Governor Wolf’s Proposed FY 2021-22: What it Means for Pennsylvania Kids and Families
Governor Tom Wolf gave his seventh and next-to-last budget address virtually amid the COVID-19 pandemic on Wednesday, February 4, 2021. In addition to the change in presentation, the governor utilized an unexpected approach to the FY 2021-22 proposal in advancing a bold plan seeking to raise revenues and dramatically increase spending on education. The tone was reminiscent of the governor’s first years in office that brought protracted budget impasses with the legislature over policy disagreements as opposed to more recent years, which have featured a more measured, incremental tenor.
Leaders from both chambers of the Republican majority responded quickly and negatively to the proposal, leading many to believe the proposal is unlikely to gain traction with the General Assembly in the coming months. With the plan being education-focused while offering less emphasis on other areas of the budget such as human services, given the plan to generate revenue from an increase in the Personal Income Tax (PIT), Republican members and some advocates raised issues with either their aversion to raising taxes or that not enough focus was placed on addressing the ongoing pandemic.
The pandemic has also exacerbated Pennsylvania’s ongoing budget deficits, which has been addressed in previous years with accounting maneuvers such as delayed payments and account transfers. Left with few choices and the unpopular option of making cuts, Gov. Wolf’s proposal opts to address the deficit by funding education priorities with a mix of revenue increases, most notably to the PIT – from 3.07% to 4.49% – effective July 1, 2021. The proposed increase in the PIT is paired with an expansion of the special tax forgiveness credit including: an increase to $15,000 for single filers, $30,000 for married filers, and a $10,000 allowance for each dependent. These changes would generate just under $3 billion in revenue; however, critics have labeled the proposal unconstitutional due to the state’s uniformity clause, as well as being billed as the largest tax increase in the state’s history by fiscal conservatives.
The total spending figure for the 2021-22 budget proposal is $37.8 billion. This represents an increase from the FY 2020-21 budget of $3.7 billion, or an 11% increase. The governor’s proposal is one of the largest, if not the largest increases offered in an annual budget proposal. The following sections will cover policy areas of priority to kids and families in the Commonwealth.
Children’s Investments in the Proposed FY 2021-22 Pennsylvania Budget
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Basic and Special Education
The proposed budget includes an increase of $567.3 million for K-12 education through the Basic Education Funding Formula, about an 8% increase over last year. There is no specific line-item funding for the Level-Up Initiative, which targets funds to the state’s 100 poorest school districts in the previous two budgets. Gov. Shapiro calls for an additional $103.8 million for Special Education.
Career and Technical Education
A bright spot in the budget proposal is an almost $24 million increase for career and technical education (CTE). Gov. Shapiro included an additional $14 million in the Career and Technical Education Subsidy line, which in part includes $3 million to cover enrollment growth and $4 million to increase the subsidy rate. The remaining $7 million increase is for developing additional CTE programs ($5 million) and attracting more industry professionals to the classroom ($2 million). PPC is pleased with the additional $3.3 million for the Career and Technical Education Equipment Grant Line, an increase of 60%. Additional funding is in the proposal to support job training and apprenticeship programs.
Other Initiatives: School Safety, Environmental Repairs, Mental Health and Nutrition
The budget seeks to build upon previous investments by the Wolf Administration for school safety by proposing an additional $100 million for school safety and security grants. Priorities of the previous administration are in the proposed $100 million initiative for matching school environmental repairs and improvements grants. If enacted, this would be the first new state school facility funding for new projects since the PlanCon moratorium in 2016.
Another $100 million increase is to create a school-based mental health support block grant. With this new grant structure, the previous $100 million earmark within the Ready to Learn Block Grant for mental health grants is discontinued.
The proposal includes a $38.5 million increase for universal free breakfast and expanded eligibility for free school lunch. Continuing the free school breakfast program will help children reach their full potential, as research shows that having a nutritious breakfast promotes better academic performance. PPC is pleased with the inclusion of these funds and the expansion of the free lunch program.
Pre-k
The budget proposal includes an increase of $32.7 million for pre-k programs: $30 million for Pre-K Counts and $2.7 million for the Head Start Supplemental Assistance Program (HSSAP). The proposed increase for Pre-K Counts will increase the rate for full-time students to $11,000 (up from $10,000) and part-time students to $5,500 (up from $5,000). Increased rates for pre-k programs will help support the early care and education workforce and ease inflationary costs for providers.
Child Care
The proposal includes an increase of $66.7 million in the Child Care Services line to allow up to 75,000 low-income Pennsylvania families to continue to be enrolled in subsidized child care through the Child Care Works Program. This increase builds on previous investments to ensure that Child Care Works reimbursements meet or exceed subsidy rate payments to providers at 60 percent of child care facilities. The proposal falls short of the goals advanced by the Start Strong PA campaign, which included initiatives to address the child care workforce and improve access and quality.
Home Visiting
Following last year’s historic budget increase for evidence-based home visiting, we appreciate the sustained funding levels in the 2023-24 budget proposal for the Community-Based Family Center line item. A proposed $25,000 state funding increase will maintain funding levels for the Nurse-Family Partnership budget line, impacted during the pandemic with shifts in funding from increased federal FMAP rates. This small adjustment is simply making the line item whole again. Last year’s competitive rebid of home visiting grant funding saw two new evidence-based home visiting models added to the previous group of six models. There is still a significant unmet need for services, with only 5% of eligible pregnant women, young children and families currently receiving them. PPC acknowledges increasing access must happen in a way that home visiting programs can effectively implement.
Early Intervention
The budget proposal includes an increase of $20.2 million for the Early Intervention Part C (infants and toddlers) program in the DHS budget. The Early Intervention Part B (age three to five) program in the PDE budget includes a proposed increase of $10.4 million to improve well-being, health and educational outcomes. This funding increase will serve an estimated 2,000 additional children to improve their well-being and decrease future special education costs.
Medicaid and CHIP funding
Gov. Shapiro’s first budget proposal appears to include a $23 million budgetary decrease for CHIP, a 26.5% decrease from last year. The COVID-19 pandemic and Public Health Emergency-linked Medicaid disenrollment freeze caused the number of children enrolled in CHIP to drop from over 187,000 to less than 130,000 in 2022. DHS is committed to taking the full 12 months to complete all necessary Medicaid redeterminations, so increased funding for CHIP is expected in future budgets.
The proposed Medical Assistance capitation line item includes a $952 million increase to cover the cost of Medicaid redeterminations starting April 1st. Much of this funding will cover the COVID-enhanced Federal Medical Assistance Percentage (FMAP) funding ramp-down. The federal Consolidated Appropriations Act of 2022 unlinked the public health emergency from the Medicaid disenrollment freeze, set the start of the unwinding process for April 1st, and created a gradual down ramp for enhanced FMAP to relieve the funding burden for states. DHS estimates a net savings of $385 million for the Medicaid program once all redeterminations are processed.
Special Supplemental Nutrition Program for Women, Infants, and Children (WIC)
In the Department of Health, federal funding noted in the WIC budget was $277.9 million, down about $309,000, mainly attributable to lower enrollment numbers. This funding connects women and children to nutritious food and nutrition counseling services. WIC is a vital part of Thriving PA, where PPC and our partners work with the administration to modernize the system and increase participation. See our county fact sheets highlighting WIC enrollment data and policy recommendations.
Separate from nutrition but also in the Department of Health budget, there is a $2.3 million proposed increase to expand Maternal Health Programing, implementing strategies outlined by the Maternal Mortality Review Committee (MMRC).
Child Welfare
The child welfare budget proposal provides a .7% increase with an additional $10 million in state investments. This increase would keep the County Child Welfare line item under $1.5 billion.
Basic and Special Education
The proposed budget includes an increase of $567.3 million for K-12 education through the Basic Education Funding Formula, about an 8% increase over last year. There is no specific line-item funding for the Level-Up Initiative, which targets funds to the state’s 100 poorest school districts in the previous two budgets. Gov. Shapiro calls for an additional $103.8 million for Special Education.
Career and Technical Education
A bright spot in the budget proposal is an almost $24 million increase for career and technical education (CTE). Gov. Shapiro included an additional $14 million in the Career and Technical Education Subsidy line, which in part includes $3 million to cover enrollment growth and $4 million to increase the subsidy rate. The remaining $7 million increase is for developing additional CTE programs ($5 million) and attracting more industry professionals to the classroom ($2 million). PPC is pleased with the additional $3.3 million for the Career and Technical Education Equipment Grant Line, an increase of 60%. Additional funding is in the proposal to support job training and apprenticeship programs.
Other Initiatives: School Safety, Environmental Repairs, Mental Health and Nutrition
The budget seeks to build upon previous investments by the Wolf Administration for school safety by proposing an additional $100 million for school safety and security grants. Priorities of the previous administration are in the proposed $100 million initiative for matching school environmental repairs and improvements grants. If enacted, this would be the first new state school facility funding for new projects since the PlanCon moratorium in 2016.
Another $100 million increase is to create a school-based mental health support block grant. With this new grant structure, the previous $100 million earmark within the Ready to Learn Block Grant for mental health grants is discontinued.
The proposal includes a $38.5 million increase for universal free breakfast and expanded eligibility for free school lunch. Continuing the free school breakfast program will help children reach their full potential, as research shows that having a nutritious breakfast promotes better academic performance. PPC is pleased with the inclusion of these funds and the expansion of the free lunch program.
Pre-k
The budget proposal includes an increase of $32.7 million for pre-k programs: $30 million for Pre-K Counts and $2.7 million for the Head Start Supplemental Assistance Program (HSSAP). The proposed increase for Pre-K Counts will increase the rate for full-time students to $11,000 (up from $10,000) and part-time students to $5,500 (up from $5,000). Increased rates for pre-k programs will help support the early care and education workforce and ease inflationary costs for providers.
Child Care
The proposal includes an increase of $66.7 million in the Child Care Services line to allow up to 75,000 low-income Pennsylvania families to continue to be enrolled in subsidized child care through the Child Care Works Program. This increase builds on previous investments to ensure that Child Care Works reimbursements meet or exceed subsidy rate payments to providers at 60 percent of child care facilities. The proposal falls short of the goals advanced by the Start Strong PA campaign, which included initiatives to address the child care workforce and improve access and quality.
Home Visiting
Following last year’s historic budget increase for evidence-based home visiting, we appreciate the sustained funding levels in the 2023-24 budget proposal for the Community-Based Family Center line item. A proposed $25,000 state funding increase will maintain funding levels for the Nurse-Family Partnership budget line, impacted during the pandemic with shifts in funding from increased federal FMAP rates. This small adjustment is simply making the line item whole again. Last year’s competitive rebid of home visiting grant funding saw two new evidence-based home visiting models added to the previous group of six models. There is still a significant unmet need for services, with only 5% of eligible pregnant women, young children and families currently receiving them. PPC acknowledges increasing access must happen in a way that home visiting programs can effectively implement.
Early Intervention
The budget proposal includes an increase of $20.2 million for the Early Intervention Part C (infants and toddlers) program in the DHS budget. The Early Intervention Part B (age three to five) program in the PDE budget includes a proposed increase of $10.4 million to improve well-being, health and educational outcomes. This funding increase will serve an estimated 2,000 additional children to improve their well-being and decrease future special education costs.
Medicaid and CHIP funding
Gov. Shapiro’s first budget proposal appears to include a $23 million budgetary decrease for CHIP, a 26.5% decrease from last year. The COVID-19 pandemic and Public Health Emergency-linked Medicaid disenrollment freeze caused the number of children enrolled in CHIP to drop from over 187,000 to less than 130,000 in 2022. DHS is committed to taking the full 12 months to complete all necessary Medicaid redeterminations, so increased funding for CHIP is expected in future budgets.
The proposed Medical Assistance capitation line item includes a $952 million increase to cover the cost of Medicaid redeterminations starting April 1st. Much of this funding will cover the COVID-enhanced Federal Medical Assistance Percentage (FMAP) funding ramp-down. The federal Consolidated Appropriations Act of 2022 unlinked the public health emergency from the Medicaid disenrollment freeze, set the start of the unwinding process for April 1st, and created a gradual down ramp for enhanced FMAP to relieve the funding burden for states. DHS estimates a net savings of $385 million for the Medicaid program once all redeterminations are processed.
Special Supplemental Nutrition Program for Women, Infants, and Children (WIC)
In the Department of Health, federal funding noted in the WIC budget was $277.9 million, down about $309,000, mainly attributable to lower enrollment numbers. This funding connects women and children to nutritious food and nutrition counseling services. WIC is a vital part of Thriving PA, where PPC and our partners work with the administration to modernize the system and increase participation. See our county fact sheets highlighting WIC enrollment data and policy recommendations.
Separate from nutrition but also in the Department of Health budget, there is a $2.3 million proposed increase to expand Maternal Health Programing, implementing strategies outlined by the Maternal Mortality Review Committee (MMRC).
Child Welfare
The child welfare budget proposal provides a .7% increase with an additional $10 million in state investments. This increase would keep the County Child Welfare line item under $1.5 billion.