A major legal battle has erupted over California’s education financing after the state’s largest teachers union filed a lawsuit alleging that state leaders withheld billions of dollars legally owed to public schools. The legal challenge accuses the state government of systematically starving public classrooms of mandatory funding over the past two fiscal years, directly violating constitutional guarantees established by California voters decades ago.
The complaint was formally lodged on Tuesday in Sacramento County Superior Court by the California Teachers Association. While the lawsuit officially targets state Finance Director Joe Stephenshaw alongside several unnamed state officials, the legal action is unmistakably directed at Gov. Gavin Newsom and his administration’s handling of recent state fiscal shortfalls.
According to the union, the Newsom administration and state lawmakers chose to deliberately underfund public education as a mechanism to balance statewide budget deficits. The court filing outlines that the state withheld $1.9 billion in school funding during the 2024–25 fiscal year, followed by an even steeper reduction of $3.9 billion in the 2025–26 fiscal year.
At the heart of the litigation is Proposition 98, a landmark constitutional amendment approved by 51% of California voters in November 1988. Proposition 98 was designed to shield classrooms from political bargaining by establishing a constitutional formula that mandates specific minimum percentages of the overall state budget be allocated directly to K-12 public schools and community colleges.
Under the state constitution, the California Legislature possesses the authority to suspend these strict funding minimums for a single year, provided that lawmakers secure a two-thirds supermajority vote. However, the constitutional framework explicitly mandates that whenever such a suspension occurs, the state is legally obligated to fully repay the withheld funds in subsequent fiscal periods.
The union’s lawsuit highlights a stark contrast in how the state addressed the two funding deficits. While state officials successfully repaid the $1.9 billion deficit from the 2024–25 budget cycle one year later, they have made no binding commitment or plan to reimburse the subsequent $3.9 billion gap created in the 2025–26 budget.
The contested $3.9 billion cut represents a substantial portion of California’s $119.9 billion total education budget. According to figures presented in the complaint, this multi-billion-dollar shortfall is equivalent to a direct loss of approximately $638 in resources for every single public school student enrolled across the state.
The California Teachers Association emphasized that these administrative funding decisions have triggered tangible, immediate harms across school districts statewide. Union leadership noted that nearly 1,000 public school employees have already lost their jobs over the past year as local districts struggled to adjust to state-level budgetary withholdings.
The union represents roughly 310,000 education professionals across California, including classroom teachers, guidance counselors, school librarians, and support personnel. Union leaders warned that without legal intervention to force state compliance, public school workforces and classroom programs will face prolonged instability.
Expressing frustration with state leadership, CTA President David Goldberg publicly condemned the spending cuts, pointing out a stark contradiction between the state’s overall economic vitality and local classroom austerity. Goldberg noted that despite a booming economy, the state’s actions have disrupted communities across California and damaged the careers of dedicated educators.
Goldberg emphasized that the lawsuit is designed to compel state leaders to return every withheld dollar to local districts. He stressed that recovering the missing funding is vital to protect students, schools, and local communities from enduring another damaging round of staff layoffs and service reductions.
Alongside the litigation, Goldberg used the moment to rally public support for Proposition 3 on the upcoming November ballot. The proposed ballot measure seeks to permanently preserve higher income tax rates on California's top earners—a tax structure initially approved by voters in 2012, reaffirmed in 2016, and currently slated to expire in 2031.
The high-income tax measure generates nearly $15 billion annually in dedicated revenue specifically earmarked for California’s public school system and community college campuses. Supporters emphasize that sustaining this revenue stream is essential for long-term fiscal stability in California education.
Representing the teachers union in court, Sacramento-based attorney Benjamin Gevercer argued that without judicial intervention, there is little hope of the missing money being restored. In the lawsuit, Gevercer highlighted that it remains entirely doubtful whether the state will ever pay back the $3.9 billion owed to local school districts.
The lawsuit requests that the Sacramento County Superior Court issue a formal order declaring the state’s budget maneuvers to be in direct violation of Proposition 98. Furthermore, the union is asking the court to issue a mandate forcing state officials to restore full constitutional funding to California schools for both the current fiscal year and upcoming budget cycles.
Following the filing, the governor’s office did not immediately issue a public response to the union's allegations. Meanwhile, the office representing California State Superintendent of Public Instruction Tony Thurmond officially declined to comment on the active litigation.
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