Grants 101: Your Questions, Answered

In FY19, federal grants amounted for 31% of state spending and totaled $657 billion.

That’s a lot of money – and the Bipartisan Infrastructure Law (BIL) adds even more grant funding opportunities. This historic legislation invests $1 trillion to revamp our nation’s infrastructure, with $2.2 billon allocated for Connecticut so far this year.

What does this mean for you and your tax dollars? The CTBILT team is here to help. Below is a quick Q&A about the federal budget and grant funding.

*For reference, we’ll be using FY19 numbers, given that the Covid-19 pandemic greatly changed the amount and composition of federal funding. ?

1.?????So, what makes up the federal budget?

In FY19, mandatory programs including Social Security, Medicare and Medicaid represented 47% of federal expenditures, and this share has been growing. Other mandatory programs, including the Supplemental Nutrition Assistance Program (SNAP) and Temporary Assistance for Needy Families (TANF) have remained flat. Discretionary funding for non-defense and defense programs each represented 15% of the total, with these shares declining.

2.?????How does federal funding get to the states?

There are four ways: Direct payments to individuals (think Social Security and the Earned Income Tax Credit); procurement (the federal purchase of goods and services such as consultants and fleets); salaries/wages for federal military and civilian employees; and of course, grants provided to states, local governments, and others to carry out federal programs, including infrastructure improvements.

3.?????How important are grants in federal spending?

Very. Grants to state and local governments amount for 16% of federal expenditures and totaled $721 billion. These grants are concentrated in Medicaid and other mandatory and domestic discretionary spending. In Connecticut, federal funds represented 27% of state revenue.

4.?????How much do states receive from the federal government?

It varies. While it’s true that states with large populations receive the most federal grant funding, states with smaller populations often do better with different types of grant funding. As an example, some grant formulas guarantee every state a certain share of total funding, which benefits less-populated states. Other factors determining funding include Medicaid, revenues from natural resources extracted from federal lands in a state, and overall demography and income.

5.?????What types of programs are supported by grant funding?

Health, income security, education and transportation accounted for about 91% of federal grant funding in FY2019. Note that many federal grants that go to local governments typically flow through state governments first.

The passage of the BIL brings enormous potential and plenty of grant funding opportunities. You can find a comprehensive list here.

From funding our roads, bridges, public transit, ports and airports, to improvements in clean water, climate resiliency and affordable internet, the BIL is already making an impact on Connecticut. Visit our new website to learn more and be sure to share our infographic below!

Find us on Twitter and at ct.gov/ctbilt.

Source: Federal Funds Information for States; grants_101_2022.pdf (ffis.org)