Top Takeaways
• Thanks to robust revenues, Gov. Gavin Newsom secured funding for his signature programs in his eighth and final budget.
• The budget includes a $2.4 billion increase in special education funding and a $5 billion block grant for districts struggling with declining enrollment.
• Legislators agreed with Newsom to withhold $3.9 billion in Prop. 98 funding, angering critics who threaten to sue.
This story was originally published by EdSource. Sign up for their daily newsletter.
In his eighth and final budget, the tax gods continued to smile upon Gov. Gavin Newsom, enabling him to cement funding for signature programs he started while salving grumbling districts that are wincing over the financial impacts of declining enrollment.
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If, as many predict, stock market turbulence tied to AI stock upends nearly a decade of rising revenues for schools, it won’t be on Newsom’s watch.
Last Monday, the Legislature passed the main budget bill that Newsom and legislators negotiated. Most of the key details for TK-12 schools are in the accompanying legislation, Assembly Bill 126, which passed Thursday, the final day before lawmakers’ summer recess.
In the 2026-27 fiscal year, which started July 1, Newsom and the Legislature provided additional funding for landmark multibillion-dollar programs: creating thousands of community schools and expanding after-school and summer school programs targeting low-income K-6 students. Serving nutritious school meals for all students — another Newsom priority — won’t really happen until schools have kitchens equipped to serve them. A one-time $500 million in grants for kitchen upgrades will help. And another $350 million will extend funding of reading coaches for high-poverty schools, a key component of literacy reform, for another five years.
Districts, especially hundreds of small districts, are complaining that state funding hasn’t kept pace with rising basic costs. They’ll get help: a $2.4 billion increase annually in the state’s share of special education, a higher-than-average cost-of-living adjustment, and a $5 billion block grant, equal to $937 per student, with no strings attached.
Districts and community colleges receive funding through Proposition 98, a constitutional amendment that guarantees roughly 40% of the General Fund. Lately, it has been shielding schools from the financial pressures of responding to massive federal cuts to food programs and medical care for low-income families.
In response, Newsom and legislators took two controversial budget actions. They are withholding $3.9 billion in Prop. 98 funding, temporarily boosting spending for programs elsewhere in the general fund. And they are shifting some preschool programs to Prop. 98, where they perhaps stand a better chance of expanding in the future, and, advocates argue, they should be anyway.
The 2026-27 budget covers everything from special education to teacher training to universal meals.
Click the arrow below and scroll to explore funding for specific education programs.
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