Pensions and health benefits for retired state employees are a significantly understated obligation for state governments, but until states actually budget money for those needs, Medicaid is the biggest threat to other state spending. The National Association of State Budget Officers reminds us of that with today’s release of the latest State Expenditure Report.
In the 20 years between FY1999 and FY2019 Medicaid has climbed from 14% to 20% of General Fund appropriations. Its share of federal funds has climbed from 43% to 58%, and of total spending from 20% to 29%. Medicaid has cut into spending on education, public assistance, transportation, and corrections. FY2019 funding in these core areas is down to 22% of federal dollars from 29% in FY1999. Federal grants to states outside of these core functions have similarly shrunk to 20% of federal funds from 28%.
You can see the growth of Medicaid at the expense of other priorities in the tables and graph below.