Arizona oversight of federal grants

• Federalism
• Terms and definitions
• Laws
• Court cases
• Major arguments
• State responses to federal mandates
• State survey of the federal grant review process
  • State responses to the federal grant review process survey, 2021
  • State responses by question to the federal grant review process survey, 2021
• Federalism by the numbers
  • Federalism by the numbers: Federal mandates
  • Federalism by the numbers: Federal grants-in-aid
  • Federalism by the numbers: Federal information collection requests
  • Overview of federal spending during the coronavirus (COVID-19) pandemic
• Index of articles

Federal grants make up a significant portion of state budgets, providing funding for programs in health care, education, infrastructure, and public assistance. These funds are typically accompanied by policy conditions or reporting requirements that shape how states implement federally funded programs. In response, states have developed varying oversight systems to review, approve, and monitor federal funding.

This page summarizes federal grant funding and oversight in Arizona. It includes data on how federal dollars contribute to the state budget, highlights Arizona’s position relative to other states, and analyzes key laws related to grant coordination, transparency, and accountability. This research was last updated in September 2025.

HIGHLIGHTS

In fiscal year 2023, 49.2% of Arizona’s total state revenue came from intergovernmental sources—primarily federal grants—the second-highest share among the 50 states. The state received approximately $29.9 billion in federal funds, the 10th-highest total nationwide.

Arizona law centralized federal grant oversight under the Governor of Arizona and the Governor’s Office of Strategic Planning and Budgeting, which coordinated, reviewed, and reported on federal aid programs. The Arizona State Legislature maintained oversight through required reports detailing all federal grants received.

This article includes information about the following topics:

• Federal funding to Arizona
  • Percentage of Arizona budget funded by the federal government
  • Amount of federal grants to Arizona

• Arizona statutes on federal grant oversight
  • Executive oversight of federal grants
  • Legislative oversight and transparency
  • Audit and financial oversight
  • Agency oversight of federal grant applications

Background

Federal grants are a major source of funding for state governments, supporting programs in areas such as health care, education, transportation, and public assistance. These funds are distributed through a variety of mechanisms—including block grants, categorical grants, and formula-based programs—and are typically accompanied by policy conditions, reporting requirements, or other administrative mandates.

Federal grants are reported as part of a state’s intergovernmental revenue, a category tracked annually by the United States Census Bureau. Intergovernmental revenue includes funds transferred from both federal and local governments, but federal sources account for the vast majority. In 2022, approximately 98% of intergovernmental revenue received by states came from the federal government. In 2023—the most recent year for which data is available—states collectively received about $1.12 trillion in intergovernmental revenue, representing 36.7% of all general revenue.

Because of the scale and conditional nature of federal funding, many states have adopted statutory and administrative frameworks to oversee how agencies apply for, accept, and manage federal grants. These frameworks reflect broader federalism concerns—such as how states balance fiscal dependence with administrative autonomy, and how they respond to federal mandates that may influence state policy priorities.

This research was last updated in July 2025.

Top federal funding programs to states

In fiscal year 2023, the federal government distributed over $1 trillion in grants to states. The largest programs included Medicaid, highway funding, rental assistance, and child nutrition. Medicaid alone accounted for 56.8% of federal grants to states, and the top 20 programs combined made up approximately 87.8% of total federal grant outlays to states.

Federal funding to Arizona

Amount of federal grants to Arizona

In 2023, Arizona received approximately $29.9 billion in intergovernmental revenue out of a total $60.9 billion in state revenue, the 10th-highest amount among the 50 states. The national average was approximately $22.3 billion per state. Across all states, intergovernmental revenue totaled about $1.12 trillion out of $3.04 trillion in general revenue. In 2022, approximately 98% of intergovernmental revenue states received came from the federal government (this figure is not yet available for 2023).

Percentage of Arizona budget funded by the federal government

In fiscal year 2023, 49.2% of Arizona’s total state revenue came from intergovernmental sources—primarily federal grants—compared to 36.7% for state governments nationwide. Arizona had the second-highest percentage of state revenue funded by the federal government.

Intergovernmental revenue by state

This table shows the percentage and amount of each state's total revenue that came from intergovernmental sources—primarily federal grants—in fiscal year 2023. It lists states in descending order by the share of revenue from these sources and includes total state revenue, intergovernmental revenue, and the percentage for each state. The data highlights how dependent each state is on federal funding as a portion of its overall budget.

Intergovernmental revenue by state, 2023

State	Total revenue (thousands)	Intergovernmental revenue (thousands)	Percent
Louisiana	$44,396,718	$22,899,720	51.6%
Arizona	$60,891,976	$29,948,016	49.2%
Missouri	$45,073,525	$20,888,653	46.3%
Wyoming	$8,357,625	$3,792,590	45.4%
Alaska	$11,883,137	$5,341,732	45.0%
Montana	$10,689,677	$4,710,013	44.1%
Kentucky	$46,180,553	$20,254,290	43.9%
Mississippi	$26,046,854	$11,310,571	43.4%
Rhode Island	$12,286,091	$5,288,136	43.0%
Oklahoma	$37,833,350	$16,255,253	43.0%
West Virginia	$18,871,691	$8,025,296	42.5%
Tennessee	$48,344,600	$20,223,947	41.8%
South Dakota	$6,278,267	$2,570,818	40.9%
Arkansas	$29,702,938	$12,104,414	40.8%
Georgia	$70,031,565	$28,344,731	40.5%
Indiana	$62,196,503	$25,102,743	40.4%
Alabama	$44,884,391	$17,879,389	39.8%
Maine	$13,604,269	$5,360,431	39.4%
New Hampshire	$10,340,297	$4,052,066	39.2%
South Carolina	$46,113,727	$17,785,656	38.6%
Nebraska	$15,493,777	$5,972,778	38.5%
Texas	$213,481,319	$82,164,797	38.5%
Pennsylvania	$127,986,754	$49,211,832	38.5%
Ohio	$98,348,911	$37,785,734	38.4%
Florida	$141,946,520	$53,706,466	37.8%
New York	$259,552,404	$96,814,839	37.3%
Michigan	$90,192,191	$33,060,736	36.7%
Vermont	$9,063,120	$3,293,531	36.3%
Colorado	$41,909,412	$15,138,043	36.1%
Maryland	$58,597,846	$21,004,254	35.8%
North Carolina	$81,064,214	$28,814,153	35.5%
Oregon	$51,612,303	$17,510,543	33.9%
New Mexico	$40,359,510	$13,628,893	33.8%
Nevada	$24,219,218	$8,040,101	33.2%
Iowa	$31,265,753	$10,333,642	33.1%
Washington	$74,164,396	$24,480,102	33.0%
California	$417,100,727	$137,666,813	33.0%
Minnesota	$60,090,592	$19,468,582	32.4%
Illinois	$111,409,197	$35,838,931	32.2%
Wisconsin	$49,805,740	$15,984,042	32.1%
Massachusetts	$80,850,200	$25,519,880	31.6%
New Jersey	$100,285,531	$31,191,180	31.1%
Connecticut	$38,016,037	$11,800,021	31.0%
Idaho	$14,453,559	$4,456,686	30.8%
Delaware	$13,462,717	$4,105,552	30.5%
Virginia	$81,975,174	$23,958,775	29.2%
North Dakota	$10,349,350	$2,876,346	27.8%
Utah	$31,293,027	$8,603,744	27.5%
Kansas	$27,507,628	$7,524,382	27.4%
Hawaii	$19,221,682	$5,057,226	26.3%

Source: U.S. Census Bureau, Annual Survey of State Government Finances

Arizona statutes on federal grant oversight

Many states have statutory provisions that govern the oversight, approval, transparency, and auditing of federal grants received within the state. These laws typically assign responsibilities to executive agencies, the governor’s office, and the legislature to ensure proper management and accountability of federal funds. This research was last updated in September 2025.

Executive oversight of federal grants

Executive oversight of federal grants refers to statutes that assign responsibility to the governor’s office to review, approve, coordinate, or manage federal grants across the state.

Arizona law assigned this oversight role to both the Governor’s Office of Strategic Planning and Budgeting and the governor directly.

Arizona Revised Statutes § 41-723 assigned coordination authority to the Governor’s Office of Strategic Planning and Budgeting, which is responsible for reviewing federal programs and advising the legislature.

“ A. The governor’s office of strategic planning and budgeting shall: 1. Confer with officials of federal agencies concerning grants-in-aid generally, and particularly in regard to federal-aid programs in progress in this state. 2. Report to the legislature at each regular session findings and recommendations in the following areas: (a) The total amount of federal grants-in-aid received by agencies of this state during the preceding fiscal year. (b) The total amount of federal grants-in-aid available to agencies of this state during the preceding fiscal year, giving reasons for any difference between the amount of monies available to and the amount of monies accepted by agencies of this state in all federal grant-in-aid programs. (c) The adequacy of grant-in-aid programs in progress in this state. (d) Federal grant-in-aid programs in which the state does not participate. (e) Legislation necessary for activation of federal programs in which the state does not participate. (f) Legislation necessary for improved operation of federal grant-in-aid programs in progress in the state of Arizona. (g) Advisability of accepting new grant-in-aid programs or discontinuing programs already in progress. 3. Have access to the books, accounts, reports and vouchers and all other pertinent records of all state agencies for the purpose of carrying out the provisions of this section. ”

Arizona Revised Statutes § 41-195.06 authorizes the governor, unless otherwise provided by law, to accept and expend federal grants and designates the governor as the state agency responsible for this purpose.

“ A. The governor, except as otherwise provided by law, is authorized to accept and expend any grants, donations, aids, or other funds received from the federal government or any agency thereof pursuant to Public Law 88-452, the economic opportunity act of 1964, and Public Law 89-136, the public works and economic development act of 1965, and any other funds made available to the state through any federal statutes, and in receiving and expending such funds, the governor shall be considered the agency of the state for all the purposes provided by this section. ”

Together, these statutes gave Arizona’s executive branch centralized authority over federal funds, with requirements for coordination, review, and legislative reporting.

Legislative oversight and transparency

Legislative oversight and transparency refers to statutes requiring reports to or involvement from the legislature in managing or approving federal grants.

The reporting mandate in § 41-723 also served to inform the legislature about federal aid received and programs not yet adopted.

“ 2. Report to the legislature at each regular session findings and recommendations in the following areas: (a) The total amount of federal grants-in-aid received by agencies of this state during the preceding fiscal year. (b) The total amount of federal grants-in-aid available to agencies of this state during the preceding fiscal year, giving reasons for any difference between the amount of monies available to and the amount of monies accepted by agencies of this state in all federal grant-in-aid programs. (c) The adequacy of grant-in-aid programs in progress in this state. (d) Federal grant-in-aid programs in which the state does not participate. (e) Legislation necessary for activation of federal programs in which the state does not participate. (f) Legislation necessary for improved operation of federal grant-in-aid programs in progress in the state of Arizona. (g) Advisability of accepting new grant-in-aid programs or discontinuing programs already in progress. ”

This provision facilitated legislative review of federal program participation, gaps in funding, and related policy proposals.

Audit and financial oversight

Audit and financial oversight refers to statutes related to auditing, financial tracking, or compliance for federal funds.

Arizona Revised Statutes § 41-1279.06 established the Audit Services Revolving Fund, which supports financial and compliance audits of federal funds.

“ A. The audit services revolving fund is established. The auditor general shall administer the fund. The fund consists of any monies received by the auditor general from: 1. State budget units for audits of federal funds required under federal law and federal rules and regulations. 2. State budget units and counties, community college districts and school districts for which the auditor general performs special audits, financial statement audits or audits of federal funds received under federal laws, rules and regulations or provides accounting services. 3. Counties where the auditor general conducts a performance audit of the transportation excise tax as prescribed by section 41-1279.03. 4. Any other source authorized by law. B. The auditor general shall use the fund monies for the purpose of conducting audits required under federal law, special audits or financial statement audits or accounting services requested by state budget units and counties, community college districts and school districts or to pay for certified public accountants to conduct such audits or provide such services. C. Monies in the audit services revolving fund are exempt from the provisions of section 35-190, relating to lapsing of appropriations. ”

This statute enabled Arizona to meet federal audit obligations while preserving state-level control over audit execution.

Agency oversight of federal grant applications

Agency oversight of federal grant applications refers to statutes that establish procedures or requirements for how state agencies request or acknowledge federal funding.

Arizona Revised Statutes § 35-113.01 assigned the Department of Administration oversight responsibilities by requiring all state agencies to submit and acknowledge federal fund applications and awards through that office.

“ A. All state agencies, boards, commissions and departments shall submit to the department of administration for acknowledgment, copies of all agreements, contracts and copies of all applications and requests for federal funds, to be used for any purpose. B. Every state agency, board, commission or department seeking federal funds for any project or program shall furnish to the department of administration with each copy of application or request a statement of the purposes for which any such project or program is desired or advocated, the source and amount of funds to be granted or provided therefor, and a statement of the conditions, if any, upon which such funds are to be provided. The director may at his discretion accept from the state agency, board, commission or department a summary of the information required in this section. C. All departments, agencies, boards or commissions, shall forward an acknowledgment to the department of administration upon receipt of federal funds. ”

This statute provided administrative oversight by requiring state agencies to disclose federal fund applications and confirm receipt, ensuring documentation and internal tracking.

Other state oversight of federal grants

Click on a state to find out its oversight of federal grants, including how it reviews, approves, and manages federal funding through statutes, executive procedures, and legislative reporting.

See also

• Federalism by the numbers
• Federalism
• Unfunded Mandates Reform Act
• Regulatory mandate
• Interlocking (cooperative) federalism

External links

• Search Google News for this topic

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