California’s state budget is the key to strengthening California’s child care, increasing enriching care options for families, and creating an equitable society.
Unfortunately, Governor Newsom’s May revision to the state budget proposal (May Revise) fails to fully seize on this opportunity in child care and deepens inequities across our state. This is also happening at a time when federal actions are directly targeting and harming our communities with the least resources. This is unacceptable.
Citing future state deficits and economic uncertainty as the reason for these funding proposals, Governor Newsom’s May Revision fails to recognize that all Californians have something to gain from supporting and strengthening child care. Currently, California loses an estimated $17 billion annually in the form of lost earnings, productivity, and revenue because child care remains scarce and expensive. As the 4th largest economy in the world, we can and must do better so all communities can share in our state’s wealth and resources.
Together, we must ensure California policymakers raise revenues and develop a state budget that implements equitable policies. Making sure that child care providers are paid fairly and families have the affordable child care they need will not only protect our communities from political and economic threat, but will also have an immediate positive impact on all Californians.
Here are our top takeaways from Governor Newsom’s May Revise (released May 14, 2025):
FAIR PAY FOR CHILD CARE PROVIDERS
Governor Newsom proposes no funding to fairly pay child care providers who deliver publicly funded affordable child care, based on the cost of care. This includes:
- No increases to child care providers’ pay while they wait to be paid fairly,
- No proposal to include any aspects of fair pay into state law and end the current payment method that suppresses child care providers’ pay.
His plan does include $91.8 million to support early implementation costs for fair pay, specifically administrative funds to continue the status quo while we wait for fair pay implementation and start-up funds to support state agency and automation activities. Governor Newsom’s proposal also notes that the goal of the California Department of Social Services (CDSS) is to automate fair pay into their technology systems “as early as July 1, 2027” – thus, delaying full implementation by at least two years.
The Governor proposes funding to maintain current child care providers’ pay. However, the state’s poverty-level payments are forcing providers to make difficult sacrifices that harm their well-being or close their programs entirely. This is why increasing their pay is an urgent need for our entire state.
The Governor’s plan also only references the state’s next steps of 1) meeting the federal requirement to submit new payment rates based on the cost of care to the federal government by July 1, 2025, and 2) negotiating a new contract with Child Care Providers United (CCPU), the state union representing family child care providers and family, friend, and neighbor providers. The current contract expires June 30, 2025.
It’s important to note that outside of the state budget process, Governor Newsom’s administration is currently collectively bargaining with CCPU and his bargaining team recently proposed cutting CCPU’s historic retirement benefits and completely eliminating their healthcare fund benefits. This would force even more providers to close their programs.
In 2023, the state agreed to fairly pay child care providers based on the cost of providing enriching care. Read more here.
AFFORDABLE CHILD CARE FOR FAMILIES
The Governor proposes no funding for increasing publicly-funded child care spaces for families with low incomes.
California families are still waiting on 77,000 new affordable child care spaces as promised by Governor Newsom. Last year’s state budget put into law that the state would fund the total promised 206,800 additional spaces but delayed completion by three years to 2028-2029 and included a pause on any new spaces from being issued in 2025-2026. Read more about it in our Budget Analysis from last year.
Governor Newsom follows through on this pause in this budget and only maintains funding for the number of families currently receiving publicly-funded child care. However, 86% of California’s children eligible for publicly funded child care are NOT enrolled. Thousands of families languish on what they call “no hope” child care waiting lists, as state leaders continue to deprioritize our youngest children. Underfunding affordable child care spaces also impacts families and children of color the most, making this an important racial justice issue.
FUNDING AFFORDABLE CHILD CARE PROGRAMS
The Governor’s proposal includes $7 billion1 ($4.5 billion in General Funds) for child care and development programs– funding at the same level as his January proposal but with some changes.
The Governor’s plan includes eliminating the child care cost-of-living adjustment (COLA). Refusing to increase providers pay AND removing the COLA will result in lower pay for child care providers due to inflation and rising costs. The layering of these proposals pushes an already fragile child care workforce to the brink of collapse.
Governor Newsom also adds funding to support the transition to paying providers prospectively (before or at the time child care services are provided) by August 1, 2026, which is a federal requirement. Child care providers have been advocating for this change for years. However, Newsom does not address the vital need to also pay providers based on children’s enrollment, rather than attendance– once again, lowering providers’ pay even more. Without this, the benefits of paying providers prospectively will be outweighed by the burdensome paperwork and over-complication of paying based on a child’s attendance.
Governor Newsom proposes continuing to fund most child care and development programs at their current funding levels. However, we know that increased and ongoing support for child care is more critical than ever as several federal actions have already harmed children and their families, and current federal budget proposals threaten to reduce federal funding for child care as well as other basic need programs that children, families, and child care providers rely on.
His plan also includes a reduction of funding for the Emergency Child Care Bridge program for children in foster care, claiming that this is to align funding with current spending. However, advocates in the field note that this is a 46% cut to the program and have raised concerns.
When we prioritize the well-being of our children and those who nurture them, California will be a better state now and always.
AFFORDABLE HEALTH CARE THROUGH MEDI-CAL
At Wednesday’s May Revise release, Governor Newsom shared that the increased usage of Medi-Cal (California’s Medicaid health care program) is a “challenge we face this year and for many years.” To address this, the Governor proposes specific changes to Medi-Cal that would result in cruelly eliminating basic health care support to hundreds of thousands of Californians, including seniors and people with disabilities. Appallingly, these changes also specifically target and harm immigrants at a time when these communities are already living in fear of federal attacks.
In a stakeholder call with the California Health and Human Services Agency on May 14, the Governor’s administration estimated that 112,000 will lose coverage over the next two years due to the proposed reinstatement of the $2,000 Medi-Cal asset limit. They also noted that as a result of the proposed requirement to charge a $100 monthly premium for specific immigrant populations enrolled, they estimate that this will result in 20% of people disenrolling from Medi-Cal.
These healthcare proposals are dangerous and will result in the loss of life. California may have a shortfall, but our state leaders cannot balance the budget by devaluing its residents and pitting populations struggling to meet basic needs against one another.
State leaders must see all Californians as humans and recognize the meaningful, unique contributions we all make to our state and local communities. State leaders can — and must — help Californians meet their basic needs, like child care and health care, by raising state revenues.
WHAT’S NEXT?
The Legislature must send their budget proposal to the Governor by June 15, 2025. Over the next month, we will band together with families, child care providers, and other advocates to make our voices heard in Sacramento at both Senate and Assembly budget committee hearings. Check out our Fair Pay Hearings and Public Meetings webpage to stay informed.
We once again call on our Assembly and Senate budget committee members to reject Governor Newsom’s decision to balance the budget on the backs of those with the least resources and follow the same path as the federal government. We urge our state legislators to stand with us to raise revenues and pass a budget that funds vital child care commitments, addresses inequities, and protects targeted communities from harmful federal actions.
- $311.7 million of the $7 billion is an adjustment for last year’s budget (2024-2025) to account for higher than previously projected usage in CalWORKs child care and costs associated with provider payment rates. ↩︎
