Same-sex marriage, which the U.S. Supreme Court in 2015 legalized nationwide in the case known as Obergefell v. Hodges, is facing resurgent hostility.

In the decade since the court’s decision, public support for same-sex marriage has increased. Currently, about 70% of Americans approve of legally recognizing the marriages of same-sex couples, a 10-percentage-point bump from 2015.

Obergefell led to an increase in marriages among same-sex partners, with more than 700,000 same-sex couples currently married.

Despite this, Republican lawmakers in five states have recently introduced symbolic bills calling on the Supreme Court to overturn its ruling in Obergefell.

And Republican lawmakers in two states have proposed legislation that creates a new category of marriage, called “covenant marriage,” that is reserved for one man and one woman.

As a professor of legal studies, I believe such attacks on same-sex marriage represent a serious threat to the institution.

And others share my concern.

A 2024 poll of married same-sex couples found that 54% of respondents are worried that the Supreme Court might overturn Obergefell, with only 17% saying they did not anticipate such a challenge.

Recognizing this fear, Democratic legislators in Michigan have called for the state to pass a ballot initiative to protect same-sex marriage. The initiative would repeal a part of the state constitution that banned same-sex marriage, but which was invalidated by the subsequent Obergefell decision. If Obergefell were overturned, that ban in the Michigan constitution would go into effect again.

And a law firm in Missouri is helping LGBTQ+ couples establish medical power of attorney plans in the event Obergefell is reversed.

Here’s what’s known about the current attacks on same-sex marriage.

What happens if anti-Obergefell state legislation passes?

Currently, two types of legislation have been introduced by Republican state lawmakers.

First, symbolic legislation that calls on the Supreme Court to overturn Obergefell has been introduced in Idaho, Michigan, Montana, North Dakota and South Dakota.

This legislation is symbolic, since state legislatures do not have control over what the Supreme Court does. And even if it passes, the legislation does not directly threaten the legality of same-sex marriage in those states because it does not address those states’ marriage laws.

But if it becomes law, this legislation sends a clear signal that, should Obergefell be overturned, these states could quickly enact legislation banning same-sex marriage. For a state such as Michigan, whose constitutional language defining marriage as between one man and one woman is still on the books, the status quo would revert immediately to outlawing same-sex marriage – it wouldn’t require any legislative vote.

Second, lawmakers in Missouri and Tennessee have introduced legislation that would create a new category of marriage that would be available only to opposite-sex couples. So-called “covenant marriage” would require that the couples who choose this kind of marriage undergo counseling prior to getting married and creates significant obstacles to getting divorced, except under very specific circumstances, such as spousal abuse.

Tennessee’s sponsor of the legislation, Rep. Gino Bulso, a Republican, was quoted on Knoxnews.com as saying his legislation “seeks to challenge the U.S. Supreme Court’s egregiously wrong 2015 decision in Obergefell v. Hodges.” According to Bulso, “The bill is not ‘anti’ anything or any person. It simply recognizes the natural order of things.”

Since this version of covenant marriage excludes same-sex couples, they would be denied access to covenant marriages, although they would still have access to more traditional forms of marriage.

Timing of attacks

Efforts by state Republican lawmakers to revisit same-sex marriage bans are part of a broader assault on LGBTQ+ rights taking place in the U.S.

The timing of these efforts is primarily driven by two factors: Donald Trump’s second term as president and the Supreme Court’s 2022 decision in Dobbs v. Jackson, which overturned the constitutional guarantee of the right to an abortion.

During his first term in office, Trump enacted policies harmful to the LGBTQ+ community, particularly involving health care and transgender rights.

But the Biden administration reversed most of these policies.

In his second term, Trump has upped his hostility to the LGBTQ+ community, following an election campaign in which he made transgender rights a wedge issue. This includes canceling more than US$125 million in federal grants related to LGBTQ+ health programs and stopping the enforcement of the Equal Access Rule, a federal policy that ensured access to federal housing programs regardless of gender identity.

In turn, this has emboldened Republican lawmakers to target same-sex marriage and other protections for the LGBTQ+ community.

The Supreme Court’s decision to overrule Roe v. Wade in Dobbs v. Jackson is the other key factor motivating the timing of attacks on same-sex marriage.

In Dobbs, the court’s conservative majority indicated its willingness to revisit – and overrule – precedents that it disagreed with, even if those precedents were supported by a large majority of the public, as was the case for Roe.

In addition, Supreme Court Justice Clarence Thomas wrote a concurring opinion in Dobbs in which he argued that the Supreme Court should apply the logic used to overrule Roe to reconsider other decisions, including Obergefell. Although Thomas’ concurring opinion does not have the force of law, it nonetheless sent what some court observers say is a clear message to opponents of same-sex marriage that at least one justice has an appetite for reconsidering Obergefell.

Reaffirm or overrule?

Should the Supreme Court agree to hear a challenge to Obergefell, one of two main outcomes is likely.

First, the court could reaffirm Obergefell. This would probably put an end to most Republican attacks on same-sex marriage and would maintain the status quo by prohibiting states from outlawing same-sex marriage.

It would also serve to make the Supreme Court appear moderate, which may enhance its near historically low public approval ratings.

Second, the court could overrule Obergefell. If a majority of justices did so, I believe they would almost certainly use the same logic employed to overturn Roe v. Wade. That is, the court’s conservative majority could argue that the Constitution does not recognize marriage as a fundamental right, and therefore it is up to the states to regulate and define marriage, including prohibiting same-sex couples from obtaining marriage licenses.

Under the Respect for Marriage Act, however, signed into law by President Joe Biden in 2022, states outlawing same-sex marriage would have to recognize same-sex marriages performed in other states, as would the federal government.

The bottom line is that Trump’s second term and the Supreme Court’s conservative activism have lit a fire in some Republican lawmakers, who are targeting same-sex marriage as part of a broader attack on LGBTQ+ rights.

If successful, these efforts would be a dramatic blow to the progress made toward LGBTQ+ equality over the past two decades.

In summary Weight loss drugs Ozempic and Wegovy would no longer be covered by California’s health insurance for low-income people under the governor’s proposal.

Popular weight loss drugs Ozempic and Wegovy would no longer be covered by Medi-Cal under a proposal unveiled by Gov. Gavin Newsom Wednesday in an effort to reduce cost overruns in the state health insurance program.

The costly drugs prescribed to fight obesity have been driving up the cost of Medi-Cal, the state program that provides health coverage for low-income Californians. Eliminating coverage for these drugs would save the state $85 million in 2025-26, and up to $680 million by 2028-29, according to the governor’s office.

Newsom’s proposal will be taken up by the state Legislature as the governor and top legislators tackle a state budget facing a $12 billion deficit.

As proposed, coverage of the drugs would end on Jan. 1, 2026. Medi-Cal patients trying to lose weight would have to pay for the prescriptions themselves, at a cost of more than $1,000 per month, making it unattainable for low-income people.

Some health professionals say the drugs are highly effective at combating obesity, a chronic disease that drives up health care costs because it can lead to many other disorders such as heart disease and diabetes.

An estimated 18 million adults in California are obese or overweight, according to the UCLA Center for Health Policy Research.

“This is a bad decision. The people who are already taking this medication, what’s going to happen to them?” said Liz Helms, president of the California Chronic Care Coalition, a group of health consumer advocacy organizations and providers.

Dr. Wayne Ho, a Los Angeles obesity specialist and researcher, said patients will likely regain the weight they’ve lost, and also lose the health benefits they’ve gained, such as lower blood pressure and cholesterol.

“It is the best tool I have had as a primary care physician in practicing preventative medicine,” Ho said of weight management drugs. For patients on Medi-Cal, he said it can be especially difficult to access obesity specialists and nutritious foods, making their weight loss journey even more difficult.

On the other hand, the California Association of Health Plans said Newsom’s proposal “should send a strong signal to the Legislature that they should reconsider mandating that health plans cover these costly drugs for weight loss without the proper clinical safeguards in place.”

California is not required by federal law to cover the cost of the weight loss drugs in its Medi-Cal program. Instead, the state opted to include them. Under Newsom’s proposed cuts, when Ozempic is prescribed to treat diabetes, it would still be covered by Medi-Cal.

Newsom’s proposal comes as Wegovy and Ozempic prescriptions among Medi-Cal enrollees are soaring along with overall prescription drug spending. In fiscal year 2023-24, drugs cost Medi-Cal close to $15.2 billion, according to state drug cost reports. That’s about a 10% increase from the previous year.

Between 2022 and 2023, Wegovy prescriptions in the Medi-Cal program jumped from 15,000 to 181,000, data from the U.S. Centers for Medicaid and Medicare Services show. Ozempic prescriptions for diabetes and weight loss rose from 178,000 in 2022 to 480,000 in 2023.

In 2023, the latest year for which data is available, Medi-Cal spent about $733 million on both drugs. (This amount does not include the refunds that Medi-Cal received from pharmaceutical companies as part of rebate programs.)

“This is a bad decision. The people who are already taking this medication, what’s going to happen to them?” LIZ HELMS, CALIFORNIA CHRONIC CARE COALITION

In his budget presentation today, Newsom did not mention the drugs. But he said the state had to “tighten things up” in its massive Medi-Cal program so he proposed several restrictions, including a freeze on Medi-Cal enrollments by people who lack permanent legal immigration status. Medi-Cal covers nearly 15 million Californians.

Earlier this year, the state had to backfill a $6.2 billion shortfall in its Medi-Cal budget to pay providers through the end of June. The Department of Health Care Services, which oversees the Medi-Cal program, cited a number of reasons for going over budget, including the state’s expansion to undocumented immigrants and an increase in prescription drug spending.

Ozempic is primarily used to treat Type 2 diabetes, but some doctors prescribe it for weight loss, too. Wegovy is used only for weight loss. Both are manufactured by Danish pharmaceutical company Novo Nordisk, and there are no generic versions.

Semaglutide, the active ingredient in both drugs, works by mimicking the GLP-1 hormone, which helps regulate blood sugar and appetite. In an attempt to contain costs, Medi-Cal already limits the quantity of Wegovy that can be dispensed every 28 days to one carton of four pen injectors. Patients inject themselves once a week.

To qualify for Medi-Cal, a single person’s annual income cannot exceed $21,597. For a family of 4, the threshold is $44,367.

Erica Yee contributed to this report.

Introduction

Governor Gavin Newsom released a summary of the May Revision to his proposed 2025-26 California state budget on May 14, proposing nearly $12 billion in budget actions to close an estimated 2025-26 deficit ($7.5 billion) and build up the state’s discretionary reserve ($4.5 billion). In contrast, the governor’s January proposal projected a small positive balance after two years of state deficits. The governor’s proposal reflects increased uncertainty as a result of federal policy changes and proposals that are destabilizing economic conditions, resulting in a more negative fiscal outlook for the state.

The $226.4 billion General Fund spending plan would protect some investments made in prior years, but notably proposes $5 billion in harmful cuts, primarily to Medi-Cal, the state’s Medicaid program that provides health care coverage to over 14 million Californians. Those cuts include a series of proposals targeting adult Californians who are undocumented, such as freezing access to Medi-Cal, instituting $100 per month premiums for those currently enrolled, and removing access to long-term care and dental benefits, among other proposals. Other proposed cuts target older adults, people with disabilities, and foster youth — communities, like Californians who are undocumented, that are among the most vulnerable in our state.

The governor’s revised budget also fails to propose any major tax policy changes to increase state revenues to address the shortfall, avoid cuts, and buffer against emerging federal threats, even while federal leaders are preparing to give away more than $4 trillion in tax cuts to high-income households and corporations.

While many of the details are forthcoming, the governor also proposes to partially close the budget gap through borrowing and fund transfers. The governor also proposes future cuts for programs supporting vulnerable Californians including food assistance and support for foster care in 2026-27 if revenues are not adequate.

The governor’s proposal continues to call for drawing down just $7.1 billion in reserves and projects total state reserves at $15.7 billion by the close of 2025-26 to guard against future revenue decline or threats to the state’s fiscal condition.

The governor also maintains his proposed changes to the state’s reserve policies to exempt rainy day fund deposits from the state’s spending cap, commonly known as the Gann Limit, and allow the rainy day fund to grow to 20% of General Fund revenues (up from the current 10% cap). These changes, which would need voter approval, would allow the state to set aside a larger portion of state revenues in the rainy day fund during periods of strong revenue growth.

Even as the governor’s proposal would cut access to health care, it would commit the state to new spending to expand the film tax credit for film studios, growing the credit from $330 million to $750 million annually.

WHat is the May Revision? The May Revision is an update to the governor’s proposed state budget, released by May 14 each year. It includes new estimates for the state’s economy and revenues, updates proposed spending based on the latest information, and may revise, add, or remove policy proposals from the January budget.

The governor’s spending plan protects and maintains some of the progress made in prior budget years to help improve economic security and opportunities for Californians with low incomes and Californians of color, including policy advances in behavioral health, cash assistance (refundable tax credits, CalWORKs, and SSI/SSP), and universal school meals. The proposal also maintains prior commitments to child care, but delays making additional commitments to expanding the system. The governor’s plan leaves out funding to address homelessness and abandons funding for housing programs for Californians with low incomes and affordable housing production as the state faces a growing housing crisis.

Changes to the state’s revenue outlook result in slightly lower estimates for the Prop. 98 minimum funding guarantee for K-12 schools and community colleges compared to January. The governor’s proposal continues to fully fund the completed rollout of universal transitional kindergarten (T-K). In a notable shift from January, the May Revision reduces proposed cuts to CSU and UC from 8% to 3%.

The administration projects that the state prison population will moderately increase in the near term due to the passage of Prop. 36 in November 2024, which increased penalties for certain drug and theft offenses, including by reversing some of Prop. 47’s (2014) sentencing reforms. However, the administration projects that the prison population will resume its long-term decline due to other justice system reforms that remain in effect. As a result, the governor proposes to close one additional state prison by late 2026.

Overall, while the governor’s proposed spending plan protects some of the progress made in earlier years, cutting access to health care and other supports for adult Californians who are undocumented, seniors, and people with disabilities, failing to advance more equitable tax policies, and misguided expansion of tax credits for film studios would weaken the state’s capacity to better help Californians manage our state’s high cost of living and meet basic needs.

With federal leaders poised to extend and expand tax cuts that primarily benefit big corporations and high-income households, offset in part by unprecedented cuts to health care, food assistance, and other vital public supports, state leaders have a responsibility to make our state’s tax system more equitable, protect the economic security and well-being of all Californians, and present a starkly different vision than federal leaders.

This First Look report outlines key pieces of the May Revision and outlines the governor’s priorities in balancing the budget to address a projected shortfall.

Contents

Budget Overview

Health

Housing & Homelessness

Economic Security

Education

Justice System

Climate Change

Wildfire Relief and Recovery: Budget Maintains Funding for Wildfire Relief and Recovery

Webinar Budget Center experts unpack key insights from the May Revision, including the governor’s broken promise to undocumented Californians, revenue options, and continued federal threats. Join us for this free, virtual event on May 22 at 1 p.m. Register today!

Budget Overview

Economic Outlook Deteriorates, Reflecting Federal Policies and Uncertainty

The administration’s economic outlook projects trends in major economic indicators that affect state tax collections and revenues in the budget. The administration downgrades the state’s economic outlook in the revised budget based on recent federal policies, most notably, the imposition of significant tariffs, including on California’s major trading partners. The administration estimates that California’s average tariff rate has increased from 2.4% last year to 27% as of mid-April and notes that this will have “immediate and broad-reaching impacts affecting nearly all the state’s $500 billion worth of imported goods as of 2024, nearly 12% of its economic output.” As a result, the revised budget:

Significantly downgrades its projections of US economic growth, particularly in 2025 when real Gross Domestic Product is expected to increase by just 1.3% — well below the pre-pandemic average growth rate of 2.6%.

Significantly revises up its projection of inflation in the US and California, as the cost of tariffs is largely expected to be passed on to consumers in the form of higher prices. The administration expects the California Consumer Price Index to increase by 3.8% in 2025, followed by another 3.5% increase in 2026.

Revises down its projection for job growth, now expecting the state to add just 6,000 jobs per month in 2025 and 3,000 per month in 2026 — substantially below the pre-pandemic average of around 30,000 jobs added per month.

Expects the state’s unemployment rate to increase by 0.1 percentage point to 5.4% in 2025 and then to 5.5% in 2026 and 2027.

Downgrades its forecast for inflation-adjusted wage and personal income growth in the state.

The revised budget notes that this forecast is based on policies in place as of mid-April and that federal policy uncertainty remains the biggest downside risk to the forecast. In other words, if federal policy choices over the coming weeks and months further weaken the economy, the state’s economic outlook will further deteriorate.

Weakened Outlook and Federal Policies Threaten Californians’ Well-Being

While the administration’s outlook is useful for understanding how economic conditions might impact budget revenues, it’s also important to consider how economic conditions are affecting Californians, who count on programs and services funded by federal and state budgets. Although California is now the fourth largest economy in the world, millions of Californians aren’t sharing in our state’s prosperity. More than 7 million state residents lack the resources to meet basic needs, over half of renters have unaffordable housing costs, and more than 1 in 5 households experience food hardship. Black, Latinx, and other Californians of color disproportionately face these challenges due to centuries of structural racism and long-standing inequities in opportunity that have been structured into budget policies, past and present.

Compounding these challenges, policies being pursued by the Trump Administration and Republicans in Congress will further drive up costs, making it even harder for families and individuals to make ends meet. For example, the Trump Administration’s sweeping tariff policy will add to the economic challenges facing people with lower incomes because tariffs are essentially regressive taxes. Plus, economists have warned that the drastic and chaotic nature of these tariffs could plunge the economy into a recession, exacerbating the economic challenges facing families, workers, and businesses. On top of this, the budget package currently advancing through Congress would slash federal funding for health care, food assistance, and other vital services, jeopardizing the health and well-being of millions of Californians. This includes:

Massive cuts to funding for Medi-Cal and efforts to repeal or undermine the Affordable Care Act that would cause Californians to lose health coverage, have fewer benefits, face higher health care costs, and experience more difficulty getting care;

The largest cut to SNAP food assistance (CalFresh in California) in history that would put low-income families and individuals at greater risk of hunger by taking away some or all of their food benefits; and

Terminating many immigrants’ access to vital programs, including denying Medicare to lawful permanent residents who have worked and paid taxes to support the program, denying SNAP to refugees, asylees, and other humanitarian immigrants, and denying the Child Tax Credit to US citizen children in mixed status families.

Revised Revenue Estimates Downgraded by $5.2 Billion for Three-Year Budget Window

While actual revenue collections for the current (2024-25) and previous (2023-24) fiscal years have been stronger than expected since the January budget proposal, the administration now projects revenues for the upcoming 2025-26 budget year to be $10.5 billion lower relative to the January projections, primarily due to economic and stock market uncertainty stemming from federal actions including President Trump’s tariff policies. This includes downgrades in the projected revenues across all three of the state’s “Big Three” revenue sources — personal income taxes, corporate taxes, and sales taxes.

Across the three-year budget window, state General Fund revenues are now projected to be $5.2 billion lower than the January budget projection, as the improved collections for 2023-24 and 2024-25 offset some of the downgrade in the 2025-26 forecast. This estimate is of a similar magnitude as recent revenue projections from the Legislative Analyst’s Office. Because this estimate only takes into account state-level General Fund revenues, it does not factor in any potential impacts of proposed reductions in funding from the federal government currently being considered in Congress.

The continuing uncertainty in the economic outlook — related to inconsistent tariff policies, deep cuts to the federal workforce, and threats of mass deportations — poses additional risks to the revenue forecast. While the May Revision does not assume an economic recession during the budget window, the administration estimates that if a mild recession were to occur, the “Big Three” revenue sources could end up being around $14 billion lower across the three-year budget window than the primary estimate.

Governor Maintains January Tax Policy Proposals and Proposes No New Revenue

The Governor’s proposal comes at a time when millions of Californians could be harmed by proposed deep federal cuts to health care, food assistance, and other critical basic needs in order to pay for tax cuts that primarily benefit high-income households and corporations. State leaders have the responsibility to maintain core state services and protect vulnerable Californians who will be most impacted by federal cuts. Policymakers can achieve this by significantly increasing state revenues and ending or reforming inequitable tax breaks that benefit profitable corporations and wealthy people.

However, the governor’s revised budget contains no new revenue proposals. He maintains the tax policy proposals included in the January budget proposal, including expanding the tax break for the film industry by more than doubling the annual film credit allocation from $330 million to $750 million — even while proposing to make cuts to health care and other services for Californians with low incomes (see sections on Health Coverage, Affordability, and Access and Californians with Disabilities and Older Adults).

The administration continues to estimate that the governor’s tax proposals as a whole will increase state General Fund revenues by $186 million in 2025-26. This revenue increase is related to a proposed change to the way banks and other financial institutions are taxed. However, this modest increase may be offset in upcoming years by revenue decreases due to the film credit expansion.

As the details of the harmful federal funding and service cuts become more clear, Californians will be looking to state leaders to protect community members who will be deeply impacted by those policies. Closely scrutinizing state tax breaks and equitably raising state revenue should be part of the solution to mitigate the suffering caused by destructive federal actions without reversing commitments already made to promote health and well-being for Californians.

Governor’s May Revision Maintains Proposal to Withdraw Reserve Funds and Change Reserves Policies

California has a number of state reserve accounts that set aside funds intended to be used for a “rainy day” when economic conditions worsen and state revenues decline. Some reserves are established in the state’s Constitution to require deposits and restrict withdrawals, and some are at the discretion of state policymakers.

California voters approved Proposition 2 in November 2014, amending the California Constitution to revise the rules for the state’s Budget Stabilization Account (BSA), commonly referred to as the rainy day fund. Prop. 2 requires an annual set-aside equal to 1.5% of estimated General Fund revenues. An additional set-aside is required when capital gains revenues in a given year exceed 8% of General Fund tax revenues. For 15 years — from 2015-16 to 2029-30 — half of these funds must be deposited into the rainy day fund, and the other half is to be used to reduce certain state liabilities (also known as “budgetary debt”).

Prop. 2 also established a new state budget reserve for K-12 schools and community colleges called the Public School System Stabilization Account (PSSSA). The PSSSA requires that when certain conditions are met, the state must deposit a portion of General Fund revenues into this reserve as part of California’s Prop. 98 funding guarantee (see section on Prop. 98).

In order to access the funds in the BSA and PSSSA, the governor must declare a budget emergency — an action that was taken in the enacted current-year (2024-25) budget in response to the state’s projected budget deficit.

The BSA and the PSSSA are not California’s only reserve funds. The 2018-19 budget agreement created the Safety Net Reserve Fund, which is intended to hold funds to be used to maintain benefits and services for CalWORKs and Medi-Cal participants in the event of an economic downturn. Additionally, the state has a Special Fund for Economic Uncertainties (SFEU) — a reserve fund that accounts for unallocated General Fund dollars and that gives state leaders total discretion as to when and how they can use the available funds.

The governor’s May Revision projects $15.7 billion in reserves at the end of 2025-26. Specifically, the proposal:

Includes a $7.1 billion withdrawal from the BSA and, due to other required adjustments, leaves the remaining BSA balance at $11.2 billion. (This withdrawal was assumed as part of the 2024-25 state budget package.)

Projects the PSSSA will have a zero balance, down from an estimated $1.5 billion in the governor’s January proposal due to a reduction in required deposits and a mandatory withdrawal.

Leaves the Safety Net Reserve with a zero balance. (The 2024-25 state budget drained all funds from this reserve.)

Projects an SFEU balance of $4.5 billion.

Administration maintains January plan to change reserve policies

The administration also maintains its January proposal to revise the state’s reserve policies under Prop. 2 (2014) and Prop. 4 (1979), which created an arbitrary spending cap known as the Gann Limit. The administration contends that these changes are needed in order to ensure the state can adequately build up reserves during periods of strong revenue growth to offset years of revenue decline.

Under Prop. 2, deposits into any reserve, including the BSA, are counted as expenditures under the spending cap. This means that savings for future budget needs are treated as spending in the year the deposit is made. As a result, in years when revenues are strong, the required deposit into the BSA could put the state at risk of exceeding the spending cap since the deposit is counted as part of the state’s overall expenditures. In order to address this situation, the governor proposes to exempt annual BSA deposits from the spending cap so that they no longer count as spending.

Proposition 2 also set a maximum size of the BSA at 10% of state General Fund revenue. The governor proposes to increase the maximum BSA deposit from 10% to 20% of General Fund revenues to allow state leaders to grow reserves to higher levels during periods when revenues are strong.

State Budget Reserves Explained See our report, California’s State Budget Reserves Explained, to learn more about the savings accounts policymakers can use to support Californians in times of budget shortfalls.

Health

May Revision Harms Californians’ Health and Access to Care

Access to health care is necessary for everyone to be healthy and thrive. Medi-Cal, California’s Medicaid program, provides free or low-cost health care to over one-third of the state’s population. This program covers a wide range of services to Californians with modest incomes, and many children, seniors, people with disabilities, and pregnant individuals rely on it.

Cuts to Medi-Cal

The governor’s revised spending plan proposes sweeping cuts to Medi-Cal that reverse years of progress toward a more inclusive, equitable health system. These cuts particularly harm undocumented Californians, but also impact low-income individuals across the state, reducing access to essential services, prescription drugs, and health care providers. This marks a major shift away from the state’s commitment to expanding health care access, especially for immigrant communities, seniors, and people with disabilities.

The revised budget includes harmful cuts specifically targeting undocumented Californians, mostly adults ages 19 and older. Some of these cuts may also affect all individuals who are federally ineligible for Medicaid, such as lawful permanent residents during a federal five-year waiting period. Despite the serious consequences of these proposals, the administration failed to clearly define who is included in these categories. When people’s health care is on the line, vague language and ambiguity are not just irresponsible. They are harmful.

The May Revision proposes the following cuts that would primarily impact undocumented Californians ages 19 and older:

Freeze Medi-Cal enrollment beginning January 2026.

Impose a $100 monthly Medi-Cal premium.

Eliminate long-term care benefits.

Eliminate dental benefits.

Eliminate In-Home Supportive Services (IHSS) for undocumented adults beginning January 2026.

Reduce funding for Federally Qualified Health Centers (FQHCs) and rural health clinics.

Implement a pharmacy rebate aggregator. Freeze Medi-Cal enrollment beginning January 2026. Under this policy change, income-eligible undocumented adults who are not enrolled by that date would be barred from entering the program. It would also block re-enrollment for those who lose coverage — even temporarily — due to changes in income, paperwork issues, or life circumstances. As a result, individuals who are otherwise eligible could permanently lose coverage. This change would reduce General Fund spending by $86.5 million in 2025-26, increasing to $3.3 billion by 2028-29. Impose a $100 monthly Medi-Cal premium. Effective January 2027, undocumented adults would be required to pay $100 per month to keep their Medi-Cal coverage — a cost that would not apply to other Medi-Cal members. For many low-income Californians, this would make coverage unaffordable and lead to disenrollment. This change would reduce General Fund spending by $1.1 billion in 2026-27 and $2.1 billion by 2028-29. Eliminate long-term care benefits. The revised budget ends long-term care coverage for undocumented adults, effective January 1, 2026. This would strip access to services that allow people with serious medical needs to live safely and with dignity. This change would reduce General Fund spending by $333 million in 2025-26 and $800 million in 2026-27 and ongoing. Eliminate dental benefits. The May Revise eliminates full-scope dental coverage for undocumented adults effective July 1, 2026. These adults will continue to have access to restricted-scope emergency dental coverage. This reduces access to basic health services and could lead to serious, untreated dental conditions. This change would reduce General Fund spending by $308 million in 2026-27 and $336 million in 2028-29 and ongoing. Eliminate In-Home Supportive Services (IHSS) for undocumented adults beginning January 2026. These services help Californians with low incomes who are over the age of 65, blind, and/or disabled live with dignity in their own homes. This proposal is both harmful and xenophobic, potentially pushing immigrant families deeper into poverty. These cuts could also lead to increased state spending on nursing home care in the long run. This change would reduce General Fund spending by $158.8 million and ongoing. Reduce funding for Federally Qualified Health Centers (FQHCs) and rural health clinics. Specifically, the May Revise eliminates Prospective Payment System rates to clinics for services provided to undocumented Californians. Clinics serving undocumented populations would no longer receive enhanced reimbursement for care, straining the financial viability of safety-net providers. This change would reduce General Fund spending by $452.5 million in 2025-26 and $1.1 billion in 2026-27 and ongoing. Implement a pharmacy rebate aggregator. Implement a pharmacy rebate aggregator, a system that helps the state collect money back from drug companies after medications are provided to Medi-Cal patients. Estimated General Fund savings are $300 million in 2025-26 and $362 million ongoing. In addition, the May Revision reflects new savings from establishing a minimum rebate for certain high-cost drugs used to treat HIV/AIDS and cancer. These additional changes are estimated to save the General Fund $75 million in 2025-26 and $150 million ongoing. However, a rebate-driven system may unintentionally restrict access to certain medications or prioritize savings over clinical value for immigrants who are impacted.

The governor’s revised budget also includes broader cuts that would affect all Medi-Cal enrollees, including seniors, people with disabilities, and individuals managing chronic health conditions. Specifically, the May Revision proposes to:

Reinstate Medi-Cal asset limits.

Make multiple cuts to In-Home Supportive Services (IHSS).

Eliminate acupuncture as a Medi-Cal benefit Reinstate Medi-Cal asset limits. Reinstate Medi-Cal asset limits, which were eliminated in January 2024 and would return in January 2026. This policy change would require seniors and people with disabilities to limit their assets to $2,000 for individuals and $3,000 for couples. The asset test weakens a household’s financial stability and discourages savings as people may be compelled to spend down in order to qualify for Medi-Cal. This change would reduce General Fund spending by $94 million in 2025-26, $540 million in 2026-27, and $791 million ongoing, inclusive of In-Home Supportive Services impacts. Make multiple cuts to In-Home Supportive Services (IHSS). Make multiple cuts to In-Home Supportive Services (IHSS), a program that helps Californians with low incomes who are over the age of 65, blind, and/or disabled live with dignity in their own homes. These include capping provider overtime and travel hours at 50 hours per week beginning July 2025, aligning IHSS Residual Program coverage with the timing of Medi-Cal eligibility, and cutting funding for county costs related to Community First Choice Option late reassessment penalties. These changes would reduce support for both IHSS recipients and the workers who provide essential in-home care. Combined, these proposals would reduce General Fund spending by about $900 million in 2025-26 and $707.5 million ongoing. Eliminate acupuncture as a Medi-Cal benefit Eliminate acupuncture as a Medi-Cal benefit, a service that many enrollees rely on to manage pain and other chronic conditions. This cut limits patient choice and may increase reliance on less effective or more expensive treatments, such as prescription medications or emergency care. This change would reduce General Fund spending by $5.4 million in 2025-26 and $13.1 million ongoing.

The revised budget also includes provider payment reductions and cuts to health care infrastructure that could destabilize the health care system, which already faced a provider shortage. Specifically, the May Revision proposes to:

Eliminate Proposition 56 supplemental payments.

Suspend the Proposition 56 loan repayment program.

Cut support for skilled nursing facilities.

Impose prior authorization for hospice care.

Cap payments to PACE providers (Program of All-Inclusive Care of the Elderly) Eliminate Proposition 56 supplemental payments. These payments help sustain providers delivering dental care, family planning, and women’s health services — often in communities with limited provider options. Eliminating this funding will likely result in fewer clinics accepting Medi-Cal patients and exacerbate existing disparities in access to reproductive and preventive care. It also undermines state goals to improve maternal health outcomes and oral health equity. This change would reduce General Fund spending by $504 million in 2025-26 and $550 million ongoing. Suspend the Proposition 56 loan repayment program. Suspend the Proposition 56 loan repayment program, which has been critical for recruiting and retaining health care professionals in underserved areas by helping repay student loans for providers who commit to serving Medi-Cal populations. Suspending the final cohort reduces the state’s ability to build a diverse and culturally competent workforce, particularly in rural and low-income communities. Without this incentive, fewer providers may choose to work in Medi-Cal, deepening workforce shortages. This change would reduce General Fund spending by $26 million in 2025-26. Cut support for skilled nursing facilities. The revised budget would eliminate the Workforce and Quality Incentive Program (WQIP), which incentivizes improvements in staffing, training, and patient care outcomes. It would also suspend the requirement for facilities to maintain backup power systems capable of lasting at least 96 hours — a critical safeguard during wildfires, power outages, and heatwaves. These cuts jeopardize the safety and well-being of some of the state’s most medically vulnerable residents. This change would reduce General Fund spending by $168.2 million in 2025-26 and $140 million ongoing. Impose prior authorization for hospice care. This policy change would require providers to obtain prior authorization before delivering hospice services. These administrative barriers could limit timely access to pain relief and supportive services. This change would reduce General Fund spending by $25 million in 2025-26 and $50 million ongoing. Cap payments to PACE providers (Program of All-Inclusive Care of the Elderly) Cap payments to PACE providers (Program of All-Inclusive Care of the Elderly), which provides comprehensive, community-based care to seniors with complex health and social needs. This may make it more difficult for providers to meet individualized care needs or expand services. This change would reduce General Fund spending by $13 million in 2025-26 and $30 million ongoing.

The revised budget also proposes a series of changes to Medi-Cal’s pharmacy benefits that would affect millions of enrollees. These proposals would undermine access to timely, effective, and affordable treatment. Specifically, the May Revision proposes to:

End coverage for GLP-1 drugs (e.g., Ozempic and Wegovy).

Imposes step therapy protocols.

Imposes prior authorization for continuation of drug therapy.

Imposes prescription drug utilization management.

Eliminate over-the-counter drug coverage. End coverage for GLP-1 drugs (e.g., Ozempic and Wegovy). End coverage for GLP-1 drugs (e.g., Ozempic and Wegovy) effective January 2026. Originally developed to treat diabetes, GLP-1 medications have also proven effective for weight loss and the management of obesity-related conditions. Under this proposal, Medi-Cal would no longer cover these drugs, resulting in reduced General Fund spending of $85 million in 2025-26, with the reduction growing to $680 million by 2028-29 and ongoing. This proposal overlooks the potential long-term health and economic benefits of reducing obesity rates, such as lower rates of heart disease and other chronic conditions. Imposes step therapy protocols. Imposes step therapy protocols, which would require Medi-Cal members to try less expensive medications before accessing more costly or preferred treatments. While this can reduce short-term costs, it may interfere with timely, clinically appropriate care. This change would reduce General Fund spending by $87.5 million in 2025-26 and $175 million ongoing. Imposes prior authorization for continuation of drug therapy. Imposes prior authorization for continuation of drug therapy effective January 2026. Medi-Cal currently allows beneficiaries to continue receiving certain drugs even after they’re removed from the contracted drug list if they had previously been approved. The proposed policy would eliminate this “continuing care” status and instead require members to seek new prior authorizations. This could disrupt treatment for people with chronic conditions who rely on medication stability. This change would reduce General Fund spending by $62.5 million in 2025-26 and $125 million in 2026-27 and ongoing. Imposes prescription drug utilization management. Under this proposal, the state would expand prior authorization protocols across more drug classes. These changes are intended to manage costs but may delay treatment access and increase administrative burden for providers and patients. This change would reduce General Fund spending by $25 million in 2025-26 and $50 million in 2026-27 and ongoing. Eliminate over-the-counter drug coverage. The May Revise ends pharmacy coverage of certain drug classes including COVID-19 antigen tests, vitamins, and certain antihistamines including dry eye products. This could burden low-income individuals with additional out-of-pocket costs for managing everyday health needs. This change would reduce General Fund spending by $3 million in 2025-26 and $6 million in 2026-27 and ongoing.

Federal Threats to Health Care Access

The harmful cuts proposed in the May Revision come at a time when California’s health care system faces serious threats from the federal level. Congressional Republicans are advancing a federal budget proposal that prioritizes tax breaks for corporations and the wealthy while slashing investments in health care. This includes deep cuts to Medicaid and efforts to undermine the Affordable Care Act (ACA), both of which could severely jeopardize access to care for millions of Californians.

Medi-Cal, which provides health coverage to nearly 15 million people and accounts for almost two-thirds (64.4%) of all federal funding flowing through California’s state budget, is particularly at risk. Reduced federal funding would lead to a significant budget shortfall, leaving state leaders with critical decisions about how to protect Medi-Cal and the Californians who depend on it.

In the face of these threats, California leaders should pursue policy solutions that protect and strengthen health care access. This includes reforming the state’s tax system to ensure profitable corporations pay their fair share and eliminating tax breaks that overwhelmingly benefit the wealthiest Californians. These steps would raise the revenue to help support vital health care programs (see tax policy section) and allow California to protect its progress — and its people — from harmful federal actions.

Federal Policy The federal government plays a major role in shaping California’s budget, economy, and the well-being of its people. Learn how federal policies shape California’s budget, economy, and vital programs — and how state leaders can respond to protect and support Californians. Explore Federal Resources

Revised Spending Plan Adjusts MCO Tax Spending

Proposition 35, which voters approved in November 2024, significantly changed how state policymakers can use revenue from the Managed Care Organization (MCO) tax. State leaders have historically relied on much of this revenue to reduce or offset General Fund spending on Medi-Cal. While Prop. 35 allows policymakers to continue using a portion of this funding for that purpose, the amount has been reduced and will decrease further starting in 2027.

The revised budget reflects the following MCO tax revenue to offset General Fund spending to support existing Medi-Cal services:

$9 billion in 2024-25

$4.2 billion in 2025-26

$2.8 billion in 2026-27

Compared to the Governor’s January proposal, this is an increase of $1.1 billion in 2024-25 and decreases of $200 million in 2025-26 and $400 million in 2026-27.

The May Revision reflects $804 million in 2024-25, $2.8 billion in 2025-26, and $2.4 billion in 2026-27 for the MCO Tax and Proposition 35 expenditure plan. This includes $1.6 billion across 2025-26 and 2026-27 to support increases in managed care base rates relative to calendar year 2024 for primary care, specialty care, ground emergency medical transportation, and hospital outpatient procedures.

Federal Threats to MCO Tax Revenue

The long-term stability of the MCO tax remains uncertain. Its structure must be periodically approved by the federal government to comply with Medicaid financing rules, and proposed federal changes could severely limit how states use provider taxes to draw down federal funds.

Congressional Republicans are advancing a federal budget proposal that includes deep health care cuts and new limits on provider taxes. These changes could cost California billions in federal funding each year. In addition, the Centers for Medicare & Medicaid Services recently issued a proposed rule that would restrict how states structure provider taxes by targeting a financing mechanism currently used to generate federal Medicaid funds. If finalized, this rule would significantly limit California’s ability to rely on the MCO tax to support Medi-Cal.

These federal policy changes could significantly disrupt California’s ability to generate and allocate MCO tax revenue. These growing risks underscore the need for state leaders to identify more stable, long-term funding sources to protect Medi-Cal and maintain critical health care investments.

Governor’s Revised Budget Sustains Behavioral Health Initiatives

Millions of Californians rely on county services for mental health and substance use treatment, known as behavioral health care. Many of these individuals face housing insecurity, justice system involvement, or child welfare placement. Strengthening the state’s behavioral health system is essential to guaranteeing that every Californian can access the care they need regardless of race, age, gender identity, sexual orientation, or where they live. In recent years, state policymakers have launched various initiatives to transform California’s behavioral health system with the goal of improving access.

Continuing BH-Connect

The governor’s May Revise maintains funding for the launch of California’s Behavioral Health Community-Based Organized Networks of Equitable Care and Treatment (BH-CONNECT), which was announced in his January budget proposal. This multiyear initiative aims to improve access to behavioral health services for Medi-Cal members with significant needs, focusing on children and youth involved in child welfare, people involved in the justice system, and individuals at risk of or experiencing homelessness.

Funding for BH-CONNECT includes $8 billion in state and federal resources over four years. Major components of BH-CONNECT include workforce investments, transitional rent assistance, and support for children and youth in child welfare, among others.

Sustaining Proposition 1 Implementation

Proposition 1, which voters approved in March 2024, is a two-part measure that amended California’s Mental Health Services Act and created a $6.38 billion general obligation bond to fund behavioral health treatment, residential facilities, and supportive housing for veterans and Californians with behavioral health needs.

In 2024, state leaders allocated funding to begin Prop. 1 implementation, including $85 million ($50 million General Fund) for 2024-25 for county behavioral health departments, which provide mental health and substance use disorder services to Californians through Medi-Cal and other programs. The administration maintains their January proposal of an additional $93.5 million total funds ($55 million General Fund) for 2025-26 for Prop. 1 implementation at the county level.

Other Behavioral Health Initiatives Sustained

The governor’s revised budget also continues other behavioral health initiatives that were launched in previous budget agreements, including:

California Advancing and Innovating Medi-Cal (CalAIM)

The Children and Youth Behavioral Health Initiative

Community Assistance, Recovery, and Empowerment (CARE) Court California Advancing and Innovating Medi-Cal (CalAIM) A multiyear initiative to transform the Medi-Cal program with the goal of improving health outcomes, particularly for individuals experiencing homelessness, foster youth, and justice-involved individuals. It brings together physical health, mental health, and social services to make care simpler and more focused on patients, while improving support through new ways of paying for and delivering care. The Children and Youth Behavioral Health Initiative A multiyear, multi-department package of investments to improve mental health and wellness supports for children, youth, and families. It focuses on prevention and early intervention, and making services more accessible in schools and community settings. Community Assistance, Recovery, and Empowerment (CARE) Court A plan to establish court-ordered treatment for people experiencing both homelessness and serious behavioral health challenges.

New Behavioral Health Investments

The revised budget also introduces two smaller actions:

CalHOPE Warm Line: $5 million from the Behavioral Health Services Fund (BHSF) to support the continuation of the CalHOPE Warm Line — a 24/7 phone line program that offers free, confidential support to Californians — through 2025-26 and beyond.

$5 million from the Behavioral Health Services Fund (BHSF) to support the continuation of the CalHOPE Warm Line — a 24/7 phone line program that offers free, confidential support to Californians — through 2025-26 and beyond. Trainings for ACEs Providers: $2.9 million in total funds (with $1.46 million from the BHSF and $1.46 million from federal funds) to support trainings for Adverse Childhood Experiences (ACEs) providers.

Federal Threats to Behavioral Health

Congressional Republicans are actively pursuing budget cuts that would severely threaten California’s behavioral health services. Medicaid is the largest payer of behavioral health services in the country and makes up a significant portion of counties’ mental health budgets, so cuts to this program at the federal level undermine the ability of state and local governments to provide behavioral health support. Additionally, programs like CalAIM and BH-CONNECT rely on federal waivers to use Medicaid funding for purposes such as housing navigation, and the federal government could choose to let the waivers expire or rescind them. Any funding cuts at the federal level would devastate the ability of hospitals, community centers, and other behavioral health providers in supporting Californians who desperately need help.

Housing & Homelessness

May Revision Continues to Withhold New Funding for Housing Affordability

California is home to over 6 million renter households, more than half of whom face unaffordable housing costs. This burden falls hardest on low-income families with children, older adults on fixed incomes, and working Californians whose wages don’t keep pace with the cost of living. For these Californians, already stretched thin, the high cost of housing makes other basic needs — like food, child care, gas, and medical care — unreachable. Yet these same Californians are once again being left behind in the name of austerity.

The May Revision upholds the administration’s decision to withhold any new or ongoing state investments in affordable housing. Worse, it proposes deeper state funding cuts to already gutted affordable housing programs, including reverting $31.7 million of unexpended General Fund for the Infill Infrastructure Grant Catalytic Program, the Commercial Property Pilot Program, and the 2021 Infill Infrastructure Grant Program that was appropriated in previous years. The revised budget also calls to restructure the Greenhouse Gas Reduction Fund (GGRF), putting at risk the Affordable Housing and Sustainable Communities Program (AHSC) which it currently supports. This program has funded over 20,000 affordable homes near transit, advancing both housing and climate goals.

The Governor did state his support for two housing development-related bills that would create building exemptions to the California Environmental Quality Act which may encourage housing production in certain instances. He also stated his support for a housing and infrastructure bond. However, even if California voters pass the bond in the upcoming election, funding wouldn’t be available until 2027 — while most affordable housing programs will run out of funds by the end of this year.

Efforts to increase housing production through streamlining and coordination are important, but not enough. Policymakers must pair them with ongoing investments in deeply affordable housing and strong tenant protections — such as anti-price gouging laws and rental assistance—to prevent more people from losing their homes.

This is especially urgent now, as federal housing programs could face deep cuts under the Trump Administration. In California, federal housing programs support over 920,000 people but fall far short of meeting demand, and nearly 15,000 California emergency housing choice vouchers will be lost soon without additional funding. While the May Revision does include an increase of $416.6 million one-time Federal Trust Fund to support recovery from natural disasters in 2023 and 2024, these dollars do not holistically address the state’s ongoing affordable housing crisis (see Climate Change section). As the state pulls back its own investments, this will only cause more Californians to face housing instability and homelessness without intentional, sustained action.

May Revision Abandons Funding to End Homelessness in California

California has both the resources and the responsibility to ensure every resident has a stable, dignified place to call home. Last year alone, homeless service providers served over 350,000 Californians experiencing homelessness — demonstrating both the scale of need and the increased capacity of the state’s response systems. This expanded reach was made possible in part by previous one-time state investments that funded critical homelessness prevention and resolution services. However, most of these funds were temporary and are now approaching critical funding cliffs.

Yet despite record numbers of people being served and housed, the Governor’s revised 2025–26 budget includes no new or ongoing state funds to address homelessness, putting hard-won progress at risk and abandoning the state’s most vulnerable residents and the permanent solutions that will solve homelessness.

Instead, the May Revision proposes $4.2 million ($4 million General Fund) in 2025-26, $6.4 million ($6.2 million General Fund) in 2026-27, and $6.2 million ($6.1 million General Fund) in 2027-28 and ongoing to support the reorganization of the Business, Consumer Services, and Housing Agency, which is set to be dissolved by July 2026. This restructuring will establish a new California Housing and Homelessness Agency aimed at improving alignment across housing and homelessness programs.

The Administration also proposes $200 million in Proposition 35 funds over two years to establish Flexible Housing Pools to support Behavioral Health Services Act reforms and Medi-Cal transitional rent benefits (see Proposition 35 Implementation and Behavioral Health sections). While these funds could help unhoused individuals with serious behavioral health conditions secure housing, they fall far short in addressing the broader statewide housing and homelessness needs. Plus, the additional proposed deep cuts to Medi-Cal and eligibility limitations could harm the same Californians these investments are attempting to serve (see Coverage, Affordability & Access section).

Meanwhile, local governments and service providers are bracing for the possibility of severe federal cuts proposed by the Trump Administration, including a 43% reduction in rental assistance, the elimination of key homelessness grants, and the possible loss of more than 15,000 California emergency housing choice vouchers — threatening to push thousands back into homelessness. Without bold, ongoing state investment, policymakers risk reversing progress and deepening a crisis that demands urgent and sustained action to continue supporting the real solutions needed.

Economic Security

Revised Budget Proposes No Changes to Refundable Tax Credits

California’s three refundable income tax credits — the California Earned Income Tax Credit (CalEITC), Young Child Tax Credit, and Foster Youth Tax Credit — provide financial support to low-income Californians, including undocumented workers who file taxes with an Individual Taxpayer Identification Number (ITIN), helping them pay for essentials like housing and food. These state credits are especially vital because they benefit many Californians who are excluded or receive minimal support from the federal EITC and Child Tax Credit (CTC).

California’s credits may become an even more important source of support for families and individuals if legislation that Congressional Republicans are currently advancing is enacted. This legislation would create onerous new processes that will make it harder for families to claim the federal EITC, likely causing eligible families to lose access to the credit. It also would strip the federal CTC from millions of US citizen and legal resident children living in mixed-status families, including an estimated 910,000 children in California. And while this legislation would increase the CTC for children in families with high incomes, it would provide nothing to children in families with low incomes, including about 2 million children in California. In addition to these threats, a recent unprecedented federal threat to taxpayer privacy protections risks making taxpayers afraid to file their taxes, causing them to lose access to vital state and federal tax credit support.

The Governor’s revised budget proposes no changes to California’s refundable state tax credits and maintains the Administration’s January proposal to provide just $10 million for tax credit outreach, education, and free tax preparation grants. These grants help community based organizations provide on-the-ground and online linguistically and culturally competent services to tax filers. This proposed level of funding is down by half from $20 million provided in 2023-24 and $12 million in 2024-25.

Revised Budget Includes Wins for CalWORKs but Cuts to Multiple Foster Youth Programs

Millions of families across the state struggle to afford basic necessities. The California Work Opportunity and Responsibility to Kids (CalWORKs) and foster youth programs help parents feel supported and ensure children are given the opportunity to succeed. Amidst this budget shortfall, this administration’s revised spending plan includes some wins for CalWORKs, while simultaneously proposing millions of dollars in cuts to programs that support foster youth in California.

The CalWORKs program is a critical component of California’s safety net for families with low incomes that helps over 650,000 children and their families with modest cash grants, employment assistance, and critical supportive services. The proposed budget would strengthen CalWORKs by:

Granting more flexibility in allowable welfare-to-work activities. The proposal would add goal-oriented activities to help better support the needs of individual parents and would also make Job Club, which provides support for resume writing, interviewing, and other job search activities, optional to align with the needs and various trajectories of individuals.

The proposal would add goal-oriented activities to help better support the needs of individual parents and would also make Job Club, which provides support for resume writing, interviewing, and other job search activities, optional to align with the needs and various trajectories of individuals. Reducing the administrative burden on counties by replacing county welfare-to-work reporting requirements with administrative data extracts.

by replacing county welfare-to-work reporting requirements with administrative data extracts. Simplifying the process for families to regain assistance after being sanctioned. Currently, families that are sanctioned can face significant and ongoing penalties that affect their ability to meet their basic needs. Reducing the red tape around sanctions can help more families regain access to their full CalWORKs grant.

However, the May Revision proposes cuts to several programs that support foster youth. The revised budget:

Governor Invests in Fighting Child Hunger, Leaves Out Older Adults

California has led the nation in fighting child hunger as the first state to adopt universal school meals in 2022. The governor’s revision builds on this by investing an additional:

$90.7 million ongoing Proposition 98 to fully fund the universal school meals program and guarantee each child can access breakfast and lunch at school regardless of their family’s income.

to fully fund the universal school meals program and guarantee each child can access breakfast and lunch at school regardless of their family’s income. $21.9 million ongoing Proposition 98 and $57.5 million General Fund to expand state-match dollars and outreach for the Summer Electronic Benefits Transfer (SUN Bucks) program. This program provides families with low incomes $120 for food for each school-aged child over the summer while they cannot access school meals.

However, the governor does not propose any additional funding for other core food assistance programs. Instead, the May Revision:

Walks back commitment to expanding the California Food Assistance Program (CFAP) to undocumented older adults age 55 and over. The revised budget adds language that would make the expansion contingent on available funding in 2027. Furthermore, the administration also has not put forth any plans to end this exclusion for undocumented Californians under age 55, even while 64% of undocumented Californians are living in or near poverty.

to undocumented older adults age 55 and over. The revised budget adds language that would make the expansion contingent on available funding in 2027. Furthermore, the administration also has not put forth any plans to end this exclusion for undocumented Californians under age 55, even while 64% of undocumented Californians are living in or near poverty. Fails to invest in CalFood, allowing the funding expansion to expire, which will take the average annual funding California food banks receive down to $8 million from $60 million. The additional funding to food banks has been key in helping them meet more diverse needs and serve more people in need with California-grown food.

Food assistance benefits are already too low and facing significant threats at the federal level. SNAP — known as CalFresh in California — is set to face up to $300 billion in federal cuts with the possible implementation of harmful proposals like shifting costs onto California and expanding time limits for participants. These cuts could impose billions of dollars worth of costs onto the state not accounted for in the May Revision and reduce benefits for the over 5 million Californians who rely on CalFresh.

Revised Budget Fails to Invest in Older Adults and Californians with Disabilities

All Californians deserve to feel included, supported, and treated with dignity in their communities regardless of their age, ability, race, gender, or economic status. However, Californians with disabilities and older adults face significant barriers, with increasing risks of not meeting their basic needs. The May Revision fails to invest in these communities.

Instead, the revised budget:

Proposes over $1 billion in mostly ongoing cuts to the In-Home Supportive Services (IHSS) Program.

Proposes over $120 million in 2025-26 and over $300 million in 2026-27 in cuts to the Department of Developmental Services (DDS).

Does not reinstate the cost of living adjustment (COLA) for the State Supplementary Payment (SSP) program. Proposes over $1 billion in mostly ongoing cuts to the In-Home Supportive Services (IHSS) Program. These services help Californians with low incomes who are over the age of 65, blind, and/or disabled live with dignity in their own homes. The revised spending plan proposes limiting the pay and hours of home care providers resulting in a reduction of $707.5 million. Additional cuts would come from the many participants who would lose access with the reinstatement of the Medi-Cal asset limit test and the coverage exclusion for adults 19 and older who are undocumented (see Health Coverage section). While the governor’s initial estimates of the cuts totaled over $1 billion, at a recent legislative hearing, the Department of Social Services provided updated estimates totaling approximately $800 million due to anticipated delays in implementing the proposed changes. Proposes over $120 million in 2025-26 and over $300 million in 2026-27 in cuts to the Department of Developmental Services (DDS). This department provides individuals with intellectual and developmental disabilities a variety of services that allow them to achieve their goals. However, these cuts reduce, and in some cases eliminate, funding for organizational trainings and other capacity-building services. Additionally, the proposal would end the rate reform hold harmless policy in February 2026 instead of June 2026. This policy would mean that some providers would be subject to a rate reduction, thereby limiting the reach of programs around the state that serve Californians with developmental disabilities. Does not reinstate the cost of living adjustment (COLA) for the State Supplementary Payment (SSP) program. In recent years, state policymakers have made significant investments to increase SSP grants; however, the total grant levels remain below federal poverty levels. After deep cuts to the program during the Great Recession, grants have not kept up with rising housing costs, making it difficult for low-income people with disabilities to make ends meet.

These cuts and lack of investments coupled with the uncertainty around the California Food Assistance Program (CFAP) expansion to older adults regardless of immigration status (see Food Assistance section) and the devastating cuts to the Medi-Cal program would compound the harm people with disabilities and older adults in California are already experiencing.

Governor’s Revised Budget Fails to Make Clear Progress Toward Rate Reform

California’s child care and development programs administered by the California Department of Social Services (CDSS) are integral for supporting California’s families and child care providers. Despite recent progress (such as increased overall funding, reduced family fees, and new child care provider health and retirement benefits), the child care system is still falling short for both families and child care providers. The number of subsidized child care spaces does not meet demand, meaning that thousands of families face prohibitively high child care costs. Specifically, without access to a child care subsidy, a single mother of an infant and a school-age child in California will spend, on average, 61% of her income on child care. Moreover, California child care provider wages have not kept up with the living wage, pointing to the urgent need for child care provider rate reform. Overall, the May Revision maintains previous commitments but fails to make advancements on provider pay that are needed for an equitable and stable child care system.

The governor’s revised budget:

Includes $7 billion to support current child care and development program commitments.

Maintains plan to add approximately 200,000 new child care slots.

Does not include a new rate structure to pay providers the true cost of care.

Maintains 2024-25 child care provider temporary rate increases. Includes $7 billion to support current child care and development program commitments. Compared to 2024-25, spending is roughly similar. The state reports higher than anticipated caseloads for CalWORKs Stage 2 child care and increased costs associated with prospective pay for providers and the recent redefinition of full-time care to 25 hours. These increases are partially offset by lower than projected caseloads for CalWORKs Stage 3 child care and eliminating the cost-of-living adjustment (COLA). The COLA elimination only applies to providers still paid through the standard reimbursement rate (SRR), equating to a $60.7 million reduction. The majority of providers are paid through the regional market rate (RMR) and do not receive a COLA. Maintains plan to add approximately 200,000 new child care slots. In 2021-22, the governor committed to adding approximately 200,000 new child care slots by 2026-27. Expansion was delayed and paused in 2023-24 and 2024-25; however, the 2024-25 budget did solidify a plan for rolling out the remaining slots. Per this plan, slot expansion remains paused during 2025-26, and costs to maintain slots are reflected in the aforementioned $7 billion. Thus, the 2025-26 revised budget does not include appropriations for slot expansion; the administration remains committed to adding 44,000 slots in 2026-27, 33,000 slots in 2027-28, and any remaining unawarded slots in 2028-29 and ongoing. However, the revised budget does include cuts to the Emergency Child Care Bridge Program (see Family and Child Well-Being section). Does not include a new rate structure to pay providers the true cost of care. The 2024-25 budget included trailer bill language requiring the state to set new reimbursement rates under the alternative methodology by no later than July 1, 2025. The state’s report detailing these new rates also must include estimated costs and timelines associated with the implementation components of the alternative methodology. Child Care Providers United (CCPU) — representing family child care and family, friend, and neighbor providers — is currently in the process of negotiating the new rate structure with the administration as part of the new union contract. In parallel, the state has been working on a new rate structure for center-based providers. While the revised budget acknowledges that the state continues to work toward an alternative methodology, it only includes $91.8 million to support rate reform-related administrative and start-up costs. Key decisions related to the rate structure, funding, and implementation still need to be made. The legislature requested that the state provide a transition plan for implementing a new rate structure by May 14; however, this was not included in the revised budget. This has left child care provider fair pay in a precarious place in advance of the July 1, 2025 federal deadline to finalize a new rate structure. Maintains 2024-25 child care provider temporary rate increases. In light of the limited progress on implementing a new rate structure, it is important to note that 2024-25 trailer bill language prohibited the new reimbursement rates or any temporary reimbursement established by the state as part of a transition timeline from being reduced below their current levels. Thus, the 2025-26 proposed budget includes $699 million to maintain the Cost of Care Plus Rate for child care providers. This is up from the approximately $659 million estimated for 2024-25. CCPU’s current contract expires June 30, 2025.

In light of federal threats, California faces many uncertainties that impact available funding for rate reform. Yet, child care providers face constant worry about their economic stability. Additionally, CCPU shared that in their recent contract negotiations, the state proposed to eliminate their health benefits and cut their retirement plan. Proposed federal cuts to Medi-Cal and CalFresh only exacerbate this proposed cut from the state, underscoring the need to maintain provider benefits and implement a rate structure that pays providers the true cost of care.

Governor Cuts Support for Immigrant Californians

Immigrants and their families are deeply ingrained in the state’s social fabric. They are members of the state’s workforce, pay taxes, attend schools, own businesses, and raise families who invest in local communities. California has the largest share of immigrant residents of any state. Over half of all California workers are immigrants or children of immigrants, and more than 2 million Californians are undocumented, according to estimates. Undocumented immigrants in California make significant contributions to state and federal revenues, contributing $8.5 billion in state and local taxes in 2022, despite their exclusion from most public benefits.

State leaders have made notable progress in recent years working towards a California for all where all people have access to economic opportunity and essential services, regardless of immigration status. In a special session called for by the governor earlier this year, legislators and the governor approved $25 million in funding for legal resources for potential fights with the incoming federal administration plus an additional $25 million to defend immigrants against deportation, detention, and wage theft.

However, the governor’s revised budget marks a significant reversal in working towards a California for all. At a time when the federal government is actively working to dismantle rights and protections for immigrants, it is critical now more than ever that California ensures the safety and well-being of all people, especially undocumented immigrants. Federal deportation policies and restrictions on immigration are not only tearing apart California families, but also threatening the state’s economic vitality, workforce stability, and access to essential services like food, housing, and care.

Instead of providing support to immigrants, the governor’s revised budget does not include any additional funding to protect and support the state’s immigrant communities and instead cuts funding for key programs serving immigrants. Specifically, the 2025-26 revised budget:

Given the actions the federal government has already taken against immigrant communities in California, state leaders should be taking bold action and making investments — not cuts — that ensure all Californians, regardless of immigration status, feel safe and have the resources they need to thrive.

Governor Does Not Provide Needed Support to Domestic and Sexual Violence Survivors

Every Californian deserves to live in a world where they feel safe. However, millions of Californians experience domestic and sexual violence every year — women, transgender, non-binary Californians, and some women of color are most likely to experience this type of violence.

The state receives federal funding through the Victims of Crime Act (VOCA) to help provide essential services to survivors of crime, including survivors of domestic and sexual violence. These funds help provide survivors with critical services like emergency shelter, counseling, and financial assistance.

However, anticipated cuts to VOCA at the federal level would result in a roughly 45% cut to state grants for organizations that support survivors of crime, decimating the funding of many of these organizations who rely entirely on VOCA funding to provide these critical services. Additionally, the US Justice Department has already cut $811 million in grants, which includes cutting funding to programs providing services to domestic violence survivors.

The governor’s May Revision:

Does not provide funding to fill the gap in crime victim services funding.

Eliminates all funding for the cash assistance program for survivors. Does not provide funding to fill the gap in crime victim services funding. In 2024, the state stepped in and provided $103 million in one-time funding to backfill federal VOCA funding gaps. However, even with federal cuts to VOCA anticipated again this year, there is no funding provided in the 2025-26 proposed budget to fill those gaps. Since 2019, funding has fallen far short of levels needed to maintain the services local organizations provide to more than 816,000 victims of crime. At the current funding levels, programs will have experienced a 67% cut in funding since 2019. Eliminates all funding for the cash assistance program for survivors. In 2022-23, the state appropriated $50 million to establish the Flexible Assistance for Survivors (FAS) grant program. These dollars were meant to provide grants to community-based organizations to provide flexible assistance such as relocation, care costs, or other basic needs to survivors of crime. However, the May Revision calls for a reversion of $49.7 million of this funding, meaning all funding appropriated for this program will be returned to the General Fund, eliminating the program and support for survivors of crime when other programs like VOCA are already facing large funding cuts.

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Education

Transitional Kindergarten Continues Planned Expansion

The California Department of Education (CDE) hosts two early learning and care programs: Transitional Kindergarten (TK) and the California State Preschool Program (CSPP). CSPP provides preschool to children ages 3 and 4 for families with low to moderate incomes and temporarily to 2-year-olds until 2027 in both school and community-based settings. TK serves 4-year-olds, and eligibility is based on age alone in public schools and is not dependent on family income. Together, CSPP and TK are cornerstones of CDE’s Universal Preschool plan intended to bring more early learning and care options to 3-and 4-year-olds in California. Moreover, TK and school-based CSPP are funded through the state’s Proposition 98 guarantee (see Proposition 98 section). However, as California strives to create a mixed delivery system that centers the needs of families, the administration has the opportunity to spend resources and implement policies in a way that integrates CSPP and TK with the broader early learning system to best support families with young children.

The governor’s revised budget:

Funds the completed rollout of Universal TK.

Implements new TK ratio guidelines.

Funds English language proficiency screeners and supplementary funding for multilingual learners in TK.

Maintains CSPP program levels but suspends cost of living adjustment (COLA). Funds the completed rollout of Universal TK. The initial year one expansion took effect during the 2022-23 school year and covered children whose fifth birthdays fell between September 2 and February 2 (the previous cut-off was December 2). The year two 2023-24 expansion provided eligibility to children who turn 5 between September 2 and April 2. The year three 2024-25 expansion extended eligibility to children who turn 5 from April 2 to June 2. As a final step, the 2025-26 school year will allow all children who turn 4 by September 1 to enroll in TK. The 2025-26 budget proposal includes $2.1 billion ongoing Proposition 98 dollars for this full implementation. The 2025-26 expansion is estimated to provide TK access to 51,000 additional children (down from the 60,000 estimate provided in January). These amounts are a reduction from the $2.4 billion proposed in January, given revised average daily attendance estimates and a lower cost-of-living adjustment (see K-12 Education section). Implements new TK ratio guidelines. As Universal TK completes expansion in 2025-26, reduced teacher-to-child ratios will take effect. Specifically, TK classroom ratios will reduce from 1:12 to 1:10 in 2025-26. This new ratio was originally planned for 2023-24 but was delayed. The 2025-26 proposed budget includes $1.2 billion ongoing Proposition 98 dollars to support this ratio reduction in every TK classroom. This is a decrease from the $1.5 billion proposed in January, driven by lowered average daily attendance estimates. Funds English language proficiency screeners and supplementary funding for multilingual learners in TK. In 2024-25, the governor signed Assembly Bill 2268 to exempt TK students from the English Language Proficiency Assessment for California (ELPAC) to determine whether new students will be designated English learners, because the ELPAC was considered inadequate for accurately screening multilingual 4-year-olds. This bill went into effect for the 2024-25 school year, meaning that TK students currently do not have an English language proficiency screener. Thus, the January proposed budget included $10 million Proposition 98 dollars for TK classrooms to use new English language proficiency screeners. This proposed appropriation is maintained in the revised budget and may help address the current lack of an English language proficiency screener in TK. Relatedly, the revised budget includes $7.5 million Proposition 98 dollars to address reductions in supplemental and concentration grant funds to local education agencies (LEAs) resulting from the recent exemption of TK students from the ELPAC. Maintains CSPP program levels but suspends cost of living adjustment (COLA). The 2024-25 budget authorized (but did not require) both part-day and full-day CSPP to enroll eligible 2-year-old children until July 1, 2027. The 2025-26 budget for CSPP includes this temporary expansion. Proposed spending for CSPP largely reflects the January proposal, reflecting an increase in funding as compared with 2024-25. However, the revised budget suspends the COLA for CSPP providers, equating to a reduction of $19.3 million ongoing Proposition 98 General Fund and $10.2 million ongoing General Fund. While rate reform is currently being negotiated by Child Care Providers United — representing home-based providers — a new rate structure will also be confirmed and implemented for CSPP. Confirming and implementing this new rate structure has faced the same challenges detailed in the Child Care section and is subject to the July 1, 2025 federal deadline.

Revised Budget Adjusts the Prop. 98 Guarantee Downward

Approved by voters in 1988, Proposition 98 constitutionally guarantees a minimum level of annual funding for K-12 schools, community colleges, and the state preschool program. The Prop. 98 guarantee tends to reflect changes in state General Fund revenues, and revenue estimates consequently update the minimum guarantee funding levels. The 2025-26 revised spending plan reflects downward adjustments in the minimum guarantee estimates and, given changes in revenue, it adjusts required deposits and withdrawals from the Prop. 98 reserve — the state budget reserve for K-12 schools and community colleges. The revised budget also makes changes to the Prop. 98 split between TK-12 and community colleges.

The chart below shows updated projections of the guarantee in the May Revision compared to projections in the January budget proposal and the 2024-25 enacted budget.

Prop. 98 revised estimates and proposed adjustments include the following:

The January proposal projected the 2025-26 Prop. 98 guarantee to be $118.9 billion. However, with declining revenue projections, the May Revision now estimates the 2025-26 minimum guarantee at $114.6 billion. This figure reflects a $4.3 billion decrease from the January estimate and is also $1.1 billion lower than the $115.7 billion estimate in the 2024-25 enacted budget.

While revenue projections grew for 2024-25, the Prop. 98 minimum guarantee estimate of $118.9 in the May Revision is slightly lower than the January projection. However, this $118.9 billion still represents an increase of $3.6 over the estimate in the June budget. Along with these updates, the maintenance factor obligation — a required payment as a result of the suspension in 2023-24 — is also likely to be adjusted. Despite this constitutionally required amount, the governor’s revised spending plan maintains a proposal to fund the guarantee at $117.6 billion in 2024-25, $1.3 billion lower. This approach aims to mitigate potential risks associated with revenue volatility by delaying the required amount until the guarantee’s final calculation for that year.

For the 2023-24 fiscal year, the guarantee’s level is maintained at $98.5. Since the guarantee was suspended with the 2024-25 budget, the 2023-24 level does not change.

The revised spending plan also makes an adjustment to a required deposit into the Public School System Stabilization Account (PSSSA) — also referred to as the Prop. 98 reserve. In 2024-25, the required deposit is $540 million, down from an estimated $1.1 billion deposit in January. Also, given the decline in Prop. 98, there’s now a mandatory withdrawal in 2025-26 of $540 million, fully drawing down this reserve (see Reserves section).

The revised budget also proposes changes to the share of Prop. 98 funds that go to TK-12 schools or the California Community Colleges. This proposal would shift the growth in Prop. 98 for Transitional Kindergarten expansion specifically to TK-12, essentially reducing the Community College’s portion by $492 million.

Revised Spending Plan Largely Maintains TK-12 Programs

The largest share of Proposition 98 funds goes to California’s school districts, charter schools, and county offices of education (COEs), which provide instruction to 5.9 million students in grades kindergarten through 12. Funding flows primarily through the Local Control Funding Formula (LCFF), which provides school districts, charter schools, and COEs a base grant per student, adjusted to reflect the number of students at various grade levels, as well as additional grants for the costs of educating English learners, students from low-income families, and foster youth. Other funds flow through a number of categorical programs such as the Expanded Learning Opportunities Program, special education, and others.

The revised spending plan largely maintains proposals included in the January budget and includes additional one-time and ongoing investments. Specifically, the revised budget:

Revised Budget Scales Back Previously Proposed Initiatives at the Community Colleges

A portion of Proposition 98 funding provides support to the California Community Colleges (CCCs), the largest postsecondary education system in the country, which serves high percentages of students of color and students with low incomes. CCCs prepare more than 1.8 million students to transfer to four-year institutions or to obtain training and employment skills.

The 2025-26 revised spending plan proposes to support a 2.3% cost-of-living adjustment (COLA) and funding for a higher level of enrollment growth; however, it eliminates and reduces funding previously proposed for other CCC initiatives.

Specifically, the revised spending plan:

Revised Budget Maintains Deferrals for the CSU and UC, Reduces Previously Proposed Cuts

California supports two public four-year higher education institutions: the California State University (CSU) and the University of California (UC). The CSU provides undergraduate and graduate education to nearly 454,000 students at 23 campuses, and the UC provides undergraduate, graduate, and professional education to more than 294,000 students across 10 campuses.

The 2025-26 May Revision maintains the planned deferral of funding increases to the UC ($240 million) and CSU ($252 million) systems from 2025-26 to 2027-28. This funding was supposed to be part of multi-year investments established through agreements between the administration and the CSU and UC systems in 2022. These agreements (also known as compacts) outlined major goals, including increasing access, improving student success and advancing equity, increasing affordability, improving collaboration among systems of higher education, and supporting workforce preparedness.

The revised spending plan also decreases previously proposed ongoing reductions for both systems. The January budget proposal included a 7.95% cut — $375 million for CSU and $397 million for UC — in ongoing General Fund support for UC & CSU systems beginning in the 2025-26 fiscal year. The May Revision reduces this cut down to $144 million for the CSU and $130 million for the UC, reflecting about a 3% reduction to each of the systems.

Additionally, for the UC system, the revised budget maintains a planned deferral of $31 million General Fund dollars from 2025-26 to 2027-28 that would have supported the UC in increasing the number of resident undergraduate students.

Revised State Budget Adjusts Student Aid as Federal Threats Emerge

Students pursuing postsecondary education often face significant financial hardship, struggling to afford basic necessities while attending college. These challenges can lead to difficult trade-offs that affect their academic experience, delay their progress, or force them to abandon their educational goals entirely. These realities highlight the critical need for state support to ensure students have the resources necessary to complete their degrees.

The May Revision makes several adjustments to programs administered by the California Student Aid Commission. Specifically, the revised spending plan:

Increases support for the Cal Grant program, the state’s financial aid program for low-income students.

Increases support for the Middle Class Scholarship (MCS).

Adjusts funding for the Golden State Teacher Grant Program. Increases support for the Cal Grant program, the state’s financial aid program for low-income students. To fund growth in the number of students eligible for Cal Grants, the revised budget provides a Cal Grant increase of $94.7 million one-time in 2024-25 and $228.7 million ongoing funds in 2025-26, both General Fund dollars. These grants, as opposed to loans, do not need to be paid back and help students afford housing, food, transportation, and child care. Increases support for the Middle Class Scholarship (MCS). The revised budget includes an one-time increase of $77 million General Fund in 2024-25 to address an increase in caseloads for this program. The MCS provides awards to students to help them cover the total cost of attendance at the University of California and California State University systems. Adjusts funding for the Golden State Teacher Grant Program. Under the May Revision, total one-time funding increases to $64.2 million, an increase of $14.2 million from the January budget proposal, reflecting a carryover of unused funds from 2024-25. This program provides awards to students in professional preparation programs and those who are working toward a teaching credential.

While these proposed adjustments will certainly provide needed funds to maintain aid to students, they come at a time of growing federal threats to Pell Grants and student loans. House Republicans outlined a plan to limit Pell Grants — which support low- and middle-income students attending public institutions, including the California Community Colleges, UC, and CSU campuses — and to impose drastic changes to the student loan system, including restricting repayment options and making it more complicated to apply. These proposals could significantly impact students across all segments of California’s public higher education system.

Justice System

May Revision Calls for Closing an Additional State Prison by October 2026

Nearly 90,800 adults convicted of a felony offense are serving their sentences at the state level, down from a peak of 173,600 in 2007. This sizable drop in incarceration is largely due to a series of justice system reforms adopted by state policymakers and the voters since the late 2000s, including Proposition 47, which California voters passed in 2014 (see Prop. 47 investments section).

Despite this substantial progress in reducing incarceration, American Indian, Black, and Latinx Californians are disproportionately represented in state prisons — a disparity that reflects racist practices in the justice system as well as the social and economic disadvantages that communities of color continue to face due to historical and ongoing discrimination and exclusion.

Among all incarcerated adults, most — around 87,600 — are housed in state prisons designed to hold roughly 71,700 people. This overcrowding equals 122% of the prison system’s “design capacity,” which is below the prison population cap — 137.5% of design capacity — established by a 2009 federal court order. California also houses around 3,200 people in facilities that are not subject to the cap, including fire camps, in-state “contract beds,” and community-based facilities that provide rehabilitative services.

The May Revision:

Revised Budget Includes Little Funding to Implement Proposition 36

Last November voters approved Proposition 36, increasing penalties for certain drug and theft offenses. For example, Prop. 36 reversed some of the sentencing reforms put in place by Prop. 47 of 2014 (see Prop. 47 Investments section). In addition, Prop. 36 established a new process allowing prosecutors to charge people with a “treatment-mandated felony” for possession of illegal drugs. Yet, even with the passage of Prop. 36, most of the justice system reforms adopted by state policymakers and voters over the past couple of decades remain in effect.

By increasing punishment for drug and theft crimes, Prop. 36 is creating new costs — including for incarceration, probation, and the courts — at the state and local levels. However, Prop. 36 amounts to a massive unfunded mandate. The measure provides no new revenue to pay for these additional state and local costs — even though Californians were promised that Prop. 36 would provide evidence-based treatment, housing solutions, and programs to increase community health and safety. Instead, Prop. 36 assumes that state and local officials will be able to accommodate the measure’s substantial costs in their already strained budgets.

As a result, state and local leaders face difficult choices about how to pay for the unfunded costs created by Prop. 36 even as they are struggling to close substantial budget deficits for the upcoming fiscal year and beyond.

The May Revision does not include any new state funding to implement Prop. 36 beyond the funds needed to support higher state prison costs. The revised budget increases prison spending by about $29 million in 2025-26 to reflect a larger state prison population due to Prop. 36, according to Department of Finance testimony provided to Senate Budget and Fiscal Review Subcommittee #5 on May 15. However, the May Revision does not propose any new additional state funding to support the service needs and other unfunded costs imposed by Prop. 36 — costs that could easily reach to the low hundreds of millions of dollars each year.

May Revision Projects Steep Drop in Proposition 47 Savings in Coming Years

Passed by voters in 2014, Proposition 47 reduced penalties for six nonviolent drug and property crimes from felonies to misdemeanors. As a result, state prison generally has not been a sentencing option for these crimes. Instead, people convicted of a Prop. 47 offense have served their sentence in county jail and/or received probation.

However, with the passage of Prop. 36 last November, some of Prop. 47’s sentencing reforms have been reversed. Key changes enacted by Prop. 36 as well as their potential impact are described at the end of this section.

How Prop. 47 Savings Are Determined and Allocated

By decreasing state-level incarceration over the past decade, Prop. 47 reduced the cost of the prison system relative to the expected cost if Prop. 47 had not been approved by voters. The Department of Finance is required to annually calculate these state savings, which are deposited into the Safe Neighborhoods and Schools Fund and used as follows:

65% for behavioral health services — which includes mental health services and substance use treatment — as well as diversion programs for individuals who have been arrested, charged, or convicted of crimes. These funds are distributed as competitive grants administered by the Board of State and Community Corrections.

25% for K-12 school programs to support vulnerable youth. These funds are distributed as competitive grants administered by the California Department of Education.

10% to trauma recovery services for crime victims. These funds are distributed as competitive grants administered by the California Victim Compensation Board.

Since 2016, California has allocated $816 million in state prison savings attributable to Prop. 47. These funds have been invested in local programs that support healing and keep communities safe. For example, research shows that people who received Prop. 47-funded behavioral health services and/or participated in diversion programs were much less likely to be convicted of a new crime. Individuals enrolled in these programs had a recidivism rate of just 15.3% — two to three times lower than is typical for people who serve prison sentences (recidivism rates range from 35% to 45% for these individuals).

May Revision Estimates That $91.5 Million in Prop. 47 Savings Will Be Available to Invest in Local Communities in 2025-26

The May Revision estimates that Prop. 47 will generate an additional $91.5 million in savings due to reduced state-level incarceration — dollars that will be invested in local communities starting in the 2025-26 fiscal year. (These savings are attributable to the 2024-25 fiscal year, but are available for expenditure in 2025-26.) With these additional funds, Prop. 47’s total investment in California’s communities will exceed $900 million, up from the current $816 million.

Prop. 47 Savings Are Projected to Decline Substantially Due to Prop. 36

With the recent passage of Prop. 36, voters increased penalties for certain drug and theft offenses, including by reversing some of Prop. 47’s sentencing reforms (see Prop. 36 section). For example, Prop. 36 allows simple drug possession, petty theft, and shoplifting to be charged as felonies in certain circumstances. Under Prop. 47’s rules, these crimes were generally misdemeanors.

The state prison population is expected to rise in the near term due to the longer sentences allowed by Prop. 36 (see State Corrections section). As a result, the annual savings attributable to Prop. 47 is projected to substantially decline. Budget documents project that annual Prop. 47 savings will decrease from $91.5 million in 2024-25 to $27.1 million in 2026-27 — a drop of $64.4 million (70%) over this two-year period.

In other words, because of Prop. 36, more than $64 million in state funding that would otherwise have supported behavioral health treatment and other critical services over the next two years is expected to be shifted back to the state prison system.

state budget terms defined What’s the difference between a trailer bill and policy bill? A deficit and an operating deficit? And what exactly is a “Budget Bill Jr.?” Our Glossary of State Budget Terms answers that and more. View Glossary

Climate Change

Budget Maintains Funding for Wildfire Relief and Recovery

As demonstrated by the devastating wildfires that swept through Los Angeles County earlier this year, as well as other disasters in recent years, Californians are deeply impacted by the effects of climate change. While the climate crisis affects all Californians, communities of color and low-income communities are often hit hardest due to historical and ongoing displacement and underinvestment.

In January, the governor signed legislation to provide over $2.5 billion in wildfire relief to Los Angeles County to help communities hit hard by the disastrous wildfires in the region. This funding included:

$2.5 billion for response and recovery efforts , including support for emergency protective measures, evacuations, and sheltering for survivors;

, including support for emergency protective measures, evacuations, and sheltering for survivors; $4 million to expedite rebuilding homes in local communities; and

in local communities; and $1 million to rebuild local schools damaged by the wildfire.

In April, the governor signed into law “early action” legislation to use some of the funding approved in January as well as funding approved by voters in November through Proposition 4 for wildfire relief and prevention. This included:

Appropriating $181 million in Prop. 4 bond funds for wildfire prevention and resilience, including $170 million to conservancies for forest vegetation and management and $10 million to the Department of Forestry and Fire Protection to fund a tribal fire resiliency center.

in Prop. 4 bond funds for wildfire prevention and resilience, including $170 million to conservancies for forest vegetation and management and $10 million to the Department of Forestry and Fire Protection to fund a tribal fire resiliency center. Authorizing the Department of Finance to use funds approved in January to increase funding for unmet response and recovery needs from damage caused by the wildfires.

The governor’s May Revise maintains previously appropriated funding for relief to Los Angeles County from the wildfires suffered earlier this year. Additionally, the May Revise:

EPA announces dozens of environmental regulations it plans to target

toggle caption Ting Shen/AFP/Getty Images

The Environmental Protection Agency announced plans to target more than two dozen rules and policies in what the agency called the “most consequential day of deregulation in U.S. history.”

The EPA didn’t provide details about what it wants to do with the regulations — whether it will try to weaken them or eliminate them entirely. In most cases, the agency said it is reconsidering rules that apply to things like climate pollution from vehicles and power plants, wastewater from coal plants and air pollution from the energy and manufacturing sectors.

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The list the agency put out is a “roadmap” of the regulations it will try to roll back in the coming year, says Jason Rylander, legal director of the Climate Law Institute at the Center for Biological Diversity, an environmental group.

“This EPA is planning to take a wrecking ball to environmental law as we know it,” he says. “The intent appears to be to neuter EPA’s ability to address climate change and to limit air pollution that affects public health.”

The EPA said in an email to NPR that it doesn’t have additional information to share about its plans for changing or repealing environmental regulations.

“We are driving a dagger straight into the heart of the climate change religion to drive down cost of living for American families, unleash American energy, bring auto jobs back to the U.S. and more,” EPA Administrator Lee Zeldin said in a news release.

Rylander says the agency didn’t have to release a list of rules it plans to challenge. “But they’ve made clear that they intend to start that process,” he says.

Overhauling federal environmental regulations requires a so-called rulemaking process that usually takes a couple of years, Rylander says.

“But we’ve seen that this administration wants to move with a speed that we have not often seen,” he adds. “I suspect that you’ll start seeing proposed rules coming out on each of these in the coming weeks.”

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Any effort by the EPA to rollback environmental rules will almost certainly face legal challenges.

“EPA Administrator Lee Zeldin today announced plans for the greatest increase in pollution in decades,” Amanda Leland, executive director of the Environmental Defense Fund, said in a statement. “The result will be more toxic chemicals, more cancers, more asthma attacks, and more dangers for pregnant women and their children. Rather than helping our economy, it will create chaos.”

Leland said her group “will vigorously oppose Administrator Zeldin’s unlawful attack on the public health of the American people that seeks to tear down life-saving clean air standards – putting millions of people in harm’s way.”

EPA says it’s reconsidering rules for power plant emissions

The EPA says it will reconsider rules finalized under the Biden administration that limit climate pollution from power plants.

Power plants are the second biggest source of planet-heating greenhouse gasses behind transportation, according to the EPA. Under the regulations, existing coal and new natural gas-fired power plants that run more than 40% of the time would have to eliminate 90% of their carbon dioxide emissions, the main driver of global warming.

The rules followed a 2022 Supreme Court ruling that limited the EPA’s options for regulating power plant emissions. Justices said that without a specific law, the agency cannot force the entire power generation industry to move away from fossil fuels toward less-polluting energy sources. So, instead, the EPA under the Biden administration created regulations governing individual power plants.

When the new rules were finalized last year, Manish Bapna, chief executive of the Natural Resources Defense Council, predicted they would “drive up investment, innovation, and good jobs in the clean energy economy of the future” and give industry the certainty it “needs to meet growing demand in the cleanest, cheapest, most reliable way possible.”

However, some in the utility industry warned the restrictions would threaten electric reliability.

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“The path outlined by the EPA today is unlawful, unrealistic and unachievable,” Jim Matheson, chief executive of the National Rural Electric Cooperative Association in a statement at the time.

Zeldin said in a news release on Wednesday that the EPA is “seeking to ensure that the agency follows the rule of law while providing all Americans with access to reliable and affordable energy.”

Pollution from cars and trucks is also on EPA’s list

President Trump has made it a priority to roll back the Biden administration’s multi-pronged push supporting the transition to electric vehicles. Changing EPA standards limiting air pollution from vehicle tailpipes is a crucial part of that agenda.

Former president Barack Obama toughened fuel economy and EPA vehicle emission standards. During Trump’s first term, automakers had lobbied for looser rules, but were caught off guard by how dramatically Trump rolled them back. The next few years were chaotic; some automakers struck a voluntary deal with California to keep meeting their stricter rules, even if it wasn’t legally necessary.

Under the Biden administration, the standards grew stricter over time with rules designed to accelerate a transition to EVs. The current EPA standards do not mandate a certain number of EVs, but they set emissions rules so strict that automakers would essentially have to manufacture a large portion of vehicles without emissions — as much as two thirds of the vehicles sold by 2032 — in order to meet the rules.

With EV sales growth slowing, some automakers have wondered if that is still feasible and called for the rules to be adjusted. But the industry is also frustrated with the whipsawing of regulations back and forth, which makes it difficult to plan future products. In a statement Wednesday, the trade group representing automakers called for a “balanced approach.”

Environmental and public health groups support the more aggressive standards, which reduce pollution that causes asthma and heart disease as well as fighting climate change. So do consumer advocacy groups: the EPA had also estimated the new rules could save drivers up to a trillion dollars in gasoline over the life of the rules. But many critics, including the oil industry, have said the rules undermine consumer choice by favoring EVs.

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EPA says it’s rethinking whether climate pollution endangers public health

Underlying a lot of the EPA’s actions on climate change is a 2009 determination that greenhouse gasses like carbon dioxide and methane threaten public health. The EPA now says it will reconsider that so-called endangerment finding, as well as actions the agency took that were based on the determination.

Daren Bakst, director of the Center for Energy and Environment at the Competitive Enterprise Institute, said in an email to NPR that the EPA has used the endangerment finding to try to “control large portions of the economy.”

If the EPA determines that the endangerment finding is no longer applicable, Bakst says it “would preclude future greenhouse gas regulations.” It could also pave the way to repeal some existing rules, he says.

However, environmental groups say it won’t be easy for the EPA to scrap its determination that greenhouse gas emissions contribute to climate change. The science showing the warming impact of those emissions has only gotten stronger since the Supreme Court authorized the agency in 2007 to regulate greenhouse gas emissions if it finds that they contribute to climate change.

“The state of climate science has evolved significantly since the endangerment finding first came out,” says Rylander, legal director at the Center for Biological Diversity. “I can’t imagine anyone being able to conclude, on the basis of current science, that greenhouse gas pollution does not affect climate and public health. So I’m somewhat baffled that they think they’re going to be able to eliminate it and have that stand up in court.”

Rachel Cleetus, policy director with the Climate and Energy Program at the Union of Concerned Scientists, agrees.

“We’re seeing climate related disasters mount catastrophically,” Cleetus says. “We’ve seen loss of life from wildfires and extremely intensifying hurricanes, floods, droughts. We’re seeing so much economic damage from these kinds of extreme climate related disasters.”

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The utility industry has also raised concerns about getting rid of the endangerment finding. In a filing to the U.S. Supreme Court, the Edison Electric Institute (EEI), a group that represents electric utilities, said allowing the EPA to regulate climate pollution creates an orderly system for cutting emissions while minimizing economic impacts on consumers and businesses. Rolling back the agency’s authority could expose companies to a flurry of environmental lawsuits, the group said. “This would be chaos.”

The EPA has repeatedly reaffirmed the endangerment finding, and in 2022, Congress included language in the Inflation Reduction Act that labels greenhouse gases as pollutants under the Clean Air Act.

Conrad Schneider, senior director for the U.S. at the Clean Air Task Force, said in a statement: “This signal to deregulate air pollution is diametrically opposed to the obligation the EPA has to protect public health.”

In this brief, we assess and make recommendations on several California Department of Corrections and Rehabilitation (CDCR) budget proposals. Below, we provide a summary of our major recommendations. (A figure summarizing all of our recommendations is in the appendix of this brief.)

State Prison and Parole Population and Other Biannual Adjustments. The Governor’s budget estimates that Proposition 36 (2024), which increased punishment for various theft and drug crimes, will cause the average daily prison population to be about 570 higher (or 1 percent) than otherwise in 2024‑25 and 3,300 higher (or 4 percent) in 2025‑26. It estimates that Proposition 36 will not impact the average daily parole population in 2024‑25 but will cause the population to be about 360 higher (or 1 percent) than otherwise in 2025‑26. We identify flaws in the administration’s methodology that mean CDCR may be overbudgeted by millions of dollars in 2024‑25 and tens of millions of dollars in 2025‑26. Accordingly, we recommend directing the administration to address these flaws at the May Revision.

San Quentin Rehabilitation Center (SQRC) and the California Model. The Governor proposes a total of $7.8 million General Fund in 2025‑26 (growing to $13 million by 2027‑28) for SQRC to activate a new learning center and make various other programmatic enhancements. The proposal is part of a systemwide effort to develop the “California Model,” which is intended to reduce recidivism and improve the health and wellness of people who live and work in prison. While it is reasonable to activate the new learning center, we recommend rejecting most of the remainder of the request unless the administration is able to provide a clear plan for SQRC. In addition, we recommend requiring the administration to produce a report that answers key questions about the California Model.

Inpatient Mental Health Beds. The Governor proposes $3 million General Fund in 2025‑26 (growing to $4.4 million in 2026‑27 and ongoing) to activate a newly constructed licensed 50‑bed mental health crisis facility. With the addition of this capacity, the budget reflects operation of 686 inpatient beds in excess of the amount projected to be necessary. We recommend approving the activation to address regional bed needs, but directing CDCR to seek approval from the Coleman federal court to align statewide inpatient bed capacity with updated population projections and to account for transportation savings. These changes could save more than $100 million annually if all the excess beds are deactivated.

Parole Community Rehabilitation Programs. The Governor proposes $44.9 million General Fund in 2025‑26 (generally increasing annually thereafter) for various parole rehabilitation programs. This would support: (1) a roughly 30 percent one‑time cost‑of‑living increase for specific programs; (2) an ongoing 2 percent annual cost‑of‑living increase for those same programs; and (3) a two‑year extension of a housing program. While providing cost‑of‑living increases is reasonable, we think the Legislature could make additional changes that generate state savings from leveraging federal funds through Medi‑Cal. Accordingly, we recommend approving the proposed funding on a limited‑term basis and requiring CDCR to take steps to increase utilization of Medi‑Cal for some of these programs, which could improve them while reducing state costs. Additionally, we recommend evaluating all of these programs to determine whether they merit continued support or need to be restructured to be effective.

Roles and Responsibilities. CDCR is responsible for the incarceration of certain adults convicted of felonies, including the provision of rehabilitation programs, vocational training, education, and health care services. As of January 29, 2025, CDCR was responsible for incarcerating about 91,000 people. Most of these people are housed in the state’s 31 prisons and 34 conservation camps. The department also supervises and treats about 34,700 adults on parole and is responsible for the apprehension of those who commit parole violations. In addition, the department operates the Pine Grove Youth Conservation Camp to provide wildland firefighting skills to justice‑involved youth from counties that have entered into contracts with CDCR.

Operational Spending Proposed for 2025‑26. The Governor’s January budget proposes a total of about $13.9 billion to operate CDCR in 2025‑26, mostly from the General Fund. Figure 1 shows the total operating expenditures estimated in the Governor’s budget for the prior and current years and proposed for the budget year. As the figure indicates, the proposed spending level reflects a decrease of $149 million (1 percent) from the revised 2024‑25 level. This decrease primarily reflects expiration of previously authorized limited‑term spending. These decreases are partially offset by various proposed augmentations, such as funding to address increased costs resulting from inflation and population caseload adjustments. The proposed $149 million decrease does not reflect anticipated reductions associated with Control Sections 4.05 and 4.12 of the 2024‑25 Budget Act or increases in employee compensation costs in 2025‑26 because they are accounted for elsewhere in the budget. For more information about the reductions associated with Control Sections 4.05 and 4.12, please see our publication, The 2025‑26 Budget: State Departments’ Operational Efficiencies (Control Sections 4.05 and 4.12). The proposed budget would provide CDCR with a total of about 60,000 positions in 2025‑26, a decrease of about 475 (less than 1 percent) from the revised 2024‑25 level.

Figure 1 Total Expenditures for Operation of CDCR (Dollars in Millions) 2023‑24

Actual 2024‑25

Estimated 2025‑26

Proposeda Change From 2024‑25 Amount Percent Adult Institutions $12,809 $12,450 $12,236 ‑$214 ‑2% Adult Parole 702 694 728 34 5 Administration 914 787 818 31 4 Board of Parole Hearings 75 73 74 1 1 Totals $14,499 $14,005 $13,856 ‑$149 ‑1%

Capital Outlay Spending Proposed for 2025‑26. The Governor’s budget proposes total expenditures of $14.1 million General Fund for capital outlay projects in 2025‑26. This amount includes (1) $11.5 million to construct new groundwater wells to supply Ironwood State Prison in Blythe, (2) $1.2 million for the preliminary plans phase of a project to construct new ground water wells to supply Central California Women’s Facility and Valley State Prison in Chowchilla, and (3) $982,000 for the working drawing phase of a project to construct a potable water treatment system at the California Health Care Facility in Stockton.

Adjustments Proposed Biannually Based on Projected Population Changes and Other Factors. As part of the Governor’s January budget proposal each year, the administration requests adjustments to CDCR’s budget based on projected changes in the prison and parole populations in the current and budget years. The adjustments are made both on the overall population and various subpopulations (such as people housed in reentry facilities and sex offenders on parole). In addition, some adjustments include factors other than population trends, such as inflation adjustments. The administration then modifies both types of adjustments based on updated information each spring as part of the May Revision.

Prison Population Projected to Increase, Parole Population Projected to Decrease Slightly in 2025‑26. As shown in Figure 2, the average daily prison population is projected to be 93,300 in 2025‑26, an increase of about 1,600 people (2 percent) from the estimated current‑year level. The average daily parole population is projected to be 34,700 in 2025‑26, a slight decrease of 270 people (less than 1 percent) from the estimated current‑year level. The projected increase in the prison population is primarily due to the estimated impact of Proposition 36, which increased punishment for certain drug and theft crimes and created a new court process called a “treatment‑mandated felony” for certain people who possess illegal drugs. Specifically, the administration estimates that Proposition 36 will cause the average daily prison population to be about 570 higher (or 1 percent) than otherwise in 2024‑25 and 3,300 higher (or 4 percent) in 2025‑26. The administration estimates that Proposition 36 will have no impact on the average daily parole population in 2024‑25 but will cause it to be about 360 higher (or 1 percent) than it otherwise would be in 2025‑26.

Net Increase in Current‑Year Funding Adjustments. The Governor’s budget reflects adjustments to 2024‑25 spending, largely from the General Fund, that result in a net increase of $51 million. The current‑year net increase in costs is primarily due to both a higher total prison population and an increase in the portion of the population with high health care needs relative to what was assumed in the 2024‑25 Budget Act. This increase in costs is partially offset by various factors, including lower‑than‑expected costs of providing naloxone (a medication that can prevent overdose deaths) to people when they are released from prison and free phone calls to people in prison.

Net Increase in Budget‑Year Funding Adjustments. The budget proposes a net increase of $81 million in adjustments in 2025‑26. Similar to the current‑year, this net increase is primarily due to both a higher total prison population and an increase in the portion of the population with high health care needs relative to what was assumed in the 2024‑25 Budget Act. This increase in costs is partially offset by various factors, such as a projected decrease in costs related to the decline in the parole population.

Impact of Proposition 36 on Prison Population Is Likely Overestimated for Current and Budget Years. The department did not provide detailed backup showing its methodology to estimate the impact of Proposition 36 on the prison population. However, based on discussions with the department, it is our understanding that CDCR used the number of people that were admitted to prison for drug possession and certain lower‑level theft crimes in 2013‑14, the year before Proposition 47 (2014) reduced prison admissions for these crimes by converting them to misdemeanors. The department then assumed that the same number of people would again be admitted to state prison under Proposition 36 and would remain in state prison for 11 months on average. We find that this estimation methodology is problematic for the following reasons:

Does Not Account for Key Features of Treatment‑Mandated Felony. CDCR’s estimate assumes that the same number of people who were committed to prison for drug possession prior to Proposition 47 would again be committed to prison under Proposition 36. However, this is not plausible for two primary reasons. First, Proposition 36 only allows people who possess certain drugs to be charged with a treatment‑mandated felony if they have at least two past drug convictions, whereas, people who possessed drugs prior to Proposition 47 could be charged with a felony even without any prior convictions. Second, it requires that people are generally given the option of treatment in lieu of incarceration in county jail or state prison. Accordingly, the number of people that reach prison under Proposition 36 for drug possession is likely to be substantially smaller than the number of people that were sentenced to prison for drug possession prior to the passage of Proposition 47.

CDCR’s estimate assumes that the same number of people who were committed to prison for drug possession prior to Proposition 47 would again be committed to prison under Proposition 36. However, this is not plausible for two primary reasons. First, Proposition 36 only allows people who possess certain drugs to be charged with a treatment‑mandated felony if they have at least two past drug convictions, whereas, people who possessed drugs prior to Proposition 47 could be charged with a felony even without any prior convictions. Second, it requires that people are generally given the option of treatment in lieu of incarceration in county jail or state prison. Accordingly, the number of people that reach prison under Proposition 36 for drug possession is likely to be substantially smaller than the number of people that were sentenced to prison for drug possession prior to the passage of Proposition 47. Includes Crimes That Were Not Affected by Proposition 36. The methodology counts 2013‑14 prison admissions for people who were convicted of receiving stolen property. However, this crime was generally not affected by Proposition 36. Similarly, the estimate appears to include all admissions for the lower‑level theft crimes affected by Proposition 47. However, Proposition 36 only affects a subset of those cases, such as by allowing multiple acts of misdemeanor theft to be prosecuted as a felony if the combined dollar amount exceeds $950.

The methodology counts 2013‑14 prison admissions for people who were convicted of receiving stolen property. However, this crime was generally not affected by Proposition 36. Similarly, the estimate appears to include all admissions for the lower‑level theft crimes affected by Proposition 47. However, Proposition 36 only affects a subset of those cases, such as by allowing multiple acts of misdemeanor theft to be prosecuted as a felony if the combined dollar amount exceeds $950. Excludes Crimes That Were Affected by Proposition 36. The methodology does not include several crimes that were affected by Proposition 36. These include cases in which people receive time added to their sentence for selling high volumes of illegal drugs, being armed with a firearm during the commission of a drug felony, or selling drugs to a person who suffers significant physical injury as a result of using the drug.

The first two flaws discussed above cause the department’s methodology to overestimate the impact of Proposition 36. The third flaw causes the methodology to underestimate the impact. On net, we find that the methodology likely overestimates the impact of Proposition 36 in the current and budget years. This is because the third flaw largely involves crimes that drive a relatively smaller number of prison admissions per year but have longer lengths of stay in prison. Accordingly, the effect of the third flaw—which leads to underestimation—is likely relatively negligible for near‑term projections. Our estimates suggest that the average daily prison population impact of Proposition 36 could be in the low hundreds in 2024‑25 and grow to around 1,000 or so in 2025‑26—less than half of the magnitude of the administration’s estimates. This would cause CDCR to be overbudgeted in the millions of dollars in 2024‑25 and tens of millions of dollars in 2025‑26. However, any estimate at this early point in the implementation of Proposition 36 is subject to significant uncertainty.

Administration’s Assumption That Proposition 36 Will Impact the Parole Population in the Budget Year Is Not Plausible. People whose current offense is classified as serious or violent, as well as certain others, such as high‑risk sex offenders, are placed on state parole supervision after they are released from prison. All other people released are placed under the supervision of a county probation officer. Only two components of Proposition 36 relate to serious or violent crimes, meaning only these provisions could impact the parole population. First, Proposition 36 specified that selling drugs to a person who suffers a significant physical injury as a result of using the drug is a serious and violent crime. Second, the measure requires courts to warn people convicted of selling certain drugs that they could be charged with murder if they sell or provide illegal drugs that kill someone. This could make it more likely for them to be convicted of murder—also a serious and violent crime—in the future if they later sell drugs to someone who dies. Both of these crimes would carry relatively long prison sentences. Accordingly, it is not plausible that someone could commit one of these crimes, serve a sentence, and be released to parole before the end of 2025‑26. This means that the proposed 2025‑26 budget includes roughly a few million dollars in excess funding for parole.

Direct CDCR to Address Key Flaws in Its Proposition 36 Population Impact Estimates at the May Revision. We recommend that the Legislature direct the department in spring budget hearings to address the key flaws in its Proposition 36 population estimates and adjust its population‑related funding requests at the May Revision accordingly. We recognize that any estimates will be subject to significant uncertainty due to the limited amount of actual data since the enactment of Proposition 36. However, the key flaws we identify above are conceptual problems that can be improved through reasonable assumptions in areas where actual data are lacking. We will continue to monitor CDCR’s populations and the other factors affecting the proposed adjustments and make recommendations based on the updated information available at the May Revision, including the administration’s revised population projections.

Broad Framework for California Model Articulated by the Secretary and Receiver. On April 4, 2023 the Secretary of CDCR and the federal Receiver who oversees prison medical care issued a joint memorandum expressing their concern that prison environments can be unfavorable to the health and well‑being of the people who live and work in them and operate at cross purposes to rehabilitative efforts. To address this concern, they announced the department is implementing the California Model, which aims to make “system changes that create an environment rich in rehabilitation, a safer and more professionally satisfying workplace for all staff, and improve outcomes and opportunities for success through robust re‑entry efforts.” More specifically, the memorandum cited the following goals: (1) improving the health and well‑being of people who live and work in California prisons, with a focus on reducing trauma and toxic stress; (2) reducing recidivism; and (3) reducing incidents of use of force, staff assaults, overdoses, self‑harm, homicides, suicides, grievances, self‑isolation, and admissions to Mental Health Crisis Beds. In addition, the memorandum outlined four pillars intended to guide development of specific policy and practice changes:

Dynamic Security. Dynamic security is an approach to security that promotes positive relationships between staff and incarcerated people through purposeful activities and professional, positive, and respectful communication.

Dynamic security is an approach to security that promotes positive relationships between staff and incarcerated people through purposeful activities and professional, positive, and respectful communication. Normalization. Normalization involves bringing life in prison as close as possible to life outside of prison to make it easier for people to adjust to life in the community upon release. Normalization can involve changes to physical features (such as adding furniture that more closely mirrors furniture used outside prison) or changes to experiences, routines, or interactions (such as celebrating cultural events).

Normalization involves bringing life in prison as close as possible to life outside of prison to make it easier for people to adjust to life in the community upon release. Normalization can involve changes to physical features (such as adding furniture that more closely mirrors furniture used outside prison) or changes to experiences, routines, or interactions (such as celebrating cultural events). Peer Support. Peer support involves training incarcerated people to use their lived experiences to provide recovery and rehabilitative support to their peers.

Peer support involves training incarcerated people to use their lived experiences to provide recovery and rehabilitative support to their peers. Trauma Informed Organization. Becoming a trauma informed organization involves changing the practices, policies, and culture of the department to recognize the impacts of trauma and ensure the physical and emotional safety of all staff and incarcerated people.

Planning and Implementation Team Responsible for Developing the California Model Statewide. A planning and implementation team within CDCR is responsible for overseeing identification and implementation of the specific activities that align with the above goals and pillars. This team includes decision‑level representatives from all areas of the department and reports to an executive steering committee co‑chaired by the Secretary and Receiver.

Several Activities Are Being Implemented at Various Prisons. Below, we provide an overview of some of the primary activities that the department reports implementing to date. We note that some of these activities build on work that had already been under way for several years. In addition, these activities have largely been done without requests for additional resources.

Resource Teams. Based on a model developed in Norwegian prisons, “resource teams” aim to reduce isolation and violence for the highest‑risk, highest‑need people in prisons. Officers on resource teams receive specialized training on the nature of mental illness and trauma, de‑escalation techniques, and strategies for motivating people to engage in rehabilitative programming and mental health care. These officers lead a team, including medical and mental health staff, to develop individualized plans to support out‑of‑cell time and engagement in positive activities while ensuring safety.

Based on a model developed in Norwegian prisons, “resource teams” aim to reduce isolation and violence for the highest‑risk, highest‑need people in prisons. Officers on resource teams receive specialized training on the nature of mental illness and trauma, de‑escalation techniques, and strategies for motivating people to engage in rehabilitative programming and mental health care. These officers lead a team, including medical and mental health staff, to develop individualized plans to support out‑of‑cell time and engagement in positive activities while ensuring safety. Peer Support Specialist Programs. CDCR has launched various certified peer support specialist training programs through which people can learn to work as peer support providers while in prison. For example, peer support specialists can help with alcohol and drug recovery, navigating health care systems, teaching people how to advocate for themselves, and promoting self‑care. Peer support specialists receive certification and work experience while in prison that can potentially help them gain employment in a similar field upon release.

CDCR has launched various certified peer support specialist training programs through which people can learn to work as peer support providers while in prison. For example, peer support specialists can help with alcohol and drug recovery, navigating health care systems, teaching people how to advocate for themselves, and promoting self‑care. Peer support specialists receive certification and work experience while in prison that can potentially help them gain employment in a similar field upon release. Honor Dorms. CDCR operates certain housing units as “honor dorms,” which provide privileges and greater access to education and other programming in exchange for positive behavior. For example, a program at Valley State Prison in Chowchilla clusters people under age 26 where they are provided with enhanced programming opportunities and older incarcerated people who serve as mentors through one of the peer support specialist programs discussed above.

CDCR operates certain housing units as “honor dorms,” which provide privileges and greater access to education and other programming in exchange for positive behavior. For example, a program at Valley State Prison in Chowchilla clusters people under age 26 where they are provided with enhanced programming opportunities and older incarcerated people who serve as mentors through one of the peer support specialist programs discussed above. Staff Training. CDCR has been rolling out staff training on California Model‑related topics, such as dynamic security and recognizing and responding to the impacts of trauma. In addition, the department reports that it is in the process of adapting its 13‑week Basic Correctional Officer Academy to reflect the California Model.

CDCR has been rolling out staff training on California Model‑related topics, such as dynamic security and recognizing and responding to the impacts of trauma. In addition, the department reports that it is in the process of adapting its 13‑week Basic Correctional Officer Academy to reflect the California Model. Normalization Efforts. CDCR reports various efforts to change physical spaces in prisons, such as by incorporating more comfortable, home‑like furniture and bedding as well as adding gardens and murals. In addition, prisons have been encouraged to look for opportunities to bring elements of normal life into prison—such as graduation ceremonies, music events, and barbeques—sometimes inviting loved ones of incarcerated people into the prison to participate.

Department Has Identified Certain Metrics to Measure California Model Impacts. The California Model planning and implementation team indicates that it is tracking data related to drug overdoses, self‑harm, misconduct, rehabilitative program participation, and post‑release connection services as a starting point for measuring the impacts of the California Model. The department is expecting to see reductions in violence, use of force, and allegations of staff misconduct.

Governor’s San Quentin Advisory Council Recommended Changes for San Quentin Rehabilitation Center (SQRC). In May 2023, Governor Newsom convened an advisory council to recommend changes at SQRC in line with the California Model framework as a pilot to potentially be scaled up. In January 2024, the advisory council released a report containing 44 recommendations. Many of these recommendations differ from, or go beyond, the activities being implemented under the oversight of the California Model project and implementation team. For example, the report recommended single‑celling the entire prison, which would involve reducing the population of the prison. It also recommended creating a new job role called a “community correctional officer” for select correctional officers at SQRC who apply to receive enhanced training in how to support rehabilitation.

2023‑24 Budget Act Authorized Construction of a New Learning Center at SQRC. The 2023‑24 Budget Act authorized $360.6 million (subsequently reduced to $239 million as recommended by the advisory council) in lease revenue bond authority for the construction of a new learning center at SQRC, which is expected to be completed in early 2026. The center will contain 28 classrooms (nearly triple the existing classroom space at the prison) a library, a media center, staff offices, a large multipurpose gathering space, a café, and a store.

California Model Project and Implementation Team and Advisory Council Leadership Working to Identify Next Steps for SQRC. The California Model project and implementation team reports that it is currently working with leaders of the San Quentin advisory council to review each of the advisory council’s recommendations and identify those that have already been implemented and those that will be pursued in the future. This analysis is expected to be completed sometime this spring. In addition, the project and implementation team indicates that after identifying the recommendations that will be pursued, it plans to engage stakeholders at the prison—such as rehabilitative program providers—in workgroups for further planning activities.

The Governor proposes a total of $7.8 million General Fund and 33.6 positions in 2025‑26 (increasing annually to $13 million and 74.4 positions by 2027‑28) to (1) activate the new learning center, (2) contract with the American Job Center of California (AJCC), and (3) make various programmatic enhancements. We discuss these elements of the proposal in more detail below.

Activate the New Learning Center ($6.2 Million Ongoing by 2027‑28). The proposal includes $3 million in 2025‑26 (growing to $6.2 million in by 2027‑28) to support the operation of the new learning center. At full implementation, this would include 24.8 custody positions, 8 plant operations positions, 5 information technology positions, 2 librarian positions, and 1 position to support community engagement (such as by processing security clearances for volunteers to enter the prison).

Contract With AJCC ($200,000 Ongoing). The proposal includes $200,000 ongoing to partner with AJCC, which provides one‑on‑one career counseling and job placement assistance for people nearing release from prison. The proposal assumes AJCC would assist approximately 1,200 people at SQRC annually.

Make Various Programmatic Enhancements ($6.6 Million Ongoing by 2027‑28). The proposal includes $4.6 million in 2025‑26 (growing to $6.6 million by 2027‑28) to make the following expansions to custody staffing and rehabilitative programming capacity:

Provide Additional Custody Staff for Existing Areas of the Prison. The proposal includes 21.6 custody positions, which would be assigned to housing units to engage with residents to build trust, rapport, and help them navigate rehabilitative opportunities at the prison.

The proposal includes 21.6 custody positions, which would be assigned to housing units to engage with residents to build trust, rapport, and help them navigate rehabilitative opportunities at the prison. Expand Basic and Secondary Education Capacity. The proposal includes eight teacher positions, which would allow CDCR to expand basic and secondary education capacity by 432 students, roughly doubling capacity.

The proposal includes eight teacher positions, which would allow CDCR to expand basic and secondary education capacity by 432 students, roughly doubling capacity. Establish Bachelor’s Degree Program. The proposal includes funding and two positions to contract with a college to establish a bachelor’s degree program at SQRC to serve 140 students at full implementation. This would be in addition to two existing associate degree programs currently offered at SQRC. CDCR currently has bachelor’s degree programs at 10 other prisons with a total of about 400 students.

The proposal includes funding and two positions to contract with a college to establish a bachelor’s degree program at SQRC to serve 140 students at full implementation. This would be in addition to two existing associate degree programs currently offered at SQRC. CDCR currently has bachelor’s degree programs at 10 other prisons with a total of about 400 students. Establish Electrical and Barbering/Manicurist Training Programs. The proposal includes two positions and funding for start‑up costs to establish two new career technical education (CTE) programs—serving a total of 54 new students—in the space that will be vacated by existing rehabilitative programs that are relocated to the new learning center. The administration indicates that it selected electrical and barbering/manicurist programs based on employment trend data. Current CTE programs at the prison are plumbing, painting, and machine shop and can serve a total of 81 students.

Resources to Activate New Building Appear Reasonable. We find that it is reasonable to provide the custody and other support staff that would enable SQRC to activate the new learning center after construction is completed. Doing so would allow rehabilitation programs that already exist at the prison to move into the new building designed for them and for people to begin accessing the library and other common areas in the building.

AJCC Contract Appears Reasonable. We find that it is reasonable to contract with AJCC to provide job counseling and placement services at SQRC given that such services could help people find employment after release and the cost of the contract is relatively small.

Administration Has Not Developed a Clear Plan for SQRC. As discussed above, the California Model project and implementation team—and the administration more broadly—is still in the process of reviewing the San Quentin advisory council’s recommendations to determine which ones it will pursue. In addition, once it determines which to pursue, it will need to identify a clear strategy and action plan for achieving those recommendations, many of which articulate a vision but do not specify the actual steps needed to achieve it. For example, the advisory council recommends creating a rehabilitation and reentry plan for every person that reflects their healthcare, education, job training, recreational, and other rehabilitative needs and goals. To effectively pursue this goal, CDCR would need to review its existing resources and processes for rehabilitation and reentry planning, determine how and why they are falling short of the advisory council’s vision, and identify the specific resources and/or process changes that are necessary to overcome those barriers. Moreover, while the project and implementation team indicates it intends to engage key stakeholders at the prison—such as rehabilitation program providers—it has not yet done so. In sum, at this time, the administration has not (1) determined which pieces of the advisory council’s vision it wants to pursue; (2) prepared a strategy and specific action plan to pursue that vision; or (3) vetted the plan with key stakeholders, many of whom will be critical to implementing it.

Premature to Approve Remainder of Request Until SQRC Planning Process Has Been Completed. Because the administration has not yet completed its planning process for SQRC, we find that it is premature to approve the remaining portions of the request. Below, we discuss these portions of the request and why certain critical pieces of planning are necessary before the Legislature can determine if they are worth pursuing relative to its other budget priorities.

Custody Staff Not Associated With the New Learning Center. The proposal includes 21.6 custody positions that would primarily be assigned to housing units to engage with the population. The department has provided high‑level descriptions of the job duties for these positions. However, it is unclear how these staff and their duties would fit into the administration’s overall plan for SQRC because one has not yet been developed. For example, a portion of these staff would be required to “collaborate with the California Model team to support rehabilitative programming, through feedback and observations made in the housing units.” However, the department has not provided any details on this California Model team, including who it consists of and what its role is. The lack of clarity on these positions is particularly notable given that they could represent a relatively high resource commitment if scaled up. Specifically, at a $3.6 million annual cost for SQRC alone, this additional staffing could cost around $100 million annually to implement statewide—particularly notable given the multiyear deficits facing the state.

The proposal includes 21.6 custody positions that would primarily be assigned to housing units to engage with the population. The department has provided high‑level descriptions of the job duties for these positions. However, it is unclear how these staff and their duties would fit into the administration’s overall plan for SQRC because one has not yet been developed. For example, a portion of these staff would be required to “collaborate with the California Model team to support rehabilitative programming, through feedback and observations made in the housing units.” However, the department has not provided any details on this California Model team, including who it consists of and what its role is. The lack of clarity on these positions is particularly notable given that they could represent a relatively high resource commitment if scaled up. Specifically, at a $3.6 million annual cost for SQRC alone, this additional staffing could cost around $100 million annually to implement notable given the multiyear deficits facing the state. Basic and Secondary Education Capacity Expansion. CDCR reports that it is in the process of developing criteria for who will be housed at SQRC with a focus on maximizing the number of people who will be able to take advantage of the enhanced rehabilitation opportunities at SQRC. Accordingly, the makeup of the population that will be housed at SQRC is not yet clear. This makes it unclear whether the proposed expansion of basic and secondary education capacity is needed. For example, if the makeup of the population shifts toward people who have a demonstrated history of participating in programs, they may be more likely to have completed basic or even secondary education by the time they reach SQRC. This is probable because people are generally required to meet certain basic education requirements before they can participate in some rehabilitation programs.

CDCR reports that it is in the process of developing criteria for who will be housed at SQRC with a focus on maximizing the number of people who will be able to take advantage of the enhanced rehabilitation opportunities at SQRC. Accordingly, the makeup of the population that will be housed at SQRC is not yet clear. This makes it unclear whether the proposed expansion of basic and secondary education capacity is needed. For example, if the makeup of the population shifts toward people who have a demonstrated history of participating in programs, they may be more likely to have completed basic or even secondary education by the time they reach SQRC. This is probable because people are generally required to meet certain basic education requirements before they can participate in some rehabilitation programs. New Bachelor’s Degree Program. The administration has not provided data showing a demand for additional bachelor’s degree program capacity systemwide. Accordingly, it is unclear whether adding a bachelor’s degree program at SQRC would simply siphon some of the roughly 400 bachelor’s degree students off of existing bachelor’s degree programs at other prisons or whether it would actually result in more bachelor’s degree attainment. In addition, Mount Tamalpais College—a private accredited college based at SQRC—currently offers an associate’s degree program and operates entirely through private philanthropy. It may be possible that Mount Tamalpais College could expand its associate’s degree capacity—or add a bachelor’s degree program if the demand indeed exists—at no cost to the state. However, because the administration has not yet engaged stakeholders in developing a specific plan, it is unclear if this option was considered. Moreover, SQRC has many other existing nonstate‑run rehabilitation programs. It is possible that after conducting its stakeholder engagement process, it will determine that some of those programs represent a higher priority for expansion than adding a new bachelor’s degree program.

The administration has not provided data showing a demand for additional bachelor’s degree program capacity systemwide. Accordingly, it is unclear whether adding a bachelor’s degree program at SQRC would simply siphon some of the roughly 400 bachelor’s degree students off of existing bachelor’s degree programs at other prisons or whether it would actually result in more bachelor’s degree attainment. In addition, Mount Tamalpais private accredited college based at offers an associate’s degree program and operates entirely through private philanthropy. It may be possible that Mount Tamalpais College could expand its associate’s degree add a bachelor’s degree program if the demand indeed no cost to the state. However, because the administration has not yet engaged stakeholders in developing a specific plan, it is unclear if this option was considered. Moreover, SQRC has many other existing nonstate‑run rehabilitation programs. It is possible that after conducting its stakeholder engagement process, it will determine that some of those programs represent a higher priority for expansion than adding a new bachelor’s degree program. New Electrical and Barbering/Manicurist Training Programs. Because the policies that will impact the makeup of the population at SQRC have not yet been finalized and the department has not yet engaged stakeholders in the planning process, it is unclear whether electrical and barbering/manicurist programs represent the highest priority for expansion at this time.

Key Questions Remain Unanswered for the California Model as a Whole. Even after the administration develops a specific plan for SQRC, certain key questions will remain about the California Model as a whole. Without answers to these questions, it is difficult for the Legislature to provide oversight over the development and implementation of the California Model and evaluate any future funding requests. We discuss these key questions below.

How Is Progression Through the Prison System Envisioned? Several of the activities being piloted under the California Model are targeted toward specific populations and environments within the prison system. For example, resource teams are typically focused on some of the most challenging populations in the highest‑security environments in the system. In addition, honor dorms—at least as they have been implemented so far—seem to be focused on specific subpopulations, such as people under the age of 26. However, the administration has not articulated how these various interventions fit together to motivate behavior change in a continuum through the prison system from admission to release. Without a clear theory of action, it is difficult to assess the overall logic of the activities being pursued under the California Model and to identify any potential gaps. For example, of the roughly 30,000 people released from prison annually, roughly half spend around a year or less in prison. A clear theory of action would articulate how the California Model would better serve this large group with short stays and what specific outcomes we might logically expect to see as a result.

Several of the activities being piloted under the California Model are targeted toward specific populations and environments within the prison system. For example, resource teams are typically focused on some of the most challenging populations in the highest‑security environments in the system. In addition, honor least as they have been implemented so to be focused on specific subpopulations, such as people under the age of 26. However, the administration has not articulated how these various interventions fit together to motivate behavior change in a continuum through the prison system from admission to release. Without a clear theory of action, it is difficult to assess the overall logic of the activities being pursued under the California Model and to identify any potential gaps. For example, of the roughly 30,000 people released from prison annually, roughly half spend around a year or less in prison. A clear theory of action would articulate how the California Model would better serve this large group with short stays and what specific outcomes we might logically expect to see as a result. What Is the Role of SQRC in the Envisioned Progression? The ongoing construction and current request for operational funding at SQRC are substantially more costly than California Model activities being implemented at other prisons. Moreover, the administration has indicated an intention to single‑cell SQRC, which would reduce the number of people that can otherwise be housed at the prison, thereby concentrating the richer resources at SQRC among an even smaller number of people. Given this resource intensity, the pilot project being developed at SQRC requires a higher level of scrutiny. In particular, the administration should be able to articulate how SQRC fits into its overall theory of action for the entire prison system and why it would logically contribute to the administration’s stated outcomes. For example, if the administration believes that access to single‑celling and richer programming will motivate people at other prisons to make more positive choices in the hopes of being placed at SQRC, then it should explain how it believes this incentive would function. For example, how would people at other prisons learn of the benefits of SQRC? What are the intermediate positive steps and institutional responses that would mark someone’s pathway to SQRC?

The ongoing construction and current request for operational funding at SQRC are substantially more costly than California Model activities being implemented at other prisons. Moreover, the administration has indicated an intention to single‑cell SQRC, which would reduce the number of people that can otherwise be housed at the prison, thereby concentrating the richer resources at SQRC among an even smaller number of people. Given this resource intensity, the pilot project being developed at SQRC requires a higher level of scrutiny. In particular, the administration should be able to articulate how SQRC fits into its overall theory of action for the entire prison system and why it would logically contribute to the administration’s stated outcomes. For example, if the administration believes that access to single‑celling and richer programming will motivate people at other prisons to make more positive choices in the hopes of being placed at SQRC, then it should explain how it believes this incentive would function. For example, how would people at other prisons learn of the benefits of SQRC? What are the intermediate positive steps and institutional responses that would mark someone’s pathway to SQRC? How Would the Administration’s Vision Be Implemented? After establishing a theory of action for how the California Model could logically lead to its stated goals, the administration should identify the key policy changes and additional budget capacity that it would need to implement this vision. For example, if the administration aims to offer single‑celling more broadly throughout the prison system, then it would need to articulate a specific plan to either expand prison capacity (which could be very costly) or reduce the prison population sufficiently to achieve its desired level of single‑celling. While it may be premature for the administration to know specific implementation details, it should be able to articulate the broad contours of a plan at this point. If it cannot do so, this raises concerns that the administration’s vision is not feasible to implement. Moreover, even if the Legislature agrees with the administration’s vision, it will want to ensure that it is comfortable with the steps and budgetary resources that would be required to achieve it. Given the multiyear deficits facing the state, it is particularly important that the Legislature understands the fiscal implications of the administration’s plans so that it can weigh California Model activities against its other budget priorities.

After establishing a theory of action for how the California Model could logically lead to its stated goals, the administration should identify the key policy changes and additional budget capacity that it would need to implement this vision. For example, if the administration aims to offer single‑celling more broadly throughout the prison system, then it would need to articulate a specific plan to either expand prison capacity (which could be very costly) or reduce the prison population sufficiently to achieve its desired level of single‑celling. While it may be premature for the administration to know specific implementation details, it should be able to articulate the broad contours of a plan at this point. If it cannot do so, this raises concerns that the administration’s vision is not feasible to implement. Moreover, even if the Legislature agrees with the administration’s vision, it will want to ensure that it is comfortable with the steps and budgetary resources that would be required to achieve it. Given the multiyear deficits facing the state, it is particularly important that the Legislature understands the fiscal implications of the administration’s plans so that it can weigh California Model activities against its other budget priorities. What Would Success Look Like? Based on its theory of action and high‑level implementation plan, the administration should be able to articulate how it would know if the model is working as expected. Specifically, the department should be able to articulate how the metrics it is tracking would logically be affected by the California Model and how it would know if trends in those metrics are indeed caused by the California Model as opposed to other factors. For example, one goal could be to reduce violence at SQRC. However, simply measuring the number of violent incidents at SQRC before and after the pilot is implemented would not be a clear indicator of success because the department is planning to change the makeup of the population of the prison, which could affect violence levels independently of the other changes being developed. In contrast, if the administration believes that SQRC will help motivate positive behavior change throughout the system, then perhaps the degree to which people report actively working to earn transfer to SQRC and the number that are successfully transferring there from higher‑level institutions could be an indicator of success.

Based on its theory of action and high‑level implementation plan, the administration should be able to articulate how it would know if the model is working as expected. Specifically, the department should be able to articulate how the metrics it is tracking would logically be affected by the California Model and how it would know if trends in those metrics are indeed caused by the California Model as opposed to other factors. For example, one goal could be to reduce violence at SQRC. However, simply measuring the number of violent incidents at SQRC before and after the pilot is implemented would not be a clear indicator of success because the department is planning to change the makeup of the population of the prison, which could affect violence levels independently of the other changes being developed. In contrast, if the administration believes that SQRC will help motivate positive behavior change throughout the system, then perhaps the degree to which people report actively working to earn transfer to SQRC and the number that are successfully transferring there from higher‑level institutions could be an indicator of success. How Will Success Be Measured and Evaluated? After it has a clear sense of what success would look like under its theory of action, the administration should develop a detailed plan for measuring and evaluating whether success is being achieved. Such a plan would include a description of the specific data points and benchmarks that will be used to measure progress. To the extent certain needed data are not currently collected, the plan would identify how that data will be collected, including the instruments or counting rules that will be used to gather it, the data systems that will be used to manage it, and the staff responsible for doing this. In addition, such a plan would identify who will evaluate data to assess if benchmarks are being met and report on the results. Given that the California Model touches on many areas of the department and has wide ranging goals, an evaluation plan may involve several components and entities. For example, it could make sense to contract with external researchers to survey staff and evaluate whether metrics of staff wellness are improving. In contrast, it could make sense for state entities that already play a role in oversight of CDCR—such as the Office of the Inspector General or the California State Auditor—to monitor implementation of or adherence to new policies.

Approve Resources to Activate New Learning Center and Contract With AJCC. We recommend that the Legislature approve the portions of the request to activate the new Learning Center and contract with AJCC. This would allow existing programs at the prison to begin utilizing the space and for people preparing to reenter the community to receive career counseling and job placement services. This would be a total of $3.2 million and 19.7 positions in 2025‑26, growing annually to $6.4 million and 40.8 positions by 2027‑28.

Reject Remaining Resources Unless Administration Is Able to Provide a Clear Plan for SQRC Justifying Them. In view of the above concerns, we recommend that the Legislature only approve the remainder of the request if the department is able to provide a complete action plan for SQRC that is consistent with legislative priorities and justifies the requested resources.

Require Administration to Report on Key Unanswered Questions. We recommend that the Legislature adopt budget bill language requiring the administration to submit a report by January 10, 2026 that answers the key questions outlined above. We note that the Legislature may want to explicitly direct the department to engage with stakeholders as it develops answers to these questions. To the extent that the administration cannot fully answer these questions by January 10, 2026, the report should outline the process for and time frame in which the questions will be answered.

Background

Overview of CDCR Mental Health. All people entering the prison system are screened for mental health needs. About one‑third of the prison population has a diagnosed mental health need. The mental health care provided at the prisons is subject to the oversight of a Special Master appointed as part of the Coleman v. Newsom federal court case, which ruled in 1995 that CDCR was not providing constitutionally adequate mental health care. Most people in prison with a mental health need can be treated in an outpatient setting, meaning they live in a prison housing unit and receive regular mental health treatment but do not require 24‑hour care. However, under certain circumstances, some people may require more intensive treatment provided in an inpatient bed. These inpatient beds provide intensive 24‑hour care with the goal of preparing the people to return to an outpatient program. Below, we discuss the various types of inpatient beds provided at CDCR.

CDCR Operates Mental Health Crisis Beds (MHCBs) to Address Shorter‑Term Acute Needs. If people are suffering from severe symptoms of a serious mental health need that cannot be managed by an outpatient program, they are generally sent to MHCBs, which provide short‑term housing and 24‑hour care. Due to their immediate need for treatment, people referred to MHCBs are supposed to be transferred to these beds within 24 hours. When an MHCB is unavailable at a specific prison, CDCR typically transports people to another prison with an available MHCB. Under CDCR regulations, people are not supposed to stay in MHCBs for more than ten days. The annual cost of operating each MHCB is around $400,000—including custody staff. Currently, there are 392 MHCBs at men’s prisons and 41 MHCBs at women’s prisons. Normally, MHCBs must be licensed by the California Department of Public Health to ensure compliance with minimum standards established for patient safety and quality of care. However, 53 of the MHCBs in CDCR are unlicensed and are legally allowed to operate only due to a waiver from the Coleman court. Most of the state’s unlicensed MHCBs are in a 34‑bed facility operated at the California Institute for Men (CIM) in Chino.

CDCR Uses Other Types of Inpatient Mental Health Beds for Longer‑Term Needs. If a patient’s condition is stabilized in an MHCB, the patient is generally sent back to a housing unit. However, if the patient’s condition requires longer‑term, 24‑hour care, the patient may be admitted to inpatient beds designed for such care. In prison, these beds are operated by CDCR. However, patients may also be placed in such beds in a state hospital operated by the Department of State Hospitals (DSH) through a referral process. There is a total of 1,632 of these beds—1,296 in prisons and 336 in state hospitals. These beds are divided into the following two types based on the nature of the care they provide:

Acute Psychiatric Programs (APPs). APPs provide shorter‑term, intensive treatment for people who show signs of a major mental illness or higher‑level symptoms of a chronic mental illness. Patients are supposed to be transferred to an APP within 72 hours of the referral, but no more than ten days after the referral and can generally stay up to 45 days. Currently, there are 489 APP beds, all of which are in state prisons. The annual cost of operating one of these beds is $300,000.

APPs provide shorter‑term, intensive treatment for people who show signs of a major mental illness or higher‑level symptoms of a chronic mental illness. Patients are supposed to be transferred to an APP within 72 hours of the referral, but no more than ten days after the referral and can generally stay up to 45 days. Currently, there are 489 APP beds, all of which are in state prisons. The annual cost of operating one of these beds is $300,000. Intermediate Care Facilities (ICFs). ICFs provide care beyond what is provided in CDCR outpatient programs, but are available for longer time periods than MHCBs or APPs. People with lower security concerns are placed in low‑custody ICFs, which are in dorms, while those with higher security concerns are placed in high‑custody ICFs, which are in cells. There are 722 ICF beds in state prisons, 658 of which are high‑custody ICF beds. In addition, there are 306 low‑custody ICF beds in state hospitals which CDCR can refer patients to. Each ICF bed in a state prison costs around $246,000 annually to operate, while those in DSH cost around $393,000 annually.

The department also maintains 85 beds for women and people sentenced to death in state prisons that can be operated as either ICF or APP beds. Additionally, there are 30 beds in state hospitals that CDCR can refer women to. Due to the specific groups these beds serve, these beds are costlier to operate—about $364,000 annually.

CDCR Determines How Many Beds to Operate Based on Projections and Court Requirements. The number of beds CDCR operates are a part of a court‑required bed plan. The department determined how many beds to operate based on projections of the mental health population completed by a private contractor using a methodology approved by the federal court. These projections are updated biannually and used to develop a bed need study that compares the department’s mental health bed capacity with its current and projected mental health populations. The court requires CDCR to operate at least 10 percent more beds than the projections imply would be needed to act as a “buffer” against unexpected surges in bed need. (We note that the bed need study counts the 336 inpatient beds in state hospitals towards the prison inpatient capacity.) CDCR cannot modify the number of beds without notifying the Special Master and receiving approval from the Coleman court.

CDCR Is Constructing a Mental Health Crisis Facility at CIM to Reduce Unlicensed Beds and Transfer Time. Since 2017, the state has approved a total of $141.1 million ($7.5 million General Fund and $133.6 million lease revenue bond authority) to construct a 50‑bed mental health crisis facility at CIM. CDCR sought the project in order to (1) replace 34 unlicensed MHCBs at CIM with licensed beds and (2) reduce the amount of time it takes to transfer people in Southern California prisons to MHCBs by adding 16 MHCBs in the region. CDCR reports that, currently, a lack of MHCBs in Southern California forces it to transfer some people in Southern California prisons to Central and Northern California prisons where more MHCBs are available. The project at CIM is expected to be completed in October of 2025.

CDCR Is Being Fined for Failing to Fill Mental Health Positions. As part of the ongoing Coleman court case, CDCR has been incurring fines monthly since April 2023 for failing to reduce vacancy rates for five mental health classifications, which include: psychiatrists; psychologists; clinical social workers; recreational therapists; and medical assistants. Many of these positions are used to operate inpatient mental health beds. The Coleman court requires that each of the five classifications have a vacancy rate below 10 percent otherwise the state is fined for each classification out of compliance. The state has paid over $150 million in fines so far, which are deposited in a special account to support staff recruitment and retention. At the time of publication, CDCR is still accruing fines but the court has paused on collecting and spending the fines due to ongoing litigation.

Activation of Newly Constructed Mental Health Crisis Facility. The Governor’s budget proposes $3 million General Fund and 13.4 positions in 2025‑26, growing to $4.4 million and 20.4 positions in 2026‑27 and ongoing, to staff the 50‑bed mental health crisis facility at CIM. Additionally, the 34 unlicensed beds currently operated at CIM would be deactivated and the $16.4 million General Fund and 86.2 positions currently supporting these beds would be shifted to staff the new facility. Accordingly, CDCR would have a total of $19.4 million and 99.6 positions to staff the facility in 2025‑26, growing to $20.8 million and 106.6 position in 2026‑27 and ongoing.

Assessment

Activation of Mental Health Crisis Facility Would Increase Amount of Statewide Excess Capacity. The underlying rationale for the newly constructed facility still remains, as it would allow the department to convert its unlicensed beds to licensed beds and it would help address capacity limitations in the Southern California region, thereby reducing the number of people needing to be transferred to other parts of the state. However, while the new facility helps address regional capacity challenges, the department has excess MHCB capacity when viewed at the statewide level. As shown in Figure 3, with the added capacity provided under this proposal, the department will continue to have more than enough existing capacity to meet all of its current and projected needs for licensed MHCBs. CDCR needs 341 MHCBs systemwide in 2025‑26, but it is proposing to operate 449 MHCBs—an excess of 109 MHCBs (84 at men’s prisons and 25 at women’s prisons). Furthermore, CDCR’s MHCB needs are projected to decline by 25 additional beds by June of 2029. Based on this projection, excess capacity would rise to 134 beds. This does not account for the increase in the prison population caused by Proposition 36, which could also increase the mental health population. However, we anticipate that even after adjusting for the effects of Proposition 36 there will still be excess capacity. For example, if Proposition 36 increases the number of MHCBs needed by 4 percent in 2025‑26 (the amount the administration expects the measure to increase the overall population by in that year) there would still be 95 excess beds in 2025‑26. (The bed need study, as well as the projections of the prison population and the effects of Proposition 36, will be updated at the May Revision. For more information, please see the “State Prison and Parole Population and Other Biannual Adjustments” section of this brief.)

MHCB Proposal Does Not Account for Reduced Costs Related to Transfers. As discussed above, the new MHCB facility would likely reduce transportation costs, as fewer people in Southern California would need to be transferred to beds in more northern parts of the state. However, the Governor’s proposal does not account for these potentially modest savings.

CDCR Also Continuing to Operate Excess APP and ICF Bed Capacity. As shown in Figure 4, CDCR is also operating excess capacity in other types of inpatient beds, including 205 APPs, 327 ICFs at both men’s prisons and state hospitals, 32 APP/ICF beds at women’s prisons, and 13 APP/ICF beds for the condemned population. Similar to MHCBs, adjusting the population for Proposition 36 would somewhat reduce the amount of excess capacity in these beds, but the department would likely still be operating significantly more inpatient beds than needed.

Figure 4 Department Has More Acute Psychiatric Program (APP) and

Intermediate Care Facilities (ICF) Beds Than Needed Proposed

Capacity 2025‑26 2029 Projected Bed

Need Excess

Capacity Projected Bed

Need Excess

Capacity ICFa 1,028 702 327 667 361 APP 489 285 205 271 218 Women’s prisonsb 75 43 32 42 33 Condemned population 40 27 13 25 15 Totals 1,632 1,056 577 1,005 627

Reducing Excess Capacity Would Create Savings and Help With Court Compliance. If the department were to reduce MHCB, APP, and ICF bed capacity, we estimate that this could result in annual ongoing savings ranging from tens of millions of dollars to more than $100 million, depending on the number of actual beds that are deactivated. The savings primarily would result from the elimination of hundreds of mental health positions needed to staff these beds. The reductions in staffing would have the added effect of reducing the vacancy rate of mental health staff. This would help the state comply with the Coleman court’s order to reduce mental health vacancies, likely allowing the state to reduce the amount of fines that would be levied on the state. As such, there could be additional significant fiscal benefits from rightsizing inpatient mental health bed capacity based on the projected need. As discussed earlier, CDCR would need to notify the Special Master and receive approval from the Coleman court to make changes in bed need capacity.

Recommendation

Approve Activation. We recommend approving the proposed activation of the CIM mental health crisis facility. Doing so would allow the department to convert unlicensed MHCBs to licensed beds. This could improve the quality of care provided by the state. Furthermore, it could reduce the time it takes to transfer people from the Southern California region to MHCBs.

Direct CDCR to Seek Approval to Align Inpatient Bed Capacity With Updated Bed Need Study. Given that CDCR’s estimates indicate there would be 686 excess inpatient beds—including MHCBs and other inpatient beds operated by CDCR and DSH—in 2025‑26, we recommend that the Legislature direct CDCR to seek approval from the Coleman court to reduce excess capacity as part of the May Revision. Specifically, we recommend directing CDCR to seek authorization from the Coleman court to include a proposal in the May Revision to reduce inpatient bed capacity based on a revised bed need study. To ensure excess capacity does not accumulate in future years, we further recommend that the Legislature add budget bill language requiring CDCR to regularly seek adjustments to its inpatient mental health bed capacity based on the bed need study. We anticipate these changes would reduce CDCR costs—both from operating the excess capacity and avoided fines—by potentially more than $100 million annually, if all the excess beds are approved for deactivation by the Coleman court. This would not only free up General Fund resources that could be used to address the multiyear deficits facing the state, but could help CDCR comply with the Coleman court order to reduce mental health vacancies. To the extent, the Coleman court denies a plan to deactivate excess bed capacity, it would benefit the Legislature to understand what criteria, threshold, or buffer the state would have to achieve under the Coleman court in order to deactivate some, if not all, of the excess capacity. The Legislature could consider having CDCR work with Special Master to produce such a report at that time.

Direct CDCR to Account for Transportation Savings. Because the MHCB proposal did not account for potential savings from transportation costs, we recommend that the Legislature also direct CDCR to include a proposal at the May Revision that accounts for such savings.

CDCR Provides Intensive Short‑Term Monitoring to Prevent Suicides. When a person in prison is suspected of being a danger to themselves, CDCR policy requires that the person be provided with short‑term intensive monitoring. This monitoring—referred to as suicide watch—is typically conducted by health care staff on a one‑on‑one basis. Staff take shifts watching the person up to 24‑hours a day. The department has various positions that can perform this one‑on‑one monitoring, but generally starts with certified nursing assistants (CNAs). However, when a CNA is not available, the department assigns other staff. These other assigned staff, such as psychiatric technicians and registered nurses, are compensated at a higher rate, making suicide watch costlier when these classifications are used. Specifically, data provided by CDCR indicate CNAs cost about $42 per hour while the department spends an average of about $69 per hour when using other positions for this work.

CDCR Budget Includes Funding for Suicide Watch. Prior to the 2017‑18 budget, CDCR managed suicide watch workload within its existing resources by often redirecting correctional and healthcare staff and using overtime. However, as suicide watch hours increased, it became more challenging for the department to redirect resources and staff for suicide watch without negatively affecting other workload. In the 2017‑18 budget, CDCR received $3 million ongoing General Fund and 185 CNA positions for suicide watch workload. While the full cost of these position was around $12 million, at the time, CDCR indicated it could use preexisting funding in its budget for overtime and other costs to absorb the remaining $9 million cost of the suicide watch workload. Separately, the biannual population adjustment process provides additional funding for CNA positions based on the number of health care beds CDCR operates. Some of these CNAs can also be used for suicide watch, but the process does not make any specific adjustments to suicide watch staffing based on changes in population. The 2024‑25 budget provided CDCR with $3.8 million General Fund and a total of 197.5 CNA positions for suicide watch. If combined with the $9 million in costs CDCR reports it has typically absorbed for suicide watch workload, total resources for suicide watch in 2024‑25 are about $12.8 million.

CDCR Has Experienced Notable CNA Vacancy Rates for Suicide Watch, but Has Had Success Hiring CNAs More Recently. Vacancy data reported by the department show that nearly one‑third of CNA positions for suicide watch—about 60 positions—are currently vacant. Although there have been fluctuations in vacancy rates in prior years, Figure 5 shows that the CNA vacancy rate has remained between 20 percent and 32 percent. This is relatively high compared to the statewide vacancy rate for all employees, which was 18 percent in December 2024. These trends suggest that the department has struggled to fill these positions in recent years. However, it is possible that this could change going forward. For example, the department indicated that, as of January 2025, it was in the process of hiring 79 CNAs from one recruitment event.

Department Consistently Overspends Budget. CDCR reports that, due to the frequent need to use positions other than CNAs for this work, they have routinely overspent their budget. As shown in Figure 6, CDCR has spent about $31 million on suicide watch annually and projects to spend about the same in the current year, resulting in overspending by $18.4 million. When overspending occurs, CDCR has to redirect funding in its budget—such as savings from unfilled positions elsewhere in the department—to cover these costs. However, CDCR reports that it can no longer redirect this level of resources.

Figure 6 CDCR Consistently Spends More Than Budgeted

on Suicide Watch (In Millions) 2020‑21 2021‑22 2022‑23 2023‑24 2024‑25a Authorized expendituresb $12.9 $12.8 $12.8 $12.8 $12.8 Actual expenditures 30.3 31.6 29.2 33.7 31.2 Difference ‑$17.4 ‑$18.8 ‑$16.4 ‑$20.9 ‑$18.4

CDCR Exploring Alternatives to Supplement Suicide Watch Hours. CDCR has indicated that it plans to work with the Coleman court and the California Department of Human Resources to identify a different classification for suicide watch that can supplement CNA positions. (As discussed in greater detail in the “Inpatient Mental Health Beds” section of this brief, the Coleman court is a federal court that oversees the provision of mental health care in CDCR pursuant to a lawsuit known as Coleman v. Newsom.) According to the department, the identified classification could cost more than CNAs but would cost less than the other positions CDCR uses for suicide watch, reducing the number of hours that the higher‑cost positions currently provide. CDCR also anticipates that this additional classification would be easier to fill than CNAs.

Suicide Watch Augmentation. The Governor’s budget includes a $13.6 million General Fund augmentation in 2025‑26 and ongoing to fund costs associated with suicide watch workload. This would bring total budgeted resources for suicide watch to $17.4 million annually. The requested amount reflects that CDCR reports it can continue to absorb $9 million on an ongoing basis as well as an additional $5 million of suicide watch workload—for a total of $14 million annually. As such, the total resources for suicide watch would be $31 million on an ongoing basis. Notably, CDCR is not requesting additional positions. Instead, the requested funds would largely pay for using more costly positions when CNAs are unavailable.

Proposed Funding May Be More Than Needed… Under the Governor’s proposal, CDCR would receive an ongoing amount of funding that reflects the costs of redirecting more expensive positions to suicide watch. However, there are a couple of reasons to think the full $13.6 million requested by CDCR might not be necessary to pay the future costs of suicide watch. First, CDCR reports hiring 79 CNAs in a single hiring event in January 2025 as mentioned above. This suggests CDCR is experiencing greater success in reducing the CNA vacancy rate, which would reduce the cost of suicide watch. For example, if CDCR successfully fills all of its vacant CNA position, these lower‑cost positions could reduce the annual cost of suicide watch by about $2.8 million. Second—even if CDCR cannot maintain its success in recruiting CNAs—costs could be lower if the department is successful in its efforts to identify a classification that is easier to fill and has a lower cost than some of the positions that are currently used.

…And Would Not Adjust to Changes in Suicide Watch Workload. Currently—and under the Governor’s proposal—CDCR receives more or less a set amount of funding for suicide watch irrespective of changes in the size of the population. However, it is possible that suicide watch hours could increase or decrease in the future with changes in the prison population. For example, data published by CDCR show that nearly two‑thirds of suicide decedents had a mental health designation in 2023, and nearly 90 percent in 2022. To the extent there are changes in the population at risk of suicide, it could drive changes in suicide watch workload. If the number of suicide watch hours needed declines, then the department would be overfunded for these services. On the other hand, if the number of suicide watch hours were to increase, CDCR would be underfunded and likely be forced to use higher‑cost positions rather than CNAs because of its limited position authority.

Approve One‑Time Funding. Because suicide watch is critical to patient safety and the department has struggled to fill these positions in recent years, we recommend the Legislature approve the proposal on a one‑time basis. However, the ongoing costs of suicide watch are still uncertain as there are reasons to think it might decline in the future—particularly if CDCR takes steps we recommend below to reduce costs. Limiting the funding to one‑time would give the Legislature a natural opportunity to reassess the ongoing level of funding needed for suicide watch as part of the 2026‑27 budget process, and allow the department time over the next year to implement the steps we recommend below.

Direct CDCR to Take Steps to Reduce Costs of Suicide Watch. In order to reduce the costs of suicide watch and more closely track changes in workload, we recommend the Legislature direct CDCR to take the following steps:

Continue Efforts to Fill CNA Vacancies. As noted above, if the department was fully staffed it could provide more suicide watch hours at a lower cost. As a result, we recommend the Legislature direct CDCR to continue to make efforts to fill the vacant positions. The recent success in hiring CNAs suggests the department may be successful in reducing the number of vacant CNA positions for suicide watch.

As noted above, if the department was fully staffed it could provide more suicide watch hours at a lower cost. As a result, we recommend the Legislature direct CDCR to continue to make efforts to fill the vacant positions. The recent success in hiring CNAs suggests the department may be successful in reducing the number of vacant CNA positions for suicide watch. Create Alternative Classification for Suicide Watch. We recommend that the Legislature direct CDCR to create an alternative position classification for suicide watch that can supplement the use of CNAs for this workload to the extent it cannot hire a sufficient number of CNAs to fully address this workload. CDCR should strive to identify a classification that is both (1) lower cost than the average the department has historically spent per hour on suicide watch by using other positions and (2) easier to recruit than CNAs.

We recommend that the Legislature direct CDCR to create an alternative position classification for suicide watch that can supplement the use of CNAs for this workload to the extent it cannot hire a sufficient number of CNAs to fully address this workload. CDCR should strive to identify a classification that is both (1) lower cost than the average the department has historically spent per hour on suicide watch by using other positions and (2) easier to recruit than CNAs. Direct CDCR to Develop a Population‑Driven Budgeting Methodology for Suicide Watch. We recommend the Legislature direct CDCR to develop a budgeting methodology for suicide watch that accounts for changes in the population that drive suicide watch hours. For example, CDCR could annually estimate its need for suicide watch based on the projected size of the overall population and/or portions of the population that are likely to contribute to suicide watch workload—such as people in prison with identified mental health needs. This would ensure the annual resources for suicide watch are more closely tied to the department’s needs—an especially important consideration given that the projected decline in the population will likely drive a decline in suicide watch workload.

To help the Legislature ensure that CDCR is making adequate progress on these steps, we recommend directing the department to report on (1) the strategies it is using to fill vacant CNA positions and data on the effectiveness of these strategies; (2) what classifications it is considering to use for suicide watch as an alternative to CNAs, the rationale for using such classifications, whether it continues to need an alternative to CNAs for suicide watch, and when it expects a new classification could be deployed; and (3) details on a population‑based budgeting methodology. This report should be provided to the Legislature no later than January 10, 2026. This would allow the Legislature to consider the report as it is determining the ongoing funding level for suicide watch as part of the 2026‑27 budget process.

Certain People Released From Prison Are Supervised by CDCR on Parole. When people are released from prison, they are generally supervised in the community for a period of time—usually between one to two years. While some of these people are supervised by county probation departments, people convicted of a serious or violent offense are generally supervised by state parole agents. Alongside supervision, the state provides people on parole with access to a variety of rehabilitation services in order to successfully reintegrate them into the community. As noted in the “State Prison and Parole Population and Other Biannual Adjustments” section of this brief, CDCR projects there to be an average daily population of about 34,700 people on parole in 2025‑26.

CDCR Uses Contracts to Provide Rehabilitation Services to People on Parole. CDCR funds a number of different rehabilitation programs for people on parole throughout the state. These services are generally provided by contractors. Programs are structured as either residential programs that provide housing—typically paired with other services—or as programs that participants attend for a period of time during the day. These programs can last for months. For example, many last for up to 180 days but can be extended for an additional 185 days. Within these programs, people can receive various services such as substance use disorder (SUD) treatment, case management, sex offender treatment, and employment assistance. The revised 2024‑25 budget includes $233.9 million total funds for these programs, including $191.1 million from the General Fund. Below, we provide details on some of the key programs offered to people on parole.

Specialized Treatment for Optimized Programming (STOP) Provides SUD Treatment and Housing. STOP is a CDCR‑funded program that provides a range of services to people on parole, but primarily focuses on various types of SUD treatment. These include residential and outpatient services but exclude Medication Assisted Treatment (MAT). (MAT combines SUD treatment services—such as cognitive behavioral therapy, a type of therapy which helps change negative patterns of behavior—with medications designed to reduce the likelihood of people relapsing while undergoing treatment.) CDCR currently has agreements with nonprofit and private contractors that administer STOP in six regions throughout the state. These regional STOP contractors (1) pay local STOP network providers to deliver services through subcontracts, (2) connect people with these providers, and (3) conduct oversight of the services provided. In 2024, the STOP network provided services to about 8,600 people on parole.

STOP is a CDCR‑funded program that provides a range of services to people on parole, but primarily focuses on various types of SUD treatment. These include residential and outpatient services but exclude Medication Assisted Treatment (MAT). (MAT combines SUD treatment as cognitive behavioral therapy, a type of therapy which helps change negative patterns of medications designed to reduce the likelihood of people relapsing while undergoing treatment.) CDCR currently has agreements with nonprofit and private contractors that administer STOP in six regions throughout the state. These regional STOP contractors (1) pay local STOP network providers to deliver services through subcontracts, (2) connect people with these providers, and (3) conduct oversight of the services provided. In 2024, the STOP network provided services to about 8,600 people on parole. Day Reporting Centers (DRCs) Connect People to Various Services. DRCs offer a “one‑stop shop” for people on parole to be connected to various nonresidential services, some of which are offered on site. The programs generally focus on addressing factors that might contribute to future criminal activity such as anger management, but also have a limited ability to connect people with transitional housing. There are 17 DRCs throughout California that served about 4,500 people in 2023‑24.

DRCs offer a “one‑stop shop” for people on parole to be connected to various nonresidential services, some of which are offered on site. The programs generally focus on addressing factors that might contribute to future criminal activity such as anger management, but also have a limited ability to connect people with transitional housing. There are 17 DRCs throughout California that served about 4,500 people in 2023‑24. Long‑Term Offender Reentry and Recovery (LTORR) Provides Housing and Services. LTORR programs are substance‑free, residential programs that provides housing, meals, and various services. The services generally focus on the needs of people that have served long prison sentences such as employment and computer‑supported literacy. There are 14 LTORR programs throughout California that served about 1,700 people in 2023‑24.

LTORR programs are substance‑free, residential programs that provides housing, meals, and various services. The services generally focus on the needs of people that have served long prison sentences such as employment and computer‑supported literacy. There are 14 LTORR programs throughout California that served about 1,700 people in 2023‑24. Returning Home Well (RHW) Program Provides Housing Services on a Limited‑Term Basis. The 2022‑23 budget included $10.6 million annually for three years for the RHW program to provide emergency transitional housing services to people on parole. To implement the program, STOP contracts were amended to include additional housing‑only services. The RHW program serves people for a maximum of 180 days or 6 months. In 2023‑24, the RHW program served a total of about 1,500 people. The department is required to submit a report by March 1, 2026 that presents metrics and outcomes associated with the program.

State Has Started Providing Cost‑of‑Living Increases for Some Providers. As discussed in our publication The 2023‑24 Budget: Considering Inflation’s Effects on State Programs, inflation can erode the quantity and quality of state services, such as service obtained through contracts. For example, CDCR has indicated that in recent years there has been a lack of providers willing to bid on expired CDCR contracts because contract rates did not have cost‑of‑living increases built into them, meaning they have not kept up with increased costs resulting from inflation. It is possible that, rather than providing service to the state, these providers are instead servicing others, such as people referred by counties and private individuals. CDCR reports this has made it difficult to continue to provide services. To address this, the 2024‑25 budget provided several parole rehabilitation programs whose contracts were set to expire with a $2.3 million General Fund increase in 2024‑25 and an ongoing 2 percent annual cost‑of‑living increase thereafter. This funding provided cost‑of‑living increases specifically to five DRCs and six LTORR programs.

Medi‑Cal SUD Treatment Programs Are Available to Treat People on Parole. Some people on parole—particularly those receiving MAT—receive SUD treatment services outside of CDCR’s contracts. Usually, these services are funded through Medi‑Cal, the state’s Medicaid program, which provides health care coverage for low‑income Californians and is overseen by the state Department of Health Care Services (DHCS). Medi‑Cal SUD treatment services are administered locally by county behavioral health departments. Under the Medi‑Cal billing structure, counties receive a fee‑for‑service reimbursement for behavioral health services based on an established fee schedule. Counties then negotiate payment terms and rates for the provision of services with providers. Federal reimbursements rates range from 50 percent to 90 percent depending on various factors such as income, services received, and whether the person has dependent children. Most people being released from prison qualify for Medi‑Cal and are therefore eligible for these services. CDCR screens people before release and, as of 2023‑24, submits Medi‑Cal applications for about 83 percent of people released, while the remainder did not have applications submitted for various reasons, such as having access to other insurance or refusing service. Between July 2023 and June 2024 (the most recent data available), Medi‑Cal applications were submitted for about 24,900 people who were released. Of these applicants, about 20,100 (81 percent) were approved, 35 (less than 1 percent) were denied, and the remaining 4,800 (16 percent) were pending at the time of release.

State Is Expanding Housing Services Offered Through Medi‑Cal. The California Advancing and Innovating Medi‑Cal (CalAIM) initiative is a large set of reforms in Medi‑Cal to expand access to new and existing services and streamline how services are arranged and paid. Under CalAIM, DHCS has been implementing two new Medi‑Cal benefits targeted at the subset of Medi‑Cal beneficiaries with the most complex care needs. These complex care needs include issues related to homelessness. Notably, several housing‑related services—such as housing navigation services and term‑limited payments for housing (such as for security deposits or first month’s rent)—are included in CalAIM as optional benefits and have been implemented by at least one Medi‑Cal managed care plan in all 58 counties. (Over 90 percent of Medi‑Cal beneficiaries are enrolled in Medi‑Cal managed care plans, which are responsible for arranging and paying for most Medi‑Cal services on behalf of their members.) Recently, DHCS received federal approval to provide transitional rent to eligible Medi‑Cal members and draw down federal funding. The transitional rent service covers up to six months of rent for certain people including those transitioning into the community from correctional facilities or transitioning from homelessness. The benefit will be mandatory to provide for certain beneficiaries beginning January 2026, and mandatory for all eligible people beginning January 2027—though these services can be offered now. Similar to Medi‑Cal SUD treatment, between 50 percent and 90 percent of the cost of these services will be covered by federal reimbursements.

Build in Inflation Adjustments to Parole Rehabilitation Program Funding. The Governor’s budget proposes $32 million General Fund in 2025‑26, $34.6 million in 2026‑27, $37.3 million in 2027‑28, $40.1 million in 2028‑29, $42.9 million in 2029‑30, and ongoing increases annually thereafter to reduce the impact of inflation on parole rehabilitation programs. This consists of (1) a roughly 30 percent one‑time catch‑up adjustment and (2) an ongoing 2 percent annual cost‑of‑living increase for two DRCs, six LTORR programs, and all STOP contracts. The one‑time catch‑up adjustment is calculated based on when the service was first provided in each county and the cost‑of‑living increases that have occurred in that area since. The administration is proposing this catch‑up adjustment because the department has not increased funding in previous years for these contracts and is concerned that it will not receive any bidders on these contracts as previously happened at two locations with expired contracts. Of the total:

$3.7 million in 2025‑26 (increasing to $5.1 million by 2029‑30 and growing annually thereafter) would be allocated to the DRCs and LTORR programs.

$28.3 million in 2025‑26 (increasing to $37.8 million by 2029‑30 and growing annually thereafter) would be allocated to STOP contracts.

Extend Funding for RHW Program for Additional Two Years and Add Services. The Governor’s budget also includes $12.9 million General Fund in 2025‑26 and 2026‑27 to extend RHW for an additional two years and add services not currently provided, such as SUD treatment assessment and programming. This consists of $10.6 million in each year to maintain the existing housing program and $2.3 million to support additional nonhousing services for the RHW population, such as services related to SUD treatment and anger management. The department indicates that the additional services are necessary because people in the RHW program have an assessed need for these services. The STOP network, which already provides the housing services, would provide the additional services as well. Absent the proposal, funding for the program would expire June 30, 2024.

Cost‑of‑living increases for parole rehabilitation programs appear reasonable because it could mitigate the erosion of the quantity and quality of services that can be caused by inflation. Because costs have increased due to inflation in recent years, it is plausible that providers are less willing to extend their existing contracts. In addition, other providers that don’t already offer these services (1) may be less willing to do so, (2) would do so by providing lower‑quality services, or (3) would provide services to fewer people. This trend would make it difficult for CDCR to find quality providers and ensure people on parole receive rehabilitation programming. For example, CDCR reports it was not successful in obtaining bids for DRC and LTORR contracts that had been set to expire at the end of 2023‑24, which were advertised at the same or similar rates to the prior contracts for these services. The department reported that the 2024‑25 funding increases for those contracts appear to have allowed it to successfully obtain contractors for some of these services, though the contracting process is still ongoing.

Ensuring that programs are cost‑effective helps ensure that the state is allocating its limited resources for rehabilitation programs in a manner that has the maximum effect on people successfully completing their parole terms and not committing additional crime. Accordingly, to the extent that the state is not allocating its resources to the most cost‑effective programs, it is potentially allowing more crime to occur than would otherwise be the case. Although some metrics exist about participants, the department generally lacks robust evaluations of the actual cost‑effectiveness of its parole rehabilitation programs. This makes it difficult for the department to determine which rehabilitation programs are cost‑effective, whether there are potential obstacles or challenges preventing them from operating cost‑effectively, and whether some are more cost‑effective than others. As such, it is difficult for the Legislature to assess which programs are the most successful at reducing recidivism and to target funding towards those programs.

Medi‑Cal SUD Treatment Has Advantages Over CDCR’s SUD Treatment for People on Parole. In our publication Improving Parolee Substance Use Disorder Treatment Through Medi‑Cal, we found that SUD treatment provided through Medi‑Cal has several advantages over CDCR‑funded SUD treatment. Specifically, Medi‑Cal‑funded SUD treatment (1) provides care based on medical necessity, (2) allows care to continue beyond parole, and (3) makes greater utilization of federal funding—all of which the existing parole SUD treatment structure under STOP does not do. In addition, nearly all Medi‑Cal enrollees in the state receive comprehensive SUD treatment services modeled after the American Society for Addiction Medicine Criteria. These findings indicate that the state is operating a parole SUD treatment system that is potentially less effective and costlier than Medi‑Cal’s existing SUD treatment structure.

STOP Report Suggests Many CDCR‑Funded Providers Either Already Are Medi‑Cal Licensed Providers or Are Interested in Becoming So. In December 2024, CDCR surveyed over 80 STOP network providers on the feasibility of becoming Medi‑Cal licensed providers. This would be necessary for these providers to give Medi‑Cal funded care to people on parole. Over half of the respondents indicated that they are in the process or would like to become Medi‑Cal licensed providers. The survey findings are encouraging in that they indicate a willingness from providers to leverage Medi‑Cal SUD treatment. To the extent these providers are able to become Medi‑Cal licensed providers and CDCR is able to successfully refer people on parole to them, it could improve the quality of care and reduce state costs. The CDCR report did, however, outline challenges STOP network providers cited in transitioning to Medi‑Cal. For example, some providers indicated they had not pursued Medi‑Cal licensure due to not knowing how to apply, administrative burdens, and cumbersome certification requirements. The report also suggests that some of these challenges could be addressed through technical assistance.

Lack of RHW Report Makes It Difficult to Assess Effectiveness of Program. Because the report on the metrics and outcomes associated with RHW will not be available until March of 2026, it is difficult for the Legislature to assess whether the program merits ongoing funding. For example, the department is expected to report on return‑to‑prison rates, reconviction rates, and housing status after leaving the program for RHW participants. Without such information, it is difficult to know whether the program is effective at reducing crime or homelessness among those exiting prison.

Under CalAIM, Medi‑Cal Could Provide Similar Services as RHW, Potentially at a Lower State Cost. As discussed above, under CalAIM, Medi‑Cal managed care plans are starting to provide housing services targeted to those at risk of homelessness and those transitioning from incarceration, which would include people on parole. This means the program targets a very similar population as RHW. For example, under CalAIM, Medi‑Cal already provides housing services—such as housing deposit support—to high‑risk, high‑need populations. Moreover, Medi‑Cal managed care plans will eventually be required to provide access to six‑month transitional housing rental assistance to eligible populations, including people on parole. To the extent people on parole receive these services, the state could draw down federal funds for those that are Medi‑Cal eligible, potentially resulting in lower state costs than providing these services through RHW.

Require CDCR to Increase Utilization of Medi‑Cal for Parole SUD Treatment. In order to capitalize on the advantages of Medi‑Cal‑funded SUD treatment programs for people on parole and the willingness of some providers to become Medi‑Cal licensed providers, we recommend a series of steps to increase the utilization of these programs for people on parole. These steps are outlined in detail in our report Improving Parolee Substance Use Disorder Treatment Through Medi‑Cal. Below, we provide a summary of these steps, which would improve the quality of parole SUD treatment while allowing the state to draw down additional federal funding in place of state funding.

Connect All People on Parole With Medically Appropriate SUD Treatment. We recommend the Legislature require CDCR to refer all people on parole with a medical need for SUD treatment to Medi‑Cal licensed providers in the community. This process should be facilitated by the fact that CDCR already screens people for medical SUD treatment needs and helps people submit Medi‑Cal applications while they are in prison.

We recommend the Legislature require CDCR to refer all people on parole with a medical need for SUD treatment to Medi‑Cal licensed providers in the community. This process should be facilitated by the fact that CDCR already screens people f