High Court Considers Challenge to Grants-in-Aid

January 23, 2012 | By Thompson Education | Post a Comment

(This post originally appeared on Title I-Derland, Thompson’s blog on federal K-12 education, and was written by Chuck Edwards, senior executive director for Thompson’s education products.) Columnist George Will Sunday highlighted an oft-overlooked challenge to the “quid pro quo” theory behind state grants-in-aid. This challenge is an incidental part of the suit against the Obama administration’s health care law that will be argued before the Supreme Court in late March.

That suit is focused mainly on the much criticized “individual mandate” requiring people to purchase health insurance or pay a fine, but it also challenges the health care law’s expansion of the Medicaid program. The expansion is partially funded by the federal government but will ultimately cost states many billions as well. States will have to accept the added expenses or opt out of the program entirely. Hitherto, the Supreme Court has upheld the federal government’s authority to impose conditions on federal grants on the theory that compliance is merely an optional quid pro quo for the money — if you want the money, you have to comply with the conditions.

But some states object, saying that the scale of the new Medicaid requirement makes it more like extortion than a contract. In particular, they claim they are compelled to participate because the federal government taxes the states’ citizens to fund the program and the money is effectively lost to a state unless it participates.

As we explained in an earlier blog, this challenge may have profound implications for the whole grant-in-aid structure that funds activities as diverse as education, highways and social services. As a nationally syndicated columnist, George Will may awake state and local grants managers to the potential impact an adverse Supreme Court decision may have.

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