A Refresher on Federal Grants:
How They Work and
Why It Matters
HSFO Annual Conference
Columbus, OH
July 28, 2013
Federal Funds
Information for States
www.ffis.org
Where the money goes:
pieces of the federal budget pie
Composition of Federal Outlays in FY 2012
($ in Billions, % of Total)
Flow of federal funds traceable to states
Payments for individuals have come to
dominate federal grants
Federal Outlays for S/L Grants as a Share of Total Federal Outlays
20
18
16
14
12
10
8
6
4
2
0
1955
1960
1965
1970
Total
1975
1980
Individuals
1985
Capital
1990
1995
Remainder
2000
2005
2010
What programs areas are supported by
state/local grants?
Federal Outlays to State and Local Governments, FY 2012
($ in Billions, % of Total)
What are the major health and
human services grants?
Types of Grants
Mandatory
Capped
Uncapped
Discretionary
Block Grant
Categorical
Grant
Formula
Grant
Direct
Appropriation
Annual
Appropriation
Formula
Grant
Project Grant
What is the key difference between
mandatory and discretionary spending?


Mandatory Spending
–
Spending isn’t determined by annual appropriations
–
Spending dictated in authorizing legislation
Discretionary Spending
–
Spending is determined through annual
appropriations process
Mandatory vs. discretionary health and
human services grants to states
How do discretionary programs work?

Two-step process to receive funding
–
Program is created through enactment of authorizing
legislation

–
Specifies maximum amount or “such sums as may be
necessary”
Program funded through appropriations process


Some authorized programs not funded
Many programs funded but lack current authorization
–
Examples: Child Care Development Block Grant , Community
Services Block Grant, Refugee Assistance, LIHEAP
What are the major types of
discretionary grants?


Block Grants: fixed funding for general purposes,
allocated to states by formula
Categorical Grants: specific, narrowly defined purpose
–
Formula grants


–
Noncompetitive awards based on predetermined formula
Amount allocated depends on various factors (i.e. population, per
capita income)
Project grants



Generally awarded through a competitive process
Fixed project periods/delivery of specific services
Cooperative agreement (substantial federal involvement)
Composition of select discretionary
programs
Discretionary: Example Programs
Block Grant
Program
Formula Grant
Categorical Grant
Formula Grant
Project Grant
Matching/ MOE
Substance Abuse Block Grant
X
X (MOE)
Mental Health Block Grant
X
X (MOE)
Maternal & Child Health Block Grant
X
X (both)
Community Health Centers
Preventive Health Block Grant
X (matching)
X
X (both)
X
X (matching)
X
Ryan White HIV/AIDS
X
Head Start
Child Welfare Services
X
Community Services Block Grant
X
Child Care and Development Block Grant
X
LIHEAP
X
Refugee Assistance
X
X
X (matching)
X
X (Matching)
How do mandatory programs work?

Most mandatory spending is in the form of
“entitlement” spending
–
Federal government legally obligated to make payments
to eligible entities



Uncapped entitlements: Total spending is determined by number
of eligible beneficiaries and authorized benefit payments
(Medicaid, SNAP)
Capped entitlements: Spending capped at specific level provided
in authorizing law (SSBG, CHIP)
Examples of other mandatory spending
–
Some funding included in health care reform
How do mandatory programs work?

Mandatory programs are funded by either direct
appropriations in authorizing law or annual
appropriations
–
–

Most mandatory spending bypasses the appropriations
process altogether
Mandatory spending included in annual appropriations
acts is determined by authorizing statute, not the
appropriations process
Some mandatory programs are block grants
How do mandatory programs work?

Legislative changes to entitlement spending can be
done through authorizing bills or reconciliation
–

Reconciliation instructions are included in the budget
resolution and considered under special procedures
Various statutory/procedural controls on
entitlement spending
–
Additional mandatory spending must be offset
Composition of select mandatory
programs
Mandatory: Example Programs
Program
Capped
Medicaid
Authorized
for set period
X
CHIP
X
TANF
X
Child Care Entitlements
X
SSBG
X
Foster Care/Adoption Assistance
Independent Living
Uncapped
Block
Grant
X
X
X
X
X
X
X
X
X
X
X
X
X
Child Support
Appropriated
Matching
or MOE
X
X
X
X
X
X
X
X
Promoting Safe and Stable
Families
X
X
X
Prevention and Public Health
Fund
X
X
X
Vaccines for Children
X
X
SNAP Admin
X
X
X
X
Child Nutrition
X
X
X
X
Example: Health Care Reform
Mandatory Funding
 Amended uncapped entitlements (Medicaid)
 Reauthorized capped entitlements (CHIP)
 Directly appropriated funding for new and existing programs
Discretionary Funding
 Extended authorization of existing programs
 Authorized new programs that must receive annual approp.
–
Creative funding mechanisms (Prevention and Public Health Fund,
initial direct appropriations)
Why does the type of funding matter?




Most mandatory programs are exempt from
sequestration and across-the-board the cuts included in
appropriations bills.
Mandatory programs continue during a government
shutdown (as long as their authorization is current).
Funding for discretionary programs determined by
Congress on an annual basis.
Mandatory programs require an authorization to
operate; discretionary programs can continue without an
authorization.
Current issues and themes dominating
federal grants

Failure of Congress to reauthorize programs
–
–

Increased reliance on appropriations process to modify
programs
–




Major mandatory programs operating under program extensions
Discretionary programs operating without authorization
Program set-asides, demonstration projects
Introduction of competitive elements to current and
proposed grants
Increased focus on program outcomes/program integrity
Trend toward program consolidation
Continued focus on reforming mandatory programs
Useful grant resources

GAO glossary of budget terms:
http://www.gao.gov/new.items/d05734sp.pdf


FFIS links: http://www.ffis.org/node/3160
Congressional Research Service (CRS) Reports
–
Federal Grants-in-Aid Administration: A primer
http://www.fas.org/sgp/crs/misc/R42769.pdf
–
Entitlements and Appropriated Entitlements
http://www.fas.org/sgp/crs/misc/RS20129.pdf
–
Introduction to the Federal Budget Process
http://www.fas.org/sgp/crs/misc/98-721.pdf

Catalog of Federal Domestic Assistance (CFDA.gov)
The End: Questions?
Contact information: Trinity Tomsic
202-624-8577, ttomsic@ffis.org