California’s largest educators union has taken legal action against state leadership, filing a lawsuit that accuses government officials of systematically withholding billions of dollars in mandatory funding from public classrooms. The legal challenge asserts that state leaders bypassed established constitutional safeguards that have protected public education financing for nearly four decades.
The lawsuit, lodged in Sacramento County Superior Court by the California Teachers Association, claims that state authorities engaged in deliberate underfunding to offset broader state budget shortfalls. While the legal filing formally names Joe Stephenshaw, the director of the California Department of Finance, it also designates several unnamed state figures, directing clear accountability toward Gov. Gavin Newsom and his administration's financial decisions.
According to the complaint, state lawmakers and the governor underfunded public schools across two consecutive fiscal cycles. The union asserts that education allocations were reduced by $1.9 billion during the 2024–25 budget cycle, followed by an even steeper reduction of $3.9 billion in the 2025–26 fiscal year, creating significant fiscal strain across public school districts statewide.
While the state eventually restored and repaid the $1.9 billion deficit from the 2024–25 budget year after a twelve-month delay, the union stresses that no such commitment has been established for the subsequent $3.9 billion shortfall. This leaves a massive multi-billion-dollar gap within a broader education budget totaling $119.9 billion.
The union calculates that the unresolved $3.9 billion funding deficit translates directly to a loss of approximately $638 for every individual public school student enrolled in California. Labor leaders argue that this missing per-pupil revenue has triggered immediate and damaging consequences for classroom resources and operational staffing.
The lawsuit highlights the human toll of these budgetary maneuvers, pointing out that nearly 1,000 public school employees have been laid off across the state over the preceding year. These workforce reductions have affected instructional capacity, student support networks, and general school operations throughout various districts.
The California Teachers Association represents roughly 310,000 educators and school professionals across the state. Its diverse membership includes classroom teachers, guidance counselors, school librarians, and an array of educational support staff who interact directly with students every day.
Addressing the lawsuit, CTA President David Goldberg sharply criticized state officials for balancing state finances at the expense of education workers and local communities. He emphasized the contradiction between overall economic health and the severe austerity measures forced upon local school systems.
Goldberg underscored that despite broader economic vitality in the state, public school educators have seen their careers derailed while school districts face widespread instability. He demanded the immediate reimbursement of all withheld educational dollars to prevent additional rounds of damaging layoffs and classroom cutbacks in upcoming academic cycles.
The union’s legal counsel, Sacramento-based attorney Benjamin Gevercer, reiterated these concerns within the court filing. Gevercer formally noted that without judicial intervention, it remains highly doubtful when or if the state will ever reimburse the $3.9 billion owed to California's public school system.
At the core of the dispute is Proposition 98, a foundational state constitutional amendment approved by 51 percent of California voters in November 1988. The voter-approved initiative established strict formulas requiring the state to dedicate a guaranteed percentage of general budget revenues directly to K-12 public schools and community colleges.
Under the constitutional rules set forth in Proposition 98, state lawmakers do possess the authority to temporarily suspend the mandatory minimum funding levels for a single year through a two-thirds supermajority vote in the Legislature. However, the law explicitly dictates that any funds withheld under such a suspension must subsequently be paid back in full.
Because state leaders have not set up a concrete schedule or formal promise to repay the 2025–26 fiscal deficit, the CTA's lawsuit asks the court to step in. The union is seeking a binding court order declaring the state’s funding maneuvers unconstitutional under Proposition 98 and requiring the state to fully restore the missing funds now and in subsequent budget years.
Alongside the litigation, union leadership is actively urging voters to support Proposition 3 on the upcoming November ballot. The proposed ballot measure seeks to make permanent an existing state tax on high-income earners that originally passed in 2012, was renewed in 2016, and is slated to expire in 2031, providing nearly $15 billion annually for public schools and community colleges.
Following the filing in Sacramento County, Gov. Newsom’s office did not immediately provide a statement in response to inquiries regarding the allegations. Representatives for State Superintendent of Public Instruction Tony Thurmond similarly declined to comment on the pending litigation.
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