RD92 - State Spending: 2024 Update
Executive Summary: WHAT WE FOUND • Three agencies—DMAS, DOE, and VDOT—received half of total appropriations in FY24, similar to recent years. Two agencies—DOE and DMAS—received nearly half of general fund appropriations. These three agencies administer some of the largest programs in the state budget: Medicaid, K–12 education, and highway construction and maintenance. • Over the past 10 years, Virginia’s operating budget grew 7% per year, on average, not adjusted for inflation. Non-general funds grew 7% per year, and general funds grew 6% per year. These average growth rates are slightly higher than in prior 10-year periods measured. A majority of total budget growth is because of growth in the non-general fund budget, primarily implementation of Medicaid expansion. The large amount of federal COVID-19 funds provided in FY22 does not overly influence the 10-year averages because it was only for one year. • Adjusted for growth in population and inflation, the total budget grew an average of 3% per year during the 10-year period; the non-general fund budget increased an average of 4% per year; and the general fund budget increased an average of 2% per year. • The majority of budget growth was concentrated in a few agencies and programs between FY15 and FY24. Ten agencies (out of 158) accounted for 73% of total budget growth, with DMAS and DOE accounting for 50%. Ten budget programs, mostly within the core functions of health care, education, and transportation, accounted for 73% of total budget growth. These largest agencies and programs have a higher share of total budget growth than reported last year because of minimal federal ARPA funds appropriated to central appropriations in FY24 and because of substantial increases for Medicaid. • Unlike in prior state spending reports, general fund budget growth was slightly less concentrated by agency and program than total fund growth, primarily because general fund appropriations for DOE (direct aid) decreased in FY24 to reflect lower enrollment projections and a decrease in the sales tax forecast. Ten agencies accounted for 67% of general fund budget growth, with two agencies—DOE and DMAS—accounting for slightly less than half of general fund growth. In contrast, 10 agencies accounted for 82% of non-general fund growth, with DMAS alone accounting for half of non-general fund growth. The substantial growth in DMAS reflects Medicaid expansion and the enhanced federal match rate during the COVID-19 pandemic. • Some agencies have had very large percentage increases in general fund appropriations since FY15. Most of these agencies are relatively small, or primarily receive non-general funds, so their growth is made up of a small proportion of total general fund budget growth. Though a relatively small agency, DCR made up 4% of general fund growth because of sizable mandatory deposits in the Water Quality Improvement Fund. |