Authors: Laura Beltrán Figueroa, PhD, Policy, Research, and Legislative Strategy Director; with contributions by Felicity A. Williams, Esq., Executive Director
July 28, 2026
Executive Summary
Pennsylvania’s FY 2026–27 enacted budget is best understood as a selective-investment and cost-maintenance budget. The budget includes a major new installment of K–12 adequacy funding and several targeted investments across education, health, human services, and public safety. At the same time, a substantial share of overall spending growth is devoted to maintaining existing obligations, including Medicaid, debt service, retirement costs, and other required expenditures. Hundreds of appropriations are flat funded, increased below inflation, or reduced, limiting the budget’s ability to expand public capacity across state government.
The enacted package therefore represents meaningful progress in several priority areas, but it does not provide a comprehensive response to Pennsylvania’s broader fiscal, affordability, and service-delivery challenges. At a time when families are facing persistently high costs for essential needs, the budget leaves many of the underlying pressures driving Pennsylvania’s affordability crisis unresolved. Major needs remain unresolved in housing, child care, higher education, public health, environmental protection, and the care workforce. The budget also leaves the Commonwealth exposed to significant uncertainty surrounding federal Medicaid, SNAP, and other funding changes.
- The General Fund spending increases by $1.824 billion, or 3.72 percent, compared with FY 2025–26 funding.
- The budget does not rely on a withdrawal from the Rainy Day Fund, but it continues to depend on accumulated balances, timing decisions, funding shifts, and other nonrecurring budget-management mechanisms.
- The enacted package does not include major new recurring revenue measures, leaving the Commonwealth without a durable revenue strategy to support rising obligations and future federal cost shifts.
- The largest clear policy investment is $526 million in additional school-funding adequacy support, provided through the broader $565 million increase in the Ready to Learn Block Grant. This continues Pennsylvania’s multiyear effort to address unconstitutional school-funding disparities.
- At the same time, more than 230 appropriations are flat funded, while several major programs receive direct reductions, including emergency housing support, tourism promotion, veterans’ homes, and portions of environmental and public-health funding.
Pennsylvania’s next fiscal decisions should focus on:
- Enacting recurring revenue reforms capable of supporting existing obligations and future public investments;
- Raising household income, including by increasing Pennsylvania’s stagnant minimum wage to a living wage;
- Protecting Medicaid, SNAP, and health coverage as federal costs and administrative responsibilities shift to the Commonwealth;
- Establishing durable funding solutions for housing, child care, higher education, and public transit; and
- Continuing the full multiyear school-funding adequacy remedy.