Apportionment of Federal Grants

October 16, 1946

Report Outline
Variable Grants: New Issue in Federal Aid
Evolution of Grants Prior to New Deal
Development of Depression Aid Measures
Movement for New Methods of Apportionment
Special Focus

Variable Grants: New Issue in Federal Aid

Claim of Poorer Station to Larger Allotments

For the first time in the long history of federal aid, Congress applied the “variable grant” principle at its 1946 session to the distribution of financial assistance for certain state and local activities which it considered in the national interest. The principle received full application in the bill establishing a permanent school lunch program. It was applied in part in two other measures: the bill authorizing federal aid to hospital construction and the bill liberalizing welfare payments under the Social Security Act. Extension of the principle to other and larger fields promises to be a leading issue at the 1947 session of Congress.

Under the variable-grant principle, funds appropriated for federal aid are channeled in larger proportionate amounts to the states with the lowest per capita incomes than to the states which are better able to meet their own needs. The purpose is to make it possible for the poorer states to maintain adequate standards of service to their people without placing undue burdens upon their inferior tax resources.

Resistance to variable grants comes chiefly from the states which make the largest tax contributions to the federal Treasury. Their representatives in Congress maintain that revenues yielded by taxes and redistributed as federal aid should be allocated among the states roughly in accordance with tax collections. Any system which violates this principle, and distributes federal assistance chiefly on a basis of need, is characterized as “a socialistic redistribution of wealth,” not within the rightful authority of the federal government.

ISSUE TRACKER for Related Reports
Budget Process
State, Local, and Intergovernmental Relations