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According to the Office of Management and Budget (OMB), federal outlays for grants to state and local governments increased from $91 billion in fiscal year 1980 (about $221 billion in 2011 constant dollars) to more than $606 billion in fiscal year 2011.

Figure 1: Total Federal Outlays for Grants to State and Local Governments, in 2011 Constant Dollars, Fiscal Years 1980-2011

Over time, growth in both the numbers of grant programs to state and local governments and their level of funding has created greater diversity and complexity in federal grants management processes. GAO has identified various strategies intended to address challenges to grants management effectiveness, oversight, and accountability.

• Track and evaluate performance. A lack of appropriate performance measures and accurate data can limit agencies’ ability to effectively measure grant program performance. To address these challenges, GAO has identified strategies that appear to facilitate effective design and implementation of performance accountability mechanisms, such as ensuring grantor and grantee technical capacity.
• Streamline grants management processes. Multiple systems and requirements can place an administrative burden on grantees, may be duplicative, and may impede cost-effective delivery of grant program services. The federal government has taken some steps to streamline grants management processes—such as creating Grants.gov, a single portal for finding and applying for grants—but there are opportunities for further efficiency.
• Enhance collaboration among intergovernmental participants and nongovernmental entities. The grant process involves different stakeholders—often at different levels of government as well as the private or nonprofit sectors—who have to share timely, accurate information with each other.With this in mind, GAO has identified key practices to enhance collaboration among these entities, such as clearly defining roles and responsibilities and establishing compatible policies.
• Improve oversight by strengthening internal controls and improving single audit process. GAO has found vulnerabilities at different points in the grant life cycle and observed oversight issues that exist across the government. To improve the accountability of grants at all stages, GAO has previously recommended strategies to improve internal controls, identify and reduce improper payments, and close out expired grants in a timely manner. In addition, reforming the single audit process could also help agencies strike a balance between risk and cost-effective accountability.
• Recognize that building sufficient capacity may involve significant costs or tradeoffs. The organizational, human capital, and financial capacity of grant-making agencies and recipients is a key issue in grants management which can impact program success. Capacity involves both the maintenance of appropriate resources and the ability to effectively manage those resources. Building sufficient capacity is a challenge that may involve significant costs or tradeoffs.

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