California districts – School districts and education advocates are pressing Gov. Gavin Newsom to release $3.9 billion in 2026-27 funding for schools and community colleges, arguing forecasts have lowballed revenues. Newsom says the money will come after projected revenue becomes ca
For months, school districts have built their budgets around a promise—then watched the math get delayed.
At a May 21 press conference outside the State House. Tatia Davenport. CEO of the California Association of School Business Officers. called for lawmakers to include $3.9 billion in the 2026-27 funding for schools and community colleges. The figure is tied to Proposition 98. the 1988 formula that guarantees K-12 and community colleges receive about 40% of California’s general-fund revenue.
The pressure is now racing toward a deadline. By midnight Monday, June 15, the California Legislature must pass a balanced state budget. Negotiations over what should be inside that final package have become. for many districts. the difference between tightening schedules now and playing catch-up later.
School leaders say the $3.9 billion is not a “someday” problem—it’s an immediate need. Depending on how it’s distributed, the amount equals about $684 per student. With enrollment declining and expenses rising. districts argue they need the money in 2026-27 rather than after the state collects more revenue.
Gov. Gavin Newsom’s position is that districts will get it once projected revenue turns into actual cash in hand by early next year, after additional revenue is collected. Department of Finance officials have warned that it’s wise to be cautious until then.
At the center of the fight is uncertainty over how Proposition 98 plays out under current forecasts. Newsom is projecting a record Prop. 98 guarantee of $127.1 billion for 2026-27. But state budget forecasters and the nonpartisan Legislative Analyst’s Office are hedging their bets. saying the projection could come up short and that growth may slow or even recede.
A coalition of education advocates reacted with anger and indignation. and members flooded the halls of the Legislature last month to lobby legislators to insert the $3.9 billion into the final budget. The coalition includes school employee unions, groups representing school boards, school administrators, business officers, charter schools, and parents.
Troy Flint. chief information officer of the California School Boards Association. said at the May 21 press conference: “It’s not just $3.9 billion. even though that’s a tremendous amount of money. what we’re confronting is an existential threat to the way that we fund public schools here in California.” He added. “That is resources that our kids won’t have. and those are opportunities they will never receive. A dollar delayed is a dollar denied.”.
Davenport made the legal argument for immediacy, saying, “Proposition 98 was passed in California by our voters to ensure that education funding could not be traded away during difficult budget years. Prop. 98 is unambiguous. It is a guarantee. It is the law. It is not a suggestion.”
Erika Jones. an elementary school teacher and secretary-treasurer of the California Teachers Association (CTA). argued that the state is dipping into what she called a minimum. “Prop. 98 is a minimum guarantee. As the fourth-largest economy in the world. California leadership should be striving to give students more than the bare minimum. let alone dipping into that minimum to cover budget shortfalls.” She added. “If state leadership cares about the future of California. they must stop diverting constitutionally guaranteed funding away from public schools. from fully funding.”.
But the case for holding back the money rests on how Prop. 98 revenue is calculated—and how reliably those calculations match reality. The revenues that anchor the state budget every June come from a multi-year forecast that can be substantially off. In recent years, forecasts have significantly underestimated revenues.
Newsom’s first pass in January for the 2026-27 fiscal year, which begins July 1, included $21.7 billion more for Prop. 98 than the Legislature had budgeted for 2025-26 in June a year earlier. According to the reporting, all of that excess money would roll forward to 2026-27.
Then, in the May budget revision, with revenues for 2025-26 continuing to arrive, Newsom increased the Prop. 98 forecast again. In January, he proposed withholding $5.6 billion. In May. he reduced the withholding to $3.9 billion and used the difference to help fund a higher cost-of-living adjustment (COLA). add to the rainy day fund. and increase money for special education.
Officials point to AI-driven investment as part of why state revenues have surged. Over the past few years. AI has been described as the state’s “ATM. ” with unanticipated income and capital gains tax receipts from the state’s wealthiest taxpayers’ investments in artificial intelligence-related corporations helping propel state tax revenues.
Still, a lot remains unknown. Some corporate and individual taxpayers did not pay their 2025 taxes by April 15. The late payments—and earlier estimated taxes—may be substantially less than anticipated.
The distrust isn’t abstract. It’s rooted in a recent lesson from the floods of 2022-23. What Newsom wants to avoid is overcommitting to Prop. 98, a problem that occurred three years ago after massive winter storms and flooding in late December 2022 and January 2023.
At the time, Newsom and the Legislature pushed back the filing date for 2022 taxes from April 15 to Nov. 16, 2023, for almost all counties. With revenues still uncertain when the 2023-24 budget was passed in the previous June. they guessed wrong and appropriated $8 billion more than Prop. 98 was entitled to.
Instead of shortchanging schools and community colleges midway through the school year. Newsom and the Legislature effectively took out a short-term loan against the non-Prop. 98 side of the general fund. That non-Prop. 98 side covers private childcare. CSU and UC. and includes spending areas such as Medi-Cal. described as driving forecasts of budget deficits.
The Legislative Analyst’s Office has also examined how close the Legislature comes to annually estimating state revenue, finding it ran between 4% over or under projections. With that range, holding back $3.9 billion on a $127 billion Prop. 98 guarantee falls within the 4% window.
In his budget message, Newsom said the state would take another look at revenues early next year and settle up revenues then, as statutes require.
Yet education advocates argue the real issue is timing and repayment certainty. They say state law doesn’t state when the money must be repaid—whether in one year or over several. In their language, they frame that ambiguity as “gimmick” or “theft” of Prop. 98, implying future governors could use Prop. 98 obligations like a piggy bank to cover other parts of the budget.
Michael Fine. CEO of the Fiscal Crisis and Management Assistant Team. wrote in an email: “This is a difficult topic as I agree with both sides.” He said he understood “the risk the administration is hedging against and agree the risk is real. ” and he recognized “the constraints placed in recent years on how to handle over-appropriations of Proposition 98.” He added. “I also fully understand and appreciate the argument around the intent of Proposition 98 being made by advocates.”.
As lawmakers negotiate, the revenue picture remains volatile. Since the May revision. three blockbuster AI corporations—SpaceX. Anthropic and OpenAI—announced they will go public with stock offerings in coming months. That could mean billions more in taxable earnings in a frenzy of stock sales—or not. depending on how the offerings perform. Unstable oil prices and rising inflation also complicate revenue projections.
The political math is clearer than the forecasting math. The Ed Coalition can count on Democratic majorities in the Senate and the Assembly. Senate and Assembly Democrats have gone on record supporting restoring full funding in the final budget.
In an alternative proposal. Senate leaders would restore the $3.9 billion and specify how to spend it: raising the discretionary block grant by $1.5 billion; adding $1.2 billion to the rainy day fund; raising the grant program for career/technical education by $300 million; and funding schools’ kitchen infrastructure by $900 million.
Democratic leaders in the Assembly have been more vague about how to fund the $3.9 billion, but in the Assembly’s budget outline they made their priority clear: “The Governor’s January proposal shortchanged schools by billions. The state constitution requires those dollars to flow — and they will.”
Under the state constitution, the Legislature must pass a state budget by June 15. If it doesn’t happen by that date. certainly by June 30. there will be an answer to the $3.9 billion question—whether districts will be handed the money for 2026-27 or asked to wait for the state’s forecasts to prove out.
California education Proposition 98 school funding Gov. Gavin Newsom state budget Legislative Analyst's Office school districts community colleges AI investment June 15 deadline rainy day fund career technical education
Why do they keep holding money for schools like it’s a coupon?
So Newsom says the money comes after the revenue projections… but they already said $3.9 billion? Feels like they’re just moving the goalposts. Teachers gonna get paid on “projected” math now?
I don’t even know what Prop 98 is anymore, but didn’t they promise 40% or whatever? If they’re lowballing revenue forecasts, then release it now, right? Seems like districts are building budgets and then acting surprised when the budget math changes.
This is California so it’s probably like: announce $3.9B, delay it, then somehow it’ll still not be enough. If the deadline is June 15 and they’re “negotiating what should be inside,” that means the schools get scraps. Also community colleges too, which is wild because everybody I know uses those classes to survive. But hey, it’s coming “after projected revenue becomes…” whatever, seems like bureaucrat speak for not soon.