Driven by the expansion of the U.S. federal government's Medicaid program, spending by states in fiscal 2015 rose to its highest rate in 23 years,
The 7.8% year-over-year increase was the largest since 1992, NASBO said, and was due mostly to the full rollout of the Affordable Care Act (ACA).
"The acceleration of federal funds to states in fiscal 2015 was almost solely due to states receiving significantly more federal Medicaid dollars as part of the first full-year of Medicaid expansion under the ACA," the report said.
Medicaid is estimated at 54.3% of all monies that the federal government sent to states in Fiscal 2015 versus 49.6% in Fiscal 2014. In comparison, the next highest programs that got federal funds in Fiscal 2015 were elementary and secondary education, at 9.9%, and transportation, at 7.2%.
In Fiscal 2015, Medicaid represents an estimated 27.4% of total state spending -- which includes all state and federal funds -- up from 25.6% in Fiscal 2014. The program also represents 15.8% of spending from state-only funds, a slight increase from 15.7% in Fiscal 2014.
In the last few years, state spending alone has risen modestly as revenues recovered slowly after the financial crises.
Spending from state funds -- which includes general and other state funds but excludes federal funds or bonds -- increased 4.6% in Fiscal 2011, rose 3.8% in Fiscal 2012, gained 2.6% in Fiscal 2013, and increased 4.0% in Fiscal 2014, according to NASBO. For Fiscal 2015, spending is estimated to grow by 5.9%.
"Looking forward, it is likely that spending from states' own fund sources will continue its recent pattern of modest growth as revenue collections increase, while the increase in federal funds to states will likely slow as the growth in Medicaid enrollment is expected to decelerate in future years after states have implemented the ACA," the report said.
