Graph of the day: States are spending more on Medicaid, less on education

December 14, 2012

The National Association of State Budget Officers is out with their annual look at state budgets, which shows that states are now spending more of their general funds on Medicaid, as they cut education spending.  

State budget decisions tend to change from year to year. But, on balance, how states divvy up their general funds tends to be pretty stable. Here's NASBO data on state general fund spending for the past decade, citing the four biggest budget items: K-12 education, Medicaid, higher education and correctional facilities.

The most notable change in state budget allotments has occurred over the last two years:  Medicaid is now reaping 19.6 percent of states' general funds, a jump from the 16 percent of state general fund spending the entitlement received in 2003. State Medicaid spending remained fairly stable during the recession, as states received an influx of federal stimulus funds.

Education funding usually ends up bearing the brunt of an increase in Medicaid spending. Numerous studies have found that when spending on the entitlement program rises, spending on education drops. 

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