The Determinants of Federal Grants

Abstract

Federal government grants are given to state and local governments for a number of reasons, but in many cases the primary motivation is redistributional. Certain areas may be plagued with unusually severe unemployment, or a large number of families with dependent children qualifying for public assistance, or they may simply be so poor that their tax bases are not large enough to provide normal public services without unusually high tax rates. Because of the nature of these problems, an area with one problem of this sort would be likely to have many such problems. States and localities having problems of this sort would probably send their governmental officials to the Federal government to seek assistance. As one writer noted, Determining the total available for disbursement, allocation formulas, and the acceptance of project applications are the subjects of intense political lobbying-in recent years, in fact, this scramble for grants has reached such a level that now many states and cities maintain Washington offices simply to lobby for, expedite, and keep track of Federal grants.' The Federal government has been cooperative, both by directly providing additional revenue to smaller governments through revenue sharing, and by providing grants for such things as public assistance programs, economic opportunity grants, and manpower training programs. The rationale for these programs is to redistribute revenue to those areas with the greatest relative need, but there is some question as to whether the actual distribution of grants has been a function of relative need, or whether political considerations have interferred with that goal. The purpose of this paper is to examine the criteria by which Federal government grants are actually distributed.2 Because of the nature of this study, only certain types of grants will be considered here. The grants examined in this study all have as their rationale some criterion of economic need. Thus, if the grants are being administered according to their stated rationale, the larg-