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Statistical Issues in Allocating Funds by Formula (2003) / Chapter Skim
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4. Components of Allocation Formula
Pages 35-39

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From page 35...
... For example, the goal of the State Children's Health Insurance Program (SCHIP) is to encourage states to establish insurance programs that cover children in families who are not eligible for Medicaid and for whom private insurance is prohibitively costly.
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From page 36...
... Many aid formulas include ad hoc adjustments for variation in need. For example, to compensate for geographic differences in prevailing salaries and thereby in the cost of education, the Title I, Part A, grants to local education agencies formula includes state per-pupil expenditure (PPE)
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From page 37...
... If the goal is redistribution of economic well-being or equal treatment of economic equals, the appropriate choice is a capacity measure that is based on an adjusted measure of income, for example, the total taxable resources (TTR) measure of capacity that is used in the community mental health services block grant and substance abuse block grant programs.
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From page 38...
... , the level of spending per eligible individual needed to achieve the target service level by, the cost index that adjusts for interlocality differences in the cost per eligible individual of providing given public services ( (I) , or the fiscal capacity of the recipient jurisdiction (~ will produce discrepancies between the actual and desired aid distributions.
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From page 39...
... Reducing the error in estimating the number of eligibles while making no improvement in estimating the cost per eligible could result in an aid distribution that lines up less well with the desired distribution. Changes in the aid distribution resulting from proposed improvements in the measurement of one or more components should be evaluated.
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Key Terms

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  • receiving aid
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  • capacity ensures
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  • eligible individual
  • allocation programs
  • aid amounts
  • block grant
  • local effort

  • formula includes
  • rts methodology
  • targeted services
  • basic package
  • includes state

  • rare instances
  • shared components
  • hoc adjustments
  • whom private
  • final component

  • capacity measure
  • increased local
  • reduce fiscal
  • insurance program
  • specific programs


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