California public schools receive the a large share of their funding from state income and sales tax revenues with a smaller amount from from property taxes that are collected at the local level and redistributed by the state.

In 1978, voters approved Proposition 13. The new law limited property tax rates to one percent of a property's assessed value at the time of acquisition. Proposition 13 reduced property tax revenues available for local governments and school districts. To cushion the impact to school districts, the state Legislature shifted state dollars to schools. With the adoption of Proposition 98 (1988) and Proposition 111 (1990), a minimum funding level from state and local property taxes was provided to K-14 public schools. Approximately 60% of all school district funds in California are general purpose in nature; the remaining 40% are restricted to specific purposes, such as the needs of special education students, low-income students, limited English-proficient students, and specific grade levels. This greatly constrains local boards of education in their spending decisions. They are further constrained in their ability to raise taxes independently of the state. Bond issues, usually limited to building programs, require a 55% vote for passage. Parcel tax measures require a 2/3 vote.

In 2013, Governor Jerry Brown revisited the state's allocation formula for school districts to increase flexibility at the local level. This proposal is known as the Local Control Funding Formula (LCFF). Under LCFF, the state provides a base grant for all students and additional grants for high-need students such as English Learners and socio-economically disadvantaged pupils.

Prop. 98 is a constitutional amendment adopted by California voters in 1988 that establishes an annual minimum funding level for K-14 education each fiscal year. Prop 98 funding comes from a combination of state General Fund revenue and local property taxes. Prop. 98 spending supports K-12 schools (including transitional kindergarten), community colleges, county offices of education, the state preschool program, and state agencies that provide direct K-14 instructional programs. While Prop. 98 establishes a required minimum funding level for programs falling under the guarantee as a whole, it does not protect individual programs from reduction or elimination.

The May 14th Revision updates the governor’s economic and revenue outlook from the budget that was proposed on January 10th.

The Legislature must pass a budget bill for the upcoming fiscal year by midnight on June 15.