History Shows That Block-Granting Low-Income Programs Leads to Large Funding Declines Over Time

Funding for programs structured as block grants tends to shrink significantly over time, an investigation of several decades of federal budget data shows. This fact should serve as a red flag for policymakers as they consider proposals — such as those in the President’s fiscal year 2026 budget — to convert more programs into block grants. Generally, these programs serve families and individuals with low incomes or other vulnerabilities; reducing their funding over time will reduce the assistance they provide.

• Since 2000, overall funding for the 15 block grant programs created before 2000 has fallen by 28 percent after adjusting for inflation, and by 41 percent after adjusting for inflation and population growth. (See Figure 1.) Overwhelmingly, these block grants assist housing, health, and social services.

  Measured relative to the size of the economy, these programs have shrunk even more — by 55 percent since 2000. Most simply, the share of our nation’s resources devoted to these programs a quarter century ago was more than twice what we’re devoting today.

• Eleven of the 15 block grants have shrunk in inflation-adjusted terms, four of them by more than half, since the year they were created in their current form (the oldest were created in 1982). Thirteen of the 15 have shrunk after adjusting for both inflation and population growth, and 14 of the 15 (all except the Child Care and Development Block Grant) have shrunk relative to the economy.
• The largest block grant program examined here, Temporary Assistance for Needy Families (TANF), has lost 47 percent of its value due to inflation since its creation. The amount of basic assistance it provides has fallen even more as states have used their added flexibility under the block grant to shift funds to other purposes. In fiscal year 2022, states spent less than one-fourth of their federal and state TANF funds on basic cash assistance.^[1]

Block grants typically provide states and localities with funding for fairly broad purposes, and often at lower funding levels (relative to the programs as previously structured) but with additional flexibilities. For example, President Trump’s 2026 budget proposals include consolidating 18 formula or competitive grant programs supporting K-12 education into a single block grant and reducing their combined funding by about 70 percent ($4.5 billion) next year. President Trump and congressional Republicans have also put forward proposals that would convert rental assistance programs into block grants, including through expansion of the “Moving to Work” demonstration.^[2]

Our examination strongly suggests that even if a block grant’s funding in its initial year is similar to the existing funding for the programs that are merged into the block grant, the purchasing power of the grant is very unlikely to be sustained. This decline in value is intrinsic to the structure of block grants. And because block grants give state and local governments broad flexibility over implementation, block granting reduces accountability. Additionally, because the funds can be used in diffuse ways, their impact can be difficult to assess; the lack of compelling evidence of their effectiveness makes block grant programs vulnerable to reductions — relative to need or to the nation’s economic resources — in subsequent years.

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Nearly All Block Grant Programs Have Declined Over Time

Table 1 shows changes in appropriations for each of the 15 block grants created before 2000, which are overwhelmingly for housing, health, and social services. The table shows the declines in value since 2000 and also since each block grant’s creation, as well as six additional block grants created after 2000.^[3] The list of programs examined is derived from a Congressional Research Service compilation of block grant programs.^[4] (All dollar figures and percent changes over time in this report are for fiscal years and are adjusted for inflation; in addition, we specify when we further adjust for growth of the U.S. population or the economy. See the Technical Note for more on our methodology.)

From 2000 to 2025, the combined funding for the 15 block grants fell by 28 percent in inflation-adjusted terms. (Since 2000, the median, or typical, funding decline for block grants has been 20 percent.) In 2025 those block grants together received $19 billion less than they did in 2000, after adjusting for inflation.

Measured since each block grant’s creation, funding for 11 of the 15 programs has also shrunk in inflation-adjusted terms. Some of the declines are dramatic: four of the block grants have shrunk by more than half. For example, funding for the job training block grant, which is focused on improving workers’ employment and earnings prospects, including among people with less formal education, has fallen by 66 percent since its creation in 1984.

These inflation-adjusted figures, moreover, significantly understate the erosion in these programs relative to need. The overall U.S. population has grown by 21 percent since 2000, suggesting more people in need of government services and assistance. When both population growth and inflation are taken into account, total funding for the 15 block grants has fallen by 41 percent ($34 billion) since 2000, with all but two of these block grants declining. (Table 1 provides program detail with adjustments for inflation as well as population growth.) Moreover, costs in some areas such as rental housing have risen faster than the general inflation rate.

The funding reductions have been even more severe relative to the size of the economy (gross domestic product or GDP), which in nominal terms has tripled since 2000. Between 2000 and 2025, block-grant funding fell from 0.36 percent of the economy to 0.16 percent, a decline of more than half. Put differently, if these 15 programs currently received the same share of the nation’s economy as they did in 2000, they would be funded at $110 billion, not their actual $49 billion.

Total funding for the block grants rose significantly in just three of the last 25 years: 2009, 2020, and 2021. Some of this increase reflected a boost in the Low Income Home Energy Assistance Program (LIHEAP) in response to a sharp rise in energy prices in the summer of 2008. Most of the increase, however, was due to temporary funding boosts for several block grants in the 2009 Recovery Act as part of the response to the Great Recession and temporary boosts in 2020 and 2021 in response to the COVID-19 pandemic. (Figure 1 does not include funding from the 2009 Recovery Act and the 2020-2021 COVID relief legislation, but includes the LIHEAP increase.) Policymakers intended this temporary funding to address a recession and ameliorate its effects — and declines in block-grant funding then quickly resumed.

Block-Granting Makes Programs Less Responsive to Changing Needs

While the data show that block grants have eroded significantly relative to need, individual entitlement programs such as Medicaid, SNAP, and unemployment insurance (UI), which serve all eligible people who apply, are highly responsive to changes in need. Entitlement programs expand immediately and automatically when need rises, such as during an economic downturn, and then shrink as the economy recovers. This feature is critically important during recessions: it not only directly helps families who lose jobs or income but also moderates the severity and duration of the recession by lessening the drop in consumer purchasing power, thereby helping the economy as a whole.^[5] Programs such as Medicaid, SNAP, and UI would lose this responsiveness if turned into block grants, as has sometimes been proposed.

Conversion to a block grant also would likely damage non-entitlement programs that provide targeted assistance to low-income households. Funding for these programs does not rise automatically, but Congress has often increased funding from year to year to prevent cuts, in part because failing to do would lead directly to harmful consequences.

For example, Congress has generally provided sufficient funding to cover the costs of all housing vouchers in use, taking into account increases in market rents and any added vouchers approved in previous years, partly because failing to do so would directly cause fewer families to receive assistance and more to experience eviction and homelessness. This is one reason that spending on targeted rental assistance programs such as vouchers and Project-Based Rental Assistance has grown by substantially more than the general inflation rate in recent decades, while inflation-adjusted funding for the major housing block grants has fallen.

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Policymakers should be skeptical of claims that merging assistance programs into broad block grants will improve results for the families the programs serve. (See Figure 2.) Experience suggests, to the contrary, that the most predictable result will be substantial erosion in funding over time and thus less assistance for people in need.

Technical Note

The funding levels used in this paper represent the amounts appropriated each year for block grants, as provided in agency “congressional justifications” that accompany the President’s budget as well as Congressional Budget Office databases.

The funding levels in our analysis include any small set-asides for related purposes, such as training, technical assistance, or evaluation, but do not include set-asides for competitive grants or ad hoc disaster assistance. The inception dates represent the fiscal year in which each of the block grants took on its current basic form; if a particular grant was phased in, the inception date is the year in which the phase-in was complete.

Some amounts given in this paper differ somewhat from those in previous CBPP papers on the subject. The main reason is that for many of the block grants, previous papers used data on amounts obligated in each year rather than amounts appropriated. We now have sources that allow switching entirely to appropriations (budget authority) data, which is a better measure of the discretionary action taken by Congress each year and allows more direct comparisons with subsequent appropriations legislation. In addition, a few of the inception dates have been revised based on further research.