With the flow of federal funding slowing dramatically, states will need to look to Washington for flexibility rather than dollars to meet their own budget challenges.

It could be argued that government is more transparent today than at any point in our country’s history. From the example set by the American Recovery and Reinvestment Act, state financial managers have worked to implement legislation envisioning ever greater access by citizens to government spending data. Transparency websites were first a trend for just a few states; they are now the norm. With each passing legislative session, the federal government hones its focus—and its mandates—on the concept of transparency. But how much is too much? At what point on the spectrum does the risk inherent in sharing so much financial data outweigh the potential benefits? These are not easy questions to answer. Regardless, it looks like transparency is here to stay.

In the early stages of the American Recovery and Reinvestment Act, one particular program—the $3.1 billion State Energy Program—had more than its share of controversy. Eventually, however, every state and territory accepted the money, but some have been slow to spend those funds. Now, the clock is ticking: States have until April 30 to spend their remaining balances. Multiple 

In the early stages of the Recovery Act, one particular program—the $3.1 billion State Energy Program—had more than its share of controversy. South Carolina Gov. Mark Sanford made headlines by rejecting stimulus dollars tied to the program, classifying it as fiscally unsustainable.

States have received a significant influx in federal dollars since the Great Recession began, primarily from the American Recovery and Reinvestment Act. As a result, state spending from federal funding also has increased significantly since the 2008 fiscal year, hitting 35 percent in fiscal year 2010. The amount of federal funding received per capita varies across states due to a number of factors. State spending from federal sources likely will decrease as Recovery Act dollars run out during the next few years, contributing to fiscal stress in statehouses across the country.

As states continue to feel the fiscal and economic effects of the Great Recession, the $66 billion in American Recovery and Reinvestment Act funding that remains unspent could go a long way in helping states get on the road to recovery.

According to White House data recently requested by The Council of State Governments, over $66 billion worth of funds¹ from the American Recovery and Reinvestment Act remain unspent.  While nearly 85 percent of stimulus dollars have been paid out and almost all of the remaining funds have been obligated for projects, the 15 percent left to be spent adds up to a hefty sum.  And as states continue to feel the fiscal and economic effects of the Great Recession, $66 billion could go a long way in helping states get on the road to recovery.

The Great Recession has had an unprecedented effect on state and local government employment and will continue to affect levels of employment in the coming years. John Lonski, chief economist for Moody's Capital Markets Research, told Reuters, “We are looking at the worst contraction of state and local government employment since 1981.” The loss of stimulus funds will exacerbate the downward trend in public employment, especially in education.