Federal grants help pay for health care, highways, and other services. The federal government first made grants to states (for education) before the Constitution was adopted. Grants were expanded to include higher education in the 1860s and transportation in the 1920s. The heyday of federal grants, however, began in the 1950s with the Interstate Highway System and continued through the 1960s with urban and poverty programs. There are now hundreds of federal grant programs for state and local governments.

Federal funds provide both opportunities and challenges for Oklahoma and other states. On the positive side, they make it possible to provide more public services than we could on our own. Some of the state's highest priorities--education, health care, and transportation--receive a significant share of funds from federal grants. The assistance of the national government is particularly important in economic downturns, when assistance for unemployment, food and nutrition, health care and income support make a difference in the lives of the most vulnerable Oklahomans.

On the other hand, federal grants are problematic for the states. The federal government  imposes mandates, or binding responsibilities, on state and local governments without necessarily providing adequate funding, and federal grant funding has remained largely frozen in recent years, in spite of cost and utilization increases.

The State of Oklahoma participates in 290 different grant programs, according to the State Auditor and inspector. In many cases these grants pay over half the cost of the service and make it possible for Oklahoma to provide much better public services. In 2007, Oklahoma state and local governments (including tribes) received nearly $5.5 billion in federal funding, according to the U.S. Department of the Census.

The federal stimulus bill passed early in 2009 changes the federal funding picture considerably by providing additional funding for a number of social services, infrastructure, and education grants as well as general assistance to stabilize the state's fiscal condition. Preliminary estimates are that Oklahoma will receive $2.6 billion in additional funds over two years, about a 20 percent increase in total federal funding. The graph below, however, shows only actual federal revenues received in 2007, the last available data.

See OK Policy's Stimulus Page for Issue Briefs, Updates, and Links to Other Resources

Read the OK Policy Fact Sheet on Impacts of Federal Funding

• Federal Grant Programs

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