I'm federally funded, and have been for the better part of my career. The paperwork reduction act has nothing to do with physically reducing paperwork, and more in reducing the work burden to the public.
It states that every form has to have a justification tied to your guiding principle, and that the public should know how difficult the form will be to fill out. In other words, if the OMB says that form 1014a(1) should only take 15 minutes to complete, it's up to your office to ensure that is the case, if you created that form. As far as physical paperwork - it only adds a couple of lines to document headers, and in the case of enormous institutions, it's listed on their main website or main document to avoid adding it to the rest of the documents.
The paperwork reduction act is usually the brunt of office jokes when it pops up on paperwork, because most people have no idea what it is and it sounds funny, and because it may add a line or two. I'm guessing you've seen that disclaimer and went from there.