From the summary:
This annual report examines spending in the functional areas of state budgets: elementary and secondary education, higher education, public assistance, Medicaid, corrections, transportation, and all other. It also includes data on the State Children’s Health Insurance Program and on revenue sources in state general funds.
State expenditures have been severely impacted by the national recession and downturn that began in December 2007. The economic downturn created a unique and in some ways unprecedented fiscal situation for states. Spending from state funds (general funds and other state funds combined) declined in both fiscal 2009 and in fiscal 2010, marking the first occurrences of outright spending declines in the 24-year history of the State Expenditure Report. The reduction in spending from state funds was due to a rapid decline in state revenue. During the two-year period from fiscal 2008-2010 state general fund revenues decreased nearly 12 percent, or by $78 billion.
Not all components of state expenditures declined during the recent downturn. Spending from federal funds increased sharply in both fiscal 2009 and fiscal 2010. Due to the influx of these additional federal dollars, total state expenditures grew modestly in both fiscal 2009 and fiscal 2010. It is estimated that in fiscal 2011 total state expenditures will once again experience moderate growth. In addition to continued growth in federal funds, both general funds and state revenue are estimated to have increased in fiscal 2011 for the first time since fiscal 2008. However, even after this growth, general funds and state revenue remain well below prerecession levels.