Grants-in-aids are federal funds provided to states and localities. Grants-in-aid dramatically increased in scope in the twentieth century and were attractive to state officials for various reasons, however, categorical grants are another form of grants-in-aid which are to be used for a specific purpose defined in a federal law, substantively or procedurally, with little to no freedom on how it is to be spent, and often requires local matching funds.
The main concern with categorical grants is the huge amount of conflict between elected state and local officials and the specialists of their own bureaucracies as well as those in the national government’s administrative agencies (pg. 131), including a rising public backlash against government unfunded mandates.
There are seven common criticisms with categorical grants: The proliferation of project grants conflicts with equalizing governmental resources, restricting categorical aid uses distorts state and local policy priorities, state and local leaders gradually yielding policy initiative to aid granters, the national government not aiding all public services, the fact that states and localities are required to put up matching funds to receive aid, the applications being difficult to apply for and often needing to be resubmitted due to technicalities, and the coordination of hundreds of grants spread across too many agencies (pg. 132).
Very few actions for change have been taken in reform surrounding the grant-in-aid system, although general revenue sharing and block grants were introduced as solutions to the major problems of the system, as well as the movement for citizen participation in administrative decision making and achieving better coordination among proliferating aid programs (pg. 138).