Measuring the cost of federal guidance in Utah

• The Utah Legislature’s Federalism Commission is studying federal agency guidance directed to the state. This guidance isn’t legally binding but is intended to change state policies.
• In addition to impinging on state authority, such guidance can impose significant costs to states, and ultimately to state taxpayers, as some examples show.
• The states need to be able to quantify these costs to help them push back against federal overreach.

​Last week, the Utah Legislature’s Federalism Commission discussed the issue of federal guidance – direction federal agencies give to state governments and others they regulate. It is not legally binding, but it reflects the agency’s opinion about what it takes to comply with laws passed by Congress, so those who are being regulated have a strong incentive to comply even if they disagree with the interpretation.

The committee discussion centered on federal guidance received by Utah agencies since a new law went into effect, requiring state agencies to disclose the guidance. There were thirty letters directed to four state agencies. Some of the letters merely provided information (such as about higher education research projects) or focused on technical issues (like how certain reports are to be filed).

A key question for the Commission is whether the guidance infringes on areas within the state’s, rather than the federal government’s, jurisdiction. In many cases, the subject matter, like education, is a traditional state domain, but the guidance is only about how federal funds are to be spent.

In some cases, though, the guidance does implicate state authority or require the state to do something it would not do but for the guidance. For example, requiring the state to make special efforts to comply with federal demands that are likely to require additional staffing. Thus, even though the state legislative and executive branches have established priorities and made appropriations accordingly, federal direction, even when it is not law, can unsettle that.

Sometimes the costs can be very significant.

Take the example of Common Core educational standards. In the mid-2010s, the U.S. Department of Education encouraged states to adopt these standards and incentivized that decision. A report by the Pioneer Institute, the American Principles Project, and the Pacific Research Institute of California found that adoption cost states and the District of Columbia “nearly $16 billion over seven years.” The costs include “the price of familiarizing educators with the new standards, obtaining textbooks and instructional materials aligned with the standards, and necessary technology infrastructure upgrades” as well as “ongoing support of the enhanced technology infrastructure and the introduction of new assessments that are currently under development.”

Another study, commissioned by the National Center for Environmental Economics at the U.S. Environmental Protection Agency, looked at a sample of environmental regulations and associated guidance directed to states and found that state and federal agencies often struggle to estimate likely costs of guidance. Though the report did not focus on this factor, it included costs of guidance, which, in some estimates, showed millions of dollars for each of the federal rules and associated guidance imposed by the EPA.

An analysis of Medicaid waivers shows that the administrative costs of these programs are not necessarily factored into implementation decisions.

Since Utah has only recently begun requiring transparency in federal guidance, it is difficult to assess exactly how much federal guidance may be costing the state. The information we do have suggests the cost could be very significant.

A way to get a sense of this would be to examine federal guidance over a longer period to determine which demands have been made on the state across multiple presidential administrations, in search of patterns. This would better equip the state to push back when it is asked to do things not required by laws that respect the constitutional division of responsibility of federalism.

Brenden Mercado, an intern with Sutherland Institute, provided helpful research assistance for this post.