Final answer:
Categorical grants are federal funds provided to state and local governments with strict requirements for specific purposes, allowing federal oversight of how the money is spent. Block grants are less restrictive and can be used for a wider range of general purposes. Despite some preferences for flexibility, categorical grants are more prevalent due to their ability to ensure accountability and control over federal objectives.
Step-by-step explanation:
What are Categorical Grants?
Categorical grants are federal transfers designed to limit the recipient's discretion in the use of funds and subject them to strict administrative criteria. They often require matching funds and come with 'strings attached', dictating that the money must be used for specific, defined purposes such as Medicaid and the food stamp program. This contrasts with block grants, which are given with fewer restrictions and for more general governmental operations. Examples of this include the Workforce Investment Act and the Surface Transportation Program.
The national government prefers using categorical grants because they provide more control over how funds are used, aligning with federal objectives. Recipients must adhere to set standards and may face penalties for non-compliance. These grants can also be a response to national emergencies, with funding amounts often dependent on a state's population and potentially involving a requirement for state-matched funding.
Despite some preferring the flexibility of block grants, categorical grants remain popular. They allow federal officials to oversee outcomes more closely and enable elected officials to take credit for positive results. Moreover, once established, these grants tend to be protected by those who have vested interests in them, such as legislators and federal agencies.