—Development of quality-control procedures to ensure that allocation procedures are carried out correctly.

—In cooperation with the General Accounting Office and the Congressional Research Service, development of a handbook on fund allocation formulas and processes. Such a handbook would provide an introduction to underlying concepts and practical considerations in the use of formulas to allocate funds. It would be valuable to people in the legislative and executive branches with direct or indirect involvement in the design and operation of formula allocation programs and could be used in training programs for various audiences. The panel offers a draft table of contents (see Appendix D).

In addition to the recommended primary activities, the committee might undertake or sponsor research on topics such as:

  • The statistical properties of alternative methods for combining components in an allocation formula.

  • Statistical issues that arise in using formula components designed to compensate for interstate differences in fiscal capacity, focusing primarily on the kinds of state data needed to estimate such components, the existing sources of such data, and the costs and benefits of developing new data sources. This review would compare per capita income, which is usually used for this purpose, and the Treasury Department’s measure of total taxable resources. Other approaches, such as Canada’s representative tax system, could be considered.

  • Statistical issues that arise in using formula components designed to compensate for geographical variability in the cost of services to be provided by a program.



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