Summary: About $3.3 billion in funds were allocated to states in fiscal year 2003 for Youth, Adult, and Dislocated Worker employment and training programs under the Workforce Investment Act (WIA) of 1998. The formulas used to distribute these funds are generally the same as those used to distribute funds under the Job Training Partnership Act (JTPA) of 1982, although WIA target populations and program goals differ from those of JTPA. In anticipation of the reauthorization of WIA, we assessed current and proposed formulas for allocating funds to states for these programs and identify potential alternative allocation formulas. We identified various issues with the current funding formulas in our April 2003 report. For this review, we focused on three questions: (1) Are there alternative formula factors that are better aligned with current programs and are based on reliable and more current data? (2) How might changes to the current formulas affect the distribution of WIA funds among the states? (3) What are the implications of proposed program and formula changes in the House's WIA reauthorization bill (H.R. 1261) for state allocations and what are some alternatives to these formulas? Our review was limited to assessing the formulas for allocating funds to the states and did not include an assessment of formulas used by states to allocate funds to local areas.
We identified a set of formula factors that are more clearly aligned with WIA target populations and are based on reliable and more timely data than those in the current and proposed formulas. We used these factors to develop potential alternative formulas that would better target funds to eligible populations. In general, these alternatives would result in some redistribution of funds due to the elimination of two factors that measure concentrated unemployment, which tend to skew allocations, and less year-to-year funding volatility than the current formulas. Finally, we found that the formulas proposed in H.R. 1261 would not address most of the issues we identified; in fact, most program funds would continue to be allocated according to the current rather than the proposed formulas, because of provisions that limit the use of the proposed formulas.
