First of all let us understand the meaning of Public Finance. It means Collection of sufficient resources from the economy in an appropriate manner along with allocating and use of these resources efficiently and effectively constitute good financial management. Resource generation, resource allocation and expenditure management

where an s&l governments or state and local governments borrowed money

Lets get the idea about where an s&l governments or state and local governments borrowed money

Generally Federal grants loan to the state and local government. All these funds accounted for 17 percent of federal outlays, 4 percent of gross domestic product (GDP), and a quarter of spending by state and local governments that year.IN the pase 30 years those “intergovernmental” grants—financial transfers from the federal government that support a wide range of state and local programs—have fluctuated as a share of federal outlays

Generally State and Local Government would have money from following ways

(1) Federal grants

(2) Public revenue

(3) Federal finance

Why Federal Grants to Local government

The answer of the above question is to promote economic efficiency in instances when those governments have localized knowledge that would permit them to implement a program more efficiently and effectively than the federal government could

Another reason that Federal Grants to Local government is, such grants may help foster policy experimentation at the state and local levels that would be difficult to achieve in a single national program.

What was the money spent on?

state and local governments face more spending constraints on how they use categorical formula grants

Example

(1)

In some state Federal grants a states for roads that state governments may build or improve using federal highway grant funds. However, among all possible road projects that meet the established criteria, states are typically able to choose which ones to fund.

(2)

If there is Project grants provided then state and local governments the least flexibility over spending, as the use of grant funds is typically limited to the specific project selected.

(3)

In some state Federal grants a states for students demonstrate adequate progress for states to remain eligible for certain education grants and states can not use for other purpose

(4)

Some other grant are also there which have general spending which could be utilizedfor general pupose by rthe states