Block grants are grants-in-aid of a specified amount from a larger government to a smaller regional government body. They are fixed sums of money given to state or local governments to support program activities and administration. Compared with other grants, block grants give state and local-level recipients more flexibility in program design and implementation with reduced federal oversight and requirements. Block grants have been in use in some form since the 1950s, and most have supported social services, public health services, or community development programs.
Block grants are supported by federal funds but administered by state or local governments, with the thought being that local authorities are better suited to handle local issues. They are often associated with supporting social welfare projects, such as Medicaid, public housing, education, and job training.
Grantees use block grant programs for prevention, treatment, recovery support, and other services to supplement Medicaid, Medicare, and private insurance services. Block grant recipients use the awards for funding priority treatment and support services for individuals without insurance or for whom coverage is terminated for short periods of time. They also collect performance and outcome data to determine the ongoing effectiveness of the programs.
However, block grants have been criticized for their fixed funding levels, which require states to absorb higher costs or to cut eligibility or benefits. Unlike with entitlements, block grants wouldnt respond the same way to a faltering economy and greater need, and the economy would lose an automatic stabilizer, which would worsen the downturn.
Examples of block grants include the Community Development Block Grant (CDBG) Program, which provides annual grants on a formula basis to states, cities, and counties to develop viable urban communities by providing decent housing. Another example is the Substance Use and Mental Health Block Grants, which are noncompetitive, formula grants mandated by the U.S. Congress.
