Intergovernmental Relations Jane Roberts, Editor

The New Federalism: An Assessment

by Stanley Botner

he “New Federalism” espoused by T President Reagan in 1981 was similar in some ways to the previous versions of Presidents Nixon and Ford, but emphasized to a greater extent the separation of national and state func- tions. Acting on premise that domes- tic spending was excessive on all lev- els, and that the national government had usurped responsibilities and authority that rightfully belonged to the states, Reagan pressed for a reduc- tion in Federal involvement, including funding in domestic policy making. Under his program, numerous categor- ical grants were to be consolidated into block grants, the net effect of which was to give states and localities more spending discretion but fewer dollars.

How successful has the Reagan pro- gram been? While it is too early for an accurate assessment, some objectives seem to have been achieved. However, the overall results have been consider- ably less than satisfactory to the Administration.

In terms of current dollars, Federal grants-in-aid declined from $94.8 bil- lion in Fiscal Year 1981 to $88.2 billion

in 1983. Following increases in 1983, 1984, 1985, and 1986, Federal grants- in-aid again declined (from $112.4 bil- lion in 1986 to $109.9 billion in 1987 and an estimated $106.3 billion in 1988). From another perspective, in 1986 the U.S. Government provided 21% of all the money spent by state and local governments, down from 27 percent in 1978. Further, this figure is expected to drop to approximately 17 in 1988.1

As John Shannon, Executive Direc- tor of the Advisory Commission on In- tergovernmental Relations, expressed it:

New fend-for-yourself federalism is marked by steadily decreasing state- local reliance on Federal aid dollars as the country increasingly looks first to the localities and then to the states to handle domestic issues. It is not the neat ’sorting out’ process long advo- cated by federalist reformers, but the harsh fend-for-yourself message that now constitutes the defacto new federalism.2

The attempt to consolidate categor- ical grants not block grants, was ini- tially successful. During the period

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1981-84 the number of categorical grant programs declined from 534 to 392. During this same period some 70 categorical grants were consolidated into eight block grants.

During the next three years, however, categorical grants-in-aid increased by 300 from 392 in 1984 to 422 in 1987, and only one new block grant crimi- nal justice was added. Interestingly, the current total of 422 categorical grants is precisely the same number that ex- isted in 1975.3

A number of proposals, including the elimination of national grants for Aid to Families with Dependent Chil- dren, have been rejected by Congress. Part of the opposition, it might be not- ed, came from state and local officials who did not wish to bear sole respon- sibility for funding and administering such programs.

Richard P. Nathan has argued that President Reagan “has been strikingly successful in achieving his intergovern- mental reform aims” and “his efforts to realign American federalism are likely to have a lasting effect.”4 Others are not so sanguine. As David C. Nice has pointed out:

“The response the Reagan Adminis- tration’s efforts to curtail national domestic programs and separate na- tional and state functions indicate that the forces that frustrated the Joint Federal-State Action committee are still powerful. Groups have rallied to protect many individual programs from cutbacks, and state officials have opposed major reductions in national

grants to states. Calls for separation may always be a feature of the politi- cal landscape, but the voices for shar- ing seem to be louder and more persistent.”5

Notes 1 Advisory Commission on Inter-

governmental Relations, Signifcant Features of Fiscal Federal- ism, 1987 Edition.

(Washington, DC: ACIR, 1987), p. xvi.

John Shannon, “Fend for Yourself (New Federalism),” Remarks Before the Institute of Governmental Studies and Center for the Study of Law and Society, University of California, Ber- keley, CA, November 13, 1986, p. 2.

Advisory Commission on Inter- governmental Relations, A Catalog of Federal Grant in Aid Programs to State and Local Govern- ments: Grants Funded FY 87. (Washington, DC: ACIR, August, 1987), p. 1.

4John L. Palmer (Ed.), Perspecfives on the Reagan Years. (Washington, DC: The Urban Institute Press, 1986), p. 123.

David C. Nice, Federalism: The Politics of Intergovernmental Rela- tions. (New York: St. Martin’s Press, 1987).

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Stanley B. Botner is Professor of Public Ad- ministration at the University of Missouri in Colombia, MO.