SFY 2025-26 Enacted Budget Summary:
Key Takeaways for CP State Affiliates

The New York State Senate and Assembly finished passing the SFY 2025-26 final state budget bills just before 10pm on May 8, 2025, and the Governor signed them on May 9. The SFY 2026 Enacted Budget provides $254 billion in all funds spending, a 5.3% year-over-year increase. This includes $146 billion in State Operating Funds spending, a 9.3% year-over-year increase. The budget package was passed 38 days after the April 1  constitutional deadline for the state budget passage. This is the latest budget New York has had since 2010.

Governor Kathy Hochul achieved many of her policy and funding priorities in the final budget deal including:

• Discovery Law Reforms,
• Involuntary Commitment Law Reforms,
• A bell-to-bell cell phone ban in schools,
• Additional penalties for individuals who commit a crime while wearing a mask,
• An inflation check rebate program ,
• Eliminating a separate primary for lieutenant governor – candidates for governor will now form a joint ticket with their lieutenant governor pick ahead of the primary, and
• Spending Reduction Authorization which authorizes the Governor to make spending reductions in the Budget if there is or is projected to be a General Fund cash imbalance in excess of $2 billion by the end of the State Fiscal Year

The Legislature was also able to get some last-minute priorities in the final budget including:

• Expanding the public campaign finance program,
• A two-year delay on the implementation of Legislators’ $35,000 outside income cap, and
• Agreement to spend approximately $7 billion to pay off the state’s unemployment insurance debt.

With the budget bills passed, legislators returned to their districts for the weekend and returned to Albany to begin the official post-budget session which is scheduled to run through June 12. Earlier last week, Speaker Heastie stated he is considering adding three more session days and instead ending on June 18.  There is also discussion of the Legislature returning post-session and prior to the end of the calendar year to address possible adverse federal action.

Following are highlights of the final budget agreement issues of interest to CP State Affiliates. Use the menu on the right to navigate by agency.

In addition, there is a more detailed comparison chart of the Governor’s, Senate’s, and Assembly’s final positions.

For further information, contact Barbara Crosier at: Bcrosier@cpstate.org.

OPWDD

• 2.6% Targeted Inflationary Increase – (increased the Governor’s 2.1% TII by .5%) $144 million state share and $300 million state/federal Medicaid investment effective April 1, 2025. This year’s 2.6% TII does not include the restrictions that the Legislature imposed last year. When combined with the more than $1 billion dollars that OPWDD has invested over the past year and the looming threat of significant federal Medicaid cuts, this 2.6% TII is a significant victory.
• $850 million to Continue Rate Enhancements – includes almost $850 million in gross annualized funding for the rate rebasing that took place on 7/1/24 – OPWDD has the “expectation that this will provide significant DSP wage increases.”
• Housing – an additional $15 million to “expand independent living opportunities for individuals with intellectual and developmental disabilities.”
• New Opportunities – an additional $30 million in FY 2025 ($60 million annualized/ $120 million with federal share) to fund OPWDD priority program reforms and new service opportunities that enable individuals to receive the support they need.
• Create Regional Disability Clinics – $25 million in capital funding to support one-time costs for building modifications and/or equipment designed to increase accessibility and improve quality of healthcare for people with developmental disabilities who access services in clinics licensed by Article 28 of the Public Health Law and Article 16 of the Mental Hygiene Law. (Capital Appropriations Bill)
• Minimum Wage – an additional $38 million ($76 million all shares) to support minimum wage increases, including indexing minimum wage to inflation, for staff at programs licensed, certified, or otherwise authorized by OPWDD.
• Renovate the Institute for Basic Research (IBR) – includes a $75 million five-year capital investment to renovate the IBR campus, including the development of a Genomics Core facility and creation of space for a Willowbrook learning center.
• Renovate Sunmount Campus – $18 million in capital funding, over four years, to renovate the Sunmount campus in Tupper Lake.
• OPWDD Managed Care Statute Extender – extends statutes related to OPWDD implementing managed long-term care plans from “through December 2025” to “through December 2027” to allow FIDA transition.

MODIFIED IN THE FINAL BUDGET

• Temporary Operator – rather than permanent authority proposed by the Governor, the final budget provides OMH and OPWDD the authority to appoint temporary operators to ensure the continued operation of programs through 3/31/2028.
• State’s Preferred Source Program Amendments Permanent – The NYS Preferred Source Program was amended in 2022 to promote integrated employment for people with disabilities. The amendments are scheduled to sunset in SFY 2026. The Governor’s proposal would have made the amendments permanent, but the final budget extends the amendments for three years (2029).
• Mental Hygiene Demonstration Programs – Extends the flexibility authority for mental hygiene agencies (OPWDD, OMH, OASAS) to develop demonstration programs through 3/31/2028 rather than permanently as proposed by the Governor.

DOH

• Create Regional Disability Clinics – $25 million in capital funding to support one-time costs for building modifications and/or equipment designed to increase accessibility and improve quality of healthcare for people with developmental disabilities who access services in clinics licensed by Article 28 of the Public Health and Article 16 of the Mental Hygiene Law.
• Mobility for People with Disabilities – Effective 1/1/26, Administrative Medicaid proposals include the following when fully annualized:
  • Enhance Rates for Clinical Specialty Evaluation for New Wheelchairs – $200,000
  • Expand Coverage for Wheelchair Repairs – $8.2 million
  • Preventive Maintenance Coverage – $400,000
• Early Intervention (EI) – provides no new rate increases and county ($12.4 million)/New York City ($19.9 million) savings due to EI telehealth rate cuts and administrative changes.
• Medically Fragile Children – Chapter 597 of 2024 – $14.3 million fully annualized to allow medically fragile adults to remain at their pediatric specialized nursing facilities after the age of 21 and until they are 36 years old.
• Medically Fragile Adult Demo Program – Chapter 637 of 2024 – $29.8 million to establish an advanced residential health care demonstration program for medically fragile aging adults.
• Social Care Networks (SCNs) – $500 million for screening and navigation, for Medicaid members, through the new SCNs to a range of social care services, including enhanced benefits for certain populations. These services include housing support, food and nutrition assistance, transportation support, and navigation to other resources for education, employment, interpersonal safety, and more.
• HEROs – $125 million to support new health planning and data infrastructure through a new Health Equity Regional Organization (HERO) to develop new statewide data infrastructure that can be used to improve outcomes, reduce health disparities, and help the State develop and evaluate metrics.
• Health, Behavioral Health, and Social Care Workforce Development – $694 million for implementation of two workforce programs to support training and education for new workers as well as support career advancement for existing workers through tuition payments and student loan repayment.

MODIFIED IN THE FINAL BUDGET

• Medicaid Rate Increase for DTCs & FQHCs – $40 million (SFY25-26) and $20 million (SFY26-27) to support enhanced rates for diagnostic & treatment centers (D&TCs) and Federally Qualified Health Centers which may be suspended if the MCO tax funds are not available.
• Applied Behavioral Analysis (ABA) Rate Cut – Medicaid began covering ABA in January 2023 for eligible members under the age of 21. The Governor’s proposal would have reduced ABA reimbursement by almost $20 million by lowering ABA reimbursement rates for non-licensed providers by 50 percent. The Legislature restored $7.2 million (for the SFY 2026) to lower rates by 12.5 percent for a reduction of $2.4 million. Rates will be further reduced by an additional 12.5 percent beginning April 1, 2026, for an annualized reduction of $9.5 million.
• Managed Care Organization (MCO) Tax* – CMS approved the new MCO tax in December 2024 and the Financial Plan assumes only two years of MCO tax revenue, totaling $3.7 billion in net State Share benefit. The final FY 2026 Budget includes $1.4 billion State share, which represents the first-year installment of targeted state share investments (which are contingent on continued federal approval), including:
  • $500 million to support the remaining Global Cap deficits,
  • $305 million to support investment in hospitals, including outpatient rates,
  • $300 million to expand Safety Net Transformation Program operating support,
  • $225 million for investment in nursing homes, assisted living and hospice programs,
  • $50 million to support a Medicaid physician fee schedule increase to bring Medicaid reimbursement closer to the Medicare level,
  • $50 million to continue Mainstream Medicaid Managed Care Quality Program funding,
  • $20 million (SFY25-26) and $10 million (SFY26-27) to support enhanced rates for D&TCs and FQHCs, and
  • $15 million for value-based providers.

*CMS has proposed repealing the MCO tax and the House Budget Reconciliation package would also repeal the tax either or both of which could be implemented as early as the end of 2025/beginning of 2026.  A repeal would eliminate the above funding.

INTENTIONALLY OMITTED FROM THE FINAL BUDGET

• Nurse Licensure Compact – rejected the Governor’s proposal to allow New York to join the Nurse Licensure Compact.
• Pharmacy –
  • Eliminates Prescriber Prevails – rejected the Governor’s proposal to require Medicaid approve a prescription drug, as prescribed by the physician.
  • OTC Formulary – rejected the Governor’s proposal to give DOH the authority to remove Medicaid coverage of over-the-counter drugs rather than only to add new drugs as in current law.
• Scope of Practice Expansion – rejected the Governor’s proposal to expand scope of practice for CMAs in nursing homes, medical assistants, pharmacy technicians, pharmacists, and physician assistants (NOT for DSPs in uncertified settings).

SED

• School Districts –
  • $37.6 billion in total School Aid for the 2025-26 school year (SY 2026), which is a $100 million increase over the Governor’s proposal.
  • Updated the census poverty data to determine economic disadvantage, driving additional aid to low-wealth school districts.
  • Guaranteed minimum 2% increase – resulting in 311 school districts, which would have seen no increase under the old formula, getting a 2% increase in state aid.
• Universal Free School Meals – provides $120 million for a total of $340 million for the statewide implementation of free school breakfast and lunch.
• Cell Phone Ban – $13.5 million for school districts to ban the use of smartphones, tablets, or smartwatches in schools during the school day.
• Financing Structure for Residential Placements of Children with Special Needs Outside of New York – extends the current structure of financing Committee on Special Education (CSE) residential placements outside of New York City (and provides parity with New York City) to 4/1/2026. The Legislature rejected the Governor’s proposal to make this permanent.
• 4410 & 853 Budgets – The budget requests for 4410 and 853 schools are not included in the state budget but are in NYSED’s methodology request to the Division of Budget that was sent on April 15, 2025.

OMH

• 2.6% Targeted Inflationary Increase (TII) for voluntary operated OPWDD, OMH, OASAS, Office of Children and Family Services (OCFS), Office of Temporary and Disability Assistance (OTDA), and the State Office for the Aging (SOFA) to “provide fiscal relief to providers to address rising operating costs and enable them to offer more competitive wages to their staff.”
• OMH Involuntary Commitment –T final agreement: 1) amends/expands the involuntary commitment standard to include inability due to their mental illness to provide for their essential needs such as food, clothing, medical care, safety or shelter; 2) amends the standards medical professionals shall use to make such determinations; and 3) allows a psychiatric nurse practitioner to certify along with a physician.
• Involuntary Commitment and Assisted Outpatient Treatment (AOT) – $16.5 million to counties to enhance county-level implementation of Assisted Outpatient Treatment (AOT) programs and $2 million for additional OMH staff to increase reporting and monitoring, enhance statewide training, and provide additional support for counties and providers.
• Mental Health Incident Review Panels – Requires the OMH Commissioner to establish at least one mental health incident review panel per quarter “to review the circumstances and events related to an incident involving a person with serious mental illness occurring in the community that involved the use of deadly physical force.” Requests for incident reviews may come from local government, non-government organizations, or not-for-profit entities involved in the provision of mental health care or that represent the interests of people with mental illness.
• Aging in Place Pilot Program – $1.6 million to introduce a pilot program to help older adults who need assistance with activities of daily living (ADLs).
• Establish Commercial Compliance Monitoring – $1 million to ensure that commercial insurers reimburse behavioral health services at or above the Medicaid rate, as required by law effective January 1, 2025.
• Daniel’s Law Pilot Program – $8 million for Daniel’s Law pilot program, up to $2 million of this funding can be used for the Behavioral Health Crisis Technical Assistance Center.
• 9-8-8 suicide prevention and behavioral health crisis hotline – $60 million.

MODIFIED IN THE FINAL BUDGET

• Temporary Operator – Rather than permanent authority proposed by the Governor, the final budget provides OMH and OPWDD the authority to appoint temporary operators to ensure the continued operation of programs through 3/31/2028.
• Mental Hygiene Demonstration Programs – Extends the flexibility authority for mental hygiene agencies (OPWDD, OMH, OASAS) to develop demonstration programs through 3/31/2028 rather than permanently as proposed by the Governor.

OTHER

• CREST Grants – $335 million for the Community Resiliency, Economic Sustainability and Technology (CREST) program, which provides capital grants of no less than $50,000 for a variety of eligible projects including investment in facilities which support arts, cultural, athletic, housing, child care, educational, parks and recreational, transportation, port development, economic development, workforce training, employment development, tourism, community redevelopment, climate change mitigation, resiliency, environmental sustainability, and other civic activities. Any projects in support of port development, economic development, workforce training, or employment development shall create or retain jobs or catalyze economic activity in New York State as certified by the commissioner of the department of economic development.
• New York Works Economic Development Fund – $400 million to provide capital grants to support projects that facilitate an employer’s ability to create new, or retain existing, jobs, or to fund infrastructure investments necessary to attract new businesses or expand existing businesses.
• Child Care Capital funding – $100 million in capital grants to facilitate childcare providers’ ability to expand enrollment capacity and serve additional children. $25 million of this money is reserved for childcare efforts of local governments.
• Disability Tax Incentives –
  • Increases the tax incentive to employers that employ people with disabilities for taxable years beginning January 1, 2025, from $2,100 to $5,000 in qualified first year wages earned by each qualified employee or, where the federal work opportunity tax credit applies, $5,000 in qualified second-year wages earned by each qualified employee.
  • Extends the Workers with Disabilities Tax Credit for three years.
• Workers’ Compensation Payments – Allow workers’ compensation payers to pay for medical treatment and care, in addition to compensation payments and prescribed medicine, without accepting liability for one year, during which such payments may be disputed. This authorization currently applies to pay compensation and prescription benefits, but not medical treatment payment.
• Payroll Mobility Tax Increase – The final budget includes an increase to the payroll mobility tax after July 1, 2025. The tax is amended by zone:
  • Zone 1 – For employers in the five boroughs of New York City (MCTD zone 1) with payrolls of $10 million or more, rates will increase from the current 0.6 percent to 0.895 percent, a 49 percent increase.
  • Zone 2 – Employers in MCTD zone 2 (comprising Dutchess, Nassau, Orange, Putnam, Rockland, Suffolk, and Westchester counties) with payrolls exceeding $2.5 million in any calendar quarter will also see their rates increase significantly from 0.34 percent to 0.635 percent
• Child Care Tax Credit – Includes Governor Hochul’s plan to give 1.6 million New York families an annual tax credit of up to $1,000 per child under age four and up to $500 per child from four through sixteen. Increase the Empire State Child Credits allowed for tax years 2025, 2026, and 2027. Specifically, a taxpayer would be allowed a refundable credit of $1,000 for each qualifying child under the age of four in tax years 2025, 2026 and 2027. Additionally, a taxpayer would be allowed a refundable credit of $330 for each qualifying child who is four years of age and not yet age seventeen in 2025, and $500 for each such qualifying child in 2026 and 2027. This bill would also expand eligibility to additional taxpayers in tax years 2025, 2026, and 2027.
• Middle Class Tax Cut – Tax reduction for more than 75 percent of all tax filers in New York providing $1 billion annually in tax relief to 8.3 million New Yorkers. This will provide savings to taxpayers earning up to $323,000 for joint filers. The bill would reduce the tax rates paid by married couples with incomes up to $323,200 who file jointly, for heads of households with incomes up to $269,300, and for single taxpayers and married taxpayers who file separately with incomes up to $215,400. The tax rates would be reduced in two phases: an initial rate cut applicable for tax year 2025 and a second rate cut beginning in tax year 2026.
• Inflation Refund Credit – Joint tax filers with income up to $150,000 will receive a $400

check, and joint filers with income over $150,000 but no greater than $300,000 will receive a $300 check. Single tax filers with income up to $75,000 will receive a $200 check, and single filers with incomes over $75,000 but no greater than $150,000 will receive a $150 check. The new law allows for a credit against taxes beginning in 2023.  The credit is effective for tax years beginning 2023.

• Spending Reduction Authorization – Includes language that authorizes but does not mandate Governor Hochul to make spending reductions in the Budget if there is or is projected to be a General Fund cash imbalance in excess of $2 billion by the end of the State Fiscal Year. If an imbalance is projected in the Governor’s quarterly financial plan update, she will have 10 days to submit to the Legislature a plan for withholding payments. The Legislature then will have ten days to issue a concurrent resolution on an alternative plan. If it does not, the Executive’s plan will go into effect. Before withholding any payments, the Executive must exhaust $2 billion in reserve funds. There is also discussion of the Legislature returning post-session and prior to the end of the calendar year to address possible adverse federal action.
• Unemployment Insurance (UI) Fund – Utilizes $7 billion in reserves to eliminate the State’s UI fund debt. The State estimates that employers that pay into the fund will save roughly $100 per employee in 2026 and $250 per employee in 2027. The Budget raises the maximum UI benefit from its current rate of $504 per week to $869 per week.

INTENTIONALLY OMITTED FROM THE FINAL BUDGET

• Office of the Medicaid Inspector General (OMIG) Reform legislation – We are extremely disappointed that the pared down OMIG Reform legislation (S.4955-A), which amends the Public Health Law concerning audits conducted by the OMIG which would provide transparency, balance and fairness to the audit process and was included in the Senate One House budget proposal, was not in the final budget.