Grants Management by State and Local Government: A Systematic Approach

This article appeared in the GAO Review, Vol. 16, Issue 2, Spring 1981. As a result of their unplanned growth in terms of size, dollars, and demands, federal grant-in-aid programs have severely tested the financial management systems of both the Federal grantor agencies responsible for administering the programs and the State and local governments that the programs were intended to help. While the Office of Management and Budget (OMB) has been active in correcting many of the problems associated with administering the programs by the Federal grantor agencies, little has been done to alleviate the financial management problems created at the State and local government levels by the unprecidented growth of these programs. Beginning in 1965, an onslaught of new and highly complex administrative requirements began flooding State and local governments as Federal agencies individually developed their own administrative requirements with which State and local governments were required to comply. Widespread inconsistencies among grant program procedures and requirements ensued. Effective central control over grant programs has been lost in many cases. Grant programs have failed to receive close scrutiny. Conflicts in priorities and program duplications have gone undetected, and inefficient or ineffective programs have been allowed to continue simply because no mechanism exists to identify them for management. The current and long-range effect on appropriated funding needs, resulting from grant matching fund requirements, reduced funding level grant programs, and the political pressures to continue programs that were begun as grant programs which have subsequently expired have been difficult to determine. New initiatives are required if State and local governments are to avoid financial chaos. Developing a fully integrated grants management system capable of providing the visibility and central control necessary for a coordinated and balanced appropriated and grant-funded program structure is a positive action that can be taken now by State and local governments to meet the growing challenge.