Quick look: California’s new budget maintains school funding and invests in literacy, teacher training and transitional kindergarten. Experts say that’s a better-than-expected outcome in a tough fiscal year.
California’s new state budget for 2025-26 largely preserves funding for schools and invests in programs that support student learning, teacher training and expanded services — even as the state faces a tighter financial outlook.
The $321.1 billion spending plan, approved this week by lawmakers and expected to be signed by Gov. Gavin Newsom, includes $114.6 billion for TK-12 schools and community colleges through Proposition 98, which guarantees a minimum level of education funding each year.
That amount is enough to fully fund the Local Control Funding Formula — the main source of state money for school districts — and provide a 2.3 percent cost-of-living adjustment. The budget also sets aside $1.7 billion in one-time funding to help districts manage rising costs and declining enrollment.
Transitional kindergarten will continue expanding to serve all 4-year-olds across the state, with increased funding to support lower adult-to-child ratios and classroom quality.
The state is also reportedly making a major investment in early literacy, providing more than $400 million to train educators and hire literacy coaches. There’s additional support for math instruction, after-school and summer programs, school meals, and teacher recruitment — including $300 million to help student teachers complete their training.
California is facing a $12 billion deficit this year, driven by slowing revenue from capital gains and personal income taxes — the state depends heavily on both, especially from higher-income earners — along with the rising costs of programs expanded during stronger economic years.
To avoid deep cuts, lawmakers and the governor chose to balance the budget using reserve withdrawals, payment delays and targeted savings.
For schools, that means the state will delay about $1.9 billion in education payments until the start of the next fiscal year and draw $405 million from the Proposition 98 rainy day fund, which will be depleted after 2025-26. These budget maneuvers are often used to preserve core programs, but they can create uncertainty for future planning.
Even so, education experts say this is an encouraging outcome for schools, especially in a year when other areas of the state budget are seeing reductions.
Lawmakers are expected to take final votes by the end of this month on key education-related trailer bills, which outline the details for how parts of the budget will be implemented. That includes AB 121, which covers funding and policy for TK-12 education, and AB 123, which focuses on higher education.