The California Teachers Association (CTA) has filed a lawsuit against the state, accusing Governor Gavin Newsom and legislative leaders of withholding at least $3.9 billion in public school and community college funding for the current budget cycle. The lawsuit centers on the delayed allocation of funds designated by Proposition 98, a 1988 state ballot measure that amended the California Constitution to guarantee a minimum level of annual funding for public education.
The union asserts that the state's revised budgets, which deferred payments for both the 2024-25 and 2025-26 school years, constitute a violation of Proposition 98 and the state constitution. The California Department of Finance has previously cited "persistent uncertainty in revenue projections" and "volatility in our revenues" as reasons for such deferrals. Legislative analysts had initially projected annual state budget deficits ranging from $20 billion to $30 billion, contributing to the state's need to manage its finances.
CTA president David Goldberg stated that these deferrals jeopardize the future of educators and vital funds for local school districts. School districts are reportedly facing significant financial pressures due to declining enrollment and inflation, making Prop. 98 funds crucial. This situation is exemplified by recent financial challenges in districts like Los Angeles Unified, which has voted to cut jobs, and San Juan Unified in Northern California, which anticipates losing approximately $3.7 million due to a substantial drop in student enrollment.
California has a history of disputes over the calculation of Proposition 98 funding, which is influenced by state revenue, economic growth, and student attendance. Legal interpretations suggest that state law prohibits reducing school funding before the close of a fiscal year. An overestimation of Prop. 98 funds could potentially force budget cuts in other state areas, complicating future budgets, especially given broader economic uncertainties.
State officials, including Governor Newsom, have attributed some of California's economic challenges and budget complexities to federal policies, such as tariffs and other economic measures implemented by the Trump administration. A spokesperson for the Department of Finance noted that "federal policies have made economic projections substantially more complex," increasing uncertainty for the 2026-27 fiscal year.