Federalism is a widely recognized feature of American government. Federalism is a constitutional division of governmental power between a central or national government and regional governmental units (such as states). Each having some independent authority over its citizens. The federal system consists of a national government and state governments existing independently of each other in the same territory while commanding the loyalties of the same individuals as citizens of both state and nation.

Under the Constitution, the powers of all governments are drawn from the same fundamental source—the sovereign people—and are exercised concurrently. States, in turn, are composed of numerous subjurisdictions, such as cities, counties, municipalities, townships, and special districts, which are dependent entities chartered by the state. The original rationale for establishing a federal system in the United States was to prevent the concentration and misuse of power by a strong national government. The states were viewed as protectors of individual liberties against the national government—and many are again coming to view the states in that light.

The nature and operation of federalism have been the subject of controversy since the founding of the Republic. Public administration is at the heart of many of the controversies that have characterized contemporary federalism. The two have had a reciprocal effect on one another. The administration of national government programs requires accommodation to the prerogatives and preferences of states and localities that have their own decision-making structure and political majorities. At the same time, the growth of bureaucracy at all levels of government has helped to reshape the federal system.

Intergovernmental relations (IGR) are all the activities and interactions occurring among governmental units of all types within the U.S. federal system. Unfunded mandates are federal (or state) regulations that impose requirements on other governments, often involving expenditures by affected governments, without providing funds for implementation.