California’s education funding landscape is undergoing significant changes as lawmakers and Governor Gavin Newsom negotiate the 2026 budget. The state legislature passed a budget on June 15, 2026, that includes higher revenue projections than those proposed by the governor, allocating several billion dollars in additional spending for TK-12 and community colleges.
The budget proposal includes a record $127 billion for schools and community colleges, with a larger-than-required cost-of-living adjustment for most programs, $1 billion more for community schools, a $2.4 billion boost to ongoing special education funding, and a $5 billion one-time block grant that districts and charter schools can spend however they want.
Key Differences in the Budget Proposals
The Legislature’s budget projects about $5 billion more in revenue than Newsom forecast just a month ago. This would translate to $2 billion more for schools and community colleges under Proposition 98, the formula that guarantees that 40% of general fund money goes to community colleges and schools. The Legislature’s budget also includes a $3.9 billion in education funding that Newsom would withhold until revenue projections come true.
The Legislature’s budget includes several significant changes, including shifting full funding responsibilities for state preschool to Proposition 98, adding more funding for paying student teachers, refurbishing school kitchens, and funding career/technical education. The budget also includes $700 million for districts to upgrade or add school kitchens, $300 million one-time for career/technical education, $450 million on top of Newsom’s proposed $250 million to pay student teachers a stipend to teach in priority areas, $350 million more for the California newcomer’s program to assist refugees through 2032, and $300 million more in assistance for homeless students, through 2032.
The Debate Over Proposition 98 Funding
The debate over Proposition 98 funding has become a contentious issue in the budget negotiations. Education groups, including the California Teachers Association and the California School Boards Association, view the withholding as a manipulation of the Proposition 98 minimum funding guarantee. They see it as a bad precedent that has the effect of loaning money to meet the immediate expenses of other areas of the budget most affected by federal budget cuts, including Medi-Cal.
Assemblywoman Laurie Davis, R-Laguna Niguel, voted against the budget, stating that “This bill shortchanges our districts $3.9 billion they need right now, not in future budget years.” Some education groups are also unhappy about another financial and structural shift suggested by the Legislature, to move all funding for the California State Preschool Program into Proposition 98.
The Impact of Funding Disparities
The way California’s school funding works, schools with large numbers of students who are low-income, English learners, homeless, or in foster care get extra funding. Schools in wealthy areas get less state funding but make up for it in local property taxes and parent donations. However, those in the middle get much less money
This disparity in funding has led to significant differences in the resources available to students. For example, Pinedale Elementary in Fresno has almost no classroom aides, after-school tutors, or behavioral counselors, while Kratt Elementary, less than two miles away, has almost identical demographics but gets $25,000 per student and has the amenities to show for it. Portola Valley Elementary in the Bay Area spends almost $46,000 per student annually, offering music and art classes, mental health counselors, small class sizes, and state-of-the-art facilities.
The consequences of the funding disparities are reflected in students’ test scores. At Pinedale, fewer than 30% of students met the state’s English language arts standard last year, while at Portola Valley, about 85% of students met the standard on both tests.
Solutions to address the funding disparities are being discussed in Sacramento. A bill in the state Senate seeks to fix the problem by creating a reserve account funded by surplus tax revenues in economically flush years. The money would come from the interest generated on the reserve account, and as the account grows, the extra funding would grow. Another bill would expand school funding for high-needs students, but some worry that it would actually make funding shortfalls worse for some districts.
