The California Legislature passed a state budget on June 15 with higher revenue projections than those proposed by Gov. Gavin Newsom, providing several billion dollars in additional spending for schools and community colleges in 2026-27. The vote marked the start of two weeks of intensive negotiations between lawmakers and the governor.
The Legislature’s budget projects about $5 billion more in revenue than Newsom forecast just a month ago. That would translate to $2 billion more for schools and community colleges under Proposition 98 the formula that guarantees 40 percent of general fund money goes to education. June 15 was the constitutional deadline for legislators to pass a balanced budget or risk losing their pay for every day late.
In its current version, the California budget adopted nearly all of what Newsom included in his May revision, with a record $127 billion for schools and community colleges. Legislators can amend the spending plan before the next fiscal year starts on July 1, based on agreements with the governor.
Where the Extra Money Goes
The Legislature allocated most of the additional revenue to specific education priorities. School districts would receive $700 million to upgrade or add school kitchens, in line with the state’s priority that schools prepare fresh and nutritious meals. Family food pantries would be another use.
Career and technical education programs would get $300 million in one-time funding. Student teachers would receive $450 million on top of Newsom’s proposed $250 million to pay stipends for teaching in priority areas, including STEM and special education.
The California newcomer’s program to assist refugees would receive $350 million more through 2032. Homeless students would get $300 million more in assistance, also through 2032.
The $3.9 Billion Dispute Remains
Several significant issues remain unresolved between the Legislature and Newsom. Chief among them is the $3.9 billion in education funding that Newsom would withhold until revenue projections come true, mainly tax receipts from taxpayers’ investments in AI stocks. Education groups are threatening to sue over the delay.
Legislative leaders appear to be acquiescing to Newsom’s plan to withhold the $3.9 billion of forecasted Proposition 98 funding, but they want a clear repayment timetable. Combined with contributing $800 million less to the rainy day fund and freeing up that money for spending, the Legislature would mitigate some of the withholding.
Barrett Snider, a founding partner of Capitol Advisors Group, a Sacramento-based school consulting firm, characterized Newsom’s budget as ‘a great budget for schools’ overall. Most education advocates agree with that assessment.
What the Record Budget Includes
The California budget includes a larger-than-required cost-of-living adjustment for most programs. Special education would receive a $2.4 billion boost to ongoing funding. Districts and charter schools would get a $5 billion one-time block grant that they can spend however they want.
Community schools would receive $1 billion more in funding under the legislative plan. The budget maintains nearly all programs Newsom included in his May revision, avoiding the deep cuts that had been feared earlier in the budget cycle.
Lawmakers and Newsom now have until July 1 to resolve their remaining differences and finalize a spending plan that both sides can support.
