Examples are detailed under one of four strategies for better targeting the intended beneficiaries: revise grant formulas, change eligibility rules, target fees and charges, and narrow tax preferences. We have issued many reports over the past decade showing that the allocation of federal grants to state and local governments is not well targeted. If the Congress decides to reduce funding for these grants, a revised formula could better target Title I LEA grants to those counties with the greatest overall need. Target Fees and Charges to Beneficiaries for Business-type Government Activities

Adjusting fees and charges to the beneficiaries of some business-type federal programs and services offers a third targeting strategy to reduce the deficit. Industrial Development Bonds

For example, tax-exempt industrial development bonds (IDBs) are poorly targeted. Targeting Can Allow for Deficit Reduction While Improving Programs and Services

As the examples from our published work show, more effective targeting is one of several available approaches that can allow for reducing spending while improving federal programs and services.
Why GAO Did This Study

Pursuant to a congressional request, GAO summarized its previous work suggesting better targeting of federal programs and services as a strategy for downsizing government and reducing the deficit.

What GAO Found

GAO found that: (1) better targeting can reduce spending and improve federal programs and services, but poor targeting can result in overspending; (2) Congress must decide how to reduce funding for certain programs and alter the allocation of resources to meet its deficit reduction goals; and (3) options for better targeting include revising formula grants to states and localities to reflect differences in fiscal capacity, altering eligibility rules for federal benefit programs to restrict certain benefits, instituting fees for those that consume certain government-provided, business-type services, and limiting or eliminating tax preferences given to state and local governments that issue industrial development bonds.