Students from multilingual homes are 5 to 18 years of age who attend a public K-12 school and speak a language other than English at home.
Millions of California students come to school with an invaluable asset: living in homes where a language other than English is spoken. Ensuring these students can leverage their linguistic assets and succeed at school requires meeting their basic needs, including access to affordable medical care.
Health care should be accessible and affordable to all Californians, especially school-aged children. Medi-Cal is our state’s health coverage program for residents with low incomes and is essential for the health and well-being of millions of K-12 students and their families.
More than 1.4 million California K-12 public school students who live in homes where a language other than English is spoken participate in Medi-Cal. Medi-Cal provides preventive care and treatment for health conditions that allows students from multilingual homes to attend and thrive at school – including achieving the opportunity of biliteracy.
Medi-Cal is a critical part of the social safety net that combats poverty, meets basic needs, and helps students attend school and prepare for the future. By providing access to affordable health care, Medi-Cal frees up household resources for other basic needs such as rent, utilities, or food. Without the support Medi-Cal and other social safety net programs provide, students’ basic needs may not be met and they would be less likely to regularly attend and engage in school.
Support for this report was provided by The Sobrato Family Foundation.
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Nearly 1.2 million California public K-12 students are English learners who bring an invaluable asset with them to school: speaking a language other than English. Ensuring these students can leverage their linguistic assets requires them to attend and succeed at school.
Having a safe, stable place to live is crucial for student development and educational success. But, more than 245,000 of California’s public K-12 students experienced homelessness in 2022-23. This includes children temporarily staying with other families due to economic hardship, and children living in motels, shelters, vehicles, public spaces, or substandard housing.
Students who are English learners disproportionately experience homelessness. English learners comprise 1 in 5 California K-12 public school students, but English learners were more than 1 in 3 of the state’s students who experienced homelessness in 2022-23. Housing instability is one reason English learners experience high rates of chronic absenteeism, which causes them to lose critical access to curriculum, opportunities to leverage their linguistic assets, and social structures that schools, educators, and peers offer.
Policymakers should boost investments in safe, affordable housing and target additional fundingand resources for students who are more likely to experience homelessness, including California’s English learners. Policy solutions should also be rooted in equitable interventions that build community trust and integrate culturally and linguistically competent practices to ensure every California K-12 student can thrive in school and life.
Support for this report was provided by The Sobrato Family Foundation.
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who are k-12 students from multilingual homes?
Students from multilingual homes are 5 to 18 years of age who attend a public K-12 school and speak a language other than English at home.
Millions of California students come to school with an invaluable asset: living in homes where a language other than English is spoken. Ensuring these students can leverage their linguistic assets and succeed at school requires meeting their basic needs, including sufficient access to food.
Access to affordable food is essential for everyone, especially for school-aged children. The CalFresh program helps Californians put food on the table by providing monthly benefits for people with low incomes, including K-12 students and their families.
More than 1 out of every 4 California K-12 public school students (27.6%) who live in homes where a language other than English is spoken participate in CalFresh, providing vital food assistance to the households of more than 650,000 students.
CalFresh is a critical part of the social safety net that combats poverty and helps students attend and succeed in school. By providing additional resources for food, CalFresh also frees up household resources for other basic needs such as rent, utilities, or medical care. Meeting the basic needs of many students from multilingual households would be more challenging without the support CalFresh provides.
Support for this report was provided by The Sobrato Family Foundation.
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key takeaway
California’s universal school meal program ensures all students have access to nutritious meals at school regardless of family income. This program combats childhood hunger, simplifies administration for schools, and has inspired similar initiatives in other states.
No child in California should go hungry. While families across the country face significant price increases in groceries and other basic needs, California schools have played a central role in making sure that children have access to nutritious meals regardless of their families’ income level.
In the 2022-23 school year, California became the first state to provide free school meals to any child regardless of whether they were eligible for the free or reduced-price meals as defined by the federal government. Since then, seven other states have passed similar policies, recognizing the benefits universal school meals provide to families and schools.
California policymakers should continue to protect universal school meal programs to support children’s health and well-being. Limiting free school lunches to families who meet a certain income threshold would be harmful to children’s health and would also increase the administrative burden for schools.
1. Reverting to the Federal School Meal Program Would Exclude Many Families Facing Food Insecurity
The California Universal School Meals Program (UMP) has expanded access to school meals to all children, well beyond what the federal government requires. The National School Lunch Program (NSLP) and School Breakfast Program (SBP), the two federally funded school meal programs, cap income eligibility at 130% and 185% of the federal poverty line (FPL), respectively. In California, that would mean that a family of four must have a total income of at most $39,000 for the children to qualify for free school meals and at most $55,500 to qualify for reduced-price meals in the current school year. However, 44% of food-insecure families in California had incomes above 185% of the FPL in 2022.1Based on Budget Center analysis of US Census Bureau, Current Population Survey for 2022 downloaded from IPUMS. As shown in the chart below, families with incomes above the threshold experience varying degrees of food insecurity.
2. The California Universal Meals Program Can Help Reduce Child Hunger
Income is not a perfect measure of whether a child is food insecure because family circumstances can change, and often do, particularly in a state with a high cost of living like California. In a 2022 survey, parents reported that the UMP has saved them money and time as well as reduced family stress. The UMP has ensured that no child has to worry about where their next meal will come from, regardless of their family situation.
3. School Meals Support Children’s Health and Learning
School meals promote good nutrition and improve health and learning,according to research. Children who participate in school meal programs are more likely to consume fruits, vegetables, and milk at breakfast and lunch, reducing the risk of nutrient deficiencies which can be harmful to health. These programs are also instrumental in supporting students’ health and well-being, with studies showing that free or reduced-price school lunches help lower rates of poor health and obesity. In addition, research shows that school meal programs help students learn and succeed in school through improved attendance, student behavior, academic performance, and long-term educational attainment.
4. The Universal School Meals Program Reduces Stigma Around Free Meals
Moving away from a means-tested approach reduces stigma around free meals, which helps the program reach more students. Research has shown that reducing the stigma associated with means-tested programs increases participation. The UMP has been successful in increasing breakfast and lunch participation as well as reducing the stigma around free school meals and unpaid meal debt. When food access is not tied to poverty status, students are less likely to shy away from grabbing a meal if they need one.
5. The Universal Meals Program Reduces Administrative Burden On Schools
The UMP reduces meal debt by making all school meals free to students. Schools are required to take on extra administrative tasks to account for meal debt, which, according to the California Department of Education (CDE), include collecting and documenting:
Evidence of efforts to collect unpaid meal charges in accordance with the CDE or local unpaid meal charge policy;
Financial documentation showing when the unpaid meal charges became an operating loss; and
Documentation showing when the repayment plan was agreed to by all parties.
Additionally, meal debt is an operating loss for schools. Thus, without UMP, school districts would likely face challenges with both the financial and administrative burdens of increased meal debt.
The UMP requires high-poverty schools to participate in the Community Eligibility Provision (CEP), which significantly reduces school meal administrative burden. CEP is a federal program that provides alternate meal counting and collection procedures. Namely, CEP schools do not collect meal applications, do not conduct verification activities, and do not classify meals as free, reduced-price, or paid. As a result, school meal administration is far less burdensome and many overhead costs are eliminated. Before the UMP requirement, only 24 percent of schools participated in CEP.
what is meal debt?
Meal debt occurs when students who are not certified to receive free school meals do not have enough cash in hand or in their school meals account to pay for their meals or for the “reduced-price” copayment. School districts set their own policy for unpaid school meal fees.
As of the 2022-23 school year, participation increased to 51 percent, prompted by the onset of UMP. However, as part of the CEP application, California schools must calculate an identified student percentage (ISP) reflecting the proportion of students that are directly certified for meals at no cost on the basis of their participation in safety net programs (i.e., CalFresh and CalWORKs) and other characteristics (such as foster youth). Some California schools face challenges with correctly calculating the ISP and are therefore not able to fully maximize the federal benefit. Therefore, with UMP and its associated CEP participation requirement, more schools may benefit from the administrative efficiency that comes with program participation but additional technical assistance from CDE could ensure schools maximize benefits from CEP participation.
California should continue to lead the way in making sure any child who needs a meal can obtain one. The California Universal School Meals Program not only supports family and child well-being and effective school administration, but it also may promote cost savings if the state can maximize the number of meals federally reimbursed at the free rate. State policymakers should continue investing in this program to maximize federal reimbursements and ensure all children have access to high-quality nutritious meals. By making sure all children receive proper nutrition at school, state leaders can help alleviate food insecurity and support children’s health and well-being.
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key takeaway
Despite California’s commitment to funding education through Proposition 98, increased child poverty and budget shortfalls pose substantial challenges.
All California students deserve the opportunity to learn and achieve their goals. Recognizing the critical role schools play in supporting student success, California voters adopted Proposition 98 (Prop. 98), which established an annual minimum funding guarantee for public K-12 schools and community colleges.
When students and their families struggle to make ends meet, their educational success is put at risk. The poverty rate for children in California more than doubled from 2021 to 2022, suggesting that more support is needed to help families meet their basic needs.
Helping Californians meet those needs while adequately funding K-14 education is challenging when the state experiences a budget shortfall that results from revenues falling far short of projections — as is the case this year. Understanding Prop. 98 and its interaction with the state budget is essential to assess policymakers’ options for addressing the challenges this year’s state budget presents.
Prop. 98 is a constitutional amendment adopted by California voters in 1988 that establishes an annual minimum funding level for K-14 education each fiscal year — the Prop. 98 guarantee. Prop. 98 funding comes from a combination of state General Fund revenue and local property taxes. Prop. 98 spending supports K-12 schools (including transitional kindergarten), community colleges, county offices of education, the state preschool program, and state agencies that provide direct K-14 instructional programs. While Prop. 98 establishes a required minimum funding level for programs falling under the guarantee as a whole, it does not protect individual programs from reduction or elimination.
How is the Prop. 98 minimum funding guarantee calculated?
Each year’s Prop. 98 guarantee is calculated based on a percentage of state General Fund revenues or the prior year guarantee adjusted for K-12 attendance and an inflation measure.1The inflation measure is either the percentage change in state per capita personal income for the preceding year or the annual change in per capita state General Fund revenues plus 0.5 percent. Since some of this information is not available until after the end of the state’s fiscal year, the Legislature funds Prop. 98 at the time of the annual Budget Act based on estimates of the Prop. 98 minimum funding level.
Once the final Prop. 98 guarantee is determined, the process of reconciling the actual and estimated guarantee is known as “settle up.” If the final Prop. 98 guarantee turns out to be higher than initially estimated, the Legislature must provide additional funding to make up the difference. On the other hand, if the Prop. 98 spending requirement is below the funding level assumed in a budget act, the Legislature has the option to amend the Budget Act to reduce funding to the lower revised minimum Prop. 98 guarantee.2The Legislature also can suspend Prop. 98 for a single year by a two-thirds vote of each house.
To the extent that the Legislature provides funding above the Prop. 98 minimum guarantee, it can increase the following year’s Prop. 98 minimum funding level and state spending required to fulfill the Prop. 98 obligation in future years. In other words, deciding to provide funding above the Prop. 98 minimum guarantee for one budget year can increase the minimum funding level for the subsequent year’s budget and beyond.
What is the Prop. 98 reserve?
California voters approved a constitutional amendment in 2014 that established the Public School System Stabilization Account (the PSSSA) – the Prop. 98 reserve. Constitutional formulas require the state to make deposits into, and withdrawals from, the Prop. 98 reserve. When the state faces a budget problem, discretionary withdrawals from the Prop. 98 reserve may also be made if the governor declares a budget emergency and the Legislature passes a bill to withdraw funds, which can only be used to support K-14 education.
Why is California facing a budget shortfall? And how large is it?
California faces a budget shortfall, also known as a “budget problem,” of tens of billions of dollars. The shortfall is based on estimates of revenues and spending across three fiscal years: 2022-23, 2023-24, and 2024-25 (the fiscal year that begins on July 1, 2024). This three-year period is known as the “budget window.” The main reason for the budget problem is that state revenue collections have fallen short of projections. A large portion of the problem is related to state revenues for the 2022 tax year, which are estimated to be about $25 billion lower than what policymakers expected when they adopted the budget for the current fiscal year last summer.
The extent of the 2022 revenue shortfall only became clear in late 2023 due to the extension of tax filing deadlines for 2022 taxes to November 2023. Because of this delay, state leaders had to finalize the 2023-24 budget last June with much less complete revenue information than usual, and they enacted a budget assuming significantly more revenue for the 2022 tax year than actually materialized.
How does California’s budget problem affect the Prop. 98 guarantee?
Revenue collections falling short of projections not only creates a budget problem for the state, it also means the Prop. 98 minimum funding guarantee for K-14 education is significantly lower than the level assumed in last year’s enacted budget. Based on revenue estimates in the governor’s January 2024 budget proposal, the Prop. 98 minimum funding guarantee dropped by $14.3 billion across the three-year budget window (2022-23 to 2024-25) compared to assumptions made last June.3The amount of state funding required to fulfill the Prop. 98 guarantee across the three-year budget window dropped by $15.2 billion below the Prop. 98 funding level assumed last June. The difference between the state’s funding requirementand the $14.3 billion total decline in the Prop. 98 guarantee reflects estimates in the governor’s January 2024 budget proposal that include a $900 million increase in local property tax revenue, which offsets the $15.2 billion reduction in the state’s portion of the Prop. 98 funding obligation.
Reconciling Prop. 98 spending with revised estimates of the Prop. 98 guarantee can be challenging when the minimum funding guarantee falls — and it is especially difficult if the revised guarantee falls significantly. The current challenge of managing such a large decline in the Prop. 98 minimum funding guarantee is further complicated because the majority of the drop — $9.1 billion — is attributed to the 2022-23 fiscal year, which ended on June 30, 2023.
The Legislature can address the challenge by amending last year’s Budget Act to reduce Prop. 98 funding to the lower revised minimum Prop. 98 guarantee. But, because the state has already allocated 2022-23 dollars to K-14 education, reducing K-14 education funding would be logistically difficult and would significantly impact K-12 schools’ and community colleges’ budgets. On the other hand, maintaining 2022-23 Prop. 98 spending above the minimum funding requirement could boost the state’s funding obligation to meet the Prop. 98 guarantee in 2023-24 and 2024-25.
How does the governor propose to address the budget problem and protect students and educators?
To help address the state budget shortfall, the governor’s January budget proposal assumes a reduction in state funding to the lower revised estimates of the Prop. 98 guarantee over the three-year budget window (2022-23 to 2024-25). To reduce Prop. 98 spending, the governor proposes a combination of spending reductions and discretionary withdrawals from the Prop. 98 reserve.
A significant part of the governor’s plan is an $8 billion reduction in Prop. 98 spending attributable to 2022-23, which would help reduce state General Fund spending to the lower revised Prop. 98 minimum funding level. However, the governor’s proposal would not take away the $8 billion from K-12 schools and community colleges — dollars they received for 2022-23 that have largely been spent. Instead, the governor proposes a complex accounting maneuver that would shift the $8 billion in K-14 education costs — on paper — from 2022-23 to later fiscal years.
First Look: Understanding the governor's 2024-25 state budget proposal
Learn about the key pieces of the 2024-25 California budget proposal, and explore how the governor prioritized spending and determined cuts amid a sizable projected state budget shortfall.
Specifically, $8 billion in 2022-23 costs would be spread across five state budgets from 2025-26 to 2029-30 ($1.6 billion per year). Moreover, these delayed expenses would be paid for using non-Prop. 98 funds. In other words, $8 billion in General Fund dollars from the non-Prop. 98 side of the state budget — funds that could otherwise support health, safety net, housing, and other critical services — would be spent on K-14 educationbut would not count as Prop. 98 spending nor boost the Prop. 98 minimum funding guarantee (the implications of this are discussed below).
In addition, to help pay for existing K-14 education program costs in 2023-24 and 2024-25, the governor proposes making $5.7 billion in discretionary withdrawals from the Prop. 98 reserve. These one-time reserve funds would help support K-14 education in 2023-24 and 2024-25 at the same time that the state reduces General Fund spending required to meet the Prop. 98 minimum funding obligation.
How could the governor’s proposal affect non-Prop. 98 spending?
The governor’s proposal would use non-Prop. 98 resources to make a total of $8 billion in payments to K-14 education starting in 2025-26, but the proposal fails to propose additional revenue or other non-spending cuts to make these payments. Because no additional alternatives are part of the plan, the proposal would create pressure to reduce spending for state budget priorities outside of K-14 education starting in 2025-26.
Shifting Prop. 98 costs to the non-Prop 98 side of the budget creates significant risks to state spending that supports California’s children and families. By creating a future obligation for K-14 education without additional resources to pay for it, the governor’s plan could force reductions in spending for programs such as child care, student aid, and social safety net services that many Californians depend on for support to make ends meet.
How can state leaders address the decline in the Prop. 98 guarantee?
Policymakers have options to address the large decline in the Prop. 98 minimum funding guarantee that include the following:
Increasing General Fund revenues would help pay for Prop. 98 expenses as well as provide funding to support state budget priorities outside of K-14 education. Revenue options state leaders consistently fail to examine are the tens of billions of dollars that the state loses to tax breaks each year, many of the largest which primarily benefit wealthy corporations and high-income individuals. The governor did put forth modest revenue solutions in his proposed 2024-25 state budget, but they make up less than 1% of the overall package of solutions.
Rely more heavily on the state’s Prop. 98 budget reserve
The governor’s proposal to make $5.7 billion in discretionary withdrawals from the Prop. 98 reserve indicates the administration’s willingness to declare a budget emergency, which would be required to make such withdrawals. However, the governor’s proposal would leave $3.9 billion in the Prop. 98 reserve at the end of 2024-25, which could be used to support K-14 education costs.
Consider the Legislative Analyst’s recommendation to use the Prop. 98 reserve to address the decline in the 2022-23 Prop. 98 guarantee
The Legislative Analyst’s Office suggests using funds from the Prop. 98 reserve to cover costs that exceeded the Prop. 98 minimum funding level in 2022-23. This option would help reduce state General Fund spending attributed to 2022-23 and the state’s Prop. 98 obligations in 2023-24 and 2024-25. While this approach could avoid cutting funding already allocated to K-14 education, it would likely mean fewer dollars are available for K-14 education costs than under the governor’s proposal.
Reduce or defer state spending for K-12 schools and community colleges
Policymakers could reduce state spending already approved for K-14 education or defer payments to K-12 schools and community colleges. However, both of these choices would create potentially significant challenges for schools.
Bottom line: Policymakers can address the decline in the Prop. 98 guarantee without creating pressure to reduce spending for priorities outside of K-14 education. The decline in the state’s Prop. 98 minimum funding guarantee due to state revenues falling short of expectations creates significant challenges for state leaders this year. However, policymakers have options for addressing these challenges, including raising revenues from wealthy corporations and high-income individuals who have ample resources to contribute.
Policymakers can also choose to withdraw more from the state’s Prop. 98 reserve to support K-14 education spending. Relying on Prop. 98 reserve funds alone may not be sufficient to cover all K-14 education expenses for which the state has made commitments. However, policymakers should look to raising revenue and other options to address the decline in the Prop. 98 guarantee that do not harm K-12 schools and community colleges or create pressure to reduce spending for state budget priorities outside of K-14 education.
The inflation measure is either the percentage change in state per capita personal income for the preceding year or the annual change in per capita state General Fund revenues plus 0.5 percent.
2
The Legislature also can suspend Prop. 98 for a single year by a two-thirds vote of each house.
3
The amount of state funding required to fulfill the Prop. 98 guarantee across the three-year budget window dropped by $15.2 billion below the Prop. 98 funding level assumed last June. The difference between the state’s funding requirementand the $14.3 billion total decline in the Prop. 98 guarantee reflects estimates in the governor’s January 2024 budget proposal that include a $900 million increase in local property tax revenue, which offsets the $15.2 billion reduction in the state’s portion of the Prop. 98 funding obligation.
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More than 2.3 million California TK-12 public school students bring a linguistic asset with them to school every day: living in homes where a language other than English is spoken. A majority of these students (1.2 million) demonstrate English proficiency during their school years. But, students’ home language skills are often neglected at school due to California’s shortage of bilingual education teachers. Neglecting students’ language assets means they may not become biliterate, causing them to miss out on numerous advantages biliteracy provides such as cognitive benefits and increased competitiveness once students enter the workplace.
To help students achieve biliteracy, California must address its shortage of adequately trained bilingual education teachers. The magnitude of this shortage can be assessed by looking at the number of teachers who have been authorized to teach bilingually in recent years, which pales in comparison to the number of TK-12 students who live in homes where languages other than English are spoken. Specifically, a large imbalance exists between 1) the number of students who live in homes where one of the top 10 languages is spoken and 2) teachers who earned an authorization to teach in those languages from 2012-13 to 2021-22 (See Table).
The bilingual teacher shortage is a significant obstacle for California students to achieve biliteracy. One step the Legislature can take to address this shortage is reinstating the Bilingual Teacher Professional Development Program (BTPDP), which expired in June 2021. Last year, the California Department of Education reported the BTPDP “was very successful and helped address a critical teacher shortage area that is in high demand.” The Legislature should fund the BTPDP and build on its success, especially to help the millions of California TK-12 students with home language assets achieve biliteracy.
Demand for TK-12 Bilingual Education Teachers Outstrips Supply in California
Language
Students from Homes Where a Language Other Than English Is Spoken
Bilingual Authorizations Issued from 2012-13 Through 2021-22
Student-to-Bilingual Authorization Ratio
Spanish
1,802,420
7,518
239.7
Vietnamese
68,150
30
2,271.7
Mandarin
67,712
436
155.3
Cantonese
42,081
61
689.9
Filipino
38,453
5
7,690.6
Arabic
32,944
11
2,994.9
Korean
29,675
133
223.1
Punjabi
22,690
2
11,345.0
Russian
21,307
3
7,102.3
Farsi
18,550
2
9,275.0
*Note: A bilingual authorization authorizes teachers to deliver instruction in languages other than English and does not include teaching intern credentials, permits, and waivers.
Source: California Department of Education and California Commission on Teacher Credentialing
Support for this report was provided by the Sobrato Family Foundation and the Stuart Foundation.
The diversity of California’s students is an invaluable asset that enables our communities to thrive. State leaders have a responsibility to ensure all students have the opportunity to learn and achieve their goals. Yet, many California students of color face persistent challenges. To address these challenges, Governor Newsom’s “Equity Multiplier” proposal would increase funding to … Continued
Every year, California’s governor and Legislature adopt a state budget that provides a framework and funding for critical public services and systems — from child care and health care to housing and transportation to colleges and K-12 schools.
But the state budget is about more than dollars and cents.
The budget expresses our values as well as our priorities for Californians and as a state. At its best, the budget should reflect our collective efforts to expand economic opportunities, promote well-being, and improve the lives of Californians who are denied the chance to share in our state’s wealth and who deserve the dignity and support to lead thriving lives.
State budget choices have an impact on all Californians and these decisions are particularly important for the nearly 6 million students in California’s K-12 public schools. Because the state budget provides the majority of funding that K-12 public schools receive each year, it is critical for Californians to understand and participate in the annual budget process to ensure that state leaders are making the strategic choices needed to allow every K-12 student — from different races, backgrounds, and places — to thrive and share in our state’s economic and social life.
This guide sheds light on the state budget, the budget process, and why they matter for K-12 students and schools with the goal of giving Californians the tools needed to effectively engage decision makers and advocate for fair and just policy choices.
Key Takeaways
the bottom line
The state spending plan is about more than dollars and cents.
Crafting the budget provides an opportunity for Californians to express our values and priorities as a state.
The state Constitution establishes the rules of the budget process.
Among other things, these rules allow lawmakers to approve spending with a simple majority vote but require a two-thirds vote to increase taxes. Voters periodically revise the budget process by approving constitutional amendments.
The governor has the lead role in the budget process
Proposing a state budget for the upcoming fiscal year gives the governor the first word in each year’s budget deliberations.
The May Revision gives the governor another opportunity to set the budget and policy agenda for the state.
Veto power generally gives the governor the last word.
The Legislature reviews and revises the governor’s proposals.
Lawmakers can alter the governor’s proposals and advance their own initiatives as they craft their version of the budget prior to negotiating an agreement with the governor.
Budget decisions are made throughout the year.
The public has various opportunities for input during the budget process.
This includes writing letters of support or opposition, testifying at legislative hearings, and meeting with officials from the governor’s administration as well as with legislators and their staffs.
In short, Californians have ample opportunity to stay engaged and involved in the budget process year-round.
California’s State Budget & Why It Matters for K-12 School Funding
The State Budget Consists of Three Types of State Funds
three types of state funds
General Fund — The state General Fund accounts for revenues that are not designated for a specific purpose.
Special Funds — Over 500 state special funds account for taxes, fees, and licenses that are designated for a specific purpose.
Bond Funds — State bond funds account for the receipt and disbursement of general obligation (GO) bond proceeds.
The state General Fund provides more than 95% of state spending that supports K-12 education.
The Largest Share of State General Fund Spending Supports K-12 Education
Under the enacted 2022-23 state budget:
Nearly one-third of General Fund dollars (33.1%) supports K-12 education.
Almost 3 out of every 10 General Fund dollars (29.3%) pays for health and human services.
Roughly 1 out of every 10 General Fund dollars (10.1%) goes to higher education.
Less than 1 out of every 10 General Fund dollars (6.3%) supports corrections, primarily the state prison system.
More than 1 out of 5 General Fund dollars (21.3%) goes to other essential services and institutions, such as transportation, environmental protection, the state’s court system, and so-called “General Government,” which consists of a variety of statewide expenses such as emergency expenditures.
Most General Fund Revenues Come From Three State Taxes
More than 9 out of every 10 General Fund dollars (just over 94%) under the enacted 2022-23 state budget are projected to come from:
The personal income tax (61.8%),
The corporation tax (17.3%); and
Sales and use taxes (15.3%)
The remaining General Fund dollars in 2022-23 are projected to come from smaller state revenue sources (5.7%), such as insurance and cigarette taxes.
The Majority of K-12 Education Funding Comes From the State
In 2020-21, K-12 school districts and county offices of education received:
More than half of their dollars (nearly 56%) from the state;
Nearly one-quarter of their dollars (24.6%) from local property taxes;
More than 1 in 10 (13.1%) of their dollars from the federal government, which included funding to mitigate effects of the COVID-19 pandemic; and
Only 6.5% of their dollars from other local sources of revenue, such as parcel taxes and fees for the use of school buildings.
Most K-12 Education Funding Is Allocated Through the Local Control Funding Formula
The Local Control Funding Formula (LCFF) is the primary funding formula for K-12 school districts and county offices of education.
State policymakers fundamentally restructured the state’s K-12 education finance system when they enacted the LCFF in 2013.
The LCFF is an equity-based formula that provides a base grant per K-12 student, adjusted to reflect the number of students at various grade levels, as well as additional grants for English learners, students from low-income families, and foster youth.
The Legislature determines LCFF grant levels in the annual state budget.
LCFF Dollars Come From the State and from Local Property Taxes
In 2020-21, nearly 2 out of every 3 dollars (66.2%) that K-12 school districts and county offices of education received were allocated through the LCFF.
Slightly less than two-thirds of LCFF dollars came from the state and slightly more than one-third came from local property taxes.
State Budget and Policy Choices Are Key to Determining the Allocation of K-12 School Funding
The state budget provides most of the funds that K-12 schools use to educate California’s 5.9 million K-12 students.
These funds go to more than 1,000 school districts, county offices of education, and charter schools.
The size of the state budget is a key factor that determines the total amount of annual funding K-12 schools receive.
However, the Legislature and governor decide how these state funds are allocated across the state.
Understanding the financial resources available to K-12 schools requires familiarity with the state budget and the state budget process.
Assembly Budget Committee and Senate Budget & Fiscal Review Committee
Review the governor’s budget proposals and develop each house’s version of the state budget. Most budget committee work is done through subcommittees that focus on specific policy areas.
Budget Act
The initial budget bill passed by the Legislature and signed into law by the governor, after any line-item vetoes. The Budget Act can be referred to by the year in which it becomes law (“Budget Act of 2021”) or by the fiscal year to which it applies (“2021-22 Budget Act”).
Budget Bill Jr.
The informal term to describe any budget bill that amends the Budget Act. Budget Bill Jrs. may be numbered sequentially using Roman numerals (e.g., Budget Bill Jr. I, Budget Bill Jr. II, etc.).
Budget-Related Bills ("Trailer Bills")
Generally make changes to state law related to the budget bill. Trailer bills typically move in tandem with the budget bill through the Assembly and Senate budget committees. Trailer bills also may move independently of the budget bill — such as through the Legislature’s policy bill process — and still be considered part of the overall “budget package.”
Department of Finance (DOF)
Leads the development of the governor’s budget proposals, prepares the governor’s budget documents, testifies on behalf of the governor at legislative budget hearings, develops the governor’s economic forecasts, and performs several other functions. The DOF’s director is the governor’s chief fiscal adviser.
Governor's Budget Summary
Provides the governor’s economic and revenue outlook, highlights major policy initiatives in the governor’s proposed budget, and summarizes proposed state expenditures. The budget summary is released on or before January 10.
Governor's Proposed Budget
Provides a detailed overview of the governor’s proposed expenditures for the upcoming fiscal year, estimated expenditures for the current fiscal year, and actual expenditures for the prior fiscal year. The proposed budget is released on or before January 10
Legislative Analyst's Office (LAO)
An independent, nonpartisan office that conducts research and analysis on state budget issues, analyzes statewide ballot measures, and provides fiscal and policy advice to the Legislature. The LAO is overseen by the Legislature’s bipartisan Joint Legislative Budget Committee.
Line-Item Veto
The governor’s power to reduce or eliminate specific items of appropriation while approving other portions of a bill. This power applies to any bill that contains an appropriation, including budget bills and budget-related bills. The Legislature may override a line-item veto with a two-thirds vote of each house.
May Revision
Released on or before May 14, the May Revision updates the governor’s economic and revenue outlook; adjusts the governor’s proposed expenditures to reflect revised estimates and assumptions; revises, supplements, or withdraws policy initiatives that were included in the governor’s proposed budget in January; and outlines adjustments to the Proposition 98 minimum funding guarantee for K-14 education.
The Constitutional Framework
The governor and legislators craft the state’s annual spending plan according to rules outlined in the state Constitution.
California voters periodically revise these rules by approving constitutional amendments that appear on the statewide ballot.
Proposals to amend the state Constitution can be placed on the ballot through a citizens’ initiative or by the Legislature.
A constitutional amendment takes effect if approved by a simple majority of voters.
Three Key Budget Deadlines
Two in the State Constitution (January 10 and June 15), One in State Law (May 14)
The governor must propose a budget for the upcoming fiscal year on or before January 10. The budget must be balanced: Estimated revenues (as determined by the governor) must meet or exceed the governor’s proposed spending.
The governor must release the May Revision on or before May 14.
The Legislature must pass a budget bill for the upcoming fiscal year by midnight on June 15. The budget bill must be balanced: Estimated General Fund revenues (as set forth in the budget bill passed by the Legislature) must meet or exceed General Fund spending.
Proposition 25: Simple Majority Vote for Budget Bill and Most Budget-Related Bills
The budget package generally may be passed by a simple majority vote of each house of the Legislature.
Prop. 25 of 2010 allows lawmakers to pass, by a simple majority vote, the budget bill as well as certain budget-related bills (“trailer bills”) that may take effect as soon as the governor signs them. Typically, the budget package consists entirely or primarily of such majority-vote bills.
To qualify as a budget-related bill under Prop. 25, a bill must (1) be listed in the budget bill and (2) contain an appropriation of any amount.
The budget package may include bills that require a two-thirds vote of each house, such as bills to raise taxes or to place constitutional amendments or general obligation bonds before the voters.
Proposition 25: Penalties for a Late Budget
Lawmakers face penalties if they fail to pass the budget bill on or before June 15.
Prop. 25 requires lawmakers to permanently forfeit both their pay and their reimbursement for travel and living expenses for each day after June 15 that the budget bill is not passed and sent to the governor.
These penalties do not apply to budget-related bills, which do not have to be passed on or before June 15.
Proposition 26: Supermajority Vote for Tax Increases
Any tax increase requires a two-thirds vote of each house of the Legislature.
Under the state Constitution, “any change in state statute which results in any taxpayer paying a higher tax” requires a two-thirds vote of each house.
This standard was imposed by Prop. 26 of 2010. This measure expanded the definition of a tax increase and thus the scope of the two-thirds vote requirement, which was originally imposed by Prop. 13 of 1978.
Prior to Prop. 26, only bills changing state taxes “for the purpose of increasing revenues” required a two-thirds vote. Bills that increased some taxes but reduced others by an equal or larger amount could be passed by a simple majority vote of each house.
Proposition 26: More Charges Are Classified as Taxes
Prop. 26 of 2010 also expanded the definition of a tax to include some fees.
Prior to Prop. 26, lawmakers could create or increase fees by a simple majority vote. These majority-vote fees included regulatory fees intended to address health, environmental, or other problems caused by various products, such as alcohol, oil, or hazardous materials.
Prop. 26 reclassified regulatory and certain other fees as taxes. As a result, a two-thirds vote of each house of the Legislature is now required for many charges that previously were considered fees and could be passed by a simple majority vote.
Additional Supermajority Vote Requirements
The state Constitution requires a two-thirds vote of each house of the Legislature in order to:
Appropriate money from the General Fund, except for appropriations that are for public schools or that are included in the budget bill or in budget-related bills that meet the requirements of Prop. 25.
Pass bills that take effect immediately (urgency statutes), except for the budget bill and Prop. 25 budget-related bills.
Place constitutional amendments or general obligation bond measures before the voters.
Override the governor’s veto of a bill or an item of appropriation.
A Bill Must Be Published for at Least 72 Hours Before the Legislature Can Act on It
Proposition 54 of 2016 requires bills to be distributed to legislators and published on the Internet, in their final form, at least 72 hours before being passed by the Legislature.
This rule applies to all bills, including the budget bill and other legislation included in the budget package.
This mandatory review period can be waived for a bill if:
The governor declares an emergency in response to a disaster or extreme peril, and
Two-thirds of legislators in the house considering the bill vote to waive the review period.
Proposition 98: A Funding Guarantee for K-12 Schools and Community Colleges
Prop. 98 of 1988 guarantees a minimum annual level of funding for K-14 education.
The amount of the guarantee is calculated each year based on one of three tests that apply under varying fiscal and economic conditions. Two of these tests include adjustments for changes in statewide K-12 attendance. Prop. 98 funding comes from the state General Fund and local property tax revenues.
The Legislature can suspend the guarantee for a single year by a two-thirds vote of each house and provide less funding. Following a suspension, the state must increase Prop. 98 funding over time to the level that it would have reached absent the suspension.
While the Legislature can provide more funding than Prop. 98 requires the guarantee has generally served as a maximum funding level.
Proposition 2: Saving for a Rainy Day, Paying Down Debt
Prop. 2 of 2014 revised the rules that apply to the Budget Stabilization Account (BSA) — the state’s constitutional rainy day fund — and also established a new requirement to pay down state budgetary debt.
The state is required to set aside 1.5% of General Fund revenues each year, plus additional dollars in years when tax revenues from capital gains are particularly strong.
Until 2029-30, half of the revenues go into the BSA and the other half must be used to pay down state budgetary debt, which includes unfunded pension liabilities. Starting in 2030-31, the entire annual transfer goes into the BSA.
State policymakers may suspend or reduce the BSA deposit and withdraw funds from the reserve, but only under limited circumstances that qualify as a “budget emergency.”
Proposition 2: A Budget Reserve for K-14 Education
Prop. 2 of 2014 also created a state budget reserve for K-12 schools and community colleges called the Public School System Stabilization Account (PSSSA).
Deposits come from state capital gains tax revenues in years when those revenues are particularly strong.
However, various conditions must be met before these dollars could be transferred to the PSSSA. For example, transfers could occur only in so-called “Test 1” years under Prop. 98, which have been rare.
Proposition 55: Potential New Funding for Medi-Cal from a Tax on the Wealthiest Californians
Prop. 55 of 2016 extends, through 2030, personal income tax rate increases on very high-income Californians and establishes a formula to boost funding for Medi-Cal, which provides health care services to Californians with low incomes.
Starting in 2018-19, General Fund revenues — including those raised by Prop. 55 — must first be used to fund (1) the annual Prop. 98 guarantee for K-12 schools and community colleges and (2) the cost of other services that were authorized as of January 1, 2016, as adjusted for population changes, federal mandates, and other factors.
If any Prop. 55 revenues remain after meeting these required expenditures, Medi-Cal would receive 50% of this excess, up to a maximum of $2 billion in any fiscal year.
Prop. 55 has not yet resulted in any additional funding for Medi-Cal.
State Appropriations Limit (SAL): A Cap on Spending
Appropriations are subject to a limit established by Prop. 4 of 1979, as modified by later initiatives. This spending cap is often called the Gann Limit.
The SAL limits the amount of state tax proceeds that can be appropriated each year. This limit is adjusted annually for changes in population and per capita personal income.
Some appropriations from tax proceeds do not count toward the limit, including debt service and spending that is needed to comply with court or federal mandates.
Revenues that exceed the SAL over a two-year period are divided equally between Prop. 98 spending and taxpayer rebates. The state last exceeded the SAL in 2020-21 (but did not do so in the prior year).
State Mandates: Pay for Them or Suspend Them
The state is required to pay for or suspend mandates that it imposes on local governments.
Prop. 4 of 1979 requires the state to reimburse local governments for costs related to a new program or a higher level of service that is mandated by the state.
Prop. 1A of 2004 expanded the definition of a mandate to include the transfer of financial responsibility from the state to local governments.
Prop. 1A also requires the state to suspend a mandate in any year in which local governments’ costs are not fully reimbursed.
What do the Governor and the Legislature Do?
the governor
Approves, modifies, or rejects spending proposals prepared by state departments and agencies through an internal process coordinated by the DOF.
Proposes a spending plan for the state each January, which is introduced as the budget bill in the Legislature.
Updates and revises the proposed budget each May (the “May Revision”).
Signs or vetoes the bills included in the budget package.
Can veto all or part of individual appropriations (line items), but cannot increase any appropriations above the level approved by the Legislature.
the legislature
Approves, modifies, or rejects the governor’s proposals.
Can add new spending or make other changes that substantially revise the governor’s proposals.
Needs a simple majority vote of each house to pass the budget bill and Prop. 25 budget-related bills.
Needs a two-thirds vote to pass certain other bills that may be part of the budget package, such as bills that increase taxes or propose constitutional amendments.
Needs a two-thirds vote of each house to override the governor’s veto of a bill or an appropriation.
What Happens When?
The state budget process is cyclical. Decisions are made throughout the year.
State departments and agencies develop baseline budgets to maintain existing service levels in the upcoming fiscal year and may prepare “budget change proposals” intended to alter service levels. The DOF review these documents.
Following a series of meetings within the governor’s administration, the governor makes final decisions and the DOF prepares the proposed budget for release in January.
Independent of the governor, legislative leaders their budget priorities for the upcoming fiscal year.
January 10
The governor releases the proposed budget for the upcoming fiscal year.
January to Mid-May
Budget committees and their subcommittees hold dozens of headings to review the governor’s proposals and make initial decisions.
Mid-May to June
The governor releases the May Revision by May 14.
Each house of the Legislature then finalizes its version of the budget. A legislative conference committee may meet to resolve differences.
June
Legislative leaders and the governor meet to address outstanding issues.
June 15
The constitutional deadline for lawmakers to pass the budget bill.
This deadline does not apply to budget-related bills, which can be passed at any time.
July 1
The new fiscal year begins.
The governor may sign the budget bill and budget-related bills — as well as issue vetoes — by this date.
July and Beyond
The Legislature may pass, by a simple majority vote, amendments that change the spending levels in the adopted budget bill.
Lawmakers also may pass additional budget-related bills, thus increasing the size and scope of the original budget package.
State departments and agencies develop baseline budgets and budget change proposals for the following fiscal year and submit them to the DOF, starting the state budget process anew.
Legislative Counsel: Bills and bill analyses, a free bill-tracking service, the state codes, and the state Constitution.
State Assembly and Senate: Committee agendas and other publications, floor session and committee schedules, the annual legislative calendar, and live audio streaming of legislative proceedings.
Support for this report was provided by the Sobrato Family Foundation and the Stuart Foundation.
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