Block Grant years: 1981 – 1993

President Ronald Reagan's administration wanted to substantially reduce the federal government's support for domestic social programs. He proposed to consolidate most federally funded human needs programs into several large, general purpose block grants, and to reduce the total amount of funding by 25 percent, and to delegate the responsibility for administering these block grants to the states. The Reagan proposals were largely approved by the Congress. Congress created eight new block grants consolidating more than 200 federal programs, reduced their funding, and turned administrative authority over to the states.

The court victory by CAAs in 1973 had resulted in Congress creating new "budget reconciliation" tools in the "Anti-Impoundment and Budget Reconciliation Act of 1974".

"Budget reconciliation" is a budget-planning process that is supposed to balance total federal revenues with total expenditures. Reconciliation precedes the normal appropriations hearings and is outside of the normal reauthorization process where major changes in statutes normally take place. In one of life's ironies, President Reagan used the reconciliation tools to repeal the EOA, close CSA, cut the budget by 25% and to turn administration over to the states. The reconciliation tools were used to dramatically alter the Federal commitment and structure.

However, although President Reagan had proposed the elimination of federal funding for CAAs, Congress did not agree. In September 1981, Congress provided that all CAAs designated and recognized by CSA were eligible to be funded under the 90 percent pass-through requirement of the Community Services Block Grant (CSBG). The CSBG provided for the continued funding of the "eligible entities," i.e., the CAAs, migrant programs, and certain other organizations that had been financed through local initiative funds by CSA. However, Congress did repeal the EOA and in so doing eliminated the procedures and regulations for designation and Federal recognition of new CAAs. Furthermore, on September 30, 1981, the CSA was abolished. Rather that following the usually policy of allowing Federal employees to transfer into other programs when their program was cut or eliminated, the CSA staff (about 1,000 of them) were fired. A new Office of Community Services was created to oversee phase-out of CSA activities (loan funds, etc.) and to pass the CSBG funds through to the state governments.

In 1981, at the start of this transition to state administration, many of the civil rights-era activists in CAAs were worried that the states in the Deep South might slip back into the old patterns where only whites received benefits or got hired to manage public programs. Fortunately this did not happen, and — in an interesting turn of history — almost all of the "Deep South" states were and still are among the most committed to the concepts of community action and to CAAs as organizations. Four states, all "Rocky Mountain" states, obtained Congressional approval to evolve to a different form of administering CSBG funds. The "waiver states" were UT, WY, CO, and ID.

States generally incorporated the CSBG into their typical pattern of public administration. States like Missouri and Florida had most social services provided by state employees at the county level. It took them a while to figure out how to relate to CAAs, but eventually they did. States like Iowa and New York were used to contracting directly with nonprofits, so it was a smooth transition.

About a third of states explicitly maintained a commitment to the principles of the Economic Opportunity Act, created a high-profile state office and left the planning and management systems in place at the CAA level. This included: MI, MN, NY, MA, SC, GA, IA,WI, OK, among others.

About a third of states buried the new state office deep in the innards of state government, but left the local determination features of CAA operations in place.

And about a third of states tried to synthesize the CSBG into some other state operation, usually the Social Services Block Grant or an employment and training agency. Some of these states tried to shift CSBG uses at the local level to provide a specific type of direct service or to match other state desires, but over time CAAs and their national associations have created policies that enabled them to retain a great deal of local flexibility over use of CSBG funds. Only four states lost interest in the system or opposed the system as such and sought drastic change in CAA operations. They were UT, WY, CO and SD. (Note this is only 3 of the waiver states.)

In the 1980's CAAs expanded their role in energy-related programs like Weatherization and LIHEAP, and began new strategies seen as appropriate for the economic and social values of the time, such as family-development programs, micro-business programs, youth programs, home-ownership programs, and programs for minority males. CAAs also greatly expanded their role in housing renovation and housing development.

In the 1980's the public began to lose faith that government programs were producing sufficient results. This was not just human development programs in nonprofit agencies, it was all programs and all forms of government, Federal state and local. "Waste, fraud and abuse" became the catch-phrase of President Reagan's era. In the early 1990's the Congress reacted to the public concerns and to their own hearings and made numerous amendments to the Chief Financial Officers Act requiring Federal agencies to do a better job of reporting on costs and results.

This paper was originally written by Jim Masters of the Center for Community Futures and published by NACAA for the 25th Anniversary of Community Action in 1989. He updates it here for the 40th Anniversary.

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