Governor Gavin Newsom's final state budget as Governor of California was finalized via multiple budget bills being signed between June 30th and September 20th, 2026. The final budget navigated major fiscal uncertainty and market fluctuations due to ongoing federal funding reductions, impacts from H.R. 1, and global macroeconomic impacts from the Trump administration's foreign and domestic economic policy agenda. Despite this climate, the California state budget aimed to delay, soften, or reject reductions to core safety net programs, including Medi-Cal and CalFresh. The final budget contains $251.5 billion in spending and balances the budget through 2027-28.
In total, the state budget allocated $7.8 billion for child care programs, and $7.53 billion for Universal Prekindergarten (CSPP and TK). The Early Care and Education budget had to navigate a $75 million reduction of federal funds from Child Care Development Block Grant (CCDBG). Despite this reduction, the state was able to backfill a partial amount of this fund ($41 million), reflecting an overall net increase of 18,440 child care slots.
Other Notable Budget Items Include:
• $39 million for Child Care Infrastructure disaster recovery for child care providers
• 2.009% COLA for child care programs, including CSPP
• No single rate structure implemented for subsidy child care provider rates
• Cost of Care Plus continued, funded with $313 million
• Abandons prospective pay for child care providers, as this is no longer required by the federal government, and sweeps previously set aside of funds
• Funding for the Bridge program was sustained, but county allocations changed noted in August 24, 2026 county fiscal letter CFL-26-27_10.
• Increase in diaper access through the allocation of funding to local regional centers for the Diaper Initiative, and funding to specific hospitals through Governor Newsom’s Golden State Initiative.
• A one-time $108 million investment to the CalFood program to support food banks.
The final budget provides a small increase or flat funding from prior years for child care slots, child care provider pay, and family well-being programs. The child care slots were partially backfilled with the $41 million to reflect 18,440 slots. The budget’s investment in safety net programs like nutrition were to mitigate the projected disenrollment and reduction in benefits. The budget included funding to delay the implementation of new Medi-Cal requirements such as the community engagement requirement, reinstated asset limit, and phase out of comprehensive coverage for certain immigrant groups. Overall, the final balanced budget intends to soften the impacts of H.R. 1 while continuing to support children and families throughout California.
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