Watch Out For The Super-Waiver

The new "super-waiver" legislation proposed in the House is dangerously broad and should be opposed by all nonprofits concerned with social justice.

The new "super-waiver" legislation proposed in the House is dangerously broad and should be opposed by all nonprofits concerned with social justice.

The new "super-waiver" legislation proposed in the House is dangerously broad and should be opposed by all nonprofits concerned with social justice.

A legislative provision with far-reaching effects that should be of concern to all nonprofits has been included in the TANF welfare reauthorization bill that will be marked up this week in the House. This "super-waiver" legislation has been introduced by Reps. Wally Herger (R-CA) and Buck McKeon (R-CA) as part of the TANF reauthorization bill (at page 88 of H.R. 4090, The Personal Responsibility, Work and Family Promotion Act of 2002) that will be marked up in the House in two subcommittees (Ways and Means Committee and Committee on Education and the Workforce) on Wednesday (April 17) and Thursday (April 18).

What is a "super-waiver?" This "super-waiver" legislation would allow the Secretaries of Health and Human Services and Labor (Herger bill), and Education (H.R. 4092, the McKeon bill) to approve requests by states to waive federal statutory and regulatory requirements, with hardly any restrictions, applicable to ANY program under those Departments in order for the states to conduct "demonstration projects." (Medicaid is exempt, however.) States have only to show that the waiver "has a reasonable likelihood of achieving the objectives of the program or programs involved" and that the waiver request is neutral in cost. If the appropriate Secretary does not act upon a state request within 90 days, it is presumed approved and can go forward. Waivers can last for up to five years and can be renewed.

The purpose is to allow states the local flexibility to design and run programs without being bound by federal statutes and regulations. Giving states the ability to design programs that are tailored to their particular circumstances is an idea supported by many people -- the problem is that this super-waiver legislation is much too broad. For example, the waiver provision for demonstration projects under TANF had prevented waivers of federal worker protection or minimum wage laws, and was specifically geared towards program improvement and innovation. In many cases, this resulted in useful state demonstration projects. The new proposed super-waiver legislation, however, is rife with problems. Without substantial modification and restrictions, it should be opposed by all nonprofits concerned with social justice and human needs.

The state waiver request could be used to transfer money from Head Start to another program, even programs not under the jurisdiction of the three departments. It could be used to create new block grants diminishing targeted services. It could be used to change eligibility requirements for programs (e.g., shift participation from 150% of poverty line to 100%) to save money or demonstrate improved performance. It could be used to waive various requirements imposed on a program, such as the requirement to do an environmental impact statement when constructing a school or various civil rights protections or insuring prevailing wages are paid under Davis-Bacon. It could be used to implement various initiatives not approved by Congress, such as expansion of charitable choice. Because the bill is written so broadly, the waiver requests could be used for just about anything.

Is passage of super-waiver legislation likely? This legislation would wrest considerable power away from Congress, moving programmatic and funding decisions from congressional appropriations and authorizing committees to the Executive Branch. While it should be expected that the President would support such additional powers, it is surprising that Congress would consider such delegations, particularly to waive any statutory requirements. Nevertheless, it will likely happen unless there is strong opposition raised by nonprofits. Moreover, the super-waiver might be extended to programs in other departments. In his April 2 speech announcing his new early childhood education initiative, President Bush expressed support for expanding the super-waiver ability to the Departments of Agriculture (USDA) and Housing and Urban Development (HUD).

Is this new legislation? Not really. In 1996, Congress came very close to passing similar legislation, the "Local Empowerment and Flexibility Act" (H.R. 2086), sponsored by Rep. Chris Shays (R-CT) in the House and by Sen. Mark Hatfield (R-OR) in the Senate (S. 88). This legislation differed from the current super-waiver in four ways:

  • It covered all of government, whereas this provision only covers HHS, Education, and DoL;

  • It covered discretionary spending programs, whereas this provision also covers entitlement programs (excluding Medicaid);

  • It allowed community panels to request the waivers, whereas this provision only allows states to make the waiver requests; and

  • It created a "Community Empowerment Board" made up of the heads of federal departments and major agencies to approve or reject requests for waivers, whereas this provision has the Secretary of the applicable agency receiving the request making the decision.
Nonetheless, many of the issues with this year’s super-waiver legislation are strikingly similar. OMB Watch analyses on the 1996 legislation are available online (See Analysis of S. 88 and Analysis of H.R. 2086). The nonprofit community organized a strong coalition to oppose the local flexibility legislation, and was finally successful. The bill passed in both the House and the Senate, but in the wee hours of the morning, as the bill was being debated in conference, President Clinton threatened to veto the legislation, and the super-waiver was stopped.

What are the problems?

  • The bill is too broad, allowing any state to request a waiver from regulations and statutes that apply to any program under HHS, Education or Labor (specifically excepting Medicaid).

  • The bill can undermine regulatory and statutory protections. The bill has no provisions to prevent state waivers of regulations that safeguard health, occupational safety, and the environment, or that promote civil and reproductive rights, or that allow equal opportunity for education, disability services, or any number of the protections guaranteed by federal statute and regulations.

  • The bill does not require that a demonstration project actually improve an existing program, or be a well-evaluated test of an innovative program. In the application, states must describe how the waiver is expected to "improve or enhance" the purposes of the program or programs involved "from the standpoint of quality, of cost effectiveness, or of both." This provision gives too much authority to improvements in programs being based on either quality or cost effectiveness. It is possible the quality of the proposed waiver might not even be an issue, if it is determined to be cost-effective. Even when quality is emphasized, no benchmarks are identified against which to measure "quality."

  • Accountability can be greatly undercut. While states must assure that there will be ongoing and final evaluations of the waivers, there is no provision for an independent evaluation. There is also no assurance of data collection, potentially undermining a national database about program performance and achievement.

  • If a state request for a waiver is not approved or rejected by the Secretary within 90 days, it is deemed approved, without any evaluation at all. If a Secretary is overwhelmed with waiver requests or cannot coordinate with other departments (if the waiver requests cuts across jurisdictional boundaries), the presumption is on approval.

  • Without congressional authority, the bill would allow the transfer of significant resources from one program to another -- funds for low-income programs could be transferred to another program serving an entirely different population. It would not matter that Congress appropriated "x" amount of dollars for one program and "x" amount for another. Eligibility provisions made at the federal level could be waived by states.

  • There are no provisions for public input and there are no assurances of public accountability. Could states waive various cost principles and audit requirements? This legislation would not seem to prevent that from happening.

  • The super-waiver provision would also terminate currently existing waiver programs under TANF, some of which have continued from waivers under the old Aid to Families with Dependent Children (AFDC) program, and many of which are the foundations of state welfare programs -- which raises a more fundamental question: Why is this provision needed?
What's the Future?

The rumor is that Republicans are realizing that this super-waiver legislation is far too over-broad, and will amend the legislation during the mark-up to make the provision seem more palatable. For example, they may limit the waiver authority to specified programs and/or provide certain types of statutory requirements that could not be waived. This was the approach taken in 1996 to make the local flexibility legislation seem more reasonable.

This seems to be part and parcel of the general strategy to draft a truly outrageous bill and then "fix" it, so it becomes less troublesome, but frequently remains bad legislation. But the "fixed" version gives the impression that the sponsors are quite reasonable. Given the number of problems with the super-waiver provision, it would require a major rewriting to "fix" it. We will be watching the results of the mark-up and keep you posted.

In the meantime, if you have thoughts about how this super-waiver legislation could affect you or the people with whom you work, let us know. You can vote in our online poll or send your comments directly to OMB Watcher .

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