The 2026-27 Budget: Overview of the Governor's Budget

Jan 12, 2026 - Under two voter initiatives, the State Constitution requires the state to set aside a share of revenues for schools and community colleges (Proposition  98, 1988) and debt payments and reserve deposits (Proposition  2, 2014).
https://lao.ca.gov/Publications/Report/5101

The 2026-27 Budget: California's Fiscal Outlook

Nov 19, 2025 - This is because constitutional spending requirements under Proposition  98 (1988) and Proposition  2 (2014) almost entirely offset revenue gains. Moreover, we estimate costs in other programs to be about $6  billion higher than anticipated.
https://lao.ca.gov/Publications/Report/5091

Rethinking California's Reserve Policy

Apr 10, 2025 - Before 2014, State Had Very Little in Reserves on Hand. After the 1980s, but prior to 2014, the SFEU was nearly exclusively used as the state ’s budget reserve. Throughout this period, as shown on the right side of Figure  3, the SFEU balance was generally enacted around 1  percent to 3  percent of revenues —very small compared to the reserves and surpluses of the decades before.
https://lao.ca.gov/Publications/Report/5028

The 2025-26 Budget: Initial Comments on the Governor's May Revision

May 17, 2025 - The  largest component is a $1.5  billion upward revision to the entering fund balance, primarily driven by higher ‑than ‑expected reversions of unspent funds and lower required Proposition  2 (2014) debt payments.
https://lao.ca.gov/Publications/Report/5044

The 2024-25 Budget: Proposition 2 Debt Payment Proposals

Mar 20, 2024 - By 2014, actuaries projected Ca lSTRS ’ assets would be depleted within a few decades. The Legislature passed Chapter  46 of 2014 (A B  1469 , Bonta), establishing a funding plan with the aim of reversing that projection and fully eliminating the Defined Benefit Program ’s unfunded liabilities by 2046.
https://lao.ca.gov/Publications/Report/4887

The 2021-22 Budget: The Governor’s Proposition 2 Proposals

Apr 26, 2021 - The 2021-22 Budget: The Governor’s Proposition 2 Proposals The Governor ’s Proposition  2 Proposals Introduction Passed by voters in 2014, Proposition  2 changed budgeting practices concerning: (1)  reserves and (2)  debt payments.
https://lao.ca.gov/Publications/Report/4418

The 2023-24 Budget: Multiyear Budget Outlook

May 23, 2023 - These formulas include spending on schools and community colleges (under Proposition  98 [1988]), as well as debt payments and reserve deposits (under the rules of Proposition  2  [2014]). If the Legislature adopts the administration ’s revenue estimates —and does not solve the additional budget problem we identify above —we anticipate there will be a revenue shortfall in 2023 ‑24.
https://lao.ca.gov/Publications/Report/4772

The 2022-23 Budget: Initial Comments on the Governor's May Revision

May 16, 2022 - As Figure  2 shows, the state ’s general ‑purpose reserves increased steadily after 2014 ‑15, when Proposition  2 was passed by voters. In  2019 ‑20, the state made its first withdrawal from the BSA  under the rules of Proposition  2 and the balance declined substantially.
https://lao.ca.gov/Publications/Report/4598

Despite Fiscal Forecasting Uncertainties, Multiyear Budget Planning Essential

May 27, 2021 - Proposition  2 (2014) enshrined in the State Constitution the Department of Finance ’s (DOF ’s) requirement to semiannually prepare a multiple-year General Fund forecast. Additionally, our office has a longstanding practice of preparing a fiscal outlook twice per year.
https://lao.ca.gov/Publications/Report/4443

The 2024-25 Budget: Overview of the Governor's Budget

Jan 13, 2024 - Proposition  2 (2014) governs deposits into and withdrawals from the state ’s general ‑purpose constitutional reserve —the Budget Stabilization Account (BSA). Under these rules, the state can make withdrawals from the constitutionally required balance of the BSA in a fiscal emergency, which occurs when estimated resources for the upcoming year are insufficient to cover the costs of the previous three enacted budgets, adjusted for inflation and population.
https://lao.ca.gov/Publications/Report/4825