May Revision narrows Proposition 98 gap but rebenches TK funding and increases deferrals, LAO warns

The May Revision to California’s budget forecasts a 2025–26 Proposition 98 guarantee of about $114.6 billion and would rebench funding to reflect the continued expansion of universal transitional kindergarten (TK), Department of Finance officials told the Assembly Budget Subcommittee on Education Finance on May 20.

The proposal moves an estimated $492 million over several years from community colleges to K–12 to align TK program costs with the segment that now delivers TK. It also relies on roughly $2.4 billion in deferrals and uses one‑time balances and smaller reserve actions to pay for many of the administration’s K–12 proposals while maintaining investments such as LCFF COLA and targeted supports, Alex Schoep of the Department of Finance said.

The change matters because, while the May Revision preserves many of the governor’s January school proposals, the LAO said the package relies heavily on one‑time solutions and debt‑like deferrals that could produce a structural shortfall next year. “This plan maintains or expands most school spending from January while using one‑time funds and deferrals that leave the state and districts vulnerable to further revenue declines,” Ken Koppin of the Legislative Analyst’s Office told the committee.

The May Revision…