Copyright © 2015 Wolters Kluwer Health, Inc. All rights reserved. Context: State health departments across the country are responsible for assuring and improving the health of the public, and yet financial constraints grow only more acute, and resource allocation decisions become even more challenging. Little empirical evidence exists regarding how officials working in state health departments make these tough allocation decisions. Design: Through a mixed-methods process, we attempted to address this gap in knowledge and characterize issues of resource allocation at state health agencies (SHAs). First, we conducted 45 semistructured interviews across 6 states. Next, a Web-based survey was sent to 355 public health leaders within all states and District of Columbia. In total, 207 leaders responded to the survey (66% response rate). Participants: Leaders of SHAs. Results: The data suggest that state public health leaders are highly consultative internally while making resource allocation decisions, but they also frequently engage with the governor's office and the legislature-much more so at the executive level than at the division director level. Respondents reported that increasing and decreasing funding for certain activities occur frequently and have a moderate impact on the agency or division budget. Agencies continue to "thin the soup," or prefer cutting broadly to cutting deeply. Conclusions: Public health leaders report facing significant tradeoffs in the course of priority-setting. The authorizing environment continues to force public health leaders to make challenging tradeoffs between unmet need and political considerations, and among vulnerable groups.