Allocation of Funds for Block Grants With Optional Transition Periods

The Omnibus Budget Reconciliation Act created nine block grant programs and provided for three optional transitional periods in which States would assume responsibility for the programs. GAO was asked to determine if those States which opted to begin administering the grants were treated differently from those which elected to let the Federal Government continue to manage the predecessor categorical programs.

For the first continuing resolution, allotments for States which opted to begin administering the block grants were calculated on a different basis than allotments made available for grantees within the nonblock grant States. During the resolution period, States accepting the block grants were allotted 25 percent of their annual amount, while only 14 percent of the annual allotment for grantees within nonblock grant States was made available for award. This Department of Health and Human Services policy was revised after the enactment of the second continuing resolution, and cumulative nonblock grant States allotments were increased to put the nonblock grant States on the same basis as block grant States. Such equal treatment was continued under the third continuing resolution.