Vocational Education: State Grant Formula Under Current Law and Reauthorization Issues

Vocational Education: State Grant Formula Under Current Law and Reauthorization Issues

Order Code RL33419
CRS Report for Congress
Received through the CRS Web
Vocational Education: State Grant Formula
Under Current Law and Reauthorization Issues
May 11, 2006
Rebecca R. Skinner and Richard N. Apling
Specialists in Social Legislation
Domestic Social Policy Division
Congressional Research Service ˜ The Library of Congress

Vocational Education: State Grant Formula
Under Current Law and Reauthorization Issues
Summary
As Congress considers the reauthorization of the Carl D. Perkins Vocational and
Technical Education Act of 1998 (P.L. 105-332; referred to as current law), one
major issue is the formula used to determine basic state grants (referred to as state
grants). While H.R. 366, the Vocational and Technical Education for the Future Act,
would not alter the formula used to determine state grants, S. 250, the Carl D. Perkins
Career and Technical Education Improvement Act of 2005, would make substantive
changes to the formula. These bills have been passed by the House and Senate,
respectively.
This report provides a detailed examination of the state grant formula under
current law, focusing particularly on provisions that result in states receiving larger
grants than they would have if only population and per capita income (pci) factors
were considered. The results demonstrate that multiple states receive a substantial
increase in funding over their initial allocation due to factors other than population
and per capita income. This increase in funding is supported by a ratable reduction
for all other state grants. It should be noted, however, that provisions added during
the 1990 reauthorization of vocational education limited the increases in funding that
states could receive above their initial allocation. As a result, eight states do not
receive the full minimum grant of ½% of total funding.
This is followed by an analysis of the changes S. 250 would make to the current
state grant formula. S. 250 would eliminate provisions that prevent states from
receiving the full minimum grant of ½%. It would also use any new funding that
exceeds the FY2006 appropriation to provide the eight states that do not receive a
minimum grant of ½% with a minimum grant award prior to distributing any
additional funding to the other states. S. 250 also contains a hold harmless provision,
that in the absence of an increase in appropriations, would also provide the eight
states with a minimum grant of ½% by ratably reducing the grants received by all
other states.
Several alternatives to the formula proposed in S. 250 are also discussed. One
set of strategies provides alternatives to the hold harmless provisions included in S.
250. The remaining strategies are designed to provide the aforementioned eight
states with additional funding, while also allowing other states to benefit immediately
from increases in appropriations, rather than having to wait for the eight states to
reach a minimum grant of ½%. These strategies are offered for discussion purposes
only. CRS takes no position with respect to these alternatives.
This report will not be updated.

Contents
Current Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Calculation of Grants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Estimated FY2006 Grants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Per-Person Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Minimum State Grant Amounts Under Prior Laws . . . . . . . . . . . . . . . . . . . 11
S. 250 Changes to Current State Grant Formula . . . . . . . . . . . . . . . . . . . . . 12
Cost of Providing States with Minimum Grants . . . . . . . . . . . . . . . . . . . . . 20
Alternative Strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Hold Harmless Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Increased Funding Based on Overall Increases in Funding . . . . . . . . . 21
Guaranteed Percentage of New Funding . . . . . . . . . . . . . . . . . . . . . . . 21
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
List of Figures
Figure 1. Overview of Current Law Formula
for Determining Basic State Grants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Figure 2. Overview of S. 250 Proposed Formula
for Determining Basic State Grants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
List of Tables
Table 1. Estimated FY2006 State Grants Based on Initial Allocation
and Full Implementation of Current Law Formula . . . . . . . . . . . . . . . . . . . . 3
Table 2. Estimated FY2007 State Grants Under S. 250
Assuming a One Percent Increase in Appropriations . . . . . . . . . . . . . . . . . 14
Table 3. Estimated Basic State Grants Under S. 250:
FY2007 through FY2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Vocational Education: State Grant Formula
Under Current Law
and Reauthorization Issues
As Congress considers the reauthorization of the Carl D. Perkins Vocational and
Technical Education Act of 1998 (P.L. 105-332; referred to as current law), one
major issue is the formula used to determine basic state grants (referred to as state
grants). While H.R. 366, the Vocational and Technical Education for the Future Act,
would not alter the formula used to determine state grants, S. 250, the Carl D. Perkins
Career and Technical Education Improvement Act of 2005, would make substantive
changes to the formula. These bills have been passed by the House and Senate,
respectively.
Before the proposed changes in S. 250 can be analyzed, it is critical to develop
an understanding of how state grants are determined under current law. As such, this
report provides a detailed analysis of the formula currently used to determine state
grants, focusing on provisions that result in states receiving larger state grants than
they would have if only population and per capita income (pci) factors were included
in the formula. It also includes a brief discussion of minimum grant provisions from
prior vocational education laws, followed by an examination of the changes S. 250
would make to the current state grant formula. The subsequent sections of the report
consider the amount of funding required to provide all states with a minimum grant
of at least ½% and analyze additional strategies to accomplish similar outcomes to
those that may be achieved under S. 250.
It should be noted that this report and its analyses do not take into account tech-
prep funding. Under current law, tech-prep funding is determined independently of
state grants. H.R. 366 would combine state grant funding and tech-prep funding into
a single state grant program, while S. 250 would retain current law. Given the
complexities of dealing solely with the state grant formula and the uncertainty
concerning whether the two programs will be combined, tech-prep funding is not
included in the analyses.
Current Law
This section begins with an examination of how grant amounts are determined
under current law. This is followed by a discussion of the estimated FY2006 grant
awards and how these awards compare to states’ initial allocations. The section
concludes with an analysis of the amount of funding provided to each state on a per-
person basis.

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Calculation of Grants. Under current law, the initial factors that determine
state grants are population factors and per capita income. Population is based on the
number of individuals in three age groups and the total number of individuals in these
age groups. Each of these groups is weighted in a formula that calculates total
population. The largest weight (0.5) is assigned to the age group including persons
aged 15 to 19. The age group including persons aged 20 to 24 is assigned a weight
of 0.2, while the age group including persons aged 25 to 65 is assigned a weight of
0.15. The final age group included in the calculation includes all individuals aged
15 to 65, and is assigned a weight of 0.15. Thus, among states with a similar number
of people aged 15 to 65, states with relatively younger populations will have a higher
weighted population count than states whose populations are relatively older.
Per capita income also affects the weighted population count for each state
through an allotment ratio. Per capita income is defined as the total personal income
in a state divided by the population of the state. For the purposes of determining state
grants, each state is assigned an allotment ratio. The allotment ratio is calculated by
dividing the pci for a given state by the pci for all states combined. The result is
multiplied by 0.5 and subtracted from one. This calculation assigns higher values to
states with pci’s lower than the national average and lower values to states with
higher-than-average pci’s. No state, however, may have an allotment ratio higher
than 0.60 or lower than 0.40.1 This allotment ratio is multiplied by the total number
of individuals in each of the aforementioned age groups prior to the weighting of the
population counts in each group. The inclusion of pci in the formula helps to provide
states with lower pci’s with additional grant funds, and vice versa.
The resulting calculation of state grants based on population and pci factors is
referred to as a state’s initial allocation. Column B in Table 1 details what these
estimated grant amounts would be based on FY2006 appropriations. Column C in
Table 1 provides the percentage of total funds each state would receive for its initial
allocation based on FY2006 appropriations for state grants.
1 The Virgin Islands and Puerto Rico are required to be assigned an allotment ratio of 0.60.

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Table 1. Estimated FY2006 State Grants Based on Initial Allocation and Full Implementation of Current Law Formula
(dollars rounded to nearest $000)
A
B
C
D
E
F
G
H
I
Initial
Change in
Estimated
allocation
grant
Percent
FY2006 final
as percent
Final strategy for
Estimated
amount
change in
grants as
Weighted
Initial estimated
of total
determining state
FY2006 final
(Column E -
grant
percent of
per-person
State
FY2006 allocation
funding
grants
grants
Column B)
amount
total funding
funding
Alabama
$20,321,000
1.76% Ratably reduced
$19,991,000
$-330,000
-1.62%
1.73%
$19.19
Alaska
$2,803,000
0.24% FY1998 grant
$4,215,000
$1,412,000
50.36%
0.36%
$26.28
Arizona
$24,818,000
2.15% Ratably reduced
$24,415,000
$-403,000
-1.62%
2.11%
$19.24
Arkansas
$12,747,000
1.10% Ratably reduced
$12,540,000
$-207,000
-1.62%
1.08%
$20.08
California
$130,878,000
11.32% Ratably reduced
$128,753,000
$-2,125,000
-1.62%
11.14%
$15.55
Colorado
$15,898,000
1.38% Ratably reduced
$15,640,000
$-258,000
-1.62%
1.35%
$14.44
Connecticut
$10,303,000
0.89% Ratably reduced
$10,136,000
$-167,000
-1.62%
0.88%
$12.65
Delaware
$2,902,000
0.25% 150% NAPPP
$4,808,000
$1,906,000
65.70%
0.42%
$25.25
Florida
$64,483,000
5.58% Ratably reduced
$63,436,000
$-1,047,000
-1.62%
5.49%
$16.67
Georgia
$37,190,000
3.22% Ratably reduced
$36,587,000
$-603,000
-1.62%
3.17%
$17.74
Hawaii
$4,854,000
0.42% ½% minimum grant
$5,780,000
$926,000
19.06%
0.50%
$19.99
Idaho
$6,904,000
0.60% Ratably reduced
$6,792,000
$-112,000
-1.62%
0.59%
$21.16
Illinois
$45,563,000
3.94% Ratably reduced
$44,824,000
$-739,000
-1.62%
3.88%
$15.33

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A
B
C
D
E
F
G
H
I
Initial
Change in
Estimated
allocation
grant
Percent
FY2006 final
as percent
Final strategy for
Estimated
amount
change in
grants as
Weighted
Initial estimated
of total
determining state
FY2006 final
(Column E -
grant
percent of
per-person
State
FY2006 allocation
funding
grants
grants
Column B)
amount
total funding
funding
Indiana
$26,344,000
2.28% Ratably reduced
$25,916,000
$-428,000
-1.62%
2.24%
$18.16
Iowa
$12,524,000
1.08% Ratably reduced
$12,321,000
$-203,000
-1.62%
1.07%
$18.18
Kansas
$11,694,000
1.01% Ratably reduced
$11,504,000
$-190,000
-1.62%
1.00%
$18.28
Kentucky
$18,433,000
1.59% Ratably reduced
$18,133,000
$-300,000
-1.62%
1.57%
$18.85
Louisiana
$21,890,000
1.89% Ratably reduced
$21,534,000
$-356,000
-1.62%
1.86%
$20.48
Maine
$5,517,000
0.48% ½% minimum grant
$5,780,000
$263,000
4.75%
0.50%
$18.72
Maryland
$17,122,000
1.48% Ratably reduced
$16,844,000
$-278,000
-1.62%
1.46%
$13.01
Massachusetts
$18,723,000
1.62% Ratably reduced
$18,419,000
$-304,000
-1.62%
1.59%
$12.40
Michigan
$39,953,000
3.46% Ratably reduced
$39,304,000
$-649,000
-1.62%
3.40%
$16.78
Minnesota
$18,558,000
1.61% Ratably reduced
$18,257,000
$-301,000
-1.62%
1.58%
$15.28
Mississippi
$14,153,000
1.22% Ratably reduced
$13,923,000
$-230,000
-1.62%
1.20%
$20.84
Missouri
$24,167,000
2.09% Ratably reduced
$23,775,000
$-392,000
-1.62%
2.06%
$17.95
Montana
$4,405,000
0.38% 150% NAPPP
$5,457,000
$1,052,000
23.89%
0.47%
$25.03
Nebraska
$7,256,000
0.63% Ratably reduced
$7,138,000
$-118,000
-1.62%
0.62%
$17.81
Nevada
$8,339,000
0.72% Ratably reduced
$8,204,000
$-135,000
-1.62%
0.71%
$15.60
New Hampshire
$4,510,000
0.39% ½% minimum grant
$5,780,000
$1,270,000
28.16%
0.50%
$18.82

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A
B
C
D
E
F
G
H
I
Initial
Change in
Estimated
allocation
grant
Percent
FY2006 final
as percent
Final strategy for
Estimated
amount
change in
grants as
Weighted
Initial estimated
of total
determining state
FY2006 final
(Column E -
grant
percent of
per-person
State
FY2006 allocation
funding
grants
grants
Column B)
amount
total funding
funding
New Jersey
$25,124,000
2.17% Ratably reduced
$24,716,000
$-408,000
-1.62%
2.14%
$12.50
New Mexico
$9,416,000
0.81% Ratably reduced
$9,264,000
$-152,000
-1.62%
0.80%
$21.09
New York
$60,730,000
5.25% Ratably reduced
$59,744,000
$-986,000
-1.62%
5.17%
$13.44
North Carolina
$35,372,000
3.06% Ratably reduced
$34,797,000
$-575,000
-1.62%
3.01%
$17.79
North Dakota
$2,944,000
0.25% FY1998 grant
$4,215,000
$1,271,000
43.17%
0.36%
$28.42
Ohio
$46,322,000
4.01% Ratably reduced
$45,570,000
$-752,000
-1.62%
3.94%
$17.29
Oklahoma
$16,206,000
1.40% Ratably reduced
$15,943,000
$-263,000
-1.62%
1.38%
$19.65
Oregon
$14,503,000
1.25% Ratably reduced
$14,267,000
$-236,000
-1.62%
1.23%
$17.16
Pennsylvania
$46,329,000
4.01% Ratably reduced
$45,576,000
$-753,000
-1.62%
3.94%
$16.13
Rhode Island
$3,989,000
0.35% ½% minimum grant
$5,780,000
$1,791,000
44.90%
0.50%
$23.15
South Carolina
$19,094,000
1.65% Ratably reduced
$18,784,000
$-310,000
-1.62%
1.63%
$19.35
South Dakota
$3,490,000
0.30% 150% NAPPP
$4,372,000
$882,000
25.27%
0.38%
$24.84
Tennessee
$24,330,000
2.10% Ratably reduced
$23,935,000
$-395,000
-1.62%
2.07%
$17.49
Texas
$96,656,000
8.36% Ratably reduced
$95,087,000
$-1,569,000
-1.62%
8.23%
$18.37
Utah
$12,550,000
1.09% Ratably reduced
$12,346,000
$-204,000
-1.62%
1.07%
$22.68
Vermont
$2,569,000
0.22% FY1998 grant
$4,215,000
$1,646,000
64.06%
0.36%
$28.31

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A
B
C
D
E
F
G
H
I
Initial
Change in
Estimated
allocation
grant
Percent
FY2006 final
as percent
Final strategy for
Estimated
amount
change in
grants as
Weighted
Initial estimated
of total
determining state
FY2006 final
(Column E -
grant
percent of
per-person
State
FY2006 allocation
funding
grants
grants
Column B)
amount
total funding
funding
Virginia
$26,233,000
2.27% Ratably reduced
$25,807,000
$-426,000
-1.62%
2.23%
$14.75
Washington
$23,003,000
1.99% Ratably reduced
$22,629,000
$-374,000
-1.62%
1.96%
$15.47
West Virginia
$7,894,000
0.68% FY1998 grant
$8,429,000
$535,000
6.77%
0.73%
$20.21
Wisconsin
$22,553,000
1.95% Ratably reduced
$22,187,000
$-366,000
-1.62%
1.92%
$17.27
Wyoming
$2,065,000
0.18% FY1998 grant
$4,215,000
$2,150,000
104.16%
0.36%
$34.83
District of Columbia
$1,475,000
0.13% FY1998 grant
$4,215,000
$2,740,000
185.70%
0.36%
$31.93
Puerto Rico
$19,291,000
1.67% Ratably reduced
$18,977,000
$-314,000
-1.62%
1.64%
$21.32
Virgin Islands
$511,000
0.04% 150% NAPPP
$627,000
$116,000
22.72%
0.05%
$25.17
Total
$1,155,902,000
100.00%
—
$1,155,902,000
—
—
100.00%
—
Source: Table prepared by CRS, Apr. 17, 2006, based on unpublished state estimates provided by the U.S. Department of Education, Budget Service.
Notes: Details may not add to totals due to rounding. The final strategy for determining the state grants column reflects the relevant requirement in the state grant formula that
determines the state’s grants. “Ratably reduced” means that a state’s initial grant was at or above the 0.5% minimum grant amount; thus the grant was subsequently ratably reduced
to provide states whose initial allocations were below the 0.5% minimum grant amount with additional funding. The expression “150% NAPPP” means that a state’s grant was ultimately
determined based on the state’s population multiplied by 150% of the NAPPP; “½% minimum grant” means that a state’s grant was ultimately determined to be the minimum grant
of ½%; and “FY1998” means that the state was held harmless at its FY1998 state grant amount. Weighted per-person funding was calculated using the weighted population counts
that are used in determining state grants.
These are estimated grants only. In addition to other limitations, some of the data that will be used to calculate final grants are not yet available. These estimates are provided solely
to assist in comparisons of the relative impact of alternative formulas and funding levels in the legislative process. They are not intended to predict specific amounts states will receive.

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Under current law, there are several provisions that alter these initial allocations
to ensure that no state’s allocation is below certain minimum grant levels. One
minimum amount is the state’s FY1998 grant; the other minimum is ½% of the total
allocated to states. The ½% minimum may be adjusted based on the following
calculations. First, it is determined what the state would receive if provided with a
minimum grant of ½%. This amount is compared with the grant amount that would
be awarded to the state under a special rule that provides the state with the lesser of
(1) 150% of their prior year grant or (2) state population multiplied by 150% of the
national average per pupil payment (NAPPP).2 Based on these calculations, the state
then receives the lesser of ½% of total funding or the grant amount calculated under
the special rule (referred to as the adjusted ½% minimum grant). This amount is
subsequently compared with the amount the state received in FY1998, and the larger
amount is awarded. For states whose initial grants exceed the minimum grant
amount of ½%, their initial allocations are ratably reduced3 to provide states whose
initial allocations were below the ½% minimum grant with their final grants.
However, the resulting ratably reduced grants may be further adjusted it the results
fall below a state’s FY1998 grant or the adjusted ½% minimum grant amount for a
state. Figure 1 and four examples are provided to demonstrate how the formula
works in practice.
Example 1: Delaware
Based on population and pci factors, Delaware would receive an initial allocation of
$2.9 million or 0.25% of total funding. As this is below a minimum grant of ½%
($5.8 million), a minimum grant of ½% is calculated and the special rule is used to
determine Delaware’s final award. Under the special rule, Delaware would receive
$7.4 million based on 150% of its prior year grant, and $4.8 million when state
population is multiplied by 150% of the NAPPP. The smaller of these two payments
is the latter. This is then compared with the minimum grant amount of ½%. As the
amount obtained by multiplying the state’s population by 150% of the national
average per-pupil payment is the smaller of the two grant amounts but is greater than
Delaware’s FY1998 grant, Delaware receives the $4.8 million.4 This is referred to
as the “150% NAPPP” strategy in Column D of Table 1.
Example 2: Hawaii
Based on population and pci factors, Hawaii would receive an initial allocation of
$4.9 million or 0.42% of total funding. As this is below a minimum grant of ½%
($5.8 million), a minimum grant of ½% is calculated and the special rule is used to
determine Hawaii’s final award. Under the special rule, Hawaii would receive $8.8
million based on 150% of its prior year grant, and $7.4 million when state population
2 The NAPPP is determined for each state by dividing the total amount allocated to all states
by total population ages 15 to 65 in all states. The resulting amount (the national average
per pupil payment) is then multiplied by each state’s total unweighted population count for
individuals aged 15 to 65.
3 Ratable reduction refers to the reduction of each state’s grants (except for those receiving
some minimum grant amount) by the same percentage. Notice in Column G of Table 1 that
many states have their initial allocation reduced by 1.62%.
4 States other than Delaware that have their estimated FY2006 grants based on 150% of the
NAPPP include Montana, South Dakota, and the Virgin Islands.

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is multiplied by 150% of the NAPPP. The smaller of these two payments is the
latter. This is then compared with the minimum grant amount of ½%. As the
minimum grant amount of ½% is the smaller of the two grants but is greater than
Hawaii’s FY1998 grant, Hawaii receives the minimum grant amount of ½%.5 This
is referred to as the “½% minimum grant” strategy in Column D of Table 1.
5 States other than Hawaii that have their estimated FY2006 grants based on the minimum
grant of ½% include Maine, New Hampshire, and Rhode Island.

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Figure 1. Overview of Current Law Formula
for Determining Basic State Grants
Source: Figure prepared by CRS, May 10, 2006.

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Example 3: Alaska
Based on population and pci factors, Alaska would receive an initial allocation of
$2.8 million (0.24% of total funding). As this is below a minimum grant of ½%
($5.8 million), a minimum grant of ½% is calculated and the special rule is used to
determine Alaska’s final award. Under the special rule, Alaska would receive $6.3
million based on 150% of its prior year grant, and $4.0 million when state population
is multiplied by 150% of the NAPPP. The smaller of these two payments is the
latter. This is then compared with the minimum grant amount of ½%. The grant
amount based on state population and 150% of the NAPPP is less than the amount
that would be provided by a minimum grant of ½%. The former is then compared
with the grant amount received by Alaska in FY1998, which was $4.2 million. Since
the FY1998 hold harmless amount is greater than the amount that would be provided
through the formula, Alaska receives the hold harmless amount.6 This is referred to
as the “FY1998 grant” strategy in Column D of Table 1.
Example 4: California
Based on population and pci factors, California would receive an initial allocation of
$130.9 million (11.32% of total funding). Since this grant amount is higher than the
state’s adjusted ½% minimum grant, California’s initial allocation is ratably reduced
by 1.62% or $2.1 million to support grants to states whose initial allocation did not
provide them with a state grant that exceeded the ½% minimum grant. This is
referred to as the “ratably reduced” strategy in Column D of Table 1. For states
whose initial allocation is subject to a ratable reduction, the ratably reduced amount
is compared with the state’s FY1998 grant amount and its adjusted ½% minimum
grant. The largest amount is awarded. For example, since California’s ratably
reduced amount is greater than its FY1998 grant and its adjusted ½% minimum
grant, California receives its initial allocation minus 1.62%.7
Estimated FY2006 Grants. Columns E, F, G, and H in Table 1 provide
each state’s estimated FY2006 final grant amount, the change in the grant amount
from initial allocation to final allocation, the percentage change in funding between
the initial and final allocation, and the state’s final percentage of total funding,
respectively. Using the special rule to determine state grants and the FY1998 hold
harmless, rather than population and pci factors only, results in an increase in funding
for 13 states and the Virgin Islands and a 1.62% decrease in funding for all other
states (Table 1). For example, the use of these provisions results in Wyoming
receiving more than twice as much funding as it would have received under the initial
allocation. In addition, under current law, the eight states receiving less than the
minimum grant of 0.5% receive between 24% (Montana) and 186% (District of
6 States other than Alaska that have their estimated FY2006 grants based on their FY1998
grants include North Dakota, Vermont, West Virginia, Wyoming, and the District of
Columbia.
7 All states not previously mentioned in Examples 1, 2, or 3 have their initial allocation
determined by population and pci factors, and their final grants determined after a ratable
reduction to support increases in the initial allocations of states whose initial allocations are
less than ½% of total funding. Approximately 39 states had their estimated FY2006 grants
determined based on this strategy.

CRS-11
Columbia) more than they would have received if grants were based solely on
population and pci.
Per-Person Funding. State grants can also be analyzed based on how much
funding the state receives for each person included in the population count. As
previously discussed, the population count is based on the population in each of three
age groups and total population across the three age groups. In determining per-
person funding, each of these populations was weighted by the factors assigned to
each population group for the calculation of state grants (e.g., 0.5 for individuals aged
15 to 19). Dividing estimated FY2006 state grants by this weighted population count
produces the amount of funding a state received for each person.8
As depicted in Table 1, there is substantial variability in per-person funding by
state. More specifically, among states receiving less than the minimum grant of 0.5%
in FY2006, including the Virgin Islands, per-person funding ranges from $24.84
(South Dakota) to $34.83 (Wyoming), exceeding the level of per-person funding
provided to all other states which ranges from $12.40 (Massachusetts) to $23.15
(Rhode Island).
Minimum State Grant Amounts Under Prior Laws
This section examines minimum grant provisions in federal vocational
education laws beginning with the Vocational Education Act of 1963 (P.L. 88-210).
While this act did not mark the beginning of federal involvement in vocational
education, the state grant formula included in the act provided a framework for
subsequent legislation.
Under the Vocational Education Act of 1963, state grants were calculated using
only population and pci factors. All states were guaranteed a minimum grant of
$10,000.
The Vocational Education Act of 1963 was amended in 1984 by the Carl D.
Perkins Vocational Education Act (Perkins I; P.L. 98-524).9 Perkins I replaced the
$10,000 minimum grant with a minimum grant of ½% of total funds, not to exceed
150% of a state’s prior year grant. It also included a provision that held states
harmless at their FY1984 grant amounts. Under Perkins I, states that were receiving
less than the minimum grant of ½% gradually received increases in their grant
amounts but these increases were limited by the 150% cap on year-to-year increases.
By FY1989, all states reached the minimum grant amount of ½% and continued to
receive the minimum grant amount in FY1990.
The Carl D. Perkins Vocational and Applied Technology Education Act
Amendments of 1990 (Perkins II, P.L. 101-392) further amended the state grant
8 The allotment ratio was not included in this calculation as the focus was on determining
the weighted count of individuals without adjusting for per capita income.
9 The Vocational Education Act of 1963 was also amended by the Vocational Education
Amendments of 1968 (P.L. 90-576), but these amendments did not modify the state grant
formula.

CRS-12
formula by adding the special rule that provides states with the lesser of (1) 150% of
their prior year grant or (2) state population multiplied by 150% of the NAPPP. The
special rule also included a provision that held states harmless at their FY1991 grant
amounts.10 This effectively left states that received less than the minimum grant of
½% in FY1991 at the same amount they received in FY1990 ($4.2 million), as
amounts for these states were identical in FY1991 and FY1990. Over time, a handful
of these states eventually exceeded their FY1991 grant amounts.11
The Carl D. Perkins Vocational and Technical Education Act of 1998 (Perkins
III; P.L. 105-332) retained the state grant formula used in Perkins II, but modified the
hold harmless provision to hold all states harmless at their FY1998 grant amounts
regardless of whether they were subject to a second set of calculations. This
effectively left Alaska, District of Columbia, North Dakota, Vermont, and Wyoming
at their FY1990 grant amounts, as their grant amounts did not change from FY1990
through FY1998.
S. 250 Changes to Current State Grant Formula
The Senate bill would alter the current formula in several ways.12 First, it would
eliminate the use of the special rule. That is, state grants would be based on
population and pci factors only, while retaining the minimum grant of ½% provision.
As a result, the Senate formula would provide the eight states13 that receive less than
½% of the total grant with increases in their state grants until they reached the
minimum grant of ½%, provided appropriations in a succeeding year were higher
than they were in FY2006 (hereafter referred to as new funding). More specifically,
any new funding available to support state grants would be provided to these eight
states based on an inverse proportion of how far the state is from receiving the
minimum grant of ½% (i.e., states furthest below ½% of total funding would receive
higher amounts than states closest to ½% of total funding). No other states would
receive any of the new money until each of the eight states had reached the ½%
minimum grant.
Table 2 demonstrates the amount of funding each state would receive assuming
appropriations increased by 1% ($11.6 million) in FY2007. A 1% increase in
10 States that were not subject to the second set of calculations were held harmless at their
FY1985 grant amount. This resulted, for example, in Massachusetts receiving its FY1985
grant amount until FY2002, with the exception of FY1992 when Massachusetts received a
slightly higher allotment.
11 For example, Delaware, Montana, and South Dakota have exceeded their FY1991 grant
amounts but have not reached the minimum grant amount of ½% of total funding.
12 For additional information about other changes that would be made to current law by S.
250, see CRS Report RL32962, Vocational Education Reauthorization: Comparison and
Analysis of Selected Provisions in H.R. 366 and S. 250, by Rebecca R. Skinner and Richard
N. Apling.
13 As detailed in Column H of Table 1, the eight states include Alaska, Delaware, Montana,
North Dakota, South Dakota, Vermont, Wyoming, and the District of Columbia. While the
Virgin Islands also receives less than the minimum grant of ½%, under S. 250, it would not
be guaranteed a minimum grant of ½%.

CRS-13
appropriations would be sufficient to provide all states with a minimum grant of at
least ½%, while also providing most other states with a small increase in funding.
The eight states that receive estimated state grants below the minimum grant of ½%
in FY2006 would receive increases ranging from 7.0% to 38.5% ($380,000 to $1.6
million). The four states that receive estimated state grants of ½% in FY2006 would
receive a 1% increase in funds ($58,000) to continue to provide them with the
minimum grant amount of ½%. Most other states would receive increases of 0.03%,
ranging from $2,000 to $40,000. Any subsequent increases in funding would also
require funds to be used to ensure all states receive the minimum grant amount of
½% (or as close to it as possible) prior to providing funding increases to any other
states. It should be noted that these calculations use the same population and pci
factors used to calculated estimated FY2006 grants. Changes in these factors would
result in additional changes in the amount and percentage of funds received by states
with grant amounts over ½% of total funding. For example, states with growing
populations would receive more funding than those with constant or declining
populations.
S. 250 also includes a hold harmless provision. From FY2007 through FY2009,
states would be held harmless at their FY2006 grant level, provided appropriations
are sufficient to provide this level of funding.14 From FY2010 through FY2012, the
hold harmless provision would change to at least 95% of the prior year grant amount.
Assuming constant appropriations, this would allow states with growing populations
to receive increased grant amounts from states that are not experiencing population
growth (or have a below average rate of increase).15 It would also allow states that
were not receiving the minimum grant of ½% to move closer to or reach this level
of funding. Increased funding to states receiving less than the minimum grant
amount of ½% and states with growing populations would be funded by reducing the
grant amounts for all other states. Under the provisions of S. 250, however, states
with increasing populations would not receive additional funding until states
receiving less than the minimum grant amount of ½% reached the minimum grant
amount.
14 For the purposes of this analysis, the years for which various hold harmless provisions
would apply have been updated by one year to account for the start of FY2006.
15 It would also accommodate changes to pci.

CRS-14
Table 2. Estimated FY2007 State Grants Under S. 250
Assuming a One Percent Increase in Appropriations
Per-
centage
increase
in grant
Estimated
amount
FY2007 grants
Increase in
from
Percent
(assuming 1%
grant amount FY2006
of
Estimated
increase in
from FY2006
to
FY2007
State
FY2006 grants appropriations)
to FY2007
FY2007
total
Alabama
$19,991,000
$19,998,000
$6,000
0.03%
1.71%
Alaska
$4,215,000
$5,837,000
$1,622,000
38.49%
0.50%
Arizona
$24,415,000
$24,422,000
$8,000
0.03%
2.09%
Arkansas
$12,540,000
$12,544,000
$4,000
0.03%
1.07%
California
$128,753,000
$128,793,000
$40,000
0.03%
11.03%
Colorado
$15,640,000
$15,645,000
$5,000
0.03%
1.34%
Connecticut
$10,136,000
$10,139,000
$3,000
0.03%
0.87%
Delaware
$4,808,000
$5,837,000
$1,029,000
21.40%
0.50%
Florida
$63,436,000
$63,456,000
$20,000
0.03%
5.44%
Georgia
$36,587,000
$36,598,000
$11,000
0.03%
3.13%
Hawaii
$5,780,000
$5,837,000
$58,000
1.00%
0.50%
Idaho
$6,792,000
$6,794,000
$2,000
0.03%
0.58%
Illinois
$44,824,000
$44,838,000
$14,000
0.03%
3.84%
Indiana
$25,916,000
$25,924,000
$8,000
0.03%
2.22%
Iowa
$12,321,000
$12,324,000
$4,000
0.03%
1.06%
Kansas
$11,504,000
$11,508,000
$4,000
0.03%
0.99%
Kentucky
$18,133,000
$18,139,000
$6,000
0.03%
1.55%
Louisiana
$21,534,000
$21,541,000
$7,000
0.03%
1.85%
Maine
$5,780,000
$5,837,000
$58,000
1.00%
0.50%
Maryland
$16,844,000
$16,849,000
$5,000
0.03%
1.44%
Massachusetts
$18,419,000
$18,425,000
$6,000
0.03%
1.58%
Michigan
$39,304,000
$39,316,000
$12,000
0.03%
3.37%
Minnesota
$18,257,000
$18,263,000
$6,000
0.03%
1.56%
Mississippi
$13,923,000
$13,928,000
$4,000
0.03%
1.19%
Missouri
$23,775,000
$23,782,000
$7,000
0.03%
2.04%
Montana
$5,457,000
$5,837,000
$380,000
6.97%
0.50%
Nebraska
$7,138,000
$7,141,000
$2,000
0.03%
0.61%
Nevada
$8,204,000
$8,206,000
$3,000
0.03%
0.70%
New Hampshire
$5,780,000
$5,837,000
$58,000
1.00%
0.50%
New Jersey
$24,716,000
$24,724,000
$8,000
0.03%
2.12%
New Mexico
$9,264,000
$9,266,000
$3,000
0.03%
0.79%
New York
$59,744,000
$59,763,000
$19,000
0.03%
5.12%
North Carolina
$34,797,000
$34,808,000
$11,000
0.03%
2.98%
North Dakota
$4,215,000
$5,837,000
$1,622,000
38.49%
0.50%
Ohio
$45,570,000
$45,584,000
$14,000
0.03%
3.90%
Oklahoma
$15,943,000
$15,948,000
$5,000
0.03%
1.37%
Oregon
$14,267,000
$14,272,000
$4,000
0.03%
1.22%
Pennsylvania
$45,576,000
$45,591,000
$14,000
0.03%
3.91%
Rhode Island
$5,780,000
$5,837,000
$58,000
1.00%
0.50%
South Carolina
$18,784,000
$18,790,000
$6,000
0.03%
1.61%

CRS-15
Per-
centage
increase
in grant
Estimated
amount
FY2007 grants
Increase in
from
Percent
(assuming 1%
grant amount FY2006
of
Estimated
increase in
from FY2006
to
FY2007
State
FY2006 grants appropriations)
to FY2007
FY2007
total
South Dakota
$4,372,000
$5,837,000
$1,465,000
33.51%
0.50%
Tennessee
$23,935,000
$23,942,000
$8,000
0.03%
2.05%
Texas
$95,087,000
$95,117,000
$30,000
0.03%
8.15%
Utah
$12,346,000
$12,350,000
$4,000
0.03%
1.06%
Vermont
$4,215,000
$5,837,000
$1,622,000
38.49%
0.50%
Virginia
$25,807,000
$25,815,000
$8,000
0.03%
2.21%
Washington
$22,629,000
$22,637,000
$7,000
0.03%
1.94%
West Virginia
$8,429,000
$8,429,000
$0
0.00%
0.72%
Wisconsin
$22,187,000
$22,193,000
$7,000
0.03%
1.90%
Wyoming
$4,215,000
$5,837,000
$1,622,000
38.49%
0.50%
District of
$4,215,000
$5,837,000
$1,622,000
38.49%
0.50%
Columbia
Puerto Rico
$18,977,000
$18,983,000
$6,000
0.03%
1.63%
Virgin Islands
$627,000
$627,000
$0
0.00%
0.05%
Total
$1,155,902,000
$1,167,461,000
$11,559,000
1.00% 100.00%
Source: Table prepared by CRS, Apr. 17, 2006, based on unpublished FY2006 state estimates
provided by the U.S. Department of Education, Budget Service. FY2007 estimates were calculated
by CRS.
Note: Details may not add to totals due to rounding. These are estimated grants only. In addition to
other limitations, some of the data which will be used to calculate final grants are not yet available.
These estimates are provided solely to assist in comparisons of the relative impact of alternative
formulas and funding levels in the legislative process. They are not intended to predict specific
amounts states will receive.
With a hold harmless of 95% of the prior year amount, it is possible that some
states could receive smaller grants each year. For example, if a state originally
received $10 million and is held harmless at 95% of that amount, its subsequent grant
could be as low as $9.5 million. If it is held harmless at 95% of the prior year
amount the following year, its subsequent grant could be as low as $9.025 million,
and so forth. Thus, while no state would receive less than 95% of their prior year
grant, states with declining or constant populations could gradually lose funding each
year to initially provide smaller states with a ½% minimum grant and to provide
larger states with growing populations with additional funds. Under the provisions
of S. 250 and constant appropriations, only states that received more than ½% of total
state funding in FY2006 could lose funding to support states at or below this amount
in FY2006 or population increases in other states. Figure 2 demonstrates how the
formula would work in practice.

CRS-16
Figure 2. Overview of S. 250 Proposed
Formula
for Determining Basic State Grants
Source: Figure prepared by CRS, May 10, 2006.
For example, assuming appropriations are constant from FY2006 through
FY2010, as depicted in Table 3, all states would continue to receive their FY2006
grant amount through FY2009, as they would be held harmless at the FY2006
amount. In FY2010, states would be held harmless at 95% of their FY2009 grant.16
This would result in most state grants declining by 0.9% to provide states that were
receiving grants of less than ½% with the minimum state grant amount. For this
analysis, estimated state grants beyond FY2006 are based on the same population and
pci factors as the FY2006 grants as currently estimated. Thus, changes in grant
amounts depicted in Table 3 do not reflect the effects of changes in population or pci
factors.
16 Assuming constant appropriations, states’ FY2009 grant amount would be the same as
their FY2006 grant amount.

CRS-17
Table 3. Estimated Basic State Grants Under S. 250: FY2007 through FY2010
Percent-age
Estimated
Estimated
Estimated
Estimated
Estimated
Dollar difference
difference
FY2006
FY2007
FY2008
FY2009
FY2010
FY2010 vs.
FY2010 vs.
State
state grant
state grant
state grant
state grant
state grant
FY2009
FY2009
(hold harmless at 100% of FY06 grant; grants rounded (hold harmless at 95% of FY06 grant; grants rounded
to nearest $000; totals may differ slightly due to
to nearest $000; totals may differ slightly due to
rounding)
rounding)
Alabama
$19,991,000
$19,991,000
$19,991,000
$19,991,000
$19,806,000
$-185,000
-0.9%
Alaska
$4,215,000
$4,215,000
$4,215,000
$4,215,000
$5,780,000
$1,565,000
37.1%
Arizona
$24,415,000
$24,415,000
$24,415,000
$24,415,000
$24,189,000
$-226,000
-0.9%
Arkansas
$12,540,000
$12,540,000
$12,540,000
$12,540,000
$12,424,000
$-116,000
-0.9%
California
$128,753,000
$128,753,000
$128,753,000
$128,753,000
$127,561,000
$-1,192,000
-0.9%
Colorado
$15,640,000
$15,640,000
$15,640,000
$15,640,000
$15,495,000
$-145,000
-0.9%
Connecticut
$10,136,000
$10,136,000
$10,136,000
$10,136,000
$10,042,000
$-94,000
-0.9%
Delaware
$4,808,000
$4,808,000
$4,808,000
$4,808,000
$5,780,000
$971,000
20.2%
District of Columbia
$4,215,000
$4,215,000
$4,215,000
$4,215,000
$5,780,000
$1,565,000
37.1%
Florida
$63,436,000
$63,436,000
$63,436,000
$63,436,000
$62,849,000
$-587,000
-0.9%
Georgia
$36,587,000
$36,587,000
$36,587,000
$36,587,000
$36,248,000
$-339,000
-0.9%
Hawaii
$5,780,000
$5,780,000
$5,780,000
$5,780,000
$5,780,000
$0
0.0%
Idaho
$6,792,000
$6,792,000
$6,792,000
$6,792,000
$6,729,000
$-63,000
-0.9%
Illinois
$44,824,000
$44,824,000
$44,824,000
$44,824,000
$44,409,000
$-415,000
-0.9%
Indiana
$25,916,000
$25,916,000
$25,916,000
$25,916,000
$25,676,000
$-240,000
-0.9%
Iowa
$12,321,000
$12,321,000
$12,321,000
$12,321,000
$12,206,000
$-114,000
-0.9%
Kansas
$11,504,000
$11,504,000
$11,504,000
$11,504,000
$11,398,000
$-106,000
-0.9%
Kentucky
$18,133,000
$18,133,000
$18,133,000
$18,133,000
$17,965,000
$-168,000
-0.9%

CRS-18
Percent-age
Estimated
Estimated
Estimated
Estimated
Estimated
Dollar difference
difference
FY2006
FY2007
FY2008
FY2009
FY2010
FY2010 vs.
FY2010 vs.
State
state grant
state grant
state grant
state grant
state grant
FY2009
FY2009
(hold harmless at 100% of FY06 grant; grants rounded (hold harmless at 95% of FY06 grant; grants rounded
to nearest $000; totals may differ slightly due to
to nearest $000; totals may differ slightly due to
rounding)
rounding)
Louisiana
$21,534,000
$21,534,000
$21,534,000
$21,534,000
$21,335,000
$-199,000
-0.9%
Maine
$5,780,000
$5,780,000
$5,780,000
$5,780,000
$5,780,000
$0
0.0%
Maryland
$16,844,000
$16,844,000
$16,844,000
$16,844,000
$16,688,000
$-156,000
-0.9%
Massachusetts
$18,419,000
$18,419,000
$18,419,000
$18,419,000
$18,249,000
$-170,000
-0.9%
Michigan
$39,304,000
$39,304,000
$39,304,000
$39,304,000
$38,940,000
$-364,000
-0.9%
Minnesota
$18,257,000
$18,257,000
$18,257,000
$18,257,000
$18,088,000
$-169,000
-0.9%
Mississippi
$13,923,000
$13,923,000
$13,923,000
$13,923,000
$13,795,000
$-129,000
-0.9%
Missouri
$23,775,000
$23,775,000
$23,775,000
$23,775,000
$23,555,000
$-220,000
-0.9%
Montana
$5,457,000
$5,457,000
$5,457,000
$5,457,000
$5,780,000
$322,000
5.9%
Nebraska
$7,138,000
$7,138,000
$7,138,000
$7,138,000
$7,072,000
$-66,000
-0.9%
Nevada
$8,204,000
$8,204,000
$8,204,000
$8,204,000
$8,128,000
$-76,000
-0.9%
New Hampshire
$5,780,000
$5,780,000
$5,780,000
$5,780,000
$5,780,000
$0
0.0%
New Jersey
$24,716,000
$24,716,000
$24,716,000
$24,716,000
$24,487,000
$-229,000
-0.9%
New Mexico
$9,264,000
$9,264,000
$9,264,000
$9,264,000
$9,178,000
$-86,000
-0.9%
New York
$59,744,000
$59,744,000
$59,744,000
$59,744,000
$59,191,000
$-553,000
-0.9%
North Carolina
$34,797,000
$34,797,000
$34,797,000
$34,797,000
$34,475,000
$-322,000
-0.9%
North Dakota
$4,215,000
$4,215,000
$4,215,000
$4,215,000
$5,780,000
$1,565,000
37.1%
Ohio
$45,570,000
$45,570,000
$45,570,000
$45,570,000
$45,148,000
$-422,000
-0.9%
Oklahoma
$15,943,000
$15,943,000
$15,943,000
$15,943,000
$15,796,000
$-148,000
-0.9%
Oregon
$14,267,000
$14,267,000
$14,267,000
$14,267,000
$14,135,000
$-132,000
-0.9%

CRS-19
Percent-age
Estimated
Estimated
Estimated
Estimated
Estimated
Dollar difference
difference
FY2006
FY2007
FY2008
FY2009
FY2010
FY2010 vs.
FY2010 vs.
State
state grant
state grant
state grant
state grant
state grant
FY2009
FY2009
(hold harmless at 100% of FY06 grant; grants rounded (hold harmless at 95% of FY06 grant; grants rounded
to nearest $000; totals may differ slightly due to
to nearest $000; totals may differ slightly due to
rounding)
rounding)
Pennsylvania
$45,576,000
$45,576,000
$45,576,000
$45,576,000
$45,154,000
$-422,000
-0.9%
Rhode Island
$5,780,000
$5,780,000
$5,780,000
$5,780,000
$5,780,000
$0
0.0%
South Carolina
$18,784,000
$18,784,000
$18,784,000
$18,784,000
$18,610,000
$-174,000
-0.9%
South Dakota
$4,372,000
$4,372,000
$4,372,000
$4,372,000
$5,780,000
$1,407,000
32.2%
Tennessee
$23,935,000
$23,935,000
$23,935,000
$23,935,000
$23,713,000
$-222,000
-0.9%
Texas
$95,087,000
$95,087,000
$95,087,000
$95,087,000
$94,207,000
$-880,000
-0.9%
Utah
$12,346,000
$12,346,000
$12,346,000
$12,346,000
$12,232,000
$-114,000
-0.9%
Vermont
$4,215,000
$4,215,000
$4,215,000
$4,215,000
$5,780,000
$1,565,000
37.1%
Virginia
$25,807,000
$25,807,000
$25,807,000
$25,807,000
$25,568,000
$-239,000
-0.9%
Washington
$22,629,000
$22,629,000
$22,629,000
$22,629,000
$22,420,000
$-209,000
-0.9%
West Virginia
$8,429,000
$8,429,000
$8,429,000
$8,429,000
$8,007,000
$-421,000
-5.0%
Wisconsin
$22,187,000
$22,187,000
$22,187,000
$22,187,000
$21,981,000
$-205,000
-0.9%
Wyoming
$4,215,000
$4,215,000
$4,215,000
$4,215,000
$5,780,000
$1,565,000
37.1%
Puerto Rico
$18,977,000
$18,977,000
$18,977,000
$18,977,000
$18,802,000
$-176,000
-0.9%
Virgin Islands
$627,000
$627,000
$627,000
$627,000
$596,000
$-31,000
-5.0%
Total
$1,155,902,000
$1,155,902,000
$1,155,902,000
$1,155,902,000
$1,155,902,000
—
—
Source: Table prepared by CRS, Apr. 17, 2006, based on unpublished FY2006 state estimates provided by the U.S. Department of Education, Budget Service. FY2007-FY2010
estimates were calculated by CRS.
Note: Details may not add to totals due to rounding. These are estimated grants only. In addition to other limitations, some of the data which will be used to calculate final grants
are not yet available. These estimates are provided solely to assist in comparisons of the relative impact of alternative formulas and funding levels in the legislative process. They are
not intended to predict specific amounts states will receive.

CRS-20
Cost of Providing States with Minimum Grants
As previously discussed based on FY2006 current estimates of state grants,
eight states would receive less than ½% of total funding. Determining the amount
of funding required to provide these states with a minimum grant of ½%, without
changing any of the current formula provisions, is complicated because any increases
in funding to provide these minimum grants results in an increase in overall funding
and a related increase in the value of a minimum grant.
While it was not possible to estimate the exact amount of funding required to
provide the ½% minimum grants under the current law formula with its 150% of
NAPPP cap, it appears that overall funding would have to more than quadruple. This
would be a significant increase in funding to accomplish the goal of providing eight
states with a minimum grant of ½%. Under the formula proposed by S. 250, overall
funding would also have to increase to meet this goal but only by about $11.2
million, as any funding in excess of the FY2006 appropriated amount would be
directed to the eight states until they reached the minimum grant amount of ½%.
One additional strategy for providing the eight states with a ½% minimum grant
without significantly increasing overall funding would be to determine how much
additional funding would be needed in a given fiscal year to increase their grants to
the desired level and provide that amount of funding as a separate line item. For
example, for FY2006, a minimum grant of ½% would be $5,780,000. Based on the
estimated state grants these eight states would receive (Table 1), an additional $10.5
million would be needed to provide them with minimum grants of ½%. Additional
funding may need to be provided in subsequent years if appropriations increase and
Congress wants to continue providing these states with a minimum grant of ½%.
This strategy requires providing funding outside of the current law formula or the
formula proposed in S. 250. If the $10.5 million was provided to the eight states via
either the current law or S. 250 formula, the additional $10.5 million would increase
the minimum grant from $5,780,000 to $5,832,000. This, in turn, would require
additional funding to provide minimum grants of ½%, resulting in the need to
increase overall funding, and so forth.
Alternative Strategies
This section discusses alternatives to those proposed in S. 250. The first set of
strategies addresses the hold harmless provisions contained in S. 250, specifically if
appropriations are held constant at their FY2006 level. The other strategies focus on
providing the aforementioned eight states with a minimum grant of ½% or, at least,
providing them with increases over their FY2006 estimated grant levels. Both
strategies would result in increased funding for the eight states over time but rely on
increased appropriations, rather than reductions in FY2006 current estimated state
grants, to support the increases, and neither strategy would result in other states
receiving less than their estimated FY2006 grant.
Hold Harmless Provisions. If appropriations for state grants remain
constant at their FY2006 level, there are several possible alternatives to the hold
harmless provisions included in S. 250. For example, states could be held harmless
at their FY2006 grant amounts through FY2012. While this does not accommodate

CRS-21
population increases or provide states receiving less than the minimum grant of ½%
with additional funding, it does guarantee that all states would continue to receive at
least what they received in FY2006, assuming appropriations are constant. A second
alternative would be to modify the hold harmless provision to hold states harmless
at 95% of their FY2006 grant amount rather than their prior year grant amount in
FY2010 through FY2012. This would prevent states from continually losing money
each year, while continuing to provide additional funding to states with increasing
populations and states receiving less than the minimum grant of ½%. A third
alternative would be to set the hold harmless percentage for FY2010 through FY2012
at a higher amount, such as 97½%, and either apply that higher percentage to states’
FY2006 grant amount or to their prior year grant amount. This would reduce the
amount by which states could fall below their FY2006 grant amount, while still
providing funding increases to states experiencing population growth and to provide
states receiving less than the minimum grant of ½% with additional funding. A
fourth alternative would be to continue to apply the current law hold harmless
provision and hold states harmless at 100% of the FY1998 grant amount. Finally,
another alternative that could be applied to several of the aforementioned alternatives
would be to only use the hold harmless provision to provide additional funds to states
with growing populations, rather than also providing additional funding to states
receiving less than the minimum grant amount of ½%. This would prevent other
states from having their FY2006 grant amounts reduced to provide states receiving
less than the minimum grant of ½% with additional funding.
Increased Funding Based on Overall Increases in Funding. Under
this strategy, states that received less than a minimum grant of ½% in FY2006 would
be guaranteed the same percentage increase in funding as the percentage increase in
total funding for state grants. For example, if total funding for state grants increased
by 1%, all states that received grants of less than ½% during the prior year would
receive a guaranteed 1% increase in funding. The remaining funds could be
distributed using the current formula, the formula proposed under S. 250, or another
formula agreed to by Congress. For example, in FY2006, Alaska, North Dakota,
Vermont, Wyoming, and the District of Columbia would receive estimated grants of
$4,215,000. A 1% increase in total appropriations to $1,167,461,000 and subsequent
1% increase in their grants would provide them with grants of $4,257,000. While
this is still below the $5,915,000 that would be required for a minimum grant of ½%
(assuming a 1% increase in appropriations), it would provide these states with their
first increase in funding since FY1990.
Guaranteed Percentage of New Funding. This strategy is similar to the
formula proposed under S. 250, but instead of providing the states that received
estimated state grants of less than ½% in FY2006 with as much available new
funding as is required to provide these states with a minimum grant of ½%, these
states would receive a guaranteed percentage of any new funding, such as 30% or
75%. Depending on the agreed upon percentage and amount of new funding, these
states may reach a minimum grant of ½% in a year, over several years, or not at all,
but they would receive additional funding. At the same time, other states would also
benefit from new funding immediately, as opposed to having to wait for the eight
states to reach a minimum grant of ½%; they would not, however, benefit as much
as they would if no funds were set-aside for these eight states.

CRS-22
Conclusion
While changes have been made over time to limit the amount of additional
funding states may receive above their initial allocations, the current state grant
formula provides substantial increases in funding to states that would otherwise
receive smaller grant amounts if only population and pci factors were considered in
making grants. S. 250 would alter the current formula to provide additional funding
specifically to the eight states that receive less than the minimum grant of ½%, while
also eliminating the provisions included in the current formula that hold grant
amounts for these states below the minimum grant of ½%. The Senate formula
would use any new funding available for state grants that exceed the FY2006
appropriation to provide these eight states with a minimum grant of ½%, or to move
them closer to the minimum grant amount depending on the amount of new funding
available. If no new funding becomes available, the S. 250 proposed formula would
rely on hold harmless provisions that ultimately decline to increase the grant amounts
to these eight states and provide additional funding to states with growing
populations by decreasing grant amounts to other states. These reductions in funding
could be mitigated, for example, by establishing a higher hold harmless provision for
FY2010 through FY2012 and/or by only allowing funds to shift from one state to
another to accommodate changes in population. If new money becomes available,
funding could be increased for the eight states, while also providing other states with
increased funding rather than having their funding levels remain constant until the
eight states reach the minimum grant amount of ½%. This could be accomplished,
for example, by providing these eight states with an increase in funding proportional
to the overall increase in total funding, or by providing them with a dedicated
percentage of new funding rather than as much funding as needed to provide them
with a minimum grant of ½%.