July | August 2017







CSG Report Details Federal Spending in the States

By Shawntaye Hopkins, CSG communications associate
The Council of State Governments published a report online Monday that outlines how trillions of dollars in federal money flow through the states. Formerly published by the U.S. Census Bureau, the federal spending report changed hands over the decades and was nearly lost. CSG now plans to publish the report annually.
The new report breaks down the $3.4 trillion, or $10,567 per capita, spent by the federal government in the states and Washington, D.C., in fiscal year 2015.

According to the report, Virginia received the most federal money per capita—that is, $17,052—of the 50 states. The state came in second to D.C., however, which received $82,508 per capita. Utah received the least per capita at $7,327.
The report describes five categories of federal spending—retirement benefits; nonretirement benefits; salaries and wages; grants; and contracts—and shows how states compare within those categories. Some federal funds such as Medicaid flow directly into state coffers while other funds, including federal salaries and Social Security payments, flow directly to individuals or companies.
More than half of the federal money flowing into Virginia, for example, fell into two categories: the contracts category and the salaries and wages category. However, those two categories combined only account for about one out of five federal dollars spent across the nation.
Retirement was the largest spending category, nationally, with 34 percent of the federal funds in states used for payments to individuals, including Social Security retirement, survivor and disability payments; veterans’ benefits; and other federal retirement and disability payments. Social Security represents the largest portion of this category.  
About 18 percent of federal spending fell into the grants category, which includes direct funding to state and local governments for programs such as health care, transportation, education and housing, as well as funding for individuals and other nonfederal entities such as research grants. Medicaid grants to states make up about half of this category.
“Benchmarking yourself from year to year, and having that aggregate data that gives you the very big picture, is important,” said Jennifer Burnett, CSG’s director of fiscal and economic development policy. “It’s important for both tracking across time for a particular state and understanding where you stand among other states.”
For almost 30 years, the U.S. Census Bureau provided detailed, vetted information about federal spending in states and counties in its annual Consolidated Federal Funds Report, or CFFR. In 2012, however, the report was discontinued after the Federal Financial Statistics program was terminated for financial reasons.
“It was a significant report and they produced it for a long time,” Burnett said. “It became the gold standard for aggregate federal government spending data in the states.”
Leaders of several nonpartisan organizations that represent state governments, including CSG, discussed the value of the CFFR and wrestled with what to do after the Census Bureau discontinued the report. Ultimately, The Pew Charitable Trusts recreated CFFR data, starting with 2004, in order to compare their methods to previously published Census data, and extended the report through 2014.
“Now, more than ever, it is clear that policy changes to the $4 trillion federal budget can impact states’ budgets and their economies,” said Anne Stauffer, director of the Fiscal Federalism Initiative at The Pew Charitable Trusts. “Pew recreated this data to shine a light on how interconnected federal and state budgets are, through programs such as Medicaid and the National Highway Program as well as spending on defense contracts and retirement programs.”
As a CSG policy analyst for more than 10 years, Burnett studied the CFFR and, later, Pew’s data to help her understand spending trends. She joined researchers, lawmakers and journalists across the country who studied the data for insights regarding the impact of federal spending in each state.
CSG, using Pew’s methodology and assistance, has now accepted responsibility for the annual report.
“We’re excited by the opportunity to do something new but also to do something that I think lives up to the expectation of our members,” said John Mountjoy, CSG’s director of policy and research.
Burnett, who analyzed the data and authored the latest federal spending report, said data-driven policymaking is on the rise and preserving the report was essential.
“This information is vitally important for state leaders, particularly given the uncertain fiscal climate in D.C., and I’m glad CSG can fill the void,” Burnett said. “Spending decisions made at the federal level have huge impacts on the fiscal and economic health of states and being able to track and compare funding is just a no-brainer.”
Read the full report here.