“While the Governor’s May Revise Budget attempts to preserve funding for TK-14 schools, one major provision raises our concern: a proposal to allow the state to arbitrarily withhold $1.3 billion from the Proposition 98 school funding guarantee. This is the second consecutive year the budget has contained some form of unconstitutional Prop 98 manipulation,” CSBA President Dr. Bettye Lusk said. “Last year’s maneuver is the subject of ongoing CSBA litigation and if this provision is not removed, we may be forced to take similar legal action this year. It’s also disheartening to see anticipated funding for the Local Control Funding Formula (LCFF) fall by $400 million, or roughly $72 per student based on average daily attendance.
“The proper way to respond to our current budget situation is to uphold Prop 98’s constitutional requirements for schools, avoid unfunded mandates, give local educational agencies the flexibility to meet local needs instead of dictating one-size-fits-all programs from Sacramento, and allow schools the time and resources needed to effectively implement ongoing programs before requiring new initiatives,” Lusk continued. “Even in lean times, investing in public schools is California’s best economic strategy, so we cannot sidestep constitutional protections for public education nor underfund Prop 98 to offset shortfalls in other sections of the budget.”
In advance of the May Revise announcement, the Governor’s office released a memo stating that the impact of President Donald Trump’s tariffs and the ensuing economic uncertainty has resulted in a $16 billion drop in state revenues, leading to an estimated $12 billion deficit in the coming 2025–26 fiscal year. The on-again, off-again tariffs have resulted in wild swings in the stock market; because state revenues are heavily influenced by personal income taxes, including capital gains, fluctuations in the stock market can have a disproportionate influence on California’s General Fund. Adding to the state’s fiscal pressures are recent expansions of Medi-Cal eligibility, which is quickly increasing cost pressures on the non-Proposition 98 side of the budget.
To bridge the $12 billion gap, the Governor is proposing to use a combination of a withdrawal from the state General Fund Reserve, programmatic savings through reductions in expenditures and other cost-saving measures. In total, the overall budget proposes $321.9 billion in state spending, but forecasts a year-over-year operational deficit of $14 billion in 2026–27, $19 billion in 2027–28 and $13 billion in 2028–29.
Overall, as in past years, public education funding under Proposition 98 is largely being preserved but comes with a caveat — a troubling withholding of $1.3 billion in public education funding. Most cuts and cost-savings proposals are to programs on the non-Prop 98 side of the budget.
Below is an abbreviated summary of Prop 98 and public education funding and program proposals included in the May Revise. For the full summary, visit blog.csba.org/may-revise-25.
In a win for CSBA advocacy, the May Revise maintains the state’s commitment to allocating additional ongoing funding to Prop 98, known as rebenching, to reflect the full implementation of universal transitional kindergarten (UTK). Additionally, the May Revise proposes a change to how funding generated by this rebench is distributed, such that TK-12 education receives the full amount of the funding generated by the rebench, rather than a portion (approximately 11 percent) going to community colleges. The May Revise proposal directs all UTK-derived funding to the TK-12 public education segment going forward.
Critically, the Governor continues to propose a maneuver to withhold $1.3 billion in Prop 98 funding from the 2024–25 fiscal year and only allocate that funding to schools. This represents the second effort in as many years to manipulate how the Prop 98 funding guarantee is calculated. CSBA is strongly opposed to this and is currently in litigation with the state challenging the inclusion of the first Prop 98 maneuver included in the 2023–24 budget.
- Lowers the proposed grant from $1.8 billion to $1.7 billion but maintains the intent that it may be used for rising costs; professional development for teachers on the English Language Arts/English Language Development (ELA/ELD) Framework, the Literacy Roadmap and the math framework; and career pathways and dual enrollment expansion efforts consistent with the Master Plan for Career Education.
- Maintains the full implementation of the Expanded Learning Opportunities Program (ELO-P) as proposed in the January Budget Proposal. This includes increasing the number of LEAs that must offer ELO-P to all pupils, by expanding the program to LEAs serving grades TK-6 with an unduplicated pupil percentage of 55 percent or more, which would replace the original threshold of 75 percent unduplicated students.
- Increases the proposed funding increase by $80.5 million from $435 million to $515.5 million for over $4.4 billion in ongoing Prop 98 funding.
- The May Revise includes an additional $10 million to increase the minimum LEA grant amount from $50,000 to $100,000.
- Provides approximately $745.3 million in one-time Prop 98 funding for the following programs:
- $535.3 million to provide LEAs with instructional materials that reflect current research; to support educators to implement the ELA/ELD Framework, the state’s Literacy Roadmap and the state’s English Learner Roadmap; to support LEAs in implementing early screening of students in K-2 for risk of reading difficulties, and an expanded Literacy Coaches Program that will include math coaches.
- $200 million to support evidence-based professional learning for elementary school educators aligned with the ELA/ELD Framework.
On June 9, the Legislature came to an agreement on the proposed 2025–26 State Budget, which includes the Governor’s proposal to “withhold” $1.3 billion in Prop 98 funding from public schools. CSBA mobilized an Action Alert on June 10. The Governor has until June 30 to sign the budget act into law.