A formula grant is a United States federal grant specifying a precise formula in the legislation creating the program.
Formula grants include quantifiable elements, such as population, amount of tax effort, proportion of population unemployed or below poverty level, density of housing, or rate of infant mortality.
The specified formula is a rule that tells potential recipient governments precisely how they can calculate the quantity of aid to which they are entitled under the provisions of law, as long as the recipient qualifies for such assistance under the stipulations of the program.
Usually, the elements in the formula are chosen to reflect characteristics related to the purpose of the aid.
This United States government–related article is a stub.