Grants in Blocks These provide more freedom to state political actors to design programs to the specific requirements of the state than category grants. The federal government imposes little constraints, enabling states to spend funding in wide programmatic areas. For example, a state can use its share of Block Grants for Education to support additional learning time for students or to fund school construction projects. Conversely, with a category grant, states must use the funds within the strict parameters set by Congress. For example, they cannot allocate these funds toward other education priorities such as teacher salaries.
Block grants are also more flexible than categorical grants. With a block grant, a state agency can decide how to use the money rather than having it dictated to them by Congress. This gives the agency more control over the program's direction and allows it to make changes as needed without seeking approval from legislators. Categorical grants, on the other hand, must be spent only on certain types of programs (such as early childhood education or homeless assistance) and may not be used for other purposes. Agencies receiving these types of grants are often required to submit annual reports to Congress about their usage of the funds.
In conclusion, block grants give states more control over their own destiny while categorical grants limit their flexibility. It all comes down to how much power you want the federal government to have over your state budget - whether that be more control or less.
By merging many categories programs under one broad term, block grants reduce the constraints on federal funding to state and local governments. Congress supports category grants because they allow expenditures to be targeted based on congressional objectives. Additionally, category grants provide states and localities with more flexibility in how they spend their funds compared to a strict formula applied to all federal dollars.
Category grants include: Social Security, Medicare, Medicaid, General Assistance (GA), Temporary Assistance for Needy Families (TANF), Substance Abuse and Mental Health Services Administration (SAMHSA) Grants, Department of Education Title I Funds, Indian Education Funds, and Child Care and Development Block Grant (CCDBG). Category grants make up about two-thirds of Federal assistance to states and territories. States must comply with certain requirements in order to receive these funds. For example, states must submit a plan describing how they will use the money and show that they are meeting federally mandated goals such as providing education or preventing violence.
Block grants include all other programs, including those that are not categorized by subject matter. Because there is no limit on what states can do with block grant funds, they offer federal officials much greater control over how those resources are spent. For example, block grants could include all of the Federal income tax withholding allowance, which amounts to about $120 billion each year.
Governors like block grants because they give states greater leeway in deciding how to spend the money. In addition, governors can choose which programs receive their block grants: only those that are popular or all of them. By contrast, formula grants require recipients to use the money in specific ways; if a program isn't cost effective or fails to meet other requirements, then it cannot be funded with formula grant money.
In general, block grants are easier to administer than formula grants because there is less paperwork required and no need for detailed reports. However, block grants may not provide enough flexibility for states to address emerging issues within their communities. For example, if a state wants to expand Medicaid under Obamacare but its governor opposes doing so, then it cannot do so with a block grant. Finally, block grants can create disparities in funding between states. If a state does not use its funds efficiently, then it will get less money in future years even though no changes have been made to determine who gets what amount of money.
Formula grants, by comparison, offer more control for states. They can apply for certain categories of funds (such as Medicaid or SNAP) and/or require recipients to follow particular procedures (such as obtaining user approval from beneficiaries before making major policy changes).
Block grants combine federal categories programs and funding and allow state officials more control over how they are used. Block grants, on the other hand, provide governments the chance and obligation to use creativity and innovation to restructure programs and make big structural changes. They can also be used to fund special projects or initiatives.
In general, block grants have two main effects on the federal-state partnership. First, they limit what states can do with their funds. Second, they relieve Congress of its duty to review how states use their money. Because of these two factors, it is not uncommon for states to spend grant money on issues that had nothing to do with why the grant was given to them in the first place.
For example, a state might use its block grant money to hire more teachers or build more prisons. Both of these are worthy goals on their own, but if the state doesn't have enough money left over after doing so to pay for other needs (like new school construction), then it's difficult to argue that they were granted those funds for purposes other than what we've just described.
Similarly, states may choose to use their block grant funds to purchase equipment that would otherwise need to be financed through tax revenues. This is known as "tax expenditure" because it reduces the amount of revenue available for other uses.