California had extra money from an improving economy and last year's tax increases. But because the federal government did not extend a 2-percent payroll tax reduction, projections for personal income growth was cut in half to 2.2 percent.
Brown says he didn't anticipate the lower growth forecast or the so-called sequester, which he says are affecting California's economy just as it was gaining strength.
The state's general fund budget of $96.4 billion still invests heavily in education, thanks to voter-approved Proposition 30.
"We have climbed out of a hole with the Proposition 30 tax, but this is not the time to break out the champagne," Brown said. "It's a call for prudence, not exuberance."
The state's education funding formula will send most of the extra money to public schools. K-12 spending is projected to rise from $47.3 billion in the 2011-12 fiscal year to $66.5 billion in the 2016-17 fiscal year. His budget provides $1,046 more per student in the coming fiscal year.
Overall, Democrats and Republicans liked the governor's fiscal restraint, and must approve the state budget by June 15.
The Associated Press contributed to this report.