Social Services, Education Rank As Biggest Expenses

March 10, 2011

Arizona’s various governmental jurisdictions spend the bulk of their dollars on social services and education, but in lesser amounts than the rest of the country.

Meanwhile, they spend more than most on public safety.

That profile emerges from an analysis of U.S. Census Bureau reports on spending by state and local government across the country.  The state parallels the rest of the country in some ways but produces important distinctions as well.

The biggest is that the state itself spends at a lower rate than most others.  Per capita spending of $3,345 in 2008 ranked 45t h.

This is balanced out though by local governments in the state.  Their spending was the 11th highest in the country at $5,211 per capita – just over the national average among the states, although this figure is distorted to a degree by the inclusion of the enormous Salt River Project and other government-connected utilities.

If one combines the total per capita spending of the state and local governments, Arizona ranked 29th in the country.  The total figure of $8,556 was a bit below the U.S. average of $9,321. 

The numbers are large because they include all government spending from all sources, including federal funding as well as state and local revenues such as from college tuition.  For instance, the Arizona Health Care Cost Containment System (AHCCCS), the state’s version of Medicaid, operates with a combination of federal, state and county funding. 

So as to avoid double counting, this analysis includes only direct expenditures.  For example, the county contribution to AHCCCS could be counted both as a local expenditure and then, when the money is actually spent by the state, as a state expenditure as well.  To avoid that problem, intergovernmental transfers, such as this one from the county to the state, are not counted.  Because the money in this case is disbursed by the state, the expenditure is included just under state spending.

AHCCCS is not just any example.  It is a major driver of the increase in spending, which now makes it a major target of cost-cutters.  The state plans to cut 250,000 participants out of the program as part of its effort to make up for the budget shortfall.

In 1985 – the base year for the Thinking Arizona analysis – the program was three years old and already growing quickly.  The first estimate of the state’s share of the cost that year was $50 million.  In a harbinger of what lay ahead, that figure grew to $85 million by the time the budget was approved.  The final tally for the year

ended up being $125 million.  The counties and the feds kicked in another $132 million.

By 2008, much had changed.  Eligibility had been expanded.  The cost of health care had gone up over the years twice as fast as the cost of living.  The bill of $5.5 billion was gargantuan.  Fortunately for the state and the counties, the other major change was that the federal government had taken over more of the burden.   The feds kicked in $3.6 billion compared with the state’s $1.5 billion.

The total cost per capita of $898, though about $100 lower than the national average of $995, was still the 29th highest in the country.   When it all social services are grouped together, Arizona ranks lower.  It exceeds just nine other states by spending $1,680 per capita, well below the national average of $2,034.

That makes social services one of three categories where overall governmental spending falls more than 10 per cent below the national average

Of the other two, one is well documented.  Arizona’s school districts spent 20 percent less per capita on elementary and second education than the overall national figure.   Their spending, at $1,496 per capita, ranked 44th in the country.

The other category where Arizona lags has gained national attention because of the current efforts in Wisconsin to curtail it.  Arizona spent $560 per capita on government employee benefits, largely retirement funds but also including workmen’s comp and unemployment insurance.  Arizona ranked 30th on this score although the figure was well below the national average of $772.   Wisconsin stood 11th at $887.

Arizona’s standing in several areas, including higher education, was about on par in this analysis with the rest of the country.  It ranked just below the national average in higher education, though spending there has been buttressed by tuition increases, and about equal in transportation, environment and housing, and governmental administration.

Meanwhile, spending on utilities and public safety came in well above the national averages.

Per capita spending on utilities of $957 per capita was 6th highest in the country, well above the national average of $636.  Much of this figure stems from the Salt River Project, which is a political subdivision of the state.  The expenditures are for the most part offset by corresponding revenues.

The state also spent more on public safety, a category that includes corrections.  Arizona ranked 7th at $828 per capita, well above the national average of $714.  Almost all of the variance was at the local level.  Local police expense was among the highest in the country, ranking 5th at a cost of $309 per capita.  Fire protection and corrections were also above the norm.

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