Albany, NY — New York’s spending on education and Medicaid will leave a yawning hole in the state budget after federal COVID relief money runs out, according to the Empire Center’s new report, Empire State Outliers. 

New York is a national outlier with respect to K-12 and Medicaid spending, with the country’s highest per-pupil K-12 spending and highest per-capita Medicaid spending. These two programs dwarf all other categories of state spending. Half of every dollar New York state government collects in taxes and fees is spent on education and Medicaid. 

In the next fiscal year alone, Governor Cuomo’s budget calls for $26.7 billion in school aid spending and $27.3 billion for the state government’s portion of Medicaid. 

Though the COVID-19 pandemic has pushed spending higher, New York was an outlier in these two spending categories long before the coronavirus. Between April 2011 and April 2019, school aid climbed 41 percent, or almost three times as fast as inflation. The state’s portion of total Medicaid costs has also outpaced inflation, rising almost 26 percentthough the state has benefited from additional federal Medicaid funding. 

Bringing these costs in line with national norms wouldn’t just relieve pressure on the state budget. Lower K-12 and Medicaid costs could translate into lower local property and sales taxes—not to mention reduced costs for the federal government,” said Ian Kingsbury, a fellow at the Empire Center and one of the paper’s coauthors. “As the state works its way out of the worst economic collapse since the Great Depression, Governor Cuomo and state lawmakers should enact substantive reforms with an eye toward not just controlling spending growth but reducing it. 

New York’s per-recipient Medicaid costs are among the highest in the U.S., contributing to a Medicaid bill that threatens to push New York’s fiscal health over the edge at the worst possible time,” said Bill Hammond, senior fellow for health policy at the Empire Center and paper coauthor. “Substantial opportunities for savings exist in rightsizing New York’s Medicaid program, but state lawmakers must take responsibility and rein in an out-of-control program.”  

The paper outlines several key reforms state lawmakers can pursue to reverse these trends, rein in spending, and cut the state’s reliance on federal bailout money. 

Read the full report here.

The Empire Center, based in Albany, is an independent, not-for-profit, non-partisan think tank dedicated to promoting policies that can make New York a better place to live, work and raise a family. 

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The Empire Center is an independent, non-partisan, non-profit think tank located in Albany, New York. Our mission is to make New York a better place to live and work by promoting public policy reforms grounded in free-market principles, personal responsibility, and the ideals of effective and accountable government.

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