Proposed Budget Highlights
The governor’s balanced budget proposal for fiscal 2027 limits new ongoing spending commitments, strengthens reserves, and focuses on government accountability and efficiency. At the same time, the budget focuses on continued implementation of previous investments in priority areas such as education, public safety, and wildfire resilience. The budget also details estimated impacts of, and state responses to, federal changes, as well as planned steps to address a $2.9 billion shortfall for this budget cycle and projected structural operating deficits in the out-years (beyond fiscal 2027). Highlights of the budget include:
Education
- Increases special education base rates to ensure all school districts receive the same rate per pupil for state special education funding.
- Proposes one-time funds to increase access to college and career pathways for high school students through dual enrollment and dual credit opportunities, as well as prioritizes the creation and expansion of dual enrollment and pathways programs through the Student Support and Discretionary Block Grant.
- Invests in expanding the community school model to more sites.
- Proposes a new education governance structure, in line with long-standing recommendations, to move oversight of the California Department of Education under the State Board of Education, as well as expand the State Superintendent’s ability to promote policy alignment across the education continuum.
- Provides full, more predictable per-pupil funding for before, after, and summer school programs for school districts.
- Directs one-time funds to continue educator residence programs.
Wildfire Resilience and Environment
- Expands wildfire and forest resilience efforts, including Cal FIRE aerial firefighting capacity.
- Proposes a new incentive program to help keep clean vehicles affordable and accessible.
- Increases support for drinking water and wastewater projects serving small, disadvantaged, and tribal communities.
Fiscal Discipline and Government Efficiency
- Advances the framework established last year for a dedicated housing and homelessness agency to improve coordination and effectiveness.
- Invests in paying down pension obligations over the next four years.
Federal Impacts
- Includes additional general funds to cover increased administrative costs of CalFresh (SNAP) covered by the state under the One Big Beautiful Bill Act (OBBBA) as well as directs general funds to support initiatives to improve the state’s payment error rate.
- Makes significant budget adjustments to Medi-Cal based on estimated additional costs and reductions under various OBBBA provisions.
Other
- Proposes new affordable housing through Cap-and-Invest auction proceeds.
- Includes new funding for grants to reproductive health care providers.
- Invests in various public safety efforts, including the California Violence Intervention and Prevention Grant Program (CalVIP) and continuing drug interdiction efforts.