Federal grants-in-aid used only for a designated activity are called
Multiple Choice
categorical grants.
block grants.
revenue-sharing grants.
targeted grants.
streamlined grants.
The correct answer and explanation is:
The correct answer is categorical grants.
Explanation:
Categorical grants are federal grants-in-aid provided to state and local governments for specific, narrowly defined purposes. These grants come with strict requirements and conditions on how the funds must be used. The federal government imposes these conditions to ensure that the money is spent on designated activities, such as education, transportation, healthcare, or environmental projects.
There are two main types of categorical grants:
- Project Grants – These are awarded based on competitive applications. For example, research grants given by the National Institutes of Health (NIH) for medical research.
- Formula Grants – These are distributed based on specific formulas set by legislation. An example is Medicaid, where funding is allocated based on a state’s population and income levels.
Unlike block grants, which provide broad discretion to states and localities on how to use the funds, categorical grants have strict federal oversight. The goal of these grants is to ensure uniformity in policy implementation across different states.
The use of categorical grants has been a point of debate in federalism. Some argue that they allow the federal government to address national issues effectively, while others believe they reduce state autonomy by forcing local governments to comply with federal mandates.
Example of Categorical Grants in Action:
- Head Start Program: A federally funded early childhood education program.
- Highway Construction Grants: Funds provided to states for road and infrastructure development under strict federal guidelines.
Overall, categorical grants play a crucial role in shaping state policies by aligning them with federal priorities while ensuring targeted and efficient use of funds.
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