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## Statistical Issues in Allocating Funds by Formula (2003) Committee on National Statistics (CNSTAT)

### Citation Manager

. "1. Introduction." Statistical Issues in Allocating Funds by Formula. Washington, DC: The National Academies Press, 2003.

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Statistical Issues in Allocating Funds by Formula

TABLE 1-1 The 11 Largest Federal Programs, Fiscal Years 1999 and 2000

 Obligations (\$billions) Rank Program FY 1999 FY 2000 FY 1999 FY 2000 Medical Assistance Program (Medicaid) 111.1 121.8 1 1 Highway Planning and Construction 26.2 25.9 2 2 Temporary Assistance for Needy Families 18.8 19.1 3 3 Title I Education 7.7 7.9 4 4 National School Lunch Program (food grant portion) 5.5 5.6 5 5 Special Education Grants to States 4.3 5.0 6 6 State Children’s Health Insurance 4.2 4.3 7 8 Foster Care Title IV-E 4.0 4.5 8 7 Community Development Block Grants 3.0 3.0 9 10 WIC (food grant portion) 2.9 2.8 10 11 Public Housing Capital Fund 2.2 3.9 14 9 Total for 11 largest programs 187.7 201.0 Total for all formula allocation programs 245.9 262.3 Source: Catalog of Federal Domestic Assistance

continuing nature not confined to a specific project. For some programs, the distribution formula used is a closed mathematical expression; for others, iterative processes are used to arrive at the final allocations. Block grant programs are a subset of formula allocation programs in which the recipient jurisdiction has broad discretion for the application of funds received in support of such programs as community development or the prevention and treatment of substance abuse, which are specified in the authorizing legislation. Matching grant programs, such as Medicaid and certain transportation programs, require that the recipient state provide a matching percentage of funds from state sources.

Allocation formulas are usually designed with one or more objectives: to distribute funds to recipient governments in proportion to some measure of program need, to equalize their fiscal capacities to meet program needs, or to influence their spending decisions. They are developed in the context of a complex political process. Use of a formula (rather than a specification

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 Front Matter (R1-R14) Executive Summary (1-4) 1. Introduction (5-17) 2. Why Provide Aid and Use Aid Formula? (18-25) 3. Basic Features of Formula Allocation Program (26-34) 4. Components of Allocation Formula (35-39) 5. Special Features of Formula Allocations (40-49) 6. Data Sources for Estimating Formula Components (50-58) 7. A State View -- California (59-70) 8. International Perspective (71-78) 9. Conclusions and Recommendations (79-89) References (90-94) Appendix A: Background Papers (95-99) Appendix B: A Review of Twelve Large Formula Allocation Programs (100-128) Appendix C: Sources of Information (129-137) Appendix D: Handbook on Fund Allocation Formulas and Processes (138-141) Appendix E: Participation in Panel Workshop and Meetings (142-142) Appendix F: Biographical Sketches of Panel Members and Staff (143-147)