Revenues & Expenditures: 8. Vermont’s 2017 Federal Grants

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In fiscal year 2017, 34% of Vermont’s total state government revenues were federal grants. These grants are the single largest source of revenue for the state government. At just over $2 billion, federal grants are twice net Education Property tax and about two and a half times total individual and corporate income tax receipts.

Every department of the state government is funded in part by federal grants. Some programs, like Medicaid, are match funded by the state and federal governments on a formula basis. Other programs, such as Food Stamps, are fully funded by the federal government.

Each year, the state’s independent auditor (KPMG) prepares the Single Audit Report (also called the Schedule of Expenditures of Federal Awards) that shows all federal grants received by the state. Given the importance of federal grants to the operations of the state, a summary of this report showing grants by federal department and major programs is provided below, going from large to small.

Fiscal Year 2017 Federal Grants to the State of Vermont ($)

FEDERAL DEPARTMENT/Program 2017 Grants
HEALTH & HUMAN SERVICES 1,272,655,313
-Medicaid Cluster 1,063,088,915
-Temporary Assistance to Needy Families cluster 33,233,017
-Child Care & Development Cluster 19,511,450
-Low-Income Energy Home Assistance 18,270,805
-Foster Care 12,426,570
-Children’s Health Insurance 11,910,909
-Adoption Assistance 10,217,185
-Child Support Enforcement 9,397,803
-Immunization Cooperative Agreements 9,253,454
-Social Services Block Grant 7,969,006
-Substance Abuse & Mental Health 7,083,281
-Aging Cluster 6,125,720
-Substance Abuse Block Grant 5,592,947
-All Other 58,574,251
DEPARTMENT OF TRANSPORTATION 267,782,340
-Highway Planning & Construction 226,696,449
-Formula Grants for Rural Areas 14,056,482
-Airport Improvement Program 9,457,449
-All Other 17,571,960
DEPARTMENT OF AGRICULTURE 180,508,357
-SNAP (Food Stamp) Cluster 122,167,045
-Child Nutrition Cluster 27,605,411
-All Other 30,735,901
DEPARTMENT OF EDUCATION 116,264,947
-Title I Grants 41,172,907
-Special Education Cluster 27,941,106
-Vocational Rehabilitation Services 12,698,440
-All Other 41,172,907
DEPARTMENT OF LABOR 92,958,057
-Unemployment Insurance 80,995,166
-Work Investment Act Cluster 4,709,383
-Employment Services Cluster 2,694,173
-All Other 4,559,335
DEPARTMENT OF DEFENSE 28,569,199
-National Guard 27,461,777
-All Other 1,107,422
ENVIRONMENTAL PROTECTION AGENCY 25,692,427
-Drinking Water Cluster 13,703,122
-All Other 11,989,305
HOUSING & URBAN DEVELOPMENT 18,926,845
-Community Development Block Grants 12,032,151
-Home Investment Partnership Program 3,107,111
-Disaster Recovery 3,091,360
-All Other 596,223
DEPARTMENT OF HOMELAND SECURITY 18,175,336
-Disaster Grants 5,274,136
-Hazard Mitigation Grants 5,096,546
-All Other 7,804,654
DEPARTMENT OF JUSTICE 8,429,885
-Crime Victim Assistance 3,134,134
-All Other 5,295,751
DEPARTMENT OF INTERIOR 8,247,155
-Fish & Wildlife Cluster 6,448,931
-All Other 1,798,224
SOCIAL SECURITY ADMINISTRTION 6,811,335
DEPARTMENT OF VETERENS AFFAIRS 3,671,984
DEPARTMENT OF ENERGY 2,148,341
US CORPORATION FOR NATIONAL COMMUNITY SERVICE 1,817,881
-Americorps 1,572,458
-All Other 245,423
US INSTITUTE OF MUSEUM & LIBRARY SERVICES 1,005,259
US GENERAL SERVICES ADMINISTRATION 396,538
DEPARTMENT OF COMMERCE 220,721
SMALL BUSINESS ADMINISTRATION 187,451
ALL OTHER FEDERAL DEPARTMENTS 1,185,875
TOTAL FEDERAL GRANTS 2,055,655,246

Source: 2017 Vermont Single Audit Report, KPMG

 

Clarifications

The chart above includes grants that are reflected in the state government’s annual audit. There are some program accounting practices that overstate the amount of federal grants and there are some omissions that have the opposite effect.

The $80.9 million “grant” for Unemployment Insurance is really about $68 million of Vermont state unemployment taxes and $12 million of real federal grants. Vermont’s Unemployment Insurance tax receipts are deposited in a trust fund at the US Treasury Department. As this money flows back to Vermont for unemployment claims, it is recorded as a federal grant.

Not all federal grants are included in the KPMG Single Audit Report. Grants flowing directly to autonomous state government entities are not included.  The largest such grants are the HUD Section 8 rental assistance programs that flow through the Vermont State Housing Authority. In fiscal year 2017, Vermont received $58 million in HUD Section 8 grants.

Downward Trend

Federal grants have been declining over the last three years. In 2017, federal grants to Vermont as reported in the Single Audit Report were down $84 million.Vermont obviously has to make up these shortfalls. In 2017, this was done largely through increased service fees.

Almost every major department of the federal government cut grants to Vermont in 2017. The largest cut came from Health and Human Services, with federal grants down $56 million (of which $18 million was in the Medicaid Cluster). Transportation was down $11 million, with the largest reduction in the Airport Improvement Program. The SNAP Cluster (Food Stamps) was down $7 million. The only department that increased materially was the Department of Defense, which was up $5 million.

Some portion of these declines would be the result of changing circumstances. For example, disaster relief money is down because Vermont has largely recovered from hurricane Irene. With a strong economy, fewer people may be qualifying for income-tested programs.

However, some portion of these declines are certainly the result of changes in policies. The current administration in Washington was in power for only the last six months in fiscal year 2017. The Vermont financial reports for fiscal year 2018 should make for some interesting reading.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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