Federal Grants-In-Aid to State and Local
Governments: An Historical
Perspective on
Contemporary Issues
Robert Jay Dilger
Senior Specialist in American National Government
February 16, 2010April 15, 2014
Congressional Research Service
7-5700
www.crs.gov
R40638
CRS Report for Congress
Prepared for Members and Committees of Congress
Federal Grants-In-Aid: An Historical Perspective on Contemporary Issues
Federal Grants to State and Local Governments
Summary
The federal government is expected to provide state and local governments more than $645607
billion in federal grant-in-aid funding in FY2011, encompassinggrants in FY2014, funding a wide range of public policy,
policies, such as health care,
transportation, income security, education, job training, social services,
community development, and environmental protection. The central role of federal grants-in-aid
in American domestic policy was demonstrated by the prominent role grants-in-aid have in the
American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5). ARRA provides more
than $325 billion for federal grants-in-aid to state and local governments.
Congress has a central role in determining the scope and nature of federal grant-in-aid programs.
In its legislative capacity, Congress first determines what it wants to accomplish and then decides
whether a grant-in-aid program is the best means to achieve it. Congress then selects which of the
six grant mechanisms to use (project categorical grant, formula categorical grant, formula-project
categorical grant, open-end reimbursement categorical grant, block grant, or general revenue
sharing), and crafts legislation to accomplish its purpose, incorporating the chosen grant
instrument. As with all legislation generally, Congress oversees the program’s implementation to
ensure that the federal administrating agency is held accountable for making certain that
congressional expectations concerning program performance are met
and environmental protection. Federal grants account for about one-third of total state
government funding, and more than half of state government funding for health care and public
assistance.
Congressional interest in federal grants to state and local governments has always been high
given the central role Congress has in determining the scope and nature of the federal grant-in-aid
system, the amount of funding involved, and disagreements over the appropriate role of the
federal government in domestic policy generally and in its relationship with state and local
governments.
Federalism scholars agree that congressional decisions concerning the scope and nature of federal
grant-in-aid programsthe
federal grants-in-aid system are influenced by both internal and external factors. Internal factors include
include congressional party leadership and congressional procedures; the decentralized nature of the
the committee system; the backgrounds, personalities, and ideological preferences of individual
congressmenMembers; and the customs and traditions (norms) that govern congressional behavior. Major
external factors include input provided by voter constituencies, organized interest groups, the
President, and executive branch officials. Although not directly involved in the legislative
process, the Supreme Court, through its rulings on federalism issues, also influences
congressional decisions concerning the federal grantgrants-in-aid programssystem.
Overarching all of these factors is the evolving nature of cultural norms and expectations
concerning government’s role in American society. Over time, the American public has become
increasingly accepting of government activism in domestic affairs generally, and of federal
government activism in particular. Federalism scholars attribute this increased acceptance of, and
sometimes demand for, government action as a reaction to the industrialization and urbanization
of American society, technological innovations in communications which have raised awareness
of societal problems, and exponential growth in economic interdependencies brought about by an
increasingly global economy.
This report provides an historical synopsis of the evolving nature of the federal grantgrants-in-aid
programssystem, focusing on the role Congress has played in defining the system’s scope and nature of those
programs. It . It
begins with an overview of the contemporary federal grantgrants-in-aid programssystem and then
examines their examines its
evolution over time, focusing on the internal and external factors that have
influenced influenced
congressional decisions concerning federal grant-in-aid programsthe system’s development. It concludes with an
assessment of
the scope and nature of the contemporary federal grants-in-aid system and raises
several issues
for congressional consideration, including possible ways to augment congressional
capacity to
provide effective oversight of this system.
Congressional Research Service
Federal Grants-In-Aid: An Historical Perspective on Contemporary Issues to State and Local Governments
Contents
The Congressional Role ................................................................................................................... 1
Federal Grants to State and Local Governments ............................................................................. 2
A Continuum of Federal Grant Administrative Conditions ....................................................... 3
Outlays for Federal Grants to State and Local Governments .....1
Contemporary Federal Grant-in-Aid Programs ..................................................... 4
Number of Federal Grants to State and Local Governments ................................2........................... 8
Land Grants and “Dual Federalism”: 1776-1860 .........................................................................8. 12
The Origins of the Modern Grants-In-Aid System: 1860-1932 ................................................... 11.. 16
The New Deal and The Rise of “Cooperative Federalism”: 1932-1960 ...................................... 13.. 18
The Great Society and The Rise of “Coercive Federalism”: 1960-1980 ....................................... 1621
Another Related Development: Federal Mandates ............................................................... 23... 27
Congress Asserts Its Authority: The Devolution Revolution That Wasn’t, 1980-2000 ................. 24
Grants-in-Aid in the 21st Century.29
Federal Grants to State and Local Governments in the 21st Century ............................................. 35
Congressional Issues .............................................................................................. 30
Congressional Issues ........................ 40
Concluding Remarks .................................................................................................................. 33
Concluding Remarks... 41
Figures
Figure 1. Outlays for Federal Grants to State and Local Governments, by Function,
FY2014 Estimate ...................................................................................................................... 34
Figures
Figure 1. Federal Grant-In-Aid Expenditures, By Function, FY2011 Estimate.... 6
Tables
Table 1. Classification of Grant Types by Three Defining Traits .............................3
Tables
Table 1. Federal Grant-In-Aid Expenditures, by Function, Selected FY1902-FY2011 ..................2
Table 2. Federal Grant-In-Aid Expenditures, Percentage of Expenditures for Individuals,
Constant Dollars, and as a Percentage of Federal Outlays and Gross Domestic Product,
Selected Fiscal Years, 1960-2011 .............................................................................................4
Table 3. Federal Grants-In-Aid, By Type, Selected Years, 1902-2009 ..........................................7
Contacts
Author Contact Information ....................... 4
Table 2. Outlays for Federal Grants to State and Local Governments, by Function,
Selected Fiscal Years 1902-2014 .................................................................................................. 5
Table 3. Outlays for Federal Grants to State and Local Governments, Percentage of
Outlays for Individuals, in Constant Dollars, and as a Percentage of Total Federal
Outlays and National Gross Domestic Product, Selected Fiscal Years, 1960-2014 ..................... 7
Table 4. Funded Federal Grants to State and Local Governments, by Type, Selected Fiscal
Years, 1902-2014 ........................................................................................................................ 10
Contacts
Author Contact Information......................................................................................................... 34.. 42
Acknowledgments .................................................................................................................... 35..... 42
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Federal Grants-In-Aid: An Historical Perspective on Contemporary Issues
The Congressional Role
The to State and Local Governments
The Congressional Role
Over the years, the federal intergovernmental system of governance has been characterized by
many as becoming increasingly centralized, with the federal government using federal grants,
federal mandates, and federal preemption of state authority to expand its influence in many policy
areas previously viewed as being primarily state and local government responsibilities. For
example, in FY2014, the federal government is expected to provide state and local governments
more than $645
607 billion in federal grant-in-aid funding in FY2011,grants encompassing a wide range of public policy
areas, such
as health care, transportation, income security, education, job training, social services,
community development, and environmental protection. The central role of federal grants-in-aid
in American domestic policy was demonstrated by the prominent role grants-in-aid have in the
$862 American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5).1 ARRA provides
more than $325 billion for federal grants-in-aid to state and local governments community
development, and environmental protection.1 Federal grants account for just under one-third of
total state government funding, and more than half of state government funding for health care
and public assistance.2
Congress has a central role in determining the scope and nature of federal grant-in-aid programs.
In its
legislative capacity, Congress first determines what it wants to accomplish and then decides
whether a grant-in-aid program is the best means to achieve it. Congress then selects which of the
six grant mechanisms to use (project categorical grant, formula categorical grant, formula-project
categorical grant, open-end reimbursement categorical grant, block grant, or general revenue
sharing), and crafts legislation to accomplish its purpose, incorporating the chosen grant
instrument.3 As with all legislation generally, Congress oversees the programgrant’s implementation to
ensure that the federal administrating agency is held accountable for making certain that
congressional expectations concerning program performance are met.
Federalism scholars agree that congressional decisions concerning the scope and nature of federal
grant-in-aid programsthe
federal grants-in-aid system are influenced by both internal and external factors. Internal factors include
include congressional party leadership and congressional procedures; the decentralized nature of the
the committee system; the backgrounds, personalities, and ideological preferences of individual
congressmenMembers (especially those of party leaders and committee and subcommittee chairs and
ranking ranking
minority membersMembers); and the customs and traditions (norms) that govern congressional
behavior.
Major external factors include input provided by voter constituencies, organized interest
groups groups
(especially the National Governors Association, the National League of Cities, U.S.
Conference Conference
of Mayors, and the National Association of Counties), the President, and executive
branch branch
officials.4 Although not directly involved in the legislative process, the Supreme Court,
through through
its rulings on federalism issues, also influences congressional decisions concerning
federal grant-in-aid programs.
Overarching all of these factors is the evolving nature of cultural norms and expectations
concerning government’s role in American society. Over time, the American public has become
increasingly accepting of government activism in domestic affairs generally, and of federal
government activism in particular. Federalism scholars attribute this increased acceptance of, and
sometimes demand for, government action as a reaction to the industrialization and urbanization
of American society; technological innovations in communications, which have raised awareness
1
U.S. Congressional Budget Office, The Budget and Economic Outlook: Fiscal Years 2010 to 2020 (Washington, DC:
GPO, January 2010), p. 95, http://www.cbo.gov/ftpdocs/108xx/doc10871/01-26-Outlook.pdf. Note: ARRA’s original
cost estimate for FY2009 through FY2019 was $787 billion.
2
Ibid.; and U.S. Government Accountability Office, RECOVERY ACT: Status of States’ and Localities’ Use of Funds
and Efforts to Ensure Accountability, GAO-10-231, December 2009, p. 1, http://www.gao.gov/new.items/d10231.pdf.
3
U.S. Advisory Commission on Intergovernmental Relations (ACIR), Categorical Grants: Their Role and Design, A52 (Washington, DC: GPO, 1978), p. 61.
4
Ibid.
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Federal Grants-In-Aid: An Historical Perspective on Contemporary Issues
of societal problems; and exponential growth in economic interdependencies brought about by an
increasingly global economy. 5
This report provides an historical synopsis of the evolving nature of federal grant-in-aid
programs, focusing on the role Congress has played in defining the scope and nature of those
programs. It begins with an overview of contemporary federal grant-in-aid programs and then
examines their evolution over time, focusing on the internal and external factors that have
influenced congressional decisions concerning federal grant-in-aid programs. It concludes with an
assessment of the scope and nature of contemporary federal grants-in-aid and raises several issues
for congressional consideration, including possible ways to augment congressional capacity to
provide effective oversight of this system.
Contemporary Federal Grant-in-Aid Programs
As indicated in Table 1, federal spending on grants-in-aid to state and local governments has
increased over the years, and is expected to reach an historic high in FY2010, with some of the
increase due to temporary ARRA funding. Federal grant-in-aid funding is expected to fall
somewhat over the next several fiscal years as ARRA funds are expended, but to remain at
historically high levels.
Table 1. Federal Grant-In-Aid Expenditures, by Function, Selected FY1902-FY2011
(nominal $ in millions)
Fiscal
Year
Total
Health
Income
Security
2011(est.)
2010(est.)
2000
1990
1980
1970
1960
1950
1940
1930
1922
1913
1902
645,714
653,665
285,874
135,325
91,385
24,065
7,019
2,212
967
100
118
12
7
317,594
294,613
124,843
43,890
15,758
3,849
214
123
22
0
0
0
0
121,705
121,818
68,653
36,768
18,495
5,795
2,635
1,123
271
1
1
2
1
Education,
Training,
Employment
and Social
Services
84,143
111,715
36,672
21,780
21,862
6,417
525
484
238
22
7
3
1
Transportation
Community
and Regional
Development
Other
68,168
72,249
32,222
19,174
13,022
4,599
2,999
429
165
76
92
0
0
22,474
21,221
8,665
4,965
6,486
1,780
109
0
0
0
0
0
0
31,630
32,049
14,819
8,748
15,762
1,625
537
53
271
1
18
7
5
Sources: U.S. Office of Management and Budget, Budget of the United States Government, Fiscal Year 2011:
Historical Tables (Washington, DC: GPO, 2010), pp. 252-257, http://www.whitehouse.gov/omb/budget/fy2011/
assets/hist.pdf; and U.S. Department of Commerce, Bureau of the Census, Historical Statistics of the United States,
Colonial Times to 1970, Part 2 (Washington, DC: GPO, 1975), pp. 1123, 1125, http://www2.census.gov/prod2/
statcomp/documents/CT1970p2-12.pdf.
5
Samuel H. Beer, “The Modernization of American Federalism,” in Toward ’76 – The Federal Polity, special issue of
Publius: The Journal of Federalism, vol. 3, no 2 (Fall 1973), pp. 49-95; and David B. Walker, The Rebirth of
Federalism, 2nd Edition (NY: Chatham House Publishers, 2000), pp. 19-35.
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Federal Grants-In-Aid: An Historical Perspective on Contemporary Issues
ARRA is expected to provide $236 billion in tax cuts and $626 billion in spending from FY2009
through FY2019, including about $325 billion for federal grant-in-aid programs for state and
local governments. 6 ARRA provides additional funding for a wide range of federal grant-in-aid
programs, such as Medicaid ($93 billion, primarily for a temporary increase in the Federal
Medical Assistance Percentages reimbursement rate), a new State Fiscal Stabilization Fund
($53.6 billion), Build America Bonds ($30 billion), Highways and Bridges ($27.5 billion), Title
1-A, elementary and secondary education for the disadvantaged, ($13 billion), Individuals with
Disabilities Education Act ($12.2 billion), Public Transit ($8.4 billion), Intercity Passenger Rail
Capital, Congestion, and Corridor Development grants ($8 billion), Temporary Assistance for
Needy Families ($5 billion), and Weatherization Assistance Grants ($5 billion).
As indicated in Table 1 and Figure 1, almost half of all federal grant-in-aid funding is for health
care (an estimated $317.5 billion in FY2011, or 49.2% of total federal grant-in-aid funding),
followed by income security ($121.7 billion, or 18.8%), education, training, employment and
social services ($84.1 billion, or 13.0%), transportation ($68.1 billion, or 10.6%), and community
and regional development ($22.4 billion, or 3.5%).
Figure 1. Federal Grant-In-Aid Expenditures, By Function, FY2011 Estimate
Community and
Regional
Other
Development
Transportation
Education, Training,
Employment and
Social Services
Health
Income Security
Source: U.S. Office of Management and Budget, Budget of the United States Government, Fiscal Year 2011: Historical
Tables (Washington, D.C.: GPO, 2010), pp. 252-257, http://www.whitehouse.gov/omb/budget/fy2011/assets/
hist.pdf.
Medicaid, with $296.7 billion in expected outlays in FY2011, has, by far, the largest budget of
any federal grant-in-aid program. Seven other programs are expected to have outlays in excess of
$10 billion in FY2011: Federal-Aid Highways ($40.1 billion), Accelerating Achievement and
Ensuring Equity (Education for the Disadvantaged—$20.9 billion), Tenant Based Rental
Assistance—Section 8 vouchers ($19.1 billion), Child Nutrition ($19.0 billion), Temporary
6
U.S. Congressional Budget Office, The Budget and Economic Outlook: Fiscal Years 2010 to 2020 (Washington, DC:
GPO, January 2010), p. 95, http://www.cbo.gov/ftpdocs/108xx/doc10871/01-26-Outlook.pdf.
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Federal Grants-In-Aid: An Historical Perspective on Contemporary Issues
Assistance for Needy Families ($17.6 billion), Special Education ($17.7 billion), and the State
Children’s Health Insurance Program ($10.3 billion). 7
Table 2 provides data on grant-in-aid expenditures in nominal and constant (inflation-adjusted)
dollars, as a percentage of federal outlays and as a percentage of gross domestic product for
selected years since 1960. It also indicates the percentage of grant-in-aid expenditures that are
payments for individuals, as opposed to payments for capital improvements and government
operations.
Table 2. Federal Grant-In-Aid Expenditures, Percentage of Expenditures for
Individuals, Constant Dollars, and as a Percentage of Federal Outlays and Gross
Domestic Product, Selected Fiscal Years, 1960-2011
Nominal $
(in millions)
% Expenditures
for Individuals
Constant $
(FY2005)
% of Federal
Outlays
% of GDP
2011 (est.)
645,714
64.9%
557,000
16.8%
4.2%
2010 (est.)
653,665
60.4%
572,300
17.6%
4.5%
2005
428,018
64.0%
428,000
17.3%
3.5%
2000
285,874
63.9%
326,800
16.0%
2.9%
1995
224,991
64.2%
283,600
14.8%
3.1%
1990
135,325
57.1%
198,100
10.8%
2.4%
1985
105,852
47.3%
189,600
11.2%
2.6%
1980
91,385
35.6%
227,100
15.5%
3.4%
1975
49,791
33.6%
186,900
15.0%
3.2%
1970
24,065
36.2%
123,700
12.3%
2.4%
1965
10,910
34.1%
65,900
9.2%
1.6%
1960
7,019
35.3%
45,300
7.6%
1.4%
Fiscal Year
Source: U.S. Office of Management and Budget, Budget of the United States Government, Fiscal Year 2011: Historical
Tables (Washington, D.C.: GPO, 2010), pp. 249, 250.
As indicated in Table 2, total federal grant-in-aid expenditures has increased since 1960, whether
measured in nominal dollars, constant dollars, as a percentage of federal outlays, or as a
percentage of gross domestic product. However, the pace of expenditure increases for federal
grant-in-aid programs has varied over the years. Federal grant-in-aid expenditures increased, in
7
U.S. Office of Management and Budget, Budget of the United States Government, Fiscal Year 2011: Analytical
Perspectives (Washington, DC: GPO, 2009), pp. 257, 259, 261, 262, http://www.whitehouse.gov/omb/budget/fy2011/
assets/spec.pdf. For further analysis see CRS Report RL32950, Medicaid: The Federal Medical Assistance Percentage
(FMAP), by Chris L. Peterson, CRS Report R40053, Surface Transportation Program Reauthorization Issues for the
111th Congress, coordinated by John W. Fischer, CRS Report RL33960, The Elementary and Secondary Education Act,
as Amended by the No Child Left Behind Act: A Primer, by Rebecca R. Skinner, CRS Report RL34002, Section 8
Housing Choice Voucher Program: Issues and Reform Proposals, by Maggie McCarty, CRS Report R40397, Child
Nutrition and WIC Programs: A Brief Overview, by Joe Richardson, CRS Report R40946, The Temporary Assistance
for Needy Families Block Grant: An Introduction, by Gene Falk, CRS Report R40055, The Individuals with
Disabilities Education Act: Final Part B Regulations, by Nancy Lee Jones and Ann Lordeman, and CRS Report
R40444, State Children’s Health Insurance Program (CHIP): A Brief Overview, by Elicia J. Herz, Chris L. Peterson,
and Evelyne P. Baumrucker.
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Federal Grants-In-Aid: An Historical Perspective on Contemporary Issues
nominal dollars, 187.3% during the 1960s, 246.4% during the 1970s, 33.4% during the 1980s,
98.0% during the 1990s, and 98.6% during the first decade of the 2000s.8
Expenditure growth for federal grant-in-aid programs has, in most years, exceeded inflation.
However, as indicated in Table 2, grant-in-aid expenditures, expressed in constant (FY2005)
dollars, did not keep pace with inflation during the early 1980s.
Federalism scholars have noted that since the 1980s, the focus of federal grant-in-aid programs
has shifted from providing assistance to places (e.g., to build public highways, support public
education, criminal justice systems, economic development endeavors and government
administration) to people (e.g., providing health care benefits, social welfare income, housing
assistance, and social services).9 Much of this shift is attributed to Medicaid, which has
experienced relatively large expenditure growth over the past several decades. As shown in Table
2, payments for individuals accounted for about one-third of federal grant-in-aid expenditures
during the 1960s and 1970s, compared to more than 60% since the mid-1990s.
In the past, the now-defunct U.S. Advisory Commission on Intergovernmental Relations (ACIR)
and the U.S. Office of Management and Budget (OMB) used information contained in the
Catalog of Federal Domestic Assistance (CFDA) to determine the number of federal grant-in-aid
programs. The CFDA “is a government-wide compendium of Federal programs, projects,
services, and activities that provide assistance or benefits to the American public.”10 It lists 15
categories of federal grants: formula grants (including formula categorical grants, formula-project
categorical grants, and block grants); project grants; direct payments for specified uses to
individuals and private firms; direct payments with unrestricted use to beneficiaries who meet
federal eligibility requirements; direct loans; guaranteed/insured loans; insurance; sale, exchange,
or donation of property and goods; use of property, facilities and equipment; provision of
specialized services; advisory services and counseling; dissemination of technical information;
training; investigation of complaints; and federal employment. It lists all authorized federal grant
programs, including grants that have not received an appropriation. Because the CFDA focuses
on the needs of applicants, if a program uses a separate application or other delivery mechanism,
the CFDA considers it a separate program. This complicates efforts to count federal grant-in-aid
programs. For example, the CFDA lists four entries for the State Fiscal Stabilization Fund.
ACIR published counts of funded federal grant-in-aid programs for FYs 1975, 1978, 1981, 1984,
1987, 1989, 1991, 1993 and 1995.11 OMB provided counts of funded grants-in-aid programs for
8
U.S. Office of Management and Budget, Budget of the United States Government, Fiscal Year 2010: Historical
Tables (Washington, DC: GPO, 2009), pp. 239, 240, http://www.gpoaccess.gov/USbudget/fy10/pdf/hist.pdf. Note: The
percentages were derived by dividing the difference between expenditures for the ninth year of the decade and the first
year of the decade by expenditures for the first year of the decade.
9
John Kincaid, “Developments in Federal-State Relations, 1992-93,” The Book of the States, 1994-95 (Lexington, KY:
The Council of State Governments, 1994), pp. 576-586; and John Kincaid, “Trends in Federalism, Continuity, Change
and Polarization,” The Book of the States, 2004 (Lexington, KY: The Council of State Governments, 2004), pp. 21-27.
10
U.S. General Services Administration, The Catalog of Federal Domestic Assistance (Washington, DC: GPO, 2009),
p. I.
11
ACIR, A Catalog of Federal Grant-In-Aid Programs to State and Local Governments: Grants Funded FY 1975, A52a (Washington, DC: GPO, 1977); ACIR, A Catalog of Federal Grant-In-Aid Programs to State and Local
Governments: Grants Funded FY 1978, A-72 (Washington, DC: GPO, 1979); ACIR, A Catalog of Federal Grant-InAid Programs to State and Local Governments: Grants Funded FY 1981, M-133CAT (Washington, DC: GPO, 1982);
ACIR, A Catalog of Federal Grant-In-Aid Programs to State and Local Governments: Grants Funded FY 1984, M-139
(Washington, DC: GPO, 1984); ACIR, A Catalog of Federal Grant-In-Aid Programs to State and Local Governments:
(continued...)
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FYs 1980-2003.12 Because they used a different methodology to determine which grant programs
to include in their count, their results differed. OMB consistently identified fewer grants than
ACIR. For example, in 1995, OMB identified 608 funded federal grant-in-aid programs
compared to ACIR’s count of 633.13 No authoritative count of funded federal grant-in-aid
programs is known to have been issued in recent years.
ACIR included in its counts all direct cash grants to state or local governmental units, other
public bodies established under state or local law, or their designee; payments for grants-in-kind,
such as purchases of commodities distributed to state or local governmental institutions;
payments to nongovernmental entities when such payments result in cash or in-kind services or
products that are passed on to state or local governments; payments to state and local
governments for research and development that is an integral part of their provision of services;
and payments to regional commissions and organizations that are redistributed at the state or local
level to provide public services.14
OMB counted only those federal grants for traditional governmental operations, as defined in
OMB Circular A-11. The definition covered only grants that “support State or local programs of
government operations or provision of services to the public.”15 It excluded federal grants that
went directly to individuals, fellowships, most grants to nongovernmental entities, and technical
research grants.
A search of the CFDA indicated that state governments, local governments, U.S. territories,
and/or federally recognized tribal governments are eligible to apply for 1,132 federal grant-in-aid
programs (defined as authorized project grants, formula grants, direct payments for specified
uses, and direct payments for unrestricted uses). 16 Of these programs, 93 are not currently funded
(...continued)
Grants Funded FY 1987, M-153 (Washington, DC: GPO, 1987); ACIR, A Catalog of Federal Grant-In-Aid Programs
to State and Local Governments: Grants Funded FY 1989, M-167 (Washington, DC: GPO, 1989); ACIR,
Characteristics of Federal Grant-In-Aid Programs to State and Local Governments: Grants Funded FY 1991, M-182
(Washington, DC: GPO, 1992); ACIR, Characteristics of Federal Grant-In-Aid Programs to State and Local
Governments: Grants Funded FY 1993, M-188 (Washington, DC: GPO, 1994); and ACIR, Characteristics of Federal
Grant-In-Aid Programs to State and Local Governments: Grants Funded FY 1995, M-195 (Washington, DC: GPO,
1995).
12
U.S. Office of Management and Budget (OMB), “The Number of Federal Grant Programs to State and Local
Governments: 1980-2003,” Washington, DC: OMB, February 18, 2004. Note: the Government Accountability Office
provided a count for FY 1990, see U.S. General Accounting Office, Federal Aid: Programs Available to State and
Local Governments, HRD 91-93FS, May 1991, http://archive.gao.gov/d20t9/143936.pdf.
13
U.S. Office of Management and Budget (OMB), “The Number of Federal Grant Programs to State and Local
Governments: 1980-2003,” Washington, DC: OMB, February 18, 2004.
14
ACIR excluded grants directly to profit-making institutions, individuals, and nonprofit institutions (unless such
payments result in cash or in-kind services or products that are passed on to state or local governments); payments for
research and development not directly related to the provision of services to the general public; payments for services
rendered; grants to cover administrative expenses for regional bodies; loans and loan guarantees; and shared revenues.
See, ACIR, Characteristics of Federal Grant-In-Aid Programs to State and Local Governments: Grants Funded FY
1995 (Washington, DC: GPO, 1995), pp. 26-28, http://www.library.unt.edu/gpo/acir/Reports/information/M-195.pdf.
15
U.S. Office of Management and Budget (OMB), “The Number of Federal Grant Programs to State and Local
Governments: 1980-2003,” Washington, DC: OMB, February 18, 2004, p. 7.
16
The number of federal grants-in-aid programs was determined by first examining all entries in the CFDA’s print
version and then cross-checking the findings against a search using the frequently updated CFDA’s on-line search
engine. Because the CFDA’s on-line search engine includes subparts of programs, the following search terms were
used to minimize this problem: assistance types (formula grants, project grants, direct payments for specified uses, and
direct payments for unrestricted uses) by beneficiary eligibility (state governments, local governments, U.S. territories,
(continued...)
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and 86 are research, fellowship, or exchange programs that are available to both public and
private institutions of higher education and are not targeted solely at either public institutions of
higher education or other public agencies. Removing them from the list leaves 953 funded federal
grants-in-aid programs. Because there is no current consensus on the methodology used to count
federal grants-in-aid programs, the 953 count of federal grant-in-aid programs listed in Table 3
for 2009 that was compiled from the CFDA should be viewed as illustrative, as opposed to
definitive, of the current number of federal grant-in-aid programs for state and local governments.
Table 3. Federal Grants-In-Aid, By Type, Selected Years, 1902-2009
# of Grants
Categorical
Block
General Revenue
Sharinga
2009
953
928
25b
0
1998
664
640
24
0
1991
557
543
14
0
1980
539
534
4
1
1968
387
385
2
0
1960
132
132
0
0
1952
71
71
0
0
1940
34
34
0
0
1930
15
15
0
0
1920
11
11
0
0
1902
4
4
0
0
Year
Source: CRS computation, U.S. General Services Administration, The Catalog of Federal Domestic Assistance
(Washington, D.C.: GPO, 2008), https://www.cfda.gov/downloads/CFDA_2008.pdf; David B. Walker, The Rebirth
of Federalism, 2nd Edition (NY: Chatham House Publishers, 2000), pp. 6,7; U.S. Advisory Commission on
Intergovernmental Relations (ACIR), Characteristics of Federal Grant-In-Aid Programs to State and Local Governments :
Grants Funded FY 1995 (Washington, D.C.: GPO, 1995), p. 3, and ACIR, Categorical Grants: Their Role and Design,
A-52 (Washington, D.C.: GPO, 1978), p. 28.
a.
General revenue sharing distributed funds to states from 1972-1981 and to localities from 1972-1986.
b.
For further analysis, see CRS Report R40486, Block Grants: Perspectives and Controversies, by Robert Jay
Dilger and Eugene Boyd.
As the data in the table suggest, the number of grant-in-aid programs to state and local
governments increased slowly from 1902 to 1930. Then, partly in reaction to the Great
Depression, Congress increased the number of grant-in-aid programs available to state and local
governments over the next three decades, roughly doubling the number of grants each decade.
During the 1960s, Congress increased the number of federal grants-in-aid exponentially,
primarily in response to national social movements concerning poverty and civil rights. Congress
continued to increase the number of federal grant-in-aid programs during the 1970s, but at a
somewhat slower pace as it addressed budgetary constraints presented by “guns versus butter”
issues associated with the Vietnam conflict. The rate of increase slowed further during the 1980s,
as Congress addressed budgetary constraints presented by demographic changes in American
(...continued)
and/or federally recognized tribal governments).
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society that led to escalating costs for several federal entitlement programs, especially for Social
Security, Medicare and Medicaid, and to efforts to merge categorical grant programs in several
functional areas into block grants. As the data in Table 3 suggest, Congress continued to increase
the number of federal grant-in-aid programs available to state and local governments during the
1990s, and has continued to do so in recent years.
Land Grants and “Dual Federalism”: 1776-1860
The relative influence of internal versus external factors on congressional decisions affecting
federal grant-in-aid programs has varied, both over time and in each specific policy area. Prior to
the Civil War, external factors, especially cultural norms and expectations concerning
government’s role in American society, restricted congressional options concerning enactment of
federal grant-in-aid programs for state and local governments.
During this time period, America was primarily a rural nation of farmers. Travel conditions were,
compared to today’s standards, primitive. Many Americans rarely left their home state, and many
others never set foot in another state. Government as we know it today, with regulations and
spending programs affecting many aspects of American life, did not exist. Although ratification of
the Articles of Confederation and Perpetual Union on March 1, 1781 formally established the
United States of America, personal allegiance was still directed more toward the individual’s
home state than to the nation. It was an era of what federalism scholars have called “dual
federalism,” where states were expected to be the primary instrument of governance in domestic
affairs.17
However, even before the Constitution’s ratification, the federal government found ways to
provide state and local governments assistance to encourage them to pursue national policy
objectives. For example, under the Articles of Confederation and Perpetual Union, Congress did
not have the power to lay and collect taxes and relied heavily on state donations to fund the
government. This lack of revenue, and expenses related to national defense, limited congressional
spending options in domestic affairs. The Congress of the Confederation addressed that issue by
adopting the Land Ordinance of 1785. The Ordinance generated revenue for the government by
authorizing the sale of land acquired from Great Britain at the conclusion of the American
Revolutionary War. The Ordinance also required every new township incorporated in those lands,
called the Ohio Country, to be subdivided into 36 lots (or sections), each one mile square. Lots 8,
11, 26 and 29 were reserved for the United States.18 The new townships were required to use Lot
17
Harry N. Scheiber, The Condition of American Federalism: An Historian’s View, a study submitted by the
Subcommittee on Intergovernmental Relations to the Committee on Government Operations, U.S. Senate, 89th Cong.,
2nd sess., October 15, 1966; and Harry N. Scheiber, “Federalism and Legal Process: Historical and Contemporary
Analyses of the American System,” Law & Civil Society Review, vol. 14, no. 3 (Spring 1980), pp. 669-683. Note:
There were aspect of cooperative federalism during this time period as well. For example, state officials administered
federal elections, state governments housed some federal prisoners, and state courts tried some federal court cases, see
Daniel J. Elazar, The American Partnership: Federal-State Cooperation in the Nineteenth Century United States
(Chicago, IL: University of Chicago Press, 1962).
18
Journals of the Continental Congress, 1774-1789, Volume XXVIII, May 20, 1785, p. 378, http://lcweb2.loc.gov/cgibin/query/r?ammem/hlaw:@field(DOCID+@lit(jc0281). Note: Proceeds from the sale of the four lots set aside for the
United States were intended to fund promised military officer pensions and claims for back pay for military service
during the Revolutionary War. Soldiers were also eligible for grants of land as compensation for these purposes, see pp.
379-380.
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16 “for the maintenance of public schools, within the said township.”19 Some schools are still
located in lot 16 of their respective townships, although many of the school lots were sold to raise
money for public education. These land grants for public education were reauthorized by
Congress in the Northwest Ordinance of 1787.20 Congress subsequently adopted similar
legislation for all states admitted to the union from 1802 to 1910, with exceptions for Texas,
which retained all of its public land, and Maine and West Virginia which were formed from other
states. From 1802 to 1848, one lot in each township was to be used for education, from 1848 to
1890 two lots, and from 1894 to 1910, with one exception, four lots.21grantin-aid programs.
1
John Kincaid, “From Cooperative to Coercive Federalism,” The Annals of the American Academy of Political and
Social Science, vol. 509, no. 1 (1990), pp. 139-152. Note: the term coercive is often used in legal arguments to suggest
that provisions of law related to federal grants-in-aid do not have constitutional standing. Federalism scholars use the
term to describe, as Kincaid explained it (p. 139), the shift in emphasis “from fiscal tools to stimulate
intergovernmental policy cooperation” to an increased reliance on “regulatory tools to ensure the supremacy of federal
policy.”
2
National Association of State Budget Officers, State Expenditure Report, Examining FY2011-2013 State Spending,
pp. 1, 7, 30, 45, at http://www.nasbo.org/sites/default/files/State%20Expenditure%20Report%20%28Fiscal%2020112013%20Data%29.pdf.
3
U.S. Advisory Commission on Intergovernmental Relations (hereafter ACIR), Categorical Grants: Their Role and
Design, A-52, 1978, p. 61, at http://www.library.unt.edu/gpo/acir/Reports/policy/a-52.pdf.
4
Ibid.
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Overarching all of these factors is the evolving nature of cultural norms and expectations
concerning government’s role in American society. Over time, although the American public has
become increasingly skeptical of government performance, they have also become increasingly
accepting of government activism in domestic affairs generally, and of federal government
activism in particular. Federalism scholars attribute this increased acceptance of, and sometimes
demand for, government action as a reaction to the industrialization and urbanization of American
society; technological innovations in communications, which have raised awareness of societal
problems; and exponential growth in economic interdependencies brought about by an
increasingly global economy.5
This report provides an historical synopsis of the evolving nature of the federal grants-in-aid
system, focusing on the role Congress has played in defining the system’s scope and nature. It
begins with an overview of the contemporary federal grants-in-aid system and then examines its
evolution over time, focusing on the internal and external factors that have influenced
congressional decisions concerning the system’s development. It concludes with an assessment of
the scope and nature of the contemporary federal grants-in-aid system and raises several issues
for congressional consideration, including possible ways to augment congressional capacity to
provide effective oversight of this system.
Federal Grants to State and Local Governments
Different federal departments and agencies, including the U.S. Census Bureau, the Government
Accountability Office, and the U.S. Office of Management and Budget use different definitions to
determine what counts as a federal grant-in-aid program. However, there is agreement on the
general characteristics associated with each grant type.
There are three general types of federal grants to state and local governments: categorical grants,
block grants, and general revenue sharing. Categorical grants can be used only for a specifically
aided program and usually are limited to narrowly defined activities. Block grants can be used
only for a specifically aided set of programs and usually are not limited to narrowly defined
activities. General revenue sharing can be used for any purpose not expressly prohibited by
federal or state law and is not limited to narrowly defined activities.
There are four types of categorical grants: project categorical grants, formula categorical grants,
formula-project categorical grants, and open-end reimbursement categorical grants. Project
categorical grants are awarded on a competitive basis through an application process specified by
the federal agency making the grant. Formula categorical grants are allocated among recipients
according to factors specified within enabling legislation or administrative regulations (e.g.,
population, median household income, per capita income, poverty, and number of miles driven).
Formula-project categorical grants use a mixture of fund allocation means, typically involving the
use of a formula specified within enabling legislation or administrative regulations to allocate
available funds among the states, followed by an application process specified by each recipient
state to allocate available funds on a competitive basis among local governments or other eligible
applicants. Open-end reimbursement categorical grants, often regarded as the equivalent of
5
Samuel H. Beer, “The Modernization of American Federalism,” in Toward ’76 – The Federal Polity, special issue of
Publius: The Journal of Federalism, vol. 3, no 2 (Fall 1973), pp. 49-95; and David B. Walker, The Rebirth of
Federalism, 2nd Edition (NY: Chatham House Publishers, 2000), pp. 19-35.
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formula categorical grants, provide a reimbursement of a specified proportion of recipient
program costs, eliminating competition among recipients as well as the need for an allocation
formula.6
A Continuum of Federal Grant Administrative Conditions
Of the six grant types, project categorical grants typically impose the most restraint on recipients
(see Table 1). Federal administrators have a high degree of control over who receives project
categorical grants (recipients must apply to the appropriate federal agency for funding and
compete against other potential recipients who also meet the program’s specified eligibility
criteria); recipients have relatively little discretion concerning aided activities (funds must be used
for narrowly specified purposes); and there is a relatively high degree of federal administrative
conditions attached to the grant, typically involving the imposition of federal standards for
planning, project selection, fiscal management, administrative organization, and performance.
General revenue sharing imposes the least restraint on recipients.7 Federal administrators have a
low degree of discretion over who receives general revenue sharing (funding is allocated
automatically to recipients by a formula or formulas specified in legislation); recipients have
broad discretion concerning aided activities; and there is a relatively low degree of federal
administrative conditions attached to the grant, typically involving periodic reporting criteria and
the application of standard government accounting procedures.
Block grants are at the midpoint in the continuum of recipient discretion. Federal administrators
have a low degree of discretion over who receives block grants (after setting aside funding for
administration and other specified activities, the remaining funds are typically allocated
automatically to recipients by a formula or formulas specified in legislation); recipients have
some discretion concerning aided activities (typically, funds can be used for a specified range of
activities within a single functional area); and there is a moderate degree of federal administrative
conditions attached to the grant, typically involving more than periodic reporting criteria and the
application of standard government accounting procedures, but with fewer conditions attached to
the grant than project categorical grants.
6
ACIR, Categorical Grants: Their Role and Design, A-52, 1978, pp. 5, 61, at http://www.library.unt.edu/gpo/acir/
Reports/policy/a-52.pdf.
7
For further information and analysis concerning general revenue sharing, see CRS Report RL31936, General Revenue
Sharing: Background and Analysis, by Steven Maguire.
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Table 1. Classification of Grant Types by Three Defining Traits
Federal Administrator’s Funding Discretion
Low
Medium
Formula Categorical Grant
Block Grant—Formula-Project Categorical
Grant
High
Project Categorical Grant
Open-ended Reimbursement
Categorical Grant
General Revenue Sharing
Range of Recipient’s Discretion in Use of Funds
Low
Project Categorical Grant
Medium
Block Grant
High
General Revenue Sharing
Formula-Project Categorical Grant
Formula Categorical Grant
Open-ended Reimbursement
Categorical Grant
Extent of Performance Conditions
Low
General Revenue Sharing
Medium
Block Grant
High
Project Categorical Grant
Formula Categorical Grant
Formula-Project Categorical Grant
Open-ended Reimbursement
Categorical Grant
Source: U.S. Advisory Commission on Intergovernmental Relations, Categorical Grants: Their Role and Design, A52 (Washington, DC: GPO, 1978), p. 7.
Outlays for Federal Grants to State and Local
Governments
As indicated in Table 2, outlays for federal grants to state and local governments have generally
increased over the years, with a relatively rapid increase from FY2008 through FY2010 due
primarily to the enactment of P.L. 111-5, the American Recovery and Reinvestment Act of 2009
(ARRA). As of December 31, 2013, ARRA had provided state and local governments $219.1
billion in grants and $275.7 billion in grants, contracts, and loans combined.8 State and local
governments received $52.9 billion in ARRA grants, contracts, and loans in FY2009, $111.9
billion in FY2010, $68.8 billion in FY2011, $25.6 billion in FY2012, 11.8 billion in FY2013, and
8
The Recovery Accountability and Transparency Board, “Recovery.gov: State/Territory Totals by Award Type,” at
http://www.recovery.gov/arra/Transparency/RecoveryData/Pages/RecipientAwardSummarybyState.aspx.
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$4.7 billion in FY2014 (through December 31, 2013) to assist their recovery from the “Great
Recession” (December 2007-June 2009).9
As expected, after reaching an historic high of $608.4 billion in FY2010, outlays for federal
grants to state and local governments declined somewhat to $606.8 billion in FY2011 as ARRA
funding began to unwind, and then declined further to $544.6 billion in FY2012 and to $546.2
billion in FY2013 as most of ARRA’s funding expired. It is anticipated that outlays for federal
grants to state and local governments will increase in FY2014 to $607.2 billion, primarily due to
increased outlays for health care generally and Medicaid specifically. However, given federal
budgetary pressures, most observers expect relatively modest increases in outlays for federal
grants to state and local governments in other programmatic areas over the next several fiscal
years.10
Table 2. Outlays for Federal Grants to State and Local Governments, by Function,
Selected Fiscal Years 1902-2014
(nominal $ in millions)
Fiscal Year
2014 est.
2013
2012
2011
2010
2009
2008
2007
2006
2005
2000
1990
1980
1970
1960
1950
Education,
Training,
Employment
and Social
Services
Transportation
Community
and Regional
Development
Total
Health
Income
Security
$607,244
546,171
544,569
606,766
608,390
537,991
461,317
443,797
434,099
428,018
$329,792
283,036
268,277
292,847
290,168
268,320
218,025
208,311
197,347
197,848
$103,994
102,190
102,574
113,625
115,156
103,169
93,102
90,971
89,816
90,885
$67,419
62,690
68,126
89,147
97,586
73,986
58,904
58,077
60,512
57,247
$62,825
60,518
60,749
60,986
60,981
55,438
51,216
47,945
46,683
43,370
$22,233
16,781
20,258
20,002
18,908
17,394
19,221
20,653
21,285
20,167
$20,981
20,956
24,585
30,159
25,591
19,684
20,849
17,840
18,456
18,501
285,874
135,325
91,385
24,065
7,019
2,212
124,843
43,890
15,758
3,849
214
123
68,653
36,768
18,495
5,795
2,635
1,123
36,672
21,780
21,862
6,417
525
484
32,222
19,174
13,022
4,599
2,999
429
8,665
4,965
6,486
1,780
109
0
14,819
8,748
15,762
1,625
537
53
Other
9
Ibid.; and U.S. Government Accountability Office, “Following the Money: GAO’s Oversight of the Recovery Act,” at
http://www.gao.gov/recovery/. ARRA provided additional funding for a wide range of federal grants to state and local
governments, including Medicaid ($93 billion, primarily for a temporary increase in the Federal Medical Assistance
Percentages reimbursement rate), a State Fiscal Stabilization Fund ($53.6 billion), Build America Bonds ($30 billion),
Highways and Bridges ($27.5 billion), Title 1-A, elementary and secondary education for the disadvantaged, ($13
billion), Individuals with Disabilities Education Act ($12.2 billion), Public Transit ($8.4 billion), Intercity Passenger
Rail Capital, Congestion, and Corridor Development grants ($8 billion), Temporary Assistance for Needy Families ($5
billion), and Weatherization Assistance Grants ($5 billion).
10
For example, see National Association of State Budget Officers, State Expenditure Report, Examining FY2010-2012
State Spending, p. 1, at http://www.nasbo.org/sites/default/files/State%20Expenditure%20Report_1.pdf; and National
Association of State Budget Officers, Fiscal Survey of the States, Fall 2012, pp. vii, viii, at http://www.nasbo.org/sites/
default/files/Fall%202012%20Fiscal%20Survey.pdf.
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Fiscal Year
1940
1930
1922
1913
1902
Total
Health
Income
Security
22
0
0
0
0
271
1
1
2
1
967
100
118
12
7
Education,
Training,
Employment
and Social
Services
238
22
7
3
1
Transportation
165
76
92
0
0
Community
and Regional
Development
Other
0
0
0
0
0
271
1
18
7
5
Sources: U.S. Office of Management and Budget, Budget of the United States Government, Fiscal Year 2015:
Historical Tables, pp. 258-310, at http://www.whitehouse.gov/sites/default/files/omb/budget/fy2015/assets/hist.pdf;
and U.S. Department of Commerce, Bureau of the Census, Historical Statistics of the United States, Colonial Times
to 1970, Part 2, pp. 1123, 1125, at http://www2.census.gov/prod2/statcomp/documents/CT1970p2-12.pdf.
As indicated in Table 2 and Figure 1, in FY2014 health care is anticipated to account for more
than half of total outlays for federal grants to state and local governments (an estimated $329.8
billion in FY2014, or 54.3% of the total), followed by income security ($104.0 billion, or 17.1%),
education, training, employment, and social services ($67.4 billion, or 11.1%), transportation
($62.8 billion, or 10.3%), community and regional development ($22.2 billion, or 3.7%), and all
other ($21.0 billion, or 3.5%).
Figure 1. Outlays for Federal Grants to State and Local Governments, by Function,
FY2014 Estimate
Community and
Regional
Development
Other
Transportation
Education, Training,
Employment and
Social Services
Health
Income Security
Source: U.S. Office of Management and Budget, Budget of the United States Government, Fiscal Year 2015: Historical
Tables, p. 267, at http://www.whitehouse.gov/sites/default/files/omb/budget/fy2015/assets/hist.pdf.
Medicaid, with $308.6 billion in expected federal outlays in FY2014, has, by far, the largest
budget of any federal grant-in-aid program. Ten other federal grants to state and local
governments are expected to have federal outlays in excess of $9 billion in FY2014: Federal-Aid
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Highways ($41.7 billion), Child Nutrition ($19.7 billion),11 Tenant Based Rental Assistance—
Section 8 vouchers ($19.0 billion), Accelerating Achievement and Ensuring Equity (Education
for the Disadvantaged—$16.8 billion), Temporary Assistance for Needy Families ($16.8 billion),
Special Education ($13.1 billion), Community Development Block Grants ($10.2 billion), the
Children’s Health Insurance Fund ($10.2 billion), State Children and Families Services Programs
($9.5 billion), and Urban Mass Transportation Grants ($9.1 billion).12
Table 3 provides data on outlays for federal grants to state and local governments in nominal and
constant (inflation-adjusted) dollars, as a percentage of total federal outlays and as a percentage
of national gross domestic product (GDP) for selected fiscal years since FY1960. It also indicates
the percentage of these outlays that are payments for individuals, as opposed to payments for
capital improvements and government operations.
Table 3. Outlays for Federal Grants to State and Local Governments, Percentage of
Outlays for Individuals, in Constant Dollars, and as a Percentage of Total Federal
Outlays and National Gross Domestic Product, Selected Fiscal Years, 1960-2014
Nominal $
(in millions)
% Outlays for
Individuals
Constant $
(in millions,
FY2009)
% of Total
Federal
Outlays
% of National
GDP
$607,244
69.7%
$557,800
16.6%
3.5%
2013
546,171
68.8%
509,700
15.8%
3.3%
2012
544,569
66.1%
515,100
15.4%
3.4%
2011
606,766
63.9%
588,900
16.8%
3.9%
2010
608,390
63.2%
603,000
17.6%
4.1%
2005
428,018
64.0%
480,400
17.3%
3.3%
2000
285,874
63.9%
366,900
16.0%
2.8%
1995
224,991
64.2%
318,700
14.8%
3.0%
1990
135,325
57.1%
224,300
10.8%
2.3%
1985
105,852
47.3%
217,600
11.2%
2.5%
1980
91,385
35.6%
264,700
15.5%
3.3%
1975
49,791
33.6%
215,300
15.0%
3.1%
1970
24,065
36.2%
142,700
12.3%
2.3%
1965
10,910
34.1%
76,400
9.2%
1.5%
1960
7,019
35.3%
52,400
7.6%
1.3%
Fiscal Year
2014 est.
Source: U.S. Office of Management and Budget, Budget of the United States Government, Fiscal Year 2015: Historical
Tables, p. 258-259, at http://www.whitehouse.gov/sites/default/files/omb/budget/fy2015/assets/hist.pdf.
11
Child Nutrition includes the School Breakfast Program, the National School Lunch Program, and other nutrition
programs.
12
U.S. Office of Management and Budget, Budget of the United States Government, Fiscal Year 2014: Historical
Tables, pp. 311-315, at http://www.whitehouse.gov/sites/default/files/omb/budget/fy2014/assets/hist.pdf.
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As indicated in Table 3, total outlays for federal grants to state and local governments have
generally increased since the 1960s.13 However, the magnitude of those increases has varied over
the years. For example, outlays for federal grants to state and local governments increased, in
nominal dollars, 187.3% during the 1960s, 246.4% during the 1970s, 33.4% during the 1980s,
98.0% during the 1990s, and 98.6% during the first decade of the 2000s.14
Outlay growth for federal grants to state and local governments has, in most years, exceeded
inflation. However, as indicated in Table 3, those outlays, expressed in constant (FY2009)
dollars, did not keep pace with inflation during the early 1980s and during early 2010s.15
Federalism scholars have noted that since the 1980s, the focus of federal grants to state and local
governments has shifted from providing assistance to places (e.g., to build public highways,
support public education, criminal justice systems, economic development endeavors and
government administration) to people (e.g., providing health care benefits, social welfare income,
housing assistance, and social services).16 Much of this shift is attributed to Medicaid, which has
experienced relatively large outlay growth over the past several decades. As shown in Table 3,
during the 1960s and 1970s about one-third of total outlays for federal grants to state and local
governments were for individuals, compared with more than 60% since the mid-1990s.
Number of Federal Grants to State and Local
Governments
In the past, the now-defunct U.S. Advisory Commission on Intergovernmental Relations (ACIR)
and the U.S. Office of Management and Budget (OMB) used information contained in the
Catalog of Federal Domestic Assistance (CFDA) to count the number of federal grants to state
and local governments. The CFDA “is a government-wide compendium of Federal programs,
projects, services, and activities that provide assistance or benefits to the American public.”17 It
lists 15 categories of federal grants: formula grants (including formula categorical grants,
formula-project categorical grants, and block grants); project grants; direct payments for specified
uses to individuals and private firms; direct payments with unrestricted use to beneficiaries who
meet federal eligibility requirements; direct loans; guaranteed/insured loans; insurance; sale,
exchange, or donation of property and goods; use of property, facilities, and equipment; provision
13
Outlays for federal grants to state and local governments increased, in nominal dollars, in 49 of the 53 fiscal years
from FY1960 through FY2013—the declines occurred in FY1982, FY1987, FY2011, and FY2012.
14
U.S. Office of Management and Budget, Budget of the United States Government, Fiscal Year 2010: Historical
Tables, pp. 239-240, at http://www.gpoaccess.gov/usbudget/fy10/pdf/hist.pdf. Note: The percentages were derived by
dividing the difference between expenditures for the ninth year of the decade and the first year of the decade by
expenditures for the first year of the decade.
15
As will be discussed, the slowdown in federal grant funding during the early 1980s was largely due to the Reagan
Administration’s efforts to reduce the rate of growth in federal domestic expenditures and to reform federalism
relationships. The slowdown in federal grant funding during the early 2010s was largely due to the expiration of
temporary federal grant assistance provided by P.L. 111-5, the American Recovery and Reinvestment Act of 2009.
16
John Kincaid, “Developments in Federal-State Relations, 1992-93,” The Book of the States, 1994-95 (Lexington,
KY: The Council of State Governments, 1994), pp. 576-586; and John Kincaid, “Trends in Federalism, Continuity,
Change and Polarization,” The Book of the States, 2004 (Lexington, KY: The Council of State Governments, 2004), pp.
21-27.
17
U.S. General Services Administration, 2012 Catalog of Federal Domestic Assistance, p. I, at https://www.cfda.gov/.
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of specialized services; advisory services and counseling; dissemination of technical information;
training; investigation of complaints; and federal employment. It lists all authorized federal grant
programs, including grants that have not received an appropriation. Because the CFDA focuses
on the needs of applicants, if a program uses a separate application or other delivery mechanism,
the CFDA considers it a separate program. This complicates efforts to count federal grants to state
and local governments.
ACIR periodically published counts of funded federal grants to state and local governments
during the 1960s and then for Fiscal Years 1975, 1978, 1981, 1984, 1987, 1989, 1991, 1993, and
1995.18 OMB provided counts of funded grants to state and local governments for FY1980FY2003.19 Because they used a different methodology to determine which grant programs to
include in their count, their results differed. OMB consistently identified fewer federal grants to
state and local governments than ACIR. For example, in FY1995, OMB identified 608 funded
federal grants to state and local governments compared to ACIR’s count of 633.20 No
authoritative count of funded federal grants to state and local governments is known to have been
issued in recent years.
ACIR included in its counts all direct cash grants to state or local governmental units, other
public bodies established under state or local law, or their designee; payments for grants-in-kind,
such as purchases of commodities distributed to state or local governmental institutions;
payments to nongovernmental entities when such payments result in cash or in-kind services or
products that are passed on to state or local governments; payments to state and local
governments for research and development that is an integral part of their provision of services;
and payments to regional commissions and organizations that are redistributed at the state or local
level to provide public services.21
18
ACIR, A Catalog of Federal Grant-In-Aid Programs to State and Local Governments: Grants Funded FY 1975, A52a, 1977 at http://www.library.unt.edu/gpo/acir/Reports/policy/a-52a.pdf; ACIR, A Catalog of Federal Grant-In-Aid
Programs to State and Local Governments: Grants Funded FY 1978, A-72, 1979 at http://www.library.unt.edu/gpo/
acir/Reports/policy/a-52a.pdf; ACIR, A Catalog of Federal Grant-In-Aid Programs to State and Local Governments:
Grants Funded FY 1981, M-133CAT, 1982 at http://www.library.unt.edu/gpo/acir/Reports/information/M-133cat.pdf;
ACIR, A Catalog of Federal Grant-In-Aid Programs to State and Local Governments: Grants Funded FY 1984, M139, 1984 at http://www.library.unt.edu/gpo/acir/Reports/information/m-139.pdf; ACIR, A Catalog of Federal GrantIn-Aid Programs to State and Local Governments: Grants Funded FY 1987, M-153, 1987 at
http://www.library.unt.edu/gpo/acir/Reports/information/m-153.pdf; ACIR, A Catalog of Federal Grant-In-Aid
Programs to State and Local Governments: Grants Funded FY 1989, M-167, 1989 at http://www.library.unt.edu/gpo/
acir/Reports/information/M-167.pdf; ACIR, Characteristics of Federal Grant-In-Aid Programs to State and Local
Governments: Grants Funded FY 1991, M-182, 1992 at http://www.library.unt.edu/gpo/acir/Reports/information/M182.pdf; ACIR, Characteristics of Federal Grant-In-Aid Programs to State and Local Governments: Grants Funded
FY1993, M-188, 1994 at http://www.library.unt.edu/gpo/acir/Reports/information/M-188.pdf; and ACIR,
Characteristics of Federal Grant-In-Aid Programs to State and Local Governments: Grants Funded FY1995, M-195,
1995 at http://www.library.unt.edu/gpo/acir/Reports/information/M-195.pdf.
19
U.S. Office of Management and Budget (OMB), “The Number of Federal Grant Programs to State and Local
Governments: 1980-2003,” February 18, 2004. Note: the Government Accountability Office provided a count for
FY1990; see U.S. General Accounting Office, Federal Aid: Programs Available to State and Local Governments, HRD
91-93FS, May 1991, at http://www.gao.gov/assets/90/89092.pdf.
20
U.S. Office of Management and Budget (OMB), “The Number of Federal Grant Programs to State and Local
Governments: 1980-2003,” February 18, 2004.
21
ACIR excluded grants directly to profit-making institutions, individuals, and nonprofit institutions (unless such
payments result in cash or in-kind services or products that are passed on to state or local governments); payments for
research and development not directly related to the provision of services to the general public; payments for services
rendered; grants to cover administrative expenses for regional bodies; loans and loan guarantees; and shared revenues.
See, ACIR, Characteristics of Federal Grant-In-Aid Programs to State and Local Governments: Grants Funded FY
(continued...)
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OMB counted only those federal grants for traditional governmental operations, as defined in
OMB Circular A-11. The definition covered only grants that “support State or local programs of
government operations or provision of services to the public.”22 It excluded federal grants that
went directly to individuals, fellowships, most grants to nongovernmental entities, and technical
research grants.
A search of the CFDA on April 14, 2014, indicated that state governments, local governments,
U.S. territories, and federally recognized tribal governments are eligible to apply for 1,453 federal
grants to state and local governments (defined as authorized project grants, formula grants, direct
payments for specified uses, and direct payments for unrestricted uses).23 Of these grants, 189 are
not currently funded, 158 are research, fellowship, or exchange programs that are available to
both public and private institutions of higher education and are not targeted solely at either public
institutions of higher education or other public agencies, and 7 were either loan programs or had
very board eligibility extending beyond state and local governments. Removing them from the list
leaves 1,099 funded federal grants to state and local governments. Because there is no current
consensus on the methodology used to count federal grants to state and local governments, the
1,099 count of federal grants to state and local governments listed in Table 4 for FY2014 that was
compiled from the CFDA should be viewed as illustrative, as opposed to definitive, of the current
number of federal grants to state and local governments.
Table 4. Funded Federal Grants to State and Local Governments, by Type, Selected
Fiscal Years, 1902-2014
Fiscal Year
# of Grants
Categorical
Block
General
Revenue
Sharinga
2014
1,099
1,078
21b
0
2013
1,052
1,030
22
0
2012
996
970
26
0
2009
953
929
24
0
1998
664
640
24
0
1995
633
618
15
0
1993
593
578
15
0
1991
557
543
14
0
1989
492
478
14
0
1987
435
422
13
0
(...continued)
1995 (Washington, DC: GPO, 1995), pp. 26-28, at http://www.library.unt.edu/gpo/acir/Reports/information/M-195.pdf.
22
U.S. Office of Management and Budget (OMB), “The Number of Federal Grant Programs to State and Local
Governments: 1980-2003,” February 18, 2004, p. 7.
23
The number of federal grants to state and local governments was determined by first examining all entries in the
CFDA’s print version and then cross-checking the findings against a search using the frequently updated CFDA’s online search engine. Because the CFDA’s on-line search engine includes subparts of programs, the following search
terms were used to minimize this problem: assistance types (formula grants, project grants, direct payments for
specified uses, and direct payments for unrestricted uses) by beneficiary eligibility (state governments, local
governments, U.S. territories, and/or federally recognized tribal governments).
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Federal Grants to State and Local Governments
Fiscal Year
# of Grants
Categorical
Block
General
Revenue
Sharinga
1984
405
392
12
1
1981
541
534
6
1
1978
498
492
5
1
1975
448
442
5
1
1968
387
385
2
0
1965
327
327
0
0
1960
132
132
0
0
1950
68
68
0
0
1940
31
31
0
0
1930
15
15
0
0
1920
12
12
0
0
1902
5
5
0
0
Source: FY1902, FY1920, FY1930, and FY1940: U.S. Advisory Commission on Intergovernmental Relations,
Periodic Congressional Reassessment of Federal Grants-in-Aid to State and Local Governments, June 1961, pp. 44-49, at
http://www.library.unt.edu/gpo/acir/Reports/policy/A-8.pdf; and U.S. Advisory Commission on Intergovernmental
Relations, Fiscal Balance in the American Federal System, vol. 1, October 1967, pp. 140-141, 156-158, at
http://www.library.unt.edu/gpo/acir/Reports/policy/a-31-1.pdf; FY1950, FY1960, FY1965, and FY1968: U.S.
Advisory Commission on Intergovernmental Relations, Fiscal Balance in the American Federal System, vol. 1,
October 1967, pp. 156-158, at http://www.library.unt.edu/gpo/acir/Reports/policy/a-31-1.pdf; FY1975, FY1978,
FY1981, FY1984: FY1987, FY1989, FY1991, FY1993, and FY1995: U.S. Advisory Commission on
Intergovernmental Relations, Characteristics of Federal Grant-In-Aid Programs to State and Local Governments: Grants
Funded FY 1995, p. 3, at http://www.library.unt.edu/gpo/acir/Reports/information/M-195.pdf; FY1998: David B.
Walker, The Rebirth of Federalism, 2nd Edition (NY: Chatham House Publishers, 2000), p. 7; and FY2009, FY2012,
FY2013, and FY2014: CRS computation, U.S. General Services Administration, The Catalog of Federal Domestic
Assistance at https://www.cfda.gov/.
a.
General revenue sharing distributed funds to states from 1972 to 1981 and to localities from 1972 to 1986.
b.
For further analysis, see CRS Report R40486, Block Grants: Perspectives and Controversies, by Robert Jay
Dilger and Eugene Boyd.
As the data in the table suggest, the number of federal grants to state and local governments
increased slowly from 1902 to 1930. Then, partly in reaction to the Great Depression, Congress
doubled the number of federal grants to state and local governments during the 1930s, and
continued to increase the number of federal grants to state and local governments during the
1940s and 1950s.
During the mid-1960s, Congress increased the number of federal grants to state and local
governments exponentially, primarily in response to national social movements concerning
poverty and civil rights. Nine federal grants to state and local governments were added in 1961,
17 in 1962, 20 in 1963, 40 in 1964, 109 in 1965, 53 in 1966, 3 in 1967, and 4 in 1968.24
24
ACIR, Fiscal Balance in the American Federal System, vol. 1, October 1967, p. 157, at http://www.library.unt.edu/
gpo/acir/Reports/policy/a-31-1.pdf.
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Congress continued to increase the number of federal grants to state and local governments
during the 1970s, but at a relatively slow pace as it addressed budgetary constraints presented by
“guns versus butter” issues associated with the Vietnam conflict. Then, at the urging of President
Ronald Reagan in 1981, Congress approved the largest reduction in the number of federal grants
to state and local governments in American history by creating 9 new block grants which
consolidated 77 categorical grants and revised two earlier block grants. The Reagan
Administration also eliminated funding for 62 categorical grants in 1981, mainly through
authority provided under P.L. 97-35, the Omnibus Budget Reconciliation Act of 1981.25
The number of federal grants to state and local governments increased relatively slowly during
the remainder of the 1980s, as Congress faced budgetary constraints presented by demographic
changes in American society that led to escalating costs for several federal entitlement programs,
especially for Social Security, Medicare and Medicaid, and by the Reagan Administration’s
general opposition to the expansion of the federal grants-in-aid system.
As the data in Table 4 indicate, the number of federal grants to state and local governments
continued to increase during the 1990s, and has continued to do so in recent years.
Land Grants and “Dual Federalism”: 1776-1860
The relative influence of internal versus external factors on congressional decisions affecting the
federal grants-in-aid system has varied, both over time and in each specific policy area. Prior to
the Civil War, external factors, especially cultural norms and expectations concerning
government’s role in American society, restricted congressional options concerning enactment of
federal grant-in-aid programs for state and local governments.
During this time period, America was primarily a rural nation of farmers. Travel conditions were,
compared to today’s standards, primitive. Many Americans rarely left their home state, and many
others never set foot in another state. Government as we know it today, with regulations and
spending programs affecting many aspects of American life, did not exist. Although ratification of
the Articles of Confederation and Perpetual Union on March 1, 1781, formally established the
United States of America, personal allegiance was still directed more toward the individual’s
home state than to the nation. It was an era of what federalism scholars have called “dual
federalism,” where states were expected to be the primary instrument of governance in domestic
affairs.26
However, even before the Constitution’s ratification, the federal government found ways to
provide state and local governments assistance to encourage them to pursue national policy
25
David B. Walker, Albert J. Richter, and Cynthia Cates Colella, “The First Ten Months: Grant-in-Aid, Regulatory,
and Other Changes,” Intergovernmental Perspective vol. 8, no. 1 (Winter 1982): 5-22.
26
Harry N. Scheiber, The Condition of American Federalism: An Historian’s View, a study submitted by the
Subcommittee on Intergovernmental Relations to the Committee on Government Operations, U.S. Senate, 89th Cong.,
2nd sess., October 15, 1966; and Harry N. Scheiber, “Federalism and Legal Process: Historical and Contemporary
Analyses of the American System,” Law & Civil Society Review, vol. 14, no. 3 (Spring 1980), pp. 669-683. Note:
There were aspects of cooperative federalism during this time period as well. For example, state officials administered
federal elections, state governments housed some federal prisoners, and state courts tried some federal court cases, see
Daniel J. Elazar, The American Partnership: Federal-State Cooperation in the Nineteenth Century United States
(Chicago, IL: University of Chicago Press, 1962).
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objectives. For example, under the Articles of Confederation and Perpetual Union, Congress did
not have the power to lay and collect taxes and relied heavily on state donations to fund the
government. This lack of revenue, and expenses related to national defense, limited congressional
spending options in domestic affairs. The Congress of the Confederation addressed that issue by
adopting the Land Ordinance of 1785. The Ordinance generated revenue for the government by
authorizing the sale of land acquired from Great Britain at the conclusion of the American
Revolutionary War. The Ordinance also required every new township incorporated in those lands,
called the Ohio Country, to be subdivided into 36 lots (or sections), each one mile square. Lots 8,
11, 26, and 29 were reserved for the United States.27 The new townships were required to use Lot
16 “for the maintenance of public schools, within the said township.”28 Some schools are still
located in lot 16 of their respective townships, although many of the school lots were sold to raise
money for public education. These land grants for public education were reauthorized by
Congress in the Northwest Ordinance of 1787.29 Congress subsequently adopted similar
legislation for all states admitted to the union from 1802 to 1910, with exceptions for Texas,
which retained all of its public land, and Maine and West Virginia, which were formed from other
states. From 1802 to 1848, one lot in each township was to be used for education, from 1848 to
1890 two lots, and from 1894 to 1910, with one exception, four lots.30
When the Framers met in Philadelphia in 1787 to rework the Articles of Confederation and
Perpetual Union, the national economy was in recession, state governments were saddled with
large debts left over from the Revolutionary War, the continental dollar was unstable and destined
to be a national joke (“not worth a continental”), the navy could not protect international
shipping, and the army proved unable to protect its own arsenal during Shay’s rebellion in 1786.
To address these issues, Congress was provided 17 specific powers in Article 1, Section 8 of the
U.S. Constitution, ratified in 1789, including the power to coin money, establish post offices,
regulate copyright laws, declare war, regulate the armed forces, borrow money, and, importantly,
lay and collect taxes.
The power to lay and collect taxes provided Congress the means to expand the federal
government’s role in domestic affairs. Moreover, the Supreme Court issued several rulings under
Chief Justice John Marshall concerning congressional authority to regulate interstate commerce
that effectively cleared the way for congressional activism in domestic policy. 22 However, the
prevailing view in Congress at this time was that any power not explicitly provided to Congress
in the Constitution was excluded purposively, suggesting that in the absence of specific,
supporting constitutional language the exercise of governmental police powers (the regulation of
private interests for the protection of public safety, health and morals; the prevention of fraud and
oppression; and the promotion of the general welfare) was either meant to be a state or local
government responsibility, or outside the scope of governmental authority altogether.
Nevertheless, during the 1800s there were congressional efforts, primarily from representatives
from western states, to adopt legislation to provide federal cash assistance for various types of
internal improvement projects to encourage western migration and promote interstate commerce.
Most of these efforts failed, primarily due to sectional divisions within the Congress which, at
that time, made it difficult to build coalitions large enough to adopt programs that targeted most
19
Ibid., p. 378.
20
31 However, the
27
Journals of the Continental Congress, 1774-1789, Volume XXVIII, May 20, 1785, p. 378. Note: Proceeds from the
sale of the four lots set aside for the United States were intended to fund promised military officer pensions and claims
for back pay for military service during the Revolutionary War. Soldiers were also eligible for grants of land as
compensation for these purposes, see pp. 379-380.
28
Ibid., p. 378.
29
Note: The Northwest Ordinance of 1787 ended state claims to the Ohio Country, established a territorial government
for the region, included civil rights provisions that served as a precursor for the Bill of Rights, mandated that new states
could be formed out of the territory once an area in the region reached a population of 60,000, and prohibited slavery in
the region.
2130
Matthias Nordberg Orfield, “Federal Land Grants to the States With Special Reference to Minnesota,” Bulletin of the
University of Minnesota, Minneapolis, MN, March 1915, p. 42.
2231
For example, in McCulloch v. Maryland, 17 U.S. (4 Wheat.) 316 (1819), the Marshall Court established the doctrine
of implied national powers, ruling that while federal powers were limited to those enumerated in the Constitution, the
necessary and proper clause found in Article 1, Section 8, enlarged, rather than narrowed, congressional authority to
act: “Let the end be legitimate, let it be within the scope of the Constitution, and all means which are appropriate,
which are plainly adapted to that end, which are not prohibited, but consist with the letter and spirit of the Constitution,
are constitutional.” For further analysis, see CRS Report RL30315, Federalism, State Sovereignty, and the
Constitution: Basis and Limits of Congressional Power, by Kenneth R. Thomas.
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Federal Grants-In-Aid: An Historical Perspective on Contemporary Issues
of its assistance to western states; opposition from Members of Congress who viewed reducing
the 13
Federal Grants to State and Local Governments
prevailing view in Congress at this time was that any power not explicitly provided to Congress
in the Constitution was excluded purposively, suggesting that in the absence of specific,
supporting constitutional language the exercise of governmental police powers (the regulation of
private interests for the protection of public safety, health and morals; the prevention of fraud and
oppression; and the promotion of the general welfare) was either meant to be a state or local
government responsibility, or outside the scope of governmental authority altogether.
Nevertheless, during the 1800s there were congressional efforts, primarily from representatives
from western states, to adopt legislation to provide federal cash assistance for various types of
internal improvement projects to encourage western migration and promote interstate commerce.
Most of these efforts failed, primarily due to sectional divisions within Congress which, at that
time, made it difficult to build coalitions large enough to adopt programs that targeted most of its
assistance to western states; opposition from Members of Congress who viewed reducing the
national debt from the American Revolutionary War as a higher priority; and opposition from
Members who viewed the provision of cash assistance for internal improvements, other than for
post roads which were specifically mentioned in the Constitution as a federal responsibility, a
violation of states’ rights, as articulated in the Tenth Amendment’s language: “The powers not
delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved
to the States respectively, or to the people.”2332
Given prevailing views concerning the limited nature of the federal government’s role in
domestic affairs, instead of authorizing direct cash assistance to states for internal improvements,
Congress typically authorized federal land grants to states. For example, in 1823 Ohio received a
federal land grant of 60,000 acres along the Maumee Road to raise revenue to improve that road.
In 1827, Ohio received another federal land grant of 31,596 acres to raise revenue for the
Columbus and Sandusky Turnpike. 2433
In 1841, nine states (Ohio, Indiana, Illinois, Alabama, Missouri, Mississippi, Louisiana,
Arkansas,
and Michigan), and, with three exceptions, all subsequent newly admitted states were
designated designated
land grant states and guaranteed at least 500,000 acres of federal land to be auctioned
to support
transportation projects, including roads, railroads, bridges, canals, and improvement of
water water
courses, that expedited the transportation of the United States mail and military personnel
and and
munitions.2534 By 1900, over 3.2 million acres of federal land waswere donated to these states to
support wagon road construction. Congress also authorized the donation of another 4.5 million
acres of federal land to Illinois, Indiana, Michigan, Ohio, and Wisconsin to raise revenue for canal
canal construction and 2.225 million acres to Alabama, Iowa, and Wisconsin to improve river
navigation. In addition, states were provided 37.8 million acres for railroad improvements and 64
million acres for flood control. 2635 States were provided wide latitude in project selection and
federal oversight and administrative regulations were minimal.
Although land grants were prevalent throughout the 1800s, given prevailing views concerning
states rights land grants, as well as cash grants, were subject to opposition on constitutional
grounds. For example, in 1854, Congress adopted legislation authorizing the donation of 10
million acres of federal land to states to be sold to provide for the indigent insane. President
Franklin Pierce vetoed the legislation claiming that:
23
32
Constitution of the United States, text available on the National Archives website: at http://www.archives.gov/
exhibits/
charters/bill_of_rights_transcript.html.
2433
Thomas Aquinas Burke, “Ohio Lands – A Short History,” 8th ed. (Columbus, OH: State Auditor’s Office, September
1996), at http://freepages.history.rootsweb.ancestry.com/~maggie/ohio-lands/ohl5.html#WROTLNDS.
2534
Benjamin Horace Hibbard, A History of the Public Land Policies (New York: The Macmillan Company, 1924), pp.
228-233. Note: Maine and West Virginia were not eligible for the guarantee because they were formed out of other
states and Texas was ineligible because it was considered a sovereign nation when admitted to the Union. Also, five
states, Wisconsin, Alabama, Iowa, Nevada and Oregon, subsequently were permitted to use their proceeds from federal
land sales solely for public education.
2635
Matthias Nordberg Orfield, Federal Land Grants to the States With Special Reference to Minnesota (Minneapolis,
MN: Bulletin of the University of Minnesota, 1915), pp. 77- 111, 115-118; Morton Grodzins, The American System
(Chicago: Rand McNally, 1966), p. 35; Gary M. Anderson and Dolores T. Martin, “The Public Domain and Nineteenth
Century Transfer Policy,” Cato Journal, vol. 6, no. 3 (Winter 1987): 908-910; John Bell Rae, “Federal Land Grants in
Aid of Canals,” The Journal of Economic History, vol. 4, no. 2 (November 1944): 167, 168; and U.S. Department of
Transportation, Federal Highway Administration, America’s Highways, 1776/1976 (Washington, DC: GPO, 1976), 24.
Note: 26 states received federal land grants during the 1800s.
Congressional Research Service
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(continued...)
Congressional Research Service
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Although land grants were prevalent throughout the 1800s, given prevailing views concerning
states’ rights, land grants, as well as cash grants, were subject to opposition on constitutional
grounds. For example, in 1854, Congress adopted legislation authorizing the donation of 10
million acres of federal land to states to be sold to provide for the indigent insane. President
Franklin Pierce vetoed the legislation, claiming that
I cannot find any authority in the Constitution making the federal government the great
almoner of public charity throughout the United States. To do so would, in my judgment, be
contrary to the letter and spirit of the Constitution, and subversive of the whole theory upon
which the union of these States is founded. ... I respectfully submit that, in a constitutional
point of view, it is wholly immaterial whether the appropriation be in money, or in land....
should this bill become a law, ... the several States instead of bestowing their own means on
the social wants of their own people, may themselves ... become humble supplicants for the
bounty of the Federal Government, reversing the state’s true relation to this Union.2736
One notable exception to the federal reluctance to provide cash grants to states occurred in 1837.
The federal government used proceeds from western land sales to retire the federal debt in 1836.
The Deposit Act of 1836 directed that, after reserving $5 million, any money in the federal
Treasury on January 1, 1837, shall be distributed to states in proportion to their respective
representation in the House and Senate. There were no restrictions placed on how states were to
use the funds. About $30 million was distributed to states in three quarterly payments in 1837
before the banking crisis of 1837 led to a recession and payments were stopped. To avoid a
promised veto from President Andrew Jackson, the legislation indicated that the funds were a
deposit subject to recall, rather than an outright grant of cash.2837
Overall, domestic policy in the United States prior to the Civil War was dominated by states. As a
federalism scholar put it:
With respect to the classic trinity of sovereign powers – taxation, the police power, and
eminent domain – the states enjoyed broad autonomous authority, which they exercised
vigorously. Indeed, property law, commercial law, corporation law, and many other aspects
of law vital to the economy were left almost exclusively to the states.... Federalism thus
provided a receptive structure for expressions of state autonomy and pursuit of state-oriented
economic objectives, not only as a matter of constitutional theory and the distribution of
formal authority but also as a matter of real power.29
The Origins of the Modern Grants-In-Aid System:
1860-1932
The Union’s victory in the Civil War marked the beginning of a second evolutionary era in
American federalism. It effectively put to an end to the doctrine that the Constitution was a
compact among sovereign states, each with the right to nullify an act of Congress that the state
deemed unconstitutional, and each with the legal right to secede from the Union. 30 It also signaled
the triumph of the northern states’ commercialism over the southern states’ agrarianism:
2738
(...continued)
MN: Bulletin of the University of Minnesota, 1915), pp. 77- 111, 115-118; Morton Grodzins, The American System
(Chicago: Rand McNally, 1966), p. 35; Gary M. Anderson and Dolores T. Martin, “The Public Domain and Nineteenth
Century Transfer Policy,” Cato Journal, vol. 6, no. 3 (Winter 1987): 908-910; John Bell Rae, “Federal Land Grants in
Aid of Canals,” The Journal of Economic History, vol. 4, no. 2 (November 1944): 167, 168; and U.S. Department of
Transportation, Federal Highway Administration, America’s Highways, 1776/1976 (Washington, DC: GPO, 1976), 24.
Note: 26 states received federal land grants during the 1800s.
36
President Franklin Pierce, “Message from the President of the United States returning a bill entitled “An act making a
grant of public lands to the several States for the benefit of indigent insane persons” with a statement of the objections
which have required him to withhold from it his approval to the United States Senate,” 33rd Cong., 1st sess., Exec. Doc.
56, May 3, 1854.
2837
Henry Franklin Graff, editor, The Presidents: A Reference History (New York: Charles Scribner’s Sons, 2002), pp.
118, 119; and Joseph A. Pechman, Federal Tax Policy (Washington, DC: The Brookings Institution, 1971), p. 290.
2938
Harry N. Scheiber, “State Law and ‘Industrial Policy’ in American Development, 1790-1987,” California Law
Review, vol. 75, no. 1 (January 1987), p. 419.
30
David B. Walker, The Rebirth of Federalism, 2nd ed. (New York: Chatham House Publishers, 2000), p. 74.
Congressional Research Service
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Congressional Research Service
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Federal Grants to State and Local Governments
The Origins of the Modern Grants-In-Aid System:
1860-1932
The Union’s victory in the Civil War marked the beginning of a second evolutionary era in
American federalism. It effectively put to an end to the doctrine that the Constitution was a
compact among sovereign states, each with the right to nullify an act of Congress that the state
deemed unconstitutional, and each with the legal right to secede from the Union.39 It also signaled
the triumph of the northern states’ commercialism over the southern states’ agrarianism:
Unimpeded by the political opposition of the southern slavocracy, the Republican coalition
of north and west carried through a program of comprehensive changes that insured the
expansion of industry, commerce, and free farming.... Instead of the policies of economic
laissez faire that the slavocracy had demanded ... the Republicans substituted the doctrine
that the federal government would provide assistance for business, industry, and farming; the
protective tariff, homestead, land subsidies for agricultural colleges, transcontinental
railroads and other internal improvements, national banks. When the defeated south came
back into the Union, it had to accept the comprehensive alternation in government policy and
economic institutions that historian Charles A. Beard was later to name the Second American
Revolution.3140
Following the war, three constitutional amendments - —the Thirteenth adopted in 1865, the
Fourteenth adopted in 1868, and the Fifteenth Amendment adopted in 1870 - —abolished slavery,
prohibited states from denying due process or equal protection to any of their citizens, and banned
racial restrictions on voting, respectfullyrespectively. In addition, Congress enacted the Reconstruction Acts
of 1867 and 1868, which imposed military government on the formally secessionist states and
required universal manhood suffrage.3241 Despite this active federal presence in domestic policy in
the South following the Civil War, the concept of dual federalism and deference to states in
domestic affairs remained a part of American culture. For example, several Supreme Court
rulings during this time period limited congressional efforts to override state laws on civil rights,
in effect leaving civil and voting rights matters to states until the 1950s and 1960s.3342 The Supreme
Court also limited congressional efforts to regulate interstate commerce by limiting the Interstate
Commerce Commission’s authority.3443
Reflecting prevailing views concerning dual federalism, and limited federal fiscal resources, the
first annualon-going, federal cash grant to states, other than for the support of the National Guard, was
not adopted
until 1887. The Hatch Act of 1887 provided each state an annual cash grant of $15,000 to
establish agricultural experiment stations. It marked the beginning of the modern grants-in-aid
system. In 1888, an annual grant of $25,000 was appropriated for the care of disabled veterans in
state hospitals. States were provided $100 per disabled veteran.35 In 1890, funding was provided
to subsidize resident instruction in the land grant colleges made possible by the Morrill Act of
1862, which provided each existing and future state with 60,000 acres of federal land, plus an
additional 30,000 acres for each of its congressional representatives, to be sold for the
endowment, support, and maintenance of at least one college where the leading subject was
agriculture and the mechanic arts.36
31
1879. P.L. 45-186, the Federal Act to Promote the Education of the Blind,
39
David B. Walker, The Rebirth of Federalism, 2nd ed. (New York: Chatham House Publishers, 2000), p. 74.
40
Robert A. Dahl, Pluralist Democracy in the United States: Conflict and Consent (Chicago: Rand McNally, 1967),
pp. 318-319.
3241
15 Stat. 2 ff; 15 Stat. 14 ff; and 15 Stat. 41.
3342
David B. Walker, The Rebirth of Federalism, 2nd ed. (New York: Chatham House Publishers, 2000), p. 75. The most
famous civil rights case during this time period was Plessy v. FurgusonFerguson 163 U.S. 537 (1896) which upheld the
constitutionality of state-imposed racial segregation.
3443
Cynthia Cates Colella, “The United States Supreme Court and Intergovernmental Relations,” in American
Intergovernmental Relations Today: Perspectives and Controversies, ed. Robert Jay Dilger (Englewood Cliffs, NJ:
Prentice-Hall, Inc., 1986), p. 43. Note: In Interstate Commerce Commission v. Brimson 154 U.S. 447 (1894), the Court
curtailed the ICC’s hearing capacity and in Interstate Commerce Commission v. Cincinnati, New Orleans and Texas
Pacific Railway Company, 167 U.S. 479 (1897) it ruled against the ICC’s authority to fix rates.
35
Morton Grodzins, The American System (Chicago: Rand McNally, 1966), pp. 35, 37.
36
Ibid., p. 34.
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In 1902, there were four annual grants-in-aid programs in operation (funding for the National
Guard, agricultural experiment stations, the care of disabled veterans, and resident instruction in
the land grant colleges), accounting for about $7 million or about 1% of federal expenditures.
State and local government expenditures at that time were slightly over $1 billion, evidence of the
relatively limited nature of federal involvement in domestic policy at that time.
An important difference between land grants and grants-in-aid had emerged, even at this early
date. Because grants-in-aid were funded from the federal treasury, many in Congress felt that they
had an obligation to ensure that the funds were spent by states in an appropriate manner. As a
result, Congress began to attach an increasing number of administrative requirements to these
grant programs. For example, in 1889, states were required to match federal funding for the care
of
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appropriated $250,000 to create a perpetual source of income for the purchase of teaching
materials for the blind. It marked the beginning of the modern federal grants-in-aid system. The
funds were used to purchase interest bearing bonds. The interest was used to purchase teaching
materials for the blind. These teaching materials were then distributed among the states (and the
District of Columbia) annually, with each state applying for assistance receiving a share of the
available teaching materials based on the state’s share of the total number of pupils enrolled in
public schools of education for the blind. The second federal cash grant to states was authorized
by the Hatch Act of 1887. It provided each state an annual cash grant of $15,000 to establish
agricultural experiment stations. In 1888, an annual grant of $25,000 was appropriated for the
care of disabled veterans in state hospitals. States were provided $100 per disabled veteran.44 In
1890, funding was provided to subsidize resident instruction in the land grant colleges made
possible by the Morrill Act of 1862, which provided each existing and future state with 60,000
acres of federal land, plus an additional 30,000 acres for each of its congressional representatives,
to be sold for the endowment, support, and maintenance of at least one college where the leading
subject was agriculture and the mechanic arts.45
In 1902, there were five federal grants to states and local governments (in addition to funding for
the National Guard): teaching materials for the blind, agricultural experiment stations, the care of
disabled veterans, resident instruction in the land grant colleges, and funding to the District of
Columbia. Outlays for these grants were about $7 million in FY1902, or about 1% of total federal
outlays. State and local government total outlays at that time were slightly over $1 billion,
evidence of the relatively limited nature of federal involvement in domestic policy at that time.
An important difference between land grants and cash grants had emerged, even at this early date.
Because federal grants were funded from the federal treasury, many in Congress felt that they had
an obligation to ensure that the funds were spent by states in an appropriate manner. As a result,
Congress began to attach an increasing number of administrative requirements to these grant
programs. For example, in 1889, states were required to match federal funding for the care of
disabled veterans or lose it. The Morrill Act of 1890 authorized the Secretary of the Interior to
withhold payments, pending an appeal to Congress, from states that failed to meet conditions
specified in the act. In 1895, expenditures authorized by the Hatch Act for agricultural experiment
stations were conditioned by annual audits. In 1911, funding authorized by the Weeks Act to
support state efforts to prevent forest fires werewas conditioned by advance approval of state plans
for for
the funds’ use, annual audits and inspections, and a state matching requirement.3746
The Sixteenth Amendment’s ratification in 1913 provided Congress the authority to lay and
collect taxes on income. Although the federal income tax initially generated only modest
amounts, it provided Congress an opportunity to shift from land grants to grants-in-aidcash grants to
encourage state and local governments to provide additional attention to policy areas Congress
considered of nationnational interest. Between 1913 and 1923, Congress adopted new grant-in-aid
federal grant-inaid programs for highway construction, vocational education, public health, and maternity care.
Federal spending on grants-in-aidOutlays for federal grants to state and local governments increased from $12 million in 1913 FY1913
to $118 million in 1922.
FY1922.
44
Morton Grodzins, The American System (Chicago: Rand McNally, 1966), pp. 35, 37.
Ibid., p. 34.
46
ACIR, Categorical Grants: Their Role and Design, A-52, 1978, pp. 15, 16, at http://www.library.unt.edu/gpo/acir/
Reports/policy/a-52.pdf.
45
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In 1923, Massachusetts brought suit against the Secretary of the Treasury, Andrew Mellon, claiming
claiming that the maternal care grants authorized by the Sheppard-Towner Act of 1921 were
unconstitutional infringements on states’ rights. The Supreme Court dismissed the case on the
grounds that it lacked jurisdiction. Nonetheless, Justice George Sutherland, writing on behalf of
the unanimous Court, indicated that, in his view, this form of congressional spending was not
unconstitutional because grants-in-aidfederal grants to state and local governments were optional and, as such,
were not coercive
instruments.3847 As a result, although few new grant-in-aid programsfederal grants to state and local
governments were adopted during the
remainder of the 1920s, grants-in-aidthose grants were now accepted as
a legal means for Congress to
encourage state and local governments to pursue national goals.
The New Deal and The Rise of “Cooperative
Federalism”: 1932-1960
Political scientists contend that about once in every generation partisan affiliations realign across
the nation, typically taking a few years to materialize but often becoming apparent during a
“critical” presidential election. Critical elections typically result in relatively dramatic and lasting
37
ACIR, Categorical Grants: Their Role and Design, A-52 (Washington, DC: GPO, 1978), pp. 15, 16.
38
Cynthia Cates Colella, “The United States Supreme Court and Intergovernmental Relations,” in American
Intergovernmental Relations Today: Perspectives and Controversies, ed. Robert Jay Dilger (Englewood Cliffs, NJ:
Prentice-Hall, Inc., 1986), p. 47.
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changes in the partisan composition within Congress and state governments. They also usually
signal the coming to power of a new partisan coalition that dominates congressional decisionmaking for a relatively long period of time. For example, the election of 1896 ended the political
stalemate between the Democratic and Republican parties and solidified the Republican Party’s
position as the majority party for the next 36 years. The election of 1932 signaled a new period of
Democratic Party dominance, particularly in the “Solid South,” that lasted until the 1970s when
partisan attachments began to weaken, southern states became increasingincreasingly Republican, and the two
two major political partyparties became increasingly competitive, each seemingly on the verge of achieving
achieving majority party status at various times, but unable to retain that status permanently. 3948
The 1932-1960 time period also saw the emergence of the “congressional conservative coalition,”
the the
unofficial title given to the shifting political alliances of southern, conservative Democrats
and and
Republican congressmenMembers. The conservative coalition became an increasingly important
counter-balance counterbalance to large Democratic majorities in both houses of Congress. Members of the
conservative conservative
coalition generally advocated balanced budgets and states’ rights, especially in civil
rights rights
legislation. They used congressional procedures, such as the filibuster or threat of a
filibuster, to
win concessions from the Democratic majority, and, in some instances, to prevent
legislation they
opposed from becoming law. They also benefitted from the congressional
seniority system,
which, during this time period, allocated committee chairmanships according to
seniority.
Because many of the congressional districts in the “solid south” were non-competitive
seats,
southern representatives held a disproportionate number of committee chairmanships in the
House, further strengthening the conservative coalition’s influence on congressional
policymaking.
47
Cynthia Cates Colella, “The United States Supreme Court and Intergovernmental Relations,” in American
Intergovernmental Relations Today: Perspectives and Controversies, ed. Robert Jay Dilger (Englewood Cliffs, NJ:
Prentice-Hall, Inc., 1986), p. 47.
48
Valdimer Orlando Key, “A Theory of Critical Elections,” The Journal of Politics, vol. 17, no. 1 (February 1955), pp.
3-18; Walter Dean Burnham, Critical Elections and the Mainsprings of American Politics (New York: W.W. Norton &
Company, 1970); and David R. Mayhew, Electoral Realignments: A Critique of an American Genre (New Haven: Yale
University Press, 2002).
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The conservative coalition prevented civil rights legislation from being enacted during this time
period, but it could not prevent Democratic majorities in the House and Senate from expanding
the federal government’s presence in domestic policy. However, throughout this time period, the
conservative coalition actively sought concessions to ensure that any new federal programs,
including any new federal grant-in-aid programsgrants to state and local governments, respected state rights. As a result, the
grant-inaidin-aid programs adopted during this time period tended to be in policy areas where state and local
local governments were already active, such as in education, health care, and highway
construction, or
where additional federal assistance was welcomed, such as job creation. Also, federal
federal administrative conditions attached to grant-in-aid programsthese grants during this era focused on the
prevention of corruption and fraudulent expenditures as opposed to encouraging states to move in
new policy directions. As a result, federalism scholars have labeled this time period as an era of
“cooperative federalism,” where intergovernmental tensions were relatively minor and state and
local governments were provided flexibility in project selection.
Faced with unprecedented national unemployment and economic hardship, President Franklin
Delano Roosevelt advocated during his presidency a dramatic expansion of the federal
government’s role in domestic affairs, including an expansion of grantsfederal grant-in-aid as programs as
a means to help
states state and local governments combat poverty and create jobs. Congress approved 16 new, continuing grant-in-aid
39
Valdimer Orlando Key, “A Theory of Critical Elections,” The Journal of Politics, vol. 17, no. 1 (February 1955), pp.
3-18; Walter Dean Burnham, Critical Elections and the Mainsprings of American Politics (New York: W.W. Norton &
Company, 1970); and David R. Mayhew, Electoral Realignments: A Critique of an American Genre (New Haven: Yale
University Press, 2002).
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programs during the years 1933-1938, and increased funding for continuing federal grant-in-aid
programs from $214 million in 1932 to $790 million in 1938.40
16 new, continuing federal grants to state and local governments from 1933 to 1938, and
increased funding for federal grants to states and local governments from $214 million in FY1932
to $790 million in FY1938.49
Congress also enacted several temporary, emergency relief grant-in-aid programs that distributed
federal funds to states according to the state’s fiscal capacity. Congress devised mathematical
formulas, based on a variety of economic and business measures, to allocate funding to each state,
resulting in the share of relief funds varying among states based on the formula’s assessment of
need. At their peak, in 1935, emergency relief measures provided states nearly $1.9 billion to
create jobs and provide emergency assistance for the unemployed. The emergency relief
programs were terminated during the 1940s, but they established a precedent for extensive federal
involvement with state and local governments in areas of national concern and for the use of
mathematical formulas for distributing federal assistance. 4150
The Social Security Act of 1935 (SSA) was, arguably, the most significant legislative enactment
of the New Deal period. It established a federal presence in social welfare policy. New grant-inaidfederal
grant-in-aid programs were established for old age assistance, aid to the blind, aid to dependent
children,
unemployment compensation, maternal and child health, crippled children, and child
welfare.
Also, federal oversight of grant-in-aid spendinggrants to state and local governments was enhanced as auditing
requirements were now
required in almost all grant programs. Also, in 1939, state employees
administering SSA
programs were required to be selected by merit system procedures, a major
advancement for the
development of professional state and local government administration and a
signal of the
declining influence of state and local party bosses in American society. In 1940, the
Hatch Act
restricted the political activities of state and local government employees paid with federal
funds.42
federal funds.51
49
ACIR, Categorical Grants: Their Role and Design, A-52, 1978, pp. 18-19, at http://www.library.unt.edu/gpo/acir/
Reports/policy/a-52.pdf.
50
Ibid., p. 18.
51
Ibid., p. 20.
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Legally, New Deal legislation was based on an expanded interpretation of congressional authority
to spend through grant-in-aid programs to promote the nation’s welfare under Article 1, Section 8,
clause 1 of the Constitution, often referred to as the congressional “spending power.” Federal
expenditures through grant-in-aid programs during the New Deal were made in several functional
areas, including some, such as social welfare, that were traditionally viewed as state
responsibilities. Opponents of an expanded role for the federal government in domestic policy
argued that New Deal grant programs precluded state action in these traditionally state functional
areas and, as such, violated the Constitution’s Tenth Amendment. Advocates of an expansion of
federal involvement in domestic affairs argued that the power of Congress to spend is more
extensive than, rather than concurrent with, enumerated or even implied law-making powers. This
disagreement led to a number of Supreme Court cases, a full discussion of which is beyond the
scope of this report. The Supreme Court rejected the New Deal’s expansion of federal authority in
eight8 of the first ten10 cases that it decided. Then, after President Roosevelt’s failed legislative
proposal proposal
to “pack the Court” in 1937, the Supreme Court upheld the constitutionality of several
New Deal
laws, including the Social Security Act.4352 As one federalism scholar noted:
40
ACIR, Categorical Grants: Their Role and Design, A-52 (Washington, DC: GPO, 1978), pp. 18, 19.
Ibid., p. 18.
42
Ibid., p. 20.
43
David B. Walker, The Rebirth of Federalism, 2nd ed. (New York: Chatham House Publishers, 2000), p. 91. Note:
President Roosevelt proposed that he be given the authority to appoint another judge for each one who had served ten
years or more and had not retired within six months of their 70th birthday. A maximum of 50 such appointments were
to be permitted, and the Supreme Court’s size was to be increased to 15.
41
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a federalism scholar noted:
A new era of judicial construction had been launched. The commerce power was given broad
interpretation in cases upholding the Labor Relations Act. The older distinction between
direct and indirect effects of commercial activity was abandoned and the more realistic
“stream-of-commerce” concept adopted. The scope of Federal taxing power was also
broadened expansively. In sanctioning the Social Security Act, the unemployment excise tax
on employers was upheld as a legitimate use of the tax power, and the grants to the states
were viewed as examples of Federal-state collaboration, not Federal coercion. The act’s oldage and benefit provisions were deemed to be proper because “Congress may spend money
in aid of general welfare.” When combined, these decisions obviously amounted to last rites
for judicial dual federalism.4453
Although the Supreme Court was no longer viewed as a major obstacle for the expansion of
grant-in-aid programs the
federal grants-in-aid system, external factors led to a reduction in federal assistance from 1939 to 1946
outlays for federal grants to
state and local governments from FY1939 to FY1946 as Congress focused on defense-related
issues during World War II. For example, federal grantin-aid funding outlays for federal grants to state and local governments
averaged $947 million from 1939FY1939 through 1946FY1946, less than half of the New Deal’s
peak.
Following the War, the number of federal grant-in-aid programsgrants to state and local governments began to increase at an
at a somewhat accelerated pace, from 29 in 1945, to 71 in 1952, and to 132 in 1960.45 Federal funding for
grants-in-aidreaching 68 grants in 1950 and 132 grants in 1960. Outlays for
federal grants to state and local governments also accelerated, from $917859 million in 1945, to FY1945, to
$2.3 billion in 1952, and to $7
FY1950, to $3.2 billion in FY1955, and to $7 billion in 1960.54 A new
development was increased funding foroutlays targeted at urban areas, such as grants for
airport construction
(1946), urban renewal (1949), and urban planning (1954).55 The most significant federal grant-inaid The most
significant grant-in-aid program enacted during the 1950s was the $25 billion, 13-year FederalAidFederal-Aid Highway Act of
1956, which authorized the construction of the then-41,000 mile National
System of Interstate and Defense Highways, with a 1972 target completion date. For the next
thirty-five years, federal surface transportation policy focused on the completion of the interstate
system. 46
52
David B. Walker, The Rebirth of Federalism, 2nd ed. (New York: Chatham House Publishers, 2000), p. 91. Note:
President Roosevelt proposed that he be given the authority to appoint another judge for each one who had served 10
years or more and had not retired within six months of their 70th birthday. A maximum of 50 such appointments were
to be permitted, and the Supreme Court’s size was to be increased to 15.
53
Ibid., p. 92.
54
U.S. Office of Management and Budget, Budget of the United States Government, Fiscal Year 2014: Historical
Tables, p. 257, at http://www.whitehouse.gov/sites/default/files/omb/budget/fy2014/assets/hist.pdf.
55
ACIR, Categorical Grants: Their Role and Design, A-52, 1978, p. 23, at http://www.library.unt.edu/gpo/acir/
Reports/policy/a-52.pdf.
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and Defense Highways, with a 1972 target completion date. For the next 35 years, federal surface
transportation policy focused on the completion of the interstate system.56
The Great Society and The Rise of “Coercive
Federalism”: 1960-1980
The 1960s was a turbulent decade, marked by both political and social upheaval of historic
proportions. Three leading public figures were assassinated, President John F. Kennedy in 1963,
civil rights leader the Reverend Martin Luther King, Jr. in 1968, and President Kennedy’s brother,
presidential candidate and Senator Robert Kennedy in 1968. The civil rights movement, led by
the Reverend King, was often met with violent resistance, with bombings of black churches,
murders of civil rights workers, and televised police beatings of civil rights demonstrators. One of
the defining moments of the civil rights movement was the march on Washington D.C., DC, in August
1963, where the Reverend King made his famous “I Have A Dream” speech. Congress responded
to the social turmoil by adopting the Civil Rights Act of 1964, which superseded state civil rights
laws by prohibiting discrimination based on race, color, religion, or national origin; the Voting
Rights Act of 1965 which superseded state election laws by outlawing literacy tests, poll taxes,
and other means to discourage minority voting; and the Civil Rights Act of 1968 which
44
45
Ibid., p. 92.
ACIR, Categorical Grants: Their Role and Design, A-52 (Washington, DC: GPO, 1978), pp. 22-24.
46
For further analysis, see CRS Report R40431, Federalism Issues in Surface Transportation Policy: Past and Present,
by Robert Jay Dilger; and CRS Report R40053, Surface Transportation Program Reauthorization Issues for the 111th
Congress, coordinated by John W. Fischer.
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superseded state civil rights laws by prohibiting discrimination in the sale, rental, and financing of
housing. Nonetheless, race riots took place in several urban areas in 1965 and in 1967.4757
During the latter half of the decade, the civil rights movement was joined by what has been called
the hippie movement, where young people rebelled against the conservative norms of the time
and disassociated themselves from mainstream liberalism and materialism. This “counterculture”
movement began in the United States and sparked a social revolution throughout much of the
westernWestern world. It began as a reaction against the conservatism and social conformity of the
1950s,
and the U.S. government’s military intervention in Vietnam. These groups questioned authority
authority and government, demanded more freedom and rights for women, gays, and minorities, and
and greater awareness of the need to protect the environment and address poverty.
The social movements and social unrest that sweepswept across the nation during the 1960s had a
strong impact on Congress. Reflecting the growing public demand for congressional action to
address civil rights, poverty, and the environment, in 1961 the House approved, 217-212, a
proposal by Speaker Sam Rayburn to enlarge the House Rules Committee from 12 to 15
membersMembers. Prior to the change, the House Rules Committee was divided, 6 to 6, along ideological
lines. Because a majority vote is necessary for the issuance of a legislative rule, the House Rules
Committee served as an institutional barrier to the passage of legislation that the committee’s
more conservative membersMembers believed infringed on states’ rights, including civil rights
legislation.48
58
56
For further analysis, see CRS Report R40431, Federalism Issues in Surface Transportation Policy: A Historical
Perspective, by Robert Jay Dilger; and CRS Report R40053, Surface Transportation Program Reauthorization Issues
for the 111th Congress, coordinated by John W. Fischer.
57
David B. Walker, The Rebirth of Federalism: Slouching Toward Washington (Chatham, NJ: Chatham House
Publishers, Inc., 1995), p. 125; and Theodore H. White, America In Search of Itself (New York: Harper & Row,
Publishers, 1982), p. 108.
58
David W. Rohde, “Committee Reform in the House of Representatives and the Subcommittee Bill of Rights,” Annals
(continued...)
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The enlargement of the House Rules Committee in 1961 signaled the weakening of the
conservative coalition’s influence within Congress and enabled the large Democratic majorities
elected during the early 1960s in the House and Senate to adopt a succession of civil rights laws,
highlighted by the previously mentioned Civil Rights Act of 1964. It also enabled Congress to
increase dramatically, both in terms of numbers and funding, federal grants-in-aid to state and
local governmentsexpand the federal grants-in-aid system, focusing on grants designed to protect the environment
and address poverty, both directly through
public assistance and job training programs and
indirectly through education, housing, nutrition,
and health care programs.
These legislative efforts were both supported and encouraged by President Lyndon Baines
Johnson. For example, during his commencement address at the University of Michigan on May
22, 1964, President Johnson announced that he would establish working groups to prepare a
series of White House conferences and meetings to develop legislative proposals to revitalize
urban America, address environmental problems, and improve educational opportunities “to begin
to set our course toward the Great Society” which “demands an end to poverty and racial
injustice, to which we are totally committed.”4959 The term “The Great Society” came to symbolize
legislative efforts during the 1960s to address poverty and racial injustice.
In concert with President Johnson’s Great Society initiatives, Congress increased dramatically the
number of federal grant-in-aid programsnearly tripled the number
of federal grants to state and local governments during the 1960s, from 132 in 1960 to 387 in
1968. In
1965 alone, 109 grant-in-aid programsfederal grants to state and local governments were adopted, including Medicaid, which now has, by far,
47
David B. Walker, The Rebirth of Federalism: Slouching Toward Washington (Chatham, NJ: Chatham House
Publishers, Inc., 1995), p. 125; and Theodore H. White, America In Search of Itself (New York: Harper & Row,
Publishers, 1982), p. 108.
48
David W. Rohde, “Committee Reform in the House of Representatives and the Subcommittee Bill of Rights,” Annals
of the American Academy of Political and Social Science, vol. 411, no. 1 (January 1974): 40, 41.
49
President Lyndon Baines Johnson, “Remarks at the University of Michigan, May 22, 1964,” Lyndon Baines Johnson
Library and Museum, Austin, TX, http://www.lbjlib.utexas.edu/johnson/archives.hom/speeches.hom/640522.asp.
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Medicaid, which now has, by far, the largest budget of any federal grant-in-aid program. Funding for grants-in-aidOutlays
for federal grants to state and local governments also increased, from $7
billion in 1960FY1960 to $20
billion in 1969FY1969. Functionally, grant-in-aid fundingfederal grants for health care increased
from $214 million in 1960
FY1960 to $3.8 billion in 1970FY1970, for income security from $2.6 billion to $5.7
billion, for
education, training, employment, and social services from $525 million to $6.4 billion,
for for
transportation from $3 billion to $4.6 billion, and for community and regional development
from from
$109 million to $1.7 billion.5060
For the most part, these legislative efforts were not opposed by state and local government
officials and their affiliated public interest groups (e.g., National Governors Association, National
League of Cities, U.S. Conference of Mayors, and National Association of Counties, etc.), primarily
because federal grant-in-aid programsgrants are voluntary and, in many instances, provided funding for
activities that
had broad public support. However, the new grants had a number of innovative
features that
distinguished them from their predecessors. Previously, most federal grant-in-aid
programsgrants to state and local
governments supplemented existing state efforts and, generally, did not intrude on state and local
government prerogatives. Most of the federal grants created during the 1960s, on the other hand, were
were designed purposively by Congress to encourage state and local governments to move into new
new policy areas, or to expand efforts in areas identified by Congress as national priorities, especially
especially in environmental protection and water treatment, education, public assistance, and urban
renewal.51
urban renewal.61
(...continued)
of the American Academy of Political and Social Science, vol. 411, no. 1 (January 1974): 40, 41.
59
President Lyndon Baines Johnson, “Remarks at the University of Michigan, May 22, 1964,” Lyndon Baines Johnson
Library and Museum, Austin, TX, at http://www.lbjlib.utexas.edu/johnson/archives.hom/speeches.hom/640522.asp.
60
U.S. Department of Commerce, Bureau of the Census, Historical Statistics of the United States, Colonial Times to
1970, Part 2, pp. 1123, 1125, at http://www2.census.gov/prod2/statcomp/documents/CT1970p2-12.pdf.
61
ACIR, An Agenda for American Federalism: Restoring Confidence and Competence, A-86, 1981, pp. 1-3, at
http://www.library.unt.edu/gpo/acir/Reports/policy/a-86.pdf; and James Sundquist, Making Federalism Work
(continued...)
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There also was an increased emphasis on narrowly focused project, categorical grants to ensure
that state and local governments were addressing national needs. In addition, most of the new
grants had relatively low, or no, matching requirements, to encourage state and local government
participation. There were also new incentive grants to encourage states to move into new policy
areas, and a diversification of eligible grant recipients, including individuals, non-profit
organizations, and specialized public institutions, such as universities. There was also a greater
emphasis on grants to urban areas. For example, federal grant outlays targeted to metropolitan
outlays for federal grants targeted at
metropolitan areas more than tripled during the 1960s, and grew to include about 70% of total
federal grant
-in-aid funding, up from about 55% at the beginning of the decade. There was also a
greater emphasis on
mandated planning requirements.5262
Although most of the federal grants adopted during the 1960s were narrowly focused project, categorical
categorical grants, the first two block grants were enacted during this time period. The Partnership for Public
Health Act of 1966P.L. 89-749,
the Comprehensive Health Planning and Public Health Services Amendments of 1966, later
known as the Partnership for Public Health Act, created a block grant for comprehensive health
care services (now the
Preventive Health and Health Services Block Grant). It replaced nine
formula categorical
grants.5363 Two years later, Congress created the second block grant, the Law Enforcement
Enforcement Assistance Administration’s Grants for Law Enforcement program (sometimes referred to as the
50
U.S. Department of Commerce, Bureau of the Census, Historical Statistics of the United States, Colonial Times to
1970, Part 2 (Washington, DC: GPO, 1975), pp. 1123, 1125, http://www2.census.gov/prod2/statcomp/documents/
CT1970p2-12.pdf.
51
ACIR, An Agenda for American Federalism: Restoring Confidence and Competence, A-86 (Washington, DC: GPO,
1981), pp. 1-3; and James Sundquist, Making Federalism Work (Washington, DC: The Brookings Institution, 1969), p.
3.
52
ACIR, Fiscal Balance in the American Federal System, Volume 1: Basic Structure of Fiscal Federalism, A-31
(Washington, DC: GPO, 1967), pp. 150-184.
53
David B. Walker, The Rebirth of Federalism: Slouching Toward Washington (Chatham, NJ: Chatham House
Publishers, Inc., 1995), pp. 70-71; and Kenneth T. Palmer, “The Evolution of Grant Policies,” in The Changing Politics
of Federal Grants, eds. Lawrence D. Brown, James W. Fossett and Kenneth T. Palmer (Washington, DC: The
Brookings Institution Press, 1984), pp. 18-20.
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referred to as the “Crime Control” or “Safe Streets” block grant) in the Omnibus Crime Control
and Safe Streets
Act of 1968.5464 Unlike the health care services block grant, it was created de
novo, and did not
consolidate any existing categorical grants.5565
The rapid expansion of grants-in-aidfederal grants to state and local governments during the 1960s led to a
growing concern that the
intergovernmental grant-in-aid system had become dysfunctional and in need of reform. For
needed to be reformed. For example, ACIR argued that along with the expansion of the federal
grant system came “a rising chorus of
complaints from state and local government officials”
concerning the inflexibility of fiscal and
administrative requirements attached to the grants.56 It 66 It
suggested that state and local government
officials were subjected to an information gap because
they found it difficult to keep up with the
host of new federal grant-in-aid programs and administrative requirements.
It also cited the need
for improved coordination among programs, noting that many state and
local government
officials were reporting administrative difficulties dealing with federal agencies
and those
agencies’ regional offices:
Between 1962 and 1965 four new systems of regional offices were established as a
consequence of grants-in-aid legislation. Adding these bodies to the separate, already
(...continued)
(Washington, DC: The Brookings Institution, 1969), p. 3.
62
ACIR, Fiscal Balance in the American Federal System, Volume 1: Basic Structure of Fiscal Federalism, A-31, 1967,
pp. 150-184, at http://www.library.unt.edu/gpo/acir/Reports/policy/a-31-1.pdf.
63
David B. Walker, The Rebirth of Federalism: Slouching Toward Washington (Chatham, NJ: Chatham House
Publishers, Inc., 1995), pp. 70-71; and Kenneth T. Palmer, “The Evolution of Grant Policies,” in The Changing Politics
of Federal Grants, eds. Lawrence D. Brown, James W. Fossett and Kenneth T. Palmer (Washington, DC: The
Brookings Institution Press, 1984), pp. 18-20.
64
Carl W. Stenberg, “Block Grants and Devolution: A Future Tool?” in Intergovernmental Management for the 21st
Century, eds. Timothy J. Conlan and Paul L. Posner (Washington, DC: Brookings Institution Press, 2008), p. 266.
65
ACIR, The Future of Federalism in the 1980s, M-126, July 1980, p. 51, at http://www.library.unt.edu/gpo/acir/
Reports/information/M-126.pdf.
66
ACIR, Categorical Grants: Their Role and Design, A-52, 1978, p. 29, at http://www.library.unt.edu/gpo/acir/
Reports/policy/a-52.pdf.
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existing regional structures brought the total number of regional systems to 12. Regional
boundaries and field office locations varied widely. Kentucky, to cite the most extreme case,
had to deal with federal agencies in ten different cities. This confusion imposed burdens on
the recipients of grants and also made the task of coordinating operations by federal agencies
in pursuit of national objectives more difficult.5767
During the 1970s, President Richard Nixon and his successor, President Gerald R. Ford, argued
that the intergovernmental grant-in-aid system was dysfunctional and advocated the sorting out of
governmental responsibilities, with the federal government taking the lead in some functional
areas and states in others. They also advocated a shift from narrowly focused categorical grants,
especially project categorical grants, toward block grants and revenue sharing. They argued that
block grants and general revenue sharing provided state and local governments additional
flexibility in project selection and promoted program efficiency by reducing administrative costs.
They, and others, believed that state and local governments should be provided additional
flexibility in project selection and relief from federal administrative requirements because:
•
greater reliance on state and local governments promotes a sense of state and
local community responsibility and self-reliance;
•
state and local government officials are closer to the people than federal
administrators and, as a result, are better positioned to discern and adapt public
programs to state and local needs and conditions;
•
state and local governments encourage participation and civic responsibility by
allowing more people to become involved in public questions;
54
Carl W. Stenberg, “Block Grants and Devolution: A Future Tool?” in Intergovernmental Management for the 21st
Century, eds. Timothy J. Conlan and Paul L. Posner (Washington, DC: Brookings Institution Press, 2008), p. 266.
55
ACIR, The Future of Federalism in the 1980s, M-126 (Washington, DC: GPO, July 1980), p. 51.
56
ACIR, Categorical Grants: Their Role and Design, A-52 (Washington, DC: GPO, 1978), p. 29.
57
Ibid., and ACIR, Fiscal Balance in the American Federal System, Vol. 1, A-31 (Washington, DC: GPO, 1967), pp.
181-184.
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•
active state and local governments encourage experimentation and innovation in
public policy design and implementation;
•
active state and local governments reduce administrative work load on the federal
government which creates program efficiencies; and
•
active state and local governments reduce the political turmoil that sometimes
results from single policies that govern the entire nation.5868
Opponents of a shift from categorical grants to block grants and revenue sharing presented
several arguments, including
•
because funding comes from the federal treasury, Congress has both the right and
thean obligation to determine how that money is spent;
•
many state and local governments lack the fiscal resources to provide levels of
government services necessary to provide the poor and disadvantaged a
minimum standard of living and equal access to governmental services, such as
education and health care, thatwhich are essential to economic success. Therefore,
Congress must act to ensure uniform levels of essential governmental services
throughout the nation;
67
Ibid., and ACIR, Fiscal Balance in the American Federal System, Vol. 1, A-31,1967, pp. 181-184, at
http://www.library.unt.edu/gpo/acir/Reports/policy/a-31-1.pdf.
68
Thomas R. Dye, Understanding Public Policy, 6th ed. (Englewood Cliffs, NJ: Prentice-Hall, Inc., 1987), p. 301.
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•
state and local governments that have the fiscal resources to provide levels of
government services necessary to provide the poor and disadvantaged a
minimum standard of living and equal access to governmental services essential
to economic success are often unable to do so because they compete with other
state and local governments for business and taxpaying residents. As a result,
state and local governments tend to focus available resources on programs
designed to attract business investment and taxpaying residents to their
communities and states rather than on programs assisting the poor and
disadvantaged. Therefore, Congress must act to ensure uniform levels of essential
governmental services throughout the nation;
•
Congress has both the right and the obligation to ensure through the carrot of
grant-in-aid programs and the stick of federal requirements that certain national
goals, such as civil rights, equal employment opportunities, protection for the
environment, and care for the poor and aged, are met because it is difficult to
achieve change when reform-minded citizens must deal with 50 state
governments and more than 79,000 local governments; and
•
there are some governmental services that have either costs or benefits that spill
over onto
other localities or states. Water and air pollution controls, for example,
benefit benefit
not only the local community that pays for the air or water pollution
controls, but
all of the communities that are located downwind or downstream
from that
community. Because state and local taxpayers are generally reluctant to
pay for
programs whose benefits go to others, state and local governments often
underfund programs with significant spillover effects. Therefore, Congress must
act to ensure that these programs are funded at logical levels.59
58
Thomas R. Dye, Understanding Public Policy, 6th ed. (Englewood Cliffs, NJ: Prentice-Hall, Inc., 1987), p. 301.
ACIR, Categorical Grants: Their Role and Design, A-52 (Washington, DC: GPO, 1978), pp. 50-58; Claude E.
Barfield, Rethinking Federalism: Block Grants and Federal, State, and Local Responsibilities (Washington, DC:
(continued...)
59
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Opponents also asserted that the arguments presented by advocates for a shift in emphasis to
block grants and revenue sharing were actually a “smoke screen” masking their true intent which,
allegedly, was to shift federal resources to their core constituencies. As mentioned previously,
most federal grant-in-aid funding during the 1960s and 1970s was targeted to metropolitan areas,
which,
at that time, were considered Democratic Party strongholds. Many observers believed that
shifting from project categorical grants to block grants or general revenue sharing would result in
less money for metropolitan areas and more money for suburban and rural areas, areas that were
more likely to be populated by Republicans than Democrats. This shift would occur because
project categorical grants are awarded on a competitive basis by federal administrators while
block grant and revenue sharing funding is allocated according to pre-determined formula, often
with minimum funding guarantees for each state and with a portion of the funding determined by
either population and/or per capita income. Because block grant and revenue sharing funding
tends to
be more geographically dispersed than project categorical grants, congressional debates
over over
which grant mechanism was best had partisan overtones that often transcended discussions
over over
which grant mechanism would improve grant performance.
Some federalism scholars have also suggested that Congress tends to prefer categorical grants
over block grants and revenue sharing because Members take pride in the authorship of sponsored
programs. They argue that categorical grants provide more opportunities for sponsorship, and
69
ACIR, Categorical Grants: Their Role and Design, A-52 (Washington, DC: GPO, 1978), pp. 50-58; Claude E.
Barfield, Rethinking Federalism: Block Grants and Federal, State, and Local Responsibilities (Washington, DC:
American Enterprise Institute for Public Policy Research, 1981), pp. 4-8; and Thomas R. Dye, Understanding Public
Policy, 6th ed. (Englewood Cliffs, NJ: Prentice-Hall, Inc., 1987), p. 300.
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Federal Grants to State and Local Governments
more opportunities for receiving political credit for that sponsorship, than block grants or revenue
sharing. In their view, constituents are more interested in a Members’ ability to serve in a material
way than in their competence in broad policymaking or in “the rightness of positions on issues of
principle, form or structure.”6070 As a result, they argue that Members are more likely to be
recognized for sponsoring or supporting specific, narrowly focused categorical grants than by
championing a more general block grant or revenue sharing approach. For example, they assert
that Members are more likely to receive recognition and political credit from constituents for
sponsoring and supporting legislation to prevent lead-based paint poisoning among children than
for legislation covering the broad area of preventativepreventive health services. 6171
Presidents Nixon and Ford’s efforts to gain congressional approval for a shift in emphasis from
categorical grants to block grants and revenue sharing were only partially successful. For
example, in his 1971 State of the Union speech, President Nixon announced a plan to consolidate
129 federal grant programs in six functional areas, 33 in education, 26 in transportation, 12 in
urban community development, 17 in manpower training, 39 in rural community development,
and 2 in law enforcement into what he called six “special revenue sharing” programs. Unlike the
categorical grants they would replace, the proposed special revenue sharing programs had no state
matching requirements, relatively few auditing or oversight requirements, and the funds were
distributed automatically by formula without prior federal approval of plans for their use.62
(...continued)
American Enterprise Institute for Public Policy Research, 1981), pp. 4-8; and Thomas R. Dye, Understanding Public
Policy, 6th ed. (Englewood Cliffs, NJ: Prentice-Hall, Inc., 1987), p. 300.
60
72
The education, transportation, rural community development, and law enforcement proposals
failed to gain congressional approval, primarily because they generated opposition from interest
groups affiliated with the programs who worried that the programs’ future funding would be
compromised.73 However, three block grants, the first signed by President Nixon and the
remaining two signed by President Ford, were approved.
The Comprehensive Employment and Training Assistance Block Grant program, created by the
Comprehensive Employment and Training Act of 1973, merged 17 existing manpower training
categorical grant programs. The Community Development Block Grant program (CDBG),
created by the Housing and Community Development Act of 1974, consolidated six existing
community and economic development categorical grant programs.74 Title XX social services,
later renamed the Social Services Block Grant program, was created de novo and, therefore, did
not consolidate any existing categorical grant programs. It was authorized by the 1974
amendments of the Social Security Act which was signed into law on January 4, 1975.75 Also, in
70
Roger H. Davidson, “Representation and Congressional Committees,” The Annals of the American Academy of
Political and Social Science, vol. 411, no. 1 (January 1974), p. 50.
6171
ACIR, Categorical Grants: Their Role and Design, A-52 (Washington, DC: GPO, 1978), p. 65; and David Mayhew,
, 1978, p. 65, at http://www.library.unt.edu/gpo/acir/
Reports/policy/a-52.pdf; and David Mayhew, “Congressional Elections: The Case of the Vanishing Marginals,” Polity,
vol. VI, no. 3 (Spring 1974), pp. 295-317.
6272
Claude E. Barfield, Rethinking Federalism: Block Grants and Federal, State, and Local Responsibilities
(Washington, DC: American Enterprise Institute for Public Policy Research, 1981), p. 3.
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The education, transportation, rural community development, and law enforcement proposals
failed to gain congressional approval, primarily because they generated opposition from interest
groups affiliated with the programs who worried that the programs’ future funding would be
compromised. 63 However, three block grants, the first signed by President Nixon and the
remaining two signed by President Ford, were approved.
The Comprehensive Employment and Training Assistance Block Grant program, created by the
Comprehensive Employment and Training Act of 1973, merged 17 existing manpower training
categorical grant programs. The Community Development Block Grant program (CDBG),
created by the Housing and Community Development Act of 1974, consolidated six existing
community and economic development categorical grant programs.64 Title XX social services,
later renamed the Social Services Block Grant program, was created de novo and, therefore, did
not consolidate any existing categorical grant programs. It was authorized by the 1974
amendments of the Social Security Act which was signed into law on January 4, 1975.65 Also, in
73
Timothy Conlan, From New Federalism to Devolution: Twenty-Five Years of Intergovernmental Reform
(Washington, DC: The Brookings Institution, 1998), p. 62.
74
Note: Most sources indicate that CDBG merged 7 categorical grant programs. However, one of the categorical grant
programs initially designated for consolidation, the Section 312 Housing Rehabilitation Loan program, was retained as
a separate program. See ACIR, Block Grants: A Comparative Analysis, A-60, 1977, p. 7, at http://www.library.unt.edu/
gpo/acir/Reports/policy/A-60.pdf.
75
Carl W. Stenberg, “Block Grants and Devolution: A Future Tool?” in Intergovernmental Management for the 21st
Century, eds. Timothy J. Conlan and Paul L. Posner (Washington, DC: Brookings Institution Press, 2008), p. 266;
ACIR, In Respect to Realities: A Report on Federalism in 1975, M-103, April 1976, pp. 16-20, at
(continued...)
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1972, general revenue sharing was approved by Congress. General revenue sharing distributed
funds to states from 1972- to 1981 and to localities from 1972- to 1986.
Nevertheless, Congress retained an emphasis on the use of categorical grants. On December 31,
1980, there were 534 categorical grant programs, 45 block grant programs and 1 general revenue
sharing program. Of the categorical grant programs, 361 were project categorical grants, 42 were
project, formula categorical grants, 111 were formula categorical grants, and 20 were open-ended
reimbursement categorical grants.6676 Overall, categorical grants accounted for 79.3% of the $91.3
billion in federal grant-in-aid fundingoutlays for federal grants to state and local governments that year, block grants
accounted for 11.3% and general
revenue sharing 9.4%.6777
Efforts to sort out governmental responsibilities were also met with resistance in Congress. For
example, President Nixon’s six special revenue sharing proposals would have provided state and
local governments the leading role in decision-making in those six functional areas. Also, his
proposed Family Assistance Plan would have replaced several public assistance categorical grant
programs with a national public assistance system covering all low-income families with
children. Although his Family Assistance Plan was not adopted, Congress did nationalize several
adult-age public assistance grant-in-aid programs in 1972, including old-age assistance, aid to the
blind, and aid to the permanently and totally disabled. 68
63
Timothy Conlan, From New Federalism to Devolution: Twenty-Five Years of Intergovernmental Reform
(Washington, DC: The Brookings Institution, 1998), p. 62.
64
Note: Most sources indicate that CDBG merged 7 categorical grant programs. However, one of the categorical grant
programs initially designated for consolidation, the Section 312 Housing Rehabilitation Loan program, was retained as
a separate program. See ACIR, Block Grants: A Comparative Analysis, A-60 (Washington, DC: GPO, 1977), p. 7.
65
Carl W. Stenberg, “Block Grants and Devolution: A Future Tool?” in Intergovernmental Management for the 21st
Century, eds. Timothy J. Conlan and Paul L. Posner (Washington, DC: Brookings Institution Press, 2008), p. 266;
ACIR, In Respect to Realities: A Report on Federalism in 1975, M-103 (Washington, DC: GPO, April 1976), pp. 1620; and ACIR, Block Grants: A Comparative Analysis, A-60 (Washington, DC: GPO, 1977), pp. 15-4078
Another Related Development: Federal Mandates
Another related, new development during the 1960s and 1970s was the imposition by Congress of
numerous federal mandates on state and local government officials. The concept of mandates
covers a broad range of policy actions with centralizing effects on the intergovernmental system,
including statutory direct-order mandates, both total and partial statutory preemption of state and
local government law, federal tax policies affecting state and local tax bases, and regulatory
action taken by federal courts and agencies. Many federalism scholars also consider program
specific and crosscutting federal grant administrative conditions mandates, even though the grants
themselves are voluntary.79
Crosscutting requirements are, perhaps, the most widely recognized mandate. They are a
condition of federal assistance that applies across-the-board to all, or most, federal grants to
advance a national social or economic goal. Title VI of the Civil Rights Act of 1964 was the first
post-World War II statute to use a crosscutting requirement. It specifies that
(...continued)
http://www.library.unt.edu/gpo/acir/Reports/information/m-103.pdf; and ACIR, Block Grants: A Comparative
Analysis, A-60, 1977, pp. 15-40, at http://www.library.unt.edu/gpo/acir/Reports/policy/A-60.pdf. Note: Title XX
initially had all of the characteristics of a block grant and ACIR counted it as a block grant since its inception, but it
was not formally called a block grant program until 1981.
6676
ACIR, A Catalog of Federal Grant-In-Aid Programs to State and Local Governments: Grants Funded FY 1981, M133 (Washington, DC: GPO, 1982), pp. 1-3.
67, 1982, pp. 1-3, at http://www.library.unt.edu/gpo/acir/Reports/information/M-133cat.pdf.
77
U.S. Office of Management and Budget, Special Analyses: Budget of the United States Government, FY 1984
(Washington, DC: GPO, 1983), p. H-20.
68
David B. Walker, The Rebirth of Federalism, 2nd ed. (New York: Chatham House Publishers, 2000), p. 127.
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Another Related Development: Federal Mandates
Another related, new development during the 1960s and 1970s was the imposition by Congress of
numerous federal mandates on state and local government officials. The concept of mandates
covers a broad range of policy actions with centralizing effects on the intergovernmental system,
including statutory direct-order mandates, both total and partial statutory preemption of state and
local government law, federal tax policies affecting state and local tax bases, and regulatory
action taken by federal courts and agencies. Many federalism scholars also consider program
specific and crosscutting grant-in-aid conditions mandates, even though the grants themselves are
voluntary.69
Crosscutting requirements are, perhaps, the most widely recognized mandate. They are a
condition of federal assistance that applies across-the-board to all, or most, federal grants to
advance a national social or economic goal. Title VI of the Civil Rights Act of 1964 was the first
post-World War II statute to use a crosscutting requirement. It specifies that:
, p. H20.
78
David B. Walker, The Rebirth of Federalism, 2nd ed. (New York: Chatham House Publishers, 2000), p. 127.
79
Paul L. Posner, “Mandates: The Politics of Coercive Federalism,” in Intergovernmental Management for the 21st
Century, eds. Timothy J. Conlan and Paul L. Posner (Washington, DC: Brookings Institution Press, 2008), p. 287.
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No person in the United States shall, on the ground of race, color, or national origin, be
excluded from participation in, be denied the benefits of, or be subjected to discrimination
under any program receiving Federal financial assistance.7080
In 1980, the U.S. Office of Management and Budget counted 59 crosscutting requirements
intended to further national social or economic goals in a variety of functional areas, including
education and the environment. 7181
Some of the statutory direct-order mandates adopted during this era included the Equal
Employment Opportunity Act of 1972, which extended the prohibitions against discrimination in
employment contained in the Civil Rights Act of 1964 to state and local government employment;
the Fair Labor Standards Act Amendments of 1974, which extended the prohibitions against age
discrimination in the Age Discrimination in Employment Act of 1967 to state and local
government employment; and the Public Utilities Regulatory Policy Act of 1978, which
established federal requirements concerning the pricing of electricity and natural gas.7282
ACIR suggested that the expansion of federal intergovernmental regulatory activity during the
1960s and 1970s fundamentally changed the nature of intergovernmental relations in the United
States:
During the 1960s and 1970s, state and local governments for the first time were brought
under extensive federal regulatory controls.... Over this period, national controls have been
adopted affecting public functions and services ranging from automobile inspection, animal
preservation and college athletics to waste treatment and waste disposal. In field after field
the power to set standards and determine methods of compliance has shifted from the states
and localities to Washington.73
69
Paul L. Posner, “Mandates: The Politics of Coercive Federalism,” in Intergovernmental Management for the 21st
Century, eds. Timothy J. Conlan and Paul L. Posner (Washington, DC: Brookings Institution Press, 2008), p. 287.
70
83
The continued emphasis on categorical grants, the increased emphasis on provisions encouraging
states to move in new policy directions, and, especially, the increased imposition of federal
mandates on state and local governments during the 1960s and 1970s led some federalism
scholars to label the 1960s and 1970s as the beginnings of a shift toward “coercive federalism.”84
Cooperative features were still present, but congressional deference to state and local government
prerogatives seen in previous eras was no longer in force. Instead of focusing primarily on the
“carrot” of federal assistance to encourage state and local governments to pursue policies that
aligned with national goals, Congress increasingly relied on the “stick” of federal mandates.
80
42 U.S.C. 2000d cited in ACIR, Regulatory Federalism: Policy, Process, Impact, and Reform (Washington, DC:
GPO, A-95, 1984), p. 71.
71, p. 71, at
http://www.library.unt.edu/gpo/acir/Reports/policy/a-95.pdf.
81
ACIR, Regulatory Federalism: Policy, Process, Impact, and Reform (Washington, DC: GPO, A-95, 1984), p. 71.
72
Ibid., p. 88.
73
Ibid., p. 246.
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The continued emphasis on categorical grants, the increased emphasis on provisions encouraging
states to move in new policy directions, and, especially, the increased imposition of federal
mandates on state and local governments during the 1960s and 1970s led some federalism
scholars to label the 1960s and 1970s as the beginnings of a shift toward “coercive federalism.”74
Cooperative features were still present, but congressional deference to state and local government
prerogatives seen in previous eras was no longer in force. Instead of focusing primarily on the
“carrot” of federal assistance to encourage state and local governments to pursue polices that
aligned with national goals, Congress increasingly relied on the “stick” of federal mandates., p. 71, at
http://www.library.unt.edu/gpo/acir/Reports/policy/a-95.pdf.
82
Ibid., p. 88.
83
Ibid., p. 246.
84
John Kincaid, “From Cooperative to Coercive Federalism,” The Annals of the American Academy of Political and
Social Science, vol. 509, no. 1 (1990), pp. 139-152. Note: the term coercive is often used in legal arguments to suggest
that provisions of law related to federal grants-in-aid do not have constitutional standing. Federalism scholars use the
term to describe, as Kincaid explained it (p. 139), the shift in emphasis “from fiscal tools to stimulate
intergovernmental policy cooperation” to an increased reliance on “regulatory tools to ensure the supremacy of federal
policy.”
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Congress Asserts Its Authority: The Devolution
Revolution That Wasn’t, 1980-2000
By the end of the 1970s, the social turmoil that marked the previous two decades had receded.
America and the westernInto the 1980s, the United States and most of the Western world experienced a revival of
conservative politics, the advancement of
free market solutions to improve government efficiency
and solve social problems, and a renewed
emphasis on materialism and the possession of
consumer goods.7585 Yet, at the same time, social
change continued to affect American lifestyles, as
women became fixtures in the workplace, the
gay rights movement become more active,
environmental concerns intensified, and rock concerts
featuring the leading rock bands and
performers of the era were televised to millions of viewers
across the nation and the world to
raise money for various social causes, such as famine relief,
support for family farms, and AIDs AIDS
prevention and treatment.
The seemingly contradictory societal trends of self-promotion and altruism that swept across
American society during the 1980s and 1990s waswere reflected in responses to national public
opinion polls concerning politics and government. These polls evidenced a growing public
hostility toward government intrusion and government performance, especially the federal
government’s performance, despite growing support for specific programs and regulations that
represented the polar opposite of these attitudes.7686 Perhaps reflecting these seemingly
contradictory trends, during this era the public tended to elect a President of one political party
and a Congress of another. Moreover, nationally, the two-party political system became more
competitive as the once solid Democratic South turned increasing Republican. The Republican
Party’s resurgence was evidenced by its winning the presidency from 1981- to 1993, and its
achieving majority status in the Senate from 1981- to 1987, and in both Houses of Congress from
1995-2001.
74
John Kincaid, “From Cooperative to Coercive Federalism,” The Annals of the American Academy of Political and
Social Science, vol. 509, no. 1 (1990), pp. 139-152. Note: the term coercive is often used in legal arguments to suggest
that provisions of law related to federal grants-in-aid do not have constitutional standing. Federalism scholars use the
term to describe, as Kincaid explained it (p. 139), the shift in emphasis “from fiscal tools to stimulate
intergovernmental policy cooperation” to an increased reliance on “regulatory tools to ensure the supremacy of federal
policy.”
75
houses of Congress from
1995 to 2001.
President Ronald Reagan’s election in 1980, coupled with the Republican Party’s resurgence,
especially its winning majority party status in the Senate that year, signaled for some the potential
for a “devolution revolution” in American federalism, where unfunded federal mandates would be
rescinded, “burdensome” administrative federal grant-in-aid conditions removed, and the
cooperative features of the federal grants-in-aid system enhanced. This belief was based on
President Reagan’s commitment to reducing the federal budget deficit. Because he was convinced
that it was necessary to increase defense spending, President Reagan concluded that the only way
to reduce the federal budget deficit was to increase revenue by encouraging economic growth
through tax reduction and regulatory relief, and limiting the growth of federal domestic
expenditures. As a former governor, he trusted state and local governments’ ability to provide
essential government services. As a result, he advocated a sorting out of governmental
responsibilities that would reduce the federal government’s role in domestic affairs, increase the
emphasis on block grants to provide state and local government officials greater flexibility in
85
David Harvey, A Brief History of Neoliberalism (New York: Oxford University Press, 2005); and Milton Friedman,
Free to Choose (New York: Harcourt Brace Jovanovich, 1980).
7686
Richard L. Cole and John Kincaid, “Public Opinion and American Federalism: Perspectives on Taxes, Spending, and
Trust: An ACIR Update,” Publius: The Journal of Federalism, vol. 30, no. 1 (Winter 2000), pp. 197, -198; William G.
Jacoby, “Issue Framing and Public Opinion on Government Spending,” American Journal of Political Science, vol. 44,
no. 4 (October 2000), pp. 752-758; and David B. Walker, The Rebirth of Federalism, 2nd ed. (New York: Chatham
House Publishers, 2000), p. 341.
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President Ronald Reagan’s election in 1980, coupled with the Republican Party’s resurgence,
especially its winning majority party status in the Senate that year, signaled for some the potential
for a “devolution revolution” in American federalism, where unfunded federal mandates would
be rescinded, “burdensome” administrative grant-in-aid conditions removed, and the cooperative
features of grant-in-aid programs enhanced. This belief was based on President Reagan’s
commitment to reducing the federal budget deficit. Because he was convinced that it was
necessary to increase defense spending, President Reagan concluded that the only way to reduce
the federal budget deficit was to increase revenue by encouraging economic growth through tax
reduction and regulatory relief, and limiting the growth of federal domestic expenditures. As a
former Governor, he trusted state and local governments’ ability to provide essential government
services. As a result, he advocated a sorting out of governmental responsibilities that would
reduce the federal government’s role in domestic affairs, increase the emphasis on block grants to
provide state and local government officials greater flexibility in 29
Federal Grants to State and Local Governments
determining how the program’s
funds are spent, and impose fiscal restraint on all federal grant-in-aidinaid programs.7787
For example, on February 18, 1981, President Reagan addressed a joint session of Congress and
proposed the consolidation of 84 existing categorical grants into 6 new block grants and requested
significant funding reductions for a number of income maintenance categorical grants, including
housing (rental) assistance, food stamps, (now Supplemental Nutrition Assistance Program),
Medicaid, and job training. Congress subsequently
approved P.L. 97-35, the Omnibus Budget
Reconciliation Act of 1981, which consolidated 7577 categorical
grants and two earlier block grants
into the following nine new block grants:
•
Elementary and Secondary Education (37 categorical grants),
•
Alcohol, Drug Abuse, and Mental Health Services (10 categorical grants),
•
Maternal and Child Health Services (9 categorical grants),
•
Preventive Health and Human Services Block Grant (merged 6 categorical grants
with the Health Incentive Grants for Comprehensive Health Services Block
Grant),
•
Primary Care (2 categorical grants),
•
Community Services (7 categorical grants),
•
Social Services (one categorical grant and the Social Services for Low Income
and Public Assistance Recipients Block Grant),
•
Low-Income Home Energy Assistance (1 categorical grant), and
•
revised thea revised Community Development Block Grant program (adding an existing
discretionary grant and 3 categorical grants).7888
Overall, funding for the categorical grants bundled into these block grants was reduced 12%,
about $1 billion, from their combined funding level the previous year.7989 President Reagan argued
77
that the funding reductions would not result in the loss of services for recipients because the
reductions would be offset by administrative efficiencies. In addition, the Reagan Administration
eliminated funding for 62 categorical grants in 1981, mainly through authority provided under the
Omnibus Budget Reconciliation Act of 1981.90
Some observers were convinced that the adoption of the Omnibus Budget Reconciliation Act of
1981 was proof of the coming devolution revolution. The number of federal grants to state and
local governments was reduced and outlays for federal grants to state and local governments fell
87
Timothy J. Conlan and David B. Walker, “Reagan’s New Federalism: Design, Debate and Discord,”
Intergovernmental Perspective, vol. 8, no. 4 (Winter 1983), pp. 6-15, 18-22.
7888
David B. Walker, Albert J. Richter, and Cynthia Colella, “The First Ten Months: Grant-In-Aid, Regulatory, and
Other Changes,” Intergovernmental Perspective, vol. 8, no. 1 (Winter 1982), pp. 5-11.
7989
U.S. General Accounting Office, Block Grants: Characteristics, Experience and Lessons Learned, GAO/HEHS-9574, February 9, 1995, p. 2, at http://www.gao.gov/archive/1995/he95074assets/230/220911.pdf. Note: funding changes ranged from a $159
million, or 30%, reduction in the Community Services Block Grant to a $94 million, or 10%, increase in funding for the
(continued...)
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that the funding reductions would not result in the loss of services for recipients because the
reductions would be offset by administrative efficiencies.
Some observers were convinced that the adoption of the Omnibus Budget Reconciliation Act of
1981 was proof of the coming devolution revolution. An unprecedented nine new block grants
had been created during President Reagan’s first year in office, the total number of grant-in-aid
programs was reduced from 539 in 1981 to 441 in 1982, and total spending on grants-in-aid fell
for the first time since World War II, from $94.8 billion in FY1981 to $$88.2 billion in FY1982.80Community Development Block Grant program.
90
David B. Walker, Albert J. Richter, and Cynthia Cates Colella, “The First Ten Months: Grant-in-Aid, Regulatory,
and Other Changes,” Intergovernmental Perspective vol. 8, no. 1 (Winter 1982): 5-22.
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Federal Grants to State and Local Governments
for the first time since World War II, from $94.7 billion in FY1981 to $88.1 billion in FY1982.91
However, in retrospect, federalism scholars now consider the 1981 block grants as more
“historical accidents than carefully conceived restructurings of categorical programs” because
they were contained in a lengthy bill that was adopted under special parliamentary rules requiring
a straight up or down vote without the possibility of amendment, the bill was designed to reduce
the budget deficit not to reform federalism relationships, and the bill was not considered and
approved by authorizing committees of jurisdiction. 8192 Nonetheless, largely due to the Omnibus
Budget and Reconciliation Act of 1981, in FY19841984 there were 12 block grants in operation
(compared to 392 categorical grants), accounting for about 15% of total grants-in-aid funding. 8293
During the remainder of his presidency, President Ronald Reagan submitted 26 block grant
proposals to Congress, with only one, the Federal Transit Capital and Operating Assistance Block
Grant, added in 1982. In addition, Congress approved the Job Training Partnership Act of 1982
which created a new block grant for job training to replace the block grant contained in the
Comprehensive Employment and Training Act of 1973.8394
Federalism scholars generally agree that President Reagan had unprecedented success in
achieving congressional approval for block grants in 1981. However, they also note that most of
President Reagan’s subsequent block grant proposals failed to gain congressional approval,
primarily because they were opposed by organizations whothat feared that, if enacted, the block
grants would result in less funding for the affected programs. For example, in 1982, President
Reagan proposed, but could not get congressional approval for, a $20 billion “swap” in which the
federal government would return to states full responsibility for funding Aid to Families With
Dependent Children (AFDC) (now Temporary Assistance for Needy Families) and food stamps
(now Supplemental Nutrition Assistance Program) in exchange for federal assumption of state
contributions for Medicaid. As part of the deal, he
also proposed a temporary $28 billion trust
fund or “super revenue sharing program” to replace
43 other federal grant programs, including 19
social, health, and nutrition services programs, 11
transportation programs, 6 community
development and facilities programs, 5 education and
training programs, Low Income Home
Energy Assistance, and general revenue sharing. The trust
fund, and federal taxes supporting it,
would begin phasing out after four years, leaving states the option of replacing federal tax support
with their own funds to continue the programs or allowing the programs to expire.95
Both the swap proposal and the proposed devolution of 43 federal grants failed to gain
congressional approval, primarily because they were opposed by organizations and Members who
91
U.S. Office of Management and Budget, Budget of the United States Government, Fiscal Year 2014: Historical
Tables, p. 257, at http://www.whitehouse.gov/sites/default/files/omb/budget/fy2014/assets/hist.pdf.
92
leaving states the
(...continued)
Community Development Block Grant program.
80
ACIR, Significant Features of Fiscal Federalism: 1985, 86 Edition (Washington, DC: GPO, 1986), p. 19.
81
Carl W. Stenberg, “Block Grants and Devolution: A Future Tool?” in Intergovernmental Management for the 21st
Century, eds. Timothy J. Conlan and Paul L. Posner (Washington, DC: Brookings Institution Press, 2008), p. 267; and
Timothy Conlan, From New Federalism to Devolution: Twenty-Five Years of Intergovernmental Reform (Washington,
DC: The Brookings Institution, 1998), pp. 110-121.
8293
ACIR, A Catalog of Federal Grant-In-Aid Programs to State and Local Governments: Grants Funded FY1984, M139 (Washington, DC: GPO, 1984), pp. 1-3.
83, 1984, pp. 1-3, at http://www.library.unt.edu/gpo/acir/Reports/information/m-139.pdf.
94
Ibid., p. 3; Timothy Conlan, From New Federalism to Devolution: Twenty-Five Years of Intergovernmental Reform
(Washington, DC: The Brookings Institution, 1998), p. 142; and CRS Report 87-845, Block Grants: Inventory and
Funding History, Sandra S. Osbourn, November 21, 1986, available by request.
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Federal Grants-In-Aid: An Historical Perspective on Contemporary Issues
option of replacing federal tax support with their own funds to continue the programs or allowing
the programs to expire.84
Both the swap proposal and the proposed devolution of 43 federal grants failed to gain
congressional approval, primarily because they were opposed by organizations and Members who
95
Timothy J. Conlan and David B. Walker, “Reagan’s New Federalism: Design, Debate and Discord,”
Intergovernmental Perspective, vol. 8, no. 4 (Winter 1983), p. 9. Note: The cost of the proposed trust fund was later
estimated at $34.4 billion.
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Federal Grants to State and Local Governments
feared that, if enacted, the proposals would result in less funding for the affected programs. For
example, the National Governors Association supported the federal take overtakeover of Medicaid, but
objected to assuming the costs for AFDC and food stamps. The economy was weakening at that
time and governors worried that they would not have the fiscal capacity necessary to support the
programs without continued federal assistance. 8596
Evidence of a coming devolution revolution proved elusive as the upward trend in funding for
grant-in-aidoutlays for
federal grants to state and local programs resumed in 1983FY1983, although at a somewhat lower rate
of increase than
during the previous two decades. As shown in Table 1, federal grant-in-aid funding increased
from $912, outlays for federal grants
to state and local governments increased from $91.4 billion in FY1980 to $135.3 billion in
FY1990 and $285.89 billion in FY2000. Medicaid
accounted for much of that revenue growth,
increasing from $13.9 billion in FY1980 to $41.1
billion in FY1990 and $117.9 billion in
FY2000.8697
Functionally, as shown in Table 1, federal grant-in-aid funding for 2, outlays for federal grants to state and local governments for
health care increased from
$15.78 billion in FY1980 to $124.8 billion in FY2000. Also, grant-in-aid funding increased for
income security from $18.4 billion in FY1980 to $68.6outlays for
federal grants to state and local governments for income security increased from $18.5 billion in
FY1980 to $68.7 billion in FY2000; for education, training,
employment and social services from
$21.89 billion to $36.67 billion; for transportation from $13
.0 billion to $32.2 billion; and for
community and regional development from $6.45 billion to $8.6
7 billion.
The number of grant-in-aid programs did fallfederal grants to state and local governments fell at the beginning of this era, from 539 in 1980 to an
541 in 1981 to an era low of 405 in 1984, but then resumed theiran upward trend. As indicated in
Table 34, there were
539 grant-in-aid programs in 1980, 557 in 1991, 541 grants to state and local governments in 1981, 405 in 1984, 435 in 1987,
492 in 1989, 557 in 1991, 593 in 1993, 633 in 1995, and 664 in 1998. Moreover, the number of
intergovernmental mandates continued to increase throughout the era. ACIR, for example,
identified 36 significant federal mandates affecting state and local governments in 1980. In 1990,
it identified 63.8798 ACIR concluded that “despite efforts to constrain the growth of
intergovernmental regulation, the 1980s remained an era of regulatory expansion rather thenthan
contraction.”8899 It offered the following explanation for the increased number of federal mandates
during the 1980s:
The causes of this continued regulatory growth are complex and varied. Many regulations
address important and well documented problems from pollution to health care to civil
84
Timothy J. Conlan and David B. Walker, “Reagan’s New Federalism: Design, Debate and Discord,”
Intergovernmental Perspective, vol. 8, no. 4 (Winter 1983), p. 9. Note: The cost of the proposed trust fund was later
estimated at $34.4 billion.
85
rights. The goals associated with these programs are popular not only with the general public
but with state and local government officials as well. But, whereas the Congress in the past
might have responded to emerging needs with a new federal aid program, the scarcity of
96
Ibid., pp. 6-15, 18-22; and Timothy Conlan, New Federalism: Intergovernmental Reform From Nixon to Reagan
(Washington, DC: The Brookings Institution, 1988), pp. 182-198.
8697
U.S. Office of Management and Budget, Historical Tables: Budget of the United States Government, Fiscal Year
2009 (Washington, DC: GPO, 2008), pp. 262, 268, 276.
87, pp. 262, 268, 276, at http://www.whitehouse.gov/sites/default/files/omb/budget/fy2009/pdf/hist.pdf.
98
ACIR, Regulatory Federalism: Policy, Process, Impact, and Reform (Washington, DC: GPO, A-95, 1984), pp. 246-249;
, at
http://www.library.unt.edu/gpo/acir/Reports/policy/a-95.pdf; and Timothy J. Conlan and David R. Beam, “Federal
Mandates: The Record of Reform and Future Prospects,”
Intergovernmental Perspective, vol. 18, no. 4 (Fall 1992), p. 7.
88
7.
99
Timothy J. Conlan and David R. Beam, “Federal Mandates: The Record of Reform and Future Prospects,”
Intergovernmental Perspective, vol. 18, no. 4 (Fall 1992), p. 8.
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Federal Grants-In-Aid: An Historical Perspective on Contemporary Issues
rights. The goals associated with these programs are popular not only with the general public
but with state and local government officials as well. But, whereas the Congress in the past
might have responded to emerging needs with a new federal aid program, the scarcity of
32
Federal Grants to State and Local Governments
federal funds during a decade of historic deficits has made the alternative of federal
mandates look increasingly attractive to federal policymakers.89100
Some observers believed that the anticipated devolution revolution might be realized following
the 1994 congressional elections which resulted in the Republican Party gaining majority status in
both the House and Senate. As evidence of the potential for a devolution revolution they pointed
to the Unfunded Mandate Reform Act of 1995 (UMRA). Its intent was to limit the federal
government’s ability to impose costs on state and local governments or on the private sector
through unfunded mandates. Providing relief from unfunded mandates was one of the stated goals
of the Republican Party’s 1994 Contract With America.90101
Under UMRA, congressional committees have the initial responsibility to identify certain federal
mandates in measures under consideration. If the measure contains a federal mandate, the
authorizing committee must provide the measure to the Congressional Budget Office (CBO). It
reports back to the committee an estimate of the mandate’s costs. The office must prepare full
quantitative estimates for each reported measure with mandate costs over pre-determined
thresholds in any of the first five fiscal years the legislation would be in effect. CBO’s cost
estimates include the direct costs of the federal mandates contained in the measure, or in any
necessary implementing regulations; and the amount of new or existing federal funding the
legislation authorizes to pay these costs. The thresholds triggering a full CBO cost estimate are
adjusted annually for inflation. They were originally $50 million for intergovernmental mandates
and $100 million for private sector mandates. The thresholds in 20102013 are $7075 million for
intergovernmental mandates and $141150 million for private sector mandates. CBO must prepare
brief statements of cost estimates for those mandates that have estimated costs below these
thresholds.91102
Members can raise a point of order if the measure containing the mandate lacks a CBO cost
estimate, either because the Committeecommittee failed to publish the CBO’s cost estimate in its report or
in in
the Congressional Record, or CBO determined that no reasonable estimate of the mandate’s
cost cost
was feasible. Members can also raise a point of order if the measure has an
intergovernmental intergovernmental
cost estimate that exceeds the annually adjusted cost threshold in any of the
first 5five fiscal years
the mandate would be in effect.
UMRA’s impact on unfunded mandates has been relatively limited. For example, GAO found
that from 1996 to March 2004, 13
June 2013, 51 points of order were raised in the House and none3 in the Senate
and only one. One point of order, on
concerning a 1996 minimum wage bill, was sustained.92 In addition, UMRA
89 in the House and two points of order,
concerning amendments relating to an increase in the minimum wage in 2005, were sustained in
the Senate.103 In addition, UMRA covers only certain types of unfunded federal mandates. As a
federalism scholar argued:
100
Ibid., p. 11.
Richard P. Nathan, “The ‘Devolution Revolution’ An Overview,” Rockefeller Institute Bulletin (Albany, NY: The
Nelson A. Rockefeller Institute of Government, 1996), pp. 5-13; John Kincaid, “The Devolution Tortoise and the
Centralization Hare,” New England Economic Review (May/June 1998), pp. 36-38; and Chung-Lae Cho and Deil S.
Wright, “The Devolution Revolution in Intergovernmental Relations in the 1990s: Changes in Cooperative and
Coercive State–National Relations as Perceived by State Administrators,” Journal of Public Administration Research
and Theory, vol. 14, no. 4 (2004), pp. 447-467.
91102
For further analysis, see CRS Report R40957, Unfunded Mandates Reform Act: History, Impact, and Issues, by
Robert Jay Dilger and Richard S. Beth.
92
U.S. Government Accountability Office, Unfunded Mandates: Analysis of Reform Act Coverage, GAO-04-637
(Washington, DC: GPO, 2004), p. 7.
90103
CRS Report R40957, Unfunded Mandates Reform Act: History, Impact, and Issues, by Robert Jay Dilger and
(continued...)
101
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covers only certain types of unfunded federal mandates. As one federalism scholar recently
argued:
33
Federal Grants to State and Local Governments
UMRA primarily covers only statutory direct orders, excluding most grant conditions and
preemptions whose fiscal effects fall below the threshold. Statutory direct orders dealing
with constitutional rights, prohibition of discrimination, national security, and Social
Security are among those excluded from coverage. Moreover, analytic and procedure
requirements do not apply to appropriations bills, floor amendments or conference reports –
those tools of “unorthodox lawmaking” that have become increasingly prevalent in the
Congress.93104
Moreover, another federalism scholar noted that the overall record of the 104th Congress,
expected by some to decentralize and devolve federalism relationships, was more status quo than
devolutionary:
Shifting back to the overall record of the 104th Congress, it is appropriate here to note the
various proposed devolutionary bills that were defeated. Chief among these was the
proposed Medicaid block grant with a $163 billion cut in funding over five years. Both a
public housing blocking proposal and the big regulatory reform measure that would have
seriously limited the Federal government’s power to issue rules affecting health, safety, and
the environment were scuttled. Extension of the Clean Water Act, enactment of a
consolidation of eighty-odd manpower training programs, and passage of a revised
Endangered Species Act, which eliminated the Federal authority to restrict threatening
activities, were all successfully resisted. A rollback of affirmative action, a conservative shift
in the Superfund’s program and rules, and the proposed Product Liability Legal Reform Act
of 1996 were also scuttled. Of the nine here, two died because of Senate rejection; three,
because of a presidential veto or the threat of one; two others failed because neither chamber
dared take either one up; and the last two died because of a deadlocked Conference
Committee and a lack of time to consider a Conference Report.94105
The devolution revolution never fully materialized during this era, despite growing public
hostility toward the federal government. The emphasis on categorical grants and the issuance of
federal mandates, continued. Yet, some decentralization of decision-making authority did take
place during the era. For example, in 1980, there were four block grants in operation. In 2000,
there were 24 block grants, including the Surface Transportation Program (1991) and the
Temporary Assistance for Needy Families (TANF) program (1996). Funded at $16.7 billion
annually, TANF rivaled the Surface Transportation Program during this era for the largest budget
of all the block grants. In addition, Congress authorized state waivers for Medicaid starting in
1981, and for child welfare assistance programs starting in 1994.95106
The seemingly contradictory trends of centralization and decentralization that took place in the
federal intergovernmental system
federal grant-in-aid programs during the 1980s and 1990s perhaps reflected the contradictory
societal trends that swept across America at the time. As mentioned previously, national public
opinion polls indicated that the public was increasingly dissatisfied with the performance of
93(...continued)
Richard S. Beth; and U.S. Government Accountability Office, Unfunded Mandates: Analysis of Reform Act Coverage,
GAO-04-637 (Washington, DC: GPO, 2004), p. 7.
104
Paul Posner, “The Politics of Coercive Federalism in the Bush Era,” Publius: The Journal of Federalism, vol. 37,
no.
3 (Summer 2007), p. 403.
94105
David B. Walker, The Rebirth of Federalism, 2nd ed. (New York: Chatham House Publishers, 2000), p. 165.
95106
For additional analysis, see CRS Report RS22448, Medicaid’s Home and Community-Based Services State Plan
Option: Section 6086 of the Deficit Reduction Act, by Cliff Binder; CRS Report RL32277, How Medicaid Works Program Basics, by Elicia J. Herz et al.; and CRS Report RL31082, Child Welfare
Financing: Issues and Options, by
Karen Spar and Christine M. Devere.
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Federal Grants-In-Aid: An Historical Perspective on Contemporary Issues to State and Local Governments
government, especially the federal government’s performance, and expressed a growing hostility
toward government (and Congress) as a whole. It could be argued that these views suggest that
the public wanted Congress to devolve federal grant-in-aid programs to state and local
governments or, at least, provide themstate and local governments greater flexibility in determining how grant-in-aid
how the grants’ funding
should be spent. Yet, at the same time, the public also expressed
relatively strong support for
individual federal government programs (and individual members of Members of
Congress). 96107 It could be
argued that these views suggest that the public wanted Congress to
maintain federal government
control over these programs, and expressed approval of their
individual congressmanMembers for doing
so.
Another possible explanation for the continued focus on categorical grants and the imposition of
federal mandates during this era is that federalism issues tend to be a second order priority for
many federal policymakerspolicy makers. For example, it could be argued that President Ronald Reagan’s
commitment to strengthening federalism through program decentralization and devolution was
unrivaled in the modern era. Yet, in an analysis of the Reagan Administration’s federalism
policies, a leading federalism scholar concluded that “devolutionary policies consistent with the
president’s definition of federalism reform ... consistently lost out in the Reagan Administration
when they ... conflicted with the sometimes competing goals of reducing the federal deficit,
deregulating the private sector, and advancing the conservative social agenda.”97108 For example,
this scholar noted that President Reagan opposed the expansion of General Revenue Sharing,
advocated the elimination of the deductibility of state and local taxes, supported the preemption
of state laws regulating double-trailer trucks and establishing minimum drinking ages, overrode
state objections to increased off-shore oil drilling and increased use of nuclear power, and
supported efforts to require states to establish workfare programs for public assistance recipients
and suing localities which sought to retain aggressive affirmative action hiring policies.98
Grants-in-Aid in the 21st Century
Every nation has experienced defining moments that affect the collective social conscious of
nearly every person in that nation. These events tend to occur about once a generation, and often
have a significant and lasting affect on political life. In the United States, the bombing of Pearl
Harbor on December 7, 1941 - “a date which will live in infamy”- the assassination of President
John F. Kennedy on November 22, 1963, and the terrorist attacks on the World Trade Center in
New York City and the Pentagon in Washington, D.C. on September 11, 2001 were such
moments. Nearly every adult in the nation alive at the time of these events, and many children as
well, can recall where they were and what they were doing when they heard the news of these
events.
It may be too soon to fully recognize the impact of 9/11 on American politics. However, for
grants-in-aid, and American federalism, the short-term impact was clear: the centralization of
96109
Federal Grants to State and Local Governments in
the 21st Century
Some observers thought that the number of federal grants to state and local governments and
outlays for federal grants to state and local governments might fall during George W. Bush’s
presidency (2001-2009), given federal budgetary pressures created by the so-called war on terror
following 9/11, President Bush’s commitment to reducing the annual federal budget deficit and
addressing the federal debt, and the Republican Party’s winning majority status in the House of
Representatives from 2001 to 2007 and in the Senate for portions of 2001 and 2002, and from
2003 to 2007. Yet, outlays for federal grants to state and local governments increased during his
presidency, from $285.8 billion in FY2000 to $461.3 billion in FY2008.
Others thought that the “the ascendancy of George W. Bush to the presidency, in concert with a
remarkably unified Republican control of the Congress, presaged a period of unified government
107
Richard F. Fenno, “If, as Ralph Nader Says, Congress Is “The Broken Branch,” How Come We Love Our
Congressmen So Much?” in Congress in Change: Evolution and Reform, Norman J. Ornstein, ed. (New York: Praeger
Publishers, 1975), pp. 277-287.
97108
Timothy J. Conlan, “Federalism and Competing Values in the Reagan Administration,” Publius: The Journal of
Federalism, vol. 16, no. 1 (Winter 1986), p. 30.
98109
Ibid.
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governmental authority and an expansion of grants-in-aid programs and funding in homeland
security and related emergency management areas.
Prior to September 11, 2001, the federal government had three categorical grants-in-aid programs
pertinent to homeland security: the State Domestic Preparedness program administered by the
Department of Justice, the Emergency Management Performance Grant program administered by
the Federal Emergency Management Agency, and the Metropolitan Medical Response System
administered by the Department of Health and Human Services. There are now 17 federal grant
programs administered by the Grant Programs Directorate within the Federal Emergency
Management Agency in the Department of Homeland Security, including 14 categorical grant
programs and the following three block grant programs: State Homeland Security Grants,
formerly called the State Domestic Preparedness Program, (created in 2003), Urban Area Security
Initiative Grants (created in 2003), and the Regional Catastrophic Preparedness Grant (created in
2008).99 Moreover, national guidelines for emergency preparedness, governing such areas as
equipment, training, and exercises and planning assisted with federal funds were issued by the
Department of Homeland Security identifying target capabilities for 36 areas of emergency
planning and response by state and local governments. Also, national mass transit and driver’s
license security standards were imposed. The National Governors Association and the National
Conference of State Legislatures estimated in 2006 that the new driver’s license security
standards adopted in 2005 would cost states about $11 billion over five years to implement.100
Some observers thought that both the number of grants-in-aid and funding for grants-in-aid might
fall during President George W. Bush’s presidency, given the budgetary pressures created by the
war on terror and his commitment to reducing the federal budget deficit, and the Republican
Party’s winning majority status in the House of Representatives from 2001-2007 and in the
Senate for portions of 2001 and 2002, and from 2003-2007. Yet, funding for federal grant-in-aid
programs increased during his presidency, from $285.8 billion in FY2000 to $461.3 billion in
FY2008. Since then, federal grant-in-aid funding has accelerated and is now expected to reach
$645.7 billion in FY2011. Medicaid has accounted for much of the expenditure growth,
increasing from $117.9 billion in FY2000 to $201.4 billion in FY2008, and an estimated $296.7
billion in FY2011, but funding has increased in other areas as well. 101 As shown in Table 1, grantin-aid funding for health care is expected to increase from $124.8 billion in FY2000 to an
estimated $317.5 billion in FY2011. Grant-in-aid funding for income security is expected to
increase from $68.6 billion in FY2000 to an estimated $121.7 billion in FY2011; for education,
training, employment, and social services, from $36.6 billion to $84.1 billion; for transportation,
from $32.2 billion to $68.1 billion; and for community and regional development, from $8.6
billion to $22.4 billion.
99
For further analysis, see CRS Report R40246, Department of Homeland Security Assistance to States and Localities:
A Summary and Issues for the 111th Congress, by Shawn Reese; and CRS Report RL33770, Department of Homeland
Security Grants to State and Local Governments: FY2003 to FY2006, by Steven Maguire and Shawn Reese.
100
Paul Posner, “The Politics of Coercive Federalism in the Bush Era,” Publius: The Journal of Federalism, vol. 37,
no. 3 (Summer 2007), pp. 397, 398; National Governors Association, “Policy Position on Secure State Driver’s
Licenses and Identification Cards,” EC-02 (Washington, DC: National Governors Association, 2009),
http://www.nga.org/portal/site/nga/menuitem.8358ec82f5b198d18a278110501010a0/?vgnextoid=
2bdf2f9655321110VgnVCM1000001a01010aRCRD.
101
U.S. Office of Management and Budget, Historical Tables: Budget of the United States Government, Fiscal Year
2010 (Washington, DC: GPO, 2009), pp. 239, 282, 291.
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As indicated in Table 3, the number of grant-in-aid programs also increased during the first
decade of the 2000s, from 664 in 1998 to 953 in 2009. In addition, the emphasis on categorical
grants was retained, as 928 of the 953 grants-in-aid in 2009 are categorical grants, and 25 are
block grants.
Also, despite UMRA, unfunded federal mandates continued to be issued in several functional35
Federal Grants to State and Local Governments
… [that would lead to] the arrest and even reversal of federal policy centralization.”110 For
example, President Bush used his authority to grant state waivers to increase state flexibility in
the use of Medicaid funds and, in his second term, in complying with No Child Left Behind
requirements. He also proposed grant consolidations of community development programs, state
control of the Head Start program, and waivers of regulations in many low-income programs
(called superwaivers).111 However, despite these efforts, federalism scholars argue that the federal
government continued to further centralize its authority in many policy areas during his
presidency, often with President Bush’s approval. For example, President Bush supported the
extension of “federal goals and standards to such areas as education testing, sales tax collection,
emergency management, infrastructure, and elections administration”112 and the imposition of
restrictions on partial-birth abortions, new work requirements for TANF recipients, and new
standards for issuing secure driver’s licenses. President Bush also supported legislative efforts to
prohibit same-sex marriage.113
The expansion and centralization of the federal grants-in-aid system has continued under
President Barack Obama. As mentioned previously, outlays for federal grants to state and local
governments accelerated during President Obama’s first term in office, due primarily to the
enactment of P.L. 111-5, the American Recovery and Reinvestment Act of 2009 (ARRA), which
was designed to assist states in their recovery from the “Great Recession” of 2007-2009.
Although, as expected, outlays for federal grants to state and local government declined in
FY2011 and FY2012, due primarily to the expiration of ARRA funding, those outlays increased
somewhat in FY2013 (to $546.2 billion) and are expected to continue to increase in subsequent
fiscal years. President Obama’s FY2015 budget request estimates that total outlays for federal
grants to state and local governments will be $607.2 billion in FY2014, $640.8 billion in FY2015,
and $649.7 billion in FY2015.114
Medicaid has accounted for much of this outlay growth since 2000, increasing from $117.9
billion in FY2000 to $201.4 billion in FY2008, $272.8 billion in FY2010, and an estimated
$308.6 billion in FY2014. However, outlays for federal grants to state and local governments
have increased in other policy areas as well.115
As shown in Table 2, outlays for federal grants to state and local governments for health care are
expected to increase from $124.8 billion in FY2000 to an estimated $329.8 billion in FY2014.
Outlays for federal grants to state and local governments for income security are expected to
increase from $68.6 billion in FY2000 to an estimated $104.0 billion in FY2014; for education,
training, employment, and social services, from $36.6 billion to $67.4 billion; for transportation,
110
Paul Posner, “The Politics of Coercive Federalism in the Bush Era,” Publius: The Journal of Federalism, vol. 37,
no. 3 (Summer 2007), p. 390.
111
Ibid., p. 392.
112
Ibid., pp. 390-391.
113
Tim Conlan and John Dinan, “Federalism, the Bush Administration, and the Transformation of American
Conservatism,” Publius: The Journal of Federalism, vol. 37, no. 3 (Summer 2007), pp. 279-303.
114
U.S. Office of Management and Budget, Budget of the United States Government, Fiscal Year 2015: Historical
Tables, pp. 259, at http://www.whitehouse.gov/sites/default/files/omb/budget/fy2015/assets/hist.pdf.
115
U.S. Office of Management and Budget, Historical Tables: Budget of the United States Government, Fiscal Year
2010, pp. 239, 282, 291, at http://www.gpo.gov/fdsys/pkg/BUDGET-2010-TAB/pdf/BUDGET-2010-TAB.pdf; and
U.S. Office of Management and Budget, Budget of the United States Government, Fiscal Year 2015: Historical Tables,
p. 316, at http://www.whitehouse.gov/sites/default/files/omb/budget/fy2015/assets/hist.pdf.
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Federal Grants to State and Local Governments
from $32.2 billion to $62.8 billion; and for community and regional development, from $8.7
billion to $22.2 billion.
As shown in Table 4, the number of federal grants to state and local governments has also
increased since 2000s, from 664 in 1998, to 953 in 2009, and 1,099 in 2014. In addition, the
emphasis on categorical grants has been retained, as 1,078 of the 1,099 funded federal grants to
state and local governments in 2014 are categorical grants, and 21 are block grants. In terms of
funding, categorical grants are expected to account for more than 90% of federal grant-in-aid
assistance in FY2014 (block grants were appropriated $52.665 billion in FY2014).116
Also, despite UMRA, unfunded federal mandates have continued to be issued in many policy
areas. For example, during the 109th Congress legislation was adopted that required states to
collect data on sex offenders and to prepare a statewide sex offender registry database; imposed
federal standards requiring state and local governments using federal foster care funding to visit
foster care children monthly; and required states to hold special elections when continuity of
government is jeopardized by a national emergency, necessitating some states to amend their state
constitutions. Congress also preempted state and local government authority by prohibiting the
use of federal grant funds for projects where eminent domain is used to support private uses;
prohibited state and local government lawsuits against manufacturers or sellers of firearms; and
regulating the citing of certain transmission lines and the citing and operation of onshore liquefied
natural gas facilities, energy efficiency and safety of nuclear facilities, and the reliability of
electric services.102117
In addition, CBO has reported that from 2004 through 2013, 173 laws were enacted with at least
one intergovernmental mandate as defined under UMRA. These laws imposed 332 mandates on
state and local governments, with 15 of these mandates exceeding UMRA’s threshold, 14 with
estimated costs that could not be determined, and 299 with estimated costs below the threshold.
CBO also reported that hundreds of other laws had an effect on state and local government
budgets, but those laws did not meet UMRA’s definition of a federal mandate.118
Grant conditions, historically the predominant means used to impose federal control over state
and local government actions, have also continued to be used to promote national goals. For
example, many
observers consider the adoption of the No Child Left Behind Act of 2001, signed into law on
January 8, 2002, to be President George W. Bush’s signature federalism achievement. Although
the act allows states to define the standards used for testing, it imposed federal testing, teaching,
and accountability standards on states and school districts that, overall, significantly increased
federal influence on public elementary and secondary education throughout the nation.103 In
addition, the Help America Vote Act of 2002 instituted “sweeping new federal standards, along
with new funding, that regulated significant features of state and local election processes.”104
Although President Obama has not issued a formal federalism plan, his Administration, and the
Democratic majorities in the House and Senate, have initially continued to use federal grants-inaid as a means to achieve national goals. For example, as mentioned previously, ARRA is
expected to provide $236 billion in tax cuts and $626 billion in spending over FYs 2009-2019,
including about $325 billion for federal grant-in-aid programs for state and local governments.
ARRA provides additional funding for a wide range of federal grant-in-aid programs, such as
Medicaid ($93 billion, primarily for a temporary increase in the Federal Medical Assistance
Percentages reimbursement rate), a new, State Fiscal Stabilization Fund ($53.6 billion), Build
America Bonds ($30 billion), Highways and Bridges ($27.5 billion), Title 1-A, elementary and
secondary education for the disadvantaged, ($13 billion), Individuals with Disabilities Education
Act ($12.2 billion), Public Transit ($8.4 billion), Intercity Passenger Rail Capital, Congestion,
and Corridor Development grants ($8 billion), Temporary Assistance for Needy Families ($5
billion), and Weatherization Assistance Grants ($5 billion). 105
102
Paul Posner, “The Politics of Coercive Federalism in the Bush Era,” Publius: The Journal of Federalism, vol. 37,
no. 3 (Summer 2007), p. 399.
103
Ibid., pp. 292, 293. For further analysis see CRS Report RL33960, The Elementary and Secondary Education Act,
as Amended by the No Child Left Behind Act: A Primer, by Rebecca R. Skinner.
104
Paul Posner, “The Politics of Coercive Federalism in the Bush Era,” Publius: The Journal of Federalism, vol. 37,
no. 3 (Summer 2007), p. 395.
105
For further analysis, see CRS Report R40223, American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111(continued...)
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Federal Grants-In-Aid: An Historical Perspective on Contemporary Issues
Congressional Issues
As the data in Table 1, Table 2, and Table 3 attest, federal grant-in-aid expenditures, in both
nominal and constant dollars, and the number of intergovernmental grants have continued to
increase since the mid-1980s. Given its increased size and cost, providing effective congressional
oversight of the intergovernmental grant-in-aid system is a daunting task. Given the decentralized
nature of the congressional committee system, Congress is well-positioned to provide effective
oversight of individual federal grant-in-aid programs. However, it could be argued that the
decentralized nature of the congressional committee system is not optimally conducive to
providing effective oversight of the interactive effects of multiple federal grant-in-aid programs,
or of the potential interactive effects of federal grant-in-aid spending programs and federal tax
policy.
In the past, the independent, bipartisan ACIR, which operated from 1959-1996, provided
Congress and others a series of authoritative reports on the status and operation of
intergovernmental grants-in-aid programs, both as individual programs and as a collective
system. GAO has published several reports over the years on federal grant-in-aid programs that
have helped to fill the informational and analytic void left by ACIR’s demise.106 However, it
could be argued that Congress may wish to examine whether a reconstituted ACIR, perhaps one
that focuses on the structure and operation of the intergovernmental system as a whole, might
prove useful as an additional source of information and analysis as it conducts oversight of the
intergovernmental federal grant-in-aid system. For example, such an organization could provide
an accepted methodology for counting grants-in-aid programs, and provide Congress periodic
assessments of the intergovernmental grant-in-aid system’s performance.
Another potential congressional issue of interest is that neither the House nor the Senate currently
has in place a committee or subcommittee that is dedicated solely to the oversight of
intergovernmental issues. In the past, both the House and the Senate have had in place a
subcommittee dedicated to the oversight of intergovernmental issues, typically focusing on the
structure and operation of federal grant-in-aid programs and federal mandates. Congress may
wish to consider whether the recent growth in the number of intergovernmental grant-in-aid
programs and the increased funding for federal grants warrants the formation of either a
(...continued)
5): Title V, Medicaid Provisions, coordinated by Cliff Binder; CRS Report R40151, Funding for Education in the
American Recovery and Reinvestment Act of 2009 (P.L. 111-5), by Rebecca R. Skinner, David P. Smole, and Ann
Lordeman; CRS Report R40214, Transportation and Transportation Security Related Provisions of House and Senate
Stimulus Legislation (H.R. 1), by John W. Fischer et al.; CRS Report R40211, Human Services Provisions of the
American Recovery and Reinvestment Act, by Gene Falk et al.; CRS Report R40216, Water Infrastructure Funding in
the American Recovery and Reinvestment Act of 2009, by Claudia Copeland et al.; CRS Report R40182, Funding for
Workforce Development in the American Recovery and Reinvestment Act (ARRA) of 2009, by David H. Bradley and
Ann Lordeman; CRS Report R40412, Energy Provisions in the American Recovery and Reinvestment Act of 2009 (P.L.
111-5), coordinated by Fred Sissine; and CRS Report RS22416, Edward Byrne Memorial Justice Assistance Grant
Program: Legislative and Funding History, by Nathan James.
106
116
This estimation is based on projected outlays of $607.2 billion for federal grant-in-aid assistance in FY2014 (see
U.S. Office of Management and Budget, Budget of the United States Government, Fiscal Year 2015: Historical Tables,
p. 258-259, at http://www.whitehouse.gov/sites/default/files/omb/budget/fy2015/assets/hist.pdf) and FY2014
appropriations for 21 funded block grants identified in CRS Report R40486, Block Grants: Perspectives and
Controversies, by Robert Jay Dilger and Eugene Boyd.
117
Paul Posner, “The Politics of Coercive Federalism in the Bush Era,” Publius: The Journal of Federalism, vol. 37,
no. 3 (Summer 2007), p. 399.
118
U.S. Congressional Budget Office, A Review of CBO’s Activities in 2008 Under the Unfunded Mandates Reform
Act, March 2009, p. 48, at http://www.cbo.gov/ftpdocs/100xx/doc10058/03-31-UMRA.pdf; U.S. Congressional Budget
Office, A Review of CBO’s Activities in 2010 Under the Unfunded Mandates Reform Act, March 2011, p. 5, at
http://www.cbo.gov/ftpdocs/121xx/doc12117/03-31-UMRA.pdf; U.S. Congressional Budget Office, A Review of
CBO’s Activities in 2011 Under the Unfunded Mandates Reform Act, March 2012, pp. 5-7, at http://www.cbo.gov/sites/
default/files/cbofiles/attachments/03-30-UMRA.pdf; U.S. Congressional Budget Office, A Review of CBO’s Activities
in 2012 Under the Unfunded Mandates Reform Act, March 2013, pp. 5-9, at http://www.cbo.gov/sites/default/files/
cbofiles/attachments/44032_UMRA.pdf; and U.S. Congressional Budget Office, A Review of CBO’s Activities in 2013
Under the Unfunded Mandates Reform Act, March 2014, pp. 3-5, at http://www.cbo.gov/sites/default/files/cbofiles/
attachments/45209-UMRA.pdf.
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Federal Grants to State and Local Governments
into law on January 8, 2002, to be President George W. Bush’s signature federalism achievement.
Although the act allows states to define the standards used for testing, it imposed federal testing,
teaching, and accountability standards on states and school districts that, overall, significantly
increased federal influence on public elementary and secondary education throughout the
nation.119 In addition, during his presidency, the Help America Vote Act of 2002 instituted
“sweeping new federal standards, along with new funding, that regulated significant features of
state and local election processes.”120
President Obama has not issued a formal federalism plan and has not formally advocated a major
shift in funding priorities within functional categories. However, the expansion of Medicaid
eligibility under P.L. 111-148, the Patient Protection and Affordable Care Act (ACA), which
President Obama strongly endorsed, is expected to increase health care’s position as the leading
category of federal assistance to state and local governments. The ACA also either authorized or
amended 71 federal categorical grants to state and local governments, further enhancing the role
of categorical grants in the intergovernmental grant-in-aid system.121
The Obama Administration has also not formally advocated a major shift in funding priorities
from categorical grants to block grants, or from block grants to categorical grants. However, the
number of funded block grants has declined somewhat during the Obama Administration, from 24
in 2009 to 21 in 2014. Also, although the Obama Administration did support ARRA’s funding for
two, relatively significant temporary block grants (the $53.6 billion Government Services State
Fiscal Stabilization Fund for public education; and the $3.2 billion Energy Efficiency and
Conservation Block Grant for energy efficiency and conservation programs) and ARRA’s
provision of additional, temporary funding to TANF ($5 billion), the Child Care and
Development Block Grant ($2 billion), the Community Development Block Grant ($1 billion),
the Community Services Block Grant ($1 billion), and the Native American Housing Block Grant
($510 million) programs, the Obama Administration has generally advocated enactment of new
competitive categorical grant programs (e.g., TIGER surface transportation grants and Race to the
Top education grants) rather than the expansion of existing block grants or the creation of new
ones.122
For example, in its FY2015 budget request, the Obama Administration asked Congress to
permanently authorize the TIGER surface transportation grant program “to help spur innovation
by competitively awarding funding to projects around the Nation” and to provide $4 billion “for a
competitive grant program, Fixing and Accelerating Surface Transportation, designed to create
119
Ibid., pp. 292, 293. For further analysis, see CRS Report RL33960, The Elementary and Secondary Education Act,
as Amended by the No Child Left Behind Act: A Primer, by Rebecca R. Skinner.
120
Paul Posner, “The Politics of Coercive Federalism in the Bush Era,” Publius: The Journal of Federalism, vol. 37,
no. 3 (Summer 2007), p. 395. For further information and analysis of the Help America Vote Act, see CRS Report
RL32685, Election Reform: The Help America Vote Act and Issues for Congress, by Eric A. Fischer and Kevin J.
Coleman.
121
U.S. General Services Administration, “Catalog of Federal Domestic Assistance,” at https://www.cfda.gov/.
122
For additional information concerning TIGER grants see CRS Report R43464, Federal Support for Streetcars:
Frequently Asked Questions, by William J. Mallett. For additional information concerning Race to the Top grants see
CRS Report R41355, Administration’s Proposal to Reauthorize the Elementary and Secondary Education Act:
Comparison to Current Law, by Rebecca R. Skinner et al.; and CRS Report R41267, Elementary and Secondary
School Teachers: Policy Context, Federal Programs, and ESEA Reauthorization Issues, by Jeffrey J. Kuenzi.
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incentives for State and local partners to adopt critical reforms in a variety of areas, including
safety and peak traffic demand management.”123
In the community and regional development area, the Obama Administration argued that the
Community Services Block Grant program’s “current structure does little to hold [community
action] agencies accountable for outcomes” and proposed to reduce its funding from $635 million
to $350 million and “to competitively award funds to high performing agencies that are most
successful at meeting community needs.”124 The Obama Administration also recommended
funding reductions for the Community Development Block Grant program and the HOME
Investment Partnership Program, arguing that these block grants needed “reforms to improve
each program’s performance by eliminating small grantees, thereby improving efficiency, driving
regional coordination, and supporting grantees in making strategic, high-impact investments that
address local community goals.”125
In the education, training, employment, and social services area, the Obama Administration
requested $4 billion “for a new competitive grant program, the State Higher Education
Performance Fund” to “support States that are committed to investing in higher education and
improving performance and outcomes at their higher education institutions” and $6 billion “to
offer competitive grants to partnerships of community colleges, public and non-profit training
entities, industry groups, and employers to launch new training programs and apprenticeships.”126
In the health area, the Obama argued that the Preventative Health and Health Services Block
Grant should be eliminated because it is “duplicative with existing activities that could be more
effectively implemented through targeted programs.”127
The Obama Administration has advocated the consolidation of categorical grant programs in
several functional areas as a means to reduce duplication and promote program efficiency.
However, instead of merging these categorical grants into a new block grant, the Obama
Administration has advocated merging them into other categorical grant programs. For example,
the Obama Administration supported the consolidation of dozens of surface transportation
categorical grant programs into other surface transportation categorical grant programs in P.L.
112-141, the Moving Ahead for Progress in the 21st Century Act of 2012 (MAP-21).128 The
123
U.S. Office of Management and Budget, Budget of the United States Government, Fiscal Year 2015: Analytical
Perspectives, p. 247, at http://www.whitehouse.gov/sites/default/files/omb/budget/fy2015/assets/spec.pdf.
124
Ibid., p. 249. For additional information concerning the Community Services Block Grant program see CRS Report
RL32872, Community Services Block Grants (CSBG): Background and Funding, by Karen Spar.
125
Ibid., p. 248. For additional information concerning the Community Development Block Grant program see CRS
Report R43394, Community Development Block Grants: Recent Funding History , by Eugene Boyd; and CRS Report
R43208, Community Development Block Grants: Funding Issues in the 113th Congress , by Eugene Boyd. For
additional information concerning the HOME Investment Partnership Program see P.L. 112-141; CRS Report R42734,
Income Eligibility and Rent in HUD Rental Assistance Programs: Responses to Frequently Asked Questions, by Libby
Perl and Maggie McCarty; and CRS Report RL34591, Overview of Federal Housing Assistance Programs and Policy,
by Maggie McCarty, Libby Perl, and Katie Jones.
126
Ibid., p. 249.
127
Ibid., p. 250.
128
For additional information concerning MAP-21 see CRS Report R42762, Surface Transportation Funding and
Programs Under MAP-21: Moving Ahead for Progress in the 21st Century Act (P.L. 112-141), coordinated by Robert
S. Kirk.
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Obama Administration has also advocated the merging of categorical grant programs in the
Department of Homeland Security as a means to “better target these funds.”129
Congressional Issues
As the data in Table 2, Table 3, and Table 4 attest, outlays for federal grants to state and local
governments, in both nominal and constant dollars, and the number of federal grants to state and
local governments have continued to increase since the mid-1980s. Given its increased size and
cost, providing effective congressional oversight of federal grants to state and local governments
can be a daunting task. Given the decentralized nature of the congressional committee system,
Congress is well-positioned to provide effective oversight of individual federal grants to state and
local governments. However, it could be argued that the decentralized nature of the congressional
committee system is not optimally conducive to providing effective oversight of the interactive
effects of multiple federal grants to state and local governments, or of the potential interactive
effects of federal grants to state and local governments and federal tax policy.
In the past, the independent, bipartisan ACIR, which operated from 1959 to 1996, provided
Congress and others a series of authoritative reports on the status and operation of
intergovernmental grants, both as individual programs and as a collective system. GAO has
published several reports over the years on federal grants that have helped to fill the informational
and analytic void left by ACIR’s demise.130 However, it could be argued that Congress may wish
to examine whether a reconstituted ACIR, perhaps one that focuses on the structure and operation
of the intergovernmental system as a whole, might prove useful as an additional source of
information and analysis as it conducts oversight of the federal grants to state and local
governments. For example, such an organization could provide an accepted methodology for
counting federal grants to state and local governments, and provide Congress periodic
assessments of the intergovernmental grant system’s overall performance.
Another potential congressional issue of interest is that neither the House nor the Senate currently
has in place a committee or subcommittee that is dedicated solely to the oversight of
intergovernmental issues. In the past, both the House and the Senate have had in place a
subcommittee dedicated to the oversight of intergovernmental issues, typically focusing on the
structure and operation of federal grants to state and local governments and federal mandates.
Congress may wish to consider whether the recent growth in the number of federal grants to state
and local governments and the increased funding for these grants warrants the formation of either
129
U.S. Office of Management and Budget, Budget of the United States Government, Fiscal Year 2015: Analytical
Perspectives, p. 248, at http://www.whitehouse.gov/sites/default/files/omb/budget/fy2015/assets/spec.pdf. For
additional information concerning the merging of categorical grant programs in the Department of Homeland Security
into a proposed National Preparedness Grant Program see CRS Report R42985, Issues in Homeland Security Policy for
the 113th Congress, coordinated by William L. Painter.
130
ACIR’s funding was withdrawn following the release for public comment and a hearing on a draft ACIR report on
federal mandates. ACIR was required by UMRA to conduct the study, and to make recommendations for mitigating the
effect mandates have on state and local governments. The draft report recommended the elimination of a number of
federal mandates which had strong support in Congress. ACIR’s commission members killed the report in a party-line
vote. Many observers concluded that the draft report led to ACIR’s losing its funding. See, John Kincaid, “Review of
‘The Politics of Unfunded Mandates: Whither Federalism?’ by Paul L. Posner,” The Academy of Political Science, vol.
114, no. 2 (Summer 1999), pp. 322-323.
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to State and Local Governments
a committee or a subcommittee whose primary focus is the examination of intergovernmental
issues.
Concluding Remarks
Although ARRA’s funding is temporary, President Obama’s recommended use of grant-in-aid
programs It could be argued that the recent upward trend in outlays for federal grants to state and local
governments is about to end because there is a general consensus that anticipated growth in
federal discretionary spending, which includes outlays for federal grants to state and local
governments, may be targeted for reductions as part of an effort to address the federal debt.
However, President Obama’s recommended use of federal grants to state and local governments
to create jobs and promote national economic growth, and Congress’s approval of that
strategy, suggests that Congress may continuehistorical tendency to
approve that strategy, suggests that the upward trend in federal grant outlays and federal grant funding and grant
numbers that has been experienced over the past several decades. President Obama’s FY2011
budget, for example, anticipates that federal outlays for grant-in-aid programs will fall from
$653.6 billion in FY2010 to $645.7 billion in FY2011 and $583.2 billion in FY2012, primarily
due to the depletion of temporary ARRA funding, and then increase to $585.8 billion in FY2013
and $613.7 billion in FY2014. All of these estimated budget outlays for federal grant-in-aid
programs are higher than the $461 billion in actual outlays for federal grant-in-aid programs in
FY2008 and $537 billion in FY2009. may continue, although at a
slower pace. As mentioned previously, President Obama’s FY2015 budget request estimates that
total outlays for federal grants to state and local governments will be $607.2 billion in FY2014,
$640.8 billion in FY2015, and $649.7 billion in FY2015.131
In retrospect, with the exception of the early 1980s, federal grant funding, the number of federal
grants, and the
issuance of federal mandates, have increased under both Democratic and
Republican Congresses
and Presidents. Historically, there have been notable differences between
the two parties’
approaches toward federalism. Although both parties have generally opposed
unfunded federal
mandates, the Republican Party has done so more aggressively, as evidenced by
its 1994 Contract
With America and sponsorship of UMRA. The Republican Party has also
advocated the
devolution of certain federal grant-in-aid programs to state and local governments
while the Democratic
Party has generally opposed devolution. The Republican Party has also
been more aggressive in
its support of the decentralization of grants-in-aid decision-making to
state and local governments
through the consolidation of categorical grants into block grants, support for for
revenue sharing, and
advocacy of administrative relief from various grant conditions. But, overall, the
historical record
suggests that for Members of both political paritiesparties, regardless of their personal ideological
ideological preferences, federalism principles often lose out when in conflict with other policy
goals, such as
reducing the federal budget deficit, promoting social values or environmental
protection, and
guaranteeing equal treatment and opportunity for the disadvantaged. As long at
this continues to
be the case, and the public continues to express support for specific government
programs, even
though they generally oppose “big” government as a whole, there is little
evidence to suggest that the
general historical trends of increasing numbers of grant-in-aid programs, increasing funding for
grant-in-aid programsfederal grants to
state and local governments, increasing outlays for those grants, an emphasis on categorical
grants, and continued enactment of federal
mandates, both funded and unfunded, is likely to change.
change.
131
U.S. Office of Management and Budget, Budget of the United States Government, Fiscal Year 2015: Historical
Tables, p. 259, at http://www.whitehouse.gov/sites/default/files/omb/budget/fy2015/assets/hist.pdf.
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Author Contact Information
Robert Jay Dilger
Senior Specialist in American National Government
rdilger@crs.loc.gov, 7-3110
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Federal Grants-In-Aid: An Historical Perspective on Contemporary Issues
Acknowledgments
This report includes information drawn from CRS Report RL30705, Federal Grants to State and Local
Local Governments: A Brief History, by Natalie Keegan. Her report is available by request from
the author.
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