California’s pandemic-era 2020-2021 budget passes, but hinges on federal aid.

Two weeks past due, Gov. Gavin Newsom finally signed the 2020-2021 California state budget on June 29. It isn’t as abysmal as many initially expected. However, it does require federal dollars to make it all work.

In terms of where the state is saving money, the government has looked into its own workings. Covid-19 has forced departments to modernize operations – shifting to telework, canceling nonessential contracts and travel, decreasing office space. This amounts to a 5-percent reduction in internal spending over all.

Other savings come from the government halting expansion of some programs, such as Medi-Cal for undocumented seniors, and fixes to the housing crisis.

Monterey Bay Economic Partnership’s Housing Program Manager Matt Huerta sees the tradeoff – losing long-term investment for immediate housing needs – as a good one. “While the state has not invested new money toward resolving our housing crisis at this time, it is continuing to support critical and proven solutions,” Huerta says. He notes the state spent over $1.85 billion in immediate solutions, including Project Roomkey, which has rented out more than 15,500 motel rooms for homeless people during Covid-19.

Then there is K-14 education, which had been bracing for deep cuts. Instead, the state settled on deferrals. Monterey County Office of Education Superintendent Deneen Guss notes that one-time federal aid and a temporary relief on pension obligations releases some pressure – but that’s for naught if federal funding doesn’t come through. “Ongoing fiscal and operating challenges remain,” Guss says. “Deferrals will create significant cash flow challenges for districts with smaller reserves.”