You are confusing Regex with Glob patterns. It is important to understand the difference. For example, Jest's testMatch takes a Glob, while testRegex takes a regex.
testPathIgnorePatterns expects Regex, not Glob. f/*/ as a Glob pattern would match a child dir of f, but as a Regex it matches f followed by zero or more / followed by a /, e.g. "f//////".
So you need to figure out the Regex for matching a child dir in a path.
(.*)+ makes no sense at all as a Regex. It means "one or more of (zero or more of any character) . It makes no sense logically to combine * and + like that. Use .* or .+, not both together.
Your next problem is the use of . because it matches any character, including /. Which means .* will match EVERYTHING to the end of the string. It won't stop at the first /, which is obviously what you want.
So you need to think: How do I match a sequence of chars that would be the child directory name, and have it stop at the first /? That would be [^/]+, or in full context:
"<rootDir>/src/app/setup-config/[^/]+/.*state.*"
This should do the trick.
ℹ️ Technically [^/]+ would also match .. (parent dir) and . (same dir) path tokens, and thus is not guaranteed to match only child directories. I doubt Jest would test such paths against this Regex, so I think you should be fine.
This Regex may still have another problem: .*state.*. You stated that
"I am trying to skip all "state" named folder(s)"
I'm not exactly sure what that means. All folders with the word "state" in them? What if the test file name (not dir name) at the end of the path includes the word "state"? Should it be excluded too? Because this pattern exclude any path included the word "state" anywhere (below the child directory we matched in the previous pattern). Since you were unclear about this, I'm going to assume it won't be a problem.
Feel free to let me know.