Block grants are used by the federal government to provide assistance to states, cities, and local governments as an alternative to the more traditional categorical grant. Rather than specifying an exact program to be implemented, the funds are for a general purpose, such as employment assistance. The specific structure, goals, and procedures of the program are left up to the recipients to determine, and federal scrutiny is generally less specific. First implemented in the 1970s, block grants have been proposed on numerous occasions as a means to renegotiate intergovernmental relations.
The earliest argument in favor of block grants emerged in the Richard M. Nixon administration ( 1969–1974 ) as part of the president's “New Federalism” and was framed in terms of specialization of labor. The federal government could efficiently collect revenue, which could be passed back to states and localities as block grants for various policy areas. States and localities would have more flexibility to develop programs optimized for their own contexts rather than having to follow a uniform policy model. In order to create these new block grants, the budget for existing categorical programs would be consolidated.
This initial proposal was opposed by both congressional committees and interest groups representing the ultimate beneficiaries of the categorical programs. Congress members opposed the grants on the grounds that it would be difficult to maintain oversight and ensure that funding was used appropriately. Interest groups opposed them out of concern that their programs could be more easily defunded without the specific support of sympathetic congressional committees. These forces defeated the bulk of Nixon's block grant proposals, and their concerns would become perennial sources of criticism for this policy tool.
In the 1980s the Ronald Reagan administration ( 1981–1989 ) revisited block grants not only as a means of specialization but also as vehicles toward shifting more power to the states. In moving decision-making processes from Washington to the state capitals, and shifting the grant recipients from specialized interests to the states, the Reagan administration hoped to disrupt the “iron triangles” of congressional committees, interest groups, and bureaucrats that some state governors asserted closed them out of the process and created a feedback loop, driving an ever-expanding public sector.
These new block grants also reduced funding for the programs they consolidated. Part of the reason for this was the presumably diminished administrative workload due to less detailed program requirements and less stringent reporting to Washington. These reductions have been a popular expected benefit of block grants, although they have been counteracted by congressional concerns for oversight, which tend to increase whatever paperwork demands are placed on block grant recipients over time.
Another goal of the Reagan administration was to reduce the role of the federal government. Because it was politically untenable to persuade Congress to immediately return the bulk of domestic policy to the states, block grants were seen as a way to at least reduce the centralization of programs imposed from above. After the Republican congressional turnover of 1994, this view was carried on by the Republican reform efforts of the 104th Congress, championed by the new Speaker of the House, Newt Gingrich. The results have not been without controversy. Many block grants gave primary budgeting authority to states, much to the displeasure of some local government officials who had preferred dealing with the federal government. Other critics were wary of increasing state authority because of historic concerns that many states were either unwilling or unable to address some policy areas independently. However, block grant proponents asserted that the mid-1970s had witnessed a largely unreported revolution in many states that increased their responsiveness and responsibilities.
To this day there are over twenty extant block grants, including such large-scale programs as Temporary Assistance to Needy Families (TANF) and the Low Income Home Energy Assistance Block Grant. Their chief advantage remains that suggested by Nixon: the ability of states, local governments, and cities to use federal funds to develop programs that fit their unique needs. For example, the Community Development Block Grant (CDBG), one of the original block grants of the Nixon administration, has funded a multitude of development projects in large cities throughout America.
However, certain programs such as healthcare and social services have proven to require more administrative capacity than some states and localities can easily muster. The nonspecific nature of block grants also makes it more difficult for regions of unusually concentrated need for a particular program to receive adequate support, since resources are allocated proportionally to regions, although certain needs (such as the impoverished population in the case of TANF) may be disproportionately distributed throughout states or regions.
SEE ALSO Devolution ; Federalism, Theory of ; Federalism in American History ; Intergovernmental Relations .
Beam, David R., and Timothy J. Conlan. “Grants.” In The Tools of Government: A Guide to the New Governance, edited by Lester M. Salamon. New York: Oxford University Press, 2002.
Conlan, Timothy. From New Federalism to Devolution: Twenty-Five Years of Intergovernmental Reform. Washington, DC: Brookings Institution, 1998.
Conlan, Timothy J., and Paul L. Posner, eds. Intergovernmental Management for the Twenty-First Century. Washington, DC: Brookings Institution, 2008.
Posner, Paul L., and Margaret T. Wrightson. “Block Grants: A Perennial, But Unstable, Tool of Government.” Publius: The Journal of Federalism 26, no. 3 (1996): 87–108.
Pennsylvania State University