Comment on Jill Khadduri's “should the housing voucher program become a state‐administered block grant?” A housing voucher block grant is a bad idea

Abstract

Khadduri argues for a well‐designed voucher block grant, phased in over several years. But proposals under consideration are more likely to undermine the effectiveness of vouchers than address their limitations. The most important advantage of housing vouchers is that they give recipients the freedom to choose the kind of housing and the location that best meet their needs. Although the current program is not living up to its potential, strategies for making it work better can be implemented without a block grant. Supporters of block grants claim welfare reform as a model, but none of the factors that contributed to declining caseloads under Temporary Assistance to Needy Families apply to housing. The single biggest problem with the housing voucher program is that federal spending for affordable housing is woefully inadequate. Instead of addressing this issue, a block grant would make housing hardship a state rather than a federal problem.     

Federal homeless information needs and local practice

Abstract

What would be required to produce a national homeless needs assessment? Information on the size and characteristics of the homeless population, evaluations of the effectiveness of interventions, and evaluations of the program and financial resources available nationwide would play pivotal roles in developing a comprehensive assessment. Estimates of the size of the homeless population are far less useful than evaluations of treatment and program delivery. There is no reason to focus attention on counts of the homeless nationwide.

Much more needs to be done to evaluate the capacity of the nation's program delivery system and to estimate the level and type of financial resources that flow into this sector. These same considerations apply to possible changes in what information the federal government will require of localities if the McKinney Act is shifted to a block grant. Evaluative assessments, including assessments of the barriers to serving the homeless, would prove to be of greater value at the local and federal levels than an emphasis on counts. Nevertheless, there is an argument for requiring a periodic local reporting of numbers and characteristics among the sheltered population under a new block grant.     

Asymmetric Effects of Intergovernmental Grants: Analysis and Implications for U.S. Welfare Policy

Theories of federal grants to states and localities suggestthat these grants have a stimulative effect on spending, causingrecipient governments to expand and contract programs alongwith changes in the grants. However, policymakers may responddifferently to grant decreases than to grant increases becausethey face political and bureaucratic pressures to expand programs.These asymmetric reactions may depend on specific politicalstructures. Pooled time-series regressions of data from theAid to Families with Dependent Children program across 46 statesfrom 1965 to 1994 demonstrate state government responses togrant changes. Bureaucratic pressures and proposals lead statesto expand their welfare benefits upon increases in federal grants,but not to contract them upon decreases in federal grants. Withregard to the 1996 welfare reforms, this study indicates thatthe switch to block grants will lead to little or no state reductionin welfare payments.     

Comment on William G. Grigsby and Steven C. Bourassa's “Section 8: The time for fundamental program change?”

Abstract

Grigsby and Bourassa claim that the major problems with the housing voucher program are that most families with affordability problems are not served and that housing assistance is not part of the federal safety net. They propose replacing the program with a housing entitlement for most very low‐income renters, with eligibility linked to receipt of safety‐net benefits. Resources to serve additional families would be generated in part by changes like those found in the Department of Housing and Urban Development's recent block grant proposals.

The Grigsby‐Bourassa proposal lacks a clear assessment of likely costs. Also, there is a risk that the means the authors propose will be heard, but that their call for expansion will not. Finally, their proposal does not intersect with other ideas to modify a basically successful program to better achieve its goals, and questions about rental markets and family and landlord behavior also must be answered.     

Beyond the categories: human service managers view the new federal aid

Social agency chief executives in six program areas--welfare, health, mental health, community action, model cities, and community mental health centers--were surveyed to determine their reaction to the recent revenue sharing/block grant efforts to decentralize the federal aid system. Despite their strong belief that social initiatives and values were advanced principally by federal action, and that excessive reliance on state and local officials could severely jeopardize social programs with weak constituencies, agency executives also recognized major weaknesses in traditional categorical grant policy and, to varying degrees, supported revenue sharing and block grant alternatives. Those agencies largely dependent on federal support for their survival--model cities, community action programs, and community mental health centers--tended to support the new aid efforts only reluctantly. Those agencies more fully integrated into the regular policy-making arrangements of local government--health, welfare, and mental health agencies--were considerably more positive in their endorsement of greater decentralization.     

Intergovernmental Relations in the Reagan Era

This article reviews federal Reagan-era policies that affected grant-in-aid programs to state and local governments. We find the most important developments in federal aid policies of the Reagan years are twofold—the relative decline in the national government's involvement in domestic affairs and the concomitant rise in the role of the states. The administration achieved these effects by devolving federal authority to states and by reducing grant spending. Reagan's biggest cuts in federal aid outlays came in 1981; in subsequent years, total grant outlays began to rebound, increasing in nominal dollars to levels above those in the Carter years, though still below the high-water mark reached in 1978 in real terms. Medicaid, the largest federal aid program, accounts for most of the overall growth, masking cuts in operating and capital grant programs. Reagan's devolutionary and retrenchment policies are one of several factors we see as contributing to the rising role of states in domestic affairs, a trend we think is likely to continue in the next administration.     

Should the housing voucher program become a state‐administered block grant?

Abstract

The Bush administration has proposed that the current national Housing Choice Voucher Program, which has an essentially uniform program design and is administered largely by local public housing authorities, become a block grant administered by the states. This article examines the potential benefits and hazards of such a change.

While this article does not support or analyze directly the administration's proposal, it concludes that state administration is fundamentally a good idea. However, the choice‐based nature of the voucher program should be preserved, and the early stages of implementation should permit changes to the program's subsidy structure and housing quality inspection only in selected states and with careful evaluation. The law enacting the new program should include clearly articulated goals and mandated reporting requirements. Also, the program should be funded and monitored to maintain the national commitment to meeting the housing needs of low‐income renters.     

Block grants and state discretion: A study of the implementation of the partnership for health act in three states

This article examines the use of federal funds provided to state health departments under a grant consolidation of eight previously categorical health programs in Michigan, Pennsylvania, and Alabama in a comparative context. The primary question addressed is why the three states chose to describe their allocations of funds within the total health department budget differently, and what political, administrative, and bureaucratic factors explained the differences. Although certain factors were found to be at work in all states (e.g. each had an incentive to concentrate the reported use of federal funds to simplify federal audits) these factors combined with circumstances unique to each state to produce different expenditure patterns. After examining the experience of three states, general hypotheses are developed. For example, it is hypothesized that more volatile changes in allocations will result from grant consolidations in policy areas which do not address basic service needs. Finally the decision-making process with respect to block grant funds is characterized as one in which a small group of professionals determined allocations autonomously with relatively little input from interest groups or other actors within state government; nevertheless, the external political and administrative environment severely limited the possibilities of realistic choice in each of the three states studied.I wish to thank the National Center for Health Services Research which supported this study under grant HS 01495. I am indebted to the state health department officials in Alabama, Michigan, and Pennsylvania who made this research possible. I would also like to thank Leonard Robins, Janet Shikles, William Schmalzreid, Bruce Vladeck, John Kingdon and Robert Baitty for comments on an earlier draft. Of course the views expressed are my own and in no way reflect the positions of the Department of Health and Human Services.     

State strategies for welfare reform: The Wisconsin story

Wisconsin is commonly cited as exemplar of the capability of states for reforming welfare. Wisconsin's welfare and caseload declined 22.5 percent between 1986 and 1994. I argue that the decline resulted from restriction of eligibility and benefits, a strong state economy, and large expenditures on welfare-to-work programs encouraged by an exceptional fiscal bargain with the federal government. Continued reduction of welfare utilization by means other than denying access are jeopardized by proposed changes in federal cost-sharing, a prospective state deficit, and the growing share of the caseload accounted for by residents of Milwaukee. Wisconsin Works, the state's plan for public assistance in a post-block grant world, continues benefit reduction and eligibility restriction but expands emphasis on employment. The special circumstances enjoyed by Wisconsin are unlikely to be duplicated elsewhere.     

Incentivizing self‐regulation: Federal vs. state‐level voluntary programs in US climate change policies

How does program sponsorship influence the design of voluntary programs? Why and how do voluntary programs on climate change sponsored by the state and federal governments in the United States vary in their institutional design? Scholars emphasize the signaling role of voluntary programs to outside stakeholders, and the excludable benefits that induce firms to take on non‐trivial costs of joining voluntary programs. Scholars have noted several types of benefits, particularly reputational benefits programs provide, but have not systematically studied why different programs emphasize different types of benefits. We suggest that excludable benefits are likely to take different forms depending on the institutional context in which program sponsors function. We hypothesize that federal programs are likely to emphasize less tangible reputational benefits while state programs are likely to emphasize more tangible benefits, such as access to technical knowledge and capital. Statistical analyses show the odds of a voluntary program emphasizing tangible benefits increases by several folds when the program is sponsored by the state as opposed to federal government.     

The benefits and costs of the Section 8 housing subsidy program: A framework and estimates of first‐year effects

This paper provides estimates for a comprehensive set of social benefits and costs associated with the federal Housing Choice Voucher ( Section 8 ) program. The impact categories for which we provide empirical estimates include the value of the voucher to recipients; additional services and public benefits induced by voucher receipt; improvements in children's health, education, and criminal behaviors; the costs of voucher provision; the labor supply impacts on voucher recipients; and community effects. These estimates rest largely on empirical analyses of the effect of voucher receipt on several recipient and taxpayer behaviors and outcomes that occur in the first year of voucher receipt. The analysis distinguishes benefits and costs accruing to program participants, nonparticipants—including taxpayers and property owners—and society as a whole. Our analysis suggests that the program is likely to meet the efficiency standard of positive net social benefits. © 2011 by the Association for Public Policy Analysis and Management.     

Administration and Governance in a Compound Republic: Martha Derthick’s Contributions to the Study of American Federalism

Martha Derthick is among the most influential scholars of American federalism, administrative behavior, and domestic policy making. Her work over a half century has pioneered the study of policy implementation, administrative and political relationships in federal grant programs, intergovernmental policy making, as well as the evolution of the federal system. This essay reviews her major intellectual contributions to the fields of federalism, public administration, and intergovernmental relations.     

The Substitution Approach To Intergovernmental Relations: The Case Of OSHA

Federal legislation of the last two decades has substantiallyreduced state autonomy in dealing with many regulatory issues.Participation in the implementation of these federal programsmay, however, enable states to exert some leverage over policyoutcomes. Variations in state leverage no doubt exist from oneintergovernmental grant program to the next. Substitution authoritymay be one variable accounting for this variation. Under a substitutionapproach, a federal agency cannot only sever the flow of fundsto a grantee; it can also step in and operate a program if statesfail to meet expectations or choose not to participate. Thisarticle generates more basic propositions about the substitutionapproach by analyzing its implementation under the OccupationalSafety and Health Act of 1970. The article examines the roleplayed by substitution authority in motivating the OccupationalSafety and Health Administration (OSHA) to adopt an aggressiveposture toward the states. The article then assesses whetherOSHA's aggressiveness prompted state grantees to exert considerableeffort on behalf of program goals. Finally, the implicationsof current reform proposals, which call for a sorting out offunctions between the states and the federal government, receiveattention.     

SSI eligibility and participation among the oldest old: evidence from the AHEAD

The proportion of elderly SSI recipients aged 70 or older has been growing in recent years, perhaps because of rising life expectancies overall and a higher incidence of poverty among the oldest old. In 1999, 84 percent of all elderly SSI recipients were 70 or older. This article examines Supplemental Security Income (SSI) eligibility and participation among the oldest old. The analysis was based on 1993 data from the Study of Assets and Health Dynamics Among the Oldest Old that were used to build a detailed SSI eligibility model to identify individuals who meet the federal criteria for SSI income and resource eligibility. The participation rate among those eligible for federal SSI benefits is 53.9 percent, which is generally consistent with the findings of other studies. Furthermore, eligible participants would receive a significantly higher federal SSI benefit than eligible nonparticipants. Correspondingly, eligible participants have significantly lower incomes and assets than eligible nonparticipants. An econometric model is used to estimate the influence of various demographic, financial, and health care use characteristics on the probability of SSI participation among eligible individuals and couples. The model corrects for measurement error in calculated benefits and for misclassifying someone as ineligible. The empirical results show that the effect of higher SSI benefits on the probability of participation is substantial--a $100 increase in benefits would increase the probability of participating for an average eligible unit by 15 percentage points. Many of the demographic, financial, and health care use variables also are important predictors of SSI participation among the oldest old. The eligibility and participation models are also used to simulate the effect of increasing the SSI unearned income disregard from $20 to $125. Those made eligible by this policy change would receive a very low federal SSI benefit on average, suggesting that they are on the margin of eligibility under the original program rules. The simulated participation rate is 48.8 percent--5 percentage points lower than under the original program rules--reflecting the low benefit that new eligibles would receive. Only 36 percent of those made eligible by the new program rules are predicted to participate. These SSI eligibility and participation models are potentially useful tools for policy analysis. It is fairly straightforward to use these models to change a feature of SSI eligibility, reestimate the group of eligible individuals and couples, and predict participation among those who are eligible under the simulated program rules. New eligibles can be compared with those eligible under original program rules. New participants can be compared with old participants. Although these models focus only on individuals aged 70 or older, this type of analysis can be helpful in estimating the potential distributional effects of proposed SSI policy changes.     

The Impact of Converting Categorical into Block Grants: The Lessons from the 314(d) Block Grant in the Partnership for Health Act

Section 314(d) of P. L. 89–749, (1966), the Partnershipfor Health Act, combined nine categorical health grants intoone block grant for health. The impact of section 314(d), according to data gathered forthis study, can be summarized as follows: the block grant increasedthe administrative flexibility of state health officials; statehealth planning agencies generally did not have a major influenceon the block grant; state health planning agencies located ingovernors' offices had less influence over the block grant thanthose located in state health departments; Congress did notsignificantly increase expenditures for the block grant; nationalinfluence was increased by creating health programs that couldpotentially have been made part of the block grant; and theblock grant did not generally result in a reordering of spendingpriorities. The best explanation for the unspectacular effect of combiningseveral categorical grants into one block grant was that, withoutnew resources, the substantial (and welcome) new administrativeflexibility given state officials was insufficient to producean important substantive reordering of program priorities.     

The Fly Ball Effect: A Theoretical Framework for Understanding the Impacts of Short‐Term Seed Grants

The federal government has long used grants‐in‐aid to encourage state and local governments to carry out federal policies. Little research has been done that examines how short‐term seed grants affect program continuation. We propose the “fly ball effect” as a theoretical framework for understanding how seed money should impact program maintenance. Our theory suggests that short‐term seed grants by themselves should result in considerable funding uncertainty and program eliminations or stagnation once the initial grant money expires. We use data from drug court start‐ups in four states to provide empirical support for our theory. We argue that understanding the logic of the fly ball effect can help granting governments to improve the effectiveness of their grant funding systems, at least as measured by strong program continuation and expansion.     

Defending the Articles of Confederation: A Reply to Dougherty

This reply addresses the issues raised byDougherty in response to my 1999 article in this journal. Ialso develop a new graphical model of the optimal collectionrate under the Articles, where states made contributions, andcontrast it to the revenue potential from direct taxation. Ibelieve that despite Dougherty's criticisms, my argumentremains valid. While the Articles were not perfect in anabsolute sense, that when more properly viewed in acomparative manner, that the system of state contributions forraising revenue under the Articles was (and still is) superiorto a system of direct federal taxation.     

Targeting Federal Grants: The Community Development Experience, 1950-1986

This article examines the degree to which federal communityand economic development programs target federal assistanceto the nation's neediest communities. Grant allocations to citieswith populations of 50,000 or more were examined for six majorfederal urban programs during 1950–1986. Federal programsthat include both needs-based eligibility and allocational featureswere found to achieve the highest levels of targeting. The analysisfurther shows that while urban conditions in the nation's mostdistressed cities continued to deteriorate during the 1980sin both relative and absolute terms, grant allocations underthe major federal urban program, Community Development BlockGrants, have not responded to the changing incidence of urbanhardship.     

Small City Autonomy in the Federal System: A Study of Local Constraint and Opportunity in California

How severe have been the restrictions on the autonomy of localgovernments, as state and federal mandates and grant programsproliferated in the 1970s? This study of mandate and grant impactsin nine, small California cities suggests that local controlhas not been reduced as much as the recent literature of federalismargues. Municipal officials in these communities perceived arange of effects according to program areas. Clean water standardswere negatively viewed, while state planning mandates actuallyserved to further local goals. Most of the cities did not hesitateto compete for grants, despite their many strings. Based onthe "hard case" of small cities—which are relative newcomersto grant and mandate programs, and generally change-resistantin attitude—this study points out some positive localgovernment impacts of federal-and state-local entanglements. ¹ As associate investigator of the project on which this paperis based, Joan Hogan of the Institute of Governmental Affairs,University of California at Davis, contributed significantlyto the research.     

Block Grants: A Perennial, But Unstable, Tool of Government

During 1995 and 1996, the Congress and the president gave considerableattention to block granting over $200 billion in federal intergovernmentalgrant programs, ranging from large entitlement programs to smallerprograms in housing, vocational education, and law enforcement.In the end, the record of successes was modest—highlightedby welfare-reform legislation that, in some respects, resembleda block grant and in others did not. The contrast between processand outcomes in this most recent block-grant cycle reinforcesthe point that block-grant prospects depend on fundamental fiscal,political, and programmatic forces that are separate from federalismconsiderations. The states' maturation as leaders in many domesticpolicy areas strengthens the performance rationale for blockgrants. The federal fiscal crisis will continue to stimulateinterest in block grants among fedeal as well as state policymakers.The proposals offering the greatest fiscal advantage (i.e.,Medicaid and AFDC) may not be those with the strongest performancerationale. Although recent congressional developments suggeststronger support for states, nationalizing forces remain embeddedin domestic policymaking. Thus, substantial questions remain,posing obstacles to a fundamental and sustained role for blockgrants in the federal system.