On Wednesday, July 29, 2015, Oakland County Commissioner Eileen Kowall presented a resolution calling for the reform of federal grants-in-aid policies to allow state and local governments more authority to innovate and to eliminate excessive administrative costs.
“The federal grant system is creating a culture of fiscal irresponsibility, wasteful use of resources and is increasingly driving policy decisions into the hands of a centralized federal bureaucracy,” said Kowall. “State and local governments are often best equipped to find innovative ways to solve the problems facing their citizens.”
Federal grants to state and local governments have ballooned to more than 1,100 separate programs, costing taxpayers $640 billion annually – a 2,500% increase from federal grant spending in 1970. Often, these grants require significant “strings attached” which force recipients to adopt federally determined policies and to spend funds within narrow limitations. Federal grants often pass through many layers of government, driving up the administrative cost of programs and reducing the benefit to intended recipients. Federal grants-in-aid programs currently represent about 30% of state government budgets throughout the nation.
Kowall’s resolution calls on federal leaders to reform the current system into block grants that provide more authority to state and local governments to create innovative programs and determine spending priorities.
“Reducing the power and influence that comes with handing out federal money will ultimately end this continual cycle of governments competing for the dollars the federal government can no longer afford to give. We will return to the vision of our founding fathers, who believed in a limited federal government and the separation of powers,” said Kowall.
The Board of Commissioners routinely reviews grant applications and awards from federal or state agencies charged with distributing federal funds. Kowall pointed to one example of how federal grants flow through layers of government and end up costing taxpayers or reducing assistance to people in need.
“The federal Community Development Block Grant program is a great example of how this process leads to waste. A Government Accountability Office report found that 17% of CDBG grant funds were used by local governments just to administrate the program. State governments added another 8% and the federal government 5%. Michigan’s CDBG compliance manual is 180 pages long. It is unacceptable to have upwards of 25% of the value of a grant swallowed up by bureaucracy,” said Kowall.
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