SUPPLEMENTARY INFORMATION:

Pursuant to 5 CFR 900.604(b)(3), OPM is tasked with responding to requests for guidance regarding compliance with the Intergovernmental Personnel Act of 1970 (IPA) and its implementing regulations. When a federally funded program requires state and local agencies to establish a merit personnel system to receive funds, the IPA and the regulations in 5 CFR part 900, subpart F, are applicable. These regulations establish the standards that must be included in a merit personnel system when it is certified by a state or local agency. OPM's current guidance issued at 89 FR 48821 (June 10, 2024) states that “state and local government agencies that receive Federal grants [are] limited to utilizing state and local government personnel in the administration of the grant-aided program.” The current guidance reversed prior OPM guidance that authorized greater flexibility in staffing arrangements for these programs. See at 84 FR 16381 (April 19, 2019).

On January 31, 2025, President Trump issued Executive Order 14192 entitled “Unleashing Prosperity Through Deregulation” ( Unleashing Prosperity). 90 FR 9065 (Feb. 6, 2025). That order made it the policy of the executive branch to “alleviate unnecessary regulatory burdens placed on the American people.”

OPM has reviewed its 2024 guidance and is updating it in light of the Unleashing Prosperity executive order. The 2024 guidance imposed extra-statutory obligations on state and local governments that administer federally funded programs covered by the IPA. The IPA and its implementing regulations do not prescribe the use of a particular staffing method such as utilizing state employees or contract employees. Accordingly, in the absence of any other statutory or regulatory requirement to use a specific staffing method, OPM advises that the state or local agency has the discretion to determine the most appropriate staffing method to best and most efficiently carry out its services for the American people. Regardless of the staffing method chosen, the state or local agency must certify that it is using a merit personnel system that meets the standards outlined in 5 CFR 900.603. Because these extra-statutory obligations will no longer be imposed on affected state and local governments, this action is considered an Executive Order 14192 deregulatory action.