Federal Grants to State and Local
Governments: An Historical Perspective on
Contemporary Issues
Robert Jay Dilger
Senior Specialist in American National Government
April 15, 2014
Congressional Research Service
7-5700
www.crs.gov
R40638
Federal Grants to State and Local Governments
Summary
The federal government is expected to provide state and local governments more than $607
billion in federal grants in FY2014, funding a wide range of public policies, such as health care,
transportation, income security, education, job training, social services, community development,
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 the
federal grants-in-aid system are influenced by both internal and external factors. Internal factors
include congressional party leadership and congressional procedures; the decentralized nature of
the committee system; the backgrounds, personalities, and ideological preferences of individual
Members; 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 grants-in-aid system.
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 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.
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Federal Grants 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 .......................................................... 4
Number of Federal Grants to State and Local Governments ........................................................... 8
Land Grants and “Dual Federalism”: 1776-1860 .......................................................................... 12
The Origins of the Modern Grants-In-Aid System: 1860-1932 ..................................................... 16
The New Deal and The Rise of “Cooperative Federalism”: 1932-1960 ........................................ 18
The Great Society and The Rise of “Coercive Federalism”: 1960-1980 ....................................... 21
Another Related Development: Federal Mandates .................................................................. 27
Congress Asserts Its Authority: The Devolution Revolution That Wasn’t, 1980-2000 ................. 29
Federal Grants to State and Local Governments in the 21st Century ............................................. 35
Congressional Issues ...................................................................................................................... 40
Concluding Remarks ..................................................................................................................... 41
Figures
Figure 1. Outlays for Federal Grants to State and Local Governments, by Function,
FY2014 Estimate .......................................................................................................................... 6
Tables
Table 1. Classification of Grant Types by Three Defining Traits .................................................... 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........................................................................................................... 42
Acknowledgments ......................................................................................................................... 42
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Federal Grants 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 $607 billion in federal 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.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 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 grant’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 the
federal grants-in-aid system are influenced by both internal and external factors. Internal factors
include congressional party leadership and congressional procedures; the decentralized nature of
the committee system; the backgrounds, personalities, and ideological preferences of individual
Members (especially those of party leaders and committee and subcommittee chairs and ranking
minority Members); and the customs and traditions (norms) that govern congressional behavior.
Major external factors include input provided by voter constituencies, organized interest groups
(especially the National Governors Association, the National League of Cities, U.S. Conference
of Mayors, and the National Association of Counties), the President, and executive branch
officials.4 Although not directly involved in the legislative process, the Supreme Court, through
its rulings on federalism issues, also influences congressional decisions concerning federal grant-
in-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%202011-
2013%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 High
Formula Categorical Grant
Block Grant—Formula-Project Categorical
Project Categorical Grant
Grant
Open-ended Reimbursement
Categorical Grant
General Revenue Sharing
Range of Recipient’s Discretion in Use of Funds
Low Medium High
Project Categorical Grant
Block Grant
General Revenue Sharing
Formula-Project Categorical Grant
Formula Categorical Grant
Open-ended Reimbursement
Categorical Grant
Extent of Performance Conditions
Low Medium High
General Revenue Sharing
Block Grant
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, A-
52 (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)
Education,
Training,
Employment
Community
Income
and Social
and Regional
Fiscal Year
Total
Health
Security
Services
Transportation
Development
Other
2014 est. $607,244
$329,792
$103,994
$67,419
$62,825
$22,233
$20,981
2013 546,171
283,036
102,190
62,690
60,518
16,781 20,956
2012
544,569
268,277
102,574
68,126
60,749
20,258 24,585
2011 606,766
292,847
113,625
89,147
60,986
20,002 30,159
2010 608,390
290,168
115,156
97,586
60,981
18,908 25,591
2009 537,991
268,320
103,169
73,986
55,438
17,394 19,684
2008 461,317
218,025
93,102
58,904
51,216
19,221 20,849
2007 443,797
208,311
90,971
58,077
47,945
20,653 17,840
2006 434,099
197,347
89,816
60,512
46,683
21,285 18,456
2005 428,018
197,848
90,885
57,247
43,370
20,167 18,501
2000 285,874
124,843
68,653
36,672
32,222
8,665 14,819
1990 135,325
43,890
36,768
21,780
19,174
4,965 8,748
1980 91,385
15,758
18,495
21,862
13,022
6,486 15,762
1970 24,065
3,849
5,795
6,417
4,599
1,780 1,625
1960 7,019
214
2,635
525
2,999
109 537
1950 2,212
123
1,123
484
429
0 53
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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Education,
Training,
Employment
Community
Income
and Social
and Regional
Fiscal Year
Total
Health
Security
Services Transportation
Development Other
1940 967
22
271
238
165
0 271
1930 100 0 1
22
76
0 1
1922 118 0 1
7
92
0 18
1913 12
0
2
3
0
0 7
1902 7
0
1
1
0
0 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
Constant $
% of Total
Nominal $
% Outlays for
(in millions,
Federal
% of National
Fiscal Year
(in millions)
Individuals
FY2009)
Outlays
GDP
2014 est.
$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%
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 FY1980-
FY2003.19 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, A-
52a, 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, M-
139, 1984 at http://www.library.unt.edu/gpo/acir/Reports/information/m-139.pdf; ACIR, A Catalog of Federal Grant-
In-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/M-
182.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
General
Revenue
Fiscal Year
# of Grants
Categorical
Block
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 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, and/or federally recognized tribal governments).
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General
Revenue
Fiscal Year
# of Grants
Categorical
Block
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.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.
30 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.
31 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 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.”32
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.33
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
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
courses, that expedited the transportation of the United States mail and military personnel and
munitions.34 By 1900, over 3.2 million acres of federal land were 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 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.35 States were provided wide latitude in project selection and
federal oversight and administrative regulations were minimal.
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.
33 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.
34 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.
35 Matthias Nordberg Orfield, Federal Land Grants to the States With Special Reference to Minnesota (Minneapolis,
(continued...)
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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.36
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.37
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.38
(...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.
37 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.
38 Harry N. Scheiber, “State Law and ‘Industrial Policy’ in American Development, 1790-1987,” California Law
Review, vol. 75, no. 1 (January 1987), p. 419.
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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.40
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, respectively. 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.41 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.42 The Supreme
Court also limited congressional efforts to regulate interstate commerce by limiting the Interstate
Commerce Commission’s authority.43
Reflecting prevailing views concerning dual federalism, and limited federal fiscal resources, the
first on-going, federal cash grant to states, other than for the support of the National Guard, was
not adopted until 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.
41 15 Stat. 2 ff; 15 Stat. 14 ff; and 15 Stat. 41.
42 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. Ferguson 163 U.S. 537 (1896) which upheld the
constitutionality of state-imposed racial segregation.
43 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.
Congressional Research Service
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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 was conditioned by advance approval of state plans for
the funds’ use, annual audits and inspections, and a state matching requirement.46
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 cash grants to
encourage state and local governments to provide additional attention to policy areas Congress
considered of national interest. Between 1913 and 1923, Congress adopted new federal grant-in-
aid programs for highway construction, vocational education, public health, and maternity care.
Outlays for federal grants to state and local governments increased from $12 million in FY1913
to $118 million in FY1922.
44 Morton Grodzins, The American System (Chicago: Rand McNally, 1966), pp. 35, 37.
45 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.
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In 1923, Massachusetts brought suit against the Secretary of the Treasury, Andrew Mellon,
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 federal grants to state and local governments were optional and, as such,
were not coercive instruments.47 As a result, although few new federal grants to state and local
governments were adopted during the remainder of the 1920s, those 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
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 decision-
making 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 increasingly Republican, and the
two major political parties became increasingly competitive, each seemingly on the verge of
achieving majority party status at various times, but unable to retain that status permanently.48
The 1932-1960 period also saw the emergence of the “congressional conservative coalition,” the
unofficial title given to the shifting political alliances of southern, conservative Democrats and
Republican Members. The conservative coalition became an increasingly important counter-
balance to large Democratic majorities in both houses of Congress. Members of the conservative
coalition generally advocated balanced budgets and states’ rights, especially in civil 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 grants to state and local governments, respected state rights. As a result, the
grant-in-aid programs adopted during this time period tended to be in policy areas where state and
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 administrative conditions attached to these 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 federal grant-in-aid programs as
a means to help state and local governments combat poverty and create jobs. Congress approved
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.50
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 federal
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 grants 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.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
8 of the first 10 cases that it decided. Then, after President Roosevelt’s failed legislative proposal
to “pack the Court” in 1937, the Supreme Court upheld the constitutionality of several New Deal
laws, including the Social Security Act.52 As 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 old-
age 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.53
Although the Supreme Court was no longer viewed as a major obstacle for the expansion of the
federal grants-in-aid system, external factors led to a reduction in 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, outlays for federal grants to state and local governments
averaged $947 million from FY1939 through FY1946, less than half of the New Deal’s peak.
Following the War, the number of federal grants to state and local governments began to increase
at a somewhat accelerated pace, reaching 68 grants in 1950 and 132 grants in 1960. Outlays for
federal grants to state and local governments also accelerated, from $859 million in FY1945, to
$2.3 billion in FY1950, to $3.2 billion in FY1955, and to $7 billion in 1960.54 A new
development was increased outlays targeted at urban areas, such as grants for airport construction
(1946), urban renewal (1949), and urban planning (1954).55 The most significant federal grant-in-
aid program enacted during the 1950s was the $25 billion, 13-year Federal-Aid Highway Act of
1956, which authorized the construction of the then-41,000 mile National System of Interstate
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, 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
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 1967.57
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
Western 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 and government, demanded more freedom and rights for women, gays, and minorities,
and greater awareness of the need to protect the environment and address poverty.
The social movements and social unrest that swept 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
Members. 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 Members believed infringed on states’ rights, including civil rights
legislation.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
expand 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.”59 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 nearly 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 federal grants to state and local governments were adopted, including
Medicaid, which now has, by far, the largest budget of any federal grant-in-aid program. Outlays
for federal grants to state and local governments also increased, from $7 billion in FY1960 to $20
billion in FY1969. Functionally, federal grants for health care increased from $214 million in
FY1960 to $3.8 billion in FY1970, 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
transportation from $3 billion to $4.6 billion, and for community and regional development from
$109 million to $1.7 billion.60
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), primarily
because federal grants 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 grants 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 designed purposively by Congress to encourage state and local governments to move into
new policy areas, or to expand efforts in areas identified by Congress as national priorities,
especially in environmental protection and water treatment, education, public assistance, and
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, 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.62
Although most of the federal grants adopted during the 1960s were narrowly focused project,
categorical grants, the first two block grants were enacted during this time period. P.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.63 Two years later, Congress created the second block grant, the Law
Enforcement Assistance Administration’s Grants for Law Enforcement program (sometimes
referred to as the “Crime Control” or “Safe Streets” block grant) in the Omnibus Crime Control
and Safe Streets Act of 1968.64 Unlike the health care services block grant, it was created de
novo, and did not consolidate any existing categorical grants.65
The rapid expansion of federal 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
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.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 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.67
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;
• 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.68
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
an 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, which 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
• some governmental services have either costs or benefits that spill over onto
other localities or states. Water and air pollution controls, for example, 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.69
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 or per capita income. Because block grant and revenue sharing funding tends to
be more geographically dispersed than project categorical grants, congressional debates over
which grant mechanism was best had partisan overtones that often transcended discussions 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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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.”70 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 preventive health services.71
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.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.
71 ACIR, Categorical Grants: Their Role and Design, A-52, 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.
72 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.
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, 5 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.76 Overall, categorical grants accounted for 79.3% of the $91.3
billion in outlays for federal grants to state and local governments that year, block grants
accounted for 11.3% and general revenue sharing 9.4%.77
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.78
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.
76 ACIR, A Catalog of Federal Grant-In-Aid Programs to State and Local Governments: Grants Funded FY 1981, M-
133, 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, p. H-
20.
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.80
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.81
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.82
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.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, A-95, 1984, p. 71, at
http://www.library.unt.edu/gpo/acir/Reports/policy/a-95.pdf.
81 ACIR, Regulatory Federalism: Policy, Process, Impact, and Reform, A-95, 1984, 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.
Into 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.85 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
prevention and treatment.
The seemingly contradictory societal trends of self-promotion and altruism that swept across
American society during the 1980s and 1990s were 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.86 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 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).
86 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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determining how the program’s funds are spent, and impose fiscal restraint on all federal grant-in-
aid programs.87
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 77 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
• a revised Community Development Block Grant program (adding an existing
discretionary grant and 3 categorical grants).88
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.89 President Reagan argued
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.
88 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.
89 U.S. General Accounting Office, Block Grants: Characteristics, Experience and Lessons Learned, GAO/HEHS-95-
74, February 9, 1995, p. 2, at http://www.gao.gov/assets/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
Community 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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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.92 Nonetheless, largely due to the Omnibus
Budget and Reconciliation Act of 1981, in 1984 there were 12 block grants in operation
(compared to 392 categorical grants), accounting for about 15% of total grants-in-aid funding.93
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 1973.94
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 that 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 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.
93 ACIR, A Catalog of Federal Grant-In-Aid Programs to State and Local Governments: Grants Funded FY1984, M-
139, 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.
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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feared that, if enacted, the proposals would result in less funding for the affected programs. For
example, the National Governors Association supported the federal takeover 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.96
Evidence of a coming devolution revolution proved elusive as the upward trend in outlays for
federal grants to state and local programs resumed in FY1983, although at a somewhat lower rate
of increase than during the previous two decades. As shown in Table 2, outlays for federal grants
to state and local governments increased from $91.4 billion in FY1980 to $135.3 billion in
FY1990 and $285.9 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
FY2000.97
Functionally, as shown in Table 2, outlays for federal grants to state and local governments for
health care increased from $15.8 billion in FY1980 to $124.8 billion in FY2000. Also, outlays 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
$21.9 billion to $36.7 billion; for transportation from $13.0 billion to $32.2 billion; and for
community and regional development from $6.5 billion to $8.7 billion.
The number of federal grants to state and local governments fell at the beginning of this era, from
541 in 1981 to an era low of 405 in 1984, but then resumed an upward trend. As indicated in
Table 4, there were 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 63.98 ACIR concluded that “despite efforts to constrain the growth of
intergovernmental regulation, the 1980s remained an era of regulatory expansion rather than
contraction.”99 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
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.
97 U.S. Office of Management and Budget, Historical Tables: Budget of the United States Government, Fiscal Year
2009, 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, 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.
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 funds during a decade of historic deficits has made the alternative of federal
mandates look increasingly attractive to federal policymakers.100
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.101
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 2013 are $75 million for
intergovernmental mandates and $150 million for private sector mandates. CBO must prepare
brief statements of cost estimates for those mandates that have estimated costs below these
thresholds.102
Members can raise a point of order if the measure containing the mandate lacks a CBO cost
estimate, either because the committee failed to publish the CBO’s cost estimate in its report or in
the Congressional Record, or CBO determined that no reasonable estimate of the mandate’s cost
was feasible. Members can also raise a point of order if the measure has an intergovernmental
cost estimate that exceeds the annually adjusted cost threshold in any of the first five fiscal years
the mandate would be in effect.
UMRA’s impact on unfunded mandates has been relatively limited. For example, from 1996 to
June 2013, 51 points of order were raised in the House and 3 in the Senate. One point of order,
concerning a 1996 minimum wage bill, was sustained 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.
101 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.
102 For further analysis, see CRS Report R40957, Unfunded Mandates Reform Act: History, Impact, and Issues, by
Robert Jay Dilger and Richard S. Beth.
103 CRS Report R40957, Unfunded Mandates Reform Act: History, Impact, and Issues, by Robert Jay Dilger and
(continued...)
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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.104
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.105
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 1994.106
The seemingly contradictory trends of centralization and decentralization that took place in the
federal intergovernmental system 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
(...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.
105 David B. Walker, The Rebirth of Federalism, 2nd ed. (New York: Chatham House Publishers, 2000), p. 165.
106 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; and CRS Report RL31082, Child Welfare
Financing: Issues and Options, by Karen Spar and Christine M. Devere.
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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 state and local governments greater flexibility in determining
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
Congress).107 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 Members 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 policy makers. For example, it could be argued that President 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.”108 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.109
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.
108 Timothy J. Conlan, “Federalism and Competing Values in the Reagan Administration,” Publius: The Journal of
Federalism, vol. 16, no. 1 (Winter 1986), p. 30.
109 Ibid.
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… [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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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.117
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
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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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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a committee or a subcommittee whose primary focus is the examination of intergovernmental
issues.
Concluding Remarks
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 historical tendency to
approve that strategy, suggests that the upward trend in federal grant outlays and federal grant
numbers that has been experienced over the past several decades 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, for
revenue sharing, and administrative relief from various grant conditions. But, overall, the
historical record suggests that for Members of both political parties, regardless of their personal
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 federal 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.
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
Acknowledgments
This report includes information drawn from CRS Report RL30705, Federal Grants to State and
Local Governments: A Brief History, by Natalie Keegan. Her report is available by request from
the author.
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