California State Budget

SB 101 Budget Act of 2025 - Signed

Child Care & Early Education

• Spaces: $1.6 billion for Alternative Payment Program, General Child Care and Migrant Child Care slots to expand childcare access, with a priority for General Child Care slots serving children who are 0 to 3 years of age.

• COLA: Includes a decrease of $60.7 million General Fund to reflect the one-year suspension of the child care cost-of-living adjustment.

• Bridge Program: Reverts up to $30 million General Fund in unspent Emergency Child Care Bridge funding from 2024-25 and authorizes a $30 million reduction to the Emergency Child Care Bridge program in 2025-26.

• Prospective Pay: Provides $8.2 million General Fund for system costs associated with the implementation of prospective pay for child care programs and $21.9 million General Fund for local administration costs. Additionally, authorizes $582,000 for the department to implement prospective pay.

• APs & CCPU: Provides an increase of $70 million General Fund for Alternative Payment Program agencies for administration and support costs associated with implementing ongoing provisions of the memorandum of understanding with Child Care Providers United.

• Cost of Care Plus: Provides $44.8 million General Fund for child care contractors to continue distributing “cost of care plus” monthly rate supplements for child care providers pursuant to the 2023 and 2024 Budget Acts.

• Rate Reform: Provides $21.8 million one-time federal funds for automation costs to implement a single rate structure for child care based on an alternative methodology. Makes the use of these funds subject to approval by the Joint Legislative Budget Committee, based on a spending plan including how the department will set rates pursuant to the single rate structure.

• Direct Deposit: Re-appropriates $1.1 million General Fund from the 2022 Budget Act and increases $944,000 General Fund to extend direct deposit for child care program payments.

• Reverts $177.5 million General Fund in unexpended funds from a one-time
  appropriation from the 2023 Budget Act for the School Facility Program.
• Ensures that schools and community colleges have a safety net in the future by
  authorizing a discretionary deposit into the Public School System Stabilization
  Account of up to $650 million, upon the recalculation of the 2024-25 Proposition
  98 minimum guarantee.
• Aligns federal fund authority with updated grant awards and available carryover
  funds for federally funded TK-12 education programs, including Title I programs,
  public charter schools, Perkins programs, McKinney-Vento programs, and others.
• Appropriates $4.3 billion Proposition 98 General Fund for the Expanded Learning
  Opportunities Program, an increase of $263 million.
• Provides a cost-of-living adjustment of $174 million Proposition 98 General Fund,
  reflecting 2.3 percent, for the Foster Youth, American Indian Early Education
  Childhood Education, American Indian Education Centers, Special Education,
  Child Nutrition, Adults in Correctional Facilities, and K-12 Mandate Block Grant
  programs.
• Appropriates $500,000 Proposition 98 General Fund for the California Association
  of Student Councils.
• Appropriates $43.9 million in Proposition 98 General Fund and federal funds to
  support the administration of the Summer Electronic Benefits Transfer Program
  (SUN Bucks) by local educational agencies.
• Appropriates a total of $1.9 billion Proposition 98 General Fund and
  approximately $3 billion in federal funds for universal school meals.
• Appropriates $5.5 billion Proposition 98 General Fund and $1.5 billion in federal
  funds for special education.
• Suspends the cost-of-living adjustment for California State Preschool Programs in
  2025-26, which results in savings of $19.3 million Proposition 98 General Fund
  and $10.2 million General Fund.
• AB 121 Education Finance: Education Omnibus Budget Trailer Bill provides for statutory changes necessary to enact the TK-12 related statutory provisions of the Budget Act of 2025.

AB 102 Budget Act of 2025 - Signed

• Spaces: $1.6 million for Alternative Payment Program, General Child Care and Migrant Child Care slots to expand childcare access, with a priority for General Child Care slots serving children who are 0 to 3 years of age.
• COLA: Appropriates $59.36 million general fund to CDSS for a cost of living adjustment (COLA) to the Cost of Care Plus rates in all CDSS child care programs, and appropriates $10.17 million general fund and $19.3 million Proposition 98 for California Department (CDE) of Education child care and preschool programs.
• Bridge Program: Alters the reversion amounts from specific purposes as specified in the 2024 Budget Act for the Emergency Child Care Bridge Program, while maintaining the overall reversion amount.
• Prospective Pay: Appropriates $30.1 million general fund to CDSS, for state and local agency administration costs to pay child care providers prospectively, based on enrollment.
• APs & CCPU: Provides $70 million General Fund for Alternative Payment Program agencies for administration and support costs associated with implementing ongoing provisions of the memorandum of understanding with Child Care Providers United.
• Rate Reform: Appropriates $21.7 million federal funds to CDSS for state administration costs for implementation rates, based on the alternative methodology and the single rate structure, subject to Joint Legislative Budget Committee notification.
• CDE New Positions: Provides funding and position authority to the CDE, for 8.0 positions for the California State Preschool Program, to support trailer bill policy workload.

AB 120 Early Childhood Education and Childcare - Signed

• Suspends the statutory cost-of-living adjustment for child care and preschool programs in 2025-26. Commencing July 1, 2026, requires all subsidized child care and preschool programs to receive a cost-of-living adjustment as a minimum annual rate increase.
• For direct contract and voucher-based subsidized child care and preschool
  programs, establishes reimbursement based on enrollment and families’
  certified need, as specified.
• Extends quarterly updates to the Legislature on the implementation of child
  care rate reform through July 1, 2027.
• Requires, beginning October 1, 2025, and through July 1, 2027, inclusive,
  the California Department of Social Services (CDSS) to update the
  Legislature quarterly regarding progress on implementation of prospective
  payment and paying based on enrollment.
• Establishes legislative intent to cease using a regional market rate for setting child care rates, and instead use an alternative methodology for setting future child care rates, pursuant to the following criteria:
  
  
  • a) Rates are set pursuant to statute and informed by the alternative
    methodology.
  • b) All subsidized child care and preschool programs are reimbursed under a single rate structure that takes into account a common set of rate elements.
  • c) Rate levels are informed by the costs associated with meeting health and safety requirements and program requirements.
  • d) Base rates are administered as a per-child amount, with programs able to receive enhancements.
  • e) Rates vary by geography, type of care setting, regulatory requirements, time categories, and child age.
• Clarifies that if a family receiving subsidized child care adds an additional
  child to the family size, the family’s eligibility period shall be extended for
  at least 12 months.
• Extends and expands once-per-month, per-child-served monthly rate
  increases for all subsidized providers, known as cost of care plus, and
  establishes a formula, based on the statutory cost-of-living adjustment, for
  increasing these monthly rates in 2025-26.
• Establishes that if various provisions of this bill are in conflict with a
  collectively bargained agreement between the state and Child Care Providers United, the collectively bargained agreement shall be controlling, as specified.
• Makes various technical and conforming changes.

SAN FRANCISCO, CA (May 15, 2025) - Yesterday, Governor Newsom released an updated budget proposal known as the ‘May Revision’ or ‘May Revise.’ With new information on state revenues and expenditures, the proposal now balances a $12 billion deficit, compared with a modest $363 million surplus projected back in January. This change is largely due to what Governor Newsom referred to as the “Trump Slump”, the economic impact of Trump’s tariffs which Newsom claims have taken a toll on tourism and capital gains, and estimated to cost California $16 billion in lost tax revenue.

Top-line Overview of the Governor's 2025-26 May Revision Budget Proposal

• Total Budget: $321.9 Billion
• General Fund: $226.4 Billion
• Total Reserves: $15.7 Billion
• Budget Shortfall: $11.9 Billion (or 5.8% of the overall budget)

Department of Social Services (Child Care and Development)

• Maintains 2024 level funding to continue the “Cost of Care Plus” monthly payment for state subsidized providers.
• Adds $44.8 million in General Funding (GF) to prepare the state to implement Monthly Cost of Care Plus Rates.
• Includes $21.7 million to support the automation of Rate Reform and $70 million to Alternative Payment Programs for additional admin support. While there is no additional funding proposed to increase provider reimbursement rates, the Governor’s Budget Summary states there is a continued commitment to work towards a single rate structure and alternative methodology for estimating the cost of care.
• Adds approximately $52 million to prospectively pay providers (equivalent to private market where parents pay in advance for services delivered rather than retroactively bill for services rendered).
• Suspends Cost of Living Allowances (COLA) for early childhood contractors beginning 2025-26 (including contracts for R&R, LPC, CCTR, CFCC, CMIG, CMAP, CHAN, and CSPP) to generate $60.7 million in savings to the GF.
• Decreases the Emergency Child Care Bridge for Foster Care Children program to $42.7 million in 2025-26 reflecting current level spending and maintains $51 million in annual ongoing funding for the program.

Proposition 98 Funding and Transitional Kindergarten (TK)

• Provides $2.1 billion in ongoing Prop 98 GF (inclusive of all prior years’ investments) to support the full implementation of Universal Transitional Kindergarten.
• Provides an additional $1.2 billion ongoing Prop 98 GF to support lowering the average student to adult ratio from 12:1 to 10:1 in every TK classroom.

Before, After, and Summer School

• Maintains full implementation of the Expanded Learning Opportunities fund (for students in grades TK-6) and estimates its ongoing cost at $515.5 million to increase the number of small Local Education Agency (LEAs).
• Adds an additional $10 million to increase the minimum grant amount from $50,000-$100,000 per LEA.

The proposed budget comes at a time of great uncertainty around federal funding, a significant source of state revenue. Federal funding makes up one third (34.6%) of California’s budget, with almost 4 in 5 federal dollars flowing through Health and Human Services. The largest share of federal funds is appropriated to Medi-Cal, which provides healthcare for more than 14 million Californians (California Budget & Policy Center).

If programs like Medicaid or SNAP are cut, the cost shifts onto states pose significant concerns for parents and child care providers. Child care already makes up approximately 25% of a family’s budget (2023 California Child Care Portfolio) and 43% of all Early Care & Education (ECE) providers still rely on at least one public assistance program including 1 in 4 providers who rely on Medicaid (Center for Law and Social Policy). Stagnant wages for child care providers, cuts to family services including health care and nutritional assistance, in addition to the potential loss of federally funded Head Start programs will only make child care more unaffordable.

Over the past few years, the state has made significant commitments and increased investments in ECE. In 2019, the state committed to pay providers equitable wages based on the “true cost of care” and in 2021 Governor Newsom promised to expand subsidized child care spaces to increase family access. While last year’s budget deficit delayed the release of 60k+ spaces until 2026-27, our child care workforce cannot wait another 3-5 years to receive equitable wages, nor can families wait for more subsidy support.

The Network acknowledges the state’s budgetary limitations, however, the Governor’s May Revise overlooks the immediate pain that people are experiencing. While expanding Transitional Kindergarten at this time is important and well intentioned, the state should be mindful of allocating resources that could help stabilize our fragile child care ecosystem. Community based child care providers cannot survive without fair subsidy rates, nor with an expanding public system in which child care alternatives and campus based (ELOP) can threaten their livelihood. We cannot afford any net loss to our child care infrastructure and need to make strategic investments with our dollars to survive and build during this "growth recession."

- Linda Asato, Executive Director of the California Child Care Resource & Referral Network

Difficult decisions must unarguably be made. However, as the 4th largest economy in the world, we urge state leaders to prioritize raising state revenues and increasing investments to support working families, children, and communities most at risk from proposed federal actions.

We stand ready to work with all state contractors, coalitions, legislators, and state partners to protect access to basic needs and services while advocating for solutions that ensure sustained investment for our children and families.

SAN FRANCISCO, CA (January 16, 2025) – Last week, Governor Gavin Newsom released his proposed 2025-26 state budget. We appreciate that the proposed budget is consistent with prior commitments related to fair provider pay, and hope that this strengthens and expands the child care workforce over time. We look forward to seeing a concrete demonstration of this commitment in the May Revise.

However, the bottom line is that a strong child care system requires a multi-pronged approach in order to be accessible and affordable for all California families. As Governor Newsom has acknowledged, child care is essential to economic growth and serves as an economic stabilizer, supporting working families across the state. Resource and referral (R&R) agencies play an integral role in connecting those families with child care. They are also trusted community institutions that protect the rights of children and families, and provide community-based disaster response coordination. Right now, R&R agencies in the Los Angeles area are supporting community members through diaper distribution, sharing disaster and mental health resources, supporting child care providers’ wellbeing, and coordinating with local partners.

“Child care is a critical part of response and recovery during and after any major disaster. Families and businesses will need reliable child care as Californians go through the long process of building back from this tremendous loss,” said Linda Asato, Executive Director of the California Child Care Resource & Referral Network. “In the immediate period, the child care community stands ready to support families with young children as we also advocate for federal disaster relief, and continue to raise awareness of the value-add that quality child care offers across generations of people, economic and social service sectors, and our nation’s competitive advantage.”

Furthermore, because the Governor’s proposal assumes current federal funding and policy, and was developed before the onset of the extensive Los Angeles wildfires, we recognize the budget as presented may be overly optimistic. As budget negotiations unfold and we learn more about how federal policy will impact California’s children and families, we are committed to advocating for a final agreement that reflects our values as a state.

• The 2024-25 California Spending Plan: Child Care and State Preschool

• The 2024-25 California Spending Plan: Human Services

Response to the Budget Act of 2024

SAN FRANCISCO, CA (July 03, 2024) - Last week, Governor Newsom signed the Budget Act of 2024, which went into effect July 1. The final budget addresses a shortfall of over $45 billion. The Governor and the Legislature arrived at a final agreement that acknowledges the importance of a stable child care system, but delays implementation deadlines beyond Newsom’s term.

Child Care Wins:

• Slot Expansion: Intent to fulfill the 200,000 child care slot expansion but shifts responsibility to fulfill slots onto the next governor. We appreciate the commitment to increase access to quality, affordable child care and will continue advocating for the fulfillment of all slots by 2028.

• Alternative Methodology: Requires Department of Social Services to report its rate reform implementation progress through January 2026, and creates a hold harmless policy to maintain 2024-25 child care and preschool rates through the current rate expiration date on July 1, 2025. However, more legislative accountability is needed to ensure completion before the next administration takes office.

• General Child Care and Development Spaces (CCTR): Restores funding for the 11,038 slots awarded in Spring 2024. These slots fulfill prior commitments that were rescinded in the May Revision and that many providers already invested in.

• Emergency Child Care Bridge Program: Total General Fund levels will remain at $83.4 million ongoing, removing barriers to families who cannot foster children due to a lack of child care access or affordability.

Missed Opportunity:

• Child Care Reversion Account: The Budget did not include a child care reversion account to hold and maintain unspent early childhood and education (ECE) dollars for ECE purposes.

As we look to the future, we remain cautious of our wins. The Legislative Analyst’s Office estimates an ongoing $10 billion annual deficit through FY2028, which may trigger future cuts to child care funding. The R&R Network therefore urges policymakers to explore alternative budget solutions. Tax reform is a potential opportunity to protect and strengthen safety net programs which are lifelines for families struggling under rising inequality and costs of living. We will explore this together with other advocates in the coming year.

“We are relieved that the final budget avoided catastrophic cuts to children and family supports. The lack of childcare or destruction of this infrastructure costs all of us. Child care is an economic issue that makes our state and economy competitive and families strong. Child care funding needs to be growing, and not just maintained at current levels,” said California Child Care Resource and Referral Network Executive Director, Linda Asato.

We will continue to advocate alongside our members and coalition partners to ensure that the state keeps its promises to families and providers.

The Senate, Assembly, and Governor have arrived at a three-party Budget agreement which includes 19 budget-related bills. The Budget Act has been signed and is effective as of July 1.

The signed budget agreement includes:

• A commitment to fund 200,000 child care spaces by 2028. ✅
• Restored funding for 11,000 CCTR spaces in the FY24-25 budget. ✅
• An alternative rate methodology that reflects the true costs of care, a timeline for its adoption, and a hold harmless policy. ✅

Read more about it here.

Click here to view the evolution of the 2024 State Budget.

(released 5/29)

Since the release of the May Revision, the Assembly and Senate have worked hard to craft a joint budget plan which must pass by Saturday, June 15, 2024. The Budget Plan was released on May 29, with budget hearings in both houses on May 30. The Budget Plan restores funding to a number of vital safety net programs.

Read more about it here.

On May 31, the Network sent a letter to the California Democratic delegation asking if they could pressure Governor Newsom to reconsider, and ultimately reject the harmful cuts proposed in the May Revision.

With state budget negotiations in full swing, pressure from the CA Democratic Congressional delegation may help protect child care funding.

Read our letter here.

SAN FRANCISCO, CA (May 10, 2024) - Earlier today, Governor Gavin Newsom released a revised 2024-25 budget (aka “May Revision” or “May Revise”), proposing additional cuts as lower than expected tax collections worsen the projected revenue shortfall. The exact amount of the shortfall is still unclear: according to the Governor, the shortfall is $27.6B; the LAO will release its own estimate next week, which is expected to be higher than the Governor’s.

At present, the Governor’s position is that current levels of core services would remain stable overall. However, he proposes to freeze child care slots at the current level of 119,000. The plans for the remaining 81,000 slots are unclear, but reaching the promised 200,000 is not currently part of the Governor’s planning for the next two fiscal years. Furthermore, approximately $35 million will be cut from the Foster Care Bridge Program, which addresses a common barrier for families accepting children in foster care, the lack of affordable child care.

He also emphasized that California remains strong and resilient, pointing to an increasing population, record high tourism, and its status as the 5th largest economy in the world.

There is no question that adjustments are needed to achieve a balanced budget. However, child care access and affordability are foundations of a strong economy. Child care is essential for Californians to work, and already inaccessible or unaffordable to so many families in the state. Even the promised 200,000 slots responded to a fraction of the actual need.

The Governor remains firmly opposed to revenue solutions, promising “no new taxes” and rather, that the state become “more efficient and more effective.” We disagree with the resistance to revenue solutions, as budget shortfalls are expected over multiple fiscal years. Alongside advocates and researchers focused on equity and shared prosperity for all, we urge him to reconsider this position. Cuts that impact workforce participation further destabilize California households, which are already struggling to afford basic expenses such as child care.

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In response to proposed cuts to the Emergency Child Care Bridge Program for Foster Children ("Bridge Program"), the Network signed a response letter urging legislators to reject this harmful cut.

Click to View the Bridge Response Letter

More resources:

• 2024-25 Budget Summary from the Governor’s Office

• Excerpt from the upcoming Assembly Budget Committee’s summary (as posted on Jason Sisney’s Substack, #CABudget)

• What Happens After the May Revision is Released? (a resource from the California Budget & Policy Center)

• What's in the May Revise - R&R Network

Click Here to Listen to Our State Budget Update

Summary: The Governor and Legislature have introduced a “budget bill jr.” in an attempt to reduce the growing budget deficit (forecasted as high as $73B) before the May Revise (due 5/14). The $17.3B package focuses on “easier” to cut programs, and includes $550M in cuts to a facilities grant program for PS, TK, and FDK. Our advocacy efforts focus on preserving key family supports and instead encouraging revenue solutions like an ultra wealthy tax.

Deficit Forecasts:

• LAO: $73B (originally estimated at $58B; expanded to $73B on Feb 20, 2024)
• Governor: $38B (Jan 10)

Revenue Estimates:

• FYTD shortfall in PIT receipts at $4.1 billion (PIT March withholding $217M above projections), CIT FYTD $1.1B shortfall, SUT FYTD $347M shortfall (March DoF Bulletin; awaiting April Bulletin)
• Governor rejects revenue solutions, including Lee’s AB 259 to tax the ultra wealthy, but advocates are pressing for revenue solutions over cuts to programs like CalWORKs (R&R Network is participating with Parent Voices and others).
  

Early Action: $17.3 billion package (details released 4/4/24; sent to Senate floor on 4/10; AB/SB 106 “budget bill jr.”)

• Why do early action? “Easier choices” in early action; tougher cuts in May; ease public perceptions of deficit before it grows larger
• What’s impacted? Expanded MCO tax ($4B); delay transit infrastructure ($1B) and preschool ($550M); shift cap-and-trade revenue ($1.8B) to backfill other programs; reduce state departments’ funding ($760M+); state employee pay deferral ($1.6B).

What’s next? Legislature to vote on $17B early action deal; awaiting May Revise; continuing advocacy efforts to press Newsom and the Legislature to preserve funding for family supports.

Resources:

• https://www.gov.ca.gov/wp-content/uploads/2024/04/Early-Action-Agreement-Overview-.pdf
• https://calmatters.org/politics/capitol/2024/04/budget-deficit-california-deal/
• https://jasonsisney.substack.com/p/march-income-taxes-up-about-300-million

SAN FRANCISCO, CA (January 17, 2024) – Last Wednesday, Governor Gavin Newsom released a proposed 2024-25 state budget. In contrast to the Legislative Analyst’s Office’s (LAO’s) earlier projection of a $68 billion shortfall, the Governor estimated the deficit at approximately $38 billion. The delta is best explained by differences in opinion and optimism regarding future revenues, with the LAO offering a more cautious prediction.

We appreciate that the Governor’s budget does not cut subsidized child care slots and makes an effort to move toward the 200k additional slots by FY 25-26, as promised three years ago in FY 21-22. The Governor has reaffirmed his commitment to implementing the changes that were made last year to shore up the child care supply, including maintaining the rate adjustments to subsidized care as cost of care payment rates are developed and sustaining the health care and retirement benefit funds for home-based child care providers.

In what will certainly be a challenging state budget year with significant revenue shortfalls, it was encouraging that our child care support system did not suffer aggressive state cuts. However, we have lost crucial federal child care relief funding at a time when families and providers are struggling to make ends meet. We risk dire implications for families.

According to the California Budget & Policy Center, income inequality worsened dramatically during the COVID-19 pandemic. “The top 1% had 78 times the income of middle-income Californians, on average, in 2021, up from 49 times the income just two years earlier.” The Governor’s Budget Summary acknowledges rising inequality and other risks to the state’s economy, including an aging population, lower fertility rates, and high housing and living costs. Coupled with the loss of federal funding, we can expect more California families will need support in the coming year. “Merely maintaining the status quo of public expenditures on safety net programs is not enough. Raising a family in California has become less and less affordable. Current funding levels can’t counteract rapidly rising inequality and poverty levels,” said Linda Asato, Executive Director of the California Child Care Resource and Referral Network.

Therefore, while the fiscal situation will require making difficult choices to achieve a balanced budget, child care remains essential for Californians to earn income to support their families and participate in society and the economy.

We will continue to dialogue with our state leaders as the budget season progresses, to lift the voices of those that aren’t often heard, but who are affected by decisions made.

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Our policy team takes positions on legislation and budget decisions that impact children, families, and the child care system. We work collaboratively to inform policymakers of the impact of legislative and budget decisions on working families. Often, we will provide testimony and send letters of support or opposition.

Click to Download the Network's 2024 Policy Agenda