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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)
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
