter program management, greater accountability, and more rational delivery systems. Local manpower planning, though still weak, is more meaningful than in the pre-CETA period, and grass roots participation in the planning process is greater. However the shift of program control scrambled the relationships among government jurisdictions and among the local institutions that deliver manpower services.^[30]

The case materials provide a view of the changing American federalism brought about by the growing importance of grants-in-aid for social service delivery programs. What we have is an evolving federalism that has no precise date, no dramatic piece of legislation to pinpoint it, but which began to become important in the social service areas amid the rapid growth of categorical grants-in-aid in the Great Society years. And at the center of the evolving federalism is the sharing of responsibilities by federal and subnational governments—particularly local governments—in program areas that either were the domain of the latter or else were being served by neither.

Shared governance has created a most uneasy partnership. And it is a partnership in which the negative power of each partner to block or harass is much stronger than the positive power to move in desired directions. Even though the locals have kept much of the power granted them under the New Federalism legislation and extended it to other areas, federal staffs still have the capacity to harass and obstruct. The locals may be able to fend off the social agencies in a number of ways including going to their congressional delegations. Members of Congress who voted for legislation which directed DOL or HUD to be tougher suddenly end up pounding on federal officials because they got tough with the legislator's own constituency. But even if the local government holds off the federal effort, there are tremendous costs of battle that drain away time and energy from substantive programmatic concerns.

[29] Mirengoff and Rindler, p. 8.

[30] Ibid. , p. 279.

I have chosen mostly to look at the more bleak side of the picture. Certainly in some of our field work we found good cooperation between the federal and the local governments. Further, there is evidence of growing local capability. I am hopeful that there is an underlying basis for building a viable working relationship. Yet it would be the gravest of errors to stuff under the rug the problems we have encountered.

What I now will do is step back and try to provide a framework for looking at these issues from the perspective of the federal agency. We start with the broad issue of the power of governments generally and the agency specifically to influence social service delivery program performance. The next set of issues is that of agency management. It revolves around questions of control, responsibilities, resources, and strategy. The ultimate question is whether or not there is a sensible federal strategy for managing federally funded but locally operated social service delivery programs. Can the partnership make sense?