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April 1969

ALLOCATION AND DISTRIBUTION OF RMP
GRANT FUNDS ANONG THE REGIONS
Issue and Backsround
The manner of allocating grant funds to the Regions, equity in the
distribution of funds among the Regions and the need for greater flexi-
bility in the use of funds have become issues of major importance to many

Program Coordinators.

Except for requiring the National Advisory Council to make recommen-
dations on the approval of grants and routine provisions for accounting
and special uses of the funds, P.L. 89-239 makes no specific reference as
to how available funds shall be allocated to or distributed among the
regions. The Act speaks of accomplishing the purposes of the title through
"orants', but neither specifies project grants nor speaks of entitlement or
allotment. Similarly, the governing Regulations refer to the broad consid-
erations which the Surgeon Cencral shall make in awarding grants to the
Regions, including such factors as: the capacity of institutions within the
program for research training and demonstration activities; coordination with
other Federally supported health activities; the population to be served by
the Program; involvement of the health resources in the region; projected use of
non-Federal resources in cerrying out the program; and geographic distribution
of grants throughout the Nation.

The grant policies and the review system adopted by the Division of
Regional Medical Programs followed closely the NIH model. In accordance with
the Act, a National Advisory Council was formed to advise the Division on
policy issues and to make recommendations in the award of grants. A Review
Committee wae established with the responsibility for looking at qualitative

aspects of programs and projects prior to subinission to Council. In theory
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this review mechanism would have placed a balanced emphasis on program
coherence, regionalization of health activities and quality of the
projects in attacking the categorical diseases. In practice, because of
a heavy work load and the technical complexity of the proposed activities,
the review process became more and more project oriented.

There was considerable variation between the Regions in the amount of
planning and core staff funds requested and awarded, ranging from $.05 to
over $,50 per capita. Those Programs which took a conservative and careful
approach to planning and organizing theix program felt themselves to be
under some pressure to move quickly into the operational phase. The message
which they seemed to hear from the Division was that unless more of the
available money was obligated, there would be difficulty in going to Congress
for increased appropriations. As more Regions became operational the
variation in the per capita amount awarded to the Regions continued.

In F.Y. 69, a number of new Regions caine in with operational proposals,
Now the projected demand for funds is estimated to exceed the amount avail-
‘able. This coupled with a tight money policy at the beginning of the new
Administration, led the Division to adopt for the first time a specific set
of priorities for funding. These priorities emphasized the need for
continued full support of core activity in order to keep the more slowly
developing programs moving. However, some Program Coordinators still feel
that those Regions which first went operational have an advantage because
of the high base level which they have established for future funding

comparison.
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Many Regions have adopted a complex grant review process which to
some extent parallels that of the Division, This has sometimes resulted
in a time span of fifteen months or more from project conception, through
review, to funding and operation. The move to an annual review cycle by
the Division further limits the extent to which the Regions can be
responsive to short term, high priority needs. This kind of flexibility
jis particularly important when working with health programs such as OEO
neighborhood health centers which need to show quick impact on local
problems. The Division has attempted to develop policies which will allow
appropriate reallocation of funds to meet the changing needs of the Regions,

but there are still real difficulties in this area.

Options and Alternatives

Reexamine the DRMP review and award process, looking for alternative
means of allocating funds within the existing system, Lf necessary, amend
Section 904 of the Act to provide for distribution or reservation of part
or all of the grant funds according to a formula or other form or entitle-
ment. Several systems could be adopted, including: placing a maximum or
ceiling on the amount of funds available for any one region;. reservation
of a specific portion of the available funds for distribution among the
regions according to a formula leaving the balance for award on a compet-
itive basis; distribution of all grant funds according to a formula with the
provision that a program for the use of these funds be submitted for Council

review.
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Considerations

(1)

(2)

(3)

(4)

Partial or total reservation of funds may be necessary to
protect the limited amounts of available money from the
monopolization by the better organized and older established
Regions. It is felt by some Regions that if they take their
time and go slowly, funds will be gone before they get a
chance to apply for them. Reservation would end what some
Regions feel to be a need to submit a premature operational
program in order to establish a base of experience for future
funding. |

The current trend in Tederal grant programs is toward bloc
grants and tax sharing, which allow basic decisions to be made
closer to the community level and which shorten the time gap
between application and funding.

A major advantage of partial bloc grant funding would be to
provide the Regions some funds which they could expend quickly
on high priority projects without going through the full ex-
tended review process, thus giving them more flexibility to
meet the local needs.

Many of the high population Regions have serious concern about
the per capita differences in grants to the various programs.
Jf these problems are not answered, (or at Jeast dealt with by
the Division) these Regions may turn to alternate political

resources for solutions.
(5)

(6)

(7)

(8)

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A real political factor in establishing any formula distri-
bution systen is the probable impossibility of reducing the
funding level of the more prosperous Regions. It would

probably be necessary to allot to each Region a minimum per

capita amount equal to that which is held by the best funded

Region. There may not be enough money available to do this.

Any formula approach would have to face squarely the necessity
of establishing Federal priorities. Many controversies could
arise including: urban vs. rural concerns, economic differences
among regions, sectional or geographic concerns, fragmentation
of the total health care system vs. the special needs of the
poor.

The whole issue of quality comes up in several forms. Those
Regions which are well funded feel that they should not be
penalized for developing good programs and moving quickly ahead.
More siowly developing Programs feel that their lack of progress
is indicative of the problem which they face and of the need for
funds to overcome these problems.

Perhaps in awarding funds, the Committee and Council have been
looking too closely at the individual projects as opposed to the
quality of the overall approach to problem solving (grand design)
which the Region presents. A new emphasis on program as opposed
to project review would make a shift to partial bloc funding

less difficult.
(10)

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Any allocation or reservation of funds based upon some kind

of formula, inevitably raises the problem of clearer and more
precise delineation of regional boundaries. This in turn
might well lead to some disputes among Regions where overlap
now occurs, requiring adjudication by the Division and Council,
which could prove to be counter~productive,

It might be possible to achieve many of the suggested improve~-
ments without legislative change. However, the question has
been raised whether the program would be willing ox politically
able to make major shifts in grant policy without strategic

legislative endorsement or push.
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