United States General Accounting Office GAO Report to Congressional Requesters February 2003 FORMULA GRANTS 2000 Census Redistributes Federal Funding Among States GAO-03-178 February 2003 FORMULA GRANTS 2000 Census Redistributes Federal Highlights of GAO-03-178, a report to Funding Among States Congressional Requesters In fiscal year 2000, about $283 The 2000 census count of 281.4 million people exceeded the 1999 population billion in federal grant money was estimate by 8.7 million people, or 3.2 percent. Three-quarters of this 1-year distributed to state and local population increase, 6.8 million people, was the result of correcting errors in governments by formula, about half population estimates over the preceding decade; the remaining portion of the of it through four formula grant increase, 1.9 million people, was the result of population growth from 1999 to programs—Medicaid, Foster Care 2000. Every state’s population had been underestimated during the 1990s, but Title IV-E, Adoption Assistance, the extent varied, from the smallest correction in West Virginia—0.3 percent—to and the Social Services Block the largest in the District of Columbia—10.2 percent. Twenty-eight states had a Grant (SSBG). States receive correction below the national average of 2.5 percent, and 23 states had a money based in part on factors correction above the national average. such as annual population estimates derived from the Correcting population estimates for the 2000 census redistributes among states previous decennial census, which is conducted by the Department of about $380 million in federal grant funding for Medicaid, Foster Care, Adoption Commerce, Bureau of the Census. Assistance, and SSBG. Funding for the 28 states that had below-average GAO was asked to measure the corrections to their populations decreases by an estimated $380.3 million; effect that using the 2000 census funding for the 23 states that had above-average corrections increases by an data has on redistributing funding estimated $388.8 million. Most of the change in funding is concentrated in states for federal formula grant programs. with larger populations. However, changes in funding are smaller in several To do this, GAO analyzed the large states because the matching rates for Medicaid, Foster Care, and Adoption change in the U.S. and state Assistance are limited by statute—matching rates cannot fall below 50 percent. populations between 1999 and 2000 Some higher-income states would receive matching rates below 50 percent if not that was the result of correcting for this limitation. Most of the shift in funding occurs in fiscal year 2003 when prior population estimates and federal matching rates for the Medicaid, Foster Care, and Adoption Assistance estimated for the four programs the extent of any redistribution of programs are based on population estimates derived from the 2000 census. A federal funding among states. small portion of the shift occurred in fiscal year 2002 because that is when the SSBG began using the 2000 census counts. The Department of Commerce provided technical comments on a draft of this report. www.gao.gov/cgi-bin/getrpt?GAO-03-178. To view the full report, including the scope and methodology, click on the link above. For more information, contact Kathryn G. Allen at (202) 512-7114. Contents Letter 1 Results in Brief 3 Background 4 Most of Population Difference Between 1999 and 2000 Resulted from Correction of Errors That Occurred During 1990s 8 2000 Census Correction of Population Estimates Redistributes an Estimated $380 Million Among States for Four Formula Grant Programs 12 Agency Comments 16 Appendix I Data for Population Estimates, Decennial Census Population Counts, and the Error of Closure 17 Appendix II Analysis of Estimated Funding Changes for Four Formula Grant Programs 21 Medicaid, Foster Care, and Adoption Assistance 21 Social Services Block Grant 29 Tables Table 1: Definition of Population Terminology Used in This Report 5 Table 2: Federal Formula Grant Program Funding for Fiscal Year 2000 6 Table 3: Population Data Used in Four Selected Formula Grant Programs, by Fiscal Year 7 Table 4: Estimated Changes in Federal Funding as a Result of the Correction in Population, by Grant Program 13 Table 5: Comparison of the 1999 Postcensal Population Estimates and the 2000 Census Counts 17 Table 6: Comparison of the 2000 Postcensal Population Estimates and the 2000 Census Counts to Determine the Error of Closure and the Percentage Correction in Population 19 Table 7: Actual and Estimated FMAPs for the Medicaid, Adoption Assistance, and Foster Care Programs for Fiscal Year 2003, by State 22 Table 8: Medicaid Program Expenditures and Estimated Federal Payments, by State 24 Table 9: Foster Care Program Expenditures and Estimated Federal Payments, by State 26 Page i GAO-03-178 Federal Formula Grant Funding Table 10: Adoption Assistance Program Expenditures and Estimated Federal Payments, by State 28 Table 11: SSBG State Allocations, Actual and Estimated, for Fiscal Year 2002 30 Figure Figure 1: Percentage Difference in Population Due to the Correction of the Error in Population Estimates, by State, on April 1, 2000 11 Abbreviations FMAP Federal Medical Assistance Percentage SSBG Social Services Block Grant This is a work of the U.S. Government and is not subject to copyright protection in the United States. It may be reproduced and distributed in its entirety without further permission from GAO. It may contain copyrighted graphics, images or other materials. Permission from the copyright holder may be necessary should you wish to reproduce copyrighted materials separately from GAO’s product. Page ii GAO-03-178 Federal Formula Grant Funding United States General Accounting Office Washington, DC 20548 February 24, 2003 The Honorable Tom Davis Chairman, Committee on Government Reform House of Representatives The Honorable Adam H. Putnam Chairman, Subcommittee on Technology, Information Policy, Intergovernmental Relations, and the Census Committee on Government Reform House of Representatives The Honorable Dave Weldon House of Representatives In fiscal year 2000, the federal government obligated about $332 billion in grants to state and local governments to help fund an array of programs ranging from Medicaid to Highway Planning and Construction. Over 85 percent, or about $283 billion, of this grant money was distributed to state1 and local governments using formulas that are based on data such as state population and personal income. For example, the $196 billion federal- state Medicaid program finances health care to low-income families with children and aged, blind, and disabled individuals through a statutory formula based on state per capita income—the ratio of total personal income to state population. To calculate grant amounts, formula grant programs generally rely on annual population estimates for each state developed by the Bureau of the Census. State populations are estimated by adding to the prior year’s population estimate the number of births and immigrants and subtracting the number of deaths and emigrants. These estimates are subject to error, mainly because migration between states and between the United States and other countries is difficult to measure. By the end of each decade, when the decennial census is taken, a significant gap may have arisen between the population estimate and the census population count for the same day of the year, such as April 1, 2000. 1 For this report, we use “state” to refer to the 50 states and the District of Columbia. Page 1 GAO-03-178 Federal Formula Grant Funding When population data based on a new census enter into federal formula grant calculations, states gain or lose funding depending on how the gaps between their population estimates and their census counts compare with the U.S. average gap. The larger the gap between a state’s population estimate and its census count, the larger the shift in funding is. For formula grant programs that distribute a set amount of federal funding, the gains in states with increased funding are offset by the losses in states with decreased funding. For open-ended formula grant programs, such as Medicaid, states with increased funding do not necessarily offset states with decreased funding. To measure the effect of using the 2000 census on the distribution of formula grant funding among the states, you asked us to examine (1) the change in the U.S. and each state’s population between 1999 and 2000 due to correcting prior population estimates and (2) the extent of any redistribution of federal funding among the states for four selected formula grant programs as a result of the 2000 census. To address these objectives, we used information on annual state population estimates that were derived from the 1990 census and state estimates that were derived from both the 1990 and 2000 censuses, as reported by the Census Bureau. To estimate the error in population estimates, we compared the April 1, 2000, population estimates based on the 1990 census with the April 1, 2000, census counts. To determine the effect of correcting the errors in population estimates on the distribution of formula grant funding to the states, we analyzed 4 federal formula grant programs of the 172 such programs identified in the Catalog of Federal Domestic Assistance—Social Services Block Grant (SSBG), Medicaid, Foster Care Title IV-E, and Adoption Assistance.2 We chose these 4 programs because their formulas use population estimates to distribute federal assistance, and they represented almost half of all formula grant funding (46 percent) in fiscal year 2000. The SSBG distributes a set appropriation exclusively on the basis of population data. The 3 entitlement programs, Medicaid, Foster Care, and Adoption Assistance, use per capita income—the ratio of personal income to state population— in identical formulas to determine federal matching rates. We obtained information on the formulas for these programs from the Department of Health and Human Services, and we used funding data for each program 2 U.S. General Services Administration, Catalog of Federal Domestic Assistance (Washington, D.C., December 2001 edition) (CD-ROM version). Page 2 GAO-03-178 Federal Formula Grant Funding for the fiscal year in which the program first used population data derived from the 2000 census to calculate grant awards. To calculate the change in formula funding resulting from correcting population estimates, we compared what funding would be if formula grant amounts were calculated using two different population estimates for the same year, one based on the 1990 census and the other on the 2000 census. We conducted our work from July 2001 through January 2003 in accordance with generally accepted government auditing standards. The 2000 census count of 281.4 million people exceeded the 1999 Results in Brief population estimate by 8.7 million people, or 3.2 percent. Three-quarters of this 1-year population increase, 6.8 million people, was the result of correcting errors in population estimates over the preceding decade; the remaining portion of the increase, 1.9 million people, was the result of population growth from 1999 to 2000. The error corrected by the 2000 census was substantially larger than the error reported for the 1990 census—2.5 percent compared with 0.6 percent. The Census Bureau attributed the increase in the 2000 “error of closure” to underestimates in the measurement of net international migration and the increased accuracy of the 2000 census—it counted people who were probably missed in the 1990 census. Every state’s population had been underestimated during the 1990s, but the extent varied widely: the largest correction was in the District of Columbia—10.2 percent—and the smallest, West Virginia—0.3 percent. Twenty-eight states had a correction below the national average of 2.5 percent, and 23 states had a correction above the national average. Of the four Census regions (Northeast, South, Midwest, and West), only the Midwest showed a pattern: all 12 midwestern states were close to or below the U.S. average correction to the population. Overall, the Midwest’s correction was the smallest of the four regions—1.5 percent. Correcting population estimates based on the 2000 census redistributes about $380 million in federal grant funding among states for the four programs we examined. We estimate that funding for the 28 states that had below-average corrections to their populations decreases by $380.3 million in the first year the new population numbers are factored into the formula grants; funding for the 23 states that had above-average corrections in their population increases by an estimated $388.8 million. Most of the change in funding is concentrated in states with larger populations. However, several large states have only minor changes in funding because the funding formula used by Medicaid, Foster Care, and Adoption Assistance limits the effect of the population correction for high-income Page 3 GAO-03-178 Federal Formula Grant Funding states by applying a minimum 50 percent federal matching rate. Some higher-income states would receive matching rates below 50 percent, but because of the minimum they are guaranteed a rate no lower than 50 percent. Most of the shift in funding occurs in fiscal year 2003 when federal matching rates for the Medicaid, Foster Care, and Adoption Assistance programs are based on population estimates derived from the 2000 census. A minor portion of the shift occurred for fiscal year 2002 because the census counts were used in the SSBG that year. The Department of Commerce provided technical comments on a draft of this report, which we incorporated as appropriate. The Census Bureau counts the U.S. population once every decade through Background its decennial census. For the years in between, the Bureau estimates states’ populations from annual data on changes in births, deaths, and net migration (including net movements of military personnel). These annual population estimates are called postcensal population estimates because they are based on the prior census (see table 1 for definitions of different population counts used in this report). This process of making annual postcensal population estimates continues until the next census. Once the new census is taken, the Bureau compares the population estimates to the census population counts for the same date. The difference between the population estimate and the census count is called the error of closure. Subsequently, annual population estimates are revised for the prior decade using the counts from the new census. For example, after the 2000 census, the annual population estimates from the 1990s were revised to be consistent with both the 1990 and 2000 censuses. These revised population estimates are called the intercensal population estimates because they rely on the preceding and the succeeding censuses.3 3 For more information about Census population estimates see Department of Commerce, Bureau of the Census, Population Estimates: Concepts and Geography (Washington, D.C.: Department of Commerce, Dec. 26, 2001), http://eire.census.gov/popest/archives/place/concepts.php (downloaded Jan. 31, 2003). Page 4 GAO-03-178 Federal Formula Grant Funding Table 1: Definition of Population Terminology Used in This Report Term Description Census population A population count is made at the beginning of each decade count as of April 1. It is based on a count of the entire population. The latest census counted the population as of April 1, 2000. Postcensal population Population estimates are made annually throughout a estimate decade, usually as of July 1 of each year. Such estimates are based on the prior census, and include annual population changes due to births, deaths, and domestic and international migration. The postcensal population estimates for July 1, 2001, were based on the April 1, 2000, census and the population change between April 1, 2000, and June 30, 2001. Error of closure The error of closure is the difference between the postcensal population estimate and census population count for the same date. For example, the error of closure for April 1, 2000, is the difference between the postcensal population estimate and the census population count for April 1, 2000. Intercensal population Once a new census is completed, the annual population estimate estimates of the prior decade (the postcensal population estimates) are adjusted to reflect the new census counts. The resulting population estimates, known as intercensal population estimates, are calculated using a mathematical formula that distributes the error of closure across the postcensal population estimates for the prior decade. Intercensal population estimates thus have been adjusted according to counts at both the beginning and the end of the decade. The intercensal population estimates for 1990 through 1999 were issued in April 2002. Source: Department of Commerce, Bureau of the Census. Of the four programs we analyzed, Medicaid is the largest, comprising 43 percent of all federal formula-based programs and 94 percent of the total funding for the four programs analyzed for this report (see table 2). Page 5 GAO-03-178 Federal Formula Grant Funding Table 2: Federal Formula Grant Program Funding for Fiscal Year 2000 Fiscal year 2000 a federal obligations Percentage of total Program (millions) federal obligations Medicaid $121,809 43.0 Foster Care Title IV-E 4,536 1.6 Adoption Assistance 1,008 0.4 SSBG 1,775 0.6 Remaining 168 formula programs 154,221 54.4 Total obligationsb 283,348 100.0 Source: U.S. General Services Administration, Catalog of Federal Domestic Assistance (Washington, D.C.: December 2001 edition) (CD-ROM version). Note: Federal obligations do not add to total because of rounding. a The obligated amounts shown here will differ slightly from the amounts allocated by formula. The obligations of the allocations may occur in years other than when the allocations occurred. b Total obligations include 23 programs that are both formula and project grants. The SSBG formula allocates an amount of funding, set by annual appropriation, directly to the states. A state’s allocation is proportional to its share of the total U.S. population. State allocations for fiscal year 2002 used the April 2000 census, and allocations for prior years used postcensal population estimates that were based on the 1990 census. In contrast with the SSBG’s fixed appropriation, the Medicaid, Foster Care, and Adoption Assistance programs are open-ended entitlement programs—the states determine the level of program expenditures, and the federal government reimburses a share of their expenditures according to matching rates, called the Federal Medical Assistance Percentages (FMAP), set by statutory formula. All three programs use the same formula, which is based on a 3-year average of state per capita income— the ratio of aggregate personal income to state population. As a state’s per capita income increases, its matching rate decreases, and vice versa. In addition, unless a state experiences changes in aggregate personal income, its federal payment generally declines if the state’s population growth is less than the national average. Matching rates range from a minimum of 50 percent to a maximum of 83 percent of a state’s Medicaid expenditures. The minimum 50 percent rate affects only the high per capita income states. For fiscal year 2002, for example, a high-income state such as Connecticut would receive a 15 percent federal matching rate if the 50 percent minimum was not in place. Page 6 GAO-03-178 Federal Formula Grant Funding For fiscal year 2002, the federal matching rates for Medicaid, Foster Care, and Adoption Assistance were based on a 3-year average of per capita income from 1997 through 1999. Rates for fiscal year 2003 are based on a 3-year average from 1998 through 2000. Although the formulas use overlapping years, the state population numbers used to compute per capita income differ depending on which fiscal year the grant is for. For these three programs, the fiscal year 2002 formula calculations used postcensal population estimates derived from the 1990 census for 1997 through 1999 to calculate per capita income. Fiscal year 2003 formula calculations used population estimates for 1998 through 2000 derived from the 2000 census.4 Thus, the 2000 census affects matching rates for these programs beginning in fiscal year 2003 (see table 3). Table 3: Population Data Used in Four Selected Formula Grant Programs, by Fiscal Year Fiscal year allocation or payment Data used SSBG 2001a July 1998 postcensal state population estimatesb c 2002 April 2000 decennial census by state Medicaid, Foster Care, and Adoption Assistance 2002a July 1997, 1998, and 1999 postcensal state population b estimates c d 2003 July 1998, 1999, and 2000 state population estimates Sources: Department of Health and Human Services, Administration for Children and Families; and Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation. a The last year the population estimates based on the 1990 census were used in the formula. b These postcensal population estimates are based on the 1990 census. c The first year that the counts based on the 2000 census were used in the formula. d These population estimates were published by the Department of Commerce’s Bureau of Economic Analysis and were based on the 2000 census. 4 These population estimates were developed as interim estimates by the Department of Commerce’s Bureau of Economic Analysis. Page 7 GAO-03-178 Federal Formula Grant Funding The difference between the 2000 census count and the 1999 postcensal Most of Population population estimate was 3.2 percent, which is large compared with the 1 Difference Between percent average annual growth rate estimated over the preceding decade. Most of the difference was due to the correction of the error that had 1999 and 2000 occurred during the 1990s. According to the Census Bureau, the size of the Resulted from error was the result of an underestimate in the measurement of net international migration during the 1990s and the improved coverage of the Correction of Errors 2000 census compared with the 1990 census. Consequently, the postcensal That Occurred During population estimate for 2000 was smaller than the 2000 census count. 1990s Every state’s population growth was underestimated and needed correction, but the correction amounts varied widely. Among the four Census regions, only the Midwest5 showed a consistent pattern: all 12 states were close to or below the national average correction. California, Florida, and New York accounted for a high percentage of the correction in population estimates in their respective regions. Correcting Errors in The 2000 census count of 281.4 million people as reported by the Census Population Estimates Bureau exceeded the 1999 postcensal population estimate by 8.7 million Accounted for Three- people, or 3.2 percent. Slightly more than three-quarters of this difference (2.5 percent) was the result of correcting errors in the population Quarters of the Difference estimates that occurred over the decade, called the error of closure (see Between 1999 to 2000 app. I for detailed data for all states). The error of closure was 6.8 million people, substantially larger than the 1.5 million error of closure associated with the 1990 census. The error of closure for the 2000 census was four times the corresponding percentage error for the 1990 census (2.5 percent compared with 0.6 percent). The large error of closure in 2000 was due to underestimating the annual growth in population during the 1990s and to the improved coverage of the 2000 census over the 1990 census. The postcensal population estimates for the decade grew an average 1.0 percent annually. However, the 2000 census showed that the average annual growth rate in population was 0.2 percent higher than the estimated rate, or 1.2 percent. The Census Bureau revised its annual population estimates upward when it released its intercensal population estimates in the spring of 2002. 5 The 12 Midwest states are Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin. Page 8 GAO-03-178 Federal Formula Grant Funding The Census Bureau cited two reasons for the size of the error in its postcensal estimated population growth through the 1990s. First, the net international migration was underestimated during the decade, especially for the Hispanic population. The Hispanic population was underestimated by approximately 10 percent, four times higher than the national average population underestimate, 2.5 percent.6 Second, the 2000 census was more accurate than the 1990 census. The population undercount from the 2000 census was much smaller compared with the 1990 census (1.18 percent, compared with 1.62 percent, making the 2000 census more accurate7); the 2000 census counted people who were probably missed in the 1990 census. 6 J. Gregory Robinson, Accuracy and Coverage Evaluation: Demographic Analysis Results (Washington, D.C.: Department of Commerce, Bureau of the Census, March 2001), 9-11, http://landview.census.gov/dmd/www/ReportRec.htm (downloaded Aug. 29, 2002). 7 The percentages are the net undercounts for the 1990 and 2000 censuses for household population from the 1990 Post-Enumeration Survey and 2000 Accuracy and Coverage Evaluation. Howard Hogan, Accuracy and Coverage Evaluation: Data and Analysis to Inform the ESCAP Report (Washington, D.C.: Department of Commerce, Bureau of the Census, March 2001), 12-14, http://landview.census.gov/dmd/www/ReportRec.htm (downloaded Jan. 15, 2003). Page 9 GAO-03-178 Federal Formula Grant Funding Size of Population The error of closure shows a wide variation across states. For example, Correction Differed Widely West Virginia and Michigan had the smallest percentage corrections, 0.27 Across States and 0.34 percent, respectively. The District of Columbia and Nevada had the largest percentage corrections in their population estimates, 10.2 percent and 7.5 percent, respectively. Twenty-eight states had a lower- than-average percentage difference, and 23 states had a greater-than- average percentage difference (see fig. 1 for the correction percentages for all states). Among the four Census regions, the Midwest had the smallest correction in population, 1.5 percent; all 12 Midwest states had corrections close to or below the national average.8 In the other three regions, a single state accounted for a large share of the population change for the region. For example, in the South, Florida’s correction in population of 4.7 percent constituted about 25 percent of the correction for the entire region. Similarly, New York’s correction was 44 percent of the northeastern states’ correction, and California’s correction was 26 percent of the correction for the western states. 8 Nebraska and South Dakota were 0.03 and 0.04 percentage points above the national average, respectively. Page 10 GAO-03-178 Federal Formula Grant Funding Figure 1: Percentage Difference in Population Due to the Correction of the Error in Population Estimates, by State, on April 1, 2000 West Virginia Michigan Ohio Alaska Kansas California Maine Alabama Kentucky Maryland Washington Wisconsin Iowa Montana Missouri North Dakota Indiana Virginia New Hampshire Vermont Illinois Idaho Louisiana Minnesota Oklahoma Mississippi Massachusetts Pennsylvania U.S. average correction, 2.5% Nebraska South Carolina South Dakota Oregon Texas Hawaii New Jersey Wyoming Tennessee Delaware Connecticut Utah Georgia New York Arkansas North Carolina New Mexico Colorado Florida Rhode Island Arizona Nevada District of Columbia 0 1 2 3 4 5 6 7 8 9 10 11 Percentage Source: GAO calculations based on data obtained from the Department of Commerce, Bureau of the Census. Page 11 GAO-03-178 Federal Formula Grant Funding The correction to the population estimates generally redistributes federal 2000 Census funding for the four programs we analyzed from the states with the Correction of smallest corrections to those having the largest. Federal funding for the 28 states that had below-average corrections decreases by an estimated Population Estimates $380.3 million. In contrast, federal funding in the 23 states with above- Redistributes an average corrections to their population estimates increases by an estimated $388.8 million. Most of the change in funding is concentrated in Estimated $380 states with larger populations. Michigan and Ohio, for example, account Million Among States for 57 percent of the total decrease in funding for states with below- for Four Formula average population corrections. A number of high-income states, including California and New York, are largely unaffected by the correction in their Grant Programs populations because their matching rates for the Medicaid, Foster Care, and Adoption Assistance programs cannot decrease below the minimum 50 percent matching rate. Without this minimum, more funding would be shifted among the states. While the redistribution of funding in the four programs began to occur in fiscal year 2002, almost all of it occurs in fiscal year 2003, when the 2000 census data are used to determine federal matching rates in the three open-ended entitlement programs. Population Correction The correction in state populations resulting from the 2000 census causes Causes Significant Funding significant changes in the funding levels among the states for the four Changes for Many States programs we examined. We estimate that the funding for the 28 states that had below-average corrections in their populations decreases by a total of $380.3 million. Conversely, funding for the 23 states that had above- average corrections in their populations increases by an estimated $388.8 million (see table 4). Page 12 GAO-03-178 Federal Formula Grant Funding Table 4: Estimated Changes in Federal Funding as a Result of the Correction in Population, by Grant Program Dollars in thousands Entitlement program Percentage correction in Social Services Adoption Total estimated State population Block Grant Medicaid Foster Care Assistance change in funding States below the U.S. average percentage correction of 2.50 West Virginia 0.27 $-240 $-13,105 $-142 $-38 $-13,526 Michigan 0.34 -1,272 -113,807 -2,311 -1,999 -119,389 Ohio 0.78 -1,150 -92,161 -2,562 -748 -96,620 Alaska 0.90 -59 -5,342 -66 -66 -5,534 Kansas 0.96 -244 -14,672 -218 -122 -15,256 California 1.08 -2,841 0 0 0 -2,841 Maine 1.49 -75 -8,124 -284 -55 -8,538 Alabama 1.51 -256 -12,442 -19 -2 -12,718 Kentucky 1.59 -215 -14,855 -169 -37 -15,275 Maryland 1.65 -263 0 0 0 -263 Washington 1.70 -277 -4,359 -25 -22 -4,682 Wisconsin 1.76 -232 -17,462 -311 -160 -18,165 Iowa 1.77 -124 -7,596 -151 -119 -7,989 Montana 1.77 -38 -1,351 -23 -7 -1,419 Missouri 1.86 -206 -17,177 -194 -71 -17,649 North Dakota 1.90 -22 -1,115 -17 -4 -1,157 Indiana 1.92 -205 -13,430 -166 -98 -13,899 Virginia 1.92 -242 -15,554 -189 -69 -16,054 New Hampshire 1.99 -37 0 0 0 -37 Vermont 2.03 -16 -1,757 -54 -18 -1,846 Illinois 2.06 -312 0 0 0 -312 Idaho 2.09 -32 -1,054 -4 -3 -1,093 Louisiana 2.18 -80 -4,168 -47 -11 -4,307 Minnesota 2.19 -90 0 0 0 -90 Oklahoma 2.20 -59 -1,844 -23 -12 -1,938 Mississippi 2.24 -43 -1,795 -4 -3 -1,844 Massachusetts 2.47 -6 0 0 0 -6 Pennsylvania 2.48 -1 2,078 64 9 2,149 Subtotal -8,639 -361,094 -6,914 -3,654 -380,300 States above the U.S. average percentage correction of 2.50 Nebraska 2.53 5 844 17 5 871 South Carolina 2.54 9 816 3 3 831 South Dakota 2.54 2 120 1 0 124 Oregon 2.63 27 4,433 42 39 4,540 Texas 2.71 242 14,911 140 63 15,356 Hawaii 2.73 19 2,056 31 20 2,125 New Jersey 2.75 124 0 0 0 124 Page 13 GAO-03-178 Federal Formula Grant Funding Dollars in thousands Entitlement program Percentage correction in Social Services Adoption Total estimated State population Block Grant Medicaid Foster Care Assistance change in funding Wyoming 2.77 8 547 6 1 562 Tennessee 3.08 192 19,976 102 35 20,305 Delaware 3.14 29 0 0 0 29 Connecticut 3.41 182 0 0 0 182 Utah 3.59 138 4,942 48 35 5,164 Georgia 3.65 528 32,841 266 167 33,803 New York 3.92 1,560 0 0 0 1,560 Arkansas 3.99 228 11,070 31 31 11,359 North Carolina 4.27 814 66,125 474 230 67,642 New Mexico 4.30 189 11,284 56 65 11,595 Colorado 4.55 495 0 0 0 495 Florida 4.68 1,968 121,783 1,281 537 125,569 Rhode Island 5.41 174 26,137 188 152 26,651 Arizona 5.77 932 42,721 525 354 44,532 Nevada 7.47 534 14,297 227 47 15,105 District of Columbia 10.23 242 0 0 0 242 Subtotal 8,639 374,902 3,439 1,786 388,766 Total 0 $13,808 $-3,475 $-1,868 $8,466 Sources: GAO calculations based on data obtained from the Department of Health and Human Services and the Department of Commerce, Bureau of the Census. Note: Totals may not add because of rounding. These results are dominated by a few highly populated states whose corrections were among the largest—meaning they are estimated to receive the most additional money or to lose the most. For example, Michigan, the eighth most populous state,9 has an estimated $119 million decline in funding because of its 0.34 percent correction in population. Michigan’s federal funding decrease accounts for about one-third of the decreases for the 28 states with a below-average correction in population. Moreover, when Michigan’s decrease is combined with that of Ohio, the seventh most populous state, the two states account for 57 percent of the estimated total decline in funding from the corrections of the population estimates. Conversely, Florida, the fourth most populous state, has the largest estimated increase in funding (about $126 million) because of the 4.7 percent correction in its population estimate. This is almost double the national average correction and accounts for about one-third of the 9 State population rankings are based on the 2000 census. Page 14 GAO-03-178 Federal Formula Grant Funding estimated increase for the 23 states with an above-average correction in population. Funding changes did not occur in some states and were muted in others because the states’ federal matching rates were fixed by the minimum 50 percent rate for the three open-ended entitlement programs. For example, on the basis of its fiscal year 2000 spending levels, California would receive an estimated $305 million less in matching aid in the three entitlement programs if its matching rate were allowed to fall below the minimum. Because of the 50 percent minimum federal matching rate, however, California only receives an estimated $2.8 million decrease—all of it linked to the SSBG. For the three entitlement programs, the correction in population had no effect in 11 states that were affected by the 50 percent minimum, and for 2 states the correction in population had a diminished effect because of the floor.10 The funding changes due to the population corrections showed little regional pattern except in the Midwest, where all 12 states had a correction in population estimates close to or below the national average that resulted in an estimated $289.5 million loss in funding owing to the correction in their populations. Medicaid Accounts for Most of the change in funding resulting from the corrections in population Most of the Change in estimates is the result of changes in Medicaid funding. The federal share of Program Funding total Medicaid payments was approximately $111 billion in fiscal year 2000 and constituted 96 percent of the share of funding to the states for the four programs and approximately 96 percent of the total estimated change in funding as well.11 The SSBG distributed $1.69 billion for fiscal year 2002, representing 1.5 percent of the funding we analyzed. It accounted for a slightly higher percentage, 2.2 percent, of the estimated funding changes. Finally, the Foster Care and Adoption Assistance programs represented 1.6 and 0.6 10 The 11 states are California, Colorado, Connecticut, Delaware, Illinois, Maryland, Massachusetts, Minnesota, New Hampshire, New Jersey, and New York. The two states partially affected are Nevada and Washington. In addition, the District of Columbia receives a special federal matching rate of 70 percent and consequently is unaffected by the correction in population. 11 See appendix II for additional detail, by state, on the changes in federal matching rates and estimated shifts in funding under each of the four programs. Page 15 GAO-03-178 Federal Formula Grant Funding percent of the funding, respectively. They account for 1.4 and 0.7 percent, respectively, of the estimated funding changes for 2003. The earliest effect of the 2000 census on any of the four programs we analyzed occurred when it was used to calculate fiscal year 2002 SSBG grants. For the Medicaid, Foster Care, and Adoption Assistance programs, the 2000 census is first used for fiscal year 2003 payments. We provided the Department of Commerce a draft of this report for Agency Comments comment. The department provided technical comments, which we have incorporated where appropriate. As arranged with your offices, unless you release its contents earlier, we plan no further distribution of this report until 30 days after its issuance date. At that time, we will send copies of this report to interested congressional committees; the Secretary of Commerce; the Secretary of Health and Human Services; and the Director, Bureau of the Census. We will also make copies available to others on request. In addition, the report will be available at no charge on GAO’s Web site at http://www.gao.gov. If you or your staffs have questions about this report, please call me at (202) 512-7114 or Jerry Fastrup at (202) 512-7211. Major contributors to this report are Gregory Dybalski, Elizabeth T. Morrison, and Michael Rose. Kathryn G. Allen Director, Health Care—Medicaid and Private Health Insurance Issues Page 16 GAO-03-178 Federal Formula Grant Funding Appendix I: Data for Population Estimates, Appendix I: Data for Population Estimates, Decennial Census Population Counts, and the Error of Closure Decennial Census Population Counts, and the Error of Closure This appendix compares the postcensal population estimates for July 1, 1999, with the census count for April 1, 2000 (table 5), and compares the April 1, 2000, postcensal population estimates (based on the 1990 census) with the census counts (table 6). States are listed in tables 5 and 6 by the magnitude of the percentage correction in population. Table 5: Comparison of the 1999 Postcensal Population Estimates and the 2000 Census Counts Population in thousands Population count Difference July 1, 1999, State April 1, 2000, census postcensal estimate Population Percentage States below the U.S. average percentage correction of 2.50 West Virginia 1,808 1,807 1 0.08 Michigan 9,938 9,864 75 0.76 Ohio 11,353 11,257 96 0.86 Alaska 627 620 7 1.20 Kansas 2,688 2,654 34 1.29 California 33,872 33,145 727 2.19 Maine 1,275 1,253 22 1.75 Alabama 4,447 4,370 77 1.77 Kentucky 4,042 3,961 81 2.04 Maryland 5,296 5,172 125 2.41 Washington 5,894 5,756 138 2.39 Wisconsin 5,364 5,250 113 2.16 Iowa 2,926 2,869 57 1.98 Montana 902 883 19 2.20 Missouri 5,595 5,468 127 2.32 North Dakota 642 634 9 1.35 Indiana 6,080 5,943 138 2.32 Virginia 7,079 6,873 206 2.99 New Hampshire 1,236 1,201 35 2.88 Vermont 609 594 15 2.54 Illinois 12,419 12,128 291 2.40 Idaho 1,294 1,252 42 3.38 Louisiana 4,469 4,372 97 2.22 Minnesota 4,919 4,776 144 3.01 Oklahoma 3,451 3,358 93 2.76 Mississippi 2,845 2,769 76 2.75 Massachusetts 6,349 6,175 174 2.82 Pennsylvania 12,281 11,994 287 2.39 States above the U.S. average percentage correction of 2.50 Nebraska 1,711 1,666 45 2.72 South Carolina 4,012 3,886 126 3.25 South Dakota 755 733 22 2.96 Page 17 GAO-03-178 Federal Formula Grant Funding Appendix I: Data for Population Estimates, Decennial Census Population Counts, and the Error of Closure Population in thousands Population count Difference July 1, 1999, State April 1, 2000, census postcensal estimate Population Percentage Oregon 3,421 3,316 105 3.17 Texas 20,852 20,044 808 4.03 Hawaii 1,212 1,185 26 2.20 New Jersey 8,414 8,143 271 3.33 Wyoming 494 480 14 2.96 Tennessee 5,689 5,484 206 3.75 Delaware 784 754 30 3.99 Connecticut 3,406 3,282 124 3.76 Utah 2,233 2,130 103 4.85 Georgia 8,186 7,788 398 5.11 New York 18,976 18,197 780 4.29 Arkansas 2,673 2,551 122 4.78 North Carolina 8,049 7,651 399 5.21 New Mexico 1,819 1,740 79 4.55 Colorado 4,301 4,056 245 6.04 Florida 15,982 15,111 871 5.76 Rhode Island 1,048 991 58 5.80 Arizona 5,131 4,778 352 7.37 Nevada 1,998 1,809 189 10.45 District of Columbia 572 519 53 10.22 United States 281,422 272,691 8,731 3.20 Source: Department of Commerce, Bureau of the Census, Population Estimates Division (Washington, D.C.), http://www.census.gov (downloaded Oct. 23, 2001). Notes: The states are listed in order of increasing percentage of population correction. (See table 6.) Totals may not add because of rounding. The census is a population count made at the beginning of each decade as of April 1. It is based on a count of the entire population. Postcensal population estimates are made annually throughout a decade, usually as of July 1 of each year. Such estimates are based on the prior census and include annual population changes due to births, deaths, and domestic and international migration. Page 18 GAO-03-178 Federal Formula Grant Funding Appendix I: Data for Population Estimates, Decennial Census Population Counts, and the Error of Closure Table 6: Comparison of the 2000 Postcensal Population Estimates and the 2000 Census Counts to Determine the Error of Closure and the Percentage Correction in Population Population in thousands April 1, 2000, population Postcensal Percentage estimate (based correction in State Census count on 1990 census) Error of closure population States below the U.S. average percentage correction of 2.50 West Virginia 1,808 1,804 5 0.27 Michigan 9,938 9,904 34 0.34 Ohio 11,353 11,265 88 0.78 Alaska 627 621 6 0.90 Kansas 2,688 2,663 26 0.96 California 33,872 33,513 359 1.08 Maine 1,275 1,256 19 1.49 Alabama 4,447 4,381 66 1.51 Kentucky 4,042 3,979 63 1.59 Maryland 5,296 5,211 85 1.65 Washington 5,894 5,796 98 1.70 Wisconsin 5,364 5,271 92 1.76 Iowa 2,926 2,876 51 1.77 Montana 902 887 16 1.77 Missouri 5,595 5,493 102 1.86 North Dakota 642 630 12 1.90 Indiana 6,080 5,967 114 1.92 Virginia 7,079 6,946 132 1.92 New Hampshire 1,236 1,212 24 1.99 Vermont 609 597 12 2.03 Illinois 12,419 12,169 250 2.06 Idaho 1,294 1,268 26 2.09 Louisiana 4,469 4,374 95 2.18 Minnesota 4,919 4,815 104 2.19 Oklahoma 3,451 3,377 74 2.20 Mississippi 2,845 2,783 62 2.24 Massachusetts 6,349 6,196 153 2.47 Pennsylvania 12,281 11,984 297 2.48 States above the U.S. average percentage correction of 2.50 Nebraska 1,711 1,669 42 2.53 South Carolina 4,012 3,913 99 2.54 South Dakota 755 736 19 2.54 Oregon 3,421 3,334 87 2.63 Texas 20,852 20,308 544 2.71 Hawaii 1,212 1,179 32 2.73 New Jersey 8,414 8,191 224 2.75 Wyoming 494 480 13 2.77 Page 19 GAO-03-178 Federal Formula Grant Funding Appendix I: Data for Population Estimates, Decennial Census Population Counts, and the Error of Closure Population in thousands April 1, 2000, population Postcensal Percentage estimate (based correction in State Census count on 1990 census) Error of closure population Tennessee 5,689 5,520 169 3.08 Delaware 784 760 24 3.14 Connecticut 3,406 3,294 112 3.41 Utah 2,233 2,157 76 3.59 Georgia 8,186 7,903 284 3.65 New York 18,976 18,264 713 3.92 Arkansas 2,673 2,572 102 3.99 North Carolina 8,049 7,722 327 4.27 New Mexico 1,819 1,744 75 4.30 Colorado 4,301 4,117 185 4.55 Florida 15,982 15,276 707 4.68 Rhode Island 1,048 995 54 5.41 Arizona 5,131 4,855 276 5.77 Nevada 1,998 1,863 135 7.47 District of Columbia 572 519 53 10.23 United States 281,422 274,608 6,814 2.50 Sources: The postcensal population estimates for April 1, 2000, are from unpublished data provided by Department of Commerce, Bureau of the Census, Population Estimates Division. The April 1, 2000, census counts are from the Bureau of the Census, http://www.census.gov (downloaded Oct. 23, 2001). Notes: The states are listed in order of increasing percentage of population correction. Totals may not add because of rounding. The census is a population count that is made at the beginning of each decade as of April 1. It is based on a count of the entire population. Postcensal population estimates are made annually throughout a decade, usually as of July 1 of each year. Such estimates are based on the prior census and include annual population changes due to births, deaths, and domestic and international migration. The error of closure is the difference between the postcensal population estimate and the census population count for the same date. The percentage correction in population is calculated by dividing the error of closure by the July 1, 1999, postcensal population estimate. Page 20 GAO-03-178 Federal Formula Grant Funding Appendix II: Analysis of Estimated Funding Appendix II: Analysis of Estimated Funding Changes for Four Formula Grant Programs Changes for Four Formula Grant Programs This appendix contains the supporting data for our calculations of the estimated change in funding due to correcting the population estimates. Specifically, for each state, we provide the funding amounts for the four programs and the estimated funding changes due to the correction in population estimates. States are listed in tables 7 through 11 by the magnitude of the percentage correction in population. The Medicaid, Foster Care, and Adoption Assistance programs are open- Medicaid, Foster ended entitlement programs for which states determine the level of Care, and Adoption program expenditures. The federal government reimburses states for a share of eligible state spending based on state per capita income. To Assistance calculate the effect of the population correction on the Federal Medical Assistance Percentages (FMAP)—also called federal matching rates—we compared actual matching rates for fiscal year 2003,1 based on the 2000 census, with the estimated matching rates based on the 1990 census (shown in table 7). Subtracting the estimated rates from the actual fiscal year 2003 rates shows the effect on the matching rates of correcting population estimates. In general, the states that had a below-average correction in population have a decrease in federal matching rates, while the states that had an above-average correction in population have an increase in matching rates. For 13 high-income states, the correction in population had no effect or had a diminished effect because of the minimum 50 percent matching rate. (Under the matching rate formula, no state can receive less than a 50 percent matching rate.) In our analysis, 11 states receive the 50 percent matching rate for fiscal year 2003; hence, under the estimated rates, the correction in population shows no change in these states’ matching rates. Two additional states, Washington and Nevada, are partially affected. Washington’s actual fiscal year 2003 matching rate is at the 50 percent minimum, while its estimated matching rate is slightly above the 50 percent minimum. Conversely, Nevada’s actual fiscal year 2003 matching rate is above the minimum, and its estimated matching rate is at the 50 percent minimum. The 70 percent matching rate for the District of Columbia is established by a special statutory provision. Accordingly, the District of Columbia’s 1 The matching rates for fiscal year 2003 are for the first year in which population estimates based on the 2000 census are used. Page 21 GAO-03-178 Federal Formula Grant Funding Appendix II: Analysis of Estimated Funding Changes for Four Formula Grant Programs matching rate remains unchanged, and the correction in population has no effect on funding. Table 7: Actual and Estimated FMAPs for the Medicaid, Adoption Assistance, and Foster Care Programs for Fiscal Year 2003, by State FMAP Actual rate based on population Estimated rate based on estimate derived from the 2000 postcensal population estimate State census derived from the 1990 census Difference States below the U.S. average percentage correction of 2.50 West Virginia 75.04 75.99 -0.95 Michigan 55.42 57.10 -1.68 Ohio 58.83 60.05 -1.22 Alaska 58.27 59.33 -1.06 Kansas 60.15 61.19 -1.04 California 50.00 50.00 0 Maine 66.22 66.90 -0.68 Alabama 70.60 71.06 -0.46 Kentucky 69.89 70.37 -0.48 Maryland 50.00 50.00 0 Washington 50.00 50.11 -0.11 Wisconsin 58.43 58.96 -0.53 Iowa 63.50 63.96 -0.46 Montana 72.96 73.26 -0.30 Missouri 61.23 61.66 -0.43 North Dakota 68.36 68.62 -0.26 Indiana 61.97 62.35 -0.38 Virginia 50.53 51.10 -0.57 New Hampshire 50.00 50.00 0 Vermont 62.41 62.75 -0.34 Illinois 50.00 50.00 0 Idaho 70.96 71.14 -0.18 Louisiana 71.28 71.40 -0.12 Minnesota 50.00 50.00 0 Oklahoma 70.56 70.67 -0.11 Mississippi 76.62 76.71 -0.09 Massachusetts 50.00 50.00 0 Pennsylvania 54.69 54.67 0.02 States above the U.S. average percentage correction of 2.50 Nebraska 59.52 59.44 0.08 South Carolina 69.81 69.78 0.03 South Dakota 65.29 65.26 0.03 Oregon 60.16 59.95 0.21 Texas 59.99 59.85 0.14 Page 22 GAO-03-178 Federal Formula Grant Funding Appendix II: Analysis of Estimated Funding Changes for Four Formula Grant Programs FMAP Actual rate based on population Estimated rate based on estimate derived from the 2000 postcensal population estimate State census derived from the 1990 census Difference Hawaii 58.77 58.45 0.32 New Jersey 50.00 50.00 0 Wyoming 61.32 61.07 0.25 Tennessee 64.59 64.19 0.40 Delaware 50.00 50.00 0 Connecticut 50.00 50.00 0 Utah 71.24 70.63 0.61 Georgia 59.60 58.84 0.76 New York 50.00 50.00 0 Arkansas 74.28 73.58 0.70 North Carolina 62.56 61.35 1.21 New Mexico 74.56 73.64 0.92 Colorado 50.00 50.00 0 Florida 58.83 57.22 1.61 Rhode Island 55.40 53.16 2.24 Arizona 67.25 65.33 1.92 Nevada 52.39 50.00 2.39 District of Columbia 70.00 70.00 0 Source: 66 Fed. Reg. 59792 (2001) and GAO calculations of Department of Commerce, Bureau of the Census and Bureau of Economic Analysis data. Notes: The states are listed in order of increasing percentage of population correction (see table 6). The census is a population count made at the beginning of each decade as of April 1; it is based on a count of the entire population. Postcensal population estimates are made annually throughout a decade, usually as of July 1 of each year. Such estimates are based on the prior census and include annual population changes due to births, deaths, and domestic and international migration. Analysis of Funding To measure the effect of the correction in the population estimates on Changes for Medicaid for federal payments, we estimated what federal payments would be using Fiscal Year 2003 matching rates calculated on the basis of postcensal population estimates derived from the 1990 census. Specifically, multiplying the two sets of state matching rates in table 7 by program expenditures (fiscal year 2000 Medicaid expenditures) yields the estimated payments. The 2000 program expenditures were the latest year for which the data were available. (See table 8.) Page 23 GAO-03-178 Federal Formula Grant Funding Appendix II: Analysis of Estimated Funding Changes for Four Formula Grant Programs Overall, the states that had a below-average correction in population show a decrease in payments, while the states that had an above-average correction in population show an increase in payments. As discussed in the previous section, 11 states show no effect, and 2 states show a partial effect because of the minimum 50 percent federal matching rate. The District of Columbia is also unaffected because of its special statutorily set matching rate. Table 8: Medicaid Program Expenditures and Estimated Federal Payments, by State Dollars in thousands Estimated federal Medicaid payments Difference FY 2000 Medicaid Based on expenditures (combined Based on actual FY estimated FY 2003 State federal and state)a 2003 FMAP FMAP Amount Percentage States below the U.S. average percentage correction of 2.50 West Virginia $1,379,499 $1,035,176 $1,048,281 -$13,105 -1.25 Michigan 6,774,253 3,754,291 3,868,098 -113,807 -2.94 Ohio 7,554,151 4,444,107 4,536,268 -92,161 -2.03 Alaska 503,994 293,677 299,020 -5,342 -1.79 Kansas 1,410,785 848,587 863,259 -14,672 -1.70 California 21,164,278 10,582,139 10,582,139 0 0 Maine 1,194,667 791,109 799,232 -8,124 -1.02 Alabama 2,704,806 1,909,593 1,922,035 -12,442 -0.65 Kentucky 3,094,832 2,162,978 2,177,833 -14,855 -0.68 Maryland 3,170,221 1,585,111 1,585,111 0 0 Washington 3,962,522 1,981,261 1,985,620 -4,359 -0.22 Wisconsin 3,294,787 1,925,144 1,942,607 -17,462 -0.90 Iowa 1,651,264 1,048,553 1,056,149 -7,596 -0.72 Montana 450,228 328,486 329,837 -1,351 -0.41 Missouri 3,994,735 2,445,976 2,463,154 -17,177 -0.70 North Dakota 428,777 293,112 294,227 -1,115 -0.38 Indiana 3,534,321 2,190,219 2,203,649 -13,430 -0.61 Virginia 2,728,848 1,378,887 1,394,442 -15,554 -1.12 New Hampshire 792,027 396,014 396,014 0 0 Vermont 516,874 322,581 324,339 -1,757 -0.54 Illinois 7,524,230 3,762,115 3,762,115 0 0 Idaho 585,831 415,706 416,760 -1,054 -0.25 Louisiana 3,473,131 2,475,648 2,479,816 -4,168 -0.17 Minnesota 3,322,283 1,661,142 1,661,142 0 0 Oklahoma 1,676,208 1,182,732 1,184,576 -1,844 -0.16 Mississippi 1,993,936 1,527,754 1,529,548 -1,795 -0.12 Massachusetts 6,396,706 3,198,353 3,198,353 0 0 Page 24 GAO-03-178 Federal Formula Grant Funding Appendix II: Analysis of Estimated Funding Changes for Four Formula Grant Programs Dollars in thousands Estimated federal Medicaid payments Difference FY 2000 Medicaid Based on expenditures (combined Based on actual FY estimated FY 2003 State federal and state)a 2003 FMAP FMAP Amount Percentage Pennsylvania 10,387,923 5,681,155 5,679,078 2,078 0.04 Subtotal 105,666,121 59,621,606 59,982,700 -361,094 -0.60 States above the U.S. average percentage correction of 2.50 Nebraska 1,055,079 627,983 627,139 844 0.13 South Carolina 2,720,980 1,899,516 1,898,700 816 0.04 South Dakota 399,231 260,658 260,538 120 0.05 Oregon 2,110,836 1,269,879 1,265,446 4,433 0.35 Texas 10,650,570 6,389,277 6,374,366 14,911 0.23 Hawaii 642,350 377,509 375,454 2,056 0.55 New Jersey 6,109,609 3,054,804 3,054,804 0 0 Wyoming 218,851 134,200 133,653 547 0.41 Tennessee 4,993,965 3,225,602 3,205,626 19,976 0.62 Delaware 523,748 261,874 261,874 0 0 Connecticut 3,151,669 1,575,835 1,575,835 0 0 Utah 810,161 577,158 572,217 4,942 0.86 Georgia 4,321,247 2,575,463 2,542,622 32,841 1.29 New York 30,191,583 15,095,792 15,095,792 0 0 Arkansas 1,581,362 1,174,636 1,163,566 11,070 0.95 North Carolina 5,464,863 3,418,818 3,352,693 66,125 1.97 New Mexico 1,226,572 914,532 903,248 11,284 1.25 Colorado 1,944,315 972,158 972,158 0 0 Florida 7,564,164 4,449,998 4,328,215 121,783 2.81 Rhode Island 1,166,831 646,424 620,287 26,137 4.21 Arizona 2,225,045 1,496,342 1,453,622 42,721 2.94 Nevada 598,189 313,391 299,094 14,297 4.78 District of Columbia 834,958 584,470 584,470 0 0 Subtotal 90,506,178 51,296,320 50,921,418 374,902 0.74 United States $196,172,298 $110,917,926 $110,904,118 $13,808 0.01 Source: Fiscal year 2000 program expenditures obtained from the Department of Health and Human Services, Centers for Medicare & Medicaid Services. GAO computed the estimated payments. Notes: States are listed in order of increasing percentage of population correction. Totals may not add because of rounding. a Excludes administrative expenditures. Analysis of Funding The effects on the funding for Foster Care and Adoption Assistance are Changes for Foster Care similar to the effects on the Medicaid programs because these programs and Adoption Assistance use the same matching rates. Table 9 shows the Foster Care program expenditures for fiscal year 2000, the estimated federal payments, and for Fiscal Year 2003 changes in funding for Foster Care based on these estimated payments. Page 25 GAO-03-178 Federal Formula Grant Funding Appendix II: Analysis of Estimated Funding Changes for Four Formula Grant Programs Table 10 shows the Adoption Assistance program expenditures for fiscal year 2000, the estimated federal payments, and the changes in funding for the program based on the estimated payments. Table 9: Foster Care Program Expenditures and Estimated Federal Payments, by State Dollars in thousands Estimated federal Foster Care payments Difference FY 2000 Foster Care Based on expenditures Based on actual estimated a State (federal and state) FY 2003 FMAP FY 2003 FMAP Amount Percentage States below the U.S. average percentage correction of 2.50 West Virginia $14,979 $11,240 $11,382 -$142 -1.25 Michigan 137,531 76,219 78,530 -2,311 -2.94 Ohio 209,987 123,536 126,097 -2,562 -2.03 Alaska 6,199 3,612 3,678 -66 -1.79 Kansas 20,985 12,623 12,841 -218 -1.70 California 759,267 379,633 379,633 0 0 Maine 41,730 27,633 27,917 -284 -1.02 Alabama 4,080 2,881 2,900 -19 -0.65 Kentucky 35,113 24,540 24,709 -169 -0.68 Maryland 132,096 66,048 66,048 0 0 Washington 22,699 11,349 11,374 -25 -0.22 Wisconsin 58,765 34,337 34,648 -311 -0.90 Iowa 32,746 20,794 20,944 -151 -0.72 Montana 7,639 5,574 5,596 -23 -0.41 Missouri 45,115 27,624 27,818 -194 -0.70 North Dakota 6,503 4,445 4,462 -17 -0.38 Indiana 43,766 27,122 27,288 -166 -0.61 Virginia 33,079 16,715 16,903 -189 -1.12 New Hampshire 11,782 5,891 5,891 0 0 Vermont 15,881 9,911 9,965 -54 -0.54 Illinois 145,408 72,704 72,704 0 0 Idaho 2,288 1,624 1,628 -4 -0.25 Louisiana 39,562 28,200 28,248 -47 -0.17 Minnesota 50,706 25,353 25,353 0 0 Oklahoma 20,457 14,434 14,457 -23 -0.16 Mississippi 4,440 3,402 3,406 -4 -0.12 Massachusetts 37,332 18,666 18,666 0 0 Pennsylvania 318,222 174,036 173,972 64 0.04 Subtotal 2,258,354 1,230,144 1,237,058 -6,914 -0.56 States above the U.S. average percentage correction of 2.50 Nebraska 21,072 12,542 12,525 17 0.13 South Carolina 9,555 6,670 6,667 3 0.04 Page 26 GAO-03-178 Federal Formula Grant Funding Appendix II: Analysis of Estimated Funding Changes for Four Formula Grant Programs Dollars in thousands Estimated federal Foster Care payments Difference FY 2000 Foster Care Based on expenditures Based on actual estimated a State (federal and state) FY 2003 FMAP FY 2003 FMAP Amount Percentage South Dakota 3,887 2,538 2,537 1 0.05 Oregon 19,950 12,002 11,960 42 0.35 Texas 100,329 60,187 60,047 140 0.23 Hawaii 9,747 5,728 5,697 31 0.55 New Jersey 70,203 35,101 35,101 0 0 Wyoming 2,220 1,361 1,356 6 0.41 Tennessee 25,604 16,538 16,435 102 0.62 Delaware 3,943 1,972 1,972 0 0 Connecticut 71,404 35,702 35,702 0 0 Utah 7,928 5,648 5,600 48 0.86 Georgia 35,038 20,883 20,617 266 1.29 New York 530,264 265,132 265,132 0 0 Arkansas 4,386 3,258 3,227 31 0.95 North Carolina 39,165 24,502 24,028 474 1.97 New Mexico 6,132 4,572 4,516 56 1.25 Colorado 15,512 7,756 7,756 0 0 Florida 79,566 46,808 45,527 1,281 2.81 Rhode Island 8,401 4,654 4,466 188 4.21 Arizona 27,341 18,387 17,862 525 2.94 Nevada 9,490 4,972 4,745 227 4.78 District of Columbia 41,299 28,909 28,909 0 0 Subtotal 1,142,436 625,822 622,383 3,439 0.55 United States $3,400,790 $1,855,966 $1,859,441 -$3,475 -0.19 Source: Fiscal year 2000 program expenditures obtained from the Department of Health and Human Services, Administration for Children and Families. GAO computed the estimated payments. Note: States are listed in order of increasing percentage of population correction. Totals may not add because of rounding. a Excludes administrative expenditures. Page 27 GAO-03-178 Federal Formula Grant Funding Appendix II: Analysis of Estimated Funding Changes for Four Formula Grant Programs Table 10: Adoption Assistance Program Expenditures and Estimated Federal Payments, by State Dollars in thousands Estimated federal Adoption Assistance payments Difference FY 2000 Adoption Assistance Based on expenditures Based on actual estimated FY State (federal and state)a FY 2003 FMAP 2003 FMAP Amount Percentage States below the U.S. average percentage correction of 2.50 West Virginia $4,048 $3,037 $3,076 -$38 -1.25 Michigan 119,003 65,951 67,951 -1,999 -2.94 Ohio 61,308 36,068 36,816 -748 -2.03 Alaska 6,254 3,644 3,711 -66 -1.79 Kansas 11,684 7,028 7,150 -122 -1.70 California 205,556 102,778 102,778 0 0 Maine 8,093 5,359 5,414 -55 -1.02 Alabama 341 241 242 -2 -0.65 Kentucky 7,657 5,351 5,388 -37 -0.68 Maryland 18,512 9,256 9,256 0 0 Washington 19,734 9,867 9,889 -22 -0.22 Wisconsin 30,116 17,597 17,757 -160 -0.90 Iowa 25,825 16,399 16,518 -119 -0.72 Montana 2,347 1,712 1,720 -7 -0.41 Missouri 16,547 10,132 10,203 -71 -0.70 North Dakota 1,396 954 958 -4 -0.38 Indiana 25,750 15,957 16,055 -98 -0.61 Virginia 12,045 6,086 6,155 -69 -1.12 New Hampshire 1,557 779 779 0 0 Vermont 5,268 3,288 3,306 -18 -0.54 Illinois 68,226 34,113 34,113 0 0 Idaho 1,620 1,149 1,152 -3 -0.25 Louisiana 9,533 6,795 6,806 -11 -0.17 Minnesota 16,959 8,479 8,479 0 0 Oklahoma 11,081 7,819 7,831 -12 -0.16 Mississippi 2,852 2,185 2,188 -3 -0.12 Massachusetts 6,368 3,184 3,184 0 0 Pennsylvania 43,264 23,661 23,652 9 0.04 Subtotal 742,943 408,871 412,524 -3,654 -0.89 States above the U.S. average percentage correction of 2.50 Nebraska 6,242 3,715 3,710 5 0.13 South Carolina 9,336 6,518 6,515 3 0.04 South Dakota 1,602 1,046 1,046 0 0.05 Oregon 18,611 11,196 11,157 39 0.35 Texas 45,057 27,030 26,967 63 0.23 Hawaii 6,290 3,697 3,677 20 0.55 Page 28 GAO-03-178 Federal Formula Grant Funding Appendix II: Analysis of Estimated Funding Changes for Four Formula Grant Programs Dollars in thousands Estimated federal Adoption Assistance payments Difference FY 2000 Adoption Assistance Based on expenditures Based on actual estimated FY State (federal and state)a FY 2003 FMAP 2003 FMAP Amount Percentage New Jersey 27,734 13,867 13,867 0 0 Wyoming 390 239 238 1 0.41 Tennessee 8,811 5,691 5,656 35 0.62 Delaware 1,560 780 780 0 0 Connecticut 16,949 8,475 8,475 0 0 Utah 5,815 4,143 4,107 35 0.86 Georgia 22,006 13,116 12,949 167 1.29 New York 277,214 138,607 138,607 0 0 Arkansas 4,386 3,258 3,227 31 0.95 North Carolina 18,973 11,869 11,640 230 1.97 New Mexico 7,097 5,292 5,227 65 1.25 Colorado 14,170 7,085 7,085 0 0 Florida 33,369 19,631 19,094 537 2.81 Rhode Island 6,793 3,763 3,611 152 4.21 Arizona 18,463 12,416 12,062 354 2.94 Nevada 1,969 1,031 984 47 4.78 District of Columbia 3,268 2,288 2,288 0 0 Subtotal 556,105 304,752 302,966 1,786 0.59 United States $1,299,048 $713,623 $715,490 -$1,868 -0.26 Source: Fiscal year 2000 program expenditures obtained from the Department of Health and Human Services, Administration for Children and Families. GAO computed the estimated payments. Notes: The states are listed in order of increasing percentage of population correction. Totals may not add because of rounding. a Excludes administrative expenditures. The fiscal year 2002 formula allocations for the SSBG are based on the Social Services Block April 1, 2000, decennial census population counts. To calculate the effect Grant of the correction in population estimates, we compared fiscal year 2002 allocations that were calculated using the April 1, 2000, decennial census (actual allocations) with allocations using the 1990 postcensal population estimates for April 1, 2000 (estimated allocations). The differences in these allocations represent the effect of the population correction reflected in the 2000 census. The change in funding is directly proportional to the percentage correction in population because the SSBG allocations are calculated exclusively on the basis of population data (see table 11). Page 29 GAO-03-178 Federal Formula Grant Funding Appendix II: Analysis of Estimated Funding Changes for Four Formula Grant Programs Table 11: SSBG State Allocations, Actual and Estimated, for Fiscal Year 2002 Dollars in thousands Formula allocations for FY 2002 Difference Estimated using the Using the census 2000 postcensal State population counts population estimates Amount Percentage States below the U.S. average percentage correction of 2.50 West Virginia $10,863 $11,103 -$240 -2.16 Michigan 59,700 60,973 -1,272 -2.09 Ohio 68,199 69,348 -1,150 -1.66 Alaska 3,766 3,825 -59 -1.55 Kansas 16,149 16,393 -244 -1.49 California 203,468 206,309 -2,841 -1.38 Maine 7,658 7,734 -75 -0.98 Alabama 26,714 26,970 -256 -0.95 Kentucky 24,279 24,494 -215 -0.88 Maryland 31,816 32,079 -263 -0.82 Washington 35,406 35,683 -277 -0.78 Wisconsin 32,220 32,452 -232 -0.71 Iowa 17,578 17,703 -124 -0.70 Montana 5,420 5,458 -38 -0.70 Missouri 33,611 33,817 -206 -0.61 North Dakota 3,858 3,879 -22 -0.56 Indiana 36,526 36,730 -205 -0.56 Virginia 42,521 42,763 -242 -0.57 New Hampshire 7,423 7,460 -37 -0.49 Vermont 3,657 3,674 -16 -0.45 Illinois 74,603 74,915 -312 -0.42 Idaho 7,773 7,805 -32 -0.41 Louisiana 26,845 26,926 -80 -0.30 Minnesota 29,551 29,642 -90 -0.30 Oklahoma 20,728 20,787 -59 -0.29 Mississippi 17,088 17,130 -43 -0.25 Massachusetts 38,139 38,146 -6 -0.02 Pennsylvania 73,773 73,774 -1 0 Subtotal 959,332 967,970 -8,639 -0.89 States above the U.S. average percentage correction of 2.50 Nebraska 10,280 10,275 5 0.05 South Carolina 24,100 24,091 9 0.04 South Dakota 4,534 4,532 2 0.05 Oregon 20,552 20,526 27 0.13 Texas 125,257 125,016 242 0.19 Hawaii 7,278 7,259 19 0.26 New Jersey 50,545 50,422 124 0.25 Page 30 GAO-03-178 Federal Formula Grant Funding Appendix II: Analysis of Estimated Funding Changes for Four Formula Grant Programs Dollars in thousands Formula allocations for FY 2002 Difference Estimated using the Using the census 2000 postcensal State population counts population estimates Amount Percentage Wyoming 2,966 2,958 8 0.28 Tennessee 34,176 33,984 192 0.56 Delaware 4,707 4,678 29 0.62 Connecticut 20,457 20,275 182 0.90 Utah 13,415 13,277 138 1.04 Georgia 49,176 48,648 528 1.09 New York 113,992 112,432 1,560 1.39 Arkansas 16,059 15,831 228 1.44 North Carolina 48,352 47,539 814 1.71 New Mexico 10,927 10,738 189 1.76 Colorado 25,838 25,342 495 1.96 Florida 96,007 94,038 1,968 2.09 Rhode Island 6,297 6,123 174 2.84 Arizona 30,820 29,888 932 3.12 Nevada 12,004 11,469 534 4.66 District of Columbia 3,436 3,195 242 7.57 Subtotal 731,176 722,537 8,639 1.20 United States $1,690,508 $1,690,508 0 0 Source: Department of Health and Human Services, Administration for Children and Families (Washington, D.C.), http://www.acf.hhs.gov (downloaded July 19, 2002). GAO computed the allocations for fiscal year 2002 based on the April 1, 2000, postcensal population estimates. Notes: The states are listed in order of increasing percentage of population correction. Totals may not add because of rounding. The census is a population count that is made at the beginning of each decade as of April 1. It is based on a count of the entire population. Postcensal population estimates are made annually throughout a decade, usually as of July 1 of each year. Such estimates are based on the prior census and include annual population changes due to births, deaths, and domestic and international migration. (290093) Page 31 GAO-03-178 Federal Formula Grant Funding The General Accounting Office, the audit, evaluation and investigative arm of GAO’s Mission Congress, exists to support Congress in meeting its constitutional responsibilities and to help improve the performance and accountability of the federal government for the American people. 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Formula Grants: 2000 Census Redistributes Federal Funding Among States
Published by the Government Accountability Office on 2003-02-24.
Below is a raw (and likely hideous) rendition of the original report. (PDF)