The Cost of Federalism

OMB released some performance reports. Here's an interesting factoid from the report on improper payments:

Breaking-out the 12 programs identified in Exhibit 4 based on whether they are administered by states or the Federal government, shows a distinct difference in their reported errors. The combined error rate for the five Federally-administered programs was 1.4 percent while the combined error rate for the seven State-administered programs was 3.5 percent. The lower error rate among Federally administered programs may be due to having standard eligibility rules across the program. State-administered programs must follow Federal eligibility regulations; however, each state can define additional (and unique) eligibility requirements. These unique state variances may increase the challenges of administering these programs and could contribute to the higher error rates.

In other words the Federal bureaucracy is more effective at preventing improper payments than the 50 State bureaucracies.