Federal Grants to States and Local Governments Under Continuing Resolutions

Federal Grants to States and Local Governments Under Continuing Resolutions

January 5, 2022
Federal Grants to States and Local Governments Under
Continuing Resolutions
Introduction
the principal purpose is to accomplish a purpose authorized
Congress uses an annual appropriations process to fund the
by Congress. Federal assistance programs are also
routine activities of most federal agencies. This process
commonly referred to as “federal grant programs.”
anticipates the enactment of 12 regular appropriations bills
There are four phases of a federal grant life cycle: pre-
before the beginning of the fiscal year. When this process is
award, award, grant administration, and post-award (see
delayed beyond the start of the fiscal year, one or more
figure below). Interim funding measures that do not provide
continuing appropriations acts (commonly known as
“
a full year of funding for federal grant programs potentially
continuing resolutions” or “CRs”) can be used to provide
affect each phase. Generally, the impact of the interim
funding until action on regular appropriations is completed.
funding may be influenced by certain provisions contained
Federal agencies operating under a CR may encounter
within the CR that might provide specific direction to
difficulties with the budgetary execution of their programs.
federal grant administering agencies regarding program
In particular, CRs can limit the ability of agencies to take
funding. In the absence of provisions for specific grant
actions that would obligate funds beyond the expiration of
programs, general grant administration practices may be
the CR. This can have an impact on the ability of federal
delayed or otherwise affected when full-year funding is not
agencies to review and process applications for federal
provided. For example, federal agencies may delay
grant programs, and on fiscal planning by state and local
calculating formula allocations for formula-based programs,
governments anticipating federal grant funding.
or may postpone making decisions regarding which
Grant Administration Issues Under CRs
applications will be awarded funding in competitive grant
Federal outlays for grants to states and local governments
programs. The grant administration practices affected by
have grown from $16.4 billion in 1940 to $734.9 billion in
CRs may vary depending on the timing of the interim
2020 in constant FY2012 dollars. There are currently
funding measure, with respect to the delays both at the
approximately 2,073 federal assistance programs authorized
beginning of the fiscal year due to the initial CR and at later
by Congress. Federal assistance refers to the transfer of
phases of the grant life cycle for CRs (and any extensions)
money, property, services, or other items of value for which
that have longer duration.

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Federal Grants to States and Local Governments Under Continuing Resolutions
Grant Pre-award Phase
recipients with respect to whether additional funding will be
provided under subsequent funding measures. Such partial
Federal grant program administration practices are typically
grant awards may not be adequate for all grant recipients.
structured to begin with the pre-award phase beginning at
For example, if a recipient is provided only partial funding
the onset of the federal fiscal year. During the pre-award
for a construction project at the beginning of the fiscal year,
phase of the federal grant life cycle, federal grant
they may be hesitant to break ground and begin work
administering agencies must evaluate the level of
without knowing whether or when the full amount of
appropriations provided for grant programs and apply
federal funding will be available. Such uncertainty may be
funding allocation methodologies. Continuing resolutions
less problematic for service-oriented grants since partial
create two significant challenges during this phase.
funding might allow a grant recipient to continue providing
First, CRs prohibit an agency from taking most actions that
services with smaller grant awards until full funding can be
would initiate new obligations or “new starts.” Grant
provided. For partial grant awards to be made, however,
awards for which the funding would be provided for the
federal agencies may have to execute several grant
first time are typically viewed as a “new start” since there is
agreements for a single project rather than executing a
no previous contractual relationship with the potential grant
single grant agreement at the beginning of the fiscal year
recipient. Such prohibition may also apply to multiyear
for the entire grant award period, increasing administrative
grant awards, when the current fiscal year appropriations
costs for both the federal agency and the grantees. As a
would fund the second or subsequent years of the grant
result, agencies may simply delay making any grant awards
award (most “multiyear” grant awards are structured as a
until the full-year appropriation is available.
series of single-year awards with separate grant agreements
executed at the beginning of each fiscal year). As a result,
Grant Program Administration Phase
CRs can delay grant funding for both new grant awards and
and Post-award Audit Phase
existing federally funded grant projects.
Once a federal grant has been awarded, grant recipients can
begin the programs or services for which federal funding
Second, CRs do not determine the level of funding that will
was provided. Continuing resolutions may influence when
be ultimately available for a given program for the entire
grant awards are made and whether a single grant award or
fiscal year, and this uncertainty delays the ability of the
multiple grant awards are provided. This affects the
federal grant administering agency to establish funding
oversight of federal grant programs, because this may cause
allocations. In turn, this delay creates uncertainty for state
the grant program administration activities and the post-
and local governments with regard to availability of federal
award audit activities to overlap. When this happens, a
funding for grant awards and may create cascading effects
federal agency may be unable to appropriately evaluate the
on their budget processes. State governments are frequently
risks of waste, fraud, and abuse for the program, and for a
the primary grant recipient for federal grant awards, but the
particular grant recipient, prior to making subsequent
majority of those funds are passed through to the sub-state
awards.
level. This can be further complicated because the fiscal
year for most states begins in July and so does not align
Additionally, when CRs affect the normal timing of grant
with that of the federal government. This potential impact
awards, there is the potential for overlapping grant award
applies to both new awards and to existing awards with
periods for the same grant recipient. For example, each
multiyear project timelines.
grant award typically includes a 12-month period for
approved activities that commences at the time the grant
Grant Award Phase
agreement is executed. If funding to a grant recipient for a
During the award phase, federal grant administering
fiscal year is delayed until the middle of that fiscal year
agencies select grant recipients and develop and execute
while funding for the next fiscal year becomes available
grant agreements awarding funding. The extent to which
without delay, the grant recipient could have overlapping
CRs affect the award phase may depend upon the duration
grant award periods. This would create a period of several
of the award period of the grant program. If the level of
months where the grant recipient has two active grant
full-year funding is not determined until later in the fiscal
awards under the same program at the same time. This
year, the grant award is typically delayed. While federal
could create oversight and accountability challenges as well
agencies can announce the prospective availability of
as program evaluation challenges for the federal
funding (through a Notice of Funding Availability) and can
administering agency. Typically, grant management
accept applications, federal administering agencies
practices and achievement of grant program goals are
generally do not execute new grant agreements until the full
assessed at the end of the grant’s performance period. In
appropriation level for a grant program is known since the
some cases, the federal agency might need to make the
federal agency cannot obligate funding not yet appropriated
second grant award prior to evaluating the grantee for
by Congress. For grant programs that use formula
appropriate compliance with the previous award. Awarding
allocations, the amount of individual grant awards cannot
funding without assessing the use of previous funding may
be determined until the full funding level is known; thus
increase the risk of waste, fraud, and abuse.
grant agreements cannot be executed until the award
amounts can be calculated.
Natalie Keegan, Analyst in American Federalism and
Emergency Management Policy
Although some grant programs may be able to make partial
grant awards under CRs if Congress has provided authority
IF12011
for agencies to do so, uncertainty may remain for grant

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Federal Grants to States and Local Governments Under Continuing Resolutions

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https://crsreports.congress.gov | IF12011 · VERSION 1 · NEW