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February 27, 2012
The growth of the federal budget deficit and continuing federal budget problems have caused many Kansas policymakers to question the reliability of federal dollars coming to Kansas. How much federal money does the state of Kansas receive? In what areas does the state have the most vulnerability?
The chart below shows federal receipts for past fiscal years. During the last 10 years, the federal government sent Kansas about $3 billion a year. The total began to climb in FY 2009 and then rose sharply in FY 2010 and FY 2011 as federal stimulus dollars flowed to all states during the recent recession, mostly to supplement spending on education, Medicaid and transportation.
FY 2012 (July 1, 2011 to June 30, 2012) is still in progress, but when federal receipts are totaled at the end of the year, they will likely be closer to the historical pattern of $3 billion or so.
For the next fiscal year — FY 2013 — Gov. Sam Brownback has proposed a state budget that would spend $14.1 billion from all funding sources. Of the total proposed spending, the governor’s budget projects that just more than $3 billion will be paid for by the federal government. The federal money is concentrated in several large categories as shown in the chart below.
Much of the federal funding that Kansas receives goes to pay for Medicaid. Federal money covers about 59 percent of Medicaid costs, and the state pays the rest. However, cutting Medicaid programs cannot be done easily or quickly. In most cases, if federal funding for Medicaid declines, the state share of Medicaid costs will go up.
Some other areas that receive federal dollars are similar to Medicaid. Just more than $100 million of the $461 million of federal money projected for the Department of Education would pay for special education expenses. As with Medicaid costs, special education expenses still must be paid even if federal funding goes down.
However, in most areas outside Medicaid and special education, a loss of federal funds would more likely result in program reductions rather than increased state spending. A loss of federal highway funding, for example, may mean that road projects are not built because it’s less likely that state funds would be used to cover the federal reduction.