State budget efficiency, business projections, and selling IT

Deltek Sr. Analyst Chris Cotner reports.

In an article published last week, I illustrated how state budget efficiency can be used as a metric for future budget increases or decreases. The prevailing logic is that efficient state budgets could indicate if a particular state is positioned for future growth. On the contrary, states with inefficient budgets may be poised for future cuts to improve efficiency. However, the counter point to this line of reasoning is that efficient states may look to become more efficient, while inefficient states may continue down the same path of increasing budgets. Since that article, further analysis of Census and Deltek data indicates some surprising trends that should enrich the business utility of previous analysis.

When combining numbers for states’ overall budget efficiency and federal aid to states’ budget efficiency, a significant trend developed (see table 1, below – subscribers have access to data on all states, here). Comparing the FY 2010 state budget efficiency data with actual state FY 2012 budgets indicated that states with better combined budget efficiency (fewer dollars per capita) were more likely to cut budgets than states with weak budget efficiency (more dollars per capita). This significant difference existed when comparing across a two-year span.

For the complete blog, go here.