United States Government Accountability Office

GAO Testimony 

Before the Subcommittee on Health, 

Committee on Energy and Commerce, 

House of Representatives 

RYAN WHITE CARE ACT

Changes Needed to Improve 

the Distribution of Funding 

Statement of Marcia Crosse 

Director, Health Care 

For Release on Delivery

Expected at 9:00 a.m. EDT

Thursday, April 27, 2006

 

GAO-06-703T 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

April 27, 2006

RYAN WHITE CARE ACT 

Changes Needed to Improve the 

Highlights of GAO-06-703T, a testimony Distribution of Funding 

before the Subcommittee on Health, 

Committee on Energy and Commerce, 

House of Representatives

The CARE Act, a federal effort to 

address the HIV/AIDS epidemic, is

administered by HHS. The Act uses

formulas based upon a grantee’s 

number of AIDS cases to distribute 

funds to eligible metropolitan areas 

(EMA), states, and territories. The 

use of AIDS cases was prescribed 

because most jurisdictions tracked 

and reported only AIDS cases when

the grant programs were

established. HIV cases must be 

incorporated with AIDS cases in

CARE Act formulas no later than 

fiscal year 2007. 

GAO was asked to discuss factors 

that affect the distribution of CARE 

Act funding. This testimony is 

based on HIV/AIDS: Changes 

Needed to Improve the 

Distribution of Ryan White CARE 

Act and Housing Funds, GAO-06-

332 (Feb. 28, 2006). GAO discusses 

how specific funding-formula 

provisions contribute to funding 

differences among CARE Act 

grantees and what distribution 

differences could result from using 

HIV cases in CARE Act funding 

formulas. 

What GAO Recommends

In its February 2006 report, GAO 

stated that if Congress wishes 

CARE Act funding to more closely

reflect the distribution of persons 

living with AIDS, it should consider

taking actions that lead to more

comparable funding per case by

revising the funding formulas. HHS 

generally agreed with GAO’s 

identification of issues in the

funding formulas. 

Multiple provisions in the CARE Act grant funding formulas as enacted 

result in funding not being comparable per AIDS case across grantees. First, 

the CARE Act uses measures of AIDS cases that do not accurately reflect the 

number of persons living with AIDS. For example, the statutory funding 

formulas require the use of cumulative AIDS case counts, which could 

include deceased cases. Second, CARE Act provisions related to 

metropolitan areas result in variability in the amounts of funding per AIDS 

case among grantees. For example, AIDS cases within EMAs are counted 

once for determining funding under Title I of the CARE Act for EMAs and 

again under Title II for determining funding for the states and territories in 

which those EMAs are located. As a result, states with EMAs receive more

total funding per AIDS case than states without EMAs. Third, CARE Act 

hold-harmless provisions under Titles I and II and the grandfather clause for 

EMAs under Title I sustain funding and eligibility of CARE Act grantees on 

the basis of a previous year’s measurements of the number of AIDS cases in 

these jurisdictions. For example, the CARE Act Title I hold-harmless

provision results in one EMA continuing to have deceased AIDS cases 

factored into its allocation because its hold-harmless funding dates back to 

the mid-1990s when formula funding was based on a count of AIDS cases 

from the beginning of the epidemic. 

If HIV case counts had been incorporated along with the number of 

estimated living AIDS cases (ELC) in allocating fiscal year 2004 CARE Act 

grants instead of ELCs alone, funding would have shifted among 

jurisdictions. Grantees in the South and the Midwest generally would have 

received more funding if HIV cases were used in the funding formulas, but 

there would have been grantees that would have received increased funding 

and grantees that would have received decreased funding in every region of 

the country. Although CARE Act grantees have established HIV casereporting systems, differences between these systems—in their maturity and 

reporting methods, for instance—would have affected the distribution of 

CARE Act funds based on ELCs and HIV case counts. Grantees with more 

mature HIV-reporting systems would tend to receive more funds. 

www.gao.gov/cgi-bin/getrpt?GAO-06-703T.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Marcia Crosse 

at (202) 512-7119 or crossem@gao.gov. 
Mr. Chairman and Members of the Subcommittee: 

I am pleased to be here today to discuss the Ryan White Comprehensive 

AIDS Resources Emergency Act of 1990 (CARE Act).1

 I will specifically 

address factors that affect CARE Act funding of services for those with the 

human immunodeficiency virus (HIV) or acquired immunodeficiency 

syndrome (AIDS) and program coverage for individuals served by the 

CARE Act.2

 The Centers for Disease Control and Prevention (CDC) 

estimate that between 1,039,000 and 1,185,000 people in the United States

were living with HIV/AIDS at the end of 2003. The number of people 

infected with HIV/AIDS is likely to have risen since then, and CDC 

estimates that, as of December 2004, it included 415,193 individuals with 

AIDS. 

The CARE Act, which is administered by the Department of Health and 

Human Services’ (HHS) Health Resources and Services Administration 

(HRSA), established a number of grant programs through which funds are 

made available to states—including the District of Columbia—territories,3

and metropolitan areas to provide health care, medications, and support 

services to individuals and families affected by HIV/AIDS. In fiscal year 

2004, more than $2 billion was provided through the CARE Act for these 

health care and support services. The majority of these funds were 

distributed under Title I and Title II4

 of the CARE Act through formuladriven base grants in fiscal year 2004 based upon a measure of each 

 1

Pub. L. No. 101-381, 104 Stat. 576 (codified as amended at 42 U.S.C. §§ 300ff–300ff-111 

(2000)). Unless otherwise indicated, references to the CARE Act are to current law. 

2

HIV is the virus that causes AIDS. Throughout this testimony, we use the common term

“HIV/AIDS” to refer to HIV disease, inclusive of cases that have progressed to AIDS. When 

we use these terms alone, HIV refers to the disease without the presence of AIDS, and

AIDS refers exclusively to HIV disease that has progressed to AIDS. 

3

In addition to the 50 states, the CARE Act authorizes grants to the District of Columbia, 

the Commonwealth of Puerto Rico, Guam, the Virgin Islands, American Samoa, the 

Commonwealth of the Northern Mariana Islands, the Republic of the Marshall Islands, the 

Federated States of Micronesia, and the Republic of Palau. Throughout this testimony, the

term state refers to the 50 states and the District of Columbia, and territory refers to these 

listed territories. 

4

The 1990 CARE Act added a new Title XXVI to the Public Health Service Act. In general, 

because Part A of that new title, which authorizes grants to metropolitan areas, was 

established by Title I of the CARE Act, it is commonly referred to as Title I, and because 

Part B, which authorizes grants to states and territories, was established by Title II of the

CARE Act, it is commonly referred to as Title II. 

Page 1 GAO-06-703T
grantee’s estimated living AIDS cases (ELC).5

 Title I provides for funding 

to eligible metropolitan areas (EMA) while Title II provides for funding to 

states and territories.6

 Both Titles I and II contain hold-harmless provisions

that limit how much funding can decline from one year to the next. Title I

also contains a grandfather clause that was added in 1996, which states 

that areas eligible for Title I funding at that time continue to be eligible

even if they no longer meet the eligibility criteria. 

The use of AIDS cases in the distribution of formula grants was prescribed 

because most jurisdictions tracked and reported AIDS cases instead of 

HIV cases when the grant programs were established. Because of concerns 

that a jurisdiction’s disease burden is not adequately reflected by only 

counting cases that have progressed to AIDS, the Ryan White CARE Act 

Amendments of 2000 required the use of HIV/AIDS case counts in the 

distribution of formula grants not later than fiscal year 2007.

7

 We have

reported that because CARE Act grants serve persons who have been 

diagnosed with HIV that has not progressed to AIDS as well as those for 

whom it has, it would be reasonable to distribute funds on the basis of the 

total number of persons living with HIV/AIDS.8

 Incorporating HIV data 

along with AIDS data would result in targeting funds more accurately 

according to need. However, because there is a lack of HIV data that are 

sufficiently adequate and reliable to serve as a basis for CARE Act formula 

grant allocations, as of December 2005, HIV cases have not been used in 

the distribution of formula grants under CARE Act programs. 

To assist the subcommittee as it considers the reauthorization of CARE 

Act programs, my testimony provides our findings on CARE Act funding 

formulas. Specifically, I will discuss 

 5

HRSA calculates a grantee’s ELCs by using data from CDC on the reported AIDS case 

counts for the last 10 years and weighting those numbers to account for the likelihood of

deaths. 

6

Under Title I, a metropolitan area with a population of at least 500,000 and more than 2,000 

reported AIDS cases in the last 5 calendar years is eligible to receive Title I funding, and is

defined as an EMA. 

7

Pub. L. No. 106-345, § 206(b), 114 Stat. 1319, 1334–35. 

8

GAO, Ryan White CARE Act: Opportunities to Enhance Funding Equity, 

GAO/T-HEHS-00-150 (Washington, D.C.: July 11, 2000), 6.

Page 2 GAO-06-703T
1. the extent of funding differences among CARE Act grantees, and how 

specific CARE Act funding-formula provisions contribute to these 

differences, and 

2. what distribution differences could result from using HIV cases in 

CARE Act funding formulas. 

My testimony today is based on our February 2006 report on CARE Act 

funding.9

 In carrying out the work for our report, we reviewed the CARE 

Act of 1990, as well as the 1996 and 2000 CARE Act amendments, HRSA 

documents on CARE Act funding, Institute of Medicine (IOM) reports on 

the CARE Act, and other related reports. We interviewed CDC, HRSA, and 

state officials, as well as officials from the National Alliance of State and 

Territorial AIDS Directors. We analyzed data for fiscal year 2004, obtained

from HRSA and CDC, to examine the effects of funding-formula provisions

and the use of HIV cases with ELCs in making CARE Act funding 

allocations.10 We also collected data on HIV case counts from state and 

local HIV/AIDS officials. Based on the information HRSA, CDC, and state 

and local officials provided regarding verification of the reliability of these 

data, we determined these data to be sufficiently reliable for the purposes 

of our analyses. We performed our work in accordance with generally

accepted government auditing standards. The report’s appendix I provides

a more detailed explanation of our scope and methodology. 

In brief, multiple provisions in the CARE Act grant funding formulas as 

enacted result in funding not being comparable per AIDS case across 

grantees. First, the CARE Act uses measures of AIDS cases that do not 

accurately reflect the number of persons living with AIDS. For example, 

the statutory funding formulas require the use of cumulative AIDS case 

counts, which could include deceased cases. Second, CARE Act provisions 

related to metropolitan areas result in variability in the amounts of funding 

per AIDS case among grantees. For example, AIDS cases within EMAs are 

counted once for determining funding under Title I of the CARE Act for 

EMAs and again under Title II for determining funding for the states and 

territories in which those EMAs are located. As a result, states with EMAs 

receive more total funding per AIDS case than states without EMAs. Third, 

 9

GAO, HIV/AIDS: Changes Needed to Improve the Distribution of Ryan White CARE Act 

and Housing Funds, GAO-06-332 (Washington, D.C.: Feb. 28, 2006).

10Our analyses of CARE Act funding-formula provisions and the use of HIV cases in making 

CARE Act funding allocations include the states, Puerto Rico, and metropolitan areas 

eligible for funding. 

Page 3 GAO-06-703T
CARE Act hold-harmless provisions under Titles I and II and the 

grandfather clause for EMAs under Title I sustain funding and eligibility of 

CARE Act grantees on the basis of a previous year’s measurements of the 

number of AIDS cases in these jurisdictions. For example, the CARE Act 

Title I hold-harmless provision results in one EMA continuing to have 

deceased AIDS cases factored into its allocation because its hold-harmless 

funding dates back to the mid-1990s when formula funding was based on a 

count of AIDS cases from the beginning of the epidemic. 

If HIV case counts had been incorporated along with ELCs in allocating 

fiscal year 2004 CARE Act grants, instead of ELCs alone, funding would 

have shifted among jurisdictions. Grantees in the South and the Midwest 

generally would have received more funding if HIV cases were used in the 

funding formulas, but there would have been grantees that would have 

received increased funding and grantees that would have received 

decreased funding in every region of the country. Although CARE Act 

grantees have established HIV case-reporting systems, differences 

between these systems—in their maturity and reporting methods, for 

instance—would have affected the distribution of CARE Act funds based 

on ELCs and HIV case counts. Grantees with more mature HIV-reporting 

systems would tend to receive more funds. 

We reported in February 2006 that if Congress wishes CARE Act funding 

to more closely reflect the distribution of persons living with AIDS, it 

should consider taking actions that lead to more comparable funding per 

case by revising the funding formulas. In accordance with achieving more 

comparable funding per AIDS case, we raised a number of matters for 

consideration when Congress reviews the CARE Act. HHS generally 

agreed with GAO’s identification of issues in the funding formulas. 

The CARE Act was enacted in 1990 to respond to the needs of individuals 

and families living with HIV or AIDS and to direct federal funding to areas 

disproportionately affected by the epidemic. The Ryan White CARE Act 

Amendments of 199611 and the Ryan White CARE Act Amendments of 

200012 modified the original funding formulas. For example, prior to the 

1996 amendments, the CARE Act required that for purposes of 

determining grant amounts a metropolitan area’s caseload be measured by 

Background 

 11Pub. L. No. 104-146, 110 Stat. 136. 

12Pub. L. No. 106-345, 114 Stat. 1319. 

Page 4 GAO-06-703T
a cumulative count of AIDS cases recorded in the jurisdiction since 

reporting began in 1981.13 The 1996 amendments required the use of ELCs 

instead of cumulative AIDS cases.14 Because this switch would have 

resulted in large shifts of funding away from jurisdictions with a longer 

history of the disease than other jurisdictions, due in part to a higher 

proportion of deceased cases, the 1996 CARE Act amendments added a 

hold-harmless provision under Title I, as well as under Title II, that limits 

the extent to which a grantee’s funding can decline from one year to the 

next. 

Titles I and II also provide for other grants to subsets of eligible 

jurisdictions either by formula or by a competitive process. For example, 

in addition to AIDS Drug Assistance Program (ADAP) base grants, Title II 

also authorizes grants for states and certain territories with demonstrated 

need for additional funding to support their ADAPs.15 These grants, known 

as Severe Need grants, are funded through a set-aside of funds otherwise 

available for ADAP base grants. Title II also authorizes funding for 

“Emerging Communities,” which are communities affected by AIDS that 

have not had a sufficient number of AIDS cases reported in the last 

5 calendar years to be eligible for Title I grants as EMAs. In addition, Title 

II contains a minimum-grant provision that guarantees that no grantee will 

receive a Title II base grant less than a specified funding amount. 

Metropolitan areas heavily affected by HIV/AIDS have always been 

recognized within the structure of the CARE Act. In 1995 we reported that, 

with combined funding under Title I and Title II, states with EMAs receive 

more funding per AIDS case than states without EMAs.16 To adjust for this 

situation, the 1996 amendments instituted a two-part formula for Title II 

base grants that takes into account the number of ELCs that reside within 

a state but outside of any EMA. Under this distribution formula, 80 percent 

 13In this statement, cumulative AIDS cases are the total number of AIDS cases, both living 

and dead, reported in a jurisdiction in a given period. 

14HRSA calculates a jurisdiction’s ELCs by using data from CDC on the reported AIDS case 

counts for the last 10 years and weighting those numbers to account for the likelihood of

deaths. We used this measure as our estimate of living AIDS cases in our analyses of CARE 

Act funding-formula provisions and the use of HIV cases in CARE Act funding formulas. 

15In addition to the 50 states, these grants, like ADAP base grants, are authorized to the 

District of Columbia, the Commonwealth of Puerto Rico, Guam, and the Virgin Islands. 

16See GAO, Ryan White CARE Act of 1990: Opportunities Are Available to Improve 

Funding Equity, GAO/T-HEHS-95-126 (Washington, D.C.: Apr. 5, 1995). 

Page 5 GAO-06-703T
of the Title II base grant is based upon a state’s proportion of all ELCs, and 

20 percent of the base grant is based on a state’s proportion of ELCs 

outside of EMAs relative to all such ELCs in all states and territories. A 

second provision included in 1996 protected the eligibility of EMAs. The 

1996 amendments provided that a jurisdiction designated as an EMA for 

that fiscal year would be “grandfathered” so it would continue to receive

Title I funding even if its reported number of AIDS cases dropped below 

the threshold for eligibility. Table 1 describes CARE Act formula grants for 

Titles I and II. 

Page 6 GAO-06-703T
Table 1: Description of CARE Act Title I and Title II Formula Grants 

Formula grant Eligible grantees Distribution Minimum grant Hold-harmless provisiona

Title I Base Grant Metropolitan areas with 

500,000 or more in 

population and with 

more than 2,000

reported AIDS cases in 

the most recent 

5 calendar years

b

 

Distributed among EMAs 

according to each EMA’s 

proportion of ELCs 

relative to all EMAs. 

No Grant annually declines to 98%, 

95%, 92%, and 89% of the base 

year grant, respectively.c In the 

fifth and all subsequent years,

EMA receives 85% of base year 

grant. The funds necessary to 

meet the hold-harmless 

requirement are deducted from

funds available for supplemental 

grants under Title I.d

Title II Base Grant States and territoriese Eighty percent of base 

grant funding divided 

among states/territories 

according to each 

grantee’s proportion of all 

ELCs. Twenty percent of 

base grant funding 

divided among 

states/territories 

according to each 

grantee’s ELCs located 

outside the EMAs within 

the state’s/territory’s 

borders relative to such 

ELCs in all 

states/territories. 

For states with fewer 

than 90 ELCs, 

$200,000; states with 

90 or more ELCs, 

$500,000; for 

territories, $50,000 

Grant declines by 1% per year

from the fiscal year 2000 grant. In 

fifth year, grant is 95% of 2000 

grant. 

Title II ADAP Base 

Grant 

States and certain 

territoriesf 

Distributed according to 

each grantee’s

proportion of all ELCs. 

No Grant declines by 1% per year

from the fiscal year 2000 grant. In 

fifth year grant is 95% of 2000

grant. 

Title II ADAP 

Severe Need Grantg

States and certain 

territoriesf with a severe 

need for a grant to 

increase access to 

medications 

Distributed according to 

each grantee’s

proportion of all ELCs: 

grantees must agree to 

match 25 percent of their 

severe need grant and 

not to impose eligibility 

requirements stricter 

than those in place on 

January 1, 2000. 

No No

Page 7 GAO-06-703T
Formula grant Eligible grantees Distribution Minimum grant Hold-harmless provisiona

Title II Emerging 

Communities Grant 

States and territories 

with metropolitan areas 

that are not eligible for 

Title I, and that have 

500–1,999 reported 

AIDS cases in the most 

recent 5 calendar years 

Funds are divided into 

two tiers: 50% distributed 

among communities with 

1,000–1,999 AIDS 

cases, and 50%

distributed among 

communities with 500–

999 AIDS cases. 

Funding is distributed

according to each 

community’s proportion 

of AIDS cases (reported 

in the most recent 5 

calendar years) in 

Emerging Communities 

within the tier. 

Minimum of $5 million 

for each tier 

No 

Source: HRSA. 

Notes: HRSA has also awarded Minority AIDS Initiative grants to EMAs, states, and territories. HRSA 

characterizes Minority AIDS Initiative grants to EMAs as Title I grants and Minority AIDS Initiative 

grants to states and territories as Title II grants. These funds are allocated by formula. Title I funds 

have been used for grants to EMAs with greater than zero reported nonwhite AIDS cases in the most 

recent 2 calendar years. The funds are distributed among all EMAs according to each EMA’s 

proportion of nonwhite AIDS cases reported over the most recent 2 calendar years. Title II funds have 

been used for grants to states and territories with greater than zero reported nonwhite AIDS cases in 

the most recent 2 calendar years. The funds are distributed among all grantees according to each 

grantee’s proportion of nonwhite AIDS cases reported over the most recent 2 calendar years. There 

are no minimum-grant or hold-harmless provisions for these grants.

a

If the distribution formula would otherwise result in a funding decrease from a prior year, a holdharmless provision may be triggered to mitigate the decrease in funding. 

b

A grandfather clause added in 1996 provides that areas eligible at that time continue to be eligible 

even if they no longer meet the eligibility criteria. 

c

The base year is the fiscal year prior to that in which the EMA first becomes eligible for holdharmless funding. 

d

Title I also includes supplemental grants, which are awarded to EMAs using a competitive application

process based on the demonstration of severe need and other criteria. 

e

In addition to the 50 states, Title II base grants are authorized for the District of Columbia, the 

Commonwealth of Puerto Rico, Guam, the Virgin Islands, American Samoa, the Commonwealth of 

the Northern Mariana Islands, the Federated States of Micronesia, the Republic of Palau, and the 

Republic of the Marshall Islands.

f

In addition to the 50 states, these grants are authorized for the District of Columbia, the 

Commonwealth of Puerto Rico, Guam, and the Virgin Islands. 

g

Funding for Severe Need grants may be reduced to maintain funding for some states under a Title II

hold-harmless provision. Severe Need grants are funded by setting aside 3 percent of the funds 

earmarked specifically for ADAPs.

Page 8 GAO-06-703T
The 2000 amendments provided for HIV case counts to be incorporated in 

the Title I and Title II funding formulas as early as fiscal year 2005 if such 

data were available and deemed “sufficiently accurate and reliable” by the 

Secretary of Health and Human Services.17 They also required that HIV 

data be used no later than the beginning of fiscal year 2007. In June 2004 

the Secretary of Health and Human Services determined that HIV data 

were not yet ready to be used for the purposes of distributing formula 

funding under Title I and Title II of the CARE Act. 

Provisions in the CARE Act funding formulas result in a distribution of 

funds among grantees that does not reflect the relative distribution of 

AIDS cases in these jurisdictions. We found that provisions affect the 

proportional allocation of funding as follows: (1) the AIDS case-count 

provisions in the CARE Act result in a distribution of funding that is not 

reflective of the distribution of persons living with AIDS, (2) CARE Act 

provisions related to metropolitan areas result in variability in the 

amounts of funding per ELC among grantees, and (3) the CARE Act holdharmless provisions and grandfather clause protect the funding of certain

grantees. 

Multiple CARE Act 

Provisions Contribute 

to Disproportionate 

Funding per AIDS 

Case 

Provisions in CARE Act 

Funding Formulas 

Incorporate Measures of 

AIDS Cases That Do Not 

Reflect an Accurate Count 

of Persons Living with 

AIDS 

Provisions in the CARE Act use measurements of AIDS cases that do not 

reflect an accurate count of people currently living with AIDS. Eligibility 

for Title I funding and Title II Emerging Communities grants, as well as the 

amounts of the Emerging Communities grants, is based on cumulative 

totals of AIDS cases reported in the most recent 5-year period. This results 

in funding not being distributed according to the current distribution of 

the disease. For example, because Emerging Communities funding is 

determined by using 5-year cumulative case counts, allocations could be

based in part on deceased cases, that is, people for whom AIDS was 

reported in the past 5 years but who have since died. In addition, these 

case counts do not take into account living cases in which AIDS was 

diagnosed more than 5 years earlier. Consequently, 5-year cumulative case 

counts can substantially misrepresent the number of AIDS patients in 

these communities. 

 1742 U.S.C. §§ 300 ff-13(a)(3)(D)(i) and 300ff-28(a)(2)(D)(i) (2000). 

Page 9 GAO-06-703T
The use of ELCs as provided for in the CARE Act can also lead to 

inaccurate estimates of living AIDS cases. Currently, Title I, Title II, and 

ADAP base funding, which constitute the majority of formula funding, are 

distributed according to ELCs. ELCs are an estimate of living AIDS cases 

calculated by applying annual national survival weights to the most recent 

10 years of reported AIDS cases and adding the totals from each year. This 

method for estimating cases was first included in the CARE Act 

Amendments of 1996. At that time, this approach captured the vast 

majority of living AIDS cases. However, some persons with AIDS now live 

more than 10 years after their cases are first reported, and they are not 

accounted for by this formula.18 Thus, like the 5-year reported case counts,

ELCs can misrepresent the number of living AIDS cases in an area in part 

by not taking into account those persons living with AIDS whose cases 

were reported more than 10 years earlier. 

CARE Act Funding 

Provisions for 

Metropolitan Areas Result 

in Disproportionate 

Funding 

When total Title I and Title II funding is considered, states with EMAs and 

Puerto Rico receive more funding per ELC than states without EMAs 

because cases within EMAs are counted twice, once in connection with 

Title I base grants and once for Title II base grants. Eighty percent of the 

Title II base grant is determined by the total number of ELCs in the state 

or territory. The remaining 20 percent is based on the number of ELCs in 

each jurisdiction outside of any EMA. This 80/20 split was established by 

the 1996 CARE Act amendments to address the concern that grantees with 

EMAs received more total Title I and Title II funding per case than 

grantees without EMAs. However, even with the 80/20 split, states with 

EMAs and Puerto Rico receive more total Title I and Title II funding per 

ELC than states without EMAs. States without EMAs receive no funding 

under Title I, and thus, when total Title I and Title II funds are considered, 

states with EMAs and Puerto Rico receive more funding per ELC. Table 2 

shows that the higher the percentage of a state’s ELCs within EMAs, the 

more that state received in total Title I and Title II funding per ELC.19

 18When determining CARE Act funding for fiscal year 2004, HRSA used a survival weight of 

.28 for AIDS cases that had been reported 10 years earlier. This figure represents the 

proportion of persons who had been reported with AIDS 10 years earlier and were known 

to be alive. 

19Approximately 80 percent of Puerto Rico’s ELCs are in EMAs. 

Page 10 GAO-06-703T
Table 2: Relationship between ELCs in EMAs and Total CARE Act Title I and II 

Funding per ELC, Fiscal Year 2004 

Percentage of states’ and 

Puerto Rico’s ELCs in EMAs Average funding per ELCa

None $3,592

Less than 50 percent 3,954

50 to 75 percent 4,717

More than 75 percent 4,955

Source: GAO analysis of HRSA data. 

a

We excluded from our analyses the nine states that received the minimum Title II base grant awards. 

Under Title II, states with fewer than 90 cases receive no less than $200,000 in Title II base grant and

states with 90 or more cases receive at least $500,000. 

The two-tiered division of Emerging Communities also results in 

disparities in funding among metropolitan areas. Title II provides for a 

minimum of $10 million to states with metropolitan areas that have 500 to

1,999 AIDS cases reported in the last 5 calendar years but do not qualify

for funding under Title I as EMAs. The funding is equally split so that half

the funding is divided among the first tier of communities with 500 to 999 

reported cases in the most recent 5 calendar years while the other half is 

divided among a second tier of communities with 1,000 to 1,999 reported

cases in that period. 

In fiscal year 2004, the two-tiered structure of Emerging Communities 

funding led to large differences in funding per reported AIDS case in the 

last 5 calendar years among the Emerging Communities because the total

number of AIDS cases in each tier was not equal. Twenty-nine

communities qualified for Emerging Communities funds in fiscal year 

2004. Four of these communities had 1,000 to 1,999 reported AIDS cases in 

the last 5 calendar years and 25 communities had 500 to 999 cases. This 

distribution meant that the 4 communities with a total of 4,754 reported 

cases in the last 5 calendar years split $5 million while the remaining 25 

communities with a total of 15,994 reported cases in the last 5 calendar 

years also split $5 million. These case counts resulted in the 4 

communities receiving $1,052 per reported case while the other 25 

received $313 per reported case. Table 3 lists the 29 Emerging

Communities along with their reported AIDS case counts over the most 

recent 5 years and their funding. 

Page 11 GAO-06-703T
Table 3: Title II Emerging Communities in Fiscal Year 2004 

Emerging Community

AIDS cases reported

in the most recent 

5 calendar years

Emerging Communities funding

per AIDS case reported in the 

most recent 5 calendar years

Memphis, Tenn. 1,588 $1,052

Nashville, Tenn. 1,123 1,052

Baton Rouge, La. 1,038 1,052

Indianapolis, Ind. 1,005 1,052

Columbia, S.C. 972 313

Charlotte, N.C. 875 313

Wilmington, Del. 801 313

Richmond, Va. 783 313

Raleigh–Durham–Chapel Hill, N.C. 775 313

Jackson, Miss. 722 313

Louisville, Ky. 705 313

Rochester, N.Y. 681 313

Fort Pierce–Port St. Lucie, Fla. 636 313

Greensboro–Winston-Salem, N.C. 617 313

Birmingham, Ala. 615 313

Oklahoma City, Okla. 608 313

Pittsburgh, Pa. 602 313

Springfield, Mass. 588 313

Monmouth–Ocean, N.J. 582 313

Buffalo–Niagara Falls, N.Y. 581 313

Greenville, S.C. 560 313

Columbus, Ohio 558 313

Milwaukee, Wis. 558 313

Salt Lake City, Utah 555 313

Sarasota, Fla. 539 313

Charleston, S.C. 538 313

Cincinnati, Ohio 517 313

Daytona Beach, Fla. 514 313

Providence, R.I. 512 313

Total 20,748

Source: GAO analysis of HRSA data. 

Note: Emerging Communities are metropolitan areas not eligible for Title I grants and that have 500–

1,999 reported AIDS cases in the most recent 5 calendar years. The 5 most recent calendar years 

are 1998–2002. 

Page 12 GAO-06-703T
Titles I and II of the CARE Act both contain provisions that protect certain 

grantees’ funding levels. Title I has a hold-harmless provision that 

guarantees that the Title I base grant to an EMA will be at least as large as

a statutorily specified percentage of a previous year’s funding. The Title I

hold-harmless provision has primarily protected the funding of one EMA, 

San Francisco. 

Hold-harmless Provisions 

and Grandfather Clause 

Protect Funding of Certain 

CARE Act Grantees 

If an EMA qualifies for hold-harmless funding, that amount is added to the 

base funding and distributed together as the base grant. In fiscal year 2004, 

the San Francisco EMA received $7,358,239 in hold-harmless funding, or 

91.6 percent of the hold-harmless funding that was distributed.20 The 

second largest recipient was Kansas City, which received $134,485, or 

1.7 percent of the hold-harmless funding under Title I. Table 4 lists the 

EMAs that received hold-harmless funding in fiscal year 2004.21 Because 

San Francisco’s Title I funding reflects the application of hold-harmless 

provisions under the 1996 amendments, as well as under current law, 

San Francisco’s Title I base grant is determined in part by the number of 

deceased cases in the San Francisco EMA as of 1995. 

 20The funds used to meet the Title I hold-harmless requirement are deducted from the funds 

otherwise available for Title I supplemental grants before these grants are awarded.

Supplemental grants are awarded by HRSA to EMAs using a competitive process based on

the demonstration of need and other criteria. 

21San Francisco was the only EMA that received hold-harmless funding from fiscal year 

1999 through fiscal year 2002. In fiscal year 2003, 19 additional EMAs qualified for holdharmless funding. Twenty-one EMAs received hold-harmless funding in fiscal year 2004. 

Eleven EMAs qualified in both fiscal years 2003 and 2004. 

Page 13 GAO-06-703T
Table 4: Title I Hold-harmless Funding, Fiscal Year 2004 

EMA 

Hold-harmless 

funding

Percent of holdharmless fundingHold-harmless 

funding per ELC

Base grant per 

ELCa

Hold-harmless 

as a percent of

base grant

San Francisco, Calif. $7,358,239 91.6% $1,020 $2,241 45.5%

Kansas City, Mo. 134,485 1.7 104 1,325 7.8

Santa Rosa, Calif. 22,614 0.3 47 1,268 3.7

Sacramento, Calif. 36,456 0.5 29 1,251 2.3

Minneapolis–St. Paul, Minn. 33,770 0.4 27 1,248 2.1

Bergen–Passaic, N.J. 55,288 0.7 26 1,248 2.1

Jersey City, N.J. 58,310 0.7 24 1,245 1.9

Oakland, Calif. 50,744 0.6 18 1,239 1.4

New Haven, Conn. 42,573 0.5 14 1,236 1.2

Tampa–St. Petersburg, Fla. 44,908 0.6 12 1,233 0.9

San Jose, Calif. 12,097 0.2 11 1,232 0.9

Boston, Mass. 60,284 0.8 10 1,231 0.8

Nassau–Suffolk, N.Y. 21,212 0.3 8 1,230 0.7

Middlesex–Somerset–

Hunterdon, N.J. 8,315 0.1 7 1,228 0.5

Jacksonville, Fla. 12,825 0.2 6 1,228 0.5

San Juan, P.R. 41,011 0.5 6 1,228 0.5

Seattle, Wash. 9,844 0.1 4 1,225 0.3

Denver, Colo. 6,745 0.1 3 1,225 0.3

Cleveland, Ohio 4,616 0.1 3 1,224 0.2

West Palm Beach, Fla. 8,523 0.1 2 1,224 0.2

Newark, N.J. 10,975 0.1 2 1,223 0.1

All Other EMAs 0 0 0 1,221 0.0

Total $8,033,563b100.0%b

Source: GAO analysis of HRSA data. 

Notes: An EMA’s base funding is determined according to its proportion of ELCs. If an EMA qualifies 

for hold-harmless funding, that amount is added to the base funding and distributed together as the 

base grant. 

a

This amount was calculated by dividing the base grant, including any hold-harmless funding, 

received by each EMA by the number of ELCs in the EMA. 

b

Individual entries do not sum to total because of rounding. 

Page 14 GAO-06-703T
More than half of the 51 EMAs received Title I funding in fiscal year 2004 

even though they were below Title I eligibility thresholds.22 The eligibility 

of these EMAs was protected based on a CARE Act grandfather clause. 

Under a grandfather clause established by the CARE Act Amendments of 

1996, metropolitan areas eligible for funding for fiscal year 1996 remain 

eligible for Title I funding even if the number of reported cases in the most 

recent 5 calendar years drops below the statutory threshold. We found 

that in fiscal year 2004, 29 of the 51 EMAs did not meet the eligibility 

threshold of more than 2,000 reported AIDS cases during the most recent 

5 calendar years but nonetheless retained their status as EMAs (see fig. 1).

The number of reported AIDS cases in the most recent 5 calendar years in

these 29 EMAs ranged from 223 to 1,941. Title I funding awarded to these 

29 EMAs was about $116 million, or approximately 20 percent of the total 

Title I funding. 

 22To be eligible for Title I funding, a metropolitan area must have reported a cumulative 

total of more than 2,000 AIDS cases during the most recent 5 calendar years and have a 

population of at least 500,000. These criteria differ from those used to calculate base grant 

funding allocations, which are calculated using the number of ELCs. 

Page 15 GAO-06-703T
Figure 1: Grandfathered EMAs, Fiscal Year 2004 

Source: GAO analysis of CDC and HRSA data.

0

500

1000

1500

2000

Number of AIDS cases reported in

the most recent 5 calendar years

Eligibility threshold

Vineland-Millville-Bridgeton, NJ

New Haven, CT

Oakland, CA

Nassau-Suffolk, NY

Norfolk, VA

Seattle, WA

Jacksonville, FL

Orange County, CA

St. Louis, MO

Jersey City, NJ

Las Vegas, NV

Denver, CO

Austin, TX

Bergen-Passaic, NJ

Hartford, CT

San Antonio, TX

Cleveland, OH

Portland, OR

Fort Worth, TX

Kansas City, MO

Minneapolis, MN

Sacramento, CA

Ponce, PR

Middlesex-Somerset-Hunterdon, NJ

San Jose, CA

Caguas, PR

Dutchess County, NY

Santa Rosa, CA

Riverside-San Bernardino, CA

Note: The 5 most recent calendar years are 1998–2002. 

Page 16 GAO-06-703T
Title II has a hold-harmless provision that ensures that the total of Title II 

and ADAP base grants awarded to a grantee will be at least as large as the 

total of these grants a grantee received the previous year.23 This provision 

has the potential of reducing the amount of funding to grantees that have 

demonstrated severe need for drug treatment funds because the holdharmless provision is funded out of amounts that would otherwise be used 

for that purpose.24 Fiscal year 2004 was the first time that any grantees 

triggered this provision. Severe Need grants are funded by a 3 percent setaside of the funds appropriated specifically for ADAPs. Eight states 

became eligible for this hold-harmless funding in fiscal year 2004. In 2004,

the 3 percent set-aside for Severe Need grants was $22.5 million. Of these 

funds, $1.6 million, or 7 percent, was used to provide this Title II holdharmless protection. (See table 5.) The remaining $20.8 million, or 

93 percent of the set-aside amount, was distributed in Severe Need grants.

 2342 U.S.C. § 300ff-28(a)(2)(I)(ii)(VI) (2000). Title II also contains a hold-harmless provision 

that requires HRSA to consider separately Title II base grants and ADAP base grants. For 

the Title II base grants, this hold-harmless provision is funded by proportionately reducing

the size of the Title II base grants made to other jurisdictions that did not qualify for this

hold-harmless funding or receive a minimum grant. For ADAP base grants, it would be 

funded by reducing the size of the ADAP base grants made to those grantees that did not 

qualify for ADAP base grant hold-harmless funding. 42 U.S.C. § 300ff-28(a)(2)(H) (2000). 

24To be eligible for a Severe Need grant, a jurisdiction must have met one of four eligibility 

criteria as of January 1, 2000. It must have limited (1) the eligibility of ADAP clients to 

those with incomes at or below 200 percent of the federal poverty level, (2) the number of

ADAP clients by using medical eligibility restrictions, (3) the number of antiretroviral drugs

covered in its drug formulary, or (4) the number of opportunistic infection medications to 

fewer than 10 in its drug formulary. (Opportunistic infections are illnesses such as 

parasitic, viral, and fungal infections, and some types of cancer, some of which usually do 

not cause disease in people with normal immune systems.) In addition, a jurisdiction must

also have agreed to provide a 25 percent match and not impose eligibility requirements 

more restrictive than those in place on January 1, 2000. According to HRSA, grantees have

provided funds or in-kind services to meet the matching requirement. 

Page 17 GAO-06-703T
Table 5: States That Received Title II Hold-harmless Funding from Severe Need Setaside, Fiscal Year 2004 

State Hold-harmless amount 

Arkansas $23,705

Kansas 22,168

New Mexico 55,171

North Dakota 1,820

Oklahoma 96,423

Tennessee 1,300,502

Utah 119,695

Vermont 128

Total $1,619,612

Source: HRSA. 

The total amount of Severe Need grant funds available in fiscal year 2004 

to distribute among the eligible grantees was less than it would have been

without the hold-harmless payments. However, in fiscal year 2004 not all 

25 of the Title II grantees eligible for Severe Need grants made the match 

required to receive such grants. In future years, if all of the eligible Title II 

grantees make the match, and if there are also grantees that qualify to 

receive hold-harmless funds under this provision, grantees with severe 

need for ADAP funding would get less than the amounts they would 

otherwise receive. 

CARE Act funding for Title I, Title II, and ADAP base grants would have 

shifted among grantees if HIV case counts had been used with ELCs, 

instead of ELCs alone, to allocate fiscal year 2004 formula grants. Our 

analyses indicate that up to 13 percent of funding would have shifted 

among grantees if HIV case counts and ELCs had been used to allocate the 

funds and if the hold-harmless and minimum-grant provisions we 

considered were maintained.25 Some individual grantees would have had 

Funding Effect of 

Using HIV Case 

Counts Would Depend 

on Multiple Factors 

 25While we are aware of differences in the HIV data across jurisdictions, we conducted this 

analysis in light of the CARE Act requirement that HIV case counts be used for the 

distribution of Title I and Title II formula grants not later than fiscal year 2007. We used 

two approaches to examine the potential effect of including HIV cases in addition to 

persons living with AIDS in fiscal year 2004 CARE Act funding formulas. See GAO-06-332, 

app. I for more details regarding our methodology. 

Page 18 GAO-06-703T
changes that more than doubled their funding.26 Grantees in the South and 

Midwest would generally have received more funding if HIV cases were 

used in funding formulas along with ELCs.27 However, there would have

been grantees that would have received increased funding and grantees 

that would have received decreased funding in every region of the country.

Funding changes in our model would have been larger without the holdharmless and minimum-grant provisions that we included. Changes in 

CARE Act funding levels for Title I base grants, Title II base grants, and 

ADAP base grants caused by shifting to HIV cases and ELCs would be 

larger—up to 24 percent—if the current hold-harmless or minimum-grant 

amounts were not in effect. 

One explanation for the changes in funding allocations when HIV cases 

and ELCs are used instead of only ELCs is the maturity of HIV casereporting systems. Case-reporting systems need several years to become 

fully operational.28 We found that those grantees that would receive 

increased funding from the use of HIV cases tend to be those with the 

oldest HIV case-reporting systems. Those grantees with the oldest 

reporting systems include 11 southern and 8 midwestern states whose 

HIV-reporting systems were implemented prior to 1995. 

 26In our analyses, we considered the Title I hold-harmless provision and the Title II holdharmless provisions that are funded by proportional reductions in Title II base grants and 

ADAP base grants. We did not include the Title II hold-harmless provision funded by

amounts otherwise available for Severe Need grants. 

27We classified states in accordance with the four U.S. Census Bureau regions and the

jurisdictions that constitute each region. Because Puerto Rico is not included in any of 

these four regions, we excluded it from our regional analyses. Additional details on this

analysis are available in GAO-06-332. 

28IOM has reported that it could take from 18 months to several years after the 

implementation of an HIV-reporting system before there would be valid estimates of the 

number of people living with HIV. See Institute of Medicine of the National Academies,

Measuring What Matters: Allocation, Planning, and Quality Assessment for the Ryan

White CARE Act (Washington, D.C.: The National Academies Press, 2004).

Page 19 GAO-06-703T
Funding changes can also be linked to whether a jurisdiction has a nameor code-based system. CDC will only accept name-based case counts as no 

code-based system had met its quality criteria as of January 2006.

29 CDC 

does not accept the code-based data principally because methods have not

been developed to make certain that a code-reported HIV case is only 

being counted once across all reporting jurisdictions.30 As a result, if HIV 

case counts were used in funding formulas, HIV cases reported using 

codes rather than names would not be counted in distributing CARE Act 

funds. However, even if code-based data were incorporated into the CDC 

case counts, the age of the code-based systems could still be a factor since 

the code-based systems tend to be newer than the name-based systems. As 

of December 2005, 12 of the 13 code-based systems were implemented in

1999 or later, compared with 10 of the 39 name-based systems.31 The effect

of the maturity of the code-based systems could be increased if, as CDC 

believes, name-based systems can be executed with more complete 

coverage of cases in much less time than code-based systems. As a result, 

jurisdictions with code-based systems could find themselves with 

undercounts of HIV cases for longer periods of time than jurisdictions with 

name-based systems. Figure 2 shows the 39 jurisdictions where HIV case 

counts are accepted by CDC and the 13 jurisdictions where they are not 

accepted, as of December 2005. 

 29CDC has established a set of performance standards for accepting case counts from HIVreporting systems. These standards include that case reporting be complete (greater than

or equal to 85 percent of cases are reported) and timely (greater than or equal to 66 percent

of cases reported within 6 months of diagnosis) and that evaluation studies demonstrate 

that the approach must result in accurate case counts (less than or equal to 5 percent of

reported cases are duplicates). CDC has determined that the only systems which have been

evaluated that meet these standards use confidential, name-based reporting. In July 2005, 

CDC began recommending that all states and territories adopt confidential name-based 

surveillance systems to report HIV infections. 

30CDC also has other concerns about code-based reporting. For example, code-based 

reporting places a greater burden on health care providers because submitted codes are

frequently incomplete and require extensive follow-up with providers to resolve potential 

duplicate reports on the same person. 

31Two of the 13 states, Illinois and Maine, established name-based HIV reporting in January 

2006. Both states are in the process of having their HIV surveillance data certified by CDC 

and, once certified, their data will be accepted by CDC.

Page 20 GAO-06-703T
Figure 2: CDC Acceptance of HIV Case Counts, December 2005 

Jurisdictions with HIV case counts not accepted by CDC

Jurisdictions with HIV case counts accepted by CDC

Sources: CDC, IOM, Connecticut, Kentucky, and Philadelphia, Pennsylvania.

Page 21 GAO-06-703T
The use of HIV cases in CARE Act funding formulas could result in 

fluctuations in funding over time because of newly identified preexisting 

HIV cases. Grantees with more mature HIV-reporting systems have 

generally identified more of their HIV cases. Therefore, if HIV cases were 

used to distribute funding, these grantees would tend to receive more 

funds. As grantees with newer systems identify and report a higher 

percentage of their HIV cases, their proportion of the total number of 

ELCs and HIV cases in the country would increase and funding that had

shifted away from states with newer HIV-reporting systems would shift 

back, creating potentially significant additional shifts in program funding. 

The funding provided under the CARE Act has filled important gaps in 

communities throughout the country, but as Congress reviews CARE Act 

programs, it is important to understand how much funding can vary across 

communities with comparable numbers of persons living with AIDS. In our 

report, we raised several matters for Congress to consider when 

reauthorizing the CARE Act. We reported in February 2006 that if 

Congress wishes CARE Act funding to more closely reflect the distribution 

of persons living with AIDS, and to more closely reflect the distribution of 

persons living with HIV/AIDS when HIV cases are incorporated into the 

funding formulas, it should take the following five actions: 

Concluding 

Observations 

• revising the funding formulas used to determine grantee eligibility and 

grant amounts using a measure of living AIDS cases that does not include 

deceased cases and reflects the longer lives of persons living with AIDS, 

• eliminating the counting of cases in EMAs for Title I base grants and again

for Title II base grants, 

• modifying the hold-harmless provisions for Title I, Title II, and ADAP base 

grants to reduce the extent to which they prevent funding from shifting to 

areas where the epidemic has been increasing, 

• modifying the Title I grandfather clause, which protects the eligibility of 

metropolitan areas that no longer meet the eligibility criteria, and 

• eliminating the two-tiered structure of the Emerging Communities 

program. 

We also reported that if Congress wishes to preserve funding for the ADAP 

Severe Need grants, it should revise the Title II hold-harmless provision 

that is funded with amounts set aside for ADAP Severe Need Grants. In 

commenting on our draft report HHS generally agreed with our 

identification of issues in the funding formulas. 

Page 22 GAO-06-703T
Mr. Chairman, this completes my prepared statement. I would be happy to

respond to any questions you or other members of the subcommittee may 

have at this time. 

For further information regarding this statement, please contact Marcia 

Crosse at (202) 512-7119 or crossem@gao.gov. Contact points for our 

Offices of Congressional Relations and Public Affairs may be found on the 

last page of this statement. James McClyde, Assistant Director; Robert 

Copeland; Cathy Hamann; Opal Winebrenner; Craig Winslow; and Suzanne

Worth contributed to this statement. 

Page 23 GAO-06-703T

Contact and 

Acknowledgments 

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