State budget efficiency rankings: Federal aid and all-funds budgets

Deltek Sr. Analyst Chris Cotner reports.

The U.S. Census Bureau released its report on federal aid to the states in September, 2011. Aside from individual data on states of interest, some of the more useful Census data revolves around state budget efficiency. This census data is combined and compared with Deltek’s own state budget data in the analysis below.

Contractors are always looking for a crystal ball view of future opportunities. Aside from predictive analytics based on past budgets and data, budget efficiency also provides some vision into what lies ahead. Simply, when states are efficient with budgets, they are able to do more with less. States able to do more with less are more likely to have future procurement opportunities due to the surplus and growth potential created from this efficiency. These same efficient states are also less likely to need future budget cuts.

In terms of per capita federal aid, the top ten most efficient states are no surprise (see figures 1 and 2, below). Virginia leads the pack, with efficiency offset by massive federal involvement in the state (military and homeland security) that is not counted in this figure. Others in the top ten (Florida, North Carolina, Georgia, and Texas) also benefit from significant federal funding through other areas not included in this aid. All of this indirect federal aid allows these state economies to achieve an additional level of stability not afforded other states. Virginia, North Carolina, Georgia, and Texas’ economies have fared relatively well during the recession, which also offset their need for federal funding. Look for excellent contracting opportunities in these states moving forward. Additionally, sixty percent of the top ten most efficient states with regard to federal aid (Nevada, Florida, Utah, Indiana, Georgia, and Texas) are also in the top ten in terms of overall all-funds state budget efficiency (subscribers have access to a detailed data comparison of federal and state per capita budgets, here). With this sort of combined budget efficiency, these states are on solid ground and should provide for excellent contracting opportunities looking ahead.

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