Under President Obama’s proposed $3.8 trillion federal budget, unveiled yesterday, California students would benefit from a $3.9 billion increase in the state’s Pell Grant funding.

The increase in student aid constitutes an extension of the $787 billion American Recovery and Reinvestment Act stimulus program enacted last February. Obama’s other provisions in the budget attempt to address the $1.267 trillion projected deficit for 2011 — down from $1.556 trillion last year — as well as job losses and a crumbling housing market.

California Congress-woman Lois Capps said that although not every step taken has been popular, they were clearly necessary.

“At this time last year our economy was on the brink of collapse, with 700,000 Americans losing jobs every month and our financial and housing markets in free fall,” Capps said in a press release. “Working with Congress, President Obama took immediate and extraordinary steps to address this serious financial crisis and a year later our economy is slowly, but surely, recovering.”

Highlights for California residents included in Obama’s 2011 budget include tax cuts for 12.6 million families, $6.3 billion to schools, teachers and students and $4 billion for housing assistance. The $3.9 billion boost in financial aid for California college students would be part of a $17 billion increase in federal Pell Grant funding nationwide. In addition, programs authorized under the Elementary and Secondary Education Act would receive $28 billion, a $3 billion increase from 2010.

Capps said she is relieved that President Obama is prioritizing education even during times of economic turbulence.

“These investments in education will pay significant dividends, as American workers are better able to compete and win in the global economy,” Capps said.

In addition to extra funding for education reform, Obama called for Congress and individual states to allocate more money to Medicaid, infrastructure projects, science and technology research, defense and homeland security and U.S. veterans. Moreover, $300 billion in tax breaks over the next 10 years were proposed for individuals, families and businesses.

The University of California Office of the President failed to comment on President Obama’s 2011 fiscal year budget proposals.