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TABLE 2.-Federal grants-in-aid to State and local governments, by year and major

categories

[Thousands of dollars]

[graphic][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][merged small][subsumed][subsumed][subsumed][merged small][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][merged small][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][merged small][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][merged small][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][merged small][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][merged small][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][merged small][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][merged small][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][merged small][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][merged small][subsumed][merged small][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][merged small][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][merged small][merged small][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][merged small][subsumed][merged small][subsumed][subsumed][subsumed][subsumed][merged small][subsumed][merged small][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][merged small][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][merged small]

I Data in this table are drawn from tabulations made in prior years by the Labor and Welfare Division, Bureau of the Budget and for more recent years from special analyses dealing with grants-in-aid and accompanying the President's budget. Figures shown do not tally precisely with other figures used in the text of the report for the reason that Budget Bureau classifications encompass a few additional items not falling within the definition of grant-in-aid used in this report. These differences in no way affect the orders of magnitude or trends of Federal grants-in-aid as defined herein.

Federal-aid highway program financed for these years out of emergency relief funds.

TABLE 3.-Federal grants-in-aid to State and local governments, by year and major

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1 In these years, included large amounts of veterans housing and defense community facilities. 2 Estimated.

557, 731

47,653

561, 523

80, 776

619, 569

125, 955

777, 574

116, 033

898,477

137,882

1,590, 897

153, 043

2,689, 379

213, 402

3,009, 916

256, 725

2,688, 800

311,900

139

2,841, 900

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53,900 3,092, 600

400, 200

477

[blocks in formation]

TABLE 4.-Federal grant-in-aid expenditures in relation to State-local revenue and Federal domestic payments

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1 Excludes payments for national defense, space, international affairs and finance, and that portion of the interest on the national debt which is attributable to defense.

2 Estimated.

Source: Bureau of the Budget, Fiscal Analysis Section, March 1967.

III. THE PROBLEM OF TERMINATING OR REDIRECTING GRANTS-IN-AID

On frequent occasions it is alleged that "once a Federal grant begins, it never ends." From a factual standpoint this allegation is almost but not quite correct. "Never" should be amended to "hardly ever." Table 4 lists those grants-in-aid from the National Government to the States which have been terminated.

This list is not impressive. With the exception of "general relief," none of the grants listed were in support of any continuing function of State or local government. On the other hand, there have been many efforts in the Congress over the years to terminate or redirect particular grant programs. During the 1950's, at one time or another, recommendations were made either by the President or by special committees established to study particular programs, to cease, taper off, or otherwise modify a dozen or more major grant programs, including those for vocational education, resident instruction at land-grant colleges, school lunches, and school construction and operation in federally affected areas. In none of these instances did the Congress decide to discontinue the program in question."

At this point it is well to recognize that grants-in-aid exist because of an original determination by the Congress in each instance of the presence of a national problem requiring the attention of the National Government as well as State or local governments. Some of these problems are of a continuing nature and in many of these cases the Congress has concluded that National Government support should also be continuing in character. Currently, for example, some problems, such as air pollution, are growing, while others such as tuberculosis and the need for vocational training in agriculture are diminishing.

The Advisory Commission on Intergovernmental Relations is charged by its statute with giving attention to the "coordination of Federal grant and other programs requiring intergovernmental cooperation" and to "the conditions and controls involved in the administration of Federal grant programs." By its concentrated attention in this report to Federal grants-in-aid, the Commission does not with so convey the impression that grants-in-aid constitute the sole or principal area of Federal expenditures which would benefit from systematic reexamination and reevaluation.

TABLE 5.-Former Federal grants-in-aid to State and local governments subsequently

Program

terminated1

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1 Does not include the following: (a) Shared revenues, loans and repayable advances; (b) programs discontinued but later renewed such as grants for maternal and child health established in 1925, discontinued in 1930 and resumed in 1936; and (c) programs disappearing through merger into other programs such as amalgamation of various small forestry grants into a larger program of forestry cooperation and management. 2 This and other types of assistance later authorized on a permanent basis in 1952 under grants for disaster relief.

Source: Derived from tables contained in app. A.

As stated earlier, the Commission is not here passing judgment upon the general philosophical question of whether grants-in-aid constitute a desirable or undesirable influence upon the effective operation of the federal system of government under the Constitution; neither does this report discuss the merits of continuing, discontinuing, or modifying any particular existing grant. As a practical matter, Federal grants-in-aid have become an important and established feature of our federal system of government. The Commission believes therefore, that particular aspects of the grant-in-aid system need careful examination to strengthen its good points and to minimize any disruptive or undermining effects. Consequently, as stated at the outset, the Commission is here concerned with whether or not an equitable and practical mechanism can be developed which would facilitate the termination of future Federal grants, once they have served their purpose or alternatively, the redirection or other modification of such grants in order that Federal funds are expended with optimum impact upon the need or problem to which the particular grant is addressed. This is not to imply that Federal grant-in-aid programs go unreviewed under current legislative and administrative processes. The respective executive agencies give close attention to the operation of the programs for which they are held responsible, and requests for grant funds are subject to the usual appropriation processes in the Congress. Furthermore, the legislative committees

exercise oversight jurisdiction with respect to the grants made under particular statutes.

The Commission notes two general obstacles to terminating or redirecting the grants, once they have served their purpose. In the first place, with the initiation of a new grant, vested interests-both governmental and private-in its continuation come into being. Subject matter staffs are created or expanded at National, State and local levels of government for the purpose of administering the grant program. Aside from any instincts of organizational self-preservation which may exist, these staffs, if they are competent and conscientious, acquire a sense of mission with respect to their particular program. Being responsible for a specific program or function they are not expecially concerned with general problems of intergovernmental fiscal relations across the board. Consequently, their recommendations for change in the grant program are typically in the direction of expansion rather than contraction.

Furthermore, once a particular grant continues for a few years it becomes an integral part of State and local budgets and constitutes one of the assumed sources cf revenue in the process of budgetary planning. With States and localities being always hard pressed with respect to revenue sources, State and local officials naturally are averse to seeing a particular grant reduced or eliminated with the consequent necessity of diverting State or local funds to continue the function at the existing level. Also, those parts of the private sector of the economy which benefit from the grant program, such as professional organizations, suppliers of material, or the providers of services which are purchased with grant funds, are all interested in continuing the program. Attempts to reduce the amount of Federal contribution are resisted strongly, presumably on the premise that it is easier to defend an existing Federal appropriation than to obtain increased amounts from State or local funds.

Secondly, efforts to redirect grant programs toward newer and more urgent problems within a given program area usually result in an additive rather than a substitutive appropriation. This is illustrated by the history of Federal grants for vocational education. Some of the subject matter areas which the original act was designed to stimulate in the national interest have long ceased to have any commanding priority in terms of national manpower shortages. On the other hand, the vocational training of practical nurses and of electronic, chemical and other technicians has been federally stimulated, not by substituting the new for the old, but through retaining the old and adding the new. The rather perennial problem of redirecting the Vocational education grants has been most recently raised by President Kennedy in his message to the Congress dealing with education. He stated:

The National Vocational Education Acts, first enacted by the Congress in 1917 and subsequently amended, have provided a program of training for industry, agriculture, and other occupational areas. The basic purpose of our vocational education effort is sound and sufficiently broad to provide a basis for meeting future needs. However, the technological changes which have occurred in all occupations call for a review and reevaluation of these acts, with a view toward their modernization. To that end, I am requesting the Secretary of Health, Education, and Welfare to convene an advisory body drawn from the educational profession, labor-industry, and agriculture as well as the lay public, together with representation from the Departments of Agriculture and Labor, to be

charged with the responsibility of reviewing and evaluating the current National Vocational Education Acts, and making recommendations for improving and redirecting the program.

IV. RECOMMENDATIONS

The Commission believes that legislative and administrative action should be taken to facilitate either the termination of grants once they have served their purpose or appropriate modification or redirection to reflect changed circumstances arising subsequent to their initial enactment. This is not to imply that all grants-in-aid have gone unreviewed. For example, grants in some fields have been subjected to rather intensive scrutiny by the executive and legislative branches from time to time and have undergone consolidations and up-datings. In general, however, the review and redirection of grants has proceeded on a sporadic and uncoordinated basis and there has not been continued, systematic attention to the problem either from the congressional or executive side.

Set forth below are specific recommendations by which the Commission believes these objectives can be substantially achieved. The first of these recommendations is directed toward Federal grantsin-aid which may be established in the future. This limitation is not based on any specific finding that all existing grants are ideally geared adequately to current circumstances. However, as emphasized above, once a grant has been in existence for a long period of time it is extremely difficult to "taper it off" or to effect major changes in it orientation. The Commission believes that the most fruitful and practical area of legislative effort is to establish a pattern for systematic review and assessment of such grant programs as may be established in the future, whereby some of the difficulties cited previously might be avoided, or reduced to a considerable extent.

It is recommended that the Congress enact a general statute along the lines set forth below which, in the absence of special provisions to the contrary in the specific instance, would be binding upon future grant-inaid enactments.8

DRAFT BILL

To provide for periodic Congressional review of Federal grants-in-aid to State and local units of government.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SEC. 1. It is the purpose and intent of this Act to establish a uniform policy and procedure whereby programs for grant-in-aid assistance from the Federal Government to the States or to their political subdivisions which may be enacted hereafter by the Congress shall be made the subject of sufficient subsequent review by the Congress and the President as to insure that grant programs are revised and redirected as necessary to meet new conditions arising subsequent to their original enactment and that grant programs are terminated when they have substantially achieved their purpose.

SEC. 2. Unless otherwise provided by the Congress in the specific instance, any statute hereafter enacted by the Congress which provides for a grant-in-aid from the Federal Government to States or to political subdivisions thereof shall be subject to the provisions of this Act; provided however, that this Act shall not apply to authorizations for shared revenues, or loans and repayable advances, nor shall it apply to any grant-in-aid statute now in effect, except that where a new

Senator Cutler did not concur in this recommendation. She states: "The provisions of the draft bill are unduly restrictive in that hesitation and uncertainty on the part of State and local governments would be induced by the requirement that grants-in-aid be reviewed and perhaps not reenacted at the end of 5 years. Under this threat of discontinuance some State and local governments might be discouraged from participating in highly desirable Federal-State-local programs involving grants-in-aid."

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