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|
|-Temporary Assistance to Needy Families cluster||33,233,017|
|-Child Care & Development Cluster||19,511,450|
|-Low-Income Energy Home Assistance||18,270,805|
|-Children’s Health Insurance||11,910,909|
|-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|
|-Substance Abuse Block Grant||5,592,947|
|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|
|DEPARTMENT OF AGRICULTURE||180,508,357|
|-SNAP (Food Stamp) Cluster||122,167,045|
|-Child Nutrition Cluster||27,605,411|
|DEPARTMENT OF EDUCATION||116,264,947|
|-Title I Grants||41,172,907|
|-Special Education Cluster||27,941,106|
|-Vocational Rehabilitation Services||12,698,440|
|DEPARTMENT OF LABOR||92,958,057|
|-Work Investment Act Cluster||4,709,383|
|-Employment Services Cluster||2,694,173|
|DEPARTMENT OF DEFENSE||28,569,199|
|ENVIRONMENTAL PROTECTION AGENCY||25,692,427|
|-Drinking Water Cluster||13,703,122|
|HOUSING & URBAN DEVELOPMENT||18,926,845|
|-Community Development Block Grants||12,032,151|
|-Home Investment Partnership Program||3,107,111|
|DEPARTMENT OF HOMELAND SECURITY||18,175,336|
|-Hazard Mitigation Grants||5,096,546|
|DEPARTMENT OF JUSTICE||8,429,885|
|-Crime Victim Assistance||3,134,134|
|DEPARTMENT OF INTERIOR||8,247,155|
|-Fish & Wildlife Cluster||6,448,931|
|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|
|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
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.
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.