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                             Federal Grants vs. Federal Mandates:
  Should the Federal Government Use a “Carrot” or a “Stick” When Dealing the States?

INTRODUCTION: Through the use of federal grants and federal mandates, the national government
exercises an astounding amount of control over state governments. Your textbook discusses the different types of
categorical grants-in-aid (formula and project grants), as well as the more broad block grants. Regardless of
their form, almost all federal grants are welcomed by states. By contrast, the federal government has earned the
states’ unyielding and ever-increasing resentment through its use of preemption, mandates, and restraints. So,
when faced with a situation that requires the states’ cooperation, federal officials must choose between extending
the states a “carrot” (i.e., a grant-in-aid) or prodding them with a “stick” (i.e., preemption, a mandate, or restraint.

DIRECTIONS: The summary below about unfunded mandates was written by analysts at the Mackinac
Center for Policy Research in 1993.
   1. Read about the four different types of unfunded mandates that the government can impose on the states.
   2. Consider the four hypothetical scenarios that follow and, in each case, decide whether a federal grant-in-
       aid or a federal mandate would be more likely to achieve a desirable outcome. BE SPECIFIC about the
       type of grant or unfunded mandate that you would choose.
   3. Use the space available to defend your choice – explain why the specific type of grant or mandate that
       you chose is better than the other available options.
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(The following text was taken from a May 1993 Mackinac Center report entitled, “Washington Should Kick the
Mandate Habit.”)

“This report examines unfunded mandates imposed by Congress on the states, with special emphasis on their impact
on state government in Michigan. It does not address that other vast arena of federal mandates – those imposed by
Congress on private enterprise from parental leave to plant closing laws – though much of the same critical appraisal
would certainly apply there as well.

The analysis here will include some historical background behind the use of mandates, as well as the inherent problems
of tracking, estimating, funding, and executing each federal requirement. The cost of these unfunded federal mandates
will be illustrated by examining the Medicaid program. The Michigan-specific numbers were secured by the authors in
cooperation with officials and staff from the Michigan Departments of Management and Budget, Social Services, and
Mental Health.

By definition, mandates are commands – requirements that the entities they are imposed upon cannot ignore. Unfunded
mandates, the subject of this report, are those passed by Congress without accompanying appropriation to cover the
expense the states must incur to carry them out. In the language used by governments, they exist in four basic forms:
direct orders, crossover sanctions, cross cutting requirements, and preemptions.

Direct orders are those mandates whereby states are required to adhere to federal policy irrespective of whether there
are federal funds available. The Americans with Disabilities Act (AWDA) of 1990, for example, forces local governments
to provide access to public transportation for the handicapped, even if less costly modes of transportation are available.

In a 1980 paper, Ed Koch, then mayor of New York City, chastised the "mandate mandarins" in government for forcing
local leaders to provide complete access to public transportation for the handicapped, rather than finding the cheapest
way to move them around New York. Mayor Koch estimated that the cost of fixing the city's transportation system to
comply with Section 504 of the Rehabilitation Act of 1973 would cost $38 per trip, per handicapped individual. It would
have been cheaper to place each person that this bill was designed to assist in a taxicab.[1]

Today, cities face a similar dilemma with the AWDA. Aside from the initial costs of retro-fitting vehicles with wheelchair
lifts, lock-down platforms, and special safety restraints, the able-bodied users of the public transportation system are
inconvenienced as well. When a handicapped individual uses a student busing service, for example, the driver has to

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get out to operate the wheelchair lift, assist the individual into the lock-down platform, and still get all the passengers
through the bus route on schedule.

Crossover sanctions force the implementation of federal requirements in one area or the states risk losing money in
another, similar area. For instance, states may lose highway grants if they failed to follow certain health or safety
requirements imposed by the federal government.

Crosscutting requirements are used to further social and economic goals and to ensure uniformity throughout the
states. A popular example is the Davis-Bacon Act, which states that construction projects receiving federal monies must
pay union-scale or "prevailing" wages, even if less expensive labor is available.

Occasionally, the federal government usurps state authority by using preemptions to overrule current state regulations.
States may have the responsibility for programs delegated to them by the federal government; however, if they fail to
meet specific requirements they risk having the federal government assume responsibility for the program. A
preemption, though regarded as a kind of "mandate" in the public sector lexicon, is somewhat different from the other
three far more frequently used mandate forms in that it tells states what they cannot do, as opposed to what they must
do.”
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Scenario #1:
The City of Atlanta has violated federal environmental regulations by allowing the Chattahooche River to become
polluted. The city has not appropriately cleaned the river, and, as a result the fish are dying, the river is trash-
infested, the water has turned a brownish color, and stench from the river has caused nearby residents to
complain. This polluted water has begun contaminating the city drinking water.

What type of federal mandate or federal grant would you choose to remedy this situation? ___________________

Given this particular situation, this type of federal program is more likely than the other available options to
produce a desirable outcome because...

    _____________________________________________________________________________________

    _____________________________________________________________________________________

    _____________________________________________________________________________________

    _____________________________________________________________________________________


Scenario #2:
The state of Delaware has inordinately high Medicare costs due to a large number of citizens dying of lung
cancer, emphysema, and other smoking-related illnesses. This state requires a disproportionately large amount of
federal money for its Medicare costs. Lawmakers in Congress would like to see Delaware cut its Medicare costs.

What type of federal mandate or federal grant would you choose to remedy this situation? ___________________

Given this particular situation, this type of federal program is more likely than the other available options to
produce a desirable outcome because...
    _____________________________________________________________________________________

    _____________________________________________________________________________________

    _____________________________________________________________________________________

    _____________________________________________________________________________________
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Scenario #3:
The District of Columbia’s public school buildings are in poor condition. Buildings are old and falling apart.
Roofs leak, and the air, heat, and sewage systems need repair. The problem is so bad, that schools cannot even
open on time. The national standardized test scores of D.C. students are some of the lowest in the country. Yet,
because of the building problems, curriculum development and improvement is now last on the priority list for
D.C. public schools.

What type of federal mandate or federal grant would you choose to remedy this situation? ___________________

Given this particular situation, this type of federal program is more likely than the other available options to
produce a desirable outcome because...
    _____________________________________________________________________________________

    _____________________________________________________________________________________

    _____________________________________________________________________________________

    _____________________________________________________________________________________


Scenario #4:
Title VI of the 1964 Civil Rights Act holds that no person may be discriminated against in the use of federal funds
because of race, color, national origin, sex, or handicapped status. It was reported that one state did not uphold the
law, because it had fewer than one-tenth of one percent of state employees belonging to any of the mentioned
groups. This state also happens to be highly dependent on federal funding for highways, and currently has a bid to
construct a national airport..

What type of federal mandate or federal grant would you choose to remedy this situation? ___________________

Given this particular situation, this type of federal program is more likely than the other available options to
produce a desirable outcome because...
    _____________________________________________________________________________________

    _____________________________________________________________________________________

    _____________________________________________________________________________________

    _____________________________________________________________________________________




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