Executive Summary
California is the largest single state-government technology market in the U.S., and FY2026-27 brings four shifts every SLG seller should track. First, the fiscal picture improved: the Budget Act of 2026 ($351.7B total, ~$251.5B General Fund) is balanced with no projected deficit this year or next, but it limits new ongoing commitments, so deals still map best to mandated modernization rather than discretionary spend. Second, leadership turned over — long-time CIO Liana Bailey-Crimmins retired in spring 2026 and Governor Newsom appointed Chris Given (ex-IRS Direct File, GovOps) as the new CDT Director and State CIO, with legacy-system modernization, digital identity, and AI as stated priorities. Third, AI governance is now central: Executive Order N-5-26 (March 2026) creates an AI vendor-certification and procurement framework, while SB 53 — the nation's first frontier-AI transparency law — took effect January 1, 2026. Fourth, procurement itself is changing: CDT's new SITeS shared-services portal (July 2026) began offering statewide-negotiated technology at discounted pricing extended to cities and counties, starting with a statewide AI-assistant agreement. For Dell, the buying motion runs through DGS / CMAS and agency contracts — with SITeS as an emerging centralized path worth getting on early; AI-infrastructure, endpoint refresh, and the Cal-Secure security buildout are the strongest entry points.
- AI-infrastructure demand as agencies operationalize GenAI pilots (Caltrans, CDTFA, Microsoft 365 Copilot) under new governance — an opening for governed private/on-prem AI (PowerEdge, networking, services).
- Cal-Secure five-year security roadmap modernization across CDT/OIS and state entities — secure compute, endpoint, and managed services.
- Legacy-system and benefits modernization (EDDNext and similar) under a new CIO focused on retiring technical debt — server, storage, and services refresh.
- Endpoint, client, and lifecycle refresh across the nation's largest state workforce, plus UC/CSU/community-college research and campus buyers.
Dell Action Plan
- Lead with governed, private/on-prem AI for sensitive workloads as agencies operationalize GenAI under EO N-5-26 and SB 53 — position Dell AI Factory / ISG as the auditable alternative to public models.
- Engage the new CIO (Chris Given) and CDT/GovOps early around legacy-system and benefits modernization (EDDNext-style) — server, storage, and services refresh.
- Map offerings to the Cal-Secure roadmap with CDT's Office of Information Security — secure compute, endpoint, and managed services.
- Validate Dell's CMAS coverage and reseller scope are current and correctly mapped to target state, local, and UC/CSU buyers before pursuing deals.
- Frame proposals to a balanced-but-committed FY2026-27 budget — anchor to mandated modernization, federal broadband/BEAD adjacency, and measurable efficiency gains rather than discretionary spend.
- Get Dell offerings onto CDT's new SITeS shared-services portal — it extends statewide-negotiated pricing to cities and counties, making it a fast path into local accounts as well as state departments.
Budget & Fiscal
California budgets on an annual cycle (fiscal year July 1-June 30). The Budget Act of 2026, signed June 29, 2026, appropriates roughly $351.7B in total spending with about $251.5B from the General Fund. Unlike the prior two years it is balanced, with no projected deficit this year or next and roughly $28.8B in reserves — but it limits new ongoing commitments, so the practical posture is still to fund what is mandated. There is no single 'state IT budget' line — technology spend is distributed across agencies plus the California Department of Technology (CDT), whose own expenditures run roughly $797M (largely the Technology Services Revolving Fund).
- Figures are annual (single-year) unless noted; California does not use a biennial cycle.
- FY2026-27 is balanced but tightly committed — tie offers to mandated modernization and federal/state-funded programs rather than discretionary spend.
- Prior year for comparison: the Budget Act of 2025 was ~$321.1B total / ~$228.4B General Fund and closed an estimated $11.8B shortfall through cuts, reserve draws, and fund shifts.
- The CDT (~$797M) and EDDNext figures below are FY2025-26 department-level numbers; FY2026-27 department detail was not yet broken out at the time of this update.
Total state funds (General Fund + special funds + selected bond funds) per DOF Schedule 9 agency totals; excludes federal funds Statewide: $321.05B → $351.71B (+9.5%). Top 11 movers of 11 agencies.
| Agency | Prior | Current | Δ $ | Δ % |
|---|---|---|---|---|
| Education (K-12 and Higher Education) | $105.41B | $120.76B | +$15.35B | +14.6% |
| Health and Human Services | $132.61B | $145.16B | +$12.55B | +9.5% |
| Government Operations | $2.91B | $5.4B | +$2.49B | +85.5% |
| General Government (incl. tax relief, statewide expenditures) | $14.24B | $12.17B | −$2.07B | -14.5% |
| Legislative, Judicial, and Executive | $13.29B | $12.19B | −$1.1B | -8.3% |
| Corrections and Rehabilitation | $17.52B | $18.59B | +$1.07B | +6.1% |
| Natural Resources | $7.88B | $8.66B | +$781.9M | +9.9% |
| Business, Consumer Services & Housing (incl. Housing & Homelessness) | $2.78B | $3.56B | +$779.4M | +28.0% |
| Environmental Protection | $4.26B | $4.88B | +$625.3M | +14.7% |
| Labor and Workforce Development | $2.18B | $2.3B | +$120.3M | +5.5% |
| Transportation | $17.97B | $18.04B | +$69.7M | +0.4% |
- Each figure is the enacted budget-year column of Schedule 9 (Comparative Statement of Expenditures) from that year's Budget Act edition, so both columns are as-enacted. Agency totals sum exactly to the published enacted totals: $321.05B (2025-26) and $351.71B (2026-27) state funds.
- Federal funds are excluded (shown separately in Schedule 9); including them, total spending is $495.6B (2025-26) and $538.9B (2026-27).
- Business & Consumer Services and Housing & Homelessness became separate agencies in the 2026-27 budget; they are combined here to match the prior-year BCSH structure (2026-27 split: Business & Consumer Services $1.33B, Housing & Homelessness $2.24B).
- Education combines TK-12 and Higher Education; DOF's Schedule 9 reports them as a single Education agency.
Source: CA DOF, 2026-27 Enacted Budget Summary Schedules (Schedule 9) · CA DOF, 2025-26 Enacted Budget Summary Schedules (Schedule 9)
Initiatives & Policy
EO N-5-26 — AI Procurement & Vendor Certification5
Signed Mar 2026Executive Order N-5-26 (March 30, 2026) directs DGS and CDT to build a vendor-certification and procurement framework for AI: vendors must attest to safeguards against illegal content, harmful bias, and civil-rights harms, and the state CISO may challenge federal supply-chain risk designations. Recommendations are due ~120 days out. Agencies will need governed, auditable AI — an opening for private/on-prem AI on sensitive workloads.
Statewide GenAI Deployment4
ScalingCalifornia has moved GenAI from pilot to production: Caltrans traffic/safety analytics, a CDTFA call-center assistant, a State Digital Assistant tool across eight departments, and Microsoft 365 Copilot Chat offered at no cost to departments. EO N-5-26 pushes vetted GenAI tools to employees with safeguards. Production AI workloads drive infrastructure, networking, and services demand — and a governed private-AI alternative for sensitive data.
Cal-Secure Cybersecurity Roadmap7
In executionCal-Secure is California's multi-year information-security maturity roadmap, led by CDT's Office of Information Security with Cal-CSIC, Cal OES, CHP, and the Military Department. It spans people, process, and technology priorities and drives sustained investment in security tooling and services across state entities — secure compute, endpoint, and managed-services opportunity.
SB 53 — Frontier AI Transparency Act6
In effect Jan 1, 2026SB 53 (signed Sept 2025, effective Jan 1, 2026) is the first U.S. law directly regulating frontier-AI developers, requiring published safety frameworks, transparency reports, catastrophic-risk disclosures, and whistleblower protections. It targets large model developers rather than buyers, but it sets the policy backdrop California agencies operate in and reinforces demand for transparent, governed AI approaches.
Broadband: Last Mile + Middle Mile + BEAD9
DeployingCalifornia is deploying broadband at historic scale: the CPUC's Last Mile Federal Funding Account awarded ~$1.1B across 113 projects, with further grants in late 2025/early 2026 and ~$550M slated for FY2027-28. The state holds an ~$1.8B BEAD allocation (more eligible locations than any other state) plus the nation's largest open-access middle-mile network, which reached 1,250 operational miles in July 2026 (~70% of the planned 8,100 miles complete or under construction) — adjacent edge, networking, and compute infrastructure demand.
Procurement & Competition
The California Department of General Services (DGS) is the central procurement authority; the California Department of Technology (CDT) sets IT policy, oversight, and statewide services. Most state and local technology buys run through DGS leveraged procurement vehicles — chiefly the California Multiple Award Schedules (CMAS), which extend federal GSA pricing into California so agencies can buy from pre-approved vendors without a full competitive bid.
| Vehicle / gate | What it means for Dell |
|---|---|
| CMAS (California Multiple Award Schedules) | Primary leveraged vehicle. Extends federal GSA Schedule pricing into California; open to state agencies, cities, counties, districts, UC, CSU, K-12, and community colleges. Confirm Dell CMAS coverage and reseller scope are current. |
| SITeS (Statewide Information Technology Shared Services) | New CDT portal (2026) for streamlined statewide purchase of technology tools, with negotiated pricing extended to cities and counties as well as state departments. Its first marquee offering is a discounted statewide AI-assistant agreement — track it as an emerging fast path that bypasses department-by-department procurement. |
| DGS Leveraged Procurement Agreements | Statewide contracts and master agreements for IT goods/services administered by DGS Procurement Division. |
| CDT statewide services | CDT delivers data-center, cloud, and security services (CalCloud / Technology Services) to participating departments through the Technology Services Revolving Fund. |
| Key buying entity | Role |
|---|---|
| DGS | Central procurement authority; owns CMAS and statewide leveraged agreements. |
| CDT | IT policy, oversight, and statewide technology/security services; home of the State CIO and Office of Information Security. |
| GovOps (Government Operations Agency) | Oversees CDT/DGS and drives the GenAI and modernization agenda. |
| UC / CSU / Community Colleges | Large independent research-computing, AI-infrastructure, and endpoint buyers. |
California is a large, mature, contract-driven market — incumbents hold CMAS and DGS agreements across compute, networking, and services, and the state's procurement and AI-governance rules add compliance overhead. Differentiation comes from AI-infrastructure capability, governed/private-AI for sensitive data, Cal-Secure-aligned security, and services that map to legacy modernization rather than price alone.
Power Structure
| Decision-maker | Why they matter |
|---|---|
| Gavin Newsom Governor · State of California | Signed EO N-5-26 (AI procurement) and SB 53 (frontier-AI law); drives the GenAI-in-government agenda. |
| Chris Given3 State CIO & CDT Director · California Department of Technology | Appointed Apr 2026, sworn in early May 2026 (ex-IRS Direct File, GovOps). Priorities: legacy modernization, digital identity, AI. Senate confirmation still pending as of June 2026. |
| Vitaliy Panych14 State Chief Information Security Officer · California Department of Technology — Office of Information Security | Statewide CISO leading Cal-Secure and (under EO N-5-26) reviewing federal supply-chain risk designations for AI procurement. Confirm still current before citing. |
| Liana Bailey-Crimmins2 Former State CIO & CDT Director · California Department of Technology | Led CDT 2022-spring 2026 through the state's early GenAI rollout; retired April 2026. |
| Government Operations Agency (GovOps) Oversight agency · State of California | Oversees CDT and DGS; co-leads GenAI executive-order implementation. |
| DGS Procurement Division Central procurement · Department of General Services | Administers CMAS and statewide IT agreements — the contracting gateway for state and local buyers. |
News & Signals
Sources
- California EDGE Coalition — Summary of the 2025-26 Enacted State Budget
- GovTech — California's State CIO Liana Bailey-Crimmins Will Retire
- StateScoop — California's governor appoints former federal official as new state CIO (Chris Given)
- Office of the Governor — California deploys first-in-the-nation GenAI technologies in state government
- Ropes & Gray — Newsom Signs Executive Order N-5-26 (AI Vendor Certification & Procurement)
- Future of Privacy Forum — California's SB 53: The First Frontier AI Law, Explained
- California Department of Technology — Cybersecurity Strategy Plan (Cal-Secure)
- California eBudget — Department of Technology (7502) FY2025-26
- CPUC — Last Mile Federal Funding Account (broadband)
- DGS — California Multiple Award Schedules (CMAS)
- NASBO — Summaries of FY2027 Proposed Budgets (June 2026)
- Office of the Governor — May Revision eliminates California's deficit (2026-27)
- Office of the Governor — Newsom signs historic balanced 2026-27 state budget (June 29, 2026)
- StateScoop — Only California state employees can use Poppy, a new AI assistant designed for security
- Office of the Governor — Newsom signs first-of-its-kind executive order to prepare workers and businesses for potential AI disruption (May 21, 2026)
- California Department of Technology — California expands AI access across state government through Anthropic partnership (July 8, 2026)
- California Department of Technology — Poppy: California's digital assistant now available statewide (July 2026)
- Office of the Governor — California nearly triples internet infrastructure ready to connect homes and businesses (July 17, 2026)