Money for nothing? The story of grants

Short history of Grants Land grant colleges exist before the Constitution Cash grants start in 1808 for state militias Grants really explode from the 1960’s to the 1980’s Top 5 grant areas- housing assistance for the poor, Medicaid, highways, unemployment, and welfare

Why do states like grants? Federal gov’t ran surpluses through 1800’s thanks to tariffs Federal income tax is progressive Federal gov’t can borrow money more easily than state govt’s can States see federal money as “free”

Why states DON’T like grants In the 1960’s, the federal government started telling states what to do with grant money. Power shifts from state to federal discretion. States sometimes have to lobby against each other for grant money, creating an intergovernmental lobby.

Types of Grant Categorical – specific purpose defined by law, and require matching funds from the state Block – combine several projects into one grant –Operational: running state programs –Capital: for buildings –Entitlement: transfers income to people (Medicaid, AFDC)

When Federalism Collides Revenue Sharing ran from 1972 – There were no matching funds needed, and states could spend on anything government related. Conditions of aid are regulations that states must follow to get aid from the federal gov’t.

Biggest Recent Grant Story Bill Clinton signed the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA), a federal law considered to be a fundamental shift in both the method and goal of federal cash assistance to the poor. PRWORA instituted Temporary Assistance for Needy Families (TANF) which became effective July 1, TANF replaced Aid to Families with Dependent Children (AFDC) program which had been in effect since 1935, changing welfare from a categorical grant to a block grant. Federal regulations required recipients to begin working after two years of receiving benefits, placed a lifetime limit of five years on benefits paid by federal funds, and aimed to encourage two-parent families and discourage out-of-wedlock births by limiting funds based on age and number of parents. Federal requirements have ensured some measure of uniformity across states, but the block grant approach has led individual states to distribute federal money in different ways. Certain states more actively encourage education, others use the money to help fund private enterprises helping job seekers.

Mandates Programs that the Federal government tells states to follow without choice. Often, mandates are UNFUNDED, meaning that the states are told what to buy, and then have to pay for it from their own funds.

Major Mandates 1960’s- Fair Housing Act- anti- discrimination legislation 1980’s – Ocean Dumping Ban – ask Dave Matthews how this works 1990’s – Americans with Disabilities Act 2000’s – No Child Left Behind – 60 years too late?

How do grants affect the balance of power within Federalism?