Many program administrators and certain congressional commit-
tees have become increasingly conscious of the need for tech-
nical assistance and training programs for State and local
units administering the functional grants falling under their
jurisdiction, yet are unable to measure the specific needs of
each unit in these areas;

Similarly, many at the national level have adopted the parallel.
goal of stimulating innovative approaches--including research,
experimentation and planning--in grant-aided as well as other
functions;

The absence of reliable data on fiscal capability and needs
for various jurisdictional units within States precludes an
apportionment-based grant for various locally-oriented programs.

The increasing reliance on project grants has important implications for the grant-in-aid system. It tends to diminish the National Government's certainty that Federal funds are being applied most effectively to meet nationally determined minimum requirements throughout the country. First, Congress leaves it to administrators to apply such distribution formulas, sometimes pursuant to legislative guidelines, imposing heavy pressure on administrators to weigh both program and political considerations in their decisions. Second, it places a premium upon the ability of applicants to know what aids are available, to prepare persuasive applications, and to expend the necessary efforts in following through to see that grants are forthcoming. By and large, this means that the State and local governments that are well organized and staffed will win the project grants. Yet they may have a relatively low index of need for the projects, or have a relatively high index of fiscal capacity with which to meet the need.

On the other hand, of course, it can be contended that placing reliance on State and local governments to exert themselves to obtain Federal grant moneys is an inevitable part of a system of shared powers. Unlike a unitary system, the Federal system values local initiative and discretion and it is only natural that some localities will fall behind others in their zeal and ability to obtain Federal grants. If uniformity of services is desired, reliance will need to be placed on the central government rather than the State and local governments.

Increasing Variety in Matching Ratios

Hand-in-hand with the multiplication of Federal grant programs has been a widening variation in Federal matching ratios employed. Table 24 shows the number of grants adopted or revised each year at various matching ratios.

In an effort to determine what, if any, were the specific reasons for the congressional decision to use particular matching ratios and apportionment formulas, the Commission staff examined Senate and House committee reports on legislation creating or revising 180 grants administered by the Department of Health, Education, and Welfare.* The research uncovered documented rationale for matching ratios in 21 instances. The explanations may be summarized as follows:

*

Differences in categorization of the grants largely account for the differences between this number and that shown for HEW in Table A-22.

Participation 1879 1887 1888 1890 1911 1914 1916 1917 1920

1922 1930 1933 1935 1937 1944 1946 1948 1949

1950

2 1

1 1 1

8 1 2

1 1

1

1

Number of Programs

1

1 3 1

2 1 13 1 19 1 21 1 5 9 17

TABLE 24 (CONCL'D). -MATCHING RATIOS, EXISTING PROGRAMS OF GRANTS-IN-AID TO STATE OR LOCAL GOVERNMENTAL UNITS
AS OF CALENDAR YEARS OF ORIGIN

Footnotes

While lacking a documented explanation of legislative reasons for establishment of Federal cost-sharing ratios for specific programs, it is possible to infer from the evolution of the grant-in-aid system some of the general forces that were at work.

The early grant programs were designed for equal sharing between the Federal and State governments. Since the 1930's, however, especially since World War II, grants often have built-in equalization-type formulas, with funds apportioned on the basis of program need and financial ability. Matching thus is in direct relation to States' and local governments' varying abilities to support the aided functions. Variable matching requirements for these programs are often based on the assumption that for all States combined the Federal contribution will approximate one-half of the program cost. In these cases, minimum and maximum percentages are provided, typically ranging from one-third to two-thirds of total program cost as the Federal share. The actual Federal share for any one State depends on some variant of the ratio of State to United States per capita income, figured usually on the basis of the previous three or five years' average personal income.

When Congress decided to increase the Federal share and depart from the traditional 50-50 sharing basis without variable matching, it may have sought to place a high priority on achievement of a particular national objective. The largest grant program--the interstate highway program enacted in 1956--was the first major departure of this kind. Its purpose was to underwrite construction of a national defense network of major roads connecting populous urban centers. More recently, Title I of the Elementary and Secondary Education Act (1965) provides unmatched grants (100 percent Federal) to local school districts for promoting educational services for culturally disadvantaged children. Grants for economic development (1965) may cover up to 80 percent of the cost of projects in areas of serious unemployment and general economic distress.