Job Training:

Effect of Under-Reported Unemployment Data on Grant Funding to Rural Areas

HRD-86-35BR: Published: Nov 26, 1985. Publicly Released: Nov 26, 1985.

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In response to a congressional request, GAO: (1) estimated the degree of underfunding to rural areas by federal grant programs which use unemployment data to distribute funds to localities; and (2) calculated how much additional federal funding rural counties would receive if their actual unemployment rates were 1 and 3 percent higher than the Bureau of Labor Statistics (BLS) reported.

GAO reviewed the 20 largest formula grant programs and identified the Job Training Partnership Act Program (JTPA) as the only one requiring states to use unemployment data to allocate federal funds to local areas. GAO: (1) calculated the potential underfunding to rural areas assuming that JTPA substate allocations were in direct proportion to the number of unemployed persons residing in the counties as BLS reported; (2) used two-thirds of the program year allotment and reduced that by 22 percent to exclude disbursements not directly related to unemployment rates in the local service delivery areas; and (3) defined a rural county for calculation purposes as having either 100 or 80 percent of its residents in rural areas. Assuming that the actual unemployment rates were either 1 or 3 percent higher than reported in those areas, GAO estimated that rural counties may have been underfunded by between 7 and 21 percent or between $5 and $29 million during program year 1984.

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