The block grants can be set based on "per capita" or on the needs of the state. Through a block grant program for Medicaid, for example, each state would receive a set amount of money from the federal government. By country United States Ī block grant in the United States is 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. 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. While this increases the town's utility, it does not maximize the town's spending on education. 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. The figure demonstrates the impact of an education block grant on a town's budget constraint. Town A chooses point Y on CD, as it spends $75,000 more on education and $300,000 more on private goods. The Community Development Block Grant is noteworthy because it is the longest running HUD program and still exists to this day.Īs recently as 2005, HUD was provided with $11.5 billion in Community Development Block Grants to award to the states of Louisiana, Texas, Mississippi, Alabama, and Florida in their efforts to rebuild the Gulf Coast after Hurricanes Katrina, Rita, and Wilma.When Town A is offered a block grant of $375,000, the budget constraint shifts outwards from AB to CD. The amount received is calculated by formulas that take into account housing overcrowding, population, population growth lag, dilapidated housing, and poverty levels. Large counties, cities within major metropolitan areas, and suburban cities with a population greater than 50,000 can apply for a grants under this program.
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The Community Development Block Grant replaced categorical programs that had been administered by the Department of Housing and Urban Development.ĬDBG funds authorize many local government activities including housing rehabilitation, social service facility maintenance, and general public improvements and economic development. So what is the Community Development Block Grant? It was the first block grant to completely bypass the states completely and award federal funds directly to local city and county governments. The Community Development Block Grant (CDBG), as mentioned above, was instated in 1974 and took effect in 1975. Title XX of the Social Security Act gave grants in 1975 to the states to provide child care for working parents, rehabilitation centers for the disabled, and help for the elderly living alone. Read more about this important block grant in the next section. In 1974, the Community Development Block Grant (CDBG) was enacted to support community development at a local level. The Comprehensive Employment and Training Act (CETA) of 1973 issued block grants to the Department of Housing and Urban Development for vocational training and summer jobs for the nation's young adults. The Omnibus Crime Control and Safe Streets Act of 1968 formed the Law Enforcement Assistance Administration (LEAA) and provided over $100 million in grants to states in order to improve local law enforcement and community crime control efforts.
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The Partnership for Health Act (PHA) of 1966, also known as Comprehensive Health Planning Act, consolidated separate health program authorizations so that $23 million in grants could be awarded by the states directly to local governments and community non-profits. The initial block grants were the Community Development Block Grant, the Partnership for Health Act, the Omnibus Crime Control and Safe Streets Act, the Comprehensive Employment and Training Act, and Title XX of the Social Security Act. The first five block grants were established by the United States federal government from the mid-60's to the mid-70's. This provides the regional governments with the flexibility to design programs and distribute resources that target a wide array of issues. The regional grantees are allowed to allocate the grant money at their discretion in accordance with local needs. They generally do not specify application requirements, negotiate awards, or evaluate the effects.įederally mandated fiscal, administrative, and planning requirements are set to the lowest levels essential to meet the federal goals. The Federal role in administering block grants is less active when compared to other types of grants. The definition of a Block Grant is a lump sum of federal government funds awarded to a state, county, or city government for use in a general purpose.