National report shows state education funding decreases as Medicaid costs increase

An analysis of state spending over recent years shows Medicaid budgets have been increasing steadily while education spending has decreased, reports Michael Cooper of The New York Times. This has implications in rural states that have historically housed a high number of Medicaid-eligible people. The National Association of State Budget Officers analysis says reasons for these budget shifts come from the "lingering economic downturn" and the overall struggling economy. As more people qualified for the program and medical costs rose, more stimulus money was pumped into it, increasing its overall budget. In 2009, Medicaid accounted for 21.9 percent of all state expenditures; this year, the estimate for state Medicaid expenditures is 23.6 percent.

Cooper reports education spending has decreased from 21.5 percent to 20.1 percent over the same period. In 1987, education got the largest amount of state spending, but in 2003 Medicaid became the largest state expenditure for the first time. The margin between the two used to be small, but for the past three years, Medicaid's lead has steadily increased. The report warned that states are likely to face "austere budgets" in coming years because of an uncertain economy, reduced federal aid, costs of the health-care overhaul and pressure to pay for pensions and health care for retired workers. (Read more)