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Proof That State-Federal Teamwork Can Pay Off

By Forrest H. "Fob" James Jr. and Zell B. Miller. Forrest H. "Fob" James Jr. (R) is governor of Alabama and Zell B. Miller (D) is governor of Georgia. / July 10, 1995



AS Congress debates the shifting of programs from federal to state control, a model already exists for a federal-state partnership that can help us meet many of these challenges.

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Created by Congress on the initiative of the governors of the 13 Appalachian Mountain states, the Appalachian Regional Commission (ARC) has helped to overcome the social and economic isolation of one of the most rural and poverty-stricken areas in our nation. Thirty years after it was created, the commission remains a viable mechanism for improving the effectiveness of federal programs in meeting diverse state needs.

ARC has reduced poverty and unemployment, raised educational attainment, boosted per capita income, and improved the quality of life in the region primarily because it is a program that shares decisionmaking authority. Here is how it works.

Congress appropriates funds to the commission. Then the governors and the federal co-chair, who is appointed by the president and confirmed by the Senate, must agree on the formula for allocating the money. Each state develops plans for investing its allocation and brings these plans to the commission for approval. No money can be spent or program guidelines issued without the agreement of the federal co-chair and a majority of the 13 governors.

The role of the federal official is to make sure each state's programs reflect broader, regional objectives and the policies of the commission embody Congress's interest in achieving national goals.

The governors and the federal co-chair make the final decisions about policies and funding. Each side has a "veto" over program proposals, which encourages consensus and cooperation.

The ARC is an economic development agency. The federal funds it commits to projects represent "seed" money used to attract more investment into the region. This is called leveraging. In its 30-year history, the commission has leveraged more than $8 billion in investments, in addition to the money appropriated to it by Congress.

Because of its broad mandate, ARC funds can be used for an array of locally determined economic development projects, from water and sewer lines and access roads to education and health care. The key requirement is that the projects lead to the creation or retention of private-sector jobs, or that they provide basic services in communities that lack them.

In Summerville, Ga., where no new jobs had been created since 1955, ARC was asked to help bring water and sewers to a city-owned industrial park. ARC provided a grant of $150,000, which led to a private investment of nearly $6 million and the creation of more than 200 new jobs in an industry that recycles plastic bottles into carpet.

In Cullman County, Ala., ARC made it possible for Wallace State Community College to construct an allied health building to house medical and dental training programs vital to relieving health manpower shortages in rural northern Alabama.

These stories can be repeated throughout Appalachia. ARC dollars seed a local initiative; the community carries it forward. Whether a water system or a health care clinic, virtually every ARC project is based on locally determined needs.

The early priorities of ARC's governors were to improve vocational education and health care. Today, a network of 700 vocational and technical education facilities graduates some 500,000 students each year. The availability of primary health care within 30 minutes of virtually every resident in Appalachia has reduced the infant mortality rate by two-thirds and attracted 5,000 physicians to the area. These improvements testify to the success of the ARC partnership model.

A recent study funded by the national Science Foundation also offers evidence of ARC's impact. The study matched counties outside of Appalachia with each ARC county and followed their respective progress from 1969 to 1991. The counties benefiting from the ARC investment grew 48 percent faster in personal income and earnings, 5 percent faster in population, and 17 percent faster in per capita income.

In addition to programmatic gains, there are significant cost savings from the ARC partnership model. Administrative expenses, shared equally by the federal government and the 13 states, run under 3 percent of the total appropriation. It is hard to find a program at any level of government that matches this achievement.

That is why the Commission has enjoyed widespread, bipartisan support in Congress. That is why every governor who has served an Appalachian state in the past 30 years agrees with Lamar Alexander, former Tennessee governor, who declared, "The ARC structure does a better job of the new federalism than almost any other structure I know about." That is why some people have said that if ARC did not already exist, the new leadership in Congress would invent it.

Despite this progress, the most rural and isolated parts of the region continue to experience severe economic distress. We must finish the job. Moreover, we and our fellow governors believe that we should look to the ARC model as an effective way to structure other federal programs.

As we pare back government, we need skilled surgeons. We must create a system that works more efficiently, effectively, and responsively. The history of the partnership of the Appalachian Regional Commission provides valuable lessons for meeting this challenge.