Pennsylvania’s Rainy Day Fund, explained

Pennsylvania officials have been saving for a rainy day for the last few budget cycles, stashing surplus money away in what’s known as the Rainy Day Fund. 

The money is reserved for emergencies and economic downturns, but with the state facing a structural budget deficit over the next several fiscal years and Pennsylvania leaders currently in the midst of a budget impasse, the state’s Rainy Day Fund is attracting additional attention.

Below, City & State examines the basics of the state’s Rainy Day Fund and how it measures up to those of other states. 

What is Pennsylvania’s Rainy Day Fund?

Pennsylvania’s Rainy Day Fund, formally known as the Budget Stabilization Reserve Fund, is a fund created in the state’s Fiscal Code for the purpose of emergencies and downturns in the economy that result in unexpected revenue shortfalls that “cannot be dealt with through the normal budget process.”

The law also states that money in the Rainy Day Fund “shall not be used to begin new programs but to provide for the continuation of vital public programs in danger of being eliminated or severely reduced due to financial problems resulting from the economy.”

In the last several fiscal years, Pennsylvania officials have made annual deposits into the Rainy Day Fund. 

How much is in the Rainy Day Fund?

Following a $737 million transfer to the Rainy Day Fund in September 2024 as part of last year’s state budget, the total amount in the fund is currently $7.04 billion. 

Other recent deposits into the fund include a $2.6 billion deposit in September 2021, a $2.1 billion deposit in September 2022 and a $900 million deposit in November 2023.

According to the Pennsylvania Treasury Transparency Portal, that amount could cover General Fund expenses for approximately 53.6 days.

Compared to other states, Pennsylvania currently ranks above the 50-state median for the number of days each state could run operations using its respective Rainy Day Funds. According to a Pew analysis of data from the National Association of State Budget Officers, the 50-state median is 49.1 days. 

Per the Pew analysis, as of March 2025, Wyoming had the nation’s largest reserve, with the state’s Rainy Day Fund able to cover approximately 302 days of operating costs. New Jersey, meanwhile, had one of the slimmest Rainy Day Funds that would only be able to cover roughly two days of operating costs. 

Will Pennsylvania officials save it or spend it?

Gov. Josh Shapiro’s executive budget proposal for the 2025-26 fiscal year shows the state dipping into the Rainy Day Fund to balance the state budget. The Shapiro administration’s seven-year financial statement shows the state using $1.6 billion to balance the budget for the current fiscal year – a move that conservatives and fiscal hawks say could be dangerous and potentially illegal.

The Commonwealth Foundation, a free-market think tank based in Harrisburg, recently sent a letter to Pennsylvania Treasurer Stacy Garrity and the leaders of the state House and state Senate Appropriations Committees, urging the state leaders to withhold any future transfers from Pennsylvania’s Rainy Day Fund without a two-thirds majority vote from the General Assembly, something the organization states is required by law. 

Nate Benefield, the organization’s chief policy officer, told City & State that the last time lawmakers used dollars in the Rainy Day Fund was when the state experienced a drop in revenues due to the Great Recession. The state made a $755 million transfer from the Rainy Day Fund to the General Fund in 2009, as well as another transfer in 2010. “We’re not in a situation where there’s a recession or a surprising loss of revenue,” he said of the state’s current fiscal landscape.

In a General Fund Status Update published by the state’s Independent Fiscal Office earlier this month, the IFO projected that the state’s General Fund deficit for the 2024-25 fiscal year is $3.4 billion. The state’s structural budget deficit is not new, as the IFO has been warning about the imbalance between anticipated revenue and expenditures for years. 

Benefield said that if the state chooses to transfer money out of the fund to balance the budget, not only would it leave the state less prepared for a potential recession or natural disaster, but it could also harm the state’s bond rating. 

“It’s improved in the last few years. The rating agencies have given us a bond upgrade, but all three (agencies) warned that any use of our reserves could jeopardize that and would result in a downgrade, which doesn’t mean a lot to the average person,” he said. “It means when we borrow money for capital projects, for road improvements, we’ll be paying a higher interest rate, meaning … a higher cost for taxpayers for that borrowing.”

Not only that, but using money from the Rainy Day Fund doesn’t address the state’s broader structural budget imbalance, Benefield added.

“Taking out of the Rainy Day Fund to cover the structural deficit doesn't solve the problem, and just leaves a huge gap between revenues and spending that taxpayers are going to have to be on the hook for,” he said.