On January 9, Governor Newsom released the 2026–27 State Budget proposal, a $248.3 billion General Fund plan that largely protects prior-year investments. But it offers few major new initiatives and does not include new revenue solutions to address looming federal cuts to health care and food assistance, or the affordability pressures hitting millions of Californians.
For workforce and education, the proposal avoids major cuts and includes targeted investments tied to the Master Plan for Career Education, alongside significant Proposition 98 funding. The administration projects a roughly $3 billion shortfall, while also emphasizing fiscal caution with reserves, including about $3 billion proposed for the Rainy Day Fund and additional set-asides for emergencies and school reserves.
This proposal marks the start of months of budget negotiations in the Legislature. With federal actions creating new cost pressures, especially in health and human services, the Administration is signaling that decisions about anything beyond continuing previously adopted investments will likely wait until the May Revision. By then, the state will have a clearer revenue picture after the April 2026 tax filing deadline.
It is shaping up to be another tough budget year. EDGE will stay engaged throughout the process and work with the Administration, Legislature, and partners to help protect and strengthen education and workforce development investments that serve California’s workers, adult learners, opportunity youth, underserved communities, and employers.
The Governor’s proposed budget for 2026-27 is reflected in budget bills AB 1563 (Gabriel) and SB 879 (Laird).
For questions, please contact Anna Alvarado, Chief of Policy & Government Affairs at aalvarado@caedge.org. To receive legislative and budget updates, including advocacy tools, please sign up for our email list here.
EDUCATION
- Master Plan for Career Education proposals include:
- Career Pathways & Dual Enrollment. The budget proposes $100 million one-time Proposition 98 General Fund to increase access to college and career pathways for students, including expanding access to dual enrollment at community colleges. Dual enrollment allows high school students to take community college classes and earn college credit while still in high school, helping them save time and money and start a career pathway earlier.
- Credit for Prior Learning. The budget proposes $37 million Proposition 98 General Fund, of which $2 million is ongoing, to continue expanding the Credit for Prior Learning Initiative. These additional funds are intended to provide a fiscal incentive that will allow more community college campuses to participate in the development of credit for prior learning, increasing access for more learners. Credit for Prior Learning helps learners earn college credit for skills and knowledge gained through work, military service, and other real-world experience.
- Community Colleges:
- Student Support Programs. The budget proposes $271 million for a 2.41% Cost of Living Adjustment (COLA) across community college funding, including $241 million for the Student Centered Funding Formula (SCFF) and about $31 million for categorical programs, including adult education. SCFF is how California determines each community college’s ongoing funding based on enrollment, student need, and student outcomes. Adult education provides adult learners opportunities to gain foundational skills and credentials that open doors to further education/skills training, better jobs, and long-term economic stability. The budget also includes a one-time $44.5 million withdrawal from the Proposition 98 Rainy Day Fund to help cover SCFF costs in 2026–27.
- Student Financial Aid. The budget proposes $3.2 billion to support the Cal Grant program. Cal Grant is California’s main financial aid program that helps eligible students pay for college, including tuition and other education costs.
- Calbright College. The budget proposes $38.1 million one-time Proposition 98 General Fund to support and provide stable funding for Calbright College in its base operations as it transitions out of its startup capacity. Calbright College is California’s fully online, statewide community college focused on helping working adults gain job skills and industry credentials.
- Block Grant. The budget proposes $100 million one-time Proposition 98 General Fund for a flexible block grant for the Community College system.
- CA Department of Education Restructure: The budget proposes shifting oversight of the California Department of Education (CDE) from the elected State Superintendent of Public Instruction to the State Board of Education. More details are expected in February trailer bills. This could matter for adult education because adult ed is housed at CDE, and it is not yet clear how the governance change could affect programs or learners. The Administration frames the proposal as implementing long-standing recommendations to reduce fragmented TK–12 governance and improve coordination, coherence, and accountability across the education system.
- Cradle-to-Career Data System. The budget maintains key funding ($15 million) to support ongoing operations of California’s Cradle-to-Career (C2C) Data System, the state’s longitudinal data platform that connects information across early learning, K–12, higher education, and workforce programs. By linking data across the education-to-workforce pipeline, C2C helps policymakers, educators, and workforce partners understand student pathways and outcomes, identify equity gaps, and make more informed decisions about program improvements and investments.
WORKFORCE DEVELOPMENT
- Apprenticeships. The budget proposes a four-year, one-time Apprenticeship Training Grant augmentation for the Department of Industrial Relations (DIR) to fund grants for approved construction and related trades apprenticeship programs. The proposal includes $18.2 million in 2026–27, $18.1 million in 2027–28, and $17.8 million in both 2028–29 and 2029–30, for a total of $71.9 million.
- Health Care Workforce. The budget proposes a “placeholder” of $150 million Behavioral Health Services Fund, instead of General Fund dollars, for workforce and prevention programming at the Department of Health Care Access and Information (HCAI) and the California Department of Public Health. The Administration states that the details of the proposal will be updated at the May Revision.
- Rural Health Transformation Program. The budget proposes $234 million in federal funding for a Rural Health Transformation Program, to be administered by the Department of Health Care Access and Information. The program would support rural health care modernization through initiatives like new care delivery models, workforce development, and upgraded technology and tools.
- California Healthy School Food Pathways Program. The budget proposes $14.3 million Proposition 98 General Fund for community colleges to support the California Healthy School Food Pathways Program, which strengthens the school food service workforce through apprenticeship and training programs.
- No new dollars for other workforce training efforts, including Breaking Barriers to Employment (which supports training and wraparound services for people facing significant barriers to work) and the Apprenticeship Innovation Fund (which helps grow apprenticeships and pre-apprenticeships, especially in new and nontraditional industries).
SOCIAL SAFETY NET
- Food Access: Since H.R. 1 reduces the federal share of CalFresh administrative costs from 50% to 25% starting Oct. 1, 2026, the state budget adds $382.9 million General Fund and assumes counties will also pay more. The budget also reflects $66.2 million in lower state costs tied to projected disenrollments under H.R. 1 work requirements, meaning fewer Californians would receive food assistance. Federal changes going into effect later this year will take food assistance away from about 74,000 immigrants, and new time limits are expected to reduce access for hundreds of thousands of older adults, veterans, opportunity youth, and people experiencing homelessness. While California began preparing for these changes in 2025–26, the current proposal does not include additional resources to manage implementation and does not yet lay out a clear plan to prevent increased hunger as these restrictions take effect.
- California Food Assistance Program (CFAP). CFAP is a state-funded nutrition assistance program that provides food benefits to Californians who are ineligible for federal SNAP/CalFresh due to immigration restrictions. The proposed budget maintains the planned expansion to include undocumented adults ages 55 and older beginning in October 2027, but it does not propose expanding CFAP to other age groups or address the immigrant eligibility exclusions included in H.R. 1.
- Child Care Access: The budget proposal maintains $7.5 billion in ongoing subsidized child care funding (including $5.1 billion General Fund), serving an estimated 487,000 children, and provides a 2.41% COLA for child care, state preschool, and child care nutrition programs. The budget does not propose new child care services beyond CalWORKs caseload adjustments. It also does not include funding for the remaining child care expansion commitments from prior years, including roughly 44,000 additional slots previously identified for future rollout, and does not specify when those slots would be funded. On the child care workforce side, the proposal reflects the state’s three-year agreement with Child Care Providers United (payment increases, stabilization payments, and investments in training and benefits) and includes $11.5 million one-time Proposition 64 funding for child care infrastructure in communities impacted by recent fires.
- Health Care Access. The budget funds Medi-Cal at $196.7B in 2025–26 ($46.4B General Fund) and $222.4B in 2026–27 ($48.8B General Fund), with enrollment projected to drop from 14.5M to 14.0M as federal and state policy changes tighten coverage, representing a decline from the nearly 15 million enrolled members. It also projects about $2.4B more General Fund cost in 2026–27 as a one-time provider payment loan ends, and less MCO tax revenue (a tax on managed care plans that helps fund Medi-Cal) is available. The budget flags impacts for immigrant communities, including an enrollment freeze for undocumented Californians, eliminating adult dental for some, and an Oct. 1, 2026, shift of some immigrant communities to restricted-scope Medi-Cal (estimated 200,000 losing full-scope coverage). For those who do not qualify for Medi-Cal, Covered California serves about 1.8M people; the budget adds no new affordability funding, and premiums could rise by an average of 97% if enhanced federal tax credits expire.