The Massachusetts FY 2027 Budget Revelation They Don’t Want Taxpayers to See.

This week marks the start of FY 2027 budget debate, and buried inside the House Ways & Means proposal is the structural problem analysts have warned about for years. It isn’t a leak, a memo, or a classified file — it’s sitting in plain sight in public budget documents.

What it exposes is what analysts call the Two-Headed Leviathan.

For years the public was told that outsourcing services to private non-profits would shrink government and save money. The FY 2027 numbers prove the opposite. Massachusetts is funding a state government that keeps growing AND pouring record billions into an unregulated NGO ecosystem that functions like a shadow government.

Taxpayers are paying for two governments at once — and one of the highest-taxed states in America is delivering the value of neither.

The Payroll Illusion

A Government That Claims to Shrink While Growing Faster Than Ever

The state’s official 2025 Workforce Data Report shows the executive branch alone at more than 46,000 full-time-equivalent employees — and that number EXCLUDES the Legislature, the judiciary, the public colleges and universities, and every quasi-public authority (MBTA, Massport, MassDOT, MassDevelopment, and dozens more). Add those layers and the total taxpayer-funded headcount is well into the six figures.

And here is the trick: even as services are outsourced, the state keeps adding new employees to oversee the very contracts they outsourced.

Outsourcing did not shrink government. It built a second one on top of the first.

The NGO Black Box

The state’s Operational Services Division does not publish a single clean “Purchase of Service” total — and that opacity is itself part of the problem. The Urban Institute’s most recent benchmark places Massachusetts non-profit human-services revenue at over $12 billion, the bulk of which is taxpayer money flowing through state contracts and grants.

Once that money lands on an NGO’s books, here is what changes:

• It’s not subject to public records law the way state agency spending is
• Detailed program-level cost breakdowns are not required
• Internal audits remain private
• Executive compensation is not capped

A non-profit can collect the majority of its revenue from taxpayers and still legally pay its CEO more than the Governor of Massachusetts ($222,000).

A real example: Seven Hills Foundation in Worcester reported $461 million in total revenue on its most recent IRS Form 990. Its President and CEO received $750,404 in total compensation — more than triple the Governor’s salary. Seven Hills is one of dozens of Massachusetts human-services non-profits in this same revenue tier.

This is why analysts call it a shadow government: publicly funded, privately shielded.

The Fair Share Shell Game

The $2.7 billion Fair Share surtax was sold to voters as a fix for the MBTA and public schools. The FY 2027 budget shows where it’s actually going.

The clearest example: the Commonwealth Cares for Children (C3) grant program — $475 million in the FY27 House Ways & Means budget, level-funded with the prior year.

Because the program is “provider-neutral,” hundreds of millions flow directly to private and non-profit centers — but the program was never designed to lower tuition for families. It is a supply-side subsidy. State money props up provider operating costs while families keep paying the same childcare bills.

The cycle:

1. Taxpayers pay the surtax
2. The state hands the money to NGOs
3. Tuition does not drop
4. State payroll grows again to administer the new grant program

Taxpayers pay more. Families pay more. The bureaucracy grows. The value does not.

Oversight in Name Only

The Office of the Inspector General has spent the last two years sounding the alarm about Massachusetts contract oversight. IG Jeffrey Shapiro stood up a brand-new Healthcare Division and a Veterans’ Services Oversight Division in 2025 specifically because existing oversight wasn’t catching what was already on the books.

One of the most alarming structural findings: many NGO contracts rely on self-certification.

Watchdog groups have called this a systemic vulnerability — billions of dollars moving with minimal verification and almost no public visibility.

And the Legislature Still Hasn’t Been Audited

It has now been more than 540 days since Massachusetts voters passed Question 1 in November 2024 by a 71% margin, instructing the State Auditor to audit the Legislature.

Auditor Diana DiZoglio has been forced to sue the Legislature in the Supreme Judicial Court to enforce the law voters passed. The Attorney General declined to support the suit. The case is now before the full SJC.

71% of Massachusetts voters told the Legislature to open the books. The Legislature said no — and is fighting it in court using taxpayer-funded lawyers.

That is the context for everything else in this column.

The Revelation

Massachusetts has reached what analysts describe as Total Bureaucratic Saturation:

Residents are not choosing between “big government” and “private solutions.” They are paying for both — simultaneously — without the accountability mechanisms either model requires to function responsibly.

The FY 2027 budget doesn’t just allocate money. It exposes a structural model where the taxpayer funds:

• A full-sized state government
• A full-sized NGO industry
• A shrinking level of oversight
• A growing level of cost

This is why the Massachusetts FY 2027 budget is no longer just a spending plan.