Nearly two weeks after the June 30 deadline, the Pennsylvania General Assembly reached a budget deal. Along with the General Appropriations Act, there was an omnibus Fiscal Code bill (budget implementation) and Public School Code bill, which laid out policies and directed funding to particular initiatives agreed to by both chambers and the Governor. Of note, issues such as regulating skill games, legalizing recreational marijuana, and increasing the minimum wage, were not part of the agreement.
General Appropriations Act – HB 2400 (Harris, D-Philadelphia)
The FY 2026-2027 budget spends $50.8 billion, which is a $1.8 billion (3.7%) increase from last year’s budget. It’s $1.1 billion less than what Governor Shapiro proposed in his budget address in February.
The budget relies on managed care payment cycle rolls that reduce state spending by $1.3 billion a year for FY 2025-26 and FY 2026-27. Each year, managed care payments for May and June will be delayed until July. Beginning in FY 2027-2028, 12 months of managed care payments will be made, with rates adjusted to cover any interest costs related to payment cycle rolls.
There is an additional $300 million (46.2% increase) taken from the Motor License Fund (MLF) for highway and safety improvements, bringing the total to $950 million. There’s also a $125 million (50%) increase transfer from the MLF to support the State Police.
Other notable budget items can be found below.
Education
- $565 million for adequacy and equity funding.
- $125 million for public school improvements.
- $100 million for school safety and school-based mental health support.
- $78.1 million increase to reduce long-term facilities debt at Pennsylvania State System of Higher Education schools.
- $58 million (0.7%) increase for basic education.
- $50 million (3.6%) increase for special education.
- $41 million (9.1%) increase for early intervention.
- $10 million (6.9%) increase for career and technical education.
- $10 million (33.3%) increase for the Student Teacher Stipend Program.
- $10 million (31%) increase for the Grow PA Scholarship Program.
Health & human services
- $615.2 million (7%) increase for Medical Assistance (MA) managed care program.
- $188.6 million increase ($107.6 million in federal funds and $81 million in state funds) due to the Budget Adjustment Factor floor for nursing homes.
- $78.2 million (11%) increase for MA fee-for-service program.
- $76.9 million (2.8%) increase for the Intellectual Disabilities Community Waiver Program.
- $50 million (3.3%) increase for child county welfare services.
- $12 million (98.6% increase for the rape crisis services.
- $10 million increase for the 988 network for mental health services.
- $7.3 million increase for the Criminal Justice Diversion and Discharge Program.
- $5 million increase for walk-in stabilization centers.
- $5 million (20%) increase for the Child Care Recruitment and Retention Program.
Fiscal Code – SB 146 (Baker, R-Luzerne)
General
- Increases the time period for a child care provider to pay a retention bonus to its staff members under the Child Care Staff Recruitment and Retention Program.
- Provides for allowable mode of operations for licensed cigarette stamping agents.
- Provides for the use of food processing residuals.
- Allows the city of Pittsburgh to levy a local services tax.
- Provides for deep well and Utica Shale permits and well plugging requirements.
- Caps the Manufacturing and Investment Tax Credit at $12 million annually.
- Establishes the Innovate in PA 2.0 Tax Credit, providing up to $15 million annually to support life sciences and biotechnology startups, workforce development partnerships, regional venture studios, and programs that leverage federal research and technology funding.
- Allows the PA Turnpike Commission to use Design Build Best Value procurement for the construction and design of roads and bridges.
- Establishes an additional Keystone Opportunity Expansion Zone (KOEZ) in Philadelphia for shipbuilding and one in Bucks County.
- Provides for a Residential Revitalization Keystone Opportunity Zone.
- Establishes a grant program for law enforcement agencies to improve clearance rates of homicides and other violent crimes.
- Increases the amount of loans available to fire and EMS companies and extends the repayment period.
- Changes the source of funding for Payment-in-Lieu-of-Taxes (PILOTS) annual charges related to real property owned by Commonwealth agencies.
- Extends the expiration date for the Multimodal Transportation Fund Grant Program local match waiver through December 31, 2027.
- Allows the General Assembly to appropriate any unexpended, unencumbered or uncommitted funds available in the State Gaming Fund, after the transfer of funds to the Property Tax Relief Fund has occurred.
- Provides a special ad hoc postretirement adjustment for qualifying retired police and firefighters and for supplemental annuities (cost-of-living adjustments) for eligible beneficiaries of the Public School Employees’ Retirement System (PSERS) and the State Employees’ Retirement System (SERS) who retired prior to July 2, 2001. Payments made via a decrease in interactive gaming tax revenue used for the Commonwealth Financing Authority’s Local Share Assessment Program.
- Requires data centers, with a peak capacity demand of more than 10 megawatts, to submit annual reports related to their energy and water usage.
- Requires transmission siting applicants to evaluate the implementation of Advanced Transmission Technologies (ATTs) when constructing new or updating existing transmission lines.
- Provides that a municipality cannot impose an amusement tax on complimentary or resort-sponsored admission to resort places of amusement provided by the resort to overnight guests without a separate charge for the amusement admission.
- For Philadelphia and Pittsburgh, provides that the local of a retail sale is the same as the location used for the sales and use tax, unless a different rule applies.
- Changes how net income is calculated for the purposes of determining business privilege tax liability in Philadelphia.
Health & human services
- Extends the Revenue Adjustment Neutrality Factor for the nursing home rate setting process until June 30, 2028.
- Revises the calculation requirements used to determine whether a nursing home has 70% of its reported total costs in resident care cost and other resident-related costs and extends the authorization date to enforce penalties until December 31, 2031.
- Requires DHS and its Independent Enrollment Broker to provide additional education materials regarding Living Independence for the Elderly (LIFE) program.
- Requires DHS to transition to chip-enabled access cards for the Supplemental Nutrition Assistance Program (SNAP).
- Establishes a reentry program under the MA program for recipients who are incarcerated.
- Provides that court-appointed special advocates and related organizations are eligible to apply for grants from the Children’s Trust Fund.
- Provides that a pharmacy benefit manager or pharmacy benefit administrator that terminated a contract or disenrolled shall authorize the pharmacy to reapply or be included in the network when 12 months lapsed and the pharmacy is qualified to participate and is enrolled in the MA program.
- Establishes a Veterans’ Trust Fund Board.
- Provides funding through the Professional Licensure Augmentation Account for the licensure of nurse-midwives and certified midwives by the State Board of Medicine.
Funding
- Provides an itemization of up to $234.9 million from the Gaming Economic Development and Tourism Fund to the Pennsylvania Convention Center.
- $100 million for the Public School Facility Improvement Grant Program.
- Up to $96.8 million in unexpended, unencumbered, and uncommitted funds from FY 2025-2026 to be transferred to the Enterprise and Technology Restricted Account.
- Provides for $25 million for the Solar for Schools Grant Program and makes changes to the program.
- Suspends the $15 million transfer from the Judicial Computer System to the School Safety and Security Fund through FY 2028-2029.
- Directs the Pennsylvania Housing Finance Agency (PHFA) to use remaining COVID funds to projects that meet certain requirements relating to housing and transfers $11.7 million to the Department of Corrections.
- $5 million for grants to municipalities for the installation and maintenance of traffic signal technologies.
- $2.5 million for the Nursing Shortage Assistance Grant Program.
Transfers
- $580 million from special funds, special funds designated as trust funds, and restricted accounts to the General Fund.
- $115.6 million from the Unemployment Compensation Contribution Fund to the Service and Infrastructure Improvement Fund.
- $114.3 million to the Tobacco Settlement Fund and for the use of funds.
- Prevents the transfer of $113.8 million from the General Fund to the Rainy Day Fund.
- $16.3 million from the PA Race Horse Development Fund to the State Racing Fund for the enforcement of equine medication rules testing.
- $14.3 million from the Joint Underwriting Association to the General Fund.
Public School Code – HB 1505 (Hanbidge, D-Montgomery)
Funding
- Provides for the distribution of $565 million through the Ready to Learn Block Grant.
- Provides for $277.3 million to community colleges.
- Distributes $75.5 million to public libraries.
- Authorizes the use of $8.3 million from the School Safety and Security Fund for training purposes.
- Provides a total of $8 million in supplemental basic education funding payments to the following school districts: Morrisville Borough, Muhlenberg, Whitehall-Coplay, and Steelton-Highspire.
- Allows for the use of up to $7 million to assist schools in financial distress or identified for financial watch status.
- Provides $5 million annually in special education funding to the Philadelphia School District to brick-and-mortar charter schools.
- Provides for $750,000 to assist residential, licensed private academic schools with tuition costs when a student is placed in the school by a court or agency and a school district of residence was unable to be determined for the 2025-2026 school year.
Basic Education
- Directs the Legislative Budget and Finance Committee to study the use of standardized tests, higher education assessments, and federal accountability requirements.
- Changes the threshold for a school entity to implement an action plan for lead contaminated drinking water.
- Requires the Department of Education (PDE) to create an inventory of public school facilities.
- Extends the classroom monitor permit for three years until June 30, 2029.
- Clarifies the definition of “professional educator” and “school or system leader” as it pertains to professional education.
- Allows an educator certified in another state to satisfy requirements for continuing professional education using credits approved in another state.
- Clarifies that a student may only receive an absence as a consequence for failure to complete a weekly benchmark.
- Requires a school district cyber school to conduct student wellness checks.
- Provides for truancy procedures.
- Requires school entities to adopt a policy relating to cyberbullying.
- Establishes criteria for school mapping.
- Provides for the collection of a student’s height and weight information for growth pattern tracking, calculation of body mass index, and reporting.
- Requires school entities to provide information regarding eating disorder awareness for students grades 6-12.
- Allows a school district to use funds for implementing later school start times.
- Requires PDE to collect information from school entities on flexible instruction days.
- Requires at least 30 minutes of recess for students in grades K-5.
- Extends the personal financial literacy requirement to all school entities and allows advanced coursework to satisfy the requirement.
- Requires standards adopted by the State Board of Education to include social media safety and the impacts of social media and mobile device usage.
- Allows intermediate units to serve as eligible providers under the Pre-K Counts program and provides for the number of days/hours of instruction.
- Requires PDE’s report on the consolidation of Duquesne City School District to be submitted by March 31, 2027.
- Extends the Disability Inclusive Curriculum Pilot Program for two additional years.
- Amends cyber charter school wellness check requirements.
- Reduces the proof of residency requirement for cyber charter schools to once a year.
- Allows PDE to waive the requirement that career and technical education programs conclude in 12th
Higher Education
- Allows Thaddeus Stevens College to establish applied science degrees.
- Makes changes to the Grow PA Tuition Waiver Program and Grow PA Scholarship Program.
- Increase the annual household income limit and maximum scholarship award for the Ready to Succeed Scholarship Program.
