On the other hand, there is a pattern of strings being attached to the funds. Concerns about adopting new federal supported programs and the policy implications of the program tend to be drowned out by bureaucratic praise that sounds a lot like a J.G. Wentworth commercial, “It’s my money and I need it now!”
What the federal government cannot take over through the “Commerce Clause” and tax policy, they try to accomplish though the carrot and stick of federal funds for states.
While Arkansas changes its policies to chase federal funds, are we overlooking other needs that would be a priority but for the chase for federal funds?
After states accept and begin to depend on federal funds, the federal government has a habit of changing the rules by requiring more state matching funds or imposing additional programs or requirements that must be adhered to in order to continue receiving funds.
A less obvious cost is the cost on Arkansas’ citizens. When Arkansas changes laws and policies merely to get federal funds, those changes aren’t made in a vacuum; they affect our citizens. New mandates cost individuals, businesses, the state, and local governments as everyone is forced to comply. It is not just a financial cost but sometimes a loss of liberty.
Arkansas state budgets are passed and programs altered without much discussion of what is gained and what is lost by accepting the funds.
When it comes to the federal programs, Arkansas wants it Congressional delegation to curb spending and to reduce federal interference. Meanwhile, the state officials and bureaucrats are heard saying of federal funds, “It’s my money and I need it now!”
SHINE THE LIGHT
It is well past time for the state to do a biennial comprehensive review of all state programs receiving federal funds. Questions I would want answered include:
- What are the benefits of the programs that we can celebrate?
- How well does the program meet its goal?
- How much federal money does the state receive for the program?
- How much State money goes to meet a federal match or to support the program?
- What changes in state policy, laws, and regulations were required in order to receive the funds?
- What mandates have been imposed on our citizens?
- What are Arkansans saying about the program and its restrictions, both praises and criticisms?
Is it worthwhile to do such a review? Yes. First, our citizens deserve to know both how the federal programs have benefited Arkansans and how federal intrusion has changed and controlled state government. Second, our politicians need to have a better picture of how much (or little) of the state budget they have control over without running afoul of federal programs. Third, such a study could put a national spotlight on the federal takeover of state policy. It was once said that the states may serve as laboratories to try novel social and economic experiments, but increasingly the federal government control those laboratories and control the results. Fourth, such a study could, if not ignored, help conservatives in Congress develop policies to assist states without including restrictions designed to control state policy.
One concern for conservatives is the huge federal debt and the possibility that the federal government will require states to take on bigger and bigger financial matches in the future.
Again, federal funds make it possible for Arkansas to provide many needed programs. But, don’t you think we should know more about the federal funding so that Arkansas can make better informed decisions?
ARKANSAS’ DEPENDENCE ON FEDERAL FUNDS
Over one third (1/3) of the 2014 revenues in Arkansas’ budget come from federal funds.[i]
The following 2014 chart doesn’t mention Federal funds and instead refers to “inter-governmental.” The state brochure goes on to describe “inter-governmental” as “predominately federal revenue used to fund federally mandated programs or to support federal grants.” The total revenue cited is $19.6 billion. Therefore the inter-governmental portion would be about $6.66 billion.
What the chart does not show is how much of the remaining state revenue goes to support federal programs as matching funds and other costs.
STATE AGENCIES RECEIVING FUNDS
When you think about state agencies that rely on federal funds, the first two to come to mind may be the Department of Human Services and the State Highway & Transportation Department, but there are many more. The following are agencies identified by a researcher from some state budget documents from 2012[ii] but this is not a complete list. (For example, the State Highway & Transportation Department, is not in this list.)
Administrative Office of the Courts
Child Abuse & Neglect
Crime Information Center
Finance and Administration
Disability Determination for Social Security
Health Services Agency
Higher Education Department
National Resources Commission
Parks & Tourism
Public Service Commission
School for the Blind
School for the Deaf
Science & Technology Authority
Secretary of State
Spinal Cord Commission
Tobacco Control Board
Workforce Services Department
A BLAST FROM THE PAST
“I Can’t Drive 55” is the name of a 1984 hit record by Sammy Hagar. Many people are familiar with the song, but few remember that the song came about as a result of a federal takeover of state policy.
In the 1970’s the federal government wanted to impose a nationwide 55 mile an hour speed limit, but speed limits are a state matter. So Congress used financial blackmail to make states comply. They added the 55 mile an hour speed limit as a condition for states to receive federal highway funds with passage of the National Maximum Speed Law (NMSL). The states were free to keep a higher speed limit – if the state was willing to lose tons of federal highway money.
Some genius in Washington D.C. decided that a 55 mile an hour speed limit would save gasoline and save lives. It did neither! But it still took many years and lots of wasted tax dollars to end the hated restriction. (Just imagine the wind-fall profits made by the company that manufactured the new “55 MPH” speed limit signs across the nation.)
Federal highway funds have been used as the stick for various federal mandates. The National Minimum Drinking Age Act required states to set the drinking age to no lower than 21 or lose some highway funds. There was also the Federal DUI Mandate which required states to lower the blood alcohol content for drunkenness to .08. Both of these two mandates accomplish good things but also serve as a reminder that federal funds come with a never ending list of hoops states must jump through in order to continue receiving federal funds. (The costs of the bureaucracy to impose the fines, not to mention resulting increases in auto insurance, behind this federal rule is a good example of additional though often miscalculated costs of federal programs.)
RECENT ISSUES IN THE NEWS
Below are some examples of issues in the news in which the pursuit of federal funds is playing a significant role.
OBAMACARE: Obamacare is hot button issue everywhere. Perhaps the biggest issue in the Arkansas legislature in 2013 and 2014 was the adoption of the Obamacare Medicaid Expansion. Policy-wise, I do not think the legislature would have entertained the idea of the adoption of Medicaid Expansion (Private Option) in 2013 or legislation to continue it in 2015 except for the promise of temporary 100% federal funding, since it primarily targets able-bodied working age people with no dependents.
ABORTION-ABORTIFACIENTS-PLAN B The owners of Hobby Lobby believe that life begins at conception and therefore certain drugs and devices labeled as “contraceptives” actually kill babies because they stop fertilized eggs. They fought the Obamacare mandate which include these items in employee insurance. They weren’t against all contraceptives – just contraceptives that they say ends life after conception, such as Plan B, Ella and certain IUDs. Hobby Lobby won at the U.S. Supreme Court. The same items Hobby Lobby fought against are required to be available through Medicaid and Obamacare Medicaid Expansion (in Arkansas currently called “Private Option”). Arkansas also covers these items in the insurance it makes available for state employees and teachers through the State and Public School Life and Health Insurance Board.
COMMON CORE: Common core has become a hot topic across the nation. The debate is not just about the merits but also the prospect of losing federal funds. Indiana was the first state to repeal Common Core. Almost immediately the federal government sent a letter to Indiana officials warning them that Indiana must have standards that are as challenging as the Common Core standards or the state will lose federal No Child Left Behind funds.[iii]
NO CHILD LEFT BEHIND: Arkansas is still trying to comply with the policy requirements imposed by the No Child Left Behind law in order to keep the flow of money coming. The media reported in July 2014 that the state had not fully complied and was having to seek another federal waiver for another year.[iv]
SCHOOL LUNCHES: Federal funds for school lunches has been helpful. Of course the federal government just loves to impose more and more restrictive requirements as a condition to receive funds. The internet is full of pictures taken by students of weird looking school lunches. There has been much criticism of what is sometimes called “Michelle Obama school lunches.” Are the new standards good or bad? One thing for sure is they will be complied with unless you are willing to risk federal funding for school lunches.
Here are a couple of headlines on school food requirements that fit the “Silly” category. They might also fit the category of “Frightening” because of the extent of the federal government’s control.
- The headline reads: “Feds ban school’s beloved “pink cookie”[v]. What is the federal government doing telling a school that its cookie treat is not allowed? You guessed it – federal funds. The cookie, which was a 40 year tradition, didn’t meet the USDA “Smart Snacks in School” standards. The “Smart Snacks” edict must be complied with to participate in the National School Lunch Program.
- A similar headline reads: “Cookies Banned From School Bake Sales, Thanks to Michelle Obama”.[vi] Yes, the PTA has been foiled because of federal rules on receiving federal child nutrition funding.
IF I HAD MY WISH
If the federal government’s goal was actually to help states and not to control state policy, it could shift its financial support of multiple programs into just a few areas, thereby, reducing or eliminating state fund matching in those areas and freeing up state funds for other areas. For example, I wish the feds would use the money they now “give” us (or “give back” to us) for education standards and programs and instead shift it toward funds that would reduce state Medicaid matching– which in turn would free up Arkansas’ funds so that Arkansas could be responsible for its own education funding and education policies. There is not much chance of that happening because controlling state policy is too attractive to the federal government.
In the meantime, don’t we owe it to our citizens to find out the real cost for our dependence on federal funds, and not just the alleged benefits of the federal-state programs?
[i] Arkansas State Budget Facts, Arkansas Department of Finance and Administration
[ii] Summary of Operating and Construction Expenditures for State Agencies and Institutions for Fiscal Years 2002-03 Through 2011-12, Bureau of Legislative Research http://www.arkleg.state.ar.us/bureau/fiscal/Publications/C.%20%2010%20Year%20Expenditure%20History/2012%20A-%20Book%20Detail%20and%20Summary.pdf