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Fitch expects this slow revenue trend will continue over the medium term as crude oil and natural gas prices are expected to remain subdued. Expenditure Framework As in most states, education and health and human services spending are Oklahoma's largest operating expenses. Education is the larger line item, as the state provides significant funding for local school districts and the public university and college system. Health and human services spending is the second largest area of spending, with Medicaid being the primary driver. Fitch expects that spending growth, absent policy actions, will be ahead of natural revenue growth, driven primarily by Medicaid, and require regular budget adjustments to ensure ongoing balance. The fiscal challenge of Medicaid is common to all U.S. states and the nature of the program as well as federal government rules limit the states' options in managing the pace of spending growth. In other major areas of spending such as education, Oklahoma is able to more easily adjust the trajectory of growth.
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