Fiscal Federalism—the federal government holds purse strings.

The system of distributing federal money to state governments.

The power of the national government to influence state policies through grants

How do grants (FREE $) entice states to cooperate?

Federal Grant: (Grants-in-aid)—free money!!

Grants-in-aid are federal funds allocated to states and local governments for specific purposes

Reasons for grants: Abundant National Government Resources; Local Provision

Categorical Grants:

Grants are for specific programs and funds matched by states.

Federal funds go to all the states on the basis of a formula depending on the states wealth and usually require that the state match the funds.

Used for programs to fight crime, improve streets, control air, special education programs, etc. Some categorical grants are considered formula grants too such as Medicaid.

2 types of categorical grants

Restrictive to specific programs.

(Big Federal Government)

1. Formula Grant: If you fit into the “Formula” you can receive grants (welfare, unemployment)

2. Project Grant: Awarded on the basis of competitive application

Example: education programs, roads, highways, etc.

Block Grant: Large grant of money that can be used for a general purpose such as public health or crime control. Allows states more discretionary spending. (also called revenue sharing)

3 Types of Block Grant

a) operational (run programs)

b) capital (buildings/services)

c) entitlements (Money to poor/needy/AFDC & Medicaid

Mandates: Formal order given by a higher authority (federal government) telling the state and local governments what programs to implement.

Problem with mandates? Most of these are unfunded and states have to come up with their own money.

--Can cause states to have to spend (prisons, schools, discrimination)

--To get money, states must comply with “conditions of aid”

American with Disabilities Act, 1990(Example of Federal Mandate)

The Americans with Disabilities Act (ADA) protects the rights of people with disabilities.

It affects access to employment; state and local government programs and services; access to places of public accommodation such as businesses, transportation, and non-profit service providers; and telecommunications.

Problems with implementation?

Conditions of Aid:

Federal government will give states money IF they meet the conditions given to receive the aid.

Requires states to spend grant money in certain way in they want to receive federal funding.

--(Examples: Government will give money to states if they lower drunk driving limit, speed limits, etc. )

What type of grant is needed most in your community?

• Block?

• Categorical?

• Project?

What kinds of agencies, departments, and/or organizations would benefit from the grant you have selected?

What kind of conditions would you attach to your grant?

Despite the “sharing of power”. . . the federal government still limits state power… Why?

Use leverage and keep representatives from their states happy using money and pork-barrel spending (using federal money for state and local projects)

Examples of “Pork” Spending—which states do they benefit?

• $84,000 to study why people fall in love

• 19 million to examine gas emissions from cow flatulence

• $219,000 to teach college student how to watch television

• $800,000 for a restroom on Mt. McKinley

• 1 million to study why people don’t ride bikes to work

• 1.2 million to study the breeding habits of a woodchuck

• 2 million to construct an ancient Hawaiian Canoe

IA State Fair Biggest Boar 2014; Lots of Fat!

And there is more. . .

100,000 to study the Hatfield-McCoy feud

100,000 to study how to avoid a falling spacecraft

1 million to preserve a sewer in Trenton, NJ as a historic monument

57,000 by the Executive branch for gold-embossed playing cards on Air Force Two

160,000 to study if you can hex an opponent by drawing an X on his chest

Dual v Cooperative Federalism

DUAL FEDERALISM: Each level of

government has distinct responsibilities that do not overlap. States are

sovereign.

COOPERATIVE FEDERALISM:

Levels of government share

responsibilitiesLayered Cake

Marbled (swirl) cake

From Dual to Cooperative Federalism

We WERE: Dual (Layered) Cake

Each level of government had its own distinct role -- national, state & local

We ARE NOW: Cooperative (Marbled Cake or 50 marbled cupcakes)

Cooperative Federalism: Elements of national and state influence swirl around each other, without clear boundaries

So is the Federal or State Government Stronger?

Federal Government - there are more strings for money now