Quick Tips for Policymakers to Maximize Federal Funds

· Maximize Participation. One of the great fiscal ironies is that the largest federal funding sources are among the most under-used, including Medicaid/Children’s Health Insurance Program and the Supplemental Nutrition Assistance Program (SNAP, formerly called Food Stamps). Participation can be maximized through a variety of outreach activities, expedited and streamlined eligibility determination, and easier access to benefits.

· Claim Indirect Costs. Several federal programs, including Title IV-E Foster Care and Adoption Assistance, allow states to claim reimbursement for the indirect costs of program-related activities, such as administration and training. Although reviewing and maximizing indirect cost recovery requires extensive effort, it can have a big pay-off.

· Use and Safeguard Existing State Resources to Leverage Federal Funding. Whenever possible, existing resources—monetary and non-monetary, state and local, public and private--should be used to maximize federal funding. In tough fiscal times, it is critical to avoid cuts to state funds that are used or might be used to match federal dollars or to preserve Maintenance of Efforts.

· Take Advantage of Discretionary Funding. Although states often focus their efforts on the largest entitlements, it pays to identify and pursue discretionary grants and other relatively small funding streams. Together, these add up to sizeable resources.

· Build Capacity To Leverage Federal Dollars. To take full advantage of federal funding opportunities and comply with complex regulatory requirements requires strong coordination among program staff, financial managers, and staff with expertise in federal funding requirements and opportunities. At least four states (Illinois, Kansas, Maryland, and Texas) have established grant offices to help agencies, local governments and nonprofit organizations identify and attract federal discretionary grants.

· Watch the Revenue Side. Federal tax changes can have a greater impact on state treasuries than increases in federal aid. Most states’ income tax and inheritance tax bases are tied to federal tax law, and federal changes can result in lost revenue. States can avoid these reductions by “decoupling” their tax codes from the federal revisions. [i]