Final answer:
Block grants are flexible funds for general purposes with few restrictions, while categorical grants have strict criteria and often require matching funds, giving the federal government greater control over how the money is spent.
Step-by-step explanation:
Block grants and categorical grants are two types of grants-in-aid that the federal government provides to state and local governments. Each has distinct characteristics, purposes, and restrictions.
Differences Between Block Grants and Categorical Grants
- Block Grants: These grants are provided to states with more general purposes in mind, allowing states a significant degree of flexibility in how to spend the funds. Block grants have fewer restrictions, which makes them preferred by states. They were notably used during Ronald Reagan's presidency as part of a push for federal assistance that allows more state autonomy.
- Categorical Grants: These are federal transfers designed to limit the discretion in the use of funds by the recipient, subjecting them to strict administrative criteria. They are often accompanied by the requirement of matching funds, where states contribute a portion of the project costs. Categorical grants are more numerous and give federal officials greater control over program performance, such as in ensuring national objectives are advanced. Examples include Medicaid and the food stamp program.
While block grants offer greater freedom to state and local governments, creeping categorization has gradually imposed more restrictions on these grants, reducing their programmatic flexibility over time. Furthermore, categorical grants are more popular among federal officials because they allow for greater oversight and credit attribution to elected officials for positive outcomes.