California as a Donor State: What It Means for Early Education

California has long been known for its generosity, and that holds true on a national scale. Year after year, our state sends more money to the federal government than it receives in return. In fact, looking at the last nine years (excluding temporary COVID relief funds), California contributed more than it got back in eight of those years.

It’s a little like a pizza party: California pays for five slices but only gets two back. The rest are handed out to other states. That makes us what’s known as a donor state, and we usually give the biggest share.

Why the Imbalance?

There are a couple of key reasons California sends out more than it gets back:

• Taxes. With a large share of high-income earners, California contributes more through federal taxes.
• Spending. Other states often receive more federal dollars per person, thanks to factors like larger military bases, higher poverty rates, or older populations requiring more services.

This imbalance might sound like generosity worth celebrating, but in practice, it leaves California with fewer federal dollars to meet urgent needs.

The Impact of H.R. 1

With the recent passage of H.R. 1, widely referred to as the Big Beautiful Bill, California stands to lose even more. This federal shift threatens to reduce support in vital areas like food assistance, health care, and community programs that families depend on.

For the early childhood education (ECE) field, the stakes are especially high. Many families who rely on child care also depend on these federal supports. The same is true for providers, who are already stretched thin and navigating rising costs. Cuts in federal funding could ripple through programs, staff, and children across the state.

What We Can Do

California cannot change the federal tax system on its own, but we can raise our collective voice. Advocacy matters. Each time we remind lawmakers that early education is essential, or when we push back against cuts that undermine families, we protect not only our programs but the communities they serve.

California families, providers, and educators deserve more than just a couple of slices of the pizza. Together, we must ensure that our contributions come back full circle to strengthen the care, learning, and future of our youngest children.

Stay informed on the latest budget updates and calls to action at:
www.everychildca.org/legislative-resources

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