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($40 billion in 2008 and $50 billion in 2009). Therefore, the upcoming “cliff” or funding drop that will occur as ARRA federal funds are spent down may be particularly noticeable in education. However, the increase in federal education funds often did not represent an increase in education ser- vices to children as much as an infusion of federal funds to

Public spending on the elderly was roughly $24,300 per person, or 2.3 times the amount spent per child.

offset losses in state funding, as state revenues contracted during the recession (e.g., the new State Fiscal Stabilization Fund). It is therefore difficult to know whether children’s education services increased in 2009 without taking into ac- count state and local expenditures on education, both now and in the future. The impact of the upcoming drop in fed- eral education funding as ARRA ends will depend to some extent on future state and local spending,and the timing and extent of a recovery in state fiscal health.

Federal and State/Local Spending on Children in 2007

In last year’s report, we reported that federal spending pro- vided just under one-third of total public investments in children in 2004, based our analyses of federal expenditures combined with a detailed 50-state analysis of state and local spending provided by researchers at the Rockefeller Institute. In this year’s report, we are able to update the state and lo- cal expenditures through 2007, as well as examine patterns throughout 1998–2007. (We have only limited information for 2009, so we are not yet able to determine total public- sector expenditures on children during the recession.)




The state and local share of total public investments ap- pears to have decreased slightly in the past decade, declining from 71 percent in 1998–2001 to 67 percent in 2005, then rising back to 69 percent in 2007. Both federal and state expenditures were increasing during this period, resulting in an increase in total public investments in children. (The rise in federal expenditures is detailed in the next section; see figure 10 and table 4.)

Federal investments continued increasing between 2007 and 2009, but we do not yet have complete comparable data for state and local spending. Estimates for two major components of state and local spending—state spending on education and Medicaid—show a decline in state in- vestments in children between 2008 and 2009, enough to partially, but not fully, offset the federal increases.9 However, we do not have data for local spending on schools—a very large component of total state and local spending—and so we do not know for certain whether total (federal/state/ local) spending on children increased or decreased in 2009. In future reports, we plan to use updated state and local expenditure data to answer this important question.

Public investments in children totaled $831 billion in 2007, including $262 billion in federal outlays and $570 billion in state and local spending. These estimates focus on outlays, not reductions in taxes, because the effect of child-related tax provisions in state and local law are generally not included in the Rockefeller Institute estimates of state and local law.10

The lion’s share of the state and local spending on chil- dren is for public schools, as shown in figure 5. State and local spending on education averaged $6,507 per child in 2007 (spread across all children under 19, including those not in school). An additional $504 dollars per capita was spent by the federal government, bringing total investments to $7,012 or almost two-thirds (66 percent) of the total public investment of $10,642 per child in 2007. Expendi- tures on health totaled $1,227 per child, or 12 percent of total public investments, with 59 percent of health spending provided by the federal government and with state and local governments making up the remaining 41 percent. Finally, non-education and non-health spending total $2,043 or 23 percent of all public investments. The federal government provides 88 percent of the dollars in this category, which includes income security, the refundable portions of the earned income and child-care tax credits, social services, housing, training, and nutrition.

Across all categories, public investments totaled $10,642 per child in 2007, including $3,348 in federal spending and $7,294 in state and local investments. Both the federal and

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