Grants-in-aidGrants show how political realities modify legal authority.• Grants dramatically increased in scope in twentieth

century.• Prevailing constitutional interpretation until late 1930s:

– federal government can’t spend money for purposes not authorized by Constitution

– grants a way around this.

Grants were attractive to state officials for various reasons:• Federal budget surpluses & tax increased revenues• Federal control of money supply• Appeared as “free” money for state officials, who did not

have to be responsible for federal taxation.

Cooperative federalismA model of federalism in which the states and national government cooperate in solving complex common problems, emphasizes an expanded role for the national government.•The New Deal and Cooperative Federalism.

– Response to the Great Depression, implemented social-welfare programs designed to alleviate the bad economic times.

– Dual federalism, in contrast, had held that programs such as relief for the poor were entirely outside of the federal role.• Supreme Court struck down dozens of New Deal programs as unconstitutional• After “Court Packing Plan” Court ceased to interfere with attempts to legislate

broadly under the commerce clause.– Why “Cooperative Federalism”? -- programs typically funded by the federal

government, but administered by states and local governments, thus creating a cooperative framework for federalist relations.

Cooperative federalism• Methods of Implementing Cooperative Federalism. – Categorical Grants: grants to states or local governments

that are for specific programs or projects.– Block Grants: federal programs that provide funds to state

and local governments for broad functional areas– Federal Mandates: requirement in federal legislation that

forces states and municipalities to comply with certain rules

Copyright © 2009Cengage Learning 4

Share of Nonmilitary Spending by the Federal, State, and Local Governments before and after the Passage of New Deal

Legislation

Meeting national needs

1960s shift in grants-in-aid• From what states demanded . . . To what federal officials

considered important as national needs– Federal grants to state and local governments increased.– Purpose of federal funds changed.

The intergovernmental lobby• Hundreds of state and local officials lobby in Washington

– U.S. Conference of Mayors – National Governors Association– National Association of Counties – National League of Cities

• Purpose: to get more federal money with fewer strings

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Where the Money Goes

Categorical vs. Block grants Categorical grants•Specific purposes defined by federal law•Often require local matching funds.Block grants (AKA special revenue sharing or broad-based aid) •General purposes with few restrictions•States preferred block to categorical grants; more autonomy.Neither achieved goal of giving states more spending freedom

– Did not grow as fast as categorical grants– Number of strings actually increased

General Revenue Sharing: provided money to states with no strings attached; ended in 1986

Categorical vs. Block grantsBlock grants grew more slowly than categorical grants

due to differences between political coalitions that supported each.

• Federal officials, liberal interest groups, organized labor tend to distrust state government

• Categorical grants give the national government more power.• Categorical grants are matters of life or death for various state

agencies.• Supervising committees in Congress favored growth of

categorical grants.

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The Shift Toward Central

Government Spending

Federal controls on state gov’t activitiesConditions of aid: tell state governments what they must do if they wish to receive grant money•traditional control -- Attached to grants; range from specific to general•Divergent views of states and federal government on costs and benefits of these conditions

– each side attempts to pass on most of the cost to the other sidesMandates: tell state governments what they must do

– federal rules that states or localities must obey; generally have little or nothing to do with federal aid

– EX: Civil rights & Environmental protection•May or may not be funded

– Mandates more likely in policy areas that receive less federal funding– Waivers exempt some parties from federal mandates.

•may also make it difficult for state/local governments to:– raise revenues & borrow funds– privatize public functions– may expose them to financial liability.

•Controversial mandates may result from court decisions – state prisons, school desegregation, legalized abortion

The “New Federalism”• Beginning with President Nixon, the Republican Party

championed devolution– the transfer of powers from the national government to state or

local government– Most Americans favor devolution, but not if that means cuts in

government programs that benefit most citizens• Federalism Today, it is not clear whether competing

theories of federalism divide Republicans from Democrats. – Democratic president Bill Clinton (1993-2001) signed legislation

transferring significant control over welfare programs to the states

– Republican president George W. Bush signed legislation that increased federal control over education and educational funding