What is the Impact of Accepting Federal Funds?

I would like to see states, or individual districts, take a look at the federal funding they receive. How much funding is received? How is the money spent? Does the funding fully cover the costs of what the district has to put in place to receive the money? It is possible that districts are having to spend more money than they receive to comply with the requirements for receiving the funds. If it is close, could a district trim some fat by not accepting funds with federal strings attached?  The belt might have to be tightened a bit, but it would be a belt of state and local sovereignty.

I recently received links to a video and copy of a report by the Civitas Institute called civitasImpact of Federal Transfers on State and Local Source Spending.  Both address the same issue and it seems like the video is referring to this report.  The report has a November 2015 date on it but the findings should still be relevant.

I was surprised that the study did not examine the costs to the state for administering the accepted federal funds.  That is what I was looking for.  I was even more surprised with the findings presented in the report.  Federal funds accepted by the state are associated with an increase in state and local taxes.  In the conclusion section, the report makes this statement:

Based on our results state revenues from taxes, charges, and other own-sources will rise by 82 cents for each additional dollar in federal transfers.

In the video below, Dan Fisher, a candidate for governor in Oklahoma says this about a study done in North Carolina:

They take about 12% federal funding for their education.   They discovered that with the strings attached to that money, they would have more money to spend on education if they rejected the 12% from the feds.


Maybe decision makers in each state should see this report and examine the impact of accepting federal funds on their state.  Could this justify not accepting federal funds and the attached strings?

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