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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.

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