California education spending rises to record $110 billion

The funding surge includes more money flowing through the Local Control Funding Formula, which directs extra per-pupil aid to English learners, foster youth and low-income students, and additional support for schools with large concentrations of those students. Governor Gavin Newsom also signed legislation in July 2026 adding a record $2.4 billion to K-12 special education, a 43% year-over-year increase.

But the new spending is colliding with frustration over results. California’s budget proposal calls for $27,418 in spending per pupil, up $10,242 under the Newsom administration, yet state test performance has weakened overall. The article cites English language arts scores moving from 6 points below standard in 2018 to 8.1 points below in 2025, while math slipped from 36.4 points below standard to 42.4 points below over the same period.

For investors, the mix is important because California remains a large customer base for education vendors, special education providers and virtual-school operators that depend on per-pupil funding. Private education companies such as Stride and Nerdy have previously disclosed that changes in state funding formulas and enrollment can materially affect revenue, and California’s spending growth may support demand even as lawmakers and parents push harder for proof the money is being used effectively.

The next catalyst is political rather than market-based: district budget disclosures, school board debates and further scrutiny over whether California’s education dollars are funding more staff and services or simply feeding a complex system with little improvement in outcomes.