page_title: Block grant (United States)
section_title: Graphical representation
hierarchical_section_title: Block grant (United States) / Graphical representation
caption_attribution_description: English: Represents impact of block grant on a town's budget constraint
context_page_description: Block grant (United States) refers to a grant-in-aid of a specified amount from the federal government of the United States to individual states and local governments to help support various broad purpose programs, such as law enforcement, social services, public health, and community development. Block grants have less oversight from the federal government and provide flexibility to each state in terms of designing and implementing programs. Block grants, categorical grants, and general revenue sharing are three types of federal government grants-in-aid programs.
context_section_description: The figure demonstrates the impact of an education block grant on a town's budget constraint. According to microeconomic theory, the grant shifts the town's budget constraint outwards, enabling the town to spend more on both education and other goods, due to the income effect.   While this increases the town's utility, it does not maximize the town's spending on education. Therefore, if the goal of a grant program is to encourage spending on a particular good, a categorical grant may be more effective in achieving this goal than a block grant, as most block grant critics would argue.
caption: When Town A is offered a block grant of $375,000, the budget constraint shifts outwards from AB to CD. Town A chooses point Y on CD, as it spends $75,000 more on education and $300,000 more on private goods.
exif: {}