What do we do now? Devolution and the legislative institution.

States have argued long and hard for more power. Now they're getting it, and making it work will be a bigger job than anyone thought.

Be careful what you wish for - your wish could come true. State legislators have long argued with Congress that more issues should be decided at a level of government closer to the people. Now, it appears, Congress and the people seem to agree, and more power and authority are devolving from the federal government to the states. In many different areas, the federal government is either passing the decision-making authority to the states or at least allowing states significantly greater flexibility in how they manage programs.

State officials have been worrying about how they will handle a specific issue, like welfare reform, safe drinking water, health insurance, or deregulation of electric utilities or telecommunications. However, since so many issues formerly controlled by the federal government may be coming to the states, often with little advance notice, legislators need to look at the institutional impacts of devolution and develop some general guidelines and strategies.

What challenges will this bring to the legislature as an institution? The Legislative Effectiveness Committee of NCSL's Assembly on State Issues has identified some of them:

* Legislatures lack institutional knowledge about the issues involved.

* Devolution may spark a series of battles between legislative and executive branches.

* Local governments, businesses and other organizations, and citizens need to be involved in decisions.

* Devolution decisions may have huge and unanticipated consequences for budget and revenue planning.

* These new issues may require legislators to make tough decisions on complex questions in a short time. Lawmakers may need to use a different outlook and structure to make these decisions quickly.

INSTITUTIONAL KNOWLEDGE

The critical first step, according to Gary Olson, director of the Senate Fiscal Agency in Michigan, is developing expertise in new areas. As states prepare for devolution, it is important to realize that the institutional knowledge on federal appropriations tends to be limited. There is one major reason for this lack. "Federal funding issues have not received much scrutiny in the state legislative budget process," says Olson, who gives a six-point plan for acquiring that knowledge:

* Develop contacts in Congress and in federal agencies. It is critically important to begin these relationships so you find a source for answers to specific questions.

* Use state offices, the National Conference of State Legislatures (NCSL) office in Washington, D.C., and state legislative contacts with these offices to help sort through complex federal issues.

* Use on-line information services. Several such resources including the NCSL World Wide Web home page can give you valuable assistance in compiling the necessary information.

* Become familiar with federal laws and regulations. When Congress transfers authority and power to the states, as it has with welfare reform, significant federal regulations also will come into play.

* Undertake plenty of advance planning. Devolution brings with it the risk that the federal government could impose new programs on the states with little advance notice. States must anticipate possible federal changes and begin advance planning long before any federal changes are actually enacted.

* Emphasize the federal-state relationship in new legislative orientation programs. Federal funding issues need to be brought to the forefront and promoted as critical when newly elected legislators are trained. This is especially important in states facing term limits.

EXECUTIVE BRANCH BATTLES

The shift in power from the federal level may result in new powers flowing to state governors instead of the legislatures. Executive branch staff far outnumber legislative staff and have a leg up in dealing with the new issues. Legislatures have two choices, says Dave Helbach, former Senate majority leader in Wisconsin and current manager of governmental affairs for Wisconsin Power and Light. "Invest in staff or give the power to the executive branch."

Olson notes that the struggle for new power should not surface just when legislators are considering bills. In Michigan, legislative and executive staff have thrashed out many issues in private meetings long before the issues reach the legislative floor. Rather than emphasizing separation of powers, devolution may be an opportunity for cooperation. To accomplish that, the legislature needs to concentrate its focus. That may involve spending more time deciding what outcomes it wants, rather than telling executive branch agencies exactly how to achieve those outcomes. Legislators may need to spend more of their time setting program objectives and designing performance measures to see whether those objectives have been met.

Some states like North Dakota will simply not have the resources to invest in legislative staff. They will be increasingly reliant on those "who have had their eyes on the federal government," according to John Olsrud, director of North Dakota's Legislative Council. For North Dakota, that means an increased reliance on the state's executive branch, on NCSL and on the state's congressional delegation.

INVOLVING OTHERS

Legislators can't make decisions in a vacuum. They need to work with local governments, businesses, organizations, citizens and other states when exercising this new authority. Tom Norton, Senate president in Colorado, emphasizes the need to exercise power at the level of government where the money is raised, and this may lead to delegating some power to local governments. Since a shift from federal to state responsibility will continually raise issues involving these different groups and individuals, legislatures need to involve them systematically in legislative debate and activity. Helbach notes that recent legislative developments in Wisconsin, such as the reorganization of the state's university hospital and clinics, show increased use of public/private partnerships. The legislature needs to combine the best aspects of government and the private sector in designing solutions.

BUDGET IMPACT

The financial implications of devolution may be staggering. State budgeting is often a lengthy process, allowing time for executive agencies to make proposals, for the governor to suggest an overall budget and for the legislature to review information, set priorities and establish legislative initiatives. In many states this is a biennial procedure that never stops - the full two-year period is needed to thrash out all the details of the state budget. The problem that devolution poses is that states may not get much advance warning about huge dollar initiatives. States will have to use budget procedures flexible enough to adapt to these last-minute changes.

One result may be an increased reliance on contingency or "rainy day" funds. States may have to set aside a higher percentage of their money for unknown needs. Some states with biennial budgets may opt for an annual budget, sacrificing some of the stability and planning they gain from a two-year budget process for the increased flexibility and responsiveness gained in a one-year budget cycle. States may also move toward funding new programs with separate earmarked funds, figuring they can better track the cost-effectiveness of those programs.

States may want even longer-term planning in certain areas. California budget analysts did a seven-year fiscal estimate on welfare reform measures, which was necessary to give legislators a clear look at how various policy choices would play out.

NEW OUTLOOK

Senator Norton emphasizes the great opportunities that devolution offers, noting that states must take responsibility. All of the problems don't have to be solved in one year, but the legislature must take positive action each year. Legislatures must break the reactive outlook and be proactive.

The increase in state responsibility will require legislative leaders and committee chairs to hone their planning skills. Legislators need to define problems, identify possible solutions, choose the best solution and identify the proper course of action. Norton notes that in citizen legislatures, with limited numbers of days in session, committees have to stay focused and on task. They must refine the issues so that the legislature as a whole doesn't have to deal at length with complex legislation. All this requires legislators to plan further ahead than they currently do.

Leaders may decide not to send some devolution issues to currently established committees. Many of these issues cut across traditional committee lines of jurisdiction. Welfare reform, for example, can touch areas typically handled by human services, health, labor, judiciary, children and education committees. Also, the issues may combine topics that cross policy and budget committee lines. Leaders may choose to assign the new issues to task forces that have members with knowledge in many areas.

California is using a joint committee to deal with welfare reform. There are four chairmen who preside on a rotating basis - the human services committee and budget committee chairs from each house. The joint committee approach is expected to speed the information-gathering and decision-making processes.

Kansas Senator Dave Kerr notes that while his state hasn't seen sweeping changes with devolution, legislators have combined or collapsed some budget subcommittees to "make it easier for them to see the whole picture" of the issues they are handling. Kerr also notes that handling these new issues dovetails with Kansas' move toward performance-based budgeting. Similar to Michigan's approach, Kansas places a greater emphasis on articulating the results to be achieved and less emphasis on telling the executive branch exactly how it should proceed.

SIDE EFFECTS 

Many of the consequences of devolution are still unknown. Some observers, however, predict that campaign finance reform will be one of them. Companies realize that state legislatures will be the site of more and more critical decisions, and lobbyists will focus greater attention on the state capitals. All this will increase the money that will be spent trying to influence state legislative decisions. The pressure will build to make changes in lobbying and ethics laws as well.

One side effect for legislative staff may involve new working relationships or alliances. Diane Bolander, director of the Iowa Legislative Service Bureau, notes that dealing with devolution issues has brought research and fiscal staff closer together. One staffer there is a "whiz" at finding information on the Internet, and everyone is sharing the findings.

Senator Norton and others emphasize the positive aspects of the devolution challenges. "We've asked for this increase in responsibility; now we're getting the chance to back up our words," he says. "The public will be watching to see if state legislatures are equal to the task. However, lawmakers must take active steps to gain the necessary knowledge to handle these new responsibilities and must examine their procedures and organization to efficiently solve the new problems."

RELATED ARTICLE: NCSL CAN HELP

NCSL can help you deal with the challenges of devolution:

* Call NCSL issue experts to get the information and contacts you need. Consult the NCSL Staff Contacts List or call either the Washington [phone] or Denver [phone] office and ask the NCSL operator to help you.

* Attend special briefings or workshops sponsored by NCSL.

* Arrange to have an NCSL expert come to your state and provide advice.

* Work with NCSL's Legislative Management Program to improve your committees or examine other institutional changes. Call Brian Weberg at [phone].

* Call your NCSL state assignment contact person and figure out possible ways to get assisstance. (See the list on Page 24).