Block Grants:

Characteristics, Experience, and Lessons Learned

HEHS-95-74: Published: Feb 9, 1995. Publicly Released: Feb 9, 1995.

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GAO provided information on federal block grant programs, focusing on: (1) states' experiences operating block grants; and (2) lessons learned that could be useful to Congress as it considers new block grants.

GAO found that: (1) 15 block grants with funding of $32 billion constituted a small portion of the total federal aid to states in fiscal year 1993; (2) in 1981, Congress created 9 block grants from about 50 categorical programs to broaden program flexibility among states; (3) the states' transition to block grants was generally smooth, since the states had existing management and delivery systems for most programs, but they had difficulties in two areas because these categorical programs were entirely federally funded or directed; (4) states reported administrative efficiencies with block grants, but documenting the cost savings was difficult; (5) although the states experienced a 12-percent funding reduction under the block grants, they used various approaches, such as using carry-over funds and additional state revenues, to help them offset the funding reductions; (6) problems with the 1981 block grant included inequitable initial state allocations, the lack of useful information for Congress and program managers to effectively oversee the grants, and reduced state flexibility due to Congress recategorizing some grants; (7) lessons learned from the 1981 experience should focus on accountability for results, equitable funding allocations based on state need, ability to pay, and cost of services; and (8) states could encounter greater transition difficulties with the larger, more complex programs being considered for inclusion in the new block grants.

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