KC Special Report: State General Fund Spending Has Dropped by $20 Billion Since 2006-07, Major Decreases for Every Major Program Area

August 17th, 2010

State general fund spending has decreased by $20 billion since 2006-07—plummeting from a peak of $103 billion in 2007-08 to $86 billion in 2009-10, according to an analysis of California Department of Finance data by Kersten Communications. 

State spending has dropped for every major program area (i.e. K-12 education, higher education, health and human services, and corrections) since the 2007-08 budget year.   

The Governor’s January and May budget proposals proposed to reduce state General Fund spending by roughly another $3 billion from 2009-10 by proposing $83.4 billion in state spending for 2010-11.  In May, the Assembly Budget Committee proposed $86 billion in state General Fund expenditures for the 2010-11 budget year, while the Senate Budget Committee proposed $93.1 billion in expenditures.    

Now into our seventh week of yet another state budget stalemate, the California State budget is at another crossroads.  On the one hand, the state can follow Governor Arnold Schwarzenegger’s lead, and the wishes of the California Republican lawmakers, and continue the trend of the past three years.  The three state budgets passed since 2007-08 have significantly ratcheted down state spending on major programs areas such as education, higher education, and health and human services, despite the increasing needs of a growing state population.

Democrats, on the other hand, prefer additional spending on these same state programs.  Kersten Communications (KC) has produced a summary spreadsheet that helps put this year’s budget stalemate into a historical perspective.  To view the spreadsheet click here.

Here is a guide to the four tabs included in the spreadsheet:

Tab #1 Summary Chart of State General Fund Spending by Expenditure Area for 1976-77 to 2010-11:  This chart summarizes actual and real general fund expenditures (real meaning in inflation adjusted 2008-09 dollars), actual and real K-12 education expenditures, actual and real higher education expenditures, actual and real higher education expenditures, actual and real health and human service expenditures, and actual and real corrections expenditures.  The chart also includes general fund per capita expenditures, real general fund per capita expenditures, state population growth, and the state consumer price index that was used to calculate the real figures. 

Tab #2  Summary Graph of State General Fund Spending by Expenditure Area for 1976-77 to 2010-11:  This graph charts state spending since 1976-77 for the following program areas:  K-12 education, higher education, health and human services, and corrections.

Tab #3   Graph of Inflation-Adjusted State Spending by Program Area for 1976-77 to 2010-11:  This graph charts real spending since 1976-77 for the following program areas: K-12 education, higher education, health and human services, and corrections. 

Tab #4  Graph of Real General Fund Spending Per Capita for 1976-77 to 2010-11:  This graph shows that real general fund spending per capita, as proposed by the Governor in his January and May Revise, approaches levels the state has not seen since the recession of 1993-94.   

Here are some factoids illustrated by the data:

–Notwithstanding the deep recession of the early 1980s, real state general fund spending increased steadily throughout the 1970s, 1980s, and 1990s—increasing from $40 billion in 1976-77 to $106 billion in 2006-07 (note: in inflation adjusted 2008-09 dollars).  Since 2006-07, real state general fund expenditures have decreased from $106 billion in 2006-07 to $85 billion in 2009-10, and could potentially go to below $80 billion in 2010-11.

–California’s population has increased by 68% since 1976-77—jumping from 22 million people in 1976-77 to 37 million in 2009-10.  Over the same period, real general fund expenditures have increased by 110%–increasing from $40.58 billion in 1976-77 to $85.39 billion in 2009-10 (note: in inflation adjusted 2008-09 dollars).

–Real general fund expenditures per capita have dropped from $2,852 in 2006-07 to $2,219 in 2009-10—a 22% decrease. 

–Actual K-12 education expenditures have dropped from $42.47 billion in 2007-08 to $34.55 billion in 2009-10—a 18.6% decrease.

– Actual health and human services expenditures have dropped from $29.34 billion in 2007-08 to $25 billion in 2009-10—a 14.6% decrease. 

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