Choosing the Right Formula Initial Report (2001) / Chapter Skim
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2. Case Studies
2. Case Studies
Pages 12-36
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From page 12... ...
The second case study relates to grants under Title I of the Elementary and Secondary Education Act. The third case study relates to block grants administered by the Substance Abuse and Mental Health Services Administration (SAMHSA)
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From page 13... ...
Department of the Treasury and used in the SAMHSA block grant formula would be a more direct measure. Further improvements could be achieved by introducing measures related to cost differentials by state.
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From page 14... ...
About 92 percent of all school districts receive Title I funds, and about 27 percent of all children ages 5 to 17 are affected by Title I services. Currently, there are two kinds of grants being made: basic grants, which account for about 84 percent of the total, and concentration grants, which are designed to supplement funding for school districts with heavy concentrations of poor children.
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From page 15... ...
To qualify for a basic grant, a school district must have at least 10 "formula" children2 and the number of formula children must exceed 2 percent of the school age population. To qualify for a concentration grant, either a district must have more than 6,500 formula children, or the number must exceed 15 percent of the total school-age population.
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From page 16... ...
Factors that affect the allocations are: · Changes in the estimated number of eligible children in each state, county, and school district. The estimated national poverty rate declined from 21.2 percent in 1993 to 19.5 percent in 1995, but there were in3For the fiscal year 1997 allocations, the panel recommended use of estimates obtained by averaging the updated county estimates with estimates based on the 1990 census (National Research Council, 1997)
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From page 17... ...
As noted above, the statute includes a graduated hold-harmless provision for basic grants, but none for concentration grants. However, for school years 1 999-2000 and 2000-2001, Congress established a 100 percent hold-harmless provision for both kinds of grants.
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Census Bureau's long-established population estimates program. The principal sources of data for the SAIPE program estimates are the CPS, the decennial census of population, and administrative record data based on individual income tax returns and participation in the Food Stamp Program.
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The comparison of model-based county estimates for 1989 with the decennial census numbers showed an average absolute difference of about 15 percent for numbers of poor children and average absolute proportional differences of 15 percent for numbers of poor children and 16 percent for proportions of poor children. Biases in the estimates for groups of counties with common characteristics are also a concern.
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From page 20... ...
The differences in the estimates of the total number of school-age children by school district were smaller, with an average absolute difference of 12 percent, because the allocations were based on the 100 percent data from the previous census and the estimates were compared with 100 percent data from the 1990 census. Initially the panel was uncertain about whether to recommend use of the model-based county estimates and subsequently had even more difficulty in deciding whether to extend its recommendation to the school district numbers.
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From page 21... ...
For the school district estimates, he asked whether alternative sources of data, such as participation in the school lunch program, might be used for states for which these data are uniformly available for all districts. Another possibility would be to make direct estimates of the current population ages 5 to 17, using school enrollment data by school district or tax return data geocoded to school districts.
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Several workshop participants called attention to the state per pupil expenditure component of the Title I allocation formula, which had been given only passing attention earlier in the session. This component is defined as current expenditures on public elementary and secondary education (minus certain federal revenue items)
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From page 23... ...
The remainder is allocated to the states. The same general allocation formula is used for both the mental health and substance abuse block grants: SALLOCi = 0.985 x 0.95 x AMT x ( zips iF )
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Reorganization Act of 1992 (P.L.102-321) , the substance abuse and mental health services block grants were separated and the cost of services component was introduced.
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The Office of Applied Studies in SAMHSA sponsors a national household survey that collects current data on substance abuse. The National Household Survey of Drug Abuse (NHSDA)
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In an effort to develop a more precise estimator of need, the study team worked with microdata from the NHSDA to develop a logistic regression model to predict the probability of need by state. The dependent variable was an approximation, based on available NHSDA variables, to a generally accepted measure of drug or alcohol dependence.
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From page 27... ...
The RAND researchers believed that the cost-of-services measure could be made more equitable by adjusting the formula to reflect these differences. After comparing allocations based on alternative measures with the allocation based on the existing formula, the researchers attempted to devise ways of presenting their findings without calling attention to outcomes for specific states.
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From page 28... ...
Block grant funds are being used to treat medically indigent people, but no measure of poverty is included in the current formula. The allocation formula includes an estimate of the number of persons at risk for substance abuse, but it does not consider what proportion of them are in need of public services.
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From page 29... ...
Also associated with these changes were temporary hold-harmless provisions and features that limited the increase that any state could receive in a single year. It had been pointed out previously that the SAMHSA block grant formulas did not take into account how much states were spending on substance abuse and mental health programs using other federal funds and their own funds.
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From page 30... ...
Census Bureau, to decide on what data sources and statistical procedures are best suited to produce the estimates needed for the allocation. But for the SAMHSA block grants, nearly all of these details have been specified in the legislation.
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From page 31... ...
The state and national estimates are both important: the former are used to determine state shares, and the latter are used by the administration and Congress to determine the total amount requested and appropriated for the program each year. Initially, the estimates were based on decennial census data, but as the program grew there were pressures to produce more timely estimates, leading to the successive introduction of a series of model-based estimates making use of more current survey and administrative data.
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based on observed changes in Food Stamp Program participation, Unemployment Insurance claims, and per capita income. The shrinkage estimates of change in the percentage eligible were added to the estimates for 1989 from the census to obtain state estimates for 1992.
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In addition, Congress has appropriated funds for increasing sample sizes to improve the precision of CPS state estimates of children lacking health insurance, with the likely effect of also increasing the precision of state estimates of persons eligible for the WIC program. Administrative record data sources will have to be monitored, to identify potential new sources and to look at the data currently in use to see if they remain suitable as changes occur in the programs they are designed to support.
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From page 34... ...
One issue that is present in most formula funding programs is the availability of relevant data from several different sources, for example income and poverty from the census, the CPS, and the Survey of Income and Program Participation. It is also important to consider how survey data will be used in conjunction with administrative data.
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From page 35... ...
It has been observed that states that are well under their fair share have some of the lowest food package costs. At the end of the earlier discussion of the SAMHSA block grants, one
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From page 36... ...
A participant noted that the WIC program followed the latter pattern, and he praised the Food and Nutrition Service for supporting the research that has been done in an effort to improve the process. However, in his experience, these two programs Title I education and WIC—are unique; for most programs the specific details of the allocation formula and process are written into the legislation.
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