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Budget Act for 2025–26: Information

Overview of education-related funding included in the Budget Act of 2025–26.

Governor Gavin Newsom signed the 2025 Budget Act and related trailer bills on June 27, 2025. He also signed sets of amendments in July, September and October. Together, these actions, put in place a spending plan for 2025–26 and a revised spending plan for 2024–25. This letter provides information on the budget actions that affect transitional kindergarten (TK) through grade twelve (TK–12), adult education, and early education programs.

Copies of this document, as well as other budget-related documents, are available on the CDE Education Budget web page. Official state budget documents are available through the California Department of Finance (DOF) website External link opens in new window or tab..

Overview

Consistent with the past several years, development of the budget was affected by significant volatility in revenue projections. In January the Department of Finance (DOF) estimated the overall state budget had a small surplus. At the May revision, however, citing primarily expenditure growth in Medi-Cal and the Trump administration’s actions on tariffs, the budget had developed a shortfall of $12 billion. The 2025–26 budget addresses the shortfall with a mix of program reductions, revenue changes, borrowing, and fund shifts.

The estimate of the shortfall and the budget’s spending levels do not reflect any actions that may be necessary due to reductions in federal funding resulting from both the federal administration’s policies and the federal budget reconciliation legislation, which was enacted after the state budget was finalized.

Despite the budget shortfall, education funding remains strong. The total overall funding (federal, state, and local) for TK–12 education programs is $137.8 billion, or $25,155 per pupil. The budget provides cost-of-living adjustments (COLAS) for most programs and includes funding to continue planned expansion of preschool, TK, expanded learning opportunities, and free school meals.

Proposition 98

Proposition 98 (Prop 98) funding (state and local) for TK–12 education and community colleges (TK–14) is $114.6 billion. For TK–12 education only, the funding level is $101.6 billion, or $18,534 per pupil. The budget reflects Prop 98 funding levels for TK–12 education of $86.9 billion in 2023–24 and $104.5 billion in 2024–25.

The Prop 98 calculations increase (rebench) the Test 1 percentage to reflect the addition of TK pupils to school workload. The calculations also adjust the split between TK–12 and the community colleges, beginning in 2025–26, to allocate all of the increase in Prop 98 funding associated with TK expansion to TK–12 programs rather than to the community colleges.

The 2024–25 funding level for TK–14 education is $1.9 billion below the required guaranteed amount under Prop 98. This action creates a settleup obligation of the same amount. The TK–12 omnibus trailer bill (Sec. 70) expresses legislative intent that settleup funding be used to reduce ongoing deficits and protect core programs.

The budget reflects a deposit of $455 million in the Public School System Stabilization Account (PSSSA), the Prop 98 rainy day fund, in 2024–25. The funds are withdrawn in 2025–26. These transfers are required by the formula that governs withdrawals and deposits for the PSSSA.

Major Budget Adjustments

The sections below provide some highlights of the Budget Act and the associated trailer bills, which are listed at the end of this letter. The TK–12 omnibus trailer bill alone contains 99 sections. Section references below refer to the TK–12 omnibus trailer bill unless otherwise indicated.

Prop 98 funding is sometimes designated as “one-time,” signaling that the funding is not likely to be continued in future years. The source of one-time funding is often an unanticipated increase in the Prop 98 guarantee in a prior year. Some one-time funding can also come from budget-year Prop 98 funding identified as one-time or from reappropriations of unused funds from prior-year appropriations.

Local Control Funding Formula

The budget package includes a 2.3 percent cost-of-living adjustment (COLA) for the Local Control Funding Formula (LCFF) in 2025–26.

The budget reflects an LCFF deferral in the amount of $245.6 million from 2024–25 to 2025–26, which Is fully repaid in 2025–26. The budget contains a new deferral of $1.9 billion from 2025–26 to 2026–27 (Education Code [EC] 14041.6).

The trailer bill includes language to protect schools from LCFF funding penalties resulting from exempting TK pupils from English language screening (Sec. 75). The trailer bill also contains multiple sections strengthening requirements for preparation of Local Control and Accountability Plans (LCAPs).

Transitional Kindergarten

The budget package provides a total of $3.3 billion Prop 98 General Fund to fully implement universal TK and to increase the staffing in each TK classroom from one staff per 12 pupils to one staff per 10 pupils. TK expansion has been a gradual process over several years. In 2025–26 children turning four before September 1 are eligible for TK (EC 48000). The budget specifies an add-on to the LCFF formula for the TK staffing increase (EC 42238.02) and also modifies calculations of the penalty for exceeding an average class size of 24 pupils.

The budget contains $10 million Prop 98 General Fund to acquire and test screening instruments to identify multilingual learners in TK (EC 48004). Local educational agencies will be required to screen pupils beginning in 2027–28.

Literacy and Mathematics

The budget provides $480 million Prop 98 General Fund for a package of programs related to literacy. These are:

  • $200 million (one-time) to augment the Literacy Coaches and Reading Specialists Grant Program (EC 53009) which supports literacy programs. These funds will be allocated based on K-3 enrollment to school sites with an unduplicated pupil percentage greater than or equal to 94 percent, with a minimum grant amount of $450,000
  • $15 million (one-time) for a county office of education to provide training for literacy coaches (EC 53009)
  • $200 million (one-time) for professional development on literacy instruction in grades TK–5 (EC 33319.6 and Sec 83),
  • $40 million for literacy screening in grades K–2 (Sec. 88)
  • $15 million for the California Collaborative for Educational Excellence to convene literacy and mathematics networks (Sec. 90)
  • $10 million (one-time) for the California Dyslexia Initiative (Sec. 92).

The budget also provides $30 million one-time Prop 98 General Fund for the Mathematics Professional Learning Partnership program at the Kern County Superintendent of Schools to support training and provide coaching (Sec. 95).

Finally, the budget provides $12.6 million federal funds for the Comprehensive Literacy Development Grant (Item 6100-117-0890, Budget Act). Previous funding under this grant has been used for statewide literacy infrastructure.

Teacher Preparation and Professional Development

The budget provides $300 million one-time Prop 98 General Fund for a new Student Teacher Stipend Program to support prospective educators, administered by the Commission on Teacher Credentialing (CTC) (EC 44400ff). Of this amount, $6 million is available for the Kern County Superintendent of Schools to operate a multimedia campaign to encourage students to become teachers, develop a grants management system, and contract for an evaluation. The legislation specifies that up to $100 million shall be available for the teacher stipend program in subsequent years.

The budget also provides $70 million Prop 98 General Fund to augment the existing Teacher Residency Grant Program administered by the CTC (EC 44415.8) and $30 million Prop 98 General Fund to extend the National Board Certification Incentive Program (Sec. 93). The legislation transfers administration of the National Board Certification Incentive Program to the CTC beginning in 2027–28 (EC 44395).

Student Support and Professional Development Discretionary Block Grant

The budget provides $1.7 billion one-time Prop 98 General Fund for a discretionary block grant (Sec. 81), to be distributed based on average daily attendance. The funds can be used for any purpose although the legislation provides a list of suggested uses of the funds: standards-aligned professional development on the English language and mathematics frameworks, teacher recruitment and retention, career technical education, and offsetting increasing costs.

Learning Recovery Emergency Block Grant

The budget provides $378.7 million one-time Prop 98 General Fund for another year of the Learning Recovery Emergency Block Grant, which supports programs to make up lost instructional time and mitigate learning loss resulting from the COVID pandemic (EC 32526). The funds will be distributed based on a local educational agency’s average daily attendance multiplied by its unduplicated pupil percentage.

Expanded Learning Opportunities

The budget provides $515.1 million Prop 98 General Fund to expand eligibility for grants supporting before-school, after-school, and summer programs. Previously a school’s unduplicated pupil percentage had to be at least 75 percent to be eligible for a grant; the trailer bill changes that to 55 percent (EC 46120). The budget also provides $10.4 million Prop 98 General Fund to increase the minimum grant from $50,000 to $100,000 (EC 46120), and states legislative intent that the per-unit rate shall not be less than $1,575 (Item 6100-110-0001, Budget Bill Jr.).

State Preschool

The budget provides a total of $2.9 billion to support the California State Preschool Program (CSPP) in 2025–26. Included in this amount is a restoration of $672.8 million that was scored as one-time savings in the 2024–25 budget, funding to continue cost-of-care monthly payments implemented pursuant to 2024 budget actions (Welfare and Institutions Code 10277.2), an additional $19.3 million Prop 98 General Fund and $10.2 million non-Prop 98 General Fund to increase cost-of-care monthly payments. The budget also sets aside $52.6 million for one-time stabilization payments for State Preschool programs, temporarily reduces Prop 98 General Fund by $81 million, and transfers $2.5 million to the California Department of Social Services to support cost-of-care monthly payments for childcare programs.

The trailer bill continues for one final year the “hold-harmless” policy (i.e. paying contractors based on their reimbursable expenses, up to their contract’s maximum reimbursable amount) adopted during the COVID pandemic (EC 8245.5, early childhood trailer bill), for programs that are open and providing services. The trailer bill specifies that commencing July 1, 2026, the contract reimbursement shall be based on the lesser of the following: (1) the maximum reimbursable amount stated in the contract, (2) net reimbursable program costs, and (3) the product of the adjusted child days of enrollment for certified children times the contract rate set forth in EC 8245.5. This policy allows reimbursement based on a program’s enrollment rather than attendance.

The budget includes $100 million for the CDE to allocate to CSPP contractors to offset any local reduction in slots due to increases in the enrollment of three-year-old children and an additional $9.5 million to prepare for implementation of prospective payments for services (Items 6100-194-0001 and 6100-196-0001).

The budget also suspends the COLA for state preschool (EC 42238.15, early childhood trailer bill).

Child Nutrition

The budget provides $160 million one-time Prop 98 General Fund for kitchen infrastructure projects and training costs needed to continue implementing universal school meals ($145 million), recruitment and retention of staff ($10 million), and a study of ultra-processed foods by the University of California, to be managed by the Marin County Office of Education ($5 million) (Sec. 79).

The budget also implements the SUN Bucks (Summer Electronic Benefits Transfer) program, which funds summer meals. The amount of funding is $21.9 million Prop 98 General Fund and an equivalent amount of federal funds (Items 6100-201-0001 and 6100-201-0890).

School Facilities

Proposition 2, approved by voters in November 2024, authorizes $8.5 billion in state general obligation bonds for school construction projects. The funds are allocated to new construction ($3.3 billion), modernization ($4 billion), charter schools ($600 million), and career technical education ($600 million). The State Allocation Board administers these funds. The budget projects that $1.5 billion will be available beginning in 2025–26.

Federal Funding

The budget does not include any major changes from previous levels of federal funding. As indicated above, the budget does not account for any potential reductions in federal funding.

Other

  • $174 million Prop 98 General Fund for a 2.3 percent cost-of living adjustment for specified categorical programs
  • $150 million one-time Prop 98 General Fund pending future legislation. The trailer bill specifies that the funds would be available for the California Career Technical Education Incentive Grant Program if legislation is not enacted (Sec. 94)
  • $30 million one-time Prop 98 General Fund for the Riverside County Office of Education to support the Special Olympics (Sec. 86)
  • $20 million one-time Prop 98 General Fund to be allocated to the Sacramento County Office of Education for the Behavioral Health Initiative (Sec. 96)
  • $10.3 million federal funds for the State Performance Plan Technical Assistance Project and the California Technical Assistance Network, which provide technical assistance to special education programs (Item 6100-161-0890)
  • $10 million one-time Prop 98 General Fund to be allocated to the California Collaborative for Educational Excellence for a new Secondary School Redesign Pilot Program (Sec. 84)
  • $5 million one-time non-Prop 98 General Fund for Save the Children, which supports after-school programs in rural districts (Item 6100-222-0001, Budget Bill Jr.)
  • $3.5 million Prop 98 General Fund to support the K–12 High Speed Network (Item 6100-182-0001)
  • $2 million one-time Prop 98 General Fund for digitization and translations of individualized education programs (Sec. 76 and 77)

Budget and Trailer Bills

The Budget Act and selected trailer bills (TBs) are as follows:

Questions:   Fiscal Policy Office | 916-319-0821
Last Reviewed: Friday, November 21, 2025