Despite Shortfall, Policymakers Have the Tools to Continue to Make Progress for Californians
About this event
Governor Newsom’s proposed 2023-24 budget was just unveiled, and the Budget Center team is here to help you understand the details. How is the state managing an uncertain revenue landscape? What do we know about estimated dollar amounts and policy proposals? How do proposals address racial and economic inequities in our communities? And what are the missed opportunities in the proposal?
Join us as we kick off a new budget season and share the policies and budget investments needed to achieve an equity-focused budget and build healthy, thriving communities for all Californians. Don’t miss our first Empower event of the year!
Thank you to our event sponsors: Blue Shield of California Foundation, Heising-Simons Foundation, and James Irvine Foundation.
About Us
The California Budget & Policy Center engages in independent fiscal and policy analysis and public education with the goal of improving public policies affecting the economic and social well-being of Californians with low and middle incomes.
Every year, California’s governor and Legislature adopt a state budget that provides a framework and funding for critical public services and systems — from child care and health care to housing and transportation to colleges and K-12 schools.
But the state budget is about more than dollars and cents.
The budget expresses our values as well as our priorities for Californians and as a state. At its best, the budget should reflect our collective efforts to expand economic opportunities, promote well-being, and improve the lives of Californians who are denied the chance to share in our state’s wealth and who deserve the dignity and support to lead thriving lives.
State budget choices have an impact on all Californians and these decisions are particularly important for the nearly 6 million students in California’s K-12 public schools. Because the state budget provides the majority of funding that K-12 public schools receive each year, it is critical for Californians to understand and participate in the annual budget process to ensure that state leaders are making the strategic choices needed to allow every K-12 student — from different races, backgrounds, and places — to thrive and share in our state’s economic and social life.
This guide sheds light on the state budget, the budget process, and why they matter for K-12 students and schools with the goal of giving Californians the tools needed to effectively engage decision makers and advocate for fair and just policy choices.
Key Takeaways
the bottom line
The state spending plan is about more than dollars and cents.
Crafting the budget provides an opportunity for Californians to express our values and priorities as a state.
The state Constitution establishes the rules of the budget process.
Among other things, these rules allow lawmakers to approve spending with a simple majority vote but require a two-thirds vote to increase taxes. Voters periodically revise the budget process by approving constitutional amendments.
The governor has the lead role in the budget process
Proposing a state budget for the upcoming fiscal year gives the governor the first word in each year’s budget deliberations.
The May Revision gives the governor another opportunity to set the budget and policy agenda for the state.
Veto power generally gives the governor the last word.
The Legislature reviews and revises the governor’s proposals.
Lawmakers can alter the governor’s proposals and advance their own initiatives as they craft their version of the budget prior to negotiating an agreement with the governor.
Budget decisions are made throughout the year.
The public has various opportunities for input during the budget process.
This includes writing letters of support or opposition, testifying at legislative hearings, and meeting with officials from the governor’s administration as well as with legislators and their staffs.
In short, Californians have ample opportunity to stay engaged and involved in the budget process year-round.
California’s State Budget & Why It Matters for K-12 School Funding
The State Budget Consists of Three Types of State Funds
three types of state funds
General Fund — The state General Fund accounts for revenues that are not designated for a specific purpose.
Special Funds — Over 500 state special funds account for taxes, fees, and licenses that are designated for a specific purpose.
Bond Funds — State bond funds account for the receipt and disbursement of general obligation (GO) bond proceeds.
The state General Fund provides more than 95% of state spending that supports K-12 education.
The Largest Share of State General Fund Spending Supports K-12 Education
Under the enacted 2022-23 state budget:
Nearly one-third of General Fund dollars (33.1%) supports K-12 education.
Almost 3 out of every 10 General Fund dollars (29.3%) pays for health and human services.
Roughly 1 out of every 10 General Fund dollars (10.1%) goes to higher education.
Less than 1 out of every 10 General Fund dollars (6.3%) supports corrections, primarily the state prison system.
More than 1 out of 5 General Fund dollars (21.3%) goes to other essential services and institutions, such as transportation, environmental protection, the state’s court system, and so-called “General Government,” which consists of a variety of statewide expenses such as emergency expenditures.
Most General Fund Revenues Come From Three State Taxes
More than 9 out of every 10 General Fund dollars (just over 94%) under the enacted 2022-23 state budget are projected to come from:
The personal income tax (61.8%),
The corporation tax (17.3%); and
Sales and use taxes (15.3%)
The remaining General Fund dollars in 2022-23 are projected to come from smaller state revenue sources (5.7%), such as insurance and cigarette taxes.
The Majority of K-12 Education Funding Comes From the State
In 2020-21, K-12 school districts and county offices of education received:
More than half of their dollars (nearly 56%) from the state;
Nearly one-quarter of their dollars (24.6%) from local property taxes;
More than 1 in 10 (13.1%) of their dollars from the federal government, which included funding to mitigate effects of the COVID-19 pandemic; and
Only 6.5% of their dollars from other local sources of revenue, such as parcel taxes and fees for the use of school buildings.
Most K-12 Education Funding Is Allocated Through the Local Control Funding Formula
The Local Control Funding Formula (LCFF) is the primary funding formula for K-12 school districts and county offices of education.
State policymakers fundamentally restructured the state’s K-12 education finance system when they enacted the LCFF in 2013.
The LCFF is an equity-based formula that provides a base grant per K-12 student, adjusted to reflect the number of students at various grade levels, as well as additional grants for English learners, students from low-income families, and foster youth.
The Legislature determines LCFF grant levels in the annual state budget.
LCFF Dollars Come From the State and from Local Property Taxes
In 2020-21, nearly 2 out of every 3 dollars (66.2%) that K-12 school districts and county offices of education received were allocated through the LCFF.
Slightly less than two-thirds of LCFF dollars came from the state and slightly more than one-third came from local property taxes.
State Budget and Policy Choices Are Key to Determining the Allocation of K-12 School Funding
The state budget provides most of the funds that K-12 schools use to educate California’s 5.9 million K-12 students.
These funds go to more than 1,000 school districts, county offices of education, and charter schools.
The size of the state budget is a key factor that determines the total amount of annual funding K-12 schools receive.
However, the Legislature and governor decide how these state funds are allocated across the state.
Understanding the financial resources available to K-12 schools requires familiarity with the state budget and the state budget process.
Assembly Budget Committee and Senate Budget & Fiscal Review Committee
Review the governor’s budget proposals and develop each house’s version of the state budget. Most budget committee work is done through subcommittees that focus on specific policy areas.
Budget Act
The initial budget bill passed by the Legislature and signed into law by the governor, after any line-item vetoes. The Budget Act can be referred to by the year in which it becomes law (“Budget Act of 2021”) or by the fiscal year to which it applies (“2021-22 Budget Act”).
Budget Bill Jr.
The informal term to describe any budget bill that amends the Budget Act. Budget Bill Jrs. may be numbered sequentially using Roman numerals (e.g., Budget Bill Jr. I, Budget Bill Jr. II, etc.).
Budget-Related Bills ("Trailer Bills")
Generally make changes to state law related to the budget bill. Trailer bills typically move in tandem with the budget bill through the Assembly and Senate budget committees. Trailer bills also may move independently of the budget bill — such as through the Legislature’s policy bill process — and still be considered part of the overall “budget package.”
Department of Finance (DOF)
Leads the development of the governor’s budget proposals, prepares the governor’s budget documents, testifies on behalf of the governor at legislative budget hearings, develops the governor’s economic forecasts, and performs several other functions. The DOF’s director is the governor’s chief fiscal adviser.
Governor's Budget Summary
Provides the governor’s economic and revenue outlook, highlights major policy initiatives in the governor’s proposed budget, and summarizes proposed state expenditures. The budget summary is released on or before January 10.
Governor's Proposed Budget
Provides a detailed overview of the governor’s proposed expenditures for the upcoming fiscal year, estimated expenditures for the current fiscal year, and actual expenditures for the prior fiscal year. The proposed budget is released on or before January 10
Legislative Analyst's Office (LAO)
An independent, nonpartisan office that conducts research and analysis on state budget issues, analyzes statewide ballot measures, and provides fiscal and policy advice to the Legislature. The LAO is overseen by the Legislature’s bipartisan Joint Legislative Budget Committee.
Line-Item Veto
The governor’s power to reduce or eliminate specific items of appropriation while approving other portions of a bill. This power applies to any bill that contains an appropriation, including budget bills and budget-related bills. The Legislature may override a line-item veto with a two-thirds vote of each house.
May Revision
Released on or before May 14, the May Revision updates the governor’s economic and revenue outlook; adjusts the governor’s proposed expenditures to reflect revised estimates and assumptions; revises, supplements, or withdraws policy initiatives that were included in the governor’s proposed budget in January; and outlines adjustments to the Proposition 98 minimum funding guarantee for K-14 education.
The Constitutional Framework
The governor and legislators craft the state’s annual spending plan according to rules outlined in the state Constitution.
California voters periodically revise these rules by approving constitutional amendments that appear on the statewide ballot.
Proposals to amend the state Constitution can be placed on the ballot through a citizens’ initiative or by the Legislature.
A constitutional amendment takes effect if approved by a simple majority of voters.
Three Key Budget Deadlines
Two in the State Constitution (January 10 and June 15), One in State Law (May 14)
The governor must propose a budget for the upcoming fiscal year on or before January 10. The budget must be balanced: Estimated revenues (as determined by the governor) must meet or exceed the governor’s proposed spending.
The governor must release the May Revision on or before May 14.
The Legislature must pass a budget bill for the upcoming fiscal year by midnight on June 15. The budget bill must be balanced: Estimated General Fund revenues (as set forth in the budget bill passed by the Legislature) must meet or exceed General Fund spending.
Proposition 25: Simple Majority Vote for Budget Bill and Most Budget-Related Bills
The budget package generally may be passed by a simple majority vote of each house of the Legislature.
Prop. 25 of 2010 allows lawmakers to pass, by a simple majority vote, the budget bill as well as certain budget-related bills (“trailer bills”) that may take effect as soon as the governor signs them. Typically, the budget package consists entirely or primarily of such majority-vote bills.
To qualify as a budget-related bill under Prop. 25, a bill must (1) be listed in the budget bill and (2) contain an appropriation of any amount.
The budget package may include bills that require a two-thirds vote of each house, such as bills to raise taxes or to place constitutional amendments or general obligation bonds before the voters.
Proposition 25: Penalties for a Late Budget
Lawmakers face penalties if they fail to pass the budget bill on or before June 15.
Prop. 25 requires lawmakers to permanently forfeit both their pay and their reimbursement for travel and living expenses for each day after June 15 that the budget bill is not passed and sent to the governor.
These penalties do not apply to budget-related bills, which do not have to be passed on or before June 15.
Proposition 26: Supermajority Vote for Tax Increases
Any tax increase requires a two-thirds vote of each house of the Legislature.
Under the state Constitution, “any change in state statute which results in any taxpayer paying a higher tax” requires a two-thirds vote of each house.
This standard was imposed by Prop. 26 of 2010. This measure expanded the definition of a tax increase and thus the scope of the two-thirds vote requirement, which was originally imposed by Prop. 13 of 1978.
Prior to Prop. 26, only bills changing state taxes “for the purpose of increasing revenues” required a two-thirds vote. Bills that increased some taxes but reduced others by an equal or larger amount could be passed by a simple majority vote of each house.
Proposition 26: More Charges Are Classified as Taxes
Prop. 26 of 2010 also expanded the definition of a tax to include some fees.
Prior to Prop. 26, lawmakers could create or increase fees by a simple majority vote. These majority-vote fees included regulatory fees intended to address health, environmental, or other problems caused by various products, such as alcohol, oil, or hazardous materials.
Prop. 26 reclassified regulatory and certain other fees as taxes. As a result, a two-thirds vote of each house of the Legislature is now required for many charges that previously were considered fees and could be passed by a simple majority vote.
Additional Supermajority Vote Requirements
The state Constitution requires a two-thirds vote of each house of the Legislature in order to:
Appropriate money from the General Fund, except for appropriations that are for public schools or that are included in the budget bill or in budget-related bills that meet the requirements of Prop. 25.
Pass bills that take effect immediately (urgency statutes), except for the budget bill and Prop. 25 budget-related bills.
Place constitutional amendments or general obligation bond measures before the voters.
Override the governor’s veto of a bill or an item of appropriation.
A Bill Must Be Published for at Least 72 Hours Before the Legislature Can Act on It
Proposition 54 of 2016 requires bills to be distributed to legislators and published on the Internet, in their final form, at least 72 hours before being passed by the Legislature.
This rule applies to all bills, including the budget bill and other legislation included in the budget package.
This mandatory review period can be waived for a bill if:
The governor declares an emergency in response to a disaster or extreme peril, and
Two-thirds of legislators in the house considering the bill vote to waive the review period.
Proposition 98: A Funding Guarantee for K-12 Schools and Community Colleges
Prop. 98 of 1988 guarantees a minimum annual level of funding for K-14 education.
The amount of the guarantee is calculated each year based on one of three tests that apply under varying fiscal and economic conditions. Two of these tests include adjustments for changes in statewide K-12 attendance. Prop. 98 funding comes from the state General Fund and local property tax revenues.
The Legislature can suspend the guarantee for a single year by a two-thirds vote of each house and provide less funding. Following a suspension, the state must increase Prop. 98 funding over time to the level that it would have reached absent the suspension.
While the Legislature can provide more funding than Prop. 98 requires the guarantee has generally served as a maximum funding level.
Proposition 2: Saving for a Rainy Day, Paying Down Debt
Prop. 2 of 2014 revised the rules that apply to the Budget Stabilization Account (BSA) — the state’s constitutional rainy day fund — and also established a new requirement to pay down state budgetary debt.
The state is required to set aside 1.5% of General Fund revenues each year, plus additional dollars in years when tax revenues from capital gains are particularly strong.
Until 2029-30, half of the revenues go into the BSA and the other half must be used to pay down state budgetary debt, which includes unfunded pension liabilities. Starting in 2030-31, the entire annual transfer goes into the BSA.
State policymakers may suspend or reduce the BSA deposit and withdraw funds from the reserve, but only under limited circumstances that qualify as a “budget emergency.”
Proposition 2: A Budget Reserve for K-14 Education
Prop. 2 of 2014 also created a state budget reserve for K-12 schools and community colleges called the Public School System Stabilization Account (PSSSA).
Deposits come from state capital gains tax revenues in years when those revenues are particularly strong.
However, various conditions must be met before these dollars could be transferred to the PSSSA. For example, transfers could occur only in so-called “Test 1” years under Prop. 98, which have been rare.
Proposition 55: Potential New Funding for Medi-Cal from a Tax on the Wealthiest Californians
Prop. 55 of 2016 extends, through 2030, personal income tax rate increases on very high-income Californians and establishes a formula to boost funding for Medi-Cal, which provides health care services to Californians with low incomes.
Starting in 2018-19, General Fund revenues — including those raised by Prop. 55 — must first be used to fund (1) the annual Prop. 98 guarantee for K-12 schools and community colleges and (2) the cost of other services that were authorized as of January 1, 2016, as adjusted for population changes, federal mandates, and other factors.
If any Prop. 55 revenues remain after meeting these required expenditures, Medi-Cal would receive 50% of this excess, up to a maximum of $2 billion in any fiscal year.
Prop. 55 has not yet resulted in any additional funding for Medi-Cal.
State Appropriations Limit (SAL): A Cap on Spending
Appropriations are subject to a limit established by Prop. 4 of 1979, as modified by later initiatives. This spending cap is often called the Gann Limit.
The SAL limits the amount of state tax proceeds that can be appropriated each year. This limit is adjusted annually for changes in population and per capita personal income.
Some appropriations from tax proceeds do not count toward the limit, including debt service and spending that is needed to comply with court or federal mandates.
Revenues that exceed the SAL over a two-year period are divided equally between Prop. 98 spending and taxpayer rebates. The state last exceeded the SAL in 2020-21 (but did not do so in the prior year).
State Mandates: Pay for Them or Suspend Them
The state is required to pay for or suspend mandates that it imposes on local governments.
Prop. 4 of 1979 requires the state to reimburse local governments for costs related to a new program or a higher level of service that is mandated by the state.
Prop. 1A of 2004 expanded the definition of a mandate to include the transfer of financial responsibility from the state to local governments.
Prop. 1A also requires the state to suspend a mandate in any year in which local governments’ costs are not fully reimbursed.
What do the Governor and the Legislature Do?
the governor
Approves, modifies, or rejects spending proposals prepared by state departments and agencies through an internal process coordinated by the DOF.
Proposes a spending plan for the state each January, which is introduced as the budget bill in the Legislature.
Updates and revises the proposed budget each May (the “May Revision”).
Signs or vetoes the bills included in the budget package.
Can veto all or part of individual appropriations (line items), but cannot increase any appropriations above the level approved by the Legislature.
the legislature
Approves, modifies, or rejects the governor’s proposals.
Can add new spending or make other changes that substantially revise the governor’s proposals.
Needs a simple majority vote of each house to pass the budget bill and Prop. 25 budget-related bills.
Needs a two-thirds vote to pass certain other bills that may be part of the budget package, such as bills that increase taxes or propose constitutional amendments.
Needs a two-thirds vote of each house to override the governor’s veto of a bill or an appropriation.
What Happens When?
The state budget process is cyclical. Decisions are made throughout the year.
State departments and agencies develop baseline budgets to maintain existing service levels in the upcoming fiscal year and may prepare “budget change proposals” intended to alter service levels. The DOF review these documents.
Following a series of meetings within the governor’s administration, the governor makes final decisions and the DOF prepares the proposed budget for release in January.
Independent of the governor, legislative leaders their budget priorities for the upcoming fiscal year.
January 10
The governor releases the proposed budget for the upcoming fiscal year.
January to Mid-May
Budget committees and their subcommittees hold dozens of headings to review the governor’s proposals and make initial decisions.
Mid-May to June
The governor releases the May Revision by May 14.
Each house of the Legislature then finalizes its version of the budget. A legislative conference committee may meet to resolve differences.
June
Legislative leaders and the governor meet to address outstanding issues.
June 15
The constitutional deadline for lawmakers to pass the budget bill.
This deadline does not apply to budget-related bills, which can be passed at any time.
July 1
The new fiscal year begins.
The governor may sign the budget bill and budget-related bills — as well as issue vetoes — by this date.
July and Beyond
The Legislature may pass, by a simple majority vote, amendments that change the spending levels in the adopted budget bill.
Lawmakers also may pass additional budget-related bills, thus increasing the size and scope of the original budget package.
State departments and agencies develop baseline budgets and budget change proposals for the following fiscal year and submit them to the DOF, starting the state budget process anew.
Legislative Counsel: Bills and bill analyses, a free bill-tracking service, the state codes, and the state Constitution.
State Assembly and Senate: Committee agendas and other publications, floor session and committee schedules, the annual legislative calendar, and live audio streaming of legislative proceedings.
Support for this report was provided by the Sobrato Family Foundation and the Stuart Foundation.
There was a problem processing your signup. Please try again. Or contact us
Please check your email to confirm your signup.
Building a just and equitable California for every person no matter their race, ethnicity, gender, age, or zip code requires investments to create health, housing, economic, and educational opportunities. But an archaic spending limit approved by some California voters under a 1979 ballot measure challenges our state’s ability to meet the ongoing needs of Californians. Known by many names — the spending cap, appropriations limit, or Gann Limit — this convoluted budget constraint blocks the state’s ability to build a better and more equitable future.
This Gann Limit Q&A addresses top questions on the spending cap and why California leaders and voters need to rethink the disco-era measure to create healthy, thriving communities for all Californians.
The Gann Limit is a constitutional spending cap approved by voters via Proposition 4 in a 1979 special election. Prop. 4 emerged from California’s anti-tax movement of the 1970s. The measure’s key proponent, Paul Gann, also co-authored Prop. 13 — the 1978 initiative that severely restricted property taxes and drastically limited the ability of local jurisdictions to raise revenues for education and community services such as libraries, parks, and fire protection.
Prop. 4 and Prop. 13 were approved by a majority-white electorate during a time when the state’s population was becoming more diverse and white Californians’ support for robust public services was in decline.
2. How does the Gann Limit work?
The Gann Limit applies to both state spending and, as explained in question #5, spending by local governments and school districts. At the state level, the limit is based on California’s 1978-79 spending level, which is then adjusted each year for changes in population and per capita personal income. In essence, the Gann Limit enshrined into the state’s Constitution the budget priorities of the late 1970s — even though the needs of Californians have dramatically changed since the disco era.
If revenues exceed the limit over a two-year period, state policymakers must provide half of the revenue over that limit to taxpayers and the other half to K-14 education. Policymakers have some discretion over how to distribute the portion going to taxpayers. In contrast, the portion going to K-14 education must be distributed on a per-pupil basis, which is an inequitable approach that treats all schools the same regardless of their students’ needs.
Alternatively, policymakers have limited options to structure budgets to avoid going over the limit, as explained in question #6. In either case, state leaders lose the flexibility to spend revenues in ways that address critical ongoing needs of Californians, including health care, child care, and housing assistance. For an in-depth explanation of how the Gann Limit works, see this April 2021 report by the Legislative Analyst’s Office.
3. Why does this spending limit matter today?
For most of the last two decades, state revenues were far enough below the Gann Limit that it did not have a significant impact on budgeting decisions. However, when the state’s revenues grow faster than population and personal income, as they have in recent years, the Gann Limit comes into play and dictates how a large share of the budget can be spent.
Big revenue gains primarily come from personal income taxes paid by high-income households, who experience much faster income growth than the typical Californian, and who pay higher tax rates under the state’s progressive income tax system. While there will be years when the Gann Limit is less of a factor in state budget decisions, over the long run the spending cap will likely continue to impose budget constraints to the extent that state revenues grow faster than the limit itself, as has been the case historically.
4. How does the Gann Limit threaten ongoing investments to help Californians thrive?
The Gann Limit challenges California’s ability to maintain current service levels and to raise revenues to make bold new investments to help more Californians prosper.
The Gann Limit is just one of several budget formulas in the state Constitution that dictate how revenues can be spent. Prop. 98, approved by voters in 1988, creates a guaranteed annual minimum funding level for K-14 education. Prop. 2, approved by voters in 2014, requires the state to direct some revenues to paying down debts and adding to the state’s main budget reserve (the Budget Stabilization Account). When revenues exceed the Gann Limit, each dollar above the limit must meet all three requirements: Gann, Prop. 98, and Prop. 2. This means that each $1 of “excess” revenue results in more than $1 in state budget obligations. Addressing all three obligations could force state leaders to cut public services outside of K-14 education, such as health care, child care, and cash assistance as well as the state university systems.
In addition to undercutting the state’s ability to support current service levels, the spending cap, if left unchanged, will undermine efforts to raise enough revenue to fund significant new ongoing investments to help all Californians thrive. These include investments to expand affordable child care, increase pay for child care providers, and adequately address the homelessness and affordable housing crises.
Cutting critical services and failing to address the biggest challenges facing the state would significantly harm Californians with low incomes who may not be able to make ends meet without the help of public supports. Many Californians of color are at particular risk because of historical and ongoing discrimination that has often limited them to low-paying, undervalued jobs and blocked them from opportunities to build wealth.
5. Does the Gann Limit affect local governments and school districts?
The Gann Limit generally applies to local governments — cities, counties, and special districts — as well as to K-12 and community college districts, all of which could be impacted in the years to come. Many school districts regularly exceed their spending caps, although the state is currently able to provide relief to these districts by counting certain district expenditures toward the state’s own limit. In general, few cities or counties are currently at risk of exceeding their limits.
However, in future years, the Gann Limit could put pressure on local budgets, particularly for cities and counties that seek revenue increases to bolster local services like affordable housing, health care, parks, and libraries.
6. What can state leaders do about the Gann Limit?
State leaders have some ability to structure budgets to avoid exceeding the limit in the near term. For example, they can spend more on things that are excluded from the limit, such as:
infrastructure projects, including housing;
emergency response;
tax refunds;
some transfers of state funds to local governments; and
spending to comply with court and federal mandates.
Finally, some of the Gann Limit rules are spelled out in state statute rather than in the state Constitution. In these cases, lawmakers have limited opportunities to change the law to ease some Gann Limit pressures. For example, state leaders made some changes in the 2021-22 and 2022-23 state budgets to avoid exceeding the limit, including allowing more flexibility in deciding whether to count state funding for local governments under the state or local limits.
However, in the long run, the Gann Limit’s restrictive rules may jeopardize existing services and many kinds of ongoing expenditures, such as big new investments in affordable child care or health care.
Even though a period of weak revenue growth may temporarily keep the state under the spending cap, the Gann Limit will roar back to life when revenues pick up again. In order to address the long-run threats posed by the limit, state leaders should ask California voters to change the state Constitution to modify or eliminate the spending cap. This would allow the state to both support the rising costs of current services and leave room for significant new ongoing investments to address the critical needs of Californians.
There was a problem processing your signup. Please try again. Or contact us
Please check your email to confirm your signup.
About this event
Our premier “Dollar and Democracy” state budget training is here to prepare you for an effective budget season in 2023 and beyond.
Whether this is your first cycle or you are a seasoned pro, you’ll learn something new as our budget expert, Adriana Ramos-Yamamoto, walks you through California’s budget process, including key deadlines and the roles of the governor, the Legislature, and advocates in making investments in our communities. Plus, learn insider tips on effective advocacy tools and what to expect in 2023 from our discussion panel of budget mavens.
Watch the Recording
Agenda
Budget Trainer:
Dollars and Democracy training, approx. 20 minutes
Adriana Ramos-Yamamoto, Policy Analyst, California Budget & Policy Center
Discussion Panel:
Looking ahead and what to expect in 2023, approx. 40 minutes
Kristina Bas Hamilton, Principal, KBH Advocacy
Scott Graves, Director of Research, California Budget & Policy Center
Christopher Sanchez, Policy Advocate, Western Center on Law & Poverty
Thank you to our event sponsors: Blue Shield of California Foundation, Heising-Simons Foundation, and James Irvine Foundation.
About Us
The California Budget & Policy Center engages in independent fiscal and policy analysis and public education with the goal of improving public policies affecting the economic and social well-being of Californians with low and middle incomes.
Safe communities, living wages, stable child care, affordable housing, and healthy workplaces. In good times and bad, what Californians need to thrive doesn’t change. We all want to live in flourishing communities and know our family, friends, and neighbors will be OK when a recession, pandemic, inflation, or extreme weather conditions hit. Government and smart … Continued
As we begin the 2022-23 fiscal year, state leaders have reached a “nearly final” California state budget agreement, though some details still remain to be finalized and additional budget-related bills will be acted upon in August and beyond. According to legislative summaries, the budget framework includes approximately $235 billion in General Fund spending for 2022-23, a significant increase over the 2021-22 General Fund budget of $196 billion. The agreement assumes a total reserve balance of more than $37 billion across the state’s four budget reserves: the Budget Stabilization Account, the Public School System Stabilization Account, the Special Fund for Economic Uncertainties, and the Safety Net Reserve. The framework contains actions to prevent the budget from exceeding the state’s constitutional spending cap (the “Gann Limit”) over the two-year period that ends June 30, 2022 and for the 2022-23 fiscal year.
This report highlights selected elements of the budget framework that represent significant advancements to improve the lives of Californians with low and middle incomes — including women, immigrants, and American Indian, Asian, Black, Latinx, and Pacific Islander Californians and other Californians of color. We also highlight areas where the budget framework misses opportunities and there is work still to be done by policymakers to ensure that all Californians are able to not only survive but thrive in their communities.
Rebates
What’s included in the 2022-23 California statebudget: The budget agreement provides one-time payments, tiered by income level, for Californians who filed a tax return for 2020. Filers will receive the following rebate amounts for themselves, their spouse if filing jointly, and up to one dependent.
$350 for filers with incomes below $75,000 ($150,000 for joint filers);
$250 for filers with incomes between $75,000 and $125,000 ($150,000 – $250,000 for joint filers);
$200 for filers with incomes between $125,000 and $250,000 ($250,000 – $500,000 for joint filers).
Relative to earlier rebate proposals from the governor and legislators, the agreement would provide more support to small families with low incomes, but less support to larger families with low incomes.
State leaders can furthersupport Californians by: expanding ongoing supports — such as the CalEITC, Young Child Tax Credit, and CalWORKs — for households with low incomes who have long struggled to afford their basic needs to help them achieve lasting economic security.
Tax Credits
What’s included in the 2022-23 California state budget: California families without work earnings who have children under age 6 will now qualify for the $1,000 Young Child Tax Credit (YCTC), and the YCTC will be adjusted annually for inflation so it keeps up with rising prices. In addition, former foster youth ages 18 to 25 who qualify for the CalEITC will be eligible for a new $1,000 Foster Youth Tax Credit modeled after the YCTC. Also, beginning on or after tax year 2024, the controller will no longer be permitted to intercept tax refunds for debt payments of Californians who receive the CalEITC or YCTC, with the exception of debt related to child or family support. This will ensure that more Californians receive the full tax refunds they are counting on. Finally, the state will provide $20 million for two years, and $10 million annually thereafter, to support community-based efforts to raise tax credit awareness and connect Californians with free tax preparation services.
State leaders can better support Californians by: establishing a larger, more meaningful minimum CalEITC, increasing the YCTC and extending it to families with older children, and continuing to expand investments in free tax prep services.
Safety Net
What’s included in the 2022-23 California statebudget: Monthly CalWORKs grants are based on the number of eligible people in the household. Reasons for ineligibility include exceeding the time limit for assistance, not meeting work requirements, or immigration status. The budget agreement includes a two-year 21% grant increase effective October 1, 2022, raising grants above the deep poverty threshold (50% of the federal poverty line) for all cases with at least four eligible people, even where there is also an excluded member. The budget agreement also passes-through to former CalWORKs families outstanding child support debt that currently is claimed as “reimbursement” for programmatic costs. Funding is appropriated for a 100% pass-through for current CalWORKs families, subject to future legislative action for the 2024-25 fiscal year.
State leaders can further support Californians with low incomes by: ensuring that grants are above the deep poverty threshold for all CalWORKs families. Additionally, state leaders should commit to ending the work participation rate penalty for counties, an outdated racist and sexist policy that hinders helping parents address barriers.
State leaders can better support California workers by: ensuring all workers in California are able to take paid time off, particularly workers paid low wages who are disproportionately women, Black, and Latinx Californians. Policymakers can do this byboosting payment rates for the state’s paid family leave and disability insurance programs to ensure that workers do not face difficult choices about paying the bills or caring for themselves or family. Policymakers should also extend COVID-19 supplemental paid sick leave, and, after the pandemic, require employers to provide additional paid sick days for all to maintain the health of workers and communities.
Child Care
What was included in the 2022-23 California state budget: Policymakers extended certain pandemic protections for families and subsidized child care and state preschool program providers, including the waiver of family fees and provider payments based on student enrollment, not attendance. The final budget agreement also invests $100 million in one-time federal funds for child care facilities. Finally, the 2022-23 budget provides $100 million for health care benefits for certain subsidized child care providers, but it does not update provider payment rates, leaving many struggling to keep pace with the rising statewide minimum wage and increasing price of food and supplies.
State leaders can better support California working parents, families, and communities by: providing reimbursement rates for subsidized child care providers that allow for fair and just wages that reflect the critical value of early educators’ profession. Providers, children, and working parents suffer when child care is limited in their communities because of policymakers’ lack of investment.
Related Content
See our report Dollars and Democracy: A Guide to the California State Budget Process to learn more about the state budget and budget process.
What’s included in the 2022-23 California statebudget: Comprehensive Medi-Cal coverage is expanded to low-income undocumented Californians ages 26 to 49, the last group explicitly excluded from eligibility due to their immigration status and age. By January 1, 2024, all qualifying Californians will have access to comprehensive Medi-Cal coverage. This move effectively builds on previous coverage steps the state has already taken and ends the racist and exclusionary policy that blocks Californians from accessing vital health services. To provide Medi-Cal for adults age 26 and over, the state is estimated to allocate:
$67 million total funds ($53 million General Fund) in 2021-22 and $745 million total funds ($628 General Fund) in 2022-23 for older adults.
$834 million total funds ($625 million General Fund) in 2023-24 for adults age 26-49.
$2.6 billion total funds ($2.1 billion General Fund) in on-going out-year costs, including In-Home Supportive Services.
State leaders can further support Californians by: moving up the comprehensive Medi-Cal coverage start date. Californians who have been barred from consistent health care coverage need timely access to critical services and care to have the ability to live a healthy life.
Public Health
What’s included in the 2022-23 California statebudget: $300 million ongoing General Fund to improve public health infrastructure, with about $200 million earmarked for local health jurisdictions and about $100 million for state-level operations. Under this proposal, local health jurisdictions would 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, this funding would establish a new Office of Policy and Planning to assess current and emerging public health threats as well as support other core functions, including emergency preparedness and public health communications. This much-needed investment will strengthen public health departments’ ability to protect and promote the health and well-being of communities across the state.
State leaders can further support Californians by: establishing dedicated funding to support community-based organizations, clinics, and tribal organizations in their efforts to address health disparities and advance racial justice, given that structural racism continues to have a profound impact on communities across the state.
Health Workforce
What’s included in the 2022-23 California state budget: significant investment in the health workforce in order to increase access to timely and culturally competent care for Californians. Specifically, the budget includes $532.5 million one-time over four years to bolster the behavioral health workforce, the public health workforce, and the primary care and reproductive health workforce. The also budget includes $296.5 million in 2022-23, $370.5 million in 2023-24 and in 2024-25 for the Workforce for a Healthy California for All Program, which aims to expand the following professions:
Community health workers, who are trained health educators and are trusted members of the community they serve;
Nurses, including registered nurses and certified nurse midwives;
Social workers;
Behavioral health providers, such as psychiatrists and psychologists; and
Multilingual health care professionals.
State leaders can further support Californians by: promoting LGBTQ+-affirming training for health providers to better serve their communities. Policymakers can also invest in efforts to make sure that the health workforce better reflects the diversity of all Californians, including their gender identities and sexual orientations.
Reproductive Health
What’s included in the 2022-23 California state budget: over $200 million to protect and increase access to reproductive health care services, particularly in response to the Supreme Court’s recent decision to end a constitutional right to an abortion as well as states’ actions to ban or restrict access to abortion care — both of which severely undermine the health and economic security of pregnant people. Funding in the budget agreement includes:
$40 million to establish an uncompensated care fund for Californians with low incomes;
$20 million to support abortion training for clinicians and health care professionals;
$20 million to establish the Los Angeles County Abortion Access Safe Haven Pilot Program; and
$20 million to assist patients in overcoming barriers to abortion care.
State leaders can further support Californians by: ensuring that all Californians have access to reproductive health care, especially Californians in rural areas and those with low incomes, given the possible influx in out-of-state patients seeking health care.
Homelessness
What’s included in the 2022-23 California statebudget: New funds in the budget agreement focus on encampments, with $300 million in 2022-23 (and $400 million in 2023-24) for local governments for encampment “resolution.” Equitable and effective use of these funds should prioritize the housing and service needs of Californians living in encampments, not just clearing streets. The budget agreement also boosts current-year investment in Homekey by $150 million, and includes intent to continue the annual $1 billion investment in flexible local funding to address homelessness for another year in 2023-24. Also included are $1 billion in 2022-23 — and $500 million in 2023-24 — for bridge housing for people experiencing homelessness with serious mental illness, as proposed by the governor in January. Policy negotiations continue for the CARE Court proposal.
State leaders can better support Californians experiencing homelessness by: increasing flexible local funds to address local service gaps and opportunities, and providing these funds on an ongoing basis to enable long-term planning. Also boosting investment in affordable permanent housing, which is necessary to end homelessness.
California Budget
The California budget is the pathway to building a just and equitable state. By ensuring Californians have access to engage in meaningful conversations and strategic decisions, our budget and policies can better reflect Californians’ values and aspirations.
What’s included in the 2022-23 California statebudget: There are increased funds to expand California’s supply of affordable housing, including for multi-family housing ($100 million in 2022-23 and $225 million in 2023-24), shovel-ready projects through the Housing Accelerator Program ($250 million), adaptive reuse of underutilized commercial space ($410 million over two years), and infrastructure for infill housing ($200 million in 2022-23 and $225 million in 2023-24). Significant new funds are also allocated to assist first-time homebuyers and homeowners with moderate and low incomes, through existing ($350 million over two years) and new ($500 million) programs. These programs could help address the racial wealth gap — but they are unlikely to benefit renters with the lowest incomes, who face the greatest housing affordability challenges and risk of homelessness.
State leaders can better support Californians’ housing needs by: increasing investment in affordable housing production and preservation to a scale that matches the need. A stable, affordable home is the most basic foundation for health and well-being, and addressing the severe affordable housing shortfall is vital for California’s long-term prosperity.
K-12 Education
What’s included in the 2022-23 California statebudget: K-12 schools will receive significant funding increases including:
$7.9 billion for a one-time discretionary block grant allocated based on the percentage of enrolled students in K-12 districts who are English learners, students from low-income families, or foster youth — a more equitable method than proposed in the May Revision.
$7.9 billion for the Local Control Funding Formula (LCFF), which includes $2.8 billion for LCFF grant costs using a three-year average of average daily attendance.
$4 billion in ongoing funding for the Expanded Learning Opportunities Program, which provides additional learning time for students before or after school, and outside of the traditional school year.
$3.6 billion for a one-time per-pupil block grant that can be used for many purposes such as arts and music.
What’s included in the 2022-23 California statebudget: The 2022-23 budget makes progress in making higher education more affordable by:
Increasing total ongoing funding for the Student Success Completion Grant (SSCG) to nearly $413 million. The SSCG supports community college students by encouraging full-time enrollment.
Providing an additional $227 million one time in 2023-24 for the Middle Class Scholarship, which supports students at the UCs and CSUs.
Initiating reforms to the Cal Grant program to expand access to more students, but major changes to the program would not be implemented until 2024-25 if there are dollars available.
The budget agreement also includes ongoing base increases for all higher education segments to support operational costs and provides $1.4 billion in grants for the construction of affordable student housing.
State leaders can further support Californians by: providing additional emergency financial assistance to students from low-income households that recently abandoned their educational plans. Education expenses are a major reason why students, especially those from low-income households, canceled their higher education plans in the most recent academic year.
Gann Limit
What’s included in the 2022-23 California statebudget: The budget package keeps state spending under the disco-era Gann Limit during both the 2022-23 fiscal year, which began on July 1, and the two-year period that ended June 30, 2022. To achieve this outcome, state leaders used the limited flexibility provided by the Gann Limit to allocate a large share of state dollars toward purposes that are excluded from the limit. For example, policymakers substantially increased spending on infrastructure, tax refunds, and emergency response — none of which counts toward the Gann Limit. The budget package also changed state law so that significantly more state funding for local governments (“subventions”) will count against local governments’ own spending limits rather than against the state’s limit, creating Gann Limit “room” at the state level.
State leaders can further address the Gann Limit’s impact by: laying the groundwork for meaningful Gann Limit reform. The Gann Limit is a roadblock to creating a more equitable California. Failure to repeal or revise the spending cap could soon jeopardize California’s ability to adequately fund public services.
The 2022-23 state budget is a once-in-a-lifetime opportunity for state leaders to provide significant relief for Californians
This website uses cookies to analyze site traffic and to allow users to complete forms on the site. The California Budget & Policy Center does not share, trade, sell, or otherwise disclose personal information. By using our website you agree to our Privacy Policy.
