CDC and the state health agencies to experiment with different approaches in supporting disease surveillance and immunization assessment, education, monitoring, and information efforts in the public and private sectors (see Figure 3).

Section 317 funds are awarded for two primary categories of support: vaccine purchase and state immunization program activities. Funding for vaccine purchase is referred to as “direct assistance” (DA); other funds awarded through the Section 317 program (referred to as “financial assistance ” or FA) support a varied array of program activities. Congress appropriates separate funds within each category; CDC retains this distinction in state grant awards. DA funding allows grantees to purchase vaccines at reduced prices negotiated by the federal government with vaccine manufacturers. Prior to the creation of the Vaccines for Children (VFC) program, Section 317 DA funds were the only federal vaccine purchase program available for the states. The Section 317 funds are used today to purchase vaccine for children, adolescents, and adults who are not eligible for VFC. Unlike most grant awards, these funds remain with CDC rather than being transferred to the grantees, and represent a “line of credit” for vaccine purchase. DA funds may also be used to appoint CDC personnel within the states who provide technical expertise for the state's immunization project.

Section 317 DA funding showed some variation at mid-decade when the VFC program began, but in general funding awards have remained relatively stable during the past decade, remaining close to about $130 million per year in the period 1996–1999 (see Table 1). In 1995, the first year for full implementation of vaccine purchase under the VFC program, the proportion of total grantee expenditures of Section 317 DA award funds dropped below 60 percent.7 Since then, state expenditure levels have risen steadily to 95 percent for 1998.

Financial assistance (FA) funds awarded through the Section 317 program support a more complex array of program activities. In contrast to the DA funding history, rapid increases and sudden decreases in the level of FA funds are the source of most of the budgetary variation in the Section 317 program over the past decade. In 1990 and 1991, FA funding and state expenditures were about one-fourth the level of those for DA (Tables 1 and 2). At mid-decade, FA levels increased substantially, rising to twice the levels for DA. New money for FA grants awards increased more than seven-fold from a total of $37 million awarded for 1990 to $261 million for 1995. In the aftermath of the rapid and unplanned build-up of Section 317 FA funds, significant amounts of carryover emerged within the state immunization budgets. Although the states had acquired extensive experience over several decades in working with the federal DA vaccine purchase funds, the large increases in support for additional immunization services appeared in areas that required new efforts (such as outreach, record assessment, performance measures, and the development of immunization registries) without careful consideration of how these funds would be used within existing state administrative and management systems.8 Although unable to respond immediately, states experimented with and built new immunization programs that drew upon federal resources. High rates of immunization coverage were sustained in the wake of these efforts, even with the addition of new vaccines to the childhood immunization schedule.

However, the delay in expenditures during the start-up period, accompanied by mid-decade pressures to reduce the costs of federal discretionary programs, led Congress

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