Carnevale Associates, LLC 1 ADAA Formula Allocation Options Formula Design Conceptual Issues September 6, 2006

2Carnevale Associates, LLC General Requirements & Deadlines Drug and Alcohol Council is to report to the budget committees by February 1, 2007 Formula is intended to apply to all ADAA prevention and treatment funding distributed to local jurisdictions by 2010 February report is to include an implementation timeline

3Carnevale Associates, LLC Other Legislative Requirements Equity: need to equitably fund services in all jurisdictions Hold Harmless: need to hold jurisdictions harmless from the impact of any developed formula Benefits: properly account for benefits that accrue regional-based treatment provided by a single jurisdiction Resources: funding needed to appropriately phase- in the formula by FY 2010

Carnevale Associates, LLC 4 Some Formula Basics

5Carnevale Associates, LLC Historical Allocation The dollar amount a jurisdiction receives is based on its percentage of total dollars received from the previous year The dollar amount a jurisdiction receives is based on its percentage of total dollars received from the previous year It will reflect all treatment and prevention dollars distributed by ADAA It will reflect all treatment and prevention dollars distributed by ADAA

6Carnevale Associates, LLC Hold Harmless Hold Harmless in a Fixed Budget Environment To hold a jurisdiction harmless from the impact of a new allocation scheme implies that it cannot be harmed fiscally by losing funds or service capacity Any formula developed in a fixed budget environment that reallocates resources will, by definition, violate the hold harmless principle some jurisdictions will “win” or see increases in funding under a new formula allocation while other jurisdictions will “lose” resources By definition, those jurisdictions that lose resources will not be held harmless from the impact of the developed formula Therefore, this exercise has little meaning unless we allow for increased funding—so what are our options?

7Carnevale Associates, LLC Hold Harmless & Budget Options Option 1: Cover the just the Losers: Amount of funding increase exactly equals the total dollar loss to those jurisdictions that lose funding in a formula that allocates the original fixed budget; jurisdiction that “win” more funds get to keep their funds—can apply to out-years Option 2: Add resources until all jurisdictions are held harmless from the new formula: A new formula combined with some increase in resources will likely reduce the number of losing jurisdictions under the new formula—under this option, we would determine the amount of funding needed to ensure that all jurisdictions are held harmless from the new formula Option 3: Work some combination of options 1 and 2: Add some initial resources generally (e.g., a 5% increase in the historical level) then add the exact amount of resources to cover the dollar loss that remains

8Carnevale Associates, LLC Equity Considerations Assumes we desire to correct services inequalities across jurisdictions—to treat equals equally Economics teaches us that there is no objective way to determine what is a “just” or “equitable” distribution of services Our objective should be to attempt to equalize services across jurisdictions in a fair or just manner—begs the question, how do we define fair?

9Carnevale Associates, LLC Equity Considerations, cont. Our Objective is to match service provision with a jurisdiction’s need for services: Our Objective is to match service provision with a jurisdiction’s need for services: How do we equitably fund prevention and treatment services across all of Maryland’s jurisdictions? How do we assess need? How do we equitably fund prevention and treatment services across all of Maryland’s jurisdictions? How do we assess need? What is a jurisdiction’s What is a jurisdiction’s fair share?

10Carnevale Associates, LLC Defining the Fair Share Drug Use Scope of the Problem Type Measures Consequences of the Problem Type Measures CrimeHealth

11Carnevale Associates, LLC Dealing with Regional-Based Treatment/Prevention Services Legislation suggests regionalism considerations for the formula—we should give more relative weight to any jurisdiction that provides a disproportionate amount of services to other jurisdictions: Options: Ignore ………….ya, right…. Propose a set-aside of funds for regional considerations that would be allocated as a separate part of the formula (done in 2001) Legislative earmarking of funds

12Carnevale Associates, LLC Previous Formula The previous formula was specified as follows: ALLOC i = 0.33*[(HIV i /HIV t )*$$$] *[ (AR i /AR t ))*$$$] +.34*[(PREV i /PREV t )*$$$], Where ALLOC i refers to the allocation to jurisdiction “i” in the State “t”, $$$ refers to the dollars million available for allocation, HIV refers to the number of HIV cases in the jurisdiction or in the State, AR refers to the number of drug and DWI arrests, and PREV refers to the estimated treatment need in the jurisdiction or in the State. Note: $$$ totaled $4.5 million in the 2001 formula.

13Carnevale Associates, LLC Road Ahead