Final answer:
The largest portion of a state's budget is typically allocated to public education, which includes spending on elementary, secondary, and university education, with education accounting for about one-third of total state and local government spending. Hence, option (C) is correct.
Step-by-step explanation:
In examining which constitutes the largest portion of a state's budget, the available data suggests that public education typically accounts for the most significant expense. According to recent figures, education accounts for about one-third of total state and local government spending. This includes spending at both the university and more significantly, the elementary and secondary levels.
On the other hand, while states do allocate a considerable amount of funds to public welfare programs, such as health care and income support, and local governments spend more on utilities, housing, and public safety like police and fire protection, these do not surpass educational expenditures.