Gov. Gavin Newsom outlines his proposed 2025-26 $322 billion state budget during a news conference at California State University, Stanislaus in Turlock on Jan. 6, 2025.
Credit: AP Photo / Rich Pedroncelli
California school districts would receive $2.5 billion through a small cost-of-living increase, plus additional funding to train math and reading coaches, expand summer and after-school programs, and help launch the state’s Master Plan for Career Education in the proposed 2025-26 state budget that Gov. Gavin Newsom released Friday.
But countering a stable funding forecast for schools and community colleges, Newsom said both the University of California and California State University should expect as deep as an 8% cut in ongoing state money.
Newsom’s budget included a strong caution. He warned that revenues could change between now and May, when he revises the budget, because of a potential global financial instability, volatility in stock market prices, and likely conflicts with President Trump that could jeopardize federal funding.
“California is facing a new federal administration that has expressed unalloyed and uninformed hostility toward the state, threatening the funding of essential services for political stunts,” Newsom stated in the introduction to the 2025-26 budget. The governor, who previewed the budget Monday, was in Los Angeles responding to the wildfires and not at a press conference today by the Department of Finance.
Christopher Nellum, executive director of the advocacy non-profit Education Trust-West, urged Newsom and the Legislature to stand firm on behalf of “many students of color and multilingual learners (who) are feeling uncertain and concerned.”
“We’re glad to see Governor Newsom affirming that California is a state that believes in and invests in educational equity,” he said. “If the incoming federal administration does what it says it will, state policymakers will find themselves standing between harm and the people of California”.
The bulk of state funding for the state’s nearly 1,000 school districts, 1,300 charter schools and community colleges is through Proposition 98, a 1988, voter-approved formula. The budget projected that Prop. 98 will be flat in 2025-26 at $118.9 billion, $300 million less than $119.2 billion in 2024-25. To avoid overfunding, the state, for now, will assume 2024-25 funding will end up $1.6 billion less, according to the budget.
Per-pupil funding for Prop. 98 would rise to $18,918 and $24,764 per pupil including federal funding and other state money, including pension contributions to teachers.
Bad news for UC and CSU
Both the University of California and California State University should expect as deep as an 8% decrease in ongoing general fund dollars under Newsom’s proposed budget for 2025-26. That’s a decline of $396.6 million at UC and $375.2 million at CSU, which officials say would affect academics and student services.
UC, though, expects its reduction will be somewhat smaller, at $271 million, because the system will be getting a restoration of $125 million that was cut in last year’s budget. But even with that, university officials say they expect problems.
UC President Michael Drake said he’s concerned about the impact that the cuts would have “on our students and campus services.”
CSU Chancellor Mildred García expressed disappointment that the governor’s budget maintains plans for a 7.95% cut in light of a rosier state budget outlook than previously projected – and said she hopes that ongoing funding will be restored if state revenues improve.
“The impact of such deep funding cuts will have significant real-world consequences, both in and out of the classroom,” García said in a statement. “Larger class sizes, fewer course offerings and a reduced workforce will hinder students’ ability to graduate on time and weaken California’s ability to meet its increasing demands for a diverse and highly educated workforce.”
The two four-year systems were each due to receive a 5% base increase in 2025-26, but the state would also defer that commitment until 2027-28, a move that was telegraphed in the 2024 budget agreement. UC additionally would have to wait until 2027-28 for a $31 million commitment offsetting revenue it lost by enrolling fewer out-of-state undergraduates and more in-state students.
New programs for schools
The expiration of about $3 billion for existing spending will free up money for one-time funding beyond the 2.4% cost of living increase for TK through grade 12.
These include:
Transitional kindergarten: The budget completes the four-year phase-in for the new program that serves as a bridge between preschool and kindergarten for all four-year-olds. In fulfilling a commitment, Newsom is also providing $1.5 billion to lower the student-to-teacher ratio from 12:1 to 10:1 in every TK classroom. This is key to maintaining quality because younger children need more personal attention, experts say.
“This is great news,” said Scott Moore, head of Kidango, a nonprofit that runs many Bay Area child care centers. “With this move to a smaller class size, TK takes an important step to becoming the high quality pre-k experience all children deserve.”
Literacy instruction: The budget would double $500 million for literacy coaches appropriated in two recent budgets and enable the funding to include math coaches. It also includes:
- $40 million for training and materials to inaugurate annual universal screening kindergartners through second graders for potential learning challenges, including dyslexia.
- $5 million to launch a Literacy Network as a clearinghouse for state-developed literacy resources and support to districts with persistent performance challenges.
Summer and after-school programs: The state will extend the Expanded Learning Opportunities Program for grades TK-6 for districts in which 55% of students are low-income students, English learners, or students in foster care. That will require an additional $435 million. Until now, funding was for only districts with 75% or more of qualifying students.
Teacher recruitment: The budget proposal includes $300 million for teacher recruitment, including $150 million in financial assistance to teacher candidates. With $50 million, it would revive dwindling funding in the Golden State Teacher Grant program, which awards up to $20,000 to students enrolled in teacher preparation programs who commit to work in priority schools or in the California State Preschool Program.
A $1.8 billion discretionary funding: Districts will have discretion over a new Student Support and Discretionary Block Grant, but will be encouraged to spend it on professional development for teachers in reading instruction, especially for English learners; teacher training in the new math standards and additional efforts to address the teacher shortage.
Career education: In multiple pieces, the budget supports Newsom’s proposed Master Plan for Career Education whose goal is to make it easier for Californians of all ages and backgrounds to find jobs in high-wage, high-growth fields.
- $100 million to support community colleges in validating the experience students bring from their jobs, the military, internships or even volunteering.
- $5 million in ongoing funding to establish a planning agency to put the Master Plan into practice and $4 million to support regional coordination for career education and training.
It also allows districts to districts to use funding from the $1.8 billion discretionary block grant to expand career pathways and dual enrollment.
Funding for career education comes through so many different programs, which school leaders describe as both a blessing and a curse. The budget directs the Department of Education to examine how it could consolidate applications for all these different grants into one single application process.
Barring a big drop in revenue, the 2025-26 proposal would mark a return to normal following the current year’s jury-rigged budget. To avoid education cuts and deal with the hangover from pandemic revenue complications, in the past two budgets, Newsom and the Legislature drained the $8.4 billion Prop. 98 rainy day fund and withheld hundreds of millions of dollars, called deferrals, from districts. The proposed budget would eliminate the deferrals and rebuild the Prop. 98 rainy day fund to $1.5 billion.
The State budget Process
Governor’s initial budget proposal:
- Must be released by January 10.
- Assumes an estimate of revenues the state will collect over the next 18 months (by June 30, 2026). Actual revenues are often significantly different based on economic conditions, federal policy and unforeseen events, like the destructive fires in Los Angeles.
May revision: In mid-May, Newsom will submit a revised budget with an updated revenue forecast.
Legislature’s response: The Assembly and Senate have until June 15 to hold hearings and respond with their own version.
Negotiation: Behind closed doors, Legislative leaders and the governor settle differences. Lawmakers sign off, and the governor signs the final version.
- About 40% of the state’s general fund will go to schools and community colleges. The bulk goes to keeping schools running, but in some years new money is spent on new programs, like, in recent years, transitional kindergarten and community schools.
- Governors increasingly have used the budget to rewrite statutes outside of the legislative process. That’s why it’s important to read the fine print in massive “budget trailer bills” written after the budget is passed.
