A Review of the 2026-27 California State Budget: What It Means for Families and Children Ages 0-5
California enacted its 2026-27 state budget on July 1. At $351.7 billion, the budget closes a persistent gap while absorbing new costs from federal changes under H.R. 1. It maintains most existing funding for child care, home visiting, and early learning, and makes several changes to Medi-Cal eligibility and immigrant health coverage that will affect families with young children.
Below is a breakdown of what the final budget means for babies, toddlers, and the families who care for them.
Child Care and Early Learning
The budget continues the state's investment in expanding subsidized child care access:
$269.2 million ongoing General Fund to restore 3,430 subsidized child care slots and add 22,770 new ones.
$112 million ongoing General Fund for a 2.01% cost-of-living adjustment for child care providers.
$36.4 million one-time federal and Proposition 64 funds to repair child care facilities damaged by the 2023, 2024, and 2025 natural disasters.
Continued implementation of the state’s three-year agreement with Child Care Providers United, including one-time stabilization payments for all child care providers (including California State Preschool Program contractors) and a commitment of up to $585 million over three years for provider health benefits, retirement, and training.
$250 million one-time Proposition 98 funding for the Universal Prekindergarten Planning & Implementation Grant, expanding access to State Preschool and Transitional Kindergarten for two-, three-, and four-year-olds.
$51.4 million ongoing Proposition 98 funding to increase monthly cost-of-care payments to California State Preschool Program (CSPP) contractors.
$33.6 million ongoing Proposition 98 funding to increase CSPP professional development days from two to five.
$20 million additional ongoing Proposition 98 funding for the state’s Quality Rating and Improvement System, which supports quality improvements in early care and education programs.
These investments build on more than $3.6 billion the state has put into child care access, workforce, and infrastructure since 2020-21, which has funded roughly 149,000 new subsidized slots to date.
Home Visiting
For families with children in the first years of life, one of the most direct investments in the budget is the CalWORKs Home Visiting Program, which is maintained at $118 million for 2026-27. This program continues to connect eligible families with home visiting services during the first three to five years of a child's development, exactly the window when this support has the greatest impact on parent-child attachment, health, and school readiness.
Basic Needs: Diapers, Food, and Cash Assistance
Several programs that meet families' most immediate needs were sustained or expanded:
Diaper Access Initiative: Through CalRx, the state continues to provide a supply of free diapers to every newborn delivered at a participating hospital, regardless of family income, and is working toward a direct-to-consumer portal for low-cost diapers and wipes.
Diaper Bank funding: $16.5 million one-time General Fund for organizations that distribute diapers and wipes to low-income families with infants and toddlers.
CalFresh: $4.6 billion in total CalFresh and nutrition spending, plus $223 million one-time to help counties manage new federal work-requirement paperwork under H.R. 1, and $100 million one-time for CalFood to keep food banks stocked.
CalWORKs cash assistance: $3.8 billion for CalWORKs, including a $59.5 million increase for a 1.8% boost to Maximum Aid Payment levels effective October 1, 2026, funded through the Child Poverty and Family Supplemental Support Subaccount.
Child Welfare and Family Support
The budget includes $1.1 billion General Fund (over $10.6 billion when federal and realignment funds are included) for child welfare services, family support, and maltreatment prevention. Notable investments include:
$357.3 million ($179.8 million General Fund) to continue building the Child Welfare Services California Automated Response and Engagement System.
$20 million one-time to maintain and increase the number of child welfare social workers responding to emergency reports.
$100 million one-time across housing support programs for families involved in the child welfare system, including Bringing Families Home, Home Safe, and the Housing and Disability Advocacy Program.
Health Coverage: Progress and Real Concerns
Medi-Cal is projected to cover 13.9 million Californians (about a third of the state), and the budget renews the Managed Care Organization Tax to help sustain the program and preserve targeted rate increases for primary and maternal care. It also delays (rather than immediately enacting) the elimination of Medi-Cal dental benefits for enrollees without satisfactory immigration status, pushing that cut back to July 2027.
That said, several federally driven changes will land hard on families with young children, especially in mixed-status households:
Parents in the Affordable Care Act adult expansion population will face new federal work or community engagement requirements, documenting at least 80 hours per month of work, school, training, or community service, starting January 1, 2027. Eligibility redeterminations for this group also shift from annual to every six months beginning in 2027-28. This is red tape that risks disrupting coverage for parents and, indirectly, their kids.
Beginning January 1, 2027, Medi-Cal members with unsatisfactory immigration status move to a fee-for-service delivery system rather than managed care.
Monthly premiums for adults with unsatisfactory immigration status (ages 19 to 59) rise from $30 to $50, effective July 1, 2027.
Immigrants with certain statuses will shift to restricted-scope Medi-Cal starting July 2027, following a federal change effective October 2026 that excludes them from full-scope federal funding.
These are the kinds of coverage disruptions that can ripple straight into a young child’s household, even when the child themselves is not the one losing eligibility
In-Home Supportive Services
IHSS, which supports children and adults with disabilities to safely remain at home, totals $33.9 billion in 2026-27. The budget does reinstate a Medi-Cal asset test ($21,000 for individuals, $31,000 for couples) that will reduce IHSS General Fund spending by $112.9 million in 2027-28 as eligibility is realigned to that limit.
What This Means for Our Work
For families with infants, toddlers, and preschoolers, this budget largely holds the line rather than pulling back. Home visiting funding, diaper access, child care slots, and preschool access all remain in place or grow, a meaningful signal that the state continues to prioritize the earliest years even in a tight fiscal year. At the same time, the health coverage changes tied to federal policy are a real threat to the stability mixed-status and low-income families need to keep their youngest children healthy and connected to care. We'll continue to track how these eligibility and redetermination changes play out on the ground, and to advocate for the families and providers who make home visiting possible across LA County.
What's Next
The state's new fiscal year began July 1, 2026. Over the summer and fall, state departments will begin developing proposals for the 2027-28 budget, and this is a key window for advocates to weigh in with legislative staff. The Governor's next budget proposal is expected in January 2027.
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