What are categorical grants?

Categorical grants are indeed federal funds provided to states for specific purposes, often accompanied by strict regulations. These grants are designed to ensure that the money is used for particular programs or projects, such as education, transportation, or health care, thereby allowing the federal government to exert significant influence over state policy in those areas.

The specificity of the purpose for which the funds can be used differentiates categorical grants from other types of funding. For example, while states receive categorical grants for designated programs, they have less flexibility in how to allocate these funds compared to block grants, which provide more general support. This structure emphasizes accountability and adherence to federal standards in areas prioritized by national objectives, leading to effective outcomes that align with federal priorities.

In contrast, other options refer to different forms of federal funding or do not accurately characterize categorical grants.