California’s State Assembly and Senate passed a $355.9 billion state budget for the fiscal year 2026-27 last week, with a record-breaking $127 billion allocated for K-14 education from kindergarten to community college. However, groups including the California Teachers Association (CTA) are still pushing for the release of the “temporarily withheld” $3.9 billion in funding.
The new budget is set to take effect on July 1st. The legislative body has provided above-standard cost-of-living adjustments for most programs, including an additional $1 billion for community colleges, a $2.4 billion increase for ongoing special education funding, a one-time discretionary fund of $5 billion for school districts and charter schools, a $700 million allocation for upgrading and expanding school kitchens, and $3 billion for vocational/technical education.
Additionally, the budget allocates $700 million (an increase of $4.5 billion over Governor Newsom’s proposal of $2.5 billion) to provide stipends for intern teachers in STEM subjects and special education; $3.5 billion for the “California Newcomers” program to assist refugees by 2032; and $3 billion to support homeless students.
Furthermore, the May proposal includes $218 million for paid maternity leave, covering up to 14 weeks for local education agencies and community colleges; a one-time $4.288 billion increase for literacy coaches; and a $11.2 million grant for new training programs, among others.
Independent education news organization Edsource cited Barrett Snider, co-founder of Capitol Advisors Group in Sacramento, in praising the budget as “favorable to schools.”
Resident Bill Conrad expressed concerns, stating that with an education system where only about half of students are proficient in English and slightly over a third are proficient in math, the budget may be seen as too “lenient.” He questioned whether it was excessive to demand some accountability mechanisms given the substantial budget allocation.
Governor Newsom’s May budget proposal suggested withholding $3.9 billion until revenues from AI stocks taxes materialize. This sparked backlash from education groups such as the CTA and the California School Boards Association (CSBA), who believe that the “funding hold” sets a negative precedent, essentially borrowing from education funds to address areas like Medi-Cal facing the most severe federal funding cuts and urgent financial needs. They continue to push for the timely release of this significant funding.
Assemblywoman Laurie Davis from the 74th District stated during the budget vote on the 15th that the $3.9 billion is “needed now, not in future years.” However, the legislature seemed to acquiesce to the “withholding” plan, promising only to establish a “reliable timetable” for the unpaid $3.9 billion.
Nevertheless, due to the state legislature’s budget total exceeding Governor Newsom’s May predictions by approximately $5 billion, if 40% of the general fund is allocated to K-12 schools and community colleges per Proposition 98, it means schools will receive an additional $2 billion. Additionally, the legislature plans to reduce funding for the “rainy day (education) reserve” by $8 billion and is expected to offset a portion of the $3.9 billion withheld.
Another adjustment in the budget includes considering the costs of the California State Preschool Program (CSPP) as part of the Proposition 98 budget funds.
Operated jointly by school districts, private nonprofits, and community colleges, the preschool program aims to provide free early childhood education for 3-4 year old children from families below the median income. Currently, school district-run preschools cost around $2 billion, secured under Proposition 98; while nonprofits and community college-operated preschools cost about $800 million funded by the state’s general fund.
This adjustment has sparked dissatisfaction from the California School Boards Association (CSBA). The CSBA stated in a release that diluting per-student educational resources within school districts when the same funding must be spread among more students and programs is unacceptable, as the state government “cannot weaken another important priority to fund preschool education.”
When Proposition 98 was passed in 1998, it received around 51% voter support in California; it mandated a certain proportion of the budget funds to be used for K-14 education (including community colleges). The funding amounts are determined by three tests: Test 1 allocates around 40% of the general fund; Test 2 adjusts based on the prior year’s guarantee during strong budget years, considering student enrollment changes and cost of living adjustments; Test 3, during weak or slow growth budget years, adjusts based on the prior year’s guarantee plus changes in student enrollment and per capita general fund revenue, with an additional 0.5% increase.
Funding for Proposition 98 comes from the state’s general tax revenues plus local property taxes. With the passage of Proposition 13 limiting annual property tax increases to 2%, Proposition 98 was established to safeguard education funding. At that time, 48 out of California’s 58 counties opposed Proposition 98, while the 10 supportive counties were primarily located in the San Francisco Bay Area and populous Los Angeles County. The California Teachers Union and other groups promoted and supported the legislation.
Former Republican Governor George Deukmejian, Chairman of the State Education Quality Commission George Christopher, and Vice President of the California Taxpayers Association Richard Simpson all opposed Proposition 98 at the time, asserting that it would jeopardize other essential public services of the state government and abolish expenditure limits established by a statewide vote.
This comprehensive overhaul in terms of education funding allocations and policy adjustments has elicited mixed responses and debates among various stakeholders involved in the California state budget.