What is meant by "categorical" in terms of government funding?

The term "categorical" in the context of government funding refers specifically to funding that is allocated for specific purposes or programs. This means that the funds must be used for particular activities defined by the government, allowing for targeted initiatives designed to address specific needs or priorities. For instance, categorical grants may be provided for health care, education, or transportation projects, and typically, the recipient must adhere to certain regulations and guidelines tied to the use of these funds. This approach ensures that resources are directed toward addressing defined issues rather than allowing broader discretion in spending, which is the hallmark of other types of funding arrangements, such as block grants.