Jul 16 Final PA Budget 2026-2027

Jul 16h in Bold Voices by

(July 16, 2026)

On July 12, twelve days after the June 30 deadline, the General Assembly approved and sent to the Governor a final budget for FY 2026-2027. The enacted budget is a 1.4% increase over last year’s budget and includes some bright spots for children and families. Specific details are below.

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Education & Lifelong Success
Family & Community Supports
Health & Wellness

Education & Lifelong Success

For the third year in a row, the budget allocates $565 million in adequacy supplement to support the most vulnerable school districts. The budget continues to invest in K-12 education by providing modest increases for Basic Education Funding (the largest source of K-12 funding), special education, and career and technical education. Unfortunately, while a small increase was proposed in the Governor’s budget, the final budget flat funded the Building Opportunities for Out of School Time program (BOOST). Level funding was also allocated for Mental Health and School Security.

Specific allocations include:

  • K-12 funding: total increase of over $623 million
  • Ready to Learn Block Grant: $565 million as the third consecutive adequacy investment
  • Basic Education Funding Formula: $58 million increase
  • Special Education: $55 million increase
  • CTE: $10 million increase for the CTE subsidy program, and the CTE Equipment Grant line was level-funded.
  • Building Opportunities for Out of School Time (BOOST): Level funding. The governor’s proposal called for a $1 million increase for out-of-school time programs.
  • Mental Health and School Security: level funding at $100 million

Accompanying the budget was a comprehensive Public School Code bill that included a study on standardized testing, truancy provisions for charter school students, wellness checks for virtual students, and a change that will allow CTE students to take the NOCTI exam prior to 12th grade if they are ready.

Family & Community Supports

The final budget included an increase for Pre-K Counts and the Head Start Supplemental Assistance Program, which is state-funded Head Start. While this amount is less than the Governor proposed, it is still an increase to help support the child care system and workforce. For additional support for the child care workforce, the budget includes the Child Care Recruitment and Retention fund for the second year in a row. For additional information on this initiative, please see this guest blog by Jen DeBell, Executive Director of PennAYEC.

Related to child welfare, the General Assembly went above the Governor’s proposal and included a $50 million increase for county child welfare needs-based budgets. The final budget also includes Governor Shapiro’s proposed $658,000 investment in ChildLine.

For Evidenced-Based Home Visiting, the Community-Based Family Centers were level-funded while the Nurse-Family Partnership had a small reduction due to changes in federal matching rates.

Specific allocations include:

  • Pre-K Counts: $3.75 million increase
  • Head Start Supplemental Assistance Program: $1.04 million increase
  • Child Care: Child Care Assistance received a $1.13 million increase, Child Care Services received level funding, and the Child Care Staff Recruitment and Retention Program received a $5 million increase
  • Child Welfare: county child welfare budget line contained a $50 million increase

Health & Wellness

Mental Health
To help support those in mental health crisis, the budget included increases for mental health services. Allies for Children is pleased to see investments made in the 988 crisis line, diversion programs, and walk-in centers.

Specific allocations include:

  • 988 Network: $10 million increase
  • Walk-in Crisis Stabilization Centers: $5 million increase
  • Criminal Justice Diversion & Discharge Program: $7.5 million increase
  • Community Hospital Integration Projects Program (CHIPP): $3.2 million increase

In total, the Mental Health Services line item received a $41 million increase.

Nutrition
Nutrition funding for children and youth has some wins overall, with more work to be done next budget cycle in other areas. The Universal Free Breakfast program was funded at a $14.3 million increase. For the federally-funded Women Infants and Children (WIC) program, no additional state funding was included. Funding needed to backfill SNAP administrative expenses resulting from HR 1 was included in the final budget and spread across several budget lines. The Fiscal Code bill, SB 146, includes language requiring DHS to transition SNAP access cards to chip-enabled technology no later than January 1, 2028 to protect against SNAP benefit theft. Additional funding of $7 million was provided to support the transition to chip-enabled cards.

Early Intervention
The infant and toddlers early intervention program, also known as Part C, received a $5.2 million reduction in the PA Department of Human Services budget. We have learned that prior-year funds will be used to maintain current rates. However, OCDEL’s Early Intervention Rate Methodology Study found that infant and toddler rates were underfunded by more than $71 million – nearly 40% – in fiscal year 2022-23 and that deficit has continued to grow in the years since. The preschool early intervention program, also known as Part B, received an increase of $41.22 million in the PA Department of Education budget.

Medicaid and CHIP
The Children’s Health Insurance Program (CHIP) received a $5.6 million increase, which will cover an increasing number of enrolled children and provide increased rates for CHIP insurance companies.

Medical Assistance capitation received an increase of $484 million for Medicaid Managed Care Organizations (MCOs) to serve plan members. The budget also reintroduced a Medicaid MCO payment delay as a cost-saving measure. This means HealthChoices and Community HealthChoices MCOs will be paid by the state the month after services are provided to their members. The budget narrative states that the MCO payment delay will save the Commonwealth $2.6 billion over two fiscal years.

Funding for the implementation of a portion of the state’s Keystones of Health Medicaid demonstration, which was approved by the federal government at the end of the Biden Administration was added. This includes:

  • $1 million to implement housing components of the waiver, which connects medically compromised individuals with stable housing.
  • $900,000 to implement Medicaid services for individuals exiting correctional facilities.

Notably missing was funding for the food and nutrition program initiatives approved in the Keystones of Health demonstration waiver to implement the DHS Food is Medicine proposal. Governor Shapiro proposed $900,000 to fund this part of the waiver.
Also related to Medicaid and missing from the budget was the Governor’s proposed minimum wage increase. The Governor’s proposal included savings for the state’s Medicaid program due to a minimum wage increase. At this time, we have no information on how the Commonwealth will offset reductions in federal Medicaid funding, especially as we approach several key implementation dates later in 2026 and early in 2027.

Allies for Children is thankful for everyone’s advocacy during budget season. Keep an eye out for more information on ways to advocate for children and families in the coming year.

To learn more about the state budget, check out these resources: