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Teachers Union Sues California Over $3.9 Billion Withheld From Schools

The union asks a court to force payment and could shape how the state applies the Prop. 98 funding floor during years of volatile tax revenue.

Gov. Gavin Newsom is not named in a suit by a large California educators union but it was clearly aimed at him.
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Overview

  • The California Teachers Association filed a lawsuit in Sacramento County Superior Court on Tuesday naming state officials, including Finance Director Joe Stephenshaw, and accusing the state of withholding $3.9 billion from K–12 schools and community colleges.
  • The complaint argues the withholding violates Proposition 98, the voter-approved constitutional rule that sets a minimum share of state revenue for education, and asks the court to declare the action unlawful and order full funding.
  • The state Department of Finance says it paused the payments as a cautious response to volatile revenue from capital gains and top-income taxes and has not committed to repaying the $3.9 billion.
  • Local districts report concrete harm from the withheld funds, with the union citing about 1,000 educator layoffs and other program cuts that disrupted school budgets and staffing.
  • The California School Boards Association plans a similar lawsuit and the CTA is urging support for Proposition 3, making the dispute both a legal battle and a political fight that could affect future budgets and ballot campaigns.