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The future of Federal discretionary spending is of considerable interest to many grant seekers, as well as to those who write grant proposals on their behalf. Many organizations rely upon it for their continued existence. In addition, many grant writers depend upon it for all or part of their incomes.


This post examines the present Federal budget for discretionary grant programs. Funding levels for such programs are determined annually through appropriations by Acts of Congress. As the Congressional Research Service (CRS) explains, “Congress can change, continue, or reverse trends in discretionary spending directly through annual appropriations decisions, or indirectly by modifying certain federal budget procedures, such as reinstating statutory limits on discretionary spending.”


Program Areas:

The Office of Management and Budget (OMB) organizes Federal grant making into nine program areas:

  1. Natural Resources and Environment Programs
  2. Agriculture Programs
  3. Commerce and Housing Credit Programs
  4. Transportation Programs
  5. Community and Regional Development Programs
  6. Education, Training, Employment, and Social Service Programs
  7. Health Related Programs
  8. Income Security Programs
  9. Justice Programs


Of these program areas, “Education, Training, Employment, and Social Service Programs” alone is slated to absorb 68% of the Federal reduction in discretionary spending.


Federal Discretionary Grants:

Total Federal grant outlays are the sum of mandatory programs and discretionary programs. The OMB reports that in 2012, total Federal grants are expected to be $584.278 billion (estimated), of which total mandatory grants are expected to be $424.925 billion (estimated). Total discretionary grants are expected to be $159.35 billion (estimated) or 27.27% of total grant outlays. The OMB reports that outlays for all discretionary grant programs had been $207.7 billion (actual) in 2010; thus a reduction of -23.25% is estimated for 2012 versus 2010. By contrast, outlays for all mandatory grant programs are expected to be $424.9 billion (estimated) in 2012, or to be increased by +6.04% over the $407.7 billion (actual) of 2010.


Trends by Grant Recipients:

The OMB sorts total Federal grant outlays by types of recipients. Two types – “physical plant grants” and “other grants” – are where most grant writers expend their time and effort. Out of the totals – which include both mandatory and discretionary – the OMB indicates that:

  • Payments for individuals are to go from 63.2% (2010)(actual) to 66.0% (2012)(estimated) – or to rise by +2.8% of the total
  • Physical capital grants are to go from 15.3% (2010)(actual) to 17.3% (2012)(estimated) – or to rise by +2.0% of the total
  • Other grants are to go from 21.5% (2010)(actual) to 16.8% (2012)(estimated) – or to fall by -4.7% of the total


Similar discussions organized by the two categories of discretionary and mandatory probably exist, but were not readily located.


Future Funding Trajectory:

One more indication of the future direction of Federal grant making is this: The OMB reports that total grants are to be reduced from 17.6% of total Federal outlays in 2010 to 15.7% in 2012. That is, they are to decrease to the lowest level as a percentage of total Federal outlays since 1995 when they were 14.8%.


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