AARP Hearing Center
Background
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 to provide broadly defined benefits or services. With the funds from a block grant, the lower level of government obtains latitude for spending the money. This reflects the belief that the lower level of government knows their needs better than the higher level of government. In exchange, though, the higher level of government generally caps the funds available each year. This can be problematic as the funds provided may be insufficient to achieve the intended purpose. In addition, quality controls may be inadequate.
Sometimes, the higher level of government imposes requirements on lower-level jurisdictions without providing the resources necessary to pay for them. This is called an unfunded mandate. Without adequate resources, the lower level of government must spend their own funds. This can potentially displace other priorities.
BLOCK GRANTS AND UNFUNDED MANDATES: Policy
BLOCK GRANTS AND UNFUNDED MANDATES: Policy
Purpose
Passing responsibilities down to lower levels of government should be undertaken primarily to place services closer to the people being served and to maximize administrative efficiencies. It should not be done as a way to reduce costs.
Unfunded mandates
Higher levels of government should provide adequate resources when mandating functions to lower levels of government.
Block grants
Services should be implemented and operated by the level of government that can most appropriately and efficiently deliver them.
Block grants should be structured to ensure that the lower level of government maintains the prior level of funding.
Funding formulas and allocation decisions should accommodate changes in demographics and inflation. They should also meet the needs of benefit recipients, reflect localities’ needs and ability to raise revenues, and accommodate variations in service-delivery costs.
Decisions about the use of block-grant allocations should be made in the open. Adequate advance notice and information must be provided to affected stakeholders, and input from those stakeholders must be considered. People who cannot attend meetings in person should still be able to provide feedback.