Federal Grant Programs September 13, 2016

Grants-in-aid Federal grants are funds from the national government to state and local governments to help pay for programs created by the national government. The federal government creates programs, sets guidelines, and writes checks. State and local governments implement federal programs. Benefits of federal programs: They enable Congress to address important national problems, such as healthcare, poverty, transportation, etc. They enable Congress to expand its authority beyond the delegated powers. They allow Congress to provide services without increasing the number of federal employees. Grants account for 16.9 percent of federal spending, $624 billion in 2014.

Grant Programs Federal grant programs support low-income healthcare, highway construction, mass transit, school lunches, nutrition, special education, scientific and medical research, the fine arts, port development, and other governmental activities.

Medicaid A federal program designed to provide health insurance coverage to low-income persons, people with disabilities, and elderly people who are impoverished. Medicaid represents more than a fourth of state spending.

Matching Fund Requirement A legislative provision that the national government will provide grant money for a particular activity only on condition that the state or local government involved supply a certain percentage of the total money required for the project or program. Medicaid is a match in Texas, with the federal government providing 58 percent of the total cost of Medicaid.

Healthcare Reform Healthcare reform expands Medicaid to cover childless adults earning at least 133 percent of the federal poverty level ($32,319 a year for a family of four in 2015; $15,800 for a single person), adding 10 million to 14 million people to Medicaid rolls nationwide.

CHIP The Children’s Health Insurance Program (CHIP) is a federal program designed to provide health insurance to children from low-income families whose parents are not poor enough to qualify for Medicaid. The federal government picks up 70 percent of the cost.

Food Stamps The Supplemental Nutrition Assistance Program (SNAP), the new name for the old Food Stamp program, is a federal program that provides vouchers to low-income families and individuals that can be used to purchase food from grocery stores. The federal government picks up all of the cost, but requires states to administer the program. To qualify for SNAP, families and individuals must be low income and have less than $5,000 in assets, including cash, savings accounts, stocks, bonds, retirement, and even prepaid burial plots. Adults under the age of 50 are limited to three months of benefits unless they have a child living at home.

TANF Temporary Assistance for Needy Families (TANF) is a federal program that provides temporary financial assistance and work opportunities to needy families. Low-income families and individuals who meet eligibility requirements receive cash and qualify for other benefits.

Highway Funding Revenue from the federal gasoline tax of 18.4 cents a gallon goes into a highway trust fund which is distributed among the states based on a formula that includes highway miles and population.

Types of Grants Categorical grants Block grants Formula grants Project grants

Categorical Grants Federal aid to states and localities clearly specifies what the money can be used for. State and local government officials have little discretion. The Food Stamp program (SNAP) and Medicaid are examples of categorical grant programs.

Block Grants Federal grants to the states can be used for general activities. State officials have some flexibility. The Community Development Program is federal block grant program that awards annual grants to cities and urban counties to implement a wide variety of community and economic development activities directed toward neighborhood revitalization, economic development, and the provision of improved community facilities and services.

Project Grants A grant program that requires state and local governments to compete for available federal money. National Sciences Foundation grants for biological sciences are examples of project grants.

Formula Grants A grant program that awards funding on the basis of a formula established by Congress Examples include the School Lunch Program, Unemployment Insurance, TANF. For example, school districts receive funds for the School Lunch Program based on the number of youngsters from families at or near the poverty level.

Census Counts and Federal Grants Demographers believe that the U.S. Census undercounts some groups, especially racial and ethnic minorities and non- citizens. If you were the mayor of Houston, would you care if the Census made an accurate count of the city’s population? Yes, because grant program funding often depends on population.

Strings Attached!

Federal Mandates A legal requirement placed on a state or local government by the national government requiring certain policy actions. States must adopt a minimum legal drinking age of 21 or lose highway funding. States must collect data on sex offenders in order to receive federal law enforcement grants.

Federal Preemption An act of Congress adopting regulatory policies that overrule state policies in a particular regulatory area is known as a federal preemption of state authority. Congress has passed more than a hundred laws preempting state regulation, including preemption of state policies dealing with cellular phone rates, nuclear power safety, pension plans, automobile safety standards, and trucking rates.

What We Have Learned What are federal grants? What are some examples of federal grant programs? What are matching funds requirements? What are block, categorical, formula, and project grants? What are federal mandates and federal preemption?