FACT SHEET: A Win for States and Taxpayers: President Obama’s Plan to Cut Red Tape, Give States Flexibility, and Save Money

Today, President Obama issued a memorandum to Executive Departments and Agencies to work with State, Tribal, and local governments to reduce unnecessary regulatory and administrative burdens in order to focus resources on achieving better outcomes at lower cost.

Over the last two years, the Administration has worked with States as well as Tribal and local governments through the Recovery Act and other means to create jobs, build infrastructure, and protect critical programs and services in the face of declining revenues.  Still, through smarter government, we can do even more to help States, improve program outcomes, and lower costs for the American taxpayer.  This is especially urgent at a time when many governments face large budget shortfalls.  

This memorandum builds on the Executive Order issued on January 18 outlining the President’s regulatory strategy.  Having heard from States, Tribes, and territories that the array of rules and regulations issued by various Federal programs and agencies may sometimes impede their efforts to modernize and integrate program delivery, the President is committed to continuing to cut this red tape while continuing to protect human health and safety.

The new Presidential Memorandum (www.whitehouse.gov/sites/default/files/2011_Flexibility_Memo.pdf) is attached.

In this memorandum, the President is:

• Instructing the Director of OMB to lead a collaborative process of Federal agencies, State, Tribal, and local governments to coordinate and streamline procedures that cut across agency, program and geographic bounds. 
• Requiring agencies to work closely with States, Tribes, and local governments to identify administrative, regulatory, and legislative barriers in Federally-funded programs that currently prevent them from efficiently using tax dollars to achieve the best results for their constituents.

This work will be done in collaboration with territories as well, and with input from other key program partners.

Further, he is directing OMB to:

• Review guidance concerning cost principles and audits for State, local, and Tribal governments to eliminate unnecessary, unduly burdensome, or low-priority recordkeeping requirements and to tie requirements to achievement of outcomes. 
• Standardize and streamline reporting and planning requirements in accordance with the Paperwork Reduction Act to develop efficient, low-cost mechanisms for collecting and reporting data and preparing expenditure plans that can support multiple programs and agencies, and
• Facilitate cost-efficient modernization of State and Tribal information systems, in collaboration with the Chief Technology Officer in the Office of Science and Technology Policy.

Agencies are required to report back within 180 days of the date of this memorandum on their actions to identify regulatory and administrative requirements that can be streamlined, reduced, or eliminated, and where increased State flexibility could be provided to achieve the same or better outcomes at lower cost.  

Progress in achieving better results at lower cost is already being made.

The President’s new memo will help expand on the success already underway in collaborating with States, Tribes, territories, and local governments, and new initiatives proposed in the President’s 2012 Budget.  For example, the Administration:

• Has created a collaborative forum with States, local governments, and other stakeholders through OMB’s Partnership Fund for Program Integrity Innovation.  The forum develops promising cross-program solutions to improve program integrity, reduce costs, and improve service and results in Federal programs that are administered by States. 
• Is taking steps to reduce reporting and documentation requirements that sap school resources from classroom learning.  Specifically, the Department of Education and OMB are developing new guidelines to focus reporting and audits on performance outcomes and enhanced transparency instead of activity-based recordkeeping. 
• Proposed Pay for Success pilots in the 2012 Budget.  These innovative projects offer Federal, State and local governments a market-based mechanism to finance and deliver services that achieve better results at lower cost.  Under this new initiative, the private sector provides intervention services to a target population and the government pays only when clearly defined outcomes are achieved.
• Proposed a new Workforce Innovation Fund in the 2012 Budget, which provides almost $380 million for grants to support systemic reforms of workforce development programs to deliver more cost-effective services and improve outcomes for participants.   To maximize flexibility to test bold approaches to achieving better results through cross-program collaboration, the Budget requests waiver authority for the Departments of Labor and Education, contingent on strong State plans to measure outcomes and evaluate program impacts. 
• Proposed a “First in the World” competition among colleges and universities to help America restore its international leadership in the number of students graduating college. In 2012, this competition would invest $120 million in innovative institutional and State strategies to increase college access and completion and improve educational productivity.

Together, these and other initiatives could substantially reduce State and federal taxpayer costs and redirect resources to achieve improved outcomes for State, Tribal and local constituents.  And these improved outcomes will play an important role in supporting the long term economic strength and competitiveness of our Nation.