The following pages examine California’s K–12 education budget, one of the state’s three largest spending categories at $149.1 billion. This overview explains where the money goes, how California students perform, and how the state compares with Texas, which has a similar population and demographic profile but approaches funding in a very different way.

First, here is a breakdown of California’s education budget:

California’s total TK–12 education budget is $149.1 billion from state, local, and federal sources. At its core is the state’s Proposition 98 guarantee, which directs $128 billion to public schools and community colleges.

Because school spending is largely shaped by fixed operating costs, staffing, and state mandates, California’s education budget falls into the following major categories:

1. Core General Operations: The LCFF ($110+ Billion)

About 75% to 80% of California’s education budget flows through the Local Control Funding Formula (LCFF).

• What it funds: The LCFF is the primary operating account for local districts. State law and collective-bargaining agreements direct about 80% to 85% of these funds to employee compensation—teacher salaries and benefits—and fixed facility expenses such as utilities and maintenance.
• The 2026–27 increase: The budget added $3.3 billion for an enhanced 4.31% cost-of-living adjustment (COLA) to address inflation and higher operating costs.

2. Categorical Programs & Specialized Direct Support

Beyond general funding, billions are reserved for programs serving specific students, infrastructure needs, and workforce development:

• Special Education ($2.4 billion ongoing increase): The state raised the base rate to $1,340 per student, helping districts cover the high cost of services for students with low-incidence disabilities.
• Discretionary Block Grants ($2.8 to $5 billion): Districts receive about $937 per student with few restrictions, giving local boards flexibility to address budget shortfalls.
• Community Schools Partnership Program ($1 billion ongoing): This initiative turns traditional campuses into hubs for wraparound social services, family support, and mental-health services.
• Educator Workforce Support ($678 million one-time): Funding supports teacher pipelines, including $408 million for student-teacher stipends, $250 million for Teacher Residency Grants, and credential pathways intended to ease teacher shortages.
• Universal Transitional Kindergarten and After-School Expansion ($2+ billion): Ongoing funding supports free TK for all four-year-olds and expanded after-school and summer programs.
• Kitchen Infrastructure and Nutrition Services ($500 million one-time): Grants help schools upgrade kitchens to support free meals for all students.

To show how the $149.1 billion funding package reaches students, the money can be traced through three financial layers.

These layers operate in the following order:

Layer 1: Your Local District Per-Pupil Share

Across all funding sources, California provides an average of $27,418 per student. The Proposition 98 guarantee—the primary pool of state and local tax revenue—provides $20,427 per student.

Because California uses a weighted equity model, per-pupil funding varies by district.

• The Base Factor: Each district begins with a Grade Span Base Grant based on Average Daily Attendance (ADA). For the current year, these grants include a 4.31% COLA.
• The Local Effect: Lower-poverty suburban districts generally receive amounts near the base level. Districts with larger shares of high-needs students receive more through equity-based multipliers.

Layer 2: The Proposition 98 Reserve Fund (The State’s Shield)

Before funds reach local districts, California manages a constitutionally required reserve known as the Proposition 98 Rainy Day Fund.

• The Balance: The Proposition 98 Reserve holds a record $9.2 billion for the fiscal cycle.
• The Function: The reserve absorbs revenue swings caused by California’s reliance on volatile capital-gains taxes. The state deposits excess revenue in strong years and draws on the fund during downturns to reduce the risk of midyear district cuts.

Layer 3: The Local Control Funding Formula (LCFF) Multipliers

After reserve funds are set aside, the remaining money flows through the Local Control Funding Formula (LCFF), which governs about 60% of California public-school funding.

The formula has three tiers that direct additional funding according to each district’s student population:

1. The Base Grant: Every school receives a foundational amount based on grade span: TK–3, 4–6, 7–8, or 9–12.
2. The Supplemental Grant (+20%): Districts receive 20% above the base grant for each student who is an English learner, foster youth, or low-income.
3. The Concentration Grant (+65%): When high-needs students exceed 55% of district enrollment, the district receives an additional 65% of the base grant for each student above that threshold.

This structure combines a $9.2 billion statewide reserve with LCFF multipliers that direct more funding to high-poverty districts than to lower-needs suburban districts.

About the $9.2 Billion Reserve Fund

Is the $9.2 billion held entirely as cash?

The reserve is real, but the state can temporarily use its cash through internal borrowing.

Under this budget mechanism, the balance remains recorded on paper while cash may be temporarily used to pay other state obligations.

The following explains how this arrangement works:

1. The Legerdemain: Internal Cash Flow Borrowing

The California Constitution places the Public School System Stabilization Account, or Proposition 98 Reserve, within the state’s General Fund.

Because the reserve is part of the General Fund, the State Controller may temporarily use unneeded balances to cover daily cash-flow shortages.

• The Reality: When capital-gains revenue rises, the state records a deposit to the school reserve. The Controller may then temporarily use that cash to pay other obligations before later tax receipts arrive.
• Why the balance remains valid: The transaction functions as an interest-free internal loan. The state must restore the school account when revenue arrives.

2. The “Settle-Up” Maneuver

This practice has fueled a political dispute among Governor Gavin Newsom, the nonpartisan Legislative Analyst’s Office (LAO), and teachers’ unions after the state expanded its use of delayed payments.

To balance the $128 billion K–12 budget, the state funded the calculated Proposition 98 minimum guarantee $3.9 billion below the required level.

• The Maneuver: The state recorded the $3.9 billion as a future “settle-up” obligation rather than paying it immediately, deferring payment until later fiscal years.
• The Result: Deferring the payment allows the state to report a balanced budget now. Teachers’ unions argue that the delay is an unconstitutional maneuver that conceals structural deficits.

The state cannot permanently redirect education funding without a two-thirds vote to suspend Proposition 98. However, it can use the reserve for short-term cash management. The full balance remains on the books even when the immediately available cash is lower.

This is how California allocates the $149.1 billion K–12 budget; it does not represent the state’s total spending on all forms of education.

A tale of two states: Texas and California

The data provides a clear comparison between the two states.

Texas serves nearly as many students as California with a smaller total budget.

• Total budgets: Texas spends $104.9 billion to educate 5.5 million students, while California spends $149.1 billion for 5.8 million.

1. California K-12 Performance (Ranked #31)

California faces foundational resource challenges that weigh on statewide performance.

• Strengths: California provides strong pre-K access and ranks highly in the share of students who take and pass AP exams.
• Challenges: California has one of the nation’s highest student-to-teacher ratios, averaging more than 22 students per teacher. Its fourth- and eighth-grade NAEP reading and math scores trail national benchmarks.

2. Texas K-12 Performance (Ranked #32)

Texas uses a different education structure, producing a distinct mix of strengths and weaknesses.

• Strengths: Texas has a substantially higher high-school graduation rate—89%, near the top five nationally—and a lower student-to-teacher ratio of about 14 to 1.
• Challenges: Texas still ranks poorly in overall school quality. Teacher shortages, funding below northeastern-state levels, and inequities tied to property taxes leave many rural and urban schools below reading and math benchmarks.

The Cost-of-Living Equalizer (Purchasing Power)

• California spends $27,418 per student, compared with $18,972 in Texas. After adjusting for regional costs and purchasing power, however, the resources those amounts buy are nearly equivalent.
• Labor Costs: California’s high cost of living drives up teacher salaries, housing-related compensation pressures, and pension obligations.
• Operating Costs: Texas’s lower cost of living means each dollar buys more space, utilities, and local services.
• Bottom Line: California’s roughly $27,000 buys about the same quantity of staff time, facilities, and services that Texas purchases for roughly $19,000. Much of the nominal gap reflects regional prices and real-estate costs.

Identical Demographic Baselines

• Student demographics strongly influence average K–12 performance on national assessments such as NAEP. California and Texas have similar student profiles:
• Each state serves about 5.5 million to 6 million K–12 students.
• In both states, roughly 60% or more of students are low-income or economically disadvantaged.
• Both have among the nation’s largest shares of English learners.
• Given these similarities, both states rank in the bottom third nationally—31st and 32nd.

Neither model has broken the longstanding association between concentrated poverty and lower average standardized-test scores.

California’s frustration is that, despite a 60% increase in per-pupil spending in recent years, average student performance has remained flat or declined slightly.

• Proficiency Gap: Recent results show that 49.3% of California students are proficient in reading and 38.4% are proficient in math.
• Decline Since 2018: In 2018, California students averaged 6 points below standard in reading and 36 points below in math. Today, the gaps are about 8 and 42 points, respectively, leaving the state in the bottom third nationally for overall child academic well-being.
• California leads in one measure: 31.8% of graduating seniors have passed at least one AP exam, compared with 21% in Texas.

Remediation Rates

Historically, both California and Texas have had high remediation rates. Longitudinal data found that roughly 50% to 60% of community-college entrants in each state were placed in remedial math or English, indicating inadequate K–12 preparation for college.

The states now address the problem differently:

California largely eliminated traditional remediation through legislation, while Texas uses a hybrid corequisite model.

1. California: The Legislative Remediation Ban

California responded to high community-college remediation rates by changing placement law.

• Policy (AB 705 and AB 1705): California barred community colleges from relying on a single placement test to assign most students to noncredit remedial classes. Most students must instead enter transfer-level, credit-bearing courses.
• Reported Results: Remediation rates fell sharply because most remedial courses disappeared. The share of students completing transfer-level math in their first year more than doubled to over 58%.
• Tradeoff: The policy moved underprepared students directly into college-level work without first changing K–12 outcomes. More students now pass transfer-level courses, but failure rates increased among the least-prepared students, while second-year persistence fell nearly 7%.

2. Texas: The Corequisite Strategy

Texas uses a different framework overseen by the Texas Higher Education Coordinating Board (THECB). Rather than eliminating remediation, the state adopted a required corequisite model.

• Policy: Students identified as underprepared through high-school records or Texas Success Initiative scores may take a credit-bearing course while also enrolling in a matching support lab.
• Results: Texas continues to count students who need corequisite support. Although its 89% high-school graduation rate exceeds California’s 82%, nearly half of standard community-college entrants still require additional academic support.

The Core Takeaway

• Texas uses TSI testing and state audits to identify students who need support, then tracks them through a structured corequisite system.
• California largely removed the remedial category through legislation, placing students in college-level courses and leaving faculty to provide needed support.
• Both states face a K–12 preparation gap between average neighborhood schools and elite schools. Texas reports the gap through testing and corequisite data, while California’s college placement rules reduce the visibility of traditional remediation.

Administration Bloat Texas and California

California has sharply expanded its non-teaching workforce; a trend critics call administrative bloat. Texas has followed a similar trajectory.

From 2020 to 2023, California public-school enrollment fell 5.1%, while districts added 74,428 nonteaching positions.

California’s 80/20-style budget framework classifies and presents this bureaucracy differently from Texas. Its non-teaching growth falls into several categories:

The “Community Schools” and Social Service Expansion

While Texas districts added central-office planners and compliance managers, California expanded programs that critics describe as “mission creep.”

California invested more than $4 billion in “Community Schools,” which turn traditional campuses into centers for wraparound social services.

• Jobs Added: The policy increased hiring of coordinators, family liaisons, mental-health counselors, program directors, and intake specialists.
• Classification: California classifies these positions as “direct student support” and “equity investments.” Under a narrower Texas definition, similar roles may be counted as administrative overhead.

The Uncertified and Program Management Boom

California’s administrative workforce has also grown through local program management:

• Long-Term Shift: Over several decades, California enrollment grew 17%, while administrators and nonteaching support staff increased 46%.
• Universal Programs: Funding for universal transitional kindergarten and expanded after-school programs also created positions for regional directors, compliance auditors, and program managers who administer state grants rather than teach.

Texas Education Bloat

The 34-Year Growth Trajectory (1992–2026)

Across Texas public schools, staffing growth over this period was heavily concentrated outside the classroom:

• Student enrollment: Increased 54%.
• Teaching staff: Increased 73%.
• Non-teaching staff and administrators: Increased 238%.

Non-teacher hiring grew four times faster than enrollment, shifting the workforce balance. Today, nonteachers make up 52% of Texas public-school employees.

The pattern is not limited to the 1990s. Texas Education Agency staff reports show that over a recent 14-year period, administrative positions grew nearly 42%—three times the 13.6% growth in classroom teachers. Non-classroom staffing continued to rise through the present, although the latest 1.4% decline in enrollment has not yet affected the budget.

The Bottom Line

The 238% increase reflects 34 years of cumulative growth in Texas education bureaucracy. Governor Greg Abbott cites it in support of a 70–30 classroom spending cap, arguing that the system has shifted from teacher-centered to administration-heavy.

The Ultimate Contrast: Why Nobody in California is Capping It

Despite California’s growth in non-teaching staff amid declining enrollment, a comparable spending cap is politically unlikely.

California’s system gives local institutions broad control:

• LCFF Flexibility: The Local Control Funding Formula gives local boards broad spending authority and does not impose statewide classroom-to-overhead ratios.
• Political Opposition: Teachers’ unions and school-board associations often oppose spending caps or audits as threats to education funding, making central-office reductions difficult.

Ultimately, both California and Texas have expanded noninstructional overhead while enrollment declined.

The difference is largely in presentation. Texas describes its approach as accountability and is pursuing legislation to reduce administrative spending. California describes comparable services as wraparound equity support and continues to fund them through new revenue measures.

This concludes my overview of California’s education budget. A follow-up post will offer commentary; Real Decisions Network maintains a strict policy of separating factual reporting from opinion.

Sources

Legislative Analyst Office (LAO)

Raise Your Hand Texas

Association of California School Administrators

California Teachers Association

Texas Public Policy Foundation

Texas A&M University

Audacy

California Senate Republicans

California State Portal CA.gov

California Budget and Policy Center

CALRTA.org

Senate Budget and Fiscal Review

California Budget.gov

California Competes

TEA Texas Education Agency

www.gregabbott.com

College Board Research

reason Foundation

California Department of Education

Longview News Journal

American Enterprise Institute – AEI

Forbes

CalMatters

Google AI