Formula Grants:

Effects of Adjusted Population Counts on Federal Funding to States

HEHS-99-69: Published: Feb 26, 1999. Publicly Released: Mar 2, 1999.

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Pursuant to a congressional request, GAO provided information on the potential effect of using adjusted population counts on the distribution of federal grant funding, focusing on: (1) 25 large formula grant programs; (2) identifying those programs that rely, at least in part, on census data to apportion funding; and (3) for selected programs, analyzing the extent to which funding would shift among states if adjusted population counts were used to apportion funds.

GAO noted that: (1) 22 of the 25 large formula grant programs rely, at least in part, on data derived from the decennial census to apportion funding among states and units of local government; (2) Medicaid was the single largest program, representing 63 percent of the $167 billion in fiscal year 1998 obligations under the 25 programs GAO reviewed; (3) for the 15 programs included in GAO's detailed analysis, using adjusted population counts would reallocate a total of $449 million among the 50 states and the District of Columbia, 0.33 percent of the $138 billion in funds apportioned by formula in GAO's detailed analysis; and (4) specifically, reallocating funding would result in the following: (a) California accounted for about 20 percent of the adjusted population and would receive nearly half of the total reallocated, or $223 million; (b) the four states that border Mexico (California, Arizona, New Mexico, and Texas) accounted for over one-third of the adjusted population and would receive nearly 75 percent of the total reallocated, or $336 million; (c) the largest dollar reduction would occur in Pennsylvania ($110 million), and the largest percentage reduction would occur in Rhode Island (1.8 percent); (d) Medicaid accounted for 90 percent of all funds reallocated; and (e) funding would generally shift from northeastern and midwestern states to the southern and western states.

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