Estimated total state spending (including general funds, other state funds, bonds, and federal funds) sharply increased in fiscal 2015. The year-over-year percentage growth rate of 7.8 percent was the highest rate since fiscal 1992. The rise in total state spending resulted from a combination of a rapid increase in federal funds to states, and modest growth in states' own fund sources. The acceleration of federal funds to states in fiscal 2015 was almost solely due to states receiving significantly more federal Medicaid dollars as part of the first full-year of Medicaid expansion under the Affordable Care Act (ACA).
Total state spending in fiscal 2014 increased at a slower rate than in fiscal 2015, growing 3.9 percent. Both federal funds to states and spending from states' own fund sources experienced modest growth in fiscal 2014. The slower growth in federal funds to states in fiscal 2014 was related to the Medicaid expansion only being implemented during the second half of the fiscal year, while the moderate increase in spending from states' own funds was partly attributable to slow revenue growth. Looking forward, it is likely that spending from states' own fund sources will continue its recent pattern of modest growth as revenue collections increase, while the increase in federal funds to states will likely slow as the growth in Medicaid enrollment is expected to decelerate in future years after states have implemented the ACA.