Summary: Legislation passed in 1981 assigned primary administrative responsibility for nine block grants to States. GAO studied the transition process and early implementation of these grants and found that the State transition to block grant administration is proceeding well, considering the short timeframe between passage of the legislation and its implementation, program funding reductions, and uncertainties surrounding 1982 appropriations. An important factor easing the initial transition to most of the block grants was the States' involvement in the predecessor programs. Numerous States have expressed concern over accepting the Primary Care Block Grant because it contains no allowance for administrative costs, requires funding of existing community health centers, and includes a matching provision. A major concern was coping with the reduced funding levels accompanying block grants. Such factors as ongoing outlays from predecessor programs and provisions requiring continued funding of certain activities limited the scope of initial changes made in most block grants. Most of the States visited were developing plans for making changes to the three health block grants and the community services block grant program, while more changes had been made immediately in block grants which had no ongoing categorical outlays and fewer legislative restrictions. State officials complained that planning was complicated by the uncertainty of block grant appropriations. The block grant legislation and regulations place great reliance on State oversight procedures. Nine of the States had enacted measures influencing block grant implementation and enhancing their oversight of future block grant decisions. A primary vehicle for assuring accountability and assessing compliance with Federal law is State audits of block grant funds. GAO is in the process of developing a standardized block grant audit provision covering both State and Federal audit responsibilities. Coordination and leadership to promote effective implementation of block grant audit legislation is needed. Legislation calls for the Secretary of Health and Human Services to consult with GAO and the States concerning the form and content of the health block grant annual reports, although the agency stated it will not prescribe the form or content of these reports. There are indications that States are working together in developing similar reporting approaches for other block grants as well.
