PA Budget and Policy Center Statement on Governor Wolf’s 2022-2023 Executive Budget

Most news reports from Harrisburg today will start by saying that Governor Wolf presented the final budget of his administration, one in which he put forward proposals that continue to reflect the priorities he has held since becoming governor. What those reports may leave out, however, is a critical part of the story: this budget is also the last chance for a Republican majority that has mostly rejected the governor’s priorities to act on them. And they should do so not only because every poll shows that the majority of Pennsylvanians support them but because the future of our children and our commonwealth depends on following the path the governor has set out for us—to provide adequate and equitable funding for education at all levels, to make it possible for workers to receive the training they need to benefit themselves and potential employers, and to fully fund human services, especially for children.

For seven years, Republicans have mostly rejected the governor’s priorities because they said we could not afford them. But by the end of June, thanks to federal American Rescue Plan funds and careful management of our resources, the state will have an accumulated surplus of an estimated $11.2 billion dollars. Thanks to a strong recovery from the pandemic and continued federal assistance, that surplus will grow. Pennsylvania Republicans keep talking about future deficits—which would not be a concern if not for the deep cuts in corporate taxes they supported. The best way to avoid those deficits, however, is to invest in our people now, not just to give the economy a short-term boost but to give it the long-term capacity for expansion created by the major new investments called for by the governor in K-12 and higher education; in workforce training; and in human services, which we summarize below.

The governor’s budget recognizes that a modern economy does not run on oil or gas, or on the investment of capital. It runs on the skills and talents of an educated, well-trained, and skilled workforce. We not only have plenty of oil and gas but we will soon have plenty of solar and wind power to replace them. We have plenty of capital. But Pennsylvania and its people are falling behind other states—and other countries—because we do not provide the human services our children need to get off to a good start, nor do we give every child the quality education and training they need to secure good-paying jobs that bring success to them and the businesses for which they work. Our failure to invest in people hurts every Pennsylvanian and by reinforcing, instead of breaking down, economic, gender, and racial barriers, it betrays the promise of our country.

Among the highlights of the budget are:

Education

K-12: A total $1.5 billion increase across all K-12 general funds appropriations. This includes:

• Increase in Basic Education funding: $1.25 billion increase in Basic Education Funding. With this investment, more than $2 billion would go through the fair funding formula, which was enacted in June 2016.
• Level Up funding: The governor proposes a $300 million increase through the Level Up program, which provides additional funding to the 100 most underfunded school districts in the state.
• Special Education: This budget includes $200 million for special education.
• Career and Technical Education: The governor proposes an additional $5 million for CTE.
• PASmart: $20 million in additional funds would go to the state’s program to connect schools and students to jobs.
• Charter school reform that would save Pennsylvania money: Governor Wolf again proposes charter school reform, which would save the state a total of $373 million per year via:

• $199 million per year savings by establishing a statewide charter tuition rate of $9,800 per student, per year.
• $174 million per year in savings for using a formula for reimbursements for special education students.

• Attracting and retaining teachers by raising the minimum pay rate: In Pennsylvania Minimum teacher compensation is currently set at a 1980s level of $18,500 per year. The governor proposes to increase this to $45,000 per year. Low teacher pay is a major reason for Pennsylvania’s growing teacher shortage.

Higher Education

• Funding for PA State System for Higher Education (PASSHE): The governor proposes $75 million for the PASSHE from the General Fund. He also proposes to accelerate from three years to two years the $150 million plan to use American Rescue Plan (ARP) funds to help PASSHE adapt to the consolidation plan approved last year.
• Nellie Bly Tuition Program: The governor proposes $200 million in Nellie Bly scholarships for PASSHE and community college students. Scholarships would be for students attending these schools who are pursuing careers in high-need sectors like health care, education, and public service. This would be funded with $100 million from the Race Horse Development Fund and $100 million in federal funds.
• Funding for Pennsylvania’s state-related universities: Most of PA’s state-related universities would receive a 5% increase.
• Community colleges would receive an increase of $14.9 million.
• Institutional assistance grants, which provide financial assistance to independent nonprofit post-secondary institutions, would be increased by $663,000.
• Addressing food insecurity for college students: The governor proposes $1 million to address college hunger. Many of Pennsylvania’s college students are experiencing food insecurity and don’t have the support and resources they need.

Pre-K

• Pre-K Counts: The governor proposes $60 million for Pre-K Counts to increase payment rates for full-time slots. This would allow programs to support the workforce as well as providers, who have increasing costs. This would also provide an additional 2,308 slots for Pre-K Counts.
• Head Start Supplemental Assistance: The governor proposes $10 million for the Head Start Supplemental Assistance program.

Child Care

• Child care funding: The governor proposes using additional investments in child care (federal and state dollars). This includes $77.7 million in federal funds that would be made available to increase access to Child Care Works, the state’s program to make child care affordable. Reimbursement rates would be increased to ensure that they meet or exceed costs at 60% of child care facilities, up from 25% two years ago. The budget also includes $44.3 million in federal funds to reduce the co-payment for families using the Child Care Works program; $6.1 million in federal funds to expand the hours of Child Care Works program sites; and $30 million in state dollars to provide for a new child care services model for state workers.
• New data system: The governor proposes spending $3.2 million in creating a new statewide data system, which would link information across the state’s child care, education, and workforce departments. This would help with future, data-driven programming decisions.

Economic Development

• An increase in funding of $1.5 million for the Industrial Resource Centers (IRC) that propose to partner with institutions of higher learning to deliver services to new and existing manufacturers.
• A $1.5 increase for the Partnerships for Regional Economic Performance Network to create entrepreneurial internships and business incubation as well as other services that assist Pennsylvania businesses.
• Additional funding of $18 million for the Ben Franklin Technology Development Authority to support startups in Pennsylvania.
• $2.35 million for Invent Penn State, the program that combines entrepreneur-focused academic program with business startup training and incubation.

Minimum Wage Increase

There would be an immediate increase from $7.25 per hour to $12 per hour on July 1, 2022, and a yearly $.50-per-hour increase until it reaches $15 per hour by July 1, 2028. At that point, the minimum wage would be set to increase with the cost of living. This proposal would also end local preemption, which would permit local governments to raise their local minimum wage; it would also include an increase of the tipped minimum wage.

Pensions

The governor’s budget again proposes that the state meet, for the seventh consecutive year, the actuarially required contribution to both PSERS and SERS, the Public School Employee Retirement System and the State Employee Retirement System. As a result of this funding, the state has moved closer to eliminating the unfunded liability in both systems.

Human Services

• Medical Assistance and long-term care: The governor proposes a $91 million increase in state funds—matched by federal funds—to bring the total investment to $190 million to increase medical assistance rates for skilled nursing professionals. This funding would allow facilities to begin hiring staff to implement increased staffing ratios changed in 2023 regulations.
• Personal care homes: A $50 million increase in supplementary payments for personal care homes, which increases monthly payments from $439 to $1,351. Personal care homes are residences that provide shelter, meals, and assistance with personal care tasks for older people or those with a disability. In recent years, these homes have been closing in Pennsylvania at a rapid rate, especially those that support low-income individuals.
• Services to individuals with intellectual disabilities and autism: $32.3 million ($18.8 of which is state funds) is proposed to support individuals with intellectual disabilities and autism. With this funding, 732 individuals would be able to move to the community living waiver and 100 individuals to the consolidated waiver program. These programs help individuals live more independently in their homes and communities.
• SNAP: The governor proposes a $14.3 million increase for SNAP benefits for low-income adults and adults with disabilities, increasing the minimum benefit from $20 per month to $35 per month for 75,000-95,000 eligible older adults and adults with disabilities.
• Home visiting and post-partum support: $15 million for post-partum health and home visiting programs. It would be $23 million with additional federal funds,
• County mental health funds: The governor proposes a $36.6 million increase (on top of $75 million in federal funds for recruitment and retention payments) in funding for county mental health services. This is in addition to the one-time increase in county mental health funds through the Brighter PA plan. This would restore two-thirds of the cuts to county-based mental health funding made during the Corbett administration.
• Food security: The budget includes $2 million in new funding of the Pennsylvania Agricultural Surplus system to reduce food insecurity.

Policing and Criminal Justice

• PA State Police funding: The governor proposes to use $141 million in General Funds to reduce the $600 million yearly transfer from the Motor License Fund to pay for the Pennsylvania State Police. This would allow Motor License funds to be used for road and bridge repair.
• Gun violence: The governor proposes $35 million for grants and technical assistance to support community-led gun violence prevention efforts.
• Bail and pretrial reforms: The governor proposes reforms that reduce the amount of time that those accused of crimes spend in jail pre-trial, with the goal of reducing racial disparity in jail, reducing recidivism, and producing savings for counties.
• Reentry and reform services: The budget includes $1 million for reentry services and $425,000 to increase staffing for probation services.
• Law enforcement reform: The governor proposes $7.7 million to provide funding for body cameras and mobile video technology to record the police’s interaction with the public.
• Reentry services: $1 million for reentry services for women and $7 million to DHS to create beds for individuals leaving a state correctional facility with complex medical or behavioral needs. This funding would support medical release for eligible inmates, including the elderly, to continue care in appropriate long-term care facilities.

Climate and Environment

• State Disaster Assistance Fund: $10 million investment to create a state disaster assistance fund, aimed to support individuals impacted by a federally declared disaster when a disaster hits a particular area of the state.
• Department of Environmental Protection and DCNR: $5 million for program and operational needs within DEP. DCNR would receive $2.5 million to support outdoor management and recreation programs.

Tax Changes

The governor proposes to reduce the corporate net income tax from 9.99% to 7.99% on January 1, 2023, with gradual reductions to 4.99%. This would cost the state $1.3 billion over five years, which would be partially compensated by an add-back provision that reduces the ability of multi-state corporations to avoid paying any corporate net income tax. PBPC strongly believes that the state should also follow 26 other states in adopting combined reporting, a practice that ensures multi-state corporations pay their fair share in state taxes.