Good news details: All-state budget vertical analysis (2010-2013)

Deltek Sr. Analyst Chris Cotner reports.

This article is part of the continuing “Good News” series with analysis and projections of state budgets. In particular, this article launches a new part of the series on all-state budget vertical analyses.

As part of our analysis of state budget data, Deltek previously published analyses and projections of the health care, social services, justice, public safety, and homeland security verticals. We also published vertical budget analyses on several larger states. However, we have yet to publish overarching analyses and projections of verticals across all states. With this article, Deltek launches an all-state budget vertical analysis series.

Previous analyses and projections (linked above) have demonstrated several key points about state budgets and related business prospects. First, from FY 2009-2011, state budgets increased at an abnormal rate. Much of this increase can be attributed to key factors including expired stimulus funding, increased health care costs (both for state workers and Medicaid), increased retirement/pension costs for state workers, and increased unemployment compensation. Second, FY 2012 is the first projected overall state budget loss since Deltek began tracking in FY 1987. This loss is mostly due to expired stimulus funding and states’ revenues decreasing as the result of the recession and slower economic growth. With decreased revenues, many states had to slash budgets, including measures such as laying off state workers, increasing state employee contributions to health care and retirement, freezing or reducing state worker pay, consolidating agencies, implementing efficiency measures through IT, and cutting departments and programs deemed unnecessary in difficult economic times. Third, and most promising for the business community, all indicators show the bloodletting should stop in FY 2013, with budgets flattening and then beginning on an upward trend. These same key points bear out in this all-state vertical analysis.

For the complete blog, go here.