Order Code RS22549
December 8, 2006
Older Americans Act: Funding Formulas
Kirsten J. Colello
Analyst in Gerontology
Domestic Social Policy Division
Summary
The Older Americans Act (OAA) is the major vehicle for the delivery of social and
nutrition services for older persons. The act’s statutory funding formulas determine
state allotments under Title III, Grants for State and Community Programs; Title V, the
Community Service Senior Opportunities Act; Title VI, Grants for Older Native
Americans; and, Title VII, Vulnerable Elder Rights Protection Activities. The OAA
Amendments of 2006 (P.L.109-365) reauthorized all programs under the act through
FY2011. Among other things, P.L.109-365 changed the formula allocation for most
Title III programs. No changes were made to Title V, VI, or VII formulas. This report
describes the OAA’s process for allocating funds under current law.
Background. Originally enacted in 1965 (P.L. 89-73), the Older Americans Act
(OAA) supports a wide range of social services and programs for older persons. The
OAA includes the following grant programs that provide funding to states based on
statutory formulas: Title III, Grants for State and Community Programs on Aging; Title
V, the Community Service Senior Opportunities Act (formerly titled the Older American
Community Service Employment Act); Title VI, Grants for Older Native Americans;1
and, Title VII, Vulnerable Elder Rights Protection Activities. These formula grants fund
programs that assist older Americans with supportive services, nutrition, disease
prevention and health promotion, family caregiver support, and community service
employment, and programs that help residents of long-term care facilities to resolve
complaints and prevent elder abuse, neglect, and exploitation.
On October 17, 2006, President Bush signed H.R. 6197 (P.L. 109-365), the Older
Americans Act Amendments of 2006. The law reauthorizes all OAA programs for five
years through FY2011. P.L. 109-365 changed the Title III formula for supportive
1 Title VI, Grants for Older Native Americans, distributes funds for supportive and nutrition
services to Indian tribal organizations based on the amount each organization received in
FY1991. If funds for a given year exceed the amount provided in FY1991, then the grant amount
is increased to equal or approximate the amount the organization received in 1980, or an amount
the Assistant Secretary considers sufficient.

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services, congregate nutrition services, home-delivered nutrition services, and disease
prevention and health promotion services to ensure that every state receives at least its
FY2006 amount, while phasing out the provision that guarantees every state a share of
any increase in total funding above FY2006. No changes were made to the other grant
formulas in the act.
Title III — Grants for State and Community Programs on Aging. Title III
authorizes grants to state and area agencies on aging in all 50 states, the District of
Columbia, Puerto Rico, and the U.S. territories to act as advocates on behalf of, and to
coordinate programs for, older persons (defined in the law as those aged 60 and older).
The Administration on Aging (AoA), within the Department of Heath and Human
Services (DHHS), allocates Title III funds to state agencies on aging. The states, in turn,
award funds to approximately 655 area agencies on aging, which are designated by states
to operate within specified planning and service areas. (States determine the manner in
which they distribute funds to area agencies on aging.)
As the OAA’s largest component, spending under Title III accounted for 70% of the
act’s total FY2006 appropriations ($1.24 billion out of $1.78 billion).2 States receive
separate allotments of funds for the following six programs authorized under Title III: (1)
supportive services and senior centers, (2) congregate nutrition services, (3)
home-delivered nutrition services, (4) nutrition services incentive grants, (5) disease
prevention and health promotion services, and (6) family caregiver support services.
To determine state allotments, a separate allocation is calculated for each of the six
grant programs. The same formula is used to determine state allocations for supportive
services and centers, congregate nutrition services, home-delivered nutrition services, and
disease prevention and health promotion services. The formulas for nutrition service
incentive grants and family caregiver services use different factors. The following section
describes the different Title III allocation formulas.
Allocation for Supportive Services and Centers, Congregate Nutrition
and Home-Delivered Nutrition Services, and Disease Prevention and Health
Promotion.
State allotments are based on a population formula factor that is defined as
each state’s relative share of the total U.S. population aged 60 years and older. For the
purposes of this calculation, the U.S. population aged 60 and older includes all states, the
District of Columbia, Puerto Rico, and the U.S. territories. Population data are from
annual population estimates published by the U.S. Census; the reference date for estimates
is July 1. There is a two-year time lag between the reference year of the population
estimates and the respective appropriation year. For example, in FY2006, state allotments
based on the population aged 60 and older were calculated using 2004 estimates.
For the purpose of determining state allotments, the law requires that allotments meet
two criteria. The first criterion is that states (including the District of Columbia and
2 For further information, see CRS Report RL31336, Older Americans Act: Programs, Funding,
and 2006 Reauthorization (P.L. 109-365)
, by Carol O’Shaughnessy and Angela Napili.

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Puerto Rico) receive a minimum amount of funds, which is defined as half of 1% of the
total grant appropriation for the respective fiscal year.3
The second criterion is the “hold harmless” provision. Prior to the 2006
reauthorization, if funding exceeded the FY2000 amount, states received no less than their
FY2000 allotment plus 20% of the percentage increase above the FY2000 program
appropriation for each of the four programs. The latter provision is often referred to as
the “guaranteed growth” provision. If funding for a given year was equal to or less than
FY2000, states received an allotment in proportion to their respective FY2000 allotments.
OAA Amendments of 2000. The way in which the AoA distributed Title III funds
to states was a concern for Congress in the 2000 reauthorization.4 A 1994 General
Accounting Office (now the Government Accountability Office, or GAO) report found
that the method AoA used did not distribute funds using the most recent population data.5
Instead, AoA allotted funds to states, first according to an amount equal to their FY1987
“hold harmless” allocations, with the remainder of the appropriations allotted to states
based on their relative share of the population aged 60 and over, according to the most
recently available estimates of state population. This negatively affected states with
faster-growing older populations, since the majority of funds were being distributed
according to population estimates that did not reflect the most recent trends. The GAO
report recommended that AoA revise its methodology for distributing funds to states.
In response to these concerns, the 2000 reauthorization resulted in the following
changes to the law: (1) Congress clarified the law to ensure that, first, funds were allotted
to states based on the most recent population data;6 (2) Congress created an FY2000 “hold
harmless” requirement, thereby ensuring that no state would receive less than it received
in FY2000; and (3) Congress created the “guaranteed growth” provision, ensuring that
all states would receive a share of any appropriations increase over the FY2000 level.
OAA Amendments of 2006. The Title III funding formula became a major point
of contention for the 109th Congress during the 2006 reauthorization debate. Congress
revisited the FY2000 “hold harmless” requirement and “guaranteed growth” provision.
These issues divided Members from states with relatively faster-growing elderly
populations from lawmakers representing states with relatively slower growth in their
older populations. High-growth states argued that the “hold-harmless” provisions in
current law provided protections to states whose populations were not increasing as fast
as others, resulting in an inequitable distribution of funds that disadvantage high-growth
states.
3 Guam and the U.S. Virgin Islands are allotted no less than one-quarter of 1% of the total grant
appropriation, and American Samoa and the Commonwealth of the Northern Mariana Islands are
allotted no less than one-sixteenth of 1% of the total grant appropriation.
4 For further information, see CRS Report RL30055, Older Americans Act: 106th Congress
Legislation
, by Carol O’Shaughnessy.
5 U.S. General Accounting Office (now the Government Accountability Office). Older Americans
Act: Title III Funds Not Distributed According to Statute
, GAO/HEHS-94-37, January 1994.
6 After unsuccessful attempts to reauthorize the OAA by the 104th and 105th Congresses, the 106th
Congress approved the Older Americans Act Amendments of 2000 (H.R. 782, P.L. 106-501,
signed Nov. 13, 2000). The Title III funding formula was a controversial issue during the six
years of congressional debate on reauthorization.

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The 2006 reauthorization ultimately resulted in changes to the law as follows: (1)
Congress changed the formula to ensure that, provided sufficient funds, every state
receives at least its FY2006 amount (creating a new fiscal year “hold harmless” amount);
and (2) Congress phased out the guaranteed growth provision, reducing the share of any
increase in appropriations by 5 percentage points annually beginning in FY2008. Over
the next four years, the guaranteed growth provisions will be
! 20% of the percentage increase in appropriations from FY2006 to
FY2007;
! 15% of the percentage increase in appropriations from FY2006 to
FY2008;
! 10% of the percentage increase in appropriations from FY2006 to
FY2009; and
! 5% of the percentage increase in appropriations from FY2006 to
FY2010.
In FY2011, the formula will not include the guaranteed growth provision; thus the
formula will be as follows: (1) states will receive an allotment based on their population
formula factor; (2) states will receive a minimum grant amount of at least half of 1%; and
(3) states will receive no less than their FY2006 allotments.
Allocation for Nutrition Services Incentive Grants. Funds for nutrition
services incentive grants are allotted to states based on a formula that takes into account
the number of meals served by each state’s nutrition program in the prior year.
Allocation for Family Caregiver Support Program. Funds for the family
caregiver support program are allotted to states based on each state’s relative share of the
population aged 70 years and older. States receive a minimum grant amount, which is
defined as half of 1% of the total grant appropriation for the respective fiscal year.7 There
is no hold harmless or guaranteed growth provision in the state formula allocation for this
grant program.
Title V — Community Service Senior Opportunities Act. Title V authorizes
the older American community service employment program. Administered by the
Department of Labor (DOL), Title V is OAA’s second largest program and is the only
federally subsidized employment program for low-income older persons (defined in the
law as those age 55 and older). Its FY2006 funding of $432.3 million represents almost
one-quarter of the act’s total funding.8
DOL allocates Title V funds for grants to state agencies in all 50 states, the District
of Columbia, Puerto Rico, and the U.S. territories, and to national organizations. To
determine grant allotments for each state, a separate allocation is calculated for each grant
type. The total Title V state allotment is the sum of its respective state agency grantee
allotment and national organization grantee allotment.
7 Guam and the U.S. Virgin Islands are allotted no less than one-quarter of 1% of the total grant
appropriation, and American Samoa and the Commonwealth of the Northern Mariana Islands are
allotted no less than one-sixteenth of 1% of the total grant appropriation.
8 For further information, see CRS Report RL31336, The Older Americans Act: Programs,
Funding, and 2006 Reauthorization (P.L. 109-365)
, by Carol O’Shaughnessy and Angela Napili.

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The Title V funding formula has been a long-standing issue for Congress.9 During
the 2006 reauthorization, the original House bill (H.R. 5293) included a provision to
update the “hold harmless” year in the Title V formula from FY2000 to FY2006;
however, the Senate bill (S. 3570) did not include this provision. The compromise bill
(H.R. 6197) enacted into law made no changes to the Title V formula. The following
describes the Title V formula allocation.10
Before allocation of funds to states, DOL is required to reserve funds as follows:
! up to 1.5% of the total appropriation for Section 502(e) demonstration
projects, pilot projects, and evaluation projects;
! 0.75% of the total appropriation for Guam, the U.S. Virgin Islands,
American Samoa, and the Commonwealth of the Northern Mariana
Islands; and
! “such amount as may be necessary” for national grants to public or
private organizations serving eligible Indians and Pacific Island and
Asian Americans.
After these reservations, the remaining funds are divided into two amounts, one for
all state agency grantees and the other for all national organization grantees. The
allocation for these amounts is dependent on program funding. If funds for a given year
are equal to their FY2000 level, then amounts set aside for all state agency and all national
organization grantees are in proportion to their respective FY2000 levels. If funds for a
given year are less than their FY2000 levels, then total amounts for the state and national
grantees are reduced proportionately. If funds for a given year exceed the FY2000 level,
up to $35 million of the excess is to be distributed as follows: 75% of the excess is to be
provided for all state agency grantees and 25% of the excess is to be provided to all
national organization grantees. Any funding amount over $35 million that remains is to
be distributed 50/50 to all state agency and national organization grantees, respectively.11
Once the national totals for state agency and national organization grantees have
been determined, the same formula is used to determine the state agency allotment and
the national organization allotment for each state. Each allotment is distributed to states
based on a formula factor that takes into account (1) a state’s relative share of the total
U.S. population 55 years and older (includes the District of Columbia and Puerto Rico),
and (2) the relative state per capita income. The formula factor is the number of persons
aged 55 and older in the state multiplied by the inverse of the state’s per capita income
index. The inverse per capita income index cannot be less than 33 and 1/3% or greater
than 75%; the index for the District of Columbia and Puerto Rico is 75%. Population data
are from the annual population estimates published by the U.S. Census; the reference date
9 For further information on the legislative history of the Title V funding formula, see CRS
Report RL30055, Older Americans Act: 2000 Reauthorization Legislation, by Carol V.
O’Shaughnessy.
10 Current law requires that funds be distributed at their FY2000 level of activities, defined as the
FY2000 number of enrollee positions multiplied by the cost per enrollee position. To convert
funds to enrollee positions, funds are divided by the DOL-determined cost per enrollee position
(CCP). For FY2006, Congress appropriated $432,311,220 to Title V and the CPP was $7,153.
This converted to a total of 60,438 enrollee positions, rounded to the nearest position.
11 Appropriations for FY2004 through FY2006 have not exceeded the FY2000 level.

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for estimates is July 1. Per capita income data are from the Bureau of Economic Analysis
(BEA) within the U.S. Department of Commerce (DOC). There is a two-year time lag
between the data (reference year of the population estimates and per capita income) and
the respective appropriation year.
For the purpose of determining state allotments to state agency and national
organization grantees, the law requires that allotments meet two criteria. The first
criterion is that states (including the District of Columbia and Puerto Rico) are to receive
at least a minimum grant allotment, which is defined as half of 1% of the respective grant
amount for the given fiscal year. The second criterion is the “hold harmless” provision.
If grant amounts for a given year are equal to, or less than, their FY2000 level, states are
to receive an allotment in proportion to their respective FY2000 levels. If grant amounts
exceed their FY2000 levels, states are to receive no less than their FY2000 level plus a
“guaranteed growth” of at least 30% of the percentage increase above the FY2000 level.
Title VII — Vulnerable Elder Rights Protection Activities. Title VII
authorizes the long-term care ombudsman program and elder abuse, neglect, and
exploitation prevention programs. Most Title VII funding is directed at the long-term care
ombudsman program, the purpose of which is to investigate and resolve complaints of
residents of nursing facilities and other long-term care facilities. Of the $20.1 million
appropriated for FY2006, almost three-quarters was for ombudsman activities.
Funds for the ombudsman and elder abuse prevention activities are allotted to states
based on each state’s relative share of the population aged 60 years and older. For the
purpose of determining state allotments, the law requires that states (including the District
of Columbia and Puerto Rico) receive a minimum amount of funds, which is defined as
half of 1% of the total grant appropriation for the respective fiscal year.12 State allotments
must also meet a FY2000 “hold harmless” provision. State agencies on aging may award
funds for these activities to a variety of organizations for administration, including other
state agencies, area agencies on aging, county governments, nonprofit service providers,
or volunteer organizations.
Issues for Congress. During Senate floor debate over H.R. 6197, the OAA
Amendments of 2006, Senator Enzi, Chairman of the Health, Education, Labor, and
Pensions (HELP) Committee, called for the 110th Congress to hold hearings to review
funding formulas for federal programs under the committee’s jurisdiction. Chairman Enzi
asked the committee to examine how these formulas are developed in order to determine
fair and equitable methods for distribution of funds, stating that the committee should
“focus its attention on how funds must follow the people and the need.” Chairman Enzi
also proposed that the HELP Committee begin its reauthorization of the Older Americans
Act no later than three years after the passage of H.R. 6197.13
12 Guam and the U.S. Virgin Islands are allotted no less than one-quarter of 1% of the total grant
appropriation, and American Samoa and the Commonwealth of the Northern Mariana Islands are
allotted no less than one-sixteenth of 1% of the total grant appropriation.
13 Sen. Enzi, “Older Americans Act Amendments of 2006,” remarks in the Senate, Congressional
Record, daily editions, September 29, 2006, p. S10770.