LegiStorm

Summary:

Block grants provide state and local governments funding to assist them in addressing broad purposes, such as community development, social services, public health, or law enforcement, and generally provide them more control over the use of the funds than categorical grants. Block grant advocates argue that block grants increase government efficiency and program effectiveness by redistributing power and accountability through decentralization and partial devolution of decisionmaking authority from the federal government to state and local governments. Advocates also view them as a means to reduce the federal deficit. For example, the Trump Administration's FY2020 budget request recommended that Medicaid be set "on a sound fiscal path ... by putting States on equal footing with the Federal Government to implement comprehensive Medicaid financing reform through a per capita cap or block grant.... [the proposal would] empower States to design State-based solutions that prioritize Medicaid dollars for the most vulnerable and support innovation." The Trump Administration's FY2021 budget request added that "Medicaid reform would restore balance, flexibility, integrity, and accountability to the State-Federal partnership." Block grant critics argue that block grants can undermine the achievement of national objectives and can be used as a "backdoor" means to reduce government spending on domestic issues. For example, opponents of converting Medicaid into a block grant argue that "block granting Medicaid is simply code for deep, arbitrary cuts in support to the most vulnerable seniors, individuals with disabilities, and low-income children." Block grant critics also argue that block grants' decentralized nature makes it difficult to measure their performance and to hold state and local government officials accountable for their decisions. Block grants have been a part of the American federal system since 1966, and are one of three general types of grant-in-aid programs: categorical grants, block grants, and general revenue sharing. These grants differ along three defining characteristics: the range of federal control over who receives the grant; the range of recipient discretion concerning aided activities; and the type, number, detail, and scope of grant program conditions. Most categorical grants are awarded through a competitive application process, can be used only for a specifically aided program, usually are limited to narrowly defined activities, and have more administrative conditions than other grant types. Block grants address broader purposes, are distributed by formula, allow greater flexibility in the use of the funds, and have fewer administration conditions than categorical grants. General revenue sharing grants are distributed by formula, have few restrictions on the purposes for which the funding may be spent, and have the least administrative conditions of any federal grant type. Project categorical grants and general revenue sharing grants represent the ends of a continuum on the three dimensions that differentiate grant types, with block grants being at the midpoint. However, there is some overlap among grant types in the middle of the continuum. For example, some block grants have characteristics normally associated with formula categorical grants. This overlap, and the variation in characteristics among block grants, helps to explain why there is some disagreement concerning precisely what constitutes a block grant, and how many of them exist. This report provides an overview of the six grant types, criteria for defining a block grant, a list of current block grants, an examination of competing perspectives concerning block grants versus other grant mechanisms to achieve national goals, an historical overview of block grants' role in American federalism, and a discussion of recent block grant proposals.