1. State Fiscal Outlook: Minnesota and the Nation ONE MINNESOTA January 25, 2012 Scott Pattison Executive Director National Association of State Budget Officers 444 North Capitol Street, NW, Suite 642 Washington, DC 20001 (202) 624-5382 www.nasbo.org

2. NASBO 2 Current Fiscal Situation: Overview

3. NASBO 3 State Fiscal Outlook Revenue improvement Still not yet pre-recession Spending pressures Health care reform Limited federal funds

4. NASBO 4 State and Local Employment Continues to Decline State and local employment has declined 665,000 from the start of the recession through December  State employment declined 132,000 from Aug. 2008-Dec. 2011  Local employment declined 533,000 from Sept. 2008-Dec. 2011 State governments have eliminated 17,000 positions since September States have also taken other personnel actions such as furloughs, early retirement, salary reduction, etc. Source: Bureau of Labor Statistics

5. NASBO 5 Current Fiscal Situation: Indicators

6. NASBO State Budgets *34-year historical average rate of growth is 5.6 percent *Fiscal ‘12 numbers are appropriated Source: NASBO Fall 2011 Fiscal Survey of States * Average

7. NASBO FY 2012 Spending Remains $20 Billion Below FY 2008 ($ in billions) * FY 2007 – 2010 are actual, FY 2011 is preliminary actual and FY 2012 is enacted.

8. NASBO Medicaid Continues to Drive General Fund Spending Growth 8 Data is based on comparative levels of enacted spending in FY 2011 and FY 2012 Source: NASBO Fall 2011 Fiscal Survey of States In Billions Changes in General Fund Spending by Category Between FY 2011 and FY 2012

9. NASBO State Revenue Continues to Grow in 3 rd Quarter, but at Slower Rate Source: Fiscal Studies Program, Rockefeller Institute of Government; U.S. Census Bureau

10. NASBO * FY 2007- -2010 are actual. FY 2011 is preliminary actual and FY 2012 is enacted. ($ in billions) Revenue Remains Below Pre-Recession Levels

11. NASBO 11 Minnesota GF Revenue: 1997-2011 Source: NASBO State Expenditure Report (estimated)

12. NASBO Balances as a Percentage of Expenditures * FY 2006 – FY 2010 are actual, FY 2011 is preliminary actual and FY 2012 is enacted. (percentages) Total Balance Levels Remain Low for Most States

13. NASBO 13 Balances in MN and Selected States Source: NASBO Dec. 2011 Fiscal Survey of States

14. NASBO Budget Cuts Made After the Budget Passed ($ millions) *FY 2012 mid-year budget cuts are ongoing Source: NASBO Fall 2011 Fiscal Survey Mid-Year Budget Cuts Decline

15. NASBO 15 Current Fiscal Situation: Economic Overview

16. NASBO 16 Unemployment Rate in MN and Selected States Source: U. S. Department of Labor, Bureau of Labor Statistics

17. NASBO National Unemployment Rate Compared to MN 17 % Source: U.S. Department of Labor, Bureau of Labor Statistics

18. NASBO Who gets out first? Historical Boost to State Earnings and Employment due to Oil & Natural Gas 18 Source: Federal Reserve Bank of Kansas City, Economic Review, Fourth Quarter 2009

19. NASBO 19 Background on State Spending Trends

20. NASBO 20 Spending by Funding Source (Percentage) Source: NASBO 2010 State Expenditure Report

21. NASBO 21 MN Spending by Funding Source (Percentage) Source: NASBO 2010 State Expenditure Report

22. NASBO 22 Total State Expenditures Source: NASBO 2010 State Expenditure Report

23. NASBO 23 General Fund: Medicaid & Education 64% Source: NASBO 2010 State Expenditure Report

24. NASBO 24 MN General Fund: Medicaid & Education Over 73% Source: NASBO 2010 State Expenditure Report

25. NASBO 25 MN General Fund Spending Growth over 10 years Sources: NASBO 2002 and 2010 State Expenditure Reports

26. NASBO 26 State Spending from Federal Funds Source: NASBO 2010 State Expenditure Report

27. NASBO 27 MN State Spending from Federal Funds Source: NASBO 2010 State Expenditure Report

28. NASBO 28 Focus on Outcomes Focus on results and outcomes Spend funds for effective programs Improve management

29. NASBO 29 Outlook

30. NASBO 30 State Fiscal Outlook State budgets dependent on economy Health care reform, federal government will have an impact Tough competition for general funds and limited federal funds Dealing with long-term liabilities

31. NASBO 31 www.nasbo.org Scott Pattison (202) 624-8804 spattison@nasbo.org