California’s largest educators union has initiated legal action against state officials, alleging that state leadership has unlawfully deprived public schools of billions of dollars in guaranteed funding over the past two fiscal years. The complaint argues that the administration’s handling of education financing directly violates longstanding constitutional protections designed to safeguard classroom resources.
Filed in Sacramento County Superior Court, the legal challenge names Joe Stephenshaw, the director of the California Department of Finance, alongside several unnamed state figures that implicitly include Gov. Gavin Newsom. The lawsuit asserts that executive and legislative leaders deliberately held back mandatory education funds to help manage broader state budget shortfalls.
At the center of the dispute is Proposition 98, a foundational constitutional amendment approved by 51 percent of California voters in November 1988. The measure establishes a minimum percentage of the state’s general fund that must be dedicated exclusively to public elementary and secondary schools, as well as community colleges.
According to the California Teachers Association, state leaders reduced constitutional school allocations by $1.9 billion during the 2024-25 fiscal year and followed with an even larger reduction of $3.9 billion for the 2025-26 budget year. While state officials eventually repaid the $1.9 billion deficit from the earlier budget cycle a year later, the union claims no corresponding commitment has been made to restore the subsequent $3.9 billion cut.
The union emphasizes that the unreturned $3.9 billion shortfall represents a substantial portion of the state’s overall $119.9 billion education budget. When broken down across the student population, the union estimates that the reduction deprives public school classrooms of approximately $638 for every enrolled student in California.
Under the provisions of Proposition 98, state lawmakers possess the legal authority to temporarily suspend the mandatory minimum school funding guarantees. However, enacting such a suspension requires a two-thirds supermajority vote in the Legislature, and the state remains constitutionally obligated to repay any withheld funds in subsequent years.
In the formal court petition, union attorney Benjamin Gevercer of Sacramento contended that the state’s current budget maneuvers leave the restoration of these educational resources completely uncertain. Gevercer highlighted that it remains doubtful when, or if, the state will ever repay the outstanding $3.9 billion balance owed to local school districts.
The labor organization argues that these fiscal withholdings have already triggered severe operational consequences in school districts throughout the state. According to the union, the funding shortfalls have led directly to the termination of nearly 1,000 public school employees within the past year alone, affecting staff across diverse educational roles.
David Goldberg, president of the California Teachers Association, condemned the state’s budgetary decisions, pointing out the painful disconnect between the state's broader fiscal health and local classroom cutbacks. Goldberg stressed that while the overall economy is thriving, the state has allowed public school educators' careers to be severely harmed and local communities to be thrown into disruption.
Goldberg called for the immediate restoration of the withheld educational funds, stating that recovering this money is vital to protecting students and school communities from enduring another round of damaging staff layoffs and severe programmatic cutbacks in upcoming budget cycles.
The California Teachers Association represents roughly 310,000 members across the state. Its membership includes classroom teachers, guidance counselors, school librarians, and an array of specialized academic support personnel who serve in California's public education system.
Through its lawsuit, the union is petitioning the Superior Court for a formal judicial order determining that the state’s withholding of funds breaches the constitutional requirements of Proposition 98. The complaint further seeks an injunction mandating full and lawful funding allocations for public schools for both the current term and future budget years.
Following the filing of the lawsuit, Gov. Newsom’s administration did not immediately provide a formal response or comment regarding the claims. Similarly, representatives from the office of California State Superintendent of Public Instruction Tony Thurmond declined to comment on the pending litigation.
Alongside the courtroom challenge, the union’s leadership is directing attention to Proposition 3 on the upcoming November statewide ballot. Union leaders are urging California voters to support the measure, which proposes to make permanent a previous state tax increase on high-income earners that was originally authorized by voters in 2012 and reauthorized in 2016.
The existing high-earner tax provision is currently scheduled to expire in 2031 if not extended by the electorate. Proposition 3 seeks to preserve the revenue stream, which generates nearly $15 billion annually to directly finance operations across California’s K-12 public schools and community colleges.
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