What are Block Grants?

/ City Reporter

Block grants are a form of fiscal federalism where the federal government provides state or local governments with funds to support broad programs and services. Unlike categorical grants, which are restricted to specific purposes, block grants offer more flexibility in how the money can be used. This post provides some key points and references to understand block grants in the United States.

Definition and Purpose

Block grants are financial aids provided by the federal government to state and local governments for general purposes. They allow states more discretion in how to allocate the funds within broad functional areas, such as education, health services, or community development (U.S. General Accounting Office, 1997).

Historical Context

The use of block grants began to expand significantly during the Nixon administration with the New Federalism initiative, which aimed to decentralize federal power and give states more control over spending (Nathan, R. P. 1996).

Major Block Grants

Some notable examples of block grants include the Community Development Block Grant (CDBG), the Social Services Block Grant (SSBG), and the Temporary Assistance for Needy Families (TANF) program. Each of these grants serves broad purposes and allows significant state discretion in fund allocation (Center on Budget and Policy Priorities, 2019).

Advantages and Criticisms

Advantages
Proponents argue that block grants provide states with the flexibility to tailor programs to meet local needs and innovate in their use of funds. This can lead to more efficient and effective use of resources (Conlan, T. J., & Posner, P. L. 2008).

Criticisms
Critics claim that block grants can lead to reduced funding over time because they often do not keep pace with inflation or rising needs. There is also concern that states might not maintain the same level of services or that funds might not be allocated equitably (Schneider, A., 2007).

Current Trends

Recent discussions about block grants often center on healthcare reform and welfare programs. Proposals to convert programs like Medicaid into block grants have been debated, with concerns about potential funding cuts and the impact on low-income populations (Rudowitz, R., & Garfield, R., 2018).

References

  • U.S. General Accounting Office. (1997). “Block Grants: Characteristics, Experience, and Lessons Learned.”
  • Nathan, R. P. (1996). “Block Grants: The Lessons of Block Grants.” Public Administration Review, 56(3), 211-220.
  • Center on Budget and Policy Priorities. (2019). “Policy Basics: Block Grants.”
  • Conlan, T. J., & Posner, P. L. (2008). “Intergovernmental Management for the 21st Century.”
  • Schneider, A. (2007). “Devolution, Fiscal Federalism, and Changing Patterns of Central-State Fiscal Relations.” Publius: The Journal of Federalism, 37(4), 535-555.
  • Rudowitz, R., & Garfield, R. (2018). “10 Things to Know about Medicaid: Setting the Facts Straight.”