What Unfunded Mandates?
States have successfully secured a $20 billion bailout from
Washington to close their expanding budget deficits. Never mind
that they created their own fiscal crises by increasing spending
nearly twice as fast as the federal government has since
Refusing to accept responsibility for their own reckless spending,
states won the media's sympathy by instead blaming a new wave of
"unfunded mandates" in education and homeland security imposed on
them by Washington.
Now, such mandates are clearly unfair. States should have control
over how they spend their own tax dollars -- rather than be forced
by Washington to fund unwanted programs. Any federal mandate on the
states should be accompanied with federal dollars to implement
Unfunded mandates, however, didn't cause the current state budget
Only two significant mandates have been enacted since the 1995
Unfunded Mandates Reform Act, according to a new report from the
Congressional Budget Office. They are the 1996 minimum-wage
increase, and the 1998 limit on federal reimbursements for state
food stamp administrative costs. (The funding status of a third
mandate, the 2001 port security bill, is still undetermined.) These
two mandates cost the states, on average, a combined $9 million per
year, or less than one-tenth of 1 percent of most states' general
fund. Not exactly a budget-busting amount.
What about those expensive new education and homeland security
programs? Contrary to sympathetic media reports, they're more
accurately classified as "programs that states don't want to pay
for." An unfunded mandate, after all, must be both unfunded and
mandated. And nearly all recent federal education and homeland
security programs are either voluntary or fully funded.
Take the No Child Left Behind Act. Washington hasn't mandated that
any state implement this law. It merely suggested a model, and
offered to subsidize states willing to implement it. States that
dislike the federal model, or find the funding insufficient, are
free to opt out and run their own programs.
Some call these programs "de facto mandates" because no rational
state would opt out of the federal programs. Why is it irrational
to opt out? Because the federal money more than justifies the
federal strings attached. States enroll unanimously in these
programs not because they're required to, but because the deals are
too good to pass up.
Then why are states still so angry with Washington? Because they
want that money with no strings attached. They've come to consider
themselves entitled to the $400 billion they receive annually from
Washington. They demand federal dollars, yet they bristle when
Congress insists on influencing how its own money is spent.
Consider again the education example. In 1965, Washington offered
money to states that volunteered to implement the federal model for
educating disadvantaged children. Participating states were given
wide latitude to spend this money on their own education programs
-- latitude states now take for granted. Then, the 2001 No Child
Left Behind Act required participating states to more closely align
their spending with the program's federal goals. The free lunch of
Washington subsidizing states' pet education programs was
States may label this reassertion of federal authority over how
federal money is spent an "unfunded mandate," but the No Child Left
Behind Act is neither unfunded nor mandated. If the program's
funding was insufficient to justify the increased federal meddling,
states would have opted out. So far, none have.
True, states are still burdened by pre-1996 unfunded mandates. The
largest and least fair is Medicaid, whose $200 billion annual cost
is only half-funded by Washington. Yet states aren't blameless
either, as 60 percent of Medicaid spending is for populations and
treatments that states voluntarily added to their own Medicaid
Other pre-1996 unfunded mandates, such as special education and
many environmental regulations, should be either funded or removed.
But how can states blame 30-year old unfunded mandates for budget
crises that suddenly began in 2001?
Note the irony: States demand total control over the spending of
their own tax money. Yet by acting as if they're entitled to
federal dollars with no strings attached, they challenge
Washington's equal right to control how its tax revenues are spent.
Now who's trying to impose an unfunded mandate on whom?
Riedl is Grover M. Hermann Fellow in Federal Budgetary
Affairs in the Roe Institute for Economic Policy Studies at The
Distributed nationally on the Knight-Ridder Tribune wire