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Medicaid Eats Up More of State Budgets, While Education Slips

The portion of state budgets consumed by Medicaid, the state/federal health care program for the poor, is growing, while the portion flowing to education has dipped a bit, a new report shows.

If that trend holds, it could carry implications for the squeeze on K-12 going forward, particularly if states' efforts to climb out of recessionary depths prove to be as difficult as some predict.

As a percentage of total state spending, the amount devoted to Medicaid was 21.9 percent in fiscal 2009, but is expected to rise to an estimated 23.6 percent in fiscal 2011, according to a state expenditure report released this week by the National Association of State Budget Officers. Those increases have been driven in part by rising enrollment (probably not surprising during a bad economy) and rising health care costs. Total state spending on Medicaid jumped by an estimated 10 percent in fiscal 2011.

Spending on elementary and secondary education, meanwhile, which was 21.5 percent of state budgets in fiscal 2009, is expected to fall to an estimated 20.1 percent in fiscal 2011, NASBO says.

Education still takes up the largest share of states' overall general fund spending—35.3 percent in fiscal 2010—the report explains, while Medicaid is second, at 15.8 percent. Higher education accounts for 11.6 percent of those budgets. Those three categories, combined, make up about two-thirds of states' total general-fund spending.

All of which suggests that competition from other sources in the budget is yet another factor—along with other political and economic pressures—likely to squeeze K-12 in the months and years ahead.

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