Rainy day fund to rescue schools and community colleges in Newsom’s 2024-25 state budget
California Governor Gavin Newsom has proposed a 2024-25 state budget that would protect schools and community colleges from an $11.3 billion drop in state revenue for education. The budget aims to maintain current funding levels and commitments, along with a less than 1% increase in the cost of living for next year.
According to projections by the Legislative Analyst’s Office, the decline in revenue over the next three years will be $30 billion less than previously expected, which alleviates the need for drastic budget cuts or late payments. The community colleges and TK-12 schools will be shielded from major impacts.
However, Newsom’s budget includes a deferral of the promised 5% increases in revenue to the University of California and California State University systems. To compensate, the UC and CSU systems would borrow the funding this year and receive the reimbursement in next year’s budget.
Newsom plans to protect schools and community colleges by utilizing $7 billion from the $10.8 billion TK-14 rainy day fund to cover the current year’s funding shortfall and meet the minimum obligation in 2024-25. The state will not seek reimbursement for the excess funding provided in the prior two years beyond the minimum requirement set by Proposition 98.
Proposition 98 is a funding formula that determines the amount of the state’s general fund allocated to TK-12 schools and community colleges. With the inclusion of transitional kindergarten, the share of the general fund dedicated to education will increase by about one percentage point to 39.5%. Proposition 98 funding for 2024-25 is projected to be $109.1 billion, representing a $3.5 billion increase compared to the revised projection for 2023-24, indicating expectations of improved state revenues.