A $96.3 billion budget was passed by California lawmakers June 14, redistributing the state funds on education, healthcare and other services while setting aside $1.1 billion from the first surplus in years for a rainy day fund.

The budget will reallocate education fund to help needier school districts, prepare for an expansion of public healthcare coverage, and lay the groundwork for years of spending increases for social services, the Los Angles Times reported.

Reuters noted that the spending plan makes changes to the way the state funds education, increasing the base amount spent on all students while funneling more money to districts with children who live in poverty or who do not speak fluent English.

The $1.1 billion reserve was part of a deal negotiated with Governor Jerry Brown, who pressed fiscal restraint on the Democratic legislature. It marks a dramatic turnaround from four years ago, when the state was in the red by $16 billion, said the Reuters.

"The passage of the budget may just represent the end of one very difficult era and the beginning of a new and better era — an era of economic growth, hope and restoration," Steinberg, a Democrat from Sacramento told AP.

The new system for funding education is being closely watched by education reformers around the country and lawmakers in other states. It would provide school districts with a base amount of $7,537 for each child annually - $537 more than Governor Jerry Brown had originally proposed, said Reuters.

However, Republican lawmakers in both houses of the Legislature were less enthusiastic. As AP reported, they said the spending plan contained accounting gimmicks and failed to address some of the state's most pressing fiscal time bombs.

Republican Assemblyman Jeff Gorell told AP that it contains additional spending that will come back to hurt the state once higher sales and income taxes passed by voters last fall expire.

Thanks to a recent voter-approved initiative, Democrats could pass the budget on a simple majority vote and did not need Republicans' support, AP reported.

The new system would make California's "one of the most progressive school finance systems in the nation," Rebecca Sibilia, fiscal strategy specialist for the education reform group StudentsFirst, told Reuters.