Schools fare relatively well in Gov. Gavin Newsom’s proposed state budget for the 2023-24 fiscal year, but a projected revenue shortfall topping $20 billion looms as a wild card in shaping the final outcome for K-12 education across California. 

The 2023-24 fiscal year starts July 1.

Newsom’s initial budget proposal in January outlined a record-setting $23,723 in per-pupil spending. That’s nearly $1,000 more than the current fiscal year, mostly thanks to a combination of declining enrollment and new funding sources. 

The governor’s proposal also includes a significant funding boost for a program that aims to direct more resources to help students from low-income families, English language learners, and foster youth. Specifically, the plan would provide school districts an additional $4.2 billion, including an 8.13% cost of living adjustment, under the so-called Local Control Funding Formula (LCFF) program.

For Proposition 98, which requires a minimum percentage of the state’s general fund to be spent on K-14 education (including community colleges), Newsom’s budget proposes to provide $108.8 billion. That’s a 1.3% reduction from current-year spending. 

Newsom’s budget plan would continue expansion of the state’s program to provide universal transitional kindergarten. Around $690 million would help districts build capacity until they’re required to offer transitional kindergarten to all students by the 2025-26 school year. The money would fund expanded eligibility, extending the program to cover an estimated 46,000 additional children.

Funding for arts and music, on the other hand, would suffer a net reduction under the governor’s budget plan. 

The state would provide approximately $941 million for arts and music education pursuant to the terms of Proposition 28 which was approved by voters in 2022. However, that would not be enough to offset a proposed $1.2 billion cut in grants for arts, music and related instructional materials. 

While schools receive a fair amount of budget protection from the Prop 98 funding guarantee, their ultimate fate in the 2023-24 budget remains far from certain. More cuts could come before the governor and Legislature finalize the spending plan by the constitutional deadline of June 30. 

One of the biggest variables is the size of the revenue shortfall the state will face in 2023-24.

When he unveiled his budget, the governor projected a deficit of $22.5 billion. But the Legislature’s nonpartisan fiscal advisor, the Legislative Analyst’s Office, subsequently said the governor’s revenue projections were too rosy. The LAO recommended the legislature “plan for a large budget problem.”

If the revenue picture darkens, the governor and Legislature could reduce school funding.

The next major step in the budget process comes in May, when the governor releases his revision to the January proposal. That will be when the Legislature starts to seriously scrutinize the budget and negotiate with Newsom.