Newsom reveals budget deficit plan

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Governor proposes 2024-25 budget that reflects an estimated $38 billion shortfall

January 22, 2024

Gov. Gavin Newsom released his 2024-25 California state budget proposal Jan. 10 that estimates a $38 billion shortfall and reflected what Newsom called “a correction after a period of distortions.”

Newsom framed the $291.5 billion budget as a return to “normalization” after the surpluses of the last few budget cycles. Still, his administration’s deficit estimate is $30 billion lower than that of the non-partisan Legislative Analyst’s Office, which predicted a $68 billion deficit in December.

The total funding for the Proposition 98 education budget is $126.8 billion for all K-12 programs, with per-pupil spending at $23,519 when accounting for all sources. Due to the drop in state revenues, the Prop. 98 minimum guarantee falls by more than $11 billion over the three-year window in this budget proposal.

To minimize the impact on education funding, Newsom proposed drawing $5.7 billion from the Prop. 98 Rainy Day Fund to cover some of the shortfall, leaving a fund balance of $3.8 billion.

Included in the budget is an estimated 0.76 percent cost-of-living adjustment (COLA) to the Local Control Funding Formula, which Newsom proposed to fully fund. The same COLA applies to programs outside LCFF, such as special education and adult education.

During ACSA’s Legislative Lunch Break special edition on Jan. 10, Executive Director Edgar Zazueta said the budget proposal was better for public education than many in the community had anticipated.

“It’s fair to say in the weeks leading up to the budget release that we were all worried about the what-ifs,” Zazueta said during the broadcast. “Were there going to be cuts to existing programs? Most of this [budget] is good. Despite the bad news coming out on the revenue front, this is a budget [in which] the governor is attempting to keep education whole.”

Newsom’s budget also maintains the timeline to implement transitional kindergarten, which remains on track with Sept. 2 to June 2 birthdays qualifying in the 2024-25 school year and full implementation expected by 2025-26. In addition, the proposal includes an increase of $122.2 million to fully fund the universal meals program.

The shortfall, however, could impact the school facility program if adopted by the June budget deadline. Newsom proposed delaying the 2023 Budget Act allocation of $550 million to the Preschool, TK and Full-Day Kindergarten Facilities Grant Program from 2024-25 to 2025-26. He said he and the state Legislature will work together to place a school facilities bond on the November ballot.

ACSA Legislative Advocate Megan Baier said the education budge

t is not a repeat of the last deficit period in California during Gov. Jerry Brown’s tenure.

“We’re much better situated than we were,” Baier said. “There were no cuts, no deferrals. I don’t anticipate that happening this year ... in the near future, we don’t foresee that.”

ACSA’s Governmental Relations team will be engaged in conversations with the governor and Legislature in the next few months during the negotiation process prior to the final budget’s adoption in June.

Read an overview of the 2024-25 budget proposal in ACSA’s summary document available at content.acsa.org/acsa-analysis-2024-25-proposed-state-budget.