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Pursuant to a congressional request, GAO provided information on the new grant allocation formula for distributing assistance to the educationally disadvantaged. GAO noted that: (1) the new funding formula contains a revised weighting scheme to measure the number of educationally disadvantaged children, a state average per-pupil expenditure factor which measures state funding for chapter 1 services, state effort bonuses based on states' per-pupil spending and equity bonuses to reward states with low disparities in per-pupil spending; (2) the formula's new weighting scheme provides a higher per-child allocation to school districts in counties with high poverty rates; (3) state effort bonuses must range between 95 and 105 percent of the nation's average effort so that states with the greatest effort are rewarded; (4) equity bonuses must also range between 95 and 105 percent; and (5) the new grant allocation formula may not be appropriate to increase targeting to high poverty areas and to reward states that reduce per-pupil spending inequities.

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