It all seems pretty straightforward though, federal dollars in versus federal dollars out.
Each year the Census Bureau releases the Consolidated Federal Funds Report, which estimates the amount of federal spending in each state and territory during the prior fiscal year. The latest report allocates approximately 92 percent of total FY 2005 federal spending. The 8 percent not allocated includes net interest outlays, foreign aid, and other outlays that are not allocable to the states. For the purposes of this report, the Tax Foundation uses this census data as is.