Block Grants: Lessons Learned

GAO discussed the consolidation of federal categorical programs into block grants to states and localities, focusing on states' previous experience with block grants. GAO noted that: (1) the 15 current block grant programs total $32 billion and constitute 11 percent of federal aid to states; (2) in 1981, Congress consolidated about 50 categorical programs into 9 block grants and also reduced their funding by an average of 12 percent; (3) although the block grants eliminated many federal reporting requirements, many states continued their prior levels of data collection for their own management purposes; (4) in general, the 1981 transition from categorical programs to block grants was smooth because the states had experience in operating programs in most of the covered areas; (5) states replaced much of the 1981 funding reductions with carryover funds from the programs and additional state revenues; (6) the lack of comparability of state data limited federal policymakers' ability to make decisions concerning funds allocation, individual state's needs, and program effectiveness; (7) Congress recatagorized some funding because the states were not meeting national needs with the block grants; and (8) if Congress decides to create new block grants, it needs to ensure accountability for results and fair allocation of funds, and to consider how the differences in the size and structure of the programs to be consolidated from those consolidated in 1981 will impact states' ability to manage the transition to block grants.