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. Under the incoming Trump administration and a Republican-controlled Congress, many of these services are expected to face significant reductions — in large part to pay for tax cuts for corporations and the wealthy. Federal funding cuts would devastate 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.
How Federal Funds Support California’s State Budget and Programs
A significant share of federal funding for California flows through the state budget. The enacted state budget for 2024-25 — the fiscal year that began on July 1, 2024 — includes $153 billion in federal funds. This is more than one-third (33.9%) of the total state budget.
More than 3 in 4 federal dollars that are estimated to flow through the state budget in 2024-25 — $115.7 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 — $98.5 billion — is budgeted through the Department of Health Care Services for Medi-Cal (California’s Medicaid program). Medi-Cal provides health care services to more than 14 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 — $12.1 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 2024-25 — $37.3 billion — support a broad range of public services and systems. This includes:
- $8.5 billion for labor and workforce development programs, primarily for unemployment insurance benefits for jobless Californians;
- $7.9 billion for K-12 education;
- $7.4 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
- $6.8 billion for additional public services and systems, including environmental protection, the state court system, and state corrections.
Potential Federal Cuts Threaten California: Health Care, Safety Net, Education At Risk
The outcome of the November 2024 national election portends major cuts to federal funding for key public services. Such cuts would have devastating consequences for Californians. Federal funding for Medi-Cal alone comprises almost two-thirds (64.4%) of all federal funding that flows through the state budget. Republicans have made clear their intention to curtail this spending.
Certain Republican-championed cuts would be particularly harmful to Medi-Cal, like the proposal to fund Medicaid through a block grant. This change would cap federal funding well below California’s actual Medi-Cal costs, forcing state policymakers to find alternative funding in an already tight budget and/or consider cuts to Medi-Cal eligibility, services, or provider rates. This block grant proposal, and others like it, would jeopardize access to Medi-Cal for the one-third of Californians — more than 14 million — who rely on it.
Other services are also at risk, including some that are funded with federal dollars that flow directly to Californians outside of the state budget — such as federal food assistance provided through the state’s CalFresh program and federal Supplemental Security Income (SSI) payments for low-income seniors and people with disabilities.
The incoming Trump administration and congressional Republicans have proposed to decrease federal support in several other policy areas — including for K-12 education — while simultaneously reducing federal revenues by extending tax cuts for corporations and the wealthy.
The resulting ebb in federal funding would trickle down to the state level and cause harm across the country. This would leave state policymakers with difficult decisions about how to fill — as much as possible — the resulting funding gaps in order to prevent the erosion of public services and systems that promote economic security and opportunity for millions of Californians.
