For Texas, the major factor in its declining ranking seems to be its rapidly growing population. Many federal funding formulas use population figures from the 1990 Census, rather than more recent population estimates, to determine states' share of federal funds. States with declining populations, such as those in the Northeast, fight changes to these formulas because they would reduce their share of federal funds. A State Policy Reports study identified a number of opportunities for states to increase their federal funding, such as outreach efforts to inform target populations of their qualification for federal programs, and expanded eligibility standards for Medicaid. Such efforts require careful study, as increased eligibility for some federal programs such as Medicaid also can raise state costs.
States also can increase federal funding by working for formula changes.
AFDC and Medicaid account for about half of all federal grants to state and local governments. These grants are based on a variety of interlinked factors, including poverty rates, state eligibility standards, and state payments for AFDC and Medicaid. The formulas used to determine these grants can be influenced by state actions while they are being drafted. During the recent national welfare and Medicaid debates, for instance, the comptroller determined that the proposed formulas were unfair to Texas and worked successfully to get them changed to be more favorable to Texas. This success should provide an incentive to seek a fairer share of all federal revenues, and serve as a basis for negotiations on future federal legislation.