What Is a Block Grant?

A block grant is an annual sum of money that is awarded by the federal government to a state or local government body to help fund a specific project or program.

Block grants have fallen out of favor in recent years. A 2017 attempt to revamp Medicaid as a block grant program did not succeed.

Nevertheless, a number of block grant programs still exist. One enduring example is the Community Development Block Grant (CDBG) program under the U.S. Department of Housing and Urban Development, which has been going since 1974.

Understanding the Block Grant

Block grants have been in use in some form since the 1950s. Most have supported social services, public health services, or community development programs.

Critics of block grant programs cite the relative lack of federal oversight as a problem. Notably, the proposal to turn Medicaid into a block grant program was seen as endangering the federal government's ability to guarantee a standard level of service.

Key Takeaways

  • Block grants are federal funds earmarked for specific state or local programs.
  • A block grant is supported by federal funds but administered by state or local governments.
  • Most block grants support housing, health, or other social services.

Block grants were designed to provide funding for those services with relatively few strings attached, allowing local governments to manage and oversee the programs.

In addition, state and local governments may add their own guidelines and will sometimes distribute a portion of the grant to other organizations, which likewise have their own guidelines and rules regarding how the money is used and for what purpose.

Examples of Block Grants

Three of the better-known block grant programs are earmarked for social services delivered at the local level:

The CDBG program, administered by the Housing and Urban Development agency, is broadly defined as working to ensure decent affordable housing, to provide services to the most vulnerable in our communities, and to create jobs through the expansion and retention of businesses," according to the agency. It provided annual grants to 1,209 state and local government agencies in 2018.

Block grants have been in use since the 1950s but have fallen from favor in recent years.

The grant amounts are awarded according to a formula based on a community's need, including its extent of poverty, overcrowding, and population growth.

The Mental Health Block Grant (MHBG)

The Mental Health Block Grant, established in 1981, has disbursed millions of dollars to states to assist in the treatment of mental illnesses.

The grant was amended in 1986 to require that states develop its services based on the advice of Mental Health Planning Councils comprised primarily of family members and non-treating professional citizens.

The Social Services Block Grant Program (SSBG)

The Social Services Block Grant Program (SSBG) is a broadly defined program that allows states and territories to tailor social service programming to the needs of their populations.

Administered by Health and Human Services, the program is intended to "reduce dependency and promote self-sufficiency; protect children and adults from neglect, abuse and exploitation; and help individuals who are unable to take care of themselves to stay in their homes or to find the best institutional arrangements," according to the department's Office of Community Services.