Skip to content

Introduction

Governor Gavin Newsom released a summary of the May Revision to his proposed 2024-25 California state budget on May 10, projecting a $44.9 billion shortfall, or $27.6 billion shortfall, when taking into account early budget action taken by the legislature in April to reduce the shortfall by $17.3 billion. While many of the details are forthcoming, the governor proposes to close the budget gap through the partial use of reserves, spending cuts, and delays or deferrals of spending authorized in earlier years. While the $201 billion General Fund spending plan would protect many investments made in prior years, it also includes cuts and delays to programs and services that affect the day-to-day lives of Californians, particularly foster youth, Californians with disabilities, immigrant communities, students, and families with young children. Notably, the administration’s strategy demonstrates continued resistance to adopting long-term revenue solutions, putting corporate profits over families. This shortsighted approach exacerbates wealth inequality, stalls progress, and undermines the governor’s vision of a California for all.

WHat is the May Revision?

Released on or before May 14, the May Revision updates the governor’s economic and revenue outlook; adjusts the governor’s proposed expenditures to reflect revised estimates and assumptions; revises, supplements, or withdraws policy initiatives that were included in the governor’s proposed budget in January; and outlines adjustments to the minimum funding guarantee for K-14 education required by Proposition 98 (1988).

The rapid shift from a budget surplus, as was the case in recent fiscal years, to the budget shortfall we face today, is a lingering effect of the unprecedented COVID-19 pandemic and its impact on the economy. The projected budget shortfall is primarily the result of state revenue collections that the administration now projects are $12.5 billion lower over the three-year budget window (fiscal years 2022-23 through 2024-25) than was anticipated in the governor’s January proposal. The shortfall reflects the steep stock market decline in 2022 — after significant growth in 2020 and 2021 — that negatively impacted income tax collections from high-income Californians and corporations, as well as the economic dampening effects of the Federal Reserve’s interest rate hikes.

Lower state revenues over the three-year budget window result in automatic adjustments to constitutionally-required funding allocations, including to the state’s main reserve and education reserve accounts, as well as reduced funding for K-12 schools and community colleges.

The governor’s proposed solutions to cover the shortfall would partially draw down on various state reserves. The solutions include using $12 billion enacted through legislative early action in April, however, just $3.1 billion would be used in 2024-25, and $8.9 billion would be shifted to 2025-26. The administration also proposes draining the Safety Net Reserve ($900 million), withdrawing $2.6 billion from the Public School System Stabilization Account for education, and leaving an estimated $22.9 billion for future use.

The administration’s proposals include billions in cuts, delays, and deferrals of critical investments intended to improve the health and well-being of all Californians. Reductions that will disproportionately affect the lives of low-income communities, Californians of color, Californians with disabilities, and families with children include, among others:

  • Ongoing cuts to CalWORKs for supportive services, home visiting, and mental health/substance abuse services (despite draining the Safety Net Reserve intended to be used to avoid cuts to CalWORKs) and a one-time cut in employment services,
  • Cuts to programs that help address homelessness and provide affordable housing,
  • Indefinitely delaying further expanding child care slots, 
  • Various reductions in investments in behavioral health, including cuts to infrastructure, housing, workforce, and youth behavioral health initiatives,
  • Cuts in ongoing support for public health and one-time investments in the health workforce, 
  • Cuts to services for Californians who are undocumented, including ongoing support for the expansion of In-Home Support Services (IHSS) and delayed expansion of the California Food Assistance Program (CFAP),  
  • Pulling back investments in transitional kindergarten (T-K) facilities and pre-kindergarten (pre-K) inclusivity of students with disabilities.

The revised budget also continues to utilize a controversial accounting maneuver to shift $8.8 billion in K-12 schools and community college (K-14) costs  — on paper — from 2022-23 to later fiscal years and pay for these delayed expenses using non-K-14 funds. 

The May Revision proposals would protect and maintain some progress made in prior budget years to help improve economic security and opportunities for Californians with low incomes and Californians of color, including expanding full-scope Medi-Cal coverage to all Californians, maintaining investments in cash assistance through the CalEITC, Young Child Tax Credit, and Foster Youth Tax Credit, and temporary rate increases for child care providers.

However, state leaders have the tools and resources to prevent other harmful cuts. By further tapping into the state’s main rainy day fund and permanently reducing tax breaks for profitable corporations, state leaders can ensure corporations pay their fair share and avoid cuts to services that help Californians stay healthy, housed, and put food on the table.

This First Look report outlines key pieces of the May Revision to the 2024-25 California budget proposal, and explores how the governor prioritized spending and determined cuts to balance the budget amid a sizable projected state budget shortfall.

Contents

Budget Overview

Economic Outlook: Revised Budget Projects Moderate Job and Wage Growth
Revenue: Revised Budget Reflects Additional $12.5 Billion Downgrade in Revenue Outlook
Tax Policy: Modified Tax Proposals Include Temporary Business Tax Break Limitations
Reserves: May Revision Includes Withdrawal of Reserve Funds, Proposes New Fund to House “Excess Revenue”

Health

Coverage, Affordability & Access: Governor Upholds Medi-Cal Expansion, Amends MCO Tax, Proposes Harmful Cuts
Health Workforce: Revised Budget Severely Cuts Health Care Workforce Development
Behavioral Health: Behavioral Health Initiatives Mostly Sustained, But New Cuts Proposed
Public Health: Cuts to Public Health Leave Californians Vulnerable to Future Threats

Homelessness & Housing

Homelessness: May Revision Reduces Limited Funding for Homelessness
Housing: May Revision Proposes Deeper Cuts for Affordable Housing

Economic Security

Overview: May Revision Proposes Alarming Cuts to Vital Safety Nets
Refundable Tax Credits: Revised Budget Maintains Tax Credits for Californians with Low Incomes
Refundable Tax Credits: Revised Budget Does Not Implement Workers’ Tax Credit Slated for 2024
CalWORKs: May Revision Proposes Additional Cuts to Critical CalWORKs Support Services
Food Assistance: Governor Proposes Cuts and Delays to Previous Food Assistance Commitments
Child Care: Governor Maintains Temporary Rate Increase, Pauses Slot Expansion
Californians with Disabilities: Governor Protects SSI/SSP but Cuts Key Services for People with Disabilities
Immigrant Californians: Proposal Eliminates and Delays Vital Services for Immigrant Californians, Maintains Cut to Legal Services
Domestic Violence: Governor Does Not Provide Needed Support to Domestic Violence Survivors

Education

Early Learning & Pre-K: Transitional Kindergarten Expansion Continues While Facilities are Cut
Proposition 98: K-14 Education’s Minimum Funding Level Drops Due to Lower Revenue Estimates
K-12 Education: Budget Proposal Relies on Reserves to Support K-12 School Funding Formula
Community Colleges: Revised Budget Increases Reserve Withdrawals for Community Colleges Funding
CSU/UC: Revised Proposal Maintains Deferrals for the CSU and UC Systems
Student Financial Aid: May Revision Abandons Commitments to Expand Student Financial Aid

Justice System

State Corrections: May Revision Calls for Deactivating Prison Housing Units, but Not Prison Closures
Retail Theft: Revised Budget Continues to Provide Over $100 Million to Address Retail Theft
Proposition 47 Investments: Revised Budget Estimates Proposition 47 Savings of $95 Million for Local Investments

Workforce & Climate Change

Other/General Workforce: Governor Proposes Additional Cuts to Several Workforce Programs
Climate Change: Revised Budget Proposes Further Cuts to Prior Environment Commitments

virtual event

How does the governor’s administration navigate and prioritize spending in the face of a challenging fiscal landscape?

Join us for this free, virtual event on May 22.

Budget Overview

Revised Budget Projects Moderate Job and Wage Growth

The administration’s economic outlook projects trends in major economic indicators that affect state tax collections and revenues in the budget. The revised outlook projects steady, but slowing national economic growth into next year, with California job gains expected to remain relatively weak through 2025. The number of nonfarm jobs in the state is forecast to increase by just 0.1% in 2024 and 0.4% in 2025, following a stronger increase of 0.9% in 2023 and 1.5% in 2019, just before the pandemic. California’s unemployment rate is projected to remain relatively higher in the near term as well: 5.2% in 2024 and 5.3% in 2025, up from 4.7% in 2023 and 4.1% in 2019. Wages and incomes are also expected to grow more slowly this year and next than just prior to and coming out of the pandemic downturn. The revised budget does not project a recession in the near term, but does note that if inflation remains elevated, the Federal Reserve could maintain higher interest rates which could slow economic activity by more than projected. 

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 with low incomes, who count on programs and services funded by the budget. In March 2024, the majority of California households with incomes under $25,000 (55%) reported having difficulty paying for basic needs like food, housing, and medical expenses, according to the most recent US Census Pulse survey. Black, Latinx, and other Californians of color, as well as households with children were more likely to struggle paying for basic expenses. The Census data from March also show that 42% of Black households with children and 32% of Latinx households with children did not have enough to eat, compared to 15% of white households with children. Among all households with children, about one-quarter (24%) had insufficient food. In addition, the latest Census data show that California continues to have the highest poverty rate of the 50 states based on the Supplemental Poverty Measure, which provides a more accurate picture of poverty by accounting for differences in the cost of housing across communities. Housing costs in California typically exceed costs in the rest of the nation, and rents have risen sharply in many parts of the state in recent years making it difficult for Californians with low incomes to afford housing.

Revised Budget Reflects Additional $12.5 Billion Downgrade in Revenue Outlook

The governor’s revised proposal is based on an updated revenue estimate for the three-year budget window spanning fiscal years 2022-23 through 2024-25. After lower-than-expected tax collections since the governor’s January proposal, the administration now expects General Fund revenues to be about $12.5 billion lower over that window than the January estimate. This is before taking into account loans and transfers, the governor’s revenue proposals, and other budget solutions (see Tax Proposals section).

The administration continues to have a more optimistic revenue outlook than the Legislative Analyst’s Office, which recently projected that the three-year total of the “Big Three” General Fund revenues sources — personal income taxes, corporate taxes, and sales taxes, which together make up the majority of General Fund revenues — could be around $19 billion lower than the governor’s January projection.

After accounting for automatic spending changes resulting from the lower revenue estimate, the governor estimates that the downgraded revenue outlook results in a $7 billion addition to the three-year state deficit the governor identified in January. 

The administration expects state revenue growth to generally return to the pre-pandemic pattern after the dramatic spike in revenues during the pandemic as the stock market surged and then subsequently corrected.

Modified Tax Proposals Include Temporary Business Tax Break Limitations

In January, the governor proposed a modest package of revenue solutions that included limiting the extent to which businesses can use prior-year losses to offset their taxable profits (“Net Operating Loss carryforwards”), eliminating oil and gas tax subsidies, and other minor tax changes. These revenue proposals made up less than 1% of the total budget solutions proposed in January.

The May Revision modifies the January revenue-related proposals by:

While temporary limitations on businesses’ ability to reduce their state income taxes help to address the deficit in the short-term, the governor’s revised proposal does little to increase state revenues on an ongoing basis and misses key opportunities to make the state’s tax system more fair. Policymakers should consider permanent limitations on business tax credits — as some states already do — to ensure that businesses are not paying next to nothing in state income taxes when they turn large profits. State leaders should also explore other options to permanently increase state revenues by making the corporate tax system more fair and eliminating or reforming other costly and inequitable tax breaks, which are not regularly considered as part of the budget process.

May Revision Includes Withdrawal of Reserve Funds, Proposes New Fund to House “Excess Revenue”

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 Prop. 98 section). In order to access the funds in the BSA and PSSSA, the governor must declare a budget emergency — an action that is not included in the May Revision or in the early budget action agreed to by the governor and Legislature in April, but will be necessary to access these funds.

The BSA and the PSSSA are not California’s only reserve funds. The 2018-19 budget agreement created the Safety Net Reserve Fund, which holds funds intended 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 current-year (2023-24) budget, enacted in mid-2023, projected $22.3 billion in the BSA; $10.8 billion in the PSSSA; $900 million in the Safety Net Reserve; and $3.8 billion in the SFEU. However, revenue adjustments in the current year result in updated 2023-24 projections in the governor’s proposed budget — $22.6 billion in the BSA; $2.6 billion in the PSSSA; $900 million in the Safety Net Reserve; and a shortfall of $843 million in the SFEU, which fluctuates throughout the year based on changes in revenues.

In April 2024, the governor and legislative leaders agreed to an early action budget package to partially address the state’s budget shortfall that included drawing down $12 billion from the BSA, a proposal that was also included in the governor’s January budget proposal.

The May Revision:

  • Includes the $12 billion withdrawal from the BSA, but spreads the withdrawal over the next two fiscal years — utilizing only $3.1 billion in 2024-25 and shifting $8.9 billion to 2025-26. 
  • Withdraws all $900 million from the Safety Net Reserve, despite also proposing significant cuts to the CalWORKs program, a program the reserve is designed to protect (see CalWORKs section).
  • Withdraws $5.8 billion from the PSSSA in 2023-24 and the remaining $2.6 billion in 2024-25.
  • Projects a 2024-25 year-end SFEU balance of $3.4 billion.

In total, the May Revision proposes to withdraw less from the state’s rainy day funds for 2024-25 than the governor’s January proposal, despite the fact that the administration projects that the budget shortfall has increased since January. Taking into account the remaining reserves in the BSA and the SFEU, the governor’s May Revision projects total remaining reserves of $22.9 billion at the end of 2024-25, compared to $18.4 billion in the governor’s January proposal. 

Given that the administration’s approach to resolving the state budget shortfall includes an array of harmful cuts to vital programs and services that help Californians with low incomes, communities of color, and Californians with disabilities, state leaders appear to have additional room to responsibly draw upon reserves to protect those programs and also leave funds available to address future fiscal uncertainties.

New Fund to Capture “Excess Revenue”

The May Revision also signaled the administration’s intent to enact legislation to enable state leaders to save more during future upswings in revenue by requiring the state to set aside a portion of anticipated “surplus” funds — funds that exceed a yet-to-be-determined standard for historical trends. The administration notes that the funds would not be able to be committed until revenues have been realized. 

While the specifics of the governor’s proposal are not yet available, any efforts to set aside additional funds would likely interact with other constitutional requirements that affect state spending and reserves, including Prop. 4 (1979; the “Gann Limit”), Prop. 98 (1988), and Prop. 2 (2014). For instance, the administration notes that amendments would be needed to Prop. 2 to allow for increased deposits to the BSA. Any amendments to the constitutional provisions, however, would need to be approved by California voters.

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

Governor Upholds Medi-Cal Expansion, Amends MCO Tax, Proposes Harmful Cuts

Access to health care is necessary for everyone to be healthy and thrive. About 14.5 million Californians with modest incomes — nearly half of whom are Latinx — are projected to receive free or low-cost health care through Medi-Cal (California’s Medicaid program) in 2024-25. Another 1.8 million Californians purchase health coverage through Covered California, the state’s health insurance marketplace. 

The May Revision maintains recent Medi-Cal expansions, but pulls back on other health care investments that were established in prior years. Specifically, the revised budget:

The May Revise also amends the Managed Care Organization (MCO) tax revenue and expenditure proposal. The MCO tax is a provider tax imposed by states on health care services that essentially reduces, or offsets, state General Fund spending on Medi-Cal. The federal government approved the initial MCO tax proposal last year. In January, the administration proposed to increase the MCO tax and the May Revision proposes an additional amendment to the MCO tax to include health plan Medicare revenue, resulting in an additional $689.9 million in reduced General Fund costs in 2024-25, $950 million in 2025-26, and $1.3 billion in 2026-27. These changes would be subject to federal approval. Overall, the May Revision includes $9.7 billion in MCO tax funds over multiple years to support the Medi-Cal program. However, rather than using $6.7 billion of this amount to continue Medi-Cal provider rate increases, as originally planned, these funds will be used to offset General Fund spending. 

The May Revise does protect some health care investments that were established in prior years. Specifically, the budget:

Lastly, the May Revision includes directed payments to children’s hospitals and public hospitals. This includes an annual allocation of $230 million to support children’s hospitals, with half of these funds provided by the federal government and the remaining half sourced from the Medi-Cal Provider Payment Reserve Fund. 

Revised Budget Severely Cuts Health Care Workforce Development

Access to health care services is important for everyone’s health and well-being. The state’s workforce must meet the needs of Californians to achieve equitable access to timely and culturally competent health services. While state policymakers have made considerable investments in recent years to bolster the health workforce, investments in various health workforce areas still fall short. 

Despite the clear need to invest in the health workforce, the May Revision cuts over $1 billion over multiple years. This includes:

The May Revision also modifies previous plans to enhance Medi-Cal provider participation under the Managed Care Organization (MCO) tax proposal. While the revised budget maintains $727 million to increase provider rates for primary care, maternity care (including doulas), and non-specialty mental health services, it reallocates $6.7 billion previously intended for other health areas, including primary and specialty care in Medi-Cal, abortion and family planning access, clinics, and the Medi-Cal workforce pool. This redirection of funds towards existing Medi-Cal services is sensible in a budget deficit, but it raises concerns about the impact on timely access to health care services.

The health care workforce and access to health care services are intrinsically linked. If people cannot find a health care provider in their area or face extended wait times for an appointment, they do not have meaningful access to health care. State policymakers must continue to build a health care workforce that not only meets the needs of Californians but also mirrors the state’s diverse population in terms of race, ethnicity, sability, gender identity, and sexual orientation. Doing so will require sustained, ongoing investments, not cuts.

Behavioral Health Initiatives Mostly Sustained, But New Cuts Proposed

Millions of Californians who cope with behavioral health conditions — mental illness or substance use disorders — rely on services and supports that are primarily provided by California’s 58 counties. Improving California’s behavioral health system is critical to ensuring access to these services for all Californians, regardless of race, age, gender identity, sexual orientation, or county of residence. 

In recent years, state policymakers have launched various initiatives to transform California’s behavioral health system with the goal of improving access. Proposition 1, the most recent of these initiatives, was approved earlier this year. Prop. 1 is a two-part measure that 1) amends California’s Mental Health Services Act and 2) creates a $6.38 billion general obligation bond to fund behavioral health treatment and residential facilities as well as supportive housing for veterans and Californians with behavioral health needs.

The May Revise includes some initial funding to begin Prop. 1 implementation, including:

In the governor’s January budget proposal and the revised budget proposal, the administration maintains funding to continue behavioral health initiatives that state leaders launched in recent years. For instance, the revised budget sustains the Behavioral Health Community-Based Organized Networks of Equitable Care and Treatment (BH-CONNECT) Demonstration, which aims to improve mental health services for Medi-Cal members. The administration assumes that implementation of BH-CONNECT will begin on January 1, 2025. Major reforms to the Medi-Cal program as well as the level of federal funding provided must be negotiated with the federal government through the Medicaid waiver process. As such, implementation will depend on the availability of funding and federal approval.

However, the revised budget also proposes a series of cuts and delays to other behavioral health initiatives. Specifically, the revised budget:

Investing in the state’s behavioral health system is crucial for supporting Californians who are coping with mental health conditions or substance use disorders. State leaders should continue to invest in the behavioral health system and address the behavioral health workforce shortage. Policymakers can also invest in efforts to make sure that the behavioral health workforce better reflects the diversity of all Californians, including their gender identities and sexual orientations.

Cuts to Public Health Leave Californians Vulnerable to Future Threats

Everyone should have the opportunity to be healthy and thrive. The California Department of Public Health as well as local public health departments are vital in protecting and promoting Californians’ health and well-being. From improving living conditions to promoting healthy lifestyles to responding to infectious disease emergencies, public health workers are essential.

Despite this important responsibility, funding has not kept pace with the cost of responding to ongoing and emerging health threats. Many Californians suffered during the COVID-19 pandemic due to the state’s lack of preparedness. Communities of color experienced higher rates of illness and death due to historic and ongoing structural racism that deny many communities the opportunity to be healthy and thrive. Structural racism continues to underscore the need to address the root cause of health disparities through public health initiatives. 

In an alarming move, the governor’s revised budget proposes significant cuts to public health investments that were established in previous years. Specifically, the May Revision eliminates $52.5 million in 2023-24 and $300 million ongoing General Fund thereafter to improve public health infrastructure at the state and local level. Under this revised spending plan, local health jurisdictions would no longer continue to receive a minimum base allocation to support workforce expansion, data collection and integration, and partnerships with health care delivery systems and community-based organizations. At the state level, these cuts will reduce the capacity to assess and respond to current and emerging public health threats and will weaken key functions such as emergency preparedness and public health communications.

These cuts to public health capacities are short-sighted and harmful. After years of underinvestment in public health, these dollars provided much-needed infrastructure support. Given that public health emergencies and climate change disasters often disproportionately impact people with low incomes and communities of color, these cuts undo progress to advance health equity. State leaders should ensure that counties and cities have the capacity to address ongoing and future public health threats.

Homelessness & Housing

May Revision Reduces Limited Funding for Homelessness

Having a place to call home is core to living with dignity and health. Yet homeless service providers served over 330,000 Californians experiencing homelessness last year, underscoring both the need and increased capacity of the state’s response systems. Homelessness providers and localities are serving more individuals and families than ever before partially due to previous one-time state funding investments that provided critical resources for homelessness prevention and resolution services. Despite this, the May Revision proposes no new resources and reduces previous allocations, effectively leaving no significant state funding to address homelessness in 2024-25 or beyond. 

The May Revision proposes to eliminate $260 million in supplemental grant funds for the  Homeless Housing, Assistance and Prevention (HHAP) Grant Program in 2025-26, but maintains the last round of funding in 2023-24. HHAP is critical as it provides local jurisdictions with flexible funds to address homelessness in their communities in a variety of ways, ranging from rental and operating subsidies to acquiring shelter, interim and permanent housing beds, and street outreach, among other uses. The May Revision also changes previously proposed funding delays into funding cuts for various homelessness programs that serve diverse populations.

These funding reductions include:

Also notable is the increased reduction of $450.7 million one-time from the last round of the Behavioral Health Continuum Infrastructure Program (BHCIP), leaving $30 million one-time General Fund in 2024-25. This program provides competitive grants to expand the community continuum of behavioral health treatment resources ranging from wellness centers to psychiatric care facilities. BHCIP will be receiving $4.4 billion in bond funds through Proposition 1, which voters approved in March 2024. The Department of Health Care Services is anticipated to open funding applications this summer and begin granting competitive awards by the fall (see Behavioral Health section). Prop 1. also restructures funds from the Mental Health Services Act, which exists separately from the state budget. It now requires counties to redirect 30% of these funds for housing interventions for people experiencing or at risk of homelessness with behavioral health conditions. However, these funds are inadequate to address the overarching need for state investments, as they focus solely on a specific subset of unhoused Californians.

May Revision Proposes Deeper Cuts for Affordable Housing

All Californians deserve a safe, stable, and affordable place to call home. However, many are blocked from this opportunity due to California’s affordable housing shortage and accompanying high housing costs. Renters, people with low incomes, Black and Latinx Californians, and undocumented Californians are especially likely to struggle to afford their homes. Yet despite noting California’s serious housing affordability challenges, the May Revision proposes deeper funding reductions and scarce new investments to affordable housing programs.

The administration now proposes $1.7 billion in General Fund reductions for various programs that support affordable housing development and homeownership. The May Revision reductions build on those in the January proposed budget. These include:

  • An additional reduction of $236.5 million General Fund for the Foreclosure Intervention Housing Preservation Program in 2023-24, bringing the total reduction to $474 million, which will eliminate the program.
  • An additional reduction of $75 million General Fund for the Multifamily Housing Program, bringing the total reduction to $325 million General Fund, eliminating state funding in 2023-24.
  • A newly proposed reduction of $127.5 million General Fund for the Adaptive Reuse Program, with $87.5 million from the 2023 Budget Act and $40 million from the 2022 Budget Act, which will eliminate the program. 
  • An additional reduction of $35 million General Fund for the Infill Infrastructure Grant Program, with $25 million from 2023 Budget Act and $10 million from the 2022 Budget Act, eliminating state funding in 2023-24.
  • An additional reduction of $26.3 million General Fund for the Veterans Housing and Homelessness Prevention Program from the 2022 Budget Act. The January proposed budget already fully reduced allocated state funds for this program in 2023-24.

The May Revision does reinstate an additional $500 million for state Low Income Housing Tax Credits – as has been done since 2019 – which help promote and finance affordable housing development. The administration also highlights Proposition 1, approved by voters in March, as providing some funding for supportive housing programs. Prop. 1 provides roughly $2 billion in bond funds for the development of permanent supportive housing units specifically for Californians experiencing or at risk of homelessness with behavioral health needs (see Homelessness and Behavioral Health sections). Over half of these funds are designated for veterans. The Department of Housing and Community Development is anticipated to open applications for this funding at the end of 2024. However, these funds are specifically for supportive housing units and fall short in providing the diverse critical investments needed to continue meaningful, affordable housing development in California.

state budget terms defined

What’s the difference between a trailer bill and policy bill? A deficit and an operating deficit? And what exactly is a “Budget Bill Jr.?” Our Glossary of State Budget Terms answers that and more.

Economic Security

May Revision Proposes Alarming Cuts to Vital Safety Nets

While California has made significant investments in its social safety net in recent years, millions of people in communities across the state are still struggling to make ends meet as the cost of living continues to outpace incomes. Poverty, particularly among children and people of color, is on the rise. Despite this, the governor’s proposed budget includes very concerning cuts to vital safety net programs that may have devastating consequences for California families with the greatest needs. Cuts to the Department of Social Services, which administers the state’s safety net programs, total nearly $2 billion in the 2024-2025 fiscal year alone. These cuts target key investments in CalWORKs, food assistance, and child care. The budget proposal outright eliminates several critical support services for CalWORKs families, significantly reduces funding for program administration, and drains the dedicated reserves that were designed to protect the program from cuts.

Additionally, the proposal delays a long-awaited program expansion of food assistance to undocumented older adults and defunds a pilot to increase CalFresh benefits. In delaying and eliminating these vital services, which were small stepping stones to larger expansions that would close gaps in food insecurity across the state, the proposal would take California a step backward. In the child care space, the governor indefinitely delays his promised slot expansion despite the growing unmet need. Other cuts in this space would affect programs that serve foster youth and people with disabilities. 

California’s future largely depends on children whose entire lives will be shaped by the extent to which our state invests in their education, health, and well-being. But children cannot thrive unless their families thrive. Despite the budget shortfall, California’s leaders have a responsibility to ensure that our state’s children and families have the opportunity to reach their full potential.

Revised Budget Maintains Tax Credits for Californians with Low Incomes

California’s Earned Income Tax Credit (CalEITC), Young Child Tax Credit, and Foster Youth Tax Credit are refundable state income tax credits that provide tax refunds or reductions in state taxes owed to millions of Californians with low incomes, boosting their incomes and helping them to pay for basic needs like food. These credits also help to promote racial and gender equity by targeting cash to Californians of color, immigrants, and women who are frequently blocked from economic opportunities and forced into low-paying jobs that fail to provide economic security.

The administration maintains these tax credits in the revised budget while also continuing to cut funding for free tax preparation assistance, education, and outreach,  in half to $10 million in 2024-25, as proposed in January. These funds support community based organizations (CBOs) in their efforts to educate community members about state and federal refundable tax credits, connect eligible tax filers to free tax preparation services and assist tax filers in applying for or renewing Individual Taxpayer Identification Numbers, which some Californians must have in order to claim tax credits. Cutting this funding will reduce the capacity of CBOs to provide these services.

Revised Budget Does Not Implement Workers’ Tax Credit Slated for 2024

The 2022-23 budget included a new refundable tax credit for workers slated to become available in tax year 2024 if the Department of Finance determined that sufficient General Fund resources were available to support it. This credit was intended to help cover the cost of being a member of a labor union, particularly among workers with lower incomes who are typically excluded from an existing tax deduction for certain business expenses, including union dues. The administration does not include this new tax credit in the revised 2024-25 budget given the multi-year budget shortfall.

May Revision Proposes Additional Cuts to Critical CalWORKs Support Services

The California Work Opportunity and Responsibility to Kids (CalWORKs) program is a critical 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. The governor’s May Revision proposes deeply concerning cuts to CalWORKs administrative and program funding in addition to the significant cuts proposed in January.

The newly proposed cuts include:

  • A one-time reduction of $272 million in 2024-25 for employment services under the single allocation funding.
  • An ongoing reduction of $126.6 million for Mental Health and Substance Abuse Services, effectively eliminating this service. 
  • An ongoing reduction of $47.1 million for the Home Visiting Program, which is designed to support positive health, development, and well-being of CalWORKs families with children under 2.

This amounts to a total cut of $445.7 million. Adding on to the cuts proposed in January, which totaled about $293 million in FY 24-25, this brings the total to about $739 million in cuts to CalWORKs, two-thirds of which would be ongoing. For many years, California has led the way in expanding CalWORKs support services, recognizing families have diverse needs and often need additional support to address barriers to work and improve their well-being. Taking programs away that offer mental health support, crisis intervention (Family Stabilization Program), and parenting support (Home Visiting Program), which research has shown can reduce or prevent the effects of adverse experiences for children, could jeopardize families’ ability to meet all program requirements and maintain access to their grants. Families not meeting strict program requirements will be at risk of punitive sanctions, which will only push them deeper into poverty. 

In addition to the proposed cuts, the governor’s budget does not include funding to redirect collected child support payments from the state back to former CalWORKs parents. For formerly assisted families, outstanding child support debt that is collected does not go to the families but rather goes to the state, county, and federal governments as “reimbursement” for the costs associated with the CalWORKs program.  Under this change, which was supposed to go into effect in April 2024, these families would have received an estimated annual total pass-through of $187 million annually.

Additionally, the governor proposes drawing down the full $900 million in the Safety Net Reserve, which was created to maintain existing CalWORKs and Medi-Cal benefits and services during an economic downturn (see Reserves section). While the governor does not propose cutting cash grants, given the projections of a sustained deficit in upcoming years, fully drawing down the reserve will leave CalWORKs vulnerable to additional cuts, similar to what occurred during the Great Recession. Closing the budget shortfall at the expense of families with low incomes is a short-sighted approach that could have detrimental effects on California’s economy and families facing the greatest needs.

Governor Proposes Cuts and Delays to Previous Food Assistance Commitments

All Californians should be able to put enough food on the table without having to go without other basic needs. But about 1 in 11 California households — and 1 in 8 California households with children — sometimes or often didn’t have enough to eat in March 2024, according to recent US Census Household Pulse data. In recent years, households have been hit with both rising food prices as well as the expiration of enhanced pandemic-era food benefits

CalFresh — California’s version of the federally funded Supplemental Nutrition Assistance Program (SNAP) — provides modest food assistance benefits to about 5.4 million Californians. The California Food Assistance Program (CFAP) is a state-funded program providing food benefits to certain non-citizens who are excluded from receiving federal  benefits, but undocumented immigrants are still excluded from CFAP benefits. The 2021-22 budget agreement included a plan to expand CFAP to Californians aged 55 and older who are excluded solely due to their immigration status. The expansion is currently set to begin in October 2025.

While the governor’s January budget proposal generally maintained prior commitments to  improve and expand the state’s food assistance programs, the May Revision proposes cuts and delays that would reverse or pause recent progress, including:

Additionally, the budget does not include funding to implement Cal Grant reform, which would allow more college students to access CalFresh benefits (see Financial Aid section). The 2022 budget included a plan for Cal Grant reform, but it was subject to sufficient funds being available in 2024, so this was one of several “trigger” proposals included 2022 that will not be moving forward this year.

Finally, the budget includes $63 million in additional funding to implement the universal school meals program to account for an expected increase in the number of meals to be provided and a cost-of-living increase (see K-12 Education section). The $63 million is in addition to the increase included in the January proposal.

Governor Maintains Temporary Rate Increase, Pauses Slot Expansion

Thousands of families in California rely on subsidized child care and development programs administered by the California Department of Social Services (CDSS) as a critical resource for supporting their families to grow and thrive. While the state has made improvements to California’s child care system — most recently through reforming family fees and committing to an alternative methodology for child care provider reimbursements — the system is still falling short for many families and child care providers. For example, as of 2022, only one in nine children eligible for subsidized child care received services, despite growing demand. Moreover, the state released data this year showing that 73% of family child care providers do not pay themselves a salary. The administration therefore has an opportunity to advance progress toward creating an equitable child care system that meets the needs of all families and reflects the integral role of child care providers.

The governor’s revised budget:

Governor Protects SSI/SSP but Cuts Key Services for People with Disabilities

All Californians should be included, supported, and treated with dignity in their communities, regardless of disability status. In California, people with disabilities can access several essential programs and services to manage their needs. The governor’s revised budget maintains a recent increase to the largest cash assistance program serving low-income Californians with disabilities, but builds on January’s proposed cuts and reduces support for key programs serving this population.

Specifically, the governor’s budget:

The governor’s January proposal included:

The May Revision maintains these delays in funding and also:

Immigrants are an integral part of California’s communities. They are not just part of the state’s mighty economic engine as taxpayers, entrepreneurs, and members of the workforce — they enrich our cultural identity as the Golden State. They are students, teachers, artists, chefs, religious leaders, colleagues, neighbors, and family members. 

California has the largest share of immigrant residents of any state. Over half of all California workers are immigrants or children of immigrants, and nearly 2 million Californians are undocumented, according to recent estimates.

State leaders have made notable progress in recent years working toward a California for all, where all people have access to economic opportunity and essential services, regardless of immigration status. Extending full-scope Medi-Cal eligibility to undocumented Californians is one significant example of this, and the governor’s May Revision maintains the final and most recent step in this expansion, extending coverage to adults ages 26 to 49. However, the revised budget takes a step backwards by eliminating or delaying other vital services for undocumented Californians that other Californians can access. Specifically, the revised budget:

The revised budget also maintains the governor’s January budget proposal to cut immigration legal services, which are a lifeline for immigrant families. Specifically, the May Revision:

  • Continues to permanently cut funding for the Temporary Protected Status (TPS) Services program, eliminating $10 million General Fund in 2023-24 and each year thereafter, zeroing out all resources for this program. 
  • Continues to permanently cut funding for the California State University Legal Services program by $5.2 million General Fund in 2023-24 and each year thereafter.

Cutting support for immigrant legal services is harmful. These services are crucial for helping immigrants stabilize their lives and remain in their communities. Immigration legal services can help put immigrants on a pathway to stability, particularly for those without status. Without access to legal services, immigrants can face greater risks of deportation and family separation, which can lead to financial hardship for families and adverse health outcomes. Given that newly arriving immigrants have the potential to grow the economy and contribute to state and local coffers, supporting them is a strategic investment in our collective future. 

The governor’s May Revision also reduces $29 million for the Rapid Response program in 2024-25, which helps sustain humanitarian support to individuals and families seeking safety at the California-Mexico border in partnership with local providers. This reversion in funds comes out of the $79.4 million General Fund reappropriated for the Rapid Response program from the 2021-22 and 2022-23 budget acts to 2023-24 as part of the early action budget deal approved by policymakers in April. The revised budget proposes no additional state funding for this program in 2024-25 despite the glaring need for continued investment

Eliminating and delaying vital services to Californians simply due to their immigration status would have a significant negative impact on immigrant communities and our collective prosperity and is a short-sighted approach to closing the state’s budget shortfall.

Governor Does Not Provide Needed Support to Domestic 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, and non-binary Californians, and some women of color are most likely to experience this type of violence. 

Domestic and sexual violence prevention programs are proven ways to stop the violence from occurring in the first place by taking a proactive approach and seeking to shift culture on racial and gender inequities. Since 2018, state policymakers have provided small, one-time grants for prevention programs, administered by the California Governor’s Office of Emergency Services. Besides funding for prevention services, the state also receives federal funding through the Victims of Crime Act (VOCA) to help provide essential services to survivors of crime, including survivors of domestic violence. These funds help provide survivors with critical services like emergency shelter, counseling, and financial assistance. 

However, cuts to VOCA at the federal level are resulting in roughly a 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 last round of prevention grants will run out at the end of 2024. Prevention efforts take time, and organizations doing this critical work cannot commit to long term programming without permanent, ongoing funding.

In the May Revision, the governor:

While the governor has failed to include funding to support survivors of domestic and sexual violence among other crimes, a bipartisan group of Assemblymembers have issued an emergency budget request to address the VOCA funding shortfalls, recognizing the importance of protecting the state’s most vulnerable individuals. 

GUIDE TO THE STATE BUDGET PROCESS

See our report Guide to the California State Budget Process to learn more about the state budget and budget process.

Education

Transitional Kindergarten Expansion Continues While Facilities are Cut

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. TK serves 4-year-olds, and eligibility is based on age alone in public schools and is not dependent on family income. Given the overlap with the child care and development programs administered through the California Department of Social Services, CSPP is included in recent family fee and rate reform wins (see Child Care section). However, as Universal TK continues to roll out and CDSS child care and development programs face cuts and delays, the administration has the opportunity to ensure that all early learning and care programs have the resources they need to prioritize family needs and early educator well-being. 

The governor’s revised budget:

K-14 Education’s Minimum Funding Level Drops Due to Lower Revenue Estimates

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 governor’s May Revision assumes a 2024-25 Prop. 98 funding level of $109.1 billion for K-14 education. Because the Prop. 98 guarantee tends to reflect changes in state General Fund revenues and estimates of General Fund revenue in the May Revision are lower than estimates in the January budget proposal, the governor’s revised spending plan assumes a decrease in the Prop. 98 guarantee in 2023-24 and 2022-23. Specifically, the May Revision assumes a 2023-24 Prop. 98 funding level of $102.6 billion, $3 billion lower than the $105.6 billion funding level assumed in the governor’s January budget proposal. The 2022-23 Prop. 98 funding level of $97.5 billion is roughly $800 million below the $98.3 billion funding level assumed in January, but it is $9.8 billion below the level assumed in the 2023-24 budget agreement – the largest decline in an estimated Prop. 98 guarantee for a prior-year since Prop. 98 was adopted. 

To address this unprecedented drop in the 2022-23 Prop. 98 guarantee, the governor’s May Revision proposes using the same complex accounting maneuver as the one he proposed in January: the revised budget plan attributes $8.8 billion in reduced Prop. 98 spending to the 2022-23 fiscal year, which would help reduce state General Fund spending to the lower revised Prop. 98 minimum funding level. However, the revised spending plan would not take away the $8.8 billion from K-12 schools and community colleges — dollars they received for 2022-23 that have largely been spent. Instead, the governor proposes to shift the $8.8 billion in K-14 education costs — on paper — from 2022-23 to later fiscal years and pay for these delayed expenses using non-Prop. 98 funds. 

The May Revision also reflects withdrawals of $5.8 billion in 2023-24 and $2.6 billion in 2024-25 from the Public School System Stabilization Account (PSSSA) – the state budget reserve for K-12 schools and community colleges (see Reserves section). Because the revised 2023-24 PSSSA balance of $2.6 billion is not projected to exceed 3% of the total K-12 share of the Prop. 98 minimum funding level in 2023-24, current law would allow K-12 school districts to maintain more than 10% of their budgets in local reserves in 2024-25.

Budget Proposal Relies on Reserves to Support K-12 School Funding Formula

The largest share of Prop. 98 funding 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. The governor’s May Revision maintains the proposal made in his January budget to withdraw funds from the Public School System Stabilization Account (PSSSA) – the state budget reserve for K-12 schools and community colleges – to support the Local Control Funding Formula (LCFF), the state’s main K-12 education funding formula. Specifically, the governor’s revised spending plan:

Revised Budget Increases Reserve Withdrawals for Community Colleges Funding

A portion of Proposition 98 funding provides support for California’s 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 2024-25 revised spending plan increases withdrawal amounts from the Prop. 98 reserve for CCC apportionments and provides additional resources to fund an increase in the cost-of-living adjustment (COLA). 

Specifically, the governor’s revised budget includes:

Revised Proposal Maintains Deferrals for the CSU and UC Systems

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 460,000 students at 23 campuses, and the UC provides undergraduate, graduate, and professional education to more than 290,000 students across 10 campuses. 

The governor’s revised budget includes additional cuts to higher education and maintains funding deferrals for both of the state’s public university systems. 

The January proposal included:

The May Revision maintains these proposals and also include the following cuts in higher education:

  • An ongoing reduction of nearly $14 million General Fund for the Proposition 56 General Fund backfill that supports Graduate Medical Education programs at the UC. 
  • An ongoing cut of $13 million General Fund for the UC Labor Centers. This funding provides support for economic research and labor education across various UC campuses. 
  • A reduction of $485 million General Fund of unspent one-time dollars for the Learning-Aligned Employment Program. The program provides resources for students at public colleges and universities to earn money while learning in a field related to their educational and career interests (see Workforce section).
  • A $60 million General Fund cut for the Golden State Teacher Grant Program. This program provides awards to students in professional preparation programs and who are working toward a teaching credential. 

May Revision Abandons Commitments to Expand Student Financial Aid

The budget shortfall and proposed solutions significantly impacts access to financial aid opportunities for California students. The May Revision does not include funding for the anticipated reform to the Cal Grant program and reduces funding for the Middle Class Scholarship (MCS). 

Specifically, the revised spending plan:

Overall, these budget choices have consequences for college affordability, degree attainment, and overall student well-being. Students pursuing postsecondary education confront significant hardship to afford basic necessities, and they are often forced to make difficult decisions that impact their college experience and degree completion.

Justice System

May Revision Calls for Deactivating Prison Housing Units, but Not Prison Closures

More than 93,000 adults who have been 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 justice system reforms adopted since the late 2000s, including Proposition 47, which California voters passed with nearly 60% support in 2014. Despite this substantial progress, American Indian, Black, and Latinx Californians are disproportionately represented in state prisons — a racial disparity that reflects racist practices in the justice system as well as structural disadvantages faced by communities of color.

Among all incarcerated adults, most — about 90,000 — are housed in state prisons designed to hold roughly 75,500 people. This overcrowding equals 119% 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 3,000 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 Continues to Provide Over $100 Million to Address Retail Theft

Retail theft is defined in several ways in California law:

Retail theft rose following the isolation and social breakdown caused by the COVID-19 pandemic. In California, commercial burglary and robbery rates continued to exceed their pre-pandemic (2019) levels as of 2022, the most recent year for which statewide data are available. In contrast, California’s statewide shoplifting rate remains below the 2019 level despite a recent increase.

In January, Governor Newsom proposed to provide $119 million in 2024-25 to address organized retail theft and other crimes. This was the same amount of General Fund support provided in the current fiscal year (2023-24) despite the large budget shortfall the state is facing.

The May Revision modestly reduces the total funding level from $119 million to $115.4 million. This reflects a $3.6 million cut to the Vertical Prosecution Grant Program, which would see its funding reduced from $10 million to $6.4 million in 2024-25. The governor does not propose cuts in 2024-25 to other components of his organized retail theft package, which includes $85 million for local law enforcement agencies and $24 million for state-level task forces and prosecution teams.

Revised Budget Estimates Proposition 47 Savings of $95 Million for Local Investments

Overwhelmingly approved by voters in 2014, Prop. 47 reduced penalties for six nonviolent drug and property crimes from felonies to misdemeanors. Consequently, state prison generally is no longer a sentencing option for these crimes. Instead, individuals convicted of a Prop. 47 offense serve their sentence in county jail and/or receive probation.

By decreasing state-level incarceration, 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.

As of the 2023 Budget Act, the state has allocated roughly $720 million in savings attributable to Prop. 47 — funds that have been invested in local programs that support healing and keep communities safe. For example, a recent evaluation 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. Specifically, individuals enrolled in these programs had a recidivism rate of just 15.3% — two to three times lower than is typical for people who have served prison sentences (recidivism rates range from 35% to 45% for these individuals).

The May Revision estimates that Prop. 47 has generated an additional $94.8 million in state savings due to reduced state-level incarceration. These dollars will be allocated through the 2024 Budget Act, increasing Prop. 47’s total investment in California’s communities to more than $800 million since these savings were first allocated through the 2016 Budget Act.

Workforce & Climate Change

Governor Proposes Additional Cuts to Several Workforce Programs

The revised budget proposes to cut spending on several workforce development programs to help address the multi-year budget problem. (See Health Workforce section.) Specific cuts include:

In addition, the revised budget cuts $485 million General Fund in unspent one-time funds for the Learning-Aligned Employment Program in 2022-23. This program places eligible students at public colleges and universities in employment opportunities related to their area of study or career objectives. (See higher education sections.)

Revised Budget Proposes Further Cuts to Prior Environment Commitments

Californians across the state have increasingly seen the effects of climate change through devastating fires, droughts, and floods, but communities of color and low-income communities are often hit hardest by these catastrophes due to historical and ongoing displacement and underinvestment. Additionally, these communities are more likely to be exposed to environmental pollutants for the same reasons. 

Significant investments in climate resilience were made through recent years’ budgets. Most of the commitments were one-time investments intended to be made across several years, so there are significant unspent funds remaining. In January, the governor proposed budget solutions that included $2.9 billion in reductions and $1.9 billion in delays of climate investments committed in previous budget agreements. Several of these proposals were included, or partially included in the early action agreement between the governor and the Legislature.

The May Revision proposes around $1 billion in additional reductions to climate and environment programs for 2022-23 as well as further reductions to planned spending beyond the current budget window. Reductions are proposed in areas including but not limited to clean energy and transportation, water and drought resilience, and wildfire resilience.

Significant new reductions that may disproportionately impact low-income and under-resourced communities include:

Stay in the know.

Join our email list!


Why We Focus on the State Budget

Every year, California’s governor and Legislature adopt a state budget that provides a framework and funding for critical public services and systems — from child care and health care to housing and transportation to colleges and K-12 schools.

But the state budget is about more than dollars and cents. The budget expresses our values as well as our priorities for Californians and as a state. At its best, the budget should reflect our collective efforts to expand economic opportunities, promote well-being, and improve the lives of Californians who are denied the chance to share in our state’s wealth and who deserve the dignity and support to lead thriving lives.

State budget choices have an impact on all Californians. These decisions affect the quality of our schools and health care, the cost of a college education, families’ access to affordable child care and housing, the availability of services and financial support to help older adults age in place, and so much more.

Because the state budget touches so many services and our everyday lives, it is critical for Californians to understand and participate in the annual budget process to ensure that state leaders are making the strategic choices needed to allow every Californian — from different races, backgrounds, and places — to thrive and share in our state’s economic and social life.

This report sheds light on the state budget and the budget process with the goal of giving Californians the tools they need to effectively engage decision makers and advocate for fair and just policy choices.

Key Takeaways

The Bottom Line

  1. The state spending plan is about more than dollars and cents.
    • Crafting the budget provides an opportunity for Californians to express our values and priorities as a state.
  2. The state Constitution establishes the rules of the budget process.
    • Among other things, these rules allow lawmakers to approve spending with a simple majority vote, but require a two-thirds vote to increase taxes. Voters periodically revise the budget process by approving constitutional amendments.
  3. The governor has the lead role in the budget process.
    • Proposing a state budget for the upcoming fiscal year gives the governor the first word in each year’s budget deliberations.
    • The May Revision gives the governor another opportunity to set the budget and policy agenda for the state.
    • Veto power generally gives the governor the last word.
  4. The Legislature reviews and revises the governor’s proposals.
    • Lawmakers can alter the governor’s proposals and advance their own initiatives as they craft their version of the budget prior to negotiating an agreement with the governor.
  5. Budget decisions are made throughout the year.
    • The public has various opportunities for input during the budget process.
    • This includes writing letters of support or opposition, testifying at legislative hearings, and meeting with officials from the governor’s administration as well as with legislators and members of their staff.
    • In short, Californians have ample opportunity to stay engaged and involved in the budget process year-round.

Key Facts About California’s State Budget

The State Budget = State Funds + Federal Funds

Three Kinds of State Funds

Three kinds of state funds account for over two-thirds (68.4%) of California’s $454.7 billion budget for 2023-24, the fiscal year that began on July 1, 2023. Specifically:

  1. General Fund — The state General Fund accounts for revenues that are not designated for a specific purpose. Most state support for education, health and human services, and state prisons comes from the General Fund.
  2. Special Funds — Over 500 state special funds account for taxes, fees, and licenses that are designated for a specific purpose.
  3. Bond Funds — State bond funds account for the receipt and disbursement of general obligation (GO) bond proceeds.

Federal funds comprise the rest (31.6%) of the state’s 2023-24 budget.

The State Budget is a Local Budget

Dollars spent through the state budget go to individuals, communities, and institutions across California. Under the enacted 2023-24 state budget:

  • More than three-quarters of total spending (78.7%) flows as “local assistance” to K-12 public schools, community colleges, families enrolled in the CalWORKs welfare-to-work program, and other essential state services and systems that are operated locally.
  • Nearly one-fifth of total spending (19.6%) goes to 23 California State University campuses, 10 University of California campuses, over 30 state prisons, and other recipients of “state operations” dollars.
  • Less than 2% of total spending flows as “capital outlay” dollars, supporting infrastructure projects across California. (Local assistance and state operations dollars also fund infrastructure.)

State Funds Primarily Support Health and Human Services or Education

Under the enacted 2023-24 state budget:

  • 7 in 10 General Fund and special fund dollars support three categories of spending: health and human services (37.2%), K-12 education (25.4%), and higher education (7.4%).
  • 6% of General Fund and special fund dollars support corrections, primarily the state prison system.
  • The balance of these dollars supports other essential services (such as transportation and environmental protection) and institutions (such as the state’s court system).

Federal Funds Primarily Support Health and Human Services

Under the enacted 2023-24 state budget:

  • Three-quarters of federal dollars (74.6%) support health and human services programs.
  • 6% of federal dollars go to transportation programs.
  • The balance of federal dollars supports other essential services, including labor and workforce development, K-12 education, and higher education.

The State Budget is a Different Kind of Bill

Bills change state law, such as by creating programs, modifying eligibility for services, or raising or lowering taxes.

  • Most legislation moves through the Legislature’s policy bill process, which includes review by policy and appropriations committees.

The state budget is a bill. But unlike other bills, the “budget bill”:

  • Provides authority to spend money across an array of public services and systems for a single year.
  • Moves through the Legislature’s budget committees on its own timeline.
  • Moves with other bills that are needed to implement the policies assumed in the budget. These bills are known as “trailer bills.”

Terms & Definitions


The Constitutional Framework

The State Constitution Establishes the Rules of the Budget Process

The governor and legislators craft the state’s annual spending plan according to rules outlined in the state Constitution.

California voters periodically revise these rules by approving constitutional amendments that appear on the statewide ballot.

  • Proposals to amend the state Constitution can be placed on the ballot through a citizens’ initiative or by the Legislature.
  • A constitutional amendment takes effect if approved by a simple majority of voters.

Three Key Budget Deadlines

Two in the State Constitution (January 10 and June 15), One in State Law (May 14)



The governor must propose a budget for the upcoming fiscal year on or before January 10. The budget must be balanced: Estimated revenues (as determined by the governor) must meet or exceed the governor’s proposed spending.


The governor must release the May Revision on or before May 14.


The Legislature must pass a budget bill for the upcoming fiscal year by midnight on June 15. The budget bill must be balanced: Estimated General Fund revenues (as set Ωforth in the budget bill passed by the Legislature) must meet or exceed General Fund spending.

Proposition 25: Simple Majority Vote for Budget Bills and Trailer Bills

The budget package generally may be passed by a simple majority vote of each house of the Legislature.

  • Prop. 25 of 2010 allows lawmakers to pass, by a simple majority vote, budget bills as well as trailer bills that may take effect as soon as the governor signs them.
  • Under the rules of Prop. 25, trailer bills must (1) be listed in the budget bill and (2) contain an appropriation of any amount.
  • Even with Prop. 25, some types of trailer bills that could be included in a budget package will require a supermajority — generally two-thirds — vote of each house. This includes, for example, bills that would raise taxes or amend a state law that was approved by voters via a ballot initiative. However, most trailer bills in the budget package will need only a simple majority vote to pass.

Proposition 25: Penalties for a Late Budget

Lawmakers face penalties if they fail to pass the budget bill on or before June 15.

  • Prop. 25 requires lawmakers to permanently forfeit both their pay and their reimbursement for travel and living expenses for each day after June 15 that the budget bill is not passed and sent to the governor.
  • These penalties do not apply to budget-related bills, which do not have to be passed on or before June 15.

Proposition 26: Supermajority Vote for Tax Increases

Any tax increase requires a two-thirds vote of each house of the Legislature.

  • Under the state Constitution, “any change in state statute which results in any taxpayer paying a higher tax” requires a two-thirds vote of each house.
  • This standard was imposed by Prop. 26 of 2010. This measure expanded the definition of a tax increase and thus the scope of the two-thirds vote requirement, which was originally imposed by Prop. 13 of 1978.
  • Prior to Prop. 26, only bills changing state taxes “for the purpose of increasing revenues” required a two-thirds vote. Bills that increased some taxes but reduced others by an equal or larger amount could be passed by a simple majority vote of each house.

Proposition 26: Supermajority Vote for Tax Increases

Prop. 26 of 2010 also expanded the definition of a tax to include some fees.

  • Prior to Prop. 26, lawmakers could create or increase fees by a simple majority vote. These majority-vote fees included regulatory fees intended to address health, environmental, or other problems caused by various products, such as alcohol, oil, or hazardous materials.
  • Prop. 26 reclassified regulatory and certain other fees as taxes. As a result, a two-thirds vote of each house of the Legislature is now required for many charges that previously were considered fees and could be passed by a simple majority vote.

Additional Supermajority Vote Requirements

The state Constitution requires a two-thirds vote of each house of the Legislature in
order to:

  • Appropriate money from the General Fund, except for appropriations that are for public schools or that are included in the budget bill or in trailer bills.
  • Pass bills that take effect immediately (urgency statutes), except for the budget bill and trailer bills.
  • Place constitutional amendments or general obligation bond measures before the voters.
  • Override the governor’s veto of a bill or an item of appropriation.

A Bill Must Be Published for at Least 72 Hours Before the Legislature Can Act On It

Proposition 54 of 2016 requires bills to be distributed to legislators and published on the Internet, in their final form, at least 72 hours before being passed by the Legislature.

This rule applies to all bills, including the budget bill and other legislation included in the budget package.

This mandatory review period can be waived for a bill if:

  • The governor declares an emergency in response to a disaster or extreme peril, and
  • Two-thirds of legislators in the house considering the bill vote to waive the review period.

Proposition 98: A Funding Guarantee for K-12 Schools and Community Colleges

Prop. 98 of 1988 guarantees a minimum annual level of funding for K-14 education.

  • The amount of the guarantee is calculated each year based on one of three tests that apply under varying fiscal and economic conditions. Two of these tests include adjustments for changes in statewide K-12 attendance. Prop. 98 funding comes from the state General Fund and local property tax revenues.
  • The Legislature can suspend the guarantee for a single year by a two-thirds vote of each house and provide less funding. Following a suspension, the state must increase Prop. 98 funding over time to the level that it would have reached absent the suspension.
  • While the Legislature can provide more funding than Prop. 98 requires, the guarantee has generally served as a maximum funding level.

Proposition 2: Saving for a Rainy Day, Paying down Debt

Prop. 2 of 2014 revised the rules that apply to the Budget Stabilization Account (BSA) — the state’s constitutional rainy day fund — and also established a new requirement to pay down state budgetary debt.

  • The state is required to set aside 1.5% of General Fund revenues each year, plus additional dollars in years when tax revenues from capital gains are particularly strong.
  • Until 2029-30, half of the revenues go into the BSA and the other half must be used to pay down state budgetary debt, which includes unfunded pension liabilities. Starting in 2030-31, the entire annual transfer goes into the BSA.
  • State policymakers may suspend or reduce the BSA deposit and withdraw funds from the reserve, but only under limited circumstances that qualify as a “budget emergency.”

Proposition 2: A Budget Reserve for K-12 Education

Prop. 2 of 2014 also created a state budget reserve for K-12 schools and community colleges called the Public School System Stabilization Account (PSSSA).

  • Deposits come from state capital gains tax revenues in years when those revenues are particularly strong.
  • However, various conditions must be met before these dollars could be transferred to the PSSSA. For example, transfers could occur only in so-called “Test 1” years under Prop. 98, which have been rare.

Proposition 55: Potential New Funding for Medi-Cal from a Tax on the Wealthiest Californians

Prop. 55 of 2016 extends, through 2030, personal income tax rate increases on very high-income Californians and establishes a formula to boost funding for Medi-Cal, which provides health care services to Californians with low incomes.

  • Starting in 2018-19, General Fund revenues — including those raised by Prop. 55 — must first be used to fund (1) the annual Prop. 98 guarantee for K-12 schools and community colleges and (2) the cost of other services that were authorized as of January 1, 2016, as adjusted for population changes, federal mandates, and other factors.
  • If any Prop. 55 revenues remain after meeting these required expenditures, MediCal would receive 50% of this excess, up to a maximum of $2 billion in any fiscal year.
  • Prop. 55 has not yet resulted in any additional funding for Medi-Cal.

State Appropriations Limit (SAL): A Cap on Spending

Appropriations are subject to a limit established by Prop. 4 of 1979, as modified by later initiatives. This spending cap is known as the Gann Limit.

  • The SAL limits the amount of state tax proceeds that can be appropriated each year. This limit is adjusted annually for changes in population and per capita personal income.
  • Some appropriations from tax proceeds do not count toward the limit, including debt service and spending that is needed to comply with court or federal mandates.
  • Revenues that exceed the SAL over a two-year period are divided equally between Prop. 98 spending and taxpayer rebates. The state last exceeded the SAL in 2020-21 (but did not do so in the prior year).

State Mandates: Pay for Them or Suspend Them

The state must pay for or suspend mandates that it imposes on local
governments.

  • Prop. 4 of 1979 requires the state to reimburse local governments for costs related to a new program or a higher level of service that is mandated by the state.
  • Prop. 1A of 2004 expanded the definition of a mandate to include the transfer of
    financial responsibility from the state to local governments.
  • Prop. 1A also requires the state to suspend a mandate in any year in which local
    governments’ costs are not fully reimbursed.

What do the Governor and the Legislature Do?

The Governor

Approves, modifies, or rejects spending proposals prepared by state departments and agencies through an internal process coordinated by the DOF.

Proposes a spending plan for the state each January, introduced as the budget bill in the Legislature.

Updates and revises the proposed budget each May (the “May Revision”).

Signs or vetoes the bills included in the budget package.

Can veto all or part of individual appropriations (line items), but cannot increase any appropriations above the level approved by the Legislature.

The Legislature

Approves, modifies, or rejects the governor’s proposals.

Can add new spending or make other changes that substantially revise the governor’s proposals.

Needs a simple majority vote of each house to pass budget bills and most trailer bills.

Needs a two-thirds vote to pass certain other bills that may be part of the budget package, such as bills that increase taxes or propose constitutional amendments.

Needs a two-thirds vote of each house to override the governor’s veto of a bill or an appropriation.


What Happens When?

The State Budget Timeline

The state budget process is cyclical. Decisions are made throughout the year.


State Budget Resources

  • Department of Finance: The governor’s budget proposals and related documents (www.dof.ca.gov).
  • Legislative Analyst’s Office: Budget and policy analyses, budget recommendations, and historical budget data (www.lao.ca.gov).
  • Legislative Counsel: Bills and bill analyses, a free bill-tracking service, the state codes, and the state Constitution (www.leginfo.legislature.ca.gov).
  • State Assembly and Senate: Committee agendas and other publications, floor session and committee schedules, the annual legislative calendar, and live audio streaming of legislative proceedings (www.assembly.ca.gov and www.senate.ca.gov).

Stay in the know.

Join our email list!

key takeaway

Despite California’s efforts to expand preschool access, many children, particularly those from families with low incomes and children of color, are missing out on these crucial early learning opportunities. The complex early learning system makes it difficult for families to navigate and enroll their children.

Children and their families deserve early education opportunities that promote whole-child development and support overall family well-being. Preschool programs are an essential component in providing these experiences for 3- and 4-year-old children. While California has made significant strides in expanding access to preschool, thousands of preschool-age children still lack access to the state’s early learning programs. This is especially true for many children of color and children from families with low incomes who do not participate in any early learning program, whether it is in a preschool setting or in any other setting within California’s early learning system.

The early learning system is complex, and families are expected to navigate this system and make decisions on early learning options available in their communities. This report shares findings on the number of children served in the California State Preschool Program (CSPP) in the context of the mixed delivery system and equitable access to early learning.

What is the California State Preschool Program?

CSPP serves 3- and 4-year-old children from income-eligible families — children are eligible if their family’s income level is at or below 100% of State Median Income ($84,818 for a family of 2). The program offers part-day and full-day preschool to families who meet certain eligibility requirements — in addition to income, families must meet other requirements to access full-day preschool.1A 3- or 4-year-old child is eligible for full-day preschool if their family meets one additional requirement under the category “needs childcare.” This category includes whether the child is identified as being in danger of harm or neglect, or if the parent is in vocational training, is enrolled in an English language learner educational program, is employed or looking for employment, is seeking housing, or is incapacitated. California Education Code, title 1, sec. 8208 (d)(1). The California Department of Education (CDE) administers CSPP, including allocating funding to contractors.

At the local level, schools and colleges, nonprofits, and local governments offer the program. CSPP is part of California’s publicly funded mixed-delivery system that serves the early learning and child care needs of California families through several programs. In 2022, the entire system, including federally funded programs, served approximately 309,000 3- and 4-year-old children — most of these children are from families with low incomes.2Total enrollment is likely overestimated because families may participate in more than one program, and available data do not provide unduplicated numbers.

How many children have enrolled in CSPP over the years?

As shown in the chart below, enrollment for 3- and 4-year-old children in CSPP has not fully recovered after sharp declines in 2020. Since then, enrollment has steadily increased but still lags behind pre-pandemic numbers. From 2019 to 2022, the program served around 41,000 fewer 3- and 4-year-old children. This trend was particularly pronounced for 4-year-old children. After slightly recovering in 2021, the number of 4-year-olds in CSPP started to dip again while enrollment for 3-year-olds continued to increase — from 2021 to 2022, 4-year-old children in part-day programs experienced the largest drop. 

How many children could potentially be served by CSPP?

Data show a clear gap between the number of children eligible for CSPP and current enrollment levels. In 2022, the program enrolled only 17% of all 3- and 4-year-old children from income-eligible families. Specifically, more than 560,000 children were eligible for CSPP in 2022, but the program served only about 96,000 children. Of the number eligible, 469,000 (84%) were children of color. This gap is partially addressed by other preschool and child care programs serving 3- and 4-year-old children from low-income families. However, even after accounting for other programs, many children still do not benefit from any form of publicly funded early learning services.

What is the demand for CSPP?

Despite the gap in access to CSPP, the total number of available slots significantly exceeds demand. In fiscal year 2022-23, CSPP funding could have served about 211,000 children, but total program enrollment was less than half of the total capacity (100,080 children). The state has made investments to expand the program, such as increasing income eligibility thresholds, but demand is still significantly lower than it was prior to 2020. This means that dollars intended to provide access to preschool are not reaching those families who technically have a spot available to them.

Why might CSPP supply outpace demand?

While there is not enough information to fully understand why enrollment lags behind available spaces, some reports point to potential reasons such as:

  • workforce challenges that limit providers’ ability to staff classrooms;
  • the long-lasting impacts of the pandemic; 
  • 4-year-old children moving to Transitional Kindergarten (TK);
  • programs may not meet families’ needs (e.g., inconvenient hours or location); and
  • families facing access challenges, such as not having enough information about the program.

More research is needed to understand these challenges and target solutions, especially related to how families navigate the system and the factors that guide their decisions.

Implications

The findings presented in this report highlight key implications for policymakers, state agencies, and other early learning advocates. The trends in CSPP amplify continued efforts to expand access for families with the most need. Overall, failure to engage families to enroll in state preschool exacerbates ongoing disparities at the intersection of race and income. Additional implications include:

What can state leaders do to better support families with preschool-age children?

Strengthening CSPP requires policy changes and investments at the program and system level. The 2023-24 enacted budget included significant investments that will strengthen CSPP and other programs in the mixed delivery system, such as provider rate supplements and family fee reform.

State leaders can further strengthen CSPP by implementing changes that center families and enacting needed reforms to support the early learning workforce. Those include:

Increasing participation in preschool is crucial to promoting whole-child development and addressing deep inequities in outcomes later in a child’s life. California is making progress in creating a more robust mixed delivery system that works for families. However, there is still much more to be done to ensure children benefit from these investments. As state leaders consider changes to state preschool and the mixed delivery system, policy developments should be informed by those most impacted, namely, providers and caregivers.

  • 1
    A 3- or 4-year-old child is eligible for full-day preschool if their family meets one additional requirement under the category “needs childcare.” This category includes whether the child is identified as being in danger of harm or neglect, or if the parent is in vocational training, is enrolled in an English language learner educational program, is employed or looking for employment, is seeking housing, or is incapacitated. California Education Code, title 1, sec. 8208 (d)(1).
  • 2
    Total enrollment is likely overestimated because families may participate in more than one program, and available data do not provide unduplicated numbers.
  • 3
    Unused dollars could also be the result of overappropriations for a policy change.
  • 4
    Early Education Division – Opportunities for All Branch, UPK Mixed Delivery Quality and Access Report (February 9, 2024), 36, https://drive.google.com/file/d/1KJjCKg4RwLU7kRVcTwhao3oxbSVfc5Px/view.

Stay in the know.

Join our email list!

California’s Budget Reserves

California’s Constitution and state law govern when funds may be withdrawn from the state’s budget reserves, the amount that can be withdrawn, and how funds may be used. 

  • Established in the state Constitution: Budget Stabilization Account, Public School System Stabilization Account
  • Established in state law: Safety Net Reserve, Special Fund for Economic Uncertainties 
Budget Stabilization Account (BSA)
(aka Rainy Day Fund)
Public School System Stabilization Account (PSSSA)Safety Net ReserveSpecial Fund for Economic Uncertainties (SFEU)
Is the state required to make an annual deposit?YesNo
However, a deposit is required under a restricted set of circumstances.1For example, these circumstances include requirements that deposits only occur when capital gains tax revenues exceed a specific level of total General Fund proceeds of taxes and when growth in the state’s minimum funding guarantee for K-12 schools and community colleges is relatively strong.
NoNo
Can a required deposit be reduced or suspended — and by who?Yes
A required deposit can be reduced or suspended if the governor declares a budget emergency and the Legislature approves the reduction or suspension by a majority vote.
Yes
A required deposit can be reduced or suspended if the governor declares a budget emergency and the Legislature approves the reduction or suspension by a majority vote.
Not applicableNot applicable
When can funds be withdrawn?Funds may be withdrawn if the governor declares a budget emergency and the Legislature passes a bill, by majority vote, to withdraw funds.2These withdrawal rules apply to funds that are deposited into the BSA as required by Proposition 2 of 2014. State policymakers may also deposit funds into the BSA on top of Prop. 2 requirements, creating a “discretionary” balance within the reserve. The Legislative Analyst’s Office suggests that the Legislature can withdraw a discretionary balance at any time without a declaration of a budget emergency by the governor. Separate from this issue, funds must be withdrawn from the BSA — without the need for a declaration of a budget emergency — when updated revenue estimates indicate that a prior-year deposit was greater than required.Funds may be withdrawn if the governor declares a budget emergency and the Legislature passes a bill, by majority vote, to withdraw funds.3Funds must be withdrawn from the PSSSA — without the need for a declaration of a budget emergency — when the state’s minimum funding guarantee for K-12 schools and community colleges is less than the prior year’s funding level, adjusted for changes in student attendance and the cost of living, or when updated revenue estimates indicate that a prior-year deposit was greater than required.The Legislature may withdraw the funds at any time by majority vote.The Legislature may withdraw the funds at any time by majority vote.4Additionally, the Department of Finance may withdraw funds from the SFEU without legislative approval to cover the cost of state disaster response efforts upon an emergency proclamation by the governor.
Is there a limit on the amount of funds that can be withdrawn?Yes
The amount that can be
withdrawn is limited to the lower
of 1) the amount needed to
address the budget emergency
or 2) half of the funds in the BSA,
unless funds had been withdrawn
in the previous fiscal year, in
which case all of the funds
remaining in the BSA may be
withdrawn.
No5However, in any year when funds must be withdrawn from the PSSSA because the state’s minimum funding guarantee for K-12 schools and community colleges is less than the prior year’s funding level — adjusted for changes in student attendance and the cost of living — the required withdrawal is limited to the amount of that shortfall.NoNo
How can the funds be used by the state?Funds may be used for any purpose.Funds must be used to support K-12 schools and community colleges.Funds are intended to maintain existing CalWORKs and Medi-Cal benefits and services during an economic downturn, but may be used for any purpose if the Legislature so chooses.Funds may be used for any purpose.

Note: A ”budget emergency” that’s declared by the governor is defined as either: 1) the existence of ”conditions of disaster or of extreme peril to the safety of persons and property within the State, or parts thereof” as defined in Article XIII B, Section 3(c)(2) of the state Constitution; or 2) a determination by the governor that there are insufficient resources to maintain General Fund expenditures at the highest level of spending in the three most recent fiscal years, adjusted for state population growth and the change in the cost of living. Article XIII B, Section 3(c)(2), defines “conditions of disaster or of extreme peril” as being “caused by such conditions as attack or probable or imminent attack by an enemy of the United States, fire, flood, drought, storm, civil disorder, earthquake, or volcanic eruption.”

Sources: California Constitution, California Government Code, and California Welfare and Institutions Code

  • 1
    For example, these circumstances include requirements that deposits only occur when capital gains tax revenues exceed a specific level of total General Fund proceeds of taxes and when growth in the state’s minimum funding guarantee for K-12 schools and community colleges is relatively strong.
  • 2
    These withdrawal rules apply to funds that are deposited into the BSA as required by Proposition 2 of 2014. State policymakers may also deposit funds into the BSA on top of Prop. 2 requirements, creating a “discretionary” balance within the reserve. The Legislative Analyst’s Office suggests that the Legislature can withdraw a discretionary balance at any time without a declaration of a budget emergency by the governor. Separate from this issue, funds must be withdrawn from the BSA — without the need for a declaration of a budget emergency — when updated revenue estimates indicate that a prior-year deposit was greater than required.
  • 3
    Funds must be withdrawn from the PSSSA — without the need for a declaration of a budget emergency — when the state’s minimum funding guarantee for K-12 schools and community colleges is less than the prior year’s funding level, adjusted for changes in student attendance and the cost of living, or when updated revenue estimates indicate that a prior-year deposit was greater than required.
  • 4
    Additionally, the Department of Finance may withdraw funds from the SFEU without legislative approval to cover the cost of state disaster response efforts upon an emergency proclamation by the governor.
  • 5
    However, in any year when funds must be withdrawn from the PSSSA because the state’s minimum funding guarantee for K-12 schools and community colleges is less than the prior year’s funding level — adjusted for changes in student attendance and the cost of living — the required withdrawal is limited to the amount of that shortfall.

Stay in the know.

Join our email list!