Six years, $150 billion in new spending, and a fiscal story that no longer runs through the classroom.
By Jose Navarro | The Navarro Report | September 8, 2026
California State Budget, 2020-21 to 2026-27 (state funds; dollars in billions)
| Fiscal Year | 2020-21 | 2021-22 | 2022-23 | 2023-24 | 2024-25 | 2025-26 | 2026-27 |
| Total State Budget | $202.1B | $262.6B | $307.9B | $310.8B | $297.9B | $321.1B | $351.7B |
| General Fund | $133.9B | $196.0B | $234.4B | $226.0B | $211.5B | $228.0B | $251.5B |
Source: California Department of Finance enacted budget summaries; Legislative Analyst’s Office spending plan overviews, 2020-21 through 2026-27.
California’s state budget has grown from $202.1 billion in 2020-21 to $351.7 billion in the fiscal year that began July 1, 2026 — a 74 percent increase across six budget cycles, according to enacted budget figures published by the Department of Finance and the Legislative Analyst’s Office. General Fund spending, the portion of the budget lawmakers control most directly, climbed even faster, from $133.9 billion to $251.5 billion, an 88 percent jump.
Inflation does not explain it. The Consumer Price Index for the Los Angeles metro area rose roughly 25 percent over the same period. California’s budget grew at nearly three times that rate.
The growth did not arrive on a smooth line. It came in two surges: a pandemic-era climb from $202.1 billion in 2020-21 to $307.9 billion just two years later, in 2022-23, fueled by a $97.5 billion state surplus and federal COVID relief; then a two-year contraction to $297.9 billion in 2024-25, as deficits reaching $55 billion forced cuts; and now a second ascent to $351.7 billion this year, powered by an AI-driven stock market rally and more than $5 billion in new and renewed taxes.
These figures reflect total state funds — the General Fund plus special funds and bond funds — the basis the Department of Finance and the Legislative Analyst’s Office use for year-over-year comparisons. They exclude the roughly $187 billion in federal funds that flow through state accounts on top of state spending in 2026-27, a figure that has itself become more volatile as Washington reshapes Medicaid and food-assistance financing.
WHERE THE MONEY MOVED: HEALTH CARE OVERTAKES EDUCATION
For most of the past half-century, K-12 education claimed the largest share of California’s General Fund, a fact so entrenched that public-opinion researchers treated it as common knowledge Californians consistently got wrong on surveys. That is no longer accurate. Health and Human Services has overtaken education as the largest category of General Fund spending, and Medi-Cal is the primary driver.
The Department of Health Care Services, which administers Medi-Cal, will spend $226.3 billion in total funds in 2026-27, including $45.7 billion from the General Fund — up from a Legislative Analyst’s Office projection of roughly $23.5 billion in General Fund support for 2020-21. That is close to a doubling of the state’s direct contribution to a single program in six years, and it does not include the CalWORKs, In-Home Supportive Services, CalFresh administration, and developmental-services spending that sit alongside Medi-Cal in the Health and Human Services Agency, whose combined General Fund request approached $94 billion in the Governor’s January proposal for the current fiscal year.
Some of that growth reflects genuine need: Medi-Cal now covers roughly 14 million Californians, more than a third of the state’s population, and the enacted budget absorbs an estimated $1.3 billion in new General Fund costs tied to the federal Medicaid overhaul known as H.R. 1, plus roughly $1.4 billion more to backfill other federal health and food-aid reductions. Some of the growth reflects policy choices Sacramento made independently, including the 2024 extension of full-scope Medi-Cal eligibility to income-eligible undocumented adults, a decision the state is now partially unwinding amid the deficits it helped create.
Schools have not been cut. Proposition 98, the constitutional school-funding guarantee, grew from roughly $96.1 billion in 2020-21 to well above $118 billion for 2026-27, and this year’s budget added $2.2 billion to the Local Control Funding Formula alone. But education’s growth has simply been outpaced by health care’s, which is why the “largest line item” title changed hands for the first time in a generation.
CORRECTIONS: THE OUTLIER
Not every category expanded with the budget. The California Department of Corrections and Rehabilitation will spend $13.8 billion from the General Fund in 2026-27 — essentially flat against 2020-21’s corrections allocation of roughly $13.4 billion, even as the state’s prison population has continued to shrink. Advocates who track the department calculate that per-inmate costs now approach $128,000 a year, a figure pushed upward mechanically as a smaller population absorbs largely fixed facility and staffing costs, not because the system itself has grown.
RESERVES AND NEW TAXES
Two facts sit uneasily beside the “paying more, getting less” complaint many residents voice. First, reserves: California enters 2026-27 with $35.2 billion set aside across its rainy-day accounts, the largest reserve balance in state history and more than triple the roughly $10.8 billion on hand heading into 2020-21. Second, revenue: this year’s enacted budget layers in more than $5 billion in new or renewed taxes, including a reinstated levy on managed-care health plans and an expanded sales tax reaching digital software and streaming services, on top of a state tax burden that already ranks among the nation’s highest.
This is not simply Sacramento’s left hand ignoring its right. It reflects a structural reality that predates any single governor or Legislature. A large and growing share of the budget is locked in constitutionally before a single new dollar is debated: Proposition 98 school funding, Proposition 2 reserve deposits, and federal matching requirements in Medi-Cal all move automatically as revenue rises. The discretionary portion of the budget — the part elected officials can genuinely redirect from one priority to another — is a shrinking fraction of a growing pie.
WHAT IT MEANS FOR SAN DIEGO
San Diego County sits close to the center of this story. County government administers a substantial share of the state’s health and social-services growth locally, through In-Home Supportive Services, county behavioral health contracts, and Medi-Cal managed care, meaning San Diego increasingly functions as a fiscal pass-through for state health policy even as local discretion over how those dollars are spent narrows. Meanwhile, infrastructure priorities that voters actually see and feel — the Pure Water San Diego treatment program, trolley and transit expansion, road maintenance — compete for a shrinking discretionary share of a General Fund now dominated by health care mandates, education formulas, and debt service.
THE ACCOUNTABILITY GAP
None of this is hidden. The Department of Finance, the Legislative Analyst’s Office, and the Senate and Assembly budget committees publish detailed, sourced breakdowns of where every dollar goes, and this report draws directly from their enacted-budget figures. The gap is not disclosure; it is translation. Residents who feel they are paying more and getting less are largely correct about the first half — California’s tax burden has risen alongside the budget. Whether they are getting less depends on which “less” they mean. The discretionary services voters notice day to day, from road conditions to park maintenance to court wait times, have grown more slowly than the topline number suggests, because an increasing share of every new budget dollar is pre-committed to health care caseloads, school funding formulas, and debt on past bonds and pension obligations before local discretion ever enters the picture.
The $351.7 billion question for California voters heading into the next budget cycle is not really “where did the money go.” The state publishes that answer every June. It is whether the automatic formulas now driving most of that growth still match what Californians would choose to fund if they were voting on each dollar today.
Human-Directed AI Journalism: This report was researched and written with AI assistance, directed, fact-checked, and edited by Jose Navarro. All figures are sourced to the California Department of Finance and the Legislative Analyst’s Office.