No one general solution to this problem; kinda depends on your ability to think out of the box with respect to what you're selling.
For example, given your numbers and knowing zilch about what you're selling, I would possibly try an AdWords test for "ohio state fair". Most of the people searching for that term will be from Ohio, search traffic for it is going to picking up in a couple of months (you can find other seasonal events; this is just an example), and I'm pretty darn sure you can own it for a lot less than $.50/click. Maybe one-tenth that or less.
Given your stated numbers, I would sure be testing a whole lot of different ads. Sometimes a small change in wording can generate a 2x change in response, which sounds like all you need to put you over. $.50/click sounds high -- better ad copy can also get you the same position for less per click.
Create content that a) Google likes, b) offers something of use to citizens of that state, and c) is highly specific so that it can rank well without a huge amount of effort.
But really, if you're that close to breakeven just using AdWords, I would focus on improving the return and testing a wider keyword net. Sounds like you're close enough that just some persistance and exploration will do it for you.