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.
What’s included in the 2022-23 California state budget: 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 further support 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.
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.
What’s included in the 2022-23 California state budget: 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.
Paid Time Off
What was not included in the 2022-23 California state budget: The final budget agreement fails to strengthen key programs that are critically necessary for workers in balancing work, their own health, and family obligations. Specifically, the final budget agreement does not update payment rates for the state’s paid family leave and disability insurance programs, leaving in place a barrier to utilizing these programs for workers paid low wages. And, despite providing tax credits for businesses to cover the expense of COVID-19 supplemental paid sick days, the budget agreement fails to extend this pandemic safeguard beyond the current sunset date of September 30, 2022. This will leave many workers with just three paid sick days per year.
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 by boosting 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.
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.
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 state budget: 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.
What’s included in the 2022-23 California state budget: $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.
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.
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.
What’s included in the 2022-23 California state budget: 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.
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 state budget: 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.
What’s included in the 2022-23 California state budget: 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.
State leaders can better support Californians by: providing additional resources to leverage the language assets of more than 40% of the state’s K-12 students who live in a home where a language other than English is spoken.
What’s included in the 2022-23 California state budget: 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.
What’s included in the 2022-23 California state budget: 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.