WASHINGTON - Federal aid to states, excluding payments to individuals, is expected this year to total only about what it was in 1972, according to a report from the Center for the Study of the States.
The federal aid includes funds for highways and education, and excludes Medicaid and direct payments to individuals, such as Aid to Families with Dependent Children, said Jennifer McCormick, co-author of the report and research associate at the center.
"To say that the inflation-adjusted level of grants is about the same as it was in 1972 or 1982 is to imply that grants have fallen precipitously in relation to the growth of the economy, state-local spending, and the federal budget," says the report on trends in federal aid, recently released by the Albany-based group.
Most types of federal aid to states increased notably during the Bush presidency, the report says. Total federal aid, adjusted for inflation, nearly doubled from 1989 to 1993, the report says. Excluding payments to individuals, aid gained about 25%, the report says.
The Bush gains only partially retraced losses during the final two years of the Carter administration and the two terms of Ronald Reagan, the report says.
Federal aid to states, excluding payments to individuals, peaked in 1978, at about $90 billion, in 1987 dollars. It then declined on average during the next nine years to just over $50 billion in 1987, McCormick said.
Since 1987, federal aid to states, excluding payments to individuals, has increased and is expected to be about $64 billion, in 1987 dollars, this year, the report says.
Many people expected the Bush administration to carry on the tradition of the Reagan administration by letting federal aid earmarked for states to continue shrinking, but it did not, McCormick said. And now people expect that aid to increase while Bill Clinton, a former governor, is in the White House, McCormick said.
"It'll be very interesting to see what happens over the next four years," she said, noting that it is impossible to predict what will happen, given the volatile nature of federal budgets.
Not surprisingly, Medicaid has been taking up an ever larger share of total federal aid to states in recent years, according to the report.
"Payments for individuals, of which Medicaid is the biggest part, rose from 36% to 61 % of total aid between 1980 and 1993," the report says.
Currently, Medicaid represents roughly 40% of all federal funds that make their way to states, and other transfer payments account for about 25% of the total, McCormick said.
Unfunded federal mandates are another problem for states, McCormick said. For example, compared to 1972, states face larger unfunded mandates today and there are more strings attached to the funds that the federal government does provide, she said.
"If the federal government increases aid $3 billion but requires states to spend $6 billion that [states] would not have spent otherwise, the net result is a burden of $3 billion, not a gain of $3 billion," the report says.