Block Grants and Unfunded Mandates

Background

Two government budget practices that can have significant implications for lower levels of government are block grants and unfunded mandates.

Block grants pass decision-making authority and fiscal responsibility to a lower level of government. With the funds from a block grantA fixed federal appropriation that states may use at their discretion within broad federal guidelines., 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 level. Those people may be more familiar with the needs of the local population. 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.

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 cost.

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.