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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K-12 Education
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Early Care and Education
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Home Visiting
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Perinatal and Child Health
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Child Welfare
Basic and Special Education
The proposed budget includes a total increase of nearly $1.1 billion for K-12 education: $900 million as a "first-year adequacy investment" and $200 million to be distributed through the Basic Education Funding Formula. The adequacy investment will serve as a large influx of funds to the most underfunded schools, replacing the Level-Up Initiative that targeted funds to the state's 100 poorest school districts in recent budgets. Gov. Shapiro calls for an additional $50 million for Special Education.
Career and Technical Education
In contrast to last year's historic investment, the budget proposal contains an increase of only $2.4 million for career and technical education (CTE) through the CTE subsidy line. Gov. Shapiro did not propose any increased funds for the CTE equipment grant line. PPC feels strongly that the CTE budget lines should not be overlooked as not all students get to participate in CTE due to the lack of sustained state investments in funding to support programming.
School Food Services
The budget proposal includes a continued $38.5 million 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 that the universal free breakfast program will be maintained as we see the benefit of universal school meals. We hope future budgets contain increased funding for universal school lunches.
Other Initiatives: School Safety, Environmental Repairs, and Mental Health
The budget seeks to build upon previous investments for school safety by proposing an additional $50 million for school safety and security grants. The budget proposal also calls for $300 million in sustainable funding for environmental repair projects in school buildings. This proposed funding would seek to address environmental issues that threaten students' health, safety, and opportunity.
Another $100 million increase is to sustain the school-based mental health support block grant. This funding is set to build upon one-time federal funds used for mental health services for students and staff. Similar to last year, the proposal moves the grant program from the Pennsylvania Commission on Crime and Delinquency to the Department of Education.
Pre-k
The budget proposal includes an increase of $ 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 full-time students' rates 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 $29.3 million in the Child Care Services line to continue the Child Care Works Program and cover the minimum wage increase up to $15. This increase backfills any remaining American Rescue Plan funds utilized by the Child Care Works program in recent years. The Child Care Administration line also saw a proposed increase of $2.3 million, a portion of which would be used in conjunction with surplus federal funds to increase subsidy rates to the 75th percentile of the cost of child care services.
Home Visiting
A low point in the governor's budget proposal was the lack of funding increases that support evidence-based home visiting services. After a competitive rebid and historic funding increase two years ago, last year was utilized by home visiting programs as a "settling-in period," which did not necessitate a funding increase. This year, however, there are multiple steps the administration should have taken to ensure that services are not cut for Pennsylvania families. One-time federal funds were used for home visiting services that must be backfilled in total by July 1, 2026; Federal home visiting funding will also be impacted by sequestration beginning in 2024. The proposed flat funding prompts concern over potential cuts in services for families currently enrolled in a home visiting program.
There is still a significant unmet need for services, with only 7% of eligible pregnant women, young children, and families currently receiving them. PPC acknowledges that increasing access must happen in a way that home visiting programs can be effectively implemented.
Early Intervention
The budget proposal includes an increase of $16.6 million for the Early Intervention Part C (infants and toddlers) program in the DHS budget. The PDE budget's Early Intervention Part B (age three to five) program includes a proposed increase of $17 million to improve well-being, health, and educational outcomes. PPC advocates for support of the Early Intervention Part C program as part of the Thriving PA campaign. Thriving PA is hopeful there will be further dialogue to address the need for additional support for Early Intervention, particularly as we await the results of a comprehensive rate methodology study being conducted by OCDEL.
Medicaid and CHIP
Gov. Shapiro's 2024-25 budget proposal includes a $14 million budgetary increase for CHIP, a 21% increase from last year. Last Spring, DHS began the monumental task of completing redeterminations for all Medicaid recipients after the end of the Public Health Emergency. The increase in CHIP funding seeks to accomplish the department's ongoing redetermination efforts.
The proposed Medical Assistance capitation line item includes a net increase of $227 million to fund Pennsylvania's Medicaid program. This total budget increase includes $64 million to reflect the impact of providing 12-month continuous Medicaid coverage for children aged 4-18 beginning January 1, 2025. PPC has supported this proposal in the past and is encouraged by Pennsylvania's speedy adoption of the federal requirement for continuous health care coverage for kids.
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, consistent funding from last year's budget. 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 $2.6 million proposed increase to continue capacity building within the department to implement prevention strategies for preventing maternal deaths and complications.
Child Welfare
The child welfare budget proposal provides a .14% increase with an additional $2 million in state investments. This proposed increase is significantly lower than increases in past years. There could be a variety of reasons for this increase, including absorbing the cost of the response for COVID-19 and underspending due to staffing shortages. PPC is working with stakeholders to determine next steps to advocate for adequate funding for county child welfare offices.
-
K-12 Education
-
Early Care and Education
-
Home Visiting
-
Perinatal and Child Health
-
Child Welfare
Basic and Special Education
The proposed budget includes a total increase of nearly $1.1 billion for K-12 education: $900 million as a "first-year adequacy investment" and $200 million to be distributed through the Basic Education Funding Formula. The adequacy investment will serve as a large influx of funds to the most underfunded schools, replacing the Level-Up Initiative that targeted funds to the state's 100 poorest school districts in recent budgets. Gov. Shapiro calls for an additional $50 million for Special Education.
Career and Technical Education
In contrast to last year's historic investment, the budget proposal contains an increase of only $2.4 million for career and technical education (CTE) through the CTE subsidy line. Gov. Shapiro did not propose any increased funds for the CTE equipment grant line. PPC feels strongly that the CTE budget lines should not be overlooked as not all students get to participate in CTE due to the lack of sustained state investments in funding to support programming.
School Food Services
The budget proposal includes a continued $38.5 million 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 that the universal free breakfast program will be maintained as we see the benefit of universal school meals. We hope future budgets contain increased funding for universal school lunches.
Other Initiatives: School Safety, Environmental Repairs, and Mental Health
The budget seeks to build upon previous investments for school safety by proposing an additional $50 million for school safety and security grants. The budget proposal also calls for $300 million in sustainable funding for environmental repair projects in school buildings. This proposed funding would seek to address environmental issues that threaten students' health, safety, and opportunity.
Another $100 million increase is to sustain the school-based mental health support block grant. This funding is set to build upon one-time federal funds used for mental health services for students and staff. Similar to last year, the proposal moves the grant program from the Pennsylvania Commission on Crime and Delinquency to the Department of Education.
Pre-k
The budget proposal includes an increase of $ 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 full-time students' rates 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 $29.3 million in the Child Care Services line to continue the Child Care Works Program and cover the minimum wage increase up to $15. This increase backfills any remaining American Rescue Plan funds utilized by the Child Care Works program in recent years. The Child Care Administration line also saw a proposed increase of $2.3 million, a portion of which would be used in conjunction with surplus federal funds to increase subsidy rates to the 75th percentile of the cost of child care services.
Home Visiting
A low point in the governor's budget proposal was the lack of funding increases that support evidence-based home visiting services. After a competitive rebid and historic funding increase two years ago, last year was utilized by home visiting programs as a "settling-in period," which did not necessitate a funding increase. This year, however, there are multiple steps the administration should have taken to ensure that services are not cut for Pennsylvania families. One-time federal funds were used for home visiting services that must be backfilled in total by July 1, 2026; Federal home visiting funding will also be impacted by sequestration beginning in 2024. The proposed flat funding prompts concern over potential cuts in services for families currently enrolled in a home visiting program.
There is still a significant unmet need for services, with only 7% of eligible pregnant women, young children, and families currently receiving them. PPC acknowledges that increasing access must happen in a way that home visiting programs can be effectively implemented.
Early Intervention
The budget proposal includes an increase of $16.6 million for the Early Intervention Part C (infants and toddlers) program in the DHS budget. The PDE budget's Early Intervention Part B (age three to five) program includes a proposed increase of $17 million to improve well-being, health, and educational outcomes. PPC advocates for support of the Early Intervention Part C program as part of the Thriving PA campaign. Thriving PA is hopeful there will be further dialogue to address the need for additional support for Early Intervention, particularly as we await the results of a comprehensive rate methodology study being conducted by OCDEL.
Medicaid and CHIP
Gov. Shapiro's 2024-25 budget proposal includes a $14 million budgetary increase for CHIP, a 21% increase from last year. Last Spring, DHS began the monumental task of completing redeterminations for all Medicaid recipients after the end of the Public Health Emergency. The increase in CHIP funding seeks to accomplish the department's ongoing redetermination efforts.
The proposed Medical Assistance capitation line item includes a net increase of $227 million to fund Pennsylvania's Medicaid program. This total budget increase includes $64 million to reflect the impact of providing 12-month continuous Medicaid coverage for children aged 4-18 beginning January 1, 2025. PPC has supported this proposal in the past and is encouraged by Pennsylvania's speedy adoption of the federal requirement for continuous health care coverage for kids.
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, consistent funding from last year's budget. 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 $2.6 million proposed increase to continue capacity building within the department to implement prevention strategies for preventing maternal deaths and complications.
Child Welfare
The child welfare budget proposal provides a .14% increase with an additional $2 million in state investments. This proposed increase is significantly lower than increases in past years. There could be a variety of reasons for this increase, including absorbing the cost of the response for COVID-19 and underspending due to staffing shortages. PPC is working with stakeholders to determine next steps to advocate for adequate funding for county child welfare offices.