No cuts for schools in the state budget

For the University of California and California State University, the news was better than anticipated. The systems would face a 3% cut for 2025-26 — notably less than the nearly 8% reduction Newsom proposed in January. The smaller cut may provide some relief at a time when higher education leaders in California and across the nation are worried about losses in federal research grants and other funding under Trump administration policies.

The 2.3% cost-of-living adjustment in 2025-26 for community colleges and most TK-12 programs is determined by a federal formula that does not factor in the cost of housing — the biggest expense facing teachers and other employees.

In his May budget revision, Newsom keeps significant money for TK-12 programs that he proposed in January — including fully rolling out transitional kindergarten for 4-year-olds, reducing the average student-to-adult ratio from 12:1 to 10:1 in every TK classroom, and expanding summer school and after-school learning to more districts.

An injection of money for early literacy

Newsom would also add $200 million to his earlier $543 million proposal for early literacy instruction — with money to buy instructional materials, hire literacy coaches and train teachers in “evidence-based literacy instruction,” which is code for teaching phonics, word decoding and other fundamental reading skills.

That funding would take a significant step toward creating and funding a comprehensive early literacy strategy and coincides with compromise legislation, pushed by Assembly Speaker Robert Rivas, on spelling out what the instruction and reading materials should look like.

“We’re thrilled. We’re excited,” said Marshall Tuck, CEO of EdVoice, a Sacramento-based nonprofit organization that co-sponsored early literacy legislation. “In a really tight budget year, prioritizing reading for California kids and investing $200 million is real leadership.”

Martha Hernandez, executive director of Californians Together — an organization that advocates for English learners — agreed. Funding for training on teaching reading and for universal screening in the early grades for reading challenges recognizes the unique needs of English learners, she said. “We are heartened by Gov. Newsom’s continued commitment to literacy, especially for our English learners.”

Newsom would also add to past efforts to recruit teachers by including $64.2 million in one-time funding for the Golden State Teacher Grant Program, which offers college tuition in exchange for teaching in underserved districts and in high-need subjects. Another $100 million would fund stipends for student teachers — since unpaid student teaching is often cited as a barrier to completing credentials.

He would also spend $15 million on a pilot program to redesign middle and high schools to better serve all students and create a network of districts to share what they learn.

The Legislature has a month to reshape Newsom’s budget before the June 15 constitutional deadline to pass a budget for the fiscal year that starts July 1.

What the budget doesn’t include is any funding to cover the potential loss of billions in federal Medi-Cal support for school health services, or cuts in Head Start, training grants for new teachers and research funding for UC and CSU. Newsom criticized the “assault on AmeriCorps — $400 million just whacked under the guise of ‘efficiency’” — while praising volunteers who helped with fire recovery efforts in Los Angeles and tutoring in public schools.

“Our ability to backfill all these federal cuts — no, we’re not going to be in a position to do that. We just are not in that position,” Newsom said. “It’s the old adage, you can’t do everything, but you can do anything. There may be areas where we can make adjustments.”

As previously indicated, Newsom included no money to implement high school ethnic studies. Although the Legislature mandated in 2021 that every school provide the course starting in fall 2025, there is no mandate without funding — meaning districts can choose not to offer it.

In one cost-cutting measure, Newsom is proposing to roll back California’s health insurance program for undocumented immigrant adults — by charging premiums and freezing new enrollment. Advocates said this will affect their children, many of whom are U.S. citizens.

“When a parent or family member is sick and unable to work or provide care, kids suffer as a result,” said Mayra Alvarez, president of the nonprofit organization The Children’s Partnership. “Ripping away these family members’ access to health care, while they are also under threat of cruel immigration enforcement and other anti-immigrant policies, in turn puts the well-being of our children at risk.”

Higher education

State funding for the system of 116 community colleges would change little from last year — receiving 0.6% less at $8.9 billion. However, $531.6 million in Proposition 98 revenue would be deferred for a year under the proposal.

UC would have its funding cut by $129.7 million, while CSU would lose $143.8 million. In January, Newsom had proposed much deeper cuts — $396.6 million and $375.2 million, respectively.

“It feels like we’ve gone from a five-alarm fire to something lesser than that. But we can’t call the emergency response off,” said Joshua Hagen, vice president of policy and advocacy for the Campaign for College Opportunity.

The revised budget maintains a proposal to defer previously promised 5% budget increases until 2027-28 for both systems. Those deferrals — part of Newsom’s multiyear compact agreements with the systems — were also included in his January budget.

The compacts, agreed to in 2022, promised annual budget increases for UC and CSU in exchange for progress toward goals such as increasing graduation rates and enrolling more California residents.

“We were able to hold strong to that over a two-year period. And we’re struggling now with some challenges,” Newsom said during a news conference Wednesday — though he added that the compacts are “sacrosanct” and that the systems would receive their deferred dollars in 2027-28.

By reducing the proposed cut to UC’s budget for 2025-26, the 10-campus system will be able to minimize cuts to student support services and preserve “critical investments like affordable student housing construction,” UC President Michael V. Drake said Wednesday in a statement.

CSU Chancellor Mildred García warned in January that a nearly 8% state budget reduction would result in larger class sizes and fewer course offerings — hampering students’ ability to graduate on time. With cuts reduced to 3%, García praised the May revision as a “thoughtful and measured approach to addressing the state’s fiscal challenges.”

Proposition 98 maneuvers

In total, the May revision proposes $45.7 billion for California’s higher education institutions and the California Student Aid Commission.

The minimum funding for 2025-26 under Proposition 98 — the formula that determines how much of the general fund must go to TK-12 and community colleges — would be $114.6 billion, down from $118.9 billion in 2024-25 because of shrinking state revenues.

Newsom proposes to make up the difference through a series of accounting maneuvers — including:

• Draining the remaining $540 million from a reserve fund that was $8.4 billion just two years ago

• Deferring $1.8 billion due to schools in June 2026 by one month — to July 2026 — creating a short-term delay but long-term obligation

• Withholding $1.3 billion due to schools and community colleges in 2024-25 in anticipation that revenues may fall short

This last maneuver caught the attention of the California School Boards Association, which filed a lawsuit last year over a related issue — still in litigation — and is threatening to sue again.

“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,” Association President Bettye Lusk said in a statement.

The immediate reaction to the budget proposal was positive — with some caveats.

“The bottom line is that amid a budget crisis, the governor is protecting every major investment in education,” said Kevin Gordon, president of Capitol Advisors, a consultant for school districts. “We want to make sure Prop 98 funding is accounted for. As long as that’s the case, there’s not much to complain about.”

Scott Moore, head of Kidango — a nonprofit that runs many Bay Area child care centers — praised the commitment to universal transitional kindergarten while criticizing Newsom’s decision to suspend a cost-of-living adjustment for child care providers for low-income children and freeze funding for emergency child care services for foster and homeless children.

“We know that small class sizes and highly qualified teachers are two of the most important quality standards to ensure children benefit from pre-K. This budget invests wisely in TK,” he said. “The proposed cut to the COLA for child care providers must be restored. Now is the worst time to eliminate a small but very much-needed and deserved COLA for those who take care of our youngest and most vulnerable children.”