Agency of Education seeks $2.73 billion for FY2027 as Medicaid and federal grants decline

The Agency of Education presented its fiscal 2027 budget request of $2,730,000,000 and told the joint House and Senate Education committees the ask represents about a 3.91% increase over current levels, driven mainly by projected growth in the base education payment and personnel cost increases.

Sean (AOE finance staff) said the request reflects a reduction in federal pandemic-era funding and a $17.4 million decrease in special funds tied to the transfer of Medicaid school-based services to the Agency of Human Services. He described the AOE operating budget (personnel, contracts, operations) as roughly $42.3 million, with a $1.13 million increase chiefly from personnel costs and a 10% increase in health-care expenses.

Deputy Secretary Jill Brooks Campbell said the agency is proposing five limited-service positions to rebuild field-facing capacity for education transformation and district support. Those positions are currently funded for eight months; AOE staff said hiring has been difficult for short-term limited-service roles and they hope to convert the positions to permanent status if funding allows.

Campbell explained a request to revert about $4 million of ARPA/SFRF funds, which came in under budget on IT modernization projects, and reappropriate those dollars as general fund to support Act 139 literacy initiatives after the agency lost access to roughly $700,000 in federal ESSER support. She said the reappropriation would not be new money but a change in designation so literacy activities could continue.

Committee members pressed staff for line-item clarity. Staff said the agency combined two operating appropriation lines (V500 and V501) into a single V501 line to align budget presentation with contracting, and reviewed grant-driver changes, noting increases tied to the inbound-based basic education program driven by estimated student counts.

AOE staff agreed to provide a breakdown of specific line items on request, including the flexible pathways and smaller grants such as Governor's Institute and youth-development appropriations. The committees also asked for detail on the APA consulting contract, merger-support/non-large-school grants and how ongoing carry-forwards are being used to support Act 73 and Act 139 priorities.

The hearing closed without any formal votes; staff said they would circulate requested materials and return with additional analysis as needed.