This analysis represents the final step in the FY 2027 state budget creation process.
The Fiscal Year (FY) 2027 General Appropriations Act (GAA) was signed by Governor Maura Healey on July 9, 2026. This is the enacted budget for the Commonwealth of Massachusetts for FY 2027, which runs from July 1, 2026 to June 30, 2027. The FY 2027 GAA budget overall allocates $63.42 billion to programs that create a thriving commonwealth: early education and care, transportation, K-12 and higher education, housing, among many others. The funding of these programs is made possible by a variety of revenue sources, including the state income tax, taxes on corporations, and the Fair Share surtax, the voter-approved ballot initiative that enacted an additional tax on the highest incomes in Massachusetts.1
The primary questions coming into this budget cycle have been about how to protect residents against the harms caused by federal policy changes and how the state can prepare for a potential national economic downturn. The 2025 federal “One Big Beautiful Bill Act” (OBBA or OB3) will impose serious harms on Massachusetts residents, including reduced access to critical food assistance and health care and cutting federal funding that supports the state budget. Many of the most severe federal cuts will begin in FY 2028. State lawmakers have crafted a balanced FY 2027 budget based on current revenue projections, but a deteriorating economy and federal cuts would reduce revenue collections. This potential reduction of revenue collections would seriously hinder the state’s ability to spend on critical programs and infrastructure.
This in-depth analysis builds upon the preliminary analysis of the FY 2027 Conference Committee budget MassBudget completed in early July for which the governor did not alter before signing into law.
This analysis covers the following topics (click on one to be taken to that section):
Overall FY 2027 Budget Size, Revenue, Fair Share surtax spending, Housing, Transportation, Early Education and Care, K-12 Education, Higher Education, and Additional Areas of Note.
Overall Budget Size and Growth
Massbudget analysis of the size of the GAA includes both line item appropriations, funding that is allocated in the annual budget, as well as pre-budget transfers, which are statutorily required uses of state revenue that are directed to assigned spending outside of the budget process. For instance, preassigned portions of the sales tax are dedicated and transferred to the Massachusetts Bay Transit Authority (MBTA) and Massachusetts School Building Authority (MSBA). As shown in the table below, taking both types of spending together, the budget increased 4.0 percent between FY 2026 GAA and FY 2027 GAA, or less than half that amount adjusted for official projections of inflation.
Comparing the Fiscal Year 2027 General Appropriations Act to the FY 2026 GAA
| FY 2026 GAA | FY 2026 GAA, adjusted for projected inflation | FY 2027 GAA | Percent Change | Percent Change, adjusted for projected inflation | |
|---|---|---|---|---|---|
| Total Line Item Appropriations | $60.1 billion | $61.5 billion | $62.4 billion | 3.8% | 1.5% |
| Pre-Budget Transfers | $7.8 billion | $8.0 billion | $8.2 billion | 5.1% | 2.7% |
| Total | $67.9 billion | $69.5 billion | $70.6 billion | 4.0% | 1.7% |
*MassBudget makes adjustments to total budget spending to reflect fund transfers within and between state and local government. This results in a budget total that appears lower than line item spending, but which more accurately reflects actual spending. Our spending total excludes the tuition payments that public higher education institutions are required to remit to the state. We also exclude revenue that is remitted by municipalities to the state for certain costs associated with municipal employee health care programs.
Revenue
The FY 2027 budget contains no new taxes or fees. The amount of revenue that is available to spend is based on the January 2026 Consensus Revenue Estimate (CRE) of $44.9 billion, which includes $2.7 billion in Fair Share surtax revenue. Changes in federal policies, from tariffs to immigration, may have significant negative impacts on national and state economies, impacting these revenue collections. As OB3 federal corporate tax cuts (see below) begin to phase in, they will reduce Massachusetts tax collections; though, the FY 2027 budget considers these revenue losses and takes steps to limit them. Meanwhile, anticipated cuts to federal reimbursements for state programs such as MassHealth (Massachusetts’ Medicaid program) and the Supplemental Nutrition Assistance Program (SNAP) are expected to reduce non-tax revenue collections in FY 2027.
OB3 Tax Cuts
In general, changes to federal corporate tax law flow automatically into Massachusetts’ state corporate tax code unless state lawmakers act to opt out of federal changes. The One Big Beautiful Bill Act (OB3), passed in July of 2025, included a number of major corporate tax cuts. In the fall of 2025, the Massachusetts Department of Revenue (DOR) estimated that the five most costly of these tax cuts – if they also became part of the Massachusetts tax code – would deprive the Commonwealth of hundreds of millions of dollars of tax revenue over the coming several years. In the FY 2027 GAA, state lawmakers opted to delay the adoption of these five costly, ineffective, and inequitable OB3 tax cuts. The FY 2027 GAA assumes these delays, and a reduction in the scope of one of the tax cuts will together save the Commonwealth $108 million in FY 2027. Importantly, lawmakers opted out of these tax cuts entirely for FY 2026, which avoids an FY 2026 revenue loss that DOR estimated would exceed $400 million. DOR’s analysis indicates that opting out entirely from these OB3 corporate tax cuts for FY 2027 and the next several years would preserve hundreds of millions more in progressive revenue.
Should substantial revenue shortfalls materialize in FY 2027, either in tax revenue or federal funding, lawmakers will need to find ways to close the resulting budget gap. Progressive revenue options, such as requiring multinational corporations to pay tax on profits they shift offshore, would be an important tool to address budget gaps that may emerge.
Additional revenue is made available in the FY 2027 GAA by making use of the high volume of tax collections on capital gains, which would otherwise automatically be deposited in the Commonwealth’s Stabilization Fund (“rainy day fund”) and other savings accounts.2 The FY 2027 GAA raises the amount of capital gains tax revenue available to the FY 2027 budget to $2.25 billion. This frees up $470 million of capital gains tax collections for budgetary spending during this fiscal year. The FY 2027 GAA also alters the allocation of the $256 million in capital gains tax revenue anticipated to be collected above the new threshold. Continuing a trend away from concentrating deposits in the Commonwealth’s already unprecedentedly large Stabilization Fund, the FY 2027 GAA directs $51.2 million to the Stabilization Fund (which currently holds over $8.5 billion), $150 million to the Retiree Benefits Trust Fund, $34.8 million to pension obligations, and $20 million to the Disaster Relief Fund.
The FY 2027 GAA also makes additional revenue available by expanding the state’s pass-thru entity (PTE) excise tax program to include Fair Share surtax payments. The PTE excise program is an accounting “workaround” that allows tax filers with “pass-through” income – a type of business income overwhelmingly collected by households with high incomes – to choose to pay the Massachusetts state tax due on this income through a special payment structure. This special structure allows these tax filers to deduct more of their state tax payments from their federal taxable income, thus reducing their federal tax bills significantly. As part of the PTE excise tax workaround, the Commonwealth collects from the tax filer a net amount equal to 10 percent of what the tax a filer pays thru the PTE program. The GAA assumes an FY 2027 gain of $296 million from expanding use of the state’s PTE program to Fair Share surtax payments. The PTE excise program thus increases revenue for the Commonwealth, while also significantly cutting federal taxes for many households with high incomes.
The FY 2027 GAA also takes a number of actions that will affect future revenue, but do not change the amount of revenue available in the FY 2027 GAA by:
- Establishing a process for retaining in the General Fund the interest generated from government funds and accounts. This will make some additional revenue available for budget actions in the course of FY 2027, though the GAA carries no specific dollar amount for these revenues.
- Creating a new formula for calculating the annual threshold below which capital gains tax collections will be available to the budget. The new formula relies on average collections over a longer time frame (10 years rather than three) to set the threshold, thereby smoothing year-to-year fluctuations.
- Establishing a standing task force that will make recommendations regarding the excess capital gains tax threshold, the long-term financial liabilities of the Commonwealth, and the health of the Stabilization Fund.
For more MassBudget analysis of tax revenue issues, visit our landing page on taxes.
FY 2027 Fair Share and FY 2026 Fair Share Supplemental Budget
The FY 2027 GAA budget includes $2.7 billion from Fair Share revenue, a surtax on the highest incomes in Massachusetts.3 The budget allocates $550 million in Fair Share funding to transportation and $2.15 billion to early education, K-12, and higher education programs.
In addition to the FY 2027 GAA budget, the legislature and the governor enacted a FY 2026 Fair Share supplemental budget, totaling $1.35 billion in Fair Share spending for one-time investments. This supplemental budget allocates $573.5 million for education and $779.5 million for transportation. The supplemental Fair Share budget dollars were available because collections from the Fair Share surtax greatly exceeded the projected collections and the resulting budgetary spending threshold set by lawmakers as part of the annual Consensus Revenue Estimate process. This has been the case each year since Fair Share surtax revenue was included in the budget process for FY 2024.4
The table below shows Fair Share surtax spending from the FY 2027 GAA in tandem with the FY 2026 Fair Share supplemental budget enacted in early June 2026. The table presents the $1.35 billion appropriated in the supplemental budget as carried over for spending in FY 2027, which began a few weeks later on July 1.
Fair Share revenue available in FY 2027 from the FY 2027 GAA and the Fair Share Supplemental Budget at the end of FY 2026
| Education | Transportation | Total | |
|---|---|---|---|
| FY 2026 Supplemental Budget | $573,500,000 | $779,500,000 | $1,353,000,000 |
| Percentage | 42% | 58% | |
| FY 2027 General Appropriations Act | $1,729,800,000 | $970,200,000 | $2,700,000,000 |
| Percentage | 64% | 36% | |
| Total Fair Share Spending | $2,303,300,000 | $1,759,600,000 | $4,053,000,000 |
| Percentage | 57% | 43% |
The Fair Share surtax revenue provided through these two budgets make $4.05 billion available for spending on public education and transportation in FY 2027. Spending in the FY 2026 supplemental budget is weighted more heavily toward transportation, whereas the FY 2027 GAA is weighted more towards education. In combination, 57 percent of Fair Share surtax revenue is designated for education and 43 percent for transportation.
Since its passage, the Fair Share surtax has enabled the Commonwealth to make critical investments in transportation and education. Long-deferred repairs and improvements have been made possible for roads and bridges across the state. The Massachusetts Bay Transportation Authority (MBTA) has been able to make improvements and invest in reduced fare programs. Regional Transit Authorities (RTAs) are flourishing with fare-free buses and more routes and service time bringing record ridership. Other transportation improvements around the Commonwealth are underway due to steady new financing of the Commonwealth Transportation Fund.
On the education side, Massachusetts has been able to continue funding free school meals and child care operational grants (programs initially funded by federal pandemic dollars). State aid for local school districts increased substantially and investments were possible in higher education, including making community college free for all students.
For more MassBudget analysis of the Fair Share tax and investment, see our Fair Share landing page.
Housing
Housing programs received a total of $1.21 billion in funding in the FY 2027 GAA, a 5.4 percent increase from the previous year without adjusting for inflation. The cost of housing is rapidly rising in the Commonwealth and continues to be a prime challenge for many households with low and moderate incomes. Therefore, in addition to building more affordable housing, it is critical for the state to continue providing new and sustained investments in programs that meet ongoing housing affordability needs.
Housing Assistance and Homeless Programs Line Items in the FY 2027 Budget
| Line item | Program | FY 2026 GAA | FY 2026 Total Appropriations | FY 2027 GAA | Percent Change from FY 2026 GAA compared to FY 2027 GAA |
|---|---|---|---|---|---|
| 7004-0100 | Operation of Homeless Programs | $18,248,242 | $18,248,242 | $29,515,982 | 61.7% |
| 7004-0101 | Emergency Assistance Family Shelter and Related Programs | $276,421,903 | $276,421,903 | $259,900,648 | -6.0% |
| 7004-0102 | Homeless Individuals Assistance and Related Programs | $113,327,398 | $115,427,398 | $114,086,718 | 0.7% |
| 7004-0108 | HomeBASE – Mass. Short Term Housing Transition Program | $57,322,001⌖ | $57,322,001⌖ | $82,322,001 | 43.6% |
| 7004-0110 | Family Shelter Diversion | $0 | $0 | $5,000,000 | N/A |
| 7004-9024 | Mass. Rental Voucher Program (MRVP) | $253,311,840 | $253,665,081 | $278,341,728 | 9.9% |
| 7004-9030 | Alternative Housing Voucher Program (AHVP) | $19,461,214 | $19,505,920 | $19,263,183 | -1.0% |
| 7004-9316 | Residential Assistance for Families in Transition (RAFT) | $207,477,715* | $221,323,570** | $209,000,000 | 0.7% |
*A supplemental budget for FY 2025 provided additional funding of $42.91 million, $13.85 million of which was carried forward into FY 2026 RAFT funding.
** A recent update shows HomeBASE is expected to receive $91.4 million in total in FY 2026 as about $34.1 million in additional funds were transferred into the line item to help meet needs.
Investments in Core Housing Assistance Programs
The FY 2027 GAA increases investments across the board to core housing assistance programs when compared to the FY 2026 GAA. FY 2027 GAA investment across these core housing assistance programs total approximately $588.9 million, an increase of $51.3 million compared to the FY 2026 GAA, not accounting for inflation. For some programs, additional funds were transferred or put in via a supplemental budget to support the programs during FY 2026 because existing funds were insufficient. The FY 2027 GAA includes:
- $278.3 million for Massachusetts Rental Voucher Program (MVRP, 7004-9024) which supports households experiencing homelessness or housing instability with affordable housing. This is an increase from FY 2026 GAA of approximately $25 million, without adjusting for inflation. This new funding would support additional housing vouchers, allowing the program to assist even more households with stable and affordable housing. According to the Massachusetts Senate Ways and Means Committee, the state could support more than 11,500 mobile and project-based rental vouchers in total with this funding allocation.
- $82.3 million for HomeBASE (7004-0108) which has been the state’s primary tool for moving families out of Emergency Assistance (EA) shelters into stable housing and providing housing assistance to families eligible for shelter.5 While this appears to be a $25 million increase over the final FY 2026 GAA, it falls short of the $91.39 million expected to be spent on HomeBASE in FY 2026. Additional funds were transferred into HomeBASE during FY 2026 to help meet the high need for housing support.
- $209.0 million for Residential Assistance for Families in Transition (RAFT, 7004-9316) which helps individuals and families facing eviction, foreclosure, loss of utilities, and other housing emergencies. This is an approximately $1.5 million increase when compared to the FY 2026 GAA, not accounting for inflation. However, RAFT received $13.85 million beyond what was initially allocated in the FY 2026 GAA from an FY 2025 supplemental budget. This additional funding was to assist in addressing the heightened demand for housing assistance because of the continued housing affordability crisis, which makes this FY 2027 expected funding increase slightly less impactful.
Support for Families Experiencing Homelessness
The FY 2027 GAA makes some new and increased investments while also cutting funds for the Emergency Assistance (EA) family shelter program when compared to FY 2026 GAA. These include:
- $259.9 million for EA shelter (7004-0101) which funds shelter for children and families. This is a funding cut of 6 percent without accounting for inflation. Newer restrictions have reduced access to EA shelter and therefore lowered the number of families in shelter. However, homelessness is still elevated in Massachusetts, making funding to address family homelessness vital.
- $5 million for Family Shelter Diversion (7004-0110) which is new funding that would divert families away from EA shelters by providing other supportive services. This new investment will partially offset the funding cut to EA shelters and services.
- $29.52 million for Operation of Homeless Shelters (7004-0100) which includes compensation of caseworkers and support personnel. The FY 2027 GAA significantly increases funding by about 62 percent, not adjusted for inflation. The FY 2027 GAA includes budget language that directs the Executive Office of Housing and Livable Communities to take steps to extend intake hours for families seeking shelter, which could account for part of the large funding increase. This positive change will provide more opportunities for support and access to families experiencing homelessness.
Public Housing Investments
The FY 2027 GAA includes approximately $119.1 million in public housing investments. Compared to the FY 2026 GAA, this is a small increase in absolute dollars ($2.23 million – not adjusted for inflation). This funding is dispersed between two line items: one that supports state public housing operations (7004-9005) and another that funds needed improvements to public housing processes and systems (7004-9007).
For more MassBudget analysis of housing issues, visit our landing page on housing.
Transportation
Transportation across the Commonwealth continues to benefit from Fair Share surtax funding, though long-term investment needs continue to outstrip revenues. Total transportation funding in the FY 2027 GAA is slated to increase only 2.6 percent over the FY 2026 GAA, just slightly ahead of inflation projections. Those calculations, however, do not include $100 million in Fair Share surtax support for human services transportation (4000-0000). This is a $450 million line item newly receiving support through Fair Share surtax funds which is traditionally categorized as a human services expenditure, though is clearly transportation-related. The FY 2027 GAA transportation total also does not include the $779.5 million in transportation investments included in the June 2026 supplemental Fair Share budget, which is $20.5 million more than the Fair Share supplemental budget enacted a year earlier. With these additions, transportation funding overall increased by 7.1 percent.
A substantial factor slowing total transportation funds for FY 2027 is a problem that has troubled the Massachusetts Bay Transit Authority (MBTA) for a quarter century.6 A major portion of MBTA funding comes from the sales tax, which is projected to grow relatively slowly in FY 2027. As a result, the pre-budget sales tax transfer to the MBTA is projected to increase only 1.3 percent to $1.44 billion, slower than projected inflation.
The MBTA also receives $465.2 million from the FY 2027 GAA in operating support, which is $5 million less than in FY 2026. Fair Share surtax revenue is providing $215.2 million of this total, which continues to show the importance of this funding source. The operating support also helps ensure continuation of the discount fares program for riders with low incomes and $35 million for an MBTA academy program to establish a pipeline for a skilled workforce for the transit authority.
The Massachusetts Department of Transportation (MassDOT) also receives $605 million from the FY 2027 GAA as a transfer to the Massachusetts Transportation Trust Fund, an 8.2 percent increase over FY 2026. These funds support a variety of functions, primarily maintenance and improvements for roads and bridges as well as some support for public transportation and intercity rail. Fair Share surtax revenue provides $70.2 million of these funds, about two-thirds of which through the Commonwealth Transportation Fund.
The FY 2027 GAA provides $217.5 million in operating support to the 15 Regional Transit Authorities (RTAs) that operate outside the Boston area. The large majority of these funds – $134.8 million – of which are Fair Share surtax revenue. The support for RTAs includes $40 million to ensure all service will remain fare-free all year round. MassDOT has determined that this policy has been a “driving factor” in major ridership increase and improved service and rider satisfaction. This is an increase from the $35 million that was provided to support fare-free policies in FY 2026. In addition to the economic and environmental benefits of fare-free policies, there are significant equity benefits. Especially on the regional transit systems, bus riders tend to have lower incomes, and the bus fare represents a far larger portion of riders’ incomes.
Transportation Funding in the FY 2027 GAA budget
| Line Item | Program | FY 2026 GAA | FY 2027 GAA | Percent Change |
|---|---|---|---|---|
| 1595-6368 | Massachusetts Transportation Trust Fund | $558,945,163 | $605,046,384 | 8.2% |
| 1595-6369 | Mass. Bay Transportation Authority | $470,200,000 | $465,150,000 | -1.1% |
| 1595-6370 | Regional Transit Authorities | $209,000,000 | $217,450,000 | 4.0% |
| 1595-6379 | Merit Rating Board | $11,671,807 | $11,671,807 | 0.0% |
| T10-34 | Sales Tax Transfer to MBTA | $1,425,280,000 | $1,444,259,200 | 1.3% |
* Does not include $100 million provided from Fair Share for Human Services Transportation (4000-0000)
The Fair Share supplemental budget enacted in June 2026 will largely be spent in FY 2027, allocating funds for the following transportation investments:
- MBTA reserve to address future deficiencies (1596-2612): $450 million
- Aid to municipalities to support snow and ice clean up (1596-2626): $101 million
- MBTA capital investments (1596-2404): $60 million
- MBTA reserve fund for workforce and safety investments (1596-2427): $50.5 million
- Reserve to support MBTA low-income reduced fare program (1596-2405): $20 million
- MassDOT workforce pipeline (1596-2613): $20 million
- One-time local earmark projects across the Commonwealth (1596-2507): $19.3 million
- Improved ferry service (1596-2521): $15 million
- Grants for RTA capital infrastructure improvements and equipment and facilities upgrades at (1596-2520): $10 million
- Reimbursements to the state for World Cup 2026 costs (1596-2026): $10 million
- Microtransit and rural last-mile transit (1596-2526): $5 million
- Aid to municipalities for support of unpaved roads (1596-2506): $3.8 million
For more analysis on transportation issues, visit MassBudget’s landing page on transportation.
Early Education and Care
Early education and care received a total of $1.87 billion in funding in the FY 2027 GAA, a 9.7 percent increase from the previous year’s GAA, not adjusted for inflation. Funding for early education and care programs are critical to supporting families and young children. High-quality early childhood education gives children a strong developmental start while helping adults to stay engaged in the workforce and support their families. Additionally, investments in the early childhood workforce ensure that educators are given the tools and compensation that they need to thrive as professionals.
Changes to Key Early Education and Care Programs in the FY 2027 Budget
| Line Items | Category | FY 2026 GAA | FY 2026 Total Appropriation | FY 2027 GAA | Percent Change from FY 2026 GAA to FY 2027 GAA |
|---|---|---|---|---|---|
| 1596-2410, 3000-1045 | C3 Operational Grants | $475,000,000 | $475,000,000 | $475,000,000 | 0.0% |
| 1596-2411, 1596-2511,1596-2452, 3000-3060, 3000-4060 | Child Care Financial Assistance | $1,059,548,980 | $1,090,021,183 | $1,220,827,822 | 15.2% |
| 3000-1000 | EEC Administration | $11,515,914 | $19,015,914 | $17,195,519 | 49.3% |
| 1596-2412, 3000-6025 | Commonwealth Preschool Partnership Initiative (CPPI) | $20,500,000 | $25,465,841 | $15,500,000 | -24.4% |
| 3000-2000 | Child Care Resource and Referral Centers (Access Management) | $20,000,000 | $20,000,000 | $20,000,000 | 0.0% |
| 3000-5000 | Grants to Head Start Programs | $20,000,000 | $20,000,000 | $20,000,000 | 0.0% |
The final FY 2027 GAA includes:
C3 Operational Funding (3000-1045): Commonwealth Cares for Children (C3) operational support for early education programs is funded at $475 million for FY 2027, which is level with FY 2026 funding. The C3 program is supported by both Fair Share surtax revenue and revenue from the state’s newly-operational online lottery. For FY 2027, Fair Share surtax revenue is contributing approximately 79 percent of C3’s total funding. For comparison, in FY 2026, C3 was funded entirely by Fair Share surtax revenue.7
Over 90 percent of early education programs receive C3 funding. This funding has been especially important for increasing educator wages, staffing in programs, and the overall number of available child care slots in the Commonwealth. Continued funding for C3 underscores the legislature’s commitment to improving the availability, affordability, and quality of the early childhood education sector across Massachusetts. However, due to the impact of inflation and the growing number of early education programs, the lack of increase in the funding amount is likely to pose challenges for the Department of Early Education and Care (EEC) and the programs receiving C3 grants. EEC may not be able to provide C3 funding to every eligible program, as was already the case in FY 2026. Participating programs will surely benefit from C3 in FY 2027, but level funding will constrain the efficacy of this operational funding compared to previous years.
Child Care Financial Assistance (3000-3060, 3000-4060): Child care financial assistance (CCFA) received $1.2 billion in the FY 2027 GAA and an additional $31.2 million in the FY 2026 Fair Share supplemental budget specifically to reduce the income-eligible CCFA waitlist. Overall, CCFA spending increased just over 16 percent from FY 2026 to FY 2027.
CCFA provides low- to no-cost child care to children in families with specific high needs (such as families participating in the state’s cash assistance program or involvement with the Department of Children and Families, known as supportive child care) or with low-incomes (income-eligible care). About 66,000 children a month participated in CCFA between May 2025 and April 2026. The cost of childcare in Massachusetts is higher than the national average, consuming about 12 percent of the income of full-time working parents. CCFA is, therefore, a critical lifeline for working families raising children in the Commonwealth.
CCFA relies heavily on revenue from the Fair Share surtax for FY 2027 spending. Overall, about 32 percent of CCFA spending for FY 2027 comes from either the Education and Transportation Fund or from the June 2026 Fair Share supplemental budget through the Education and Transportation Innovation and Capital Fund. The FY 2026 Fair Share supplemental budget transferred $150 million of excess Fair Share surtax revenue to the High-Quality Early Education and Care Affordability Fund. These dollars were then designated for both supportive and income-eligible child care in the FY 2027 GAA.
Fair Share surtax revenue will also support a small but meaningful reduction of the income-eligible CCFA waitlist in FY 2027. The $31.2 million included in the FY 2026 Fair Share supplemental budget is expected to reduce the waitlist by up to 2,000 children, through a combination of contracted seats and child care vouchers. Income-eligible CCFA has been unavailable to new families since March 2024, which has negatively impacted both families and programs trying to fill seats. As of June 2026, there are just over 31,000 children on the waitlist. This investment represents much needed relief for families with low incomes looking for child care.
Commonwealth Preschool Partnership Initiative (3000-6025): The Commonwealth Preschool Partnership Initiative (CPPI) received $10.5 million in the FY 2027 GAA, a 32 percent decrease compared to FY 2026. CPPI supports the collaboration of local school districts and community-based child care programs in providing low- to no-cost high-quality preschool. CPPI is supported exclusively by Fair Share surtax revenue in FY 2027. This will be the second consecutive fiscal year in which the Fair Share surtax’s contribution to the program exceeds any contribution from the General Fund.
Although this reduction in funding threatens the maintenance of CPPI programming, the exact impact is unclear at the time of this analysis. Governor Healey’s Gateway to Pre-K Initiative set the goal of implementing a CPPI program in every Gateway city by 2026. As of FY 2026, 19 of 26 Gateway city school districts received CPPI funding. The FY 2027 appropriation makes it unlikely that this goal will be achieved. Funds from this line item are used primarily to support the staffing and high-quality curriculum implementation that makes CPPI successful. There are currently 30 communities across the Commonwealth receiving CPPI funds. In FY 2025, more than 3,200 preschoolers were enrolled in CPPI classrooms.
Department of Early Education and Care (EEC) Administration (3000-1000): EEC administration received $9.2 million for FY 2027, accounting for non-administrative earmarks within the line item. Since FY 2025, EEC administration funding has been reduced by about 24 percent, accounting for earmarks and not adjusting for inflation. When administrative funding was reduced from $12.1 million in the FY 2025 GAA to $6.0 million in the FY 2026 GAA (accounting for earmarks), EEC was able to use flexible Fair Share surtax funds to avoid significant staffing and operations changes. Although the FY 2027 GAA increased administrative funding slightly, it does not restore FY 2025 funding. According to EEC, Governor Healey’s FY 2027 budget proposal of $13.2 million (without earmarks) would restore FY 2025 funding levels. Reductions to EEC administration funding are likely to have negative impacts on overall staffing capacity and general program efficacy.
The June 2026 Fair Share supplemental budget will largely be spent in FY 2027 and includes support for the following early education items:
- Transfer from the Education and Transportation Innovation and Capital Fund to the High-Quality Early Education and Care Affordability Fund: $150 million transfer will be used primarily to support child care financial assistance (CCFA) (see above section on CCFA)
- Income-Eligible Waitlist and Educator Loan Forgiveness (1596-2702): $31.2 million to reduce the income-eligible child care waitlist (see above section on CCFA) and $7 million for an early educator loan forgiveness program
For more analysis on early education and care, see MassBudget’s education landing page.
K-12 Education
K-12 Education received a total of $10.4 billion in funding in the FY 2027 GAA, a 4.9 percent increase from FY 2026. This includes $9.17 billion for K–12 operational programs that support public school districts, such as Chapter 70 aid, special education reimbursements, student transportation reimbursements, and free school meals Additionally, approximately $1.29 billion is included for school construction and modernization projects that help ensure students and educators have safe, healthy, and modern learning environments.
Changes to Key K-12 Education Spending Areas in the FY 2027 Budget
| Line Items | Category | FY 2026 GAA | FY 2026 Total Appropriation | FY 2027 GAA | Percent Change from FY 2026 GAA to FY2027 GAA | Percent Change from FY 2026 Total Appropriation to FY 2027* |
|---|---|---|---|---|---|---|
| 7061-0008 | Chapter 70 | $7,361,864,553 | $7,361,864,553 | $7,658,399,506 | 4.0% | 4.0% |
| T10-62, 1596-2424 | School Buildings | $1,275,280,000 | $1,300,280,006 | $1,286,259,200 | 0.9% | -1.1% |
| 7061-0012 | Special Education Circuit Breaker | $484,927,484 | $641,952,453 | $654,644,886 | 35.0% | 2.0% |
| 7061-9010 | Charter School | $198,988,065 | $198,988,065 | $200,402,605 | 0.7% | 0.7% |
| 1596-2422 | School Meals | $180,000,000 | $192,000,000 | $180,000,000 | 0.0% | -6.2% |
| 1596-2451, 7035-0006, 7035-0008 | Transportation | $132,439,587 | $132,439,587 | $150,797,852 | 13.9% | 13.9% |
*FY 2026 Total Appropriation reflects the FY 2026 GAA plus additional appropriations made after the budget was enacted. For the Special Education Circuit Breaker ($152.0 million), Green School Works ($25.0 million), and Regional School Transportation ($4.0 million), the difference between the FY 2026 GAA and FY 2026 Total Appropriation is largely due to funding provided in the FY 2026 Fair Share Supplemental Budget, which provides a more comparable baseline for inflation-adjusted and year-over-year funding changes.
Chapter 70 Aid (7061-0008): In the final year of implementing the Student Opportunity Act (SOA), the FY 2027 GAA provides $7.66 billion in Chapter 70 aid to school districts, a $300 million increase from the FY 2026 GAA, a 4.0 percent increase. This includes approximately $7.05 billion in formula-based aid, $550 million in state aid to complete the final year of the SOA’s six-year funding increases, and $52.2 million to increase the minimum aid amount from $150 to $160 per pupil. This minimum aid increase applies to districts that would otherwise experience reductions in Chapter 70 aid due to declining enrollment or other formula-driven changes.
Student Transportation (1596-2451, 7035-0006, 7035-0008), which supports reimbursements for school transportation, regional school district transportation, and transportation for students experiencing homelessness, received $150.8 million in the FY 2027 GAA, a 13.9 percent increase from FY 2026’s total appropriation.
- School Transportation Reimbursements (1596-2451): $58.4 million to reimburse regional, vocational, and agricultural school districts for transportation costs.
- Regional School District Transportation (7035-0006): $57.2 million to reimburse regional school districts for student transportation costs.
- Homeless Student Transportation (7035-0008): $35.2 million to reimburse school districts for transportation provided under the federal McKinney-Vento Homeless Assistance Act.
English Learner Declining Enrollment Mitigation Fund (1599-0008): The FY 2027 GAA includes a $4 million reserve fund to offset aid reductions resulting from unexpected declines in English Learner enrollment. The fund responds to recent enrollment shifts that can disproportionately affect district finances, as explained in a recent MassBudget report. While this new fund is modest relative to the scale of potential losses for school districts, it represents an important step toward helping some districts close significant budget gaps in the upcoming fiscal year.
Foundation Budget Review Commission: The creation of a Foundation Budget Review Commission is one of the most significant K–12 policy achievements of this budget cycle because it takes a critical major step in reforming Massachusetts’ school finance system. The Commission is responsible for recommending updates to the state’s pre-K–12 Chapter 70 funding formula and issuing a report by October 31, 2028. The Commission will also consider findings from a separate Department of Elementary and Secondary Education (DESE) local contribution study and examine other K-12 funding programs, including rural school aid, charter school reimbursements, the special education circuit breaker, and municipal school district transportation costs. This all recognizes that the fiscal health of school districts extends beyond Chapter 70 alone.
The Fair Share supplemental budget that was enacted in June 2026 will largely be spent in FY 2027 and includes support for the following K-12 education items:
- Special Education Reimbursement Fund (1596-2604): $152.0 million to support additional special education reimbursement payments to school districts.
- School District Regionalization and Shared Services Grant Program (1596-2624): $16.5 million for grants supporting school district regionalization, shared services, technical assistance, and DESE’s regionalization toolkit, with priority for districts experiencing enrollment declines and underutilized school facilities.
- Rural School Aid (1596-9813): $4.0 million to provide additional aid to eligible rural school districts with low student density and below-average per capita income.
- Regional School Transportation Reserve (1596-2704): $3.0 million to provide additional support for regional school transportation costs.
- Civics Education Grants (1596-2703): $2.05 million to support civics education programs and initiatives.
- Cell Phone-Free Public Schools Grant Program (1596-0111): $1.0 million to support school districts implementing cell phone-free school policies.
In addition to the FY 2027 budget and the FY 2026 Fair Share supplemental budget, Governor Healey filed a separate FY 2027 Fair Share supplemental budget (H.5586). This supplemental budget proposes $100 million for all 319 operating school districts and Commonwealth charter schools. Funds are proposed to be distributed based on each district’s share of statewide student enrollment and used flexibly by local leaders to help address school budget shortfalls in the upcoming school year. If enacted by the legislature, this one-time investment would provide significant relief to school districts struggling across the state.
For more analysis of K-12 education issues in Massachusetts, visit the MassBudget Education landing page.
Higher Education
Higher education received a total of $2.2 billion in funding in the FY 2027 GAA, a 3.4 percent increase from FY 2026. Investments in higher education are critical to making college more affordable, expanding access to postsecondary opportunities, improving student retention and completion, and preparing Massachusetts residents for family-sustaining careers while strengthening the state’s economy.
Direct Operating Support for Public Institutions of Higher Education
The FY 2027 GAA provides $1.69 billion, a nearly $100 million increase to the standard operating budgets of the University of Massachusetts (UMass) system, state universities, and community college campuses. This increase includes $33.8 million more to UMass campuses, $34.9 million to state universities, and $30.7 million more to community colleges. In the years to come, budget writers should consider equitable distribution of increases to each sector of public higher education to ensure our most under-resourced students and institutions have the funding needed to thrive. In MassBudget’s FY 2026 budget analysis, MassBudget recommended budget writers more equitably distribute operating funding increases across the three public higher education sectors. The FY 2027 GAA reflects meaningful progress toward that goal.
Changes to Key Higher Education Spending Areas in the FY 2027 Budget
| Line item | Category | FY 2026 GAA | FY 2026 Total Appropriation | FY 2027 GAA | Percent Change from FY 2026 GAA to FY 2027 GAA |
|---|---|---|---|---|---|
| 7070-0065 | Massachusetts State Scholarship Program | $175,788,311 | $178,192,905 | $177,188,311 | 0.8% |
| 1596-2501, 1596-2418 | Free Community College | $120,000,000 | $120,821,909 | $137,048,000 | 14.2% |
| 1596-2414 | Student Financial Aid | $85,000,000 | $85,000,000 | $85,000,000 | 0.0% |
| 7100-4002, 1596-2439 | SUCCESS | $28,000,000 | $32,245,802 | $28,000,000 | 0.0% |
Student Financial Aid: The MASSGrant Plus Expansion Program (1596-2414) received $85.0 million in the FY 2027 GAA. Combined with the $18.3 million provided in the FY 2026 Fair Share Supplemental Budget, a total of $103.3 million will be available in FY 2027 to expand need-based financial aid for Massachusetts students attending public colleges and universities. The program helps reduce the cost of attending Massachusetts public colleges and universities, though there is still no statewide policy guaranteeing a tuition-free or no-out-of-pocket bachelor’s degree. While the Fair Share surtax has significantly expanded financial aid, college affordability also includes costs for housing, food, transportation, books, supplies, and other living expenses that remain barriers to college enrollment, persistence, and degree completion.
Free Community College (1596-2501) received $137.0 million in the FY 2027 GAA, a 12 percent increase from FY 2026 for Free Community College (and MassReconnect). Funded entirely through Fair Share surtax revenue, the program helps make higher education more affordable by covering remaining tuition and fees for eligible community college students after other federal and state grant aid has been applied. This program has been responsible for a 40 percent increase in community college enrollment, makes higher education more affordable for all Commonwealth residents, and constitutes a crucial investment in workforce development.
State University and Community College SUCCESS Grants: The FY 2027 GAA level-funded the State University SUCCESS Grants (1596-2439) and Community College SUCCESS Grants (7100-4002) at $14 million each, the same as FY 2026. Together, the programs provide wraparound support, including peer mentoring, academic advising, and academic skills workshops. These support services are designed to improve retention, transfer, and degree completion for students facing the greatest barriers to success, including low-income, first-generation, students of color, students with disabilities, and LGBTQ+ students.
The Fair Share supplemental budget that was enacted in June 2026 and will largely be spent in FY 2027 also includes support for the following higher education items:
- Financial Aid Expansion Reserve (1596-2603): $18.3 million to provide financial assistance to Massachusetts students attending public colleges and universities, with funding transferable to existing state financial aid programs.
- Targeted Scholarships (1596-2423): $15.0 million to provide financial assistance to public higher education students pursuing credentials in high-demand professions, including at least $1.5 million for eligible students age 25 or older attending municipal colleges.
- Tomorrow’s Educators and Educator Loan Repayment Programs (1596-9805): $10.1 million to encourage public higher education graduates to work in Massachusetts public schools through educator preparation and student loan repayment assistance, with priority for diversifying the educator workforce and supporting districts with higher poverty rates.
- Public Higher Education Endowment Incentive Program (1596-2425): $10.0 million to match private fundraising by community colleges and state universities for scholarships, endowed faculty positions, STEM and research programs, student success initiatives, financial aid, and other institutional priorities.
- University of Massachusetts Foundation, Inc. Higher Education Endowment Incentive Program (1596-2426): $10.0 million to match private fundraising by public colleges and universities for scholarships, academic programs, research, campus diversity initiatives, and programs supporting student persistence and completion.
- UMass Medical School Family Medicine Scholarship Pilot (1596-2622): $10.0 million to cover remaining tuition and fees for eligible UMass medical students who commit to practicing family medicine for at least five years in qualifying Massachusetts community health centers or health systems.
For more information about higher education issues in Massachusetts, visit the MassBudget education landing page.
Additional Areas of Note
Funding for transitional assistance caseworkers
The FY 2027 GAA provides $122 million in funding for Department of Transition Assistance (DTA) caseworkers (4400-1100), a cut of nearly $21 million from total projected appropriations in FY 2026. According to an analysis conducted by the Massachusetts Law Reform Institute (MLRI), this level of funding would result in approximately 150 caseworkers being laid off if no additional funding is provided through a supplemental budget. These caseworkers help administer programs like the Supplemental Nutrition Assistance Program (SNAP), Health Incentive Program (HIP), and employment and training – all serving families and individuals with low incomes.
| Line Item | Program | FY 2026 GAA | FY 2026 Total Appropriations | FY 2027 GAA | Percent change, FY 2026 GAA to FY 2027 GAA | Percent change, FY 2026 total to FY 2027 GAA |
|---|---|---|---|---|---|---|
| 4400-1100 | DTA caseworkers | $101,262,107 | $142,913,665 | $121,991,351 | +20% | -15% |
Providing adequate funding to ensure DTA staffing is keeping up with increased need is critical for families to receive much-needed food assistance benefits. It is also crucial for maintaining essential federal funding for years to come in light of new eligibility barriers to SNAP and other human service programs included in recent federal legislation. During the year following enactment of federal policy changes related to SNAP, the Center on Budget and Policy Priorities estimates that SNAP rolls in Massachusetts have fallen by about 175,000 people, a drop of 16 percent through May 2026. Children comprise 35 percent of those no longer receiving SNAP benefits. The Commonwealth will have to act promptly to prevent further losses of food assistance for children and adults by adding funding in an upcoming supplemental budget. Additional funds are needed to maintain and add more DTA caseworkers. This is an urgent need as it will take time for these workers to be hired, trained, and develop expertise.
In addition to the serious consequences for families and individuals who will lose access to food, new federal rules from the federal “One Big Beautiful Bill Act” (OB3) legislation newly require states to assume part of the cost of providing SNAP benefits if the Payment Error Rate (PER) exceeds prescribed levels. Failure to reduce the rate will result in Massachusetts having to assume a larger percentage of the cost of SNAP benefits, totaling potentially hundreds of millions of additional dollars. The shortage of DTA caseworkers is likely to make it more difficult for people who need SNAP and other human service benefits to properly comply with new eligibility and reporting rules. Ample numbers of skilled and experienced caseworkers are needed to reduce the error rate while also ensuring that people who need food assistance can properly document their situation and successfully navigate the new federal obstacles.
Funding for tax assistance for tax filers with low incomes
The FY 2027 GAA provides $500,000 for Volunteer Income Tax Assistance (VITA) sites as part of funding for the Department of Revenue (1201-0100). This amount is the same as FY 2026 and only one-third the amount provided in FY 2023. There are 88 VITA sites across the Commonwealth, serving over 23,000 taxpayers with low incomes and utilizing trained assistance from volunteers. VITA assists these taxpayers by helping them access free tax preparation, claim refundable tax credits, and connect to other services like the Women, Infants, and Children (WIC) food program and Head Start. These sites are also crucial to ensure the maximum impact of the Child and Family Tax Credit, the expanded Earned Income Tax Credit, and the Senior Circuit Breaker. In the wake of major federal tax changes enacted in 2025 and major workforce reductions at the federal Internal Revenue Service (IRS), the need to help families with low incomes and ensure they receive their federal and state credits is greater than ever. Unfortunately, the FY 2027 GAA continues to leave VITA sites under-resourced and families underserved.
Unrestricted local aid (UGGA)
Unrestricted General Government Assistance (1233-2350, or “UGGA”) is flexible state aid provided to support cities and towns. The FY 2027 GAA includes $1.36 billion for UGGA, a $40.0 million increase over FY 2026, or 3.0 percent. This is the largest inflation-adjusted increase in UGGA funding since FY 2020.
| Line Item | Program | FY 2026 GAA | FY 2027 GAA | $ Change from FY 2026 GAA to FY 2027 GAA | Percent change |
|---|---|---|---|---|---|
| 1233-2350 | Unrestricted General Government Assistance | $1,323,109,519 | $1,363,109,516 | $40,000,000 | 3.0% |
Annual changes to UGGA funding receive a lot of attention because municipalities have few opportunities to generate their own revenue outside of property taxes, which are tightly restricted by Proposition 2 ½ . Municipalities tend to depend on the property tax for the majority of their revenue. In the absence of robust and targeted local aid, the ability of different communities to provide services and infrastructure for their residents and communities would be highly disparate, reflecting and reinforcing stark differences in property values. For many cities and towns, UGGA is a critical source of funding. The extent to which UGGA keeps up with annual costs can determine decisions about garbage collection and parks maintenance, when city hall is open to help residents, or whether summer programs are available to youth.
Unfortunately, UGGA has not kept up with inflation for decades, even while cities and towns face rising costs for health care and other expenses. Moreover, the annual apportionment of UGGA between individual cities and towns has not been updated for decades. UGGA began in FY 2010, replacing two earlier programs that together provided municipalities with more funds than UGGA does (adjusted for inflation). Those earlier programs distributed funding more heavily to the cities and towns with greatest need, such as communities where residents had lower incomes and where lower property values limited municipalities’ capacity to generate their own revenue. UGGA, unlike the previous general aid programs or local aid for education, does not have a formula that gets annually applied to adjust the distribution of aid to changing needs. Unlike education aid, there is also no regular review of the adequacy of UGGA or assessment of its distribution between Massachusetts’ 351 cities and towns. Overall, a 2025 MassBudget analysis finds that the connection between economic need and local aid has become loose and inconsistent. Nonetheless, UGGA can still be regarded as mildly economically progressive: a community with low incomes or low property wealth is more likely to receive a relatively larger share of UGGA per resident.
UGGA funding in FY 2027 is distributed differently than in past years. Municipalities will receive the same amounts as in FY 2026 plus a portion of the $40 million increment distributed based on their current per-capita population. As a result, some towns that customarily receive relatively small amounts of UGGA because they are very wealthy will receive some of the largest percentage increases.
The municipalities with the largest percentage increases include Chilmark (120.0 percent), Aquinnah (69.8 percent), Nantucket (67.0 percent), Rowe (38.8 percent), and Truro (30.3 percent). Other communities receiving comparatively large increases include Edgartown (29.4 percent), Oak Bluffs (27.4 percent), and Weston (12.1 percent).
Meanwhile, the municipalities with the smallest percentage increases include Boston (1.3 percent), Gateway Cities such as Holyoke (2.1 percent), Fall River and Springfield (2.2 percent), Lawrence (2.4 percent), Pittsfield (2.5 percent), and Brockton and Worcester (2.6 percent), as well as rural towns such as Adams (2.0 percent) and Clarksburg, Athol, and Orange (all 2.4 percent). If future increases to UGGA are similarly distributed on a per-capita basis, it will steadily undermine the progressivity of general local aid.
Learnfare
The FY 2027 GAA repeals the state’s “learnfare” policy which currently penalizes children ages 6-16 who receive cash assistance through the Transitional Assistance to Families with Dependent Children (TAFDC) program if they do not attend school regularly. Families whose children have too many unexcused absences may lose the child’s portion of the cash assistance grant (referred to as “learnfare”). The policy has been both inequitable and ineffective. It punishes families experiencing deep poverty without addressing the causes of chronic absenteeism.
Looking Forward
The FY 2027 General Appropriations Act (GAA) brings together resources for public investments that support a higher quality of life across the Commonwealth. However, Massachusetts faces tremendous fiscal uncertainty that puts at risk our ability to make those investments. OB3 is severely cutting human service programs that families with low and moderate incomes rely on to make ends meet, like Medicaid and SNAP, while providing significant tax breaks that largely benefit the wealthiest individuals and corporations. The loss of these and other federal funding – such as federal financial aid for college education, Head Start, Section 8 housing vouchers, and changes in eligibility to enroll in the Affordable Care Act – mean that the FY 2027 Massachusetts budget could experience significant cuts after it is enacted.
While the FY 2027 GAA demonstrates the broad benefits of Fair Share surtax funding across the Commonwealth, cuts to federal support will bring enormous new funding challenges, particularly in programs designed to support the most vulnerable populations and communities. It will require additional and intentional effort to defend the advances that have been made in Massachusetts in recent years to ensure families have a robust safety net to rely on during their most challenging times. Implementing other revenue-generating policies, such as closing corporate tax loopholes and ending misguided tax breaks, such as for aircraft purchases, would provide more resources to sustain these essential programs.
To find more information on the FY 2027 budget, visit MassBudget’s Budget Browser tool, which details each spending line item, compares spending levels to past years with adjustments available for the impact of inflation. Please note that spending from the June FY 2026 Fair Share supplemental budget is currently listed in the Budget Browser as FY 2026 spending because it has not yet been officially carried forward to FY 2027.
Endnotes
1 To ensure that this additional tax continues to apply only to the Commonwealth’s highest income taxpayers, the $1 million income level is adjusted annually to reflect any increases in the cost of living by the same method used for federal income tax brackets.
2 There is an annually adjusted threshold for the amount of tax collected on capital gains income that lawmakers can use to balance the budget. Collections above the threshold are automatically deposited into the state’s rainy day fund, though lawmakers can choose to forgo some or all of this deposit in any given year.
3 To ensure that only the highest incomes are subject to the Fair Share surtax, the $1,000,000 income threshold enacted in 2022 is annually adjusted for inflation. In November 2025, the Department of Revenue certified that the threshold for tax year 2026 will be $1,107,750.
4 As of the first ten months of FY 2026 (though April), the Comptroller certified that Fair Share collections already exceeded $3.1 billion. Given that the FY 2026 budget anticipated only $2.4 billion in Fair Share surtax collections, at least $700 million (plus May and June collections) will be available for future Fair Share investment. Fifteen percent of the funds exceeding the FY 2026 spending threshold will be deposited in the Education and Transportation Stabilization to address potential future shortfalls for Fair Share spending items. The remaining 85 percent will be made available for supplemental one-time spending through the Education and Transportation Innovation and Capital Fund.
5 Families living in non-EA domestic violence shelters and residential use treatment programs may also be eligible for HomeBASE.
6 MassBudget, “How Slow Sales Tax Growth Causes Funding Problems for the MBTA,” January 2018.
7 This funding came through a combination of Education and Transportation Fund dollars and Early Education and Care Operational Grant Fund dollars, the latter of which received a one-time transfer of excess Fair Share revenue during FY 2025.
