In late June, Governor Newsom and the California Legislature reached an agreement for the California 2026-27 Budget. You can read DRC’s response to the Budget here.

Major impacts on people with disabilities: DRC thanks the Legislature and advocates for fighting back against many harmful proposals that would affect people with disabilities. The 2026-27 Budget came with wins and losses. This Budget:

• Funds special education programs 43% higher than last year. 
• Provides $900 million in one-time funding for the state’s local homelessness program, which is $400 million more than the governor’s proposal in May. This serves as a lifeline to prevent and reduce homelessness.
• Does not cut any In-Home Supportive Services programs.
• Continues to pour money into coercive and harmful programs like CARE Court and fund the harmful forced use of psychiatric medication in county jails.
• Starting July 1, 2027, lowers the Medi-Cal asset limit from $130,000 for one person to $21,000. This applies to Medi-Cal programs for people with disabilities and seniors.

Reserves and revenue: The Budget increased the amount of funding that can be used for emergencies or unplanned costs, known as reserves. It also starts a process to create proposals that would make some large businesses pay more into Medi-Cal. DRC welcomes new sources of funding, or revenue, to prevent cuts to vital programs. We hope to see more new revenue proposals from the next governor. 

Conclusion: While the Budget still does not meet the many needs of people with disabilities, including housing, behavioral health services, and greater health access, it is much better than what it could have been without the community fighting back. Pressure from community members, disability advocates, families, and providers helped stop or soften several of the most harmful proposals in the Governor’s January and May Revision budgets. It is important that the disability community continues to play a part in the budget process, including by bringing budget proposals to the Legislature and Governor.

You can read the Governor’s summary of the Budget. Learn more about the California Budget process.

The following are some of the key 2026-27 budget items that impact Californians with disabilities and the programs that assist them.

Education (TK-12) 

The Budget continues to prioritize TK-12 education funding through Proposition 98, the constitutional guarantee that sets minimum funding levels for schools and community colleges.

The Budget maintains and expands several education programs focused on student support and equity. These investments matter because students with disabilities benefit greatly from school environments that prioritize whole child support, coordination of services, and family engagement. Specifically, the Budget includes:

• Special education funding: $2.4 billion per year will fund special education programs, a 43% increase from the last budget year. This reflects the higher percentage of California students eligible for special education services and the pressure from school districts and advocates for the state to provide more resources to support students with disabilities. There is a one-time $30 million increase to support schools to expand access to general education for students with disabilities.
• Community schools model: $1 billion per year will expand the community schools model which integrates academic instruction with health, mental health, social services, and academic supports. This funding will support schools if at least 65% of their students are low-income, English learners, and youth in foster care. In 2026-27, there will also be $512 million to fund programs in community schools such as professional development, behavioral health, and a bridge between education agencies and community partners.
• Office of Civil Rights: Nearly $3.6 million will be used to establish a California Office of Civil Rights (OCR). The OCR will provide educational resources, training, and technical assistance to local educational agencies to prevent and address discrimination and bias within California’s TK-12 education. 

Employment/Department of Rehabilitation 

Department of Rehabilitation (DOR)

The Budget approves DOR’s January proposal for approximately $60 million in ongoing federal funding authority and 54 permanent positions to address growing demand for vocational rehabilitation services that help individuals with disabilities obtain, keep, and advance employment. The funding: 

• Supports the goals of the Master Plan for Developmental Services.
• Advances competitive integrated employment under SB 639 (Durazo, Chaptered 2021).
• Authorizes a General Fund loan of up to 50% of federal appropriations if federal grant funds are delayed.
• Establishes a dual-provider system through an interagency agreement between DOR and DDS to improve access to employment services for individuals with intellectual or developmental disabilities.
• Requires DDS to post progress reports twice per year beginning December 1, 2026. 
• Removes barriers for employment service providers in the DDS system by no longer requiring Commission on Accreditation of Rehabilitation Facilities (CARF) accreditation.

Job Training:

The Budget supports job training for youth at ports, emergency medical technicians, hospitality workers, construction workers via the High Road Construction Career Program, formerly incarcerated individuals in Creating Restorative Opportunities and Programs, and youth in the juvenile justice system through a Jail 2 Jobs pilot in Los Angeles County. It creates employment pathways by funding pre-apprenticeship programs for the buildings trade sector and apprenticeship grants for building and construction. It funds the Social Entrepreneurs for Economic Development program so that community-based organizations can support immigrants and those with limited English proficiency who face employment barriers when starting or maintaining a small business.

Healthcare/Home and Community-Based Services 

Medi-Cal

Last year, Congress passed H.R. 1, a law that made extreme cuts to funding for vital health and human services. As a result, California could lose up to $30 billion in funding for Medi-Cal each year, with as many as 3.4 million people losing coverage. The Budget does not fully account for these federal cuts or fully backfill these services, leaving many people with disabilities without the coverage they rely on. Some key changes to the Medi-Cal program include:

• Asset limit: The Budget greatly lowers the Medi-Cal asset limit for disabled adults and seniors. The new limit will be $21,000 for an individual or $31,000 for a couple starting July 1, 2027 or later. Before this change, it was $130,000 for an individual and $195,000 for a couple. This deeply inhumane approach demands poverty to continue receiving critical health care. This cut is estimated at $348.5 million in the first year and $407 million in future years.
• More paperwork: The Budget adds federal work reporting requirements for immigrants accessing state-only Medi-Cal, a program not impacted by H.R. 1. It also requires them to renew their eligibility twice as often. These changes will cut even more people from Medi-Cal.
• Humanitarian immigrants: Humanitarian immigrant groups such as refugees, asylees, and domestic violence survivors will be cut from full-scope Medi-Cal. Instead, they will be moved to restricted-scope Medi-Cal which only covers emergency and pregnancy care starting on July 1, 2027. For the final six months before the cut, they will be transitioned to fee-for-service full-scope Medi-Cal. 
• $50 Medi-Cal premiums for some: Adults aged 19-59 with “unsatisfactory immigration status” (UIS) will have to pay $30-$50 each month to access Medi-Cal starting July 1, 2027. The next governor will choose the premium amount in their 2027-28 May Revision budget proposal. Some groups considered UIS have Deferred Action for Childhood Arrivals (DACA), have temporary visas, or are undocumented. This financial barrier is another attack on healthcare access for communities that are already struggling. This is an estimated cut of $427.3 million in 2027-28 and $314.3 million annually starting 2029-30.

In-Home Supportive Services (IHSS)

In-Home Supportive Services (IHSS) is a Medi-Cal program that allows people with disabilities and older adults to access help with services like personal care, housework, and accompaniment to medical appointments. This allows them to continue living in their homes. Because of the new lower Medi-Cal asset limit, some people with disabilities will lose access to IHSS. Aside from this, the Budget makes no major changes to IHSS funding or programs which is a major victory that disability justice advocates and allies have fought hard for. This means that, in the coming budget year, the IHSS Residual program will remain, the IHSS Backup Provider System will remain, and counties will not be responsible for paying more for IHSS hours.

Other Healthcare

Premiums for Californians purchasing health coverage through Covered California (California’s Affordable Care Act marketplace) are expected to increase by an average of 97% because of H.R. 1. The Budget will provide $300 million each year in new funding to help more people afford this monthly cost to keep their health coverage.

Housing/Homelessness 

The 2026-2027 Budget made some modest investments in addressing the ongoing affordable housing and homelessness crises in California. The Legislature also allocated housing investments and reforms alongside the possible passage of the $11.25 billion Veterans and Affordable Housing Bond Act of 2026 that California voters would need to approve in November.

Housing

Demand remains high for safe, secure, equitable, affordable, and accessible housing for people with very low and extremely low incomes. The State Budget aims to expand the supply of affordable housing. Some items worth noting in the Budget include:

• Expanding supply of affordable housing: The Budget allocated $500 million for the state Low-Income Housing Tax Credit (LIHTC) for the 2027 calendar year to subsidize the building and preservation of affordable multifamily housing units for low-income Californians. Paired with the federal LIHTC, this makes building high-density, below-market-rate housing projects economically workable. The budget also invested $200 million for the Multifamily Housing Program to construct, rehabilitate, and preserve housing for lower-income renters.
• Centralizing and expediting state housing solutions: The newly created California Housing and Homelessness Agency (CHHA) unites five different divisions to expand housing production, address homelessness, finance affordable housing, and enforce civil rights laws. Yet several key California state agencies that still live outside CHHA tackle homelessness through healthcare, social services, and infrastructure. Homelessness is a multifaceted issue, and it remains to be seen how CHHA would work in tandem with other programs and agencies to address its root causes. If done right, working with impacted communities could lead to more impactful change and constructive solutions that respect the dignity of people with disabilities.
• Supporting housing and services for people experiencing homelessness: $1.4 billion is expected to be made available over the next year for affordable homes through Proposition 1 Homekey+ funds. These funds are allocated to cities, counties, and tribal entities to acquire, convert, and build permanent supportive housing for veterans and individuals with mental health or substance use challenges.

Homelessness

More funding is needed, after devastating cuts from the federal government, toward permanent housing and voluntary services to ensure Californians remain housed. The enacted Budget includes:

• Investing in homelessness solutions: The budget provides $900 million on a one-time basis for the seventh round of the Homeless, Housing, Assistance, and Prevention (HHAP) Program, the state’s local homelessness program, which is $400 million more than the Governor’s proposal in May. This serves as a lifeline to many cities, counties, and Continuums of Care (CoCs) to prevent and reduce homelessness.

Intellectual and Developmental Disabilities 

The Department of Developmental Services’ (DDS) Budget increased from $18.7 billion to $21.6 billion, with the increase largely adjusting for a higher expected caseload.

The DDS budget does not include any direct cuts to Lanterman Act programs. The Budget includes policy changes to the regional center service system, including:

• Updated grievance process: The 4731 complaint process will be replaced with a new grievance process starting on February 1, 2027, in compliance with the Federal Access Rule. This process will allow people who receive regional center services to file a grievance under two circumstances: when they believe their rights are being violated and when they are dissatisfied with their services. The new policy includes anti-retaliation protections and other protections about access to records related to the grievance.
• Regional center oversight: New policies for regional center boards start on December 31, 2027, including requirements designed to better support self-advocate participation in regional center board activities.
• Tailored Day Services: Tailored Day Services can now be provided on the same day as other employment services to address gaps in supporting individuals transitioning from day programs to employment. Tailored Day Services are a flexible alternative to traditional day services supporting community integration, education, and employment through individualized, one-to-one support.

Legal Services/Access to Justice 

The Budget includes a $30 million increase to the Equal Access Fund (EAF), California's primary state funding source for approximately 100 nonprofit legal services organizations that provide free civil legal assistance to low-income Californians and people with disabilities. Of this investment: 

• $24 million will be distributed directly to EAF grantees.
• $5.25 million will fund the California Access to Justice Commission's Infrastructure and Innovation Grants to strengthen the capacity of civil legal services providers.
• $750,000 will support the Commission's efforts to assist legal aid attorneys who lost access to Public Service Loan Forgiveness because of their work representing immigrants and other marginalized communities. 

The final Budget also includes: 

• One-time $100 million increase for a total of $175 million for essential immigrant legal services in California. 
• $50 million backfill for the Victims of Crime Act (VOCA).

Mental Health

Behavioral Health

Strong coalition advocacy helped to save funding for many critical behavioral health services that the Governor had initially proposed cutting. But most of these wins commit only one year of funding, so many of these same fights over cuts will return next year. The state's budget priorities in behavioral health remain misplaced: it keeps funding costly and unproven programs like CARE Court, while proven, cost-saving services like the Peer-Run Warm Line stay underfunded.

• Mobile Crisis Response Services: The final Budget includes $42.2 million one-time General Fund to continue funding the statewide Medi-Cal community-based mobile crisis response services benefit for this fiscal year, through June 30, 2027. Mobile crisis response teams provide behavioral health crisis intervention services that are safer, more appropriate, and more effective than law enforcement.
• Community Advocacy and Engagement: The final Budget maintains full funding for the Commission for Behavioral Health’s $6.7 million Community Advocacy Program. This critical program ensures that people with lived experience—including consumers, diverse racial/ethnic minorities, immigrants and refugees, LGBTQ+ individuals, veterans, children, transition-age youth, parents, and families—have a meaningful voice shaping California’s behavioral health system.
• Behavioral Health Innovation Funding: The final Budget maintains full funding for the Behavioral Health Innovation Partnership Fund, at $20 million for one year. This fund is the only dedicated statewide resource for testing, evaluating, and scaling innovative approaches to mental health and substance use services, including community-based outreach, early intervention, peer-led models, and culturally responsive programs.
• CARE Court: The state continues to pour money into coercive and harmful programs like CARE Court. This includes, but is not limited to, $5 million one-time General Fund in 2026-27 to increase petitions and referrals; as well as ongoing General Funds of $35 million for court-ordered CARE Plans, $22.5 million for county behavioral health departments, and $17.4 million for legal representation.
• Forced Treatment: The final Budget includes $4.3 million General Fund annually through 2029-2030 to implement SB 820 (expanded use of involuntary psychiatric medication in county jails), which DRC opposed. 
• Behavioral Health Services Act (BHSA) Implementation: The first year of BHSA implementation began July 1, 2026. State-level allocations include $174.8 million from the BHSA to the California Department of Public Health for population-based prevention. Despite advocates and some legislators raising concerns, the final Budget uses BHSA funds to pay for programs the state used to cover with General Fund dollars, shrinking the pool of BHSA funds available for services. 
• Peer-Run Warm Line: The final Budget does not restore funding for the California Peer-Run Warm Line. The $6.5 million ongoing BHSA request was rejected. The Warm Line will continue at the reduced $5 million set in the 2025 Budget Act. This cut has already closed the Spanish-language line, laid off more than 100 Certified Peer Specialists, and dropped monthly capacity by 75%. 
• Schizophrenia Pilot Program: The final Budget includes $5 million one-time General Fund for a behavioral health pilot serving individuals with schizophrenia and their families. It will fund LEAP (Listen-Empathize-Agree-Partner) training and enhance crisis response and de-escalation efforts in two pilot counties (Santa Barbara and San Luis Obispo). 

Public Safety 

Proposition 36

In November 2024, voters approved Proposition 36, a ballot measure DRC opposed. Prop 36 reinstates harsher punishments for certain theft and drug crimes, increasing the incarcerated population, in which people of color and people with disabilities are overrepresented. The 2025 Budget Act included $100 million in one-time funding to implement Prop 36. The 2026-27 final Budget provides an additional $50 million over three years towards implementation. 

California Department of Corrections and Rehabilitation

• Incarcerated Firefighter Pay 
  • $15.8 million ($5.2 million General Fund) in 2026-27 and $13.3 million ($2.6 million General Fund) in 2027-28 and ongoing to implement an hourly wage payment to incarcerated firefighters assigned to active fires. 
• ADA Facility Improvements 
  • $23.1 million one-time General Fund in 2026-27 to complete accessibility improvements at eight institutions.

What’s Next?

In the months ahead, Disability Rights California will:

• Track how the Budget is implemented and whether it improves daily life for Californians with disabilities;
• Push back against future cuts to essential services and fight for broader access to care and community supports; and
• Continue pressing state leaders to make budget decisions that reflect the rights, needs, and lived experiences of disabled Californians.