Updated January 22th, 2025
Overview
On January 10th, Governor Gavin Newsom unveiled his proposed budget for the 2025-26 fiscal year, totaling $322 billion. We’re excited to share that the budget proposal was generally responsive to this letter signed by more than 1,000 Movement members – thank you to all who participated in that campaign! Thanks to the work of organizations and businesses like you, the budget proposal includes minimal cuts to kids’ services and programs and highlights the Governor’s commitment to supporting children with investments in TK, community schools, after-school programs, and career education.
While these are important steps forward, there’s still more to be done as California continues to rank 35th nationally in child well-being. For those who are interested in getting more “in the weeds”, the blog post below – informed by Children Now policy experts – includes non-exhaustive highlights from the proposed budget across the areas of education, health, early childhood, and child welfare. As a Movement member, you can stay informed and involved in the budget process by keeping an eye out for possible budget-related advocacy opportunities from The Children’s Movement, which we will share before the budget is finalized at the end of June.
In The Weeds: The 2025-26 Proposed State Budget
Education Funding & Programs
Governor Newsom’s proposed budget outlines major investments in California’s education system, with an increase of $7.5 billion over the next two fiscal years for TK-12 schools and community colleges. This funding boost includes a $3.9 billion increase for the current fiscal year and another $3.6 billion for 2025-26. A portion of this increase, about $1.6 billion, is proposed to be held back due to uncertainties in state revenues, but it will likely be allocated later when the draft budget is updated. This cautious approach is designed to ensure flexibility and avoid making long-term financial commitments that would later need to be reversed.
A key focus of the budget is funding the last implementation year of Transitional Kindergarten (TK). Starting in 2025-26 school year, all 4-year-olds will be eligible for TK, adding an estimated 60,000 new students to the program. This expansion comes with funding to improve classroom staffing, reducing the student to teacher ratio from 12 to 1 to 10 to 1, to ensure a better learning environment for young children.
The budget also includes a significant Cost of Living Adjustment (COLA) for the Local Control Funding Formula and categorical programs, providing $2.7 billion to help districts cover rising costs. Additionally, the Governor proposes a major increase in funding for the Expanded Learning Opportunity Program (ELO-P), which provides before and after school programs for students. This expansion will allow more schools to offer these important programs, which help support academic learning and provide safe environments for students after regular school hours.
In response to the ongoing challenges that persist from the COVID-19 pandemic, the Governor has set aside additional funds to help schools recover from the learning disruptions many students faced. This includes $379 million for the Learning Recovery Emergency Block Grant, aimed at helping schools continue to address learning gaps caused by the pandemic, particularly for students who were most affected by school closures.
There’s also a strong emphasis on improving literacy and math education, with $545 million set aside to support literacy coaches, provide screening tools to help identify students’ needs, and create a clearinghouse of teaching materials. In addition, $300 million is proposed for new efforts to recruit and retain teachers, which is especially important as many districts face teacher shortages. This includes funding for programs that encourage new teachers to enter the profession, like the Teacher Recruitment Incentive Grant Program, and support existing teachers in advancing their skills, like the National Board Certification Incentive Program.
The budget includes investments in preparing students for the workforce, with $100 million allocated to help community college students gain credit for prior learning and develop skills through career programs. The proposal also includes funds to enhance the state’s ability to track students’ progress from kindergarten through college via a Cradle-to-Career Data System, ensuring that education systems at all levels work together to help students succeed.
On higher education, the Governor proposes funding for the fourth year of the multi-year Compacts with University of California (UC) and the California State University (CSU), and of multi-year Roadmap with the California Community Colleges (CCC). The budget includes total funding of $45.1 billion ($28.5 billion General Fund and local property tax and $16.6 billion other funds) for UC, CSU, CCC and the California Student Aid Commission.
Health Services & Coverage
California’s recently proposed state budget contains significant funding and new initiatives aimed at improving health and services for children across the state. Among the key updates is the approval of $8 billion in federal funding for a new program called BH-CONNECT, which will enhance mental health services for Medi-Cal members, especially children and youth. This initiative will run from January 2025 through 2029, helping expand behavioral health services for children living with mental health challenges, as well as those experiencing homelessness or involved with the justice system.
The budget also includes continued support for addressing youth substance use disorders through Proposition 64. In 2025-26, nearly $300 million will be dedicated to prevention, treatment, and education programs aimed at youth, helping to prevent substance use before it begins and providing necessary care for those affected.
In addition, schools across California will benefit from a fully funded community schools initiative, which will improve access to integrated educational, health, and mental health services. These funds will support the community school model at more than 2,000 public schools, creating environments where students’ health and well-being are prioritized alongside their learning.
A new fee schedule program within the Children and Youth Behavioral Health Initiative (CYBHI) aims to support the mental health of students by making it easier for schools to provide and get reimbursed for behavioral health services for students under 26. This new program, starting in January 2025, will ensure that more children and young people can get the mental health support they need at school.
The state is also investing in nutrition and health through its California Farm to School Program, which provides healthy meals to nearly half of all schoolchildren in the state, with a focus on helping underserved communities. This program will be supported by $24.9 million to continue growing and improving.
For children with specific needs, the budget also proposes a new diaper initiative, allocating $7.4 million in 2025-26 and $12.5 million in 2026-27 to provide free diapers to families with newborns. This is aimed at improving health outcomes for both mothers and babies, particularly in low-income communities.
Finally, The FY 2024-25 budget act allocated $10 million for the Hearing Aid Coverage for Children Program, but less than $654,000 of that allocation, or 7%, went to children’s services and hearing aids. The Governor’s proposed FY 20205-26 budget includes a significant cut to this program, reducing funding for children’s services to $1.5 million; funding for the program’s administrative vendor, however, remains unchanged.
Child Care & Early Childhood Programs
Governor Newsom continues the state’s ongoing $7.1 billion commitment in funding to state subsidized child care programs, including a total of $4.6 billion in General Fund. This includes the existing reimbursement rates across all child care programs by backfilling expiring federal funds. The Governor’s budget acknowledges the state is still developing a single rate structure as part of the state’s alternative methodology and negotiating a new agreement with the Child Care Providers United-California that is set to expire on June 30, 2025. The proposed budget also maintains the prior year commitments to 146,000 new child care slots, compared to the 2021-22 Budget Act, but does not propose any new child care services in the 2025-26 Budget Year.
Child Welfare Programs
The 2025-26 state budget proposal includes critical investments that will have a direct impact on system-involved children and youth. Among the notable provisions, $1.7 million is allocated for training on the Child and Adolescent Needs and Strengths (CANS) tool, which will help ensure foster care payments issued under the Permanent Foster Care Rate Structure beginning in 2027 are better aligned with the individual needs of children in foster care. Additionally, $1.5 million will be invested in improving the quality of data in the Child Welfare Services Case Management System (CWS/CMS), paving the way for the new Child Welfare Services-California Automated Response and Engagement System (CWS-CARES). This upgrade is expected to improve case management for foster children, ensuring better coordination and more effective services across agencies.
Ongoing funding of $1.5 million will continue to support Homeless Education Technical Assistance Centers, helping homeless youth receive the educational support they need to succeed. Furthermore, $30 million in ongoing funding will expand the Rising Scholars Network, a program that provides college opportunities for students impacted by the criminal justice system.
