Governor Newsom’s final state budget proposal addresses an anticipated deficit, but is based on revenue estimates that are higher than anticipated and does not assume a recession or market downturn in the 2026-27 fiscal year. The proposals for education include modest increases and largely avoids cuts but also includes a controversial proposal to withhold $5.6 billion from Prop. 98. CFT is aligned with other education labor and advocacy groups in opposition of this proposal.
Overall, the state budget as proposed is roughly 9% higher than the current year, for a total of $348.9 billion. The General Fund spending is proposed to be $20 billion more than 2025-26, at $248.3 billion. Newsom’s proposal suspends an expected deposit for the current year into the state’s primary Rainy Day fund (Budget Stabilization Account) but ends the fiscal year with $23 billion in total state reserves.
The governor’s approach maintains existing programs and limits new spending and programs, though there are a couple of significant education proposals. The Proposition 98 guarantee is now estimated at $21.8 billion above the 2025-26 enacted budget, with higher amounts in all three years of the updated estimate. For TK-14, a fully funded statutory cost-of-living adjustment (estimated at 2.41%) is included in the proposal. For the University of California, there are proposed funding increases consistent with intent language in prior years.
The January budget proposal also includes a controversial proposal to reform the way the state’s public education governance bodies are structured. The reform would shift oversight and management of the CA Department of Education from the State Superintendent of Public Instruction to an Education Commissioner appointed by the governor. This new Commissioner would also serve as the executive officer of the State Board of Education. If adopted in the 2026-27 budget, the new structure would take effect on January 1, 2027.
Over the coming months, CFT will continue to closely monitor the state’s fiscal outlook and to advocate for a budget that prioritizes public education. The legislative budget committees will meet and deliberate this spring, and Gov. Newsom will release additional details about his proposals for the 2026-27 budget. The next full budget proposal will be released in May as the May Revision.