Federal dollars support a wide array of public services and systems that touch the lives of all Californians — from health care and food assistance to child care and public schools. Some of these services face unprecedented cuts under the Republican-passed budget bill that President Trump signed in July. These federal reductions target vital services that help the most vulnerable Californians, including immigrant communities, Californians with disabilities, low-income families with young children, older adults living on fixed incomes, and many more.
These budget reductions come on top of other harmful actions taken by Republican leaders in Washington, D.C. These include blocking or delaying hundreds of billions of dollars in federal funding for a broad range of public services, canceling over $9 billion in funding for public broadcasting and foreign aid, and failing to act on California’s request for federal disaster aid to help Angelenos recover from the devastating wildfires that swept through Los Angeles in January.
How Federal Funds Support California’s State Budget and Essential Services
A significant share of federal funding for California flows through the state budget. The enacted state budget for 2025-26 includes almost $175 billion in federal funds. This is over one-third (35.2%) of the total state budget.
Almost 4 in 5 federal dollars that are projected to flow through California’s state budget in 2025-26 — $136.6 billion — support vital health and human services (HHS) for millions of Californians, including children, seniors, and families with low incomes.
- The largest share of federal funding for HHS programs — $119.3 billion — is budgeted through the Department of Health Care Services for Medi-Cal (California’s Medicaid program). Medi-Cal provides health care services to nearly 15 million Californians with low incomes, including children, older adults, and people with disabilities. More than half of Californians enrolled in Medi-Cal are Latinx.
- The second-largest share of federal funding for HHS programs — $11.6 billion — goes to the Department of Social Services. These funds support child welfare services, foster care, the CalWORKs program, and other critical services that assist low-income and vulnerable Californians.
The remaining federal funds that are projected to flow through the state budget in 2025-26 — $38.0 billion — support a broad range of public services and systems. This includes:
- $8.7 billion for labor and workforce development programs, primarily for unemployment insurance benefits for jobless Californians;
- $8.1 billion for K-12 education;
- $7.3 billion for higher education (the California Community Colleges, the California State University, and the University of California);
- $6.8 billion for transportation, primarily to improve state and local transportation infrastructure; and
- $7.0 billion for additional public services and systems, including environmental protection, the state court system, and state corrections.
Federal Budget Cuts Largely Target Health Care and Food Assistance, Threatening Californians’ Health and Financial Security
On July 4, President Trump signed into law a budget bill that strips away health care and food assistance from tens of millions of Americans, while doubling down on costly tax cuts that mainly benefit corporations and the wealthy.
The Republican-passed bill sets in motion massive reductions to federal funding for Medicaid health coverage (Medi-Cal in California) and SNAP food assistance (CalFresh in California) — cuts that will destabilize the state budget and harm millions of Californians, including children, older adults, and people with disabilities.
The budget bill was opposed by every Democrat and backed by every Republican in California’s congressional delegation.
President Trump’s budget bill cuts more than $1 trillion from Medicaid over the next decade. This includes creating bureaucratic barriers to coverage like burdensome and ineffective work requirements, taking away health care from many immigrants, and making other changes that will diminish federal support for Medicaid over the next few years. Overall, these changes will:
- Eliminate or put at risk health coverage for millions of Californians with low incomes who rely on Medi-Cal to meet their health care needs.
- Reduce federal funding for Medi-Cal over the next several years. This funding loss is especially concerning given that federal support for Medi-Cal makes up more than two-thirds (68.4%) of all federal funds that flow through California’s state budget.
In addition, Trump’s budget bill includes billions of dollars in damaging cuts to SNAP (CalFresh) food assistance, education, and other critical services — while simultaneously adopting trillions of dollars in tax cuts that disproportionately benefit corporations and the wealthy.
Mitigating the Impact of Federal Budget Cuts Requires Bold State Action
The impacts of these harmful federal funding cuts and policy changes will be felt across California for years to come. Vulnerable Californians, including those with low incomes, older adults, people with disabilities, and communities of color, will face the greatest harm to their well-being as a result.
Mitigating these impacts will require bold state action. This should include state tax policy changes to raise the revenue needed to prevent the erosion of essential public services and protect Californians from deepening hardship.
