Summary: In examining a variety of grant programs, GAO has supported the concepts of: (1) consolidating separate categorical programs having related objectives and serving similar target populations, (2) placing management responsibility for similar programs within the same agency, and (3) giving the States greater flexibility to match resources with needed priorities. The consolidation of fragmented and restrictive categorical grants into broader purpose programs is fundamental to improving the administration of assistance programs. Block grants seek to achieve the goal of supporting rather than changing State and local priorities by providing assistance for a broad range of purposes in a functional area, thereby maximizing flexibility and easing administrative burdens at State and local levels. Various features to be considered in designing block grant legislation, such as that currently under consideration, include provisions for accountability, formulas for fund distribution, and matching or maintenance of effort. In designing block grants, Congress must consider the trade-offs between State and local discretion and Federal control. There should be a balance between the extent of flexibility provided to State and local governments and the degree of accountability to the Federal Government required to assure that the program's national objectives will be met. The provision of accountability, planning provisions, performance goals, oversight requirements, and specification of required or ineligible activities should be considered. While the proposed legislation requires grantees to keep the records prescribed by the Secretary of Energy for effective financial audits and performance evaluations, it contains no requirements for performance goals or activity requirements. It increases the matching funds from non-Federal sources from 30 percent for fiscal year (FY) 1982 to 50 percent for FY's 1983 and 1984. The appropriateness and effectiveness of matching requirements have become important issues for the entire public sector because of the rapid growth of Federal matching grant programs over the past years and the recent wave of fiscal constraints and expenditure reductions by all levels of government. In a recent report, GAO recommended that Congress use matching requirements more sparingly and concluded that maintenance of effort requirements must be made more flexible to avoid penalizing bona fide spending reductions as well as program innovation.
