Block Grants are Wolves in Sheep's Clothing

By Sarah Ann Kotchian

What is a Block Grant?

In plain terms, a block grant is a lump sum of money given to states by the federal government to fund a specific program. The state can essentially spend the money on its own terms within certain limitations, but when the money is gone, the money is gone, even if the program requirements or needs have not been met. And if there is more money than need, the money can be used in ways that inherently have less accountability than originally intended when the money is doled out to states. So, what initially sounds like a good deal for states, especially those keen on local control, is actually a wolf in sheep’s clothing, or if you are more into car analogies, a lemon.

Why Not Block Grants?

Based on several decades of historical budget data, funding for block grants has fallen significantly over time. This is a RED FLAG for states who will be left only with the flexibility to figure out how to cover program costs when funds have eroded, or in turn, the flexibility of how to limit program eligibility and enrollment in times of need.

The nation’s largest federal block grant, TANF, short for Temporary Assistance for Needy Families, has been frozen since its creation and lost about a third of its value between 1997 and 2015 due to inflation. What does this mean? In 2015, for every 100 poor families with children in Nebraska, only 17 received TANF cash assistance, down from 46 in 2001. To be clear, our child poverty rate has not met with a similar decrease and in fact increased from 14% in 2001 to 17% in 2015.

Furthermore, block grants cannot respond in the face of emergencies. If a state faces an increased need because of a natural disaster, disease outbreak, economic depression, or for any other reason, the amount of the block grant is fixed and cannot respond in kind to increased need. This is dangerous territory for states when block grant funding already tends to fall short of meeting initial needs and then still erodes over time.

Finally, for better or for worse, states can move federal block grant funds around to fill other unmet needs or replace state funding. Block grants also allow states to make choices that can create deeper program cuts or severely limit eligibility so fewer and fewer in need are covered.

Again, Though, What About the Flexibility?

The flexibility left to states to manage the lump sum of a block grant can lead to less accountability, which can then lead to less evidence of responsible spending, which then leads to stronger and stronger arguments for program cuts or elimination of funding for a program altogether. And not just any programs, but the evidence of this lies in programs for housing, health and social services for the most vulnerable among us – families in poverty, the disabled, children and seniors.

So About That Graham-Cassidy Bill . . .

The current Graham-Cassidy bill is based around a block grant structure and a very complicated formula. True to block grant form, the total changes in federal spending under the Graham-Cassidy block grant program would mean significantly less for Nebraskan’s health coverage, to the tune of $726 million less than current funding, with deeper cuts expected over time until all block grant funding ends as proposed in 2026.

Also true to block grant form, Nebraska would have flexibility over the use of this money, with no guarantee it would be used to help provide and increase access to the affordable insurance coverage Nebraskans need and want.

Call Today to Stop the Graham-Cassidy Bill:

Call Senators Fischer and Sasse and tell them to oppose the Graham-Cassidy bill.

Sen. Deb Fischer (202) 224-6551       Sen. Ben Sasse (202) 224-4224


 Sarah Ann Kotchian is the Vice President of Public Policy for Holland Children's Movement.

Contribute Become a Registered Voter! Holland Children's Institute