Conditional Federal Funds Control Act

Conditional Federal Funds Control Act

Summary    

The purpose of this legislation is to coordinate the acceptance of federal conditional funds among the several states. Conditional federal fund programs (such as Medicaid) now account for 40 percent of the average state budget. The conditions attached to such funds diminish the states’ flexibility and erode the responsiveness of state government to local preferences. Individual states that refuse federal funds in order to escape the conditions face the onerous penalty of losing billions of their residents’ tax dollars to other states.

An effective solution would be to use “reciprocal legislation” to forge a united front among a majority of states in order to exert greater influence on the shape of conditional federal grant programs. Such legislation would come into effect when a majority of states have passed it.

This model legislation would prohibit the state from complying with conditions attached to federal funds where the conditions affect policies outside the federal interest in a particular conditional federal grant program. The legislation would give effect to the distinction articulated by the Supreme Court in NFIB v. Sebelius (2012) between conditions that apply to the manner in which federal funds are spent and conditions that apply to collateral state programs or policies. States would be free to give effect to conditions that apply to the manner in which federal funds are spent, but are directed to ignore conditions that apply to collateral state programs or policies.

This legislation would give Congress a strong incentive to limit the conditions on federal funds in a way that protects federalism.

Model Legislation

Section 1. {Title} This Act may be cited as the “Conditional Federal Funds Control Act.”

Section 2. {Acceptance of conditional federal grants to the state} Notwithstanding any other provision of law, with respect to any state program supported by federal funds, the agencies and officers of the state of {insert state} shall implement such program without regard to the conditions provided in federal law for receipt of such funds. Conditions that specify only the manner in which such funds are to be spent shall not be subject to this section. Applications for federal approval of state programs shall make reference only to conditions that specify only the manner in which such funds are to be spent.

Section 3. {Effective date}  This Act shall come into force when substantially similar acts have been adopted in at least 30 sister states.


Approved by the ALEC Board of Directors on January 29, 2013

Keyword Tags: Budget, Federalism

Task Forces