2021-22 State Budget Proposal

2021-22 State Budget Proposal

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

This year’s budget provides historic levels of funding for K-12 education, including an increase of $525 million in Basic Education Funding driven through the funding formula, as well as an additional $225 million allocated for the Level-Up Initiative that targets funds to the state’s 100 poorest school districts. Through the budget negotiation process, Governor Wolf hesitated budging from his February starting point of $1.5 billion for Basic Education, still hovering close to the $1 billion mark until recently. Special Education also received a $100 million increase, lower than the $300 million contained in the governor’s proposal.  

An area of disappointment in K-12 spending in the budget is Career and Technical Education. After two years of being level funded, CTE received only a $6.1 million increase, bringing its appropriation to $105.1 million. PPC and stakeholder partners including the Pennsylvania Association of Career and Technical Administrators, were pushing the legislature for a $25 million increase. The Career and Technical Education Equipment Grant Line was level-funded at its current amount of $5.55 million. 

Following recent acts of school violence and ongoing concern about the long-term impact of the COVID-19 pandemic on students, the budget contains $200 million of additional funding directed to the School Safety and Security Fund, with $100 million specified to run through the Ready to Learn Block Grant to address school-based mental health services and the other $100 million allocated as a new General Fund appropriation for physical safety at schools.  

On other fronts, legislative Republicans ensured that a $125 million increase was included for the Educational Improvement Tax Credit Program as part of the final budget deal while the Wolf Administration allowed for the dissolution of its proposed charter school regulations, which would have subjected all charter schools to more stringent and transparent accounting, admissions, and ethics standards. The regulations were approved by the IRRC earlier this year but were not published finally in the Pennsylvania Bulletin, while in the meantime, Republicans in the House and Senate passed a disapproval resolution challenging their standing. Amendments to the state’s charter law have floundered since the law was first enacted in 1997 and appear to be unachievable through legislative or regulatory means at this juncture.  


A total increase of $79 million: $60 million for Pre-K Counts and $19 million for the Head Start Supplemental Assistance Program (HSSAP)—one of the largest increases seen by the programs in their history and true show of bipartisan support. This proposed increase would allow for an expansion of approximately 2,300 slots for eligible 3- and 4-year-olds participating in the Pre-K Counts Program. The funding will also support an increase in reimbursement rates for high-quality Pre-K Counts Program providers to $10,000 for full-day slots (up from $8,750), and $5,000 for half-day slots (up from $4,375). PPC and our partners in the Pre-K for PA campaign commend state House and Senate legislators and Governor Wolf for their strong, continued support for high-quality pre-k programs. 

Child Care 

A $25 million increase in state funds within the Child Care Services line to address the child care “cliff” by implementing a sliding scale copayment in the Child Care Works subsidy program for working individuals and families making between 235% and 300% of the federal poverty level.  The program’s current eligibility limit is 200% FPL, but families can stay in the program up to 235% FPL to aid in curbing this cliff effect. 

There is also $90 million in ARPA funds for one-time retention and recruitment payments to be distributed to qualified child care staff members. Language outlines that DHS must begin accepting applications from providers no later than January 1, 2023, and providers must distribute retention payments to qualified program staff within 90 days of receipt of the funds (recruitment payments must be distributed within 180 days). The payment amount cannot exceed $2,500. “Qualified staff” is defined as, an employee of a qualified child care provider who is involved in direct supervision of children or environmental services and does not include executives, contracted staff, administrators, support staff or owners. 

This recruitment and retention payment initiative is on top of the recent announcement from the Wolf Administration that they are using $99.9 million in CCDBG-specific ARPA funds for one-time Work Force Support Grants distributed through OCDEL for certified child care providers. Applications for those grants, awarded at either a $1,000 or $2,000 level, closed in June with payments being distributed now through September. 

While Start Strong PA, the child care campaign in which PPC is a proud member, is appreciative of the support shown for the sector in this budget, our partners were advocating for a $2/hour wage increase for workforce using a mixture of recurring funds in reserve and repurposed from the governor’s proposal.   

Also in the final budget mix was the enactment of a new state Child Care and Dependent Tax Credit, equal to 30% of its federal counterpart. The credit can be applied against an individual’s personal income tax liability for employment-related expenses incurred for dependent care costs, including child care, while working or seeking employment. Inclusion of the tax credit was seen as being part of the broader package that coalesced around the successful effort to reduce the state’s Corporate Net Income Tax.  

PPC and our partner United Way of PA, which was leading the efforts, hoped an Earned Income Tax Credit would be included in the final tax code bill to help working families and address child poverty while making the business climate more attractive. 

Home Visiting 

PPC, as part of the Childhood Begins at Home campaign, is thrilled the budget includes a historic increase of $15 million for evidence-based home visiting in the Community-Based Family Center line. This is an impressive 77% increase in the state appropriation, showing state policymakers’ commitment to home visiting. In addition, $1 million is earmarked for the Nurse-Family Partnership line item to serve 200 more low-income, first-time moms.   

The results of the recent competitive regrant process for state home visiting funds included multiple programs whose funding continuation was contingent upon the inclusion of the full $15 million increase for the Community-Based Family Center line. This funding increase will also allow more voluntary home visiting programs to help parents and others raising children with the supports necessary to address substance use disorders, develop school readiness, improve maternal and child health, promote economic self-sufficiency, and reduce abuse and neglect. In Governor Wolf’s February budget proposal, he noted one-time stimulus funds (Community-Based Child Abuse Prevention dollars) totaling $8 million are also being channeled to home visiting services, meaning $24 million in additional funds will be directed to home visiting in the 2022-23 fiscal year.  

Early Intervention 

The budget includes an increase of $9.3 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 also received an increase of $10 million in the final package. Governor Wolf’s February proposal level-funded this line-item. 

Moving forward, DHS will must provide quarterly early intervention program reports to the legislature documenting state and federal appropriations, and to submit revised estimates of funds needed for specific line items to make required payments for the remainder of the fiscal year with a written explanation from the secretary on why payment is needed. This reporting requirement stems from mounting legislative consternation around other, larger “supplemental” budget needs from DHS, particularly related to Medicaid. 

Medicaid and CHIP funding 

The budget includes a total increase of $40.9 million for CHIP, or 67%. Overall, the budget also includes $1.3 billion of COVID-enhanced Federal Medical Assistance Percentage (FMAP) funding (6.2%), which directly offsets General Fund spending, through December 31st. Otherwise, it does not appear the budget speaks to the impending conclusion of the federal COVID-19 public health emergency and with it, the daunting Medicaid redetermination process DHS must lead. During the PHE, Congress instituted a disenrollment freeze in Medicaid, but eligibility will need to be redetermined once the period ends. 

In the governor’s February proposal, some level of funding was proposed for the end of the PHE, along with a 6-month timeframe for DHS to conduct the redetermination process. However, that was when a July end-date for the PHE was a possibility. At this time, we speculate the end of the PHE may not occur until January 2023. The PHE was last extended in April through July. The Biden Administration will provide a 60-day notice ahead of the end of the PHE.  

The budget also includes nearly $23 million to cover unpaid CHIP premium payments that accrued during the COVID-19 pandemic when CHIP MCOs were unable to disenroll CHIP participants who did not pay their premiums. Further, this budget course corrects a long-standing accounting maneuver used by policymakers to achieve balanced budgets in fiscally precarious times: MCOs have typically only been paid 10 out of the 12 months of the year for the services they provide in the Medicaid program. The 2022-23 budget corrects this “payment delay” by providing a two-month supplemental payment as well as the 12-month payment moving forward, at a cost of more than $1.5 billion. 

Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) 

In the Department of Health, federal funding noted in the budget for WIC was flat funded at $278 million, as is standard each fiscal year. 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 are working with the administration to modernize the system and increase participation. See our county fact sheets highlighting WIC enrollment data and policy recommendations. 


The child welfare budget shows a 12% increase with an additional $160.4 million in state investments. The County Child Welfare line item currently is funded at just under $1.5 billion. The governor’s proposal called for an increase of $181 million, with approximately $149 million of that supporting county child welfare agencies in their needs-based budgets.

Budget-related code bills of importance:  

HB 1421 (Thomas) is this year’s Fiscal Code vehicle. The underlying bill relates to military burials at national cemeteries, but as is standard with the Fiscal Code, has been amended with a wide array of language. Key areas of interest to PPC within the bill include: 

  • Outlining parameters for the Child Care Stabilization Program ($90 million in ARPA funds) to provide funding to qualified child care providers for the recruitment and retention of qualified staff (see Early Care and Education tab). 
  • Prohibiting charter schools from receiving payments from appropriations for Basic Education Funding, School Employees’ Social Security, or Public School Employees’ Retirement, as these funds are already included in the per student tuition rate paid by school districts to charter schools (aka “double dip”). 
  • Implementing the Pre-K Counts Program provider rate increase of 14.3% ($8,750 to $10,000 for a full-time slot) (see Early Care and Education tab).  
  • Stipulating the allocation of $25 million in the Child Care Services line for individuals and families in Child Care Works with incomes between 235% and 300% FPL to implement a sliding scale copayment schedule to address the child care “cliff.” Copayment amounts on the scale are to be published by DHS in the Pennsylvania Bulletin (see Early Care and Education tab). 
  • Requiring the DHS secretary to report quarterly to the legislature on 11 separate line items including: caseloads, costs, revised budget projections, and calculations of estimated supplemental funding needs. Detailed explanations of supplemental funding needs are required from the secretary (see Early Care and Education tab). Of the programs highlighted, 7 are Medicaid-related, 3 are related to intellectual disabilities/autism, and the 11th is early intervention. 
  • Continuing language included in last year’s budget preventing DHS from adding “non-medically necessary services” to the Medicaid program requiring supplemental funding without approval from the legislature and requiring them to be outlined in the governor’s executive budget. 
  • Assessments for nursing facilities, a common element of the budget process typically found in the human services code, was moved to the fiscal code, as Governor Wolf vetoed HB 1420 on Friday, July 8. The assessment brings in needed revenue for the commonwealth and had to be preserved or would otherwise throw the budget off-kilter. Other technical language from the human services code was also relocated to the Fiscal Code. The governor vetoed the Human Services Code for matters relating to the ability of labor contracts to provide long-term care and intellectual disability services.  

HB 1642 (White) is this year’s Public School Code vehicle. The underlying bill would increase scholarships for students attending poor schools by increasing the number of schools considered economically disadvantaged as well as increasing the amount of tax credits used for the Educational Improvement Tax Credit (EITC) by $5 million.  

Among others, the amended School Code bill has the following provisions: 

  • Offers flexibility for students who must show proficiency on a Keystone Exam in order to graduate. 
  • Requires an industry-recognized credential attained by a student to be included on the student’s transcript beginning in the 2022-23 school year (also in HB 1013).  
  • Reconstitutes the Special Education Funding Commission as of January 2024, with a report due November 2024. 
  • Creates the Commission on Education and Economic Competitiveness, set to convene February 2023 and required to issue a report to the legislature within 18 months. Early education is included in its long-term goal setting (also in SR 144). 
  • Streamlines the process for out-of-state K-12 teachers and career and technical educators to receive a Pennsylvania certification (also in HB 2646). 
  • Implements an optional “Science of Reading” early literacy program for school entities (also in HB 2045). 
  • Requires a survey of school mental health services (also in HB 2024)
  • Outlines in significant detail how to appropriate the $100 million in the final budget for school safety and security, as well as $100 million for school mental health services (see K-12 education tab, also in HB 2468). 
  • Outlines Section 1704-A-Abolition of Rulemaking: This section nullifies Governor Wolf’s charter regulations, saying the Legislative Reference Bureau may not publish the regulation in the Pennsylvania Bulletin (see K-12 education tab). 
  • Increases the amount of funding available for the EITC Program by $125 million and outlines other provisions for the program (see K-12 education tab). 
  • Adjusts the CTE formula multipliers to allocate the additional $6 million in the budget; as previously drafted, the formula was capped. 

SB 1235 (DiSanto) is one non-budget related bill worth mentioning that also passed the legislature and is currently on the governor’s desk. The legislation, which PPC supported, prohibits DHS from developing bidding zones for CHIP that would limit plan choice for families. Recently, Capital Blue Cross would have been affected by a plan from the department that would have precluded it from participating in CHIP, even though it has done so throughout the program’s history and with legislative language requiring Blues plans to do so. With the passage of SB 1235, the plan is moot and all current plan participants will be able to continue as bidders. 

The following bills—essential for the well-being of children and youth—did not make it to the governor’s desk. However, with the General Assembly returning for a few session weeks this fall, we hope they will make it to the finish line before the end of the legislative session:  

  • HB 1866 (Boback)—A priority for PPC, this bill would improve permanency practices for transition age youth in the foster care system by codifying steps for county child welfare agencies to assist older youth in achieving permanency and a successful transition to adulthood. HB 1866 builds on current statute by making permanency expectations clearer and ensuring the requirements we have in place are fully and effectively implemented. The bill passed the House and is out of the Senate Aging and Youth Committee. It is currently awaiting a vote in the Senate Appropriations Committee before going to the Senate floor. 
  • SB 522 (Baker)—Would create a universal lead screening mandate for infants and pregnant women by health care providers and require health insurance policies to cover blood lead tests. The bill passed the Senate and is currently in the House Children and Youth Committee. 
  • SB 967 (Schwank)—Would create the WIC State Advisory Board within the DOH to provide direction on increasing enrollment, identifying technology improvements and prioritizing other policy initiatives largely aimed at modernizing the program. PPC supports the ability for stakeholders to have a stronger voice in advising the WIC program. The bill passed the Senate and is currently in the House Children and Youth Committee.