Your Guide to Navigating the Federal Budget Process

The annual process of funding the government is a monumental task, and staying on top of the many moving parts can be complicated and time intensive. To help you make sense of how the federal budget is determined, we break down the theoretical timeline, explain the significance of each step, and highlight how details of the federal budget impact state budgets.


Medicaid falls under mandatory spending, as do programs such as Temporary Assistance for Needy Families (TANF), SNAP, adoption and foster care programs, and child nutrition programs that provide meals to low-income students in school. Examples of discretionary funding to states include Title I funds for high-poverty schools, Head Start, and public safety grants.

Unlike the federal government, states have balanced budget requirements. This means uncertainty or a delay in the federal budget can have significant consequences for states, given how much of their revenue depends on federal funds. For example, Covid-19 placed an unexpected strain on state finances as they grappled with the economic fallout of the pandemic. This caused declines in state revenues that needed to be balanced by more federal aid, and/or spending cuts.

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