What type of federal funding is designated by law for specific categories like education or crime prevention?

The correct answer identifies "categorical grant-in-aid" as the form of federal funding that is designated by law for specific categories such as education or crime prevention. Categorical grants are highly targeted funds provided by the federal government to support particular projects or programs. These grants come with strict guidelines and requirements on how the money should be used, ensuring that the funds are applied precisely to the specified categories.

For example, if the federal government allocates a categorical grant for education, the state or local government receiving the grant must utilize the funds specifically for educational purposes, such as improving schools or providing scholarships, rather than for other unrelated expenses.

The focus of categorical grants is to address specific national issues, allowing for federal oversight and accountability, which is not typical of other funding types such as block grants, which afford more flexibility in how funds can be utilized, or cooperative grants and federal matching funds, which do not have the same level of specificity in expenditures. Understanding this distinction is key to recognizing the role of federal funding in various sectors within the American governmental framework.