http://books.nap.edu/books/0309087104/html/2.html#pagetop

The essential feature of a formula allocation program is that fund distribution is determined by the application of a formula that uses statistical information to calculate or estimate the values of its inputs. The allocation process consists of a basic calculation using a mathematical formula or algorithm; it often includes adjustments that place constraints on levels or shares (percentages of the total allocation) or on changes in levels or shares. The kinds of data used vary widely: total population, population by age group, per capita income, and proportion of persons with family income below the poverty line are a few examples. It's contains PDF Document, Acrobat Reader required for reading. For developing contries, the full text are available free.