NewDEAL Calls for Federalism that Balances Flexibility and Accountability

Submits testimony to U.S. House Committee on Oversight and Government Reform

Washington, DC – Offering a perspective gained from working with 150 of the nation’s most innovative state and local leaders, NewDEAL Executive Director Debbie Cox Bultan outlined in congressional testimony three principles that the federal government should follow to ensure an effective relationship with state and local officials. The NewDEAL (Developing Exceptional American Leaders) was invited to submit testimony by the Committee’s Acting Ranking Member, Congressman Gerald Connolly (VA-11), in conjunction with Tuesday’s hearing on Federalism Implications for Treating States as Stakeholders. Bultan provided examples of ways that the federal government has supported and hindered efforts of NewDEAL members, who include statewide officials, state legislators, mayors, county executives, and other local officials working to improve the quality of life of their constituents.

Full Testimony Below

“As NewDEAL Honorary Co-Chair and former Delaware Governor Jack Markell has noted, the best approach for the federal government to realize this potential [for states to serve as laboratories of democracy] is to first set goals for states to meet and then provide flexibility for states to reach those goals, whether it is improving student performance in public schools, reducing dirty air emissions, cutting health care costs, or many other policy objectives,” said Bultan in remarks submitted to the record by Rep. Connolly at the hearing. “Second, even while granting flexibility in how funding is spent, the federal government must ensure accountability for results. Third, Washington must avoid unnecessary regulations that restrict states’ opportunities to experiment so long as states are not disadvantaging portions of their populations.”

Bultan noted ways in which state and local initiatives on workforce training and education can benefit from steps taken in recent federal laws, like the Workforce Innovation and Opportunity Act of 2014 and the Every Student Succeeds Act of 2015, which have provided states with more flexibility in using federal resources. In addition, she emphasized recent efforts by the Trump Administration and Congress that have fallen short, including in the President’s infrastructure plan, which would place a major burden on state and local governments, and a law passed last year that attempts to restrict work at the state and local levels to address the lack of retirement security among Americans.

About NewDEAL

Co-chaired by U.S. Senator Mark Warner (VA) and former Delaware Governor Jack Markell, the NewDEAL is a network of pro-growth progressive state and local officeholders in 46 states, and was founded to support innovative leaders in developing and spreading policies that spur economic growth that is broadly-earned and sustainable. The organization facilitates the exchange of ideas among its members and connects them with other pro-growth progressive political, policy, and private sector leaders.

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Testimony of Debbie Cox Bultan, Executive Director of the NewDEAL

House Oversight and Government Reform Committee

Hearing on Federalism Implications for Treating States as Stakeholders

February 27, 2018

Chairman Gowdy, Ranking Member Connolly, and members of the Committee on Oversight and Government Reform, thank you for the opportunity to provide these comments and for convening a hearing on this critical topic. The effectiveness of government at all levels – federal, state, and local – depends significantly on the way issues related to federalism are handled and whether leaders at each level fulfill the roles for which they are best suited.

As a network of 150 innovative state and local leaders pursuing policies on a wide range of issues in 46 states, the NewDEAL has gained an important perspective on the impact that the approach to federalism in Washington is having on governments throughout the country. The NewDEAL brings together these leaders to develop and share ideas at numerous in-person and virtual forums during which they have provided valuable insights on the ways in which the federal government has supported, and hindered, efforts to improve the quality of life of their constituents.

As NewDEAL Honorary Co-Chair and former Delaware Governor Jack Markell has noted, the ability of states, as well as their local government counterparts, to serve as laboratories of democracy remains as clear as ever. The best approach for the federal government to realize this potential is to first set goals for states to meet and then provide flexibility for states to reach those goals, whether it is improving student performance in public schools, reducing dirty air emissions, cutting health care costs, or many other policy objectives. Second, even while granting flexibility in how funding is spent, the federal government must ensure accountability for results. Third, Washington must avoid unnecessary regulations that restrict states’ opportunities to experiment so long as states are not disadvantaging portions of their populations.

The following testimony will provide more detail about what those three principles mean in practice.

One area in which the federal government has taken positive strides and should continue to incentivize state innovation is workforce development. The Workforce Innovation and Opportunity Act (WIOA), signed into law in 2014, reduces federal red tape to allow states to do what makes sense on the ground by better tailoring workforce efforts to local employers, while also giving states the ability to streamline youth through adult workforce efforts, including through better integration with K-12 systems.

NewDEAL Leaders are on the front lines of preparing workers for new and growing industries and must adapt to the employment opportunities in the areas they represent. They recognize that no effort Is more important for attracting business activity, giving their people access to good jobs, and growing the economy in their communities.

In Cook County, Illinois, Commissioner Bridget Gainer has demonstrated an effective way to tap into federal funding by starting the first earned credit for employers who create and run a Department of Labor registered apprenticeship program. This initiative includes opportunities for employers to build apprenticeships in non-traditional areas, like services and technology fields, where there is projected growth in the coming decades.

Louisville Mayor Greg Fischer’s Code Louisville program involves a series of 12-week software development tracks for adults who want to pursue a career in the software development industry at no cost to the student. More than 100 companies have already hired Code Louisville graduates.

Moreover, Arkansas Representative Warwick Sabin founded the Arkansas Regional Innovation Hub, a model for communities to provide the space, equipment, and employer to worker/student connections that are critical to a well-trained workforce. Partnerships with high schools and community colleges give students access to programs in high-tech areas like robotics and 3D-printing, while employers can create programs to train current employees or potential recruits in welding, coding, and more.

Workforce preparation is essential to the prosperity of the nation, yet the responsibility to carry it out falls to leaders who are closest to the people who need help. Congress and federal agencies should continue to look to the leadership of these officials and others like them, and to encourage communities across the country to replicate their successes.

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NewDEAL applauds the legislation recently introduced by Representative Connolly – H.R.534, Restoring the Partnership Act – as embodying the right approach to the federal – state relationship.  Americans prosper when federal, state, and local governments work together to advance their interests and refuse to let bureaucracy, regulatory roadblocks, and power struggles dominate the dynamic. The federal government must recognize that while flexibility for state and local governments is necessary, new unfunded mandates or cuts to federal funding, including those that come disguised as streamlined programs with more flexibility, like “block grants,” threaten the ability of state and local officials to deliver on essential support for their constituents.

President Trump’s infrastructure proposal embodies the wrong approach. Although the White House claims to have put forward a $1.5 billion infrastructure plan, the President has provided for only about one-sixth of that in federal funding, while placing a great financial burden on local and state governments.  He appears to want the federal government to take the credit, while state and local governments foot the bill. That is heavy-handed federalism at its worst. In addition, Congress should heed the comments of NewDEAL Leader Columbia, SC Mayor Steve Benjamin, who has expressed concern that most of the funding in the President’s plan comes from budget cuts to transit, community development block grants, and other programs upon which cities like Columbia rely.

Initiative like the West Coast Infrastructure Exchange, which creates a regional public-private partnership to streamline infrastructure investments, show that repairing our nation’s infrastructure does not need to be the responsibility of a single government entity, or even the public sector alone. However, the federal government needs to fulfill its responsibilities. State and local governments often need federal flexibility and policy structures, but also the resources that only the federal government can offer, to maximize progress.

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While state and local leaders value the recognition of their key priorities and flexibility in using federal resources to address them, NewDEAL also appreciates the importance of accountability for the use of those resources. The latest reauthorization of the Elementary and Secondary Education Act, known as the Every Student Succeeds Act and signed into law in 2015, took positive steps in restoring authority in education policy to states while also retaining some notable accountability provisions of the previous version of the major federal education law, No Child Left Behind. ESSA kept the requirement to not only test nearly all students to measure school, district, and state progress, but also to break out results by sub-groups, such as minority populations and students with disabilities, to ensure schools are supporting all of their students.

NewDEAL Leader Massachusetts Senator Eric Lesser is pursuing expansion of the successful Education Empowerment Zones initiative, which frees struggling schools from many district directives, giving them more control over hiring and curriculum. Initiatives like this are more possible because of the federal government’s requirements to intervene when groups of students are persistently struggling, as well as the flexibility that the federal law gives states to allow innovation in school turnaround at the local level. This balance is the key: federal requirements to hold states accountable for advancing the interests of all of their people equitably, while maintaining flexibility for identifying new solutions.

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Many positive models exist for the federal government working cooperatively with state and local leaders to solve major policy challenges, including WIOA and ESSA.

NewDEAL urges Congress and the Trump Administration to learn from those models and avoid unnecessarily limiting state and local leaders’ opportunities to find innovative solutions to America’s challenges. One example of these solutions, pursued by State Treasurers Tobias Read (Oregon) and Mike Frerichs (Illinois), addresses the extraordinary lack of retirement savings among Americans by giving employers the choice to either provide qualified retirement savings options, or facilitate employees’ automatic enrollment into a state program. While employees can voluntarily opt out, automatic enrollment significantly increases the likelihood of a worker’s long-term participation. The savings accounts are individually owned by the respective workers and are portable from job to job.

As Treasurers Read and Frerichs have pointed out, “Congress recently chose to create more red tape for states by rolling back U.S. Department of Labor rules that had supported these state efforts, apparently acting at the behest of financial industry firms wary of competing with states that could establish savings options that are ‘relatively low-cost for workers.’”

When states and municipalities develop new ways to tackle major problems that impact large proportions of Americans, the federal government’s first reaction should be to follow those efforts to see if they should inform national policy, rather than trying to restrict them before their results are known.

Thank you again for the chance to participate in this important discussion and to highlight a perspective gleaned from working with forward-looking, innovative state and local leaders who regularly navigate the challenges and opportunities created by how the federal government interacts with states. I look forward to any opportunities to follow up on this testimony.