The federal government provides states with block grants in several discretionary spending areas. States frequently pass along block grants to local governments, either with or without additional state funds. Block grants have a long tradition in intergovernmental relations and have become more common in recent years. They can be a good way to empower people familiar with the needs of a population to make decisions about service delivery. On the other hand, block grants can be problematic if they supplant previously designated funding or if quality controls are inadequate.
For example, the federal government has established several programs for states to operate, with the understanding that the federal government would fund the programs. Yet some of them were underfunded, including Temporary Assistance for Needy Families and programs established under the No Child Left Behind Act (education reform) and the Homeland Security Act (antiterrorism efforts).
Such underfunding forces lower levels of government to implement policies without adequate resources
Block Grants and Unfunded Mandates: Policy
When a higher level of government determines that a lower level should perform a necessary function, adequate resources must be made available to accomplish the task. 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, not as a way to reduce costs.
Services should be implemented and operated by the level of government most appropriate to deliver them. When a block grant is deemed appropriate:
- States should at a minimum maintain their current funding commitments.
- Funding formulas should accommodate changes in demographics and inflation to meet the needs of benefit recipients.
- Discretionary decisions about the use of block-grant allocations should be made in the open and with input from affected stakeholders. Adequate advance notice, open hearings at the local level, and accurate, timely information are essential to the process. Distance information and web-based systems should also be employed to encourage public participation.
- Allocation decisions should reflect localities’ needs and ability to raise revenues and should accommodate variations in service-delivery cost.