The Enacted State Budget

As blog readers will know, yours truly is the guy who notes that the glass is half empty. Now that the enacted state budget is posted, he will point to the following sentence regarding UC:

Compact Funding Deferral—Maintains a $240.8 million one-time General Fund deferral of the 2025-26 Compact payment, representing a 5-percent base increase in the fourth year of the Compact, to 2027-28.*

And he will point out that nobody can compel a future legislature to do anything. In particular, the current governor will have been termed out in January 2027. The budget for 2027-28 will be enacted six months later.

What about the overall state budget? The table below summarizes the basics:

The Good News is that last year's budget finished in the black, with a small surplus of about $5 billion thanks to the inflow of tax revenue related to AI capital gains. Some of that money went automatically to K-14, thanks to Prop 98. The Bad News is that this year's budget is in deficit to the tune of around $21 billion. Of course, news reports repeated the idea that the budget was "balanced." But although more funding was placed in the "rainy day" fund, it basically came out of the General Fund (GF) reserve. So it went from one reserve into another, and when we look at the sum of all reserves, the total declines. Now, maybe AI will again provide a surprise dose of revenue. Or maybe not. Or maybe we might discover that the AI thing was a bubble that burst. Or maybe... 

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*Source: https://ebudget.ca.gov/2026-27/pdf/Enacted/BudgetSummary/HigherEducation.pdf.

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Note: The table is from https://ebudget.ca.gov/2026-27/pdf/Enacted/BudgetSummary/SummaryCharts.pdf. To estimate the changes in the various reserves last year, I used data from the governor's January 2026 proposal: https://ebudget.ca.gov/2026-27/pdf/BudgetSummary/SummaryCharts.pdf.