The Interaction of Federal and State Aid in New York State

GAO examined the distributional trends and patterns of Federal and State aid to local areas in New York State from 1969 to 1975. GAO also examined the differences in the intergovernmental grant distribution policies of the Federal and New York State Governments.

From 1969 to 1975, Federal and State aid increased at different rates. The growth and other factors contributed to changes in the urban-rural distribution of Federal and State aid. Four trends in aggregate aid flows to county areas contributed to changes in aid distribution patterns: (1) Federal aid grew at a rate of over twice that of State aid; (2) New York State distributed more aid per capita to New York City and rural counties than to other counties; (3) Federal aid distribution patterns changed so much between 1969 and 1975 that the rank order of aid distribution among New York City, rural, and urban areas changed; and (4) New York State decreased the size of the urban-rural differences in its per capita aid grants between 1969 and 1972. In subsequent years, aid to urban and rural areas grew at roughly the same rate. Federal aid followed a similar pattern. GAO found that the driving forces for shifts in Federal and State aid distribution were public assistance and revenue sharing programs. These changes resulted, in part, from changes in Federal and State roles in these programs.