Summary

In response to congressional concerns that current title III allocations do not fully reflect indicators of states' needs, GAO examined the interstate funding formula of the current Older Americans Act of 1965. This formula allocated more than $770 million in federal title III dollars in fiscal year 1993 among the 50 states and the District of Columbia. GAO concludes that Congress should modify the formula for distributing title III money to better target those elderly persons with the greatest social and economic needs. In this report, GAO (1) develops equity standards appropriate to evaluating the allocation of title III assistance to the states, (2) uses these standards to create alternative formulas under which funds might be distributed more equitably, (3) shows how each of the alternatives would redistribute funding among the states, and (4) explores ways of phasing in a new formula to moderate the degrees of funding changes in a single year.

GAO found that: (1) current OAA funding allocations do not achieve beneficiary equity; (2) states differ in their concentrations of high-risk individuals; (3) the current formula does not recognize differences among states in the costs of providing title III services; (4) current OAA funding allocations do not achieve taxpayer equity; (5) several options for distributing funds exist that would improve equity in fund distribution; (6) some states are consistently underfunded under the current formula; and (7) a new distribution formula should be phased in over a multiyear period in order to allow states to gradually adjust to new funding levels.