Budget Passed, Other Legislative Actions
Affect Health, Funding

The General Assembly ended its June session on Friday, passing at $39.78 billion FY2021-22 state budget.  Late Friday night, the Senate adjourned until September 20 and the House until September 27.

The total is a huge $7.7 billion (24 percent) increase in spending compared to the FY2020-21 budget, and another $1.04 billion in federal relief dollars brings the general fund to $40.82 billion, a 29.2 percent growth in spending.  An additional $34.8 billion in federal funds were included in the budget as passed.

The budget does not raise taxes, nor does it include provisions to increase the minimum wage, expand gaming or legalize adult use of marijuana, all issues that had been bandied about this spring.

Dozens of bills were left on the calendars in both chambers, including many with broad bipartisan support.  Those include bills that would have extended telemedicine and other medical flexibilities that were in place during the Governor’s disaster emergency order, prior authorization reform and bills that would have extended scope of practice for CRNPs and Physician Assistants.

The House and Senate did pass SB 425, which we supported, and which will again allow non-physician providers to solicit and secure informed consent from patients.

In addition, the General Assembly also sent a major piece of election reform legislation to the Governor who promised a veto.  The bill (HB 1300) passed the House and Senate on party-line votes, 110-91 and 29-21.  While headlines focused on voter ID and signatures as a form of voter suppression, a Franklin & Marshall  poll  this month indicates a majority of residents support voter ID laws and signature verification on ballots. In the survey, 95% of Republicans and 79% of independents believed all voters should show a photo ID before casting a ballot compared with 47% of Democrats. Another 94% of Republicans and 88% of independents agreed that election workers should verify that signatures on mail-in ballots match voter registration records, compared with just 64% of Democrats.

Also, on their way to the Governor – some for vetoes are bills banning vaccine passports and allowing parents to have their children held back a grade due to learning disruptions during the COVID-affected 2020-21 school year. Legislation also passed to convert the state Banking Fund into a public trust to prevent state government from accessing the dedicated revenue to balance budgets rather than for the designated purpose of financing the regulation of the banking industry.

A standoff between Republicans and the Governor on a bill allowing beer distributors, grocery and convenience stores to sell ready to drink (RTD) cocktails ended up leaving restaurants, taverns and bars without the ability to sell cocktails to go or maintain outdoor serving areas as they have trying to stay afloat during the COVID-19 orders.  The House took the RTD provisions out of the legislation, but the Senate refused to budge on the issue before adjourning.  Wolf had promised a veto if those provisions were in the final bill, as it would open the door to sales of spirits outside of restaurants and the state’s wine and spirits stores.  Left in the political dust were the state’s restaurants and hotels, among the hardest hit businesses in the last 16 months.  As many as 25% of these small businesses will have closed before the end of 2022 because of losses caused by pandemic closings and orders.

On the budget, Sen. Jake Corman said, “This budget offers a blueprint to help our commonwealth recover from the damage created by the COVID-19 pandemic and chart a better path forward.” Speaking of the Republican caucus, he said, “I am very proud of that team dealing with this pandemic in this very unique year in a very responsible way.  I am thankful we were able to pass a fiscally responsible budget that helps us tackle the immediate needs created by the pandemic as well as the financial challenges that lie ahead.”

Democrats were not as enthusiastic, and many Democrats who voted for the budget still called the process a “missed opportunity.”  Sen. Vince Hughes said they were pleased that budget “makes progress in a number of areas, from extra school funding, to a newly created $30 million Community Violence Program, to a dramatic increase in funding for rental assistance and mortgage security.”  He said, “we wanted much more for the people of PA, and they certainly deserve much more.

Much of the increase in overall spending is due to growth in entitlements, especially in the Department of Human Services with its entitlement programs including Medicaid. The department’s budget is to grow by $1.81 billion, or 11.7 percent, compared to the agency’s current year spending. (A line item spreadsheet of the just passed budget, comparing it to previous years is also attached.)

Including the federal dollars received during the past two fiscal years, DHS spending has grown from $13.61 billion at the start of FY2020-21 to $17.32 billion for FY2021-22, more than 25% in one year and most of the total growth.  Medical Assistance funding rose this year to $10.2 billion, up from the $8.9 billion in 2020-21.

The budget plan maintains funding for academic medical centers, fully funds Medicaid budget lines for trauma centers and obstetric, neonatal intensive care, and burn units. The commonwealth’s critical access hospitals were given an increase to account for additional hospitals becoming part of the system in the coming year.

Not in the health care budget was funding for grants to hospitals or providers under the American Rescue Plan Act, nor grants for community programs to bolster post-pandemic health care.

Gov. Wolf said he would sign the budget this week.  It passed with bipartisan support, as 35 House Democrats voted in favor, while 14 Senate Democrats did the same. Seven House Republicans voted against the budget bill, while no Senate Republicans opposed the measure.

Wolf said, “This budget will help our state move forward and rebuild a strong, equitable economy that works for Pennsylvanians. It provides the largest education funding increase in state history so our students can get the education and training they need for good jobs and to enjoy a successful life in Pennsylvania. And it isn’t any ordinary increase in funding – it is new funding specifically and equitably targeted at the most underfunded districts that disproportionately serve students of color, students in poverty, students with disabilities and English learners.

“The budget also helps stabilize child care so working parents can return to the workforce, provides for their families and grows the economy. We are addressing the housing crisis, so homeowners and renters will have a roof over their head and a safe place to live. This is a budget that invests in Pennsylvanians.”

35 House Democrats voted in favor of the budget, while 14 Senate Democrats did the same. Seven House Republicans voted against the budget bill, while no Senate Republicans opposed the measure.

Senate Appropriations Committee Minority Chair Vincent Hughes, D-Philadelphia, said that the budget “does not meet our desires but …. moves the ball forward,” noting that the bill increases funds education, community violence prevention and emergency financial relief programs. Hughes voted in favor of the bill.

The Fiscal Code, Administrative Code, Tax Code and Public School Code bills were passed as well, all traditionally part of the budget package.

The Fiscal Code implements the spending authorized by the General Appropriations bill.  This year’s bill allocated more than $2 billion in federal relief funds, more than half of which will go into assistance for renters, homeowners and providing assistance toward paying utility costs.

COVID-19 and the shutdown of schools and child care services pushed child care issues, particularly availability and access, to the forefront during the past 16 months, and the Fiscal Code provides $728 million in federal relief dollars for the state Department of Human Services’ Child Care Stabilization Program, with the funds to be used by child care providers to cover a range of expenses such as personnel costs, rent, facility maintenance and improvements, personal protective equipment (PPE) and COVID-related supplies, goods and services needed to resume providing care, mental health supports for children and early educators, and reimbursement of costs associated with the current public health emergency. As part of the legislation, the department will be tasked with establishing an application process for interested childcare providers.

Approximately $350 million of federal relief funding - federal ARPA Elementary and Secondary School Emergency Relief (ESSER) funds - will be used to address learning loss, as well as provide for summer enrichment and after school programs. Another roughly $150 million of ESSER funds will also be distributed to education institutions throughout the state; here’s a breakdown of the distribution of the combined $500 million:

  • Roughly $250 million to school districts, charter schools, and cyber charter schools from the required set-aside for learning loss proportionally based on the allocation of federal Title I, Part A funds.
  • Roughly $50 million to school districts, charter schools, and cyber charter schools from the required set-aside for summer enrichment programs based on the allocation of federal Title I, Part A funds.
  • $43.5 million to IUs, distributed proportionally on aid ratio and average daily membership.
  • $43.5 million to career and technical centers proportionally based on the secondary career and technical education subsidy.
  • $19.9 million to education programs for neglected, delinquent and at-risk youth proportionally based on the allocation of federal Title I, Part D funds.
  • $15 million to approved private schools, private residential rehabilitative institutions and chartered schools for the education of the deaf and the blind proportionally based on average daily membership.
  • $14 million to additional targeted support and improvement schools proportionally based on economically disadvantaged enrollment.
  • $14 million over three years to the Department of Education for the administration of ARPA ESSER and the ARPA - Emergency Assistance to Nonpublic Schools.

In addition to those funds for public schools, $152.7 million in federal relief dollars – from ARPA Emergency Assistance to Non-Public Schools funds - is to be distributed to non-public schools as prescribed as part of a new grant program to be created with the state Department of Education.

HB1348 also allows DHS, with approval of the Budget Secretary, to transfer federal funds from the Temporary Assistance for Needy Families(TANF) Block Grant to the Child Care and Development Fund Block Grant and the Social Services Block Grant if the transfer will not result in a deficit. The Budget Secretary must provide notice to the chair and minority chair of the Appropriations Committees of both the House of Representatives and the Senate ten days prior to the transfer.

And the legislation places a few more requirements upon the DHS with an eye of attempting to slow the agency’s growth in spending as well as more quickly identify and reduce the future need for supplemental appropriation requests to account for agency spending in excess of what it was appropriated for the fiscal year. The past few years, those supplemental requests have been growing, with the latest supplemental request being nearly $1 billion.

HB1348 prohibits the department from adding non-medically necessary services to the MA program that would result in a supplemental appropriation without the approval of the General Assembly.

Additionally, under the bill the Secretary of Human Services will be required to report quarterly to the Secretary of Budget and the chairpersons of the House and Senate Appropriations Committees on the department’s entitlement appropriations, with the reported information to include the number of enrollees by month, the average cost per enrollee, the required payment amounts by appropriation during the fiscal year, and the revised estimate of money needed by appropriation to make required payments for the remainder of the fiscal year.

The Fiscal Code also directs various percentage allocations of the state’s Tobacco Settlement Fund for health-related programs, with the total allocation for FY2021-22 being $327.45 million. Related to the Tobacco Settlement Fund, HB1348 transfers a bit more than $115.3 million in Cigarette Tax revenue to pay the debt service for the Tobacco Settlement Fund borrowing that was used to close a $1.5 billion budget hole in the FY2017-18 state budget.

The bill also significantly increases the state’s Rainy Day fund. Nearly $2.52 billion of the more than $3 billion revenue surplus from FY2020-21 will be directed to that fund, increasing its total to $2.76 billion. Republicans noted that the IFO predicts an economic contraction and decline in state revenue this coming year of more than $2.2 billion, creating a potential budget hole of up to $7.7 billion next June.   Another $5 billion in federal relief funds will go unspent to be used in future budgets.

A state regulation implemented by the Wolf administration to expand the number of salaried employees eligible for overtime pay in Pennsylvania is repealed under the Administrative Code bill.  The repeal affects a Department of Labor and Industry regulation that requires salaried workers earning up to certain annual pay thresholds to get time-and-a-half pay for any time they work over 40 hours in a week.

This regulation has made an estimated 400,000 additional salaried workers eligible for overtime pay. Gov. Tom Wolf announced the eligibility in 2018 after the General assembly refused to pass legislation raising the state minimum wage.

HB336 requires the Attorney General to defend claims against the Commonwealth in cases where the claim relates to a self-insurance program or third-party insurance managed by the Department of General Services.  Lobbyist disclosure rules are expanded, requiring that lobbyists register any "equity" they may hold in an entity they are lobbying on behalf of starting on July 30, 2022.

The duties of the Independent Fiscal Office are expanded too, with the IFO responsible for providing an independent revenue estimate for a bill or amendment affecting state revenues and fees if the estimated annual fiscal impact is above $50 million.

The new Tax Code bill (HB 952, largely expands state sales and use tax exemptions.

The Public School Code bill amends the Intercollegiate Athletics code with guidelines about how student athletes can get paid for the right to use their likeness.

No one in the General Assembly or Administration offered any statements on whether the General Assembly must return every three weeks to approve continuing gubernatorial emergency orders such as those currently in effect for the state opioid epidemic.  A Constitutional amendment, certified last week, limits the governor’s declarations of emergencies to 21 days unless the legislature votes on a concurrent resolution to extend the order.

Finally, this week, noting that 75% of Pennsylvanians have now received at least their first COVID-19 vaccination, the Department of Health on Friday formally ended its universal masking orders, effective 12:01 a.m. on Monday, June 28.