A major difference between block and categorical grants is whether they are applicable to general issues or not. Buzzle compares block vs. categorical grants, using various aspects like their definition, history, advantages, disadvantages, and the like.
Did You Know?
Though modern Democrats support categorical grants, and Republicans swear by the effectiveness of block grants, initial block grants in the US were passed by Democrats.
In a federal republic like USA, Congress and the regional governments are in charge of different issues. While the federal government looks over areas like military expenditure, the state and local agencies handle issues like social services, education, and transportation. However, if these regional bodies want to implement programs which would bring about an improvement in the issues under their control, they need to obtain funds for it. Regional governments can obtain funds in two ways – by collecting taxes, and by federal aids or grants.
Since the federal government is at a national level, it has a higher financial capability as compared to localized state governments or counties. It can use this advantage to fund projects of the lower agencies. Federal grants to the states is of three main types – block grants, categorical grants, and revenue sharing. These three differ in the freedom offered to the receiving government to utilize the funds.
To get a better understanding of the three, imagine an arrangement where categorical grants occupy a position on one side which represents the most stringent federal control and strict regulations on how the fund can be used. Revenue sharing occupies the opposite position, since they come without any kind of regulations whatsoever on how the states can use these funds. Then, in such an arrangement, block grants will occupy the middle position. Here is a better comparison of block vs. categorical grants or aids.
Definition
Block Grants
These are large funds given by the federal government to regional (state or local) administrations, to be used on broad-base issues like education and mental health.
Categorical Grants
These are federal funds given to regional governments or agencies, which are to be used only on specific issues like airport construction, or pavement repairs, with strict restrictions on their usage.
History
Block Grants
Block grants were first issued during the 1960s, when categorical grants began to face criticism, owing to the strict regulations they necessitated. To solve this problem, the first block grant related to public health was authorized by President Lyndon Johnson in 1966, by clubbing together 9 categorical grants. This was followed in the ’70s and ’80s by consolidating many categorical grants into corresponding block grants, under the presidencies of Richard Nixon, Ronald Reagan, and George H.W. Bush. Today, block grants are the fastest growing types of federal aid, of which they comprise about 15%.
Categorical Grants
Categorical grants played a major role in the revival of the American economy during the Great Depression of the 1930s. At the time, only the federal government had the fiscal capacity to finance projects at the local levels. The number of these grants increased steadily through the World War, and then shot up even more dramatically in the ’70s. Today, 90% of all federal funding is in the form of categorical grants.
Federal Control
Block Grants
Though authorized under certain guidelines, they still allow a great deal of freedom to the state and local agencies in utilizing the money. They are based on the assumption that regional administrations are capable of discriminating between the issues which deserve funding, and those that do not.
Categorical Grants
They are subject to strict federal control, as first, they are authorized only for a set of issues decided by Congress, and second, the usage of funds is strictly monitored by the federal government. Additionally, in order to become eligible for such grants, interested states have to put up some of their own money in the form of matching funds.
Types
Block Grants
States do not have to compete amongst themselves to obtain these grants, which are mostly formula-based. Under this arrangement, the states are entitled to such grants if they satisfy a certain formula as decided by Congress. Formula-based block grants usually favor smaller states.
Categorical Grants
They may either be project-based, in which states compete amongst themselves, and the grant goes to the most suitable proposal, or formula-based, in which states receive the aid as a matter of right. Most grants authorized today fall under the project-based category. Another rare type is the project-formula grant, where states receive federal aid via a formula, and local agencies then apply to the states for the grant.
Number of Grants
Block Grants
By the end of 2014, there are 23 block grants in effect, out of which, 21 are funded, and the remaining 2 have received approval, but have not been funded as yet.
Categorical Grants
1,018 categorical grants have received approval till the end of 2014, which makes up about 90% of all federal aid.
Preferred By
Block Grants
They are preferred by state and local administrations, as it gives them more freedom in channeling funds where they are the most needed.
Categorical Grants
They are preferred by Congress, because it allows them to have a greater control over where the money will be used. Besides, these grants allow them to influence regional affairs by deciding the guidelines under which the funds will be approved.
Political Support
Block Grants
They have traditionally been supported by the Republicans, who prefer decentralization, and hail these grants as a way to give more power to local authorities.
Categorical Grants
Democrats support these grants because of the federal supervision they bring with them, which ensures better use of funds and higher efficiency, along with concentration of power at the top level of government.
Examples
Block Grants
- Community Mental Health Block Grants
These provide states and local governments with funds for carrying out the states’ plans on providing community mental health services to adults with mental disorders, and juveniles with emotional disturbances. - Temporary Assistance for Needy Families
One of the most popular block grants, TANF, provides states with federal aid to ensure that impoverished families with dependent children achieve self-sufficiency. - Social Services Block Grant
SSBG were authorized to help states improve their social service systems, such as daycare and foster care for children, or security, and ensure that impoverished families achieve economic self-sufficiency, so that they don’t remain dependent on social services for long.
Categorical Grants
- Flood Mitigation Assistance Grant
This grant, authorized by the Federal Emergency Management Agency (FEMA), provides states and local governments with aid for flood-protection of buildings, which are insured under the National Flood Insurance Program (NFIP). - Supplemental Nutrition Assistance Program
SNAP provides federal aid to regional authorities for providing assistance to impoverished families, so that they can obtain access to healthy nutrition. - Housing Choice Vouchers
This program provides funding for states to enable low-income families, the handicapped, and the elderly to purchase or rent safe and cost-effective housing in the private sector.
Advantages
Block Grants
Their biggest advantage is the liberty for fund utilization by the states, since local administrations are more aware of which issues require them the most. So, funds can be diverted to such issues by the state’s discretion. Moreover, these grants require programs to be implemented under fewer restrictions. They support the concept of New Federalism, by empowering local administrations. These grants also remove the need for interested parties to compete among themselves.
Categorical Grants
The strict regulations under which these grants have to be used ensure the economical usage of funds, and efficiency of implementation. The importance of merit inspires regional governments to come up with good proposals. Besides, such grants allow the federal government to channel aid to those sectors and states which are in dire need of the same. Categorical grants also enable the country to work towards meeting national objectives.
Disadvantages
Block Grants
Though they are desirable for the freedom provided to regional administrations in utilizing funds, off late, Congress has been accused of adding more restrictions to such grants, which takes this advantage away. Such grants do not allow federal monitoring, which would have ensured cost-effectiveness. Moreover, the economic liberty offered by these type of grants may be misused by regional entities, which are not accountable since the grants are given by a formula.
Categorical Grants
These grants require strict adherence to federal regulations to obtain funds, which makes it difficult for local communities which may lack the resources to do so. Besides, states may not get funding for issues which require urgent attention, as the federal government may have authorized it for other types of projects.
To sum up, it can be said that, while both, block and categorical grants are types of federal aids, and both are subject to specific regulations, the former is authorized for wider areas, and offers more liberty, while the latter is for highly-specific issues, and involves more restrictions.
FAQs
Block grants provide state and local governments funding to assist them in addressing broad purposes, such as community development, social services, public health, or law enforcement, and generally provide them more control over the use of the funds than categorical grants.
What is the biggest criticism of block grants? ›
The major problems with block grants include:
- No Automatic Response. When people or communities are most vulnerable economically, block grants don't respond to increased need.
- Falling funding. ...
- flexibility in funds.
Block grants: Money given for a fairly broad purpose with few strings attached. Categorical grants: Money given for a specific purpose that comes with restrictions concerning how the money should be spent.
Why do states prefer block grant to categorical grant quizlet? ›
Why do states prefer block grants to categorical grants? B: Block grants allow states to spend federal money on any government purpose, although they are coming with more strings attached. Categorical grants required the states to spend the money on a specific purpose, like building an airport.
Are block grants or categorical grants better? ›
Block grants are broader in scope than categorical and have fewer Federal requirements. They allow recipients considerable discretion in determining specific activities funded within their program areas, but still maintain certain substantive goals and objectives.
Are categorical or block grants more common? ›
Categorical grants are the most common types of grants given by the federal government to state and local governments, but they are not the only type. There also exist block grants, which are given by the federal government directly to local governments with few strings attached.
Why does the government prefer categorical grants? ›
The national government has greatly preferred using categorical grants to transfer funds to state and local authorities because this type of grant gives them more control and discretion in how the money is spent.
What are advantages and disadvantages of block grants? ›
One advantage of block grants is that they allow the states flexibility in spending and less restrictive. One disadvantage of block grants is that money can be used ineffectively. As a way to organize government, federalism has both advantages and disadvantages.
Why are block grants good? ›
Block grants are federal funds earmarked for specific state or local programs. A block grant is supported by federal funds but administered by state or local governments, the thought being local authorities are better suited to handle local issues. Such programs are often meant to improve social welfare programs.
Which of the following is an accurate comparison of categorical and block grants? ›
Which of the following is an accurate comparison of federal block grants and categorical grants. Block grants lead to loss of congressional oversight on spending money while categorical grants require that certain requirements are met.
categorical grants are grants that have a specific purpose. this type of grant has been increasing the power of the federal gov relative to the states because the categorical grants come with "strings attached" and states must spend the money in accord with the national government's wishes.
What is the most common type of grant? ›
Program/project grants
This is the most common type of grant.
What kind of grants do state governors generally prefer? ›
Governors and mayors generally prefer block grants because they give the states more flexibility in how the money is spent. Congress prefers categorical grants so that the expenditures are targeted according to congressional priorities.
Why do many Republicans want to convert categorical grants such as Medicaid into block grants? ›
Why do many Republicans want to convert categorical grants such as Medicaid, into block grants? Block grants have been championed for their cost-cutting effects. By eliminating uncapped federal funding, as the TANF issue illustrates, the national government can reverse the escalating costs of federal grant programs.
For what purposes are categorical grants used? ›
Categorical grants are intended to help states improve the overall well-being of their residents, but also empower the federal government to exert more power over the states within a specific policy area.
What is one of the biggest problems with federal block grants quizlet? ›
What is one of the biggest problems with federal block grants? There is a need for greater accountability in how the funds are actually spent by the states. There is a need to be sure that the states are following the precise regulations established by the federal government.
Which president used block grants? ›
In 1971, President Nixon proposed consolidating 129 different programs into six block grants. A Democratic Congress rejected Nixon's original consolida- tion proposal. Nonetheless, by the end of the Ford administration, Congress had created three large new block grants.
What is the purpose of block grants given to state or local governments quizlet? ›
Block grants lessen the restriction on federal grants given to state and local govt by grouping several categorical grants under one broad heading. Governors prefer block grants because states have more flexibility in how money is spent.
How can the national government use categorical grants block grants and federal mandates? ›
Block and categorical grants provide money to lower government levels to subsidize the cost of implementing policy programs fashioned in part by the federal government. This strategy gives state and local authorities some degree of flexibility and discretion as they coordinate with the federal government.
What are 3 examples of categorical grants? ›
Examples of categorical grant funding include Head Start programs, Magnet School programs, Forestry Assistance programs, and Asbestos Abatement programs.
But in categorical grants, it's very specific in terms of how the states are to use that money, even if historically it was something where the states had the powers. So an example of this would be the federal program, the Special Supplemental Nutrition Assistance Program for Women, Infants, and Children, or WIC.
How does a categorical project grant operate? ›
Categorical grants are funds the federal government gives to state and local governments to spend on specific activities within specific programs. The federal government usually requires localities and states to apply for categorical grants for specific purposes.
Who or what defines the purpose of a categorical grant quizlet? ›
A categorical grant is when money is given by Congress for a specific purpose. A block grant is money given to a state for a broad category like secondary education or health services.
Which type of federal grant can only be used for a specific purpose? ›
There are two main types of federal grants. Categorical grants are restricted to a narrow purpose, such as providing nutrition under the Special Supplemental Nutrition Program for Women, Infants, and Children, also known as WIC. Even more restricted are grants limited to specific projects, such as building a highway.
What are block grants in simple terms? ›
Block grants are awarded by the Federal government to state and local governments for broadly defined purposes — for example, social services or community development. Block grants are given primarily to general purpose governmental units in accordance with a statutory formula.
What is an example of a block grant? ›
The TANF block grant is an example of a block grant. The Temporary Assistance for Needy Families (TANF) block grant is given to states to operate their own programs to provide financial assistance to families in need.
What are the three main types of grants in aid? ›
ED offers three kinds of grants: Discretionary grants: awarded using a competitive process. Student loans or grants: to help students attend college. Formula grants: uses formulas determined by Congress and has no application process.
What party supports block grants? ›
Though today Republicans tend to promote them more often, the first block grants were introduced and passed by Democrats. Those first two block grants addressed health programs and promoting public safety through the Safe Streets Program. But after that, Republicans tended to lead the block grant wave.
When did block grants come into existence? ›
The earliest block grants were enacted as Democratic initiatives. The first two block grants, the Partnership for Health program, approved in 1966, and the Safe Streets program, created under the Omnibus Crime Control and Safe Streets Act of 1968, were enacted by a Democratic Congress during the Johnson administration.
What is a block grant quizlet? ›
block grants. definition: a grant from the federal government that a local/state government can allocate to a wide range of services. It is generally broad with what it can be used for, have few strings attached.
Block grants reflect cooperative federalism in the way that federal money is used to help the American communities. Block grants allow the local powers distribute the money to qualifying programs and agencies.
Which of the following conditions is typically attached to a categorical formula grant quizlet? ›
Which of the following conditions is typically attached to a categorical formula grant? The state or local government must provide matching funds.
Which of the following is an accurate comparison of the separation of powers in Congress? ›
Which of the following is an accurate comparison of separation of powers among the three branches of government? Row D (Executive- Can veto laws passed by Congress, Legislative- Can override a presidential veto with a super majority, Judicial- Can declare laws passed by Congress to be unconstitutional.
Why do states tend to prefer block grants over categorical grants? ›
Block grants provide state and local governments funding to assist them in addressing broad purposes, such as community development, social services, public health, or law enforcement, and generally provide them more control over the use of the funds than categorical grants.
Why does the federal government prefer the use of categorical grants rather than block grants quizlet? ›
Why does the federal government prefer the use of categorical grants rather than block grants? They have more control and discretion over how much money is used.
What form of government does not exist today? ›
However, an Absolute Monarchy does not exist anymore, but the format of a Monarchy still remains. A Constitutional Monarchy is sometimes called a 'limited monarchy', and just like it suggests, it's because the monarchy has limitations and other powers at work.
Are categorical or block grants more common? ›
Categorical grants are the most common types of grants given by the federal government to state and local governments, but they are not the only type. There also exist block grants, which are given by the federal government directly to local governments with few strings attached.
How are categorical grants different from block grants? ›
Block grants and categorical grants are funding given to state and local governments by the federal government. The key difference is that block grants can be used for any purpose decided upon by the state or city whereas categorical grants must be used for a specific, designated purpose.
Why does the government prefer categorical grants? ›
The national government has greatly preferred using categorical grants to transfer funds to state and local authorities because this type of grant gives them more control and discretion in how the money is spent.
Which of the following types of funding categories do states generally prefer most? ›
States prefer block grants because there are less strings attached and the money can be used for a broader purpose.
Which of the following explains why most states prefer block grants (as compared to categorical grants)? Block grants specify general purposes but can be administered according to local needs.
Are categorical or block grants better? ›
Block grants are broader in scope than categorical and have fewer Federal requirements. They allow recipients considerable discretion in determining specific activities funded within their program areas, but still maintain certain substantive goals and objectives.
What is the biggest problem with block grants? ›
A block grant wouldn't respond the same way to a faltering economy and greater need. Fixed funding levels would require states to absorb higher costs — or to cut eligibility or benefits. And the economy would lose an automatic stabilizer, which would worsen the downturn.
What are the advantages and disadvantages of block grants? ›
One advantage of block grants is that they allow the states flexibility in spending and less restrictive. One disadvantage of block grants is that money can be used ineffectively. As a way to organize government, federalism has both advantages and disadvantages.
What is the most common type of grant? ›
Program/project grants
This is the most common type of grant.
How does a categorical grant benefit the national government quizlet? ›
categorical grants are grants that have a specific purpose. this type of grant has been increasing the power of the federal gov relative to the states because the categorical grants come with "strings attached" and states must spend the money in accord with the national government's wishes.
What are the advantages and disadvantages of block grants? ›
One advantage of block grants is that they allow the states flexibility in spending and less restrictive. One disadvantage of block grants is that money can be used ineffectively. As a way to organize government, federalism has both advantages and disadvantages.
Why do states continue to accept federal grants? ›
Why do states continue to accept federal grant money? States depend on the federal grant money to meet policy needs.
How does a categorical grant benefit the national government quizlet? ›
categorical grants are grants that have a specific purpose. this type of grant has been increasing the power of the federal gov relative to the states because the categorical grants come with "strings attached" and states must spend the money in accord with the national government's wishes.
Who or what defines the purpose of a categorical grant quizlet? ›
A categorical grant is when money is given by Congress for a specific purpose. A block grant is money given to a state for a broad category like secondary education or health services.
Block grants are awarded by the Federal government to state and local governments for broadly defined purposes — for example, social services or community development. Block grants are given primarily to general purpose governmental units in accordance with a statutory formula.
Why do many Republicans want to convert categorical grants such as Medicaid into block grants? ›
Why do many Republicans want to convert categorical grants such as Medicaid, into block grants? Block grants have been championed for their cost-cutting effects. By eliminating uncapped federal funding, as the TANF issue illustrates, the national government can reverse the escalating costs of federal grant programs.
What is one of the biggest problems with federal block grants quizlet? ›
What is one of the biggest problems with federal block grants? There is a need for greater accountability in how the funds are actually spent by the states. There is a need to be sure that the states are following the precise regulations established by the federal government.
What is the most common grant? ›
Program/project grants
This is the most common type of grant. Program/project grants specify that funding may only be used to support the program or project referenced in your proposal.
What is the primary reason that the federal government uses grant funding? ›
- The federal government uses grants-in-aid to reward states that provide policy in a manner consistent with congressional goals. - The federal government occasionally overrides state and local laws that are inconsistent with federal policies.
Which states contribute the most to federal taxes? ›
Here are the top 10 states in terms of total federal income taxes paid: Show Chart. Show Data.
...
Total Federal Taxes Paid by State.
| FEDERAL TAXES PAID BY STATE |
|---|
| RANK | STATE | FEDERAL TAXES PAID BY STATE (in thousands) |
|---|
| 1 | California | $234,499,671 |
| 2 | New York | $140,510,002 |
| 3 | Texas | $133,417,081 |
7 more rows23 Aug 2022
Categorical grants are federal grants given to state and local governments to encourage their cooperation in implementing specific purposes and programs. These grants give less flexibility to state governments than block grants.
What form of government does not exist today? ›
However, an Absolute Monarchy does not exist anymore, but the format of a Monarchy still remains. A Constitutional Monarchy is sometimes called a 'limited monarchy', and just like it suggests, it's because the monarchy has limitations and other powers at work.
What kind of grants do state governors generally prefer? ›
Governors and mayors generally prefer block grants because they give the states more flexibility in how the money is spent. Congress prefers categorical grants so that the expenditures are targeted according to congressional priorities.
How can the national government use categorical grants block grants and federal mandates? ›
Block and categorical grants provide money to lower government levels to subsidize the cost of implementing policy programs fashioned in part by the federal government. This strategy gives state and local authorities some degree of flexibility and discretion as they coordinate with the federal government.
There are two main types of federal grants. Categorical grants are restricted to a narrow purpose, such as providing nutrition under the Special Supplemental Nutrition Program for Women, Infants, and Children, also known as WIC. Even more restricted are grants limited to specific projects, such as building a highway.
Which of the following conditions is typically attached to a categorical formula grant quizlet? ›
Which of the following conditions is typically attached to a categorical formula grant? The state or local government must provide matching funds.
