California Gov. Jerry Brown last week released a revised state budget that he said prudently pays down debt and saves billions of dollars, while carefully directing funding where it’s needed most — to improve schools, help low-income Californians, prevent tuition increases and respond to drought and climate change.

“Another recession is on the way — we just don’t know when. That’s why this budget locks billions into the Rainy Day Fund and pays down debt,” Brown said. “At the same time, this budget spends more than ever on schools and creates a new tax credit to help California’s working poor.”

The May revision also continues to focus on the key elements of the January budget, Brown added, carrying out the Local Control Funding Formula (LCFF), federal health care reform, public safety realignment, the Water Action Plan and the cap-and-trade expenditure plan.

The May revision sets aside $3.8 billion in 2015-16 consistent with the voter-approved Proposition 2 Rainy Day Fund. Of this amount, $1.9 billion is directed to pay down existing debt and long-term liabilities. The other $1.9 billion will be saved in the state’s Rainy Day Fund, bringing its balance to $3.5 billion. In addition, it repays $765 million owed to local governments.

For K-12 schools, funding will increase by more than $3,000 per student in 2015-16 and increases spending for K-12 schools and community colleges by $6 billion. It also maintains flat tuition at the state’s universities for undergraduates.

The May revision establishes a state Earned Income Tax Credit (EITC), designed to complement the federal EITC, to provide fiscal relief for Californians with incomes less than $6,580 and no dependents or $13,870 with three or more dependents. The credit is expected to benefit 2 million individuals, with an average household benefit of $460 and a maximum benefit of $2,653.

The May revision adds $1.2 billion from cap-and-trade auction proceeds, for a total of $2.2 billion, to expand California’s programs to reduce greenhouse gas emissions. It also includes a total of $2.2 billion for programs to conserve water, respond to emergency conditions and expand local water supplies.