California has several budget reserves that help to manage annual state revenues and protect services when the state faces a budget deficit. California’s Constitution and state law govern when funds may be withdrawn from the state’s reserves, the amount that can be withdrawn, and how funds may be used.
TWO RESERVE ACCOUNTS ARE ESTABLISHED IN THE STATE CONSTITUTION:
- Budget Stabilization Account (BSA)
- Public School System Stabilization Account (PSSSA)
Three reserve accounts are established in state law:
- Safety Net Reserve
- Special Fund for Economic Uncertainties (SFEU)
- Projected Surplus Temporary Holding Account
The following table answers five key questions about California’s budget reserves:
- Is the state required to make an annual deposit?
- Can a required deposit be reduced or suspended — and by who?
- When can the funds be withdrawn?
- Is there a limit on the amount of funds that can be withdrawn?
- How can the funds be used by the state?
For more information about California’s reserve accounts, see the Budget Center’s companion resources, including this video — California’s State Budget Reserves Explained.
