Overview

On Thursday, May 14, 2026, Governor Newsom released the May Revision to the 2026–27 State Budget. In his opening remarks, he highlighted California’s economic strength across multiple indicators, including growth and new business starts, and expressed concerns about the Trump administration’s impact on California, particularly in the areas of innovation and affordability.

Turning to the 2026–27 State Budget, the Governor emphasized a balanced budget, reduced deficits, and a significant increase in revenues—approximately $16.5 billion above the Governor’s Budget proposal. He also noted California’s historically volatile revenue structure and advocated for reforms to Proposition 2 to better capture excess revenues during periods of economic growth.

Why This Matters

The release of the May Revision, which reflects updated revenues and economic conditions, marks the beginning of the most critical phase of budget advocacy and negotiations between the Governor and Legislature. During this period, legislators and the Administration rely heavily on feedback from local practitioners.

CASBO member engagement is especially important because school business officials can provide firsthand insight into how budget proposals impact local educational agencies, including the effects of rising cost pressures, operational demands, and long-term fiscal considerations.

By sharing your expertise, you can help ensure the final state budget reflects the realities facing schools and supports fiscally responsible policies that protect resources intended for students.

Please join us on Wednesday, May 20, at 11:00 a.m. for our May Revision Webinar to hear additional insights from CASBO’s Legislative Committee leadership and Governmental Relations team, and to share your questions and input.
Watch Recording Here

New Proposals

Paid Pregnancy Leave

At the May Revision, the Governor proposes to require local educational agencies and community colleges to pay for up to 14 weeks of paid pregnancy disability leave.  This proposal mirrors AB 65 (Aguiar-Curry) which has been opposed by CASBO due to being an unfunded mandate.  The Budget summary notes that the costs of this proposal–estimated to be $218M per year by the Department of Finance–are absorbable within the “Super COLA”.

Literacy Coaches

At the May Revision, the Governor proposes increasing a prior-year investment in literacy coaches by $428.8M in one-time Proposition 98 General Fund dollars. The proposal also includes $11.2M to establish a new Literacy Coaches and Reading Specialist Educator Training Competitive Grant Program.

Updated Proposals

At the May Revision, the Administration updated several budget proposals included in the Governor’s January Budget proposal. To provide an easy comparison, the updated May Revision proposals are presented alongside the original January proposals. Budget proposals not referenced below remain unchanged from the Governor’s Budget.

Budget Snapshot

Governor’s Budget May Revision
Total Budget $348.9B $349.9B
General Fund $248.3B $246.6B
Reserves $23B total and $4.1B in the Public School Rainy Day Fund $29.9B total and $10.3B in the Public School Rainy Day Fund

Proposition 98 at a Glance

Prop 98 funding

Governor’s Budget May Revision
2024-25 $123.8B $124.9B
2025-26 $121.4B but proposes underfunding the guarantee at $115.9B $125.1B but proposes underfunding the guarantee at $121.2B
2026-27 $125.5B $127.1B

Three-year increase: At the May Revision, $28B in the three years relative to the 2025 Budget Act, compared to $21.7B at the Governor’s Budget.

Per-pupil funding

Governor’s Budget May Revision
Prop 98 $20,427 $21,013
All Sources $27,418 $28,282

Rainy Day Fund

2025 Budget Act Governor’s Budget May Revision
2024-25 $455M mandatory deposit $3.8B mandatory deposit $5.3B mandatory deposit
2025-26 $455M mandatory withdrawal
  • $424.3M mandatory deposit
  • $240M discretionary deposit
  • $3.4B mandatory deposit
  • $1.6B discretionary deposit
2026-27 n/a $407.1M mandatory withdrawal

  • Triggers reserve cap
 No change

Local Control Funding Formula (LCFF)

Governor’s Budget May Revision
COLA 2.41% 4.31% total (Super COLA), 2.87% of which is statutory
Discretionary Increase $2B statewide $3.3B based on the statutory COLA, plus $906.7M from the Super COLA
Deferrals $1.9B is fully repaid in 2026-27 No change

Other Updated Proposals

Governor’s Budget May Revision
Special Education COLA: 2.41%

$509M ongoing Proposition 98 General Fund

 COLA: 2.87%

$2.4B ongoing Proposition 98 General Fund which is equal to an AB 602 rate of $1340 per pupil
Discretionary Block Grant

 $2.8B one-time Proposition 98 General Fund

Can support the statewide priorities of:

Professional Development for:

ELA/ELD Framework

Math Framework

TK instruction

Teacher recruitment & retention

Dual enrollment and career pathways

 $5B one-time Proposition 98 General Fund

This is proposed to remain fully discretionary with the same priorities from the Governor’s Budget.
Educator Workforce

 $250M one-time Proposition 98 General Fund

Teacher and Counselor Residency Program
  • $30M one-time Proposition 98 General Fund for a teacher residency technical assistance center
  • $16.2M in IDEA funds and $1.6M in one-time federal Title II funds for the Golden State Teacher Grant Program
  • $15M one-time Proposition 98 General Fund for the 21st Century California School Leadership Academy
  • $5M one-time Proposition 98 General Fund for a transcript review system at the Commission on Teacher Credentialing
Community Schools

 $1B Proposition 98 General Fund

Supports the expansion of the community school model to additional schools serving large high needs populations

 An additional $485M in reappropriated funds from unused CCSPP extension grants for:

  • Planning and Implementation grants ($401M)
  • Middle and High School Redesign ($50M)
  • State Transformational Assistance Center ($28M)
  • Children and Youth Behavioral Health Initiative ($6M)
Education Governance

 Proposes to implement recommendations from the 2002 Master Plan for Education to improve state governance of TK-12 Education

Moves the California Department of Education under the State Board of Education

Provides additional authority to the Superintendent of Public Instruction to strengthen coordination and alignment between the education segments.

 Shifts $1.5M in non-98 General Fund in 2026-27, growing to $3M beginning in 2027-28, from the CDE to the new Office of the Superintendent of Public Instruction

ADVERTISEMENT