Gov. Hobbs’ Proposed FY2026 Executive Education Budget: What You Need To Know
Gov. Hobbs released her proposed FY26 Budget on Friday, Jan. 17, 2025. The Governor’s budget seeks to address the education funding shortfalls in the FY25 budget, by aiming to boost K-12 education, restore some higher education funding, support affordable childcare, and establish income caps for Universal Empowerment Scholarship Accounts.
Education Forward Arizona continues to urge the governor and legislative leaders to prioritize increasing Arizona’s attainment rate—the percentage of adults with a degree or credential—to achieve the Achieve60AZ Goal: 60 percent of working-age adults earning a degree or certificate by 2030. Arizona currently is only at 48 percent. Achieving this goal requires a strong education pipeline, from early learning through postsecondary education and training. This moment, with only five years to go, requires urgency and ambition if we are to reach this goal, which is crucial for strengthening families, the workforce, and the economy.
Gov. Hobbs’ budget recognizes that a strong economy depends on robust investments in education, starting with affordable childcare and extending to higher education.
Proposed Investments to Support Affordable Childcare
The Bright Futures AZ initiative, included in the budget, focuses on making childcare more affordable and available. In our recent polling, students said that the cost of childcare was a significant barrier to enrolling and being successful in education and training after high school. Budget request highlights include:
- $7.12 million in ongoing funding
- $5.5 million in one-time funding
- $112 million to support the Childcare Assistance Program
Proposed Funding for K-12 Education
Arizona must invest in a strong K-12 education system as the pipeline to reaching the Achieve60AZ attainment goal.
Proposition 123, approved by voters in 2016, is set to expire in June 2025 unless the Arizona Legislature calls a special election by May 2025. If the proposition is not renewed, a prior lawsuit mandates that K-12 public education continue receiving nearly $300 million in funding, which would then need to be sourced from the General Fund.
Highlighted proposed K-12 investments for FY2026 include:
- $529M in General Fund Investments
- $200M for School Building Renewal Grants: Focused on school building renewal projects, plus ongoing baseline funding.
- $168M for School New Schools: Focused on funding for new and ongoing construction costs at eleven schools.
ESA Enrollment Growth Trends & Costs: Universal ESA costs are projected to exceed half a billion dollars in FY26, driven largely by new recipients that have not previously attended a public school, creating significant unbudgeted expenses for the state.
Universal ESA Reform: Establishes scaled income caps, with anticipated savings, while maintaining support for families with the most need. Families with a combined annual income of up to $200K would remain eligible. The proposal would impact the Universal ESA program only; those enrolled before the program’s expansion would not be impacted. The modification is projected to produce a net savings of $150M for the General Fund.
Proposed Postsecondary Funding
Equitable access to education and training beyond high school is a key priority for Education Forward Arizona, driving progress toward the state’s Achieve60AZ attainment goal. Gov. Hobbs’ FY26 budget proposes funding of $370 million to support Arizona’s three state universities, with the bulk of that in increased bonding authority, including:
- $325M for SPEED Bond Authority Increase: SPEED (Stimulus Plan for Economic and Educational Development) bond authority provides funding for debt and capital projects.
- $23M to Restore Operational Funding: Addresses past cuts, helping universities maintain operations and enhance services.
- $20M in One-Time Funding for the Arizona Promise Program: Restores the $20 million that was cut last year to the program that offers tuition scholarships to economically disadvantaged high school graduates with a GPA of 2.5 or higher.
- $15M in One-Time Funding for the Arizona Teachers Academy: Supports qualified and certified teachers, helping address teacher shortages and strengthening Arizona’s education pipeline.
Proposed Funding for Community Colleges, Tribal Colleges, Career Training, and Adult Education
The proposed budget aims to restore previously cut funding and provide incremental new funding for community colleges, tribal nations, dual enrollment for high school students, and adult education. These initiatives emphasize the importance of workforce development and expanding access to education across Arizona:
- $6M in One-Time Funding for Adult Education Programs:
- $2 million for Community College Adult Education Workforce Development
- $2 million for Continuing High School and Workforce Training Programs
- $2 million for the Adult Workforce Diploma Program
- $4M in One-Time Funding from ARPA for the Tribal College Education and Workforce Scholarship Program
- $3M in One-Time Funding for the Dual Enrollment Program
- $3M in One-Time Funding for the Arizona Nurse Education Investment Program
- $1.9M Formula Funding for community colleges, including $871K for STEM Aid Formula Funding.
Education Forward Arizona’s Advocacy
We need more than to merely replace budget cuts of the past if we are to reach the state’s attainment goal. While Education Forward Arizona supports these proposed investments and will collaborate with Gov. Hobbs’ administration and legislative leaders to ensure their implementation, more must be done to meet the Achieve60AZ goal. Put simply: We are running out of time, and we need bold actions.
We will continue to advocate for:
- A Permanent Solution to the Aggregate Expenditure Limit (AEL): This will enable school districts to use allocated resources without outdated spending restrictions. Read our AEL Education Explainer.
- Expansion of Dual Enrollment Programs: Students completing at least two dual-enrollment courses have a significantly higher likelihood of earning a college degree. Read our Dual Enrollment Education Explainer.
- Transparency and Accountability for Empowerment Scholarship Accounts: We must ensure that funds are used effectively and responsibly.
- A Revised Proposition 123: This will secure additional support for K-12 education funding.
- The Arizona Promise Program: Arizonans cite cost as the number one factor limiting their enrollment in postsecondary opportunities.
These measures aim to strengthen the state’s education system and prepare Arizonans for to participate in the workforce.
Read the complete FY2026 Executive Budget Proposal here.
If you are interested in learning more about our perspective and advocacy priorities, please read the Op-Ed we released this week in the Capitol Times.