Grants constitute a form of federal assistance consisting of payments in cash or in kind for a specified purpose, allocated to a state or local government or to a nongovernmental recipient.state and local governments, grants are an important tool used by the federal government to achieve national objectives. When taken as a whole, federal grant programs are extremely diverse and complex. They vary widely in numerous ways, including size, the nature of the recipients, and the types of programs they fund. For example, grants range from relatively small dollar amounts, such as a research grant from the National Science Foundation for less than a couple of thousand dollars, to By providing funding to much larger dollar amounts, such as Medicaid grants to individual states, with outlays of about $265 billion in fiscal year 2013. Grant programs also vary in two important dimensions: (1) the amount of discretion given the recipient in determining how the funds will be used, and (2) the way they are allocated (or awarded). Grants generally are described as either block grants or categorical grants. Block grants are less restrictive and permit the use of funds for broader categories of activities, such as community development or public health. Block grants generally give greater discretion to recipients in identifying problems and designing programs to address those problems using grant funds. In contrast, categorical grants are the most restrictive, permitting funds to be used only for specific activities related to their purpose, such as for nutrition for the elderly. While the distinction between “block” and “categorical” grants is useful, it is important to recognize that in practice, the labels represent the ends of a continuum: in the middle range, the two types overlap considerably. The degree of discretion represented by the identified types of grants enables a different balance to be struck between the interests of the federal government —that funds be used efficiently and effectively to meet specified national objectives—and the ability of grant recipients to use funds for those (approved) activities that best fit local priorities while also minimizing administrative burdens associated with accepting the grant. Over time, grant program funding has increased steadily, as Congress and federal grant-making agencies have created greater diversity and complexity in federal grants management. According to OMB, federal outlays for grants to state and local governments increased from $91.4 billion in fiscal year 1980 (about $224 billion in 2013 constant dollars) to about $546 billion in fiscal year 2013, (see figure 1). Consolidation rationale: Prior research by the former U.S. Advisory indicated that Commission on Intergovernmental Relations (ACIR) there are two instances where it may be suitable to consolidate categorical grant programs: when categorical programs are too small to have much impact or to be worth the cost of administration; and when multiple programs exist in functional areas (including health, education, and social services) that have a large number of programs, or are in functional areas (including justice, natural resources, and occupational health and safety) where there is fragmentation. The proliferation of grant programs can increase problems related to fragmentation, overlap, and duplication (see figure 2 for our definition of these terms, based on our related framework). As we have previously reported, program consolidations may help address these problems. Consolidations also have the potential to improve the effectiveness and performance of federal assistance programs by simplifying grant administration and facilitating coordination among grant recipients. Approaches for consolidation: For purposes of this report we classified consolidations as employing either a block grant approach or a hybrid approach. A block grant approach is generally broad in scope. It is intended to increase state and local flexibility and generally give recipients greater discretion to identify problems or to design programs addressing those problems using funding from the grant. Block grants funds are provided through less restrictive, broader categories of activities, such as community development or public health. Hybrid approaches can consolidate a number of narrower categorical programs while retaining strong standards and accountability for discrete federal performance goals. Hybrid approaches may also include Performance Partnerships, offer additional flexibility in using funds across multiple programs but are held accountable for meeting certain performance measures. They do so by giving grantees the flexibility to pool discretionary funds across multiple federal programs (or agencies) serving similar populations and communities, in exchange for greater accountability for results. The pooling of discretionary funds is also referred to as “blended” funding. Legislative authority: These grant program consolidations require legislative authorization. Federal agencies do not have inherent authority to consolidate grant programs or to enter into grant agreements without affirmative legislative authorization. In authorizing grant programs, federal laws identify the types of activities that can be funded and the purposes to be accomplished through the funding. Frequently, legislation establishing a grant program will define the program objectives and leave the administering agency to fill in the details by regulation. Grant programs are typically subject to a wide range of accountability requirements under their authorizing legislation or appropriation and implementing regulations: this is done so that funding is spent for its intended purpose. In addition, grant programs are subject to cross-cutting requirements applicable to most assistance programs (see table 1 for more information). The Omnibus Budget Reconciliation Act of 1981 (OBRA) consolidated several dozen categorical grant programs (and three existing block grants) into nine block grants covering health and human services, education, community services and development, and energy assistance. These block grants from the 1980s were designed to be more detailed in their reporting and auditing provisions but had fewer kinds of planning and spending restrictions than earlier block grants. For example, OBRA provisions of general applicability impose reporting and auditing requirements, and require states to conduct public hearings as a prerequisite to receiving funds in any fiscal year.the OBRA programs include such items as limitations on allowable In addition, several of administrative expenses, prohibitions on the use of funds to purchase land or construct buildings, “maintenance of effort” provisions, and anti- discrimination provisions. Applicable restrictions are not limited to those contained in the program statute itself—other federal statutes applicable to the use of grant funds must also be followed. In turn, these additional restrictions may impose legal responsibilities on grantees. Thus, the block grant mechanism does not totally remove federal involvement, nor does it permit the circumvention of federal laws applicable to the use of grant funds. In this latter respect, a block grant is legally no different from a categorical grant. As a result of the 1981 block grants, the states’ role in grants administration changed in a number of ways. As we previously reported, four themes capture these actions (see text box). Lessons Learned from States’ Experience of 1981 Block Grants Fiscal strategies. States used block grants to adopt fiscal strategies in response to federal funding changes. These strategies included the ability to continue using prior categorical grant funds, to transfer funds among certain block grants, and to use their state funds to help offset federal cuts. Programmatic discretion. Block grants reduced the federal role in several domestic assistance areas and gave states discretion to determine needs, set priorities, and fund activities within broadly defined areas. Prior involvement in the categorical grant programs provided an administrative framework for absorbing the new responsibilities. Managerial improvements. An objective of block grants was to promote management improvements by reducing federal requirements. Many management improvements were reported, including reduced time and effort preparing applications and reports, changed or standardized administrative procedures, improved planning and budgeting practices, and better use of staff. Accountability considerations. Monitoring the expenditure of block grant funds to achieve stated national objectives—a theme throughout the block grant reports—has been (and is) a central federal accountability function under past and present block grant legislation. Tracking federally supported activities, recipients, and dollars is a major evaluation function. Whether federal funds support activities that advance national objectives is historically of central interest to Congress. The Moving Ahead for Progress in the 21st Century Act (MAP-21) restructured existing highway programs by eliminating or consolidating numerous programs and establishing a revised, core formula program structure. As part of this major restructuring, a new program–the Transportation Alternatives (TA) program–was authorized under MAP- 21 in 2012; in fiscal years 2013 and 2014 the TA program had authorizations of $809 million and $820 million, respectively. TA program provides a single source of funding generally replacing separate funding for individual programs, including the former Transportation Enhancement (TE) activities (renamed the Transportation Alternatives activities), the Safe Routes to School (SRTS) Program, and the Recreational Trails Program (RTP). However, RTP continues to be separately funded through a set-aside requirement under the TA program. Not all formerly eligible activities may be funded through the TA program, though, as MAP-21 also eliminated some eligible activities formerly included under TE activities. Funds for the TA program—like funds for other federal-aid to highway programs—are annually apportioned to the states through a formula.flexibilities regarding how they administer the programs: for example, each state develops its own process to solicit and select projects for funding. The TA program funds are awarded at the state or metropolitan planning organization (MPO) level through a competitive process, but the authorization does not establish specific standards or procedures for how this should be done. The TA program added new requirements that did not previously exist: for example, 50 percent of a state’s apportionment must be suballocated based on population; states and MPOs must solicit and select projects through competitive processes and only eligible entities may sponsor projects, MPOs, and nonprofit entities are not eligible entities. ESG funds are allocated by formula to metropolitan cities, urban counties, territories, and states for select outreach, emergency shelter, homelessness prevention, rapid re- housing assistance, and homeless management information systems. 42 U.S.C. §§ 11371-11378. providing funding opportunities through the CoC program to nonprofit organizations and state and local governments that use those funds to quickly rehouse homeless individuals and families. The McKinney-Vento Homeless Assistance Act, originally passed in 1987, was the first major federal legislative response to homelessness.