GAO discussed the distribution of funds to states and eligible metropolitan areas (EMA) under the Ryan White Comprehensive AIDS Resources Emergency (CARE) Act. GAO noted that: (1) the CARE Act is the only federal program that makes funds available specifically for medical and support services to individuals with acquired immunodeficiency syndrome (AIDS); (2) during fiscal year 1994, over $500 million in title I and II funds were distributed to states and EMA; (3) grant allocation formulas should reflect the number of people needing services and the cost of providing those services; (4) the CARE Act funding formulas result in funding disparities that are, to a large extent, unrelated to service costs or the states' ability to fund services from local sources; (5) greater funding equity could be achieved by eliminating the inappropriate double counting of AIDS cases and by using more appropriate measures of EMA and state funding needs; (6) although the costs of providing AIDS services vary among EMA and states, the title I and title II formulas do not measure those differences; (7) the cost of providing medical services in New York, Oakland, and San Francisco is about 30 percent above the national average; and (8) modifying the formulas to achieve more equitable funds distribution will involve significant changes in grants to some EMA and states.