The Bureau measured the accuracy of the 1990 Census as well, and  recommended statistically adjusting the results. The Bureau does not plan to use statistical  estimates of the population for adjusting census data based on its belief  that the 2000 Census demonstrated “that the science is insufficiently  advanced to allow making statistical adjustment to population counts of a  successful decennial census in which the percentage of error is presumed  to be so small that adjustment would introduce as much or more error than  it was designed to correct.”

	The Top 20 Formula Grant Programs Represented Two Thirds of All Federal Grant Programs

In fiscal year 2004, the federal government administered 1,172 grant  programs, with $460.2 billion in combined obligations. For example, Medicaid was the largest formula grant program,  with federal obligations of $183.2 billion, or nearly 40 percent of all grant  obligations, in fiscal year 2004. Using statistical population estimates to recalculate  federal Medicaid allocations to states, states would have shifted 0.23  percent of $159.7 billion in federal Medicaid funds in fiscal year 2004 and  0.25 percent of $1.7 billion in SSBG funds would have shifted as a result of  the simulations in fiscal year 2005. If statistical population estimates had been used, of the overall  allocation of $159.7 billion of federal funds, 22 states would have received  more Medicaid funding, 17 states would have received less, while 11 states  and the District of Columbia would have received the same. Based on our  simulation of the formula funding for Medicaid---Nevada would have gained  1.47 percent in grant funding and Wisconsin would have lost 1.46 percent. Statistical Population Estimates from the 2000 Census Would Have Reallocated 0.25 Percent of SSBG Funds Among the States

Using statistical population estimates to recalculate federal SSBG  allocations, 0.25 percent of $1.7 billion in SSBG funds would have shifted in  fiscal year 2005 as a result of the simulation. In short, 27 states and the  District of Columbia would have gained $4.2 million and 23 states would  have lost a total of $4.2 million. Based on our simulation of the formula  funding for SSBG, Washington, D.C. would have gained 2.05 percent in  grant funding and Minnesota would have lost 1.17 percent. Statistical Population Estimates from the 2000 Census Would Have Shifted a Smaller Percentage of Funding Compared to Those from the 1990 Census

For the Medicaid program, recalculating state allocations using statistical  population estimates based on the 2000 Census would have changed the  funding for 39 states in fiscal year 2004. This is because the difference  between the actual and estimated population counts was smaller for the  2000 Census compared to the 1990 Census. Scope and Methodology

As agreed with your offices, we identified (1) the top 20 formula grant  programs based on the amount of funds targeted by any means, and (2)  how much money would have been allocated using census data for certain  formula grant programs, and the prospective impact of using estimated  population counts from the 1990 and 2000 Censuses to recalculate state  allocations for these grant programs. We use the term “allocation” to  include Department of Health and Human Services (HHS) reimbursement  to states of Medicaid expenditures subject to the Federal Medical  Assistance Percentage (FMAP) formula and Social Services Block Grant  (SSBG) state allotments. Both the Census  Bureau and GAO deem the 1990 and 2000 statistical population estimates  as unreliable and they should not be used for any purposes that legally  require data from the decennial census.
Why GAO Did This Study

Decennial census data need to be as accurate as possible because the population counts are used for, among other purposes, allocating federal grants to states and local governments. The U.S. Census Bureau (Bureau) used statistical methods to estimate the accuracy of 1990 and 2000 Census data. Because the Bureau considered the estimates unreliable due to methodological uncertainties, they were not used to adjust the census results. Still, a key question is how sensitive are federal formula grants to alternative population estimates, such as those derived from statistical methods? GAO was asked to identify (1) the top 20 formula grant programs based on the amount of funds targeted by any means, and (2) the amount of money allocated for Medicaid and Social Services Block Grant (SSBG), and the prospective impact of estimated population counts from the 1990 and 2000 Censuses on state allocations for these two programs. Importantly, as agreed, GAO's analysis only simulates the formula grant reallocations. We used fiscal year 2004 Medicaid state expenditure and 2005 SSBG state allocation data, the most recent data available.

What GAO Found

In fiscal year 2004, the top 20 formula grant programs together had $308 billion in obligations, or 67 percent of the total $460.2 billion obligated by the 1,172 federal grant programs. Medicaid was the largest formula grant program, with obligations of $183.2 billion, or nearly 40 percent of all grant obligations. The federal government allocated $159.7 billion to states in Medicaid funds (not including administrative costs such as processing and making payments to service providers) and $1.7 billion in SSBG funds. Recalculating these allocations using statistical population estimates from the Accuracy and Coverage Evaluation and the Post Enumeration Survey--independent sample surveys designed to estimate the number of people that were over- and undercounted in the 2000 and 1990 Censuses--would have produced the following results. First, a total of 0.23 percent ($368 million) of federal Medicaid funds would have been shifted overall among the states in fiscal year 2004 and 0.25 percent ($4.2 million) of SSBG funds would have shifted among the states in fiscal year 2005 as a result of the simulations using statistical population estimates from the 2000 Census. Second, with respect to Medicaid, 22 states would have received additional funding, 17 states would have received less funding, and 11 states and the District of Columbia would have received the same amount of funding using statistical population estimates from the 2000 Census. Based on a fiscal year 2004 federal Medicaid allocation to the states of $159.7 billion, Nevada would have been the largest percentage gainer, with an additional 1.47 percent in funding, and Wisconsin would have lost the greatest percentage--1.46 percent. Third, with respect to SSBG, 27 states and the District of Columbia would have gained funding, and 23 states would have lost funding using statistical population estimates from the 2000 Census. Based on a fiscal year 2005 SSBG allocation of $1.7 billion, Washington, D.C. would have been the biggest percentage gainer, receiving an additional 2.05 percent in funding, while Minnesota would have lost the greatest percentage funding--1.17 percent. Fourth, statistical population estimates from the 2000 Census would have shifted a smaller percentage of funding compared to those using the 1990 Census because the difference between the actual and estimated population counts was smaller in 2000 compared to 1990.