Legislative Update

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January 9, 2025

Governor Newsom Previews State Budget Proposal

At a press event on Monday, January 6, 2025, Governor Newsom provided a preview of his 2025-26 State Budget proposal. 

Governor Newsom said that his $322.2 billion proposal is fully balanced with no budget deficits and state revenues exceeding 2024 State Budget Act projections by $16.5 billion. The Governor said his proposal does not predict any shortfalls for the budget year. 

Below we provide a summary of some of the top-line budget areas that the Governor highlighted during the press conference of relevance to community colleges.  

Proposition 98  

While he did not provide the updated Proposition 98 numbers for 2023-24 and 2024-25, he said that his budget projects that the minimum guarantee will grow to $118.9 billion for 2025-26. This is a $3.6 billion increase from the $115.3 billion that was included for the 2024-25 fiscal year in the 2024 State Budget Act. The Governor noted the Proposition 98 reserve is $1.5 billion.

Cost-of-Living Adjustment

The Governor’s Budget proposal projects a 2.43% cost-of-living adjustment (COLA) for 2025-26, which is slightly lower than what the Legislative Analyst’s Office projected in its November Fiscal Outlook report (2.46%). 

It is important to note that there are still two data points outstanding in order to calculate the final statutory COLA. One of those data points will be released at the end of January and the other will be available at the end of April. 

The statutory COLA is traditionally applied to the Student Centered Funding Formula (SCFF) rates and to a number of other categorical programs funded outside of the SCFF. 

Next Steps

Originally, Governor Newsom was going to be in Washington, D.C., for former President Jimmy Carter’s funeral when his budget proposal was set to be officially released this Friday, January 10, 2025. However, with the ongoing Los Angeles-area wildfires, the Governor has canceled his D.C. trip. At this point we do not know if the Governor will be holding his traditional press conference Friday morning when his budget proposal is released or if the Department of Finance staff will brief the public. 

We will provide more information about what is in the Governor’s Budget proposal in subsequent ACCCA Updates over the next several weeks and will provide updates on the proposals as they begin to be vetted by legislative budget subcommittees. Stay tuned.