Budget Spotlight - 05/7/2026

Subcommittee #1 (Education)
Pérez (D-Pasadena) Chair, Ochoa Bogh (R-Yucaipa), and Archuleta (D-Pico Rivera)

Current Education Governance Produces Poor Results. The subcommittee held a joint informational hearing with the Education Policy Committee on Wednesday to discuss the Governor's proposal to "re-envision" education governance. The proposal would remove the Superintendent of Public Instruction (SPI) as the head of the Department of Education, and would establish an Education Commissioner, appointed by the Governor, as the head of the department. The SPI would become a voting member of the State Board of Education and the Board of Governors of the California Community Colleges. The current system of governance has been described as a system where "everyone is in charge, and no one is accountable." Changes must be made to California's education system. Despite massive increases in per pupil spending since the Newsom administration began, student performance on California assessments has decreased overall. In 2018, California students were 6 points below standard on the English Language Arts assessment, versus 8.1 points below standard in 2025. In Mathematics, students were 36.4 points below standard in 2018 and 42.4 points below standard in 2025.

Key Topics to be Heard Next Week: No subcommittee hearing. The Governor will release his May Revision budget update on Thursday, May 14.

Subcommittee #2 (Resources, Environmental Protection, and Energy)
Reyes (D-Colton) Chair, Choi (R-Irvine), Blakespear (D-Encinitas), and McNerney (D- Pleasanton)

Vacancy Savings Assumptions. The subcommittee heard the Joint Legislative Budget Committee's (JLBC) evaluation of the Governor's proposal to eliminate vacant positions, including approximately 650 positions flagged for additional legislative review. Senator Choi focused much of his discussion on the Newsom Administration's approach to long-vacant positions and asked the Department of Finance how departments manage ongoing vacancies, including whether vacancy savings are sometimes used to support other operational needs, such as administrative contracts or general departmental expenses. Senator Choi also expressed appreciation for JLBC's detailed analysis of the proposal and supported JLBC's oversight role in evaluating the Administration's assumptions and projected savings.

Key Topics to be Heard Next Week: No subcommittee hearing. The Governor will release his May Revision budget update on Thursday, May 14.

Subcommittee #3 (Health and Human Services)
Menjivar (D-San Fernando Valley) Chair, Grove (R-Bakersfield), and Weber Pierson (D-San Diego)

Saving At-Risk Hospitals from Closure. On Tuesday, May 5th, the full Senate Budget Committee heard AB 108 (Gabriel), an urgent budget bill that appropriated up to $25 million General Fund to the Department of Health Care Access and Information to issue relief grants to hospitals that report less than 10 days cash-on-hand. Senate Republicans supported the bill as it provided quick financial relief to the most distressed hospitals that are on the brink of closure but reiterated that more funding is needed to help additional at-risk hospitals. The primary causes for hospitals' fiscal distress are misguided state programs, including Medi-Cal payment rates that reimburse 74 cents on the dollar for the cost of care and unworkable earthquake mandates. In December 2025, Senate Republicans sent a budget priority letter to the Governor requesting $300 million for distressed hospitals. Senate Republicans also challenged the Governor to increase Medi-Cal reimbursements to hospitals to provide long-term stability. AB 108 was approved by the Legislature and signed by the Governor on May 7, 2026.

Shortchanging Developmental Services. The subcommittee heard from the Department of Developmental Services on the required increases in service provider rate reimbursements, as outlined in a 2024 bill (AB 2423, Mathis). The bill requires a biennial departmental review and updates to provider reimbursement rates, but the Governor's budget does not include any scheduled rate increases in 2027. Senator Shannon Grove (R-Bakersfield) is very concerned that the department is intentionally slowing the required rate review to reduce General Fund costs through a delay in rate increases. A delay essentially would underfund services to tens of thousands of intellectually and developmentally disabled Californians. Senate Republicans believe that services to the state's disabled population should be a high priority in the budget. The subcommittee took no action but will consider the issue again in a few weeks.
Key Topics to be Heard Next Week: No subcommittee hearing. The Governor will release his May Revision budget update on Thursday, May 14.

Subcommittee #4 (State Administration and General Government)
Hurtado (D-Bakersfield) Chair, Niello (R-Fair Oaks), Cabaldon (D-Yolo), Smallwood-Cuevas (D-Los Angeles)

Governor Blocks Care for Elderly and Disabled Veterans. The subcommittee heard testimony on the Department of Veterans Affairs' elimination of 150 vacant nursing positions at the department's veterans' homes, which deliver long-term care to aged and disabled veterans. The elimination was part of a broader position "sweep" across many state departments to score budget savings. While removing the 150 positions saved the state $12.6 million General Fund, it comes at the expense of care for more veterans. Had the department filled the nursing positions, the department could have admitted more veterans currently on waiting lists into the homes. Senate Republicans strongly disagree with the Governor that any budget savings must come from withholding care from those who bravely served our country. The subcommittee will act on this issue later this spring.

Key Topics to be Heard Next Week: No subcommittee hearing. The Governor will release his May Revision budget update on Thursday, May 14.

Subcommittee #5 (Corrections, Public Safety, Judiciary, Labor, and Transportation)
Richardson (D- San Pedro) Chair, Seyarto (R-Murrieta), and Durazo (D-Los Angeles)

High-Spend Rail Rises to Seven Times the Original Cost Estimate. The subcommittee discussed the status of the California High-Speed Rail (HSR) project and the Draft 2026 Business Plan. In 2008 voters approved about $9 billion in bond funds to build a HSR that would travel between San Francisco (SF) and Los Angeles (LA) in 2 hours and 40 minutes or less, cost $33 billion, and be operating by 2020. The latest business plan presents a system that would instead operate on shared track with various regional commuter trains and freight trains, have basic platform stations, and relocate the Merced and Bakersfield stations to the outskirts of town, at a cost of $126.3 billion. To build the HSR as originally envisioned the business plan estimates a cost of $231 billion, or seven times the initial cost estimate. The business plan also assumes the Legislature will enact various law changes, including providing tax increment financing to capture property and sales tax revenues around HSR stations and the rail corridor to fund the project. Senator Kelly Seyarto (R-Murrieta) expressed concern about taking money from schools and local governments for the benefit of the project, noting the Legislature is unlikely to approve this proposal, especially with significant local opposition. Additionally, this redirection of tax revenues raises constitutional issues. This item was informational, and no votes were taken.

Key Topics to be Heard Next Week: No subcommittee hearing. The Governor will release his May Revision budget update on Thursday, May 14.

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• Budget