Federal aid is allocated to states for a variety of purposes. After the federal government generates revenue from taxes, it is redistributed to the states based on need. Not all states benefit equally from this redistribution. Federal aid is distributed to states for transportation, public education, Medicaid, community development, and other programs vital to residents.
States that receive more federal aid tend to have poorer populations, lower tax revenues, and have more assistance programs such as Medicaid. States with higher income residents tend to receive less federal aid. Federal aid can be allocated in the form of competitive grants, which are likely to fluctuate from year to year. Federal aid is also awarded from formula grants that incorporate population and poverty statistics. California receives the highest total amount of federal funding at $43.61 billion. California, however, only receives net federal funding of $12 per resident.
The ten states with the highest total federal funding are:
Net federal funding per resident is the amount that a state received per capita from the government minus the amount that residents and organizations paid the government per capita. Virginia has the highest net federal funding per resident at $10,301 per resident. Unlike the previously mentioned trend, Virginia receives disproportionately high federal aid despite being one of the U.S.'s wealthier states. This could be attributed to their large defense contracting sectors. On the opposite end, some states have negative net federal funding. These states have paid to the federal government in taxes more than they receive back in aid. New Jersey has the largest negative net federal funding of -$2,368 per resident, followed by Massachusetts with -$2,343 per resident.
The ten states with the lowest net federal funding per resident are: