Federal aid as a conditional grant of funds to the states has existed for more than a century (ACIR, 1978). Its growth and consequences over the past four decades, however, have transformed it into a political-administrative issue of major impor- tance. In 1978, for example, federal aid constituted 26% of state-local general revenue and about one-sixth of the national budget. These proportions prompted many voices calling for restoring a "balance" in national-state/local relations.
A state-focused, agency-based review of federal aid since the 1960s is therefore warranted. Table 2 provides the basis for pursuing a temporal overview.
The receipt of federal aid by state agencies in the early 1960s was modest, at best. About one-third of the ASAP respondents in 1964 reported that their agency received federal aid. By 1968 the proportion exceeded 50% and it ap- proached two-thirds by 1974. The reach of federal aid peaked in 1978 with slightly more than three-fourths of all responding administrators heading agencies
Table 2 Federal Aid Patterns Among State Administrative Agencies, 1964-1994 Receipt of aid Dependency Diversity Complexity
(N=) under 25% 25-49% 50-74% 75% or more (N=) 1 2 3 4 5 or more (N=) Project Formula Block Nonmatching Loans (N=) 1964 34% (910) 47% 23 17 13 (309) NA NA NA NA NA NA NA NA NA NA 1968 54% (987) 49% 23 20 8 (522) NA NA NA NA NA NA NA NA NA NA 1974 63% (1587) 48% 20 19 13 (983) 37% 27 17 8 11 (975) 71% 55 30 20 4 (989) 1978 76% (1363) 44% 21 19 15 (1014) 34% 28 19 9 10 (996) 72% 60 25 21 3 (1037) 1984 70% (1078) 45% 22 20 14 (746) 36% 26 18 11 9 (741) 67% 58 34 16 3 (750) 1988 69% (1439) 45% 22 19 14 (981) 38% 25 17 11 9 (974) 63% 59 31 16 4 (987) 1994 73% (1205) 45% 20 21 14 (863) 31% 27 21 12 10 (845) 70% 63 32 19 5 (867)
« 1 3 CD 5? 5- ctT
1
o> CD" ^ ^ Note Because of rounding the percentages may not add to 100 Source D S Wnght, American State Administrators Proiect (ASAP) Surveys, Institute of Research in Social Science, University of North Carolina, Chapel Hill, NC42 Wright and Cho
receiving aid. Since that apogee the penetration of federal aid among state agen- cies has stabilized at about 70%.
Of what significance are these trends and fluctuations? Beyond the simple quantitative statement that the administrative reach of federal aid doubled be- tween 1964 and 1978, what broader conclusions or interpretations can we attach to the patterns? At a somewhat higher descriptive level the escalation of aid among state agencies documents and even dramatizes the heavily interdependent character of national-state relations. In addition, and in the face of episodic devo- lution initiatives from both presidential and congressional sources, the level of interdependency has remained high since 1978.
It may be true, as Chubb (1985a) argued over a decade ago, that the "bias toward centralization'' has ceased. But these ASAP survey results show that any marked movement toward decentralization has yet to reveal itself using federal aid as an indicator. As one observer (Walker, 1997:38) recently noted, "Devolu- tion has not entered a new and accelerated phase...[but] instead it has proven to be just one dynamic among the many that drive the system, and its success to date clearly indicates that it is no Big Deal and in no sense a Revolution." Obvi- ously, the 1996 welfare "reform" legislation (P.L. 104-193) is not reflected in the ASAP federal aid impacts. But even that devolutionary legislation contained prescriptive nationalizing elements. In short, the fabric of national-state adminis- trative interdependency appears to remain as broadly and perhaps as tightly wo- ven as at any time in the past two decades.
Indeed, 40 years ago President Dwight D. Eisenhower made a modest pro- posal to "unwind" federal aid interdependency (Grodzins, 1960a,b). Two small grant-in-aid programs and some tax revenues were offered as "turn-backs" to the states. The Gordian Knot of federal aid interdependency could not be cut then, nor has it been dramatically reconfigured in more contemporary times. To understand why federal aid is so durable and pervasive, we need a better grasp of its configurations. The following sections present analyses of federal aid de- pendency, diversity, and complexity—all viewed from the standpoint of state administration.
1. Dependency
A prominent if not dominant interpretation of the power relations involved in federal aid is one of dependency or, as Pressman describes it, the donor-recipient relationship (Pressman, 1975). This asymmetric power pattern is far from an exclusive view, however (Ingram, 1977). Our approach to understanding federal aid influence is to argue that the fiscal transfers create the preconditions but not the certainty of a subordinate relationship. Dependency is, then, a continuous variable (or interval) whose measurement is fiscal. The power relationship created by dependency remains problematic.
Intergovernmental Interdependences 43 The degree of dependency on federal aid by state agencies is reported in Table 2 for the years 1964-1994. The figures reveal the extent to which state agencies receiving federal aid rely on that revenue source for varying proportions of their budgets. The number of cases on which the percentages are based vary for two reasons. First, increasing proportions of state agencies received federal aid (from 1964 to 1978). Second, the response rates to the different ASAP surveys varied from about 70% in 1964 and 1968, to slightly under 40% in 1984 and 1994.
A review of the dependency percentages across the seven ASAP surveys discloses a singular and striking feature. There are insignificant and inconsequen- tial variations from 1964 across the intervening years to 1994. Despite dramatic agency program and policy fluctuations in the decades of the 1960s through the 1990s, federal aid dependency among state agencies has remained remarkably stable. How can we account for this unexpected fact?
There is no simple, sure, straightforward explanation that comes to mind.
We might posit two sharply contrasting sets of conditions and then hypothesize that a combination of factors falling between the extremes offers avenues for testing alternative explanations.
One approach is to hypothesize a sharp or even complete discontinuity between the high politics of federal aid in Washington and the operational reality of state agency acquisition of federal funds for program implementation. In visual terms this would emphasize the insulation or isolation of the PEGs (located on the outer surfaces of the cube in Figure 3) from the PPPs, positioned in the cylin- drical core of the cube.
This separation between broad ideological cleavages over ' 'federalism is- sues," for which federal aid is a convenient surrogate, and the prosaic processes of aid administration has been uncovered earlier. Peterson and associates (1986) used a volcanic eruption metaphor to describe the unanticipated findings of their research on the workings of federalism in the early 1980s. Their research on the implementation of distributive and redistributive aid programs through the contentious years of the first Reagan Administration prepared them "to record the dying moments of Pompeii shortly before Mount Vesuvius erupted" (1986:
xii). To their surprise, "Vesuvius erupted, all right, but the lava it spewed forth reached only to the edges of Pompeii, or, more exactly, the town fought back, dousing the fires that a new political leadership in Washington had been igniting'' (1986:xii).
We doubt that the stable patterns of federal aid dependency are produced by the fire brigade capacity of state administrative agencies. We might suppose, however, that the state agencies have some built-in fire retardant features that might buffer, smooth, or protect them from the vicissitudes of national political conflagrations over federal aid. Clearly, the issue is ripe for further creative and systematic research.
44 Wright and Cho A second approach to understanding the unexpected stability of federal aid dependency is to question what seems obvious. The apparent stability is just that—apparent, superficial, and false. The aggregate proportions for the varying degrees of dependency may actually mask wide variations depending on different agency, administrator, and contextual characteristics. Here, too, for illustrative purposes we may take a page from Peterson (1981, 1986, 1995) and his research on federalism and intergovernmental relations.
Peterson has consistently advanced the proposition across two decades that functional efficiency in performing certain activities is fundamentally linked to the capacity (or incapacity) of particular jurisdictions within the American politi- cal system. This functional linkage, in the case of ASAP findings on federal aid dependency, suggests the need for disaggregation by type(s) of agency programs, activities, or functions. To understand the dynamics of intergovernmental interde- pendency we need to understand the differences among aid programs and poli- cies. Or, as Peterson (1979:157) expressed it, "Public policy structures political relationships." It is necessary to know the type or arena of policy to understand the politics associated with it (Lowl, 1970, 1972). This issue is addressed later.
2. Diversity
Escalation in the number of grant-in-aid programs in the 1960s and its continua- tion through the 1970s raised many issues among the actual and potential recipi- ents of federal aid. One significant one was: How many different aid programs should we (our agency) pursue? Another was: What types or forms of aid shall we secure? The first question involves the issue of diversity—the multiple or varied sources from which monies are obtained. The second poses the problem of complexity—how many different forms of aid can our agency manage?
This juncture is not the place for a wide-ranging review of types of federal aid programs. Some brief historical data, however, on the numbers and types of programs are useful for placing the subsequent analysis in context. The total numbers of programs in operation from 1960 to 1995 are shown below for se- lected years (ACIR, 1995).
1960: 132 1967: 379 1975: 443 1981: 534
1984: 392 1989: 478 1993: 578 1995: 618
Apart from a significant drop during the first Reagan Administration (1981-1985), the clear trend regarding the number of grant programs has been
Intergovernmental Interdependences 45
upward. This presents state agencies (and other recipients) with a cafeteria of opportunities. These grant programs, of course, tend to be concentrated in or among a few major national agencies. For example, nearly 300 grant programs are administered by the Department of Health and Human Services and over 100 by the Department of Education. One part of the ASAP survey was aimed at ascertaining how many different national agencies funded the state agency's pro- grams.
The diversity percentages in Table 2 show that, quite consistently since the 1970s, roughly one-third of the state agencies secure federal aid from a single federal department or agency. This substantial proportion suggests the promi- nence of what might be termed a "single-shot" strategy; one national agency is the exclusive source of federal aid. At the second level of diversity—receipt of aid from two national agencies—about one-fifth of all aid-dependent state agen- cies rely on a two-track strategy in securing federal aid funds. At the third tier of aid acquisition, another one-fifth of the state agencies obtain funds from three major national sources. At the top two levels of aid diversity, four and five (or more) sources, about 10% of the state agencies operate in each of these two multisource environments. Here, as in the case of dependency, the distributions across the five ASAP surveys are strikingly similar.
The diversity dimension can be positioned within the visual framework of Figure 3. Imagine that state agencies receiving federal aid exist in the state-level plane and are in the center of the plane where the core cylinder passes through the state plane. That cylindrical core, of course, represents the conduit through which federal aid funds pass. Imagine further that the several hundred grant-in- aid programs are grouped within 10 large conduits which represent the main national agencies that channel aid to the states (and localities). The configuration of aid diversity discussed above represents the manner or pattern by which differ- ent state agencies intersect with the various national agency aid conduits.
Two concluding points can be made concerning the diversity dimension.
First, the row percentages across the five ASAP surveys reveal again how stable the aid distribution patterns are. The proportions for 1994 are not much different from those in 1974. This consistency exists despite major shifts in national poli- tics and significant pressures to alter intergovernmental policies, including federal aid programs. In short, state agencies still appear to connect or intersect with national aid agencies in ways that have been quite stable over the past two de- cades. Is this some immunity from the "Vesuvius effect" noted earlier? Or has the political shock from the 1994 national elections produced effects that will not surface until 1998 or later? Only more recent data and further careful analysis will shed light on the question.
The second point involves link(s) between diversity and dependency. Are the state agencies most dependent on federal aid also more reliant on a single national source for funds? In short, are diversity and dependency inversely re-
46 Wright and Cho lated? The availability of five ASAP data sets permitted multiple testing of this hypothesis for the years 1978 through 1994. None of the five bivariate analyses revealed any relationship, positive or negative, between diversity and depen- dency. In other words, the most aid-dependent state agencies are not more likely to pursue single-shot aid acquisition strategies than the least dependent. Diversity and dependency appear to be uncorrelated federal aid variables.
3. Complexity
It is common knowledge that a variety of federal aid instruments are used as intergovernmental transfers. The existence of different ways of classifying federal aid lends confusion to the analysis because the types of aid are not mutually exclusive. For ASAP survey purposes we relied on a simplified scheme shown in the lower segment of Table 2.
Some background on aid patterns by types of grant is useful in understand- ing and interpreting the percentages in Table 2. The numbers below serve this purpose (ACIR, 1995).
Number of Grant Programs by Type of Federal Aid
Year 1975 1984 1989 1995
Project grants 296 267 323 446
Project- formula grants
35 27 21 30
Formula grants
96 80 117 125
Block grants 4 12 14 15
Two features are prominent in the figures listed above. The first is the predominance of project grants from a purely numerical standpoint. This is not the case with regard to dollar amounts, however, since nearly 80% of all federal aid funds ($230 billion in 1995) are disbursed through only 25 formula-based aid programs.
A second comment on the above numbers involves the small number of block grants, virtually all of which are formula based. These few broad-based grants, however, still channel about 10% of all federal aid to the states (ACIR, 1995). Of course, the most featured of all recent block grants is the TANF grant (Temporary Assistance to Needy Families) enacted under the Personal Responsi- bility and Work Opportunity Act of 1996 (P.L. 104-193). This block grant pro- gram allocated over $16 billion among the 50 states in the fiscal year 1997.
The percentages in Table 2 for complexity show some initially unsurprising results. First, project grants, the most numerous type of grant, lead in the propor-
Intergovernmental Interdependences 47 tion of state agencies receiving them. Second, formula grants, the next most ex- tensive type of aid instrument, follow closely behind project grants in terms of recipient frequencies.
Somewhat unexpected are the figures for block grants. While far less nu- merous in the scheme of grant types, these flexible funds make an impact across a substantial proportion of state agencies. Block grants number less than 5% of all grant programs and allocate about 10% of all federal aid. Yet those funds reach the coffers of about one-third of all aid-receiving state agencies. This somewhat surprising finding may be a factor contributing to the reduced level of perceived national influence on the part of state administrators (Yoo and Wright, 1994).
Reinforcing the idea of reduced national influence are the proportions of agencies receiving nonmatching grants. From one in five to one in six of the administrators report that their agency receives some nonmatching grant money.
While some (or several) conditions may be attached to nonmatching grant funds, the lack of fiscal effort on the part of the recipient makes this type of funding particularly attractive.
A final point brings this discussion of federal aid complexity to a close. It constitutes the reiteration of a theme mentioned earlier. A scan of the row percent- ages for each type of funding instrument from 1974 to 1994 shows a striking consistency in the proportions. The figures seldom vary more than three to five percentage points from one ASAP survey to the next. The complexity associated with managing multiple types of aid instruments does not appear to have changed greatly across three decades of monitoring aid arrangements by ASAP survey methods. This leads us to conclude that the cylindrical core populated by program policy professionals is relatively insulated from the political shocks impacting on the surface(s) of the rectangular cube (see Figure 3). It may in fact be very difficult for PEGs to reshape and redirect intergovernmental relationships among the PPPs.
These findings and their implications can be framed in broader and less technical terms. They support the view that federal aid penetrates state agencies extensively and significantly. Furthermore, the patterns of federal aid receipt sug- gest that aid processes are quite stable and institutionalized. The apparent distance of elected officials from influence and impact on aid receipt and effects raises questions of democratic control and administrative accountability. Are federal aid impacts, trends, and shifts largely immune from the efforts of electoral coali- tions to redirect or reset policy priorities? Our analyses and findings are better at helping us pose the question than answering it.
III. FUNCTIONALISM. FEDERAL AID, AND FLUIDITY
In discussing federal aid dependency we noted that the type of agency contributes to an understanding (or explanation) of the politics and administration associated
48 Wright and Cho with the policy arena (Lowi, 1970, 1972; Peterson, 1979, 1986). Measuring policy
"types" according to Lowi's categories of distributive, regulatory, and redistrib- utive has been both difficult and controversial. For the descriptive and explana- tory purposes of this essay we do not use Lowi's macrocategories. Instead, we employ a less aggregated and more nominal classification scheme. We use clus- ters of the types(s) of state agencies, a scheme that we call "functionalism."
The row headings in Table 3 reveal one grouping of the many different types of state agencies whose administrative heads have responded to ASAP questionnaires from the 1970s to the 1990s. We classified the diverse agencies into the 13 categories shown in Table 3. From this set of functional categories we look for patterns present between the variable of functionalism and two mea- sures of federal aid—receipt and dependency. We carry the functionalism ap- proach one step further in Table 4. There we assess the relationship between functionalism and fluidity—the extent of agency policy change.