Targeting of intergovernmental aid: The case of urban development action grants

During the past several decades, the federal government has had numerous grant-in-aid programs to address the pressing problems of the nation's cities. A continuing question in the academic literature with important practical consequences has been how effective the federal government is in targeting the available funds to cities most in need. A review of the literature on targeting is presented and three hypotheses are developed from it.;The targeting literature is placed in the context of Theodore Lowi's theory on policy types, which identifies three policy types--redistributive, distributive, or regulatory. This study deals with redistributive policies, which place resources where they are needed most, and distributive policies, which spread resources regardless of need.;The Urban Development Action Grant (UDAG) program was a redistributive program with a goal of developing jobs and taxes in the county's neediest cities and urban counties. The political history of UDAG demonstrates that a number of actions were taken over the life of the program to broaden its appeal and to make is more distributive, as Lowi's theory suggests. The major findings of five studies of UDAG targeting issues by the General Accounting Office and the Department of Housing and Urban Development are also presented.;Qualitative and quantitative data obtained from the Department of Housing and Urban Development are analyzed in order to address the three hypotheses derived from the targeting literature and Lowi's theory. Conclusions from the analyses are that political pressures were exerted to make UDAG more distributive, that the funds were spread more widely than one would expect if only needs criteria were used, and UDAG did not become more distributive over time despite the political pressures exerted to make it so.