Governor Releases Budget Proposal for 2025-26, Announcing Modest Surplus and Focus on Accountability for Homeless Programs

Last week, Governor Newsom released his January budget proposal for the 2025-26 fiscal year, announcing a modest surplus after two consecutive years of deficits. In addition to the funding included in the 2024-25 state budget for the new Permanent Foster Care Rate Structure, the Department of Social Services has proposed an additional $1.78 million for 2025-26 and $1.73 million ongoing for nine permanent positions to support the first phase of implementation, including the statutorily required coordination of access and engagement of lived experts, and ongoing oversight once implemented. 

Of note in the area of homelessness, is the proposed creation of a new California Housing and Homelessness Agency for a more integrated and effective administrative framework for addressing the state’s housing and homelessness challenges. The proposal states that any future homelessness funding for local governments must incorporate stronger accountability policies. This includes increased scrutiny and demonstration of local governments’ progress resulting from the Homeless Housing, Assistance and Prevention (HHAP) program before releasing additional disbursements of funds. HHAP is the main source of funding for addressing youth homelessness—a minimum of 10 percent of overall HHAP funding is used for this purpose.

All budget documents can be found on the state’s budget website. 

Budget Proposal Expands Support for Justice System-Involved College Students and Institutionalizes Homeless Student Technical Assistance

The Governor’s budget proposal released on January 10 largely holds funding stable for California’s K-12 and Community College systems, while proposing cuts to the Cal State and University of California systems that could reach up to eight percent. The budget also seeks to invest $100 million in one-time funding to expand Credit for Prior Learning and begin developing the state’s first “Career Passport” to allow students to create formal documentation of their marketable skills and abilities developed through work and other experiences outside of the classroom. These proposals are offered to implement key provisions of the Governor’s Master Plan for Career Education.

In addition, the proposal seeks to invest $5 million in ongoing funding to establish a state planning and coordinating body to advance recommendations of the Plan, and $4 million in one-time funding to evaluate how regional coordination models can be expanded to support career education and training. Furthermore, the proposal includes $1.8 billion in one-time discretionary block grants for Local Education Agencies (LEAs) to use for, among other things, career pathways and dual enrollment expansion efforts in line with the Plan. 

The Governor’s budget proposal also seeks to expand funding by an additional $30 million for the Rising Scholars Network at the California Community Colleges, which serves students impacted by the criminal justice system and invest $1.5 million in ongoing funding to maintain support for the Homeless Education Technical Assistance Centers to help improve identification and support of K-12 students experiencing homelessness. Finally, while several categorical programs at the Community Colleges were provided a Cost of Living Adjustment, the NextUp, Homeless and Housing Insecurity Pilot (HHIP) program, and basic needs programs were not among those receiving an increase.

Report Summarizes Stakeholder Input on Strengths Building Funding in New Foster Care Rate Structure

The Alliance for Children’s Rights (ACR) released a report and webinar summarizing the results from a survey of stakeholders on the "Strengths Building and Maintenance" component of the new Permanent Foster Care Rate Structure, which is due to take effect on July 1, 2027. Once the new structure is implemented, the foster care rate will consist of funding for three distinct components: Care & Supervision, Immediate Needs, and Strengths Building and Maintenance. 

As described in ACR’s report, the Strengths Building component of the rate will fund activities identified by the Child and Family Team (CFT) or the youth and caregiver such as clubs, sports, or extracurricular activities, and other supports like peer mentoring, art or other classes. The funds will be handled by a third-party spending plan manager, and paid directly to the caregiver or provider, except in the case of non-minor dependents (NMD) in Supervised Independent Living Placements (SILPs), who will receive their Strengths Building funding directly. Survey respondents recommended that all NMDs be supported in developing autonomy, citing their ability to lead decision-making, with the CFT serving in an advisory capacity.

Survey respondents also recommended providing clear and detailed guidelines on what can be funded with Strengths Building funds and ensuring clear communication with caregivers and youth regarding the administrative requirements for accessing funding. Having clear payment, reimbursement, and appeals processes was also noted as important, along with ensuring accessibility, including offering a mobile-friendly website, and accountability, through audits and feedback mechanisms. Finally, survey respondents recommended addressing barriers such as a lack of transportation and offering financial literacy skills-building training.

Upcoming Webinars, Training, and Events

• Foster Youth & Tax Filing: Helping Youth Learn, Prepare, File, & Follow Through
• Project 3,500: How Two State Programs Expanded Housing for Former Foster Youth in California

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