How do US States Approach Multi‐Year Expenditure Forecasting?

Abstract In the United States, 30 states publish multi‐year expenditure forecasts, while the remaining exhibit variation in their financial planning practices. Building on the literature examining budget forecasts, this study provides insights from interviews with eight states selected using a typology from a cluster analysis. The findings indicate that states view multi‐year expenditure forecasting as a tool to guide budgetary decisions with a focus on maintenance, facilitate compliance with statutory requirements, and enable communication with stakeholders. Consistently, the uncertainty introduced by Medicaid was cited as a challenge to forecasting. Additional challenges stem from political maneuvering and the subjective nature of forecasting.