Revenues & Expenditures: 5. How Do Vermont’s Expenditures Compare to Other States?

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The National Association of State Budget Officers (“NASBO”) collects state government spending and revenue data from all 50 states and then summarizes the information so states can compare their spending and revenue policies with all the other states in the country.

While every state in the country does a Comprehensive Annual Financial Report, the information provided by NASBO is based on state budgets, so the underlying data differs from the numbers outlined in the prior article.

The biggest difference is the accounting methodology. Budgets are based on cash inflows and outflows and the Comprehensive Annual Financial Reports are based on accrual accounting. So, for example, the $324 million in non-cash expenses outlined in the prior article will not be included in the NASBO numbers.

One last cautionary note. The NASBO report has actual data for fiscal year 2015 and 2016, but uses estimated data for 2017 that was provided by each state. Vermont’s actual expenditures were somewhat higher than the estimates used in this report.

In the table below, Vermont’s total state government expenditures and all major spending categories will be compared to the US average, all on a per capita basis. To provide a direct state comparison, Vermont will also be compared to the neighboring state of New Hampshire.

 

Fiscal Year 2017 Per Capita State Government Expenditures ($)

 

Category Vermont New Hampshire All US States Vermont vs. All US States (%)
Total State Spending 8,910 4,463 6,088 +46%
Medicaid 2,562 1,582 1,763 +45%
Education: Elementary and Secondary 2,912 871 1,181 +147%
Transportation 863 395 491 +76%
CAPEX 498 275 328 +52%
Corrections 250 106 184 +36%
Public Assistance 156 53 83 +89%
Higher Education 151 103 635 -76%
All Other 2,017 1,353 1,749 +15%

Source: National Association of State Budget Officers State Expenditures Report Fiscal Years 2015-2017. Population data from the US Census Bureau.

 

Key Observations

Vermont Has High State Government Spending: Vermont’s fiscal year 2017 per capita expenditures were 46% higher than the national average and, with the sole exception of Higher Education, every category of expenditures were materially higher.

Vermont’s Education Spending is Centralized at the State Government Level: The per capita Education expenditures outlined above paint a misleading picture. Vermont has centralized public school spending at the state level to a much greater extent than most other states, which continue to rely on local property taxes. These local expenditures are not included in the table above. As a result, both the per capita education and total state government expenditures are somewhat overstated for Vermont. Excluding Education expenditures, Vermont’s per capita state expenditures exceed the national average by 29%.

Vermont Has a Small Population: Some portion of Vermont’s high level of per capita public spending must be related to its small population. Overhead costs (like the cost of the Governor) and infrastructure costs (like transportation and capital expenditures) need to be spread across a much smaller than average state population. New Hampshire, for example, has total per capita state expenditures 50% lower than Vermont and a population 115% larger.

A look at other states with small populations tends to show levels of per capita state expenditures similar to Vermont (although all of these other states have vastly greater geographic territories to worry about: Vermont’s cost per square mile would be much higher), as follows:

 

State 2017 Total Per Capita State Expenditures ($)
Alaska 13,638
North Dakota 9,566
Vermont 8,910
Wyoming 8,703
South Dakota 4,863

 

Vermont’s lower population can’t explain all the spending differences: The state’s two largest expenditures, public education and Medicaid, are both higher than the state’s low population can explain. Together, they account for 61% of the total expenditures outlined above. According to the US Census Bureau Survey of State Education Expenditures, the cost per public student in Vermont is 58% higher than the national average. Medicaid spending is also absolutely high. According to the J. Henry Family Foundation, Vermont’s Medicaid cost per enrollee is 40% higher for adults, 79% higher for children and 23% higher for individuals with disabilities when compared to the national average.

Vermont Has Low Higher Education Spending: Sadly, it appears that Vermont invests much less than the average state in higher education. It seems that this has been the case for a long time. UVM was expensive when the author graduated from high school in 1972 and he moved to another state to afford college.

 

1 COMMENT

  1. Great read. I’d like to point out. My kids go to Castleton for about 10,000 per year per student. If they had to pay for it themselves with student loans….they could. College is within reach. Not sure why public education has to be such a ripoff. I am definitely in favor of matching spending in the state to be less than our revenue. We should have a surplus. Cut hard, cut fast and do it everywhere. I have to live within my means. The folks at the statehouse (spending my money) should have to also.

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