California’s CalSHAPE program, which directed nearly $1 billion in utility ratepayer funds toward school HVAC and plumbing upgrades, is effectively closed to new applicants after the California Energy Commission halted applications in mid-2024. A September 2026 budget trailer bill gave schools that already received grants an additional three years to finish their projects, but a separate measure to reopen the program for new upgrades was dropped after Gov. Gavin Newsom withheld support, according to CalMatters. The result is that roughly $191 million in unspent ratepayer money will be returned to the four investor-owned utilities that funded the program by December 2026, with small rebates to customers estimated at 20 cents to $2 per month for one year.
How the program worked and why it stalled
CalSHAPE was created by Assembly Bill 841 in 2020 and funded by ratepayer contributions from Southern California Gas Company, Pacific Gas & Electric, Southern California Edison, and San Diego Gas & Electric between 2021 and 2023. The California Energy Commission administered the grants. As of the end of 2024, the CEC had awarded more than $789 million to 647 local educational agencies, two California State University campuses, and one community college, supporting 1,114 projects across 4,917 school sites or about 49 percent of all school sites in the state, according to the CEC’s 2024 annual staff report.
But the program’s reach was limited. The same report shows that only 193 of the 1,114 grants had completed reconciliation reports, and only $339 million of the $788.6 million awarded had actually been paid out to school districts, indicating slow disbursement. The CEC abruptly moved the application deadline forward from July 31, 2024, to July 1, 2024, citing budgetary constraints, according to an agency notice. That effectively closed the door for new applications.
Assessments without upgrades
The program helped more than 4,500 schools assess the condition of their HVAC systems, but only 172 schools made significant upgrades with program funds, CalMatters reported. Many districts secured assessment funds but missed the window to apply for construction-phase grants. Torrance Unified School District used $1.6 million to $2.4 million in first-phase funds to identify about 300 air conditioning units past their useful life, serving about 6,000 students, but could not apply for roughly $6 million in phase-two upgrade funding before the deadline. Temecula Valley Unified received $4.6 million to survey 30 schools, finding that about a third of its heating and cooling systems need replacement, but was unable to apply for upgrade funds.
The Los Angeles Unified School District, where students endured 12 consecutive days of temperatures above 90 degrees, received $27 million for assessments but no upgrade funding. One environmental group estimated that 60,000 K-12 students in California have lost classroom time this school year due to weather-related events, according to the Orange County Register.
Failed legislative attempts to extend the program
Two legislative efforts to extend or expand CalSHAPE failed. Assembly Bill 3121, introduced in mid-2024 by Assemblymember Cottie Petrie-Norris, proposed clawing back CalSHAPE funding along with grants for solar on low-income multifamily buildings and batteries for medically vulnerable households, aiming to curb rising electricity rates. Critics noted that the rebates would be only $30 to $50 one-time per customer. The bill did not advance after advocacy opposition, Canary Media reported.
In 2024, Assemblymember Al Muratsuchi proposed expanding CalSHAPE through 2030, but the Assembly’s utilities committee declined to hear the bill, according to CalMatters.
What the evidence shows about the program’s performance
The CEC’s 2024 annual staff report documented that the CalSHAPE Ventilation Program had a total budget of $737 million and that only 193 of 1,114 grants had completed reconciliation reports as of December 2024, with $339 million in total funds paid out of $788.6 million awarded. The report also estimated that the ventilation projects would reduce greenhouse gas emissions by 3,303 metric tons of CO2 equivalent, and that plumbing program grants would produce an estimated 2.5 billion gallons in water savings through 58,974 fixture replacements, with a 65 percent reduction in water usage at sites receiving plumbing grants.
A 2025 audit by the California Public Utilities Commission found that the CEC’s own overly complicated funding process forced the agency to stop accepting applications, and that this process left school districts at risk of failing to finish grant-funded improvements before key deadlines tied to the legal obligation to return unspent funds to utilities. The audit recommended that the CEC find a way to spend all the money or that the Legislature pass a law to let ratepayers have the money back early. Neither recommendation was implemented, according to CalMatters.
What happens next
The budget trailer bill gave 216 school districts that had already received CalSHAPE grants an additional three years to complete their projects, according to CalMatters. But the program itself is closed to new applicants. The CEC’s CalSHAPE page lists an October 31, 2026, final reporting deadline for the Ventilation Program, and a December 1, 2026, funding liquidation date when all unspent funds must be returned to utilities. The program sunsets on January 1, 2027. San Diego Gas & Electric, which contributed about $189.6 million to CalSHAPE and stands to get back $100 million, has stated it is committed to returning all unspent funds to customers through bill relief, CalMatters reported.