California State Controller's Office : State Spending

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State Finances 101

State Spending

How the money in the General Fund is spent is determined by the Governor and the Legislature through the annual state budget process. The spending choices available to the Governor and Legislature are limited by federal or state laws and requirements, court orders, and ballot measures passed by the voters.

Figure 11 shows how total General Fund spending has changed since FY 2001-02. The number for FY 2012-13 is the amount appropriated in the FY 2012-13 state budget enacted in June 2012.

Figure 11 shows how total General Fund expenditures have changed since FY 2001-02. Through FY 2004-05, spending remained below $80 billion. From 2005-06 to 2007-08, spending increased from $91.6 billion to $103 billion. From 2008-09 through 2012-13, spending averaged $89.6 billion per year.

^{Source: Department of Finance (Chart C, General Fund Program Distribution, July 2012)}

General Fund Spending in Major Policy Areas

Figure 12 shows the proportion of General Fund money spent in the FY 2011-12 for major policy areas.

Figure 12 shows General Fund spending in major policy areas for the FY 2011-12. K-12 Education is the highest expenditure at 39%, followed by Health and Human Services at 31%, Higher Education at 11%, and Corrections and Rehabilitation at 9%.

^{*Other includes: Business, Transportation and Housing, State and Consumer Services, Tax Relief, and Environmental Protection Agency (each less than 1 percent of General Fund).}

^{Source: Department of Finance (Chart C, General Fund Program Distribution, July 2012)}

The three largest areas of State spending are education (kindergarten through higher education), health and human services, and the corrections system.

Figure 13 shows the amount of General Funds spent since 2001. The number for FY 2012-13 is the amount allocated, or appropriated, in the FY 2012-13 state budget.

Figure 13 shows the amount of General Funds spent over the last 12 fiscal years for K-16 Education, Health and Human Services, and Corrections. K-16 peaked in 2007-08 at more than $50 billion.

^{Source: Department of Finance (Chart C, General Fund Program Distribution, July 2012)}

Figure 14 shows how much of the State’s General Fund went to education, health and human services, and corrections, combined, since 2001. The number for FY 2012-13 is the amount allocated, or appropriated, in the FY 2012-13 state budget.

Figure 14 shows the percent of the General Fund appropriated for K-16 Education, Corrections, and Health and Human Services combined over the last 12 fiscal years. Appropriations for these programs were between 84.6% and 94.3% of total General Fund dollars.

^{Source: Department of Finance (Chart C, General Fund Program Distribution, July 2012)}

Figure 15 shows the percent of total General Fund dollars spent on specific agencies and programs at different times during the past 10 fiscal years. The number for FY 2011-12 is the amount allocated, or appropriated, in the FY 2011-12 state budget.

Figure 15 shows the General Fund dollars appropriated for specific agencies for several fiscal years since 2002-03. K-12 average was around 40%, Health and Human Services around 30%, Higher Education was slightly more than 10% and Corrections moved between 5% and 10%.

^{Source: Department of Finance (Chart C, General Fund Program Distribution, July 2012)}Note: The “Other” category includes federal funding the State hopes to receive that has not yet been distributed to specific programs.

Spending for State Operations and Local Programs

When most people think about the state budget, they assume that the money the State collects is spent at the state level. As the following chart shows, most of the money the State collects goes to programs and services delivered at the local level.

Table 1 shows who determines what taxes to impose, and who uses the money collected from those taxes.

Kind of Tax	Who Decides	Who Uses
Personal Income Tax	State	State, counties, schools
Sales and Use Tax	State, counties, cities	State, county, cities
Property Tax (property*, vehicle fees)	State	Counties, cities, schools, and special districts

* Property tax rates were fixed in the State Constitution by Proposition 13 in 1978.

As Figure 16 shows, most of the taxes the State collects and spends are transferred to local governments. This “local assistance” is used to pay for schools and for state health and welfare programs (such as CalWORKS, In-Home Supportive Services, and Medi-Cal) that are administered at the local level. “State operations” include the Legislature, Judicial and Executive branches, Department of Corrections, and some higher education. Many programs receive funding both for state operations and local assistance. A comprehensive breakdown of the distribution of funds can be found on Schedule 9, Comparative Statement of Expenditures of the state budget, which can be found at http://www.ebudget.ca.gov/pdf/BudgetSummary/BS_SCH9.pdf

Figure 16 shows the amount of General Fund money spent for state operations compared to the amount of General Fund money sent to local governments and schools in FY 2011-12.

Figure 16 shows the proportion of General Fund for State operations and local spending. Local Assistance receives 70% of the General Fund, State operations receive 28%. The remaining 2% goes to non-governmental and capital outlay funding.

^{Figure 16 - Source: State Controller’s Office (Monthly Statement of General Fund Cash Receipts and Disbursements, June 2012) See the Schedule of Cash Disbursements to see a breakdown by programs of state operations and local assistance.}

Figure 17 shows the amount of General Fund money spent on state operations and the amount transferred to the local level for local assistance since 2001.

Figure 17 shows that over the last 11 fiscal years, approximately $40 billion more in General Fund money goes to Local Assistance annually compared to General Fund money going to State operations.

^{Figure 17 - Source: Department of Finance (Chart F, Expenditures by Character – All Funds, July 2012)}

The Controller’s annual local government reports provide a more in-depth look at city, county, and special district finances.

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