An analysis of the procedures states have adopted to distribute federal funds for vocational education under the 1976 Amendments to the Vocational Education Act shows that there is widespread confusion and variation among the states. While the Act specifies that a formula must be used for distribution of funds, the exact criteria for determining the formula are not spelled out, and states, therefore, have established a variety of formulas, some of which are no more in tune with the Act's intent than a simple per-capita distribution would be. There are three basic steps in designing formulas for distributing funds: data selection, transformation of data into standardized scores, and transformation of standardized scores into dollar allocations or reimbursement rates. States employed a variety of approaches to data collection and to transforming raw data into standardized scores, although they used one of three general methods for transforming standardized scores into dollar allocations or rates of reimbursement: a tabular method, a reimbursement rate equation, or a weighted points method. No state was using a procedure free of technical difficulties, arbitrary judgments, unexplained calculations, questionable interpretations of federal law, or inaccurate and inappropriate questionable interpretations of federal law, or inaccurate and inappropriate data. An alternative formula was proposed. (The final section of this report provides detailed descriptions of the fund distribution practices in each state--see note.) (KC)