State Budget Update as of June 23, 2020

On June 22nd, Governor Newsom and the Legislature reached an agreement on a final 2020-21 state spending plan. The budget agreement includes a combination of the Governor’s May Revision and the Legislative plan approved on June 15th. In general, the agreement accepts the Governor’s May Revision proposal to cut funding first then restore if new federal funds become available, with an October 15th trigger of restoration of cuts and reversal of deferrals. As the agreement mentions, the budget package uses reserves to preserve the state’s health and social services programs, as well as other programmatic funding for schools, workforce, and childcare. We know these public services have become more critical than ever due to the economic and societal changes caused by the COVID-19 pandemic. As a result of the ongoing pandemic, it has pushed the state into a recession, plunging state revenues – creating a projected $54 billion revenue shortfall for next year and thus, pressuring State leaders in making difficult decisions on where cuts and spending will occur.

Couple highlights of the budget agreement include:

  • Rejects the May Revision proposals to reduce funding for the Strong Workforce and K-12 Strong Workforce programs, keeping the programs at 2019-20 spending levels.
  • Restores all May Revise reductions to K-12 regular public-school categorical programs to fully fund Career Tech, after school, and Adult Education programs.
  • Maintains $37 million General Fund for the Adult Reentry Grant.
  • Rejects the Governor’s May Revision proposal that would have cut, absent a federal funds trigger restoration, all but the base funding for CalWORKs Subsidized Employment, yielding $134.1 million General Fund in 2020-21, and rejects the associated May Revision trailer bill language proposal from the Administration.
  • Provides $15 million one-time General Fund to support emergency financial aid for undocumented students at UC, CSU and the community colleges.
  • Reduces funding for Calbright College by $5 million ongoing and $40 million one-time.
  • Approves $10 million General Fund one-time to fund the Social Entrepreneurs for Economic Development (SEED) Initiative to provide micro-grants and entrepreneurial training to immigrants.
  • Approves a total of $100 million to supports the IBank’s loan guarantee program that provides financial assistance to small businesses.
  • Rejects the May Revise 10% trigger cuts to all childcare programs.
  • Rejects the May Revision proposal to cut apportionment funding for community colleges.

As for next steps, an amended 2020-21 State Budget Act (SB 121/AB 89) will be presented for a vote by the full legislature by the end of this week and the Governor is expected to sign the budget by the end of the month. Trailer bills are now in print and contain statutory changes to implement the budget bill. The California EDGE Coalition will continue to remain actively engaged as budget and bill discussions continue, leading up to the August 31st end of session deadline.

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