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California’s Budget Reserves Explained

March 2026 | By the California Budget & Policy Center

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Just like households save for emergencies, California sets aside money in budget reserves. Budget reserves are California’s way of preparing for the unexpected, saving a little today to protect vital public services tomorrow.

Dive Deeper Into California’s Budget Reserves

For a deeper understanding of California’s reserve accounts, explore the Budget Center’s companion resources:

In this video, we break down how California’s state reserves work, including the four main reserve accounts: the Budget Stabilization Account (the state’s “rainy day fund”), the Public School System Stabilization Account, the Safety Net Reserve, and the Special Fund for Economic Uncertainties.

Learn how these reserves are funded, when they can be used, and why balancing savings with current investments is key to supporting Californians’ well-being.

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The Budget Center’s essential resources for understanding and navigating the California state budget — all in one place.

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Some decisions in California’s Legislature require more than a simple majority — they need a supermajority, or two-thirds vote. But what does that really mean, and why does it matter for Californians?

In this short explainer, we break down how Proposition 26 changed the rules around taxes and fees, what kinds of actions require a supermajority vote, and how this impacts the ability of lawmakers to make policy decisions that affect everyday people.

Want to Better Understand
the State Budget?

The Budget Center’s essential resources for understanding and navigating the California state budget — all in one place.

Explore tools, videos, and expert insights designed to strengthen your advocacy and guide informed decision-making.

Visit the Budget Academy

Budget Academy
California Budget

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Ever wondered where California gets the money to fund schools, healthcare, and public services? This quick explainer breaks down the key components of the state budget — from the General Fund to federal dollars — and shows how these funds work together to power the state’s economy and serve its communities.

Want to Better Understand
the State Budget?

The Budget Center’s essential resources for understanding and navigating the California state budget — all in one place.

Explore tools, videos, and expert insights designed to strengthen your advocacy and guide informed decision-making.

Visit the Budget Academy

Budget Academy
California Budget
Federal Policy

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California’s state budget affects every Californian, but where do those dollars go? In this short explainer video, we break down how California’s budget is funded and where the money goes, from health care and education to public infrastructure, safety net programs, and environmental protection.

Want to Better Understand
the State Budget?

The Budget Center’s essential resources for understanding and navigating the California state budget — all in one place.

Explore tools, videos, and expert insights designed to strengthen your advocacy and guide informed decision-making.

Visit the Budget Academy
Budget Academy

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Explore the year-long process of creating and revising California’s state budget — a process that shapes policies impacting every Californian. This video simplifies each key step, from initial proposals by state agencies to the governor’s budget release, legislative reviews, and final negotiations.

Gain the insights you need to stay informed and empowered about California’s financial decisions.

Want to Better Understand
the State Budget?

The Budget Center’s essential resources for understanding and navigating the California state budget — all in one place.

Explore tools, videos, and expert insights designed to strengthen your advocacy and guide informed decision-making.

Visit the Budget Academy

Budget Academy

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Proposition 98, passed in 1988, is a cornerstone of California school funding, guaranteeing minimum funding levels for K-12 education funding and community college funding. But how does it work? And what does it mean for public schools and the state budget?

In this explainer video, we break it all down, including the funding sources, calculations, and its impact on education funding in California. Learn how this law ensures a steady financial base for schools while adapting to the state’s fiscal conditions.

Want to Better Understand
the State Budget?

The Budget Center’s essential resources for understanding and navigating the California state budget — all in one place.

Explore tools, videos, and expert insights designed to strengthen your advocacy and guide informed decision-making.

Visit the Budget Academy

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Education

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Watch to learn more about trailer bills in California

Trailer bills play a crucial role in California’s budget process by making the legal changes needed to implement policies in the Budget Act. This video explains how trailer bills work, their journey through budget committees, and the voting rules they must follow. You’ll explore how these bills impact vital areas like health, housing, and education to expand your knowledge of California’s legislative process.

Want to Better Understand
the State Budget?

The Budget Center’s essential resources for understanding and navigating the California state budget — all in one place.

Explore tools, videos, and expert insights designed to strengthen your advocacy and guide informed decision-making.

Visit the Budget Academy

Budget Academy

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Even before the COVID-19 pandemic, unaffordable housing costs represented one of California’s most pressing challenges – and the job losses triggered by stay-home orders necessary to address the public health emergency threaten to exacerbate this long-standing crisis. Housing affordability is a problem throughout the state when housing costs are compared to incomes, and the Californians who are most affected by the affordability crisis are renters, households with the lowest incomes, people of color, and immigrants.

See our report — Staying Home During California’s Affordability Crisis — by Research Associate, Aureo Mesquita, and Senior Policy Analyst, Sara Kimberlin to learn more.

This video is part of our Policy Perspectives Speaker Series. Thank you to our 2020 series sponsors: First 5 California, First 5 LA, and the Stupski Foundation, for making this programming possible.

Housing & Homelessness

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