In February 2026, Governor Josh Shapiro unveiled his fourth budget proposal for the Pennsylvania General Fund. The $53.3 billion proposal for fiscal year 2026-27 is about $2.7 billion, or 5 percent, more than last year’s enacted budget, and roughly double what the state spent a decade ago.

The General Fund is the main way PA pays for its core functions: schools, health coverage for low-income residents, public safety, and the agencies that regulate daily life. It does not include the billions in federal grants PA receives each year, or what county and local governments raise and spend on their own. It is funded primarily through the income and sales taxes paid by Pennsylvanians.

Governor Shapiro’s budget proposes spending roughly $4,100 per Pennsylvanian next year. But most of that spending is not discretionary. Nearly half the budget goes to just two things: health insurance for low-income residents through Medicaid, and funding for K-12 public schools. The rest is divided among prisons, universities, workforce programs, state parks, and dozens of other services.

Following the release of the Governor’s proposal, the budget moves to the legislature, where the House and Senate Appropriations Committees hold public hearings before negotiations produce a final bill. Residents can follow hearings online through the General Assembly’s website, and weigh in on the process by contacting their state representative or senator directly. The final budget is required to be signed by June 30, the last day of the fiscal year, but that deadline has been missed in each of the last three years. Last year, the budget wasn’t enacted until November, four and a half months after the deadline.

To better understand PA’s new budget, we broke the budget into major categories, divided those totals by the state population, and compared the proposed per-person amounts for fiscal year 2026-27 (FY27) to last year’s budget (FY26). After the chart below, we provide some of the main highlights from this year’s budget.

Here are some of the most substantial takeaways:

• Four categories account for nearly two thirds of the entire budget. Medicaid (26 percent), K-12 Core Funding (21 percent), Justice & Public Safety (9 percent), and School Pension Obligations (8 percent) together account for 64 percent of the proposed budget. The remaining 23 categories divide the other 36 percent.
• Nearly half the budget is in categories the state is legally required to fund. Medicaid is legally required for anyone who qualifies. School Pension Obligations are set by formula and legally guaranteed. Treasury & Debt Service payments are required to avoid default. Special Education funding is mandated by federal law. Child Welfare runs through federally mandated programs. Together these five categories total about $1,780 in per-person spending, or 44 percent of the proposed budget.
• About two thirds of the $208 per-person increase comes from categories with limited discretion. Medicaid enrollment and cost growth (+$85), Justice & Public Safety staffing and health care costs (+$21), Treasury & Debt Service bond payments (+$13), and School Pension Obligations (+$9) together account for about $129 of the total per-resident increase.
• State spending in several large categories is matched by federal dollars, making cuts more consequential than they appear. Several of the largest categories, including Medicaid, Special Education, Child Welfare, and Intellectual Disabilities & Autism, draw significant federal matching funds. Cutting state dollars in these categories does not just reduce state spending, it also forfeits the federal match. For example, the federal government covers 56 cents of every dollar, so a $1 state cut reduces total program funding by about $2.30.
• Higher Education receives no federal matching funds, and proposed funding is essentially flat. Unlike most other large categories, every dollar in Higher Education is entirely state-funded with no federal match. Proposed funding increases by just $12 million, about $1 per Pennsylvanian.
• Economic & Community Development’s 46 percent cut reflects the proposed elimination of five programs. The budget proposes to reduce spending in this category from $39 to $21 per Pennsylvanian. The $18 per-person decline is entirely accounted for by five programs marked for elimination: Community and Economic Assistance (-$9), Local Municipal Relief (-$4), Keystone Communities (-$3), Workforce Development (-$1), and Hospital and Health System Emergency Relief (-$1). It is worth noting that Governor Shapiro proposed to cut these programs in each of the past two budget cycles, but funding was restored in the enacted budget each year.

Sources: Pennsylvania’s 2026-27 Proposed Budget General Fund Appropriation

Figures represent proposed funding in fiscal year 2026-2027 for Pennsylvania’s General Fund budget, adjusted for the state’s population using the latest available data. Per-person spending totals are compared to the prior year available funding for fiscal year 2025-26.

Nick Hand is a data scientist and public sector technologist. He was director of the City Controller’s Finance, Policy and Data unit during Rebecca Rhynhart’s tenure.

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