I think your question if if they can "co-exist", correct?
They can and they have coexisted many times in the past, and even today. A monarchy with teocracy happens when there is a ruler (monarch ) who has an absolute or near-absolute power and claims to derive this power from God.
A historical example is ancient Egypt and a current example is Vatican City
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The answer to this question is Discretion
Block grants are given by the federal government for various type of service for the Feds. These services tend to expose a lot of sensitive information that could be dangerous if released to the wrong hand, so the grants tend to be given discretely.
