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Report

Reconciliation Bill Passed by House Republicans Would be Devastating for Californians

June 2025 | By California Budget & Policy Center

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key takeaway

The House reconciliation bill would deeply harm Californians by cutting funding for essential programs like health care, food assistance, and education — while granting massive tax breaks to the wealthy and corporations. These cuts would disproportionately impact families with low incomes, immigrants, and communities of color, pushing more people into poverty and widening racial and economic inequities across the state.

Budgets reflect our collective values and priorities. Yet, recent proposals in Congress would take our country in the wrong direction, threatening access to essential health care and food assistance for millions to help fund massive new tax breaks for the wealthy and fuel policies that cause harm and tear families apart. These choices make clear whose interests are being prioritized, and it’s not everyday people.

What would the federal budget reconciliation bill recently approved by the House mean for California?

  • Higher costs for food and health care for millions of families and individuals, making it even harder to make ends meet when the cost of living is already too high.
  • Increased hunger and poverty, including among children, as families face higher costs and lose access to support to meet basic needs.
  • Lost access to life-saving treatments, routine doctor visits, and medications for older adults, people with disabilities, veterans, and people with low incomes, as their coverage gets pulled out from under them.
  • More extreme income inequality and wider racial inequities, with the top 1% getting richer and people with lower incomes and people of color disproportionately harmed.
  • Increased fear and danger for millions of Californians who are immigrants and their children as significant new funding supercharges immigration enforcement and cruel policies, including restrictions on assistance, single out immigrant communities.
  • Huge new costs shifted to the state that it currently cannot absorb, destabilizing the state’s fiscal health and forcing state policymakers to make painful decisions that Congress is avoiding.

As the Senate considers modifying proposals in the House bill, this resource shows the significant and wide-reaching harm that proposed policies would inflict on communities across California.

table of contents

Health Care

Medi-Cal, California’s Medicaid program, provides free or low-cost health coverage to nearly 15 million Californians — over 1 in 3 Californians — including children, pregnant individuals, seniors, and people with disabilities.

California has significantly expanded access to health coverage over the past decade, largely due to the federal Affordable Care Act (ACA), which the state fully implemented in 2014. A key component of this health care reform was extending Medi-Cal eligibility to low-income adults under age 65 without dependents. This group, known as the “ACA expansion population,” was previously excluded from Medicaid in most states. Today, they make up a big share of Medi-Cal enrollees (about 5 million people).

The ACA also established Covered California, the state’s health insurance marketplace where individuals and families can purchase private coverage with the help of federal and state subsidies. About 1.8 million Californians rely on Covered California.

Alongside Medi-Cal and Covered California, Medicare is a critical pillar of California’s health care system. Medicare is a federal program that provides health insurance to people age 65 and older and to younger individuals with long-term disabilities. About 6.6 million Californians are enrolled in Medicare, including 1.6 million people who are dually eligible for both Medicare and Medi-Cal due to their age and income level.

California has gone further than many states by expanding full-scope Medi-Cal to undocumented immigrants, helping drive the state’s uninsured rate to historic lows. Because federal law prohibits using Medicaid funds for this coverage, this expansion is funded entirely by the state.

But all of this progress is now under threat.

House Republicans have proposed a bill that would dismantle key components of the ACA and make the deepest health care cuts in history — slashing over $800 billion in federal funding over 10 years, with most of those cuts targeting Medicaid. These cuts would take health coverage away from millions of Californians, increase out-of-pocket costs for millions more, and force families to make impossible choices between getting the care they need and covering rent, groceries, or other essentials.

The damage wouldn’t stop at Medi-Cal. The proposal would also make health coverage less accessible and less affordable for the millions of people who rely on Medicare and Covered California.

In total, the bill would strip billions in federal funding from California — destabilizing the state’s health care system and fiscal health, and threatening the health and economic security of millions of Californians.

Major Impacts of the House Bill on Medicaid (Medi-Cal)

The House bill includes a number of harmful proposals that would weaken Medicaid (Medi-Cal) and put health coverage at risk for millions of Californians, including children, older adults, people with disabilities, and the nearly 5 million adults in the ACA expansion population. It would:

  • Penalize states that provide health coverage to certain groups of immigrants effective October 2027. Specifically, if a state provides health coverage to people who are undocumented as well as people with other immigration statuses, the House bill would reduce the federal matching rate for covering the Medicaid expansion population under the ACA from 90% to 80%. To avoid this penalty, state leaders could decide to end state-funded coverage for undocumented immigrants and eliminate health coverage for roughly 218,000 children and 1.4 million adults in California. Maintaining current Medi-Cal coverage under this penalty would increase state spending by an estimated $27.5 billion from 2028 to 2034. In the first year alone, the additional cost would be about $3.2 billion.
  • Put up to 5 million adults in California at risk of losing Medi-Cal due to burdensome work requirements beginning no later than December 2026. This policy change would require adults in the ACA expansion population to prove they are working, looking for work, or participating in job training programs for at least 80 hours per month in order to maintain their Medi-Cal coverage. Work requirements are essentially cuts that would cause significant health coverage losses. Although up to 5 million adults are at risk of losing Medi-Cal, the number could be lower — ranging from 2.3 million to 3.4 million — depending on the data matching methods that California could use to automatically exempt enrollees based on parenthood or wage data.
  • Make it more expensive for many adults to access health care by imposing mandatory cost-sharing of up to $35 per service for certain adults beginning October 2028. In this context, cost-sharing refers specifically to copayments: the fixed out-of-pocket fees people must pay when they receive a health care service. Even modest costs can lead people to delay or skip needed care, putting their health at risk. Currently, most Medicaid enrollees do not pay copayments, and some services (e.g., emergency care, pregnancy-related care, and family planning) are fully exempt. Under this proposal, states would be required to impose copayments for all non-exempt services, which the House bill would expand to include primary care and behavioral health services. Providers would also be allowed to deny care to people who cannot pay the required copayment, making it even harder for low-income adults to access care.
  • Make it more challenging for adults in the ACA expansion population to maintain their Medi-Cal coverage due to increased eligibility checks starting in late 2026. The House bill would require states to conduct eligibility redeterminations at least every six months for ACA expansion adults. Current law requires states to do this every 12 months. The redetermination process often involves complex paperwork and documentation requirements, which can be burdensome for people to navigate. Additionally, many Californians experience long wait times when trying to contact county Medi-Cal workers to address eligibility questions or submit necessary information. This change, set to take effect on December 31, 2026, would make it more challenging for adults to maintain their Medi-Cal coverage.
  • End gender-affirming care as an essential health benefit. About 36,000 transgender, gender expansive, and intersex (TGI) Californians with low-incomes who qualify for Medi-Cal access treatments that align with their gender identity and allow them to live safe and healthy lives. Gender-affirming care saves lives, and for the 50% of TGI Californians who experience serious mental health challenges every year, this care is critical to ensuring they can survive.
  • Severely reduce access to preventive care, primary care, and reproductive and sexual health care by defunding providers that offer abortion services. Specifically, the House bill prohibits Medicaid funding to be used to pay for services provided by Planned Parenthood for 10 years. More than 80% of Californians who seek care at Planned Parenthood health centers rely on Medi-Cal for their health coverage, meaning the large majority of Californians receiving critical care from Planned Parenthood would be severely restricted in their access to preventive care, primary care, and reproductive and sexual health care. Federal law already prohibits Medicaid from covering abortion services, except in certain circumstances.
  • Restrict states’ ability to raise revenue for Medicaid by prohibiting new or increased provider taxes — a key financing tool that states use to fund Medicaid and other important health care investments. This would directly threaten California’s ability to raise and allocate revenue through the Managed Care Organization (MCO) tax, which helps bring in additional federal funds to sustain and improve Medi-Cal coverage and access, especially in communities that have long faced barriers to care. The bill also mirrors a proposed federal rule that would further restrict how provider taxes can be structured.
  • Keep harmful policies in place that make it harder for people to access and maintain Medi-Cal health coverage. Specifically, the bill blocks federal reform that would make it easier for children, seniors, and people with disabilities to enroll and maintain health coverage. This rule was designed to reduce administrative barriers, prevent unnecessary coverage losses, and improve continuity of care.

Major Impacts of the House Bill on Medicare

The House bill includes harmful provisions that would undermine Medicare and put health coverage at risk for millions of older adults and people with disabilities. It would:

  • Take Medicare away from certain immigrants who currently qualify. Medicare is an earned benefit. People qualify for Medicare if they have worked in the US for at least 10 years or if they have a spouse who has. Currently, immigrants with legal permission to live and work in the US can qualify for Medicare if they meet the work criteria. The House bill would restrict access to US citizens, green card holders, certain Cuban parolees, and individuals from COFA nations (Compacts of Free Association). This means many immigrants who have spent years contributing to Medicare would be blocked from ever receiving the benefits they’ve earned — an exclusion that is unfair and deeply unjust.
  • Keep harmful policies in place that make it harder for low-income seniors and people with disabilities to afford health care and prescription drugs. Specifically, the House bill would block federal reform that would have allowed more low-income Medicare beneficiaries to enroll in the Medicare Savings Program, which covers Medicare premiums and often other out-of-pocket costs through Medicaid. The rule would simplify the process and require states to automatically enroll people who receive SSI. Blocking this change would leave many without critical financial assistance.
  • Keep unsafe nursing home conditions in place, putting seniors and people with disabilities at risk. The House bill would block implementation of a new federal rule finalized in May 2024 that requires nursing homes to increase staffing levels and report more information about worker pay. These long-overdue reforms were designed to address dangerously low staffing levels that put patients at risk. Delaying these protections would prolong unsafe conditions for many older adults and people with disabilities who depend on nursing homes for daily care.

Major Impacts of the House Bill on Covered California

The House bill includes sweeping changes that would reduce access to Covered California and raise health care costs for many Californians, especially immigrants and people with fluctuating incomes. It would:

  • Take Covered California support away from certain immigrants who currently qualify. The House bill would cut off premium tax credits and cost-sharing assistance for nearly 112,000 Californians who rely on Covered California to afford health insurance. It would eliminate eligibility for many immigrant groups, including people with work or student visas, refugees, survivors of trafficking, and DACA recipients (Deferred Action for Childhood Arrivals). If enacted, this change could make it harder for thousands of individuals and families to afford health coverage and may lead to more people going without care or falling into medical debt.
  • Fails to extend enhanced premium tax credits, making Covered California coverage much more expensive. Without action, an estimated 2.4 million Californians would face higher premium costs, and up to 183,000 people could lose coverage altogether when the credits expire at the end of 2025. Monthly premium costs would rise by an average of 63%, with even steeper increases for communities of color — up to 76% for Latinx enrollees and 71% for Asian enrollees.
  • Make it harder for people to get health coverage through Covered California. The House bill would cut California’s open enrollment period from 90 days to 45 days. If this policy change was in place this past year, it would have prevented over 100,000 Californians from being able to enroll in health coverage. The bill would also eliminate year-round enrollment for people with incomes under 150% of the poverty line, making it harder for those with low or unstable incomes to sign up when they need coverage. In addition, the bill would end automatic renewals and require eligibility to be verified before enrollment, creating new barriers that could lower enrollment and increase the number of uninsured Californians.
  • Raise health care costs and penalize people with fluctuating incomes. Under current law, people who get premium tax credits through Covered California only have to repay a portion if their income ends up higher than expected, but the House bill would remove those protections and require full repayment, no matter their income level. It would also end cost-sharing assistance for people who enroll outside of the standard open enrollment window. These changes would make coverage more costly and less stable for many Californians, especially seasonal employees, gig workers, and others who have fluctuating incomes.

Food Assistance

SNAP nutrition assistance (CalFresh in California) helps over 5 million Californians each month, including workers with low-paying jobs, buy the food they need to support their households. It brings billions of federal dollars into the state each year that Californians spend in their communities which helps boost local businesses and jobs. In early 2023, CalFresh kept 1.1 million state residents out of poverty, reducing California’s poverty rate by 3 percentage points, according to the Public Policy Institute of California.

The House reconciliation bill would dramatically raise costs and reduce food assistance for millions of Californians by cutting federal funding for SNAP by nearly $300 billion — about 30% — the largest cut in the program’s history. These cuts would increase poverty, food insecurity, and hunger, among children, older adults, people with disabilities, and many others. The House bill would force state leaders to make painful cuts to this vital support and break the foundational agreement that food benefits are a federal responsibility as an entitlement program. Here are some of the major impacts in California.

The House bill would:

  • Put the state on the hook for nearly $4 billion more per year. The largest cut to the SNAP program would involve a fundamental change to the funding structure, where states would be required to pay a portion of SNAP benefits. In California, based on recent trends, the state would be responsible for about $3.1 billion annually to maintain current benefit levels. Shifting a share of the cost of CalFresh benefits to California would likely make it impossible for the state to cover benefit costs during recessions when the need for food assistance rises but state revenues decline. Additionally, the bill would require states to increase the proportion of administrative costs they cover from 50% to 75%, which in California would mean that the state would have to pay an additional $600 million per year. It would be extremely difficult for California to find nearly $4 billion in California’s already strained budget fast enough to prevent families and individuals from losing benefits. This would put Californians who rely on CalFresh to meet their basic food needs at risk of facing reduced benefits or exclusion from the program entirely.
  • Put 286,000 adults with school-age children and 201,000 older adults at risk of losing their CalFresh benefits as a result of harsh time limits. The bill would expand its already restrictive time limits for food assistance to caretakers of school-age children and older adults between the ages of 55 and 64, putting a total of 888,000 Californians, who live in households with impacted adults, at risk of losing part of their household benefits. These program participants would be limited to three months of food assistance across three years unless they show compliance with a 20-hour-per-week work requirement or prove they qualify for an exemption, such as having a disability. Work requirements are punitive and ineffective bureaucratic hurdles for families that do not lead to increased employment. Rather, they push caretakers, people with disabilities, people with mental health challenges, people who live in high unemployment areas, and people with precarious employment off assistance. Additionally, the bill would make it very difficult for states to receive waivers for time limits in most high unemployment areas, thereby demanding people work for food assistance even when jobs are not readily available.
  • Cut CalFresh benefits for all 5.5 million program participants. The bill would permanently freeze the cost of the Thrifty Food Plan (TFP) outside of inflation adjustments. The TFP had not been updated since the 1970s to reflect current science-based dietary recommendations or the economic realities of buying and preparing food prior to a 2021 expansion. The bill would prevent future revisions, effectively decreasing already limited benefits and making it significantly harder for families to afford groceries. Additionally, the bill would increase the paperwork burden required to get utility deductions and remove internet costs as a deductible expense, which would decrease the amount of assistance most households would receive. 
  • Potentially put significant pressure on other programs by cutting SNAP. Programs that provide food to school-age children could be directly impacted as a result of the SNAP cuts. The Summer EBT program, otherwise known as SUN Bucks, provides modest assistance to families during the summer breaks to help when school meals are not an option. The amount of benefits is based on the TFP, which would be eroded over the years through this bill. Additionally, schools use a data-linking process to help identify students who participate in CalFresh in order to receive reimbursement for free or reduced-price school meals from the federal government. If students lose their CalFresh status, the state may be on the hook to pay for meals through the universal meals program. As a whole, cuts to SNAP mean that more people will experience food insecurity, which could put pressure on underfunded food banks and other programs, like the Women, Infants, & Children (WIC) program, to help mitigate the harm.

Immigrants

California is home to the largest share of immigrants in the US and immigrants are an integral part of California’s social fabric, pay taxes, and contribute to its economic success. Over half of all California workers are immigrants or children of immigrants, and the more than 2 million Californians who are undocumented make significant contributions to state and federal revenues, contributing $8.5 billion in state and local taxes in 2022, despite their exclusion from most public benefits.

Federal cuts and other harmful policies targeting immigrants will have detrimental effects on families, communities, and the state’s entire economy. The House reconciliation bill would deprive children and families of nutrition and health care, while supercharging an immigration enforcement agenda that threatens constitutional protections. It provides billions in largely unrestricted funds for the Trump Administration’s immigration enforcement agenda and presents a generational threat to democratic rule of law and community safety across the country. Here are some of the major impacts in California.

The House bill would:

  • Increase fear and danger for millions of Californians who are immigrants and their children, as $150 billion in unrestricted funds are directed to immigration enforcement, with detrimental effects on families, communities, and the state’s entire economy. Restrictive and harsh immigration policies negatively impact how immigrants interact with public services and institutions through a “chilling effect,” result in negative health and financial outcomes, and harm key industries like housing, farming and food production, and caregiving. This unprecedented increase in enforcement would also negatively impact US-born workers:  Immigrants generate jobs for US-born workers directly as entrepreneurs and indirectly, as research has shown that for every 13 foreign-born workers who leave the labor force because of direct removals and the chilling effect of deportations, 10 US-born workers lose their jobs.
  • Jeopardize Medi-Cal coverage for certain immigrants, including roughly 218,000 children and 1.4 million adults in California. It would cut federal Medicaid funding to California as a penalty for providing health care to certain groups of immigrants — including people who are undocumented, refugees, asylees, and survivors of domestic violence and sex trafficking — which would result in the state losing $27.5 billion in federal funding from 2028 to 2034 unless California ends this coverage.
  • Take away Medicare from certain groups of immigrants, including refugees, asylees, and some survivors of domestic violence and sex trafficking. Since workers contribute to Medicare through taxes from their paychecks, this exclusion means taking away health care from people who have paid for and earned this benefit (see Health Care section).
  • Bar certain groups of immigrants from qualifying for subsidies that help people afford health insurance in Covered California (see Health Care section).
  • Take SNAP food assistance — CalFresh in California — away from immigrants who are not naturalized citizens or do not hold a green card. This means refugees, asylees, and immigrants who are trafficking survivors or survivors of domestic violence would be excluded from federal nutrition assistance. CalFresh benefits are completely funded by the federal government, so, without state action to ensure access to state-funded benefits, this provision will cut off immigrants from a key tool to providing food on the table for themselves and their families.
  • Create harsh and inequitable tax rules for immigrant filers and their US citizen family members. It would exclude 910,000 US citizen and legal resident children in California from the Child Tax Credit if one or both of their parents do not have Social Security Numbers (SSNs), even though these parents collectively pay billions in state and local taxes every year. It would also prohibit immigrants without SSNs and mixed-status families from receiving tax credits for college students, and would take away Premium Tax Credits — which help people afford health coverage — from immigrants with certain legal statuses, including but not limited to refugees, asylees, and domestic violence and trafficking victims. Additionally, the bill would implement a remittance tax only for immigrant filers on transfers of funds to people in other countries.

Federal Policy

The federal government plays a major role in shaping California’s budget, economy, and the well-being of its people.

Learn how federal policies shape California’s budget, economy, and vital programs — and how state leaders can respond to protect and support Californians.

Explore Federal Resources

Refundable Tax Credits

Credits like the Earned Income Tax Credit (EITC) and Child Tax Credit are proven tools for improving economic security among Californians with low and moderate incomes, and they’ve been linked to long-term benefits for children, including better health and school achievement.

The House reconciliation bill aims to take away benefits from millions of families and children, causing profound harm in the short and long term. The bill proposes imposing inefficient administrative burdens on families applying for the EITC, excludes even more families from the Child Tax Credit, and threatens to take away mechanisms meant to streamline tax filing. At the same time, none of these types of requirements are being proposed for the wealthy and corporations set to claim the grossly generous benefits outlined in this same bill. This package has been proposed under the guise of maximizing efficiency. In reality, it enforces exclusionary and ineffective requirements intended to discourage families from accessing public supports for which they are eligible. Here are some of the major impacts in California.

The House bill would:

  • Take the Child Tax Credit away from 910,000 US citizen children and children with legal residency in mixed status families in California by requiring that their parents have a Social Security Number (SSN) for their children to receive the credit, as discussed in the Immigrants section. In addition, the bill permanently excludes children who do not have a SSN. This proposal is particularly harmful to mixed-status families and immigrants who are already ineligible for most public supports.
  • Exclude 2 million children with low incomes in California from a temporary increase in the Child Tax Credit that benefits moderate to higher income families and fails to end the current exclusion of those children from the full credit simply because their families’ income is too low.
  • Put over 1.7 million families in California, including more than 2.8 million children, at risk of losing the EITC due to significant new administrative burdens. By introducing a new precertification system, similar to one previously proven to be inefficient and wasteful, families would be required to apply for a certificate for each qualifying child before they could claim the EITC when filing their taxes. This new system would require more time-consuming paperwork and likely cause eligible families to lose access to the credit.
  • Terminate the IRS Direct File program, taking a free tax filing option away from millions of eligible California taxpayers. This program was successfully piloted in states like California in 2024, and significantly expanded in 2025, following widespread interest in the program. California was planning to integrate its existing free state filing system, CalFile, with Direct File in 2026 to make federal and state tax filing easier for Californians. Eliminating this program would mean many families and individuals will continue losing money paying to file their taxes.
  • Fail to extend enhanced Premium Tax Credits that made Covered California health coverage more affordable (see Health Care section).
  • Exclude many immigrants and their families from tax benefits for which they were previously eligible (see Immigrants section).

Tax Cuts

The House reconciliation bill contains a costly, upside-down tax package that would largely benefit high-income people and corporations, and would be paid for by the historic cuts to health coverage and food assistance that would cause deep harm to millions of Californians.

The tax provisions of the bill are estimated to cost nearly $4 trillion over 10 years — this includes extending the expiring tax cuts enacted in 2017 and adding more tax cuts on top of that. About 44% of the tax benefits would go to the richest 5% of Americans in 2026, while the bottom 20% of Americans would only get around 1% of the benefits — and any tax benefit received by low-income households would largely be offset by cost increases resulting from the bill’s proposed health care and food assistance cuts. Here are some of the major impacts in California.

The House bill would:

  • Give an average tax cut of almost $40,000 to the richest 1% of Californians (fewer than 200,000 households that have incomes of more than about $1 million), while giving the bottom 20% of Californians (representing nearly 4 million households) a cut of only $170 on average in 2026 — an amount that would be wiped out by the cuts to health care and food assistance, as well as the impacts of tariffs on the cost of goods and services.
  • Expand and make permanent a tax break mostly benefiting wealthy business owners. Even under the existing, smaller tax break, millionaires receive more than half of the total benefits.
  • Permanently weaken the federal estate tax so that wealthy people can pass on up to $30 million to their heirs without any taxes. If the 2017 tax law were to expire, this would drop to about $11 million, but instead the bill would continue to allow more wealthy families to pass on tens of millions without paying a cent of tax, further entrenching wealth inequality. In California, only 743 estates were subject to the federal estate tax in 2022.
  • Give corporations more than $160 billion in tax breaks (nationwide) in the near term by rolling back provisions from the 2017 tax law that were intended to help offset the cost of the huge, permanent reduction in the corporate tax rate from 35% to 21% — and adding some new tax breaks as well. Some of these provisions are set to expire in a couple of years — but just like what is happening now, corporations would likely lobby to extend or make those cuts permanent and Congress would oblige.
  • Provide a generous tax break for donors contributing to private school voucher programs, allowing some wealthy donors to make a profit off their donation while depleting revenues for public schools, as discussed in the Education section.

Education

California’s Constitution guarantees free public education from transitional kindergarten through 12th grade. Serving nearly 6 million students, the system is primarily funded by the state and local property taxes and governed by statewide requirements, with local school boards responsible for critical spending decisions. The state also has an extensive postsecondary public education system of colleges and universities, serving more than 2.5 million students. Given the high cost of completing a postsecondary education, many students depend on state and federal aid to afford the high cost of attendance.

The current version of the budget reconciliation package includes proposals that would significantly undermine public education and harm students at every level. For higher education, the reconciliation package slashes access to federal aid by weakening Pell Grants and loan programs, pushing college further out of reach for millions of California students. While PK-12 federal funding would not be impacted through this process, the bill advances a proposal that seeks to expand school vouchers, prioritizing private schools at the expense of public education. This proposal defies the will of California voters, who have consistently rejected school vouchers, and creates a tax giveaway for the wealthy for funneling public dollars into private schools.

The House bill would:

Housing

Safe, affordable housing is the foundation for all families and individuals to thrive. A key tool in financing affordable housing is the federal Low Income Housing Tax Credit (LIHTC) program. Through LIHTC, states award tax credits to developers, who then sell them to financial institutions and other outside investors to help finance the acquisition, rehabilitation, or new construction of rental housing targeted to lower-income households. The House reconciliation bill proposes some positive reforms to LIHTC. However, this progress is eclipsed by the extreme tax cuts and the erosion of anti-poverty programs Californians are entitled to.

The House bill proposes key temporary changes to the LIHTC program for 2025 to 2029, including:

  • A 12.5% allocation increase for three years which increases the amount of LIHTC funding states will receive to support affordable housing projects.
  • Lowering the bond-financing threshold from 50% to 25% which makes the credit more accessible for certain projects. 
  • Designating rural and tribal areas as “Difficult to Develop Areas” which allows an increase in credits that housing developments in these areas can receive.

While these adjustments are important, the bill’s unjustified corporate tax cuts have the potential to undermine these changes. When corporate taxes are lowered, as they were during the first Trump administration, the value of LIHTCs drops because financial institutions have less tax liability to offset. This reduces investor demand and lowers tax credit pricing. When tax credits have a lower value, it makes affordable housing projects harder to finance and often results in delays. It then continues to exacerbate the housing shortage and provides no real or urgent relief to Californians. Meanwhile, corporate landlords with significant real estate holdings are among the corporate interests that stand to benefit from the tax cuts in the reconciliation bill. Ultimately, reforming LIHTC means little if it comes at the cost of slashing corporate tax liability, health care, food assistance, and other basic necessities because families and communities will be left worse off regardless.

Resource Roundup

The Budget Center and our partners have produced a number of key resources that provide additional analyses and details on the impacts of the House reconciliation bill. Select resources are listed below. Please see our Federal Policy page for all federally focused publications and partner resources.

Federal Policy

You may also be interested in the following resources:

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key takeaway

Black women have helped propel California into becoming the fourth-largest economy in the world, yet Congressional proposals to cut essential programs like health coverage and nutrition assistance would disproportionately harm them. These cuts compound the systemic racism, economic inequality, and generational trauma Black women in California already face.

Access to affordable health care, child care, housing, and nutritious food is necessary for all Californians to thrive. However, right now, Congressional members, including some California representatives, are actively pushing for federal budget and policy proposals that would pave the way for deep and harmful cuts to programs that provide health coverage, nutrition assistance, and other essentials in part to fund huge tax giveaways for the wealthy. These cuts would be harmful for millions of vulnerable Californians who are already struggling to secure basic needs. Still, these proposals would be especially devastating for Black women in California who continuously face significant disparities in areas such as health, poverty, and unemployment due to historic and ongoing racism and sexism.

About This Report

This report was co-authored with the California Black Women’s Collective Empowerment Institute. The Institute is dedicated to uplifting Black women and girls; CABWCEI fosters strategic partnerships, amplifies voices, and drives systemic change to eliminate barriers and advance social and economic equity across California.

As the anchor organization for the California Black Women’s Think Tank at CSU Dominguez Hills, CABWCEI works to strengthen representation, mobilize collective influence, and advocate for policies that secure social and economic safety nets.

Black Women Are Crucial for California, But Have Endured Centuries of Racism

Black women are vital in lifting up their communities and creating a strong California. They have been at the forefront in fighting for their rights and the rights of all marginalized communities. Black women have helped propel California forward and into becoming the fourth-largest economy in the world. With Black women serving as the primary breadwinner in 80% of Black households, when Black women thrive, their communities thrive.

However, Black women have also been subjected to centuries of exploitation, racism, sexism, and systemic injustices in California. Between 1909 and 1979, the state implemented a eugenics program that led to the sterilization of over 20,000 individuals, disproportionately affecting women of color, and leaving lasting impacts on affected communities. Systemic discrimination also continues to affect Black women in the state, with a recent report by the California Black Women’s Collective Empowerment Institute finding that, as recently as 2024, over half of Black women experienced racism or discrimination at work.

Proposed federal funding cuts would continue to harm Black women. These cuts would force Black women to face impossible choices between working in order to support themselves and their families, being unpaid caregivers for their families and children, paying rent, and putting food on the table. For many Black women, programs like Medi-Cal, CalFresh, and federal housing assistance are the only way to access basic needs like health care, nutritious food, and safe housing.  Cutting funding to these programs would worsen racial inequities and further increase the systemic barriers Black women and their families face that harm their ability to achieve economic security.

Key Terms

What Programs Are At Risk for Black Women in California?

Republican Congressional members are proposing cuts to vital programs that millions of Californians, including Black women, rely on. Black women have consistently been subjected to systems that undervalue them and create structural inequalities. These vital programs that are under threat are critical for supporting Black women and closing the disparities they face in all aspects of their lives, from health insurance to food assistance and education to child care.

Many critical safety net programs are facing potentially devastating cuts that would severely limit the ability of Black women to access crucial benefits. Instead of helping vulnerable families access basic needs, Congressional leaders prioritize spending that benefits profitable corporations and the wealthy.

Federal Threats to Medi-Cal Would Deepen Existing Health Inequities for Black Women

Millions of Black Californians rely on Medi-Cal, California’s Medicaid program, to stay healthy and access vital health services like primary care and mental health support.

Reliable and affordable health care is critical for Black women and children’s ability to take care of themselves and their families, and to thrive in California. Medi-Cal should be strengthened to better meet the needs of Black women, not cut.

Black Women Could Lose Access to Critical Nutrition and Income Assistance Programs

Many critical safety net programs are facing potentially devastating cuts that would severely limit the ability of Black women to access crucial benefits. CalFresh (or SNAP):

  • Supports 47.3% of Black women in receiving food assistance; but
  • Is at risk of losing $300 billion of federal funding and is vulnerable to proposals to offload the cost of this program onto the state.

WIC allows women and children to access a multitude of health, nutrition, and supportive services. In California:

  • 47% of Black women participate in WIC; 
  • Only 66.5% of Black women receive adequate prenatal care; and
  • WIC helps to ensure children are healthy, which is especially important given the percentage of Black women receiving adequate prenatal care is much lower than the state average of 73.4%.

In addition to food assistance programs, income assistance programs also provide Black women with crucial support in meeting their basic needs. The Supplemental Security Income (SSI) program primarily serves Californians with disabilities and adults 65 or older to ensure they have the income necessary to afford necessities. The SSI program:

  • Supports over one quarter of Black women in California;
  • Is critical for aging Black women in California, who face disproportionate health disparities, including frequent experiences of racism in healthcare settings and inadequate treatment for pain; and
  • Also supports aging Black women who experience high rates of “kinlessness,” increasing vulnerability to social isolation and accelerated aging due to chronic exposure to systemic stressors.

SSI is critical to ensuring aging Black women can afford the care they need when they need it the most.

Another income assistance program is CalWORKs (or TANF), which provides crucial cash assistance to Black women across the state and is funded by federal and state dollars.

  • Almost 20% of Black women in California receive CalWORKs benefits, demonstrating the importance of federal funding in supporting Black women who continuously face economic barriers due to decades of racial and gender discrimination.

Access to Low Cost Child Care is Crucial for Black Families

Child care is crucial for both parents and children in California so that children can grow and learn and parents can stay employed or continue their education to support themselves and their families. However, the high cost of this care threatens to push families, especially those headed by Black single moms, deeper into poverty.

A Black mother of three in South Los Angeles describes: “My youngest will start TK in the fall, marking her first time in school. Unlike my son and middle daughter, who both attended preschool, she didn’t because I couldn’t afford it this time around. Preschool costs increased from $600 for my son to nearly $800 for my daughter, and by the time my youngest arrived, it was close to $1,000 a month — something we just couldn’t manage.”

  • Black single moms in California with an infant and school-age child spend over two thirds, or 67%, of their income on child care without access to a state subsidized program or Head Start. 
  • In California, the CalWORKs Stage 1 child care program provides subsidized child care to CalWORKs participants to help ease some of these high costs. In 2023, Stage 1 CalWORKs helped 9,509 Black children receive child care to support their growth and development. 
  • CalWORKs Stage 1 is funded (in part) through the federal TANF program, and threats to TANF at the federal level put Stage 1 child care funding at risk, which would have severe negative impacts on thousands of Black children and their families. 
  • Black children are disproportionately eligible for subsidized child care; therefore, when the supply of affordable child care is reduced (which may happen through cuts to TANF), Black families are more likely to be burdened.

Federal Programs That Allow More Black Women to Afford College Are Under Threat

All Black women in California pursuing higher education and career pathways should have access to an affordable education and the ability to achieve economic security. However, structural barriers in college readiness, access to college, and college completion for Black students have resulted in fewer Black women with at least a Bachelor’s degree than the state average. Almost 70% of Black women do not have a Bachelor’s degree, and for the 31% of Black women who do have one, federal support is key in being able to afford the high cost of higher education. However, the Trump administration’s active dismantling of the Department of Education threatens critical programs that make college possible for Black women in California.

One of the programs under threat is Pell Grants, which:

  • Support approximately 32,000 Black women across the University of California, California State University, and California Community College systems. 
  • Provide on average an award of about $4,500 per year, which means that with tuition at a California State University institution currently at $6,084 per year, Pell Grants cover almost three-quarters of the cost of tuition. 
  • Are awarded mainly to families with an annual income of less than $20,000, meaning they provide significant aid in helping students attend college.

Without this federal support, going to college could become impossible for tens of thousands of Black women in the state, further entrenching disparities in the education system.

Black Women Disproportionately Face Housing Cost Burdens

Federal housing programs support 920,437 people across the state, but are still unable to meet the growing demand from Californians at risk of losing their homes. This means any cuts to federal housing programs would further jeopardize the stability of housing of Black women, who already face severe housing insecurity.

For Black women in California:

Conclusion

The proposed federal budget cuts are not just financial decisions — they affect the daily lives of millions of vulnerable Californians who use these programs to access basic needs. With 2 out of 5 Black women just one paycheck away from instability, stripping away access to essential programs like Medi-Cal, CalFresh, CalWORKs, Pell Grants, and federal housing support would inflict disproportionate harm on Black women in California who are also already navigating the compounded weight of systemic racism, economic inequality, and generational trauma. When Black women — who are the backbone of their families and communities — lose access to health care, child care, housing, education, and food, the entire state suffers. To ensure a just and thriving California, we must protect and expand these lifeline programs, not dismantle them. The path to economic justice, racial equity, and community well-being begins with investing in Black women. Anything less is a betrayal of the values we claim to uphold.

Policy Recommendations for Black Women in California

Legislative Proposals:

Protect and Expand State-Funded Child Care for Working Black Mothers by prioritizing funding in the California Budget Act for the CalWORKs Stage 1 and Alternative Payment (AP) childcare programs, with an equity lens to ensure Black families at or near the poverty line are not waitlisted or displaced by funding cuts.

  • Justification: Black single mothers in California spend over 67% of income on child care without subsidies.
  • Budget-conscious solution: Reallocate existing child care infrastructure dollars and target enrollment protections for the most vulnerable families.
  • Equity tool: Direct the CA Department of Social Services to issue emergency guidance prioritizing Black households disproportionately affected by child care inaccessibility.

Codify a Racial Equity Impact Assessment Requirement for budget and safety net changes by introducing legislation requiring all proposed budget adjustments and program cuts to undergo a Racial and Gender Equity Impact Review — specifically assessing harm to Black women and families.

  • Justification: Cuts to Medi-Cal, TANF, and Pell Grants disproportionately impact Black women.
  • Feasibility: Modeled after existing equity assessment tools used in San Francisco, Oakland, and at the federal level.
  • Outcome: Creates transparency and accountability without significant cost — empowering legislative committees and budget staff with equity data before decisions are finalized.

Non-Legislative Proposal:

Launch a Public-Private Partnership to Sustain Food & Housing Security for Black Women. For instance, create a Black Women’s Stability Relief Fund in partnership with philanthropy and corporations (e.g., Kaiser Permanente, Wells Fargo Foundation) to support food, rental, and emergency cash aid for Black women-headed households impacted by federal cuts to CalFresh, WIC, and housing programs.

  • Justification: Nearly 47% of Black women rely on CalFresh; over 63% are rent-burdened.
  • Low-cost to state: State provides administrative infrastructure through existing county-level human services, with funding driven by philanthropic partners and local employer tax credits.
  • Model: Use Los Angeles County’s Guaranteed Income Pilot or United Way’s Rent Relief Fund as templates.

Kellie Todd Griffin is the founding president and CEO of the California Black Women’s Collective Empowerment Institute.

Federal Policy

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Introduction

Governor Gavin Newsom released a summary of the May Revision to his proposed 2025-26 California state budget on May 14, proposing nearly $12 billion in budget actions to close an estimated 2025-26 deficit ($7.5 billion) and build up the state’s discretionary reserve ($4.5 billion). In contrast, the governor’s January proposal projected a small positive balance after two years of state deficits. The governor’s proposal reflects increased uncertainty as a result of federal policy changes and proposals that are destabilizing economic conditions, resulting in a more negative fiscal outlook for the state.

The $226.4 billion General Fund spending plan would protect some investments made in prior years, but notably proposes $5 billion in harmful cuts, primarily to Medi-Cal, the state’s Medicaid program that provides health care coverage to over 14 million Californians. Those cuts include a series of proposals targeting adult Californians who are undocumented, such as freezing access to Medi-Cal, instituting $100 per month premiums for those currently enrolled, and removing access to long-term care and dental benefits, among other proposals. Other proposed cuts target older adults, people with disabilities, and foster youth — communities, like Californians who are undocumented, that are among the most vulnerable in our state.

The governor’s revised budget also fails to propose any major tax policy changes to increase state revenues to address the shortfall, avoid cuts, and buffer against emerging federal threats, even while federal leaders are preparing to give away more than $4 trillion in tax cuts to high-income households and corporations.

While many of the details are forthcoming, the governor also proposes to partially close the budget gap through borrowing and fund transfers. The governor also proposes future cuts for programs supporting vulnerable Californians including food assistance and support for foster care in 2026-27 if revenues are not adequate.

The governor’s proposal continues to call for drawing down just $7.1 billion in reserves and projects total state reserves at $15.7 billion by the close of 2025-26 to guard against future revenue decline or threats to the state’s fiscal condition.

The governor also maintains his proposed changes to the state’s reserve policies to exempt rainy day fund deposits from the state’s spending cap, commonly known as the Gann Limit, and allow the rainy day fund to grow to 20% of General Fund revenues (up from the current 10% cap). These changes, which would need voter approval, would allow the state to set aside a larger portion of state revenues in the rainy day fund during periods of strong revenue growth.

Even as the governor’s proposal would cut access to health care, it would commit the state to new spending to expand the film tax credit for film studios, growing the credit from $330 million to $750 million annually.

WHat is the May Revision?

The May Revision is an update to the governor’s proposed state budget, released by May 14 each year. It includes new estimates for the state’s economy and revenues, updates proposed spending based on the latest information, and may revise, add, or remove policy proposals from the January budget.

The governor’s spending plan protects and maintains some of the progress made in prior budget years to help improve economic security and opportunities for Californians with low incomes and Californians of color, including policy advances in behavioral health, cash assistance (refundable tax credits, CalWORKs, and SSI/SSP), and universal school meals. The proposal also maintains prior commitments to child care, but delays making additional commitments to expanding the system. The governor’s plan leaves out funding to address homelessness and abandons funding for housing programs for Californians with low incomes and affordable housing production as the state faces a growing housing crisis.

Changes to the state’s revenue outlook result in slightly lower estimates for the Prop. 98 minimum funding guarantee for K-12 schools and community colleges compared to January. The governor’s proposal continues to fully fund the completed rollout of universal transitional kindergarten (T-K). In a notable shift from January, the May Revision reduces proposed cuts to CSU and UC from 8% to 3%.

The administration projects that the state prison population will moderately increase in the near term due to the passage of Prop. 36 in November 2024, which increased penalties for certain drug and theft offenses, including by reversing some of Prop. 47’s (2014) sentencing reforms. However, the administration projects that the prison population will resume its long-term decline due to other justice system reforms that remain in effect. As a result, the governor proposes to close one additional state prison by late 2026.

Overall, while the governor’s proposed spending plan protects some of the progress made in earlier years, cutting access to health care and other supports for adult Californians who are undocumented, seniors, and people with disabilities, failing to advance more equitable tax policies, and misguided expansion of tax credits for film studios would weaken the state’s capacity to better help Californians manage our state’s high cost of living and meet basic needs.

With federal leaders poised to extend and expand tax cuts that primarily benefit big corporations and high-income households, offset in part by unprecedented cuts to health care, food assistance, and other vital public supports, state leaders have a responsibility to make our state’s tax system more equitable, protect the economic security and well-being of all Californians, and present a starkly different vision than federal leaders.

This First Look report outlines key pieces of the May Revision and outlines the governor’s priorities in balancing the budget to address a projected shortfall.

Contents

Budget Overview

Health

Housing & Homelessness

Economic Security

Education

Justice System

Climate Change

Webinar

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Budget Overview

Economic Outlook Deteriorates, Reflecting Federal Policies and Uncertainty

The administration’s economic outlook projects trends in major economic indicators that affect state tax collections and revenues in the budget. The administration downgrades the state’s economic outlook in the revised budget based on recent federal policies, most notably, the imposition of significant tariffs, including on California’s major trading partners. The administration estimates that California’s average tariff rate has increased from 2.4% last year to 27% as of mid-April and notes that this will have “immediate and broad-reaching impacts affecting nearly all the state’s $500 billion worth of imported goods as of 2024, nearly 12% of its economic output.” As a result, the revised budget:

  • Significantly downgrades its projections of US economic growth, particularly in 2025 when real Gross Domestic Product is expected to increase by just 1.3% — well below the pre-pandemic average growth rate of 2.6%.
  • Significantly revises up its projection of inflation in the US and California, as the cost of tariffs is largely expected to be passed on to consumers in the form of higher prices. The administration expects the California Consumer Price Index to increase by 3.8% in 2025, followed by another 3.5% increase in 2026. 
  • Revises down its projection for job growth, now expecting the state to add just 6,000 jobs per month in 2025 and 3,000 per month in 2026 — substantially below the pre-pandemic average of around 30,000 jobs added per month.
  • Expects the state’s unemployment rate to increase by 0.1 percentage point to 5.4% in 2025 and then to 5.5% in 2026 and 2027.
  • Downgrades its forecast for inflation-adjusted wage and personal income growth in the state.

The revised budget notes that this forecast is based on policies in place as of mid-April and that federal policy uncertainty remains the biggest downside risk to the forecast. In other words, if federal policy choices over the coming weeks and months further weaken the economy, the state’s economic outlook will further deteriorate.

Weakened Outlook and Federal Policies Threaten Californians’ Well-Being

While the administration’s outlook is useful for understanding how economic conditions might impact budget revenues, it’s also important to consider how economic conditions are affecting Californians, who count on programs and services funded by federal and state budgets. Although California is now the fourth largest economy in the world, millions of Californians aren’t sharing in our state’s prosperity. More than 7 million state residents lack the resources to meet basic needs, over half of renters have unaffordable housing costs, and more than 1 in 5 households experience food hardship. Black, Latinx, and other Californians of color disproportionately face these challenges due to centuries of structural racism and long-standing inequities in opportunity that have been structured into budget policies, past and present.

Compounding these challenges, policies being pursued by the Trump Administration and Republicans in Congress will further drive up costs, making it even harder for families and individuals to make ends meet. For example, the Trump Administration’s sweeping tariff policy will add to the economic challenges facing people with lower incomes because tariffs are essentially regressive taxes. Plus, economists have warned that the drastic and chaotic nature of these tariffs could plunge the economy into a recession, exacerbating the economic challenges facing families, workers, and businesses. On top of this, the budget package currently advancing through Congress would slash federal funding for health care, food assistance, and other vital services, jeopardizing the health and well-being of millions of Californians. This includes:

  • Massive cuts to funding for Medi-Cal and efforts to repeal or undermine the Affordable Care Act that would cause Californians to lose health coverage, have fewer benefits, face higher health care costs, and experience more difficulty getting care;
  • The largest cut to SNAP food assistance (CalFresh in California) in history that would put low-income families and individuals at greater risk of hunger by taking away some or all of their food benefits; and
  • Terminating many immigrants’ access to vital programs, including denying Medicare to lawful permanent residents who have worked and paid taxes to support the program, denying SNAP to refugees, asylees, and other humanitarian immigrants, and denying the Child Tax Credit to US citizen children in mixed status families.

Revised Revenue Estimates Downgraded by $5.2 Billion for Three-Year Budget Window

While actual revenue collections for the current (2024-25) and previous (2023-24) fiscal years have been stronger than expected since the January budget proposal, the administration now projects revenues for the upcoming 2025-26 budget year to be $10.5 billion lower relative to the January projections, primarily due to economic and stock market uncertainty stemming from federal actions including President Trump’s tariff policies. This includes downgrades in the projected revenues across all three of the state’s “Big Three” revenue sources — personal income taxes, corporate taxes, and sales taxes.

Across the three-year budget window, state General Fund revenues are now projected to be $5.2 billion lower than the January budget projection, as the improved collections for 2023-24 and 2024-25 offset some of the downgrade in the 2025-26 forecast. This estimate is of a similar magnitude as recent revenue projections from the Legislative Analyst’s Office. Because this estimate only takes into account state-level General Fund revenues, it does not factor in any potential impacts of proposed reductions in funding from the federal government currently being considered in Congress.

The continuing uncertainty in the economic outlook — related to inconsistent tariff policies,  deep cuts to the federal workforce, and threats of mass deportations — poses additional risks to the revenue forecast. While the May Revision does not assume an economic recession during the budget window, the administration estimates that if a mild recession were to occur, the “Big Three” revenue sources could end up being around $14 billion lower across the three-year budget window than the primary estimate.

Governor Maintains January Tax Policy Proposals and Proposes No New Revenue

The Governor’s proposal comes at a time when millions of Californians could be harmed by proposed deep federal cuts to health care, food assistance, and other critical basic needs in order to pay for tax cuts that primarily benefit high-income households and corporations. State leaders have the responsibility to maintain core state services and protect vulnerable Californians who will be most impacted by federal cuts. Policymakers can achieve this by significantly increasing state revenues and ending or reforming inequitable tax breaks that benefit profitable corporations and wealthy people.

However, the governor’s revised budget contains no new revenue proposals. He maintains the tax policy proposals included in the January budget proposal, including expanding the tax break for the film industry by more than doubling the annual film credit allocation from $330 million to $750 million — even while proposing to make cuts to health care and other services for Californians with low incomes (see sections on Health Coverage, Affordability, and Access and Californians with Disabilities and Older Adults).

The administration continues to estimate that the governor’s tax proposals as a whole will increase state General Fund revenues by $186 million in 2025-26. This revenue increase is related to a proposed change to the way banks and other financial institutions are taxed. However, this modest increase may be offset in upcoming years by revenue decreases due to the film credit expansion.

As the details of the harmful federal funding and service cuts become more clear, Californians will be looking to state leaders to protect community members who will be deeply impacted by those policies. Closely scrutinizing state tax breaks and equitably raising state revenue should be part of the solution to mitigate the suffering caused by destructive federal actions without reversing commitments already made to promote health and well-being for Californians.

Governor’s May Revision Maintains Proposal to Withdraw Reserve Funds and Change Reserves Policies

California has a number of state reserve accounts that set aside funds intended to be used for a “rainy day” when economic conditions worsen and state revenues decline. Some reserves are established in the state’s Constitution to require deposits and restrict withdrawals, and some are at the discretion of state policymakers.

California voters approved Proposition 2 in November 2014, amending the California Constitution to revise the rules for the state’s Budget Stabilization Account (BSA), commonly referred to as the rainy day fund. Prop. 2 requires an annual set-aside equal to 1.5% of estimated General Fund revenues. An additional set-aside is required when capital gains revenues in a given year exceed 8% of General Fund tax revenues. For 15 years — from 2015-16 to 2029-30 — half of these funds must be deposited into the rainy day fund, and the other half is to be used to reduce certain state liabilities (also known as “budgetary debt”).

Prop. 2 also established a new state budget reserve for K-12 schools and community colleges called the Public School System Stabilization Account (PSSSA). The PSSSA requires that when certain conditions are met, the state must deposit a portion of General Fund revenues into this reserve as part of California’s Prop. 98 funding guarantee (see section on Prop. 98).

In order to access the funds in the BSA and PSSSA, the governor must declare a budget emergency — an action that was taken in the enacted current-year (2024-25) budget in response to the state’s projected budget deficit.

The BSA and the PSSSA are not California’s only reserve funds. The 2018-19 budget agreement created the Safety Net Reserve Fund, which is intended to hold funds to be used to maintain benefits and services for CalWORKs and Medi-Cal participants in the event of an economic downturn. Additionally, the state has a Special Fund for Economic Uncertainties (SFEU) — a reserve fund that accounts for unallocated General Fund dollars and that gives state leaders total discretion as to when and how they can use the available funds.

The governor’s May Revision projects $15.7 billion in reserves at the end of 2025-26. Specifically, the proposal:

  • Includes a $7.1 billion withdrawal from the BSA and, due to other required adjustments, leaves the remaining BSA balance at $11.2 billion. (This withdrawal was assumed as part of the 2024-25 state budget package.)
  • Projects the PSSSA will have a zero balance, down from an estimated $1.5 billion in the governor’s January proposal due to a reduction in required deposits and a mandatory withdrawal. 
  • Leaves the Safety Net Reserve with a zero balance. (The 2024-25 state budget drained all funds from this reserve.)
  • Projects an SFEU balance of $4.5 billion.

Administration maintains January plan to change reserve policies

The administration also maintains its January proposal to revise the state’s reserve policies under Prop. 2 (2014) and Prop. 4 (1979), which created an arbitrary spending cap known as the Gann Limit. The administration contends that these changes are needed in order to ensure the state can adequately build up reserves during periods of strong revenue growth to offset years of revenue decline.

Under Prop. 2, deposits into any reserve, including the BSA, are counted as expenditures under the spending cap. This means that savings for future budget needs are treated as spending in the year the deposit is made. As a result, in years when revenues are strong, the required deposit into the BSA could put the state at risk of exceeding the spending cap since the deposit is counted as part of the state’s overall expenditures. In order to address this situation, the governor proposes to exempt annual BSA deposits from the spending cap so that they no longer count as spending.

Proposition 2 also set a maximum size of the BSA at 10% of state General Fund revenue. The governor proposes to increase the maximum BSA deposit from 10% to 20% of General Fund revenues to allow state leaders to grow reserves to higher levels during periods when revenues are strong.

State Budget Reserves Explained

See our report, California’s State Budget Reserves Explained, to learn more about the savings accounts policymakers can use to support Californians in times of budget shortfalls.

Health

May Revision Harms Californians’ Health and Access to Care

Access to health care is necessary for everyone to be healthy and thrive. Medi-Cal, California’s Medicaid program, provides free or low-cost health care to over one-third of the state’s population. This program covers a wide range of services to Californians with modest incomes, and many children, seniors, people with disabilities, and pregnant individuals rely on it.

Cuts to Medi-Cal

The governor’s revised spending plan proposes sweeping cuts to Medi-Cal that reverse years of progress toward a more inclusive, equitable health system. These cuts particularly harm undocumented Californians, but also impact low-income individuals across the state, reducing access to essential services, prescription drugs, and health care providers. This marks a major shift away from the state’s commitment to expanding health care access, especially for immigrant communities, seniors, and people with disabilities.

The revised budget includes harmful cuts specifically targeting undocumented Californians, mostly adults ages 19 and older. Some of these cuts may also affect all individuals who are federally ineligible for Medicaid, such as lawful permanent residents during a federal five-year waiting period. Despite the serious consequences of these proposals, the administration failed to clearly define who is included in these categories. When people’s health care is on the line, vague language and ambiguity are not just irresponsible. They are harmful.

The May Revision proposes the following cuts that would primarily impact undocumented Californians ages 19 and older:

The governor’s revised budget also includes broader cuts that would affect all Medi-Cal enrollees, including seniors, people with disabilities, and individuals managing chronic health conditions. Specifically, the May Revision proposes to:

The revised budget also includes provider payment reductions and cuts to health care infrastructure that could destabilize the health care system, which already faced a provider shortage. Specifically, the May Revision proposes to:

The revised budget also proposes a series of changes to Medi-Cal’s pharmacy benefits that would affect millions of enrollees. These proposals would undermine access to timely, effective, and affordable treatment. Specifically, the May Revision proposes to:

Federal Threats to Health Care Access

The harmful cuts proposed in the May Revision come at a time when California’s health care system faces serious threats from the federal level. Congressional Republicans are advancing a federal budget proposal that prioritizes tax breaks for corporations and the wealthy while slashing investments in health care. This includes deep cuts to Medicaid and efforts to undermine the Affordable Care Act (ACA), both of which could severely jeopardize access to care for millions of Californians.

Medi-Cal, which provides health coverage to nearly 15 million people and accounts for almost two-thirds (64.4%) of all federal funding flowing through California’s state budget, is particularly at risk. Reduced federal funding would lead to a significant budget shortfall, leaving state leaders with critical decisions about how to protect Medi-Cal and the Californians who depend on it.

In the face of these threats, California leaders should pursue policy solutions that protect and strengthen health care access. This includes reforming the state’s tax system to ensure profitable corporations pay their fair share and eliminating tax breaks that overwhelmingly benefit the wealthiest Californians. These steps would raise the revenue to help support vital health care programs (see tax policy section) and allow California to protect its progress — and its people — from harmful federal actions.

Federal Policy

The federal government plays a major role in shaping California’s budget, economy, and the well-being of its people.

Learn how federal policies shape California’s budget, economy, and vital programs — and how state leaders can respond to protect and support Californians.

Explore Federal Resources

Revised Spending Plan Adjusts MCO Tax Spending

Proposition 35, which voters approved in November 2024, significantly changed how state policymakers can use revenue from the Managed Care Organization (MCO) tax. State leaders have historically relied on much of this revenue to reduce or offset General Fund spending on Medi-Cal. While Prop. 35 allows policymakers to continue using a portion of this funding for that purpose, the amount has been reduced and will decrease further starting in 2027.

The revised budget reflects the following MCO tax revenue to offset General Fund spending to support existing Medi-Cal services:

  • $9 billion in 2024-25
  • $4.2 billion in 2025-26
  • $2.8 billion in 2026-27

Compared to the Governor’s January proposal, this is an increase of $1.1 billion in 2024-25 and decreases of $200 million in 2025-26 and $400 million in 2026-27.

The May Revision reflects $804 million in 2024-25, $2.8 billion in 2025-26, and $2.4 billion in 2026-27 for the MCO Tax and Proposition 35 expenditure plan. This includes $1.6 billion across 2025-26 and 2026-27 to support increases in managed care base rates relative to calendar year 2024 for primary care, specialty care, ground emergency medical transportation, and hospital outpatient procedures.

Federal Threats to MCO Tax Revenue

The long-term stability of the MCO tax remains uncertain. Its structure must be periodically approved by the federal government to comply with Medicaid financing rules, and proposed federal changes could severely limit how states use provider taxes to draw down federal funds.

Congressional Republicans are advancing a federal budget proposal that includes deep health care cuts and new limits on provider taxes. These changes could cost California billions in federal funding each year. In addition, the Centers for Medicare & Medicaid Services recently issued a proposed rule that would restrict how states structure provider taxes by targeting a financing mechanism currently used to generate federal Medicaid funds. If finalized, this rule would significantly limit California’s ability to rely on the MCO tax to support Medi-Cal.

These federal policy changes could significantly disrupt California’s ability to generate and allocate MCO tax revenue. These growing risks underscore the need for state leaders to identify more stable, long-term funding sources to protect Medi-Cal and maintain critical health care investments.

Governor’s Revised Budget Sustains Behavioral Health Initiatives

Millions of Californians rely on county services for mental health and substance use treatment, known as behavioral health care. Many of these individuals face housing insecurity, justice system involvement, or child welfare placement. Strengthening the state’s behavioral health system is essential to guaranteeing that every Californian can access the care they need regardless of race, age, gender identity, sexual orientation, or where they live. In recent years, state policymakers have launched various initiatives to transform California’s behavioral health system with the goal of improving access.

Continuing BH-Connect

The governor’s May Revise maintains funding for the launch of California’s Behavioral Health Community-Based Organized Networks of Equitable Care and Treatment (BH-CONNECT), which was announced in his January budget proposal. This multiyear initiative aims to improve access to behavioral health services for Medi-Cal members with significant needs, focusing on children and youth involved in child welfare, people involved in the justice system, and individuals at risk of or experiencing homelessness.

Funding for BH-CONNECT includes $8 billion in state and federal resources over four years. Major components of BH-CONNECT include workforce investments, transitional rent assistance, and support for children and youth in child welfare, among others.

Sustaining Proposition 1 Implementation

Proposition 1, which voters approved in March 2024, is a two-part measure that amended California’s Mental Health Services Act and created a $6.38 billion general obligation bond to fund behavioral health treatment, residential facilities, and supportive housing for veterans and Californians with behavioral health needs.

In 2024, state leaders allocated funding to begin Prop. 1 implementation, including $85 million ($50 million General Fund) for 2024-25 for county behavioral health departments, which provide mental health and substance use disorder services to Californians through Medi-Cal and other programs. The administration maintains their January proposal of an additional $93.5 million total funds ($55 million General Fund) for 2025-26 for Prop. 1 implementation at the county level.

Other Behavioral Health Initiatives Sustained

The governor’s revised budget also continues other behavioral health initiatives that were launched in previous budget agreements, including:

New Behavioral Health Investments

The revised budget also introduces two smaller actions:

  • CalHOPE Warm Line: $5 million from the Behavioral Health Services Fund (BHSF) to support the continuation of the CalHOPE Warm Line — a 24/7 phone line program that offers free, confidential support to Californians — through 2025-26 and beyond.
  • Trainings for ACEs Providers: $2.9 million in total funds (with $1.46 million from the BHSF and $1.46 million from federal funds) to support trainings for Adverse Childhood Experiences (ACEs) providers.

Federal Threats to Behavioral Health

Congressional Republicans are actively pursuing budget cuts that would severely threaten California’s behavioral health services. Medicaid is the largest payer of behavioral health services in the country and makes up a significant portion of counties’ mental health budgets, so cuts to this program at the federal level undermine the ability of state and local governments to provide behavioral health support. Additionally, programs like CalAIM and BH-CONNECT rely on federal waivers to use Medicaid funding for purposes such as housing navigation, and the federal government could choose to let the waivers expire or rescind them. Any funding cuts at the federal level would devastate the ability of hospitals, community centers, and other behavioral health providers in supporting Californians who desperately need help.

Housing & Homelessness

May Revision Continues to Withhold New Funding for Housing Affordability

California is home to over 6 million renter households, more than half of whom face unaffordable housing costs. This burden falls hardest on low-income families with children, older adults on fixed incomes, and working Californians whose wages don’t keep pace with the cost of living. For these Californians, already stretched thin, the high cost of housing makes other basic needs — like food, child care, gas, and medical care — unreachable. Yet these same Californians are once again being left behind in the name of austerity.

The May Revision upholds the administration’s decision to withhold any new or ongoing state investments in affordable housing. Worse, it proposes deeper state funding cuts to already gutted affordable housing programs, including reverting $31.7 million of unexpended General Fund for the Infill Infrastructure Grant Catalytic Program, the Commercial Property Pilot Program, and the 2021 Infill Infrastructure Grant Program that was appropriated in previous years. The revised budget also calls to restructure the Greenhouse Gas Reduction Fund (GGRF), putting at risk the Affordable Housing and Sustainable Communities Program (AHSC) which it currently supports. This program has funded over 20,000 affordable homes near transit, advancing both housing and climate goals.

The Governor did state his support for two housing development-related bills that would create building exemptions to the California Environmental Quality Act which may encourage housing production in certain instances. He also stated his support for a housing and infrastructure bond. However, even if California voters pass the bond in the upcoming election, funding wouldn’t be available until 2027 — while most affordable housing programs will run out of funds by the end of this year.

Efforts to increase housing production through streamlining and coordination are important, but not enough. Policymakers must pair them with ongoing investments in deeply affordable housing and strong tenant protections — such as anti-price gouging laws and rental assistance—to prevent more people from losing their homes.

This is especially urgent now, as federal housing programs could face deep cuts under the Trump Administration. In California, federal housing programs support over 920,000 people but fall far short of meeting demand, and nearly 15,000 California emergency housing choice vouchers will be lost soon without additional funding. While the May Revision does include an increase of $416.6 million one-time Federal Trust Fund to support recovery from natural disasters in 2023 and 2024, these dollars do not holistically address the state’s ongoing affordable housing crisis (see Climate Change section). As the state pulls back its own investments, this will only cause more Californians to face housing instability and homelessness without intentional, sustained action.

May Revision Abandons Funding to End Homelessness in California

California has both the resources and the responsibility to ensure every resident has a stable, dignified place to call home. Last year alone, homeless service providers served over 350,000 Californians experiencing homelessness — demonstrating both the scale of need and the increased capacity of the state’s response systems. This expanded reach was made possible in part by previous one-time state investments that funded critical homelessness prevention and resolution services. However, most of these funds were temporary and are now approaching critical funding cliffs.

Yet despite record numbers of people being served and housed, the Governor’s revised 2025–26 budget includes no new or ongoing state funds to address homelessness, putting hard-won progress at risk and abandoning the state’s most vulnerable residents and the permanent solutions that will solve homelessness.

Instead, the May Revision proposes $4.2 million ($4 million General Fund) in 2025-26, $6.4 million ($6.2 million General Fund) in 2026-27, and $6.2 million ($6.1 million General Fund) in 2027-28 and ongoing to support the reorganization of the Business, Consumer Services, and Housing Agency, which is set to be dissolved by July 2026. This restructuring will establish a new California Housing and Homelessness Agency aimed at improving alignment across housing and homelessness programs.

The Administration also proposes $200 million in Proposition 35 funds over two years to establish Flexible Housing Pools to support Behavioral Health Services Act reforms and Medi-Cal transitional rent benefits (see Proposition 35 Implementation and Behavioral Health sections). While these funds could help unhoused individuals with serious behavioral health conditions secure housing, they fall far short in addressing the broader statewide housing and homelessness needs. Plus, the additional proposed deep cuts to Medi-Cal and eligibility limitations could harm the same Californians these investments are attempting to serve (see Coverage, Affordability & Access section).

Meanwhile, local governments and service providers are bracing for the possibility of severe federal cuts proposed by the Trump Administration, including a 43% reduction in rental assistance, the elimination of key homelessness grants, and the possible loss of more than 15,000 California emergency housing choice vouchers — threatening to push thousands back into homelessness. Without bold, ongoing state investment, policymakers risk reversing progress and deepening a crisis that demands urgent and sustained action to continue supporting the real solutions needed.

Economic Security

Revised Budget Proposes No Changes to Refundable Tax Credits

California’s three refundable income tax credits — the California Earned Income Tax Credit (CalEITC), Young Child Tax Credit, and Foster Youth Tax Credit — provide financial support to low-income Californians, including undocumented workers who file taxes with an Individual Taxpayer Identification Number (ITIN), helping them pay for essentials like housing and food. These state credits are especially vital because they benefit many Californians who are excluded or receive minimal support from the federal EITC and Child Tax Credit (CTC).

California’s credits may become an even more important source of support for families and individuals if legislation that Congressional Republicans are currently advancing is enacted. This legislation would create onerous new processes that will make it harder for families to claim the federal EITC, likely causing eligible families to lose access to the credit. It also would strip the federal CTC from millions of US citizen and legal resident children living in mixed-status families, including an estimated 910,000 children in California. And while this legislation would increase the CTC for children in families with high incomes, it would provide nothing to children in families with low incomes, including about 2 million children in California. In addition to these threats, a recent unprecedented federal threat to taxpayer privacy protections risks making taxpayers afraid to file their taxes, causing them to lose access to vital state and federal tax credit support.

The Governor’s revised budget proposes no changes to California’s refundable state tax credits and maintains the Administration’s January proposal to provide just $10 million for tax credit outreach, education, and free tax preparation grants. These grants help community based organizations provide on-the-ground and online linguistically and culturally competent services to tax filers. This proposed level of funding is down by half from $20 million provided in 2023-24 and $12 million in 2024-25.

Revised Budget Includes Wins for CalWORKs but Cuts to Multiple Foster Youth Programs

Millions of families across the state struggle to afford basic necessities. The California Work Opportunity and Responsibility to Kids (CalWORKs) and foster youth programs help parents feel supported and ensure children are given the opportunity to succeed. Amidst this budget shortfall, this administration’s revised spending plan includes some wins for CalWORKs, while simultaneously proposing millions of dollars in cuts to programs that support foster youth in California.

The CalWORKs program is a critical component of California’s safety net for families with low incomes that helps over 650,000 children and their families with modest cash grants, employment assistance, and critical supportive services. The proposed budget would strengthen CalWORKs by:

  • Granting more flexibility in allowable welfare-to-work activities. The proposal would add goal-oriented activities to help better support the needs of individual parents and would also make Job Club, which provides support for resume writing, interviewing, and other job search activities, optional to align with the needs and various trajectories of individuals. 
  • Reducing the administrative burden on counties by replacing county welfare-to-work reporting requirements with administrative data extracts.
  • Simplifying the process for families to regain assistance after being sanctioned. Currently, families that are sanctioned can face significant and ongoing penalties that affect their ability to meet their basic needs. Reducing the red tape around sanctions can help more families regain access to their full CalWORKs grant.

However, the May Revision proposes cuts to several programs that support foster youth. The revised budget:

Governor Invests in Fighting Child Hunger, Leaves Out Older Adults

California has led the nation in fighting child hunger as the first state to adopt universal school meals in 2022. The governor’s revision builds on this by investing an additional:

  • $90.7 million ongoing Proposition 98 to fully fund the universal school meals program and guarantee each child can access breakfast and lunch at school regardless of their family’s income.
  • $21.9 million ongoing Proposition 98 and $57.5 million General Fund to expand state-match dollars and outreach for the Summer Electronic Benefits Transfer (SUN Bucks) program. This program provides families with low incomes $120 for food for each school-aged child over the summer while they cannot access school meals. 

However, the governor does not propose any additional funding for other core food assistance programs. Instead, the May Revision:

  • Walks back commitment to expanding the California Food Assistance Program (CFAP) to undocumented older adults age 55 and over. The revised budget adds language that would make the expansion contingent on available funding in 2027. Furthermore, the administration also has not put forth any plans to end this exclusion for undocumented Californians under age 55, even while 64% of undocumented Californians are living in or near poverty. 
  • Fails to invest in CalFood, allowing the funding expansion to expire, which will take the average annual funding California food banks receive down to $8 million from $60 million. The additional funding to food banks has been key in helping them meet more diverse needs and serve more people in need with California-grown food.

Food assistance benefits are already too low and facing significant threats at the federal level. SNAP — known as CalFresh in California — is set to face up to $300 billion in federal cuts with the possible implementation of harmful proposals like shifting costs onto California and expanding time limits for participants. These cuts could impose billions of dollars worth of costs onto the state not accounted for in the May Revision and reduce benefits for the over 5 million Californians who rely on CalFresh.

Revised Budget Fails to Invest in Older Adults and Californians with Disabilities

All Californians deserve to feel included, supported, and treated with dignity in their communities regardless of their age, ability, race, gender, or economic status. However, Californians with disabilities and older adults face significant barriers, with increasing risks of not meeting their basic needs. The May Revision fails to invest in these communities.

Instead, the revised budget:

These cuts and lack of investments coupled with the uncertainty around the California Food Assistance Program (CFAP) expansion to older adults regardless of immigration status (see Food Assistance section) and the devastating cuts to the Medi-Cal program would compound the harm people with disabilities and older adults in California are already experiencing.

Governor’s Revised Budget Fails to Make Clear Progress Toward Rate Reform

California’s child care and development programs administered by the California Department of Social Services (CDSS) are integral for supporting California’s families and child care providers. Despite recent progress (such as increased overall funding, reduced family fees, and new child care provider health and retirement benefits), the child care system is still falling short for both families and child care providers. The number of subsidized child care spaces does not meet demand, meaning that thousands of families face prohibitively high child care costs. Specifically, without access to a child care subsidy, a single mother of an infant and a school-age child in California will spend, on average, 61% of her income on child care. Moreover, California child care provider wages have not kept up with the living wage, pointing to the urgent need for child care provider rate reform. Overall, the May Revision maintains previous commitments but fails to make advancements on provider pay that are needed for an equitable and stable child care system.

The governor’s revised budget:

In light of federal threats, California faces many uncertainties that impact available funding for rate reform. Yet, child care providers face constant worry about their economic stability. Additionally, CCPU shared that in their recent contract negotiations, the state proposed to eliminate their health benefits and cut their retirement plan. Proposed federal cuts to Medi-Cal and CalFresh only exacerbate this proposed cut from the state, underscoring the need to maintain provider benefits and implement a rate structure that pays providers the true cost of care.

Governor Cuts Support for Immigrant Californians

Immigrants and their families are deeply ingrained in the state’s social fabric. They are members of the state’s workforce, pay taxes, attend schools, own businesses, and raise families who invest in local communities. California has the largest share of immigrant residents of any state. Over half of all California workers are immigrants or children of immigrants, and more than 2 million Californians are undocumented, according to estimates. Undocumented immigrants in California make significant contributions to state and federal revenues, contributing $8.5 billion in state and local taxes in 2022, despite their exclusion from most public benefits.

State leaders have made notable progress in recent years working towards a California for all where all people have access to economic opportunity and essential services, regardless of immigration status. In a special session called for by the governor earlier this year, legislators and the governor approved $25 million in funding for legal resources for potential fights with the incoming federal administration plus an additional $25 million to defend immigrants against deportation, detention, and wage theft.

However, the governor’s revised budget marks a significant reversal in working towards a California for all. At a time when the federal government is actively working to dismantle rights and protections for immigrants, it is critical now more than ever that California ensures the safety and well-being of all people, especially undocumented immigrants. Federal deportation policies and restrictions on immigration are not only tearing apart California families, but also threatening the state’s economic vitality, workforce stability, and access to essential services like food, housing, and care.

Instead of providing support to immigrants, the governor’s revised budget does not include any additional funding to protect and support the state’s immigrant communities and instead cuts funding for key programs serving immigrants. Specifically, the 2025-26 revised budget:

Given the actions the federal government has already taken against immigrant communities in California, state leaders should be taking bold action and making investments — not cuts — that ensure all Californians, regardless of immigration status, feel safe and have the resources they need to thrive.

Governor Does Not Provide Needed Support to Domestic and Sexual Violence Survivors

Every Californian deserves to live in a world where they feel safe. However, millions of Californians experience domestic and sexual violence every year — women, transgender, non-binary Californians, and some women of color are most likely to experience this type of violence. 

The state receives federal funding through the Victims of Crime Act (VOCA) to help provide essential services to survivors of crime, including survivors of domestic and sexual violence. These funds help provide survivors with critical services like emergency shelter, counseling, and financial assistance.

However, anticipated cuts to VOCA at the federal level would result in a roughly 45% cut to state grants for organizations that support survivors of crime, decimating the funding of many of these organizations who rely entirely on VOCA funding to provide these critical services. Additionally, the US Justice Department has already cut $811 million in grants, which includes cutting funding to programs providing services to domestic violence survivors.

The governor’s May Revision:

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Education

Transitional Kindergarten Continues Planned Expansion

The California Department of Education (CDE) hosts two early learning and care programs: Transitional Kindergarten (TK) and the California State Preschool Program (CSPP). CSPP provides preschool to children ages 3 and 4 for families with low to moderate incomes and temporarily to 2-year-olds until 2027 in both school and community-based settings. TK serves 4-year-olds, and eligibility is based on age alone in public schools and is not dependent on family income. Together, CSPP and TK are cornerstones of CDE’s Universal Preschool plan intended to bring more early learning and care options to 3-and 4-year-olds in California. Moreover, TK and school-based CSPP are funded through the state’s Proposition 98 guarantee (see Proposition 98 section). However, as California strives to create a mixed delivery system that centers the needs of families, the administration has the opportunity to spend resources and implement policies in a way that integrates CSPP and TK with the broader early learning system to best support families with young children.

The governor’s revised budget:

Revised Budget Adjusts the Prop. 98 Guarantee Downward

Approved by voters in 1988, Proposition 98 constitutionally guarantees a minimum level of annual funding for K-12 schools, community colleges, and the state preschool program. The Prop. 98 guarantee tends to reflect changes in state General Fund revenues, and revenue estimates consequently update the minimum guarantee funding levels. The 2025-26 revised spending plan reflects downward adjustments in the minimum guarantee estimates and, given changes in revenue, it adjusts required deposits and withdrawals from the Prop. 98 reserve — the state budget reserve for K-12 schools and community colleges. The revised budget also makes changes to the Prop. 98 split between TK-12 and community colleges.

The chart below shows updated projections of the guarantee in the May Revision compared to projections in the January budget proposal and the 2024-25 enacted budget.

Prop. 98 revised estimates and proposed adjustments include the following:

  • The January proposal projected the 2025-26 Prop. 98 guarantee to be $118.9 billion. However, with declining revenue projections, the May Revision now estimates the 2025-26 minimum guarantee at $114.6 billion. This figure reflects a $4.3 billion decrease from the January estimate and is also $1.1 billion lower than the $115.7 billion estimate in the 2024-25 enacted budget. 
  • While revenue projections grew for 2024-25, the Prop. 98 minimum guarantee estimate of $118.9 in the May Revision is slightly lower than the January projection. However, this $118.9 billion still represents an increase of $3.6 over the estimate in the June budget. Along with these updates, the maintenance factor obligation — a required payment as a result of the suspension in 2023-24 — is also likely to be adjusted. Despite this constitutionally required amount, the governor’s revised spending plan maintains a proposal to fund the guarantee at $117.6 billion in 2024-25, $1.3 billion lower. This approach aims to mitigate potential risks associated with revenue volatility by delaying the required amount until the guarantee’s final calculation for that year. 
  • For the 2023-24 fiscal year, the guarantee’s level is maintained at $98.5. Since the guarantee was suspended with the 2024-25 budget, the 2023-24 level does not change.

The revised spending plan also makes an adjustment to a required deposit into the Public School System Stabilization Account (PSSSA) — also referred to as the Prop. 98 reserve. In 2024-25, the required deposit is $540 million, down from an estimated $1.1 billion deposit in January. Also, given the decline in Prop. 98, there’s now a mandatory withdrawal in 2025-26 of $540 million, fully drawing down this reserve (see Reserves section). 

The revised budget also proposes changes to the share of Prop. 98 funds that go to TK-12 schools or the California Community Colleges. This proposal would shift the growth in Prop. 98 for Transitional Kindergarten expansion specifically to TK-12, essentially reducing the Community College’s portion by $492 million.

Revised Spending Plan Largely Maintains TK-12 Programs

The largest share of Proposition 98 funds goes to California’s school districts, charter schools, and county offices of education (COEs), which provide instruction to 5.9 million students in grades kindergarten through 12. Funding flows primarily through the Local Control Funding Formula (LCFF), which provides school districts, charter schools, and COEs a base grant per student, adjusted to reflect the number of students at various grade levels, as well as additional grants for the costs of educating English learners, students from low-income families, and foster youth. Other funds flow through a number of categorical programs such as the Expanded Learning Opportunities Program, special education, and others.

The revised spending plan largely maintains proposals included in the January budget and includes additional one-time and ongoing investments. Specifically, the revised budget:

Revised Budget Scales Back Previously Proposed Initiatives at the Community Colleges

A portion of Proposition 98 funding provides support to the California Community Colleges (CCCs), the largest postsecondary education system in the country, which serves high percentages of students of color and students with low incomes. CCCs prepare more than 1.8 million students to transfer to four-year institutions or to obtain training and employment skills. 

The 2025-26 revised spending plan proposes to support a 2.3% cost-of-living adjustment (COLA) and funding for a higher level of enrollment growth; however, it eliminates and reduces funding previously proposed for other CCC initiatives.

Specifically, the revised spending plan:

Revised Budget Maintains Deferrals for the CSU and UC, Reduces Previously Proposed Cuts

California supports two public four-year higher education institutions: the California State University (CSU) and the University of California (UC). The CSU provides undergraduate and graduate education to nearly 454,000 students at 23 campuses, and the UC provides undergraduate, graduate, and professional education to more than 294,000 students across 10 campuses. 

The 2025-26 May Revision maintains the planned deferral of funding increases to the UC ($240 million) and CSU ($252 million) systems from 2025-26 to 2027-28. This funding was supposed to be part of multi-year investments established through agreements between the administration and the CSU and UC systems in 2022. These agreements (also known as compacts) outlined major goals, including increasing access, improving student success and advancing equity, increasing affordability, improving collaboration among systems of higher education, and supporting workforce preparedness.

The revised spending plan also decreases previously proposed ongoing reductions for both systems. The January budget proposal included a 7.95% cut — $375 million for CSU and $397 million for UC — in ongoing General Fund support for UC & CSU systems beginning in the 2025-26 fiscal year. The May Revision reduces this cut down to $144 million for the CSU and $130 million for the UC, reflecting about a 3% reduction to each of the systems.

Additionally, for the UC system, the revised budget maintains a planned deferral of $31 million General Fund dollars from 2025-26 to 2027-28 that would have supported the UC in increasing the number of resident undergraduate students.

Revised State Budget Adjusts Student Aid as Federal Threats Emerge

Students pursuing postsecondary education often face significant financial hardship, struggling to afford basic necessities while attending college. These challenges can lead to difficult trade-offs that affect their academic experience, delay their progress, or force them to abandon their educational goals entirely. These realities highlight the critical need for state support to ensure students have the resources necessary to complete their degrees.

The May Revision makes several adjustments to programs administered by the California Student Aid Commission. Specifically, the revised spending plan:

While these proposed adjustments will certainly provide needed funds to maintain aid to students, they come at a time of growing federal threats to Pell Grants and student loans. House Republicans outlined a plan to limit Pell Grants — which support low- and middle-income students attending public institutions, including the California Community Colleges, UC, and CSU campuses — and to impose drastic changes to the student loan system, including restricting repayment options and making it more complicated to apply. These proposals could significantly impact students across all segments of California’s public higher education system.

Justice System

May Revision Calls for Closing an Additional State Prison by October 2026

Nearly 90,800 adults convicted of a felony offense are serving their sentences at the state level, down from a peak of 173,600 in 2007. This sizable drop in incarceration is largely due to a series of justice system reforms adopted by state policymakers and the voters since the late 2000s, including Proposition 47, which California voters passed in 2014 (see Prop. 47 investments section).

Despite this substantial progress in reducing incarceration, American Indian, Black, and Latinx Californians are disproportionately represented in state prisons — a disparity that reflects racist practices in the justice system as well as the social and economic disadvantages that communities of color continue to face due to historical and ongoing discrimination and exclusion.

Among all incarcerated adults, most — around 87,600 — are housed in state prisons designed to hold roughly 71,700 people. This overcrowding equals 122% of the prison system’s “design capacity,” which is below the prison population cap — 137.5% of design capacity — established by a 2009 federal court order. California also houses around 3,200 people in facilities that are not subject to the cap, including fire camps, in-state “contract beds,” and community-based facilities that provide rehabilitative services.

The May Revision:

Revised Budget Includes Little Funding to Implement Proposition 36

Last November voters approved Proposition 36, increasing penalties for certain drug and theft offenses. For example, Prop. 36 reversed some of the sentencing reforms put in place by Prop. 47 of 2014 (see Prop. 47 Investments section). In addition, Prop. 36 established a new process allowing prosecutors to charge people with a “treatment-mandated felony” for possession of illegal drugs. Yet, even with the passage of Prop. 36, most of the justice system reforms adopted by state policymakers and voters over the past couple of decades remain in effect.

By increasing punishment for drug and theft crimes, Prop. 36 is creating new costs — including for incarceration, probation, and the courts — at the state and local levels. However, Prop. 36 amounts to a massive unfunded mandate. The measure provides no new revenue to pay for these additional state and local costs — even though Californians were promised that Prop. 36 would provide evidence-based treatment, housing solutions, and programs to increase community health and safety. Instead, Prop. 36 assumes that state and local officials will be able to accommodate the measure’s substantial costs in their already strained budgets.

As a result, state and local leaders face difficult choices about how to pay for the unfunded costs created by Prop. 36 even as they are struggling to close substantial budget deficits for the upcoming fiscal year and beyond.

The May Revision does not include any new state funding to implement Prop. 36 beyond the funds needed to support higher state prison costs. The revised budget increases prison spending by about $29 million in 2025-26 to reflect a larger state prison population due to Prop. 36, according to Department of Finance testimony provided to Senate Budget and Fiscal Review Subcommittee #5 on May 15. However, the May Revision does not propose any new additional state funding to support the service needs and other unfunded costs imposed by Prop. 36 — costs that could easily reach to the low hundreds of millions of dollars each year.

May Revision Projects Steep Drop in Proposition 47 Savings in Coming Years

Passed by voters in 2014, Proposition 47 reduced penalties for six nonviolent drug and property crimes from felonies to misdemeanors. As a result, state prison generally has not been a sentencing option for these crimes. Instead, people convicted of a Prop. 47 offense have served their sentence in county jail and/or received probation.

However, with the passage of Prop. 36 last November, some of Prop. 47’s sentencing reforms have been reversed. Key changes enacted by Prop. 36 as well as their potential impact are described at the end of this section.

How Prop. 47 Savings Are Determined and Allocated

By decreasing state-level incarceration over the past decade, Prop. 47 reduced the cost of the prison system relative to the expected cost if Prop. 47 had not been approved by voters. The Department of Finance is required to annually calculate these state savings, which are deposited into the Safe Neighborhoods and Schools Fund and used as follows:

  • 65% for behavioral health services —  which includes mental health services and substance use treatment — as well as diversion programs for individuals who have been arrested, charged, or convicted of crimes. These funds are distributed as competitive grants administered by the Board of State and Community Corrections.
  • 25% for K-12 school programs to support vulnerable youth. These funds are distributed as competitive grants administered by the California Department of Education.
  • 10% to trauma recovery services for crime victims. These funds are distributed as competitive grants administered by the California Victim Compensation Board.

California Has Allocated $816 Million in Prop. 47 Savings to Date

Since 2016, California has allocated $816 million in state prison savings attributable to Prop. 47. These funds have been invested in local programs that support healing and keep communities safe. For example, research shows that people who received Prop. 47-funded behavioral health services and/or participated in diversion programs were much less likely to be convicted of a new crime. Individuals enrolled in these programs had a recidivism rate of just 15.3% — two to three times lower than is typical for people who serve prison sentences (recidivism rates range from 35% to 45% for these individuals).

May Revision Estimates That $91.5 Million in Prop. 47 Savings Will Be Available to Invest in Local Communities in 2025-26

The May Revision estimates that Prop. 47 will generate an additional $91.5 million in savings due to reduced state-level incarceration — dollars that will be invested in local communities starting in the 2025-26 fiscal year. (These savings are attributable to the 2024-25 fiscal year, but are available for expenditure in 2025-26.) With these additional funds, Prop. 47’s total investment in California’s communities will exceed $900 million, up from the current $816 million.

Prop. 47 Savings Are Projected to Decline Substantially Due to Prop. 36

With the recent passage of Prop. 36, voters increased penalties for certain drug and theft offenses, including by reversing some of Prop. 47’s sentencing reforms (see Prop. 36 section). For example, Prop. 36 allows simple drug possession, petty theft, and shoplifting to be charged as felonies in certain circumstances. Under Prop. 47’s rules, these crimes were generally misdemeanors.

The state prison population is expected to rise in the near term due to the longer sentences allowed by Prop. 36 (see State Corrections section). As a result, the annual savings attributable to Prop. 47 is projected to substantially decline. Budget documents project that annual Prop. 47 savings will decrease from $91.5 million in 2024-25 to $27.1 million in 2026-27 — a drop of $64.4 million (70%) over this two-year period.

In other words, because of Prop. 36, more than $64 million in state funding that would otherwise have supported behavioral health treatment and other critical services over the next two years is expected to be shifted back to the state prison system.

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Climate Change

Budget Maintains Funding for Wildfire Relief and Recovery

As demonstrated by the devastating wildfires that swept through Los Angeles County earlier this year, as well as other disasters in recent years, Californians are deeply impacted by the effects of climate change. While the climate crisis affects all Californians, communities of color and low-income communities are often hit hardest due to historical and ongoing displacement and underinvestment.

In January, the governor signed legislation to provide over $2.5 billion in wildfire relief to Los Angeles County to help communities hit hard by the disastrous wildfires in the region. This funding included:

  • $2.5 billion for response and recovery efforts, including support for emergency protective measures, evacuations, and sheltering for survivors;
  • $4 million to expedite rebuilding homes in local communities; and
  • $1 million to rebuild local schools damaged by the wildfire.

In April, the governor signed into law “early action” legislation to use some of the funding approved in January as well as funding approved by voters in November through Proposition 4 for wildfire relief and prevention. This included:

  • Appropriating $181 million in Prop. 4 bond funds for wildfire prevention and resilience, including $170 million to conservancies for forest vegetation and management and $10 million to the Department of Forestry and Fire Protection to fund a tribal fire resiliency center.
  • Authorizing the Department of Finance to use funds approved in January to increase funding for unmet response and recovery needs from damage caused by the wildfires.

The governor’s May Revise maintains previously appropriated funding for relief to Los Angeles County from the wildfires suffered earlier this year. Additionally, the May Revise:

  • Includes an increase of $416.6 million to support recovery from natural disasters. These funds will be available to the Department of Housing and Community Development and reflect available federal dollars for recovery efforts from natural disasters in 2023 and 2024 (see Housing section).

Federal Policy

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Access to affordable health care, housing, and nutritious food is necessary for all Californians to thrive. But Republican federal budget proposals would pave the way for deep and harmful cuts that would take health coverage, nutrition assistance, and other essentials away from millions of Californians who are already struggling to make ends meet in the face of persistently high inflation and the high cost of living. These cuts would increase poverty and hardship, widen race and ethnic inequities, and make it harder for workers to maintain their jobs in exchange for funding huge tax giveaways for the wealthy. 

This resource shows how many residents in each of California’s congressional districts benefit from vital programs at risk of being cut to illustrate the potentially wide-reaching impact cuts could have in communities across the state.

table of contents

Health Care and Nutrition Assistance Programs

Health Care

Medi-Cal saves lives. It’s a lifeline that provides free or low-cost health coverage for nearly 15 million Californians — over one-third of the state’s population — including children, pregnant individuals, seniors, and people with disabilities. Cutting Medi-Cal funding would mean taking critical care away from residents who need it the most in every congressional district in the state. Without access to health coverage, Californians will face impossible choices that put their health and economic security at risk while also driving up long-term costs for the state. Communities that would be particularly harmed by cuts include those in CA-22 (Valadao), where 67% of residents are enrolled in Medi-Cal, as well as in CA-21 (Costa) and CA-13 (Gray), where roughly 60% of residents or more are enrolled.

What is medi-cal?

Medi-Cal, California’s Medicaid program, provides free or low-cost health care to over one-third of the state’s population. This program covers a wide range of services to Californians with modest incomes, and many children, seniors, people with disabilities, and pregnant individuals rely on it.

Nutrition

CalFresh nutrition assistance helps over 5 million Californians each month, including workers with low-paying jobs, buy the food they need to support their households. It brings billions of federal dollars into the state each year that Californians spend in their communities helping to boost local businesses and jobs. In early 2023, CalFresh kept 1.1 million state residents out of poverty, reducing California’s poverty rate by 3 percentage points, according to the Public Policy Institute of California. Cutting CalFresh funding would increase poverty and hunger, making it harder for residents in every California congressional district to maintain their jobs, and hurting local businesses as families spend less on groceries. Cuts could also reduce students’ access to free meals at school, putting additional pressure on family budgets. Note that data for small business owners refers to the use of CalFresh and Medi-Cal, given the compounding effects of these threats for many Californians. Communities that would be especially harmed by cuts include those in CA-21 (Costa) and CA-22 (Valadao), where more than one-quarter of residents benefit from CalFresh.

What is calfresh?

CalFresh — California’s name for the Supplemental Nutrition Assistance Program (SNAP) — is the state’s most powerful tool to fight hunger. CalFresh provides modest monthly cash-like assistance to over 5 million Californians with low incomes to purchase food.

Income Assistance Programs

Income

Income supports like CalWORKs and SSI help Californians with very low incomes, including people who are blind and individuals with disabilities, pay the rent and buy essentials for their families, like diapers and school supplies. These and other safety net supports lifted 3.2 million Californians out of poverty in early 2023, according to the Public Policy Institute of California. Cutting vital income supports would increase poverty and hardship for low-income families with children, seniors, and disabled children and adults. Cuts would also reduce the spending power of residents in every California congressional district, hurting local businesses and the local economy. Districts that would be particularly harmed by cuts to CalWORKs include CA-21 (Costa), CA-22 (Valadao), and CA-20 (Fong), and those especially harmed by cuts to SSI include CA-37 (Kamlager), CA-21 (Costa), and CA-22 (Valadao).

what is calworks?

The California Work Opportunity and Responsibility to Kids (CalWORKs) program, California’s TANF program, is a core component of California’s safety net for families with low incomes. The program helps over 650,000 children and their families, who are predominantly people of color, with modest cash grants, employment assistance, and critical supportive services.

what is ssi?

The Supplemental Security Income (SSI) program is a critical lifeline that assists over 1 million low-income individuals with disabilities and adults age 65 or older in California by covering expenses such as housing, food, and other essential living costs. California provides a modest supplement to SSI recipients with its own state-funded State Supplementary Payment (SSP) program.

Refundable Tax Credit Programs

Refundable Tax Credits

Credits like the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) are proven tools for improving economic security among Californians with low and moderate incomes, and they’ve been linked to long-term benefits for children, including better health and school achievement. Cutting these credits would take away income that families in every California congressional district count on to make ends meet, reducing their spending power and hurting local businesses and the economy. Districts that would be especially harmed by cuts to the CTC include CA-22 (Valadao), CA-21 (Costa), and CA-13 (Gray), where more than one-third of residents currently benefit from the credit, and CA-22 (Valadao), CA-21 (Costa), and CA-25 (Ruiz), where one-quarter or more residents benefit from the EITC.

In sharp contrast, the tax breaks Republican leaders want to provide through the budget will overwhelmingly enrich millionaires and billionaires, potentially providing a tax break of $72,800 to California’s richest 1%, who have incomes of roughly $1 million or more. This means just a sliver of the population in California’s congressional districts will reap the majority of the benefits of federal budget proposals, including just 0.14% of tax filers in CA-33 (Aguilar) and 0.16% of those in CA-23 (Obernolte) and CA-22 (Valadao) – roughly 500 tax filers in each of those three districts.

What is the eitc?

The Earned Income Tax Credit (EITC) is a federal tax credit that provides hundreds to thousands of dollars as a tax refund to about 2.5 million working families and individuals with low or moderate incomes in California. Families mostly use the EITC to pay for necessities such as food and housing, and the credit lifts millions of people out of poverty across the US each year.

what is the ctc?

The Child Tax Credit (CTC) is a federal tax credit that provides up to $2,000 per child to about 4.6 million families in California. When the credit was significantly increased and expanded to families with low incomes for one year during the pandemic it cut the US child poverty rate to an historic low and substantially reduced California’s child poverty rate.

Early Care and Education

Subsidized early care and education programs allow parents with low incomes to work or go to school, feeling secure that their children have a safe space to learn and grow. However, early care and education programs in California remain unaffordable for many families across the state. For example, a single mother in California with an infant and a school-age child will spend 61% of her income on child care. Additionally, only 14% of California’s children eligible for state-administered child care actually receive care due to inadequate state and federal funding.

The federal Head Start, Early Head Start, Migrant/Seasonal Head Start, and American Indian/Alaska Native Head Start (collectively, Head Start) programs provide critical early care and education for more than 73,000 children ages zero to 5 for families living in poverty in California, plus homeless, foster, and disabled children. Federal Head Start funding flows directly to local programs and is not a part of state-administered subsidized child care programs. Given the tremendous gap in the number of children eligible and the number of children enrolled in state-administered programs, Head Start provides a lifeline for families with low incomes looking for affordable child care. Additionally, the California Department of Social Services administers a child care program for CalWORKs participants called “Stage 1.” Stage 1 CalWORKs child care helps a family access immediate child care as the parent/guardian participates in the CalWORKs program. The Stage 1 CalWORKs child care program is funded through federal Temporary Assistance for Needy Families (TANF) dollars and serves over 53,000 children in California.

Without Head Start and CalWORKs Stage 1 child care, thousands more families in California would be stuck on child care waiting lists, making it even harder for them to make ends meet. This strain not only burdens families but also negatively impacts the state’s economy by reducing workforce participation and spending as parents struggle to find affordable child care options. Early care and education programs also provide an economic benefit for the community. For example, research shows that every one dollar invested in Head Start generates at least seven dollars in benefits.

Districts that would be particularly harmed by cuts to Head Start programs include CA-13 (Gray), CA-21 (Costa), CA-22 (Valadao), CA-31 (Cisneros), and CA-52 (Vargas).

Housing

Safe, affordable housing provides the foundation for families and individuals to thrive, supporting strong communities, better health, career and educational success, and economic mobility. However, California’s housing shortage, combined with wages that have not kept pace with the cost of living, forces millions into economic hardship and unstable housing situations. More than half of all California renters struggle with unaffordable housing costs, leaving them vulnerable to financial crises, displacement, and even homelessness.

High housing costs push Californians out of their homes and communities while stretching budgets so thin that basic necessities like food, child care, gas, and medical expenses become out of reach. Federal housing programs—such as rental assistance, homelessness prevention and mitigation, and affordable housing development—support Californians in every congressional district by helping people pay rent, secure stable homes, and stay in their communities. In California, federal housing programs support 920,437 people and 507,463 households. Still, these programs don’t meet the demand—Housing Choice Vouchers, for example, reach only 1 in 4 eligible households, leaving many without the support they need. Since housing programs are not entitlements, limited funding leaves many without support even though they qualify, and further cuts could put even more Californians at risk of losing their homes. Districts where renters face particularly high rental costs compared to their income include CD-27 (Whitesides), CA-29 (Rivas), CA-33 (Aguilar), CA-49 (Levin), and CA-51 (Jacobs).

Federal Policy

The federal government plays a major role in shaping California’s budget, economy, and the well-being of its people.

Learn how federal policies shape California’s budget, economy, and vital programs — and how state leaders can respond to protect and support Californians.

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key takeaway

Republican federal budget proposals would significantly widen California’s already extreme income inequality by slashing essential programs like Medi-Cal and CalFresh while delivering massive tax breaks to the wealthy. State leaders must take action to protect Californians by preventing harmful cuts.

The gap between the rich and poor in California is vast, and the majority of Californians believe this is a problem that policymakers should address. However, Republican federal budget proposals would significantly widen inequities by taking health care, nutrition assistance, and other essentials away from millions of people to fund massive tax breaks for the wealthy. These proposals would also deepen racial and ethnic inequities, with cuts falling hardest on Californians of color and tax benefits predominantly enriching white Californians.

California’s leaders should do everything possible to combat inequality and protect their communities from these federal threats by first working to prevent or mitigate harmful cuts, while also developing strategies to protect their communities if those cuts are enacted. State policymakers can safeguard essential services if they equitably raise new state revenue by ending costly tax breaks that further enrich the wealthy and corporations who will be the primary beneficiaries of federal tax cuts.

California’s Stark Income Inequality

While millions of Californians struggle to afford food, housing, and other necessities as the state’s affordability crisis worsens, a tiny sliver of the population enjoys extreme income and wealth. The richest 0.1% of Californians had an average income of $12.9 million in 2022 (the most recent year for which data are available) — about 250 times the average income of middle-income Californians ($51,300). The top 0.1% earn in just over a day what the average middle-income Californian makes in an entire year. The richest 1% of Californians, with an average income of $2.6 million in 2022, can make in about one week what the average middle-income Californian earns in a year.

Collectively, the richest 0.1% of Californians — nearly 17,500 households — have more income than the roughly 3.5 million households in the middle fifth. In other words, a population roughly the size of the city of Los Angeles is out-earned by a group small enough to fit inside a sports arena. Specifically, the top 0.1% had 12% of all income reported for state tax purposes in 2022, while the middle fifth had 9% of all income. Altogether, the richest 0.1% of Californians reported about $226 billion in income for state tax purposes that year.

Corporate Profit Growth Far Outpaces Workers’ Wage Increases

Corporations have seen skyrocketing profits in recent years, but these gains have failed to trickle down to the workers who help make those profits possible. California corporate profits reached $365 billion in 2022, reflecting a 133% increase since 2002 in inflation-adjusted terms. In contrast, the typical Californian’s earnings have barely kept up with inflation. Median annual earnings for a full-time, year-round worker rose by just 8% during that period, after accounting for inflation. While data on California profits after 2022 is not yet available, corporate profits nationally have continued to rise.

Corporations with state profits of at least $10 million — which represent just around 0.5% of all profitable corporations in the state — saw their profits in California more than double from 2017 to 2022, soaring from $113 billion to $220 billion. In contrast, Californians’ purchasing power declined during this period due to high inflation, a phenomenon that some researchers suggest has been amplified by corporations keeping prices high even as their costs declined following pandemic-era cost spikes due to supply chain issues. Households with low incomes have been hit hardest by inflation because prices have risen more for necessities that make up a larger share of their spending.

Republican Federal Budget Proposals Would Worsen Income Inequality

Proposed federal budget and tax cuts would greatly exacerbate the already stark inequalities in the state by slashing assistance that helps millions of Californians meet their basic needs while extending and potentially expanding tax breaks that primarily benefit wealthy people and corporations.

While the details of these cuts have yet to be determined, the budget resolution passed by Congress in April instructs the House committee with jurisdiction over Medicaid (Medi-Cal in California) to make cuts on of at least $880 billion over ten years and instructs the committee with jurisdiction over the Supplemental Nutrition Assistance Program (SNAP, known as CalFresh in California) to make cuts of at least $230 billion. These cuts would be roughly equal to the share of the proposed tax cuts that would go to the richest 1% of Americans. Federal cuts could also target other programs that help people meet their basic needs, such as income support for families, older adults, and people with disabilities.

what is medicaid?

Medicaid, known as Medi-Cal in California, provides free or low-cost health coverage for nearly 15 million Californians — over one-third of the state’s population — including children, pregnant individuals, seniors, and people with disabilities. Cutting Medi-Cal funding would mean taking critical care away from residents who need it the most.

what is snap?

SNAP, known as CalFresh in California, provides modest monthly assistance to over 5 million Californians with low incomes to purchase food. Proposals to cut this powerful anti-poverty program and implement harsh work requirements would make it harder for millions of people with low incomes to put food on the table. 

Families with low incomes would be worse off, while wealthy households would get a windfall if Congress makes the deep cuts to Medicaid and SNAP included in the budget resolution instructions for the House and extends provisions of the 2017 federal tax law. Specifically, the top 1% of Americans would gain $43,500 a year on average while the bottom fifth of Americans would lose $1,125 annually from the combined impact of the deep cuts to Medicaid and nutrition assistance and the extension of  the 2017 tax law that mainly benefits wealthy people and corporations. In California, the reduction in Medi-Cal benefits alone could be akin to losing $1,948 in income, or about 8.7% of the average income of the bottom fifth of households.

Republican Federal Budget Proposals Would Worsen Racial Inequality

Proposed cuts to Medicaid (Medi-Cal) and SNAP (CalFresh) paired with massive tax breaks for the wealthy would also widen already stark racial inequities both nationally and in California.  Cuts to health and food assistance would overwhelmingly harm Californians of color, who are more likely to benefit from these programs due to the long legacy of racist policies and practices that have excluded them from income and wealth-building opportunities. About 8 in 10 Californians who are enrolled in Medi-Cal are people of color, including 57% who are Latinx, 12% who are Asian, 7% who are Black.1Center on Budget and Policy Priorities analysis of US Census Bureau, American Community Survey data 2022-23. Latinx includes all individuals who identify as Latinx, regardless of race. 20% of Medi-Cal enrollees are white (not Latinx), while another 5% are multiracial or identify with another race not elsewhere specified. More than 7 in 10 Californians who head households enrolled in CalFresh are people of color, including 43% who are Latinx, 13% who are Asian, and 11% who are Black.2Center on Budget and Policy Priorities analysis of US Census Bureau, American Community Survey data 2022-23. Latinx includes all individuals who identify as Latinx, regardless of race. 27% of CalFresh heads of household are white (not Latinx), while another 5% are multiracial or identify with another race not elsewhere specified. In contrast, because racial income and wealth gaps are already vast due to centuries of structural racism, any tax policy that redistributes benefits to people with high incomes or wealth will disproportionately benefit white people. Nationally, in 2018 white households received 80% of the benefits of federal tax cuts enacted during the first Trump Administration even though they comprised 67% of households. In addition, research finds that white households generally receive 88% of the benefits of any corporate tax break, while Black and Latinx households receive just 1%.3This excludes the share of benefits of corporate tax breaks that go to foreign investors.

Federal Republican Tax Proposals Would Provide a Massive Windfall for the Wealthy

The details on what tax cuts will ultimately be included in the federal budget package is still uncertain, but the centerpiece will be extending or making permanent all or most of the provisions of the 2017 tax law enacted in the first Trump administration that are set to expire at the the end of 2025. Republican leaders are also considering additional tax cuts on top of extending the expiring provisions.

Republican Federal Budget Proposals Would Widen Inequality in Every California Congressional District

Across California, the federal budget and tax cuts would represent a large upward redistribution of resources from families already struggling with the costs of living to the wealthy who barely notice when the cost of essentials increases. Millionaires, who stand to benefit most from the proposed tax cuts, represent just between 0.2% and 2.8% of residents in each of California’s Congressional Districts. In contrast, large shares of residents in these districts could be harmed by cuts to Medi-Cal or CalFresh. In the majority of California’s districts, at least one-third of residents receive critical health coverage through Medi-Cal. Half to two-thirds of residents in 10 districts rely on Medi-Cal for health care. Additionally, at least 10% of residents in most districts count on CalFresh to buy groceries, with at least 20% using CalFresh to feed their households in eight districts.

State Leaders Should Protect Californians From Increased Hardship and Inequality

Policymakers should invest in the well-being of everyday people, not just the wealthy. But federal Republicans are pushing forward with plans to slash health care and other vital services that millions of people count on every day — all to further enrich the top 1%. These proposals would widen the already extreme income inequality in California, deepening racial and ethnic inequities and making it even more difficult for all Californians to prosper. State leaders should do everything they can to protect their communities from these threats, including ending costly tax breaks that further enrich the wealthy and corporations who will reap the majority of the benefits of these federal proposals. This would allow California to equitably raise new state revenue to shield communities from federal threats this year and beyond and safeguard essential services that promote the health and economic well-being of all Californians.

Federal Policy

The federal government plays a major role in shaping California’s budget, economy, and the well-being of its people.

Learn how federal policies shape California’s budget, economy, and vital programs — and how state leaders can respond to protect and support Californians.

Explore Federal Resources
Federal Policy
  • 1
    Center on Budget and Policy Priorities analysis of US Census Bureau, American Community Survey data 2022-23. Latinx includes all individuals who identify as Latinx, regardless of race. 20% of Medi-Cal enrollees are white (not Latinx), while another 5% are multiracial or identify with another race not elsewhere specified.
  • 2
    Center on Budget and Policy Priorities analysis of US Census Bureau, American Community Survey data 2022-23. Latinx includes all individuals who identify as Latinx, regardless of race. 27% of CalFresh heads of household are white (not Latinx), while another 5% are multiracial or identify with another race not elsewhere specified.
  • 3
    This excludes the share of benefits of corporate tax breaks that go to foreign investors.

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key takeaway

TK enrollment in California has doubled since 2021-22, with growth across all student groups and high-poverty schools. To ensure all children benefit, the state must address disparities in access for students of color and those from low-income families.

Early childhood education is foundational for young children’s development and their long-term outcomes, and preschool programs provide essential opportunities for 3- and 4-year-olds.1For example, see “Predictor: Access to Preschool,” Urban Institute (webpage), accessed March 1, 2025, https://upward-mobility.urban.org/framework/education/preschool Recognizing the importance of early learning, California policymakers chose in 2021 to embark on a significant expansion of Transitional Kindergarten (TK), a specialized preschool program for 4-year-old children offered at public schools. To ensure this expansion benefits all children, it is crucial to track participation for student groups that have historically faced barriers, namely students of color and those from families with low incomes, as the challenges these students face may continue throughout their education. Given these ongoing patterns of inequity, this report highlights TK enrollment trends from 2021-22, before the age-eligibility expansion began to 2023-24, the second year of expansion and the most recent data available for these student groups.

Enrollment Increased Across All Race and Ethnicity Groups

TK enrollment has grown substantially across all racial and ethnic groups between the 2021-22 and 2023-24 school years. Overall enrollment increased by 101%, from 75,410 to 151,336 students. In 2023-24, TK enrolled 59% of eligible four-year-olds in California. While all student groups experienced significant growth, the percentage growth varied. Multi-racial students experienced the highest percentage growth (130%), followed by Asian students, who also had substantial increases (117%). Latinx students had the highest enrollment number in both years, 42,702 in 2021-22 and 83,362 in 2023-24, reflecting a percentage increase of 95%. American Indian or Alaska Native students had the lowest enrollment numbers (314 in 2021-22 and 571 in 2023-24) and the smallest percentage growth (82%).

Moving forward, the state should track take-up rates among the groups with the lowest percentage growth, including  American Indian or Alaska Native, Latinx, and Black students. Additionally, ensuring equitable access to TK will require a focus on understanding and addressing potential barriers to participation among these students.

High-Poverty Elementary Schools Have Significantly Increased Their Enrollment

Elementary schools with higher poverty levels had the largest increases in TK enrollment between 2021-22 and 2023-24. Growth in the number of students varied across schools by their overall share of students eligible for Free and Reduced Price Meals (FRPM), a proxy to identify students from low-income families.2Free and reduced-price meal eligibility (FRPM) is a measure of need based on poverty levels that the state uses as a proxy to identify students from families with low incomes. Children from households with incomes below 185 percent of the federal poverty level are considered eligible. Eligibility is based on household size and income; for example, for the 2024-25 school year, a student in a household composed of three members with an annual income at or below $47,767 would be deemed eligible and counted as low income. Complete household size and income scale: https://www.cde.ca.gov/ls/nu/rs/scales2425.asp Schools in the highest FRPM category (76-100%) grew their enrollment by nearly 30,000 students, compared to about 10,000 students in schools with the lowest share of FRPM-eligible students (0-25%). The differences are primarily because there are far more schools in the highest FRPM category (1,982) than in the lowest (409).

Elementary schools in higher-poverty areas also had a significant increase in new TK programs. The following table displays the number of schools that added new TK programs — those that did not have any TK enrollment in 2021-22 — by FRPM categories. As shown in the table, 387 schools in the 76-100% FRPM category initiated new TK programs compared to 151 in the lowest FRPM category (0-25%). This shows that expansion efforts have primarily supported high-poverty schools by enabling them to establish and offer TK programs. 

A higher share of children from low-income families participate in TK. Due to the lack of publicly available data, it is challenging to accurately determine the exact number of low-income children enrolled in TK.3The California Department of Education does not publicly report counts of students eligible for FRPM by grade level. The following table displays the estimated number of students from low-income families in TK, calculated based on the overall proportion of FRPM-eligible students at each elementary school. The estimate reveals that 90,754 children from low-income families are enrolled in TK, representing 64% of total enrollment.4Only schools classified as “public elementary schools” are included in this estimate. The increasing role of TK in supporting low-income families also highlights the need to monitor how families utilize the program and address any potential barriers.

Overall, TK enrollment has expanded significantly, with substantial growth across all racial and ethnic groups and a notable increase in TK programs in high-poverty schools. These trends demonstrate TK’s growing role in providing early learning opportunities to more children. However, more research is needed to understand local challenges. For example, TK uptake rates from 2021-22 to 2023-24 show faster growth in low-poverty schools (79%) compared to high-poverty schools (58%), suggesting potential barriers to access that warrant further investigation to ensure equity.

To build on this significant progress, the state should prioritize equity by addressing disparities in growth and ensuring that all children, particularly those from low-income families and children of color, can benefit from TK. This includes assessing and strengthening how the broader mixed delivery preschool system supports children and their families. By focusing on these areas, the state can continue to expand access to early learning opportunities, ensuring that children from low-income families have the strong foundation they need to succeed in school and beyond.

Federal Policy
  • 1
    For example, see “Predictor: Access to Preschool,” Urban Institute (webpage), accessed March 1, 2025, https://upward-mobility.urban.org/framework/education/preschool
  • 2
    Free and reduced-price meal eligibility (FRPM) is a measure of need based on poverty levels that the state uses as a proxy to identify students from families with low incomes. Children from households with incomes below 185 percent of the federal poverty level are considered eligible. Eligibility is based on household size and income; for example, for the 2024-25 school year, a student in a household composed of three members with an annual income at or below $47,767 would be deemed eligible and counted as low income. Complete household size and income scale: https://www.cde.ca.gov/ls/nu/rs/scales2425.asp
  • 3
    The California Department of Education does not publicly report counts of students eligible for FRPM by grade level.
  • 4
    Only schools classified as “public elementary schools” are included in this estimate.

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key takeaway

California is expanding Transitional Kindergarten to all four-year-old children by 2025-26, supported by state investments to improve access, staffing, and equity in public preschool programs.

Early learning is foundational for young children’s development, and preschool programs provide essential opportunities for 3- and 4-year-olds. Recognizing this, in 2021, California policymakers embarked on a significant expansion of Transitional Kindergarten (TK), a specialized preschool program for 4-year-old children offered at public schools. This ambitious expansion is backed by substantial state investment, reflecting a commitment to broaden access to preschool education. To support the multi-year plan, the state has allocated billions of dollars in one-time and ongoing funding. Through these investments, TK will be universally available to all four-year-old children in California by the 2025-26 school year.

How Policy Decisions Shaped the Expansion of Transitional Kindergarten

The TK program has been in place since 2012.1Senate Bill 1381 (Simitian, Chapter 705, Statutes of 2010), https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=200920100SB1381 Its original purpose was to provide preschool education for four-year-old children who, based on the month they were born, were no longer eligible to enroll in kindergarten after the state adjusted the age cutoff for kindergarten admission — creating TK also allowed school districts to continue claiming Average Daily Attendance (ADA) for these students.2SB 1381 (Simitian) Essentially, this policy change prevented four-year-olds from being admitted to kindergarten if they turned five later in the year after enrolling in kindergarten.3Assembly Committee on Education analysis of Senate Bill 1381 (Simitian), June 1, 2010, https://leginfo.legislature.ca.gov/faces/billAnalysisClient.xhtml?bill_id=200920100SB1381# After a gradual implementation of this policy, during the 2014-15 school year, four-year-old children had to turn five on or before September 1st to be admitted into kindergarten. At the same time, certain four-year-olds no longer eligible for kindergarten were admitted into TK. Specifically, from 2014-15 until 2022-23, four-year-old children were eligible for TK if they had their fifth birthday between September 2nd and December 2nd.

In 2021-22, state leaders initiated another multi-year policy through the state budget to significantly grow the TK program, implementing a five-year plan that gradually increases age eligibility based on the month a child was born.4This expansion is part of a broader initiative, Universal PreKindergarten (UPK), aimed at bringing together preschool programs to ensure all children have access to early learning experiences the year before they start kindergarten. The increase in eligibility is primarily backed by allocating additional funding to school districts to implement the expansion. By the end of the expansion plan, in 2025-26, the program will be open to all four-year-old children who turn four by September 1.

The State Has Invested Billions of Dollars to Support Transitional Kindergarten

To carry out the expansion plan, state leaders agreed to provide the needed resources to initiate the expansion and sustain the program going forward. So far, the state budget has provided a mix of both one-time and ongoing resources. Those are outlined below:

  • One-time resources have been allocated to build foundational elements of the program. The state has provided more than $1 billion since 2021-22 in one-time dollars for TK planning and implementation grants, facilities, and efforts to support the preschool teacher workforce — some of this funding was also available to support the California State Preschool Program (CSPP) and kindergarten.
  • The state is increasing ongoing funding for TK to accommodate the substantial growth in attendance resulting from the expansion. TK is supported by the Local Control Funding Formula (LCFF), which uses attendance to generate funding allocations to school districts (more details are provided in the “How Proposition 98 and the LCFF Support Transitional Kindergarten” section below). As of 2024-25 the state has provided an estimated $1.4 billion to account for the growth in attendance — this number tends to change when districts update and report their attendance numbers throughout the school year. Under current attendance projections the state would provide an additional $876 million in 2025-26, which would mark full expansion of the program. Attendance projections in prior years have overestimated TK uptake and attendance. Therefore, for 2025-26, the projected funding may be lower than currently proposed once attendance is collected and reported.
  • The state is increasing ongoing funding to improve staffing ratios in TK. As shown in the chart, an estimated $517 million has been allocated in 2024-25 to maintain a 1:12 adult-to-student ratio in TK classrooms. The 2025-26 budget proposes an additional $952 million to reduce ratios to 1:10, which would grow to a total of nearly $1.5 billion for this purpose. These dollars help maintain current staffing levels and would bring thousands of additional teachers and instructional aides to TK classrooms.5Districts that fail to meet staffing ratios face penalties that result in loss of funding. There are also penalties for not meeting class size requirements or teacher education requirements.

California has dedicated significant funding to schools to support the expansion of TK, including resources for planning grants, staffing, and attendance growth. This investment has facilitated substantial enrollment growth. However, realizing the full potential of this expansion requires addressing several key challenges. Securing and retaining a qualified TK workforce is essential, as staffing challenges could hinder the program’s effectiveness. Additionally, a continued focus on equitable access and consistent student attendance, particularly among low-income families is crucial. By addressing these key areas, California can maximize the impact of its investments and ensure four-year-olds benefit from this expansion.

Proposition 98 and the Local Control Funding Formula

How do state resources support TK expansion?

TK is funded through the LCFF, the same mechanism that funds K-12 grades. Funding for LCFF originates from Proposition 98, which guarantees a minimum annual funding amount for TK-12 schools and community colleges. The state fulfills this guarantee using General Fund dollars and local property taxes.

To support the growing costs of TK expansion, policymakers have gradually increased the Prop. 98 minimum guarantee. This adjustment, driven by increased student attendance through the LCFF, results in a larger share of state revenue being dedicated to education. This process of adjusting Prop. 98 is commonly known as “rebenching.” The chart below illustrates the year-over-year growth in Prop. 98 since 2022-23 based on current and projected attendance through the 2025-26 fiscal year. The orange bar reflects total growth across 2022-23 to 2025-26.

What is the role of the LCFF in distributing resources to local communities for TK expansion?

The LCFF is the primary funding formula for K-12 school districts, charter schools, and county offices of education. The LCFF is an equity-based formula that provides a base grant per TK-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 LCFF uses an attendance measure, average daily attendance (ADA), to calculate funding. The base grant for TK (and grades K-3) in 2024-25 is $10,025, as shown in the table below, and is adjusted if districts meet average class sizes of 24 students or less. Districts also receive an add-on per TK ADA to maintain class ratios of 1:12 per classroom.

Additionally, the TK-3 base grant — and the base grant for all other grade levels — is “weighted” to provide additional funding to districts that enroll students classified as English learners, are eligible to receive a free or reduced-price meal, or are foster children. The LCFF provides a  “supplemental” grant of 20% of the base grant for each of these students. When the number of these high-need students (TK and all other grade levels combined) exceeds 55% of a school district’s enrollment, a “concentration” grant of 65% of the base grant is applied for students above that threshold. These two grants are the key variables that ensure a more equitable distribution of funding to the highest-need districts.

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key takeaway

Republican budget proposals would impose harsh and ineffective “work requirements” that restrict access to health care, food, and other necessities for millions of Americans. These “work requirements” are just paperwork barriers, not solutions. Federal policymakers should reject them.

All Californians, no matter their race, gender, or zip code, deserve to have affordable health care, housing, food, and other necessities that allow them to thrive in their communities. But Republican federal budget proposals would pave the way for deep and harmful cuts that would take health coverage, nutrition assistance, and other essentials away from millions of Californians struggling to make ends meet due to persistently high inflation and the state’s long-standing housing affordability crisis. These cuts would increase poverty and widen racial and ethnic inequities in exchange for funding huge tax giveaways for the wealthy.

One way Republican leaders may implement this deeply inequitable agenda is by making access to vital services contingent upon complying with rigid “work requirements” — rules that require regular documentation of work hours. Such proposals are ineffective, punitive, counterproductive, and a waste of federal funds. Research shows that these requirements don’t meaningfully or sustainably increase employment or earnings. Instead, they take health care, food, and other vital resources away from families and individuals in need — disproportionately Black people and other people of color — by adding unnecessary paperwork and work reporting hurdles to receive the support they need. “Work requirements” — more accurately, paperwork or work reporting requirements — increase hardship and make it even more challenging to maintain or find jobs. Policymakers should reject all proposals to impose work reporting requirements, recognizing them for what they are — harmful cuts that threaten the health and well-being of the communities they represent.

what are “work requirements?”

“Work requirements” — more accurately, paperwork or work reporting requirements — withhold essential services and support unless individuals can regularly document time spent working or engaged in certain activities, or else prove they are exempt from these requirements. These rigid reporting rules often trip people up on red tape, causing them to lose access to health care, food, and other essential human needs that they are otherwise eligible for and that all people deserve. To refer to these rules, this report interchangeably uses the term “work reporting requirements” and the more common term “work requirements” (in quotations to indicate that such requirements largely impose paperwork burdens).

“Work Requirements” Are Unnecessary, Ineffective, Punitive, Counterproductive, and a Waste of Money

Republican-led proposals to impose new or harsher work reporting requirements are simply harmful cuts by another name. Rather than fostering economic mobility as proponents claim, these requirements threaten to push families and individuals deeper into poverty by withholding health care, food assistance, and other vital support. This report makes clear that “work requirements” are:

  • Unnecessary. Most people who are likely to be targets of such requirements already do work for pay, while the remainder are engaged in valuable — but unpaid — caregiving work, attending school to improve their employment prospects, or are ill, disabled, retired, or between jobs.
  • Ineffective. They fail to meaningfully or sustainably increase employment or earnings. Instead, their main effect is to take vital assistance away from people in need. Consequently, they have little to no effect on economic mobility, and may even drive some families and individuals deeper into poverty.
  • Punitive. Forcing workers to regularly document work hours increases administrative bureaucracy and often trips people up on red tape, causing them to lose access to vital benefits. Complying with these onerous requirements can be especially difficult for workers paid low wages who lack control over fluctuating work hours or have employers who are unwilling to verify their employment.
  • Counterproductive. They fail to address the fundamental barriers that prevent so many people from meeting basic needs, including a racially discriminatory labor market rife with low-paying jobs and the lack of affordable child care that is necessary to work. Plus, taking away people’s health care or ability to afford food only makes it harder for them to maintain employment and make ends meet.
  • A waste of money. Implementing and enforcing “work requirements” is costly and wastes funds that would be far better spent on services and supports that actually improve the lives of all people.

Research Shows that “Work Requirements” Simply Don’t Work

“Work requirements” are already part of several social safety net programs, but research into those policies has consistently shown that they do not increase employment opportunities in the long run or decrease “program dependence.” Instead, these policies lead to participants being pushed out of programs and are tied to increases in deep poverty. Specifically, research finds that “work requirements:”

Adding More Hurdles for Accessing Medicaid Would Harm People’s Health and the Economy

Medi-Cal is California’s Medicaid program that provides free or low-cost health care to over one-third of the state’s population. The program serves individuals with modest incomes, including children, seniors, people with disabilities, and pregnant individuals. Medi-Cal is a lifeline for millions, ensuring access to essential health services that support public health and economic stability.

Medi-Cal coverage is essential to building and sustaining a stable workforce in California, especially because many low-wage jobs do not offer employer-sponsored health insurance and do not pay enough for people to afford coverage through Covered California, the state’s health insurance marketplace established under the Affordable Care Act. Ensuring access to Medi-Cal not only promotes individual health but also strengthens the state’s economy by supporting worker productivity.

Despite the critical role Medi-Cal plays, Congressional Republicans and the Trump administration have pushed for Medicaid “work requirements,” a policy that would make it harder for people to stay covered by tying health insurance to employment. Medicaid work reporting requirements are essentially cuts that would cause significant health coverage losses. Such proposals would require Medicaid beneficiaries to prove they are working, looking for work, or participating in job training programs in order to maintain coverage. Imposing such requirements in Medicaid would be:

  • Unnecessary: Most Medicaid enrollees under age 65 are already working (for pay). In California, over 3 in 5 adults work full-time or part-time (for pay). Among those who are not employed for pay, many are providing unpaid care for family members — an essential form of labor that sustains families and communities, yet is often overlooked by work reporting requirements. Others are managing illness or disability, or are enrolled in school.
  • Ineffective: Research consistently shows work reporting requirements are an ineffective policy tool that fail to increase employment. Instead, they create bureaucratic hurdles that cause people to drop off Medicaid — particularly people with disabilities, caregivers, and those working in unstable or low-wage jobs. Many enrollees who meet the work criteria still risk losing coverage due to administrative barriers, such as difficulty completing complex paperwork, missing deadlines, or lacking the necessary documents to prove eligibility.
  • Punitive: If implemented, “work requirements” would put over 8 million people in California at risk of losing their health coverage. (See this resource for details on the impact by congressional district.) Health coverage losses on this scale would have devastating effects on people’s health and economic security as well as the broader economy.
  • Counterproductive: Without coverage, people would struggle to see doctors, get medications, and access preventive care, leading to more severe health problems and even medical debt. At the same time, hospitals and clinics, especially in low-income and rural areas, would face higher costs for unpaid care, putting financial strain on local health systems. Imposing “work requirements” would also make it harder for people to maintain employment, particularly people with chronic illnesses, such as diabetes and heart disease, who need regular access to health care to manage their conditions.
  • A Waste of Money: Implementing and enforcing work reporting requirements in Medicaid would be costly. The Government Accountability Office estimates that administrative costs can range from millions to hundreds of millions per state. These funds would be better spent on improving access to health care services in Medi-Cal rather than on unnecessary bureaucratic hurdles that take health coverage away.

“Work requirements” undermine the very purpose of Medicaid: it is health insurance, not a jobs program.

Federal Policy

The federal government plays a major role in shaping California’s budget, economy, and the well-being of its people.

Learn how federal policies shape California’s budget, economy, and vital programs — and how state leaders can respond to protect and support Californians.

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Imposing Harsher Time Limits in SNAP/CalFresh Would Cut Benefits for Many and Increase Hunger

CalFresh, California’s name for the Supplemental Nutrition Assistance Program (SNAP), provides program participants with modest monthly noncash benefits to buy food and is the state’s most powerful tool to fight hunger. At the federal level, SNAP requires participants between the ages of 18 and 54 who do not qualify for limited exemptions to meet work reporting requirements in order to receive aid beyond a very limited window of time. In effect, this policy imposes a harsh time limit on access to SNAP that pushes participants off benefits after three months.

Despite the extensive body of research showing that “work requirements” take food away from those who need it and do not have lasting effects on employment, Republican leaders continue to push forward proposals to expand already rigid time limits enforced through work reporting requirements for SNAP recipients. Recent proposals for harsher time limits would specifically target older adults, people experiencing homelessness, foster youth who have aged out of the system, and veterans, increasing hardship among these communities who already face disproportionate challenges to meet work reporting requirements and struggle to make ends meet. “Work requirements” for SNAP are a failed experiment that have proven to be:

  • Unnecessary: The majority of SNAP recipients who can work already do. Over 3 in 4 adults who participated in CalFresh in a given month had recent paid employment. Those who cannot work are limited by significant barriers to employment, such as disability or macroeconomic conditions outside their control, like a lack of job opportunities. Additionally, many recipients who did not have paid employment reported having unpaid caretaking responsibilities that prevented them from working in a traditional setting, highlighting the limitations of work reporting requirement policies in recognizing essential unpaid labor.
  • Ineffective: Work reporting requirements do not increase work participation, they just increase hunger. Research has extensively shown that work reporting requirements create barriers that ultimately take away critical assistance from people in need. This is especially true for people experiencing homelessness and people with disabilities.
  • Punitive: Proposals to impose harsher time limits via “work requirements” and limit key exemptions are grounded on the false narrative that people should earn the right to eat. Many SNAP recipients have low-wage and unstable jobs that are characterized by irregular schedules. This type of precarious work means that sometimes people may not be able to meet specific work hour requirements if their hours are cut or they miss work due to illness. Work reporting requirements punish recipients for not having quality jobs with predictable hours and benefits, without addressing the root causes of these issues.
  • Counterproductive: Food assistance is a key support for people to work and contribute to their communities. Being well-fed and having access to adequate nutrition is essential to staying healthy, reducing the risk of chronic illness, and increasing academic achievement and labor productivity. SNAP benefits also provide significant economic benefits to local economies, with each dollar in benefits generating a $1.54 return and helping fund jobs, as well as helping to reduce poverty. Harsher time limits would diminish the effectiveness of one of the strongest antipoverty programs and have long-term economic consequences for everyone.

Rejecting the expansion of already stringent SNAP time limits is necessary to ensure low-income families will continue to be able to access the healthy food they need.

Policymakers Should Reject Proposals to Impose “Work Requirements” that Just Add Bureaucratic Burdens

As Republicans in Congress push to make it more difficult for Californians to access health care, nutrition assistance, and other anti-poverty programs, it’s important to call these what they are: harmful bureaucratic burdens. Rather than fostering economic mobility, these layers of paperwork threaten to take away health care, food, and other essentials that all people need to thrive. These Republican proposals fail to improve affordability and, combined with the proposed tax cuts for the wealthy, will only deepen inequality across the country. Policymakers should reject these proposals, recognizing them for what they are — harmful cuts that jeopardize the health and well-being of the communities they represent.

Federal Policy

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