On May 14, Governor Newsom released the 2026–27 May Revision, a $321.9 billion spending plan that reflects stronger-than-expected revenues alongside continued economic uncertainty. General Fund revenues came in $16.5 billion above January projections, driven largely by a spike in 2025 capital gains income. The proposal maintains nearly $29.9 billion in total reserves, including $15.1 billion in the Rainy Day Fund.
At the same time, Californians continue to face rising costs, while job growth is expected to remain largely flat, particularly in lower-wage sectors. These conditions reinforce the importance of sustained investments in education, workforce development, and economic mobility, especially for opportunity youth, adult learners, and working Californians navigating a changing economy.
While the May Revision reflects a more stable fiscal outlook than anticipated earlier this year, it also signals important choices ahead. We are pleased to see continued prioritization of investments that strengthen education-to-career pathways and long-term economic opportunity, including dual enrollment, credit for prior learning, workforce Pell implementation efforts, the Cradle-to-Career data system, and stronger connections between employers and the education and workforce systems that prepare Californians for in-demand jobs.
The Governor’s proposed budget for 2026-27 is reflected in budget bills AB 1563 (Gabriel) and SB 879 (Laird). The Legislature is expected to vote on the main budget bill by June 15, with additional hearings and negotiations continuing through the end of June before the new fiscal year begins July 1.
Below is an overview of the 2026–27 May Revision related to education, workforce development, and social safety net issues, many of which align with EDGE’s 2026 Policy Priorities.
For questions, please contact Valerie Johnson, EDGE Policy & Advocacy Manager, at vjohnson@caedge.org.
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EDUCATION
Career Pathways and Dual Enrollment. The May Revision maintains the $100 million investment for dual enrollment, including trailer bill language allowing the 180-minute instructional day requirement for College and Career Access Pathways dual enrollment. Dual enrollment allows learners to earn college credit while simultaneously completing their high school diploma or high school equivalency, creating a more connected path into postsecondary education and career opportunities. Career pathways and dual enrollment expansion are also named as priority uses within the $5 billion Student Support and Professional Development Discretionary Block Grant on the TK-12 side of the budget, which provides flexible funding to support student needs, educator capacity, and college and career readiness.
Credit for Prior Learning. The May Revision maintains the January proposal of $37 million Proposition 98 General Fund, of which $2 million is ongoing, to continue expanding the Credit for Prior Learning Initiative. These funds provide a fiscal incentive for more community college campuses to participate, increasing access for more learners to earn college credit for skills and knowledge gained through work, military service, and other real-world experience.
Workforce Pell Grant. The May Revision includes a new $664,000 one-time General Fund investment to support the California Student Aid Commission (CSAC) implementation of the new federal Workforce Pell Grant program authorized under H.R. 1 of 2025. This program will expand federal financial aid access to students in short-term career training programs lasting between 8 and 14 weeks. The California Student Aid Commission has been designated as the administering agency for Workforce Pell and will work in collaboration with the Cradle-to-Career Data System, the Labor and Workforce Development Agency, and other key partners to advance implementation of the program.
Student Centered Funding Formula (SCFF) COLA. This is the biggest community college allocation increase in the May Revision. The SCFF Cost of Living Adjustment (COLA) is upgraded from 2.41 percent to 4.31 percent, nearly doubling, adding $197.7 million in ongoing Proposition 98 General Fund. An additional 1.4 percent is discretionary. This brings the total proposed SCFF COLA adjustment in 2026-27 to $438.3 million. This is a meaningful investment in the institutions that serve the most diverse and economically underserved students in California, and a significant improvement over the January Governor’s Budget.
Categorical Programs COLA. The May Revision provides a COLA for select categorical programs, and the Adult Education Program increases from 2.41 percent to 2.87 percent, adding $6.1 million ongoing Proposition 98 General Fund. Programs receiving the 2.87 percent COLA include Extended Opportunity Programs and Services, Disabled Student Programs and Services, and CalWORKs student services. These programs, along with adult education, help adult learners and students with higher support needs gain foundational skills, access critical services, and earn credentials that open doors to further education, better jobs, and long-term economic stability.
Adult Learner Demonstration Project. The May Revision provides a new $9.7 million one-time Proposition 98 General Fund investment, available over three years, that supports the Adult Learner Demonstration Project. This initiative provides comprehensive services to help adult workers facing economic barriers build skills, access education and training pathways, and move into stable, higher-paying jobs.
Student Support Block Grant. The May Revision includes a one-time increase of $607,000, bringing the total Student Support Block Grant for community colleges to $100.6 million for 2026-27. These funds will help colleges provide supports such as basic needs assistance, childcare, advising, mental health services, job placement, and other employment supports, with an emphasis on skills-based learning, career pathways, and student equity.
Strong Workforce Program. The May Revision does not restore the Strong Workforce Program to its prior base funding level. The Strong Workforce Program is California’s core community college investment in career education and workforce training aligned with regional labor market needs. While the system requested one-time funding to backfill the program, the May Revision instead continues the $60 million annual earmark from the Strong Workforce Program for the Rebuilding Nursing Infrastructure Grant Program for a third year.
Cal Grant Program. Estimated Cal Grant expenditures rise to $3.2 billion in 2026-27, with $31.5 million in additional ongoing General Fund, driven by more Cal Grant-eligible students. Cal Grant is California’s main financial aid program, helping eligible students pay for college costs, including tuition, fees, books, supplies, living expenses, and other education-related costs.
Investments for the Cradle-to-Career Data System. The May Revision maintains the ongoing $15 million investment in the Cradle-to-Career Data System, a statewide platform that connects education, workforce, financial aid, and social services data to better inform policy and improve student outcomes. The proposal also includes $1.3 million one-time General Fund to support the Cradle-to-Career Data System’s workload related to implementing and participating in the federal Workforce Pell Grant Program, with funds contingent on Department of Finance approval of an expenditure plan. New trailer bill language also requires state data providers to establish memoranda of understanding with the Cradle-to-Career Data System for data-sharing purposes, further supporting the system’s ability to securely collect and link cross-sector data.
Calbright College. Calbright College. The May Revision maintains the Governor’s January proposal to provide an additional $38.1 million ongoing for Calbright College, bringing total annual funding to $53.1 million. The increase is intended to stabilize base operations as Calbright transitions out of its startup phase. Calbright is California’s online community college, offering free, flexible, competency-based programs designed to help adults build skills, earn credentials, and prepare for in-demand jobs.
Workforce Training for Food Service Workers. The May Revision maintains the Governor’s January proposal to provide $14.3 million ongoing for the California Healthy School Food Pathway Program. The program supports community college training for food service workers to prepare healthy meals for K-12 students.
WORKFORCE DEVELOPMENT
Workforce Innovation and Opportunity Act Allocations (WIOA). The May Revision increases federal WIOA expenditure authority by $74.3 million for state operations and $95.6 million for local assistance to align with updated federal allocations. This reflects additional federal workforce funding available to California to support the state and local workforce development system, including employment services, training, and related workforce supports.
Managed Care Organization (MCO) Tax. The MCO Tax is a significant funding source for Medi-Cal, supporting health care coverage, provider payment increases, and other health care investments. The current tax expires on December 31, 2026, creating uncertainty for ongoing Medi-Cal investments and the health care providers and workforce that deliver these services.
Apprenticeships. The May Revision maintains the Governor’s January proposal for a four-year, one-time Apprenticeship Training Grant augmentation through the Department of Industrial Relations. The proposal provides $71.9 million total to support grants for approved construction and related trades apprenticeship programs, including $18.2 million in 2026-27, $18.1 million in 2027-28, and $17.8 million in both 2028-29 and 2029-30.
Health Care Workforce. The May Revision includes $100 million through the Department of Health Care Access and Information to implement Proposition 1 behavioral health workforce programs, including funding for program administration and grants or other support to expand the behavioral health workforce. It also includes $100 million General Fund to continue the BH-CONNECT Workforce Initiative. Together, these investments support the training, recruitment, and retention of behavioral health practitioners serving Medi-Cal members and Californians who are uninsured.
Rural Health Transformation Program. The May Revision provides an additional $126.4 million in one-time federal funding authority for the Department of Health Care Access and Information to administer and implement the federal Rural Health Transformation Program, including $11.4 million for administration and $115.0 million for implementation. The program is intended to strengthen rural health systems by supporting care delivery innovation, workforce capacity, and health care infrastructure and technology improvements in rural communities.
No New Funding for SEED 4.0 / Immigrant Entrepreneurship. The May Revision does not include the proposed $45 million over two years for the Social Entrepreneurs for Economic Development initiative. SEED supports entrepreneurship and small business opportunities for immigrant and other under-resourced communities, helping participants pursue self-employment, start or grow small businesses, and build economic security. Continued investment in immigrant entrepreneurship strategies would support local economies, job creation, and more inclusive economic growth across California.
No New Funding for the Manufacturing Investment Tax Credit. The May Revision does not include the proposed $210 million for the Manufacturing Investment Credit, a targeted tax credit to help manufacturers offset local sales and use taxes paid on new qualifying equipment purchased and installed in California. Establishing the credit would help spur business investment, strengthen economic competitiveness, and support job creation in manufacturing and related sectors across the state.
SOCIAL SAFETY NET
Impacts on Food Access. The May Revision maintains the January proposal to expand the California Food Assistance Program to income-eligible people age 55 and older, regardless of immigration status, beginning in 2027-28, but only if funding is provided in a future state budget. The Administration estimates the expansion would eventually cost $169 million annually and serve 74,000 people once fully implemented, while the Legislative Analyst’s Office estimates costs could be higher, ranging from $140 million to $400 million annually. The proposal does not include expansion for people under age 55. At the same time, federal H.R. 1 changes are expected to significantly reduce access to CalFresh and the California Food Assistance Program, putting approximately 665,500 Californians at risk of losing food assistance due to expanded work requirements and about 72,000 people at risk of losing access due to immigrant eligibility changes. Beginning in October 2026, H.R. 1 also reduces the federal share of CalFresh administrative costs from 50 percent to 25 percent, increasing costs for the state and counties. The May Revision does not propose resources to replace lost benefits, leaving immigrant communities and Californians across the state at greater risk of food insecurity.
Impacts on Health Care Access. The May Revision continues restrictions on Medi-Cal access for immigrant Californians, including an enrollment freeze for certain adults age 19 and older and new barriers that could cause people to lose or be unable to regain full-scope coverage. It also proposes increasing monthly Medi-Cal premiums from $30 to $50 for adults ages 19 to 59 whose coverage is fully state-funded due to immigration status, effective July 1, 2027. The May Revision also reflects implementation of federal H.R. 1 changes to Medi-Cal, including new work and community engagement requirements, more frequent eligibility renewals, and changes to eligibility rules tied to immigration status. The proposal includes $4 million for navigators to help clinics and community partners support Medi-Cal eligibility, enrollment, and retention. These changes would create new barriers for immigrant communities and make it harder for workers to stay healthy, employed, and connected to care.
Child Care. The May Revision includes cuts to child care programs administered by the Department of Social Services. It cuts the Emergency Child Care Bridge Program by $42.7 million General Fund in 2025-26 and ongoing, leaving approximately $51 million General Fund to support the program, and suspends the statutory child care cost-of-living adjustment, resulting in a $60.7 million ongoing General Fund cut. The proposal also does not provide new funding to fulfill the planned expansion of subsidized child care slots or advance rate reform, leaving families, providers, and California’s workforce without the long-term stability they need.