Higher than anticipated state revenues are set to provide a modest funding boost for California’s TK-12 schools and community colleges in 2025-26, according to the Legislative Analyst’s Office ("LAO"). However, much of this revenue will go toward paying down education debt and replenishing the Proposition 98 reserve, leaving limited new funds for direct spending. 

Moreover, a rarely used constitutional “spike” protection will cap funding growth, likely dampening schools’ expectations despite overall revenue gains. The LAO’s forecast offers a detailed look at how education funding priorities will balance debt relief, reserve-building, and competing demands.

This funding dynamic raises important questions for stakeholders about how to balance immediate classroom needs with California's fiscal health and related priorities.