Categorical grants, also called conditional grants, are grants issued by the United States Congress which may be spent only for narrowly defined purposes. They are the main source of federal aid to state and local governments and can be used only for specified categories of state and local spending, such as education or roads. These grants have been accompanying rules and guidelines that constrain the recipient government in the use of grant funds. [1] Categorical grants are intended to help states improve the overall well-being of their residents, but also empower the federal government to exert more power over the states within a specific policy area.
The United States federal government gives financial assistance to states, local governments, and other entities. They are defined and governed by the Federal Grant and Cooperative Agreement Act of 1977, as incorporated in Title 31 Section 6304 of the U.S. Code. A Federal grant is a:
"...legal instrument reflecting the relationship between the United States Government and a State, a local government, or other entity when 1) the principal purpose of the relationship is to transfer a thing of value to the State or local government or other recipient to carry out a public purpose of support or stimulation authorized by a law of the United States instead of acquiring (by purchase, lease, or barter) property or services for the direct benefit or use of the United States Government; and 2) substantial involvement is not expected between the executive agency and the State, local government, or other recipient when carrying out the activity contemplated in the agreement.” [2]
Federal grants are mainly categorized as block grants, categorical grants, and general revenue sharing. [3] The U.S. federal government issues grants through more than 1,000 different grant programs across its agencies. [4]
The way categorical grants are distributed is either through project grants or formula grants.
Project grant funding is given to help subsidize a specific service for a specified amount of time. These grants are competitive and follow a specific cycle. An agency makes a funding program based on their mission, Administration, and/or congressional initiatives. Then the grant making agency announces the funding opportunity and invites groups to apply. After the application is closed all applicants are reviewed by the agency and award recipients are chosen. States compete for project grant funding by going through the application process and those that best meet the application criteria are selected. [5]
An example of project grant funding is the grants given by the Department of Agriculture Animal and Plant Health Inspection Services which operates the Wildlife Services Program. Applicants who meet the goal and the criteria might receive this funding for programs that help “Reduce damage caused by mammals and birds and those mammal and bird species that are reservoirs for zoonotic diseases, (except for urban rodent control through control and research activities)." as the grants objectives specify. [6]
Formula grant funding is for services that help a particular group of people, such as low income students or children with disabilities. Unlike project grants, these do not involve a competitive process. All applicants who apply and meet the criteria receive funding based on a formula created by the federal government. Congress decides how much money to spend in an area and then they divvy it up to applicants (usually states) by their formula. This formula can be based on population or project goals. [7]
For example, the United States Department of Health and Human Services operates the Nutrition Services Incentive Program. This program offers grant funding for states to give nutritious meals to the elderly in a geographic location. The formula used to determine how much grant money to give a state is based on how many meals were given out the year before within that state. [8]
Head Start was created in 1965 as a summer school program to help low income students catch up before the start of their first year in school. Now they serve more than 1 million low income families per year in education health and encouraging parental involvement. [9] Head Start programs are partially funded by categorical grants and in 2014 Congress gave over 500 million towards the program. Head Start categorical grant participants have to follow conditions of the grant meaning they have to make reports to the US Department of Health and Human Services periodically as well as submit to an annual audit. [10]
Medicaid is also partially funded by categorical grants. Funds are given in the form of a formula grant to each state. Medicaid like Head Start is group specific in that it is meant to help low income persons and families. [11]
Categorical grants increase the ability of the federal government to influence policy at the state and local levels. The founding fathers, particularly the antifederalists, were skeptical of the power of the national government, and so the Constitution does not afford the federal government many tools to steer policy at the state and local levels. This means that when Congress has ideas about things they would like to implement on a national level, they have to have a way to get states to comply or agree. Categorical grants and other grants provide a way for the federal government to work cooperatively with the states and still get a broader national outcome. This outlines the basic idea of cooperative federalism where the states and the federal government work cooperatively and equally to achieve something bigger than either can do alone. Grants thereby incentivize states to help implement federal government national plans. [12]
Economists have studied the idea of categorical grants through the systems they support, such as Medicaid, food stamps, and education programs. Specifically, they have looked at how these grants might cause the income and crowding out effects.
The crowding out effect is when the government's giving essentially lowers the amount of money the private sector would be able to provide themselves. This is always a concern with government grants. [13] For example, if the government provides a categorical grant for education then some states might end up spending less on education than they would have without it because they are able to move to a better level of education without spending as much. This problem occurs when the amount of the grant is less than the state would have been willing to spend originally. They then use the grant to replace what they would have spent and therefore have more money to spend on other goods. Some economists believe in the Flypaper effect instead meaning that when more money is given to an area it tends to stick there like flypaper. [14] This means that the state would essentially raise the budget for a good or service if they continued to get more money for it. [15]
Medicaid in the United States is a federal and state program that helps with healthcare costs for some people with limited income and resources. Medicaid also offers benefits not normally covered by Medicare, including nursing home care and personal care services. The main difference between the two programs is that Medicaid covers healthcare costs for people with low incomes while Medicare provides health coverage for the elderly. There are also dual health plans for people who have both Medicaid and Medicare. The Health Insurance Association of America describes Medicaid as "a government insurance program for persons of all ages whose income and resources are insufficient to pay for health care."
In the United States, federal grants are economic aid issued by the United States government out of the general federal revenue. A federal grant is an award of financial assistance from a federal agency to a recipient to carry out a public purpose of support or stimulation authorized by a law of the United States.
The Community Development Block Grant (CDBG), one of the longest-running programs of the U.S. Department of Housing and Urban Development, funds local community development activities with the stated goal of providing affordable housing, anti-poverty programs, and infrastructure development. CDBG, like other block grant programs, differ from categorical grants, made for specific purposes, in that they are subject to less federal oversight and are largely used at the discretion of the state and local governments and their subgrantees.
A block grant is a grant-in-aid of a specified amount from a larger government to a smaller regional government body. Block grants have less oversight from the larger government and provide flexibility to each subsidiary government body in terms of designing and implementing programs. Block grants, categorical grants, and general revenue sharing are three types of federal government grants-in-aid programs.
The Children's Health Insurance Program (CHIP) – formerly known as the State Children's Health Insurance Program (SCHIP) – is a program administered by the United States Department of Health and Human Services that provides matching funds to states for health insurance to families with children. The program was designed to cover uninsured children in families with incomes that are modest but too high to qualify for Medicaid. The program was passed into law as part of the Balanced Budget Act of 1997, and the statutory authority for CHIP is under title XXI of the Social Security Act.
A means test is a determination of whether an individual or family is eligible for government assistance or welfare, based upon whether the individual or family possesses the means to do without that help.
The Elementary and Secondary Education Act (ESEA) was passed by the 89th United States Congress and signed into law by President Lyndon B. Johnson on April 11, 1965. Part of Johnson's "War on Poverty", the act has been one of the most far-reaching pieces of federal legislation affecting education ever passed by the United States Congress, and was further emphasized and reinvented by its modern, revised No Child Left Behind Act.
In the United States, federal mandates are orders that induce "responsibility, action, procedure or anything else that is imposed by constitutional, administrative, executive, or judicial action" for state and local governments and/or the private sector.
The Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) is an American federal assistance program of the Food and Nutrition Service (FNS) of the United States Department of Agriculture (USDA) for healthcare and nutrition of low-income pregnant women, breastfeeding women, and children under the age of five. Their mission is to be a partner with other services that are key to childhood and family well-being. The basic eligibility requirement is a family income below 185% of the federal poverty level. Most states allow automatic income eligibility, where a person or family participating in certain benefits programs, such as the Supplemental Nutrition Assistance Program, Medicaid, or Temporary Assistance for Needy Families, may automatically meet the income eligibility requirements. Currently, WIC serves 53 percent of all infants born in the United States.
A Pell Grant is a subsidy the U.S. federal government provides for students who need it to pay for college. Federal Pell Grants are limited to students with financial need, who have not earned their first bachelor's degree, or who are enrolled in certain post-baccalaureate programs, through participating institutions. Originally known as a Basic Educational Opportunity Grant, it was renamed in 1980 in honor of Democratic U.S. Senator Claiborne Pell of Rhode Island. A Pell Grant is generally considered the foundation of a student's financial aid package, to which other forms of aid are added. The Federal Pell Grant program is administered by the United States Department of Education, which determines the student's financial need and through it, the student's Pell eligibility. The U.S. Department of Education uses a standard formula to evaluate financial information reported on the Free Application for Federal Student Aid (FAFSA) for determining the student's Expected Family Contribution (EFC).
The Low Income Home Energy Assistance Program is a United States federal social services program first established in 1981 and funded annually through Congressional appropriations. The mission of LIHEAP is to assist low income households, particularly those with the lowest incomes that pay a high proportion of household income for home energy, primarily in meeting their immediate home energy needs. The program, part of the United States Department of Health and Human Services (HHS), is funded by grants appropriated from the federal government.
The Balanced Budget Act of 1997 was an omnibus legislative package enacted by the United States Congress, using the budget reconciliation process, and designed to balance the federal budget by 2002. This act was enacted during Bill Clinton's second term as president.
The Community Services Block Grant (CSBG) provides federal funding for Community Action Agencies (CAAs) and other programs that seek to address poverty at the community level. Like other block grants, CSBG funds are allocated to the states and other jurisdictions through a formula, with less federal oversight and fewer federal requirements than categorical grants. The CSBG formula determines each jurisdiction's funding level based on poverty population; once disbursed, most of the money is passed by the states and other jurisdictions to CAAs and other designated organizations to be spent on employment, education, income management, housing, nutrition, emergency services, and health.
In the United States, federal assistance, also known as federal aid, federal benefits, or federal funds, is defined as any federal program, project, service, or activity provided by the federal government that directly assists domestic governments, organizations, or individuals in the areas of education, health, public safety, public welfare, and public works, among others.
The Title X Family Planning Program is the only federal grant program dedicated to providing individuals with comprehensive family planning and related preventive health services. It was enacted under President Richard Nixon in 1970 as part of the Public Health Service Act.
Social programs in the United States are programs designed to ensure that the basic needs of the American population are met. Federal and state social programs include cash assistance, health insurance, food assistance, housing subsidies, energy and utilities subsidies, and education and childcare assistance. Similar benefits are sometimes provided by the private sector either through policy mandates or on a voluntary basis. Employer-sponsored health insurance is an example of this.
Following the signing of the Children’s Health Insurance Program (CHIP) into law on August 5, 1997, as Title XXI of the Social Security Act, Utah started looking at how to implement the Federal program under the Center for Medicare and Medicaid Services.
Patient navigators educate and assist United States citizens in enrolling into health benefit plans stipulated in the Patient Protection and Affordable Care Act (ACA). Patient navigators are also called "insurance navigators" or "in-person assisters" who have defined roles under the ACA. Although their roles might overlap, patient navigators are not community health workers or health advocates. "Navigators" work in states with Federally-Facilitated Exchanges (FFEs) or State Partnership Exchanges.
The Cooperative State Research, Education, and Extension Service (CSREES) was an extension agency within the U.S. Department of Agriculture (USDA), part of the executive branch of the federal government. The 1994 Department Reorganization Act, passed by Congress, created CSREES by combining the former Cooperative State Research Service and the Extension Service into a single agency.
Government spending in the United States is the spending of the federal government of the United States, and the spending of its state and local governments.
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