oversight

Older Americans Act: Options to Better Target Need and Improve Equity

Published by the Government Accountability Office on 2012-11-30.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                United States Government Accountability Office

GAO             Report to the Ranking Member, Special
                Committee on Aging, U.S. Senate



November 2012
                OLDER AMERICANS
                ACT
                Options to Better
                Target Need and
                Improve Equity




GAO-13-74
Contents


Letter                                                                                     1
               Agency Comments and Our Evaluation                                          5

Appendix I     Briefing Slides                                                             7



Appendix II    Objectives, Scope, and Methodology                                        28



Appendix III   Application of the Partial Beneficiary Equity Option to Fiscal Year
               2012 Titles III and VII Allotments                                        39



Appendix IV    Transition Measures for Moderating Impact of Formula Modifications        44



Appendix V     Comments from the Department of Health and Human Services                 54



Appendix VI    GAO Contact and Staff Acknowledgments                                     56



Tables
               Table 1: Disability Questions from the American Community
                        Survey, 2008-2010                                                30
               Table 2: Comparison of States’ Share of Population Age 60 and
                        Over with at Least One ADL Limitation                            31
               Table 3: Percentage of Older Adults Age 60 and Older with Various
                        Indicators of Need with One or More Activities of Daily
                        Living Limitations                                               33
               Table 4: Comparison of Fiscal Year 2012 Title III Allotments to
                        Simulated Partial Beneficiary Equity Allotments                  39
               Table 5: Comparison of 2012 Title VII Allotments to Simulated
                        Partial Beneficiary Equity Allotments                            41
               Table 6: Transition Combining the FY 2012 Current Formula
                        Allotments and Partial Beneficiary Equity Formula Option,
                        Comparison of Allotments                                         46



               Page i                                           GAO-13-74 Older Americans Act
Table 7: Transition Using a Hold Harmless, Comparison of FY 2012
        Allotments to Allotments for the Partial Beneficiary Equity
        Formula Option                                                                    50




Abbreviations

AAA               Area Agency on Aging
ADL               activities of daily living
ACS               American Community Survey
AOA               Administration on Aging
BLS               Bureau of Labor Statistics
FMR               Fair Market Rents
HHS               Department of Health and Human Services
OAA               Older Americans Act of 1965
Treasury          Department of the Treasury
TTR               Total Taxable Resources



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Page ii                                                    GAO-13-74 Older Americans Act
United States Government Accountability Office
Washington, DC 20548




                                   November 30, 2012

                                   The Honorable Bob Corker
                                   Ranking Member
                                   Special Committee on Aging
                                   United States Senate

                                   The Older Americans Act of 1965 (OAA) 1 was enacted to help older
                                   individuals remain in their homes and communities as long as possible.
                                   Based on formulas specified in law, 2 the Department of Health and
                                   Human Services’ (HHS) Administration on Aging (AOA) awards grants to
                                   fund services for older individuals. State and local agencies are
                                   responsible for planning, developing, and coordinating services within
                                   each state, as well as distributing OAA grant funds to local Area Agencies
                                   on Aging (AAA) through intrastate funding formulas developed by each
                                   state in accordance with OAA requirements. Services funded by titles III
                                   and VII OAA grants, as well as by other sources, provide a broad range of
                                   vital assistance to older adults and include congregate and home-
                                   delivered meals, home-based care, transportation services, and elder
                                   abuse, neglect, and exploitation prevention programs. In fiscal year 2012
                                   approximately $1.4 billion and $22 million, respectively, was provided for
                                   services and programs under title III and title VII of the OAA. In fiscal year
                                   2010—the most recent year for which data are available—these funds
                                   were used to serve nearly 11 million older Americans and their
                                   caregivers. While all adults age 60 and over are eligible for services, the
                                   OAA title III requires programs to target or prioritize service to older
                                   individuals with the greatest economic and social need.3 The OAA defines
                                   such need as (1) living below the poverty threshold; (2) having physical or
                                   mental disabilities that pose risk for institutional placement; or (3) cultural,




                                   1
                                       Pub. L. No. 89-73, 79 Stat. 218 (codified as amended at 42 U.S.C. §§ 3001 and 3058ff).
                                   2
                                      42 U.S.C. §§ 3024, 3030s-1(f), and 3058b. Under the current OAA authorization, for
                                   titles III and VII, the formula considers each state’s proportion of elderly U.S. residents—
                                   60 years of age and over or 70 years of age and over depending on the program—but the
                                   statute also provides that each state will receive at least as much funding as it received in
                                   a specified prior fiscal year and that no state receive less than one-half percent of the
                                   funds appropriated.
                                   3
                                       42 U.S.C. § 3025(a)(2)(E).




                                   Page 1                                                       GAO-13-74 Older Americans Act
social, or geographic isolation, including isolation caused by language,
race, or ethnic status. 4

Given current fiscal pressures, it is increasingly important to ensure that
program funds align with greatest economic and social need, especially
considering that demographic studies show that older Americans will
make up an increasing proportion of the country’s population in the next
few decades. Specifically, U.S. census projections estimate the number
of Americans age 65 and over will increase from 40 million in 2010 to 72
million in 2030. 5 Accordingly, the number of those eligible and in need of
services like those provided under OAA title III and VII programs will
increase as well. In 2011, we issued a report examining unmet need for
OAA title III services showing that many older adults who may be in need
of meals or home-based care may not receive assistance from title III
programs or from other sources. 6 Despite the growing need for these
services as the population ages, it is anticipated that the funding level for
these programs at the federal level will remain relatively flat in fiscal year
2013—as it has for at least the last 9 years. 7

In light of concerns about the growing demand for these vital OAA
services combined with current federal fiscal constraints, you asked us to
assess the current formula used to allot OAA funds to the states and
explore options to better ensure that the needs of the growing older adult
population are met. Specifically, our study examined (1) how intrastate
funding formulas take into account older adults with greatest economic
and social need as defined by OAA, (2) options for modifying OAA title III
and VII statutory funding formulas to better target older adults with the
greatest economic and social need under generally accepted equity
standards, and (3) what effect, if any, might these formula modifications




4
    42 U.S.C. § 3002(23) and (24).
5
  U.S. Census Bureau, Population Division, “Table 2. Projections of the Population by
Selected Age Groups and Sex for the United States: 2010 to 2050 (NP2008-T2),”
released August 14, 2008. Note our analysis is of people age 60 and over.
6
  GAO, Older Americans Act: More Should Be Done to Measure the Extent of Unmet
Need for Services, GAO-11-237 (Washington, D.C.: February 28, 2011).
7
  Title III funding has fluctuated between a little over $1.2 billion and a little over $1.4
billion from fiscal years 2004 to 2012. For the same period, title VII funding has fluctuated
between a little over $19 million and just under $22 million.




Page 2                                                       GAO-13-74 Older Americans Act
have on states’ program allotments and what transition measures could
be used to ease the implementation of modifications.

We used several methodologies to develop our findings. To assess how
intrastate funding formulas account for older individuals in greatest
economic and social need, we reviewed the state plans for all 50 states
and the District of Columbia—45 of which had intrastate funding
formulas. 8 To develop formula modification options and estimate the
effects on states’ program allotments, we analyzed data from a number of
sources, including AOA’s data on state OAA titles III and VII allotments,
American Community Survey (ACS) data on elderly populations,
Department of the Treasury’s (Treasury) data on state taxable resources,
Bureau of Labor Statistics (BLS) data on wages, and the Department of
Housing and Urban Development data on rents. For all of the objectives,
we reviewed literature on OAA services and elder abuse and we
interviewed advocacy groups, state and local aging officials in Illinois and
Wisconsin, experts on aging, and officials at AOA. Appendix II provides a
detailed description of our methodology.

We conducted this performance audit from March 2012 through
November 2012 in accordance with generally accepted government
auditing standards. Those standards require that we plan and perform the
audit to obtain sufficient, appropriate evidence to provide a reasonable
basis for our findings and conclusions based on our audit objectives. We
believe that the evidence obtained provides a reasonable basis for our
findings and conclusions based on our audit objectives.

On July 23, 2012, we briefed your staff on the results of our analysis. This
report formally conveys the information provided during that briefing (see
app. I for the briefing slides). In summary, we found that that states used
a variety of demographic factors to account for greatest economic and
social need in their intrastate funding formulas. We also presented three
options for revising the statutory funding formula to more equitably
account for differences among states with respect to needs, cost, and
capacity using generally accepted equity standards. The first option



8
  Eight states and the District of Columbia are single planning and service areas and are
not required to use an intrastate funding formula to distribute title III funds; nevertheless,
three of these states use an intrastate funding formula. We did not review intrastate
funding formulas in the U.S. territories.




Page 3                                                        GAO-13-74 Older Americans Act
allots 9 funds based on states’ elderly population with limitations in their
activities of daily living (ADL); the second option adds an additional factor
to account for costs of providing services, and the third option further
accounts for state resource capacity. 10 Lastly, we found that such
modification to the formula would redistribute funds among states, and
presented a number of transition measures that could moderate such
effects.

More specifically, we found that:
•    States use a variety of factors to distribute OAA intrastate funding to
     AAAs and local service providers. All states that use intrastate funding
     formulas 11—which help determine the distribution of funds within a
     given state—use one or more demographic measures of need to
     target funding for OAA titles III and VII services. Factors included age,
     income, rural residence, disability impairment status, and minority
     status to indicate need for OAA services.
•    The current statutory funding formula could better meet generally
     accepted equity standards 12 in targeting greatest economic and social



9
  In the briefing slides, we summarized the statutory funding formula and federal and state
actions in using the funds for authorized purposes, generally using the terms “allotment”
and “allocation.” In accordance with the statutory framework, we have now updated the
terminology in this letter to use the term “allotment” when referring to the manner in which
the federal agency provides funding to the states See 42 U.S.C. §§ 3024, 3030s-1(f) and
3058b. We now use the term “distribution” when referring to the states’ actions in
providing funds to local areas. See 42 U.S.C. § 3025(a)(2)(C). Thus, references to
allotment or allocation in the briefing slides should be interpreted according to the federal
action or the state actions as described here.
10
   In the briefing slides, we sometimes referred to the availability of state resources, in
which case we are referring to states’ fiscal capacity (see app. I).
11
   States that designated a single planning and service area covering all older individuals
in the state on or before October 1, 1980, may continue to operate in that manner. 42
U.S.C. § 3025(a)(1)(E) and (b)(5).
12
   There are two standards concerning the concept of equity that have commonly been
used to design and evaluate funding formulas. The first—known as beneficiary equity—
stipulates that funds should be distributed to states according to the needs of their
respective populations and adjusted for the cost of providing services. Partial beneficiary
equity is achieved when funds are distributed based on the size of a state’s population
potentially needing services, without adjusting for differences across states in terms of the
cost of providing services. The second standard—known as taxpayer equity—applies to
programs, such as OAA title III, in which states also contribute funds. This standard, like
the first, seeks to provide individuals in need with the same level of services, but it also
considers a state’s ability to finance a given program from its own resources.




Page 4                                                        GAO-13-74 Older Americans Act
                          need for services by addressing differences among states with
                          respect to the (1) needs of the elderly population, (2) cost of services
                          to address those needs, and (3) capacity of individual states to
                          finance needed services. Funds are currently allotted to states
                          according to the relative proportion of older individuals, and states
                          with similar populations are treated the same, irrespective of need.
                          We presented three options for revising the formula using generally
                          accepted equity standards to illustrate a range of possibilities. The
                          first, the partial beneficiary equity option, distributes funds based on
                          the state’s population in need of services by measuring older adults
                          with limitations in their ability to maintain an independent lifestyle; the
                          second, the full beneficiary equity option, accounts for differences in
                          the costs of key inputs for providing services, such as wages, food,
                          and office space; and the third, the taxpayer equity option, further
                          accounts for state resource capacity.
                     •    Modifying the formula under a partial beneficiary option using ADL
                          limitations as a need measure could result in a number of states
                          seeing changes in their allotments and we presented several
                          transition measures for moderating the impact of such changes.
                          Under the partial beneficiary equity option, states with
                          disproportionately high elderly populations with ADL limitations—as
                          well as low-income states—would receive larger increases in their
                          allotments. At the same time, states currently receiving the small state
                          minimum 13 could see larger decreases in their allotments. However, if
                          transition measures such as a phase-in or hold harmless provision, 14
                          minimum allotment, or funding floors and ceilings are implemented,
                          the effect on states can be tempered.

                     We provided HHS with the opportunity to comment on a draft of this
Agency Comments      report (HHS’ written comments appear in appendix V). In its comments,
and Our Evaluation   HHS generally agreed with our findings. In particular, HHS acknowledged
                     the importance of moderating the effects of any formula changes in the
                     current fiscal environment of relatively flat funding levels.



                     13
                         The statute provides that no state receive less than one-half of one percent of the title
                     III and VII funds appropriated. 42 U.S.C. §§ 3024(a)(3)(A), 3030s-1(f)(2)(B)(i)and
                     3058b(a)(2)(B)(i).
                     14
                        The statute provides, for example, that notwithstanding the current formula no state is
                     to receive less funds under title III (other than Part E) than it did in 2006. 42 U.S.C. §
                     3024(a)(3)(D)(i).




                     Page 5                                                        GAO-13-74 Older Americans Act
HHS also called attention to a few issues that reinforced our findings.
While not specifically raising these issues on its own, HHS noted that
questions could be raised regarding the impact of formula changes on
very rural states. Such an adverse effect was a key reason why the report
discusses the importance of formula changes with transitions measures,
such as a minimum allotment for small states that could mitigate such
effects. Further, HHS highlighted the wide variation in the frequency,
collection, and weighting of cost data among states and communities,
which highlights the importance of creating a cost index that relies on
federal data sources that capture the geographic variation in the costs of
key inputs for providing services. HHS also agreed that, should Congress
implement a different funding formula under the reauthorization of the
OAA, the agency would work with Congress to ensure that any such
formula involved appropriate available data.


As agreed with your office, unless you publicly announce its contents
earlier, we plan no further distribution of this report until 30 days from its
issue date. At that time, we will send copies of this report to the Secretary
of Health and Human Services, relevant congressional committees, and
other interested parties. In addition, this report will be available at no
charge on GAO’s website at www.gao.gov .

If you or your staff have any questions about this report, please contact
me at (202) 512-7215 or jeszeckc@gao.gov. Contact points for our
Offices of Congressional Relations and Public Affairs may be found on
the last page of this report. GAO staff members who made key
contributions to this report are listed in appendix VI.

Sincerely yours,




Charles Jeszeck, Director
Education, Workforce, and Income Security Issues




Page 6                                             GAO-13-74 Older Americans Act
Appendix I: Briefing Slides
                       Appendix I: Briefing Slides




  Appendix I: Briefing Slides

         Older Americans Act:
     Options to Better Target Need
          and Improve Equity

      Briefing for Congressional Requesters on
                 Preliminary Findings

                           July 23, 2012



                                                                  Page 1




                       Page 7                        GAO-13-74 Older Americans Act
                            Appendix I: Briefing Slides




Introduction

• The Older Americans Act of 1965 (OAA) was enacted to provide
  services to older adults and help them remain in their homes and
  communities. OAA funds are allocated primarily based on states’
  relative proportion of older adults and states develop formulas to target
  those funds within the state consistent with the act.
• Programs funded by Titles III and VII OAA grants provide a broad range
  of vital services to older adults, including:
           Title and Part    Service
           III B             Support services, such as transportation
           III C             Congregate and home-delivered meals
           III E             Caregiver support
           VII               Vulnerable elder rights protection activities

• In FY 2012, approximately $1.36 billion was provided for Title III
  services, and $21.8 million was provided for Title VII services.
                                                                                          Page 2




                            Page 8                                           GAO-13-74 Older Americans Act
                          Appendix I: Briefing Slides




Background
Current OAA Formula Allocates Funds
Primarily Based on Age
• The OAA funding formula generally allocates federal funds to states
  based on the proportion of elderly residents in each state. For example:
         Title and part        Formula

         III B and C
                               Share of population age 60 and older
         VII

         III E                 Share of population age 70 and older


• The Act also provides a minimum level of funding to each state. No
  state receives less than one-half percent of the total appropriation. The
  FY 2012 minimums for Titles III and VII were about $5.9 million and
  $108,000, respectively.
• A “hold harmless” provision also guarantees that each state will receive
  at least as much funding as it received in a specified prior fiscal year.
                                                                                   Page 3




                          Page 9                                      GAO-13-74 Older Americans Act
                                  Appendix I: Briefing Slides




Background
OAA Requires States to Target Greatest
Economic and Social Need
• While the federal formula is generally based on age, OAA
  requires state programs to target or prioritize service to older
  adults with the greatest economic and social need, including
  those
    • living at or below the poverty threshold,
    • having physical or mental disabilities that pose risks for
      institutional placement, or
    • impacted cultural, social, or geographic isolation, including
      isolation caused by language, race, or ethnic status.
• States are required to consider such factors when developing the
  intrastate formulas they use to allocate funds among their local
  agencies.*

*42 U.S.C. § 3025(a)(2)(ii)(C).                                              Page 4




                                  Page 10                       GAO-13-74 Older Americans Act
                                    Appendix I: Briefing Slides




Background
General Distribution of OAA Funds

                   U.S. Department of Health and Human Services, Administration on
                              Community Living, Administration on Aging
                Allocates funds to states based on proportion of elderly population, generally
                                           those over age 60 or 70.


                                            State Units on Aging
                              Distribute funds using intrastate funding formulas,
                                which must be approved by AOA*, that target
                               elderly with greatest economic and social need
                                    using factors reflecting individual state
                              characteristics, such as age, minority status, and
                                                 income level.

                                  Area aging agencies or local service
                                                 providers
                               Use funds to deliver services in the community.

*42 U.S.C. § 3024(a)(2)(D).                                                                      Page 5




                                    Page 11                                         GAO-13-74 Older Americans Act
                                             Appendix I: Briefing Slides




Background
Activities of Daily Living Capture Many
Need Factors
• A 2011 GAO study* found that the very old, minorities, and poor
  experienced greater disabilities in terms of being able to perform
  activities necessary to maintain an independent lifestyle or
  activities of daily living (ADL). ADLs measure a person’s ability to
  perform “basic” daily activities such as eating, bathing, dressing,
  and toileting.

• These are many of the same population groups that OAA
  identifies as having greatest social and economic need and
  instructs states to use similar factors in allocating federal funding
  among local agencies.

• The U.S. Census Bureau’s American Community Survey (ACS)
  refined its questions related to ADLs in 2008.
* GAO, Older Americans Act: More Should Be Done to Measure the Extent of Unmet Need for Services, GAO-11-237 (Washington,
D.C.: February 28 , 2011).
                                                                                                                              Page 6




                                             Page 12                                                             GAO-13-74 Older Americans Act
                       Appendix I: Briefing Slides




Research Objectives

1. How do intrastate funding formulas take into account older adults
   with greatest economic and social need as defined by OAA?

2. What are options for modifying OAA Title III and VII statutory
   funding formulas to better target older adults with the greatest
   economic and social need under generally accepted equity
   standards?

3. What effect, if any, might these formula modifications have on
   states’ program allotments and what transition measures could
   be used to ease the implementation of modifications?


                                                                       Page 7




                       Page 13                            GAO-13-74 Older Americans Act
                                                   Appendix I: Briefing Slides




Methodology

• Reviewed intrastate funding formulas for all 50 states.*
• Reviewed literature on OAA services and elder abuse.
• Interviewed advocacy groups, state and local aging officials in
  Illinois and Wisconsin, experts on aging, and officials at the
  Department of Health and Human Services, Administration on
  Aging.
• Analyzed data from the American Community Survey (ACS),
  Treasury's Total Taxable Resources (TTR) databases, Bureau of
  Labor Statistics data from the Occupational Employment
  Statistics, and U.S. Department of Housing and Urban
  Development’s Fair Market Rents (FMR) data to develop formula
  options.

* Some states are single service-area states and are not required to use an intrastate funding formula to distribute Title III funds. 42 U.S.C.
§ 3025(b)(5). We did not review intrastate funding formulas in the U.S. territories.
                                                                                                                                                  Page 8




                                                   Page 14                                                                     GAO-13-74 Older Americans Act
                       Appendix I: Briefing Slides




Objective One

States Use a Variety of Factors to Allocate
OAA Funding
• All states with intrastate funding formulas use one or more
  measures of need to target funding for OAA services.

• States use a variety of factors to indicate need, including
   • age,
   • income,
   • rural residence,
   • disability or impairment status, and
   • minority status.




                                                                       Page 9




                       Page 15                            GAO-13-74 Older Americans Act
                                                      Appendix I: Briefing Slides




Objective Two

Equity Standards for Designing and
Evaluating Funding Formulas*
• Improved targeting for greatest social and economic need could
  be accomplished by adhering to commonly used equity standards.
• Beneficiary Equity – federal allotments are based on need and
  adjusted for differences in the cost of providing services:
      • Partial Beneficiary Equity – distributes funds based on size
        of state’s population potentially needing services, and
      • Full Beneficiary Equity – also adjusts for differences in the
        cost of providing services in each state.

• Taxpayer Equity – allotments are adjusted to account for each
  state’s ability to finance a given program from its own resources.


* These standards are commonly used in social science research to evaluate and design funding formulas. See, for example, National Research
Council, Statistical Issues in Allocating Funds by Formula, Panel on Formula Allocations, Committee on National Statistics (Washington, D.C.: 2003).   Page 10




                                                      Page 16                                                                         GAO-13-74 Older Americans Act
                                Appendix I: Briefing Slides




Objective Two

Current Federal Formula Could Better
Meet Equity Standards
•    Current federal formula primarily allocates funds to states according to the relative
     proportion of older adults, with adjustments for minimum funding levels for each state
     and “hold harmless” provisions.
•    The current federal formula does not address differences among states with respect to
        • needs of their elderly population,
        • cost of services to address need, and
        • capacity of states to finance services.
•    Under the current federal formula states with similar populations are treated alike
     irrespective of need. For example:
    Louisiana has approximately 83,000                                                   Colorado              Louisiana
    more people age 60 and older with at             Population age 60 and               793,144               785,877
    least one ADL limitation than Colorado,          older
    but Louisiana receives less funding              Population 60 and                   234,714               317,913
    because their total population age 60 and        older with at least one             (30 percent)          (40 percent)
    older is less than in Colorado.                  ADL limitation (share)
                                                    Source: GAO analysis of 2008-2010 3-year average American Community Survey
                                                    data. Note: For purposes of this analysis, our measure includes people who
                                                    reported at least one ADL limitation or a severe vision or hearing impairment.

                                                                                                                       Page 11




                                Page 17                                                                 GAO-13-74 Older Americans Act
                                                       Appendix I: Briefing Slides




Objective Two

ADLs Better Capture Need and Achieve
Partial Beneficiary Equity
• Need for OAA services can be better estimated using data on
  ADL limitations.
• Our analysis found the incidence of ADL limitations is higher
  among some of the demographic groups captured in need factors
  used by states.
                   Those age 60 and over reporting at least one ADL limitation
                                                                   Limited                                                                        Minority
                           Lower               Higher                                  English                                 Non-
                                                                   English                                 Minority                               and low-
                          income*             income*                                 speaking                                minority
                                                                  speaking                                                                        income

 Percent of
                                 49%                  31%                 42%                  33%               37%                  33%                 51%
 population

Source: GAO analysis of 2008-2010 3-year average American Community Survey data.

  * For purposes of this table, lower income is defined as 100 percent of the federal poverty level or less and higher income is defined as more than 100 percent of
  the federal poverty level.


                                                                                                                                                          Page 12




                                                       Page 18                                                                           GAO-13-74 Older Americans Act
                Appendix I: Briefing Slides




Objective Two

Prevalence of Having at Least One ADL
Limitation Increases with Age




                                                         Page 13




                Page 19                       GAO-13-74 Older Americans Act
                          Appendix I: Briefing Slides




Objective Two

Concentration of Elderly with ADL
Limitations Varies across States
Across all states, the
share of the
population age 60
and older with at least
one ADL limitation is
34 percent. States
with an index value
greater than 1 are
above the national
average.




                                                                   Page 14




                          Page 20                       GAO-13-74 Older Americans Act
                      Appendix I: Briefing Slides




Objective Two

Adjusting for Cost Differences Could
Achieve Full Beneficiary Equity
• In addition to need, allotments can be adjusted for differences
  in the cost of key inputs for providing services, including
    • wages,
    • food, and
    • office space (rent).




                                                                  Page 15




                      Page 21                          GAO-13-74 Older Americans Act
                      Appendix I: Briefing Slides




Objective Two

Adjusting for State Taxable Resources
Could Achieve Taxpayer Equity
• Allotments can be adjusted to achieve taxpayer equity by
  basing allotments on a state’s need population—adjusted for
  the cost of providing services—and its ability to fund program
  services.
• A state with fewer taxable resources compared to other states
  would have a larger allotment percentage and, therefore, a
  larger final allotment (all else being equal).
• Adjustments are based on Treasury’s Total Taxable Resources
  data, which provide a comprehensive measure of the economic
  activities that underlie a state’s sources of revenues—personal
  and corporate income.


                                                                Page 16




                      Page 22                        GAO-13-74 Older Americans Act
                                                        Appendix I: Briefing Slides




Objective Three

Potential Effects of Partial Equity Formula
Modifications on States’ Allocations*
• Under a Partial Beneficiary Equity option using ADL limitations, a
  number of states could see changes in their allocations.
                                       Decrease in                 Increase in                  Decrease over         Increase over
                                       funding                     funding                      20 percent            20 percent
          Number of                                        29                           22                      10                            7
          states
          Note: Last two columns only capture those states with increases or decreases of 20 percent or more.


• States with disproportionately high elderly populations with ADL
  limitations, as well as low-income states, could see higher
  increases in their allocations (e.g., Alabama, Arkansas, and
  Kentucky).
• States currently receiving the small state minimum could see
  larger decreases in their allocations (e.g., Alaska, Delaware, and
  Wyoming).
* Analysis of allocations for the 50 states and the District of Columbia for Title III funding only. Does not include analysis of Title VII
funding.
                                                                                                                                                  Page 17




                                                        Page 23                                                                    GAO-13-74 Older Americans Act
                             Appendix I: Briefing Slides




Objective Three

Options for Moderating Impact of Formula
Changes
• Phase-in provision combining the old and new formulas, with a gradual
  increase in the portion of funding distributed through the new formula, until the
  phase-in period is complete. For example:
      Year               Old formula                       New formula
      1                  50 percent                         50 percent
      2                  40 percent                         60 percent
      3                  30 percent                         70 percent
      4                  20 percent                         80 percent
      5                  10 percent                         90 percent
      6 (complete)        0 percent                        100 percent

• Funding floors and ceilings limiting the amount of funding that a state could lose
  or gain under a new formula from year to year.
• Hold harmless provision limiting the increase or decrease in funding that states
  could receive under a new formula, until funding for the program increases.
• Maintaining a minimum allocation for small states.
                                                                                    Page 18




                             Page 24                                     GAO-13-74 Older Americans Act
                        Appendix I: Briefing Slides




Concluding Observations

• Given the growing need for OAA services in a constrained fiscal
  environment, it is increasingly important to ensure that program funds
  are aligned with the greatest economic and social need consistent with
  some measure of a state’s resources.
• In deciding whether to revise the current federal formula, policymakers
  should consider how to strike a balance among all important equity
  factors:
    • need,
    • cost of providing services, and
    • availability of state resources.
• While revising the formula poses challenges, there are options that
  could ease the transition and minimize disruption in OAA services. For
  example, features from different formulas could be combined.

                                                                       Page 19




                        Page 25                             GAO-13-74 Older Americans Act
                                              Appendix I: Briefing Slides




Appendix I: OAA Funding Formula
Options to Improve Allocation Equity*




*The options presented here are simplified to focus on the various factors used in each formula and do not represent the actual equations.

                                                                                                                                Page 20




                                              Page 26                                                            GAO-13-74 Older Americans Act
                         Appendix I: Briefing Slides




GAO on the Web
Web site: http://www.gao.gov/

Contact
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(202) 512-4800, U.S. Government Accountability Office
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                                                                                 Page 21




                         Page 27                                      GAO-13-74 Older Americans Act
Appendix II: Objectives, Scope, and
               Appendix II: Objectives, Scope, and
               Methodology



Methodology

               Our objectives were to examine (1) how intrastate funding formulas take
               into account older adults with greatest economic and social need as
               defined by the Older Americans Act of 1965 (OAA), (2) options for
               modifying OAA title III and VII statutory funding formulas to better target
               older adults with the greatest economic and social need under generally
               accepted equity standards, and (3) what effect, if any, might these
               formula modifications have on states’ program allotments and what
               transition measures might ease the implementation of modifications. To
               address the first objective, we reviewed the state plans for all 50 states
               and the District of Columbia—45 of which had intrastate funding
               formulas. 1 To address the second objective, we used two generally
               accepted formula design standards intended to achieve equity for
               beneficiaries and taxpayers. 2 To meet both equity standards, a formula
               should use reliable and appropriate measures of the need population in
               each state and the cost of providing services in each state. A taxpayer
               equity formula additionally requires a reliable measure of a state’s ability
               to finance a program from its own resources. In the following sections, we
               describe how we measured the need population, cost of providing
               services, and financing capacity in each state, and how we developed
               various formula options to incorporate these equity standards. For the
               third objective, we analyzed the Administration on Aging’s (AOA) data on
               state OAA titles III and VII allotments and the American Community
               Survey (ACS) data on elderly populations. Finally, to address all three
               objectives, we reviewed literature on OAA services and elder abuse;
               interviewed advocacy groups, state and local aging officials in Illinois and
               Wisconsin, experts on aging, and officials at AOA; and we reviewed
               relevant laws, regulations, and guidance.

               We conducted this performance audit from March 2012 through
               November 2012 in accordance with generally accepted government
               auditing standards. Those standards require that we plan and perform the



               1
                 Some states are single service-area states and are not required to use an intrastate
               funding formula to distribute title III funds. 42 U.S.C. § 3025(b)(5)(A). We did not review
               intrastate funding formulas in the U.S. territories.
               2
                 Beneficiary equity stipulates that funds should be distributed to states according to the
               needs of their respective populations, so that each state, with its federal allotment, can
               provide the same level of services to each person in need. Taxpayer equity stipulates that
               funds are distributed so that states can provide individuals comparable services using
               both state and federal funds, while each state contributes about the same proportion of its
               resources to a given federal program.




               Page 28                                                      GAO-13-74 Older Americans Act
                       Appendix II: Objectives, Scope, and
                       Methodology




                       audit to obtain sufficient, appropriate evidence to provide a reasonable
                       basis for our findings and conclusions based on our audit objectives. We
                       believe that the evidence obtained provides a reasonable basis for our
                       findings and conclusions based on our audit objectives.


Analyzing Intrastate   To assess how intrastate funding formulas take into account, as required
Funding Formulas       by the OAA, older adults with greatest economic and social need as
                       defined by the OAA, we reviewed the most recently available state plans
                       for all 50 states. As a starting point for our analysis, we obtained an
                       electronic listing of state agency on aging intrastate funding formulas
                       updated by AOA staff in May 2012. This list categorized factors in each
                       state’s funding formula to target and indicate need, as well as the weights
                       applied to each factor. To assess the reliability of the data, we also
                       obtained electronic copies of state plans from the National Association of
                       States United for Aging and Disabilities website or officials or an AOA
                       official. In a few cases, we also obtained electronic copies of the state
                       plan directly from the state unit on aging website or an agency official. For
                       the 45 states with intrastate funding formulas, we independently reviewed
                       the intrastate formulas detailed in the state plan noting the factors used to
                       indicate need and the assigned weights, and revised and updated the
                       AOA listing provided to us. To ensure the data collected were accurate
                       and complete, two analysts independently reviewed and analyzed the
                       formulas.


Measuring State Need   Data that directly measure the number of people in a state who potentially
Populations            need OAA services do not exist. Although AOA collects data on the
                       number of clients who receive certain types of OAA services, these data
                       are not appropriate for use in a funding formula for two reasons. First,
                       caseloads may be influenced by state funding levels. For example, an
                       agency’s caseload may be relatively small because of limited funds, not
                       because of limited demand for services. Second, data that can be
                       controlled by state agency officials should not be used in a funding
                       formula because they could introduce some undesirable incentives into
                       the program. For instance, if a state’s allotment were determined by the
                       size of its caseload, a state agency might be rewarded for taking
                       inappropriate actions, such as enrolling individuals into an OAA program
                       who do not require these services.

                       There are, however, several national surveys that provide estimates of
                       the number of people that may need OAA services by state using several
                       need indicators. Measures of need for OAA services may be based on


                       Page 29                                           GAO-13-74 Older Americans Act
Appendix II: Objectives, Scope, and
Methodology




low income or minority status, impairments, limited English proficiency,
race, and living in rural area. Several surveys include some of these
measures and are conducted by statistical agencies such as the U.S.
Census Bureau, the National Institute on Aging, and the Social Security
Administration.

For this study we used the Census Bureau’s ACS to use as a measure of
state populations potentially in need of OAA services for several reasons.
First, the ACS provides data on states’ populations age 60 and over.
Second, the ACS has a large sample size (with about 3 million housing
units surveyed across all 50 states, the District of Columbia, and Puerto
Rico), which would allow for accurate estimates of populations in each
state. 3 Third, the ACS surveys people in group quarters such as those
living in nursing care facilities. This is significant because the title VII
Long-term Care Ombudsman program focuses on advocating on behalf
of older residents of long-term care facilities, including nursing homes,
assisted living, and other residential settings. Fourth, the ACS asks
questions that are designed to capture a wide range of potential
economic and social need for populations 60 and older who are targeted
for OAA services, including a person’s ability to perform basic activities of
daily living (ADL), and these questions are asked consistently across all
states (see table 1).

Table 1: Disability Questions from the American Community Survey, 2008-2010

    Question
    1.   Is this person deaf or does he/she have serious difficulty hearing?
    2.   Is this person blind or does he/she have serious difficulty seeing even when wearing
         glasses?
    3.   Because of a physical, mental, or emotional condition, does this person have
         serious difficulty concentrating, remembering, or making decisions?
    4.   Does this person have serious difficulty walking or climbing stairs?
    5.   Does this person have difficulty dressing or bathing?
    6.   Because of a physical, mental, or emotional condition, does this person have
         difficulty doing errands alone such as visiting a doctor’s office or shopping?
Source: U.S. Census Bureau, American Community Survey (2008-2010).




3
 One limitation of the ACS for purposes of allotting OAA funds, however, is that the data
are not available for the other U.S. territories.




Page 30                                                              GAO-13-74 Older Americans Act
                                        Appendix II: Objectives, Scope, and
                                        Methodology




                                        From the ACS data averaged for 2008 to 2010, the number of elderly
                                        people age 60 and over that had at least one ADL limitation is listed in
                                        table 2. Nationwide, about 34 percent of all adults over 60 are limited by
                                        at least one of the six items indicated in table 2. The state’s share of
                                        elderly population compared with the national 34 percent is used to
                                        calculate a state index. If the state’s index value is greater than 1 then the
                                        percentage share of their elderly population with at least one ADL
                                        limitation is higher compared to the national average. For example, West
                                        Virginia has a higher percent of elderly with at least one ADL limitation
                                        (42 percent) compared to the national average (34 percent) and an index
                                        greater than 1. Mississippi ranks the highest in percentage of elderly with
                                        at least one ADL limitation. Mississippi’s state index is 1.28. At the other
                                        end Colorado has the least percent of elderly with at least one ADL
                                        limitation. Colorado’s state’s index is 0.87.

Table 2: Comparison of States’ Share of Population Age 60 and Over with at Least One ADL Limitation

                                                             Number with at      Percentage with
                             Number of elderly                least one ADL      at least one ADL         State to national
State                         age 60 and over                      limitation            limitation         average index
Totals                              55,871,230                    18,941,108               33.90%                     1.00
Alabama                                914,807                       373,662               40.85%                     1.20
Alaska                                  85,953                         30,429              35.40%                     1.04
Arizona                              1,201,071                       367,907               30.63%                     0.90
Arkansas                               577,965                       240,338               41.58%                     1.23
California                           5,930,094                     1,938,535               32.69%                     0.96
Colorado                               793,347                       234,714               29.59%                     0.87
Connecticut                            701,564                       212,704               30.32%                     0.89
Delaware                               178,423                         57,323              32.13%                     0.95
District of Columbia                    96,949                         31,186              32.17%                     0.95
Florida                              4,312,979                     1,362,336               31.59%                     0.93
Georgia                              1,480,443                       526,517               35.56%                     1.05
Hawaii                                 273,399                         81,791              29.92%                     0.88
Idaho                                  269,969                         94,680              35.07%                     1.03
Illinois                             2,229,960                       725,069               32.51%                     0.96
Indiana                              1,168,207                       407,755               34.90%                     1.03
Iowa                                   613,051                       200,908               32.77%                     0.97
Kansas                                 518,052                       183,550               35.43%                     1.05
Kentucky                               810,708                       332,533               41.02%                     1.21
Louisiana                              785,851                       317,913               40.45%                     1.19




                                        Page 31                                                GAO-13-74 Older Americans Act
                            Appendix II: Objectives, Scope, and
                            Methodology




                                                        Number with at                    Percentage with
                 Number of elderly                       least one ADL                    at least one ADL                    State to national
State             age 60 and over                             limitation                          limitation                    average index
Maine                     294,439                                  104,568                             35.51%                             1.05
Maryland                  999,733                                  301,054                             30.11%                             0.89
Massachusetts            1,252,829                                 389,813                             31.11%                             0.92
Michigan                 1,888,120                                 643,100                             34.06%                             1.00
Minnesota                 942,976                                  279,820                             29.67%                             0.88
Mississippi               532,428                                  231,384                             43.46%                             1.28
Missouri                 1,153,175                                 424,288                             36.79%                             1.09
Montana                   205,106                                    68,692                            33.49%                             0.99
Nebraska                  337,579                                  113,036                             33.48%                             0.99
Nevada                    463,287                                  139,035                             30.01%                             0.89
New Hampshire             254,488                                    75,798                            29.78%                             0.88
New Jersey               1,640,212                                 489,437                             29.84%                             0.88
New Mexico                383,604                                  140,072                             36.51%                             1.08
New York                 3,627,253                               1,173,610                             32.36%                             0.95
North Carolina           1,727,139                                 618,971                             35.84%                             1.06
North Dakota              131,650                                    45,966                            34.92%                             1.03
Ohio                     2,249,710                                 769,349                             34.20%                             1.01
Oklahoma                  697,580                                  285,232                             40.89%                             1.21
Oregon                    751,860                                  254,812                             33.89%                             1.00
Pennsylvania             2,662,996                                 900,008                             33.80%                             1.00
Rhode Island              208,204                                    70,042                            33.64%                             0.99
South Carolina            884,234                                  317,300                             35.88%                             1.06
South Dakota              156,676                                    54,118                            34.54%                             1.02
Tennessee                1,198,644                                 460,380                             38.41%                             1.13
Texas                    3,673,715                               1,361,585                             37.06%                             1.09
Utah                      345,934                                  109,120                             31.54%                             0.93
Vermont                   129,647                                    42,075                            32.45%                             0.96
Virginia                 1,386,861                                 436,196                             31.45%                             0.93
Washington               1,171,854                                 389,577                             33.24%                             0.98
West Virginia             415,102                                  174,949                             42.15%                             1.24
Wisconsin                1,063,026                                 324,361                             30.51%                             0.90
Wyoming                    98,377                                    33,510                            34.06%                             1.00
                            Source: GAO analysis of U.S. Census Bureau, American Community Survey 3-year average data (2008-2010).




                            Page 32                                                                          GAO-13-74 Older Americans Act
                                         Appendix II: Objectives, Scope, and
                                         Methodology




Activities of Daily Living and           Prior GAO work has shown that indicators of the ability of a person to
Different Need Measures                  perform basic activities of daily living (ADL) are highly correlative with
                                         other need indicators used by states, such as age, income, and minority
                                         status. For example, in another report, we found that food insecurity
                                         among the elderly was associated with being low-income and having ADL
                                         limitations. 4

                                         Table 3 presents the estimated proportion of adults age 60 and over
                                         within various demographic groups reporting one or more ADL limitation.
                                         It shows that many of the demographic groups associated with greatest
                                         economic and social need for title III and VII services (based on low-
                                         income or minority status, impairments, and limited English proficiency)
                                         have a higher percent chance of having one or more ADL limitation
                                         compared to those not within the above-mentioned groups.

Table 3: Percentage of Older Adults Age 60 and Older with Various Indicators of Need with One or More Activities of Daily
Living Limitations

                                                                             Percent age 60 and                  Percent age 60 and older reporting
Indicator of need                                       Category                          older                        one or more ADL limitations
Age                                                         60 -64                               29.1%                                            21%
                                                             65-69                               21.5%                                            24%
                                                             70-74                               16.4%                                            30%
                                                             75-99                               13.1%                                            40%
                                                            80 -84                               10.2%                                            52%
                                                  85 and above                                     9.6%                                           73%
Race                                                      Minority                                  21%                                           37%
                                                   Non-minority                                     84%                                           33%
Family Poverty Status            At or below poverty threshold                                       9%                                           49%
English Proficiency                  Limited English Speaking                                       14%                                           42%
                                         Source: GAO analysis of U.S. Census Bureau, American Community Survey 3-year average data (2008-2010).




                                         To assess the reliability of the ACS, we reviewed the technical
                                         documentation for these data files, including the coding and definition of
                                         variables of interest, the procedures for handling missing data, coding
                                         checks, and imputation procedures for missing data. Because the ACS


                                         4
                                          GAO, Older Americans Act: More Should Be Done to Measure the Extent of Unmet
                                         Need for Services, GAO-11-237 (Washington, D.C.: February 28, 2011).




                                         Page 33                                                                          GAO-13-74 Older Americans Act
                       Appendix II: Objectives, Scope, and
                       Methodology




                       had a very high response rate, a low allocation rate, and narrow
                       confidence intervals, we found the ACS data to be sufficiently reliable for
                       our study objectives.


Measuring State Cost   Beneficiary equity-based allotment formulas distribute funds so that states
Differences            are able to provide the same levels of services to each person in need.
                       Such formulas can include an index that takes into account differences in
                       the costs of key inputs used to provide services in addition to other
                       formula factors. Developing a cost index including such key inputs could
                       serve as a reasonable proxy to reflect general differences across states in
                       the cost of providing OAA services. A cost of services index is used in the
                       funding formulas for the Community Mental Health Services and the
                       Substance Abuse Prevention and Treatment block grants. Development
                       of a cost of services index for the OAA titles III and VII allotment formulas
                       can draw on a methodology employed in prior GAO reports. 5 Construction
                       of such an index requires estimates of (1) the shares of program national
                       average expenditures for broad categories of OAA title III funded
                       services; (2) the mix of inputs required to provide those services; and (3)
                       geographic variation in the cost of those inputs. This yields a broad based
                       index that reflects cost of a typical or national average mix of services
                       rather than actual services costs for each state. This approach in effect
                       encourages efficiency by rewarding states that are more efficient in
                       delivering OAA-funded services.

                       There are a variety of measures for the costs of resources or inputs that
                       go into providing OAA title III services, which are generally beyond the
                       direct control of state agencies, and that are captured in various available
                       data sets. These key inputs include wages, food, office space, and
                       transportation. These data sets can be used to construct an OAA title III
                       cost index as described above. For example, AOA compiles annual
                       reports on state expenditures for 14 categories of OAA services ranging
                       from home delivered meals to adult day care, which could be used to
                       identify the shares of program national average expenditures for broad
                       categories of OAA services. Also, there are available data sets that
                       capture the costs of such inputs. For example, a 1996 Mathematica


                       5
                        GAO, Older Americans Act: Funding Formula Could Better Reflect State Needs,
                       GAO/HEHS-94-41 (Washington, D.C.: May 12, 1994) and Vocational Rehabilitations
                       Funding Formula: Options for Improving Equity in State Grants and Considerations for
                       Performance Incentives, GAO-09-798 (Washington, D.C.: September 30, 2009).




                       Page 34                                                  GAO-13-74 Older Americans Act
                            Appendix II: Objectives, Scope, and
                            Methodology




                            Policy Research, Inc. report provides detailed estimates of input costs for
                            providing nutritional services that in fiscal year 2010 represented about 60
                            percent of title III services, including congregate and home delivered
                            meals. There are also a number of other federal data sources that may
                            capture geographic variations in the costs of key inputs such as labor,
                            food, and rents—namely, data from the Bureau of Labor Statistics, the
                            United States Department of Agriculture, and the Department of Housing
                            and Urban Development.


Measuring State Financing   A taxpayer equity standard stipulates that funds are distributed so that
Capacity                    states can provide individuals comparable services using both state and
                            federal funds, while each state contributes about the same proportion of
                            their resources to a given federal program. This equity standard requires
                            a formula to include an indicator of each state’s ability to finance its share
                            of the costs of a given program from its own sources. In a funding
                            formula, a good indicator of a state’s financing ability would measure all
                            types of taxable resources and would not be affected by an individual
                            state’s actual fiscal decisions. The Department of the Treasury’s
                            (Treasury) Total Taxable Resources (TTR) estimate is such a measure. A
                            number of prior GAO reports have found that TTR is a comprehensive
                            measure of a jurisdiction’s fiscal capacity, and two specifically found that
                            it is not affected by jurisdictions’ fiscal choices. 6 Incorporating TTR
                            estimates into OAA title III and VII formulas could achieve taxpayer equity
                            by capturing states’ ability to fund program services through a measure of
                            the economic activities that underlie states’ revenue sources—personal
                            and corporate income. Specifically, according to Treasury, the objective
                            of TTR is to capture the unduplicated sum of per capita Income and gross
                            state product (GSP) that is susceptible to taxation by a jurisdiction’s
                            government. By this means, the entirety of income potentially exposed to


                            6
                              For example, GAO, School Finance: Options for Improving Measures of Effort and
                            Equity in Title I, GAO/HEHS-96-142 (Washington, D.C.: August 30, 1996); Ryan White
                            Care Act of 1990: Opportunities to Enhance Funding Equity, GAO/HEHS-96-26
                            (Washington, D.C.: November 13, 1995); Older Americans Act: Funding Formula Could
                            Better Reflect State Needs, GAO/HEHS-94-41 (Washington, D.C: May 12,1994); and
                            Medicaid Formula: Fairness Could Be Improved, GAO/T-HRD-91-5 (Washington, D.C.:
                            December 7, 1990). See also, GAO, Federal Disaster Relief: Improved Criteria Needed to
                            Assess a Jurisdiction’s Capability to Respond and Recover on Its Own, GAO-12-838
                            (Washington, D.C.: September 12, 2012) and Vocational Rehabilitation Funding Formula:
                            Options for Improving Equity in State Grants and Considerations for Performance
                            Incentives, GAO-09-798 (Washington, D.C.: September 30, 2009), which found that TTR
                            is not affected by jurisdictions’ fiscal choices.




                            Page 35                                                 GAO-13-74 Older Americans Act
                                 Appendix II: Objectives, Scope, and
                                 Methodology




                                 taxation is measured. In practice, the calculation is relatively simple. A
                                 jurisdiction’s GSP is supplemented with income received by jurisdiction
                                 residents that originated in other jurisdictions. This would include the
                                 labor earnings of residents who commute to jobs in other jurisdictions,
                                 and the capital income (mainly interest, dividends, rent, and capital gains)
                                 of all jurisdiction residents due to asset holdings in other jurisdictions. It
                                 excludes indirect business taxes paid to the federal government (such as
                                 the payroll tax and federal excises). TTR is used in allotment formulas for
                                 HHS’s Services’ Substance Abuse and Mental Health Services
                                 Administration’s Community Mental Health Service and the Substance
                                 Abuse Prevention and Treatment block grant programs.


Analysis of Formula              For our second objective, we developed three prototype formula options
Options                          based upon equity standards commonly used to design and evaluate
                                 funding formulas. We also estimated the grant allotments that each state
                                 would receive under the partial beneficiary equity option, using data from
                                 the ACS on states’ elder populations with one or more ADL limitations.
                                 See appendix III for a table of our estimates of the grant allotments.
                                 Specifically, for states’ need populations we used the ACS 2008-2010, 3-
                                 year average state data to limit the effects of any year-to-year
                                 fluctuations. As described above, we used the six questions from the ACS
                                 related to the ability to live independently.

Description of Formula Options   The three prototype formula options we developed for revising the OAA
                                 title III and VII allotment formulas are (1) a partial beneficiary equity
                                 formula option that distributes funds based only on the size of a state’s
                                 population potentially in need of services, (2) a full beneficiary equity
                                 formula option with an adjustment for the cost of services, and (3) a
                                 taxpayer equity formula option with the addition of a measure of state
                                 fiscal capacity to account for the relative ability of a state to finance its
                                 share of service costs.

Partial Beneficiary Equity                                                       State Need Population
                                      State Allotment         Appropriation x
Formula Option                                                                  ∑ State Need Population

                                 where: state need population = number of elderly in a state reporting
                                 limitation in one or more activities of daily living, ADLs.

                                 This formula would allot funds based on each state’s share of the total
                                 population in need nationally. It would only partially achieve beneficiary




                                 Page 36                                             GAO-13-74 Older Americans Act
                          Appendix II: Objectives, Scope, and
                          Methodology




                          equity because it does not account for differences among states in the
                          cost of providing services.

                                                                           S        C       A           N       P
Full Beneficiary Equity   State Allotment         Appropriation x      ∑       S        C       A           N       P
Formula Option
                          where: Cost Adjusted Need Popululation               Need Population x Cost Index


                          The cost index in the formula estimates for each state the relative cost of
                          providing OAA-funded services. This formula option thus achieves full
                          beneficiary equity by accounting for both a state’s need population and its
                          costs of providing OAA-funded services.

                                    Taxpayer Equity Option

                          State Allotment
                                                 State Cost Adjusted Need Population x Allotment Percentage
                              Appropriation x
                                                ∑ State Cost Adjusted Need Population x Allotment Percentage

                                                                           TTR/C        A           N   P
                              where: Allotment Percentage       1   0.15       ∑   TTR/ ∑       S   N   P



                          This formula option would achieve taxpayer equity by basing allotments
                          on a state’s need population, adjusted for its cost of providing services,
                          and its ability to fund the state’s share OAA-funded services. In this
                          option, the formula includes an “allotment percentage” to account for a
                          relative state’s ability to finance OAA-funded services from its own fiscal
                          resources. As we described earlier, a number or prior GAO reports have
                          found TTR data to provide a comprehensive measure of a state’s fiscal
                          resources.7 TTR provides a comprehensive indicator of a state’s relative
                          ability to finance services. A state with fewer fiscal resources compared to
                          other states would have a larger allotment percentage and, therefore, a
                          larger final allotment (all else being equal). The allotment percentage
                          equation indicates each state’s required contribution in terms of a
                          matching rate to finance the OAA-funded services. Nationally, this rate is




                          7
                           See GAO-12-838, GAO-09-798, GAO/HEHS-96-142, GAO/HEHS-96-26,
                          GAO/HEHS-94-41, and GAO/T-HRD-91-5.




                          Page 37                                                           GAO-13-74 Older Americans Act
                             Appendix II: Objectives, Scope, and
                             Methodology




                             assumed for illustrative purposes to be 15 percent, with each state’s rate
                             to varying according to its share of national TTR. 8


Literature Review and        To gain perspectives on intrastate funding formulas and options for
Interviews and Site Visits   modifying the statutory funding formulas for titles III and VII, we first
                             reviewed relevant literature and spoke with AOA officials. In addition, we
                             interviewed experts on aging, key national organizations to understand
                             the perspectives of program participants, aging network practitioners, and
                             service providers. Key national organizations included representatives
                             from organizations that represent aging network practitioners and service
                             providers, such as Meals On Wheels Association of America, National
                             Association of States United for Aging and Disability, and National
                             Association of State Long-Term Care Ombudsman Programs. We also
                             interviewed representatives from AARP, a key national organization that
                             represents program participants. In addition, we interviewed other
                             national experts in the aging network. We also conducted site visits in two
                             states, Illinois and Wisconsin, for which we held on-site, semi-structured
                             interviews with regional, state, and local aging officials. These interviews
                             included open-ended questions addressing topics related to our research
                             objectives, including characteristics of program participants, factors that
                             best account for greatest economic and social need, the equity of the
                             distribution of funds under the existing funding formulas, and access to
                             research or data on OAA funding formulas and services. States were
                             selected for geographic efficiency for field office staff conducting the work
                             and are not a representative sample of state units on aging.




                             8
                               States are required to provide a matching share of 15 percent in order to receive funds
                             for OAA title III supportive services and congregate and home-delivered nutrition
                             programs. 42 U.S.C. § 3024(d)(1)(D). Similarly, a matching share of 25 percent is required
                             for the title III National Family Caregiver Support Program. However, no match is required
                             for title III disease prevention and health promotion services or for any title VII programs.
                             42 U.S.C. § 3029(b)(1).

                             .




                             Page 38                                                     GAO-13-74 Older Americans Act
Appendix III: Application of the Partial
                                           Appendix III: Application of the Partial
                                           Beneficiary Equity Option to Fiscal Year 2012
                                           Titles III and VII Allotments


Beneficiary Equity Option to Fiscal Year 2012
Titles III and VII Allotments
                                           The following tables show the application of the partial beneficiary equity
                                           option—distributing funding based on elderly eligible population with at
                                           least one limitation in ADL—to the fiscal year 2012 titles III and VII
                                           allotments. Title III and title VII allotments could also be modified to allow
                                           for full beneficiary equity by additionally adjusting for differences in the
                                           cost of providing services in each state, and for taxpayer equity by
                                           additionally adjusting for differences in each state’s ability to finance
                                           these programs from its own resources.

                                           Table 4 shows the partial beneficiary equity title III allotment for each
                                           state and the percentage change from their fiscal year 2012 allotment
                                           under the partial beneficiary equity option, which is described in appendix
                                           II, and compares populations age 60 and over to population age 60 and
                                           older with at least one ADL limitation. In this table, we exclude the hold
                                           harmless provision and the minimum allotment provided under the current
                                           formula, one-half of one percent of the total federal funds appropriated to
                                           the OAA program, or about $5.9 million for fiscal year 2012.




Table 4: Comparison of Fiscal Year 2012 Title III Allotments to Simulated Partial Beneficiary Equity Allotments

                                                             Formula based on the elderly having an at least one ADL limitation
                                                                                                          Difference
                                    2012 title III
50 states and DC              allotment amount                        Simulated amount              Amount             Percent
Alabama                             $18,218,136                              $22,939,239          $4,721,103            25.91%
Alaska                               $5,928,086                               $1,868,047         -$4,060,039           -68.49%
Arizona                             $24,054,835                              $22,585,938         -$1,468,897            -6.11%
Arkansas                            $11,499,761                              $14,754,433          $3,254,672            28.30%
California                         $118,678,094                             $119,007,334           $329,241              0.28%
Colorado                            $15,803,697                              $14,409,174         -$1,394,523            -8.82%
Connecticut                         $14,327,416                              $13,057,972         -$1,269,444            -8.86%
Delaware                             $5,928,086                               $3,519,079         -$2,409,007           -40.64%
District of Columbia                 $5,928,086                               $1,914,519         -$4,013,567           -67.70%
Florida                             $86,721,589                              $83,634,278         -$3,087,311            -3.56%
Georgia                             $29,451,447                              $32,323,061          $2,871,614             9.75%
Hawaii                               $5,928,086                               $5,021,178           -$906,908           -15.30%
Idaho                                $5,928,086                               $5,812,438           -$115,648            -1.95%
Illinois                            $46,709,183                              $44,512,237         -$2,196,947            -4.70%
Indiana                             $23,302,596                              $25,032,221          $1,729,624             7.42%




                                           Page 39                                                 GAO-13-74 Older Americans Act
                                Appendix III: Application of the Partial
                                Beneficiary Equity Option to Fiscal Year 2012
                                Titles III and VII Allotments




                                                  Formula based on the elderly having an at least one ADL limitation

                         2012 title III                                                        Difference
50 states and DC   allotment amount                        Simulated amount              Amount             Percent
Iowa                     $13,526,086                              $12,333,812         -$1,192,274            -8.81%
Kansas                   $11,004,841                              $11,268,198           $263,358              2.39%
Kentucky                 $16,143,866                              $20,414,316          $4,270,450            26.45%
Louisiana                $15,655,237                              $19,516,789          $3,861,552            24.67%
Maine                     $5,940,070                               $6,419,466           $479,396              8.07%
Maryland                 $19,940,856                              $18,481,809         -$1,459,047            -7.32%
Massachusetts            $26,370,317                              $23,930,755         -$2,439,563            -9.25%
Michigan                 $37,747,646                              $39,480,132          $1,732,486             4.59%
Minnesota                $18,875,651                              $17,178,247         -$1,697,404            -8.99%
Mississippi              $10,664,774                              $14,204,744          $3,539,970            33.19%
Missouri                 $23,260,470                              $26,047,187          $2,786,717            11.98%
Montana                   $5,928,086                               $4,217,026         -$1,711,060           -28.86%
Nebraska                  $7,318,818                               $6,939,319           -$379,499            -5.19%
Nevada                    $9,153,288                               $8,535,407           -$617,881            -6.75%
New Hampshire             $5,928,086                               $4,653,265         -$1,274,821           -21.50%
New Jersey               $33,432,655                              $30,046,707         -$3,385,949           -10.13%
New Mexico                $7,619,473                               $8,599,069           $979,595             12.86%
New York                 $77,516,307                              $72,048,324         -$5,467,983            -7.05%
North Carolina           $34,413,733                              $37,998,844          $3,585,110            10.42%
North Dakota              $5,928,086                               $2,821,869         -$3,106,217           -52.40%
Ohio                     $45,248,374                              $47,230,601          $1,982,227             4.38%
Oklahoma                 $13,989,820                              $17,510,491          $3,520,671            25.17%
Oregon                   $14,965,075                              $15,642,997           $677,922              4.53%
Pennsylvania             $57,248,700                              $55,251,803         -$1,996,897            -3.49%
Rhode Island              $5,928,086                               $4,299,903         -$1,628,183           -27.47%
South Carolina           $17,656,443                              $19,479,157          $1,822,714            10.32%
South Dakota              $5,928,086                               $3,322,323         -$2,605,763           -43.96%
Tennessee                $23,784,711                              $28,262,888          $4,478,177            18.83%
Texas                    $73,246,322                              $83,588,174         $10,341,852            14.12%
Utah                      $6,937,554                               $6,698,915           -$238,639            -3.44%
Vermont                   $5,928,086                               $2,582,999         -$3,345,087           -56.43%
Virginia                 $27,537,616                              $26,778,223           -$759,393            -2.76%
Washington               $23,443,456                              $23,916,267           $472,811              2.02%
West Virginia             $8,828,503                              $10,740,180          $1,911,676            21.65%
Wisconsin                $21,426,723                              $19,912,634         -$1,514,089            -7.07%




                                Page 40                                                 GAO-13-74 Older Americans Act
                                           Appendix III: Application of the Partial
                                           Beneficiary Equity Option to Fiscal Year 2012
                                           Titles III and VII Allotments




                                                                    Formula based on the elderly having an at least one ADL limitation

                                    2012 title III                                                                                        Difference
50 states and DC              allotment amount                                  Simulated amount                                 Amount                       Percent
Wyoming                              $5,928,086                                            $2,057,190                       -$3,870,896                       -65.30%
Total                            $1,162,801,174                                      $1,162,801,174                                       $0                     0.00%

                                           Source: GAO analysis of AOA data on OAA title III state allotments (2012) and U.S. Census Bureau, American Community Survey 3-
                                           year average data (2008-2010).




                                           Table 5 shows the partial beneficiary equity title VII allotments for each
                                           state and the percentage change from their fiscal year 2012 allotments
                                           under the partial beneficiary equity option, which is described in appendix
                                           II, and compares populations age 60 and over to population age 60 and
                                           older with at least one ADL limitation. In this table, our simulation
                                           excludes the hold harmless provision and the minimum allotment that the
                                           current formula provides, of one-half of one percent of the total federal
                                           funds appropriated to the OAA program, or about $108,000 for fiscal year
                                           2012.


Table 5: Comparison of 2012 Title VII Allotments to Simulated Partial Beneficiary Equity Allotments

                                                                     Formula based on the elderly having at least one ADL limitation
                                                                                                                                 Difference
                                             2012 title VII
50 states and DC                       allotment amount                    Simulated amount                                 Amount                            Percent
Alabama                                            $336,116                              $417,659                            $81,543                           24.26%
Alaska                                             $107,898                                $34,012                          -$73,886                          -68.48%
Arizona                                            $446,777                              $411,226                           -$35,551                            -7.96%
Arkansas                                           $211,423                              $268,637                            $57,214                           27.06%
California                                      $2,187,718                            $2,166,787                            -$20,931                            -0.96%
Colorado                                           $294,722                              $262,350                           -$32,372                          -10.98%
Connecticut                                        $257,340                              $237,749                           -$19,591                            -7.61%
Delaware                                           $107,898                                $64,072                          -$43,826                          -40.62%
District of Columbia                               $107,898                                $34,858                          -$73,040                          -67.69%
Florida                                         $1,581,700                            $1,522,744                            -$58,956                            -3.73%
Georgia                                            $549,939                              $588,512                            $38,573                             7.01%
Hawaii                                             $107,898                                $91,421                          -$16,477                          -15.27%
Idaho                                              $107,898                              $105,828                            -$2,070                            -1.92%
Illinois                                           $830,033                              $810,442                           -$19,591                            -2.36%
Indiana                                            $429,683                              $455,766                            $26,083                             6.07%
Iowa                                               $228,715                              $224,564                            -$4,151                            -1.81%




                                           Page 41                                                                            GAO-13-74 Older Americans Act
                      Appendix III: Application of the Partial
                      Beneficiary Equity Option to Fiscal Year 2012
                      Titles III and VII Allotments




                                          Formula based on the elderly having at least one ADL limitation

                         2012 title VII                                         Difference
50 states and DC   allotment amount          Simulated amount                Amount                Percent
Kansas                      $191,820                    $205,162             $13,342                 6.96%
Kentucky                    $298,426                    $371,687             $73,261               24.55%
Louisiana                   $291,260                    $355,346             $64,086               22.00%
Maine                       $108,575                    $116,880              $8,305                 7.65%
Maryland                    $369,048                    $336,502             -$32,546               -8.82%
Massachusetts               $463,743                    $435,711             -$28,032               -6.04%
Michigan                    $697,750                    $718,822             $21,072                 3.02%
Minnesota                   $346,545                    $312,767             -$33,778               -9.75%
Mississippi                 $195,712                    $258,628             $62,916               32.15%
Missouri                    $423,498                    $474,246             $50,748               11.98%
Montana                     $107,898                     $76,780             -$31,118              -28.84%
Nebraska                    $124,937                    $126,345              $1,408                 1.13%
Nevada                      $171,053                    $155,406             -$15,647               -9.15%
New Hampshire               $107,898                     $84,723             -$23,175              -21.48%
New Jersey                  $607,466                    $547,066             -$60,400               -9.94%
New Mexico                  $138,638                    $156,565             $17,927               12.93%
New York                  $1,342,758                  $1,311,796             -$30,962               -2.31%
North Carolina              $637,783                    $691,852             $54,069                 8.48%
North Dakota                $107,898                     $51,378             -$56,520              -52.38%
Ohio                        $833,389                    $859,936             $26,547                 3.19%
Oklahoma                    $258,023                    $318,817             $60,794               23.56%
Oregon                      $277,005                    $284,815              $7,810                 2.82%
Pennsylvania                $994,623                  $1,005,979             $11,356                 1.14%
Rhode Island                $107,898                     $78,289             -$29,609              -27.44%
South Carolina              $328,382                    $354,660             $26,278                 8.00%
South Dakota                $107,898                     $60,490             -$47,408              -43.94%
Tennessee                   $440,583                    $514,587             $74,004               16.80%
Texas                     $1,359,212                  $1,521,904            $162,692               11.97%
Utah                        $127,819                    $121,968              -$5,851               -4.58%
Vermont                     $107,898                     $47,029             -$60,869              -56.41%
Virginia                    $510,806                    $487,556             -$23,250               -4.55%
Washington                  $435,392                    $435,448                 $56                 0.01%
West Virginia               $154,347                    $195,548             $41,201               26.69%
Wisconsin                   $393,789                    $362,553             -$31,236               -7.93%
Wyoming                     $107,898                     $37,456             -$70,442              -65.29%




                      Page 42                                                 GAO-13-74 Older Americans Act
                      Appendix III: Application of the Partial
                      Beneficiary Equity Option to Fiscal Year 2012
                      Titles III and VII Allotments




                                                Formula based on the elderly having at least one ADL limitation

                         2012 title VII                                                                     Difference
50 states and DC   allotment amount                  Simulated amount                                 Amount                            Percent
Total                    $21,171,324                           $21,171,324                                     $0                          0.00%
                      Source: GAO analysis of AOA data on OAA title VII state allotments (2012) and U.S. Census Bureau, American Community Survey 3-
                      year average data (2008-2010).




                      Page 43                                                                            GAO-13-74 Older Americans Act
Appendix IV: Transition Measures for
              Appendix IV: Transition Measures for
              Moderating Impact of Formula Modifications



Moderating Impact of Formula Modifications

              To moderate the decrease in allotments presented in appendix III, we
              present two transition measures. As illustrated in appendix III,
              implementing a partial beneficiary equity formula option using a measure
              of the elderly with at least one ADL limitation will result in allotment
              changes as large as 20 percent. The changes are due in part to a change
              in how the formula measures the need population, as well the exclusion
              of two significant provisions under current law. Specifically, our analysis in
              appendix III did not include the hold harmless provision and the one-half
              of one percent minimum allotment. The following two transition measures
              moderate significant allotment changes by gradually introducing the new
              formula over a number of years or limiting the yearly allotment changes
              using a hold harmless provision, as well by including the one-half of one
              percent minimum allotment. To illustrate the moderating effect of these
              transition options, we have simulated two transitions for the partial equity
              formula. In the first transition, the new formula is phased-in over 6 years
              and lessens the year-to-year changes. In the second transition, the
              changes in allotments are limited annually, and the number of years to
              complete transition may vary. In the two transitions presented, the
              allotments under the partial beneficiary equity formula include the one-
              half of one percent minimum allotment, approximately $5.9 million for
              fiscal year 2012. The comparisons are made for fiscal 2012 title III
              allotments using the same funding amount.

              Phase-In Transition

              In the first example, a 6 year transition is demonstrated, which
              incrementally phases in the new formula. In the first year, the allotments
              are based on a 50-50 split between the current formula and the partial
              beneficiary equity formula option. In a 50-50 split, half of the allotment is
              based on the current formula and half from the partial beneficiary equity
              formula option. In the second year, the split is 40-60 between the current
              formula and the partial beneficiary equity formula option. The split in the
              succeeding years are 30-70, 20-80, 10-90, and 0-100. By the sixth year
              the entire allotment is based on the partial beneficiary equity formula
              option. Table 6 shows the first, second, and fifth year allotments under a
              6-year phase-in. This transition could be made faster or more gradually
              by changing the splits between the current and alternative formulas and
              number of years. Other split combinations could be used for the initial and
              subsequent years, such as 80-20, 60-40, 40-60, 20-80, and 0-100.

              Table 6 shows the allotments under the partial beneficiary equity formula
              option using this transition method and compares the changes to the
              current allotments. For example, the allotment to Alabama rises by 12


              Page 44                                            GAO-13-74 Older Americans Act
Appendix IV: Transition Measures for
Moderating Impact of Formula Modifications




percent in the first year of transition (using the 50-50 split). In comparison,
if no transition was provided its allotment would have risen by 27 percent.
By the fifth year, the allotment to Alabama rises to over 20 percent. In
contrast, the allotment to New Jersey in the first year falls by 6 percent,
and without the transition its allotment falls by 10 percent. By the fifth
year, the allotment falls by over 11 percent.




Page 45                                            GAO-13-74 Older Americans Act
Appendix IV: Transition Measures for
           Appendix IV: Transition Measures for Moderating Impact of Formula Modifications




Moderating Impact of Formula Modifications


Table 6: Transition Combining the FY 2012 Current Formula Allotments and Partial Beneficiary Equity Formula Option, Comparison of Allotments

                                                    Year 1: 50:50 Allotments                       Year 2: 40:60 Allotments                   Year 5: 10:90 Allotments

States and the                 Actual 2012           Partial         Difference                Partial         Difference                  Partial         Difference
District of Columbia                title III        equity      Amount       Percent          equity       Amount            Percent      equity       Amount          Percent
Alabama                            $18,218          $20,458       $2,240      12.29%          $20,835         $2,617          14.37%      $21,967        $3,749         20.58%
Alaska                               $5,928          $5,928              $0       0.00%        $5,928             $0           0.00%       $5,928           $0           0.00%
Arizona                            $24,055          $23,189         -$866      -3.60%         $22,951        -$1,104          -4.59%      $22,238       -$1,817          -7.55%
Arkansas                           $11,500          $13,053       $1,553      13.50%          $13,317         $1,817          15.80%      $14,108        $2,608         22.68%
California                        $118,678        $118,144          -$534      -0.45%        $117,700          -$979          -0.82%     $116,367       -$2,311          -1.95%
Colorado                           $15,804          $15,069        -$735       -4.65%         $14,862          -$942          -5.96%      $14,242       -$1,561          -9.88%
Connecticut                        $14,327          $13,479        -$848       -5.92%         $13,327        -$1,000          -6.98%      $12,871       -$1,456         -10.16%
Delaware                             $5,928          $5,928              $0       0.00%        $5,928             $0           0.00%       $5,928           $0           0.00%
District of Columbia                 $5,928          $5,928              $0       0.00%        $5,928             $0           0.00%       $5,928           $0           0.00%
Florida                            $86,722          $84,503       -$2,218      -2.56%         $83,896        -$2,826          -3.26%      $82,074       -$4,648          -5.36%
Georgia                            $29,451          $30,768       $1,317          4.47%       $30,911         $1,460           4.96%      $31,342        $1,890          6.42%
Hawaii                               $5,928          $5,928              $0       0.00%        $5,928             $0           0.00%       $5,928           $0           0.00%
Idaho                                $5,928          $5,928              $0       0.00%        $5,928             $0           0.00%       $5,928           $0           0.00%
Illinois                           $46,709          $44,310       -$2,399      -5.14%         $44,120        -$2,589          -5.54%      $43,549       -$3,160          -6.77%
Indiana                            $23,303          $24,048         $745          3.20%       $24,115          $812            3.49%      $24,316        $1,014          4.35%
Iowa                               $13,526          $12,229       -$1,297      -9.59%         $12,186        -$1,340          -9.91%      $12,057       -$1,469         -10.86%
Kansas                             $11,005          $10,746         -$259      -2.35%         $10,792          -$213          -1.93%      $10,930          -$75          -0.68%
Kentucky                           $16,144          $18,171       $2,028      12.56%          $18,514         $2,371          14.68%      $19,543        $3,399         21.05%
Louisiana                          $15,655          $17,482       $1,827      11.67%          $17,788         $2,133          13.62%      $18,705        $3,050         19.48%
Maine                                $5,940          $6,115         $175          2.94%        $6,143          $202            3.41%       $6,225         $285           4.80%
Maryland                           $19,941          $19,147         -$794      -3.98%         $18,918        -$1,023          -5.13%      $18,231       -$1,709          -8.57%
Massachusetts                      $26,370          $24,369       -$2,001      -7.59%         $24,158        -$2,213          -8.39%      $23,522       -$2,848         -10.80%


                                                               Page 46                                                  GAO-13-74 Older Americans Act
           Appendix IV: Transition Measures for Moderating Impact of Formula Modifications




Michigan                           $37,748          $38,391        $643         1.70%        $38,404     $656        1.74%         $38,444         $696     1.84%
Minnesota                          $18,876          $17,936        -$940       -4.98%        $17,695   -$1,180       -6.25%        $16,973       -$1,902   -10.08%
Mississippi                        $10,665          $12,323      $1,658       15.55%         $12,626   $1,961       18.39%         $13,534       $2,869    26.90%
Missouri                           $23,260          $24,390      $1,130         4.86%        $24,587   $1,326        5.70%         $25,176       $1,915     8.23%
Montana                              $5,928          $5,928             $0      0.00%         $5,928       $0        0.00%          $5,928           $0     0.00%
Nebraska                             $7,319          $6,806       -$513        -7.01%         $6,796    -$522        -7.14%         $6,769        -$550     -7.52%
Nevada                               $9,153          $8,859       -$295        -3.22%         $8,750    -$404        -4.41%         $8,423        -$730     -7.98%
New Hampshire                        $5,928          $5,928             $0      0.00%         $5,928       $0        0.00%          $5,928           $0     0.00%
New Jersey                         $33,433          $31,279      -$2,154       -6.44%        $30,877   -$2,556       -7.65%        $29,670       -$3,763   -11.25%
New Mexico                           $7,619          $8,081        $462         6.06%         $8,140     $521        6.84%          $8,317         $698     9.16%
New York                           $77,516          $71,902      -$5,614       -7.24%        $71,558   -$5,959       -7.69%        $70,525       -$6,991    -9.02%
North Carolina                     $34,414          $36,036      $1,622         4.71%        $36,232   $1,818        5.28%         $36,819       $2,405     6.99%
North Dakota                         $5,928          $5,928             $0      0.00%         $5,928       $0        0.00%          $5,928           $0     0.00%
Ohio                               $45,248          $45,835        $587         1.30%        $45,870     $621        1.37%         $45,972         $724     1.60%
Oklahoma                           $13,990          $15,609      $1,619       11.57%         $15,899   $1,909       13.64%         $16,767       $2,777    19.85%
Oregon                             $14,965          $15,249        $284         1.90%        $15,247     $282        1.88%         $15,240         $275     1.84%
Pennsylvania                       $57,249          $53,936      -$3,312       -5.79%        $53,913   -$3,336       -5.83%        $53,843       -$3,406    -5.95%
Rhode Island                         $5,928          $5,928             $0      0.00%         $5,928       $0        0.00%          $5,928           $0     0.00%
South Carolina                     $17,656          $18,461        $805         4.56%        $18,564     $908        5.14%         $18,872       $1,215     6.88%
South Dakota                         $5,928          $5,928             $0      0.00%         $5,928       $0        0.00%          $5,928           $0     0.00%
Tennessee                          $23,785          $25,931      $2,146         9.02%        $26,251   $2,466       10.37%         $27,211       $3,426    14.40%
Texas                              $73,246          $77,997      $4,751         6.49%        $78,682   $5,436        7.42%         $80,737       $7,491    10.23%
Utah                                 $6,938          $6,773        -$164       -2.37%         $6,724    -$214        -3.08%         $6,575        -$363     -5.23%
Vermont                              $5,928          $5,928             $0      0.00%         $5,928       $0        0.00%          $5,928           $0     0.00%
Virginia                           $27,538          $27,117       -$421        -1.53%        $26,910    -$628        -2.28%        $26,291       -$1,247    -4.53%
Washington                         $23,443          $23,541         $98         0.42%        $23,492      $49        0.21%         $23,345         -$98     -0.42%
West Virginia                        $8,829          $9,444        $616         6.98%         $9,648     $819        9.28%         $10,258       $1,430    16.20%


                                                              Page 47                                            GAO-13-74 Older Americans Act
        Appendix IV: Transition Measures for Moderating Impact of Formula Modifications




Wisconsin                       $21,427          $20,486       -$941        -4.39%            $20,268                 -$1,159                -5.41%                $19,614            -$1,812                 -8.46%
Wyoming                           $5,928          $5,928             $0      0.00%             $5,928                        $0               0.00%                  $5,928                   $0               0.00%
Total                        $1,162,801      $1,162,801              $0      0.00%        $1,162,801                         $0               0.00%            $1,162,801                     $0               0.00%
                                                                                     Source: GAO analysis of AOA data on OAA Titles III and VII state allotments (2012) and U.S. Census Bureau, American Community Survey
                                                                                     3-year average data (2008-2010).




                                                           Page 48                                                                    GAO-13-74 Older Americans Act
Appendix IV: Transition Measures for
Moderating Impact of Formula Modifications




Hold Harmless Transition

The second transition method utilizes a hold harmless provision. The hold
harmless provision works by constraining the losses of states that could
lose funding under an alternative formula. The additional funding needed
to raise the allotments to the states losing more than a certain percentage
is obtained by proportionally lowering the allotments to the states not
affected by the hold harmless provision. In the example presented in table
7, the hold harmless losses are 2 percent in the first year, 4 percent in the
second year, 6 percent in the third year, 8 percent in the fourth year, and,
10 percent in the fifth year.

Table 7 shows the allotments under the partial equity formula using this
hold harmless transition method and compares the changes to the current
allotments. The allotment to Alabama rises by 13 percent in the first year
of transition. In comparison, if no transition was provided for its allotment
would have risen by 26 percent. By the fifth year, the allotment to
Alabama rises to 22 percent. In contrast, the allotment to New Jersey in
first year falls by 2 percent, the maximum permissible loss. Without the
transition, New Jersey’s allotment falls by 10 percent. By the fifth year,
the allotment to New Jersey falls by 10 percent.




Page 49                                           GAO-13-74 Older Americans Act
           Appendix IV: Transition Measures for Moderating Impact of Formula Modifications




Table 7: Transition Using a Hold Harmless, Comparison of FY 2012 Allotments to Allotments for the Partial Beneficiary Equity Formula Option

                                                  Year 1: Allotments Include 2% HH                 Year 2: Allotments Include 4% HH       Year 5: Allotments Include 10% HH

States and the                            Actual 2012         Partial        Difference               Partial       Difference                 Partial      Difference
District of Columbia                           title III      equity       Amount      Percent        equity    Amount       Percent           equity     Amount    Percent
Alabama                                        $18,218       $20,602        $2,384      13.09%       $21,435      $3,217     17.66%           $22,299      $4,081   22.40%
Alaska                                          $5,928        $5,928             $0       0.00%       $5,928          $0         0.00%         $5,928          $0    0.00%
Arizona                                        $24,055       $23,574         -$481        -2.00%     $23,093       -$962         -4.00%       $21,955     -$2,100    -8.73%
Arkansas                                       $11,500       $13,251        $1,751      15.23%       $13,787      $2,287     19.89%           $14,342      $2,843   24.72%
California                                   $118,678      $116,305         -$2,374       -2.00%    $113,931     -$4,747         -4.00%      $115,685     -$2,993    -2.52%
Colorado                                       $15,804       $15,488         -$316        -2.00%     $15,172       -$632         -4.00%       $14,223     -$1,580   -10.00%
Connecticut                                    $14,327       $14,041         -$287        -2.00%     $13,754       -$573         -4.00%       $12,895     -$1,433   -10.00%
Delaware                                        $5,928        $5,928             $0       0.00%       $5,928          $0         0.00%         $5,928          $0    0.00%
District of Columbia                            $5,928        $5,928             $0       0.00%       $5,928          $0         0.00%         $5,928          $0    0.00%
Florida                                        $86,722       $84,987        -$1,734       -2.00%     $83,253     -$3,469         -4.00%       $81,299     -$5,422    -6.25%
Georgia                                        $29,451       $29,030         -$421        -1.43%     $30,203       $752          2.55%        $31,421      $1,969    6.69%
Hawaii                                          $5,928        $5,928             $0       0.00%       $5,928          $0         0.00%         $5,928          $0    0.00%
Idaho                                           $5,928        $5,928             $0       0.00%       $5,928          $0         0.00%         $5,928          $0    0.00%
Illinois                                       $46,709       $45,775         -$934        -2.00%     $44,841     -$1,868         -4.00%       $43,269     -$3,440    -7.36%
Indiana                                        $23,303       $22,837         -$466        -2.00%     $23,391        $88          0.38%        $24,333      $1,031    4.42%
Iowa                                           $13,526       $13,256         -$271        -2.00%     $12,985       -$541         -4.00%       $12,173     -$1,353   -10.00%
Kansas                                         $11,005       $10,785         -$220        -2.00%     $10,565       -$440         -4.00%       $10,954        -$51    -0.47%
Kentucky                                       $16,144       $18,334        $2,191      13.57%       $19,076      $2,932     18.16%           $19,844      $3,700   22.92%
Louisiana                                      $15,655       $17,528        $1,873      11.97%       $18,237      $2,582     16.49%           $18,972      $3,317   21.19%
Maine                                           $5,940        $5,928           -$12       -0.20%      $5,998        $58          0.98%         $6,240        $300    5.05%
Maryland                                       $19,941       $19,542         -$399        -2.00%     $19,143       -$798         -4.00%       $17,966     -$1,975    -9.90%
Massachusetts                                  $26,370       $25,843         -$527        -2.00%     $25,316     -$1,055         -4.00%       $23,733     -$2,637   -10.00%
Michigan                                       $37,748       $36,993         -$755        -2.00%     $36,891       -$857         -2.27%       $38,378        $630    1.67%
                                                             Page 50                                                 GAO-13-74 Older Americans Act
           Appendix IV: Transition Measures for Moderating Impact of Formula Modifications




                                                  Year 1: Allotments Include 2% HH                 Year 2: Allotments Include 4% HH       Year 5: Allotments Include 10% HH
                                                                             Difference                             Difference                              Difference
States and the                            Actual 2012         Partial                                 Partial                                  Partial
District of Columbia                           title III      equity       Amount      Percent        equity    Amount       Percent           equity     Amount    Percent
Minnesota                                      $18,876       $18,498         -$378        -2.00%     $18,121       -$755         -4.00%       $16,988     -$1,888   -10.00%
Mississippi                                    $10,665       $12,758        $2,093      19.62%       $13,273      $2,608     24.46%           $13,808      $3,143   29.47%
Missouri                                       $23,260       $23,393          $133        0.57%      $24,339      $1,079         4.64%        $25,320      $2,059    8.85%
Montana                                         $5,928        $5,928             $0       0.00%       $5,928          $0         0.00%         $5,928          $0    0.00%
Nebraska                                        $7,319        $7,172         -$146        -2.00%      $7,026       -$293         -4.00%        $6,746       -$573    -7.83%
Nevada                                          $9,153        $8,970         -$183        -2.00%      $8,787       -$366         -4.00%        $8,297       -$856    -9.35%
New Hampshire                                   $5,928        $5,928             $0       0.00%       $5,928          $0         0.00%         $5,928          $0    0.00%
New Jersey                                     $33,433       $32,764         -$669        -2.00%     $32,095     -$1,337         -4.00%       $30,089     -$3,343   -10.00%
New Mexico                                      $7,619        $7,723          $104        1.36%       $8,035       $416          5.46%         $8,359        $740    9.71%
New York                                       $77,516       $75,966        -$1,550       -2.00%     $74,416     -$3,101         -4.00%       $70,037     -$7,480    -9.65%
North Carolina                                 $34,414       $34,127         -$286        -0.83%     $35,507      $1,093         3.18%        $36,938      $2,524    7.33%
North Dakota                                    $5,928        $5,928             $0       0.00%       $5,928          $0         0.00%         $5,928          $0    0.00%
Ohio                                           $45,248       $44,343         -$905        -2.00%     $44,133     -$1,115         -2.46%       $45,912        $664    1.47%
Oklahoma                                       $13,990       $15,727        $1,737      12.41%       $16,362      $2,372     16.96%           $17,022      $3,032   21.67%
Oregon                                         $14,965       $14,666         -$299        -2.00%     $14,617       -$348         -2.33%       $15,206        $241    1.61%
Pennsylvania                                   $57,249       $56,104        -$1,145       -2.00%     $54,959     -$2,290         -4.00%       $53,709     -$3,540    -6.18%
Rhode Island                                    $5,928        $5,928             $0       0.00%       $5,928          $0         0.00%         $5,928          $0    0.00%
South Carolina                                 $17,656       $17,495         -$162        -0.92%     $18,202       $545          3.09%        $18,935      $1,279    7.24%
South Dakota                                    $5,928        $5,928             $0       0.00%       $5,928          $0         0.00%         $5,928          $0    0.00%
Tennessee                                      $23,785       $25,383        $1,599        6.72%      $26,409      $2,625     11.04%           $27,474      $3,689   15.51%
Texas                                          $73,246       $75,072        $1,826        2.49%      $78,106      $4,860         6.64%        $81,254      $8,008   10.93%
Utah                                            $6,938        $6,799         -$139        -2.00%      $6,660       -$278         -4.00%        $6,512       -$426    -6.14%
Vermont                                         $5,928        $5,928             $0       0.00%       $5,928          $0         0.00%         $5,928          $0    0.00%
Virginia                                       $27,538       $26,987         -$551        -2.00%     $26,436     -$1,102         -4.00%       $26,031     -$1,507    -5.47%


                                                             Page 51                                                 GAO-13-74 Older Americans Act
        Appendix IV: Transition Measures for Moderating Impact of Formula Modifications




                                               Year 1: Allotments Include 2% HH                        Year 2: Allotments Include 4% HH                            Year 5: Allotments Include 10% HH
                                                                          Difference                                              Difference                                                    Difference
States and the                         Actual 2012         Partial                                           Partial                                                         Partial
District of Columbia                        title III      equity       Amount      Percent                  equity          Amount              Percent                     equity          Amount          Percent
Washington                                  $23,443       $22,975         -$469        -2.00%              $22,506               -$938            -4.00%                   $23,249               -$195         -0.83%
West Virginia                                $8,829        $9,646          $817        9.26%               $10,036              $1,207            13.68%                   $10,440             $1,612         18.26%
Wisconsin                                   $21,427       $20,998         -$429        -2.00%              $20,570               -$857            -4.00%                   $19,357            -$2,070          -9.66%
Wyoming                                      $5,928        $5,928             $0       0.00%                 $5,928                   $0           0.00%                     $5,928                  $0         0.00%
Total                                   $1,162,801      $1,162,801            $0       0.00%           $1,162,801                     $0           0.00%              $1,162,801                     $0         0.00%
                                                                                     Source: GAO analysis of AOA data on OAA Titles III and VII state allotments (2012) and U.S. Census Bureau, American Community
                                                                                     Survey 3-year average data (2008-2010).




                                                          Page 52                                                                    GAO-13-74 Older Americans Act
Appendix IV: Transition Measures for
Moderating Impact of Formula Modifications




While the preceding illustrations show the application of transition options
to the OAA title III formula allotments, these options for moderating
formula changes could also be applied to title VII. These transition options
could also be used to moderate the impact of the application of the full
beneficiary equity option by additionally adjusting for differences in cost of
providing services in each state, and the taxpayer equity option by
additionally adjusting for differences in each state’s ability to finance
these programs from its own resources. Finally, the change in formula
allotments could also be moderated if additional program funding were
available.




Page 53                                           GAO-13-74 Older Americans Act
Appendix V: Comments from the Department
             Appendix V: Comments from the Department
             of Health and Human Services



of Health and Human Services




             Page 54                                    GAO-13-74 Older Americans Act
Appendix V: Comments from the Department
of Health and Human Services




Page 55                                    GAO-13-74 Older Americans Act
Appendix VI: GAO Contact and Staff
                  Appendix VI: GAO Contact and Staff
                  Acknowledgments



Acknowledgments

                  Charles A. Jeszeck, Director, (202) 512-7215, or jeszeckc@gao.gov
GAO Contact
                  In addition to the contact named above, David Lehrer, Assistant Director;
Staff             Amber Yancey-Carroll, Analyst-in-Charge; Gregory Dybalski, Jessica
Acknowledgments   Gray, Sharon Hermes, DuEwa Kamara, Luann Moy, and Michael
                  Springer made significant contributions to the engagement. Also
                  contributing to this report were Jessica Botsford, David Chrisinger, Holly
                  Dye, Monika Gomez, Kathy Leslie, Ashley McCall, Sheila McCoy, Mimi
                  Nguyen, Lorin Obler, Anna Maria Ortiz, Max Sawicky, Sal Sorbello, and
                  Craig Winslow.




(131163)
                  Page 56                                          GAO-13-74 Older Americans Act
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