Quick look: Gov. Gavin Newsom’s latest budget plan for 2025-26 preserves funding for key K-12 programs — including expanded learning — even as the state works to close a $12 billion deficit. Still, local schools and districts are planning cautiously in response to declining enrollment, rising costs and a smaller cost-of-living adjustment.
Despite the unveiling of a revised state budget that aims to close a $12 billion deficit, California’s public schools are poised to maintain funding for critical programs focused on student learning and recovery.
Gov. Gavin Newsom on Wednesday released his updated $322 billion spending plan for 2025-26, citing revenue losses tied to federal tariff policies and rising social service costs. The revised proposal walks back some earlier commitments but holds the line on a number of education priorities.
In a statement, State Superintendent of Public Instruction Tony Thurmond expressed gratitude for the continued support of programs aligned with statewide efforts to boost student achievement. These include $525 million for expanded learning programs, $200 million in one-time funds for literacy professional development and $10 million for reading difficulty screeners.
Universal transitional kindergarten
Although the state is moving to reduce spending in some areas — including proposed Medi-Cal rollbacks, capped overtime for in-home care workers and reductions to climate-related funds — K-12 education appears to be spared from the most severe cuts.
Among the state investments left intact is the full implementation of universal transitional kindergarten, aimed at providing early learning opportunities for all 4-year-olds in California.
At the same time, higher education systems are facing reductions, with the University of California and California State University systems absorbing 3 percent cuts to their base operations instead of the deeper 8 percent initially proposed.
School districts across California still continue to face financial headwinds tied to declining enrollment, rising operational costs and smaller-than-anticipated cost-of-living adjustments. Even with key programs funded in the May revise, local education leaders are expected to proceed cautiously as they plan for the year ahead.
Proposition 98 guarantee lowered
The May Revision sets the cost-of-living increase for school funding at 2.3 percent — a little lower than earlier estimates — and delays $1.8 billion in school payments by one month, from June to July 2026, to help manage the state’s cash flow.
The updated plan follows Newsom’s opening proposal in January that had projected a modest surplus. But revised estimates revealed a deeper shortfall, driven by rising costs and slower-than-expected revenues.
The Proposition 98 minimum guarantee, which determines funding levels for TK-14 education, has also been revised downward by approximately $4.6 billion from the January estimate, though it remains higher than it was in 2023-24. The May Revision also draws dollars from the Proposition 98 rainy day fund to help sustain current investments.
Newsom’s revised plan will be the subject of negotiations with state lawmakers, who must pass a balanced budget by June 15. School districts are simultaneously finalizing their own spending plans for the upcoming year, with a deadline of June 30.