Budget Overview
On Wednesday, January 28, Governor Maura Healey released her fiscal year 2027 (FY27) budget proposal. This proposal, called House 2, serves as the first step in a months-long debate as the budget moves through the legislative process.
In total, House 2 is a $63 billion spending plan that comes at a time of fiscal uncertainty and looming federal cuts. The economy continues to be sluggish, with Massachusetts only forecasting a modest 2.9% growth in revenue collections. This, plus an estimated $3.7 billion in cuts due to the federal budget reconciliation bill, has created a stormy budget season.
For several months leading up to the proposal’s release, The Arc engaged in focused advocacy with the Healey-Driscoll administration. We communicated our priorities directly with administrative leaders. We focused on the workforce and protecting Medicaid-funded services. Through our action alert system, over 1,700 letters were sent to the Governor to reiterate this critical message. The IDD-Autism Alliance, led by The Arc and comprised of strong advocacy partners, sent a letter to the Governor to communicate our shared priorities. It is clear that even in this challenging budget year, this advocacy made a difference in key areas. While challenges will remain and advocacy will continue to be needed, our community is strongly positioned.
Immediately after the Governor’s proposal was filed, The Arc of Massachusetts team analyzed it for areas of investment and areas of concern: see the below analysis for more details. In the coming weeks, we will continue to work with partner organizations and legislators to determine needed amendments in the House and Senate budget debates. Connect with us here and check our state budget webpage for real-time information as the budget progresses.
Department of Developmental Services (DDS) Budget
The Governor’s FY27 budget proposes a $91.4 million increase for DDS when compared with FY26 funding. Some line items were increased from FY26, while other services remained level-funded.
Services such as the Turning 22 Program were level-funded. The Arc hears daily from constituents who remain unserved and underserved. With nearly 1,500 individuals expected to transition into DDS services in FY27 alone, level-funding fails to meet the realities of a rapidly growing population.
There are some DDS programs that received an increase from FY26 in the Governor’s FY27 proposal:
- Autism Omnibus: 31% increase
- Community Day/Work: 9% increase
- State Operated Homes: 7% increase
- Respite/Family Support: 6% increase
- Community Residential: 2% increase
The Arc is grateful for the increased funding for the Autism Omnibus line item. This funding represents substantial growth and will support the increasing number of people with autism and no intellectual disability, many with complex needs. Regarding the DESE-DDS Residential Placement Prevention Program, we are confirming that appropriate funding will be available for this vital program.
Chapter 257 Workforce Rates
The FY27 budget proposal maintains Chapter 257 rates benchmarked to the 53rd percentile of the Bureau of Labor Statistics (BLS). While we know that rates need to grow significantly to ensure fuller recruitment and retention of the workforce, our advocacy goal in this difficult year was to prevent cuts to the workforce rates. We are glad to see that reflected in the budget and highlighted by the Governor and the administration.
It is important to note that the current funding level ($175 million) doesn’t match the 53rd percentile and additional funding will need to be added to the Chapter 257 rate reserve line item, either through a future vehicle or by an extension of existing resources. It is our understanding that an additional $85 million is needed to reach the full $260 million funding to secure rates to the 53rd percentile. We will continue to work with our advocacy partners to ensure that Chapter 257 is fully funded for FY27.
MassHealth Budget
The MassHealth budget represents a significant portion of the overall budget and was funded at $22.7 billion in FY27, compared to $22.1 billion in FY26. Significant cost containment efforts were made to control spending, particularly in light of the federal cuts that will target MassHealth in the coming years.
The budget included a moratorium on all rate increases and program expansions that are not required by federal law. For programs like Day Habilitation that serve some of the most vulnerable in our community, this means no progress on waitlists for the hundreds of individuals who are waiting for access to services. Over the past few years, we have successfully advocated for incremental increases to these rates, making progress on waitlists by addressing wages. This year’s rate freeze, coupled with inflation and other cost pressures on programs, will create challenging situations for providers and individuals in need of services.
There are also cuts pending to other critical services. In 2025, CEO Maura Sullivan participated in a legislatively mandated Personal Care Attendant (PCA) workgroup. The purpose of this workgroup was to, with advocates, make difficult choices about ways to control rapidly growing PCA spending. This is a tough task, given how critical PCA services are for so many in our community. That workgroup identified $32 million in cost-cutting measures, with a focus on mitigating impacts for those who use PCA services as much as possible. That workgroup will be tasked with finding additional savings or making legislative recommendations.
Similar workgroups will be established to identify cost-cutting measures in both Adult Day Health (ADH) and Adult Foster Care (AFC). The workgroups will be asked to cut $15 million in ADH spending and $35 million in AFC spending. While these cuts will be significant, it is important that they are being done with advocates at the table, including The Arc. We will serve on the AFC working group. In the current economic situation, cuts are unavoidable. But by having a seat at the table, we can influence what is and isn’t cut and ensure that we are mitigating harm to the best of our abilities.
There was also a proposal in the MassHealth budget to cap adult dental spending at $1,000 per member per year, with exemptions for people who are DDS-eligible. While this exemption is important, we must also ensure that we continue advocacy on the oral health crisis our community is facing and ensure that future cuts to MassHealth-funded oral healthcare are prevented.
On the whole, this year’s MassHealth proposal is challenging. While we understand the current fiscal situation and the need for measured cost containment, we cannot lose sight of how vital services like day habilitation, PCA, and AFC are for many in our community. We are engaging in conversations about the next steps in our advocacy.
Additional Priorities
The House 2 proposal contains several other important funding initiatives, outside of DDS and MassHealth.
- Special Education: The budget includes an additional $154 million to reimburse school districts for some transportation costs. Coupled with fully funding the Special Education Circuit Breaker, this will allow for a full phase-in of reimbursements for the costs of transportation for out-of-district special education students.
- Early Intervention: The Early Intervention line item received a 4% cut in the budget, with a funding level of $37.7 million. Early Intervention is a critically needed service for thousands of families. We will work with our partners to determine any advocacy needs.
- Transportation: A new $450 million line-item was created under the Executive Office of Health and Human Services (EOHHS) to support transportation costs through MassHealth, DDS, and the Department of Mental Health. Of this, $91 million is included for DDS.
- Connector Care: The budget extends a pilot program which would expand eligibility to people earning between 300 and 400% of the Federal Poverty Line (FPL) through the end of 2027. This will allow 49,000 residents to continue accessing more affordable health insurance. Due to federal cuts, this program cannot provide subsidies for those earning between 400 and 500% of the FPL.
- SNAP: The budget proposes a $46.4 million increase to the Department of Transitional Assistance (DTA) Caseworkers Reserve to further support staffing needs and ensure compliance with new federal SNAP requirements. The budget also fully funds the Healthy Incentives Program at $29.7 million, releasing supplemental funding for SNAP recipients to purchase fresh produce from farmers’ markets.
Conclusion
While some of the worst potential cuts were avoided, and needed increases for DDS were included, there are areas of significant concern. We are also aware that future budget years might be increasingly challenging given economic factors and federal cuts. Our collaborative advocacy will continue to be critical to show the value of these services to individuals, families, and the Commonwealth as a whole.
The Governor’s budget proposal now moves to the House of Representatives. In April, the House Ways and Means Committee will release their FY27 proposal and there will be an opportunity to file amendments. In the coming months, we will be working with advocacy partners and our legislative champions to determine what amendments are necessary. Please stay tuned to support our advocacy efforts.
If you have any questions, please reach out to Nora Bent, Director of Government Affairs and Strategic Partnerships, at nbent@arcmass.org.
