how does colorado stack up? the state’s economy from a

How Does Colorado Stack Up? The State’s Economy from a National and State Perspective

Western Interstate Commissionfor Higher Education (WICHE)

“Creating a Vision for the Future”Education Summit

June 8, 2007

Scott PattisonExecutive Director

National Association of State Budget Officers

444 North Capitol Street, NW, Suite 642 • Washington, DC 20001 • (202) 624-5382 • www.nasbo.org

2NASBO

Current Fiscal Situation

3NASBO

The Current Fiscal Situation

Fiscal 2006 state finances were strong and stableOverall fiscal 2007 state finances continue to be in good shape, although some pockets of weaknessSomewhat tighter fiscal conditions expected in fiscal 2008, but growth expectedCompetition for dollars continues:

Medicaid, pensions, IT, transportation, education, corrections, accounting changes

4NASBO

Above Average Expenditure Growth in Fiscal ’07

General Fund Expenditure Growth (%)

-4

-2

0

2

4

6

8

10

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

**20

08**

%

Actual Inflation Adjusted

*29-year historical average rate of growth is 6.5 percent **Fiscal 07 numbers are estimated; fiscal 08 reflect recommended budgets

Source: NASBO June 2007 Fiscal Survey of States

*

5NASBO

Expenditure Growth in Selected States

All States General Fund Expenditure Growth Rate Compared to Selected States General Fund Growth Rate

0

5

10

15

20

25

2007 (estimated) 2008 (recommended)

%

National Colorado Arizona Utah Kansas


6NASBO

Balances Remain Healthy; Some Decline Likely for Fiscal 2008

Total Year-End Balances and Total Year-End Balances as a Percentage of Expenditures, Fiscal 1979-Fiscal 2008 (Recommended)

0

10

20

30

40

50

60

70

1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007*

Total Balances as a Percentage of Expenditures Total Balance

*2007 figures are estimated; 2008 figures are recommended Source: NASBO June 2007 Fiscal Survey of States

7NASBO

Balances in Selected States

All States Balances as Percentage of Expenditures Compared to Selected States Balances as Percentage of Expenditures

0

5

10

15

20

25

2006 2007 (estimated) 2008 (recommended)

%



8NASBO

Budget Cuts have Declined Since Early 2000’s Downturn

Budget Cuts Made After the Budget Passed,Fiscal 1986-Fiscal 2007 ($ millions)

18

23

11 12

20

35

22

9 8

13

7

2 31

16

37

18

52 3

28

37

$0

$1,500

$3,000

$4,500

$6,000

$7,500

$9,000

$10,500

$12,000

$13,500

$15,000

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

*

0

10

20

30

40

Number of states (right) Amount of reduction (left)

Recession ends

Recession ends

*MI, WI, and RI have made budget cuts so far in fiscal 2007 Source: June 2007 Fiscal Survey of States

9NASBO

Spending Pressures

10NASBO

Competing Spending Pressures

Medicaid and Health CareK-12 IncreasesHigher EducationDemographic ChangesInfrastructurePensions

11NASBO

Education and Health Care: Now 64% of General Fund Spending

General Fund Spending, Fiscal 2005

All Other25.8%Transportation

0.5%

Corrections7.0%

Public Assistance2.3%

Medicaid16.9%

Higher Education11.7%

Elementary & Secondary Education

35.8%

Source: NASBO 2005 State Expenditure Report

12NASBO

Education and Health Care in Colorado: 74% of General Fund Spending

Colorado General Fund Spending, Fiscal 2005

All Other17.3%

Transportation0.0%Corrections

8.6%Public Assistance

0.0%

Medicaid20.6%

Higher Education10.2%

Elementary & Secondary Education

43.3%


13NASBO

Medicaid Spending

Total Medicaid Spending as Percentage of Total State Expenditures

0

5

10

15

20

25

30

1990 1995 2000 2005 2010*

%

Medicaid as % of Total State Expenditures

*2010 percentage projected by Health Management Associates Source: NASBO State Expenditure Report

14NASBO

Medicaid Growth inSelected States

All States Total Medicaid Growth Rate Compared to Selected States Total Medicaid Growth Rate

-2

0

2

4

6

8

10

12

14

2006 2007 (estimated) 2008 (recommended)

%



15NASBO

Enrollees Expenditures

Children = 19%

Elderly = 22%

Disabled = 46%

Adults = 13%Children = 48%

Elderly = 9%Disabled = 17%

Adults = 26%

2007 U.S. Total = 62.2 million U.S. Total = $305 billion in 2007

68% of Medicaid Spending on Benefits in 2007 is for Elderly and Disabled

26% 68%

Source: Vernon Smith, Health Management Associates

16NASBO

Higher Education in Selected States

Higher Education Expenditures as a Percent of Total Expenditures

024

68

101214

161820

2004 2005 2006 (estimated)

%



17NASBO

Higher Education in Selected States – General Fund

General Fund Higher Education Expenditures as a Percent of Overall General Fund Expenditures

02468

101214161820

2004 2005 2006 (estimated)

%



18NASBO

National Spending by Funding Source (Percentage)

Total State Expenditures By Funding Source, Fiscal 2005

General Funds43.7%

Federal Funds28.9%

Other State Funds25.1% Bonds

2.3%


19NASBO

Colorado Spending by Funding Source (Percentage)

Total State Expenditures By Funding Source, Fiscal 2005

General Funds40.8%

Federal Funds23.0%

Other State Funds34.6%

Bonds1.6%


20NASBO

Outlook

21NASBO

State Fiscal Outlook

Revenue and spending growth likely to slow

Balances are healthy, Calendar Year ’07 looks goodHousing decline and a slowing economy could be problematic

Tough competition for state general fundsLong-term federal fiscal imbalance threatens funds to states

DeficitsIncreasing defense, retirement and health care costs

22NASBO

www.nasbo.org

how does colorado stack up? the state’s economy from a

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