Response to the Governor's Proposed State Budget from the R&R Network

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 healthcare 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.