State of Texas Cash Flow - The Expenditures Side

In fiscal 2012, Texas state government spent a net $94.3 billion, 1.3 percent decrease from fiscal 2011.

The largest expenditure area by function was health and human services, accounting for $38.1 billion or 40.5 percent of all net expenditures. This represented a 1.5 percent, or $591 billion decrease compared to fiscal 2011’s total.

Texas’ second-largest expenditure in fiscal 2012 (35.8 percent of total spending) was for education, at $33.7 billion, an increase of 0.4 percent over fiscal 2011. The state’s Foundation School Program made $19.2 billion in grants (an increase of 8.8 percent) to local school districts. Other grants were made to purchase textbooks and to provide funding for students considered at risk, students with disabilities and child nutrition programs. These expenditures added $6.3 billion to the education total, a decrease of 16 percent from fiscal 2011.

Each year, Texas distributes money from state and federal sources to local governments for a variety of program categories. In fiscal 2012, Texas disbursed $36 billion to local governments, school districts and junior colleges.

Education accounted for 91.4 percent of state and federal funds (74.4 percent of all funds) flowing to local governments in fiscal 2012. This included $26.8 billion sent to school districts, junior colleges and other local governments. In addition to normal Foundation School Program funding, the state appropriated fiscal 2012 payments for local school district property tax relief.

Salaries and wages for state employees, including faculty at state colleges and universities, are spread across different sections of the state budget; together they represented the third-largest area of state spending, at $10.3 billion in fiscal 2012, a decrease of 0.7 percent.
The largest percent increase in flow of funds to local governments in fiscal 2012 was for Natural Resources/ Recreational Services, totaling $470.2 million, an increase of 152.4 percent over fiscal 2011.

State-managed investments

At the end of fiscal 2012, investments held by funds within the State Treasury totaled $185.7 billion, excluding securities lending collateral. Securities lending collateral accounted for another $23.8 billion, bringing the total investment balance to $209.5 billion at the end of fiscal 2012.

Some of the state funds with investment authority are non-expendable, meaning that their principal cannot be appropriated for state spending. Their investment earnings, however, can be appropriated.

Rainy Day Fund

Texas’ rainy day fund — more formally known as the Economic Stabilization Fund (ESF) — is generated largely by oil and gas production taxes.

  • If the state’s annual oil and/or gas production tax collections exceed those collected in fiscal 1987, 75 percent of the amount above that level is transferred to the ESF.
  • The rainy day fund also receives half of any surplus general revenue at the end of each biennium that is not reserved for a specific purpose. It also retains interest earned on its fund balance.
  • The Legislature also may make direct appropriations to the ESF, but has never done so.

Appropriations from the fund to close a budget deficit caused by declining revenues require three-fifths approval by legislators. All other appropriations would require a two-thirds majority vote.

The Legislature has made monetary appropriations from the ESF six times, all by a two-thirds vote.

Most recently, the 82nd Legislature, faced with a revenue shortfall during the recent recession, appropriated the $3.2 billion in fiscal 2011 from the economic stabilization fund to cover previously authorized expenditures. Including transfers to the fund in November 2011, the balance at the close of fiscal 2012 was $6.13 billion.

On Nov. 29, 2012 the Legislature transferred $1.88 billion to the ESF, increasing the balance of the rainy day fund to about $8.02 billion, its highest balance since the fund’s establishment in 1988.

State of Texas Cash Flow Revenue
Examine the detailed State of Texas Annual Cash Report 2012 and CASH reports from previous fiscal years.

Posted January 22, 2013