Reforming How Federal Grants Are Provided to the State


This model policy establishes requirements for departments, agencies, and officials of state government to follow when applying for grant agreements, such as providing the Governor and State Legislature with a cost-benefit analysis and a list of compliance mandates associated with the grant. It also requires the Governor to approve the submission of a grant application.

Reforming How Federal Grants Are Provided to the State


Whereas, the Framers established, and the States ratified, the Constitution of the United States of America for purposes of protecting our rights and ensuring that citizens direct the course of government; and

Whereas, in order to preserve liberty, the constitutional structure rests on a system of dual sovereign governments; and

Whereas, under that structure, the federal government is intended to have limited powers, with the broader, residual powers being reserved for the states or the people; and

Whereas, in denigration of that structure, federal assistance to a state in the form of federal grants requires the state to surrender such powers to the federal government in exchange for federal funding; and

Whereas, many such federal grant programs require the state to provide matching state funds and additional resources and to conform its policies and programs to those preferred by the federal government; and

Whereas, contrary to popular opinion, federal grant money is not free money to the state. When such federal grant programs become unfunded once the grant period ends, it falls upon the state to finance the federally imposed programs; and

Whereas, such unfunded federal grant programs result in permanently larger state government spending that must be financed by permanently higher levels of state taxation (specifically, the Mercatus Center found that every additional dollar in federal grants stimulates a permanent increase in state and local taxes of 33–42 cents)[1]; and

Whereas, the federal government often subverts the authority of the state by entering into grant agreements directly with state agencies without the knowledge and/or consent of the state legislature or governor; and

Whereas, that breakdown in the state constitutional structure negates political accountability and leaves the state in a poor position to negotiate the terms of the grant agreement with the federal government; and

Whereas, the authority to control taxation and appropriations and to establish laws governing state programs and policies is vested in the state legislature; and

Whereas, such authority is undermined if state agencies are allowed to obligate state resources or adopt federal policies and priorities independent of executive or legislative control.

Therefore, it is prohibited for any state employee, state agency or state agent to apply for any grant or to enter into any agreement, including but not limited to cost-sharing agreements and grants, which obligates [insert state] to any explicit or implied maintenance of effort requirements without the express prior consent of [insert state] Legislature. Further, the state legislature establishes the following process for state agencies to follow.

Model Policy

This article shall be known and may be cited as “Reforming How Federal Grants Are Provided to the States”.


As used in this article:

“Local government” means any unit of government within a state, including a county, municipality, city, town, or township;

Section 1. Application for grant agreements; requirements.

Any department agency, or official of state government applying for or renewing a grant agreement, either as the recipient or sub- recipient of such grant, shall, at least 60 days prior to submitting the grant application, provide the following to the Governor and the [state equivalent of the Office of Management and Budget] and the state legislative budget committee:

(a) Legal basis. State agency must provide the authorizing state statute for the proposed grant;

(b) Cost Benefit Analysis. All costs and benefits will be reported by the State Agency as either 1) quantified and monetized, 2) quantified, but not monetized, or 3) not quantified. In addition to a clear statement of whether the benefits of the proposed grant will exceed its costs, the evaluation must include, but may not be limited to, the following criteria:

i. Estimated Compliance Costs. Any direct or indirect costs associated with the implementation of the grant to the state, the grant recipient, and local government, with projections covering at least 10 years after the expiration of the grant period;

ii. Estimated Benefits: Any direct or indirect benefits associated with the implementation of the grant to the state, the grant recipient, and local government, with projections covering at least 10 years after the expiration of the grant period;

iii. Estimated Effect on Revenue. The State Agency must identify any sources of revenue affected by the proposed grant and the estimated increase or decrease in revenues or expenditures of state and local government that would result from the implementation of the proposed grant, including the costs necessary to enforce any rules associated with the grant;

(c) Termination of Grant. The State Agency shall make a written determination as to whether the programs, policies, or practices, implemented under the grant will be continued after the grant period expires;

i. If the State Agency determines the programs, policies, or practices, implemented under the grant will continue after the grant period expires, it shall identify the revenue source for any costs identified under Section 1(b).

(d) The impact on state and local policy, including any resulting line of accountability or transfer of governing control from state or local officials to any entity inside or outside this state, whether the federal government, a private corporation or association, or any other entity;

(e) The purpose and effect of the grant program, including its effect on and interrelationship with any existing program or policy currently operating within this state;

(f) All compliance mandates, both existing and new, and policy directives associated with satisfying the terms of the grant; and

(g) Any laws that must be passed or rescinded to comply with the terms of the grant, including budgetary considerations.

Section 2. Office of Management and Budget

(a) [State equivalent of the Office of Management and Budget] shall provide a report on each grant to the Governor and the State Legislature by the end of 30 calendar days after the submission required under Section 1 of this Act.

(b) The report shall include an assessment of the agency’s compliance with procedural steps required by Section 1 of this Act and an assessment of whether the grant imposes any new limits or mandates on private-sector activity.

(c) The grant applicant shall cooperate with [state equivalent of the Office of Management and Budget] by providing information relevant to [state equivalent of the Office of Management and Budget] report under Section 1 of this Act.

(d) All grant applications and reports required under this Act shall be recorded in a public database managed by [state equivalent of the Office of Management and Budget].

Section 3. Written consent by Governor.

No grant shall be submitted to the grant-making entity for application unless the Governor provides written consent. At the Governor’s discretion, he or she may allow the grant applicant to revise and resubmit the grant application for the Governor’s reconsideration.

Section 4. All laws and parts of laws in conflict with this article are repealed.

[1] See: