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Federal Funds and Development Policy

Note: This topic page may contain material that has not yet been updated to reflect the new Farm Act, signed into law on February 7, 2014. ERS has published highlights and some implications of the Act’s new programs and provisions. Sign up for the ERS Farm Bill e-newsletter to receive notices of topic page updates and other new Farm Bill-related materials on the ERS website.

Federal financial assistance can contribute to the success of a local rural development strategy. However, the total amount of Federal funding received by an area may be less important than the mix of Federal assistance and its fit with the local rural development strategy. ERS analysis of Federal funding shows that most of Federal funding comes in the form of payments to individuals for social security, retirement, Medicare and Medicaid, farm payments, federal procurement and salaries, and expenditures on national defense and other national functions. Moreover, these programs are not distributed equally across the country. The amount of such Federal assistance varies by region and type of rural county. The geographic distribution of Federal funding also varies by type of assistance, such as loans, grants, direct payments to individuals, etc. For data on the distribution of Federal funds by function, region, and type, see tables   table 3 . The urban/rural distribution of Federal funds also varies from State to State (See the ERS State Fact Sheets).  For more information about data on the geographic distribution of Federal funding see Federal Funds Data.

USDA's rural development programs include the infrastructure programs of the Rural Utilities Service, business programs of the Rural Business-Cooperative Service, and housing and community development programs of the Rural Housing Service (see USDA-Rural Development). Moreover, the form of the assistance (grants, loans, guaranteed loans) makes a difference in the extent of targeting, both to rural areas and to distressed areas (See The Form of Rural Development Assistance Matters to Distressed Counties in Amber Waves, and the longer report, Geographic Targeting Issues in the Delivery of Rural Development Assistance).

The 2011 ERS report Impacts of Regional Approaches to Rural Development: Initial Evidence on the Delta Regional Authority, estimated some of the economic impacts of one such program.  Earlier ERS research examined data from the EDA's public works program investments in water and sewer facilities (see Economic Impact of Water/Sewer Facilities in Rural and Urban Communities PDF icon (16x16) ). ERS has also looked into other aspects of Federal programs as they relate to rural development, including USDA's housing programs ( Meeting the Housing Needs of Rural Residents: Results of the 1998 Survey of USDA's Single Family Direct Loan Housing Program), and Federal credit programs more generally and their role in rural areas.  ERS has also described programs affected by the rural development title of the 2008 Farm Act, and examined policy issues of continuing relevance, such as the pros and cons of using block grants for rural development (see How Would Rural Areas Fare Under Block Grants PDF icon (16x16) ?).  In addition, ERS researchers have written a history of Federal rural development policy, available from the Rural Information Center's web site, providing background information about how and why Federal rural development programs were created. 

Last updated: Wednesday, March 12, 2014

For more information contact: Faqir Bagi

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