WASHINGTON–In recent decades, major economic security programs have continually failed to meet needs after crises like hurricanes or economic recessions. Much of the failure can be traced to their funding structure. Today, the Georgetown Center on Poverty and Inequality (GCPI) released a new report, Structurally Unsound: The Impact of Using Block Grants to Fund Economic Security Programs. The report outlines how the block grant funding structure is fundamentally ill-equipped to support basic living standards compared to other structures (especially those with meaningful benefits guarantees) and is the wrong way to fund economic security programs.
“Block grants are not designed to serve everyone who needs help. They artificially cap the amount of federal resources available to fund programs, which means that when states use up the designated funds, that’s it–even if the funds are not enough to cover access for everyone who needs it. In the event of a crisis when need increases, like a hurricane or recession, that could be the difference between helping families and communities stabilize and cutting off essential access to basic supports,” said Cara Brumfield, Senior Policy Analyst at GCPI.
Block grants and similar proposals could cut federal Medicaid spending by hundreds of billions of dollars and leave millions of people uninsured. Lowering food assistance expenditures through block grants would mean several million fewer people receiving support to keep food on the table each year. For example, in Puerto Rico, Medicaid and food assistance operate as capped block grants which limits the island’s capacity to respond to need—especially during times of crisis.
“Block grants are fundamentally ill-equipped to promote economic security and often exacerbate inequality, especially racial inequities. As our paper outlines, policymakers should steer clear of new block grants and focus on transitioning existing block grants into stronger structures that are better equipped to meet basic living standards–like food on the table and a roof overhead,” adds Brumfield.
As the new report highlights, the block grant funding structure is less effective at meeting basic living standards for the people they are intended to serve than other, stronger program funding structures. GCPI analyzed the performance of major block grants in recent decades and found that:
- Block grants respond poorly to changing need: Ill-determined funding caps constrain block grant programs’ effectiveness and ability to respond to need–especially during times of crisis, like weather events and recessions.
- Block grants are unaccountable: Flexibility in how states and other entities can spend federal block grant dollars, paired with modest oversight and corrective action, means they are often spent on activities and services that are distant from core program goals and the needs of people experiencing poverty.
- Block grants can exacerbate inequality: Communities that already face large barriers to financial security, including people of color, women, and people with disabilities, experience even greater inequities under block grants due to expansive flexibility and weak federal protections and accountability measures.
- Shortcomings of block grants suggest flaws in related structures: The drawbacks of block grants are related to per capita cap and superwaiver ideas. These similar structures also have the potential to undermine access to and adequacy of economic security programs.
Policymakers must uphold the United States’ commitment to protecting access to a basic standard of living by transitioning existing block grant structures for social protection programs into stronger structures and continuing to preserve the funding structures of important and effective non-block grant programs such as Medicaid and SNAP.
To learn more about why block grants should be transitioned to stronger funding structures, read the full report.
About GCPI: The Georgetown Center on Poverty and Inequality (GCPI) works with policymakers, researchers, practitioners, advocates, and people with lived experience to develop effective policies and practices that alleviate poverty and inequality in the United States.GCPI conducts research and analysis, develops policy and programmatic solutions, hosts convenings and events, and produces reports, briefs, and policy proposals. We develop and advance promising ideas and identify risks and harms of ineffective policies and practices, with a cross-cutting focus on racial and gender equity. The work of GCPI is conducted by two teams: The Initiative on Gender Justice and Opportunity and the Economic Security and Opportunity Initiative.
The mission of the Georgetown Center on Poverty and Inequality’s (GCPI) Economic Security and Opportunity Initiative (ESOI) is to expand economic inclusion in the United States through rigorous research, analysis, and ambitious ideas to improve programs and policies.