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 1996 and the Ryan White CARE Act Amendments of 2000 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 a cumulative count of AIDS cases recorded in the jurisdiction since reporting began in 1981. The 1996 amendments required the use of ELCs instead of cumulative AIDS cases. 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. 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. 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 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. 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. 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 hold- harmless provisions and grandfather clause protect the funding of certain grantees. 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. 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. 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. 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. 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. 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. 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. 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. 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. More than half of the 51 EMAs received Title I funding in fiscal year 2004 even though they were below Title I eligibility thresholds. 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. 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. This provision has the potential of reducing the amount of funding to grantees that have demonstrated severe need for drug treatment funds because the hold- harmless provision is funded out of amounts that would otherwise be used for that purpose. Fiscal year 2004 was the first time that any grantees triggered this provision. Severe Need grants are funded by a 3 percent set- aside 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 hold- harmless protection. (See table 5.) The remaining $20.8 million, or 93 percent of the set-aside amount, was distributed in Severe Need grants. 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. Some individual grantees would have had changes that more than doubled their funding. Grantees in the South and Midwest would generally have received more funding if HIV cases were used in funding formulas along with ELCs. 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 hold- harmless 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 case- reporting systems. Case-reporting systems need several years to become fully operational. 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. Funding changes can also be linked to whether a jurisdiction has a name- or 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. 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. 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. 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. 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: 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. 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. This is a work of the U.S. government and is not subject to copyright protection in the United States. 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Summary:
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. 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 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.