Ofelia Medina | Senior Policy Strategist |
May 30, 2024
The Governor’s updated FY 2024-25 state budget proposal, also known as the May Revise, was released on May 10. Similar to his remarks on the January proposal, Governor Gavin Newsom noted that the Revise represented a return to historical budget norms after years of unprecedented surpluses. And while he expressed his commitment to maintaining funding for core programs, Newsom also emphasized that tough decisions would be needed regarding investments not deemed urgent given the state’s fiscal situation.
Budget Shortfall and Early Actions. The state budget deficit was previously estimated this year to be between $38 and $73 billion; this wide range in estimates was due to differing assumptions between the Department of Finance and the Legislative Analyst’s Office regarding economic conditions and revenue collections. To address this shortfall, early action was taken in April, resulting in approximately $17.3 billion in reductions, revenue and borrowing delays, fund shifts, and deferrals.
Despite these actions, the state still faces a $27.6 billion deficit for the 2024-25 fiscal year, attributed to lower-than-expected tax receipts and persistent inflation.
May Revise Proposes More Cuts. To balance the budget, Newsom’s May Revise proposes several cost-saving measures, including reductions in funding for early learning facilities and child care spaces, cuts to children and youth behavioral health funding, reductions in climate change objectives funding, and administrative and operational cost reductions.
Key highlights of the 2024-2025 May Revise related to First 5 LA’s priorities include:
Family Supports – Promote a comprehensive system of family supports to advance positive outcomes for the whole child and whole family.
- Reduction of $47.1 million ongoing for the CalWORKs Home Visiting Program and $126.6 million ongoing for the CalWORKs Mental Health and Substance Abuse Services.
- A two-year delay of the California Food Assistance Program expansion automation to begin in FY 2026-27 with benefits starting in FY 2027-28.
Health Systems – Improve systems to promote the optimal development of children through early identification and supports.
- Reduction of $6.7 billion over multiple years from the Medi-Cal provider rate increases planned for January 1, 2025, as well as Graduate Medical Education and Medi-Cal labor workforce.
- Elimination of $52.5 million in 2023-24 and $300 million ongoing General Fund for state and local public health.
- Multi-year spending reductions — $72.3 million General Fund in 2023-24, $348.6 million General Fund in 2024-25, and $5 million General Fund in 2025-26 — for the Children & Youth Behavioral Health Initiative.
- Funding to support ongoing continuous eligibility of Medi-Cal supports for children birth to age 5 was not included in May Revise.
- Multi-year cuts — $300.9 million in 2023‑24, $302.7 million in 2024-25, $216 million in 2025‑26, $19 million in 2026-27, and $16 million in 2027‑28 — for various health care workforce initiatives, including community health workers, nursing, social work, Song-Brown residencies, Health Professions Career Opportunity Program, and California Medicine Scholars Program.
- Elimination of $280 million for one-time Equity and Practice Transformation grants for Medi-Cal providers.
Early Learning – Expand access to affordable, quality early care and education.
- Pausing the expansion of 119,000 child care spaces until fiscal conditions improve. This action results in a reduction of $489 million in 2024-25 and $951 million in 2025-26.
- A pullback of $550 million, initially planned for 2025-26, to support the California Preschool, Transitional Kindergarten, and Full-Day Kindergarten Grant Program. The May Revise indicates that this investment could instead be incorporated into an educational facilities bond proposal under consideration by the Legislature.
- Elimination of $47.9 million in 2025-26 and $97.9 million General Fund ongoing starting in 2026-27 for California State Preschool Program (CSPP) adjustment factor costs that would have increased funded enrollment for students with disabilities to at least 10%, up from 5%. With this reduction, CSPP providers will still be required to set aside 5% of funded enrollment for students with disabilities.
Communities – Ensure communities have the resources and environment that support optimal development of children prenatal to age 5.
- Reduction of $260 million in Homeless Housing, Assistance and Prevent (HHAP) Round 5 supplemental grant funds in 2025-26.
- Reduction of $136 million in 2023-24 ($268.5 million over four years) for the Department of Toxic Substances Control’s Cleanup in Vulnerable Communities Initiative Program. The May Revision maintains $65 million ($107.5 million over three years) for this program through a fund shift to the Greenhouse Gas Reduction Fund.
- A delay in $200 million in funds for Broadband Last Mile from FY 2025-26 to FY 2027-28.
Reactions. Following the release of the May Revise, the First 5 Network issued a statement expressing disappointment in the Governor’s proposed actions.
“… This budget proposal falls drastically short of reflecting our values that create the trauma-informed, healing-centered and culturally responsive systems which our children and families deserve,” stated First 5 CA Executive Director Jackie Wong. “As we confront the gravity of the revised budget, our focus remains unyielding on realizing our Audacious Goal and North Star: ensuring that every child in California has the opportunity to thrive.” 
“Ensuring the prosperity and well-being of our youngest residents is at the core of First 5 LA’s commitment,” added First 5 LA President and CEO Karla Pleitéz Howell. “We encourage the Governor to uphold the innovative policies that lifted up children and families during the pandemic.”
Next Steps. Lawmakers will continue budget negotiations with the Governor’s office through June as they continue to finish their own version of the budget. The Legislature is required to pass a budget bill by June 15, and the Governor must sign the budget by June 30. Given that both the Governor and Legislature might revisit the budget in August, First 5 LA will continue to monitor the state budget beyond the June deadlines.
