Block Grants and Unfunded Mandates

Block grants and unfunded mandates are two government budgetary practices that can have significant implications for lower levels of government. 

Block grants pass decision-making authority and fiscal responsibility to a lower level of government. With the funds from a block grant, the lower level of government obtains broad latitude for spending the money. In exchange, the higher level of government generally caps the funds available each year for the program. 

Block grants can be a good way to empower people at the state and local levels. Those people may be more familiar with the needs of local populations. On the other hand, block grants can be problematic. They supplant funds that the lower level of government had previously spent. Quality controls may be inadequate, or funds provided may be insufficient to achieve the intended purpose. 

Sometimes the federal government imposes requirements on lower-level jurisdictions. If the necessary resources are not provided to pay for these demands, it is called an unfunded mandate. Without federal government resources, states must spend their own funds. This can potentially displace other priorities.