State Rather Than Federal Policies Provided the Framework for Managing Block Grants

HRD-85-36: Published: Mar 15, 1985. Publicly Released: Mar 15, 1985.

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GAO reviewed the implementation of the Omnibus Budget Reconciliation Act which substantially changed various federal domestic assistance programs by consolidating numerous categorical programs into nine block grants and shifting the primary management responsibility to the states.

GAO found that these block grants provided states with greater discretion to plan and manage federal funds according to state procedures with the expectation that states could deliver services in a more coordinated and efficient manner. Rather than treating them as separate programs, the states considered health and social services block grant funds as funding sources available to achieve broader goals. In contrast, most of the states' decisions concerning low-income energy assistance and community services funds tended to be made through planning processes since these were supported solely with federal funds. State officials indicated that block grants added the flexibility which enabled them to better integrate related federal and state activities. Because many awards under prior programs were made directly to local providers, the block grant for alcohol, drug abuse, and mental health provided states with opportunities to integrate federally funded activities into established state delivery networks and to apply controls and restrictions. States were encouraged to interpret the legislation and rely on existing management procedures rather than look to the federal agencies for guidance. As states gained experience with the programs, the need for additional federal technical assistance diminished. Legislation which created uniform audit requirements for federal assistance to state governments improved states' ability to cover block grant audits and congressional program oversight.

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