The 2026-27 Budget: California's Fiscal Outlook

Nov 19, 2025 - This year, for example, our outlook reflects our best estimates of the effects of H.R. 1: One Big Beautiful Bill Act on the state budget but does not make assumptions about future federal policy changes.
https://lao.ca.gov/Publications/Report/5091

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

Jan 12, 2026 - That said, recent budgets have set the SFEU bet ween $3.5  billion and $4.5  billion, so the Governor ’s budget proposal to set the balance to $4.5  billion is generally in line with recent policy.
https://lao.ca.gov/Publications/Report/5101

The 2024-25 Budget: Proposition 2 Debt Payment Proposals

Mar 20, 2024 - A supplemental pension payment allows pension systems to invest more money sooner. This, in turn, allows for higher investment returns than otherwise would be the case. These higher investment returns reduce future required contributions from employers to the unfunded liability than would otherwise be the case.
https://lao.ca.gov/Publications/Report/4887

The 2025-26 Budget: California's Fiscal Outlook

Nov 20, 2024 - One path is falling interest rates and expansion of money available for lending and investment. A key driver of California ’s economic slump over the last two years has been the Federal Reserve ’s efforts to tamp down inflation by raising interest rates and shrinking how much money is available for lending and investment.
https://lao.ca.gov/Publications/Report/4939

New Inflation Poses Not So New Budget Risk

Dec 15, 2022 - Higher interest rates disincentivize consumers from borrowing and —by raising the cost of capital —dissuades firms from borrowing to make new investments. Relatedly, higher interest rates also increase the return on safer investments, such as treasury bonds and savings deposits.
https://lao.ca.gov/Publications/Report/4653

The 2025-26 Budget: Overview of the Governor's Budget

Jan 13, 2025 - The reason for the reduction is the recent voter approval of Proposition  35 (2024), which requires the state to spend less MCO tax money on offsetting General Fund spending and more money on provider rate increases.
https://lao.ca.gov/Publications/Report/4951

Flexible Funding to California in the American Rescue Plan

Mar 23, 2021 - How Will the Money Be Allocated? Federal funds anticipated at the time of budget enactment are appropriated just like any other state revenue source. This means the Legislature will need to approve a plan for spending these funds in the 2021-22 Budget Act .
https://lao.ca.gov/Publications/Report/4407

Rethinking California's Reserve Policy

Apr 10, 2025 - Functionally, borrowing has the same impact as reserves —it moves money from a period when state revenues are surging to one when they fall short —but generally involves higher interest costs for the state.
https://lao.ca.gov/Publications/Report/5028

The 2022-23 Budget: California’s Fiscal Outlook

Nov 17, 2021 - The Legislature can meet its SAL requirements in any of three ways: (1) lower tax revenues; (2) split the excess revenues between additional school and community college district spending and taxpayer rebates, or (3) appropriate more money for purposes excluded from the SAL.
https://lao.ca.gov/Publications/Report/4472

The 2022-23 Budget: Fiscal Outlook for Schools and Community Colleges

Nov 17, 2021 - Although CalSTRS recently reported investment returns far above its long ‑term target, these returns are unlikely to reduce required district contributions. Under the funding plan the Legislature adopted in 2013 ‑14, the state General Fund is responsible for most of the volatility in CalSTRS ’ investment returns.
https://lao.ca.gov/Publications/Report/4473