Mega-Block Grants: Massive Challenge for States

BURLINGTON, VT. — Burlington, Vt -- Along with exhilaration at the prospect of finally gaining dramatic new power, during their recent meeting here the nation's governors were worrying quietly:

What happens if the mega-block grant revolution actually comes off? What if Washington does block and dispatch all of welfare and Medicaid, plus dozens of child care, job-training and related programs to the states? How will we redesign and work the programs? What if the block grant monies from Congress fall short of our needs?


A leading U.S. federalism expert, Richard Nathan of the Rockefeller Institute of Government in Albany, N.Y., has been pointing out that the block grants sought by congressional Republicans go far beyond anything Republicans, even Ronald Reagan, ever before sought.

In the past, block grants covered discretionary-type programs, from community development to law enforcement. But under what Nathan calls the "New[t] Federalism," massive entitlement-type programs, on which tens of millions of Americans depend for basic welfare and medical services, would be thrown to the states -- with strict caps on the amount of continued federal support.


Said Ohio Gov. George Voinovich: "I'm telling my fellow Republican governors, this is a big management problem. Watch out if we get what we asked for. The country will be watching us. If we blow it, we may never get another chance."

It's true the massive block grants are not yet a "done deal" in Congress, and could face presidential vetoes. President Clinton came to Burlington to personally tell the governors that he will automatically grant them waivers loosening federal welfare rules for certain reforms already being tried by some states.

The Republicans are saying waivers are old hat and insufficient -- as Senate Majority Leader Bob Dole put it, states shouldn't have to play the "Mother may I?" game. But Republicans are susceptible to the Democratic complaint that any governor or legislature, in a recession or hard times, will be hard-pressed to put children and welfare recipients first when every interest group from teachers to universities to nursing homes is beating on the door, demanding special help.

The best guess is that the block grant locomotive is roaring down the track too fast to be stopped, that the best Democrats may be able to achieve is a required "maintenance of effort" or floor under welfare and Medicaid payments to prevent indifferent or hard-pressed states from undertaking a "race to the bottom" to see which can cut poor people's programs the most radically.

But will the states be ready if some morning next winter a deal's been struck in Washington to give them direct responsibility and control over a vast array of welfare, Medicaid, children's and jobs programs with funding strictly capped?

States that haven't planned -- that aren't prepared to inform their own departments, citizens and local governments about the tough choices ahead -- could find themselves plunged into nasty political battles.

Colorado Gov. Roy Romer noted that if Medicaid, which provides health care to the poor, became a block grant overnight, "we'd have the biggest provider fight you've ever seen." Indeed, one can imagine everything from nursing homes to physician groups to mental health agencies instantly at each other's throats.

Yet the states would also have immense opportunities. Example: Many federal programs now require separate bureaucracies, or forbid commingling of funds from different social programs. With the big block grants, says Illinois Gov. Jim Edgar: "we'd have much greater flexibility. We could streamline and reform our social agencies. We could save a small fortune on accounting alone."


Then there's the big opportunity to take the dozens of state-financed computerized systems which seek to track recipients of welfare, public health services, aging benefits, even job training, and put the records onto accessible computer systems with easily exchangeable data likely to reduce errors and costs.

Mr. Voinovich claims Ohio's one of the best prepared states. Its Family & Children First Initiative has department heads working on collaborative techniques. Now 74 of 88 counties have their own Family & Children First Councils, drawing citizens, businesses and service agencies together to figure out what really works on a local basis.

As a further reinvented government initiative, Mr. Voinovich is able to claim Ohio "leads the nation" in "one-stop shops" for such social services as job training and placement. Independent experts say Mr. Voinovich is correct, that only a small handful of states (among them North Carolina, Minnesota, Oregon and Washington) rival Ohio's efficiency.

Now, though, all states will have to match the best if they want to integrate systems and hold down costs. They'll have to tap the talent in their universities. They'll need broad task forces. They'll have to think of involving media, of encouraging civic journalism projects so that citizens see the range of block grant opportunities and speak up for priorities they believe critical.

The goal: to minimize funding dogfights, to give citizens a voice, to involve localities, to use block grants to truly improve government.

States that leave themselves in an unprepared, reactionary position, will live to rue the day.


Neal R. Peirce writes a column on state and urban affairs.