How Much Money Is in the State’s Budget Reserves?
At the end of February 2023, California held a total of $37.2 billion in four state budget reserves:
| Budget Stabilization Account (BSA) | $23.3 billion |
| Public School System Stabilization Account (PSSSA) | $9.5 billion |
| Special Fund for Economic Uncertainties (SFEU) | $3.5 billion |
| Safety Net Reserve | $900 million |
California’s Budget Reserves
California’s Constitution and state law govern when funds may be withdrawn from these reserves, the amount that can be withdrawn, and how funds may be used.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) | Public School System Stabilization Account (PSSSA) | Safety Net Reserve | Special Fund for Economic Uncertainties (SFEU) | |
|---|---|---|---|---|
| Is the state required to make an annual deposit? | Yes | No 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. | No | No |
| 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 applicable | Not 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| When can funds be withdrawn? | Funds may be withdrawn if the governor declares a budget emergency and the Legislature passes a bill, by majority vote, to withdraw funds.2 The withdrawal rules governing the BSA may not apply to some of the funds in the BSA. Specifically, of the $23.3 billion in the account as of December 31, 2022, $1.8 billion was not deposited in accordance with the current constitutional rules. The Legislative Analyst’s Office suggests that the Legislature may be able to appropriate this $1.8 billion “optional” balance without a declaration of a budget emergency by the governor. In contrast, under this interpretation, the various withdrawal rules would apply to the remaining BSA balance. Separate and apart 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. | No | No |
| 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. |
