COLA increase – California’s May revision adds billions for schools and colleges, raises COLA, but keeps $3.9B tied up until next year.
California schools could see billions more—yet a major chunk of constitutionally required education funding remains parked for later, setting the stage for a contentious final budget fight.
In Gov.. Gavin Newsom’s revised state budget released Thursday. the governor’s allocation for K-12 schools and community colleges includes $1.7 billion in additional funding. along with a higher cost-of-living adjustment.. But Newsom is still withholding $3.9 billion in Proposition 98 funding until early next year. a move school organizations say should be used immediately for classrooms.
The proposal would also raise California’s statutory minimum cost-of-living adjustment (COLA) from 2.87% to 4.31%.. In effect. the higher COLA would increase how much districts receive for operating expenses—through the Local Control Funding Formula—compared with the January plan. and it would also become the new base for calculating future COLA adjustments.
At the same time. the revised budget reduces the COLA for the California State Preschool Program to 2.01%. down from 2.41% that had been proposed in January.. Advocates for early learning providers warned that this cut signals the state is choosing to prioritize K-12 COLA while leaving preschool programs under pressure.
Sen. John Laird, D-Santa Cruz, who chairs the Senate Budget Committee, said school leaders had been seeking “base money” to keep up with rising expenses. He pointed to the May revision’s higher COLA and additional special education funding as welcome steps.
However, praise from education advocates came with caveats.. Children Now President Ted Lempert said the May revision places $8.1 billion more than the January budget into education overall. and he described it as a real effort to protect funding in recent years.. Still, he argued that students are “way behind,” underscoring that the headline gains may not fully close persistent gaps.
Debra Schade. president of the California School Boards Association. said the picture is mixed: she argued the May revise masks underfunding tied to the Proposition 98 school funding guarantee and relies heavily on one-time money.. Her concern is that one-time increases can inflate short-term numbers without offering the stability districts need to plan for long-term student supports.
The dispute over withheld Proposition 98 funds traces back to the governor’s January budget. when Newsom proposed holding $5.6 billion until early 2027.. School groups objected. and the California Teachers Association and the school boards association have threatened legal action. arguing that Proposition 98 allocations are a constitutional guarantee voters approved.
In the May revision. Newsom reduced the amount being held compared with January—adding $1.7 billion—while continuing to withhold $3.9 billion until early next year.. Edgar Zazueta of the Association of California School Administrators rejected the idea, saying the money belongs in classrooms supporting students.. CTA President David Goldberg said withholding funds risks serious harm, including destabilized and under-resourced classroom conditions.
The labor and staffing stakes are also becoming visible as districts plan for the next school year. Goldberg said this week more than 2,000 educators would find out whether their layoff notices remain in place, linking uncertainty about funding to the question of job stability.
When asked about the withholding issue during a state budget presentation Thursday. Newsom urged advocates to view the larger budget story.. He argued that the state has invested heavily over seven years in transforming the education system as transitional kindergarten expands. describing those efforts as “unprecedented” and among the most significant per-pupil investments in the nation.
Behind the scenes, negotiations will run against a tight calendar. The May revision is treated as the starting line for final negotiations before the Legislature’s June 15 deadline, followed by passage by July 1, the start of the fiscal year.
In its estimates. the revised Proposition 98 allocation would be a record $127.1 billion for 2026-27. with per-student funding rising to a record $21. 013 from state dollars.. Including federal and other sources, total per-pupil funding is estimated at $28,282.. But questions remain about the overall revenue picture. as the May revision’s broader estimate appears lower than what the Senate and the independent Legislative Analyst’s Office had forecast.
Laird said returning the withheld $3.9 billion to ongoing education funding will be one of the items considered as lawmakers weigh updated revenue projections based on May tax receipts.
The budget’s cost-of-living changes are a central piece of the proposal.. Newsom would raise the statutory COLA from 2.87% to 4.31%. a change that would boost districts’ operating expenses—moving the January-proposed COLA effect from $3.1 billion to $4 billion under the Local Control Funding Formula.. Meanwhile, other programs, including special education, would follow the statutory COLA at 2.87%, with the COLA increase for districts set at 4.31%.
A major priority in the plan is special education funding.. Newsom would add $1.8 billion to the additional $509 million proposed in January. bringing the special education increase to a total of $2.4 billion—about 43% more than a year earlier.. Newsom described it as the largest special education investment in California’s history. framing it as a response to parent concerns and ongoing gaps between obligations and state and federal support.
The governor’s revised budget also increases a one-time discretionary block grant.. Newsom would expand the Student Support and Professional Development Block Grant from the January proposal of $2.8 billion to $5 billion.. He said the funds are intended to support teacher training for math. reading. and literacy for English learners. alongside career pathways and expanded dual enrollment. while leaving districts wide latitude on how to use the money.
To reduce risk in future years, Newsom’s plan would raise the Proposition 98 reserve to $10.3 billion, nearing the statutory maximum. Supporters say the reserve can cushion education budgets if a recession hits or if projected revenue patterns fail to materialize.
Public interest attorney John Affeldt warned that the state should not rely on unstable revenue assumptions. arguing California needs stronger permanent revenue streams for schools and communities.. He tied the issue to the broader concern that educators are being asked to transform students’ lives even as teachers may feel priced out of the communities they serve.
Community schools remain another highlighted initiative.. The revised budget would add $1 billion to $4.1 billion already committed to creating 2. 500 community schools. which are designed around community partnerships that can include wellness. mental health. and career opportunities.. Newsom’s proposal also includes repurposing nearly $500 million in extension grants to support additional community schools.
On academic instruction, the budget extends and adjusts state-linked professional development efforts.. Since 2019. California has funded $715 million to hire and train reading specialists and coaches in high-poverty schools as part of an early literacy plan. but those funds have been structured as time-limited grants.. Newsom proposes $440 million to extend those literacy supports through 2031.
Math-focused investments would also change.. Newsom would add $60 million to the $30 million funded last year for the Mathematics Professional Learning Partnership. which is building a statewide network of coaches and math specialists aligned with the 2023 math framework.. The proposal still does not add funding for elementary schools to hire coaches. leaving an open question about how coaching capacity will be funded at that level.
Newsom is also encouraging districts to use part of the $5 billion discretionary block grant for literacy and math instruction, reflecting an effort to steer local spending toward core academic supports.
While K-12 and community college funding draws most of the spotlight. the revised proposal gives early education and child care less direct attention.. The budget includes $15 million for training tied to implementing programs such as Transitional Kindergarten and $5 million in ongoing support to help districts use the Multitudes dyslexia screener at no cost.
But the larger policy shift is the COLA reduction for the California State Preschool Program. which advocates say may deepen financial strain on providers already operating with limited margins.. Early Edge California Executive Director Patricia Lozano called the lower COLA a troubling signal. arguing that access to affordable child care affects not only early learning but also families’ economic well-being.
Lozano said the administration and Legislature should restore preschool COLA and fulfill commitments to fund additional child care slots before final budget negotiations conclude.
The debate over where the COLA increase lands—TK-12 versus preschool—drew sharp criticism.. Bruce Fuller. who co-authored a report from the UC Berkeley Equity and Excellence in Early Childhood alliance. said the governor backed health premiums and local school supports while leaving child care needs unresolved for families searching for affordable options.. Lempert of Children Now said he hoped the early education COLA cut could be reversed by lawmakers.
The broader context is that the revised budget focuses on a system-wide expansion through Transitional Kindergarten and new models like community schools.. Even as those initiatives receive substantial funding. critics argue that early education continues to face disruptions from shifting enrollments as families move into newer public TK options.
As the Legislature prepares its response. lawmakers will work within the budget process that starts with an initial release by Jan.. 10, followed by a May 14 revision that updates general fund revenue assumptions and their impact on Proposition 98.. Between late May and early June, budget subcommittees report to full budget committees.. Then comes the constitutional June 15 deadline. with negotiations between legislative leaders and the governor and final passage expected before the fiscal year begins on July 1.
The stakes of that negotiation are heightened by the practice of using budget trailer bills to rewrite statutes outside the standard legislative process.. With roughly 40% of the state general fund dedicated to TK-12 and community colleges. much of what districts experience depends not only on the headline funding totals. but also on the fine print that can change program rules and implementation details.
For families and educators, the immediate question is whether the held $3.9 billion will eventually be restored and when.. For now. Newsom’s May revision offers a partial match to district priorities—higher COLA. expanded special education funding. literacy and math supports. and additional community school resources—while leaving a key constitutional dispute unresolved for the final budget.
California education budget Proposition 98 COLA increase special education funding community schools transitional kindergarten community colleges