The U.S. Government Accountability Office (GAO) released a report today on federal funding provided to state and local governments.  The report reveals trends in federal funding to state and local governments over the last three decades and identifies challenges in managing the many state and local grant programs.  While federal grants to state and locals as a percent of total federal spending has not dramatically changed, an increasing amount of that funding has been directed towards health-related programs and away from other projects, according to the report.

Over the last three decades . . . the proportion of federal outlays to state and local governments dedicated to Medicaid grants more than tripled, rising from 2.4 percent of total federal government outlays in 1980 to 7.6 percent in 2011. The increase in federal outlays for Medicaid and other health-related grant programs was offset by an approximately equivalent decrease in grants to state and local governments targeted for other areas such as transportation, education, and regional development.

The report also cites the need for better performance measures and improved coordination among federal agencies to address existing challenges in grant management. The GAO uses input from state and local grant recipients, and remembers Hurricane Katrina, to describe some of the shortcomings of federal grant management.  While it does not include any specific recommendations to federal agencies, this report may signal an increased scrutiny of federal grant programs.  As the GAO writes,

In a time of fiscal constraint, continuing to support the current scope and breadth of federal grants to state and local governments will be a challenge.

For more information, contact Stanley J. Czerwinski  or Beryl H. Davis at the GAO.