Teachers union sues California over $3.9B in delayed education funds

California’s powerful teachers union said Tuesday it’s suing the state for excluding billions of dollars for public schools and community colleges from this year’s budget.

The California Teachers Association accused Gov. Gavin Newsom and lawmakers of withholding at least $3.9 billion for Proposition 98, which is a 1988 California ballot measure that amended the state constitution to set a guaranteed minimum amount of annual education funding.

Revised state budgets had deferred Prop. 98 payments for both the 2024-25 and 2025-26 school years. Such deferrals are necessary “due to persistent uncertainty in revenue projections” and to “account for some of the volatility in our revenues,” the state Department of Finance previously said.

The Newsom administration has been juggling how to close state budget deficits during the past few years. Legislative analysts initially predicted future deficits between $20 billion and $30 billion per year.

But the money-saving measures are a violation of Prop. 98 and the state constitution, the union alleges.

“These are public school educators who have devoted their entire career to educating California students, and their future is in jeopardy with threats to withhold vital funds from our local school districts,” CTA president David Goldberg said in a past statement on the deferral.

School districts are reportedly counting on every dollar they can get from Prop 98 as they face financial hardships from declining enrollment and inflation.

For example, the Los Angeles Unified Board voted this year to cut jobs amid its budget shortfall. In another Northern California district, a big drop in enrollment meant that San Juan Unified could lose as much as $3.7 million in revenue.

California has long faced disputes over how it calculates Prop. 98 funding, which is based on state revenue, economic growth and student attendance.

“Does the governor have the flexibility to wait and see what the final number is, or do they need to set the amount based on best projections at the time the budget’s adopted? — it’s a bit of a gray area,” John Affeldt, an attorney at Public Advocates, told the Sacramento Bee.

State law prevents California from reducing school funding before the close of a fiscal year.

That means an overestimation of the Prop. 98 amount could force the state to cut from other areas of the budget — which could complicate subsequent budgets, especially in light of federal cuts, the Department of Finance told the Post in an email.

State Democrats, including Newsom, have blamed President Donald Trump for cutting funds to state-administered programs. Trump’s tariffs and other economic policies have also hurt California’s economy, Newsom has claimed.

“There is an increased amount of uncertainty in revenues for 2026-27, as federal policies have made economic projections substantially more complex,” said department spokesperson H.D. Palmer.

Palmer added that the delayed Prop. 98 funding should not be a factor in school layoffs.

“If a district is basing their school budget for long-term expenditures like multi-year salary contracts on one-time funding that can and does fluctuate, that’s not what many fiscal experts would consider to be a prudent budgeting practice,” he said.

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