What Federalism Means for State and Local Policy

Updated: October 28, 2026

Federalism divides governing power between the federal government and the states. That division shapes which level sets policy, pays for it and puts it into practice.

For state and local policy, the effects are practical: federal rules and funding can influence what states do, while states set many policies and leave local governments room to act. The balance varies by issue, so a policy can involve all three levels at once.

Understanding federalism helps explain why a national decision may lead to different results from state to state—and why local choices often depend on state law and federal support.

• 24 Chief Financial Officers Act agencies Agencies in the GAO survey of coordination activities

What does federalism mean for state and local policy?

Federalism divides governing authority among the national, state, and local governments, so policy in one place can involve more than one level. The national government handles broader governance, while states and cities can shape responses to local needs.

For a local policy question, start by identifying which government has authority over the issue. Then check whether another level shares that authority or sets rules the local government must follow.

A city ordinance is not automatically independent of state law. Before relying on a local rule, check the applicable state and federal requirements as well as the ordinance itself.

How to check a local policy

• Identify the issue: Determine whether the question concerns a local matter, a broader state responsibility, or an area involving national governance.
• Check state law: Find out whether the state has set requirements that affect the city’s authority or the ordinance.
• Check federal rules: Look for national requirements that also apply to the issue.

State and local approaches can reflect differences in local needs. That flexibility does not, by itself, settle which rules control; the relevant laws at each level still matter.

Why is coordination part of state and local policymaking?

Coordination is part of state and local policymaking because governments often share responsibility for problems, even when local officials have the closest knowledge of local conditions.

Local knowledge can help shape a response to a community’s needs, but overlapping responsibilities mean that one government’s decisions may depend on another’s. Coordination can limit duplicated efforts by helping agencies share information and work together rather than run separate efforts on the same problem.

GAO found that most of the 24 Chief Financial Officers Act agencies it surveyed reported information-sharing and coordination activities. These included serving as liaisons, conducting outreach, and hosting or attending events. The examples show how coordination can work across agencies; the agencies involved may change as a problem changes.

Trace who does what

When you follow a policy decision, distinguish the government that sets the rule from the one that administers or coordinates it. Those roles may sit at different levels, and the agencies working together may shift as circumstances change. Check the rule itself, then identify which government carries it out and which bodies help coordinate implementation.

How does Executive Order 13132 shape federal consultation?

Executive Order 13132 shapes federal consultation by assigning agencies responsibilities to consult state and local governments and to designate a federalism official.

On September 12, 2024, OMB provided documentation showing that, on May 11, 2022, it sent all federal agencies noted in GAO-21-560 a reminder about GAO’s recommendation and their federalism responsibilities under Executive Order 13132. The reminder connected the agencies’ consultation duties with a specific accountability step: naming an official responsible for federalism.

In a June 29, 2021, letter to GAO, OMB said it would facilitate agency compliance with the order’s requirement to designate a federalism official. GAO later marked that recommendation “Closed – Implemented.”

What to check in a local policy

For a federal policy that affects local government, check whether the agency consulted state and local governments and identify which agency’s federalism official handled the responsibility. The official’s role and the record of consultation can help clarify how local concerns entered the federal process.

What mistake is it to treat local policy variation as a national solution?

Treating a successful state or local policy as a ready-made national solution is a mistake because a local trial does not automatically become federal law, and it may not fit conditions elsewhere.

State and local governments can test approaches close to the people and problems they govern. A policy that works in one place can offer a model for other governments or inform national debate, but federal adoption still requires action by the federal government.

Variation does not, by itself, mean that one government has failed. Local needs differ, and governments may have different authority to address them; a choice suited to one place may be a poor fit in another.

Check the fit before borrowing

• Problem: Is the issue in the adopting place the same one the original policy addressed?
• Authority: Does the state or local government have the power to carry out that policy, or would federal action be needed?
• Conditions: Do local circumstances support the same approach?

Some issues call for a common national rule. If approval standards for the same pharmaceuticals differed across states, patients and providers could face confusion about what has been approved. The task is to distinguish useful local experimentation from questions where a shared standard matters.

When does federalism fail to produce a single local answer?

Federalism fails to produce a single local answer when authority is shared and implementation depends on the law, agency, state, and local government involved.

Consultation under Executive Order 13132 is not uniform: GAO found that responsibilities for consulting with state and local governments under Executive Order 13132 varied. You should not assume every federal agency follows the same process.

The COVID-19 pandemic showed how state choices can diverge. States gave different messages about the crisis and about vaccination, masks, and reopening, leaving people to navigate varying policies rather than one local answer.

For a specific policy dispute, check the governing rule and the current notice from the agency responsible. The general principle of local discretion cannot resolve a conflict without those details.

Frequently asked questions