A Review of the 2025-26 California State Budget
The 2025-2026 California State Budget was put together under difficult fiscal conditions, with state leaders working to close a significant budget shortfall. In the face of economic uncertainty, we’re encouraged to see that key investments in children and families, including universal transitional kindergarten, early care and education, and behavioral health, have been protected. These sustained commitments reflect the state’s ongoing prioritization of equity and opportunity for all children. At the same time, we remain deeply concerned about cuts that limit access to essential services, like Medi‑Cal freezes and premiums for undocumented adults, at a moment when immigrant families need support more than ever.
Below is a breakdown of some of the key points of the official final 25-26 state budget.
Investments in Early Learning and Education
The 2025–26 budget includes:
California is moving forward with the full implementation of Universal Transitional Kindergarten (TK).
$2.1 billion in ongoing funding for Universal TK, ensuring all four-year-olds are eligible to enroll.
$1.2 billion to lower student-to-adult ratios in TK classrooms from 12:1 to 10:1, improving individualized attention and safety.
$515 million for before, after-school, and summer programming through the Expanded Learning Opportunities Program (focusing on districts with high concentrations of low-income students, English learners, and foster youth).
$480 million for evidence-based literacy instruction and educator training aligned with California’s ELA/ELD Framework, the state’s foundational document to guide literacy instruction.
$300 million to launch the new Student Teacher Stipend Program, offering $10,000 grants to support teacher candidates through their credentialing process.
$378.6 million to support the Learning Recovery Emergency Block grant to help Local Educational Agencies (LEAs) in establishing learning recovery initiatives through the 2027-28 school year.
Additional funding was also directed to programs that support whole-child health and learning, including:·
$145 million for school kitchen upgrades and training to strengthen universal school meals.
$21.9 million in state funds (matched by federal dollars) for the Summer EBT (SUN Bucks) program, ensuring children have access to food year-round.
$20 million to support the implementation of Children and Youth Behavioral Health Initiative, increase access to behavioral health services in schools.
These investments reflect a long-term strategy to strengthen early childhood education, improve literacy, and grow a diverse, well-trained teacher workforce.
Support for Child Care Providers
The Department of Social Services will receive:
$88.6 million to pay voucher-based child care programs based on certified need, not attendance.
$59.4 million for a cost-of-living adjustment (COLA) for child care providers.
$30.7 million to begin implementing federal requirements for prospective (upfront) provider payments.
$70 million for administrative support to help agencies manage new workload and system changes.
While broader structural reform is still being worked on, these investments aim to stabilize California’s child care infrastructure and support the workforce that makes family-centered care possible.
Cuts Affecting Immigrant Communities
Amid difficult tradeoffs, the state paused or eliminated several planned expansions in Medi-Cal coverage for undocumented adults:
A freeze on enrollment for full-scope Medi-Cal for undocumented adults ages 19 and over (effective no sooner than January 2026).
Medi-Cal Premiums for Adults with Unsatisfactory Immigration Status, ages 19-59 — implementation of $30 monthly premiums for individuals with unsatisfactory immigration status aged 19 to 59, effective July 1, 2027.
Elimination of dental benefits and specialty drug coverage for undocumented adults ages 19 and over.
Reinstatement of Medi-Cal asset test limits for seniors and disabled adults.
Shifts in how clinics and Federally Qualified Health Centers are reimbursed, which could limit access to care for undocumented adults.
These cuts will have significant implications for immigrant families’ access to care.
Immigration & Legal Aid for Families
$10 million for the Children’s Holistic Immigration Representation Project.
$10 million for One California, which supports broader immigration services.
$7.5 million for YMCA of LA, supporting food assistance and legal aid.
Expanded Support for Basic Needs
In addition to ongoing programs, the budget provides:
$52 million for CalFood, boosting food bank capacity across the state.
$36 million for California Fruit and Vegetable EBT, helping families access fresh produce.
$7.5 million for YMCA of LA, supporting food assistance and legal aid.
$7.4 million for diaper banks and 12.5 million for the Diaper Access Initiative, which provides a three-month supply of diapers to families with newborns through hospitals.
These investments help meet the most basic and immediate needs of families with young children.
Child Welfare & Family Support
$81 million for the Bringing Families Home program, which provides housing support for child welfare-involved families at risk of homelessness.
$31.5 million for Foster Family Agencies to offset liability insurance cost increases.
$21 million maintained for the Family Urgency Response System- system designed to provide collaborative and timely state-level phone-based response and county-level in-home, in-person mobile response during situations of instability, to preserve the relationship of the caregiver and the child or youth..
Continued support for the Tiered Rate Structure Implementation, which helps tailor services to child and adolescent needs.
CalWORKs Improvements
The budget modernizes and simplifies CalWORKs, making it easier a more family-centered and easier to navigate program for families and counties:
Simplified orientation, welfare-to-work planning, and sanction rules.
Optional job club and expanded activity options.
Less burdensome county reporting.
Redirection of $4.6M in savings to local assistance.
These changes reflect a more family-centered, flexible approach to economic mobility.
Affordable Housing and Homelessness
The budget continues housing-related investments and regulatory reforms:
$500 million for the Low-Income Housing Tax Credit program.
$500 million (in 2026–27) for the Homeless Housing, Assistance, and Prevention (HHAP) program.
Streamlined permitting and California Environmental Quality Act (CEQA) reforms to accelerate housing development (particularly in vacant or underutilized land within existing urban areas and affordable housing in location efficient areas- close to transit, services and amenities).
New oversight of homeless shelters to ensure safety and accountability.
These changes are designed to reduce housing instability, a top concern for families and home visiting programs in LA County.
What This Means for Our Work
Despite economic challenges, California is keeping many child- and family-focused commitments intact. However, deep concern remains around cuts to Medi-Cal and immigrant health access. We will continue to advocate for policies that uplift all families, especially those most impacted by poverty, racism, and systemic barriers.
What’s Next
The state's new fiscal year began on July 1, 2025. From July onwards, the legislature may introduce budget amendments and other changes to the current budget package. From the Summer to the Fall, state departments and agencies are preparing budget proposals for the next fiscal year. This is a crucial period for the public to engage with legislative staff, advocate for specific issues, and propose ideas for the upcoming year. After a series of meetings, the governor will make final decisions, and the proposed budget for the next fiscal year will be released in January 2026.
Resources
If you would like to view the full 2025-26 California State Budget Summary, click here.
For further details and a comprehensive guide to the state budget process, click here.
Want to learn more about the budget process? Check out the Budget Academy- the Budget Center’s essential resources for understanding and navigating the California state budget.