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Planning for Tomorrow: Challenges States Face in Forecasting Long-Term Expenditures

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The Government Finance Research Center at the University of Illinois Chicago conducted an analysis of the challenges that states face in producing long-term expenditure forecasts, as commissioned by The Pew Charitable Trusts. Nationally, 30 states publish these forecasts, while the remaining 20 exhibit variation in their financial planning practices. The research, which relied on collecting information through interviews, began with a state typology that accounted for characteristics associated with expenditure forecasting challenges. The typology used variables anchored in a review of academic papers, technical reports, and other relevant materials, to produce eight clusters of states. Interviews were conducted with a representative of each of the eight groupings where the researchers aimed to learn about the forecasting challenges associated with the process, budget components, policy changes, spending frequency, economic conditions, structural changes to the economy, and structural balance.

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