❖ Budget News & Updates

California Budget Deal Reached — Schools Get Record Funding, Zero Deficit for Two Years

Governor Newsom, Senate President pro Tempore Monique Limón, and Assembly Speaker Robert Rivas announced a final 2026-27 state budget agreement on June 26, 2026. The deal is historic on two fronts: it balances the General Fund with zero deficit for both 2026-27 and 2027-28, and it delivers record per-pupil funding for California's TK-12 schools. The Legislature is scheduled to vote on approximately 20 implementing bills — including the education omnibus trailer bill (SB/AB 126) — on Monday, June 29. Total state spending reaches $351.7 billion for 2026-27, with General Fund spending at $251.5 billion.

• Record per-pupil funding: $21,148 from Prop 98 alone; estimated $28,207 per pupil from all state and federal sources
• LCFF: +$2.2 billion with a 4.31% "Super COLA" — same rate adopted by the Legislature on June 15
• Special Education: +$1.8 billion ongoing — historic base rate and cost pool increases
• Community Schools: +$1 billion ongoing — including new Promise Neighborhood partnerships
• $5 billion one-time block grant — for dual enrollment, career pathways, deferred maintenance, and professional development through 2032
• School facilities: $1.5B + $500M — Prop 2 bonds for construction; separate $500M for kitchen infrastructure and family food pantries
• 22,770 new child care slots added; 2% COLA for all child care programs
• $3.9B Prop 98 settle-up: 33% of any higher-than-projected revenues earmarked to pay down the outstanding obligation to schools from 2025-26
• Education governance change: Department of Education formally moved into the Executive Branch — a Newsom priority

Legislature Passes 2026-27 Budget — Schools Get Billions More; Newsom Negotiations Begin

The California Legislature passed the 2026-27 budget on June 15, meeting the constitutional deadline. Both chambers voted on the same unified bill (AB 109) — the Senate approved 28–9, the Assembly 59–18. The Legislature adopted Gov. Newsom's May Revision as a baseline, then added billions in additional spending for TK-12 based on higher revenue projections (~$5 billion more than the Governor forecast, yielding $2B more for schools under Prop 98). Active negotiations with the Governor continue through June 30.

• COLA: 4.31% adopted — same "Super COLA" as May Revision; Legislature adds $2B more overall via higher Prop 98
• Special Education: $2.4B ongoing — largest increase in state history; Legislature adds $450M for student teacher stipends
• Child Nutrition: +$700M one-time — school kitchen upgrades and family food pantries
• Child Care: +$270M — subsidized care for 22,770 additional children from low-income families
• Transportation: $561M preserved — $239M ongoing + $322M one-time for fleet modernization; adopted as-is
• Block Grant: $5B one-time — fully discretionary; districts & charters spend as they see fit
• $3.9B withholding: partial resolution — Legislature demanded "reliable repayment schedule"; not yet restored
• Preschool structural shift (controversial) — Legislature proposes moving $800M in preschool into Prop 98; CSBA strongly opposed

May Revision Released: Schools Get More — With One Catch

Gov. Newsom released the 2026-27 May Revision one day early on May 14, 2026. School districts received most items on their wish list — a significantly higher COLA, the largest special education investment in state history, and a doubled discretionary block grant. But a major point of contention remains: Newsom is still withholding $3.9 billion in Proposition 98 funding that school organizations say belongs in classrooms now, with some threatening lawsuits over what they call a constitutional violation.

• COLA raised to 4.31% — up from the statutory 2.87%; LCFF increases from $3.1B (January) to $4.0B; becomes new base for future calculations
• Special Ed: $2.4B total increase — "the largest investment in special education in California history, maybe in American history" — Newsom; +43% over last year
• Block Grant doubled to $5B — up from $2.8B in January; wide district discretion for teacher training, literacy, math, career pathways
• Prop 98 Guarantee: record $127.1B — per-pupil funding reaches a record $21,013; total with federal/other sources: $28,282
• $3.9B still withheld — Newsom released $1.7B of the $5.6B held back in January; $3.9B deferred to next year; CTA and CSBA threatening to sue
• Community Schools: +$1B — added to $4.1B already invested; +~$500M in repurposed extension grants
• Preschool COLA cut to 2.01% — reduced from the January proposal of 2.41%, drawing criticism from early education advocates

California Schools Could See Up to $15.6 Billion More in Thursday's May Revision

With the May Revision just days away, a major shift in California's school funding picture has emerged. Surging state revenues — driven largely by AI investment gains — have produced an estimated $10 billion Prop. 98 education surplus beyond what Gov. Newsom projected in January. Under Prop. 98, roughly 40% of state general fund revenues are constitutionally guaranteed to schools and community colleges. Add back the $5.6 billion Newsom withheld in January — which both the Assembly and Senate say the state Constitution requires be restored — and districts could be looking at a total windfall of up to $15.6 billion above January projections for 2026-27. The key takeaways from the article:

• $15.6 billion in additional Prop. 98 funding potentially flowing to schools and community colleges
• COLA revised upward from 2.41% to 2.87%, worth approximately $500 million more to district operating budgets
• $5.6 billion withheld in the January budget is now expected to be restored in the May Revision

The LCFF cost-of-living adjustment is expected to climb from 2.41% to 2.87% — worth roughly $500 million more to district budgets. Both chambers have pledged the $5.6 billion will flow; the Assembly called it an outright constitutional obligation. How the windfall is divided — one-time vs. ongoing, base COLA vs. new programs — will be the central debate when the May Revision is released on May 15, 2026.