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Statistical Issues in Allocating Funds by Formula (2003) / Chapter Skim
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Executive Summary
Pages 1-4

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From page 1...
... The essential feature of a formula allocation program is that fund distribution is determined by the application of a formula that uses statistical information to calculate or estimate the values of its inputs. The allocation process consists of a basic calculation using a mathematical formula or algorithm; it often includes adjustments that place constraints on levels or shares (percentages of the total allocation)
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From page 2...
... At the other extreme, the legislation would define the general objectives of the program, and the program agency would develop the specific formula and allocation procedures. The panel calls on formula allocation program designers in both the legislative and executive branches to be aware of and to evaluate the potential for behavioral responses by the funded jurisdictions aimed at influencing input data or other factors that affect calculated funding levels.
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From page 3...
... The panel also recommends that OMB establish a standing Interagency Committee on Formula Allocations charged with developing improved simulation and quality-control techniques for use in formula design and fund allocation procedures. Appendix E of this report contains a template that could be used by the interagency committee to develop a handbook that would serve as an introduction to underlying concepts and practical considerations in the use of formula-based fund allocation.
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Key Terms

  • allocation programs
  • fund allocation
  • allocation program
  • data issues
  • interagency committee

  • executive branches
  • allocation process
  • formula inputs
  • fiscal capacity
  • formula design

  • essential feature
  • review protocol
  • formula features
  • formula allocations
  • standing interagency

  • strongly recommends
  • behavioral responses
  • affect calculated
  • providing documentation
  • allocations charged

  • assessing alternative
  • excellent tool
  • calculation using
  • issues created
  • influencing input

  • underlying concepts
  • omb establish
  • formula review
  • alternative measures
  • practical considerations


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