Soaring inflation and shrinking tax revenues will make it tougher for at least 25 states to fund public services.
Thousands of teachers may be laid off if the proposed budget cuts go through.
A ruling that parents in the state 'do not have a constitutional right' to home-school their children prompts anger, confusion. Schwarzenegger may ask legislature to intervene.
With California's debt topping $16 billion, the governor is stuck with a legislative standoff over tax hikes.