Vocational Education-Basic Grants Formula: Distributional and Equalization Effects of the VEBG Formula and VEBG Formula Alternatives

摘要

The paper presents an analysis of the distributional and equalization effects of the present and alternative formulas for the determination of Federal matching grants for the Vocational Education-Basic Grants program. It contains a synoptic review of background information focusing on the existing formula, a brief discussion of major formula issues, a description of the frameworks utilized in the analysis of the present and alternative formulas, and a series of tables depicting the effects of various formula modifications. The major objective of the analysis is the development of formula modifications which significantly increase the effectiveness of the Federal aid formula in the achievement of equalization relative to fiscal capacity and need among the states. The criterion developed to measure the achievement of such equalization is the state-local revenue gap, the difference in yield arising from the application of a specified level of state-local effort to each state's capacity/need ratio. The analyses show that some improvement in the equalization power of the Vocational Education-Basic Grants program can be attained by substituting income per need unit for the present per capita income formula element, by adjusting for interstate cost-of-government differentials, and updating the formula elements.