Informing the use of formula-based funding allocations in public health practice: Initial findings

Federal and state public health programs often use funding formulas to allocate resources among constituent states or localities. These formulas typically include measures of service need that reflect program objectives but vary in the use of measures of service cost, resource availability, or program performance. While the methods and implications of formula design options have been extensively evaluated for the Ryan White HIV Care program, less attention has been focused on funding allocation methods in other areas of public health practice. This project investigates the relationship between formula allocations and the use of various proxy measures of service need (population demographics, risk factor prevalence, disease incidence or prevalence), resource requirements (local service costs and resource availability), and program performance (process or outcome measures). Analyses are based on testing alternate formula designs and resulting allocations for both hypothetical and actual public health programs, including federal emergency preparedness, pandemic influenza, maternal and child health programs and selected state programs. Factor analysis and regression methods are used to explore the impacts of alternative allocation methods. The presentation will describe approaches to characterizing resulting differences in allocation outcomes and summarize initial observations regarding the use of alternative primary data sources and adjustment strategies to account for differences among jurisdictions in costs, resource need, or performance. Looking ahead to subsequent project stages, this study will characterize challenges to public health program managers and policymakers when designing funding formulas, with an aim to define metrics with which formula options can be evaluated. While the selection of any allocation method may have political consequences, this study seeks to develop tools that can provide an objective basis for weighing available options for both current and future formula-based allocations.