Governor’s initial proposal for 2024-25 budget addresses large deficit without significant cuts or increases to public education funding

On January 10, Governor Newsom presented his initial budget proposal for the upcoming fiscal year. With tax receipts down this year and the late tax deadline last year, the Department of Finance is estimating a $37.9 billion budget deficit in the year ahead. Despite the shortfall, Governor Newsom did not propose significant cuts to education, instead essentially funding K-14 education at a similar level to the current year. The Governor’s proposed budget defers an anticipated 5% base funding increase for the University of California.

While significant cuts are not proposed, the proposed COLA for schools and community college funding is estimated at just .76%. The final statutory COLA amount will be finalized in the coming months, and it is expected to remain well below the record increases in the past few years. The January budget proposal applies the COLA to TK-12 categorial programs that typically receive the COLA and to many community college programs, as usual. With the modest COLA, districts should have relatively flat year over year state funding under this proposal, though where enrollment is declining a lot, state revenues may be lower. Federal COVID-19 stimulus funds (e.g., ESSER and HEERF) are also being spent down and expiring.

Given the uncertainty of the state’s fiscal condition last summer when the budget was finalized and the economic slowdown over the past year, a budget deficit this year was expected. California’s budget reserves are at all-time highs as well and the state is in a fairly strong position for these conditions. The governor’s January proposal has measures including cuts, borrowing, funding delays and deferrals, and relies on state and Prop. 98 rainy day funds. Nonetheless, the scale of the deficit is large and many details about the governor’s solutions are still unclear.

Over the coming months, CFT will continue to advocate for a budget that prioritizes public education and push for bold actions that tackle critical issues facing our schools, including addressing ongoing staffing shortages and ensuring students get the services and support they deserve. The legislative budget committees will meet and deliberate this spring, and Gov. Newsom will release additional details about his proposals for the 2024-25 budget. The next full budget proposal will be released in May as the May Revision.

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For more information, please contact CFT Research Director Aimee Shreck.