This report finds that state budgets are stable and continue to grow. However, this growth is moderate and recovery for state finances since the end of the Great Recession has been modest. While states' fiscal conditions are improving, progress is slow and state governments face significant financial challenges going forward. Requirements for spending on K-12 education, health care and other important areas continue to grow, often at faster rates than state revenue growth. Long-term critical challenges include pent-up demand for spending on infrastructure and rising pension and health care costs. States vary in their fiscal health, some doing very well and others facing more significant budgetary problems. For example, the steep decline in oil prices has impacted some energy producing states. Overall, state finances are somewhat improved compared to last year, but growth is modest and some states are worse off than others.