3.3 Intergovernmental Relationships

Federal Intergovernmental Grants and Unfunded Mandates

Learning Objectives

By the end of this section, you will be able to:

• Explain how federal intergovernmental grants have evolved over time.

• Identify the types of federal intergovernmental grants.

• Describe the characteristics of federal unfunded mandates.

Introduction

The national government often relies on state and local governments to achieve its objectives, using intergovernmental grants as financial incentives to align state actions with national goals. In contrast to grants, unfunded mandates impose federal requirements without providing corresponding funding.

Evolution of Federal Intergovernmental Grants

• Historical Perspective: Federal grants have been used since the Articles of Confederation, starting with land grants in the early 1800s to support infrastructure such as roads and railroads, which were essential for national development.

  • Example: Colleges like Oklahoma State University and the University of Delaware are land-grant institutions due to federal land donations.

  • In 1890, black land-grant universities were established to support higher education for African Americans in the segregated South.

• Transition to Cash Grants: By the early 20th century, cash grants replaced land grants, leading to the modern federalism approach.

Types of Federal Intergovernmental Grants

1. Categorical Grants:

   • Limit recipient discretion and impose strict administrative criteria for the use of funds.

   • Require matching funds from states.

   • Examples: Medicaid and food stamp programs.

2. Block Grants:

   • Provide more spending flexibility with fewer federal administrative requirements.

   • Examples include the Workforce Investment Act and Surface Transportation Program.

3. General Revenue Sharing:

   • Distributed with minimal restrictions (abolished in 1986).

   • Over $85 billion was allocated to various governments from 1972–1986.

Growth in Federal Grants

Between 1960–2018, federal grants to state and local governments grew from $7 billion to $697 billion, with significant allocations for health and income security. In 2014, the majority of grants were categorical.

• Health: Over 60% of the federal grant budget in 2018 was dedicated to health-related programs like Medicaid, which have seen substantial growth over the past few decades.

Categorical vs Block Grants

• Popularity of Categorical Grants:

  • Elected officials can claim credit for effective outcomes.

  • They allow more federal control over program outcomes compared to block grants, which have faced criticism for accountability issues.

• Political Landscape:

  • Block grants increased during Reagan's presidency but have fluctuated under different administrations.

Unfunded Mandates

• Definition: Unfunded mandates are federal regulations requiring state and local compliance without full financial support.

  • Increased since the 1960s to ensure states adhere to national policy goals.

• Forms: Can be punitive (civil penalties or grant suspensions) for non-compliance, as seen with the Civil Rights Act of 1964.

  • E.g., The Real ID Act of 2005 imposed significant costs on states for compliance without adequate funding.

Conclusion

The persistent use of grants and unfunded mandates illustrates a pattern of coercion versus cooperation between federal and state governments. Understanding this relationship and the implications of these funding methods is crucial for navigating contemporary federalism.

Learning Objectives Achieved:

1. Evolution of Grants: Traced from land grants to modern cash grants, highlighting their role.

2. Types of Grants: Identified three types (categorical, block, general revenue sharing) with examples.

3. Characteristics of Unfunded Mandates: Explained their nature and examples of their impacts on state governance, particularly in the context of compliance costs and penalties.