Labor market information is used to help make and assess social and monetary policies, tax and budget projections, and private investment decisions. Produced under cooperative agreements between states and the Bureau of Labor Statistics (BLS), labor market information helps provide an up-to-date picture of the U.S. economy and generate closely watched economic indicators, such as unemployment rates and the Gross Domestic Product. In addition, decisions about the distribution of billions of federal dollars to states and local governments depends, in part, on labor market information. In summary, GAO found that (1) funding for the Covered Employment and Wages (ES-202) and Current Employment Statistics (CES) programs declined in real terms over the past 7 years; (2) BLS estimates the funding needs of states by adjusting prior year funding and uses formulas to allocate funds to states; and (3) workload and cost increases outpaced funding increases in the ES-202 program, which could result in data quality problems, according to state Labor Market Information (LMI) officials. BLS estimates LMI budget needs for states by making adjustments to the past year's funding and allocates appropriated funds to states by using allocation formulas. Specifically, in estimating the amount of funding needed for state LMI offices, BLS starts with the past year's funding, and adds an adjustment for cost inflation. In addition, for the ES-202 program that has a continuously growing workload, BLS adds an amount for expected workload increases. However, BLS's requests for funding increases to cover growing costs and workloads are not always approved. In developing its budget estimates, BLS does not collect information from state LMI offices to determine what those offices' costs or budget needs are because, according to BLS officials, BLS cannot readily verify such information.