A RECORD BUDGET FOR SCHOOLS AND CITIES — BUT WILL IT BE ENOUGH TO RESHAPE CONNECTICUT’S FUTURE?

THE PRESS CENTER | BREAKING NEWS | CONNETICUIT LEGESLATION

MAY 31 2026 AT 8:27 AM

Governor Ned Lamont has signed Public Act 26‑68, the FY 2027 budget adjustment bill, marking one of the most expansive state investments in education, municipal stability, and affordability initiatives in more than a decade. The bill passed with overwhelming bipartisan support, reflecting broad consensus among legislators, municipal leaders, and education advocates.

“This budget delivers more education funding and municipal aid than ever before… while also making strategic investments to support affordability initiatives and paying down debt,” the governor said.

 1. Education: Largest Statewide Increase in a Generation

 K–12 Funding

The budget delivers $193 million in supplemental education grants, including: 

– $162.2M in direct municipal aid 

– $8.7M for charter schools 

– $8.3M for magnet schools 

– $800K for vocational agriculture programs 

– $10M in temporary educational aid 

Since 2019, Education Cost Sharing (ECS) grants have grown 18%, totaling $444.9M in new support.

 Student‑Centered Investments

– $12M for universal free school breakfast for all 500,000 students 

– $5M for expanded school‑based mental and behavioral health 

– $2M to support 75 teacher apprentices annually 

– $2M for a statewide literacy coaching program 

These investments reinforce the administration’s long‑term goal of universal pre‑K and improved student outcomes.

2. Municipal Aid: Stabilizing Local Budgets

The budget allocates over $100 million in one‑time municipal assistance to help towns and cities offset inflation, rising healthcare costs, and federal cutbacks—directly supporting efforts to stabilize or reduce local property taxes.

 3. Early Childhood Education: Historic Expansion

A $300 million investment into the Early Childhood Education Endowment marks the largest expansion of early childhood programs in Connecticut history. The endowment is designed to: 

– Increase state‑funded childcare slots 

– Strengthen provider capacity 

– Support families with rising childcare costs 

This continues the state’s trajectory toward universal pre‑K access.

 4. Higher Education: New Loan Alternatives

The budget authorizes $30 million in bonding for CHESLA to launch a replacement for the discontinued federal Grad PLUS Subsidized Loan Program, ensuring graduate students retain access to affordable financing options.

 5. Fiscal Stability: Major Pension Paydowns

Connecticut will make over $1 billion in additional pension payments in both FY 2026 and FY 2027, generating $200 million in annual savings for 25 years. 

Total additional pension payments under the Lamont administration will reach $11 billion, reducing long‑term taxpayer costs by $25 billion.

 6. Health & Human Services: Targeted Modernization

 Public Health

– $892K to pilot free flu vaccines for uninsured and under‑insured adults 

– Streamlining of the Certificate of Need (CON) program under the Department of Public Health 

 Mental Health & Addiction Services

– $3.54M to expand community resources enabling timely hospital discharge 

– $775K for expanded suicide prevention and postvention services 

 Veterans

– $1M for free statewide bus passes 

– $500K for housing and residential care support in Rocky Hill 

 Child Welfare

– $3.34M for new DCF programs, including caregiver grants, social worker internships, and a new Urgent Crisis Center in Stamford 

 7. Corrections & Reentry Health Care

The budget invests $1M to make permanent Connecticut’s first‑in‑the‑nation interagency model linking Medicaid services with correctional health care. 

An additional $9.15M supports implementation of federal youth‑coverage mandates and launches a reentry‑focused pilot at York Correctional Institution.

 8. Hospitals: Five‑Year Stability Agreement

The budget codifies a new five‑year agreement with hospitals, increasing supplemental payments and support for hospital‑affiliated physician groups, with special emphasis on facilities serving high‑Medicaid populations.

 9. Housing & Transportation

 Housing

– $500K to operationalize new statewide housing initiatives under Public Act 25‑49 

 Transportation

– $3.5M for free bus passes for veterans 

– 50% fare discounts for K–12 students 

– Continued $716.6M annual support for bus and rail services 

 10. Public Safety & Technology Modernization

The budget dedicates $9.86M to modernize Connecticut State Police equipment and technology, replacing outdated first‑generation systems with advanced tools to improve officer and public safety.

 11. Revenue & Tax Policy Changes

 Affordability Measures

– New small‑business tax credit to encourage ICHRA adoption 

– Sales Tax‑Free Week expansion, raising the exemption cap from $100 to $300 

– Elimination of taxes on school supplies, returning $6M to families 

– New Caregiver Tax Credit for out‑of‑pocket elder‑care expenses 

 Economic Growth

– Pass‑through entities now eligible for 6% R&D tax credits 

– Immediate full expensing of R&D costs beginning in 2026 

 Cannabis

– Conversion from a THC‑based tax to a 10.75% excise tax for simplicity and predictability 

 UConn Athletics

– Tax credits to secure UConn basketball and hockey games in Hartford for the next 20 years 

 12. Volatility Cap & Strategic Use of Surplus

With volatile revenues exceeding $2 billion, the governor authorized $813.7 million in targeted investments, including: 

– $183M for schools 

– $100M for municipalities 

– $50M for the Federal Cuts Response Fund 

– $80M for Medicaid cost pressures 

These allocations balance affordability initiatives with continued fiscal discipline.

 If you want next steps

You can explore: 

– a deeper analysis of education funding impacts 

– a breakdown of tax changes and who benefits 

– a policy brief version suitable for publication

Source Credit: https://portal.ct.gov/governor/news/press-releases