This project will study the effect of the ADAMH block grant program on state substance abuse spending by analyzing spending data from the fifty states between fiscal years 1984-96. A central question about the block grant form of intergovernmental aid is whether states spend the funds on the intended services, or whether they use budgetary strategies to appear to be in compliance with maintenance-of-effort provisions but in effect reallocate block grant funds away from substance abuse services. The investigators' preliminary study of six years of state substance abuse agency spending suggests that the ADAMH block grant has stimulated state spending, but this effect may be only since 1990, and differs by state. Given changes in the block grant ending for substance abuse in 1993, the continued importance of the block grant as a source of funding for state agencies in substance abuse, and the heightened interest in block grants across the board in the """"""""new, new federalism,"""""""" careful study of the ADAMH block grant experience is warranted. Interest in the impact of the ADAMH block grant on stale spending extends beyond the substance abuse community to those concerned with intergovernmental relations and public funding for social programs. This project will: l. Document federal block grant requirements and enforcement efforts over the period of study. 2. Conduct an econometric investigation of the effect of block grant funding on state agency spending. Block grant formula changes in 1989-1992 and in 1993 yield exogenous changes in the key independent variable of interest. We will test an implication of median voter theory that an increase in block grant funding will have an effect on substance abuse funding equal to an increase in state per capita income. In addition, we will test the following hypotheses relevant to policy towards substance abuse services funding: H1: A one dollar increase in federal block grant funding increases state spending by one dollar. H2: Increased federal enforcement of block grant regulations including maintenance-of-effort regulations is associated with a larger impact of block grants on state spending. H3: States in which the substance abuse agency is part of the mental health agency will increase substance abuse spending less in response to an increase in federal spending in comparison to states in which the substance abuse agency is not part of the mental health agency. H4: States in which the block grant makes up a larger share of state spending will increase their spending more in response to block grant funding in comparison to states in which the block grant is a smaller share of state funds. 3. Use state block grant reports and discussions with state agency personnel in a subset of states to assess qualitatively whether federal regulations have been successful in influencing the composition of state spending within categories of service, and for target populations.
