For the past year, the issue of public education funding has been particularly contentious in California. A pitched political battle between education advocates and the administration of Gov. Arnold Schwarzenegger began with a December 2004 preview of the governor's budget proposal for 2005?06. The fight continued through a spring filled with protests and advertising campaigns, ongoing debate about a special election (now scheduled for Nov. 8), and a final budget adoption in early July. The culmination was in August 2005 when the California Teachers Association (CTA) and State Superintendent of Public Instruction Jack O'Connell filed a lawsuit against the administration based on the budget decisions. This report explains the policy and financial issues behind the budget battles of 2005. It also describes how much money schools will have this year and how those funds were allocated. The following topics are discussed: (1) Total funds for K-12 and community colleges increase; (2) Funds go to K-12 districts based on established formulas and priorities; and (3) This school year will be as difficult for many districts as it was for state leaders. (Contains 6 figures.)