Governor Newsom announces $267-billion “May Revise” budget

California Governor Gavin Newsom promises sweeping change in his $267 billion budget proposal — called the “California Comeback Plan — for 2021-2022. The Governor’s office calls this budget “the biggest economic recovery package in California history.”


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In the budget proposal — colloquially referred to as the “May Revise” — Newsom leverages the $75.7 billion budget windfall to fund programs to cut down on the unhoused population in the state, rebuilding the state’s behavioral health system, funding for the CalAIM initiative and other programs designed to help the state recover from the pandemic.

In a press conference Friday, Newsom announced a total homelessness package of $12 billion. He said this investment is an effort to rebuild the behavioral health system dismantled over decades, which has caused part of the current homelessness crisis in the state.

“Where [Reagan] began the process of dismantling the investments in our state’s behavioral health system, our mental health system. It was never followed up with the community based care that was pledged and promised for many different reasons, many different factors. I’m mindful of that, and I think that all of us are living that example as it relates to what’s happening on the streets and sidewalks over the last number of decades in our state.”

Newsom said he hopes this plan will help get more than 65,000 people off the streets or avoid homelessness. The May Revise also comes with new accountability measures to help the state ensure local governments are spending the money effectively. Local governments will be able to use targeted grants and programs to move people out of encampments and into housing.

The governor said that he hopes these investments will help California end family homelessness within five years.

As part of his proposal to increase services for the unhoused, Newsom touched on the funding for the CalAIM proposal — originally proposed in 2019 but had been postponed due to the pandemic — the May Revision now allocates $1.6 billion total funds for 2021-22 and $1.5 billion total funds in 2022-23 for the reforms. 

“We are not just dusting off, but we have augmented. We have amended, we have improved upon the original CalAIM proposal, and this is about a once in a generation — historic — transformation of our Medi-Cal system.”

The goal of CalAIM is to coordinate physical health, behavioral health and social services in a patient-centered manner to improve overall health and well-being. The reform efforts also include efforts to improve quality outcomes, reduce health disparities, reduce complexity across all delivery systems and implement value-based initiatives and payment reform.

As part of California’s continued investments in whole person care, especially behavioral health services, Newsom announced significant investments for the Children and Youth Behavioral Health Initiative, which aims to transform California’s behavioral health system for children and youth. The goal of this initiative is to better connect children and youth to behavioral health care, invest in school-based services and expand the infrastructure for providing behavioral health care.

The revised budget includes the highest level of funding for the public school system in California with $93.7 billion. Of that, $3 billion will go towards making thousands of public schools full-service community schools. Newsom said:

“We want to make our public education system enriching. We want to make our public education system what it’s capable of being, and that’s why we believe in community schools. We believe in breaking down silos and walls, literally and figuratively, connecting dots, building partnerships with community-based organizations. Bringing public health into the public schools. Bringing public supports from cities and counties into the public schools.”

Many students struggled with broadband issues during the pandemic. In October 2020, EdSource reported 300,000 students still lacked connectivity. In order to help close that divide, Newsom dedicated $7 billion in American Rescue Plan and state funds to expand broadband access. 

 “This is an opportunity to finally close that digital divide, not just for our kids, but for our rural communities. This is part of an economic development strategy, connecting the dots in all parts of this state.”

The California Budget & Policy Center said this revision misses a key opportunity to expand food assistance to all Californians, especially undocumented immigrants. Over half the children in undocumented households and nearly 40% of children in mixed status households lived in poverty in 2018. 

“The California Food Assistance Program (CFAP) provides state-funded food assistance to ‘qualified’ immigrants who are not eligible for CalFresh. However, undocumented Californians remain ineligible. Exclusion from basic supports, such as food assistance, is one reason Californians in families that include undocumented immigrants are more likely to live in poverty… Policymakers have the fiscal space to dismantle these racist and xenophobic policies by extending food assistance to all Californians who are ineligible for federal benefits.”

However, the May Revision does expand eligibility for comprehensive Medi-Cal coverage to seniors — 60 or older — regardless of immigration status. This is an estimated 80,000 adults and this expansion would have a partial-year cost of $69 million ($50 million General Fund) in 2021-22, rising to a projected ongoing annual cost of $1 billion ($859 million General Fund). 

The governor’s proposal would continue to leave undocumented immigrants between the ages of 26 to 59 without access to Medi-Cal coverage. Chris Hoene, the executive director of the California Budget & Policy Center, said:

“While the governor’s revised 2021-22 state budget makes significant investments, including getting cash directly into the hands of low- and middle-income households, and funding for child care, rental support, and assisting people experiencing homelessness, California’s revenue means policymakers can provide greater support and make bolder and even more equitable policy choices that meet people’s ongoing health and economic needs.”