Ofelia Medina | Senior Policy Strategist |
February 26, 2025
In early January, California Governor Gavin Newsom provided a high-level highlight of the state’s 2025-2026 Budget proposal, which included a total proposed spending plan of $322 billion with a modest surplus of $363 million and almost $17 billion more in revenue than planned. Newsom’s briefing emphasized accountability and efficiency, calling attention to policy and programmatic areas that have been subject to media scrutiny and critique from the incoming Federal administration, such as housing and homelessness services as well as justice reform and crime prevention.
Overall, the governor’s spending plan protects and maintains much of the modest progress made in prior budget years to help improve economic security and opportunities for Californians with low incomes and Californians of color, including policy advances in health care and behavioral health, cash assistance (refundable tax credits and SSI/SSP), food assistance, and universal transitional kindergarten (TK). The proposal also boosts funding for TK-12 schools and community colleges due to automatic adjustments in constitutionally required funding allocations and budget commitments made in recent years.
Newsom’s budget included a strong caution, however. He warned that revenues could change between now and May, when he revises his budget proposal, because of potential global financial instability, volatility in stock market prices, and likely conflicts with President Donald Trump that could jeopardize federal funding.
Not included in the governor’s budget proposal is $50 million that was agreed to in a deal between him and Senate and Assembly Democrats. The deal provides additional monies to push back against President Trump’s policies and executive actions. Newsom had proposed for the California Department of Justice to fight the federal government in court shortly after Trump’s reelection in November. An additional $25 million was proposed by state Senate leaders to defend immigrants against deportation, detention and wage theft. The $25 million proposed by the Senate would fund grants for legal nonprofits and immigration support centers.
Top key highlights of the Governor’s 2025-2026 January Budget Proposal aligned to First 5 LA’s 2025-2029 Policy Agenda include:
Children prenatal to age 5 and their families have their basic needs met.
Support policies to address the access, sustainability, and accountability of perinatal care systems to reduce maternal and infant mortality and ensure healthy and joyous births.
- Provider rate increases for primary care, maternal care, and non-specialty mental health services, including those implemented in 2024, and in alignment with Proposition 35 expenditures for 2025 and 2026.
Strengthen safety net policies that provide long-term support to reduce poverty and promote economic stability.
- A 0.2-percent increase to CalWORKs Maximum Aid Payment levels, with an estimated cost of $9.1 million in October 1, 2025.
- California was additionally selected to participate in a federal pilot program, the CalWORKs Work and Family Well-Being Pilot, as one of five states to test alternative performance measures in the Temporary Assistance for Needy Families (TANF) program.
Promote comprehensive housing policies and systems to ensure access to stable homes.
- A new California Housing and Homelessness Agency to create a more integrated and effective administrative framework.
Children prenatal to age 5 have nurturing relationships and environments.
Ensure policy efforts increase mental health screening, treatment, and accountability to address challenges faced by birthing and postpartum people.
- Behavioral Health Community Based Organized Networks of Equitable Care and Treatment (BH Connect): The Budget includes $8 billion in total funding to support BH Connect from January 1, 2025, to December 31, 2029.
Promote policies and practices that increase access to healthy food options and food security.
- $106.3 million in additional ongoing Proposition 98 General Fund to fully fund the universal school meals program in 2025-26.
Elevate policies aimed at enhancing and funding access to safe parks and open spaces.
- $46.8 million for Urban Greening Program to green communities by creating and expanding green streets, parks, and schoolyards.
- $190 million for a Statewide Park Program to create new parks and improve existing parks in the state’s most disadvantaged communities.
Children prenatal to age 5 have a solid foundation for well-being, lifelong learning, and success.
Advance policies, practices, and public investment to strengthen the mixed-delivery system and increase family choice.
- $2.4 billion investment for the full implementation of universal transitional kindergarten (UTK).
- $1.5 billion ongoing funding (Proposition 98) to continue lowering the student to teacher ratio within TK classrooms from 12:1 to 10:1.
- Maintaining funding to continue the Cost of Care Plus Rate monthly payments for state-subsidized child care providers. Further, the administration reaffirms its commitment to working towards a single rate structure and alternative methodology for estimating the true cost of care.
Amplify policies that ensure health systems are robust and coordinated, and accountable for delivering early intervention services.
- Decrease of $8.5 million ($5.8 million General Fund) for Service Provider Rate Reform
- Plans to release the Master Plan for Developmental Services, which will include recommendations to more effectively meet the needs of individuals and families receiving developmental services and stabilize the developmental systems workforce.
Advocate for policies that support culturally affirming care, services, and supports that meet diverse needs.
- $10 million one-time Proposition 98 General Fund for the statewide use of English language proficiency screeners to support multilingual learning in transitional kindergarten.
- $2 million for the template & transition digitization of the individual education plan (IEP) template, as well as to provide translation into multiple languages.
- $1 million one-time Proposition 98 General Fund to evaluate the state’s process for developing and adopting standards, curriculum frameworks, and instructional materials and make recommendations to streamline and improve the process.
Additionally, in response to the recent wildfires, on January 8, 2025, Governor Newsom signed Executive Order N-6-25, which permits CDSS to waive statutes and accompanying regulations or directives related to the use, licensing, certification, and/or registration and approval of child care programs and facilities. These flexibilities will allow providers to accommodate additional children who have been displaced or use temporary spaces if their facilities have been damaged, destroyed, or rendered inaccessible by the fires.
The January budget proposal is the first step of California’s budgetary developmental process. From now until mid-June, negotiations will take place between the administration and legislature leading to a revised budget in May and a signed 2025-2026 budget by June 30th.
