HOPE’s Review of the Governor’s Proposed 2026–2027 California State Budget
A Latina-centered analysis of what the proposed budget means for our communities and the voices shaping the conversation.
Latinas are essential to California’s present and future. Across the state, nearly 7.98 million Latinas make up 20.2% of California’s population, and their economic and social well-being is deeply tied to the state’s overall prosperity. Latinas account for 18.6% of Californians with a college degree or higher, represent 54% of women’s labor force participation, and own 13.3% of women-owned small businesses statewide.1 As the state sets its priorities for the year ahead, these realities must guide how resources are allocated across sectors that directly impact Latina communities, strengthening outcomes for all Californians.
The state budget is a reflection of those priorities and California’s values, with direct implications for education, healthcare, and economic mobility. At its core, it determines whether the social safety net remains strong enough to support working families during times of economic uncertainty. For more than 20 years, HOPE has analyzed the California State Budget through the lens of Latina experiences and contributions to the state’s growth. This review offers a broader landscape analysis highlighting investments that can expand opportunity, support working families, and strengthen long-term prosperity for all communities.
Overview of the Proposed 2026–2027 State Budget
Governor Gavin Newsom released his proposed California State Budget for 2026–2027 amid ongoing economic uncertainty, shifts in federal policies, and increasing pressure on state safety-net programs. The Governor’s proposed budget emphasizes fiscal restraint, preserves core services, and makes targeted investments in workforce development, education, and economic stability. With reductions in federal funding and restrictions on eligibility under recent federal policy changes, California faces a defining choice: whether to absorb those losses and protect families or allow gaps in coverage that will deepen hardship for millions of low-income Californians, especially women and children.
While the Governor’s proposal projects a $3 billion deficit, this figure is modest compared to the $18 billion deficit reported by the Legislative Analyst’s Office (LAO). The LAO also expressed growing concerns about the potential for multi-year deficits once the AI boom subsided and about how the Governor arrived at his calculations. For example, several calculations influence Proposition 98, reserves, and the spending limit, which, according to the LAO, is approximately $8 billion more than should go to them. Additionally, they claimed the state will need at least $10 billion in savings in the coming years.2
Overall, the proposed budget reflects both progress and challenges. While several long-standing education and entrepreneurship priorities are preserved and even strengthened, there are also proposals that may limit progress on expanding healthcare access for all Californians, particularly efforts tied to federal requirements. For working families, the safety net includes access to affordable healthcare through Medi-Cal, food security through CalFresh, income stability through CalWORKs, housing stability, child care, and legal protections that allow families to work, care for their children, and plan for their futures. These programs do not replace work; they make work possible.
At HOPE, we use our core policy priorities—Civic Engagement and Representation, Economic Opportunity, Educational Access, and Health Care Access—to guide our analysis of the budget. Through this lens, we assess how the proposed investments can promote fairness, expand opportunity, and strengthen California’s future. Read more below for HOPE’s analysis across these key policy areas.
Educational Access
Education shapes not only individual opportunity, but also the long-term economic and civic strength of our communities. Latino and Hispanic students make up nearly 56% of California’s public-school students, underscoring the stakes of these investments. Yet persistent gaps remain: while 87% of Latino 19-year-olds in California hold a high school diploma, only 44% of Latino graduates received the school-based support needed to meet University of California (UC) and California State University (CSU) eligibility requirements, such as completion of A–G coursework.3
HOPE recognizes that the Governor’s budget continues investments in K–12 schools and community colleges, while also introducing new funding to address rising costs and strengthen existing initiatives. However, there are still areas where the state can improve how it ensures students receive resources beyond education such as mental health support, transportation, and family stability that help them succeed in school.
The budget proposes the following investments:
Early Education: The Early Education portion of the budget includes ongoing Proposition 98 funding of $2.4 billion to fully implement Universal Transitional Kindergarten (UTK) statewide, along with an additional $1.5 billion to reduce TK (Transitional Kindergarten) classroom ratios from 12:1 to 10:1, thereby enhancing quality and accessibility.
K-12: In the K-12 sector, the Expanded Learning Opportunities Program will provide before-school, after-school, and summer programs, while a Discretionary Block Grant could support various districts’ and schools’ needs. High-poverty schools will benefit from support for literacy and math coaches, as well as enhanced screening and resources for English learners, and a $100 million investment towards College and Career Access Pathways expansion. There is also an effort to change the State Superintendent’s authority over the state board of education, although details have not yet been made public.
“While the Governor’s proposal includes important investments, particularly in special education, and provides flexible funding that aligns with the principles of local control, we remain deeply concerned about the proposed $5.6 billion underfunding of Proposition 98 in the 2025-26 year. Proposition 98 funding is constitutionally owed to support today’s students, and deferring these dollars shifts financial risk to local educational agencies that must balance budgets in real time.”
- California Association of School Business Officials (CASBO)
Community Colleges: Community colleges will see a 2.4% cost-of-living adjustment for their base funding, student services, and select categorical programs. They also have an expansion of the Credit for Prior Learning (CPL) program, which will acknowledge and award credit for students’ previous educational experiences. It includes a block grant to help districts address their local needs.
California State University & University of California: The Governor’s budget is proposing $254.3 million for the University of California (UC) and $264.8 million for California State University (CSU) as part of the fifth year of the Multi-Year Compact Agreements. It maintains last year’s five percent base increases for both institutions. Additionally, the budget defers three percent base decreases totaling $129.7 million for UC and $143.8 million for CSU from the 2025 Budget Act. This shifts repayment to the 2027-28 fiscal year, allowing both universities to secure cash-flow loans to cover outstanding obligations. These Governors’ budgets noted that these investments come at a time when federal funding for our higher education institutions is under attack, a stark contrast to last year’s budget.
Other Postsecondary Investments: A formalized Master Plan for Career Education will promote workforce alignment and support regional workforce ecosystems. At the same time, new funding for the agency will coordinate efforts among TK-12 education, higher education, labor, and economic agencies to align educational credentials with employer demand and introduce a Career Passport in conjunction with Credit for Prior Learning.
Financial Aid: The Governor’s budget proposes $1.1 billion General Fund for the Middle Class Scholarship to reimburse the cost of grants up to 35 percent of student need in 2025-26. For the 2026-27 school year, the Governor’s budget proposes $513 million General Fund, sufficient to provide grants of up to 17.5 percent of student need. However, no additional investments were included for CalGrant Reform.
Advancing educational opportunity for all is essential. When more students succeed along college and career pathways, entire communities benefit through greater economic stability, leadership representation, and civic participation. HOPE looks forward to tracking how the state will continue removing barriers, investing in students at every stage, and keeping pathways to learning open through dual enrollment in K–12, funding for early college exposure, financial supports that drive economic mobility, and prioritization of student supports.
Economic Mobility
Economic security for Latinas in California is bolstered by sustained investments that reduce financial strain, expand pathways to upward mobility, and strengthen resilience against economic uncertainty. Safety net programs are not charity; they are an essential economic infrastructure that stabilizes families, prevents hunger, reduces long-term healthcare costs, and supports workforce participation. For Latinas who are disproportionately represented in caregiving roles, service industries, and low-wage essential work, these programs are often the difference between stability and crisis. HOPE strongly supports protecting funding for safety net programs that serve our most vulnerable communities.
The Governor’s budget includes:
Small Business & Entrepreneurship: The budget maintains targeted economic development tools for small businesses, including expanding California Competes grants to support small businesses that cannot fully benefit from tax credits. It continues to back employment social enterprises aligned with regional economic priorities, but does not introduce the Social Entrepreneurs for Economic Development (SEED) Grant Program. Key investments include a one-time $60 million allocation from the General Fund for the California Competes Grant Program to support job growth and a $17 million allocation for the Regional Initiative for Social Enterprises (CalRISE), which provides assistance to employment social enterprises for individuals with significant barriers to work.
Consumer Protection & Economic Fairness: The budget proposes a structural reorganization to strengthen consumer protection by establishing a new California Consumer Protection Agency that will consolidate licensing, regulation, and enforcement functions.
Legal Services: The Governor continued an allocation of $75 million from the General Fund to provide crucial legal services for immigrant communities. This funding plays a vital role in ensuring that our neighbors have access to the legal representation they need.
Child Care: The Governor’s budget includes $7.5 billion for DSS-administered childcare and development programs. In addition, the budget proposes $11.5 million one-time Proposition 64 funds for childcare infrastructure, targeted towards communities impacted by recent wildfires.
Budget Risks and Remaining Gaps:
Housing Access: There were no new investments related to housing. The Governor’s budget makes no cuts but also does not propose any new General Fund investments in any affordable housing programs including: Low Income Housing Tax Credit (LIHTC), Multifamily Housing Program (MHP), Portfolio Reinvestment Program, the Infill Infrastructure Grants, the Joe Serna Farmworker Housing Grant program, the Veterans Housing and Homelessness Prevention program, California Dream for All or CalHome. However, the Governor’s budget mentions a series of proposals intended to “improve efficiency and maximize the impact of available resources” among the state’s major housing programs. The specific language for these proposals is still forthcoming.
California Work Opportunity and Responsibility to Kids (CalWORKs): The Governor’s budget includes $6.5 billion ($1.2 billion General Fund) for the CalWORKs program and projects a CalWORKs caseload of 360,137 families in 2026-27.
CalFresh: The Governor’s budget proposes an increase of $382.9 million General Fund for CalFresh administration as a result of the CalFresh administration cost shift from the federal government to states under H.R. 1. The proposal also includes a decrease of $66.2 million General Fund due to restricted CalFresh eligibility as a result of H.R. 1.
“Given the scale of federal cuts to food assistance, California leaders should take meaningful steps to minimize the potential hunger spikes by making bold investments that help protect Californians in need.”
- California Budget & Policy Center
These investments support inclusive economic growth and expand workforce opportunities for Latinas. The SEED (Social Entrepreneurs for Economic Development) Grant Program provides micro-grants, business training, and technical assistance to immigrant and Limited English Proficient (LEP) entrepreneurs—serving as a critical on-ramp to entrepreneurship, income stability, and long-term economic mobility. However, limited funding continues to constrain the program’s reach and long-term scalability, particularly for entrepreneurs and families pursuing homeownership and upward mobility. HOPE advocates for protecting and expanding the SEED Grant Program as a core component of California’s economic safety net and small business ecosystem.
Strong consumer protections are also essential for economic security, particularly for vulnerable communities. HOPE seeks to work to ensure new agencies prioritize equity, representation, and community outreach so that families can access the protections and resources they need.
Healthcare Access
Affordable, quality healthcare is a fundamental component of opportunity, yet structural challenges continue to limit access for many communities. The proposed budget reflects increased costs within health and human services, but it accepts federal cuts to safety net programs like Medi-Cal without adequate state backfill. As a result, working Latina families, particularly undocumented and mixed-status households, are at heightened risk of losing access to essential, life-saving care amid shifting federal policies.
In response to the recent changes under H.R. 1 to immigrant-related policies in Medi-Cal, the Governor has proposed two actions to reduce state costs. The first proposal seeks to adjust coverage for certain immigrant groups that have lost federal cost-sharing benefits. In contrast, the second focuses on applying new eligibility rules to specific populations. This could lead to savings of about $900 million in the 2026-27 fiscal year.
“Our communities cannot withstand further health care cuts or barriers, especially as families are already bearing the weight of harmful federal rollbacks, including the chilling effects of H.R. 1. California must do more than simply hold the line, we must step forward with courage to restore Medi-Cal for All and fully protect the safety-net programs that our most vulnerable communities depend on. It is our duty to safeguard those most at risk, and that requires creativity and political will to identify budget solutions that do not endanger the health and well-being of California families. This is a moment to look beyond the immediate crisis and commit to a future where every Californian can thrive.”
- Dr. Seciah Aquino, Executive Director of the Latino Coalition for a Healthy California.
The Office of Governor Newsom intends to revert $71 million in unused EDDNext project funds and modify In-Home Supportive Services (IHSS) eligibility to align with Medi-Cal, bringing in savings of $86 million. The Governor’s future projections hint at even more opportunities for savings as the state looks to streamline costs, particularly within IHSS, which could save $650 million by 2029-30 if current trends continue. The Governor’s budget explicitly limits full health coverage for immigrant Californians, leaving only restricted coverage for emergencies and pregnancy care. While maintaining emergency and prenatal care is crucial, it is not sufficient—comprehensive full-scope coverage before, during, and after pregnancy is essential for the health of mothers and babies. The safety net must ensure continuity of coverage, not just episodic or emergency care.
In addition to these cost-saving measures, the budget’s workforce development proposals include placeholders for behavioral health and rural health workforce investments, but do not include details on restrictions to eligibility and benefit renewals for Medi-Cal and other safety-net programs. The budget lacks clear investments in community health workers, promotoras, and doulas, trusted providers within Latina and immigrant communities who are essential to bridging gaps in care, especially prenatal and postpartum support. It also does not protect or expand the community-trusted health workforce, including Community Health Workers (CHWs) and Promotoras. California must invest in these community-trusted providers to ensure access to culturally competent care.
HOPE calls on California leaders to go beyond maintaining existing systems and to actively reinforce the health care safety net. At a time when federal policy is retreating from its responsibility to protect vulnerable families, California must lead with courage.
Protecting Medi-Cal, food access, maternal health, and community-based care is not only an act of compassion—it is essential to economic stability, workforce participation, and the state’s long-term prosperity.
Looking Ahead
As the Legislature begins budget hearings and prepares for the May Revision, HOPE will continue advocating for inclusive workforce and entrepreneurship programs, expanded economic security, and the implementation of career education and consumer protection initiatives through an equity lens. This work will be grounded in a Latina-centered perspective, recognizing the unique barriers Latinas face and the importance of strengthening pathways to leadership and economic mobility.
HOPE will actively monitor budget developments and engage with policymakers to ensure that the final budget promotes economic opportunity, health and education access, and empowerment across California.
HOPE (Hispanas Organized for Political Equality). (2025, October). Economic Status of Latinas National Report. latinas.org/eslrnational
The Legislative Analyst’s Office (LAO). (2025, January). The 2026–27 Budget: Overview of the Governor’s Budget. https://lao.ca.gov/Publications/Report/5101
The Campaign for College Opportunity. (2021, November). 2021 State of Higher Education for Latinx Californians. https://collegecampaign.org/publication/2021-state-of-higher-education-for-latinx-californians