​Intrastate Funding Formula (IFF) Updates
As of May 14, 2021

The following questions and answers are being provided in response to the feedback that has been received related to the proposed changes in the IFF.

1. Why is the IFF being revised now? 
The action being taken to revise the IFF is required by the Administration for Community Living (ACL), a federal department that allocates Older Americans Act (OAA) federal funding to Pennsylvania and all other states. During ACL's review of the Pennsylvania Department of Aging's four-year State Plan on Aging, ACL provided conditional approval of the plan contingent on the department revising the IFF. The department is required to begin implementation of the new IFF on July 1, 2021. A copy of the letter from ACL mandating the revision of Pennsylvania's IFF can be found here. We have requested several extensions on the formal submission of the IFF, however ACL has held firm that we must have it implemented for July 1, 2021. If the IFF is not updated, it could adversely impact Pennsylvania's federal funding to support seniors.

No changes to the IFF have been made in 15 years. During that time, the older adult population in Pennsylvania has increased by 750,000. Changes made to the IFF must consider specific criteria and be in compliance with the OAA. The update of Pennsylvania's IFF will impact how federal funds will be distributed among Pennsylvania's 52 Area Agencies on Aging (AAAs).

The proposed update would ultimately reallocate, among the AAAs, about $8.8 million of the total $57.2 million in federal funds impacted by the IFF. This allocation will be done using a phased-in approach to mitigate impacts and help affected AAAs seek alternative funding sources, where possible.

2. What is the Intrastate Funding Formula (IFF)? 
The IFF is a mathematical formula the department uses to distribute federal funding (Title III and Title VII) to the AAA network for services delivered by each AAA. As the State Unit on Aging, the Pennsylvania Department of Aging is required by ACL to have a formula for the distribution of federal funds to the 52 AAAs in the commonwealth.

The OAA provides specific guidance on factors that must be included in the IFF:

(i) the geographical distribution of older individuals in the State; and

(ii) the distribution among planning and service areas of older individuals with greatest economic need and older individuals with greatest social need, with particular attention to low-income minority older individuals.

The OAA does not dictate the weight of these factors, but does specify preferences to be considered in the IFF:

provide assurance that preference will be given to providing services to older individuals with greatest economic need and older individuals with greatest social need (with particular attention to low-income older individuals, including low-income minority older individuals, older individuals with limited English proficiency, and older individuals residing in rural areas), and include proposed methods of carrying out these preferences in the state plan

The department must use the most current US census-derived data to determine the geographic distribution of older adults with the greatest economic and social need when developing the IFF and apply factors to ensure equitable distribution of funds. A percentage weight is assigned to each factor with a sum of the weighted factors equaling 100%.

Currently only Title IIIB (Supportive Services), IIIC (Nutrition Services) and Title VII (Ombudsman) funds are disbursed using the IFF. In the upcoming IFF revision, both Title IIID (Health Promotions) and IIIE (Caregiver Services) will also be allocated using the model as required by the OAA. 

3. What data is being used as the "most current census data"?
In the revised IFF, the population data used was obtained from the Penn State Data Center and is derived from 2018-2019 census data from the Vintage Population Estimates and the American Community Survey. This is federal information that is an approved data source per ACL. 

The data from the 2020 census, at the detail needed for this calculation, will not be available from the Penn State Data Center until at least December 2021 which is after the implementation deadline required by ACL.

4. Why not just update the census numbers and use the existing IFF?
If the department only updated the current IFF with the updated census data, the financial impact to AAAs would be significant, with over $12 million in federal funding being shifted between AAAs as opposed to the proposed $8.8 million.

The existing IFF does not fully address factors that have evolved and become significant over the past decade such as the increasing number of older adults who live alone, comprising nearly half of the individuals the department serves.

In its proposed IFF, the department is keeping four (4) of the five (5) existing IFF factors (person 75+, minorities, poverty and rural). One factor was changed - all persons over 60 years old - to recognize persons between the ages of 60-74 as a distinct group, and a factor was added for persons who live alone. The weights associated with each factor were evaluated against OAA requirements.

CURRENT & PROPOSED WEIGHTS

• The existing weight for the two Age-related factors in the current formula is disproportionate. Combined, the calculated factors for Age are weighted as 60.58% of the total weighted population.

• The current Living in Poverty factor is severely underrepresented with a calculated value of only 7.31% of the total weighted population.

 
5. Why didn’t this happen over the past 15 years?
The department is required to submit a new State Plan on Aging every four years. The IFF is a required component of the State Plan submission whether it is revised or not. No changes were proposed in previous state plans over the past 10 years and ACL raised no issues with the IFF. This is the first time that ACL is requiring Pennsylvania to revise the IFF. To ensure the IFF is regularly reviewed and updated moving forward, the department will be implementing a policy to ensure that the IFF is reviewed and any relevant census data updates made at least every four years when a new four-year State Plan on Aging is being developed for ACL’s approval.

 
6. What was involved in the update process?
The department undertook a thoughtful, months-long process, during which the department not only reviewed age as a factor of need, but how the distribution formula aligned with the OAA objectives to serve minority populations, rural populations, those living in poverty and those at risk of isolation such as older adults who live alone. 
 
As part of the IFF update process, the department examined the current IFF model, reviewed federal requirements governing the intrastate allocation of funds and compared what factors several other states considered in their models.
 
The department engaged with leadership of the AAA network to receive their input and feedback on revisions to the IFF. We discussed the factors, weights and other considerations (i.e. past efforts on IFF), comparisons to other states and AAA utilization data. We also considered financial impacts and mitigation strategies. Subsequent steps included meeting with the board of directors of the Pennsylvania Association of Area Agencies on Aging (P4A) and a presentation to the whole network of 52 AAAs. 
 
The department proposed to revise the model to include the following factors:

• Individuals 60-74                   
• Individuals Over 75 
  
• Individuals Over 65-Living Alone
• Individuals Over 60-Minority
• Individuals Over 60-Rural
• Individuals Over 60- Living In Poverty

1. Poverty:  2018 ACS 5-Year Estimates Detailed Tables
2. Minority:  U.S. Census Bureau 2018 Vintage Population Estimates prepared by the Penn State Data Center
3. Age:  U.S. Census Bureau 2018 Vintage Population Estimates prepared by the Penn State Data Center
4. Lives Alone:  2018 ACS 5-Year Estimates Detailed Tables
5. Rural:  2019 ACS 5-Year file and Urban and Rural Definition according to the Center for Rural Pennsylvania

The update is anticipated to ultimately reallocate about $8.8 million in federal funding among the AAAs, using a phased-in approach to mitigate impacts and help affected AAAs seek alternative funding where possible.
 
To provide some context:  
 
The $8.8 million represents about 15 percent of the total federal funding subject to the IFF, which is $57.2 million.
 
The department understands that this change will impact AAAs – which is why there will be a gradual, phased-in approach.  The department will also continue to advocate for, work with and explore other ways to help those AAAs that will have funds reallocated from them.

8. How often will the funding be adjusted in the future?
Optimally, the latest U.S. population numbers should be reviewed at least every four years. At that point, funding adjustments will be determined to reflect any changes in the demographics of the AAA service area.

Reviewing the IFF on a predetermined schedule allows Pennsylvania to keep funding current and protect AAAs from experiencing significant funding shifts due to changes in demographics. This will prevent challenges associated with the funding redistribution becoming more compounded and greater every year.
 
9. Will service cuts be necessary?
AAAs will each have to assess the operational and service impacts within their service plan areas. As proposed, 34 of the 52 AAAs will see an increase in federal funding. These changes could be resulting from a greater rate of increase in the older adult population and/or the change in the demographic characteristics of their older adult population over time. All AAAs will  continue to receive the same level of state funding. The AAA network will also receive an infusion of over $55 million in funding through the American Rescue Plan Act. These funds can be used over the next three years to help mitigate the impact of shifting funds. 
 
10. How will these changes be implemented?
The department is proposing a phased-in implementation over multiple years to help mitigate the impacts to AAAs that see a decrease in funding, allow time to adjust their programming budgets and take advantage of other federal, state and local funds that may be available, such as the American Rescue Plan funding.  
 
The department also notes that the gradual implementation is also important for AAAs that are receiving more funding.  Gradual implementation will also provide these AAAs time to plan and build their program capacities to leverage new funding efficiently. 
 
11. What definitions for factors did the department utilize in the IFF?

a.  Poverty (American Community Survey - Census):
Following the Office of Management and Budget’s (OMB’s) Statistical Policy Directive 14, the Census Bureau uses a set of monetary income thresholds that vary by family size and composition to determine who is in poverty. If the total income for a family or unrelated individual falls below the relevant poverty threshold, then the family (and every individual in it) or unrelated individual is considered in poverty.

Information about OMB’s Directive 14 can be found here: https://www.census.gov/topics/income-poverty/poverty/about/history-of-the-poverty-measure/omb-stat-policy-14.html 

b.  Rural (American Community Survey - Census):
For the definition of rural, the department utilized the Penn State Data Center, which uses the Center for Rural Pennsylvania’s designation of urban/rural for Pennsylvania municipalities. Using the Rural Center's definition, Penn State Data Center is able to take population data by municipality and match this to the Rural Center’s designation and then aggregate it to the county level. 
 
The Center for Rural Pennsylvania's definition can be found here: https://www.rural.palegislature.us/demographics_rural_urban.html
 
c.  60-74 and 75+ Age Data (Population Estimates - Penn State Data Center – Census):
 https://www.census.gov/glossary/#term_Age
 
d. 60+ Minority (Population Estimates - Penn State Data Center – Census):
For the definition of Minority, Non-Minority is solely comprised of the “Non-Hispanic White” population – all other designations fall under the umbrella term of Minority (Non-Hispanic Black or African American, Non-Hispanic Asian, Non-Hispanic-American Indian or Alaska Native, Non-Hispanic Native Hawaiian or other Pacific Islander, Non-Hispanic Two or More Races, Hispanic (any race)).
https://www.census.gov/glossary/#term_Race 
https://www.census.gov/glossary/#term_Ethnicity 

e. 65+ Lives Alone definitions utilized by the Penn State Data Center (American Community Survey - Census):
https://www.census.gov/glossary/#term_Household
 

The department engaged with leadership of the AAA network to receive their input and feedback on revisions to the IFF. In January 2021, PDA began to meet with P4A leadership to discuss these changes. We discussed the factors, weights and other considerations (i.e. past efforts on IFF), comparisons to other states and AAA utilization data. We also considered financial impacts and mitigation strategies. Subsequent steps included meeting with the board of directors of P4A and a presentation to the whole network of 52 AAAs. 

The Pennsylvania Council on Aging (PCoA) is a statutorily created council whose members are a diverse group of older adults from Pennsylvania. This council was informed in March, 2021 of the procedure being followed to address the IFF issue, and a formal overview was provided to PCoA on April 22 after publication of the summary and financial impacts. 

To meet ACL’s requirement for public review and comment, PDA issued a press release with a link to the IFF summary and a related spreadsheet with the financial impacts on April 20. We also pushed the press release directly to aging network stakeholders such as AARP, the Alzheimer’s Association, and others so that they could provide their feedback. Legislative oversight committees, the House Aging and Older Adult Services Committee and the Senate Aging and Youth Committee were also sent the information for review and comments. This comment period ran from April 20 to April 28. However, we have received and accepted feedback beyond the deadline. 

PDA reviewed the feedback received, prepared this update and is taking steps to respond to stakeholder questions and concerns, including having ongoing meetings with the AAA network and responding to and meeting with legislators who have requested meetings. 
 
Comments were received through PDA’s website feedback option, and through emails or letters sent to the Legislative Affairs Office, Office of the Secretary and the Governor’s Office.