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"content": "\u003cp>When Congress allowed COVID-era subsidies for health insurance to expire, \u003ca href=\"https://www.kqed.org/news/tag/california\">California\u003c/a> used its own funds to offset the hike in Obamacare premium costs for residents with low incomes.\u003c/p>\n\u003cp>But the reach has been limited.\u003c/p>\n\u003cp>As Gov. Gavin Newsom negotiates his last budget with the legislature, the Democrat wants to offer financial help to more than 1 in 4 enrollees in Covered California, the nation’s largest state-run health insurance marketplace. Democratic lawmakers, who hold a supermajority, are still debating the plan.\u003c/p>\n\u003cp>“My budget proposal would KEEP $0 monthly plans for low-income Californians to help clean up the financial disaster Trump created,” Newsom \u003ca href=\"https://www.facebook.com/CAgovernor/posts/pfbid0D7ZbfX4NexjyjBrNuyXribDdCep4aDahzNSHaZX9g8Cnyu9MA7AaUAg99dxp7K7Sl\">posted on Facebook\u003c/a>, where he often chides the president and GOP Congress.\u003c/p>\n\u003cp>[ad fullwidth]\u003c/p>\n\u003cp>\u003ca href=\"https://stateline.org/2026/02/18/some-states-are-helping-to-make-obamacare-plans-more-affordable/\">Ten blue states\u003c/a> have put up their own funds to keep Affordable Care Act plans affordable and residents insured, as the rising cost of healthcare has emerged as a \u003ca href=\"https://www.kff.org/public-opinion/poll-the-cost-of-health-care-remains-at-the-top-of-the-publics-list-of-economic-concerns-even-as-concerns-about-gas-prices-climb/\">top concern\u003c/a> among voters. Newsom’s $300 million proposal would make California’s program among the most generous, but even the nation’s richest state can’t patch a \u003ca href=\"https://hbex.coveredca.com/data-research/library/Brief%201%20IRA%20ACA%20Premium%20Impacts%202026.pdf\">$2.5 billion hole\u003c/a> left by the expiration of enhanced subsidies at the end of last year.\u003c/p>\n\u003cp>“The gap between what people can pay in their monthly budget and what health insurance costs is so big that it’s a lot for states to take on,” said \u003ca href=\"https://www.commonwealthfund.org/person/stacey-pogue\">Stacey Pogue\u003c/a>, a senior research fellow at the Center on Health Insurance Reforms at Georgetown University. “They’re going to have to figure out how they can finance that.”\u003c/p>\n\u003cp>New Mexico lawmakers have \u003ca href=\"https://stateline.org/2026/02/18/some-states-are-helping-to-make-obamacare-plans-more-affordable/\">backfilled 100%\u003c/a> of the lost federal subsidies with state money. It seems to have worked; New Mexico saw \u003ca href=\"https://www.hca.nm.gov/2026/02/10/health-insurance-enrollment-up-in-new-mexico-amid-national-decline/\">double-digit increases\u003c/a> in marketplace enrollment this year, but state analysts \u003ca href=\"https://www.nmlegis.gov/Sessions/26%20Regular/firs/HB0004.PDF\">have warned\u003c/a> that the subsidy program isn’t sustainable.\u003c/p>\n\u003cfigure id=\"attachment_12040844\" class=\"wp-caption aligncenter\" style=\"max-width: 1760px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12040844\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2025/05/npr.brightspotcdn.jpg\" alt=\"\" width=\"1760\" height=\"1174\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2025/05/npr.brightspotcdn.jpg 1760w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/05/npr.brightspotcdn-800x534.jpg 800w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/05/npr.brightspotcdn-1020x680.jpg 1020w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/05/npr.brightspotcdn-160x107.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/05/npr.brightspotcdn-1536x1025.jpg 1536w\" sizes=\"auto, (max-width: 1760px) 100vw, 1760px\">\u003cfigcaption class=\"wp-caption-text\">Protesters gather outside Kern Medical Hospital in Bakersfield. They’re opposing proposed GOP cuts to Medicaid, which provides health insurance to lower-income Americans. \u003ccite>(Joshua Yeager/KVPR)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>\u003ca href=\"https://www.wgbh.org/news/politics/2026-01-08/massachusetts-spending-250-million-to-blunt-cost-increases-from-expired-health-care-subsidies\">Massachusetts\u003c/a> and \u003ca href=\"https://newjerseymonitor.com/2026/05/20/new-jersey-healthcare-fiscal-abyss/\">New Jersey\u003c/a>, which, like California, tax residents \u003ca href=\"https://www.kff.org/faqs/faqs-health-insurance-marketplace-and-the-aca/marketplace-basics/im-uninsured-am-i-required-to-get-health-insurance/\">for not having health insurance\u003c/a>, are also spending hundreds of millions of dollars to try to keep premium payments low. Their hope, healthcare experts say, is to avoid the exodus seen in states such as Georgia that didn’t offer enrollees help.\u003c/p>\n\u003cp>Since the enhanced subsidies expired, \u003ca href=\"https://www.kff.org/affordable-care-act/what-we-know-so-far-about-2026-aca-marketplace-enrollment-premiums-and-deductibles/\">enrollees nationwide\u003c/a> have seen their premium payments increase by $65 a month on average.\u003c/p>\n\u003cp>Conservatives, including \u003ca href=\"https://www.ocregister.com/2026/01/13/insurance-company-subsidies-are-no-prescription-for-lowering-healthcare-costs/\">congressional Republicans\u003c/a>, have long argued that the subsidy expansion was too generous to high-income enrollees and \u003ca href=\"https://www.facebook.com/reel/25473637075567865\">inflated healthcare costs\u003c/a>.\u003c/p>\n\u003cp>“There are never enough subsidies to make health insurance affordable because subsidies are the problem,” said Michael Cannon, director of health policy studies at the libertarian Cato Institute. “They are causing people to turn a blind eye to fraud and waste and excessive prices because it’s someone else’s money that they’re spending, not their own.”\u003c/p>\n\u003ch2>Helping the poorest?\u003c/h2>\n\u003cp>People who earn too much to qualify for Medicaid got relief starting in January after Newsom and legislators softened the blow for about 300,000 of the lowest-income enrollees. They offset lost federal premium tax credits for individuals who \u003ca href=\"https://board.coveredca.com/meetings/2026/May%2021,%202026/Presentation_2027_State_Premium_Subsidy_Program_Design.pdf\">earned up to $23,475\u003c/a> last year and partially filled the gap for those who earned up to $25,823.\u003c/p>\n\u003cp>The governor now wants to expand subsidies to those who earn up to $31,920 this year for an individual and $66,000 for a family of four — an estimated 218,000 additional people.\u003c/p>\n\u003cp>Veronica and William Walter, who live in the San Francisco Bay Area, earn less than $40,000 a year in one of the nation’s most expensive regions. They’re counting on a more generous state healthcare tax credit if they have to pay for health insurance next year.\u003c/p>\n\u003cfigure id=\"attachment_12086988\" class=\"wp-caption aligncenter\" style=\"max-width: 2000px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12086988\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/06/PricedOutCA2.jpg\" alt=\"\" width=\"2000\" height=\"1500\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/06/PricedOutCA2.jpg 2000w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/06/PricedOutCA2-160x120.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/06/PricedOutCA2-1536x1152.jpg 1536w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\">\u003cfigcaption class=\"wp-caption-text\">Veronica Walter talks through her financial challenges while sitting at the dining table in her two-bedroom condo in Newark, California. Walter says she wouldn’t be able to afford the nearly $200 monthly premium for health insurance that she and her husband would likely pay on Covered California, even after a proposed expansion of state subsidies. \u003ccite>(Christine Mai-Duc/KFF Health News)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>A car accident two years ago left William temporarily disabled, qualifying the couple for Medi-Cal, the state’s Medicaid program.\u003c/p>\n\u003cp>Now he’s back at work as a security guard, and Veronica said she’s worried they’ll be kicked off Medi-Cal. She’s even more worried about how they’ll get by with federal premium tax credits not nearly as generous as before.\u003c/p>\n\u003cp>“Without it, we’re going to be facing worse problems than we have now,” she said. Under Newsom’s proposal, Veronica and others in the highest eligible income bracket could receive an average monthly subsidy of $36 a person.[aside postID=news_12084761 hero='https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/IMG_1522.jpg']“For them, $36 a month is the sort of thing that can make a difference between keeping coverage and losing coverage,” said Peter Lee, former executive director of Covered California. “We can’t fix everything with that gap, but we can focus the dollars on those who need it most.”\u003c/p>\n\u003cp>The Walter family, though, may still face a nearly $200 monthly premium payment to cover both of them, $130 more than they previously paid for healthcare and prescriptions through Covered California.\u003c/p>\n\u003cp>“I can’t afford that, not really,” said Veronica, a pet sitter who works part-time at a school. “A giant state like this with this many people, and this many resources? You can’t just leave the people with nothing for healthcare or healthcare they can’t afford.”\u003c/p>\n\u003cp>California policy researchers and health advocates acknowledge the limits of a partial subsidy but say that concentrating funds on those who earn less is the most efficient way to maximize impact. People who drop coverage are \u003ca href=\"https://www.kff.org/affordable-care-act/what-we-know-so-far-about-2026-aca-marketplace-enrollment-premiums-and-deductibles/#:~:text=Declines%20in%20plan%20sign%2Dups%20for%20young%20adults%20ages%2018%20to%2034%20account%20for%20more%20of%20the%20decrease%20in%20ACA%20Marketplace%20plan%20selections%20than%20any%20other%20age%20group.\">often younger\u003c/a>, healthier, and less likely to have high healthcare costs — all factors that help stabilize the insurance risk pool. Without coverage, Lee said, they’re also more likely to experience debt from medical emergencies or leave unpaid hospital bills that strain the \u003ca href=\"https://lao.ca.gov/Publications/Report/5180\">taxpayer-funded safety net\u003c/a>.\u003c/p>\n\u003cp>Cary Sanders, senior policy director at the California Pan-Ethnic Health Network, a health advocacy group, said the state’s move last year kept low-income enrollment in Covered California steady and reduced racial disparities in coverage.\u003c/p>\n\u003cp>“It’s working; it’s just that it’s not enough,” Sanders said. “We need the federal subsidies back.”\u003c/p>\n\u003ch2>Still no help for many\u003c/h2>\n\u003cp>When Congress passed enhanced subsidies in 2021, it capped monthly premium payments for \u003ca href=\"https://kffhealthnews.org/health-industry/obamacare-premiums-subsidies-trump-republicans-policy-fallout-kff-analysis/\">even the highest earners\u003c/a> at 8.5% of income. Those temporary enhancements allowed about 8 million Americans to choose robust plans with no monthly premium payment last year and helped double Obamacare enrollment to \u003ca href=\"https://www.kff.org/affordable-care-act/enrollment-growth-in-the-aca-marketplaces/\">an all-time high\u003c/a> of 24 million.\u003c/p>\n\u003cp>At the end of last year, 22 million of them lost that help when the GOP Congress blocked the extension.\u003c/p>\n\u003cp>The pressures on Obamacare enrollees don’t stop at premiums. Federal legislation Republicans passed last summer, known as the \u003ca href=\"https://dmhc.ca.gov/Portals/0/Docs/OFR/FSSB/Feb2026/CoveredCaliforniaUpdate.pdf#page=11\">One Big Beautiful Bill Act\u003c/a>, also shortens enrollment windows, tightens income verification requirements for subsidies, and requires enrollees who earn more than they projected to pay back the full amount.\u003c/p>\n\u003cfigure id=\"attachment_12052592\" class=\"wp-caption aligncenter\" style=\"max-width: 2000px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12052592\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2025/08/Covered-CA-lawn-sign.jpg\" alt=\"Una persona camina sobre la acera, a lado del patio de una casa donde está el letrero de Covered California.\" width=\"2000\" height=\"1232\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2025/08/Covered-CA-lawn-sign.jpg 2000w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/08/Covered-CA-lawn-sign-160x99.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/08/Covered-CA-lawn-sign-1536x946.jpg 1536w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\">\u003cfigcaption class=\"wp-caption-text\">Carteles de Covered California en Berkeley el 13 de enero de 2017. A partir del 31 de agosto, los beneficiarios de DACA ya no podrán encontrar planes de salud a través de Covered California. Hay algunas opciones limitadas disponibles. \u003ccite>(Lea Suzuki/The San Francisco Chronicle vía Getty Images)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>Even if Newsom’s proposal passes, most Covered California customers won’t get state help. Nearly 1 million enrollees — 52% — earn above the $31,300-a-year individual earning cutoff.\u003c/p>\n\u003cp>Victoria Garzouzi was one of many \u003ca href=\"https://kffhealthnews.org/health-care-costs/insurance-premium-payments-terminal-diagnosis-aca-subsidies-covered-california/\">middle-income retirees\u003c/a> hit with one of the most extreme premium increases: The monthly payment for her low-level bronze plan jumped eightfold to $1,600.\u003c/p>\n\u003cp>To make ends meet, she came out of retirement and dipped into her savings. “I’m working to pay for my insurance,” she said. “I am an army of one.”\u003c/p>\n\u003cp>Despite a $6,000 deductible, her health insurance premium payment is more than the mortgage on her two-bedroom house. She’s putting off a needed cataract surgery until October, when she turns 65 and qualifies for Medicare.\u003c/p>\n\u003cp>While GOP leaders have not publicly weighed in on the state subsidies, some Democratic lawmakers have questioned why more help hasn’t been proposed.[aside postID=news_12086370 hero='https://cdn.kqed.org/wp-content/uploads/sites/10/2026/06/MBC-profile-view-with-driver.jpg']Assembly member Dawn Addis, who chairs the chamber’s budget subcommittee on health, suggested Newsom could tap an additional $230 million from a fund for healthcare cost relief — money raised from a state penalty levied on those who can afford to enroll in health insurance but choose not to.\u003c/p>\n\u003cp>Lawmakers have \u003ca href=\"https://kffhealthnews.org/health-care-costs/california-stockpiles-penalties-from-uninsured-residents-instead-of-lowering-care-costs/\">previously criticized state officials\u003c/a> for socking away much of the penalty revenue, which was supposed to go toward healthcare affordability. After California discontinued its premium subsidies thanks to increased federal assistance, the Newsom administration said the state was saving to help consumers once those temporary subsidies expired. Instead, California borrowed from the subsidy fund to cover state budget shortfalls, to the tune of $771 million. Starting this year, the subsidy fund should see an influx of cash as the state pays back the loan.\u003c/p>\n\u003cp>At a May legislative hearing, Joseph Donaldson, then a Department of Finance analyst, said maintaining the reserve was a prudent and financially sustainable approach.\u003c/p>\n\u003cp>Dylan Roby, a public health professor at the University of California-Irvine who consults for Covered California, said the focus on lower-income enrollees is deliberate. They qualify for federal subsidies that higher earners don’t, maximizing federal investment and strengthening the broader system.\u003c/p>\n\u003cp>“You end up with more advanced premium tax credits flowing into the state that you would have been leaving on the table,” he said.\u003c/p>\n\u003cp>State lawmakers have until June 15 to pass a state budget. Then, Covered California’s board would decide eligibility and benefit amounts, a decision that could come this summer, with new subsidies starting Jan. 1.\u003c/p>\n\u003cp>Even with the extra help, Walter and her husband worry they won’t be able to afford a potential $200 monthly premium payment. Walter said she’d likely have to rely on free clinics or ration medications.\u003c/p>\n\u003cp>“I take so many pills, I rattle,” she said. “That, on top of the $200? For us, it really adds up.”\u003c/p>\n\u003cp>\u003cem>Are you struggling to afford your health insurance? Have you decided to forgo coverage? \u003c/em>\u003ca href=\"https://kffhealthnews.org/help-us-report-on-rising-insurance-costs/\">\u003cem>Click here\u003c/em>\u003c/a>\u003cem> to contact KFF Health News and share your story.\u003c/em>\u003c/p>\n\u003cp>\u003ca href=\"https://kffhealthnews.org/about-us/\">\u003cem>KFF Health News\u003c/em>\u003c/a>\u003cem> is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at\u003c/em> \u003ca href=\"https://www.kff.org/about-us/\">\u003cem>KFF\u003c/em>\u003c/a>\u003cem> — the independent source for health policy research, polling, and journalism.\u003c/em>\u003c/p>\n\u003cp>[ad floatright]\u003c/p>\n",
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"excerpt": "California is considering expanding financial help for low-income residents struggling to pay high health insurance premiums after losing federal subsidies. But relief for state marketplace customers will be limited. Here’s who may get help and what it could mean for premiums.",
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"title": "1 in 4 Covered California Enrollees Could Get State Aid Under Newsom Proposal | KQED",
"description": "California is considering expanding financial help for low-income residents struggling to pay high health insurance premiums after losing federal subsidies. But relief for state marketplace customers will be limited. Here’s who may get help and what it could mean for premiums.",
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"content": "\u003cdiv class=\"post-body\">\u003cp>\u003cp>When Congress allowed COVID-era subsidies for health insurance to expire, \u003ca href=\"https://www.kqed.org/news/tag/california\">California\u003c/a> used its own funds to offset the hike in Obamacare premium costs for residents with low incomes.\u003c/p>\n\u003cp>But the reach has been limited.\u003c/p>\n\u003cp>As Gov. Gavin Newsom negotiates his last budget with the legislature, the Democrat wants to offer financial help to more than 1 in 4 enrollees in Covered California, the nation’s largest state-run health insurance marketplace. Democratic lawmakers, who hold a supermajority, are still debating the plan.\u003c/p>\n\u003cp>“My budget proposal would KEEP $0 monthly plans for low-income Californians to help clean up the financial disaster Trump created,” Newsom \u003ca href=\"https://www.facebook.com/CAgovernor/posts/pfbid0D7ZbfX4NexjyjBrNuyXribDdCep4aDahzNSHaZX9g8Cnyu9MA7AaUAg99dxp7K7Sl\">posted on Facebook\u003c/a>, where he often chides the president and GOP Congress.\u003c/p>\n\u003cp>\u003c/p>\u003c/div>",
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"content": "\u003cdiv class=\"post-body\">\u003cp>\u003c/p>\n\u003cp>\u003ca href=\"https://stateline.org/2026/02/18/some-states-are-helping-to-make-obamacare-plans-more-affordable/\">Ten blue states\u003c/a> have put up their own funds to keep Affordable Care Act plans affordable and residents insured, as the rising cost of healthcare has emerged as a \u003ca href=\"https://www.kff.org/public-opinion/poll-the-cost-of-health-care-remains-at-the-top-of-the-publics-list-of-economic-concerns-even-as-concerns-about-gas-prices-climb/\">top concern\u003c/a> among voters. Newsom’s $300 million proposal would make California’s program among the most generous, but even the nation’s richest state can’t patch a \u003ca href=\"https://hbex.coveredca.com/data-research/library/Brief%201%20IRA%20ACA%20Premium%20Impacts%202026.pdf\">$2.5 billion hole\u003c/a> left by the expiration of enhanced subsidies at the end of last year.\u003c/p>\n\u003cp>“The gap between what people can pay in their monthly budget and what health insurance costs is so big that it’s a lot for states to take on,” said \u003ca href=\"https://www.commonwealthfund.org/person/stacey-pogue\">Stacey Pogue\u003c/a>, a senior research fellow at the Center on Health Insurance Reforms at Georgetown University. “They’re going to have to figure out how they can finance that.”\u003c/p>\n\u003cp>New Mexico lawmakers have \u003ca href=\"https://stateline.org/2026/02/18/some-states-are-helping-to-make-obamacare-plans-more-affordable/\">backfilled 100%\u003c/a> of the lost federal subsidies with state money. It seems to have worked; New Mexico saw \u003ca href=\"https://www.hca.nm.gov/2026/02/10/health-insurance-enrollment-up-in-new-mexico-amid-national-decline/\">double-digit increases\u003c/a> in marketplace enrollment this year, but state analysts \u003ca href=\"https://www.nmlegis.gov/Sessions/26%20Regular/firs/HB0004.PDF\">have warned\u003c/a> that the subsidy program isn’t sustainable.\u003c/p>\n\u003cfigure id=\"attachment_12040844\" class=\"wp-caption aligncenter\" style=\"max-width: 1760px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12040844\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2025/05/npr.brightspotcdn.jpg\" alt=\"\" width=\"1760\" height=\"1174\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2025/05/npr.brightspotcdn.jpg 1760w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/05/npr.brightspotcdn-800x534.jpg 800w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/05/npr.brightspotcdn-1020x680.jpg 1020w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/05/npr.brightspotcdn-160x107.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/05/npr.brightspotcdn-1536x1025.jpg 1536w\" sizes=\"auto, (max-width: 1760px) 100vw, 1760px\">\u003cfigcaption class=\"wp-caption-text\">Protesters gather outside Kern Medical Hospital in Bakersfield. They’re opposing proposed GOP cuts to Medicaid, which provides health insurance to lower-income Americans. \u003ccite>(Joshua Yeager/KVPR)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>\u003ca href=\"https://www.wgbh.org/news/politics/2026-01-08/massachusetts-spending-250-million-to-blunt-cost-increases-from-expired-health-care-subsidies\">Massachusetts\u003c/a> and \u003ca href=\"https://newjerseymonitor.com/2026/05/20/new-jersey-healthcare-fiscal-abyss/\">New Jersey\u003c/a>, which, like California, tax residents \u003ca href=\"https://www.kff.org/faqs/faqs-health-insurance-marketplace-and-the-aca/marketplace-basics/im-uninsured-am-i-required-to-get-health-insurance/\">for not having health insurance\u003c/a>, are also spending hundreds of millions of dollars to try to keep premium payments low. Their hope, healthcare experts say, is to avoid the exodus seen in states such as Georgia that didn’t offer enrollees help.\u003c/p>\n\u003cp>Since the enhanced subsidies expired, \u003ca href=\"https://www.kff.org/affordable-care-act/what-we-know-so-far-about-2026-aca-marketplace-enrollment-premiums-and-deductibles/\">enrollees nationwide\u003c/a> have seen their premium payments increase by $65 a month on average.\u003c/p>\n\u003cp>Conservatives, including \u003ca href=\"https://www.ocregister.com/2026/01/13/insurance-company-subsidies-are-no-prescription-for-lowering-healthcare-costs/\">congressional Republicans\u003c/a>, have long argued that the subsidy expansion was too generous to high-income enrollees and \u003ca href=\"https://www.facebook.com/reel/25473637075567865\">inflated healthcare costs\u003c/a>.\u003c/p>\n\u003cp>“There are never enough subsidies to make health insurance affordable because subsidies are the problem,” said Michael Cannon, director of health policy studies at the libertarian Cato Institute. “They are causing people to turn a blind eye to fraud and waste and excessive prices because it’s someone else’s money that they’re spending, not their own.”\u003c/p>\n\u003ch2>Helping the poorest?\u003c/h2>\n\u003cp>People who earn too much to qualify for Medicaid got relief starting in January after Newsom and legislators softened the blow for about 300,000 of the lowest-income enrollees. They offset lost federal premium tax credits for individuals who \u003ca href=\"https://board.coveredca.com/meetings/2026/May%2021,%202026/Presentation_2027_State_Premium_Subsidy_Program_Design.pdf\">earned up to $23,475\u003c/a> last year and partially filled the gap for those who earned up to $25,823.\u003c/p>\n\u003cp>The governor now wants to expand subsidies to those who earn up to $31,920 this year for an individual and $66,000 for a family of four — an estimated 218,000 additional people.\u003c/p>\n\u003cp>Veronica and William Walter, who live in the San Francisco Bay Area, earn less than $40,000 a year in one of the nation’s most expensive regions. They’re counting on a more generous state healthcare tax credit if they have to pay for health insurance next year.\u003c/p>\n\u003cfigure id=\"attachment_12086988\" class=\"wp-caption aligncenter\" style=\"max-width: 2000px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12086988\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/06/PricedOutCA2.jpg\" alt=\"\" width=\"2000\" height=\"1500\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/06/PricedOutCA2.jpg 2000w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/06/PricedOutCA2-160x120.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/06/PricedOutCA2-1536x1152.jpg 1536w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\">\u003cfigcaption class=\"wp-caption-text\">Veronica Walter talks through her financial challenges while sitting at the dining table in her two-bedroom condo in Newark, California. Walter says she wouldn’t be able to afford the nearly $200 monthly premium for health insurance that she and her husband would likely pay on Covered California, even after a proposed expansion of state subsidies. \u003ccite>(Christine Mai-Duc/KFF Health News)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>A car accident two years ago left William temporarily disabled, qualifying the couple for Medi-Cal, the state’s Medicaid program.\u003c/p>\n\u003cp>Now he’s back at work as a security guard, and Veronica said she’s worried they’ll be kicked off Medi-Cal. She’s even more worried about how they’ll get by with federal premium tax credits not nearly as generous as before.\u003c/p>\n\u003cp>“Without it, we’re going to be facing worse problems than we have now,” she said. Under Newsom’s proposal, Veronica and others in the highest eligible income bracket could receive an average monthly subsidy of $36 a person.\u003c/p>\u003c/div>",
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"content": "\u003cdiv class=\"post-body\">\u003cp>“For them, $36 a month is the sort of thing that can make a difference between keeping coverage and losing coverage,” said Peter Lee, former executive director of Covered California. “We can’t fix everything with that gap, but we can focus the dollars on those who need it most.”\u003c/p>\n\u003cp>The Walter family, though, may still face a nearly $200 monthly premium payment to cover both of them, $130 more than they previously paid for healthcare and prescriptions through Covered California.\u003c/p>\n\u003cp>“I can’t afford that, not really,” said Veronica, a pet sitter who works part-time at a school. “A giant state like this with this many people, and this many resources? You can’t just leave the people with nothing for healthcare or healthcare they can’t afford.”\u003c/p>\n\u003cp>California policy researchers and health advocates acknowledge the limits of a partial subsidy but say that concentrating funds on those who earn less is the most efficient way to maximize impact. People who drop coverage are \u003ca href=\"https://www.kff.org/affordable-care-act/what-we-know-so-far-about-2026-aca-marketplace-enrollment-premiums-and-deductibles/#:~:text=Declines%20in%20plan%20sign%2Dups%20for%20young%20adults%20ages%2018%20to%2034%20account%20for%20more%20of%20the%20decrease%20in%20ACA%20Marketplace%20plan%20selections%20than%20any%20other%20age%20group.\">often younger\u003c/a>, healthier, and less likely to have high healthcare costs — all factors that help stabilize the insurance risk pool. Without coverage, Lee said, they’re also more likely to experience debt from medical emergencies or leave unpaid hospital bills that strain the \u003ca href=\"https://lao.ca.gov/Publications/Report/5180\">taxpayer-funded safety net\u003c/a>.\u003c/p>\n\u003cp>Cary Sanders, senior policy director at the California Pan-Ethnic Health Network, a health advocacy group, said the state’s move last year kept low-income enrollment in Covered California steady and reduced racial disparities in coverage.\u003c/p>\n\u003cp>“It’s working; it’s just that it’s not enough,” Sanders said. “We need the federal subsidies back.”\u003c/p>\n\u003ch2>Still no help for many\u003c/h2>\n\u003cp>When Congress passed enhanced subsidies in 2021, it capped monthly premium payments for \u003ca href=\"https://kffhealthnews.org/health-industry/obamacare-premiums-subsidies-trump-republicans-policy-fallout-kff-analysis/\">even the highest earners\u003c/a> at 8.5% of income. Those temporary enhancements allowed about 8 million Americans to choose robust plans with no monthly premium payment last year and helped double Obamacare enrollment to \u003ca href=\"https://www.kff.org/affordable-care-act/enrollment-growth-in-the-aca-marketplaces/\">an all-time high\u003c/a> of 24 million.\u003c/p>\n\u003cp>At the end of last year, 22 million of them lost that help when the GOP Congress blocked the extension.\u003c/p>\n\u003cp>The pressures on Obamacare enrollees don’t stop at premiums. Federal legislation Republicans passed last summer, known as the \u003ca href=\"https://dmhc.ca.gov/Portals/0/Docs/OFR/FSSB/Feb2026/CoveredCaliforniaUpdate.pdf#page=11\">One Big Beautiful Bill Act\u003c/a>, also shortens enrollment windows, tightens income verification requirements for subsidies, and requires enrollees who earn more than they projected to pay back the full amount.\u003c/p>\n\u003cfigure id=\"attachment_12052592\" class=\"wp-caption aligncenter\" style=\"max-width: 2000px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12052592\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2025/08/Covered-CA-lawn-sign.jpg\" alt=\"Una persona camina sobre la acera, a lado del patio de una casa donde está el letrero de Covered California.\" width=\"2000\" height=\"1232\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2025/08/Covered-CA-lawn-sign.jpg 2000w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/08/Covered-CA-lawn-sign-160x99.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/08/Covered-CA-lawn-sign-1536x946.jpg 1536w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\">\u003cfigcaption class=\"wp-caption-text\">Carteles de Covered California en Berkeley el 13 de enero de 2017. A partir del 31 de agosto, los beneficiarios de DACA ya no podrán encontrar planes de salud a través de Covered California. Hay algunas opciones limitadas disponibles. \u003ccite>(Lea Suzuki/The San Francisco Chronicle vía Getty Images)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>Even if Newsom’s proposal passes, most Covered California customers won’t get state help. Nearly 1 million enrollees — 52% — earn above the $31,300-a-year individual earning cutoff.\u003c/p>\n\u003cp>Victoria Garzouzi was one of many \u003ca href=\"https://kffhealthnews.org/health-care-costs/insurance-premium-payments-terminal-diagnosis-aca-subsidies-covered-california/\">middle-income retirees\u003c/a> hit with one of the most extreme premium increases: The monthly payment for her low-level bronze plan jumped eightfold to $1,600.\u003c/p>\n\u003cp>To make ends meet, she came out of retirement and dipped into her savings. “I’m working to pay for my insurance,” she said. “I am an army of one.”\u003c/p>\n\u003cp>Despite a $6,000 deductible, her health insurance premium payment is more than the mortgage on her two-bedroom house. She’s putting off a needed cataract surgery until October, when she turns 65 and qualifies for Medicare.\u003c/p>\n\u003cp>While GOP leaders have not publicly weighed in on the state subsidies, some Democratic lawmakers have questioned why more help hasn’t been proposed.\u003c/p>\u003c/div>",
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"content": "\u003cdiv class=\"post-body\">\u003cp>Assembly member Dawn Addis, who chairs the chamber’s budget subcommittee on health, suggested Newsom could tap an additional $230 million from a fund for healthcare cost relief — money raised from a state penalty levied on those who can afford to enroll in health insurance but choose not to.\u003c/p>\n\u003cp>Lawmakers have \u003ca href=\"https://kffhealthnews.org/health-care-costs/california-stockpiles-penalties-from-uninsured-residents-instead-of-lowering-care-costs/\">previously criticized state officials\u003c/a> for socking away much of the penalty revenue, which was supposed to go toward healthcare affordability. After California discontinued its premium subsidies thanks to increased federal assistance, the Newsom administration said the state was saving to help consumers once those temporary subsidies expired. Instead, California borrowed from the subsidy fund to cover state budget shortfalls, to the tune of $771 million. Starting this year, the subsidy fund should see an influx of cash as the state pays back the loan.\u003c/p>\n\u003cp>At a May legislative hearing, Joseph Donaldson, then a Department of Finance analyst, said maintaining the reserve was a prudent and financially sustainable approach.\u003c/p>\n\u003cp>Dylan Roby, a public health professor at the University of California-Irvine who consults for Covered California, said the focus on lower-income enrollees is deliberate. They qualify for federal subsidies that higher earners don’t, maximizing federal investment and strengthening the broader system.\u003c/p>\n\u003cp>“You end up with more advanced premium tax credits flowing into the state that you would have been leaving on the table,” he said.\u003c/p>\n\u003cp>State lawmakers have until June 15 to pass a state budget. Then, Covered California’s board would decide eligibility and benefit amounts, a decision that could come this summer, with new subsidies starting Jan. 1.\u003c/p>\n\u003cp>Even with the extra help, Walter and her husband worry they won’t be able to afford a potential $200 monthly premium payment. Walter said she’d likely have to rely on free clinics or ration medications.\u003c/p>\n\u003cp>“I take so many pills, I rattle,” she said. “That, on top of the $200? For us, it really adds up.”\u003c/p>\n\u003cp>\u003cem>Are you struggling to afford your health insurance? Have you decided to forgo coverage? \u003c/em>\u003ca href=\"https://kffhealthnews.org/help-us-report-on-rising-insurance-costs/\">\u003cem>Click here\u003c/em>\u003c/a>\u003cem> to contact KFF Health News and share your story.\u003c/em>\u003c/p>\n\u003cp>\u003ca href=\"https://kffhealthnews.org/about-us/\">\u003cem>KFF Health News\u003c/em>\u003c/a>\u003cem> is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at\u003c/em> \u003ca href=\"https://www.kff.org/about-us/\">\u003cem>KFF\u003c/em>\u003c/a>\u003cem> — the independent source for health policy research, polling, and journalism.\u003c/em>\u003c/p>\n\u003cp>\u003c/p>\u003c/div>",
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"title": "Bay Area Transit Agencies Saved $1 Billion Since 2020. Can They Sustain Those Savings?",
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"headTitle": "Bay Area Transit Agencies Saved $1 Billion Since 2020. Can They Sustain Those Savings? | KQED",
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"content": "\u003cp>The \u003ca href=\"https://www.kqed.org/news/tag/bay-area\">Bay Area’s \u003c/a>four major\u003ca href=\"https://www.kqed.org/news/tag/public-transit\"> public transit\u003c/a> agencies — BART, Muni, Caltrain and AC Transit — collectively saved more than $1 billion since 2020 as they responded to changes in travel patterns during and after the pandemic, according to a new report.\u003c/p>\n\u003cp>“BART has really dialed back on spending and doing [service] increases at a time of great unknown, while also wanting to keep a nice quality of service running so that we can continue to attract riders,” BART spokesperson Alicia Trost said.\u003c/p>\n\u003cp>The state-required financial \u003ca href=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/4a_26-0635_3_Attachment_B_Phase_One_FER_Proposed_Final_Report.pdf\" target=\"_blank\" rel=\"noopener\">efficiency review report\u003c/a>, released Friday, credits the operating cost savings to temporary service reductions, wage and hiring freezes and scaling back or deferring new projects. For BART, that meant $516 million in savings, for SFMTA, nearly $300 million, for AC transit, $200 million and for Caltrain, $76 million.\u003c/p>\n\u003cp>[ad fullwidth]\u003c/p>\n\u003cp>It comes as the four transit operators, which collectively represent 80% of public transit ridership in the region, stare down a fiscal cliff. Operators hope \u003ca href=\"https://www.kqed.org/news/12070685/campaign-to-avert-bay-area-public-transit-death-spiral-gets-underway\">a funding measure\u003c/a> making its way to the November ballot, which could generate $1 billion annually, comes to the rescue.\u003c/p>\n\u003cp>But critics argue the measure could reward bad behavior by bailing out fiscally irresponsible agencies.\u003c/p>\n\u003cp>Steve Glazer, a former state senator who represented most of Contra Costa County and parts of Alameda County, has been a vocal critic of BART’s financial management and argued the regional agency hasn’t understood where long-term service reductions need to be made and cut operations accordingly.\u003c/p>\n\u003cfigure id=\"attachment_11997867\" class=\"wp-caption aligncenter\" style=\"max-width: 2000px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"wp-image-11997867 size-full\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2024/07/007_KQED_PublicTransit_03102020_6511_qed.jpg\" alt=\"\" width=\"2000\" height=\"1333\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2024/07/007_KQED_PublicTransit_03102020_6511_qed.jpg 2000w, https://cdn.kqed.org/wp-content/uploads/sites/10/2024/07/007_KQED_PublicTransit_03102020_6511_qed-800x533.jpg 800w, https://cdn.kqed.org/wp-content/uploads/sites/10/2024/07/007_KQED_PublicTransit_03102020_6511_qed-1020x680.jpg 1020w, https://cdn.kqed.org/wp-content/uploads/sites/10/2024/07/007_KQED_PublicTransit_03102020_6511_qed-160x107.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2024/07/007_KQED_PublicTransit_03102020_6511_qed-1536x1024.jpg 1536w, https://cdn.kqed.org/wp-content/uploads/sites/10/2024/07/007_KQED_PublicTransit_03102020_6511_qed-1920x1280.jpg 1920w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\">\u003cfigcaption class=\"wp-caption-text\">A new financial efficiency report comes as a measure makes its way to the November ballot, aiming to prevent the region’s public transportation from falling off a fiscal cliff. \u003ccite>(Beth LaBerge/KQED)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>“They’ve had four years to anticipate this fiscal cliff that they claim they’re going over and yet have taken none of the more substantial steps necessary to financially right-size the system, so that the revenues are matching the expenditure[s],” Glazer said.\u003c/p>\n\u003cp>Trost pushed back, arguing that cutting service before allowing voters to decide on the measure would lead to a decrease in ridership and could send BART down a deeper financial spiral.\u003c/p>\n\u003cp>“We don’t believe cutting service is going to serve the Bay Area … the Bay Area relies on the service level we’re providing now,” she said. “Right now, if you come from Dublin, you’re waiting 20 minutes for a train… [state] Sen. Glazer is saying that people should be waiting more, and we disagree.”\u003c/p>\n\u003cp>Earlier this year, Gov. Gavin Newsom authorized a \u003ca href=\"https://www.kqed.org/news/12073891/newsom-signs-590-million-loan-to-avert-drastic-bay-area-transit-cuts\">$590 million emergency bridge loan\u003c/a> to prevent Bay Area agencies from shuttering stations and slashing service. Trost said BART officials predicted they would run out of those funds next month.[aside postID=news_12074874 hero='https://cdn.kqed.org/wp-content/uploads/sites/10/2026/03/260303-MUNIFUNDINGKICKOFF-14-BL-KQED.jpg']“But because of all of these efficiency measures, we’ve been able to carry that money over into fiscal year [20]27, which is going to help us reduce our deficit,” she told KQED.\u003c/p>\n\u003cp>Before the pandemic, regional population and job growth led transit agencies to expand service and make large capital investments, the report states. But the pandemic disrupted that trend and forced agencies to cut back service, freeze hiring and hold back on investing in new lines and schedules.\u003c/p>\n\u003cp>Even as riders have returned, commuting patterns have changed for the foreseeable future.\u003c/p>\n\u003cp>The report also details ways transit agencies could improve ridership and customer experience without incurring new costs. BART and Muni, for example, could improve fare compliance and enforcement and implement demand-based pricing for parking at their stations.\u003c/p>\n\u003cp>Parisa Safarzadeh, a San Francisco Municipal Transit Agency spokesperson, said that while many of the cuts detailed in the report represented one-time cost savings, they also illustrate how the agency managed its finances with precision in a time of uncertainty.\u003c/p>\n\u003cp>“We understand it’s not enough to rely on one-time sources or stop-gap cuts as a sustainable way to address our financial challenges,” she said to KQED in an emailed statement. “We appreciate how this review underscores the need to establish a ‘new normal’ in how we continue the hard work to build on this momentum.”\u003c/p>\n\u003cp>Last October, \u003ca href=\"https://www.kqed.org/news/12039394/last-ditch-effort-fund-bay-area-transit-tries-pick-up-support\">Newsom signed a bill\u003c/a> that allowed advocates to start fundraising and gathering signatures for the measure to appear on the November ballot. \u003ca href=\"https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202520260SB63\">SB 63\u003c/a> also required a third party to conduct a two-phase financial efficiency review. This report marks the first phase of that process. If voters approve the measure in November, a second review would be required to evaluate further cost-saving strategies and financial sustainability.\u003c/p>\n\u003cp>The law also requires the agencies to adopt some of the recommendations to improve service and ridership experience by July 1. BART’s Board is expected to vote on it during its first meeting in June.\u003c/p>\n\u003cp>\u003c/p>\n",
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"content": "\u003cdiv class=\"post-body\">\u003cp>\u003cp>The \u003ca href=\"https://www.kqed.org/news/tag/bay-area\">Bay Area’s \u003c/a>four major\u003ca href=\"https://www.kqed.org/news/tag/public-transit\"> public transit\u003c/a> agencies — BART, Muni, Caltrain and AC Transit — collectively saved more than $1 billion since 2020 as they responded to changes in travel patterns during and after the pandemic, according to a new report.\u003c/p>\n\u003cp>“BART has really dialed back on spending and doing [service] increases at a time of great unknown, while also wanting to keep a nice quality of service running so that we can continue to attract riders,” BART spokesperson Alicia Trost said.\u003c/p>\n\u003cp>The state-required financial \u003ca href=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/4a_26-0635_3_Attachment_B_Phase_One_FER_Proposed_Final_Report.pdf\" target=\"_blank\" rel=\"noopener\">efficiency review report\u003c/a>, released Friday, credits the operating cost savings to temporary service reductions, wage and hiring freezes and scaling back or deferring new projects. For BART, that meant $516 million in savings, for SFMTA, nearly $300 million, for AC transit, $200 million and for Caltrain, $76 million.\u003c/p>\n\u003cp>\u003c/p>\u003c/div>",
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"content": "\u003cdiv class=\"post-body\">\u003cp>\u003c/p>\n\u003cp>It comes as the four transit operators, which collectively represent 80% of public transit ridership in the region, stare down a fiscal cliff. Operators hope \u003ca href=\"https://www.kqed.org/news/12070685/campaign-to-avert-bay-area-public-transit-death-spiral-gets-underway\">a funding measure\u003c/a> making its way to the November ballot, which could generate $1 billion annually, comes to the rescue.\u003c/p>\n\u003cp>But critics argue the measure could reward bad behavior by bailing out fiscally irresponsible agencies.\u003c/p>\n\u003cp>Steve Glazer, a former state senator who represented most of Contra Costa County and parts of Alameda County, has been a vocal critic of BART’s financial management and argued the regional agency hasn’t understood where long-term service reductions need to be made and cut operations accordingly.\u003c/p>\n\u003cfigure id=\"attachment_11997867\" class=\"wp-caption aligncenter\" style=\"max-width: 2000px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"wp-image-11997867 size-full\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2024/07/007_KQED_PublicTransit_03102020_6511_qed.jpg\" alt=\"\" width=\"2000\" height=\"1333\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2024/07/007_KQED_PublicTransit_03102020_6511_qed.jpg 2000w, https://cdn.kqed.org/wp-content/uploads/sites/10/2024/07/007_KQED_PublicTransit_03102020_6511_qed-800x533.jpg 800w, https://cdn.kqed.org/wp-content/uploads/sites/10/2024/07/007_KQED_PublicTransit_03102020_6511_qed-1020x680.jpg 1020w, https://cdn.kqed.org/wp-content/uploads/sites/10/2024/07/007_KQED_PublicTransit_03102020_6511_qed-160x107.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2024/07/007_KQED_PublicTransit_03102020_6511_qed-1536x1024.jpg 1536w, https://cdn.kqed.org/wp-content/uploads/sites/10/2024/07/007_KQED_PublicTransit_03102020_6511_qed-1920x1280.jpg 1920w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\">\u003cfigcaption class=\"wp-caption-text\">A new financial efficiency report comes as a measure makes its way to the November ballot, aiming to prevent the region’s public transportation from falling off a fiscal cliff. \u003ccite>(Beth LaBerge/KQED)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>“They’ve had four years to anticipate this fiscal cliff that they claim they’re going over and yet have taken none of the more substantial steps necessary to financially right-size the system, so that the revenues are matching the expenditure[s],” Glazer said.\u003c/p>\n\u003cp>Trost pushed back, arguing that cutting service before allowing voters to decide on the measure would lead to a decrease in ridership and could send BART down a deeper financial spiral.\u003c/p>\n\u003cp>“We don’t believe cutting service is going to serve the Bay Area … the Bay Area relies on the service level we’re providing now,” she said. “Right now, if you come from Dublin, you’re waiting 20 minutes for a train… [state] Sen. Glazer is saying that people should be waiting more, and we disagree.”\u003c/p>\n\u003cp>Earlier this year, Gov. Gavin Newsom authorized a \u003ca href=\"https://www.kqed.org/news/12073891/newsom-signs-590-million-loan-to-avert-drastic-bay-area-transit-cuts\">$590 million emergency bridge loan\u003c/a> to prevent Bay Area agencies from shuttering stations and slashing service. Trost said BART officials predicted they would run out of those funds next month.\u003c/p>\u003c/div>",
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"content": "\u003cdiv class=\"post-body\">\u003cp>“But because of all of these efficiency measures, we’ve been able to carry that money over into fiscal year [20]27, which is going to help us reduce our deficit,” she told KQED.\u003c/p>\n\u003cp>Before the pandemic, regional population and job growth led transit agencies to expand service and make large capital investments, the report states. But the pandemic disrupted that trend and forced agencies to cut back service, freeze hiring and hold back on investing in new lines and schedules.\u003c/p>\n\u003cp>Even as riders have returned, commuting patterns have changed for the foreseeable future.\u003c/p>\n\u003cp>The report also details ways transit agencies could improve ridership and customer experience without incurring new costs. BART and Muni, for example, could improve fare compliance and enforcement and implement demand-based pricing for parking at their stations.\u003c/p>\n\u003cp>Parisa Safarzadeh, a San Francisco Municipal Transit Agency spokesperson, said that while many of the cuts detailed in the report represented one-time cost savings, they also illustrate how the agency managed its finances with precision in a time of uncertainty.\u003c/p>\n\u003cp>“We understand it’s not enough to rely on one-time sources or stop-gap cuts as a sustainable way to address our financial challenges,” she said to KQED in an emailed statement. “We appreciate how this review underscores the need to establish a ‘new normal’ in how we continue the hard work to build on this momentum.”\u003c/p>\n\u003cp>Last October, \u003ca href=\"https://www.kqed.org/news/12039394/last-ditch-effort-fund-bay-area-transit-tries-pick-up-support\">Newsom signed a bill\u003c/a> that allowed advocates to start fundraising and gathering signatures for the measure to appear on the November ballot. \u003ca href=\"https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202520260SB63\">SB 63\u003c/a> also required a third party to conduct a two-phase financial efficiency review. This report marks the first phase of that process. If voters approve the measure in November, a second review would be required to evaluate further cost-saving strategies and financial sustainability.\u003c/p>\n\u003cp>The law also requires the agencies to adopt some of the recommendations to improve service and ridership experience by July 1. BART’s Board is expected to vote on it during its first meeting in June.\u003c/p>\n\u003cp>\u003c/p>\n\u003c/div>\u003c/p>",
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"slug": "after-meta-layoffs-newsom-signs-ai-order-to-protect-workers-and-jobs",
"title": "After Meta Layoffs, Newsom Signs AI Order to ‘Protect Workers’ and Jobs",
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"content": "\u003cp>\u003ca href=\"https://www.kqed.org/news/tag/gov-gavin-newsom\">Gov. Gavin Newsom\u003c/a> issued on Thursday what his office called a “first-of-its-kind”\u003ca href=\"https://www.gov.ca.gov/wp-content/uploads/2026/05/5.21.26-AI-Workforce-EO-FINAL-SIGNED.pdf\"> executive order\u003c/a> directing state agencies to prepare workers and businesses for artificial intelligence-driven workforce disruption.\u003c/p>\n\u003cp>“California has never sat back and watched as the future happened to us — and we won’t start now,” Newsom said, in a statement accompanying the order. “We have taken the lead on advancing innovation, safety, and transparency. But we must think bigger. This moment demands that we reimagine the entire system — how we work, how we govern, how we prepare people for the future.”\u003c/p>\n\u003cp>The order mandates agencies to explore a range of policy options, including severance standards, expanded unemployment insurance, job retraining programs aimed specifically at white-collar workers, worker ownership models and a concept the governor called “universal basic capital,” giving all residents a stake in assets such as corporate stocks, bonds or wealth funds.\u003c/p>\n\u003cp>[ad fullwidth]\u003c/p>\n\u003cp>The move reflects \u003ca href=\"https://www.kqed.org/news/12079472/stanford-study-ai-experts-are-optimistic-about-ai-the-rest-of-us-not-so-much\">growing tension among Americans\u003c/a> over how AI is disrupting their \u003ca href=\"https://www.kqed.org/news/12034490/ai-companions-seductive-risk-teens-senators-want-more-guardrails\">personal lives\u003c/a> and \u003ca href=\"https://www.kqed.org/news/12076726/ai-is-changing-tech-work-heres-why-it-matters-for-the-rest-of-us\">jobs\u003c/a>, even as many business leaders continue to express optimism about the technology’s capabilities. Layoffs tied to AI are snowballing across many sectors of the economy, including Silicon Valley, and labor leaders are growing increasingly impatient with the governor’s cautious approach to regulating the industry.\u003c/p>\n\u003cp>Earlier this week, Meta announced it was laying off roughly 8,000 workers, about 10% of its workforce, as the company accelerates its shift toward AI. Intel, Cisco, Amazon and other tech giants have also dramatically reduced their headcounts in recent months, citing the need to shift spending to AI-focused employees and data center construction.\u003c/p>\n\u003cp>Anthropic co-founder Dario Amodei has predicted that roughly half of all white-collar jobs could disappear within five years. Most other tech leaders disagree with the specific timeline but broadly agree that AI will displace white-collar workers in engineering, communications and law in the near future.\u003c/p>\n\u003cfigure id=\"attachment_12055158\" class=\"wp-caption aligncenter\" style=\"max-width: 2000px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12055158\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2025/09/AnthropicAIGetty.jpg\" alt=\"\" width=\"2000\" height=\"1333\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2025/09/AnthropicAIGetty.jpg 2000w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/09/AnthropicAIGetty-160x107.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/09/AnthropicAIGetty-1536x1024.jpg 1536w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\">\u003cfigcaption class=\"wp-caption-text\">From left to right: Anthropic CEO Dario Amodei, Chief Product Officer Mike Krieger and Head of Communications Sasha de Marigny give a press conference during Anthropic’s first developer conference in San Francisco, California, on May 22, 2025. \u003ccite>(Julie Jammot/AFP via Getty Images)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>The economic logic driving those cuts has alarmed policymakers.\u003c/p>\n\u003cp>Newsom\u003ca href=\"https://x.com/CAgovernor/status/2057507319139750057\"> posted to the social media platform X\u003c/a> shortly after signing: “California will pursue new policies that make sure working Californians — not just Big Tech — benefit from the wealth and breakthroughs coming out of this space.”\u003c/p>\n\u003cp>Newsom telegraphed Thursday’s order earlier this week, when he appeared at the Center for American Progress IDEAS Conference in Washington. “Businesses are going to make a fortune, and that’s why you cannot continue to have a payroll tax system that taxes jobs and then subsidizes automation,” Newsom said.\u003c/p>\n\u003cp>Tom Kemp, executive director of the California Privacy Protection Agency, applauded the fact that the order named data privacy as a consumer protection concern and highlighted the CPPA’s automated decision-making technology regulations, which he called “the nation’s most comprehensive.”[aside postID=news_12084499 hero='https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/TeenagersMetaSocialMediaGetty.jpg']Others are more skeptical. “\u003cspan style=\"font-weight: 400\">Catastrophic job loss from AI is not inevitable, it’s a political choice\u003c/span>,” Lorena Gonzalez, president of the California Federation of Labor Unions, AFL-CIO, wrote in a statement.\u003c/p>\n\u003cp>However, Gonzalez noted one area of genuine agreement: the order’s emphasis on collective bargaining as a tool for protecting workers from AI displacement.\u003c/p>\n\u003cp>“That database of AI provisions in collective bargaining agreements exists, and we have introduced bills that mirror those protections over the past few years,” she wrote, going on to chide the governor for vetoing a number of them.\u003c/p>\n\u003cp>According to \u003ca href=\"https://www.kqed.org/news/12079472/stanford-study-ai-experts-are-optimistic-about-ai-the-rest-of-us-not-so-much\">Stanford HAI’s 2026 AI Index\u003c/a>, software developers ages 22 to 25 are among those most likely to see their skills made redundant earliest. This year, U.S. employment fell nearly 20% from 2024, even as headcount for older developers continued to grow.\u003c/p>\n\u003cp>Following the job cuts announced at Meta, a union of Alphabet workers in the U.S. and Canada released a statement that suggests Silicon Valley’s own labor force may seek to organize.\u003c/p>\n\u003cp>“As Big Tech companies attempt to nudge ahead of each other in the AI race, our daily work lives are shifting,” Alphabet Workers Union-CWA Local 9009 said in a statement. “It’s undeniable that our whole industry is being transformed by the corporate push to adopt new AI tools. It’s hard not to feel anxiety and fear when we can see more and more tech companies cutting huge portions of their workforce both in anticipation of replacing them with AI, and to fund their multi-billion-dollar bets on AI as the future of the industry.”\u003c/p>\n\u003cfigure id=\"attachment_12036125\" class=\"wp-caption aligncenter\" style=\"max-width: 2000px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12036125\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2025/04/MetaGetty2.jpg\" alt=\"\" width=\"2000\" height=\"1333\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2025/04/MetaGetty2.jpg 2000w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/04/MetaGetty2-800x533.jpg 800w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/04/MetaGetty2-1020x680.jpg 1020w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/04/MetaGetty2-160x107.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/04/MetaGetty2-1536x1024.jpg 1536w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/04/MetaGetty2-1920x1280.jpg 1920w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\">\u003cfigcaption class=\"wp-caption-text\">The Meta, Facebook, Instagram, WhatsApp, Messenger and Threads logos are screened on a mobile phone on Jan. 25, 2025. \u003ccite>(Beata Zawrzel/NurPhoto via Getty Images)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>Meta declined to comment, and Anthropic, OpenAI, DeepMind and Amazon did not respond in time for this report.\u003c/p>\n\u003cp>In February, AFL-CIO President Liz Shuler and Gonzalez delivered what amounted to an ultimatum to Newsom: regulate AI or lose labor’s support for any future presidential run. Shuler called a potential AI-driven economic collapse a coming “crisis.”\u003c/p>\n\u003cp>In August 2025, Newsom announced a\u003ca href=\"https://www.kqed.org/news/12051433/california-teams-with-google-microsoft-ibm-adobe-to-prepare-students-for-ai-era\"> partnership with Google, Microsoft, IBM and Adobe\u003c/a> to expand AI education in California schools and community colleges, a workforce preparation push that now looks like a precursor to Thursday’s more sweeping order.\u003c/p>\n\u003cp>Newsom also announced the statewide expansion of Engaged California, a digital platform originally launched to help coordinate recovery after the 2025 Los Angeles wildfires, which will now be used to gather public input on AI’s impact on the workforce.\u003c/p>\n\u003ch2>A backdrop of federal inaction\u003c/h2>\n\u003cp>Newsom’s order comes as President Donald Trump on Thursday announced he was postponing signing a long-anticipated AI executive order, telling reporters, “I didn’t like what I was seeing.”\u003c/p>\n\u003cp>The planned federal order would have created a system for the government to vet powerful new AI models before public release, a process the administration had been negotiating with Anthropic, OpenAI, Google and xAI.\u003c/p>\n\u003cfigure id=\"attachment_12074482\" class=\"wp-caption aligncenter\" style=\"max-width: 2000px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12074482\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/02/GettyImages-2262729717-scaled-e1773182284895.jpg\" alt=\"\" width=\"2000\" height=\"1413\">\u003cfigcaption class=\"wp-caption-text\">President Donald Trump speaks during a press briefing at the White House on Feb. 20, 2026, in Washington, D.C. \u003ccite>(Chen Mengtong/China News Service/VCG via Getty Images)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>Trump has argued that aggressive AI oversight could hobble the United States in its technology competition with China, calling AI “a critical engine of the economy.” He told reporters he discussed AI safeguards with Chinese President Xi Jinping during a recent trip to China.\u003c/p>\n\u003cp>But it remains unclear whether the federal administration will allow California and other states to take dramatic action as AI reshapes the American labor force.\u003c/p>\n\u003cp>In December 2025, Trump faced\u003ca href=\"https://www.kqed.org/news/12066910/trumps-ai-order-provokes-pushback-from-california-officials-and-consumer-advocates\"> backlash\u003c/a> from California officials and consumer advocates after he issued an executive order curtailing states’ ability to regulate AI, though the order didn’t directly preempt state AI laws.\u003c/p>\n\u003cp>[ad floatright]\u003c/p>\n",
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"content": "\u003cdiv class=\"post-body\">\u003cp>\u003cp>\u003ca href=\"https://www.kqed.org/news/tag/gov-gavin-newsom\">Gov. Gavin Newsom\u003c/a> issued on Thursday what his office called a “first-of-its-kind”\u003ca href=\"https://www.gov.ca.gov/wp-content/uploads/2026/05/5.21.26-AI-Workforce-EO-FINAL-SIGNED.pdf\"> executive order\u003c/a> directing state agencies to prepare workers and businesses for artificial intelligence-driven workforce disruption.\u003c/p>\n\u003cp>“California has never sat back and watched as the future happened to us — and we won’t start now,” Newsom said, in a statement accompanying the order. “We have taken the lead on advancing innovation, safety, and transparency. But we must think bigger. This moment demands that we reimagine the entire system — how we work, how we govern, how we prepare people for the future.”\u003c/p>\n\u003cp>The order mandates agencies to explore a range of policy options, including severance standards, expanded unemployment insurance, job retraining programs aimed specifically at white-collar workers, worker ownership models and a concept the governor called “universal basic capital,” giving all residents a stake in assets such as corporate stocks, bonds or wealth funds.\u003c/p>\n\u003cp>\u003c/p>\u003c/div>",
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"content": "\u003cdiv class=\"post-body\">\u003cp>\u003c/p>\n\u003cp>The move reflects \u003ca href=\"https://www.kqed.org/news/12079472/stanford-study-ai-experts-are-optimistic-about-ai-the-rest-of-us-not-so-much\">growing tension among Americans\u003c/a> over how AI is disrupting their \u003ca href=\"https://www.kqed.org/news/12034490/ai-companions-seductive-risk-teens-senators-want-more-guardrails\">personal lives\u003c/a> and \u003ca href=\"https://www.kqed.org/news/12076726/ai-is-changing-tech-work-heres-why-it-matters-for-the-rest-of-us\">jobs\u003c/a>, even as many business leaders continue to express optimism about the technology’s capabilities. Layoffs tied to AI are snowballing across many sectors of the economy, including Silicon Valley, and labor leaders are growing increasingly impatient with the governor’s cautious approach to regulating the industry.\u003c/p>\n\u003cp>Earlier this week, Meta announced it was laying off roughly 8,000 workers, about 10% of its workforce, as the company accelerates its shift toward AI. Intel, Cisco, Amazon and other tech giants have also dramatically reduced their headcounts in recent months, citing the need to shift spending to AI-focused employees and data center construction.\u003c/p>\n\u003cp>Anthropic co-founder Dario Amodei has predicted that roughly half of all white-collar jobs could disappear within five years. Most other tech leaders disagree with the specific timeline but broadly agree that AI will displace white-collar workers in engineering, communications and law in the near future.\u003c/p>\n\u003cfigure id=\"attachment_12055158\" class=\"wp-caption aligncenter\" style=\"max-width: 2000px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12055158\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2025/09/AnthropicAIGetty.jpg\" alt=\"\" width=\"2000\" height=\"1333\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2025/09/AnthropicAIGetty.jpg 2000w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/09/AnthropicAIGetty-160x107.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/09/AnthropicAIGetty-1536x1024.jpg 1536w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\">\u003cfigcaption class=\"wp-caption-text\">From left to right: Anthropic CEO Dario Amodei, Chief Product Officer Mike Krieger and Head of Communications Sasha de Marigny give a press conference during Anthropic’s first developer conference in San Francisco, California, on May 22, 2025. \u003ccite>(Julie Jammot/AFP via Getty Images)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>The economic logic driving those cuts has alarmed policymakers.\u003c/p>\n\u003cp>Newsom\u003ca href=\"https://x.com/CAgovernor/status/2057507319139750057\"> posted to the social media platform X\u003c/a> shortly after signing: “California will pursue new policies that make sure working Californians — not just Big Tech — benefit from the wealth and breakthroughs coming out of this space.”\u003c/p>\n\u003cp>Newsom telegraphed Thursday’s order earlier this week, when he appeared at the Center for American Progress IDEAS Conference in Washington. “Businesses are going to make a fortune, and that’s why you cannot continue to have a payroll tax system that taxes jobs and then subsidizes automation,” Newsom said.\u003c/p>\n\u003cp>Tom Kemp, executive director of the California Privacy Protection Agency, applauded the fact that the order named data privacy as a consumer protection concern and highlighted the CPPA’s automated decision-making technology regulations, which he called “the nation’s most comprehensive.”\u003c/p>\u003c/div>",
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"content": "\u003cdiv class=\"post-body\">\u003cp>Others are more skeptical. “\u003cspan style=\"font-weight: 400\">Catastrophic job loss from AI is not inevitable, it’s a political choice\u003c/span>,” Lorena Gonzalez, president of the California Federation of Labor Unions, AFL-CIO, wrote in a statement.\u003c/p>\n\u003cp>However, Gonzalez noted one area of genuine agreement: the order’s emphasis on collective bargaining as a tool for protecting workers from AI displacement.\u003c/p>\n\u003cp>“That database of AI provisions in collective bargaining agreements exists, and we have introduced bills that mirror those protections over the past few years,” she wrote, going on to chide the governor for vetoing a number of them.\u003c/p>\n\u003cp>According to \u003ca href=\"https://www.kqed.org/news/12079472/stanford-study-ai-experts-are-optimistic-about-ai-the-rest-of-us-not-so-much\">Stanford HAI’s 2026 AI Index\u003c/a>, software developers ages 22 to 25 are among those most likely to see their skills made redundant earliest. This year, U.S. employment fell nearly 20% from 2024, even as headcount for older developers continued to grow.\u003c/p>\n\u003cp>Following the job cuts announced at Meta, a union of Alphabet workers in the U.S. and Canada released a statement that suggests Silicon Valley’s own labor force may seek to organize.\u003c/p>\n\u003cp>“As Big Tech companies attempt to nudge ahead of each other in the AI race, our daily work lives are shifting,” Alphabet Workers Union-CWA Local 9009 said in a statement. “It’s undeniable that our whole industry is being transformed by the corporate push to adopt new AI tools. It’s hard not to feel anxiety and fear when we can see more and more tech companies cutting huge portions of their workforce both in anticipation of replacing them with AI, and to fund their multi-billion-dollar bets on AI as the future of the industry.”\u003c/p>\n\u003cfigure id=\"attachment_12036125\" class=\"wp-caption aligncenter\" style=\"max-width: 2000px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12036125\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2025/04/MetaGetty2.jpg\" alt=\"\" width=\"2000\" height=\"1333\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2025/04/MetaGetty2.jpg 2000w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/04/MetaGetty2-800x533.jpg 800w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/04/MetaGetty2-1020x680.jpg 1020w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/04/MetaGetty2-160x107.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/04/MetaGetty2-1536x1024.jpg 1536w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/04/MetaGetty2-1920x1280.jpg 1920w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\">\u003cfigcaption class=\"wp-caption-text\">The Meta, Facebook, Instagram, WhatsApp, Messenger and Threads logos are screened on a mobile phone on Jan. 25, 2025. \u003ccite>(Beata Zawrzel/NurPhoto via Getty Images)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>Meta declined to comment, and Anthropic, OpenAI, DeepMind and Amazon did not respond in time for this report.\u003c/p>\n\u003cp>In February, AFL-CIO President Liz Shuler and Gonzalez delivered what amounted to an ultimatum to Newsom: regulate AI or lose labor’s support for any future presidential run. Shuler called a potential AI-driven economic collapse a coming “crisis.”\u003c/p>\n\u003cp>In August 2025, Newsom announced a\u003ca href=\"https://www.kqed.org/news/12051433/california-teams-with-google-microsoft-ibm-adobe-to-prepare-students-for-ai-era\"> partnership with Google, Microsoft, IBM and Adobe\u003c/a> to expand AI education in California schools and community colleges, a workforce preparation push that now looks like a precursor to Thursday’s more sweeping order.\u003c/p>\n\u003cp>Newsom also announced the statewide expansion of Engaged California, a digital platform originally launched to help coordinate recovery after the 2025 Los Angeles wildfires, which will now be used to gather public input on AI’s impact on the workforce.\u003c/p>\n\u003ch2>A backdrop of federal inaction\u003c/h2>\n\u003cp>Newsom’s order comes as President Donald Trump on Thursday announced he was postponing signing a long-anticipated AI executive order, telling reporters, “I didn’t like what I was seeing.”\u003c/p>\n\u003cp>The planned federal order would have created a system for the government to vet powerful new AI models before public release, a process the administration had been negotiating with Anthropic, OpenAI, Google and xAI.\u003c/p>\n\u003cfigure id=\"attachment_12074482\" class=\"wp-caption aligncenter\" style=\"max-width: 2000px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12074482\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/02/GettyImages-2262729717-scaled-e1773182284895.jpg\" alt=\"\" width=\"2000\" height=\"1413\">\u003cfigcaption class=\"wp-caption-text\">President Donald Trump speaks during a press briefing at the White House on Feb. 20, 2026, in Washington, D.C. \u003ccite>(Chen Mengtong/China News Service/VCG via Getty Images)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>Trump has argued that aggressive AI oversight could hobble the United States in its technology competition with China, calling AI “a critical engine of the economy.” He told reporters he discussed AI safeguards with Chinese President Xi Jinping during a recent trip to China.\u003c/p>\n\u003cp>But it remains unclear whether the federal administration will allow California and other states to take dramatic action as AI reshapes the American labor force.\u003c/p>\n\u003cp>In December 2025, Trump faced\u003ca href=\"https://www.kqed.org/news/12066910/trumps-ai-order-provokes-pushback-from-california-officials-and-consumer-advocates\"> backlash\u003c/a> from California officials and consumer advocates after he issued an executive order curtailing states’ ability to regulate AI, though the order didn’t directly preempt state AI laws.\u003c/p>\n\u003cp>\u003c/p>\u003c/div>",
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"title": "Here’s What Newsom’s Revised Budget Means for Education in California",
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"content": "\u003cp>Gov. Gavin Newsom’s proposed\u003ca href=\"https://www.kqed.org/news/12083617/newsom-touts-dominance-of-california-in-final-budget-proposal\"> spending plan\u003c/a> this week includes $2.4 billion in new ongoing investments for special education and paid pregnancy leave for teachers — issues teachers have brought front and center in the face of high living costs and staff retention struggles.\u003c/p>\n\u003cp>While education advocates said the plan released Thursday and known as \u003ca href=\"https://www.kqed.org/news/12083623/newsom-unveils-final-state-budget-proposal-amid-deep-federal-spending-cuts\">the “May Revise” \u003c/a>is a significant improvement from Newsom’s January proposal, they say the governor still owes schools money from the state’s general fund.\u003c/p>\n\u003cp>“Gov. Gavin Newsom’s May Budget Revise contains welcome provisions that will benefit public schools,” California School Board Association President Debra Schade said in a statement. But, she continued, “the administration’s generosity in some areas is undercut by its inclusion of funding for one-time projects and one-size-fits-all mandates instead of investing those resources in base funding.”\u003c/p>\n\u003cp>[ad fullwidth]\u003c/p>\n\u003cp>Newsom’s spending plan includes a $6.4 billion boost to districts’ discretionary funding from January, driven by higher-than-expected income tax revenue related to the AI boom. The increase also comes after months of pressure from school districts across the state, many of which face record budget shortfalls due to the rising costs for competitive teacher salaries and benefits, insurance and energy, as well as enrollment declines that drive down total per-pupil funding.\u003c/p>\n\u003cp>“It’s clear the governor heard educators’ voices on several of our priorities in our fight to Fully Fund Schools,” California Teachers Association President David Goldberg said in a statement. “Aside from the proposed withholding of Prop. 98 funds, today’s newly announced May budget revision includes critical investments and huge victories for California schools and communities.”\u003c/p>\n\u003cfigure id=\"attachment_12051437\" class=\"wp-caption aligncenter\" style=\"max-width: 2000px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12051437\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2025/08/GavinNewsomAISF1.jpg\" alt=\"\" width=\"2000\" height=\"1333\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2025/08/GavinNewsomAISF1.jpg 2000w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/08/GavinNewsomAISF1-160x107.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/08/GavinNewsomAISF1-1536x1024.jpg 1536w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\">\u003cfigcaption class=\"wp-caption-text\">On the rooftop of Google’s San Francisco offices on Aug. 7, 2025, Gov. Gavin Newsom announced a major statewide partnership with Google, Microsoft, IBM and Adobe to expand generative AI education — including training programs, certifications and internships — across California’s high schools, community colleges and Cal State universities. \u003ccite>(Courtesy of the Office of the Governor)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>The budget plan notes that the number of students in California public schools with disabilities is increasing, along with the costs for providing special education services. Newsom, who has been open about his \u003ca href=\"https://www.kqed.org/news/12074892/newsom-promotes-new-memoir-as-he-ramps-up-national-spotlight\">experience with dyslexia\u003c/a>, increased funding for students with disabilities by 43% more than the 2025 budget.\u003c/p>\n\u003cp>This year, \u003ca href=\"https://www.kqed.org/news/12073306/sfusd-teachers-strike-no-end-in-sight-health-care-battle\">striking San Francisco \u003c/a>and \u003ca href=\"https://www.kqed.org/news/12066588/west-contra-costa-teachers-agree-to-end-strike-and-return-to-class-after-a-week\">West Contra Costa educators\u003c/a> bargained for better special education working conditions and wage boosts for specialized employees, positions that are notoriously hard to staff.\u003c/p>\n\u003cp>They also raised concerns about general teacher recruitment and retention, which Newsom aimed to address with additional investments into programs that ease credentialing, and another long-fought CTA request: paid pregnancy leave.[aside postID=news_12083494 hero='https://cdn.kqed.org/wp-content/uploads/sites/10/2025/06/250428-OUSD-OFFICE-FILE-MD-04_qed.jpg']In California, educators who take leave while pregnant or after giving birth must use their sick time to cover missed work days. If they’ve used up that time off, teachers then receive “differential pay” — their wage minus the cost of a substitute teacher.\u003c/p>\n\u003cp>Newsom vetoed a past attempt to address pregnancy leave in 2019, and another bill that would have granted 14 weeks of paid leave, introduced by Assemblymember Cecilia Aguiar-Curry, D-Winters, in 2024, which died on the state Senate floor.\u003c/p>\n\u003cp>“Thousands of CTA members shared their story, signed petitions, showed up to the Capitol to fight for pregnancy leave — and now our sponsored legislation alongside Assemblymember Aguiar Curry is now in the May Revise,” said Erika Jones, CTA’s secretary-treasurer. “Fourteen weeks of paid pregnancy leave will be transformational for California educators and families.”\u003c/p>\n\u003cp>In addition to the targeted investments, May’s revision also includes billions in new discretionary dollars for districts.\u003c/p>\n\u003cp>Schools will benefit from an increased cost-of-living adjustment, up to 2.87% from 2.41% in Newsom’s January budget plan. They’ll also get a special boost thanks to what’s called a “super” cost-of-living adjustment, applied specifically to the local control funding formula, the system for how much of California’s education funding is allocated.\u003c/p>\n\u003cp>Barrett Snider, a partner with education lobbying firm Capitol Advisors, said the governor deserves credit for trying to keep pace with rising costs.\u003c/p>\n\u003cfigure id=\"attachment_12077729\" class=\"wp-caption aligncenter\" style=\"max-width: 2000px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12077729\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/03/260326-SJSchoolClosures-23-BL.jpg\" alt=\"\" width=\"2000\" height=\"1333\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/03/260326-SJSchoolClosures-23-BL.jpg 2000w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/03/260326-SJSchoolClosures-23-BL-160x107.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/03/260326-SJSchoolClosures-23-BL-1536x1024.jpg 1536w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\">\u003cfigcaption class=\"wp-caption-text\">Empire Gardens Elementary School in San José on March 26, 2026. The school is among those proposed for closure as part of the San José Unified School District’s “Schools of Tomorrow” plan. \u003ccite>(Beth LaBerge/KQED)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>“It’s all going up, and it’s going up more than 2.87%,” Snider said. “The ed[ucation] community for years has been saying we ought to find a new index to track for actual costs because what we see in the field doesn’t track.”\u003c/p>\n\u003cp>Snider said Newsom might get pushback, though, for earmarking a portion of that adjustment to pay for the new paid pregnancy leave mandate.\u003c/p>\n\u003cp>“It’d be like your boss saying, ‘We’re giving you a raise,’ but then telling you that a portion of that raise has to be spent on a company-mandated expense,” he said.\u003c/p>\n\u003cp>Some advocates bemoaned a lack of funding for \u003ca href=\"https://www.kqed.org/news/12083461/california-advocates-want-newsom-to-fulfill-promise-to-fund-child-care-spaces\">subsidized child care spaces\u003c/a>, calling the cuts an “unfulfilled promise” from a governor who has long touted his expansion of transitional kindergarten.\u003c/p>\n\u003cp>Educators are also gearing up to fight a plan to defer paying $3.9 billion from the largest pool of education money, Proposition 98 funding, which Newsom could shift to other sectors of the budget. The state’s constitution requires an annual minimum guarantee equivalent to about 40% of the state’s general fund to be directed to K-12 schools and community colleges that can be spent however districts see fit.\u003c/p>\n\u003cp>Last year, Newsom withheld $1.9 billion of these funds, which will be repaid this year.\u003c/p>\n\u003cp>Though less than the $5.6 billion deferral proposed in the January draft budget, school boards, district officials and unions across the state have said delaying any funding violates the state constitution and perpetuates a dangerous precedent.\u003c/p>\n\u003cp>“If they continue to sort of cleverly manipulate the Prop. 98 guarantee and underfund it, it ceases to have its intended effect that voters expected when they passed it in 1988,” Snider said. He said many school districts have already factored the proposed withholding into their budget planning, since they began months ago.\u003c/p>\n\u003cfigure id=\"attachment_11958565\" class=\"wp-caption aligncenter\" style=\"max-width: 2000px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-11958565\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2023/08/081822_NewsomFresno_LV_CM_006-copy.jpg\" alt='A white middle-aged man in a blue suit and blue tie speaks behind a dais that says \"Healthy Minds For California Kids\" surrounded by people.' width=\"2000\" height=\"1333\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2023/08/081822_NewsomFresno_LV_CM_006-copy.jpg 2000w, https://cdn.kqed.org/wp-content/uploads/sites/10/2023/08/081822_NewsomFresno_LV_CM_006-copy-800x533.jpg 800w, https://cdn.kqed.org/wp-content/uploads/sites/10/2023/08/081822_NewsomFresno_LV_CM_006-copy-1020x680.jpg 1020w, https://cdn.kqed.org/wp-content/uploads/sites/10/2023/08/081822_NewsomFresno_LV_CM_006-copy-160x107.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2023/08/081822_NewsomFresno_LV_CM_006-copy-1536x1024.jpg 1536w, https://cdn.kqed.org/wp-content/uploads/sites/10/2023/08/081822_NewsomFresno_LV_CM_006-copy-1920x1280.jpg 1920w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\">\u003cfigcaption class=\"wp-caption-text\">Gov. Gavin Newsom outlined new efforts to support the mental health of students at McLane High School in Fresno on Aug. 18, 2022. \u003ccite>(Larry Valenzuela, CalMatters/CatchLight Local)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>“You end up manipulating the school budgeting process because the January proposal is what schools use to build their budgets for the year,” Snider said.\u003c/p>\n\u003cp>Goldberg said this week that more than 2,000 educators across the state who received preliminary layoff notices in March will find out if those are permanent. State law requires public school districts to issue pink slips for the coming year by May 15.\u003c/p>\n\u003cp>“These are public school educators who have devoted their entire career to educating California students, and their future is in jeopardy with threats to withhold vital funds from our local school districts,” Goldberg said.\u003c/p>\n\u003cp>[ad floatright]\u003c/p>\n",
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"content": "\u003cdiv class=\"post-body\">\u003cp>\u003cp>Gov. Gavin Newsom’s proposed\u003ca href=\"https://www.kqed.org/news/12083617/newsom-touts-dominance-of-california-in-final-budget-proposal\"> spending plan\u003c/a> this week includes $2.4 billion in new ongoing investments for special education and paid pregnancy leave for teachers — issues teachers have brought front and center in the face of high living costs and staff retention struggles.\u003c/p>\n\u003cp>While education advocates said the plan released Thursday and known as \u003ca href=\"https://www.kqed.org/news/12083623/newsom-unveils-final-state-budget-proposal-amid-deep-federal-spending-cuts\">the “May Revise” \u003c/a>is a significant improvement from Newsom’s January proposal, they say the governor still owes schools money from the state’s general fund.\u003c/p>\n\u003cp>“Gov. Gavin Newsom’s May Budget Revise contains welcome provisions that will benefit public schools,” California School Board Association President Debra Schade said in a statement. But, she continued, “the administration’s generosity in some areas is undercut by its inclusion of funding for one-time projects and one-size-fits-all mandates instead of investing those resources in base funding.”\u003c/p>\n\u003cp>\u003c/p>\u003c/div>",
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"content": "\u003cdiv class=\"post-body\">\u003cp>\u003c/p>\n\u003cp>Newsom’s spending plan includes a $6.4 billion boost to districts’ discretionary funding from January, driven by higher-than-expected income tax revenue related to the AI boom. The increase also comes after months of pressure from school districts across the state, many of which face record budget shortfalls due to the rising costs for competitive teacher salaries and benefits, insurance and energy, as well as enrollment declines that drive down total per-pupil funding.\u003c/p>\n\u003cp>“It’s clear the governor heard educators’ voices on several of our priorities in our fight to Fully Fund Schools,” California Teachers Association President David Goldberg said in a statement. “Aside from the proposed withholding of Prop. 98 funds, today’s newly announced May budget revision includes critical investments and huge victories for California schools and communities.”\u003c/p>\n\u003cfigure id=\"attachment_12051437\" class=\"wp-caption aligncenter\" style=\"max-width: 2000px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12051437\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2025/08/GavinNewsomAISF1.jpg\" alt=\"\" width=\"2000\" height=\"1333\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2025/08/GavinNewsomAISF1.jpg 2000w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/08/GavinNewsomAISF1-160x107.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/08/GavinNewsomAISF1-1536x1024.jpg 1536w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\">\u003cfigcaption class=\"wp-caption-text\">On the rooftop of Google’s San Francisco offices on Aug. 7, 2025, Gov. Gavin Newsom announced a major statewide partnership with Google, Microsoft, IBM and Adobe to expand generative AI education — including training programs, certifications and internships — across California’s high schools, community colleges and Cal State universities. \u003ccite>(Courtesy of the Office of the Governor)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>The budget plan notes that the number of students in California public schools with disabilities is increasing, along with the costs for providing special education services. Newsom, who has been open about his \u003ca href=\"https://www.kqed.org/news/12074892/newsom-promotes-new-memoir-as-he-ramps-up-national-spotlight\">experience with dyslexia\u003c/a>, increased funding for students with disabilities by 43% more than the 2025 budget.\u003c/p>\n\u003cp>This year, \u003ca href=\"https://www.kqed.org/news/12073306/sfusd-teachers-strike-no-end-in-sight-health-care-battle\">striking San Francisco \u003c/a>and \u003ca href=\"https://www.kqed.org/news/12066588/west-contra-costa-teachers-agree-to-end-strike-and-return-to-class-after-a-week\">West Contra Costa educators\u003c/a> bargained for better special education working conditions and wage boosts for specialized employees, positions that are notoriously hard to staff.\u003c/p>\n\u003cp>They also raised concerns about general teacher recruitment and retention, which Newsom aimed to address with additional investments into programs that ease credentialing, and another long-fought CTA request: paid pregnancy leave.\u003c/p>\u003c/div>",
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"content": "\u003cdiv class=\"post-body\">\u003cp>In California, educators who take leave while pregnant or after giving birth must use their sick time to cover missed work days. If they’ve used up that time off, teachers then receive “differential pay” — their wage minus the cost of a substitute teacher.\u003c/p>\n\u003cp>Newsom vetoed a past attempt to address pregnancy leave in 2019, and another bill that would have granted 14 weeks of paid leave, introduced by Assemblymember Cecilia Aguiar-Curry, D-Winters, in 2024, which died on the state Senate floor.\u003c/p>\n\u003cp>“Thousands of CTA members shared their story, signed petitions, showed up to the Capitol to fight for pregnancy leave — and now our sponsored legislation alongside Assemblymember Aguiar Curry is now in the May Revise,” said Erika Jones, CTA’s secretary-treasurer. “Fourteen weeks of paid pregnancy leave will be transformational for California educators and families.”\u003c/p>\n\u003cp>In addition to the targeted investments, May’s revision also includes billions in new discretionary dollars for districts.\u003c/p>\n\u003cp>Schools will benefit from an increased cost-of-living adjustment, up to 2.87% from 2.41% in Newsom’s January budget plan. They’ll also get a special boost thanks to what’s called a “super” cost-of-living adjustment, applied specifically to the local control funding formula, the system for how much of California’s education funding is allocated.\u003c/p>\n\u003cp>Barrett Snider, a partner with education lobbying firm Capitol Advisors, said the governor deserves credit for trying to keep pace with rising costs.\u003c/p>\n\u003cfigure id=\"attachment_12077729\" class=\"wp-caption aligncenter\" style=\"max-width: 2000px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12077729\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/03/260326-SJSchoolClosures-23-BL.jpg\" alt=\"\" width=\"2000\" height=\"1333\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/03/260326-SJSchoolClosures-23-BL.jpg 2000w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/03/260326-SJSchoolClosures-23-BL-160x107.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/03/260326-SJSchoolClosures-23-BL-1536x1024.jpg 1536w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\">\u003cfigcaption class=\"wp-caption-text\">Empire Gardens Elementary School in San José on March 26, 2026. The school is among those proposed for closure as part of the San José Unified School District’s “Schools of Tomorrow” plan. \u003ccite>(Beth LaBerge/KQED)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>“It’s all going up, and it’s going up more than 2.87%,” Snider said. “The ed[ucation] community for years has been saying we ought to find a new index to track for actual costs because what we see in the field doesn’t track.”\u003c/p>\n\u003cp>Snider said Newsom might get pushback, though, for earmarking a portion of that adjustment to pay for the new paid pregnancy leave mandate.\u003c/p>\n\u003cp>“It’d be like your boss saying, ‘We’re giving you a raise,’ but then telling you that a portion of that raise has to be spent on a company-mandated expense,” he said.\u003c/p>\n\u003cp>Some advocates bemoaned a lack of funding for \u003ca href=\"https://www.kqed.org/news/12083461/california-advocates-want-newsom-to-fulfill-promise-to-fund-child-care-spaces\">subsidized child care spaces\u003c/a>, calling the cuts an “unfulfilled promise” from a governor who has long touted his expansion of transitional kindergarten.\u003c/p>\n\u003cp>Educators are also gearing up to fight a plan to defer paying $3.9 billion from the largest pool of education money, Proposition 98 funding, which Newsom could shift to other sectors of the budget. The state’s constitution requires an annual minimum guarantee equivalent to about 40% of the state’s general fund to be directed to K-12 schools and community colleges that can be spent however districts see fit.\u003c/p>\n\u003cp>Last year, Newsom withheld $1.9 billion of these funds, which will be repaid this year.\u003c/p>\n\u003cp>Though less than the $5.6 billion deferral proposed in the January draft budget, school boards, district officials and unions across the state have said delaying any funding violates the state constitution and perpetuates a dangerous precedent.\u003c/p>\n\u003cp>“If they continue to sort of cleverly manipulate the Prop. 98 guarantee and underfund it, it ceases to have its intended effect that voters expected when they passed it in 1988,” Snider said. He said many school districts have already factored the proposed withholding into their budget planning, since they began months ago.\u003c/p>\n\u003cfigure id=\"attachment_11958565\" class=\"wp-caption aligncenter\" style=\"max-width: 2000px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-11958565\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2023/08/081822_NewsomFresno_LV_CM_006-copy.jpg\" alt='A white middle-aged man in a blue suit and blue tie speaks behind a dais that says \"Healthy Minds For California Kids\" surrounded by people.' width=\"2000\" height=\"1333\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2023/08/081822_NewsomFresno_LV_CM_006-copy.jpg 2000w, https://cdn.kqed.org/wp-content/uploads/sites/10/2023/08/081822_NewsomFresno_LV_CM_006-copy-800x533.jpg 800w, https://cdn.kqed.org/wp-content/uploads/sites/10/2023/08/081822_NewsomFresno_LV_CM_006-copy-1020x680.jpg 1020w, https://cdn.kqed.org/wp-content/uploads/sites/10/2023/08/081822_NewsomFresno_LV_CM_006-copy-160x107.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2023/08/081822_NewsomFresno_LV_CM_006-copy-1536x1024.jpg 1536w, https://cdn.kqed.org/wp-content/uploads/sites/10/2023/08/081822_NewsomFresno_LV_CM_006-copy-1920x1280.jpg 1920w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\">\u003cfigcaption class=\"wp-caption-text\">Gov. Gavin Newsom outlined new efforts to support the mental health of students at McLane High School in Fresno on Aug. 18, 2022. \u003ccite>(Larry Valenzuela, CalMatters/CatchLight Local)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>“You end up manipulating the school budgeting process because the January proposal is what schools use to build their budgets for the year,” Snider said.\u003c/p>\n\u003cp>Goldberg said this week that more than 2,000 educators across the state who received preliminary layoff notices in March will find out if those are permanent. State law requires public school districts to issue pink slips for the coming year by May 15.\u003c/p>\n\u003cp>“These are public school educators who have devoted their entire career to educating California students, and their future is in jeopardy with threats to withhold vital funds from our local school districts,” Goldberg said.\u003c/p>\n\u003cp>\u003c/p>\u003c/div>",
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"content": "\u003cp>Gov. Gavin Newsom unveiled his eighth and final \u003ca href=\"https://www.kqed.org/news/12083617/newsom-touts-dominance-of-california-in-final-budget-proposal\">budget proposal\u003c/a> today, with a possible presidential bid on the horizon and a crowded field of candidates jockeying to succeed him. His proposal is fully balanced, seeking to offset significant federal spending cuts, but does not introduce major new spending.\u003c/p>\n\u003cp>After opening with sharp criticism of the president’s agenda and promoting California’s economic strength, Newsom laid out several targeted proposals including help for Californians facing higher Affordable Care Act premiums and Medi-Cal cuts, tax relief for new businesses and increased funding for K-12 education and universities.\u003c/p>\n\u003cp>Marisa and Guy are joined by KFF Health News senior correspondent Angela Hart to unpack the details of Newsom’s plan and what it signals about his priorities in his last stretch as governor.\u003c/p>\n\u003cp>Check out \u003ca href=\"https://www.kqed.org/newsletters/political-breakdown\">Political Breakdown’s weekly newsletter\u003c/a>, delivered straight to your inbox.\u003c/p>\n\u003cp>[ad fullwidth]\u003c/p>\u003cp>\u003c/p>\n",
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"content": "\u003cdiv class=\"post-body\">\u003cp>\u003cp>Gov. Gavin Newsom unveiled his eighth and final \u003ca href=\"https://www.kqed.org/news/12083617/newsom-touts-dominance-of-california-in-final-budget-proposal\">budget proposal\u003c/a> today, with a possible presidential bid on the horizon and a crowded field of candidates jockeying to succeed him. His proposal is fully balanced, seeking to offset significant federal spending cuts, but does not introduce major new spending.\u003c/p>\n\u003cp>After opening with sharp criticism of the president’s agenda and promoting California’s economic strength, Newsom laid out several targeted proposals including help for Californians facing higher Affordable Care Act premiums and Medi-Cal cuts, tax relief for new businesses and increased funding for K-12 education and universities.\u003c/p>\n\u003cp>Marisa and Guy are joined by KFF Health News senior correspondent Angela Hart to unpack the details of Newsom’s plan and what it signals about his priorities in his last stretch as governor.\u003c/p>\n\u003cp>Check out \u003ca href=\"https://www.kqed.org/newsletters/political-breakdown\">Political Breakdown’s weekly newsletter\u003c/a>, delivered straight to your inbox.\u003c/p>\n\u003cp>\u003c/p>\u003c/div>",
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"content": "\u003cp>After eight years of wild swings between record surpluses and perilous shortfalls, Gov. \u003ca href=\"https://www.kqed.org/news/tag/gavin-newsom\">Gavin Newsom\u003c/a> touted a state of equilibrium on Thursday with his final \u003ca href=\"https://ebudget.ca.gov/budget/m/2026-27/BudgetSummary\">budget proposal\u003c/a>: a $350 billion, fully balanced spending plan that aims to backfill deep federal spending cuts but proposes no new programs and some spending reductions.\u003c/p>\n\u003cp>Newsom’s fiscal swan song comes as he gears up for a possible presidential run, as \u003ca href=\"https://www.kqed.org/voterguide/california/governor\">a crowded field of candidates\u003c/a> jockey to succeed him and as the state weathers ongoing attacks from the Trump administration.\u003c/p>\n\u003cp>But those federal cuts are offset in part by state revenues that came in $16.5 billion higher than the governor’s office projected in January, when Newsom released his initial spending plan. Income tax revenue was higher than expected and Silicon Valley stocks showed a strong performance, driving projected surplus for the next two fiscal years.\u003c/p>\n\u003cp>[ad fullwidth]\u003c/p>\n\u003cp>That includes $4.5 billion in excess funds next year, as well as nearly $10 billion more Newsom wants to set aside in a savings account for use the following year.\u003c/p>\n\u003cp>“It shows the nature of the economy in the state, the nature of that growth engine,” he said, though he cautioned that the state’s revenue streams remain volatile. “It spikes from year to year, it collapses. When the nation gets a cold, we get the flu.”\u003c/p>\n\u003cp>\u003cspan style=\"font-weight: 400;\">In an unusual move, Newsom administration officials did not provide a clear projection of the surplus or deficit that the governor’s plan was solving for. Joe Stephenshaw, director of the Department of Finance, said he could not provide an “apples to apples” comparison with the $2.9 billion shortfall Newsom projected in his January budget.\u003c/span>\u003c/p>\n\u003cfigure id=\"attachment_12070222\" class=\"wp-caption aligncenter\" style=\"max-width: 2000px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12070222\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/01/260116-NEWSOMLURIEPRESSER-06-BL-KQED.jpg\" alt=\"\" width=\"2000\" height=\"1333\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/01/260116-NEWSOMLURIEPRESSER-06-BL-KQED.jpg 2000w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/01/260116-NEWSOMLURIEPRESSER-06-BL-KQED-160x107.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/01/260116-NEWSOMLURIEPRESSER-06-BL-KQED-1536x1024.jpg 1536w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\">\u003cfigcaption class=\"wp-caption-text\">Gov. Gavin Newsom and Mayor Daniel Lurie listen to speakers during a press conference at the Friendship House Association of American Indians in San Francisco on Jan. 16, 2026. Behind them stands a sculpture of Helen Waukazoo, the founder of the Friendship House Association of American Indians. \u003ccite>(Beth LaBerge/KQED)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>In his revised proposal, Newsom unveiled new plans to help Californians facing higher Affordable Care Act premiums and Medi-Cal cuts, and to ease the tax burden on new businesses. He also proposed more money for K-12 education and universities, and a new $100 million fund to help homeowners rebuild after a natural disaster, including the January 2025 Los Angeles wildfires.\u003c/p>\n\u003cp>But Newsom resisted calls from fellow Democrats to raise taxes in order to offset federal cuts and rising health care costs, though he does want to cap the amount large corporations can claim on tax credits.\u003c/p>\n\u003cp>He used his opening remarks to attack the president’s agenda and to tout California’s economic strength in key economic areas, including manufacturing, agriculture, innovation and job creation.[aside postID=news_12069177 hero='https://cdn.kqed.org/wp-content/uploads/sites/10/2026/01/HJA_2939_SOTS_001-2000x1333.jpg']“Dominance. That’s the way to describe, in one word, the state of California. We simply have no peers. We are the tentpole of the American economy,” Newsom said, before launching into a series of slides to back up his point, including one featuring a picture of Fox News host Sean Hannity with the words “California Derangement Syndrome” plastered below.\u003c/p>\n\u003cp>He went on to slam Trump’s “illegal” tariffs, the president’s deep cuts to science and medical research grants and the economic effects of his deportation push and the war in Iran. Then he showed an AI-generated image of Trump and Treasury Secretary Scott Bessent superimposed as the characters in the movie “Dumb and Dumber.”\u003c/p>\n\u003cp>“I think this captures in so many respects the remarkable, remarkable work that these two have done and the impacts had on American people and the economy since they got into office,” he said sarcastically.\u003c/p>\n\u003cp>Republican leaders in the Legislature, though, were quick to slam the governor’s spending priorities.\u003c/p>\n\u003cp>“If there is truly a budget surplus, priorities should focus on providing things like real cost-of-living relief for Californians, fully funding Proposition 36, and paying off the federal unemployment insurance debt so job creators are no longer stuck paying for Newsom’s lack of leadership,” said Sen. Tony Strickland, R-Huntington Beach.\u003c/p>\n\u003ch2>Medi-Cal and health care\u003c/h2>\n\u003cp>Spending on Medi-Cal, the state’s health care safety net, is declining by $3.7 billion compared to the previous state budget. That’s in part a result of Trump’s plan to impose work requirements on Medi-Cal recipients — a move expected to reduce enrollment — but also due to cuts Newsom is proposing.\u003c/p>\n\u003cp>Newsom is proposing to implement an asset limit for seniors and disabled adults on Medi-Cal and increase the monthly premiums for undocumented adults on Medi-Cal, from $30 to $50. The change will apply to residents between the ages of 19 and 59, effective in 2027.\u003c/p>\n\u003cp>Federal rule changes under Trump are forcing California to change how it insures undocumented immigrants.\u003c/p>\n\u003cfigure id=\"attachment_12053886\" class=\"wp-caption aligncenter\" style=\"max-width: 1999px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12053886\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2025/08/HealthCareICECalMatters1.jpg\" alt=\"\" width=\"1999\" height=\"1334\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2025/08/HealthCareICECalMatters1.jpg 1999w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/08/HealthCareICECalMatters1-160x107.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/08/HealthCareICECalMatters1-1536x1025.jpg 1536w\" sizes=\"auto, (max-width: 1999px) 100vw, 1999px\">\u003cfigcaption class=\"wp-caption-text\">Protesters gather outside Glendale Memorial Hospital, where federal immigration agents wait for Milagro Solis Portillo to recover in Glendale, on July 17, 2025. \u003ccite>(J.W. Hendricks/NurPhoto via Getty Images)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>“No one has done better to address their anxiety and needs,” Newsom said of the state’s undocumented population.\u003c/p>\n\u003cp>But immigrant advocates immediately lashed out. California Pan-Ethnic Health Network executive director Kiran Savage-Sangwan called the Medi-Cal changes for undocumented “devastatingly cruel,” especially when considered alongside last year’s elimination of dental care for undocumented Medi-Cal recipients, and other fees the state began imposing based on immigration status in order to close a shortfall last year.\u003c/p>\n\u003cp>“In light of the state’s surge of revenues, continuing to advance these brutal cuts, despite a nine-month delay, is further evidence that they aren’t a matter of math but a matter of values,” Savage-Sangwan said.\u003c/p>\n\u003cp>The federal health care changes, enacted in the One Big Beautiful Bill Act, created requirements for Medi-Cal recipients to prove they are working or volunteering. Newsom projects that change will result in 44,000 Californians losing coverage in the next fiscal year.\u003c/p>\n\u003cp>But the federal bill will also reduce some Medicaid payments to California and limit the state’s ability to raise health care dollars through a tax on health care providers.\u003c/p>\n\u003cp>In response, Democrats in the state Senate are advocating for a new tax on the largest 2% of corporations to close the Medi-Cal funding gap.\u003c/p>\n\u003cfigure id=\"attachment_12057897\" class=\"wp-caption aligncenter\" style=\"max-width: 1998px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"wp-image-12057897 size-full\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2025/09/image3.jpg\" alt=\"\" width=\"1998\" height=\"1332\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2025/09/image3.jpg 1998w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/09/image3-160x107.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/09/image3-1536x1024.jpg 1536w\" sizes=\"auto, (max-width: 1998px) 100vw, 1998px\">\u003cfigcaption class=\"wp-caption-text\">Lester Johnson (left), a restaurant owner in Richmond, Virginia, stands next to a sign that reads “Affordable Care Act Premiums Will Rise More Than 75%” during a news conference to call on Republicans to pass Affordable Care Act tax breaks on Capitol Hill on Sept. 16, 2025, in Washington, D.C. Democratic Senators joined Protect Our Care and advocates to call on the GOP to protect health care for Americans and stop premium hikes. \u003ccite>(Andrew Harnik/Getty Images)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>Newsom is pushing instead to limit the tax credits that businesses can claim to $5 million or 50% of the company’s tax liability — a move the administration projects will raise $850 million in the upcoming fiscal year and $1.7 billion the following year.\u003c/p>\n\u003cp>“I mean, some folks are never going to pay taxes for years and years and years, and they’re just hoarding these tax credits. So we’re going to put a little cap on that,” he said, adding that the change will affect large corporations, not small businesses.\u003c/p>\n\u003cp>In a separate health care move, Newsom is proposing to spend $300 million to cover health care premiums for low-income Californians to purchase health care through the Covered California exchange.\u003c/p>\n\u003cp>In December, Affordable Care Act subsidies \u003ca href=\"https://www.kqed.org/forum/2010101912213/congress-scrambles-to-address-healthcare-funding-before-year-end\">expired\u003c/a> for millions of Americans after Congress failed to reach a deal to extend the tax credits.\u003c/p>\n\u003ch2>Taxes and fees\u003c/h2>\n\u003cp>Other Newsom proposals echo calls from candidates in the wide-open race to succeed him as governor.\u003c/p>\n\u003cp>Newsom wants to cut in half the $800 minimum franchise tax that businesses pay each year, regardless of their profit. Steve Hilton, the leading Republican in the governor’s race, has \u003ca href=\"https://www.kqed.org/news/12079441/heres-how-californias-next-governor-will-change-your-taxes\">called to eliminate the tax entirely\u003c/a>.\u003c/p>\n\u003cfigure id=\"attachment_12072282\" class=\"wp-caption aligncenter\" style=\"max-width: 2000px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12072282\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/02/CAGovDebateAP1.jpg\" alt=\"\" width=\"2000\" height=\"1333\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/02/CAGovDebateAP1.jpg 2000w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/02/CAGovDebateAP1-160x107.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/02/CAGovDebateAP1-1536x1024.jpg 1536w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\">\u003cfigcaption class=\"wp-caption-text\">From left, Xavier Becerra, Steve Hilton, Matt Mahan, Tom Steyer, Tony Thurmond, Antonio Villaraigosa and Betty Yee stand on the stage during the California gubernatorial candidate debate on Tuesday, Feb. 3, 2026, in San Francisco. \u003ccite>(Laure Andrillon/AP Photo)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>The governor is also taking aim at the fees that local governments charge housing developers for their projects’ anticipated impact on roads and parks.\u003c/p>\n\u003cp>The fees have been a target of both Republicans and two moderate Democrats in the race: San José Mayor Matt Mahan and former Los Angeles Mayor Antonio Villaraigosa.\u003c/p>\n\u003cp>Newsom’s proposal would block local governments from charging impact fees on affordable housing developments that tap state funds.[aside postID=news_12083461 hero='https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/260428-VallejoChildCare-37-BL_qed.jpg']The legislature will now hold hearings on Newsom’s budget plan and negotiate a final spending agreement with the administration before June 15.\u003c/p>\n\u003cp>Asked if he has any regrets in \u003ca href=\"https://www.kqed.org/news/12068929/in-final-year-gov-gavin-newsom-looks-to-finish-what-he-started\">his final year in office\u003c/a>, the governor hinted that he would have liked to move sooner on changes to expand the state’s rainy day fund.\u003c/p>\n\u003cp>In 2021 and 2022, Newsom touted budget surpluses of $75 billion and $97 billion — only to see those windfalls turn into deficits in subsequent years. The governor said he is still negotiating a deal with legislative leaders to potentially expand the rainy day fund.\u003c/p>\n\u003cp>But Newsom, who has studiously avoided weighing in on the messy race for governor, did make sure everyone knows he’s thinking about the next person in his seat.\u003c/p>\n\u003cp>“I am not just trying to get out of Dodge,” he said. “This is a balanced budget structurally for the next 18 months, after I am gone. I am not just planning for next fiscal year.”\u003c/p>\n\u003cp>[ad floatright]\u003c/p>\n",
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"content": "\u003cdiv class=\"post-body\">\u003cp>\u003cp>After eight years of wild swings between record surpluses and perilous shortfalls, Gov. \u003ca href=\"https://www.kqed.org/news/tag/gavin-newsom\">Gavin Newsom\u003c/a> touted a state of equilibrium on Thursday with his final \u003ca href=\"https://ebudget.ca.gov/budget/m/2026-27/BudgetSummary\">budget proposal\u003c/a>: a $350 billion, fully balanced spending plan that aims to backfill deep federal spending cuts but proposes no new programs and some spending reductions.\u003c/p>\n\u003cp>Newsom’s fiscal swan song comes as he gears up for a possible presidential run, as \u003ca href=\"https://www.kqed.org/voterguide/california/governor\">a crowded field of candidates\u003c/a> jockey to succeed him and as the state weathers ongoing attacks from the Trump administration.\u003c/p>\n\u003cp>But those federal cuts are offset in part by state revenues that came in $16.5 billion higher than the governor’s office projected in January, when Newsom released his initial spending plan. Income tax revenue was higher than expected and Silicon Valley stocks showed a strong performance, driving projected surplus for the next two fiscal years.\u003c/p>\n\u003cp>\u003c/p>\u003c/div>",
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"content": "\u003cdiv class=\"post-body\">\u003cp>\u003c/p>\n\u003cp>That includes $4.5 billion in excess funds next year, as well as nearly $10 billion more Newsom wants to set aside in a savings account for use the following year.\u003c/p>\n\u003cp>“It shows the nature of the economy in the state, the nature of that growth engine,” he said, though he cautioned that the state’s revenue streams remain volatile. “It spikes from year to year, it collapses. When the nation gets a cold, we get the flu.”\u003c/p>\n\u003cp>\u003cspan style=\"font-weight: 400;\">In an unusual move, Newsom administration officials did not provide a clear projection of the surplus or deficit that the governor’s plan was solving for. Joe Stephenshaw, director of the Department of Finance, said he could not provide an “apples to apples” comparison with the $2.9 billion shortfall Newsom projected in his January budget.\u003c/span>\u003c/p>\n\u003cfigure id=\"attachment_12070222\" class=\"wp-caption aligncenter\" style=\"max-width: 2000px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12070222\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/01/260116-NEWSOMLURIEPRESSER-06-BL-KQED.jpg\" alt=\"\" width=\"2000\" height=\"1333\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/01/260116-NEWSOMLURIEPRESSER-06-BL-KQED.jpg 2000w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/01/260116-NEWSOMLURIEPRESSER-06-BL-KQED-160x107.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/01/260116-NEWSOMLURIEPRESSER-06-BL-KQED-1536x1024.jpg 1536w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\">\u003cfigcaption class=\"wp-caption-text\">Gov. Gavin Newsom and Mayor Daniel Lurie listen to speakers during a press conference at the Friendship House Association of American Indians in San Francisco on Jan. 16, 2026. Behind them stands a sculpture of Helen Waukazoo, the founder of the Friendship House Association of American Indians. \u003ccite>(Beth LaBerge/KQED)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>In his revised proposal, Newsom unveiled new plans to help Californians facing higher Affordable Care Act premiums and Medi-Cal cuts, and to ease the tax burden on new businesses. He also proposed more money for K-12 education and universities, and a new $100 million fund to help homeowners rebuild after a natural disaster, including the January 2025 Los Angeles wildfires.\u003c/p>\n\u003cp>But Newsom resisted calls from fellow Democrats to raise taxes in order to offset federal cuts and rising health care costs, though he does want to cap the amount large corporations can claim on tax credits.\u003c/p>\n\u003cp>He used his opening remarks to attack the president’s agenda and to tout California’s economic strength in key economic areas, including manufacturing, agriculture, innovation and job creation.\u003c/p>\u003c/div>",
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"content": "\u003cdiv class=\"post-body\">\u003cp>“Dominance. That’s the way to describe, in one word, the state of California. We simply have no peers. We are the tentpole of the American economy,” Newsom said, before launching into a series of slides to back up his point, including one featuring a picture of Fox News host Sean Hannity with the words “California Derangement Syndrome” plastered below.\u003c/p>\n\u003cp>He went on to slam Trump’s “illegal” tariffs, the president’s deep cuts to science and medical research grants and the economic effects of his deportation push and the war in Iran. Then he showed an AI-generated image of Trump and Treasury Secretary Scott Bessent superimposed as the characters in the movie “Dumb and Dumber.”\u003c/p>\n\u003cp>“I think this captures in so many respects the remarkable, remarkable work that these two have done and the impacts had on American people and the economy since they got into office,” he said sarcastically.\u003c/p>\n\u003cp>Republican leaders in the Legislature, though, were quick to slam the governor’s spending priorities.\u003c/p>\n\u003cp>“If there is truly a budget surplus, priorities should focus on providing things like real cost-of-living relief for Californians, fully funding Proposition 36, and paying off the federal unemployment insurance debt so job creators are no longer stuck paying for Newsom’s lack of leadership,” said Sen. Tony Strickland, R-Huntington Beach.\u003c/p>\n\u003ch2>Medi-Cal and health care\u003c/h2>\n\u003cp>Spending on Medi-Cal, the state’s health care safety net, is declining by $3.7 billion compared to the previous state budget. That’s in part a result of Trump’s plan to impose work requirements on Medi-Cal recipients — a move expected to reduce enrollment — but also due to cuts Newsom is proposing.\u003c/p>\n\u003cp>Newsom is proposing to implement an asset limit for seniors and disabled adults on Medi-Cal and increase the monthly premiums for undocumented adults on Medi-Cal, from $30 to $50. The change will apply to residents between the ages of 19 and 59, effective in 2027.\u003c/p>\n\u003cp>Federal rule changes under Trump are forcing California to change how it insures undocumented immigrants.\u003c/p>\n\u003cfigure id=\"attachment_12053886\" class=\"wp-caption aligncenter\" style=\"max-width: 1999px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12053886\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2025/08/HealthCareICECalMatters1.jpg\" alt=\"\" width=\"1999\" height=\"1334\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2025/08/HealthCareICECalMatters1.jpg 1999w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/08/HealthCareICECalMatters1-160x107.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/08/HealthCareICECalMatters1-1536x1025.jpg 1536w\" sizes=\"auto, (max-width: 1999px) 100vw, 1999px\">\u003cfigcaption class=\"wp-caption-text\">Protesters gather outside Glendale Memorial Hospital, where federal immigration agents wait for Milagro Solis Portillo to recover in Glendale, on July 17, 2025. \u003ccite>(J.W. Hendricks/NurPhoto via Getty Images)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>“No one has done better to address their anxiety and needs,” Newsom said of the state’s undocumented population.\u003c/p>\n\u003cp>But immigrant advocates immediately lashed out. California Pan-Ethnic Health Network executive director Kiran Savage-Sangwan called the Medi-Cal changes for undocumented “devastatingly cruel,” especially when considered alongside last year’s elimination of dental care for undocumented Medi-Cal recipients, and other fees the state began imposing based on immigration status in order to close a shortfall last year.\u003c/p>\n\u003cp>“In light of the state’s surge of revenues, continuing to advance these brutal cuts, despite a nine-month delay, is further evidence that they aren’t a matter of math but a matter of values,” Savage-Sangwan said.\u003c/p>\n\u003cp>The federal health care changes, enacted in the One Big Beautiful Bill Act, created requirements for Medi-Cal recipients to prove they are working or volunteering. Newsom projects that change will result in 44,000 Californians losing coverage in the next fiscal year.\u003c/p>\n\u003cp>But the federal bill will also reduce some Medicaid payments to California and limit the state’s ability to raise health care dollars through a tax on health care providers.\u003c/p>\n\u003cp>In response, Democrats in the state Senate are advocating for a new tax on the largest 2% of corporations to close the Medi-Cal funding gap.\u003c/p>\n\u003cfigure id=\"attachment_12057897\" class=\"wp-caption aligncenter\" style=\"max-width: 1998px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"wp-image-12057897 size-full\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2025/09/image3.jpg\" alt=\"\" width=\"1998\" height=\"1332\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2025/09/image3.jpg 1998w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/09/image3-160x107.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/09/image3-1536x1024.jpg 1536w\" sizes=\"auto, (max-width: 1998px) 100vw, 1998px\">\u003cfigcaption class=\"wp-caption-text\">Lester Johnson (left), a restaurant owner in Richmond, Virginia, stands next to a sign that reads “Affordable Care Act Premiums Will Rise More Than 75%” during a news conference to call on Republicans to pass Affordable Care Act tax breaks on Capitol Hill on Sept. 16, 2025, in Washington, D.C. Democratic Senators joined Protect Our Care and advocates to call on the GOP to protect health care for Americans and stop premium hikes. \u003ccite>(Andrew Harnik/Getty Images)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>Newsom is pushing instead to limit the tax credits that businesses can claim to $5 million or 50% of the company’s tax liability — a move the administration projects will raise $850 million in the upcoming fiscal year and $1.7 billion the following year.\u003c/p>\n\u003cp>“I mean, some folks are never going to pay taxes for years and years and years, and they’re just hoarding these tax credits. So we’re going to put a little cap on that,” he said, adding that the change will affect large corporations, not small businesses.\u003c/p>\n\u003cp>In a separate health care move, Newsom is proposing to spend $300 million to cover health care premiums for low-income Californians to purchase health care through the Covered California exchange.\u003c/p>\n\u003cp>In December, Affordable Care Act subsidies \u003ca href=\"https://www.kqed.org/forum/2010101912213/congress-scrambles-to-address-healthcare-funding-before-year-end\">expired\u003c/a> for millions of Americans after Congress failed to reach a deal to extend the tax credits.\u003c/p>\n\u003ch2>Taxes and fees\u003c/h2>\n\u003cp>Other Newsom proposals echo calls from candidates in the wide-open race to succeed him as governor.\u003c/p>\n\u003cp>Newsom wants to cut in half the $800 minimum franchise tax that businesses pay each year, regardless of their profit. Steve Hilton, the leading Republican in the governor’s race, has \u003ca href=\"https://www.kqed.org/news/12079441/heres-how-californias-next-governor-will-change-your-taxes\">called to eliminate the tax entirely\u003c/a>.\u003c/p>\n\u003cfigure id=\"attachment_12072282\" class=\"wp-caption aligncenter\" style=\"max-width: 2000px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12072282\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/02/CAGovDebateAP1.jpg\" alt=\"\" width=\"2000\" height=\"1333\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/02/CAGovDebateAP1.jpg 2000w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/02/CAGovDebateAP1-160x107.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/02/CAGovDebateAP1-1536x1024.jpg 1536w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\">\u003cfigcaption class=\"wp-caption-text\">From left, Xavier Becerra, Steve Hilton, Matt Mahan, Tom Steyer, Tony Thurmond, Antonio Villaraigosa and Betty Yee stand on the stage during the California gubernatorial candidate debate on Tuesday, Feb. 3, 2026, in San Francisco. \u003ccite>(Laure Andrillon/AP Photo)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>The governor is also taking aim at the fees that local governments charge housing developers for their projects’ anticipated impact on roads and parks.\u003c/p>\n\u003cp>The fees have been a target of both Republicans and two moderate Democrats in the race: San José Mayor Matt Mahan and former Los Angeles Mayor Antonio Villaraigosa.\u003c/p>\n\u003cp>Newsom’s proposal would block local governments from charging impact fees on affordable housing developments that tap state funds.\u003c/p>\u003c/div>",
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"content": "\u003cdiv class=\"post-body\">\u003cp>The legislature will now hold hearings on Newsom’s budget plan and negotiate a final spending agreement with the administration before June 15.\u003c/p>\n\u003cp>Asked if he has any regrets in \u003ca href=\"https://www.kqed.org/news/12068929/in-final-year-gov-gavin-newsom-looks-to-finish-what-he-started\">his final year in office\u003c/a>, the governor hinted that he would have liked to move sooner on changes to expand the state’s rainy day fund.\u003c/p>\n\u003cp>In 2021 and 2022, Newsom touted budget surpluses of $75 billion and $97 billion — only to see those windfalls turn into deficits in subsequent years. The governor said he is still negotiating a deal with legislative leaders to potentially expand the rainy day fund.\u003c/p>\n\u003cp>But Newsom, who has studiously avoided weighing in on the messy race for governor, did make sure everyone knows he’s thinking about the next person in his seat.\u003c/p>\n\u003cp>“I am not just trying to get out of Dodge,” he said. “This is a balanced budget structurally for the next 18 months, after I am gone. I am not just planning for next fiscal year.”\u003c/p>\n\u003cp>\u003c/p>\u003c/div>",
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"title": "Former Newsom Chief of Staff Pleads Guilty to Scheme That Bled Money From Becerra’s Account",
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"content": "\u003cp>\u003cem>This story was originally published by \u003ca href=\"https://calmatters.org/\">CalMatters\u003c/a>. \u003ca href=\"https://calmatters.org/subscribe-to-calmatters/\">Sign up\u003c/a> for their newsletters.\u003c/em>\u003c/p>\n\u003cp>A former political consultant for Democratic frontrunner for governor \u003ca href=\"https://www.kqed.org/news/tag/xavier-becerra\">Xavier Becerra\u003c/a> and ex-aide to Gov. Gavin Newsom pleaded guilty Thursday to conspiracy to commit bank and wire fraud, submitting a false tax return and lying to federal investigators.\u003c/p>\n\u003cp>The consultant, Dana Williamson, \u003ca href=\"https://calmatters.org/politics/2025/11/newsom-chief-of-staff-indicted/\">was charged in a corruption scandal\u003c/a> that shocked Sacramento. Following an investigation that included FBI wiretaps and seized communications, prosecutors accused Williamson of conspiring with Becerra’s longtime chief of staff Sean McCluskie and another Sacramento lobbyist to divert $225,000 from Becerra’s dormant state campaign account into McCluskie’s hands.\u003c/p>\n\u003cp>As part of the plea deal, Williamson agreed to pay $225,000 in restitution to Becerra and $500,000 in restitution to the IRS. She faces up to 38 years in prison.\u003c/p>\n\u003cp>[ad fullwidth]\u003c/p>\n\u003cp>Williamson’s plea comes just over two weeks before the primary election that will determine whether Becerra advances to the November election.\u003c/p>\n\u003cp>According to the indictment, the money was to help McCluskie follow Becerra to Washington when he was named U.S. secretary of Health and Human Services in the Biden administration. McCluskie’s job there offered a lower salary.\u003c/p>\n\u003cp>Prosecutors say the Democratic operatives charged Becerra’s dormant campaign account $10,000 a month under the guise of maintaining it for legal compliance, but instead routed it to McCluskie in violation of federal laws prohibiting federal employees from being involved in campaign activities. The investigation was launched during the Biden administration.\u003c/p>\n\u003cfigure id=\"attachment_12074138\" class=\"wp-caption aligncenter\" style=\"max-width: 1999px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12074138\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/02/260220-XAVIER-BECERRA-ON-PB-MD-04_qed.jpg\" alt=\"\" width=\"1999\" height=\"1333\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/02/260220-XAVIER-BECERRA-ON-PB-MD-04_qed.jpg 1999w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/02/260220-XAVIER-BECERRA-ON-PB-MD-04_qed-160x107.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/02/260220-XAVIER-BECERRA-ON-PB-MD-04_qed-1536x1024.jpg 1536w\" sizes=\"auto, (max-width: 1999px) 100vw, 1999px\">\u003cfigcaption class=\"wp-caption-text\">Former United States Secretary of Health and Human Services Xavier Becerra speaks with Scott Shafer on Political Breakdown at KQED in San Francisco on Feb. 20, 2026. \u003ccite>(Martin do Nascimento/KQED)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>McCluskie and the other lobbyist, Greg Campbell, pleaded guilty to fraud in the case. Williamson also faced a variety of tax evasion charges and was accused of fraudulently obtaining federal COVID-19 benefits.\u003c/p>\n\u003cp>The plea deal brings to a close a case that has loomed over \u003ca href=\"https://calmatters.org/politics/2026/05/california-governor-becerra-criticism/\">Becerra’s recently revitalized campaign\u003c/a> for governor. It’s unclear whether it will have any effect on the crowded race, in which Becerra is one of \u003ca href=\"https://calmatters.org/politics/2026/03/california-governor-candidates/\">six Democrats vying for the seat\u003c/a> that Newsom is vacating; two Republicans also are in the running.\u003c/p>\n\u003cp>The timing of the agreement is unusual. Federal prosecutors typically avoid pursuing political cases within 60 days of an election under a Justice Department custom designed to prevent interference that could advantage or disadvantage candidates. Voters have already begun turning in their ballots in the gubernatorial race.\u003c/p>\n\u003cp>Federal prosecutor Michael Anderson told U.S. District Court Judge Troy Nunley the plea was the result of months of negotiations between prosecutors and Williamson. Williamson had previously rejected one plea offer and made a counter-offer, Anderson said, calling the agreement the “most favorable” outcome for both parties.\u003c/p>\n\u003cp>Campbell and McCluskie are scheduled to be sentenced June 4, two days after the primary election.\u003c/p>\n\u003cp>Becerra was lagging in polling and fundraising until former Rep. Eric Swalwell dropped out over sexual assault allegations in early April, when he suddenly shot into the lead as \u003ca href=\"https://calmatters.org/politics/2026/04/swalwell-congress-resignation/\">anxious Democratic voters searched\u003c/a> for a candidate to coalesce around.\u003c/p>\n\u003cp>Williamson’s case is one of several critiques opponents have seized upon in debates and negative ads to call into question Becerra’s judgment and fitness for executive office.\u003c/p>\n\u003ch2>Allegations were a ‘gut punch’\u003c/h2>\n\u003cp>Prosecutors have considered Becerra a victim in the case and he has not been charged with any wrongdoing. He has said he cooperated with investigators and that revelations of McCluskie’s betrayal were a “gut punch” to him akin to finding out about an unfaithful spouse.\u003c/p>\n\u003cp>But some in the California capital’s often-overlapping circles of interest groups, lobbyists and political strategists have questioned how Becerra could not have known what the payments were for.\u003c/p>\n\u003cp>On the campaign trail, Becerra has faced questions about whether he should have paid closer attention to his campaign account’s expenses. Strategists say $10,000 a month — the amount he agreed to be charged — is a high price for account maintenance.[aside label=\"From the 2026 Voter Guide\" link1='https://www.kqed.org/voterguide/governor,Learn about the California Governor Election' hero=https://cdn.kqed.org/wp-content/uploads/sites/80/2026/04/Aside-California-Governor-2026-Primary-Election-1200x1200@2x.png]It is common practice in California for official staff members of lawmakers and other officeholders also to work on their bosses’ political campaigns, allowing them to supplement taxpayer-funded state salaries with payments from campaign accounts. Williamson herself was paid by the California Democratic Party for political work on ballot measures during the two years she was employed in the governor’s office as Newsom’s top aide. She made nearly $200,000 from the party in 2024 on top of her official duties, according to campaign finance records.\u003c/p>\n\u003cp>\u003ca href=\"https://www.kcra.com/article/xavier-becerra-new-questions-after-campaign-funds-stolen/71143407\">Asked by KCRA\u003c/a> last month how voters could be assured Becerra would not let taxpayer funds be similarly “swindled,” Becerra did not answer.\u003c/p>\n\u003cp>Williamson was a hard-charging Sacramento lobbyist who previously ran Gov. Jerry Brown’s office. When Newsom appointed her chief of staff in 2023, her clients included criminal justice reform advocates, healthcare corporation Centene, Meta, Comcast and the video game giant Activision.\u003c/p>\n\u003cp>The indictment accused Williamson of lying to investigators about whether she used her position in Newsom’s office to influence a gender equality and workplace harassment lawsuit state regulators had brought against Activision. The state later settled that case for $54 million.\u003c/p>\n\u003cp>Newsom’s office put Williamson on leave when she informed them she was under investigation in November 2024. He has also said the charges caught him by surprise.\u003c/p>\n\u003cp>\u003cem>This article was \u003ca href=\"https://calmatters.org/politics/2026/05/california-newsom-chief-plea-deal/\">originally published on CalMatters\u003c/a> and was republished under the \u003ca href=\"https://creativecommons.org/licenses/by-nc-nd/4.0/\">Creative Commons Attribution-NonCommercial-NoDerivatives\u003c/a> license.\u003c/em>\u003c/p>\n\u003cp>\u003c/p>\n",
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"content": "\u003cdiv class=\"post-body\">\u003cp>\u003cp>\u003cem>This story was originally published by \u003ca href=\"https://calmatters.org/\">CalMatters\u003c/a>. \u003ca href=\"https://calmatters.org/subscribe-to-calmatters/\">Sign up\u003c/a> for their newsletters.\u003c/em>\u003c/p>\n\u003cp>A former political consultant for Democratic frontrunner for governor \u003ca href=\"https://www.kqed.org/news/tag/xavier-becerra\">Xavier Becerra\u003c/a> and ex-aide to Gov. Gavin Newsom pleaded guilty Thursday to conspiracy to commit bank and wire fraud, submitting a false tax return and lying to federal investigators.\u003c/p>\n\u003cp>The consultant, Dana Williamson, \u003ca href=\"https://calmatters.org/politics/2025/11/newsom-chief-of-staff-indicted/\">was charged in a corruption scandal\u003c/a> that shocked Sacramento. Following an investigation that included FBI wiretaps and seized communications, prosecutors accused Williamson of conspiring with Becerra’s longtime chief of staff Sean McCluskie and another Sacramento lobbyist to divert $225,000 from Becerra’s dormant state campaign account into McCluskie’s hands.\u003c/p>\n\u003cp>As part of the plea deal, Williamson agreed to pay $225,000 in restitution to Becerra and $500,000 in restitution to the IRS. She faces up to 38 years in prison.\u003c/p>\n\u003cp>\u003c/p>\u003c/div>",
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"content": "\u003cdiv class=\"post-body\">\u003cp>\u003c/p>\n\u003cp>Williamson’s plea comes just over two weeks before the primary election that will determine whether Becerra advances to the November election.\u003c/p>\n\u003cp>According to the indictment, the money was to help McCluskie follow Becerra to Washington when he was named U.S. secretary of Health and Human Services in the Biden administration. McCluskie’s job there offered a lower salary.\u003c/p>\n\u003cp>Prosecutors say the Democratic operatives charged Becerra’s dormant campaign account $10,000 a month under the guise of maintaining it for legal compliance, but instead routed it to McCluskie in violation of federal laws prohibiting federal employees from being involved in campaign activities. The investigation was launched during the Biden administration.\u003c/p>\n\u003cfigure id=\"attachment_12074138\" class=\"wp-caption aligncenter\" style=\"max-width: 1999px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12074138\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/02/260220-XAVIER-BECERRA-ON-PB-MD-04_qed.jpg\" alt=\"\" width=\"1999\" height=\"1333\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/02/260220-XAVIER-BECERRA-ON-PB-MD-04_qed.jpg 1999w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/02/260220-XAVIER-BECERRA-ON-PB-MD-04_qed-160x107.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/02/260220-XAVIER-BECERRA-ON-PB-MD-04_qed-1536x1024.jpg 1536w\" sizes=\"auto, (max-width: 1999px) 100vw, 1999px\">\u003cfigcaption class=\"wp-caption-text\">Former United States Secretary of Health and Human Services Xavier Becerra speaks with Scott Shafer on Political Breakdown at KQED in San Francisco on Feb. 20, 2026. \u003ccite>(Martin do Nascimento/KQED)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>McCluskie and the other lobbyist, Greg Campbell, pleaded guilty to fraud in the case. Williamson also faced a variety of tax evasion charges and was accused of fraudulently obtaining federal COVID-19 benefits.\u003c/p>\n\u003cp>The plea deal brings to a close a case that has loomed over \u003ca href=\"https://calmatters.org/politics/2026/05/california-governor-becerra-criticism/\">Becerra’s recently revitalized campaign\u003c/a> for governor. It’s unclear whether it will have any effect on the crowded race, in which Becerra is one of \u003ca href=\"https://calmatters.org/politics/2026/03/california-governor-candidates/\">six Democrats vying for the seat\u003c/a> that Newsom is vacating; two Republicans also are in the running.\u003c/p>\n\u003cp>The timing of the agreement is unusual. Federal prosecutors typically avoid pursuing political cases within 60 days of an election under a Justice Department custom designed to prevent interference that could advantage or disadvantage candidates. Voters have already begun turning in their ballots in the gubernatorial race.\u003c/p>\n\u003cp>Federal prosecutor Michael Anderson told U.S. District Court Judge Troy Nunley the plea was the result of months of negotiations between prosecutors and Williamson. Williamson had previously rejected one plea offer and made a counter-offer, Anderson said, calling the agreement the “most favorable” outcome for both parties.\u003c/p>\n\u003cp>Campbell and McCluskie are scheduled to be sentenced June 4, two days after the primary election.\u003c/p>\n\u003cp>Becerra was lagging in polling and fundraising until former Rep. Eric Swalwell dropped out over sexual assault allegations in early April, when he suddenly shot into the lead as \u003ca href=\"https://calmatters.org/politics/2026/04/swalwell-congress-resignation/\">anxious Democratic voters searched\u003c/a> for a candidate to coalesce around.\u003c/p>\n\u003cp>Williamson’s case is one of several critiques opponents have seized upon in debates and negative ads to call into question Becerra’s judgment and fitness for executive office.\u003c/p>\n\u003ch2>Allegations were a ‘gut punch’\u003c/h2>\n\u003cp>Prosecutors have considered Becerra a victim in the case and he has not been charged with any wrongdoing. He has said he cooperated with investigators and that revelations of McCluskie’s betrayal were a “gut punch” to him akin to finding out about an unfaithful spouse.\u003c/p>\n\u003cp>But some in the California capital’s often-overlapping circles of interest groups, lobbyists and political strategists have questioned how Becerra could not have known what the payments were for.\u003c/p>\n\u003cp>On the campaign trail, Becerra has faced questions about whether he should have paid closer attention to his campaign account’s expenses. Strategists say $10,000 a month — the amount he agreed to be charged — is a high price for account maintenance.\u003c/p>\u003c/div>",
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"content": "\u003cdiv class=\"post-body\">\u003cp>It is common practice in California for official staff members of lawmakers and other officeholders also to work on their bosses’ political campaigns, allowing them to supplement taxpayer-funded state salaries with payments from campaign accounts. Williamson herself was paid by the California Democratic Party for political work on ballot measures during the two years she was employed in the governor’s office as Newsom’s top aide. She made nearly $200,000 from the party in 2024 on top of her official duties, according to campaign finance records.\u003c/p>\n\u003cp>\u003ca href=\"https://www.kcra.com/article/xavier-becerra-new-questions-after-campaign-funds-stolen/71143407\">Asked by KCRA\u003c/a> last month how voters could be assured Becerra would not let taxpayer funds be similarly “swindled,” Becerra did not answer.\u003c/p>\n\u003cp>Williamson was a hard-charging Sacramento lobbyist who previously ran Gov. Jerry Brown’s office. When Newsom appointed her chief of staff in 2023, her clients included criminal justice reform advocates, healthcare corporation Centene, Meta, Comcast and the video game giant Activision.\u003c/p>\n\u003cp>The indictment accused Williamson of lying to investigators about whether she used her position in Newsom’s office to influence a gender equality and workplace harassment lawsuit state regulators had brought against Activision. The state later settled that case for $54 million.\u003c/p>\n\u003cp>Newsom’s office put Williamson on leave when she informed them she was under investigation in November 2024. He has also said the charges caught him by surprise.\u003c/p>\n\u003cp>\u003cem>This article was \u003ca href=\"https://calmatters.org/politics/2026/05/california-newsom-chief-plea-deal/\">originally published on CalMatters\u003c/a> and was republished under the \u003ca href=\"https://creativecommons.org/licenses/by-nc-nd/4.0/\">Creative Commons Attribution-NonCommercial-NoDerivatives\u003c/a> license.\u003c/em>\u003c/p>\n\u003cp>\u003c/p>\n\u003c/div>\u003c/p>",
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"content": "\u003cp>On the ground floor of a new affordable housing complex in Redwood City, workers are in the middle of constructing a \u003ca href=\"https://www.kqed.org/early-childhood-education-and-care\">childcare\u003c/a> center.\u003c/p>\n\u003cp>Peninsula Family Service plans to enroll 36 infants and toddlers when the center is scheduled to open next year, using state funds awarded to the nonprofit to provide free or low-cost childcare to income-eligible families.\u003c/p>\n\u003cp>But the fate of that plan will depend on state budget negotiations over the next several weeks.\u003c/p>\n\u003cp>Earlier this year, Gov. Gavin Newsom proposed cutting funding for about 4,200 subsidized childcare spaces — money Peninsula Family Service will need to run the new center. The move would save $98 million, but advocates say it would roll back a pledge he made to expand access to childcare for working families.\u003c/p>\n\u003cp>[ad fullwidth]\u003c/p>\n\u003cp>“Newsom really championed and campaigned on being the early learning and care governor, and I think that there are many promises he made as part of that that have not been fulfilled,” said Nina Buthee, executive director of EveryChild California, which advocates for publicly funded childcare programs.\u003c/p>\n\u003cp>When Newsom presented his spending plan for the next fiscal year in January, the state projected a nearly $3 billion shortfall. The Legislative Analyst’s Office \u003ca href=\"https://lao.ca.gov/Publications/Report/5168\">recommended\u003c/a> cutting funding for “general childcare” spaces because they hadn’t been spent yet and therefore won’t affect families currently receiving subsidized childcare.\u003c/p>\n\u003cfigure id=\"attachment_12070630\" class=\"wp-caption aligncenter\" style=\"max-width: 2000px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12070630\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/01/260116-NewsomLuriePresser-32-BL_qed.jpg\" alt=\"\" width=\"2000\" height=\"1333\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/01/260116-NewsomLuriePresser-32-BL_qed.jpg 2000w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/01/260116-NewsomLuriePresser-32-BL_qed-160x107.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/01/260116-NewsomLuriePresser-32-BL_qed-1536x1024.jpg 1536w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\">\u003cfigcaption class=\"wp-caption-text\">Gov. Gavin Newsom speaks during a press conference at the Friendship House Association of American Indians in San Francisco on Jan. 16, 2026. \u003ccite>(Beth LaBerge/KQED)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>But Buthee said at least 16 childcare providers across California haven’t spent the money because they’re still in the process of building or renovating facilities, but meeting state licensing standards and getting approval, especially for the care of infants and toddlers, takes time.\u003c/p>\n\u003cp>“Depending on where you are in California, licensing could take anywhere from a couple of weeks to up to six months or nine months,” she said. “Really, the state is not helping contractors expedite the process.”\u003c/p>\n\u003cp>Some of the affected contractors include Children’s Paradise, a childcare provider in San Diego County, which planned to open two locations in childcare “deserts” — areas where options are too few to meet the demand. The locations would have been large enough to serve 470 children, according to EveryChild California.\u003c/p>\n\u003cp>Peninsula Family Service was awarded $2.7 million to serve nearly 80 children at two new centers, said its CEO, Heather Cleary. If funding from the state goes away, she said, the agency might have to consider charging private tuition.[aside postID=news_12082904 hero='https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/260508-EXPANSIONCONSEQUENCE-TV-05214-KQED.jpg']“That’s not our intent. We really want to do everything we can to bring a subsidized program to this county, and that involves the state,” she said.\u003c/p>\n\u003cp>\u003cspan style=\"font-weight: 400\"> Subsidized childcare slots were not mentioned in the proposed 2026-2027 state budget, known as the “May Revision,” Newsom released on Thursday. He said the plan would balance California’s budget for the next two years, long after he leaves office. \u003c/span>\u003cspan style=\"font-weight: 400\">“We’re not going to walk away from this state and put the next Legislature and the next governor in a difficult spot,” he said. \u003c/span>\u003c/p>\n\u003cp>\u003cspan style=\"font-weight: 400\">Newsom’s updated plan will set off a busy period of negotiations leading to a final budget that the Legislature must pass by June 15. State Senate leaders have indicated they would not only reject cutting child care slots, but that they’d rather \u003c/span>\u003ca href=\"https://democrats.senate.ca.gov/sites/democrats.senate.ca.gov/files/iu/FINAL-FFTF-Budget.pdf\">\u003cspan style=\"font-weight: 400\">increase\u003c/span>\u003c/a>\u003cspan style=\"font-weight: 400\"> funding to subsidize 44,000 spaces. \u003c/span>\u003c/p>\n\u003cp>In 2021, Newsom pledged to add more than 200,000 subsidized childcare slots, both in contracted centers and in the form of vouchers for low-income families. His administration has funded 130,000 of those slots while making other huge investments in early childhood education and care, like \u003ca href=\"https://www.kqed.org/news/12082904/as-transitional-kindergarten-grows-hundreds-of-child-care-centers-close\">expanding access to transitional kindergarten\u003c/a> for all 4-year-old children and allowing in-home childcare providers who receive the subsidies to unionize. The move has led to \u003ca href=\"https://www.kqed.org/news/12051737/child-care-union-strikes-deal-to-preserve-benefits-bump-up-pay\">healthcare and retirement funds \u003c/a>for a workforce that has historically been underpaid, and the state is slowly working toward improving their wages.\u003c/p>\n\u003cp>“We’ve had the most significant childcare expansion subsidies in the United States. Should be better known. It’s not,” Newsom told MSN in a January interview.\u003c/p>\n\u003cp>Between 2019 and 2024, enrollment in subsidized childcare programs grew by 63%, according to an analysis by the \u003ca href=\"https://calbudgetcenter.org/app/uploads/2026/04/2026-Child-Care-Chart-Book-Designed.pdf\">California Budget & Policy Center\u003c/a>.\u003c/p>\n\u003cfigure id=\"attachment_12081820\" class=\"wp-caption aligncenter\" style=\"max-width: 2000px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"wp-image-12081820 size-full\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/04/260428-VallejoChildCare-23-BL.jpg\" alt=\"\" width=\"2000\" height=\"1333\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/04/260428-VallejoChildCare-23-BL.jpg 2000w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/04/260428-VallejoChildCare-23-BL-160x107.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/04/260428-VallejoChildCare-23-BL-1536x1024.jpg 1536w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\">\u003cfigcaption class=\"wp-caption-text\">Teacher Brianda Casillas works with children in a classroom at Rise Vallejo, an early education center, in Vallejo, on April 28, 2026. \u003ccite>(Beth LaBerge/KQED)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>Laura Pryor, a research director at the center, said while the Newsom administration deserves credit for making unprecedented investments in early childhood education, it has fallen short in some areas — like the slots.\u003c/p>\n\u003cp>She estimates that about 1.77 million children qualify for subsidized childcare, but are not enrolled in these programs.\u003c/p>\n\u003cp>“For every individual that gets access to a space, it’s thousands and thousands of dollars saved that expands their budget,” Pryor said. “If our goal is to fund all children that are eligible, we are moving in the right direction.”\u003c/p>\n\u003cp>“If there’s this additional cut, we’re not only walking back on the progress, but walking back on this positive trend that we’ve been seeing in the past several years,” she said.\u003c/p>\n\u003cp>\u003c/p>\n",
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"content": "\u003cdiv class=\"post-body\">\u003cp>\u003cp>On the ground floor of a new affordable housing complex in Redwood City, workers are in the middle of constructing a \u003ca href=\"https://www.kqed.org/early-childhood-education-and-care\">childcare\u003c/a> center.\u003c/p>\n\u003cp>Peninsula Family Service plans to enroll 36 infants and toddlers when the center is scheduled to open next year, using state funds awarded to the nonprofit to provide free or low-cost childcare to income-eligible families.\u003c/p>\n\u003cp>But the fate of that plan will depend on state budget negotiations over the next several weeks.\u003c/p>\n\u003cp>Earlier this year, Gov. Gavin Newsom proposed cutting funding for about 4,200 subsidized childcare spaces — money Peninsula Family Service will need to run the new center. The move would save $98 million, but advocates say it would roll back a pledge he made to expand access to childcare for working families.\u003c/p>\n\u003cp>\u003c/p>\u003c/div>",
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"content": "\u003cdiv class=\"post-body\">\u003cp>\u003c/p>\n\u003cp>“Newsom really championed and campaigned on being the early learning and care governor, and I think that there are many promises he made as part of that that have not been fulfilled,” said Nina Buthee, executive director of EveryChild California, which advocates for publicly funded childcare programs.\u003c/p>\n\u003cp>When Newsom presented his spending plan for the next fiscal year in January, the state projected a nearly $3 billion shortfall. The Legislative Analyst’s Office \u003ca href=\"https://lao.ca.gov/Publications/Report/5168\">recommended\u003c/a> cutting funding for “general childcare” spaces because they hadn’t been spent yet and therefore won’t affect families currently receiving subsidized childcare.\u003c/p>\n\u003cfigure id=\"attachment_12070630\" class=\"wp-caption aligncenter\" style=\"max-width: 2000px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12070630\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/01/260116-NewsomLuriePresser-32-BL_qed.jpg\" alt=\"\" width=\"2000\" height=\"1333\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/01/260116-NewsomLuriePresser-32-BL_qed.jpg 2000w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/01/260116-NewsomLuriePresser-32-BL_qed-160x107.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/01/260116-NewsomLuriePresser-32-BL_qed-1536x1024.jpg 1536w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\">\u003cfigcaption class=\"wp-caption-text\">Gov. Gavin Newsom speaks during a press conference at the Friendship House Association of American Indians in San Francisco on Jan. 16, 2026. \u003ccite>(Beth LaBerge/KQED)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>But Buthee said at least 16 childcare providers across California haven’t spent the money because they’re still in the process of building or renovating facilities, but meeting state licensing standards and getting approval, especially for the care of infants and toddlers, takes time.\u003c/p>\n\u003cp>“Depending on where you are in California, licensing could take anywhere from a couple of weeks to up to six months or nine months,” she said. “Really, the state is not helping contractors expedite the process.”\u003c/p>\n\u003cp>Some of the affected contractors include Children’s Paradise, a childcare provider in San Diego County, which planned to open two locations in childcare “deserts” — areas where options are too few to meet the demand. The locations would have been large enough to serve 470 children, according to EveryChild California.\u003c/p>\n\u003cp>Peninsula Family Service was awarded $2.7 million to serve nearly 80 children at two new centers, said its CEO, Heather Cleary. If funding from the state goes away, she said, the agency might have to consider charging private tuition.\u003c/p>\u003c/div>",
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"content": "\u003cdiv class=\"post-body\">\u003cp>“That’s not our intent. We really want to do everything we can to bring a subsidized program to this county, and that involves the state,” she said.\u003c/p>\n\u003cp>\u003cspan style=\"font-weight: 400\"> Subsidized childcare slots were not mentioned in the proposed 2026-2027 state budget, known as the “May Revision,” Newsom released on Thursday. He said the plan would balance California’s budget for the next two years, long after he leaves office. \u003c/span>\u003cspan style=\"font-weight: 400\">“We’re not going to walk away from this state and put the next Legislature and the next governor in a difficult spot,” he said. \u003c/span>\u003c/p>\n\u003cp>\u003cspan style=\"font-weight: 400\">Newsom’s updated plan will set off a busy period of negotiations leading to a final budget that the Legislature must pass by June 15. State Senate leaders have indicated they would not only reject cutting child care slots, but that they’d rather \u003c/span>\u003ca href=\"https://democrats.senate.ca.gov/sites/democrats.senate.ca.gov/files/iu/FINAL-FFTF-Budget.pdf\">\u003cspan style=\"font-weight: 400\">increase\u003c/span>\u003c/a>\u003cspan style=\"font-weight: 400\"> funding to subsidize 44,000 spaces. \u003c/span>\u003c/p>\n\u003cp>In 2021, Newsom pledged to add more than 200,000 subsidized childcare slots, both in contracted centers and in the form of vouchers for low-income families. His administration has funded 130,000 of those slots while making other huge investments in early childhood education and care, like \u003ca href=\"https://www.kqed.org/news/12082904/as-transitional-kindergarten-grows-hundreds-of-child-care-centers-close\">expanding access to transitional kindergarten\u003c/a> for all 4-year-old children and allowing in-home childcare providers who receive the subsidies to unionize. The move has led to \u003ca href=\"https://www.kqed.org/news/12051737/child-care-union-strikes-deal-to-preserve-benefits-bump-up-pay\">healthcare and retirement funds \u003c/a>for a workforce that has historically been underpaid, and the state is slowly working toward improving their wages.\u003c/p>\n\u003cp>“We’ve had the most significant childcare expansion subsidies in the United States. Should be better known. It’s not,” Newsom told MSN in a January interview.\u003c/p>\n\u003cp>Between 2019 and 2024, enrollment in subsidized childcare programs grew by 63%, according to an analysis by the \u003ca href=\"https://calbudgetcenter.org/app/uploads/2026/04/2026-Child-Care-Chart-Book-Designed.pdf\">California Budget & Policy Center\u003c/a>.\u003c/p>\n\u003cfigure id=\"attachment_12081820\" class=\"wp-caption aligncenter\" style=\"max-width: 2000px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"wp-image-12081820 size-full\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/04/260428-VallejoChildCare-23-BL.jpg\" alt=\"\" width=\"2000\" height=\"1333\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/04/260428-VallejoChildCare-23-BL.jpg 2000w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/04/260428-VallejoChildCare-23-BL-160x107.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/04/260428-VallejoChildCare-23-BL-1536x1024.jpg 1536w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\">\u003cfigcaption class=\"wp-caption-text\">Teacher Brianda Casillas works with children in a classroom at Rise Vallejo, an early education center, in Vallejo, on April 28, 2026. \u003ccite>(Beth LaBerge/KQED)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>Laura Pryor, a research director at the center, said while the Newsom administration deserves credit for making unprecedented investments in early childhood education, it has fallen short in some areas — like the slots.\u003c/p>\n\u003cp>She estimates that about 1.77 million children qualify for subsidized childcare, but are not enrolled in these programs.\u003c/p>\n\u003cp>“For every individual that gets access to a space, it’s thousands and thousands of dollars saved that expands their budget,” Pryor said. “If our goal is to fund all children that are eligible, we are moving in the right direction.”\u003c/p>\n\u003cp>“If there’s this additional cut, we’re not only walking back on the progress, but walking back on this positive trend that we’ve been seeing in the past several years,” she said.\u003c/p>\n\u003cp>\u003c/p>\n\u003c/div>\u003c/p>",
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"content": "\u003cp>Ballots are already landing in mailboxes across California and \u003ca href=\"https://www.kqed.org/voterguide/california/governor\">the race to replace Gov. Gavin Newsom\u003c/a> is entering its final stretch.\u003c/p>\n\u003cp>In the first open race in almost 30 years, the gap between candidates widened further after former Rep. \u003ca href=\"https://www.kqed.org/news/12079583/eric-swalwell-ends-california-governor-campaign-after-sexual-assault-allegations\">Eric Swalwell dropped out\u003c/a>. With no clear frontrunner, voters are left navigating a crowded, unsettled field still taking shape just weeks before the primary.\u003c/p>\n\u003cp>[ad fullwidth]\u003c/p>\n\u003cp>\u003ca href=\"https://www.kqed.org/author/mlagos\">Marisa Lagos\u003c/a>, host of KQED’s \u003ca href=\"https://www.kqed.org/podcasts/politicalbreakdown\">\u003cem>Political Breakdown\u003c/em>\u003c/a>, and KQED politics correspondent \u003ca href=\"https://www.kqed.org/author/gmarzorati\">Guy Marzorati\u003c/a> spoke with \u003ca href=\"https://www.kqed.org/californiareportmagazine\">\u003cem>The California Report Magazine\u003c/em>\u003c/a> to break down the race and key players.\u003c/p>\n\u003cp>Both have hosted \u003ca href=\"https://www.kqed.org/pressroom/12710/gubernatorial-candidate-tom-steyer-added-to-kqeds-town-hall-series\">KQED’s Gubernatorial town hall series\u003c/a>, set to continue through the month with Sheriff Chad Bianco on May 18, and Tom Steyer on May 26.\u003c/p>\n\u003ch2>On how to understand the race\u003c/h2>\n\u003cp>\u003cstrong>Lagos:\u003c/strong> Democrats are a little confused because there’s no blockbuster candidate like Arnold Schwarzenegger, Jerry Brown, Gavin Newsom, but being a rock star is not a prerequisite to being governor. You do have a number of very experienced, smart Democrats in this race, along with some serious Republicans.\u003c/p>\n\u003ch2>On the frontrunners of a crowded field\u003c/h2>\n\u003cp>\u003cstrong>Marzorati: \u003c/strong>We’re still in a position where, no matter what poll you’re looking at, none of these candidates are breaking 20% — so it’s all very muddled. But we have seen the emergence of a top five in most polling: two Republicans — \u003ca href=\"https://www.kqed.org/news/12078793/trump-endorses-steve-hilton-for-california-governor-giving-gop-a-front-runner\">Steve Hilton\u003c/a>, a former Fox News commentator, and \u003ca href=\"https://www.kqed.org/news/12081096/riverside-county-sheriff-chad-bianco-on-his-faith-cutting-taxes-and-ballot-seizure\">Chad Bianco\u003c/a> — and on the Democratic side, \u003ca href=\"https://www.kqed.org/news/12082059/xavier-becerra-backpedals-on-single-payer-as-he-woos-powerful-doctors-lobby\">Xavier Becerra\u003c/a>, \u003ca href=\"https://www.kqed.org/news/12080843/rivals-target-steyer-becerra-in-debate-as-california-governor-race-tightens\">Tom Steyer\u003c/a>, and \u003ca href=\"https://www.kqed.org/news/12082254/porter-focuses-on-california-housing-costs-ai-plans-at-kqed-town-hall\">Katie Porter\u003c/a>.\u003c/p>\n\u003cfigure id=\"attachment_12072282\" class=\"wp-caption aligncenter\" style=\"max-width: 2000px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12072282\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/02/CAGovDebateAP1.jpg\" alt=\"\" width=\"2000\" height=\"1333\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/02/CAGovDebateAP1.jpg 2000w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/02/CAGovDebateAP1-160x107.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/02/CAGovDebateAP1-1536x1024.jpg 1536w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\">\u003cfigcaption class=\"wp-caption-text\">From left, Xavier Becerra, Steve Hilton, Matt Mahan, Tom Steyer, Tony Thurmond, Antonio Villaraigosa and Betty Yee stand on the stage during the California gubernatorial candidate debate on Tuesday, Feb. 3, 2026, in San Francisco. \u003ccite>(Laure Andrillon/AP Photo)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>There are more candidates on the Democratic side we could talk about, but this top five has started to take shape in recent weeks.\u003c/p>\n\u003cp>The most notable shift has been Eric Swalwell dropping out — he had been seen as a frontrunner — and since then, Becerra has gained ground in just the past few weeks.\u003c/p>\n\u003ch2>On how Democratic candidates are positioning themselves\u003c/h2>\n\u003cp>\u003cstrong>Lagos: \u003c/strong>Xavier Becerra really relying on his experience. He was a former attorney general. He was in Congress for several decades before that, representing Los Angeles and then he was in the Biden administration as Health and Human Service Secretary, and we’re both hearing him talk about that, and a lot of people attack him on that.\u003c/p>\n\u003cp>\u003cstrong>Marzorati:\u003c/strong> Tom Steyer spent more than $160 million of his own money on this campaign so far that has smashed every self-funding record in California history.\u003c/p>\n\u003cp>What makes it so fascinating to me is you have this billionaire in a time where a lot of Democrats are kind of looking sideways at billionaires. You have this billionaire in Tom Steyer who is running as the most progressive candidate in this race.\u003c/p>\n\u003cfigure id=\"attachment_12081068\" class=\"wp-caption aligncenter\" style=\"max-width: 1999px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12081068\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/04/FTP_9P3A3287_1_qed.jpg\" alt=\"\" width=\"1999\" height=\"1333\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/04/FTP_9P3A3287_1_qed.jpg 1999w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/04/FTP_9P3A3287_1_qed-160x107.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/04/FTP_9P3A3287_1_qed-1536x1024.jpg 1536w\" sizes=\"auto, (max-width: 1999px) 100vw, 1999px\">\u003cfigcaption class=\"wp-caption-text\">Steve Hilton, Republican gubernatorial candidate for California, left, and Tom Steyer, Democratic gubernatorial candidate for California, fist bump prior to a gubernatorial debate at KRON Studios in San Francisco, California, US, on Wednesday, April 22, 2026. California will hold its primary election on June 2, where the top two finishers advance to the general election in November regardless of party affiliation. Photographer: Jason Henry/Nexstar/Bloomberg\u003c/figcaption>\u003c/figure>\n\u003cp>He’s getting supported by Our Revolution, the Bernie Sanders group. He’s supporting single payer healthcare. He’s pushing to raise corporate taxes to bring in money for schools. So it’s like this dichotomy of this personality, this investor, this billionaire, and this progressive platform that he talked to us about.\u003c/p>\n\u003cp>\u003cstrong>Lagos: \u003c/strong>Katie Porter struggled at times to find lane in this race. She was pretty progressive. One of her mentors is Elizabeth Warren, the senator from Massachusetts who did endorse her recently.\u003c/p>\n\u003cp>In the fall, she got hit by some videos, including one from five years ago snapping at a staff member. She’s had to apologize for that. But you do have to wonder if it sort of created a ceiling for her and you can’t disentangle her gender. So fair or not, that has really dogged her in this race.[aside label=\"From the 2026 Voter Guide\" link1='https://www.kqed.org/voterguide/governor,Learn about the California Governor Election' hero=https://cdn.kqed.org/wp-content/uploads/sites/80/2026/04/Aside-California-Governor-2026-Primary-Election-1200x1200@2x.png]\u003cstrong>Marzorati:\u003c/strong> We also have \u003ca href=\"https://www.kqed.org/news/12075490/san-jose-mayor-matt-mahan-positions-himself-as-a-change-candidate-in-governors-race\">Matt Mahan\u003c/a>, the mayor of San José, who’s running. He got into this race somewhat late. He’s trying to run as a centrist Democrat, trying to maybe have some crossover appeal to independence and even Republicans.\u003c/p>\n\u003cp>\u003ca href=\"https://www.kqed.org/news/12077747/antonio-villaraigosas-second-act-can-a-pragmatist-lead-california\">Antonio Villaraigosa\u003c/a> who was mayor of Los Angeles over a decade ago, is more of a centrist candidate as well.\u003c/p>\n\u003cp>And then \u003ca href=\"https://www.kqed.org/news/12077118/tony-thurmond-carves-out-a-progressive-path-in-the-race-for-california-governor\">Tony Thurmond\u003c/a>, the state superintendent of public instruction, has held statewide office, but has kind of struggled to break through at all in this race.\u003c/p>\n\u003ch2>On how the primaries work\u003c/h2>\n\u003cp>\u003cstrong>Lagos: \u003c/strong>In most states, Republicans face off in a primary and Democrats face off [in a primary]. The winner of each face each other in the fall. But in California, it could be anybody in the race. And so we have seen that really set up the system where all these Democrats are splitting the vote.\u003c/p>\n\u003ch2>On the Republican side\u003c/h2>\n\u003cp>\u003cstrong>Lagos: \u003c/strong>Both of them call the one-party rule for the last decade a failure. They say that Democrats own all of the problems in this state — the affordability crisis, the housing crisis, the homelessness crisis — and that they would be a new chapter.\u003c/p>\n\u003cp>Bianco is a Riverside County sheriff. He’s definitely further to the right than Hilton. Bianco made some waves earlier this year when he seized tens of thousands of ballots from last November’s election, kind of echoing some of these claims we’ve heard from the president around election security. And he has really tried to pitch himself as an outsider.\u003c/p>\n\u003cfigure id=\"attachment_12081062\" class=\"wp-caption aligncenter\" style=\"max-width: 1999px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12081062\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/04/FTP_9P3A3852_1_qed.jpg\" alt=\"\" width=\"1999\" height=\"1333\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/04/FTP_9P3A3852_1_qed.jpg 1999w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/04/FTP_9P3A3852_1_qed-160x107.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/04/FTP_9P3A3852_1_qed-1536x1024.jpg 1536w\" sizes=\"auto, (max-width: 1999px) 100vw, 1999px\">\u003cfigcaption class=\"wp-caption-text\">Chad Bianco, Republican gubernatorial candidate for California, speaks during a gubernatorial debate at KRON Studios in San Francisco, California, US, on Wednesday, April 22, 2026. California will hold its primary election on June 2, where the top two finishers advance to the general election in November regardless of party affiliation. \u003ccite>(Jason Henry/Nexstar/Bloomberg)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>Steve Hilton is trying to run as a more traditional Republican, yet he is associated with Trump and the kind of MAGA movement. He has made an effort to both appeal to more hardcore conservatives and moderate Democrats.\u003c/p>\n\u003cp>Both Hilton and Bianco, if you look at their platforms, are very much running on a sort of traditional conservative anti-tax, pro-growth and pro-business.\u003c/p>\n\u003ch2>On what voters are weighing\u003c/h2>\n\u003cp>\u003cstrong>Marzorati: \u003c/strong>I honestly hear from voters wrestling with this idea of, “Okay, do I want someone who I know is going to kind of shake things up and bring change or do I want someone I know who is going to fight Trump well?”\u003c/p>\n\u003ch2>On what to watch in the final stretch\u003c/h2>\n\u003cp>\u003cstrong>Lagos:\u003c/strong> How the candidates, especially on the Democratic side, continue to interact with one another will be worth watching. Are they throwing bombs or are they just really trying to push a positive message about themselves to break through and get voters to come out and vote by June 2?\u003c/p>\n\u003cp>\u003cstrong>Marzorati:\u003c/strong> If you look at California as kind of a laboratory for democratic politics, like what would the future leader of the state kind of put forward for the rest of the country? Because a lot of these issues, you know, housing affordability, the energy transition, we’re kind of the canary in the coal mine in a lot of ways for what the country is going to be going through. So I think there are a lot of differences you see between Democrats.\u003c/p>\n\u003cp>[ad floatright]\u003c/p>\n",
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"content": "\u003cdiv class=\"post-body\">\u003cp>\u003cp>Ballots are already landing in mailboxes across California and \u003ca href=\"https://www.kqed.org/voterguide/california/governor\">the race to replace Gov. Gavin Newsom\u003c/a> is entering its final stretch.\u003c/p>\n\u003cp>In the first open race in almost 30 years, the gap between candidates widened further after former Rep. \u003ca href=\"https://www.kqed.org/news/12079583/eric-swalwell-ends-california-governor-campaign-after-sexual-assault-allegations\">Eric Swalwell dropped out\u003c/a>. With no clear frontrunner, voters are left navigating a crowded, unsettled field still taking shape just weeks before the primary.\u003c/p>\n\u003cp>\u003c/p>\u003c/div>",
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"content": "\u003cdiv class=\"post-body\">\u003cp>\u003c/p>\n\u003cp>\u003ca href=\"https://www.kqed.org/author/mlagos\">Marisa Lagos\u003c/a>, host of KQED’s \u003ca href=\"https://www.kqed.org/podcasts/politicalbreakdown\">\u003cem>Political Breakdown\u003c/em>\u003c/a>, and KQED politics correspondent \u003ca href=\"https://www.kqed.org/author/gmarzorati\">Guy Marzorati\u003c/a> spoke with \u003ca href=\"https://www.kqed.org/californiareportmagazine\">\u003cem>The California Report Magazine\u003c/em>\u003c/a> to break down the race and key players.\u003c/p>\n\u003cp>Both have hosted \u003ca href=\"https://www.kqed.org/pressroom/12710/gubernatorial-candidate-tom-steyer-added-to-kqeds-town-hall-series\">KQED’s Gubernatorial town hall series\u003c/a>, set to continue through the month with Sheriff Chad Bianco on May 18, and Tom Steyer on May 26.\u003c/p>\n\u003ch2>On how to understand the race\u003c/h2>\n\u003cp>\u003cstrong>Lagos:\u003c/strong> Democrats are a little confused because there’s no blockbuster candidate like Arnold Schwarzenegger, Jerry Brown, Gavin Newsom, but being a rock star is not a prerequisite to being governor. You do have a number of very experienced, smart Democrats in this race, along with some serious Republicans.\u003c/p>\n\u003ch2>On the frontrunners of a crowded field\u003c/h2>\n\u003cp>\u003cstrong>Marzorati: \u003c/strong>We’re still in a position where, no matter what poll you’re looking at, none of these candidates are breaking 20% — so it’s all very muddled. But we have seen the emergence of a top five in most polling: two Republicans — \u003ca href=\"https://www.kqed.org/news/12078793/trump-endorses-steve-hilton-for-california-governor-giving-gop-a-front-runner\">Steve Hilton\u003c/a>, a former Fox News commentator, and \u003ca href=\"https://www.kqed.org/news/12081096/riverside-county-sheriff-chad-bianco-on-his-faith-cutting-taxes-and-ballot-seizure\">Chad Bianco\u003c/a> — and on the Democratic side, \u003ca href=\"https://www.kqed.org/news/12082059/xavier-becerra-backpedals-on-single-payer-as-he-woos-powerful-doctors-lobby\">Xavier Becerra\u003c/a>, \u003ca href=\"https://www.kqed.org/news/12080843/rivals-target-steyer-becerra-in-debate-as-california-governor-race-tightens\">Tom Steyer\u003c/a>, and \u003ca href=\"https://www.kqed.org/news/12082254/porter-focuses-on-california-housing-costs-ai-plans-at-kqed-town-hall\">Katie Porter\u003c/a>.\u003c/p>\n\u003cfigure id=\"attachment_12072282\" class=\"wp-caption aligncenter\" style=\"max-width: 2000px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12072282\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/02/CAGovDebateAP1.jpg\" alt=\"\" width=\"2000\" height=\"1333\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/02/CAGovDebateAP1.jpg 2000w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/02/CAGovDebateAP1-160x107.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/02/CAGovDebateAP1-1536x1024.jpg 1536w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\">\u003cfigcaption class=\"wp-caption-text\">From left, Xavier Becerra, Steve Hilton, Matt Mahan, Tom Steyer, Tony Thurmond, Antonio Villaraigosa and Betty Yee stand on the stage during the California gubernatorial candidate debate on Tuesday, Feb. 3, 2026, in San Francisco. \u003ccite>(Laure Andrillon/AP Photo)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>There are more candidates on the Democratic side we could talk about, but this top five has started to take shape in recent weeks.\u003c/p>\n\u003cp>The most notable shift has been Eric Swalwell dropping out — he had been seen as a frontrunner — and since then, Becerra has gained ground in just the past few weeks.\u003c/p>\n\u003ch2>On how Democratic candidates are positioning themselves\u003c/h2>\n\u003cp>\u003cstrong>Lagos: \u003c/strong>Xavier Becerra really relying on his experience. He was a former attorney general. He was in Congress for several decades before that, representing Los Angeles and then he was in the Biden administration as Health and Human Service Secretary, and we’re both hearing him talk about that, and a lot of people attack him on that.\u003c/p>\n\u003cp>\u003cstrong>Marzorati:\u003c/strong> Tom Steyer spent more than $160 million of his own money on this campaign so far that has smashed every self-funding record in California history.\u003c/p>\n\u003cp>What makes it so fascinating to me is you have this billionaire in a time where a lot of Democrats are kind of looking sideways at billionaires. You have this billionaire in Tom Steyer who is running as the most progressive candidate in this race.\u003c/p>\n\u003cfigure id=\"attachment_12081068\" class=\"wp-caption aligncenter\" style=\"max-width: 1999px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12081068\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/04/FTP_9P3A3287_1_qed.jpg\" alt=\"\" width=\"1999\" height=\"1333\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/04/FTP_9P3A3287_1_qed.jpg 1999w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/04/FTP_9P3A3287_1_qed-160x107.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/04/FTP_9P3A3287_1_qed-1536x1024.jpg 1536w\" sizes=\"auto, (max-width: 1999px) 100vw, 1999px\">\u003cfigcaption class=\"wp-caption-text\">Steve Hilton, Republican gubernatorial candidate for California, left, and Tom Steyer, Democratic gubernatorial candidate for California, fist bump prior to a gubernatorial debate at KRON Studios in San Francisco, California, US, on Wednesday, April 22, 2026. California will hold its primary election on June 2, where the top two finishers advance to the general election in November regardless of party affiliation. Photographer: Jason Henry/Nexstar/Bloomberg\u003c/figcaption>\u003c/figure>\n\u003cp>He’s getting supported by Our Revolution, the Bernie Sanders group. He’s supporting single payer healthcare. He’s pushing to raise corporate taxes to bring in money for schools. So it’s like this dichotomy of this personality, this investor, this billionaire, and this progressive platform that he talked to us about.\u003c/p>\n\u003cp>\u003cstrong>Lagos: \u003c/strong>Katie Porter struggled at times to find lane in this race. She was pretty progressive. One of her mentors is Elizabeth Warren, the senator from Massachusetts who did endorse her recently.\u003c/p>\n\u003cp>In the fall, she got hit by some videos, including one from five years ago snapping at a staff member. She’s had to apologize for that. But you do have to wonder if it sort of created a ceiling for her and you can’t disentangle her gender. So fair or not, that has really dogged her in this race.\u003c/p>\u003c/div>",
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"content": "\u003cdiv class=\"post-body\">\u003cp>\u003cstrong>Marzorati:\u003c/strong> We also have \u003ca href=\"https://www.kqed.org/news/12075490/san-jose-mayor-matt-mahan-positions-himself-as-a-change-candidate-in-governors-race\">Matt Mahan\u003c/a>, the mayor of San José, who’s running. He got into this race somewhat late. He’s trying to run as a centrist Democrat, trying to maybe have some crossover appeal to independence and even Republicans.\u003c/p>\n\u003cp>\u003ca href=\"https://www.kqed.org/news/12077747/antonio-villaraigosas-second-act-can-a-pragmatist-lead-california\">Antonio Villaraigosa\u003c/a> who was mayor of Los Angeles over a decade ago, is more of a centrist candidate as well.\u003c/p>\n\u003cp>And then \u003ca href=\"https://www.kqed.org/news/12077118/tony-thurmond-carves-out-a-progressive-path-in-the-race-for-california-governor\">Tony Thurmond\u003c/a>, the state superintendent of public instruction, has held statewide office, but has kind of struggled to break through at all in this race.\u003c/p>\n\u003ch2>On how the primaries work\u003c/h2>\n\u003cp>\u003cstrong>Lagos: \u003c/strong>In most states, Republicans face off in a primary and Democrats face off [in a primary]. The winner of each face each other in the fall. But in California, it could be anybody in the race. And so we have seen that really set up the system where all these Democrats are splitting the vote.\u003c/p>\n\u003ch2>On the Republican side\u003c/h2>\n\u003cp>\u003cstrong>Lagos: \u003c/strong>Both of them call the one-party rule for the last decade a failure. They say that Democrats own all of the problems in this state — the affordability crisis, the housing crisis, the homelessness crisis — and that they would be a new chapter.\u003c/p>\n\u003cp>Bianco is a Riverside County sheriff. He’s definitely further to the right than Hilton. Bianco made some waves earlier this year when he seized tens of thousands of ballots from last November’s election, kind of echoing some of these claims we’ve heard from the president around election security. And he has really tried to pitch himself as an outsider.\u003c/p>\n\u003cfigure id=\"attachment_12081062\" class=\"wp-caption aligncenter\" style=\"max-width: 1999px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12081062\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/04/FTP_9P3A3852_1_qed.jpg\" alt=\"\" width=\"1999\" height=\"1333\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/04/FTP_9P3A3852_1_qed.jpg 1999w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/04/FTP_9P3A3852_1_qed-160x107.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/04/FTP_9P3A3852_1_qed-1536x1024.jpg 1536w\" sizes=\"auto, (max-width: 1999px) 100vw, 1999px\">\u003cfigcaption class=\"wp-caption-text\">Chad Bianco, Republican gubernatorial candidate for California, speaks during a gubernatorial debate at KRON Studios in San Francisco, California, US, on Wednesday, April 22, 2026. California will hold its primary election on June 2, where the top two finishers advance to the general election in November regardless of party affiliation. \u003ccite>(Jason Henry/Nexstar/Bloomberg)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>Steve Hilton is trying to run as a more traditional Republican, yet he is associated with Trump and the kind of MAGA movement. He has made an effort to both appeal to more hardcore conservatives and moderate Democrats.\u003c/p>\n\u003cp>Both Hilton and Bianco, if you look at their platforms, are very much running on a sort of traditional conservative anti-tax, pro-growth and pro-business.\u003c/p>\n\u003ch2>On what voters are weighing\u003c/h2>\n\u003cp>\u003cstrong>Marzorati: \u003c/strong>I honestly hear from voters wrestling with this idea of, “Okay, do I want someone who I know is going to kind of shake things up and bring change or do I want someone I know who is going to fight Trump well?”\u003c/p>\n\u003ch2>On what to watch in the final stretch\u003c/h2>\n\u003cp>\u003cstrong>Lagos:\u003c/strong> How the candidates, especially on the Democratic side, continue to interact with one another will be worth watching. Are they throwing bombs or are they just really trying to push a positive message about themselves to break through and get voters to come out and vote by June 2?\u003c/p>\n\u003cp>\u003cstrong>Marzorati:\u003c/strong> If you look at California as kind of a laboratory for democratic politics, like what would the future leader of the state kind of put forward for the rest of the country? Because a lot of these issues, you know, housing affordability, the energy transition, we’re kind of the canary in the coal mine in a lot of ways for what the country is going to be going through. So I think there are a lot of differences you see between Democrats.\u003c/p>\n\u003cp>\u003c/p>\u003c/div>",
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"slug": "did-newsoms-3-8-billion-hotels-to-housing-program-pay-off",
"title": "Did Newsom’s $3.8 Billion Hotels-to-Housing Program Pay Off?",
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"headTitle": "Did Newsom’s $3.8 Billion Hotels-to-Housing Program Pay Off? | KQED",
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"content": "\u003cp>\u003c!-- Creative Commons Attribution-NonCommercial-NoDerivatives https://creativecommons.org/licenses/by-nc-nd/4.0/ -->\u003c/p>\n\u003cp>\u003cem>This story was originally published by \u003ca href=\"https://calmatters.org/\">CalMatters\u003c/a>. \u003ca href=\"https://calmatters.org/subscribe-to-calmatters/\">Sign up\u003c/a> for their newsletters.\u003c/em>\u003c/p>\n\u003cp>As \u003ca href=\"https://www.kqed.org/news/tag/covid-19\">COVID-19\u003c/a> tore through California, Jennifer Hark Dietz had a decision to make. The state was making perhaps its biggest push ever to get people off the street, offering up billions of dollars for cities and organizations like hers to turn old motels into new homes.\u003c/p>\n\u003cp>It was risky. The Homekey program came with up-front cash and a promise to move fast and cut red tape. But it also meant taking on old buildings with little vetting, which had the potential to put a developer in a deep financial hole.\u003c/p>\n\u003cp>At first, the gamble paid off. In just a few months, Hark Dietz’s nonprofit, People Assisting The Homeless, was housing people in the old 40-room Hollywood Orchid Suites in Los Angeles. She called it a “shining light” for what seemed possible with the radical new program.\u003c/p>\n\u003cp>[ad fullwidth]\u003c/p>\n\u003cp>But then came a pale pink Travelodge in the suburb of Gardena. The city of LA had already bought the motel for $9 million, and Hark Dietz said her team didn’t have a chance to vet or tour the site. They’d only seen online photos and basic inspection reports before they took it over in December 2020. A city consultant estimated that it would take about $50,000 to start moving people into the roadside motel.\u003c/p>\n\u003cp>“Of course,” she said, “we know now that’s not the case.”\u003c/p>\n\u003cp>More than five years and nearly $3 million later, the motel — which turned out to need all new windows, plumbing and electrical, among other issues — was still vacant earlier this year. There was plywood over some of the windows, and someone had graffitied a ghost on one side.\u003c/p>\n\u003cfigure id=\"attachment_12082684\" class=\"wp-caption aligncenter\" style=\"max-width: 2000px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12082684\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey2.jpeg\" alt=\"\" width=\"2000\" height=\"1334\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey2.jpeg 2000w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey2-160x107.jpeg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey2-1536x1025.jpeg 1536w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\">\u003cfigcaption class=\"wp-caption-text\">Live Oak Apartments in Ukiah on Feb. 26. Live Oak offers its residents access to common spaces, such as a community garden and meeting rooms for visitors. \u003ccite>(Manuel Orbegozo for CalMatters)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>The boom-or-bust results in Los Angeles underscore how little is known publicly about a generational project with a high price tag and even higher stakes. Some projects were huge successes. Others were total failures. Dozens remain stuck in limbo. CalMatters found there’s been little public accountability for any of it.\u003c/p>\n\u003cp>Launched by Gov. Gavin Newsom in the summer of 2020, Homekey awarded more than $3.8 billion to local governments to convert motels and other buildings into homeless housing, thrusting many local governments into a new role running multimillion-dollar real estate projects. Cities and counties could hire outside contractors to help or do the work themselves, skipping some of the usual building process for the sake of speed.\u003c/p>\n\u003cp>It was unlike anything the state had ever done, largely because it sprang from desperation. Homekey launched during peak COVID, five months before vaccines were available, and after cities had already moved thousands of unhoused people into motels through \u003ca href=\"https://calmatters.org/housing/homelessness/2024/05/california-homeless-project-roomkey/\">Project Roomkey\u003c/a>, another Newsom program. But those rooms were temporary, and officials were scrambling to prevent a mass exodus back to the streets.[aside postID=news_12082132 hero='https://cdn.kqed.org/wp-content/uploads/sites/10/2025/04/250218-SFDowntown-12-BL_qed-1020x680.jpg']With Homekey, local officials across the state bought and gutted Motel 6s, Best Westerns and roadside inns. They got more creative as the program evolved: Tiny homes sprouted in Silicon Valley, and Santa Cruz retrofitted an old dentist’s office. In Southern California, housing took shape in a former Tri-Delt sorority house, an earthquake-stricken church and a hostel that once served as a refuge for Japanese Americans returning from World War II internment.\u003c/p>\n\u003cp>“What we’re doing here today is multiples of what any state in American history has committed to address this crisis of homelessness,” Newsom said at a \u003ca href=\"https://calmatters.org/housing/homelessness/2021/05/newsom-end-homelessness-pandemic-lessons/\">2021 press conference\u003c/a> announcing a major Homekey expansion.\u003c/p>\n\u003cp>The program came with little built-in oversight. Earlier this year, state lawmakers killed a bill to audit Homekey. No state agency has publicly analyzed the program in detail to find out what’s working and what’s not.\u003c/p>\n\u003cp>The challenge now: A new and more complex phase is already underway with up to $2 billion from the \u003ca href=\"https://calmatters.org/health/mental-health/2025/06/prop-1-mental-health-awards/\">voter-approved Prop. 1\u003c/a> mental health bond. But no one has publicly accounted for how many of the program’s original projects stalled out and how many succeeded.\u003c/p>\n\u003cp>To find out what happened, CalMatters filed more than 100 public records requests with cities and counties that were awarded Homekey funds. We asked for key details on 250 projects announced through the end of 2024, covering all but a handful of projects for which less public data was available. Those state and local records — along with dozens of visits to Homekey sites, plus interviews with people who built and lived in them — create a first-of-its-kind window into how it all played out.\u003c/p>\n\u003cp>Among our findings:\u003c/p>\n\u003cul>\n\u003cli>\u003cstrong>Homekey made producing housing simpler. But it came at a cost\u003c/strong>. Homekey provided billions of dollars in housing funding up front, allowing some developers to sidestep the usual webs of investors and lenders and finish much faster than normal. But fewer funders also means less oversight. With rushed vetting, some projects got bogged down in delays, blown budgets or worse. At least one Homekey developer was forced out of business by an unwieldy project. Another is facing fraud charges.\u003c/li>\n\u003cli>\u003cstrong>When Homekey worked, those involved stress that it \u003c/strong>\u003cstrong>\u003cem>really\u003c/em>\u003c/strong>\u003cstrong> worked.\u003c/strong> Nearly 13,500 people now live at Homekey sites, according to the state Housing Department. For small and rural communities, such as Glenn County, the program provided crucial cash for their first-ever homeless housing. Officials from Mendocino County to Ventura say they were able to stabilize people longer term by adding stronger ties to public services and extra investment in resources such as counseling.\u003c/li>\n\u003cli>\u003cstrong>Those successes magnify the opportunities squandered. \u003c/strong>Projects involving about 3,000 homes — roughly 1 in 5 promised by the program — weren’t finished as of the end of last year. Another 2,000 units have people living in them on a temporary basis but haven’t been converted into permanent housing, the program’s main goal. In 10 instances involving 500 more units, the state publicized grants that later were canceled or that never materialized because local officials or developers backed out.\u003c/li>\n\u003cli>\u003cstrong>A lack of transparency raises familiar questions about the program’s future\u003c/strong>. State officials stress that they have extended deadlines and improved vetting for the program’s latest bond-funded iteration, Homekey+. But they refused to publicly provide details about that vetting process. And as homeless services providers have long warned, there remains no guaranteed state funding to keep existing or planned Homekey projects going.\u003c/li>\n\u003c/ul>\n\u003cp>Yes, many Homekey projects opened late or over budget. But, officials emphasize, they still opened.\u003c/p>\n\u003cp>Newsom said he considers the program a “phenomenal success.”\u003c/p>\n\u003cfigure id=\"attachment_12076525\" class=\"wp-caption aligncenter\" style=\"max-width: 2000px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12076525\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/03/260116-NewsomLuriePresser-33-BL_qed.jpg\" alt=\"\" width=\"2000\" height=\"1333\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/03/260116-NewsomLuriePresser-33-BL_qed.jpg 2000w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/03/260116-NewsomLuriePresser-33-BL_qed-160x107.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/03/260116-NewsomLuriePresser-33-BL_qed-1536x1024.jpg 1536w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\">\u003cfigcaption class=\"wp-caption-text\">Gov. Gavin Newsom speaks during a press conference at the Friendship House Association of American Indians in San Francisco on Jan. 16, 2026.\u003c/figcaption>\u003c/figure>\n\u003cp>“We’re talking about hundreds and hundreds of projects all across the state of California that they’re trying to manage and organize and operate,” he said when CalMatters asked about it at a recent press conference. “And I imagine each one of them brings its own opportunities and own challenges as we move forward and implement at a scale we’ve never implemented in the state’s history.”\u003c/p>\n\u003cp>Taryn Sandulyak knows that better than most. The Bay Area developer thought Homekey might be her big break, but it ultimately put her out of business. She sees a fundamental mismatch at the heart of the program. It wanted high quality, high speed and low budgets.\u003c/p>\n\u003cp>“You can only have two of those,” Sandulyak said. “You really can’t ever have three. That’s the issue with Homekey, is they give you not quite enough money to do it, and they want you to do it really, really fast and really, really well.”\u003c/p>\n\u003cp>The chasm between Homekey successes and failures isn’t a simple, one-size-fits-all story. But it does provide an outline of what it will take to make good on California’s big effort to finally make a dent in its homelessness crisis.\u003c/p>\n\u003ch2>‘Failing was not an option’\u003c/h2>\n\u003cp>On the west side of Ventura, just as the surf town creeps up into the hills toward Ojai, sits what used to be one of the city’s worst nuisance properties: a nearly 100-year-old apartment building once known, in a nod to local drug slang, as the “Booyah Mansion.”\u003c/p>\n\u003cp>The city’s housing authority, Ventura Housing, cobbled together enough money in 2019 to buy the building. But it didn’t have enough cash to fix all 300-something code violations at the crime-ridden property — until Homekey came along.\u003c/p>\n\u003cp>“We had some scary stuff go on here,” said Karen Flock, Ventura Housing’s real estate development director. “This property failing was not an option.”\u003c/p>\n\u003cfigure id=\"attachment_12082685\" class=\"wp-caption aligncenter\" style=\"max-width: 2000px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12082685\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey3.jpeg\" alt=\"\" width=\"2000\" height=\"1334\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey3.jpeg 2000w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey3-160x107.jpeg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey3-1536x1025.jpeg 1536w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\">\u003cfigcaption class=\"wp-caption-text\">Live Oak Apartments in Ukiah on Feb. 26. Live Oak offers its residents access to common spaces, such as a community garden and meeting rooms for visitors. \u003ccite>(Manuel Orbegozo for CalMatters)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>Now known as El Portal, the 29-unit apartment complex today serves as a lifeline for a mother with 9-year-old twins, one severely autistic. It’s a refuge for a woman who lived for six years in a city-funded Tuff Shed. Another neighbor still keeps his shopping cart from the street in his apartment as a reminder of what he’s been through, and why he can never go back.\u003c/p>\n\u003cp>Ventura and other cities and counties that were able to pull off Homekey projects relatively on time and on budget credit a variety of factors for their success. Some grantees provided services themselves rather than contracting them out, better integrating public resources. Others raised extra money for on-site social services or worked closely with first responders to head off concerns about crime and stabilize residents.\u003c/p>\n\u003cp>Jeffrey Lambert, CEO of Ventura Housing, said the crucial thing was realizing early that Homekey money alone isn’t nearly enough. Instead, the city combined it with other public and private funding, staffing and resources. Projects that failed or got stuck in limbo often fell apart after they ran out of money.\u003c/p>\n\u003cp>“Homekey works,” Lambert said, “because of all the stuff added on top of it.”\u003c/p>\n\u003cp>\u003c!-- iframe plugin v.4.3 wordpress.org/plugins/iframe/ -->\u003cbr>\n\u003ciframe loading=\"lazy\" title=\"Look up Homekey projects in your city or county\" aria-label=\"Table\" id=\"datawrapper-chart-kiDgD\" src=\"https://datawrapper.dwcdn.net/kiDgD/8/\" scrolling=\"no\" frameborder=\"0\" style=\"width: 0; min-width: 100% !important; border: none;\" height=\"550\" data-external=\"1\" width=\"100%\" class=\"iframe-class\">\u003c/iframe>\u003c/p>\n\u003cp>For housing researchers such as Ryan Finnigan, deputy director of research at UC Berkeley’s Terner Center for Housing Innovation, the real strength of Homekey was not the building minutiae. It was an attempt to challenge the state’s status quo of painstakingly slow housing development while people kept pouring onto the streets.\u003c/p>\n\u003cp>“If we’re not willing to try a new approach,” he said, “then we’re not going to learn as much about how we can be more creative, how we can work with more urgency than the current systems.”\u003c/p>\n\u003cp>As fraught and full of delays as the construction process can be, getting a project completed is often just the first hurdle for Homekey. Once a project opens its doors, it typically needs significant resources in addition to the state funding. Mendocino County credits much of its project’s success to extra services for residents, which aren’t paid for by the state grant, said Megan Van Sant, a senior program manager for the county who oversees the Homekey site.\u003c/p>\n\u003cp>At the former Best Western hotel now known as Live Oak Apartments, there’s a therapist on retainer for tenants, plus a dog trainer paid to work with problem pets. Both try to help residents resolve any issues that come up before they escalate into grounds for an eviction.\u003c/p>\n\u003cp>To provide those extras, the county runs the project itself, rather than contracting with an outside service provider as many Homekey projects do. Two county staffers work full-time inside the building, using their connections to do everything from enrolling residents in Medi-Cal to pairing them with mental health services.\u003c/p>\n\u003cp>All that is expensive.\u003c/p>\n\u003cfigure id=\"attachment_12082686\" class=\"wp-caption aligncenter\" style=\"max-width: 2000px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12082686\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey4.jpeg\" alt=\"\" width=\"2000\" height=\"1334\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey4.jpeg 2000w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey4-160x107.jpeg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey4-1536x1025.jpeg 1536w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\">\u003cfigcaption class=\"wp-caption-text\">Resident Sherry Collins inside her room at Live Oak Apartments in Ukiah on Feb. 26. \u003ccite>(Manuel Orbegozo for CalMatters)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>“I think the state should continue to support these projects,” Van Sant said. “The state asked communities to do these projects, and they cost more to do well than what you can earn in rent.”\u003c/p>\n\u003cp>Sherry Collins, 66, moved into the project three years ago, at a time when she was terrified of what would come next. Her husband had died, her health was failing, she couldn’t work, and she couldn’t afford to keep living in her cabin in the tiny coastal city of Fort Bragg.\u003c/p>\n\u003cp>Now she feels like she’s home. Collins decorated the window of her room with little red and pink hearts and adopted a kitten with extra toes, whom she named Mr. Handsome.\u003c/p>\n\u003cp>She continues to deal with health challenges after losing a leg to diabetes about a year ago. The building has only four units accessible for people with disabilities, making it a challenge to accommodate everyone, but one recently opened up for Collins, where she can more comfortably shower.\u003c/p>\n\u003cp>“They have been awesome to me,” Collins said. “They’re more like family.”\u003c/p>\n\u003ch2>Never-ending projects\u003c/h2>\n\u003cp>For Sandulyak, Homekey was too good to refuse.\u003c/p>\n\u003cp>Five years earlier she had co-founded Firm Foundation Community Housing, which helped Bay Area churches turn their parking lots and backyards into tiny homes for homeless residents.\u003c/p>\n\u003cp>Homekey was a once-in-a-lifetime opportunity to dramatically scale up that vision by using millions in state funds to house dozens of people in Vallejo. It would be the small nonprofit’s most ambitious project by far.\u003c/p>\n\u003cfigure id=\"attachment_12082687\" class=\"wp-caption aligncenter\" style=\"max-width: 2000px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12082687\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey5.jpeg\" alt=\"\" width=\"2000\" height=\"1333\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey5.jpeg 2000w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey5-160x107.jpeg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey5-1536x1024.jpeg 1536w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\">\u003cfigcaption class=\"wp-caption-text\">The official ribbon cutting at the grand opening of Broadway Village in Vallejo on March 5. \u003ccite>(Nathan Weyland for CalMatters)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>Sandulyak never suspected that by applying for Homekey, she had doomed her organization.\u003c/p>\n\u003cp>Firm Foundation was awarded $12 million in 2022 to build a 47-unit modular apartment building called the Broadway Project. Over the next four years, nearly everything that could go wrong did.\u003c/p>\n\u003cp>Some problems had nothing to do with Homekey. The general contractor went bankrupt, and the nonprofit tapped to operate the facility squabbled with the city, leaving the project in limbo for a year. The state wouldn’t let Firm Foundation pick a new partner to run the housing, which Sandulyak says further delayed the opening.\u003c/p>\n\u003cp>Other problems were directly related to Homekey. By design, the program forced cities to take a much more hands-on role with housing development than they were used to. Vallejo wasn’t prepared for that responsibility. It fumbled its attempt to get a key federal grant and failed to set up important safeguards that protect affordable housing projects from financial risks.\u003c/p>\n\u003cp>Soon, Sandulyak had $2 million in bills and no way to pay them. With construction three-quarters done, the project ran out of money. Firm Foundation was forced to stop work.\u003c/p>\n\u003cp>It became such a nightmare that the Vallejo City Council asked for an independent audit to find out what went wrong and why. The \u003ca href=\"https://www.documentcloud.org/documents/28094481-vallejo-broadway-affordable-housing-report/\">audit blamed\u003c/a> both the city and Firm Foundation for allowing the project to run out of money before it was finished. Firm Foundation vastly underestimated the project’s cost, and the city bungled efforts to secure additional funds.\u003c/p>\n\u003cp>In some ways, the audit found, the very nature of Homekey helped set the project up for failure.\u003c/p>\n\u003cfigure id=\"attachment_12023514\" class=\"wp-caption aligncenter\" style=\"max-width: 2000px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12023514\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2025/01/20250114_Mare-Island_DMB_00333.jpg\" alt=\"\" width=\"2000\" height=\"1333\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2025/01/20250114_Mare-Island_DMB_00333.jpg 2000w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/01/20250114_Mare-Island_DMB_00333-800x533.jpg 800w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/01/20250114_Mare-Island_DMB_00333-1020x680.jpg 1020w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/01/20250114_Mare-Island_DMB_00333-160x107.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/01/20250114_Mare-Island_DMB_00333-1536x1024.jpg 1536w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/01/20250114_Mare-Island_DMB_00333-1920x1280.jpg 1920w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\">\u003cfigcaption class=\"wp-caption-text\">A kayaker floats down the Napa River past the Navy Yard of Mare Island in the city of Vallejo, Tuesday, Jan. 14, 2025. \u003ccite>(David M. Barreda/KQED)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>One big problem was the timeline. Homekey required projects to finish construction within one year of their award, and to move people in 90 days after that. To meet those deadlines, Firm Foundation created budgets before the architectural drawings were even done, contributing to serious cost underestimates, the audit found.\u003c/p>\n\u003cp>The audit also found a lack of oversight at the Broadway Project, which it said is typical of Homekey projects. Normally, a single affordable housing project uses funding from multiple sources, including the city, the county, the state, federal funds, tax credits, private banks and more. The more funders and investors, the more eyes watching and holding the developer accountable. With Homekey, the city applying for the grant typically takes on all those risks by itself, the audit found.\u003c/p>\n\u003cp>On a recent Thursday morning, Sandulyak gathered with city officials and her construction partners in front of a crowd to celebrate what they, at times, had thought would be impossible: the Broadway Project was finally open. Behind them rose the terracotta-colored wall of the sleek, new, modular apartment building. A red ribbon waited in front of them.\u003c/p>\n\u003cp>On the count of three, Sandulyak helped Vallejo’s assistant city manager snip the ribbon. The crowd cheered.\u003c/p>\n\u003cp>The project ended up coming in two and a half years late and 70% over budget. Despite those setbacks, the audit found it \u003cem>still \u003c/em>cost less per unit and was built more quickly than the region’s average affordable housing project.\u003c/p>\n\u003cp>But it cost Sandulyak everything. She laid off three of her four employees, and she plans to lay off the last one and dissolve her organization. The nonprofit is still on the hook for more than $1 million in unpaid bills related to the project.\u003c/p>\n\u003cfigure id=\"attachment_12082708\" class=\"wp-caption aligncenter\" style=\"max-width: 1980px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12082708\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/GettyImages-2172244931.jpg\" alt=\"\" width=\"1980\" height=\"1367\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/GettyImages-2172244931.jpg 1980w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/GettyImages-2172244931-160x110.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/GettyImages-2172244931-1536x1060.jpg 1536w\" sizes=\"auto, (max-width: 1980px) 100vw, 1980px\">\u003cfigcaption class=\"wp-caption-text\">Governor Gavin Newsom speaks during a press conference of housing & homelessness with new legislation and funding and bills signing, along with other local, state and federal leaders are gathered in San Francisco, California, United States on Sept. 19, 2024. \u003ccite>(Tayfun Coskun/Anadolu via Getty Images)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>Despite her pride in the finished building, Sandulyak wonders how much more housing her nonprofit could have built — if only she’d never applied for Homekey.\u003c/p>\n\u003cp>Still, 52 people now have somewhere to call home.\u003c/p>\n\u003cp>“I’m unshaken in my belief that that is worth it,” Sandulyak said.\u003c/p>\n\u003cp>One of those people is 62-year-old Terrence White, a former refinery worker who was forced into early retirement by an injury and can’t afford market-rate rent. Now, he pays $294 a month and finally has his own place.\u003c/p>\n\u003cp>“It feels wonderful,” he said.\u003c/p>\n\u003ch2>The Homekey gold rush\u003c/h2>\n\u003cp>During the frantic first two years of Homekey, when many experienced affordable housing developers were sitting out the untested new program, an LA company called Shangri-La Industries stepped in to help fill the void. It scored nearly $115 million in contracts to build 500 homes for homeless Californians in cities from Salinas to San Bernardino.\u003c/p>\n\u003cp>But a \u003ca href=\"https://www.documentcloud.org/documents/28097013-holmes-indictment/\">federal indictment\u003c/a> and a separate civil lawsuit allege that millions in state funds instead went to fund a lavish lifestyle for the company’s chief financial officer.\u003c/p>\n\u003cp>Among the charges attributed in \u003ca href=\"https://www.documentcloud.org/documents/28097094-shangri-la-v-holmes/\">court records\u003c/a> to Shangri-La’s former CFO, Cody Holmes: $46,000 in monthly rent for a Beverly Hills house with a pool. Designer gifts for a girlfriend, including a $127,000 diamond necklace and a $111,000 crocodile Birkin bag. A $5,000-a-month lease on a Ferrari Portofino. Another $53,000 for Coachella passes, and $44,000 for flights on private jets.\u003c/p>\n\u003cfigure id=\"attachment_12082689\" class=\"wp-caption aligncenter\" style=\"max-width: 2000px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12082689\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey7.jpeg\" alt=\"\" width=\"2000\" height=\"1333\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey7.jpeg 2000w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey7-160x107.jpeg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey7-1536x1024.jpeg 1536w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\">\u003cfigcaption class=\"wp-caption-text\">The Quality Inn & Suites building, a former Shangri-La project, stands vacant in Thousand Oaks on Feb. 26. \u003ccite>(Julie Leopo-Bermudez for CalMatters)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>All this while many of the desperately needed motel rooms sat empty.\u003c/p>\n\u003cp>Homekey set a low bar for contractors to qualify: They had to have worked on at least two affordable housing projects that included at least one homeless tenant.\u003c/p>\n\u003cp>Shangri-La easily cleared that hurdle. But had any state or local officials done more digging, they might have seen warning signs.\u003c/p>\n\u003cp>Shangri-La’s construction business was sued twice for breach of contract in \u003ca href=\"https://www.documentcloud.org/documents/28094732-shangri-la-2018-breach-contract-complaint/\">2018\u003c/a> and \u003ca href=\"https://www.documentcloud.org/documents/28094731-shangri-la-2019-contract-fraud-complaint/\">2019\u003c/a>, court records show, after two firms alleged that it failed to pay them. The company was also a contractor on a troubled LA veteran housing project, where records first \u003ca href=\"https://www.kcrw.com/shows/greater-la/stories/30-million-motel-homeless-shelter-prop-hhh-taxpayer-oversight-la\">reported by KCRW\u003c/a> show Shangri-La partners sold the property to themselves, increasing the project’s budget by $8 million.\u003c/p>\n\u003cp>With Homekey, federal \u003ca href=\"https://www.justice.gov/usao-cdca/pr/beverly-hills-man-arrested-brentwood-man-charged-separate-criminal-cases-linked-fraud\">prosecutors allege\u003c/a> that Holmes “knowingly submitted fake bank records” to the state Housing Department to boost Shangri-La’s credentials — financial claims that state officials apparently failed to verify with the banks. Holmes has pleaded not guilty, and an attorney representing him declined to comment.\u003c/p>\n\u003cp>As the company took on the Homekey projects, property records show that entities connected to Shangri-La or its partners paid around $13 million for actress Milla Jovovich’s Beverly Hills mansion, adding to a portfolio that included a $7 million oceanfront home in Long Beach purchased two years earlier.\u003c/p>\n\u003cfigure id=\"attachment_12082690\" class=\"wp-caption aligncenter\" style=\"max-width: 2000px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12082690\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey8.jpeg\" alt=\"\" width=\"2000\" height=\"1334\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey8.jpeg 2000w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey8-160x107.jpeg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey8-1536x1025.jpeg 1536w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\">\u003cfigcaption class=\"wp-caption-text\">The Quality Inn & Suites building, a former Shangri-La project, stands vacant in Thousand Oaks on Feb. 26. \u003ccite>(Julie Leopo-Bermudez for CalMatters)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>In a separate \u003ca href=\"https://www.documentcloud.org/documents/28093061-hcd-vs-shangri-la-complaint/\">civil fraud case\u003c/a>, state prosecutors allege in court records that Shangri-La went behind the state’s back and took out undisclosed loans on the Homekey buildings, giving up control of the sites and violating their contract with the state. That became a major problem when the company defaulted on the loans.\u003c/p>\n\u003cp>For several of the properties, no one had filed crucial paperwork to ensure that they remained affordable housing. After the buildings ended up in foreclosure, some were scooped up by companies with no commitment to homeless housing.\u003c/p>\n\u003cp>Homekey contracts tasked local officials with vetting projects and reviewing contractors’ organizational documents, budgets and other key details. But records show state officials also reviewed Shangri-La’s financials, and once they paid out the Homekey money, they failed to verify that paperwork was completed to restrict the buildings to affordable housing.[aside postID=news_12068047 hero='https://cdn.kqed.org/wp-content/uploads/sites/10/2025/12/20251211_YOUTHHOMELESSNESS_DECEMBER_GH-5-KQED.jpg']The state Housing Department and several local governments that hired Shangri-La for Homekey projects declined to comment, citing ongoing litigation.\u003c/p>\n\u003cp>Andy Meyers, the former CEO of Shangri-La, acknowledged in an interview that he had “a lack of control” over his company. He has sued Holmes for fraud. He also blamed the local and state officials.\u003c/p>\n\u003cp>“My CFO had a lot of wrongdoing,” he said. “But it was a confluence of events that caused each project to go bad.”\u003c/p>\n\u003cp>Meyers said officials’ failure to file the proper affordable housing restrictions, which were also required by his lender, triggered a financial disaster that led his company to default on some of the properties. On two projects that Shangri-La did open in San Bernardino and Salinas, he estimated that the company incurred around $11 million in unexpected costs.\u003c/p>\n\u003cp>“We have spent so much money following their guidelines and following their timetables,” he said, “and they never followed their guidelines or timetables.”\u003c/p>\n\u003cp>Monterey County Supervisor Chris Lopez rallied support for a Homekey project in his hometown of King City. He thought Shangri-La made sense for four projects in the county, since it had already opened one Homekey site in Salinas.\u003c/p>\n\u003cp>But it didn’t take long for constituents to start asking why rooms were sitting empty behind chain-link fences.\u003c/p>\n\u003cfigure id=\"attachment_12028078\" class=\"wp-caption aligncenter\" style=\"max-width: 1568px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12028078\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2025/02/021125-ICE-Schools-Salinas-LV_34-copy.jpg\" alt=\"\" width=\"1568\" height=\"1045\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2025/02/021125-ICE-Schools-Salinas-LV_34-copy.jpg 1568w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/02/021125-ICE-Schools-Salinas-LV_34-copy-800x533.jpg 800w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/02/021125-ICE-Schools-Salinas-LV_34-copy-1020x680.jpg 1020w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/02/021125-ICE-Schools-Salinas-LV_34-copy-160x107.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/02/021125-ICE-Schools-Salinas-LV_34-copy-1536x1024.jpg 1536w\" sizes=\"auto, (max-width: 1568px) 100vw, 1568px\">\u003cfigcaption class=\"wp-caption-text\">A person drives a tractor through a field of crops on farmland near Salinas on Feb. 11, 2025. \u003ccite>(Larry Valenzuela/CalMatters/CatchLight Local)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>“The longer it went on without seeing any movement, the flag started to get raised,” Lopez said. “I was starting to hear less and less communication and more sort of finger pointing\u003cem>.”\u003c/em>\u003c/p>\n\u003cp>Local officials like Lopez had to start from scratch, raising millions more dollars to revive the projects as encampments swelled. It took 10 different deals totaling $16 million to open the King City project in March, three years behind schedule.\u003c/p>\n\u003cp>The full trail of Shangri-La’s deceit stretches from the state’s agricultural heartland to the edge of the Southern California desert. A $27 million Thousand Oaks hotel project sits abandoned today, robbing a region of 77 homes while it had a decade-long housing waitlist. Another $16 million project scrapped in Salinas would have provided 58 homes. Officials still plan to salvage 200 homes in other parts of Monterey County. The only two Shangri-La projects that stayed open during the legal battle, two motels in Southern California, were full of people who were plunged into messy foreclosure disputes.\u003c/p>\n\u003cp>Carrie Harmon, San Bernardino County’s director of community development and housing, said in an email that “the county entered into this effort in good faith, relying on representations that later proved to be inaccurate.”[aside postID=news_12082518 hero='https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/OAKRIDGE_11_qed-1.jpg']Even some of those whose Homekey projects went well say they’re not surprised that things went sideways. In Mendocino County, Van Sant said the state’s oversight was limited to quarterly progress reports. Once the money was spent, the state stopped asking for any information at all.\u003c/p>\n\u003cp>“They gave us a bunch of money, made us do some paperwork, and then they’re out of here,” Van Sant said.\u003c/p>\n\u003cp>For Colleen Robinson, public officials’ failure to see the red flags with Shangri-La was life-changing.\u003c/p>\n\u003cp>Robinson, now 62, survived years on the street after losing her job and fleeing a bad relationship. The All Star Lodge in downtown San Bernardino was her chance to start over. Shangri-La did manage to renovate and open that project in late 2022.\u003c/p>\n\u003cp>Two years later, the bank foreclosed. Because no one had put the affordable housing restriction on the property, the new owner told Robinson and other tenants that it was going to quadruple the rent. She said the new owner neglected the building; weeds and stray cats reclaimed the parking lot, police sirens blared, and neighbors died with little explanation.\u003c/p>\n\u003cp>“This would give hell a run for its money,” Robinson said.\u003c/p>\n\u003cp>Harmon said the county was still trying to buy the building and figure something out, but Robinson didn’t wait around to see how the saga ended. On a Thursday in February, she packed up and boarded a Greyhound bus for Iowa, where one of her children lives.\u003c/p>\n\u003ch2>Homeless veterans still waiting\u003c/h2>\n\u003cp>Some Homekey projects still haven’t opened.\u003c/p>\n\u003cp>Santa Cruz County has three badly delayed Homekey projects, one of which will be more than four years late when it is slated to finally be finished at the end of next year. For that project, the county obtained more than $6 million to convert rustic vacation cabins under a grove of redwood trees into housing for homeless veterans. The state initially set a completion deadline of 2023, but the project ran out of money before it crossed the finish line, forcing construction to stop.\u003c/p>\n\u003cp>There were many reasons why, but one stands out: underestimating the cost, said Robert Ratner, director of Santa Cruz County’s Housing for Health division.\u003c/p>\n\u003cfigure id=\"attachment_12082694\" class=\"wp-caption aligncenter\" style=\"max-width: 2000px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12082694\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey9.jpeg\" alt=\"\" width=\"2000\" height=\"1333\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey9.jpeg 2000w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey9-160x107.jpeg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey9-1536x1024.jpeg 1536w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\">\u003cfigcaption class=\"wp-caption-text\">An unfinished motel conversion in the Encino neighborhood of Los Angeles on January 27. The project is expected to finish more than a year after the original deadline, city records show. \u003ccite>(Courtesy of CalMatters)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>The developers had never undertaken a project this large, and that inexperience contributed to the budgeting error, Ratner said. But so did the design of Homekey, which capped what the state was willing to pay per unit at about half what it takes to build affordable housing in some parts of California.\u003c/p>\n\u003cp>The idea was that projects would be cheaper because they were converting existing buildings, while also cutting out extra layers of bureaucracy that add time and expense. That led developers to low-ball budgets, which came back to bite them when the savings weren’t as great as anticipated, Ratner said.\u003c/p>\n\u003cp>Once the budgeting error was made, neither the state nor the county caught it, Ratner said. The county assumed that the state would scrutinize all Homekey applications and throw out any that didn’t seem viable, Ratner said. But it appears that in reality, the state was relying on the counties to do that vetting.\u003c/p>\n\u003cp>Santa Cruz County had little experience analyzing whether a construction project was adequately budgeted. Typically, the county relies on other funders, such as construction lenders and tax credit investors, to do that job. But those investors weren’t present here.\u003c/p>\n\u003cp>When asked whether he and his colleagues had done their due diligence to make sure the projects were realistic, Ratner was straightforward.\u003c/p>\n\u003cfigure id=\"attachment_11682474\" class=\"wp-caption aligncenter\" style=\"max-width: 1920px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-11682474\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2018/07/SantaCruzBeach.jpg\" alt=\"Visitors enjoy the beach below West Cliff Drive in Santa Cruz. Santa Cruz County has the second-highest poverty rate in the state, after Los Angeles.\" width=\"1920\" height=\"1226\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2018/07/SantaCruzBeach.jpg 1920w, https://cdn.kqed.org/wp-content/uploads/sites/10/2018/07/SantaCruzBeach-160x102.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2018/07/SantaCruzBeach-800x511.jpg 800w, https://cdn.kqed.org/wp-content/uploads/sites/10/2018/07/SantaCruzBeach-1020x651.jpg 1020w, https://cdn.kqed.org/wp-content/uploads/sites/10/2018/07/SantaCruzBeach-1200x766.jpg 1200w, https://cdn.kqed.org/wp-content/uploads/sites/10/2018/07/SantaCruzBeach-1180x753.jpg 1180w, https://cdn.kqed.org/wp-content/uploads/sites/10/2018/07/SantaCruzBeach-960x613.jpg 960w, https://cdn.kqed.org/wp-content/uploads/sites/10/2018/07/SantaCruzBeach-240x153.jpg 240w, https://cdn.kqed.org/wp-content/uploads/sites/10/2018/07/SantaCruzBeach-375x239.jpg 375w, https://cdn.kqed.org/wp-content/uploads/sites/10/2018/07/SantaCruzBeach-520x332.jpg 520w\" sizes=\"auto, (max-width: 1920px) 100vw, 1920px\">\u003cfigcaption class=\"wp-caption-text\">Visitors in Santa Cruz enjoy the beach below West Cliff Drive. Santa Cruz County has the second-highest poverty rate in the state, after Los Angeles. \u003ccite>(Stephen Dunn/Getty Images)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>“I would say no,” Ratner said. “I can’t say yes with a straight face at this juncture.”\u003c/p>\n\u003cp>Other projects just never happened.\u003c/p>\n\u003cp>A $14 million Homekey award was supposed to help breathe new life into the Hotel Travelers, a rundown, century-old building in Oakland’s Chinatown, as housing for people returning from incarceration. But once the developer got a look at the building, that plan fell apart. An inspection revealed such severe issues with the building’s construction that the developer determined it would be “morally untenable” to proceed. Oakland returned the grant.\u003c/p>\n\u003cp>In total, CalMatters found at least 10 cases where a Homekey award was announced, only for the grantee to later withdraw their application, return or redirect the money, or have the state claw it back. Some instances had more public explanation than others.\u003c/p>\n\u003cp>City officials in Fresno voted down their own project. Long Beach was unable to come up with a suitable location for $2 million worth of brand-new tiny homes left sitting in storage. Projects in Marin and Mariposa counties evaporated when real estate deals fell through, and the state rescinded its grant for a project in Salinas after a nonprofit partner pulled out.\u003c/p>\n\u003ch2>Newsom’s legacy and a financial cliff\u003c/h2>\n\u003cp>Despite the vastly different outcomes at Homekey projects around the state, there’s no plan for a comprehensive audit to see what worked and what didn’t — a decision that raises the question of whether the state has done enough to grapple with Homekey as it forges ahead with the new version of the program, Homekey+.\u003c/p>\n\u003cp>Earlier this year, lawmakers nixed a public accounting proposed by \u003ca href=\"https://calmatters.digitaldemocracy.org/legislators/leticia-castillo-187479\">Assemblymember Leticia Castillo\u003c/a>, a Republican from Corona.\u003c/p>\n\u003cp>“While the program has expanded housing options, critical questions remain about its long-term impact and cost-effectiveness,” a \u003ca href=\"https://ad58.asmrc.org/wp-content/uploads/2025/02/Homekey-Program-Audit-Fact-Sheet.pdf\">summary\u003c/a> of \u003ca href=\"https://calmatters.digitaldemocracy.org/bills/ca_202520260ab505\">Assembly Bill 505\u003c/a> said. “It is unclear how many Homekey-funded units remain occupied after one year, how many individuals successfully transition to stable, long-term housing, and whether Homekey’s cost per unit is competitive.”\u003c/p>\n\u003cfigure id=\"attachment_12029662\" class=\"wp-caption aligncenter\" style=\"max-width: 2000px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12029662\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2025/03/020624_No-Place-Like-Home_CC_CM_12-copy.jpg\" alt=\"\" width=\"2000\" height=\"1333\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2025/03/020624_No-Place-Like-Home_CC_CM_12-copy.jpg 2000w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/03/020624_No-Place-Like-Home_CC_CM_12-copy-800x533.jpg 800w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/03/020624_No-Place-Like-Home_CC_CM_12-copy-1020x680.jpg 1020w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/03/020624_No-Place-Like-Home_CC_CM_12-copy-160x107.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/03/020624_No-Place-Like-Home_CC_CM_12-copy-1536x1024.jpg 1536w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/03/020624_No-Place-Like-Home_CC_CM_12-copy-1920x1280.jpg 1920w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\">\u003cfigcaption class=\"wp-caption-text\">Framers work to build the Ruby Street apartments in Castro Valley on Feb. 6, 2024. The construction project is funded by the No Place Like Home bond, which passed in 2018 to create affordable housing for homeless residents experiencing mental health issues. \u003ccite>(Camille Cohen for CalMatters)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>The bill was never publicly debated. It died in January.\u003c/p>\n\u003cp>The state did do one \u003ca href=\"https://calmatters.org/housing/homelessness/2024/04/california-homelessness-spending/\">audit of multiple homeless services programs\u003c/a> in 2024. It didn’t get into Homekey delays or what actually happened to people living in the buildings, but it analyzed the costs of eight projects.\u003c/p>\n\u003cp>Based on that small sample, the auditor concluded that Homekey was “likely” cost-effective, with an average cost of $144,000 per unit, compared to the hundreds of thousands of dollars more it can cost for new construction in California.\u003c/p>\n\u003cp>The challenge is that when Homekey plans fell short of ambitions at job sites around the state, the consequences were often murky. In extreme cases, where cities acknowledged that projects failed to materialize, the state has clawed back grants.\u003c/p>\n\u003cp>But usually, the main penalty for blown deadlines or other missteps is that the state may hold it against a local government or developer the next time it applies for funding — a dynamic that provides no public transparency.\u003c/p>\n\u003cp>What happens next will be left up to a new state housing agency \u003ca href=\"https://www.bcsh.ca.gov/about/reorganization.html\">set to be launched\u003c/a> this summer, the California Housing and Homelessness Agency. That effort is expected to include a new development committee to “provide centralized, coordinated guidance to state housing policy and funding decisions.”\u003c/p>\n\u003cfigure id=\"attachment_11877271\" class=\"wp-caption aligncenter\" style=\"max-width: 1920px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-11877271\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2021/06/RS49740_009_MountainView_ProjectHomekey_06082021-qut.jpg\" alt=\"\" width=\"1920\" height=\"1278\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2021/06/RS49740_009_MountainView_ProjectHomekey_06082021-qut.jpg 1920w, https://cdn.kqed.org/wp-content/uploads/sites/10/2021/06/RS49740_009_MountainView_ProjectHomekey_06082021-qut-800x533.jpg 800w, https://cdn.kqed.org/wp-content/uploads/sites/10/2021/06/RS49740_009_MountainView_ProjectHomekey_06082021-qut-1020x679.jpg 1020w, https://cdn.kqed.org/wp-content/uploads/sites/10/2021/06/RS49740_009_MountainView_ProjectHomekey_06082021-qut-160x107.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2021/06/RS49740_009_MountainView_ProjectHomekey_06082021-qut-1536x1022.jpg 1536w\" sizes=\"auto, (max-width: 1920px) 100vw, 1920px\">\u003cfigcaption class=\"wp-caption-text\">Final construction is completed on a row of housing units at LifeMoves Mountain View, a modular housing community, on June 8, 2021. The site, part of California’s Homekey program, provides temporary housing and resources to people in the city who are currently homeless. \u003ccite>(Beth LaBerge/KQED)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>For now, the state’s Housing Department maintains that it “monitors each project closely” if issues arise or deadline extensions are granted. Even with widespread delays, the agency maintains that “Homekey has helped build more and faster.”\u003c/p>\n\u003cp>The state said it is learning as it gives out the new Homekey+ funding.\u003c/p>\n\u003cp>After seeing so many projects miss the one-year deadline, the state doubled the timeline for new construction to two years. Homekey+ projects that \u003ca href=\"https://www.hcd.ca.gov/sites/default/files/docs/grants-and-funding/homekey/hk-plus-nofa-amendment.pdf\">serve veterans\u003c/a> now can propose bigger budgets for new builds, potentially addressing the issue of under-budgeted projects running out of money.\u003c/p>\n\u003cp>Officials also said they’re scrutinizing applications more closely now, including looking carefully at whether applicants are budgeting enough funds for their proposed projects, said California Health and Human Services Secretary Kim Johnson.\u003c/p>\n\u003cp>“We are improving our own vetting process, if you will,” she said during a recent news conference, “to ensure these projects are successful in delivering.”\u003c/p>\n\u003cp>The state’s housing department maintains that Homekey accomplished a major feat: building thousands of units despite a global pandemic, labor shortages, supply chain issues and other challenges.\u003c/p>\n\u003cfigure id=\"attachment_12082698\" class=\"wp-caption aligncenter\" style=\"max-width: 2000px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12082698\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey9-1.jpg\" alt=\"\" width=\"2000\" height=\"1333\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey9-1.jpg 2000w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey9-1-160x107.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey9-1-1536x1024.jpg 1536w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\">\u003cfigcaption class=\"wp-caption-text\">Gary Wish stands outside El Portal apartments in Ventura on Feb. 26, 2026. \u003ccite>(Julie Leopo-Bermudez for CalMatters)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>“It is tremendously rewarding to see so many vulnerable Californians housed so quickly, and to have voters expand the successful Homekey model to house and support veterans and others facing behavioral health challenges,” Assistant Deputy Director Cari Scott said in a statement.\u003c/p>\n\u003cp>As the state’s housing policies shift, there’s one big question left for people like Van Sant in Mendocino: Will there be enough money to keep Homekey projects running?\u003c/p>\n\u003cp>Most of the projects have a pay-as-you-go model, versus standard 10- or 15-year affordable housing financing — a calculation that leaves a financial cliff looming for thousands of Homekey homes.\u003c/p>\n\u003cp>“If [Homekey] is going to be a long-term, permanent, successful program,” Van Sant said, “I think the state’s going to have to find a way to find some ongoing funding for it.”\u003c/p>\n\u003cp>\u003cem>Data reporters\u003c/em> \u003cem>Erica Yee and Kate Li contributed to this story.\u003c/em>\u003c/p>\n\u003cp>\u003cem>This article was \u003ca href=\"https://calmatters.org/housing/2026/05/newsom-homekey-records/\">originally published on CalMatters\u003c/a> and was republished under the \u003ca href=\"https://creativecommons.org/licenses/by-nc-nd/4.0/\">Creative Commons Attribution-NonCommercial-NoDerivatives\u003c/a> license.\u003c/em>\u003c/p>\n\u003cp>[ad floatright]\u003c/p>\n",
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"title": "Did Newsom’s $3.8 Billion Hotels-to-Housing Program Pay Off? | KQED",
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"content": "\u003cdiv class=\"post-body\">\u003cp>\u003cp>\u003c!-- Creative Commons Attribution-NonCommercial-NoDerivatives https://creativecommons.org/licenses/by-nc-nd/4.0/ -->\u003c/p>\n\u003cp>\u003cem>This story was originally published by \u003ca href=\"https://calmatters.org/\">CalMatters\u003c/a>. \u003ca href=\"https://calmatters.org/subscribe-to-calmatters/\">Sign up\u003c/a> for their newsletters.\u003c/em>\u003c/p>\n\u003cp>As \u003ca href=\"https://www.kqed.org/news/tag/covid-19\">COVID-19\u003c/a> tore through California, Jennifer Hark Dietz had a decision to make. The state was making perhaps its biggest push ever to get people off the street, offering up billions of dollars for cities and organizations like hers to turn old motels into new homes.\u003c/p>\n\u003cp>It was risky. The Homekey program came with up-front cash and a promise to move fast and cut red tape. But it also meant taking on old buildings with little vetting, which had the potential to put a developer in a deep financial hole.\u003c/p>\n\u003cp>At first, the gamble paid off. In just a few months, Hark Dietz’s nonprofit, People Assisting The Homeless, was housing people in the old 40-room Hollywood Orchid Suites in Los Angeles. She called it a “shining light” for what seemed possible with the radical new program.\u003c/p>\n\u003cp>\u003c/p>\u003c/div>",
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"content": "\u003cdiv class=\"post-body\">\u003cp>\u003c/p>\n\u003cp>But then came a pale pink Travelodge in the suburb of Gardena. The city of LA had already bought the motel for $9 million, and Hark Dietz said her team didn’t have a chance to vet or tour the site. They’d only seen online photos and basic inspection reports before they took it over in December 2020. A city consultant estimated that it would take about $50,000 to start moving people into the roadside motel.\u003c/p>\n\u003cp>“Of course,” she said, “we know now that’s not the case.”\u003c/p>\n\u003cp>More than five years and nearly $3 million later, the motel — which turned out to need all new windows, plumbing and electrical, among other issues — was still vacant earlier this year. There was plywood over some of the windows, and someone had graffitied a ghost on one side.\u003c/p>\n\u003cfigure id=\"attachment_12082684\" class=\"wp-caption aligncenter\" style=\"max-width: 2000px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12082684\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey2.jpeg\" alt=\"\" width=\"2000\" height=\"1334\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey2.jpeg 2000w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey2-160x107.jpeg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey2-1536x1025.jpeg 1536w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\">\u003cfigcaption class=\"wp-caption-text\">Live Oak Apartments in Ukiah on Feb. 26. Live Oak offers its residents access to common spaces, such as a community garden and meeting rooms for visitors. \u003ccite>(Manuel Orbegozo for CalMatters)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>The boom-or-bust results in Los Angeles underscore how little is known publicly about a generational project with a high price tag and even higher stakes. Some projects were huge successes. Others were total failures. Dozens remain stuck in limbo. CalMatters found there’s been little public accountability for any of it.\u003c/p>\n\u003cp>Launched by Gov. Gavin Newsom in the summer of 2020, Homekey awarded more than $3.8 billion to local governments to convert motels and other buildings into homeless housing, thrusting many local governments into a new role running multimillion-dollar real estate projects. Cities and counties could hire outside contractors to help or do the work themselves, skipping some of the usual building process for the sake of speed.\u003c/p>\n\u003cp>It was unlike anything the state had ever done, largely because it sprang from desperation. Homekey launched during peak COVID, five months before vaccines were available, and after cities had already moved thousands of unhoused people into motels through \u003ca href=\"https://calmatters.org/housing/homelessness/2024/05/california-homeless-project-roomkey/\">Project Roomkey\u003c/a>, another Newsom program. But those rooms were temporary, and officials were scrambling to prevent a mass exodus back to the streets.\u003c/p>\u003c/div>",
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"content": "\u003cdiv class=\"post-body\">\u003cp>With Homekey, local officials across the state bought and gutted Motel 6s, Best Westerns and roadside inns. They got more creative as the program evolved: Tiny homes sprouted in Silicon Valley, and Santa Cruz retrofitted an old dentist’s office. In Southern California, housing took shape in a former Tri-Delt sorority house, an earthquake-stricken church and a hostel that once served as a refuge for Japanese Americans returning from World War II internment.\u003c/p>\n\u003cp>“What we’re doing here today is multiples of what any state in American history has committed to address this crisis of homelessness,” Newsom said at a \u003ca href=\"https://calmatters.org/housing/homelessness/2021/05/newsom-end-homelessness-pandemic-lessons/\">2021 press conference\u003c/a> announcing a major Homekey expansion.\u003c/p>\n\u003cp>The program came with little built-in oversight. Earlier this year, state lawmakers killed a bill to audit Homekey. No state agency has publicly analyzed the program in detail to find out what’s working and what’s not.\u003c/p>\n\u003cp>The challenge now: A new and more complex phase is already underway with up to $2 billion from the \u003ca href=\"https://calmatters.org/health/mental-health/2025/06/prop-1-mental-health-awards/\">voter-approved Prop. 1\u003c/a> mental health bond. But no one has publicly accounted for how many of the program’s original projects stalled out and how many succeeded.\u003c/p>\n\u003cp>To find out what happened, CalMatters filed more than 100 public records requests with cities and counties that were awarded Homekey funds. We asked for key details on 250 projects announced through the end of 2024, covering all but a handful of projects for which less public data was available. Those state and local records — along with dozens of visits to Homekey sites, plus interviews with people who built and lived in them — create a first-of-its-kind window into how it all played out.\u003c/p>\n\u003cp>Among our findings:\u003c/p>\n\u003cul>\n\u003cli>\u003cstrong>Homekey made producing housing simpler. But it came at a cost\u003c/strong>. Homekey provided billions of dollars in housing funding up front, allowing some developers to sidestep the usual webs of investors and lenders and finish much faster than normal. But fewer funders also means less oversight. With rushed vetting, some projects got bogged down in delays, blown budgets or worse. At least one Homekey developer was forced out of business by an unwieldy project. Another is facing fraud charges.\u003c/li>\n\u003cli>\u003cstrong>When Homekey worked, those involved stress that it \u003c/strong>\u003cstrong>\u003cem>really\u003c/em>\u003c/strong>\u003cstrong> worked.\u003c/strong> Nearly 13,500 people now live at Homekey sites, according to the state Housing Department. For small and rural communities, such as Glenn County, the program provided crucial cash for their first-ever homeless housing. Officials from Mendocino County to Ventura say they were able to stabilize people longer term by adding stronger ties to public services and extra investment in resources such as counseling.\u003c/li>\n\u003cli>\u003cstrong>Those successes magnify the opportunities squandered. \u003c/strong>Projects involving about 3,000 homes — roughly 1 in 5 promised by the program — weren’t finished as of the end of last year. Another 2,000 units have people living in them on a temporary basis but haven’t been converted into permanent housing, the program’s main goal. In 10 instances involving 500 more units, the state publicized grants that later were canceled or that never materialized because local officials or developers backed out.\u003c/li>\n\u003cli>\u003cstrong>A lack of transparency raises familiar questions about the program’s future\u003c/strong>. State officials stress that they have extended deadlines and improved vetting for the program’s latest bond-funded iteration, Homekey+. But they refused to publicly provide details about that vetting process. And as homeless services providers have long warned, there remains no guaranteed state funding to keep existing or planned Homekey projects going.\u003c/li>\n\u003c/ul>\n\u003cp>Yes, many Homekey projects opened late or over budget. But, officials emphasize, they still opened.\u003c/p>\n\u003cp>Newsom said he considers the program a “phenomenal success.”\u003c/p>\n\u003cfigure id=\"attachment_12076525\" class=\"wp-caption aligncenter\" style=\"max-width: 2000px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12076525\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/03/260116-NewsomLuriePresser-33-BL_qed.jpg\" alt=\"\" width=\"2000\" height=\"1333\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/03/260116-NewsomLuriePresser-33-BL_qed.jpg 2000w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/03/260116-NewsomLuriePresser-33-BL_qed-160x107.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/03/260116-NewsomLuriePresser-33-BL_qed-1536x1024.jpg 1536w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\">\u003cfigcaption class=\"wp-caption-text\">Gov. Gavin Newsom speaks during a press conference at the Friendship House Association of American Indians in San Francisco on Jan. 16, 2026.\u003c/figcaption>\u003c/figure>\n\u003cp>“We’re talking about hundreds and hundreds of projects all across the state of California that they’re trying to manage and organize and operate,” he said when CalMatters asked about it at a recent press conference. “And I imagine each one of them brings its own opportunities and own challenges as we move forward and implement at a scale we’ve never implemented in the state’s history.”\u003c/p>\n\u003cp>Taryn Sandulyak knows that better than most. The Bay Area developer thought Homekey might be her big break, but it ultimately put her out of business. She sees a fundamental mismatch at the heart of the program. It wanted high quality, high speed and low budgets.\u003c/p>\n\u003cp>“You can only have two of those,” Sandulyak said. “You really can’t ever have three. That’s the issue with Homekey, is they give you not quite enough money to do it, and they want you to do it really, really fast and really, really well.”\u003c/p>\n\u003cp>The chasm between Homekey successes and failures isn’t a simple, one-size-fits-all story. But it does provide an outline of what it will take to make good on California’s big effort to finally make a dent in its homelessness crisis.\u003c/p>\n\u003ch2>‘Failing was not an option’\u003c/h2>\n\u003cp>On the west side of Ventura, just as the surf town creeps up into the hills toward Ojai, sits what used to be one of the city’s worst nuisance properties: a nearly 100-year-old apartment building once known, in a nod to local drug slang, as the “Booyah Mansion.”\u003c/p>\n\u003cp>The city’s housing authority, Ventura Housing, cobbled together enough money in 2019 to buy the building. But it didn’t have enough cash to fix all 300-something code violations at the crime-ridden property — until Homekey came along.\u003c/p>\n\u003cp>“We had some scary stuff go on here,” said Karen Flock, Ventura Housing’s real estate development director. “This property failing was not an option.”\u003c/p>\n\u003cfigure id=\"attachment_12082685\" class=\"wp-caption aligncenter\" style=\"max-width: 2000px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12082685\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey3.jpeg\" alt=\"\" width=\"2000\" height=\"1334\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey3.jpeg 2000w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey3-160x107.jpeg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey3-1536x1025.jpeg 1536w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\">\u003cfigcaption class=\"wp-caption-text\">Live Oak Apartments in Ukiah on Feb. 26. Live Oak offers its residents access to common spaces, such as a community garden and meeting rooms for visitors. \u003ccite>(Manuel Orbegozo for CalMatters)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>Now known as El Portal, the 29-unit apartment complex today serves as a lifeline for a mother with 9-year-old twins, one severely autistic. It’s a refuge for a woman who lived for six years in a city-funded Tuff Shed. Another neighbor still keeps his shopping cart from the street in his apartment as a reminder of what he’s been through, and why he can never go back.\u003c/p>\n\u003cp>Ventura and other cities and counties that were able to pull off Homekey projects relatively on time and on budget credit a variety of factors for their success. Some grantees provided services themselves rather than contracting them out, better integrating public resources. Others raised extra money for on-site social services or worked closely with first responders to head off concerns about crime and stabilize residents.\u003c/p>\n\u003cp>Jeffrey Lambert, CEO of Ventura Housing, said the crucial thing was realizing early that Homekey money alone isn’t nearly enough. Instead, the city combined it with other public and private funding, staffing and resources. Projects that failed or got stuck in limbo often fell apart after they ran out of money.\u003c/p>\n\u003cp>“Homekey works,” Lambert said, “because of all the stuff added on top of it.”\u003c/p>\n\u003cp>\u003c!-- iframe plugin v.4.3 wordpress.org/plugins/iframe/ -->\u003cbr>\n\u003ciframe loading=\"lazy\" title=\"Look up Homekey projects in your city or county\" aria-label=\"Table\" id=\"datawrapper-chart-kiDgD\" src=\"https://datawrapper.dwcdn.net/kiDgD/8/\" scrolling=\"no\" frameborder=\"0\" style=\"width: 0; min-width: 100% !important; border: none;\" height=\"550\" data-external=\"1\" width=\"100%\" class=\"iframe-class\">\u003c/iframe>\u003c/p>\n\u003cp>For housing researchers such as Ryan Finnigan, deputy director of research at UC Berkeley’s Terner Center for Housing Innovation, the real strength of Homekey was not the building minutiae. It was an attempt to challenge the state’s status quo of painstakingly slow housing development while people kept pouring onto the streets.\u003c/p>\n\u003cp>“If we’re not willing to try a new approach,” he said, “then we’re not going to learn as much about how we can be more creative, how we can work with more urgency than the current systems.”\u003c/p>\n\u003cp>As fraught and full of delays as the construction process can be, getting a project completed is often just the first hurdle for Homekey. Once a project opens its doors, it typically needs significant resources in addition to the state funding. Mendocino County credits much of its project’s success to extra services for residents, which aren’t paid for by the state grant, said Megan Van Sant, a senior program manager for the county who oversees the Homekey site.\u003c/p>\n\u003cp>At the former Best Western hotel now known as Live Oak Apartments, there’s a therapist on retainer for tenants, plus a dog trainer paid to work with problem pets. Both try to help residents resolve any issues that come up before they escalate into grounds for an eviction.\u003c/p>\n\u003cp>To provide those extras, the county runs the project itself, rather than contracting with an outside service provider as many Homekey projects do. Two county staffers work full-time inside the building, using their connections to do everything from enrolling residents in Medi-Cal to pairing them with mental health services.\u003c/p>\n\u003cp>All that is expensive.\u003c/p>\n\u003cfigure id=\"attachment_12082686\" class=\"wp-caption aligncenter\" style=\"max-width: 2000px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12082686\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey4.jpeg\" alt=\"\" width=\"2000\" height=\"1334\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey4.jpeg 2000w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey4-160x107.jpeg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey4-1536x1025.jpeg 1536w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\">\u003cfigcaption class=\"wp-caption-text\">Resident Sherry Collins inside her room at Live Oak Apartments in Ukiah on Feb. 26. \u003ccite>(Manuel Orbegozo for CalMatters)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>“I think the state should continue to support these projects,” Van Sant said. “The state asked communities to do these projects, and they cost more to do well than what you can earn in rent.”\u003c/p>\n\u003cp>Sherry Collins, 66, moved into the project three years ago, at a time when she was terrified of what would come next. Her husband had died, her health was failing, she couldn’t work, and she couldn’t afford to keep living in her cabin in the tiny coastal city of Fort Bragg.\u003c/p>\n\u003cp>Now she feels like she’s home. Collins decorated the window of her room with little red and pink hearts and adopted a kitten with extra toes, whom she named Mr. Handsome.\u003c/p>\n\u003cp>She continues to deal with health challenges after losing a leg to diabetes about a year ago. The building has only four units accessible for people with disabilities, making it a challenge to accommodate everyone, but one recently opened up for Collins, where she can more comfortably shower.\u003c/p>\n\u003cp>“They have been awesome to me,” Collins said. “They’re more like family.”\u003c/p>\n\u003ch2>Never-ending projects\u003c/h2>\n\u003cp>For Sandulyak, Homekey was too good to refuse.\u003c/p>\n\u003cp>Five years earlier she had co-founded Firm Foundation Community Housing, which helped Bay Area churches turn their parking lots and backyards into tiny homes for homeless residents.\u003c/p>\n\u003cp>Homekey was a once-in-a-lifetime opportunity to dramatically scale up that vision by using millions in state funds to house dozens of people in Vallejo. It would be the small nonprofit’s most ambitious project by far.\u003c/p>\n\u003cfigure id=\"attachment_12082687\" class=\"wp-caption aligncenter\" style=\"max-width: 2000px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12082687\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey5.jpeg\" alt=\"\" width=\"2000\" height=\"1333\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey5.jpeg 2000w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey5-160x107.jpeg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey5-1536x1024.jpeg 1536w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\">\u003cfigcaption class=\"wp-caption-text\">The official ribbon cutting at the grand opening of Broadway Village in Vallejo on March 5. \u003ccite>(Nathan Weyland for CalMatters)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>Sandulyak never suspected that by applying for Homekey, she had doomed her organization.\u003c/p>\n\u003cp>Firm Foundation was awarded $12 million in 2022 to build a 47-unit modular apartment building called the Broadway Project. Over the next four years, nearly everything that could go wrong did.\u003c/p>\n\u003cp>Some problems had nothing to do with Homekey. The general contractor went bankrupt, and the nonprofit tapped to operate the facility squabbled with the city, leaving the project in limbo for a year. The state wouldn’t let Firm Foundation pick a new partner to run the housing, which Sandulyak says further delayed the opening.\u003c/p>\n\u003cp>Other problems were directly related to Homekey. By design, the program forced cities to take a much more hands-on role with housing development than they were used to. Vallejo wasn’t prepared for that responsibility. It fumbled its attempt to get a key federal grant and failed to set up important safeguards that protect affordable housing projects from financial risks.\u003c/p>\n\u003cp>Soon, Sandulyak had $2 million in bills and no way to pay them. With construction three-quarters done, the project ran out of money. Firm Foundation was forced to stop work.\u003c/p>\n\u003cp>It became such a nightmare that the Vallejo City Council asked for an independent audit to find out what went wrong and why. The \u003ca href=\"https://www.documentcloud.org/documents/28094481-vallejo-broadway-affordable-housing-report/\">audit blamed\u003c/a> both the city and Firm Foundation for allowing the project to run out of money before it was finished. Firm Foundation vastly underestimated the project’s cost, and the city bungled efforts to secure additional funds.\u003c/p>\n\u003cp>In some ways, the audit found, the very nature of Homekey helped set the project up for failure.\u003c/p>\n\u003cfigure id=\"attachment_12023514\" class=\"wp-caption aligncenter\" style=\"max-width: 2000px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12023514\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2025/01/20250114_Mare-Island_DMB_00333.jpg\" alt=\"\" width=\"2000\" height=\"1333\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2025/01/20250114_Mare-Island_DMB_00333.jpg 2000w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/01/20250114_Mare-Island_DMB_00333-800x533.jpg 800w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/01/20250114_Mare-Island_DMB_00333-1020x680.jpg 1020w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/01/20250114_Mare-Island_DMB_00333-160x107.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/01/20250114_Mare-Island_DMB_00333-1536x1024.jpg 1536w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/01/20250114_Mare-Island_DMB_00333-1920x1280.jpg 1920w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\">\u003cfigcaption class=\"wp-caption-text\">A kayaker floats down the Napa River past the Navy Yard of Mare Island in the city of Vallejo, Tuesday, Jan. 14, 2025. \u003ccite>(David M. Barreda/KQED)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>One big problem was the timeline. Homekey required projects to finish construction within one year of their award, and to move people in 90 days after that. To meet those deadlines, Firm Foundation created budgets before the architectural drawings were even done, contributing to serious cost underestimates, the audit found.\u003c/p>\n\u003cp>The audit also found a lack of oversight at the Broadway Project, which it said is typical of Homekey projects. Normally, a single affordable housing project uses funding from multiple sources, including the city, the county, the state, federal funds, tax credits, private banks and more. The more funders and investors, the more eyes watching and holding the developer accountable. With Homekey, the city applying for the grant typically takes on all those risks by itself, the audit found.\u003c/p>\n\u003cp>On a recent Thursday morning, Sandulyak gathered with city officials and her construction partners in front of a crowd to celebrate what they, at times, had thought would be impossible: the Broadway Project was finally open. Behind them rose the terracotta-colored wall of the sleek, new, modular apartment building. A red ribbon waited in front of them.\u003c/p>\n\u003cp>On the count of three, Sandulyak helped Vallejo’s assistant city manager snip the ribbon. The crowd cheered.\u003c/p>\n\u003cp>The project ended up coming in two and a half years late and 70% over budget. Despite those setbacks, the audit found it \u003cem>still \u003c/em>cost less per unit and was built more quickly than the region’s average affordable housing project.\u003c/p>\n\u003cp>But it cost Sandulyak everything. She laid off three of her four employees, and she plans to lay off the last one and dissolve her organization. The nonprofit is still on the hook for more than $1 million in unpaid bills related to the project.\u003c/p>\n\u003cfigure id=\"attachment_12082708\" class=\"wp-caption aligncenter\" style=\"max-width: 1980px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12082708\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/GettyImages-2172244931.jpg\" alt=\"\" width=\"1980\" height=\"1367\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/GettyImages-2172244931.jpg 1980w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/GettyImages-2172244931-160x110.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/GettyImages-2172244931-1536x1060.jpg 1536w\" sizes=\"auto, (max-width: 1980px) 100vw, 1980px\">\u003cfigcaption class=\"wp-caption-text\">Governor Gavin Newsom speaks during a press conference of housing & homelessness with new legislation and funding and bills signing, along with other local, state and federal leaders are gathered in San Francisco, California, United States on Sept. 19, 2024. \u003ccite>(Tayfun Coskun/Anadolu via Getty Images)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>Despite her pride in the finished building, Sandulyak wonders how much more housing her nonprofit could have built — if only she’d never applied for Homekey.\u003c/p>\n\u003cp>Still, 52 people now have somewhere to call home.\u003c/p>\n\u003cp>“I’m unshaken in my belief that that is worth it,” Sandulyak said.\u003c/p>\n\u003cp>One of those people is 62-year-old Terrence White, a former refinery worker who was forced into early retirement by an injury and can’t afford market-rate rent. Now, he pays $294 a month and finally has his own place.\u003c/p>\n\u003cp>“It feels wonderful,” he said.\u003c/p>\n\u003ch2>The Homekey gold rush\u003c/h2>\n\u003cp>During the frantic first two years of Homekey, when many experienced affordable housing developers were sitting out the untested new program, an LA company called Shangri-La Industries stepped in to help fill the void. It scored nearly $115 million in contracts to build 500 homes for homeless Californians in cities from Salinas to San Bernardino.\u003c/p>\n\u003cp>But a \u003ca href=\"https://www.documentcloud.org/documents/28097013-holmes-indictment/\">federal indictment\u003c/a> and a separate civil lawsuit allege that millions in state funds instead went to fund a lavish lifestyle for the company’s chief financial officer.\u003c/p>\n\u003cp>Among the charges attributed in \u003ca href=\"https://www.documentcloud.org/documents/28097094-shangri-la-v-holmes/\">court records\u003c/a> to Shangri-La’s former CFO, Cody Holmes: $46,000 in monthly rent for a Beverly Hills house with a pool. Designer gifts for a girlfriend, including a $127,000 diamond necklace and a $111,000 crocodile Birkin bag. A $5,000-a-month lease on a Ferrari Portofino. Another $53,000 for Coachella passes, and $44,000 for flights on private jets.\u003c/p>\n\u003cfigure id=\"attachment_12082689\" class=\"wp-caption aligncenter\" style=\"max-width: 2000px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12082689\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey7.jpeg\" alt=\"\" width=\"2000\" height=\"1333\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey7.jpeg 2000w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey7-160x107.jpeg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey7-1536x1024.jpeg 1536w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\">\u003cfigcaption class=\"wp-caption-text\">The Quality Inn & Suites building, a former Shangri-La project, stands vacant in Thousand Oaks on Feb. 26. \u003ccite>(Julie Leopo-Bermudez for CalMatters)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>All this while many of the desperately needed motel rooms sat empty.\u003c/p>\n\u003cp>Homekey set a low bar for contractors to qualify: They had to have worked on at least two affordable housing projects that included at least one homeless tenant.\u003c/p>\n\u003cp>Shangri-La easily cleared that hurdle. But had any state or local officials done more digging, they might have seen warning signs.\u003c/p>\n\u003cp>Shangri-La’s construction business was sued twice for breach of contract in \u003ca href=\"https://www.documentcloud.org/documents/28094732-shangri-la-2018-breach-contract-complaint/\">2018\u003c/a> and \u003ca href=\"https://www.documentcloud.org/documents/28094731-shangri-la-2019-contract-fraud-complaint/\">2019\u003c/a>, court records show, after two firms alleged that it failed to pay them. The company was also a contractor on a troubled LA veteran housing project, where records first \u003ca href=\"https://www.kcrw.com/shows/greater-la/stories/30-million-motel-homeless-shelter-prop-hhh-taxpayer-oversight-la\">reported by KCRW\u003c/a> show Shangri-La partners sold the property to themselves, increasing the project’s budget by $8 million.\u003c/p>\n\u003cp>With Homekey, federal \u003ca href=\"https://www.justice.gov/usao-cdca/pr/beverly-hills-man-arrested-brentwood-man-charged-separate-criminal-cases-linked-fraud\">prosecutors allege\u003c/a> that Holmes “knowingly submitted fake bank records” to the state Housing Department to boost Shangri-La’s credentials — financial claims that state officials apparently failed to verify with the banks. Holmes has pleaded not guilty, and an attorney representing him declined to comment.\u003c/p>\n\u003cp>As the company took on the Homekey projects, property records show that entities connected to Shangri-La or its partners paid around $13 million for actress Milla Jovovich’s Beverly Hills mansion, adding to a portfolio that included a $7 million oceanfront home in Long Beach purchased two years earlier.\u003c/p>\n\u003cfigure id=\"attachment_12082690\" class=\"wp-caption aligncenter\" style=\"max-width: 2000px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12082690\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey8.jpeg\" alt=\"\" width=\"2000\" height=\"1334\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey8.jpeg 2000w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey8-160x107.jpeg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey8-1536x1025.jpeg 1536w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\">\u003cfigcaption class=\"wp-caption-text\">The Quality Inn & Suites building, a former Shangri-La project, stands vacant in Thousand Oaks on Feb. 26. \u003ccite>(Julie Leopo-Bermudez for CalMatters)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>In a separate \u003ca href=\"https://www.documentcloud.org/documents/28093061-hcd-vs-shangri-la-complaint/\">civil fraud case\u003c/a>, state prosecutors allege in court records that Shangri-La went behind the state’s back and took out undisclosed loans on the Homekey buildings, giving up control of the sites and violating their contract with the state. That became a major problem when the company defaulted on the loans.\u003c/p>\n\u003cp>For several of the properties, no one had filed crucial paperwork to ensure that they remained affordable housing. After the buildings ended up in foreclosure, some were scooped up by companies with no commitment to homeless housing.\u003c/p>\n\u003cp>Homekey contracts tasked local officials with vetting projects and reviewing contractors’ organizational documents, budgets and other key details. But records show state officials also reviewed Shangri-La’s financials, and once they paid out the Homekey money, they failed to verify that paperwork was completed to restrict the buildings to affordable housing.\u003c/p>\u003c/div>",
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"content": "\u003cdiv class=\"post-body\">\u003cp>The state Housing Department and several local governments that hired Shangri-La for Homekey projects declined to comment, citing ongoing litigation.\u003c/p>\n\u003cp>Andy Meyers, the former CEO of Shangri-La, acknowledged in an interview that he had “a lack of control” over his company. He has sued Holmes for fraud. He also blamed the local and state officials.\u003c/p>\n\u003cp>“My CFO had a lot of wrongdoing,” he said. “But it was a confluence of events that caused each project to go bad.”\u003c/p>\n\u003cp>Meyers said officials’ failure to file the proper affordable housing restrictions, which were also required by his lender, triggered a financial disaster that led his company to default on some of the properties. On two projects that Shangri-La did open in San Bernardino and Salinas, he estimated that the company incurred around $11 million in unexpected costs.\u003c/p>\n\u003cp>“We have spent so much money following their guidelines and following their timetables,” he said, “and they never followed their guidelines or timetables.”\u003c/p>\n\u003cp>Monterey County Supervisor Chris Lopez rallied support for a Homekey project in his hometown of King City. He thought Shangri-La made sense for four projects in the county, since it had already opened one Homekey site in Salinas.\u003c/p>\n\u003cp>But it didn’t take long for constituents to start asking why rooms were sitting empty behind chain-link fences.\u003c/p>\n\u003cfigure id=\"attachment_12028078\" class=\"wp-caption aligncenter\" style=\"max-width: 1568px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12028078\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2025/02/021125-ICE-Schools-Salinas-LV_34-copy.jpg\" alt=\"\" width=\"1568\" height=\"1045\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2025/02/021125-ICE-Schools-Salinas-LV_34-copy.jpg 1568w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/02/021125-ICE-Schools-Salinas-LV_34-copy-800x533.jpg 800w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/02/021125-ICE-Schools-Salinas-LV_34-copy-1020x680.jpg 1020w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/02/021125-ICE-Schools-Salinas-LV_34-copy-160x107.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/02/021125-ICE-Schools-Salinas-LV_34-copy-1536x1024.jpg 1536w\" sizes=\"auto, (max-width: 1568px) 100vw, 1568px\">\u003cfigcaption class=\"wp-caption-text\">A person drives a tractor through a field of crops on farmland near Salinas on Feb. 11, 2025. \u003ccite>(Larry Valenzuela/CalMatters/CatchLight Local)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>“The longer it went on without seeing any movement, the flag started to get raised,” Lopez said. “I was starting to hear less and less communication and more sort of finger pointing\u003cem>.”\u003c/em>\u003c/p>\n\u003cp>Local officials like Lopez had to start from scratch, raising millions more dollars to revive the projects as encampments swelled. It took 10 different deals totaling $16 million to open the King City project in March, three years behind schedule.\u003c/p>\n\u003cp>The full trail of Shangri-La’s deceit stretches from the state’s agricultural heartland to the edge of the Southern California desert. A $27 million Thousand Oaks hotel project sits abandoned today, robbing a region of 77 homes while it had a decade-long housing waitlist. Another $16 million project scrapped in Salinas would have provided 58 homes. Officials still plan to salvage 200 homes in other parts of Monterey County. The only two Shangri-La projects that stayed open during the legal battle, two motels in Southern California, were full of people who were plunged into messy foreclosure disputes.\u003c/p>\n\u003cp>Carrie Harmon, San Bernardino County’s director of community development and housing, said in an email that “the county entered into this effort in good faith, relying on representations that later proved to be inaccurate.”\u003c/p>\u003c/div>",
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"content": "\u003cdiv class=\"post-body\">\u003cp>Even some of those whose Homekey projects went well say they’re not surprised that things went sideways. In Mendocino County, Van Sant said the state’s oversight was limited to quarterly progress reports. Once the money was spent, the state stopped asking for any information at all.\u003c/p>\n\u003cp>“They gave us a bunch of money, made us do some paperwork, and then they’re out of here,” Van Sant said.\u003c/p>\n\u003cp>For Colleen Robinson, public officials’ failure to see the red flags with Shangri-La was life-changing.\u003c/p>\n\u003cp>Robinson, now 62, survived years on the street after losing her job and fleeing a bad relationship. The All Star Lodge in downtown San Bernardino was her chance to start over. Shangri-La did manage to renovate and open that project in late 2022.\u003c/p>\n\u003cp>Two years later, the bank foreclosed. Because no one had put the affordable housing restriction on the property, the new owner told Robinson and other tenants that it was going to quadruple the rent. She said the new owner neglected the building; weeds and stray cats reclaimed the parking lot, police sirens blared, and neighbors died with little explanation.\u003c/p>\n\u003cp>“This would give hell a run for its money,” Robinson said.\u003c/p>\n\u003cp>Harmon said the county was still trying to buy the building and figure something out, but Robinson didn’t wait around to see how the saga ended. On a Thursday in February, she packed up and boarded a Greyhound bus for Iowa, where one of her children lives.\u003c/p>\n\u003ch2>Homeless veterans still waiting\u003c/h2>\n\u003cp>Some Homekey projects still haven’t opened.\u003c/p>\n\u003cp>Santa Cruz County has three badly delayed Homekey projects, one of which will be more than four years late when it is slated to finally be finished at the end of next year. For that project, the county obtained more than $6 million to convert rustic vacation cabins under a grove of redwood trees into housing for homeless veterans. The state initially set a completion deadline of 2023, but the project ran out of money before it crossed the finish line, forcing construction to stop.\u003c/p>\n\u003cp>There were many reasons why, but one stands out: underestimating the cost, said Robert Ratner, director of Santa Cruz County’s Housing for Health division.\u003c/p>\n\u003cfigure id=\"attachment_12082694\" class=\"wp-caption aligncenter\" style=\"max-width: 2000px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12082694\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey9.jpeg\" alt=\"\" width=\"2000\" height=\"1333\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey9.jpeg 2000w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey9-160x107.jpeg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey9-1536x1024.jpeg 1536w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\">\u003cfigcaption class=\"wp-caption-text\">An unfinished motel conversion in the Encino neighborhood of Los Angeles on January 27. The project is expected to finish more than a year after the original deadline, city records show. \u003ccite>(Courtesy of CalMatters)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>The developers had never undertaken a project this large, and that inexperience contributed to the budgeting error, Ratner said. But so did the design of Homekey, which capped what the state was willing to pay per unit at about half what it takes to build affordable housing in some parts of California.\u003c/p>\n\u003cp>The idea was that projects would be cheaper because they were converting existing buildings, while also cutting out extra layers of bureaucracy that add time and expense. That led developers to low-ball budgets, which came back to bite them when the savings weren’t as great as anticipated, Ratner said.\u003c/p>\n\u003cp>Once the budgeting error was made, neither the state nor the county caught it, Ratner said. The county assumed that the state would scrutinize all Homekey applications and throw out any that didn’t seem viable, Ratner said. But it appears that in reality, the state was relying on the counties to do that vetting.\u003c/p>\n\u003cp>Santa Cruz County had little experience analyzing whether a construction project was adequately budgeted. Typically, the county relies on other funders, such as construction lenders and tax credit investors, to do that job. But those investors weren’t present here.\u003c/p>\n\u003cp>When asked whether he and his colleagues had done their due diligence to make sure the projects were realistic, Ratner was straightforward.\u003c/p>\n\u003cfigure id=\"attachment_11682474\" class=\"wp-caption aligncenter\" style=\"max-width: 1920px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-11682474\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2018/07/SantaCruzBeach.jpg\" alt=\"Visitors enjoy the beach below West Cliff Drive in Santa Cruz. Santa Cruz County has the second-highest poverty rate in the state, after Los Angeles.\" width=\"1920\" height=\"1226\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2018/07/SantaCruzBeach.jpg 1920w, https://cdn.kqed.org/wp-content/uploads/sites/10/2018/07/SantaCruzBeach-160x102.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2018/07/SantaCruzBeach-800x511.jpg 800w, https://cdn.kqed.org/wp-content/uploads/sites/10/2018/07/SantaCruzBeach-1020x651.jpg 1020w, https://cdn.kqed.org/wp-content/uploads/sites/10/2018/07/SantaCruzBeach-1200x766.jpg 1200w, https://cdn.kqed.org/wp-content/uploads/sites/10/2018/07/SantaCruzBeach-1180x753.jpg 1180w, https://cdn.kqed.org/wp-content/uploads/sites/10/2018/07/SantaCruzBeach-960x613.jpg 960w, https://cdn.kqed.org/wp-content/uploads/sites/10/2018/07/SantaCruzBeach-240x153.jpg 240w, https://cdn.kqed.org/wp-content/uploads/sites/10/2018/07/SantaCruzBeach-375x239.jpg 375w, https://cdn.kqed.org/wp-content/uploads/sites/10/2018/07/SantaCruzBeach-520x332.jpg 520w\" sizes=\"auto, (max-width: 1920px) 100vw, 1920px\">\u003cfigcaption class=\"wp-caption-text\">Visitors in Santa Cruz enjoy the beach below West Cliff Drive. Santa Cruz County has the second-highest poverty rate in the state, after Los Angeles. \u003ccite>(Stephen Dunn/Getty Images)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>“I would say no,” Ratner said. “I can’t say yes with a straight face at this juncture.”\u003c/p>\n\u003cp>Other projects just never happened.\u003c/p>\n\u003cp>A $14 million Homekey award was supposed to help breathe new life into the Hotel Travelers, a rundown, century-old building in Oakland’s Chinatown, as housing for people returning from incarceration. But once the developer got a look at the building, that plan fell apart. An inspection revealed such severe issues with the building’s construction that the developer determined it would be “morally untenable” to proceed. Oakland returned the grant.\u003c/p>\n\u003cp>In total, CalMatters found at least 10 cases where a Homekey award was announced, only for the grantee to later withdraw their application, return or redirect the money, or have the state claw it back. Some instances had more public explanation than others.\u003c/p>\n\u003cp>City officials in Fresno voted down their own project. Long Beach was unable to come up with a suitable location for $2 million worth of brand-new tiny homes left sitting in storage. Projects in Marin and Mariposa counties evaporated when real estate deals fell through, and the state rescinded its grant for a project in Salinas after a nonprofit partner pulled out.\u003c/p>\n\u003ch2>Newsom’s legacy and a financial cliff\u003c/h2>\n\u003cp>Despite the vastly different outcomes at Homekey projects around the state, there’s no plan for a comprehensive audit to see what worked and what didn’t — a decision that raises the question of whether the state has done enough to grapple with Homekey as it forges ahead with the new version of the program, Homekey+.\u003c/p>\n\u003cp>Earlier this year, lawmakers nixed a public accounting proposed by \u003ca href=\"https://calmatters.digitaldemocracy.org/legislators/leticia-castillo-187479\">Assemblymember Leticia Castillo\u003c/a>, a Republican from Corona.\u003c/p>\n\u003cp>“While the program has expanded housing options, critical questions remain about its long-term impact and cost-effectiveness,” a \u003ca href=\"https://ad58.asmrc.org/wp-content/uploads/2025/02/Homekey-Program-Audit-Fact-Sheet.pdf\">summary\u003c/a> of \u003ca href=\"https://calmatters.digitaldemocracy.org/bills/ca_202520260ab505\">Assembly Bill 505\u003c/a> said. “It is unclear how many Homekey-funded units remain occupied after one year, how many individuals successfully transition to stable, long-term housing, and whether Homekey’s cost per unit is competitive.”\u003c/p>\n\u003cfigure id=\"attachment_12029662\" class=\"wp-caption aligncenter\" style=\"max-width: 2000px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12029662\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2025/03/020624_No-Place-Like-Home_CC_CM_12-copy.jpg\" alt=\"\" width=\"2000\" height=\"1333\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2025/03/020624_No-Place-Like-Home_CC_CM_12-copy.jpg 2000w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/03/020624_No-Place-Like-Home_CC_CM_12-copy-800x533.jpg 800w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/03/020624_No-Place-Like-Home_CC_CM_12-copy-1020x680.jpg 1020w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/03/020624_No-Place-Like-Home_CC_CM_12-copy-160x107.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/03/020624_No-Place-Like-Home_CC_CM_12-copy-1536x1024.jpg 1536w, https://cdn.kqed.org/wp-content/uploads/sites/10/2025/03/020624_No-Place-Like-Home_CC_CM_12-copy-1920x1280.jpg 1920w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\">\u003cfigcaption class=\"wp-caption-text\">Framers work to build the Ruby Street apartments in Castro Valley on Feb. 6, 2024. The construction project is funded by the No Place Like Home bond, which passed in 2018 to create affordable housing for homeless residents experiencing mental health issues. \u003ccite>(Camille Cohen for CalMatters)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>The bill was never publicly debated. It died in January.\u003c/p>\n\u003cp>The state did do one \u003ca href=\"https://calmatters.org/housing/homelessness/2024/04/california-homelessness-spending/\">audit of multiple homeless services programs\u003c/a> in 2024. It didn’t get into Homekey delays or what actually happened to people living in the buildings, but it analyzed the costs of eight projects.\u003c/p>\n\u003cp>Based on that small sample, the auditor concluded that Homekey was “likely” cost-effective, with an average cost of $144,000 per unit, compared to the hundreds of thousands of dollars more it can cost for new construction in California.\u003c/p>\n\u003cp>The challenge is that when Homekey plans fell short of ambitions at job sites around the state, the consequences were often murky. In extreme cases, where cities acknowledged that projects failed to materialize, the state has clawed back grants.\u003c/p>\n\u003cp>But usually, the main penalty for blown deadlines or other missteps is that the state may hold it against a local government or developer the next time it applies for funding — a dynamic that provides no public transparency.\u003c/p>\n\u003cp>What happens next will be left up to a new state housing agency \u003ca href=\"https://www.bcsh.ca.gov/about/reorganization.html\">set to be launched\u003c/a> this summer, the California Housing and Homelessness Agency. That effort is expected to include a new development committee to “provide centralized, coordinated guidance to state housing policy and funding decisions.”\u003c/p>\n\u003cfigure id=\"attachment_11877271\" class=\"wp-caption aligncenter\" style=\"max-width: 1920px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-11877271\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2021/06/RS49740_009_MountainView_ProjectHomekey_06082021-qut.jpg\" alt=\"\" width=\"1920\" height=\"1278\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2021/06/RS49740_009_MountainView_ProjectHomekey_06082021-qut.jpg 1920w, https://cdn.kqed.org/wp-content/uploads/sites/10/2021/06/RS49740_009_MountainView_ProjectHomekey_06082021-qut-800x533.jpg 800w, https://cdn.kqed.org/wp-content/uploads/sites/10/2021/06/RS49740_009_MountainView_ProjectHomekey_06082021-qut-1020x679.jpg 1020w, https://cdn.kqed.org/wp-content/uploads/sites/10/2021/06/RS49740_009_MountainView_ProjectHomekey_06082021-qut-160x107.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2021/06/RS49740_009_MountainView_ProjectHomekey_06082021-qut-1536x1022.jpg 1536w\" sizes=\"auto, (max-width: 1920px) 100vw, 1920px\">\u003cfigcaption class=\"wp-caption-text\">Final construction is completed on a row of housing units at LifeMoves Mountain View, a modular housing community, on June 8, 2021. The site, part of California’s Homekey program, provides temporary housing and resources to people in the city who are currently homeless. \u003ccite>(Beth LaBerge/KQED)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>For now, the state’s Housing Department maintains that it “monitors each project closely” if issues arise or deadline extensions are granted. Even with widespread delays, the agency maintains that “Homekey has helped build more and faster.”\u003c/p>\n\u003cp>The state said it is learning as it gives out the new Homekey+ funding.\u003c/p>\n\u003cp>After seeing so many projects miss the one-year deadline, the state doubled the timeline for new construction to two years. Homekey+ projects that \u003ca href=\"https://www.hcd.ca.gov/sites/default/files/docs/grants-and-funding/homekey/hk-plus-nofa-amendment.pdf\">serve veterans\u003c/a> now can propose bigger budgets for new builds, potentially addressing the issue of under-budgeted projects running out of money.\u003c/p>\n\u003cp>Officials also said they’re scrutinizing applications more closely now, including looking carefully at whether applicants are budgeting enough funds for their proposed projects, said California Health and Human Services Secretary Kim Johnson.\u003c/p>\n\u003cp>“We are improving our own vetting process, if you will,” she said during a recent news conference, “to ensure these projects are successful in delivering.”\u003c/p>\n\u003cp>The state’s housing department maintains that Homekey accomplished a major feat: building thousands of units despite a global pandemic, labor shortages, supply chain issues and other challenges.\u003c/p>\n\u003cfigure id=\"attachment_12082698\" class=\"wp-caption aligncenter\" style=\"max-width: 2000px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12082698\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey9-1.jpg\" alt=\"\" width=\"2000\" height=\"1333\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey9-1.jpg 2000w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey9-1-160x107.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/05/homekey9-1-1536x1024.jpg 1536w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\">\u003cfigcaption class=\"wp-caption-text\">Gary Wish stands outside El Portal apartments in Ventura on Feb. 26, 2026. \u003ccite>(Julie Leopo-Bermudez for CalMatters)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>“It is tremendously rewarding to see so many vulnerable Californians housed so quickly, and to have voters expand the successful Homekey model to house and support veterans and others facing behavioral health challenges,” Assistant Deputy Director Cari Scott said in a statement.\u003c/p>\n\u003cp>As the state’s housing policies shift, there’s one big question left for people like Van Sant in Mendocino: Will there be enough money to keep Homekey projects running?\u003c/p>\n\u003cp>Most of the projects have a pay-as-you-go model, versus standard 10- or 15-year affordable housing financing — a calculation that leaves a financial cliff looming for thousands of Homekey homes.\u003c/p>\n\u003cp>“If [Homekey] is going to be a long-term, permanent, successful program,” Van Sant said, “I think the state’s going to have to find a way to find some ongoing funding for it.”\u003c/p>\n\u003cp>\u003cem>Data reporters\u003c/em> \u003cem>Erica Yee and Kate Li contributed to this story.\u003c/em>\u003c/p>\n\u003cp>\u003cem>This article was \u003ca href=\"https://calmatters.org/housing/2026/05/newsom-homekey-records/\">originally published on CalMatters\u003c/a> and was republished under the \u003ca href=\"https://creativecommons.org/licenses/by-nc-nd/4.0/\">Creative Commons Attribution-NonCommercial-NoDerivatives\u003c/a> license.\u003c/em>\u003c/p>\n\u003cp>\u003c/p>\u003c/div>",
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"title": "California School Districts Plead With Newsom to Restore Budget",
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"headTitle": "California School Districts Plead With Newsom to Restore Budget | KQED",
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"content": "\u003cp>Education officials across \u003ca href=\"https://www.kqed.org/news/tag/california\">California\u003c/a> are calling on the governor and state Legislature to scrap a plan to withhold billions in education funding that they say means more cuts for students and continues a harmful trend of underfunding.\u003c/p>\n\u003cp>Ahead of Gov. Gavin Newsom’s revised budget proposal, expected next week, school district leaders across the state are pushing for him to allocate the full amount of Proposition 98 funding required by the state.\u003c/p>\n\u003cp>“The proposed withholding would trigger real reductions to student services, academic interventions, mental health services, staffing, and programs that our students rely on every single day,” said Edgar Zazueta, the executive director of the Association of California School Administrators, at a press conference this week. “California has a responsibility right now. It’s to honor the commitment that they’ve made to public education, to protect students and to fully fund Prop. 98.”\u003c/p>\n\u003cp>[ad fullwidth]\u003c/p>\n\u003cp>Proposition 98 requires an annual minimum guarantee of funding for K-12 schools and community colleges, which equates to about 40% of the state’s general fund. In his draft budget released in January, Newsom proposed holding back $5.6 billion earmarked for schools, based on general fund revenue for the 2025-2026 year.\u003c/p>\n\u003cp>While Newsom said the deferral would mitigate the risk of appropriating more resources than end up being available, due to “persistent uncertainty in revenue projections,” school boards, district officials and unions across the state said delaying the funding violates the state constitution, and will mean real losses for districts already strapped for cash.\u003c/p>\n\u003cfigure id=\"attachment_12070630\" class=\"wp-caption aligncenter\" style=\"max-width: 2000px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12070630\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/01/260116-NewsomLuriePresser-32-BL_qed.jpg\" alt=\"\" width=\"2000\" height=\"1333\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/01/260116-NewsomLuriePresser-32-BL_qed.jpg 2000w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/01/260116-NewsomLuriePresser-32-BL_qed-160x107.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/01/260116-NewsomLuriePresser-32-BL_qed-1536x1024.jpg 1536w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\">\u003cfigcaption class=\"wp-caption-text\">Gov. Gavin Newsom speaks during a press conference at the Friendship House Association of American Indians in San Francisco on Jan. 16, 2026. \u003ccite>(Beth LaBerge/KQED)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>Though the governor has touted “historic” education allocations over recent years — including an unexpected $22 billion in additional funding for next year — school districts across the Bay Area and beyond are facing massive, multi-year budget shortfalls.\u003c/p>\n\u003cp>Many have lost per-pupil funding due to enrollment declines, and California School Board Association spokesperson Troy Flint said rising costs — for teacher compensation, pension and health care contributions and special education — are outpacing funding gains.\u003c/p>\n\u003cp>“When you add all that up, the idea that schools have more money is, while it’s intuitive, not reflective of reality,” Flint said.\u003c/p>\n\u003cp>According to Barrett Snider, an education lobbyist with Capitol Advisors, the state sees withholding this pool of money, which is an excess of the projected funding for last year, as “No harm, no foul” for school districts, and a possible solution to pay for higher-than-anticipated costs elsewhere in the state budget. The education community disagrees.[aside postID=news_12077803 hero='https://cdn.kqed.org/wp-content/uploads/sites/10/2026/03/260326-SJSchoolClosures-02-BL.jpg']“This is a chronically underfunded system,” Snider said. “We’ve got declining enrollment all over the state. We’ve got pressure from labor because the cost of living has gone up everywhere. We need to solve that problem, so you want to borrow money from us?”\u003c/p>\n\u003cp>CSBA estimates that the delay means losing about $900 per student across the state. Every $1 billion withheld equates to about 9,500 educators who could lose their jobs, according to Doug Knepp, president of the West Sacramento Teachers Association.\u003c/p>\n\u003cp>“We take the position that a dollar deferred is a dollar denied, and IOU is not a guarantee,” Flint said. “The Prop. 98 monies are intended for the current budget year, which is being developed, not for an indeterminate date in the future.”\u003c/p>\n\u003cp>In March, San Francisco Unified School District board leadership sent a letter to Newsom, urging him to restore the Proposition 98 funding. That letter was signed by other district leaders across the Bay Area and state, who said the withholding “represents tens of millions of dollars from each of our districts and will directly harm our schools and the students they serve as soon as next school year.”\u003c/p>\n\u003cp>On Thursday, district officials from Oakland are also expected to join a statewide lobbying day hosted by the California Teachers Association in favor of restoring Proposition 98 funding.\u003c/p>\n\u003cp>As education officials push for Newsom to release the funding in his final budget proposal ahead of the July 1 deadline, Snider and Flint both said, to some extent, the “damage” has already been done.\u003c/p>\n\u003cfigure id=\"attachment_12072507\" class=\"wp-caption aligncenter\" style=\"max-width: 2000px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"wp-image-12072507 size-full\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/01/02172023_ksuzuki_tkprogress-157_qed-1.jpg\" alt=\"\" width=\"2000\" height=\"1331\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/01/02172023_ksuzuki_tkprogress-157_qed-1.jpg 2000w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/01/02172023_ksuzuki_tkprogress-157_qed-1-160x106.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/01/02172023_ksuzuki_tkprogress-157_qed-1-1536x1022.jpg 1536w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\">\u003cfigcaption class=\"wp-caption-text\">Wooden blocks and tiny jackets rest on the rug during playtime at a transitional kindergarten class at Cesar Chavez Elementary School in East San José on Feb. 17, 2023. \u003ccite>(Kori Suzuki/KQED)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>“We’re already seeing school districts have had to develop their budget on the assumption that the withholding will go through,” Flint said. “No matter how this resolves, it’s already had a negative impact as school districts have to reduce staffing support and services.”\u003c/p>\n\u003cp>Still, the advocates said it’s not too late to stop the withholding from becoming a precedent. Last year, the state withheld $1.9 billion from schools, which will be repaid in this year’s budget, under similar circumstances.\u003c/p>\n\u003cp>“Precedent is an issue,” Snider said. “Because the effect is that it effectively neuters Prop. 98 from its intent, which is to protect the school portions of the budget from the non-education side pressures.\u003c/p>\n\u003cp>“What’s being proposed by the governor is sort of a clever workaround to that. And if the education community doesn’t speak up and push back, they’ll just keep doing it,” he continued.\u003c/p>\n\u003cp>Currently, CSBA is suing the state over funds withheld last year, and Flint said if this year’s delay is approved in the final state budget, the organization is very likely to litigate again.\u003c/p>\n\u003cp>\u003c/p>\n",
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"excerpt": "Gov. Gavin Newsom has proposed a delay in $5.6 billion in education funding, as school districts across the Bay Area and throughout the state face massive, multi-year budget shortfalls. \r\n",
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"content": "\u003cdiv class=\"post-body\">\u003cp>\u003cp>Education officials across \u003ca href=\"https://www.kqed.org/news/tag/california\">California\u003c/a> are calling on the governor and state Legislature to scrap a plan to withhold billions in education funding that they say means more cuts for students and continues a harmful trend of underfunding.\u003c/p>\n\u003cp>Ahead of Gov. Gavin Newsom’s revised budget proposal, expected next week, school district leaders across the state are pushing for him to allocate the full amount of Proposition 98 funding required by the state.\u003c/p>\n\u003cp>“The proposed withholding would trigger real reductions to student services, academic interventions, mental health services, staffing, and programs that our students rely on every single day,” said Edgar Zazueta, the executive director of the Association of California School Administrators, at a press conference this week. “California has a responsibility right now. It’s to honor the commitment that they’ve made to public education, to protect students and to fully fund Prop. 98.”\u003c/p>\n\u003cp>\u003c/p>\u003c/div>",
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"content": "\u003cdiv class=\"post-body\">\u003cp>\u003c/p>\n\u003cp>Proposition 98 requires an annual minimum guarantee of funding for K-12 schools and community colleges, which equates to about 40% of the state’s general fund. In his draft budget released in January, Newsom proposed holding back $5.6 billion earmarked for schools, based on general fund revenue for the 2025-2026 year.\u003c/p>\n\u003cp>While Newsom said the deferral would mitigate the risk of appropriating more resources than end up being available, due to “persistent uncertainty in revenue projections,” school boards, district officials and unions across the state said delaying the funding violates the state constitution, and will mean real losses for districts already strapped for cash.\u003c/p>\n\u003cfigure id=\"attachment_12070630\" class=\"wp-caption aligncenter\" style=\"max-width: 2000px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-12070630\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/01/260116-NewsomLuriePresser-32-BL_qed.jpg\" alt=\"\" width=\"2000\" height=\"1333\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/01/260116-NewsomLuriePresser-32-BL_qed.jpg 2000w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/01/260116-NewsomLuriePresser-32-BL_qed-160x107.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/01/260116-NewsomLuriePresser-32-BL_qed-1536x1024.jpg 1536w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\">\u003cfigcaption class=\"wp-caption-text\">Gov. Gavin Newsom speaks during a press conference at the Friendship House Association of American Indians in San Francisco on Jan. 16, 2026. \u003ccite>(Beth LaBerge/KQED)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>Though the governor has touted “historic” education allocations over recent years — including an unexpected $22 billion in additional funding for next year — school districts across the Bay Area and beyond are facing massive, multi-year budget shortfalls.\u003c/p>\n\u003cp>Many have lost per-pupil funding due to enrollment declines, and California School Board Association spokesperson Troy Flint said rising costs — for teacher compensation, pension and health care contributions and special education — are outpacing funding gains.\u003c/p>\n\u003cp>“When you add all that up, the idea that schools have more money is, while it’s intuitive, not reflective of reality,” Flint said.\u003c/p>\n\u003cp>According to Barrett Snider, an education lobbyist with Capitol Advisors, the state sees withholding this pool of money, which is an excess of the projected funding for last year, as “No harm, no foul” for school districts, and a possible solution to pay for higher-than-anticipated costs elsewhere in the state budget. The education community disagrees.\u003c/p>\u003c/div>",
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"content": "\u003cdiv class=\"post-body\">\u003cp>“This is a chronically underfunded system,” Snider said. “We’ve got declining enrollment all over the state. We’ve got pressure from labor because the cost of living has gone up everywhere. We need to solve that problem, so you want to borrow money from us?”\u003c/p>\n\u003cp>CSBA estimates that the delay means losing about $900 per student across the state. Every $1 billion withheld equates to about 9,500 educators who could lose their jobs, according to Doug Knepp, president of the West Sacramento Teachers Association.\u003c/p>\n\u003cp>“We take the position that a dollar deferred is a dollar denied, and IOU is not a guarantee,” Flint said. “The Prop. 98 monies are intended for the current budget year, which is being developed, not for an indeterminate date in the future.”\u003c/p>\n\u003cp>In March, San Francisco Unified School District board leadership sent a letter to Newsom, urging him to restore the Proposition 98 funding. That letter was signed by other district leaders across the Bay Area and state, who said the withholding “represents tens of millions of dollars from each of our districts and will directly harm our schools and the students they serve as soon as next school year.”\u003c/p>\n\u003cp>On Thursday, district officials from Oakland are also expected to join a statewide lobbying day hosted by the California Teachers Association in favor of restoring Proposition 98 funding.\u003c/p>\n\u003cp>As education officials push for Newsom to release the funding in his final budget proposal ahead of the July 1 deadline, Snider and Flint both said, to some extent, the “damage” has already been done.\u003c/p>\n\u003cfigure id=\"attachment_12072507\" class=\"wp-caption aligncenter\" style=\"max-width: 2000px\">\u003cimg loading=\"lazy\" decoding=\"async\" class=\"wp-image-12072507 size-full\" src=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/01/02172023_ksuzuki_tkprogress-157_qed-1.jpg\" alt=\"\" width=\"2000\" height=\"1331\" srcset=\"https://cdn.kqed.org/wp-content/uploads/sites/10/2026/01/02172023_ksuzuki_tkprogress-157_qed-1.jpg 2000w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/01/02172023_ksuzuki_tkprogress-157_qed-1-160x106.jpg 160w, https://cdn.kqed.org/wp-content/uploads/sites/10/2026/01/02172023_ksuzuki_tkprogress-157_qed-1-1536x1022.jpg 1536w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\">\u003cfigcaption class=\"wp-caption-text\">Wooden blocks and tiny jackets rest on the rug during playtime at a transitional kindergarten class at Cesar Chavez Elementary School in East San José on Feb. 17, 2023. \u003ccite>(Kori Suzuki/KQED)\u003c/cite>\u003c/figcaption>\u003c/figure>\n\u003cp>“We’re already seeing school districts have had to develop their budget on the assumption that the withholding will go through,” Flint said. “No matter how this resolves, it’s already had a negative impact as school districts have to reduce staffing support and services.”\u003c/p>\n\u003cp>Still, the advocates said it’s not too late to stop the withholding from becoming a precedent. Last year, the state withheld $1.9 billion from schools, which will be repaid in this year’s budget, under similar circumstances.\u003c/p>\n\u003cp>“Precedent is an issue,” Snider said. “Because the effect is that it effectively neuters Prop. 98 from its intent, which is to protect the school portions of the budget from the non-education side pressures.\u003c/p>\n\u003cp>“What’s being proposed by the governor is sort of a clever workaround to that. And if the education community doesn’t speak up and push back, they’ll just keep doing it,” he continued.\u003c/p>\n\u003cp>Currently, CSBA is suing the state over funds withheld last year, and Flint said if this year’s delay is approved in the final state budget, the organization is very likely to litigate again.\u003c/p>\n\u003cp>\u003c/p>\n\u003c/div>\u003c/p>",
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"title": "Following Newsom’s Veto, Lawmaker Returns With Drug-Free Homeless Housing Bill",
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"content": "\u003cp>San Francisco Assemblymember Matt Haney is reviving a proposal to allow drug-free housing for people transitioning out of homelessness, months after Gov. Gavin Newsom vetoed a similar bill.\u003c/p>\n\u003cp>Haney’s new proposal, AB 1556, would set rules for how “recovery residences” can operate within California’s Housing First framework, the \u003ca href=\"https://legiscan.com/CA/text/AB1556/id/3425398\">state’s policy\u003c/a> of offering permanent housing without first requiring people to meet conditions like sobriety, mental health treatment or employment.\u003c/p>\n\u003cp>“We should give people who are ready to take the steps to get to recovery and stability an opportunity to do so,” Haney said at a press conference in San Francisco on Monday. “People want to live in housing where they receive the support to be off of and away from drugs with people who will support them in that process.”\u003c/p>\n\u003cp>[ad fullwidth]\u003c/p>\n\u003cp>The legislation comes after Newsom \u003ca href=\"https://www.gov.ca.gov/wp-content/uploads/2025/10/AB-255-Veto.pdf\">rejected \u003c/a>Haney’s \u003ca href=\"https://www.kqed.org/news/12058779/newsoms-veto-of-sober-housing-bill-sparks-a-backlash-in-sf\">AB 255 last year\u003c/a>. That bill would have allowed some state homelessness dollars to support sober housing programs.\u003c/p>\n\u003cp>In his veto message, Newsom said recovery-focused housing is already allowed under state law and argued the bill “wrongly suggests incompatibility with Housing First.” He also raised concerns about creating a separate certification and oversight process that could cost taxpayers money.\u003c/p>\n\u003cp>Housing First has been \u003ca href=\"https://www.kqed.org/news/12054270/trumps-tectonic-shift-on-homelessness-could-have-dire-impacts-in-california\">credited with reducing barriers\u003c/a> for people who might otherwise be denied housing because of substance use, mental health challenges or other issues. But some local officials and advocates argue the policy has also made it harder to fund housing where residents can live away from active drug use.[aside postID=news_12034006 hero='https://cdn.kqed.org/wp-content/uploads/sites/10/2025/03/20250327_SoberHousing_GC-9-1020x680.jpg']Supporters of sober housing have said those environments are especially important as cities like San Francisco continue to \u003ca href=\"https://www.kqed.org/news/12034006/san-francisco-mans-housing-struggle-relapse-put-him-back-on-streets\">confront homelessness and addiction\u003c/a>, including its ongoing fentanyl crisis. But the proposal is likely to face pushback from some homelessness advocates, who have long warned that sobriety requirements can become a pathway to eviction.\u003c/p>\n\u003cp>Haney said the new bill is meant to provide clarity for housing providers, local governments and people in recovery who want a sober living environment. According to Haney’s office, AB 1556 would allow recovery residences to maintain sobriety standards, while requiring a “non-punitive” response when someone relapses, including connecting residents to alternative housing and services rather than kicking them out of the program and pushing them back into homelessness.\u003c/p>\n\u003cp>Housing California, a statewide affordable housing advocacy group, has already listed its opposition to AB 1556, \u003ca href=\"https://housingca.org/policy/policy-priorities-2026/\">citing concerns\u003c/a> about residents being required to choose recovery housing and harm-reduction housing options.\u003c/p>\n\u003cp>Newsom’s veto last year did not dismiss recovery housing outright. Instead, he said the state should continue working on ways to support recovery-focused models without undermining Housing First.\u003c/p>\n\u003cp>\u003c/p>\n",
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"content": "\u003cdiv class=\"post-body\">\u003cp>\u003cp>San Francisco Assemblymember Matt Haney is reviving a proposal to allow drug-free housing for people transitioning out of homelessness, months after Gov. Gavin Newsom vetoed a similar bill.\u003c/p>\n\u003cp>Haney’s new proposal, AB 1556, would set rules for how “recovery residences” can operate within California’s Housing First framework, the \u003ca href=\"https://legiscan.com/CA/text/AB1556/id/3425398\">state’s policy\u003c/a> of offering permanent housing without first requiring people to meet conditions like sobriety, mental health treatment or employment.\u003c/p>\n\u003cp>“We should give people who are ready to take the steps to get to recovery and stability an opportunity to do so,” Haney said at a press conference in San Francisco on Monday. “People want to live in housing where they receive the support to be off of and away from drugs with people who will support them in that process.”\u003c/p>\n\u003cp>\u003c/p>\u003c/div>",
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"content": "\u003cdiv class=\"post-body\">\u003cp>\u003c/p>\n\u003cp>The legislation comes after Newsom \u003ca href=\"https://www.gov.ca.gov/wp-content/uploads/2025/10/AB-255-Veto.pdf\">rejected \u003c/a>Haney’s \u003ca href=\"https://www.kqed.org/news/12058779/newsoms-veto-of-sober-housing-bill-sparks-a-backlash-in-sf\">AB 255 last year\u003c/a>. That bill would have allowed some state homelessness dollars to support sober housing programs.\u003c/p>\n\u003cp>In his veto message, Newsom said recovery-focused housing is already allowed under state law and argued the bill “wrongly suggests incompatibility with Housing First.” He also raised concerns about creating a separate certification and oversight process that could cost taxpayers money.\u003c/p>\n\u003cp>Housing First has been \u003ca href=\"https://www.kqed.org/news/12054270/trumps-tectonic-shift-on-homelessness-could-have-dire-impacts-in-california\">credited with reducing barriers\u003c/a> for people who might otherwise be denied housing because of substance use, mental health challenges or other issues. But some local officials and advocates argue the policy has also made it harder to fund housing where residents can live away from active drug use.\u003c/p>\u003c/div>",
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"content": "\u003cdiv class=\"post-body\">\u003cp>Supporters of sober housing have said those environments are especially important as cities like San Francisco continue to \u003ca href=\"https://www.kqed.org/news/12034006/san-francisco-mans-housing-struggle-relapse-put-him-back-on-streets\">confront homelessness and addiction\u003c/a>, including its ongoing fentanyl crisis. But the proposal is likely to face pushback from some homelessness advocates, who have long warned that sobriety requirements can become a pathway to eviction.\u003c/p>\n\u003cp>Haney said the new bill is meant to provide clarity for housing providers, local governments and people in recovery who want a sober living environment. According to Haney’s office, AB 1556 would allow recovery residences to maintain sobriety standards, while requiring a “non-punitive” response when someone relapses, including connecting residents to alternative housing and services rather than kicking them out of the program and pushing them back into homelessness.\u003c/p>\n\u003cp>Housing California, a statewide affordable housing advocacy group, has already listed its opposition to AB 1556, \u003ca href=\"https://housingca.org/policy/policy-priorities-2026/\">citing concerns\u003c/a> about residents being required to choose recovery housing and harm-reduction housing options.\u003c/p>\n\u003cp>Newsom’s veto last year did not dismiss recovery housing outright. Instead, he said the state should continue working on ways to support recovery-focused models without undermining Housing First.\u003c/p>\n\u003cp>\u003c/p>\n\u003c/div>\u003c/p>",
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