California budget squeeze grows

California school districts are sending layoff notices while Sacramento is arguing over money that voters already set aside for classrooms. Governor Gavin Newsom’s 2026-27 budget would delay $5.6 billion in Proposition 98 education funding, and the California Teachers Association says nearly 2,500 educator layoff notices have already gone out. (cta.org, cta.org) Proposition 98 is the rule California voters passed in 1988 to guarantee a minimum level of funding for public schools and community colleges. For 2025-26, that minimum guarantee is $121.4 billion, according to both the governor’s budget documents and the teachers union fighting the proposal. (ebudget.ca.gov, cta.org) The fight is over “settle-up” money, which is the extra amount schools are owed when tax collections come in higher than the state assumed in the last budget. Newsom’s January plan says schools are entitled to about $6.9 billion more for 2025-26 than lawmakers budgeted last June, but proposes paying only part of that now and pushing $5.6 billion into the future. (lao.ca.gov, gov.ca.gov) The governor is not proposing an across-the-board cut to the published education budget line. His budget summary still shows total Proposition 98 funding rising to $125.5 billion in 2026-27 and total kindergarten-through-twelfth-grade funding of $149.1 billion, with per-pupil Proposition 98 funding of $20,427. (ebudget.ca.gov) That is why this fight is so confusing outside budget circles. On paper, education spending is going up, but districts and unions say cash that should reach schools now is being used to help close the state’s broader budget gap first. (cta.org, lao.ca.gov) California’s nonpartisan Legislative Analyst’s Office did not endorse the delay as the best option. It said the proposal shifts costs to future years and recommended an alternative: set aside enough money to cover the full guarantee now and place some of the added funding in the Proposition 98 reserve instead. (lao.ca.gov) The state is having this argument even after revenues improved. Newsom’s full budget summary says General Fund revenues are projected to be more than $42 billion higher across the budget window than expected in the 2025 budget act, while the Legislative Analyst’s Office still warned in December that California faced an almost $18 billion budget problem for 2026-27. (ebudget.ca.gov, lao.ca.gov) Bay Area school leaders say the timing could hardly be worse because many districts are already cutting staff, closing campuses, or trimming programs after enrollment declines, higher labor costs, and the expiration of pandemic-era aid. Regional officials warned lawmakers this latest state proposal could cost Bay Area districts more than $586 million. (eastbaytimes.com, eastbaytimes.com) More than 20 Bay Area school board leaders have signed a letter urging legislators to reject the proposal, including leaders from Fremont Unified School District. Their argument is simple: when districts do not know whether state money will arrive, they plan for the worst, and that means pink slips, bigger classes, and fewer adults on campus. (msn.com, cta.org) This is also not the first round of deferred school money. The California Teachers Association says last year’s budget withheld $1.9 billion in Proposition 98 funding, and that amount is only now scheduled to be paid out, which is one reason unions describe this year’s plan as a repeat rather than a one-off fix. (cta.org, cta.org) The next deadline is the budget the Legislature passes by June 15, with the final deal due by July 1. Until then, districts are building school-year staffing plans around money the constitution appears to promise, but the state is asking to pay later. (lao.ca.gov, ebudget.ca.gov)