Our communities spoke, and state budget leaders listened. Leaders can still do more to protect the health of California’s children, but the 2026-2027 budget is a promising start.

The California state budget, signed by Gov. Gavin Newsom June 29, reflects hard work by advocates and community members to protect the health of children, working families, people with disabilities, and immigrants. 

The Children’s Partnership and our allies know that California must lead in the face of attacks from the federal government. As our country’s leading economic force, California has the resources to support the well-being of all our communities, now and into the future.

This budget deal attempts to do much of that. It goes as far as it has ever gone in requiring wealthy corporations to pay their fair share in taxes and contributions to health coverage for employees whom they force to use Medi-Cal. The Children’s Partnership thanks the Legislature and Governor for making progress with this first step toward health equity in California.

“Advocates have long pushed for new revenue-generating mechanisms to be included in our state budget. Our budget leaders are beginning to listen,” said Mayra E. Alvarez, president of The Children’s Partnership. “We’re encouraged by this budget deal and look forward to working with the next administration to get the job done. Hard-working families continue to face a growing affordability crisis and the loss of federal support for their basic needs. It is our responsibility to protect affordable health coverage and strengthen safe and welcoming communities. These remain essential to the well-being of California’s children and families.”

Here is The Children’s Partnership’s analysis of the 2026-27 California budget for child health equity:

Revenue generation

Positives

• Establishes a business tax credit cap that will generate nearly $9 billion through 2029.
• Advances a framework for the Fair Share from Big Corporations Act, which will hold the state’s largest corporations accountable for the taxpayer costs of their employees enrolled in Medi-Cal. The budget requires the next Governor’s administration to present viable options to this effect to the Legislature by April 1, 2027.

Health care

Positives

• Temporarily preserves full-scope Medi-Cal coverage for some immigrants – including refugees, asylees, trafficking survivors, and other categories of lawfully present immigrants – through the 2026-27 budget year. While the budget agreement makes a stated commitment to working toward maintaining eligibility beyond July 1, 2027, we remain concerned and will be prepared to oppose any future attempts to kick this population off Medi-Cal.
• Delays the start of Medi-Cal premiums for adults with unsatisfactory immigration status (UIS) until July 1, 2027, and rejects the Governor’s previously proposed premium increase from $30 to $50 for adults ages 19-59 with UIS. Instead, the budget postpones the implementation of premiums adopted in last year’s budget. UIS refers to people who have an immigration status that is not eligible for federally funded public benefits; the term encompasses people who are undocumented as well as some people who are lawfully present.
• Delays Medi-Cal dental coverage elimination for adults ages 19+ with UIS, preserving dental benefits through July 1, 2027.
• Moves approximately 2 million Medi-Cal members with UIS from managed care to fee-for-service effective Jan. 1, 2027, and includes funds to support this change: $31 million for care coordination, $8 million for navigation support through community-based organizations and clinics, and $5.2 million for expanded provider enrollment capacity. We look forward to working with our partners and engaging with the Administration to ensure Medi-Cal members are fully supported throughout this transition.
• Includes $300 million to backfill higher Covered California premium costs resulting from the expiration of enhanced federal subsidies.
• Gives $15 million to the Department of Health Care Access and Information (HCAI) to support workforce training and expansion for promotoras, also known as community health workers. This is a welcome, albeit modest, investment given the current lack of existing ongoing state funding for this workforce.
• Provides $420 million for county systems to mitigate the increased workload from H.R. 1 implementation, including $197 million for Medi-Cal and $223 million for CalFresh.
• Allocates $26 million in one-time funds to stabilize access to gender-affirming health care for transgender youth. This investment will help establish a state-only Medi-Cal coverage and reimbursement pathway, and provide targeted grants to rebuild the gender-affirming care provider network, which was slashed by federal funding cuts.

Missed opportunities

• No funding for the Medi-Cal Renewal Relief Act (AB 2201), legislation co-sponsored by TCP, as well as other H.R. 1 harm-reduction legislation that TCP supports. The Medi-Cal Renewal Relief Act supports continuous Medi-Cal coverage for children and families and reduces the heightened administrative burden brought on by H.R. 1 for counties processing Medi-Cal renewals.
• No funding to support the Department of Health Care Services in producing a public report on the Medi-Cal benefit for community health workers, promotoras, and representatives (CHW/P/Rs), including utilization, spending, access, and workforce data, while providing guidance to managed care plans on effective community health worker implementation. This investment would have helped DHCS support managed care plans in using CHW/P/Rs to help people with new H.R. 1 Medi-Cal eligibility requirements, including work requirements and biannual renewals.
• No funding to expand the capacity of CHW/P/Rs and community-based organizations in helping Medi-Cal members navigate care, maintain coverage, and connect to services. We are disappointed that this investment was not included in the final state budget, especially as H.R. 1 increases administrative barriers to coverage and demand for CHW/P/Rs continues to grow.

Mental health

Positives

• Provides a continued $1 billion investment in Community Schools that support underserved students and their families with integrated health, mental health, and social services directly on school campuses. Sustaining this investment reflects an understanding that addressing youth mental health requires coordinated, community-based approaches rather than isolated interventions.
• Rejects proposed cuts to the Mobile Crisis Benefit in Medi-Cal and continues the benefit until July 1, 2027. The budget also commits to continuing work in addressing the long-term funding sustainability of the 988 system and mobile crisis response services. The Mobile Crisis Benefit helps ensure that children and youth experiencing behavioral health crises can receive timely, appropriate care in their communities, reducing unnecessary emergency department visits, law enforcement involvement, and psychiatric hospitalizations.

Immigrant families

Positives

• Includes a one-time increase of $100 million for immigration legal services, in addition to the $75 million annual allocation. Funds will support removal defense, unaccompanied children, legal capacity building, and emerging due process needs.
• Allocates $100 million in one-time Proposition 98 funds for the new California New Americans in Schools (CalNAS) program, expanding the California Newcomer Network to support immigrant families as well as educators.
• Provides $75 million in one-time Proposition 98 funds for the Dream Resource Center Grant Program, activating previously passed policy to bring these centers to high schools. This important investment will help high schools provide critical resources for our state’s significant population of immigrant and mixed-status students.
• Includes $10 million to create the Bilingual Teacher Pathway Program, which will help create safe, inclusive, and linguistically affirming schools.

Missed opportunities

• No renewal of Educator Workforce Investment Grant funding to support the professional learning and capacity-building required to carry out the implementation of the English Learner Roadmap policy. While it was included in the block grant, we believe direct investment in implementation is necessary and will continue to support this initiative in the coming years. 
• Approval of $55 million to fund Department of Motor Vehicles database sharing, a betrayal of California’s commitment to protecting its immigrant communities. By integrating state driver data into a federal verification network, California breaks a long-standing promise of trust made to undocumented residents when it first granted them the right to drive safely. This short-sighted decision fuels a justifiable fear that immigrant families’ personal information will be exposed to federal immigration enforcement, forcing them further into the shadows.

Early care and education

Positives

• Protects historic investments in universal pre-K and adds 22,770 new child care slots in 2026-27, which will help low-income immigrant parents stay in the workforce.

Missed opportunities

• No rate reform for the severely undercompensated early care and education (ECE) workforce. By not investing in the providers who sustain the ECE system, the state is effectively blocking parents and caregivers from working the hours they need to survive, as they will continue to have difficulty finding child care, let alone child care they can afford. This failure to support families directly undercuts their financial security. We must continue to demand a care infrastructure that works for everyone.

There is always more we can do to build a California budget for child health equity. This budget lays a solid foundation as we continue working toward a California that embraces all children as our children. 

Read More:

May 2026: Governor’s budget proposal needs to do more for children and families

2026 legislative and budget priorities for children’s health equity