Federal government probably shouldn't be distributing ANY money to the states at all, whether as part of block grants or anything. This has been a major root of evil since the beginning and created a form empire where the subjects are paid to be loyal. I'd change things so that any money above a certain amount outside the general fund going to specific states, groups, or individuals - including loans or redistribution through agency grants - has to be approved by Congress on a per-state per-budget basis, and it has to be with the UNANIMOUS agreement of all the states. It would probably only happen in emergency situations.