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Evolution of Federal Grants Policy

Trace the historical development of federal grant programs from land grants in the 1860s to the explosion of grant programs in the 1960s-2000s, including key acts like the Equal Opportunity Act and initiatives like Nixon's New Federalism. Explore challenges and transformations in policy, from cash grants for agricultural stations to the shift towards block grants and community development. Understand the impact on local communities and the factors influencing grant targeting.

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Evolution of Federal Grants Policy

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  1. Development of Federal Grant programs and policy • 1860s: Land grants to promote higher education • 1887: first cash grants for agricultural experiment stations • 1930s: grants for health, welfare, labor • 1960s-2000s: grant program explosion • 1962 – 160 programs • 1967 – 379 programs • 1995 – 618 programs

  2. Development of Federal Grant programs and policy • Equal Opportunity Act (1964) “War on Poverty” • Title II-A: Community Action Programs • Purpose: to stimulate local communities to develop programs to attack poverty • Up to 90% federal financing of approved projects • “…developed, conducted, and administered with the maximum feasible participation of residents…”

  3. Development of Federal Grant programs and policy • 1966: Demonstration (Model) Cities Act • “…improving quality of urban life…the most critical domestic problem facing the United States…” • Small number (10-20) of model cities to be designated for generous and assistance. 63 were included. • Demonstration agencies to be closely tied to local elected officials’ discretion

  4. Development of Federal Grant programs and policy • 1966: “Creative Federalism” hearings • duplication and overlap of programs • Lack of uniformity across programs • Failure of federal priorities to recognize local needs • Variety of matching fund requirements • Promoted programs based on “easy money” • Uncertainty about amounts and timing • Grantsmanship more important than needs

  5. Development of Federal Grant programs and policy • 1967: The Green Amendment • Local poverty agencies must be designated by state/local governments • Shift in emphasis from political action to service provision

  6. Develop Development of Federal Grant programs and policy • Nixon’s “New Federalism” • General Revenue Sharing • Block grants • Urban community development (CDBG) • Manpower training (CETA) • Never enacted • Education • Transportation • Rural community development • Law enforcement

  7. CDBG Objectives • Benefit low- and moderate-income persons • Prevent of eliminate slums or blight • Meet urgent community needs

  8. Unique Characteristics of CDBG • Predictable flow of funds to states, localities • Flexible, locally controlled use

  9. Development of Federal Grant programs and policy • Omnibus Budget Reconciliation Act, 1981 • Consolidated 57 categorical grants into 9 block grant programs • “Everything that can be run by state and local governments we shall turn over to state and local governments” • Small Cities Community Development Grants

  10. Distribution of CDBG funds • State and local officials are important in determining redistributive effects of CDBG funds • Tendencies of state/local governments • targeting CDBG funds varies – tend to spread benefits widely • Benefit coalitions shape federal program outcomes • Benefit coalitions with a strong federal partner are more likely to succeed in obtaining targeted funds

  11. Factors affecting CDBG Targeting • Unemployment in the state • Proportion of funds allocated by state officials • Competitiveness of state politics • Changes in other federal aid • Community needs

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