Substance Abuse and Mental Health: Hold-harmless Provisions Prevent More Equitable Distribution of Federal Assistance Among States

GAO discussed the formula used to allocate federal aid under the alcohol, drug abuse, and mental health services block grant, focusing on the hold-harmless provision, which froze state shares of a portion of the grant at their 1984 levels. GAO noted that: (1) the hold-harmless provision has led to states receiving unequal funding on a per-person-at-risk basis; (2) Congress passed 1988 legislation to phase out the hold-harmless provision by fiscal year 1993; and (3) under the new formula, states with low financing capacities would receive greater funding, and state allocations would generally be more equitable and need-based.