Maintenance of Effort: The Federal Takeover of State Budgets

Maintenance of Effort (MOE) requirements related to federal grants to the states have removed the power of a state’s elected officials to control their own budgets. The Congressional Budget Office clearly states the intent of MOEs: “Federal grant programs provide a mechanism for federal policymakers to promote their priorities at the state and local levels by influencing the amount of money spent by state and local governments and the typed of activities on which those governments pend their money.”

The two most well-known programs with MOEs are also the birthplace for the concept. Medicaid and Elementary and Secondary Education Act, now known as No Child Left Behind, were created in 1965 under President Lyndon Johnson and his vision of a “Great Society.” In FY 2014 these two areas of the budget consumed over two-thirds of the state of Kansas’ General Fund expenditures, partially driven by the MOEs they contain.

There is a long held constitutional premise that prohibits one legislature from binding a future legislature to an appropriation, but the construct of MOEs directly contradicts that belief. Returning power to state elected officials, in terms of MOEs, requires a vigilant and proactive approach to mitigating the federal takeover of state budgets.

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