Social services and education make up the bulk of the spending proposed in Governor Shapiro’s budget plan

Combined, social services and education spending represent 80% of Gov. Josh Shapiro’s total spending plan proposed for 2026-2027. (Getty Images)

Governor Josh Shapiro brought the budget he proposed for next year on Tuesday, allocating more than $53 billion in general fund spending, with nearly 80% of that going to just two state agencies.

The Department of Human Services continues to receive the most dollars from the general fund ($21.9 billion), followed closely by the Department of Education ($20.6 billion).

Gov. Josh Shapiro begins the budget process with a $53 billion spending plan

About $1 billion in up-to-date spending on social services will fund Medicaid increases. As health care prices rise, so do Medicaid costs – and people on Medicaid tend to be poorer, older, and sicker than the general population.

Raising the state minimum wage could reduce the number of Medicaid benefits, Shapiro said, estimating that a wage of $15 an hour – up from the current $7.25 – would save Pennsylvania $300 million a year in benefits programs.

“We can put more money in their pockets so they don’t need Medicaid anymore,” Shapiro said.

His proposal would allocate $10 million to expand the 988 mental health crisis hotline. More or less 90% of connections are received by national operators, who received over 13,500 calls in December. Another $5 million will go to mental health crisis stabilization centers – priority for district authorities.

The governor also recommended legislation to provide direct drug payments toward the annual out-of-pocket costs of health insurance, a move that would cost no money but would require legislative approval.

Home care workers did not receive an expected escalate under Medicaid, although current payments in Pennsylvania lag behind neighboring states. The Pennsylvania Home Care Association estimated that more than 112,500 senior shifts were missed each month and found that 29% of child care hours went unfilled due to low wages.

“Access to home care is already severely hampered for families in every region of Pennsylvania,” said Mia Haney, CEO of PHA. “This budget does not address the reality facing care providers, workers and recipients today, and that is deeply concerning.”

Pennsylvania rapidly aging society strains the health care system, increasing demand for home and community-based options, which cost less than nursing homes or care centers.

“The proposed budget fails to recognize that investing in home care is no longer optional – it is essential,” Haney said.

Education financing

Administration officials touted an overall 30% escalate in education spending from 2023, including changes to tax adequacy and equity in the wake of the court ruling. He found the state’s school funding system “unconstitutional,” meaning inadequately resourced schools receive less than their wealthier counterparts.

Under the governor’s spending plan, in addition to the $3 billion currently spent, an additional $565 million would be dedicated to fiscal adequacy and fairness.

Rachel Nagy, an elementary school principal in the California Area School District in Washington County, told reporters that the additional $360,000 in matching funds in her district “had a transformative impact.”

“We used these funds to strategically reduce kindergarten class sizes while expanding career and technology education opportunities at the high school level. These were not add-ons, these were intentional investments tailored to student needs and workforce needs,” Nagy said.

New career and technical education pathways included veterinary science and emergency medical technicians, with 41% of high school students participating in a CTE program.

Advocates from the Education Law Center and the Public Interest Law Center issued a joint release praising the continued spending, which “has already begun to produce real benefits for students across the state.”

“Despite these investments, schools remain $3.8 billion underfunded and the current compliance timeline is far too slow,” the statement continued. “Those children who continue to bear the burden of this neglect – low-income children, children of color and children with disabilities – will continue to bear the consequences of this failure until this task is completed.”

Shapiro will also continue to escalate funding for cyber charter schools. In the last budget, districts were able to reduce per-pupil fees for students attending virtual schools, which do not pay for the physical maintenance of classrooms. The decision saved public schools an estimated $175 million and proposed another $75 million in rescheduling costs.

Another $100 million will be divided equally between basic and special education, for a total of $8.3 billion and $1.6 billion, respectively.

The Future Teacher Scholarship Fund, established just three years ago, covered the costs of current teachers like Hallie Sill while they were in training. Sill, who currently works at Susquehanna Township High School in Dauphin County, was a special guest of Shapiro and mentioned by the governor in his speech.

Pennsylvania will require schools to operate evidence-based reading programs

“We need more Halli in our classrooms, so let’s increase our commitment to this initiative we know works,” Shapiro said. “As she and the other 2,000 (first-year) student teachers show, if we put more money in people’s pockets, we can give them jobs they love.”

The $35 million in scholarships for student teachers, an escalate of $5 million over last year, is less than the $40 million requested by PA Needs Teachers.

“Over 4,000 Hallies come out every year across Pennsylvania who are excited to give back to the next generation, but need help making ends meet during a semester of free student teaching,” said Emily Sagor of PA Needs Teachers. “We are encouraged that Governor Shapiro has proposed $35 million for this popular, bipartisan program. We also recognize that additional funding is needed to fully fund the program and ensure that every future teacher like Hallie can take advantage of this life-changing opportunity.”

The organization also called for removing “unnecessary” barriers to certification – another topic of Shapiro’s speech regarding professional licensing, including cosmetology and nursing.

Missed opportunities and criticism

But others noticed missed opportunities.

The PA Literacy Coalition has called on the state to allocate $50 million for early literacy, building on previous directives to improve school reading by shifting to “literacy” instruction.

“As Pennsylvania continues to invest in education, we must ensure that these investments deliver tangible results for students, and the most urgent area of ​​action is literacy,” said Rachael Garnick of the Pennsylvania Literacy Coalition. “Our community has made important steps forward in recent years, but there is still much work to be done. We must meet this moment with the urgency, leadership and continued investment required to ensure that no child’s future depends on whether the system was prepared to teach them to read.”

Republicans in the Legislature have scrutinized increases in education spending, calling for cuts as enrollment declines.

“We believe that money is not the only thing that makes schools effective,” said House Minority Leader Jesse Topper. “That’s what the other side would like to believe. We believe that there are many policies similar to the literacy initiatives that we were able to introduce in the last budget that will actually help turn the results around. And that has to be matched by any amount of money.”

In previous years, Republicans have called for a broader school voucher program, believing it “Parents and guardians should be able to choose the best learning environment to meet their children’s learning needs.”

Republicans have a slim majority in the state Senate, while Democrats have a slim majority in the House, meaning the final budget will require bipartisan support. The state’s fiscal year ends on June 30.