Official Recap of FY27 Second Budget Vote

Earlier today, the DC Council passed the District’s Fiscal Year 2027 Local Budget Act, a significantly improved budget for children, youth, and families compared to what was originally proposed by Mayor Bowser. This should be a major cause for celebration and is a clear reflection of the power of organizing and advocacy.

Of particular note are the restorations to child care. It is fair to say that the Council rescued the District’s early childhood education system from what would have been a certain collapse. In addition to the many funding wins previously secured at the Council’s first reading on June 9, Chairman Mendelson added $1.5 million to the Early Childhood Educator Pay Equity Fund to ensure the program can continue operating under its current structure and even allow for modest growth. The Mayor had all but eliminated funding for early educator pay in her proposed budget, but thanks to sustained advocacy efforts, the Council was able to restore the Pay Equity Fund to a total of $73.5 million (including $61.5 million restored by the Council) and enhance funding for the child care subsidy program by $39 million, bringing the subsidy budget to a total of $153 million in FY27. Additionally, full funding for HealthCare4ChildCare was preserved under the Council’s adopted budget. These wins mean no early educator will suffer a pay cut, and no eligible family should be locked out of affordable child care in the coming year. 

In addition to the above changes, we are also pleased that the final budget voted on today added $1.5 million to restore some staffing capacity for school-based behavioral health (SBBH) services, though the FY27 budget remains roughly $4 million short of our partners’ ask. Underfunding SBBH means dozens of schools will be left without clinicians to support students with the greatest needs and those facing the greatest barriers to consistent mental health care outside of a school setting. This will only exacerbate the District’s social worker shortage and hinder our ability to serve teens and transition-age young adults, a concern DC Action continues to elevate at government oversight hearings.

DC Action is grateful that the Council also preserved or restored funding for other essential programs and services, including out-of-school time and youth homelessness programs. However, we remain concerned that many of these programs continue to operate with flat funding—a de facto funding cut—and that much of the funding is slated to decrease in the out-years of the current financial plan. The budget for the OST Office decreases by as much as $12 million next year, and the $1.5 million restored to youth permanent supportive housing is only a one-time restoration.

That said, it is important to celebrate the broad support for, and continued investment in, out-of-school programming. This reflects an increased recognition and understanding that these programs play a vital role in the lives of young people and provide essential support for working families, who can rest assured that their children have access to a safe and supportive environment while they work. Like many on the Council, DC Action believes that the District must continue to do more to expand access to out-of-school time programming so that every young person and family has access to the programs they want and deserve. Along with our partners, we will continue to push for the passage and implementation of the Universal Out of School Time Act.

While we are grateful that the Council was able to restore most funding for youth homelessness services, we remain concerned that funding for these programs is still insufficient given the level of need. Policymakers must do more to ensure our most vulnerable young people have access to the stable housing, workforce and postsecondary connections, and economic security they need to thrive and successfully transition to adulthood.

We also believe that the direct service organizations that provide OST, youth homelessness, child care, and other services should be fairly compensated through District grants and provided with long-term funding stability for the essential work they do. That is why DC Action has repeatedly advocated for increased funding to keep pace with programmatic need, demand, and naturally occurring increases in operational expenses. We look forward to working with the new Mayor and Council to ensure the Fiscal Year 2028 budget replenishes and increases funding for out-of-school time programs and services aimed at ending youth homelessness.

However, none of this will be possible without new revenue. For a third consecutive year, the Mayor failed to propose, and the Council failed to adopt, significant tax reform. This means the District is leaving a substantial amount of new revenue on the table that could have been used to close remaining gaps in the social safety net, such as restoring cost-of-living adjustments to the Temporary Assistance for Needy Families (TANF) program or adding additional housing vouchers to the District’s adult and family homelessness systems. Additional funding shortfalls that new revenue could help address are detailed in the chart below.

This was a missed opportunity, and policymakers should not wait another year to fix this mistake. Some Councilmembers have proposed a hearing this fall on tax and revenue policy, and unlike in previous years, the Council must now follow through and hold a hearing that is open to the public. When that hearing takes place, it will be incumbent upon everyone in the District who wants our budget to continue prioritizing kids and families to demand that the District’s wealthiest residents and most profitable businesses pay their fair share in taxes.

Sign up for DC Action’s newsletter to be the first to know when a fall revenue hearing is scheduled so you can make your voice heard.

While this is not a perfect budget, it is significantly improved from what the Mayor proposed this spring, and the Council—and Chairman Mendelson in particular—deserve our gratitude for listening to their constituents and bringing it this far.

 

Detailed Summary of Changes to the Fiscal Year 2027 Budget

Policy/Program	DC Action Coalitions’ FY27 Asks	Mayor’s Proposed FY27 Budget	DC Council’s Budget, Final Reading
Early Childhood Educator Pay Equity Fund	Return early educators to pay parity with DCPS teachers and fully fund PEF at $94.2M, including $12M for health care coverage.  At a minimum, PEF salaries require $62M to keep pace with recent credential growth	Budgeted $12M for HealthCare4ChildCare; eliminated $60M for educator salaries	Funds PEF at $73.5M: protects $12M for HC4CC and restores $61.5M for salaries (one-time)
Child Care Subsidy	Fund subsidy program at $177M to fully eliminate the need for a waitlist and support recent trends in enrollment growth At a minimum, the subsidy program requires $153 million to prevent further freezes to enrollment.	Funded at $114M, requiring program enrollment to shrink by more than 2K children	Funds at $153M ($39M Council enhancement is one-time)
HealthySteps	Protect $1.3M in grants for 2-Gen parent wellness and child development supportive services embedded in pediatric care sites	Eliminated; cut $1.3M	Restored at $1.35M (one-time)
Out-of-School Time	Increase funding for OST grants by 10% for a total OST Office budget of $33M for FY27	Funds OST Office at $30.7M in FY27; significant reduction in out-years	Preserves OST Office at $30.7M (one-time)
New Heights	Protect DCPS program that supports pregnant and parenting students; preserve $304K (3 FTEs)	Eliminated; cut $304K	Restored at $292,517 for 3 staff positions (one-time)
Youth Homelessness	Increase funding for the youth homelessness system by 15% for a total youth system budget of $28M for FY27	Cut youth system by $1.5M from permanent supportive/extended transitional housing-youth and by $750K for transitional housing-youth	Restored $1.5M for PSH/ETH-youth and established a $450K grant for Sasha Bruce Youthwork drop-in center
Policy/Program	Partner/Allies Ask	Mayor’s Budget	DC Council Budget
TANF	Protect 15,000 kids in 7,000 of DC’s lowest income families from cuts to Temporary Assistance for Needy Families (TANF) benefits, requiring $20.5M to reverse harmful cuts planned for FY27.	Kept all $20.5M in planned FY27 cuts to TANF benefits and eligibility.	Restored $12.8 million to remove time limits, $1.5M to reduce sanctions, and $121K to expand TANF eligibility to pregnant  persons beginning in the second trimester; failed to fund $5.6M for cost of living adjustments
Paid Family and Medical Leave	Preserve program as is: 12 weeks of parental, medical, and family caregiving benefits at $1,190 maximum weekly wage replacement	Eliminated all medical and family caregiving benefits for FY27 and cut weekly wage replacement to $1,000 for all benefit types	Restored 10 weeks of medical leave, 6 weeks of family caregiving leave, and maximum benefits to $1,100/week
Child Tax Credit	Protect the DC Child Tax Credit – a new tax credit – to provide lower and middle income families (households earning less than $119K) a $1,000 tax credit per child/year.	Eliminated; returning $56 million to District budget annually	Unfunded in financial plan
CHAMPS Youth Crisis Services	Child and Adolescent Mobile Psychiatric Service (ChAMPS) – Full restoration at $1.3 million	Eliminated; cut $1.3M	Restored at $1.3M (recurring)
School-Based Behavioral Health	Protect access to school-based behavioral health services and clinicians by funding the program at $24.6M	Cut the program by $6.1M and eliminated partnerships with community-based organizations operating in-school services	Redirected $5.4M from internal DBH clinician hires to fund community-based staffing partnerships; augmented CBO SBBH program by $700K; Augmented CBO grant budget by $2.2M, but the program is still underfunded by ~$4M compared to FY26 levels.
Community  Schools	Expand the Community Schools model to 8 new schools with $2M more in grant funding to provide critical services to students and families at schools with the most acute needs	Eliminated OSSE grants for Community Schools and cut multiple DCPS Connected Schools positions, leaving ~12 schools without vital resources to keep students attached to and thriving in school	Restored $2.45M (one-time) to Community Schools and established a task force with $50,000 to create a sustainable plan for the program’s future.
Alliance Health Care Coverage	Restore health care coverage for DC residents ineligible for Medicaid/Basic Health Plan by removing the age and income limitations from the DC Health Care Alliance and ensure parity in health services such as dental and vision; fund Alliance at $54.9M for FY27.  Ensure access to health care coverage for Lawful Permanent Residents with incomes 100-215% FPL who recently lost Medicaid coverage due to federal policy changes.	Funded access to dental and vision coverage and paused age limit for FY27 which would have brought Alliance eligibility for adults to 21, down from age 26	Added $38.3M to increase income eligibility to 138% of federal poverty for all adults, lifted moratorium on new enrollees, and restored access to more comprehensive health benefits package Failed to restore coverage for those with incomes 139-215% FPL; failed to address coverage for Lawful Permanent Residents with incomes 100-215% FPL who recently lost Medicaid coverage due to federal policy changes.
ERAP	Fund the Emergency Rental Assistance Program at $30M to support ~4,000 families	Insufficiently funded at $7M	Failed to enhance ERAP funding beyond Mayor’s proposed budget level
Housing Vouchers	Prevent 1,200 households from losing a housing voucher by replacing expiring federal Emergency Housing Vouchers (EHVs) and fund 300 new Permanent Supportive Housing vouchers for families and 300 for individuals; total ask of roughly $73M	Maintained emergency voucher funding cliff and funded no new permanent vouchers	Added $28.2M to partially prevent the voucher cliff at DHS/ DCHA and added $7.4M to support some families exiting rapid rehousing.  Leaves 521 EHVs unfunded; households will lose voucher coverage in early 2027.