January 18, 2017

Federal Spending in California

Methodology and Comparison to Other Estimates

This post describes the method we used to produce the estimates in this blog series. This post also compares our estimates of federal expenditures to two studies that estimate federal funding to the states. They are: a report by the Pew Charitable Trusts Fiscal Federalism Initiative and a report by the New York Comptroller’s Office. Both of these reports estimate figures for all fifty states and the District of Columbia.

Method and Sources for Estimating Federal Expenditures. In this blog series, we aggregated many direct and survey sources to estimate federal funding by program. These include both federal and state sources. On the federal level they include direct sources (such as the Social Security Administration and the Internal Revenue Service), survey-based sources (the Bureau of Economic Analysis), and aggregated data sources (USASpending.gov). Our primary state-level source was the Department of Finance, but we also consulted other department-level data where appropriate. We also consulted some private sources, including Federal Funds Information for States, which aggregates information on federal grants to the states. Often, the selection of one source over another required judgment about the quality of different estimates. By nature, this bottom up approach excludes federal funding for some small federal programs and grants. It also excludes federal expenditures made directly to Indian Tribes.

Other Approaches. In order to construct their estimates of federal expenditures for all fifty states, both Pew and the New York Comptroller used third-party sources that report estimates of various federal funding amounts for all states. For example, the federal website USASpending.gov reports total grant and contracts amounts by place. Similarly, the Bureau of Economic Analysis reports state-by-state amounts for a variety of direct expenditures to individuals, including salaries and wages, Medicare spending, and other cash benefits. We also used these sources where necessary, but consulted more direct sources when possible.

Comparing LAO Approach to Others. Figure 1 displays the LAO’s estimate of federal funding in the state compared to the most recent estimate of the same figure from the other two studies. As shown in the figure, our estimate is higher than either of these other two. Most of the difference is attributable to differences in our estimates of grants spending and our inclusion of significant refundable tax credits as components of federal spending. While our estimate is not comparable with multi-state estimates, our approach does allow us to display spending amounts at a more detailed level and with more precision and detail than others.

Figure 1

Comparing LAO Estimate of Federal Spending
in California to Other Estimates

Total Federal Expenditures in California (In Billions)