WHAT WE FOUND:

• Virginia’s total operating budget, including general and non-general funds, was $92.8 billion in FY25, which is 11% ($9.5 billion) more than the previous year. Nearly all this growth was in four agencies—DMAS (increased Medicaid costs), DOE (increased SOQ costs), UVA (increased services at the medical center), and Virginia Tax (income tax rebate).

• Three agencies—DMAS, DOE, and VDOT—received approximately half of total appropriations in FY25, which is similar to recent years. These three agencies administer some of the largest programs in the state budget: Medicaid, K–12 education, and highway construction and maintenance. Two of these agencies—DOE and DMAS—also received approximately half of general fund appropriations.

• Over the past 10 years, Virginia’s total operating budget grew 7% per year, on average, not adjusted for inflation, and the general fund budget grew at about the same rate. The non-general fund budget grew at a faster rate (8%), primarily because of Medicaid expansion starting in FY18. The general fund budget has grown at a significantly faster rate (e.g., 13–15%) in recent years, reflecting large increases in state revenue.

• Adjusted for population growth and inflation, the total budget and general fund budget grew an average of 3% per year during the 10-year period, and the non-general fund budget increased an average of 4% per year.

• The majority of budget growth was concentrated in a few agencies and programs between FY16 and FY25. Ten agencies (out of 160) accounted for 75% of total budget growth, with DMAS and DOE accounting for about half. Ten budget programs, mostly within the core functions of health care, education, and transportation, accounted for 72% of total budget growth.

• Non-general fund growth was even more concentrated than total fund growth, with 10 agencies accounting for 84% of growth between FY16 and FY25. DMAS alone accounted for about half of non-general fund growth reflecting Medicaid expansion, increased costs from Medicaid utilization and inflation, and the enhanced federal match during the COVD-19 pandemic.

• General fund budget growth was somewhat less concentrated between FY16 and FY25, with 10 agencies accounting for 72% of growth. DOE and DMAS were responsible for almost half of general fund growth.