Finance

How Much Do States Rely on Federal Funding?

There's a wide range of dependence across and within the states. Here's a state-by-state look at how welfare, education and roads could be impacted by the next budget that Trump signs.
by | May 22, 2017
Someone holds a copy of President Trump's fiscal 2018 budget at the U.S. Government Publishing Office's plant. (AP/Carolyn Kaster)

As Congress debates the budget, states are eagerly waiting to hear how it will affect them.

Updated data from the Census Bureau's 2015 Annual Survey of State Government Finances published last week indicates that federal aid made up nearly a third of all states’ general fund revenues in fiscal year 2015. The single largest line items in states’ budgets include federal funding for transportation, Medicaid and other social assistance programs.

The survey, which provides a detailed portrait of how states generate and spend money, suggests states' reliance on federal money varies greatly. Even larger discrepancies exist across individual areas of state government.

We've compiled data below showing how much of each state's budget is tied to federal aid across select major spending areas.

 

State Budgets Most Reliant on Federal Funding Overall

Neighboring Louisiana and Mississippi are generally among the top recipients in federal aid year after year. That was true again in 2015: Federal intergovernmental revenues accounted for about 42 percent of their general fund revenues, the top shares nationally.

Other states whose budgets are most dependent on the feds include Arizona (40 percent), Kentucky (40 percent), New Mexico (39 percent), Montana (39 percent) and Oregon (39 percent). That’s roughly twice as much as the least-reliant state budgets, which include North Dakota (18 percent) and Virginia (22 percent).

 
Federal Share of FY15 General Revenue
NOTE: Figures only reflect funds allocated directly to states, not those routed to localities and other recipients.
 

Public Welfare

Public welfare is the single largest source of federal funding, primarily driven by Medicaid costs.

Federal aid made up nearly two-thirds (64 percent) of states’ public welfare general expenditures, according to the survey data. The share was highest -- more than 90 percent -- in New Mexico and Ohio. By comparison, federal revenues accounted for slightly less than half of public welfare spending in Colorado, Massachusetts, Rhode Island and Virginia.

The Census Bureau’s classification of public welfare funding includes Medicaid, Temporary Assistance for Needy Families (TANF), child welfare services and a range of other assistance programs mostly for low-income individuals. It excludes school nutrition programs and the Special Supplemental Nutrition Program for Women, Infants and Children (WIC).

SOURCE: Governing calculations of federal intergovernmental revenues, general expenditure data from 2015 Annual Survey of State Government Finances; U.S. Census Bureau
 

Education

Education-related programs make up the next-largest type of federal funding. Top sources include money for Head Start, the National School Lunch Program and language assistance initiatives.

When it comes to total general education expenditures, federal funds nationally accounted for just 13 percent in fiscal 2015, as schools are primarily funded by various state and local taxes.

The share was highest (20 percent) for Wyoming’s budget, followed by South Dakota, Georgia and Florida. Six other states relied on federal funding for less than one-tenth of education spending.

SOURCE: Governing calculations of federal intergovernmental revenues, general expenditure data from 2015 Annual Survey of State Government Finances; U.S. Census Bureau
 

Roads

The federal government distributed $41.6 billion in roadway infrastructure and highway safety funding to states in fiscal 2015.

Federal aid made up for more than half of what the Census categorizes as “highway” spending in eight states, led by Rhode Island and Wyoming. Meanwhile, it made up roughly one-fifth of spending in Massachusetts and Minnesota.

Most of this funding comes from the Federal Highway Trust Fund. It doesn’t include grants related to transit systems.

SOURCE: Governing calculations of federal intergovernmental revenues, general expenditure data from 2015 Annual Survey of State Government Finances; U.S. Census Bureau

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