Wednesday, March 9, 2011

Change to "Guesstimated" State and Local Spending

Up to now, the "guesstimated" state and local spending for years after the latest US Census Bureau report on State and Local Government Finances has been a simple projection of the change between the last two reported years. If, e.g., education spending increased by 5% between 2007 and 2008 we have constructed an education spending value for all future years by increasing each year by five percent.
Effective immediately we are changing the "guesstimated" method. The new method assumes that state and local spending and revenue in the next few years will trend back towards the average value recorded in the recent past, expressed as a percent of GDP (or GSP).
Here is the new method for computing "guesstimated" spending for all states combined and for each individual state.

  1. Establish a five year Reference Period. At present the last year for which state spending is available is 2009, so the reference period is 2005 through 2009. (UPDATE 1/23/14: Reference period is now 2011 to 2012)
  2. For each spending and revenue item calculate an average value for the Reference Period as percent of GDP for a combined state or local value, or as percent of Gross State Project (GSP) for individual states.
  3. Compute a Projected Value (e.g., for 2010) that would continue the percentage change for the latest two years (2008 and 2009) for each spending or revenue item.
  4. Compute a Revert-to-mean Value (e.g., for 2010) that would return the spending or revenue item to the average calculated for the Reference Period as percent of projected GDP for the US or state GSP for the year.
  5. Calculate and save in the database (e.g., for 2010) a Mean Value for the spending/revenue item that is half way between the Projected Value and the Revert-to-mean Value.
  6. Repeat procedure for all spending and revenue items.
  7. Compute total spending and total revenue from new values for 2010.
  8. Repeat for other states.

The projected value for US GDP is the value for each year from Table 10.1 in the Historical Tables of the federal budget. The projected value for each state GSP is computed by applying the change in federal GDP growth rate to the last year's state GSP and then moving the state GSP growth rate towards the federal growth rate by 40 percent of the difference between the state and the federal growth rate.
The "guesstimated" value for state and local revenue code "X08 Employee Retirement - Earnings on Investments" is too volatile to be "guesstimated" using this method. It is computed by changing the latest year's value by 60 percent of the difference between the latest year's value and the average value for the Reference Period. This value, for all states combined, was a $500 billion loss in 2009. This method reverts "X08" to a substantial gain in 2010 and future years. (UPDATE: 1/23/14: X08 is now computed like other items)



12 comments:

  1. fed. education programs are a waist !!!! children are more lack of knollage today than yesterday. leave our taxes alone and let us solve our own problems!!!!!!!

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    1. If states and local school districts aren't solving the problems do we just give up? Almost all of the taxes and spending is still local not from the Feds.

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    2. Anyone that spells "knowledge" as knollage shouldn't be left alone to solve their own problems.

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    3. There are far more problems with that comment than the spelling of knowledge lol!

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    4. I smell a rat. No one would say "children are more lack of knollage" and proceed to spell "than" correctly. I wonder if this might be a leftist troll posing as an uneducated right-winger to try and make the right seem like a bunch of idiots.

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    5. Perhaps if you had more federally subsidized education, you would know how to post on a website without appearing so uneducated. A grammar book could be your friend if you would just give it a try!

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    6. The right *are* a bunch of idiots, you're being quite creatively delusional to suggest the poster is a lefty trying to make the rest of you look bad. Oreilly & Co. already to a good enough job of that ;)

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  2. Learn to spell your own language correctly, Mary! Perhaps then people will take your complaints about the government more seriously.

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  3. I agree with Mary's comment. We need more education and her comment proves this.

    Wait, she was advocating to remove federal education programs?

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  4. This posting is beautifully explained regards the topic and thanks to u for posting this information and the way it explain clearly is so nice. Hopefully it must be very necessay for people and help them......

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  5. It would be nice if your could show how well your 'guestimate' approach has worked in the past. E.g. how does years 2004-2008 predict 2009 compared to 2009 actuals ?

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  6. it has nothing to do with guesstimates or "intimates" or anything else.welfare sets standards for amounts they can help their clients with[for example telephone,rent,personal allowance....]you have to sign up at a social services agency,or send in a blank application by mail and wait forsomething to happen.thsy have lists of doctors and dentisits that accept welfare clients,also stores that will serve welfare clients[ex.walmart,tops[new store hamilton st old t&c plaza ]and other stores in the area.i guess some of these people are trying to impress new young minds that money comes from them,or we make it in bed,but that is not the truth.geneva ny

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