Governor Newsom has signed the 2026–27 State Budget, including the TK–12 Budget Trailer Bill (AB 126) and companion legislation implementing state governance reforms (AB 181). Overall, the final budget represents a positive outcome for California’s public schools, preserving ongoing investments while providing significant one-time flexible funding to help local educational agencies address their unique priorities and continue supporting student success.

You can read the Governor’s press releases and watch the signing ceremony for AB 126 using the links below.

The chart below highlights CASBO’s key budget advocacy priorities and compares them with the final outcomes included in the 2026–27 Budget Act.
CASBO May Revision Advocacy Position 2026-27 Budget Act Outcome
Support for the historic investment in special education Increases the AB 602 formula rate to $1340 per pupil
Support the $5B Student Support and Professional Development Block Grant, allocated by ADA, with full discretion and minimal reporting requirements

Establishes a $5B block grant, allocated by ADA, with full discretion and a final report

Trailer Bill language:

  • Requires LEAs with declining enrollment or projected declining enrollment to hold a hearing about their plan to address declining enrollment
  • Prohibits LEAs from charging professional services fees during the expenditure period of the grant
Support the “Super” COLA Includes a 4.31% “Super” COLA
Support the sale of $1.5 billion in authorized school facility bonds in 2026–27 Allocates $1.5 billion of Proposition 2 bond funds for 2026-27
Support for a Tier 2 Expanded Learning Opportunities Program rate of $1,800 Established a $1800 Tier 2 rate for the Expanded Learning Opportunity Grant Program
Support TK-12 Governance Reform AB 181 moves the management of the California Department of Education under an Education Commissioner.  The Commissioner will be appointed by the Governor and confirmed by the Senate.  The Superintendent of Public Instruction becomes a voting member of the SBE, replacing one of the current seats appointed by the Governor.  In addition, AB 181 adds two new State Board of Education seats, one appointed by the Speaker of the Assembly and the other by the Pro Tem of the Senate.
Support Paid Pregnancy Leave if amended to cover all LEAs and delay the implementation Includes up to 14 weeks of paid pregnancy leave funded by the “Super” COLA.  The final budget did not address the request to ensure all LEAs, such as COEs and basic aid, can cover the cost of the leave.  The implementation date is moved to January 1, 2027.
Oppose the $3.9B withholding of Proposition 98 in 2025-26 $3.9B is withheld in 2025-26

In addition to the positions outlined above, CASBO opposed the Legislature’s proposal to shift the cost of private preschool into the Proposition 98. While the final budget adopts this policy change, it also includes a one-time rebench of the Proposition 98 guarantee to account for the associated costs in 2026-27. Here is a recent article that discusses the change further.

Beyond CASBO’s specific budget advocacy priorities, the 2026–27 Budget Act and accompanying trailer bills include several additional policy and fiscal changes that are relevant to school business officials.

  • Changes the audit filing date to January 31st of each year (SEC. 39)
  • Updates authorizer responsibilities to strengthen oversight of charter schools and protect against misuse of public funds (SEC. 91)
  • $400M for kitchen infrastructure grants that will support improving kitchen equipment and staff training (SEC. 100)
  • Requires LEAs to adopt a contracting policy no later than July 1, 2027, with specific provisions such as:
    • Requiring all contract work to be non-sectarian and in compliance with non-discrimination laws
    • Prohibitions on:
      • Paying for tuition or fees at a private school, with exceptions for IEP
      • Offering gifts or incentives to pupils and their families for enrollment, referral, and retention
      • Contracts for season passes to amusement parks, zoos, and other family entertainment activities
      • Contracts with pupils or their families for services provided only to that pupil
      • Reimbursements for parents and guardians for activities and services
    • Requiring non-classroom-based charter schools to itemize contract costs related to staff and instruction for the purposes of funding determinations
    • Requiring contracts to reflect reasonable market value
    • Outlining student safety provisions for contactors who interact with students
  • SB 122, a Budget Trailer Bill on Taxation, establishes a sales tax on software for all users, including LEAs.  This includes installed software, hybrid products, and SAAS applications.

CASBO Sponsored Bills Update

In addition to all the work on the Budget, we also had key wins for CASBO’s sponsored bills.  AB 2008, AB 2490 and AB 2496 all passed out of the Senate Education Committee before the July 2nd deadline and will be considered by the Appropriations Committee in August.

Learn More

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