Federal funding comprises more than one-third of the latest budget in California, a state where non-partisan analysts recently made dismal fiscal projections.
After the California Legislative Analyst’s Office predicted the state was headed toward a staggering $30 billion budget deficit by 2027, lawmakers on both sides of the aisle voiced support for scrutinizing spending and trimming the budget.
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California receives more federal funding than any other state. But the looming budget shortfalls are raising questions about where those dollars are going.
Federal funding comprised 33.9%, or $152.8 billion, of the state’s 2024-25 budget, according to the California Budget and Policy Center. The majority, or 75% of the funds went to support health and human services programs. Most of the remaining dollars were allocated to other “essential” state programs regarding labor and workforce development, K-12 education, higher education, and transportation.
The federal government has sent California $31 billion in one-time aid since the pandemic hit in 2020, with federal funds accounting for 23% of K–12 funding in 2020–21 and 11% in 2021–22, according to the Public Policy Institute of California. The organization noted that the state is still facing fiscal challenges in education departments.
Besides the state’s K-12 system, top California colleges and universities also rely heavily on federal funding to spearhead research programs and financial support for students. For example, the University of California received nearly $16 billion in aid during the fiscal year 2022-2023.
A vast amount of the federal funds California has received involves COVID-19 relief packages. The state received more than $43 billion from the Biden administration’s American Rescue Plan between March 2021 and December 2024, including $27 billion in state fiscal recovery funds.
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Just under $1 billion went to “address public health impacts” and back efforts such as vaccine incentives. About $7 billion served as reparations due to the negative economic impacts of COVID-19 on households and businesses. Broadband Investments received $2.4 billion while $16.7 billion went to replace lost state revenue.
Big dollars also flowed in from the government after natural disasters.
Gov. Gavin Newsom (D-CA) recently announced that affected residents would receive $40.7 million in new federal aid to address the devastation the state saw from wildfires six years ago.
The money comes from the federal grand funding, specifically the 2018 Community Development Block Grant—Disaster Recovery Workforce Development program, and will be distributed to Butte, Lake, Los Angeles, Shasta, and Ventura counties, the governor said earlier this month.
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The news California would receive additional disaster relief funding this month follows over $139 billion in federal dollars it has received to respond to the wildfires, hurricanes, and other disasters that occurred between 2017 and 2019. An additional $20.5 billion was doled out to the state from the FEMA Disaster Relief Fund and the SBA Disaster Loans account.
The grant aid California received for the 2018 wildfires comes as the state receives a hefty chunk of federal grant funding every year. During fiscal year 2021, it received approximately 13% of all federal grant funding distributed by the U.S. government, per a state analysis.
Federal grant funding to the state that year came from 27 different federal agencies. At more than $109 billion, the bulk of aid came from the Department of Health and Human Services.
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As a sanctuary state, California has also received millions in FEMA funding for services for illegal immigrants. The federal agency has spent $159 million on assisting the individuals since 2023, according to an analysis by Center Square.
With his state continuing to face a staggering budget crisis, California’s Democratic governor recently made a trip to Washington, D.C., to petition the Biden administration for more money, including still more disaster and health funding.