On May 14, Governor Gavin Newsom presented the 2025-26 May Revision, an updated state budget proposal shaped by economic disruptions stemming from federal instability. The proposal adjusts for a projected $11.95 billion shortfall driven by market volatility, decreased tourism revenue, and the impact of tariffs. These combined factors have contributed to an estimated $16 billion reduction in the state’s revenues.
California remains the world’s fourth-largest economy, continuing to lead in innovation, agriculture, and economic output. Yet despite this strength, the state is entering a challenging budget year, one that risks deepening the hardships faced by millions of Californians who are already struggling to make ends meet. Even so, the Governor’s revised spending plan manages to protect and sustain key progress from previous budgets aimed at improving economic security and expanding opportunity for Californians paid low wages and communities of color.
This budget season remains particularly challenging, underscoring the urgent need for California to uphold its commitment to equity, especially for communities experiencing economic and social barriers. EDGE is prepared to work alongside the Administration, Legislature, and partners to ensure that workers, returning students, opportunity youth, underserved communities, and industries are prioritized as we navigate this period of economic uncertainty.
After the release of the May Revision, the Legislature develops a budget plan in late May/early June to facilitate passage of a balanced budget bill before the June 15 deadline. The Governor has 12 days once passed by the Legislature to sign or veto the budget plan. Check out the budget process timeline here.
Below is an overview of the 2025-26 May Revision related to education, workforce development, and social safety net issues, many of which are aligned with EDGE’s 2025 Policy Priorities.
Education
Community College Funding. The May Revision brings some important updates for California’s community colleges by adjusting investments in how colleges are funded and how they serve students:
- Student Centered Funding Formula. The May Revision includes over $210 million in one-time funding and $104.7 million in ongoing funding for the Student Centered Funding Formula (SCFF), which determines how colleges receive funding based on student needs and success. This ensures colleges are fully supported for both the 2024–25 and 2025–26 school years.
- Enrollment Growth. The proposal includes $109.5 million in ongoing funding to support a 2.35% increase in student enrollment. This helps colleges expand access, offer more classes, and provide support services to accommodate more students.
- COLA. The May Revision also reduces the previously proposed Cost-of-Living Adjustment (COLA) to 2.3%, down from 2.43%. While still higher than last year’s 1.07%, this smaller adjustment means less new funding to help colleges keep up with rising costs. As a result, the SCFF will see a $12.9 million reduction, and categorical programs, which support underserved students, students with disabilities, and English learners, will receive $122,000 less than initially expected.
- TK Shift. The May Revision proposes to shift $492.4 million in Proposition 98 General Fund money away from community colleges and into the TK–12 education system to support the expansion of transitional kindergarten (TK). This reallocation significantly impacts community colleges, reducing the overall share of Prop 98 funds they receive. It threatens to destabilize local funding, making it harder for colleges to plan, hire, and maintain essential student services, especially at a time when enrollment is beginning to rebound and demand for support is high.
While the May Revision offers key investments in enrollment growth and continues to support the SCFF, the combination of a reduced COLA and the large-scale shift of nearly half a billion dollars toward TK-12 undermines the financial stability of California’s community colleges. These changes could ripple out to affect students most in need, making it harder for colleges to deliver on their promise of equitable access and success.
Cuts to the Student Support and Professional Development Discretionary Block Grant to $1.7 billion (from $1.8 billion in the Governor’s January Budget) due to Prop 98 reductions. These dollars are supposed to help schools fund professional development for teachers, including expanding career pathways and dual enrollment efforts.
Cuts to Career Passport and Credit for Prior Learning proposals. The May Revision reduces the Career Passport proposal from $50 million to $25 million. The Career Passport is a digital tool intended to help individuals, especially those without traditional four-year degrees, showcase their skills and experiences to potential employers and access well-paying jobs. The budget proposal also reduces the Credit For Prior Learning item from $50 million to $15 million (one-time), and from $7 million to $5 million (ongoing). Credit for Prior Learning is a critical initiative enabling more Californians to convert their real-world experience into college credits. These proposals are part of the Master Plan for Career Education.
Cuts $20 million to the Rising Scholars Program. The May Revision reduces the $30 million ongoing augmentation for the Rising Scholars Network to $10 million ongoing. The Rising Scholars Network is a statewide initiative within the California Community Colleges system that supports students who are currently or formerly justice-involved. The network aims to expand access to higher education for justice-involved individuals, recognizing education as a critical tool for rehabilitation and reducing recidivism.
Cal Grant Program Caseload Adjustments: The Cal Grant program is estimated to provide nearly 492,000 financial aid awards to students who meet specified eligibility criteria in fiscal year 2025-26. Projected spending increases to $2.3 billion in 2023-24, $2.5 billion in 2024-25, and $2.8 billion in 2025-26, based on the latest estimates of enrollment of Cal Grant-eligible students. The budget adds $94.7 million one-time for 2024-25 and $228.7 million ongoing for 2025-26. These costs are largely driven by an unexpected number of eligible students attending Cal Grant-awarding institutions.
Workforce Development
DIR Apprenticeship Training Grant Expansion: The May Revision provides an additional $18.2 million one-time funding for the Department of Industrial Relations to support construction and trade apprenticeships, on top of the $3 million in the Governor’s January Budget.
Cuts to Regional Coordination for Career Education. The May Revision proposes to cut $3 million in one-time General Fund for the Labor and Workforce Development Agency (LWDA) in 2025-26, leaving $1 million to roll out regional coordination planning for career education. The Governor’s January budget included $4 million in one-time General Fund for the LWDA to support evaluation of the expansion of regional coordination models to support implementation of the Master Plan for Career Education.
Cuts to the CA Education Interagency Council. The revised budget proposes to withdraw the total $5 million (ongoing) that would create the California Education Interagency Council, initially proposed to support the Master Plan for Career Education. The Council is intended to improve systems alignment, support data-driven policy, and build clearer pathways for students, workers, and support employers.
Maintains the $17 million investment for CalRISE. The May Revision maintains key funding for the Regional Initiative for Social Enterprise (CalRISE) program, which offers financial and technical assistance to employment social enterprises to help build the capacity to create and retain jobs in communities. Employment social enterprises are businesses that provide jobs, on-the-job training, and specialized support to people who face high barriers to work, including homelessness, previous incarceration, substance use, or mental health issues.
Maintains the $3 million investment to continue supporting the Cradle-to-Career Data System (C2C). The May Revision maintains an increase of $3 million (ongoing), as proposed in the January budget proposal, to support the California College Guidance Initiative and the C2C. CCGI is central to C2C’s college and career planning tools. It will provide these tools to all 6th-12th-grade students in the state and use eTranscript California to transfer community college transcripts to four-year colleges, aiming to bridge gaps between K-12 and higher education, ensuring every California student has the resources for college and career success.
No additional funding for the Apprenticeship Innovation Fund (AIF). The May Revision did not propose any new funding for the Apprenticeship Innovation Fund (AIF). Established in 2022, AIF represents a vital state investment in expanding and sustaining innovative apprenticeship programs aligned with the Interagency Advisory Committee on Apprenticeships (IACA). Unlike traditional models in the building and fire trades, AIF supports the growth of registered apprenticeships in high-demand sectors such as healthcare, advanced manufacturing, technology, education, and more. The program provides essential funding and reimbursement to apprenticeship partners and local education agencies to cover the operational and training costs necessary to run these programs effectively and equitably.
No additional funding for High Road Training Partnerships (HRTPs). The May Revision did not propose any new funding for HRTPs. The HRTP initiative started as a $10M demonstration project designed to model partnership strategies for the state. Ranging from transportation to health care to hospitality, the HRTP model embodies the sector approach to industry partnerships that deliver equity, sustainability, and job quality.
No additional funding for the CA Apprenticeship Initiative (CAI). The May Revision did not include any new funding for the California Apprenticeship Initiative (CAI). The California Community Colleges had initially requested a $60 million ongoing increase to meaningfully expand registered apprenticeship programs through CAI, supporting the Governor’s goal of reaching 500,000 earn-and-learn apprenticeships by 2029. CAI offers grants to community colleges, K–12 districts, and their industry partners to develop innovative, high-quality apprenticeship opportunities that connect learners with real-world career pathways.
No additional funding for Breaking Barriers to Employment Grants. The May Revision did not include additional funding for the Breaking Barriers to Employment program. Community-based organizations (CBOs) are essential partners in bridging underrepresented workers to training and career pathways. This program equips individuals from underserved communities with the supplemental, supportive, and wraparound services necessary to access, persist in, and complete workforce and education programs – ultimately leading to meaningful, family-sustaining employment.
Safety Net
Enrollment Freeze for Full-Scope Medi-Cal Expansion for Undocumented Immigrants (Adults 19 and Older). The May Revision proposes to freeze enrollment in full-scope Medi-Cal coverage for undocumented Californians age 19 and over, beginning January 1, 2026. The May Revision reflects General Fund savings for this proposal of $86.5 million in 2025-26, increasing to $3.3 billion by 2028-29. Although these savings are achieved primarily from expected reductions in enrollment in Medi-Cal coverage for undocumented Californians over time, freezing new enrollments would limit access to vital healthcare services for many Californians.
Child Care. The May Revision maintains funding to continue the Cost of Care Plus Rate monthly payments adopted for state-subsidized child care providers, consistent with requirements related to the reimbursement floor established in the 2024 Budget Act. However, the revised budget cuts $42.7 million from the Emergency Child Care Bridge and $60.7 million from the Cost-of-Living Adjustment to achieve a balanced budget, increasing challenges for working families to access affordable child care.
Future spending triggers. The May Revision outlines $456.1 million in trigger-based spending commitments for 2027–28, dependent on the state’s fiscal condition. A key trigger is the expansion of the California Food Assistance Program (CFAP), which would allocate $117.2 million in 2027–28 and increase to $163.2 million in 2028–29. CFAP extends food benefits to Californians who are excluded from federal nutrition programs due to their immigration status. However, tying the 2027–28 funding to future state revenues creates harmful uncertainty and delays urgently needed support. This approach prolongs food insecurity, places additional strain on local food banks, and defers the health and economic benefits that come with consistent access to food.
For questions, please contact Jason Henderson, EDGE Policy Analyst, at jhenderson@caedge.org.
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