01-69. State Children's Health Insurance Program; Final Allotments to States, the District of Columbia, and U.S. Territories and Commonwealths for Fiscal Year 2001

AGENCY:

Health Care Financing Administration (HCFA), HHS.

ACTION:

Notice.

SUMMARY:

This notice sets forth the final allotments of Federal funding available to each State, the District of Columbia, and each U.S. Territory and Commonwealth for fiscal year (FY) 2001 under title XXI of the Social Security Act (the Act).

Established by section 4901 of the Balanced Budget Act of 1997, and amended by the Medicare, Medicaid and SCHIP Balanced Budget Refinement Act of 1999, title XXI of the Act authorizes payment of Federal matching funds to States, the District of Columbia, and U.S. Territories and Commonwealths to initiate and expand health insurance coverage to uninsured, low-income children under a new State Children's Health Insurance Program (SCHIP). States may implement SCHIP through a separate State program under title XXI, an expansion of a State Medicaid program under title XIX, or a combination of both.

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FOR FURTHER INFORMATION CONTACT:

Richard Strauss, [phone].

SUPPLEMENTARY INFORMATION:

I. Purpose of This Notice

This notice sets forth the allotments available to each State, the District of Columbia, and each U.S. Territory and Commonwealth for FY 2001 under title XXI of the Social Security Act (the Act).

Final allotments for a fiscal year are available to match expenditures under an approved State child health plan for 3 fiscal years, including the year for which the final allotment was provided. Federal funds appropriated for title XXI are limited, and the law specifies a formula to divide the total annual appropriation into individual allotments available for each State, the District of Columbia, and each U.S. Territory and Commonwealth with an approved child health plan.

Section 2104(b) of the Act indicates that “the Secretary shall allot to each State * * * with a State child health plan approved under this title.” This language requires States, the District of Columbia, and U.S. Territories and Commonwealths to have an approved child health plan for the fiscal year in order for the Secretary to provide an allotment for that fiscal year. All States, the District of Columbia, and U.S. Territories and Commonwealths had approved plans at the beginning of FY 2001. Therefore, the FY 2001 allotments contained in this notice pertain to all States, the District of Columbia, and U.S. Territories and Commonwealths.

II. Methodology for Determining Final Allotments for States, the District of Columbia, and U.S. Territories and Commonwealths

This notice specifies in the Table under section III, the final FY 2001 allotments available to individual States, the District of Columbia, and U.S. Territories and Commonwealths for child health assistance expenditures under approved State child health plans. As discussed below, the FY 2001 final allotments have been calculated to reflect the methodology for determining an allotment amount for each State, the District of Columbia, and each U.S. Territory and Commonwealth as prescribed by the Balanced Budget Refinement Act of 1999 (BBRA) (Pub. L. 106-113), enacted on November 29, 1999.

Section 2104(a) of title XXI provides that, for purposes of providing allotments to the 50 States and the District of Columbia, the following amounts are appropriated: $4,295,000,000 for FY 1998; $4,275,000,000 for each FY 1999 through FY 2001; $3,150,000,000 for each FY 2002 through 2004; $4,050,000,000 for each FY 2005 through 2006; and $5,000,000,000 for FY 2007. However, under section 2104(c) of the Act, 0.25 percent of the total amount appropriated each year is available for allotment to the U.S. Territories and Commonwealths of Puerto Rico, Guam, the Virgin Islands, American Samoa, and the Northern Mariana Islands. The total amounts are allotted to the U.S. Territories and Commonwealths according to the following percentages: Puerto Rico, 91.6 percent; Guam, 3.5 percent; the Virgin Islands, 2.6 percent; American Samoa, 1.2 percent; and the Northern Mariana Islands, 1.1 percent.

For FY 2001, title XXI, as amended by the BBRA, provides an additional $34,200,000 for allotment to the U.S. Territories and Commonwealths. Therefore, the total amount available for allotment to the U.S. Territories and Commonwealths in FY 2001 is $44,887,500 (that is, $34,200,000 plus $10,687,500 (0.25 percent of the FY 2001 appropriation of $4,275,000,000)).

Furthermore, under sections 4921 and 4922 of the Balanced Budget Act of 1997 (BBA) (Public Law 105-33), enacted on August 5, 1997, the total amount available for allotment to the 50 States and the District of Columbia is reduced by an additional total of $60,000,000; $30,000,000 to the Public Health Service for a special diabetes research program for children with Type I diabetes, and $30,000,000 for special diabetes programs for Indians. The diabetes programs are funded from FYs 1998 through 2002 only.

Therefore, the total amount available nationally for allotment for the 50 States and the District of Columbia for FY 2001 was determined in accordance with the following formula:

A_T = S_2104(a) − T_2104(c) − D₄₉₂₁ − D₄₉₂₂

A_T =Total amount available for allotment to the 50 States and the District of Columbia for the fiscal year.

S_2104(a) = Total appropriation for the fiscal year indicated in section 2104(a) of the Act. For FY 2001, this is $4,275,000,000.

T_2104(c) = Total amount available for allotment for the U.S. Territories and Commonwealths; determined under section 2104(c) of the Act as 0.25 percent of the total appropriation for the 50 States and the District of Columbia. For FY 2001, this is: .0025 × $4,275,000,000 = $10,687,500.

D₄₉₂₁ = Amount of grant for research regarding Type I Diabetes under section 4921 of the BBA. This is $30,000,000 for each of the fiscal years 1998 through 2002.

D₄₉₂₂ = Amount of grant for diabetes programs for Indians under section 4922 of the BBA. This is $30,000,000 for each of the fiscal years 1998 through 2002.

Therefore, for FY 2001, the total amount available for allotment to the 50 States and the District of Columbia is $4,204,312,500. This was determined as follows:

A_T ($4,204,312,500) = S_2104(a) ($4,275,000,000) − T_2104(c) ($10,687,500) − D₄₉₂₁ ($30,000,000) − D₄₉₂₂ ($30,000,000)

For purposes of the following discussion, the term “State,” as defined in section 2104(b)(1)(D)(ii) of the Act, “means one of the 50 States or the District of Columbia.”

Under section 2104(b) of the Act, as amended by BBRA, the determination of the Number of Children for a fiscal year is based on the three most recent March supplements to the Current Population Survey (CPS) of the Bureau of the Census officially available before the beginning of the calendar year in which the fiscal year begins. The determination of the State Cost Factor is based on the Annual Average Wages Per Employee in the health services industry, which is determined by the most recent 3 years of such wage data reported by the Bureau of Labor Statistics (BLS) of the Department of Labor officially available prior to the beginning of the calendar year in which the fiscal year begins. Therefore, for FY 2001 we are using the most recent official data from the Bureau of the Census and the BLS, respectively, available prior to January 1 of calendar year 2000 because FY 2001 begins on October 1, 2000; that is, in calendar year 2000.

Number of Children

For FY 2001, as specified by section 2104(b)(2)(A)(iii) of the Act, the Number of Children is calculated as the sum of 50 percent of the number of low-income, uninsured children in the State, and 50 percent of the number of low-income children in the State. The Number of Children factor for each State is developed by the Bureau of the Census based on the standard methodology used to determine official poverty status and uninsured status in the annual CPS on these topics. As part of a continuing formal process between HCFA and the Bureau of the Census, each fiscal year HCFA obtains the Number of Children data officially from the Bureau of the Census.

Under section 2104(b)(2)(B) of the Act, the Number of Children for each State (provided in thousands) was determined and provided by the Bureau of the Census based on the arithmetic average of the number of low-income children and low-income children with no health insurance as calculated from the three most recent March supplements to the CPS officially available from the Bureau of the Census before the beginning of the 2000 calendar year. In particular, through December 31, 1999, the most recent official data available from the Bureau of the Census on the numbers of children were data from the three March CPSs conducted in March 1997, 1998, and 1999 (representing data for years 1996 through 1998).

State Cost Factor

The State Cost Factor is based on annual average wages in the health services industry in the State. The State Cost Factor for a State is equal to the sum of: 0.15, and 0.85 multiplied by the ratio of the annual average wages in the health industry per employee for the State to the annual wages per employee in the health industry for the 50 States and the District of Columbia.

Under section 2104(b)(3)(B) of the Act, as amended by the BBRA, the State Cost Factor for each State for a fiscal year is calculated based on the average of the annual wages for employees in the health industry for each State as reported, determined, available as final, and provided to HCFA by the BLS in the Department of Labor for each of the most recent 3 years available before the beginning of the calendar year in which the fiscal year begins. For example, FY 2001 begins on October 1, 2000; that is, FY 2001 begins during calendar year 2000. Therefore, the State cost factor for FY 2001 is based on the most recent 3 years of BLS data officially available as final before January 1, 2000 (the beginning of the calendar year in which FY 2001 begins); that is, it would be based on the BLS data available as final through December 31, 1999. In accordance with these requirements, we used the final State Cost Factor data available from BLS for 1995, 1996, and 1997 in calculating the FY 2001 final allotments.

The State Cost Factor is determined based on the calculation of the ratio of each State's average annual wages in the health industry to the national average annual wages in the health care industry. Because BLS is required to suppress certain State-specific data in providing HCFA with the State-specific average wages per health services industry employee due to the Privacy Act, HCFA calculated the national average wages directly from the State-specific data provided by BLS. As part of a continuing formal process between HCFA and the BLS, each fiscal year HCFA obtains these wage data officially from the BLS.

Under section 2104(b)(4) of the Act, as amended by the BBRA, each State and the District of Columbia is allotted a “proportion” of the total amount available nationally for allotment to the States. The term “proportion” is defined in section 2104(b)(4)(D)(i) of the Act and refers to a State's share of the total amount available for allotment for any given year. In order for the entire total amount available to be allotted to the States, the sum of the proportions for all States must exactly equal one. Under the statutory definition, a State's proportion for a fiscal year is equal to the State's allotment for the fiscal year divided by the total amount available nationally for allotment. In general, a State's allotment for a fiscal year is calculated by multiplying the State's proportion for the fiscal year by the national total amount available for allotment for that fiscal year in accordance with the following formula:

SA_i = P_i × A_T

SA_i = Allotment for a State or District of Columbia for a fiscal year.

P_i = Proportion for a State or District of Columbia for a fiscal year.

A_T = Total amount available for allotment to the 50 States and the District of Columbia for the fiscal year. For FY 2001, this is $4,204,312,500.

In accordance with the amended statutory formula for determining allotments, the State proportions are determined under two steps, which are described below in further detail.

Under the first step, each State's proportion is calculated by multiplying the State's Number of Children and the State Cost Factor to determine a “product” for each State. The products for all States are then summed. Finally, the product for a State is divided by the sum of the products for all States, thereby yielding the State's preadjusted proportion.

Application of Floors and Ceilings

Under the second step, the preadjusted proportions are subject to the application of proportion floors, ceilings, and a reconciliation process, as appropriate. The amended SCHIP statute specifies three proportion floors, or minimum proportions, that apply in determining States' allotments. The first proportion floor is equal to $2,000,000 divided by the total of the amount available nationally for the fiscal year. This proportion ensures that a State's minimum allotment would be $2,000,000. For FY 2001, no State's preadjusted proportion is below this floor. The second proportion floor is equal to 90 percent of the allotment proportion for the State for the previous fiscal year; that is, a State's proportion for a fiscal year must not be lower than 10 percent below the previous fiscal year's proportion. The third proportion floor is equal to 70 percent of the allotment proportion for the State for FY 1999; that is, the proportion for a fiscal year must not be lower than 30 percent below the FY 1999 proportion.

Each State's allotment proportion for a fiscal year is limited by a maximum ceiling amount, equal to 145 percent of the State's proportion for FY 1999; that is, a State's proportion for a fiscal year must be no higher than 45 percent above the State's proportion for FY 1999. The floors and ceilings are intended to minimize the fluctuation of State allotments from year to year and over the life of the program. The floors and ceilings on proportions are not applicable in determining the allotments of the U.S. Territories and Commonwealths; they receive a fixed percentage specified in the statute of the total allotment available to the U.S. Territories and Commonwealths.

As determined under the first step, which is applied prior to the application of any floors or ceilings, the sum of the proportions for all the States and the District of Columbia will be equal to exactly one. However, the application of the floors and ceilings under the second step may change the proportions for certain States; that is, some States' proportions may need to be raised to the floors, while other States' proportions may need to be lowered to the maximum ceiling. If this occurs, the sum of the proportions for all States and the District of Columbia may not exactly equal one. In that case, the statute requires that the proportions will need to be adjusted, under a method that is determined by whether the sum of the proportions is greater or less than one.

The sum of the proportions would be greater than one if the application of the floors and ceilings resulted in raising the proportions of some States (due to the floors) to a greater degree than the proportions of other States were lowered (due to the ceiling). If, after application of the floors and ceiling, the sum of the proportions is greater than one, the amended statute requires the Secretary to determine a maximum percentage increase limit, which, when applied to the State proportions, would result in the sum of the proportions being exactly one.

If, after the application of the floors and ceiling, the sum of the proportions is less than one, the States' proportions must be increased in a “pro rata” manner so that the sum of the proportions again equals one. It is also possible, although unlikely, that the sum of the proportions (after the application of the floors and ceiling) will be exactly one, and therefore, the proportions would require no further adjustment.

Determination of Preadjusted Proportions

The following is an explanation of how HCFA applied the two State-related factors specified in the statute to determine the States' preadjusted proportions for FY 2001. The term “preadjusted,” as used here, refers to the States” proportions prior to the application of the floors and ceiling and adjustments, as specified in the amended SCHIP statute. The determination of each State and the District of Columbia's preadjusted proportion for FY 2001 is in accordance with the following formula:

PP_i=(C_i×SCF_i)/Σ (C_i×SCF_i)

PP_i=Preadjusted proportion for a State or District of Columbia for a fiscal year.

C_i=Number of children in a State (section 2104(b)(1)(A)(i) of the Act) for a fiscal year. This number is based on the number of low-income children for a State for a fiscal year and the number of low-income uninsured children for a State for a fiscal year determined on the basis of the arithmetic average of the number of such children as reported and defined in the three most recent March supplements to the CPS of the Bureau of the Census, officially available before the beginning of the calendar year in which the fiscal year begins. (See section 2104(b)(2)(B) of the Act.)

For fiscal year 2001, the number of children is equal to the sum of 50 percent of the number of low-income uninsured children in the State for the fiscal year and 50 percent of the number of low-income children in the State for the fiscal year. (See section 2104(b)(2)(A)(iii) of the Act.)

SCF_in=State cost factor for a State (section 2104(b)(1)(A)(ii) of the Act). For a fiscal year, this is equal to:

0.15+0.85×(W_i/W_N)

W_i=The annual average wages per employee for a State for such year (section 2104(b)(3)(A)(ii)(I) of the Act).

W_N=The annual average wages per employee for the 50 States and the District of Columbia (section 2104(b)(3)(A)(ii)(II) of the Act).

The annual average wages per employee for a State or for all States and the District of Columbia for a fiscal year is equal to the average of such wages for employees in the health services industry (SIC 80), as reported by the BLS of the Department of Labor for each of the most recent three years officially available before the beginning of the calendar year in which the fiscal year begins. (See section 2104(b)(3)(B) of the Act).

(C_i×SCF_i)=The sum of the products of (C_i×SCF_i) for each State (section 2104(b)(1)(B) of the Act).

The resulting proportions would then be subject to the application of the floors and ceilings specified in the amended SCHIP statute and reconciled, as necessary, to eliminate any deficit or surplus of the allotments because the sum of the proportions was either greater than or less than one.

Section 2104(e) of the Act requires that the amount of a State's allotment for a fiscal year be available to the State for a total of 3 years; the fiscal year for which the State child health plan is approved and the 2 following fiscal years. Section 2104(f) of the Act requires the Secretary to establish a process for redistribution of the amounts of States' allotments that are not expended during the 3-year period to States that have fully expended their allotments.

III. Table of State Children's Health Insurance Program Final Allotments for FY 2001

Key to Table

Column/Description

Column A=Name of State, District of Columbia, U.S. Commonwealth or Territory.

Column B=Number of Children. The Number of Children for each State (provided in thousands) was determined and provided by the Bureau of the Census based on the arithmetic average of the number of low-income children and low-income uninsured children, and is based on the three most recent March supplements to the CPS of the Bureau of the Census officially available before the beginning of the calendar year in which the fiscal year begins. The FY 2001 allotments were based on the 1997, 1998, and 1999 March supplements to the CPS. These data represent the number of people in each State under 19 years of age whose family income is at or below 200 percent of the poverty threshold appropriate for that family, and who are reported to be not covered by health insurance. The Number of Children for each State was developed by the Bureau of the Census based on the standard methodology used to determine official poverty status and uninsured status in their annual March CPSs on these topics.

For FY 2001, the Number of Children is equal to the sum of 50 percent of the number of low-income uninsured children in the State and 50 percent of the number of low-income children in the State.

Column C=State Cost Factor. The State Cost Factor for a State is equal to the sum of: 0.15, and 0.85 multiplied by the ratio of the annual average wages in the health industry per employee for the State to the annual wages per employee in the health industry for the 50 States and the District of Columbia. The State Cost Factor for each State was calculated based on such final wage data for each State as reported, determined, and officially available to HCFA by the BLS in the Department of Labor for each of the most recent 3 years before the beginning of the calendar year in which the fiscal year begins. The FY 2001 allotments were based on final BLS wage data for 1995, 1996, and 1997.

Column D=Product. The Product for each State was calculated by multiplying the Number of Children in Column B by the State Cost Factor in Column C. The sum of the Products for all 50 States and the District of Columbia is below the Products for each State in Column D. The Product for each State and the sum of the Products for all States provides the basis for allotment to States and the District of Columbia.

Column E=Proportion of Total. This is the calculated percentage share for each State of the total allotment available to the 50 States and the District of Columbia. The Percent Share of Total is calculated as the ratio of the Product for each State in Column D to the sum of the products for all 50 States and the District of Columbia below the Products for each State in Column D.

Column F=Adjusted Proportion of Total. This is the calculated percentage share for each State of the total allotment available after the application of the floors and ceilings and after any further reconciliation needed to ensure that the sum of the State proportions is equal to one. The three floors specified in the amended statute are: (1) a floor of $2,000,000 divided by the total of the amount available for all allotments for the fiscal year; (2) an annual floor of 90 percent of (that is, 10 percent below) the preceding fiscal year's allotment proportion; and (3) a cumulative floor of 70 percent of (that is, 30 percent below) the FY 1999 allotment proportion. There is also a cumulative ceiling of 145 percent of (that is, 45 percent above) the FY 1999 allotment proportion.

Column G=Allotment. This is the SCHIP allotment for each State, Commonwealth, or Territory for the fiscal year. For each of the 50 States and the District of Columbia, this is determined as the Adjusted Proportion of Total in Column F for the State multiplied by the total amount available for allotment for the 50 States and the District of Columbia for the fiscal year.

For each of the U.S. Territory and Commonwealths, the allotment is determined as the Proportion of Total in Column E multiplied by the total amount available for allotment to the U.S. Territories and Commonwealths. For the U.S. Territories and Commonwealths, the Proportion of Total in Column E is specified in section 2104(c) of the Act. The total amount is then allotted to the U.S. Territories and Commonwealths according to the percentages specified in section 2104 of the Act. There is no adjustment made to the allotments of the U.S. Territories and Commonwealths as they are not subject to the application of the floors and ceiling. As a result, Column F in the table, the Adjusted Proportion of Total, is empty for the U.S. Territories and Commonwealths.

State Children's Health Insurance Program

A State	B Number of children (000)	C State cost factor	D Product	E Proportion of total 3	F Adjusted proportion of total 3	G Allotment 1
Allotments for Federal Fiscal Year: 2001
Alabama	302	0.9659	291.71	1.52	1.83	$77,012,259
Alaska	41	1.0392	42.61	0.22	0.18	7,760,462
Arizona	542	1.0514	569.88	2.96	2.96	124,519,004
Arkansas	277	0.8931	246.94	1.28	1.28	53,957,231
California	2,905	1.1108	3,226.23	16.77	18.21	765,547,705
Colorado	204	1.0017	204.34	1.06	1.06	44,648,559
Connecticut	162	1.1165	180.31	0.94	0.94	39,379,724
Delaware	51	1.0889	54.99	0.29	0.22	9,071,840
Districe of Columbia	42	1.2960	53.78	0.28	0.28	11,751,544
Florida	978	1.0305	1,007.86	5.24	5.76	224,044,718
Georgia	621	0.9953	618.09	3.21	3.21	135,053,332
Hawaii	74	1.1690	85.92	0.45	0.24	10,076,456
Idaho	110	0.8893	97.83	0.51	0.43	17,887,730
Illinois	787	0.9966	783.85	4.07	3.28	138,022,569
Indiana	298	0.9234	274.71	1.43	1.50	63,161,480
Iowa	178	0.8469	150.76	0.78	0.78	32,940,215
Kansas	154	0.8719	134.27	0.70	0.70	29,337,719
Kentucky	276	0.9276	256.02	1.33	1.33	55,939,972
Louisiana	396	0.8876	351.06	1.82	2.17	91,130,730
Maine	68	0.9049	61.53	0.32	0.32	13,444,691
Maryland	225	1.0460	235.34	1.22	1.31	55,202,678
Massachusetts	292	1.0495	305.92	1.59	1.15	48,252,963
Michigan	573	1.0074	576.71	3.00	2.45	103,166,689
Minnesota	255	0.9824	250.02	1.30	0.76	31,986,711
Mississippi	289	0.8882	256.24	1.33	1.33	55,987,988
Missouri	326	0.9204	299.59	1.56	1.38	58,207,299
Montana	83	0.8415	69.42	0.36	0.31	13,224,992
Nebraska	102	0.8563	87.34	0.45	0.40	16,742,374
Nevada	120	1.1954	143.45	0.75	0.75	31,344,200
New Hampshire	58	0.9826	56.99	0.30	0.30	12,452,305
New Jersey	403	1.1237	452.28	2.35	2.35	98,823,044
New Mexico	219	0.9225	201.56	1.05	1.34	56,407,772
New York	1,360	1.0841	1,473.80	7.66	6.85	287,950,908
North Carolina	501	0.9899	495.95	2.58	2.13	89,562,475
North Dakota	48	0.8697	41.31	0.21	0.14	5,678,153
Ohio	675	0.9650	650.87	3.38	3.10	130,369,218
Oklahoma	262	0.8523	222.88	1.16	1.83	76,764,895
Oregon	228	1.0063	229.45	1.19	1.05	44,068,679
Pennsylvania	638	0.9969	636.01	3.31	3.15	132,309,145
Rhode Island	44	0.9785	42.57	0.22	0.23	9,570,566
South Carolina	294	1.0055	295.61	1.54	1.54	64,591,234
South Dakota	43	0.0873	37.42	0.19	0.19	8,177,039
Tennessee	446	0.9991	445.11	2.31	1.77	74,518,279
Texas	2,028	0.9277	1,880.82	9.77	11.96	502,812,459
Utah	153	0.9059	138.14	0.72	0.65	27,306,505
Vermont	29	0.8696	25.22	0.13	0.09	3,982,509
Virginia	350	0.9885	345.50	1.80	1.80	75,491,290
Washington	314	0.9467	296.78	1.54	1.25	52,561,622
West Virginia	108	0.8961	96.77	0.50	0.50	21,145,730
Wisconsin	241	0.9438	226.99	1.18	1.09	45,771,172
Wyoming	38	0.8779	32.92	0.17	0.17	7,193,664
Total States only			19,241.72	100.00	100.00	4,204,312,500
Allotments for commonwealths and territories 2
Puerto Rico				91.60		41,116,950
Guam				3.50		1,571,063
Virgin Islands				2.60		1,167,075
American Samoa				1.20		538,650
N. Mariana Islands				1.10		493,763
Total Commonwealths and Territories only				100.00		44,887,500
Total States and Commonwealths and Territories						4,249,200,000
1 Total amount available for allotment to the 50 States and the District of Columbia is $4,204,312,500; determined as the fiscal year appropriation ($4,275,000,000) reduced by the total amount available for allotment to the Commonwealths and Territories under section 2104(c) of the Act ($10,687,500) and amounts for Special Diabetes Grants ($60,000,000) under sections 4921 and 4922 of BBA.
2 Total amount available for allotment to the Commonwealths and Territories is $10,687,500 (determined as .25 percent of $4,275,000,000, the fiscal year appropriation) plus $34,200,000 as specified in section 2104(c)(4)(B) of the Act.
3 Percent share of the total amount available for allotment to the Commonwealths and Territories is a specified in section 2104(c) of the Social Security Act.

IV. Impact Statement

We have examined the impact of this notice as required by Executive Order 12866. Executive Order 12866 directs agencies to assess all costs and benefits of available regulatory alternatives and, when rules are necessary, to select regulatory approaches that maximize net benefits (including potential economic environments, public health and safety, other advantages, distributive impacts, and equity). We believe that this notice is consistent with the regulatory philosophy and principles identified in the Executive Order. The formula for the allotments is specified in the statute. Since the formula is specified in the statute, we have no discretion in determining the allotments.

The Unfunded Mandates Reform Act of 1995 requires that agencies prepare an assessment of anticipated costs and benefits before publishing any notice that may result in an annual expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more (adjusted each year for inflation) in any one year. Because participation in the SCHIP program on the part of States is voluntary, any payments and expenditures States make or incur on behalf of the program that are not reimbursed by the Federal government are made voluntarily. This notice will not create an unfunded mandate on States, tribal, or local governments. Therefore, we are not required to perform an assessment of the costs and benefits of these regulations.

Under Executive Order 12612, Federalism, we have reviewed this notice and determined that it does not significantly affect States' rights, roles, and responsibilities.

Low-income children will benefit from payments under this program through increased opportunities for health insurance coverage.

We believe this notice will have an overall positive impact by informing States, the District of Columbia, and U.S. Territories and Commonwealths of the extent to which they are permitted to expend funds under their child health plans using their FY 2001 allotments.

In accordance with the provisions of Executive Order 12866, this notice was reviewed by the Office of Management and Budget.

(Section 1102 of the Social Security Act (42 U.S.C. 1302))

(Catalog of Federal Domestic Assistance Program No. 00.000, State Children's Health Insurance Program)

Dated: October 10, 2000.

Michael M. Hash,

Acting Administrator, Health Care Financing Administration.

Dated: October 25, 2000.

Donna E. Shalala,

Secretary.