The May Revise Slashes Funding for Kids

Governor Newsom’s revised state budget brings mixed news for California’s schools and colleges. While some key programs remain funded, overall spending for K-12 schools and community colleges will drop by $4.6 billion. This reduction is tied to Proposition 98, which links school funding to state revenues. Although revenues are higher than expected this year, the state suspended the Prop 98 guarantee for 2023-24, so schools won’t benefit. Looking ahead, projected revenue declines of more than $10 billion in 2025-26 will result in an ongoing $4.3 billion cut to education. Despite the cuts, the Governor is maintaining some education initiatives from his January proposal like increased funding for before- and after-school programs, fully funding universal school meals, protecting teacher training and professional development programs.

To cover the shortfall while preserving these priorities, the State will use the entire $1.2 billion School Rainy Day Fund and borrow from future funding by delaying $1.8 billion in school payments to 2025-26, a tactic often called using the “education credit card.” Additional budget adjustments include lower transitional kindergarten (TK) attendance estimates, smaller cost-of-living increases, suspending cost-of-living adjustments for state preschool, cutting $100 million from discretionary grants, and reducing funds set aside for school facilities. An additional $309 million from local property taxes will help offset some of these costs.

For higher education, the proposed cuts to the University of California and California State University systems are now smaller than initially expected. The Governor is preserving funding agreements that offer 5% annual increases in exchange for improved graduation rates, more California student enrollment, and expanded dual enrollment. Funding for the state’s Master Plan for Career Education also remains intact.

To address the budget shortfall, the May Revision includes proposals to cut funding for programs that are vital to the well-being of some of the most vulnerable children and youth in the foster care system.  

One such program is the Family Urgent Response System (FURS), consisting of a 24/7 helpline and mobile support teams, which helps roughly 5,000 children with lived foster care experience each year. Launched during the pandemic to offer immediate trauma-informed support and stability, FURS has become a lifeline for many children, families, and caregivers. Cutting $13 million from this program puts these vital services at risk, jeopardizing the well-being and stability of children and youth and leaving them without the support they need during crises.  

Another concerning proposal is a $42.7 million reduction to the Emergency Child Care Bridge Program. This program helps children entering foster care find safe, familiar homes by addressing the critical barrier of lack of access to child care. Reductions threaten efforts to place children quickly and securely and to ensure ongoing stability in family homes.   

Additionally, the Revision proposes subjecting implementation of the Tiered Foster Care Rate Structure to a trigger, contingent on available state funding in spring 2027. This rate structure would further support family-based placements—critical for keeping children connected to their families and communities—and prevent youth from being inappropriately placed in group homes or congregate care. 

The Revision proposes reintroducing monthly premiums for certain Californians on Medi-Cal, the state’s low-income health program. Starting in January 2027, adults over age 19 with “unsatisfactory immigration status” could be required to pay $100 per month for Medi-Cal coverage. The goal is to save approximately $1.1 billion in the first year, growing to $2.1 billion over time; however, implementing and managing these premiums would cost the state about $30 million annually. Importantly, the plan does not specify any exemptions, meaning groups such as young adults, pregnant women, or parents with children could also be affected by these new costs.  

Furthermore, the plan proposes freezing Medi-Cal enrollment for undocumented adults over 19, which could result in more than 130,000 young adults losing access to vital health care. Since many of these young adults have been eligible since 2020, this would threaten the health and safety of our most vulnerable communities.  

The budget also proposes the elimination of approximately $504 million in payments to key health providers, including dentists, family planning clinics, and women’s health services. These cuts could weaken the safety net for millions of Californians who rely on these essential services.  

Finally, in a bright spot, the Revision allocates funding to support the 988 Suicide and Crisis Lifeline, a critical resource for individuals facing mental health crises. This hotline is especially vital for young people, LGBTQ+ youth, and other vulnerable populations who face higher risks of mental health challenges. 

The May Revise outlines significant cuts across multiple sectors, including In-Home Supportive Services, with early childhood programs also impacted. Still, some key investments remain intact.  

As California continues negotiations with Child Care Providers United-California on a new agreement before the current one expires in June 2025, the Governor’s revised budget keeps funding steady for monthly child care payments, providing $44.8 million through the existing Cost of Care Plus Rate.  

At the same time, the budget removes the planned 2.3% cost-of-living adjustment, aiming to save $60.7 million in ongoing General Fund support for child care programs, along with $19.3 million from Proposition 98 and $10.2 million in General Fund dollars for the California State Preschool Program. Without this adjustment, early care and education providers and families may struggle to keep up with rising costs, threatening the stability and quality of programs statewide.  

On a more positive note, the Governor maintains support for key early learning initiatives, including the rollout of TK for all 4-year-olds, lowering TK classroom ratios, and boosting early literacy efforts, especially for multilingual learners.  

Lastly, the budget includes $31.45 million in one-time funding to support the California Vaccine Management System or myCAvax, the state’s vaccine management system, which plays a vital role in supporting public health for children and families statewide.