Summary of LAO Findings and Recommendations on the 2010-11 Budget

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	Program	Budget Issue	LAO Finding Or Recommendation	Last Updated
Go Back	California Agency on Service and Volunteering	Establishment of a new state agency, the California Agency on Service and Volunteering.	Recommend rejecting the Governor's proposal to create a new volunteerism agency. Recommend eliminating the position dubbed the Secretary of Service and Volunteering by the Governor for savings, thus ensuring flat year-over-year funding for this office.	5-05-10

Detailed Narrative
*Governor’s Proposal.* The Governor proposes to eliminate the Office of Planning and Research (OPR) effective January 1, 2011, as discussed in a separate analysis on this site. One existing part of OPR, an entity established by executive order that is called CaliforniaVolunteers (CV), administers about $30 million of federal funding each year from the Corporation for National and Community Service for AmeriCorps and other community service programs in California. Upon the elimination of OPR, the Governor’s budget proposes that the Legislature establish CV in statute as a separate agency in state government. The Governor further proposes augmenting CV's baseline General Fund budget by $100,000 (including 2.1 personnel years, consisting of three full-time and part-time personnel) to perform administrative activities now funded from OPR’s budget. In total, the Governor proposes $1 million of General Fund support for the new volunteerism agency in 2010-11. *Recommend Against Creation of a New Volunteerism Agency.* The Legislature established the agency level of government in statute to encompass major state functions—generally with thousands of employees—related to core state responsibilities, such as prisons, business and transportation, health and human services, and state administration. By contrast, volunteerism grants, oversight, and promotion are very minor functions of state government. At a time when the Legislature faces huge reductions in core state programs, we do not concur with the Governor's proposal to create a new state agency for this minor function. Moreover, we do not believe there is a rationale for a separate, new department related to volunteerism. A separate volunteerism department or agency is not required under federal law for California to receive AmeriCorps and other funding. The federal government appears to require only that state entities like CV have the administrative resources necessary to administer and oversee federal grants. *Moving CV to Housing and Community Development Department Is an Option.* The U.S. Code specifically references the need for state entities like CV to coordinate activities with other state departments administering federal financial assistance programs. One existing entity administering federal financial assistance programs for the state is the Department of Housing and Community Development (HCD), a large, established department that administers various federal funding programs, including the Community Development Block Grant program, homeless shelter grants, and certain affordable housing and Section 8 rent assistance funds. Accordingly, upon elimination of OPR, we suggest that CV be established as a section or subsection within HCD’s Division of Financial Assistance, which administers these federal financial assistance programs. The missions of CV and HCD’s Division of Financial Assistance seem well matched, as they are focused on assisting lower-income persons and communities through distribution of federal and other assistance. Under this option, the Legislature also should provide a small amount of administrative funding and personnel resources to ensure that HCD’s administrative and overhead functions suffer little or no impact as a result of becoming the new parent of CV. Most of the staff positions of CV--who, by virtue of their current placement as a program within OPR are exempt from civil service--would be converted to civil service positions within HCD. In our view, no trailer bill would be required to accomplish this transfer of budgetary and position authority to HCD. (One element of the administration’s proposed trailer bill to establish a volunteerism agency, the proposed California Volunteers Fund, is discussed in a separate analysis on this Web site.) *Governor’s General Fund Volunteerism Funding Proposal for 2010-11.* In the 2009-10 Budget Act, the Legislature programmed $927,000 of General Fund support for CV activities. Principally as a result of budget adjustments related to the Governor’s furlough program, the final expected General Fund spending by CV in 2009-10 is only about $839,000. The Governor, however, proposes just over $1.0 million of General Fund spending for CV functions in 2010-11. The Governor’s proposal takes the base amount of General Fund support provided by the Legislature in 2009-10 and grows it by roughly $100,000 to transfer three full-time and part-time positions to CV’s successor entity to perform administrative and overhead functions now provided by the staff of OPR, CV’s current parent entity. There is no set required level of state funding for California service projects to receive AmeriCorps and related federal funding. Instead, the federal government offers an administrative grant of somewhere around $850,000 to $1 million to the state, and the state must match each dollar. Then, the overall quality of the state’s management and oversight efforts for the grants is one factor in the state’s ability to compete for a portion of federal AmeriCorps and related funding. *Recommend General Fund Support at $90,000 Less Than Proposed.* Given these facts, we recommend that the Legislature provide General Fund support for CV of only $927,000, or $90,000 less than proposed by the Governor. With the expiration of the furlough program on July 1, 2010, this would basically represent flat funding for CV in 2010-11—the same amount included by the Legislature in CV’s 2009-10 budget item. As noted above, we believe it is important to transfer the two or three administrative staff to HCD to ensure that it experiences no negative administrative effects as a result of becoming CV’s new parent. Accordingly, we recommend elimination of the position designated unilaterally by the Governor as the secretary of service and volunteering (a position formerly authorized as CV's executive director) with its over $130,000 of annual salary and benefits. There would still be several managerial-level positions in the CV organization, including the current chief of staff position, which could be converted by HCD (if that department chooses) to head the new CV section or subsection in the Division of Financial Assistance. The savings from elimination of the secretary position may be sufficient--even after scoring the $90,000 of General Fund savings that we recommend--to allow CV to establish one or more new line staff positions to enhance oversight of federal grants. This would address a concern of CV that any reductions in funding could make the state less competitive for federal grants due to a perceived decline in administrative and oversight capacity. Under our recommendation, therefore, CV could have greater administrative and oversight capacity than it does now.

Detailed Narrative

Governor’s Proposal. The Governor proposes to eliminate the Office of Planning and Research (OPR) effective January 1, 2011, as discussed in a separate analysis on this site. One existing part of OPR, an entity established by executive order that is called CaliforniaVolunteers (CV), administers about $30 million of federal funding each year from the Corporation for National and Community Service for AmeriCorps and other community service programs in California. Upon the elimination of OPR, the Governor’s budget proposes that the Legislature establish CV in statute as a separate agency in state government. The Governor further proposes augmenting CV's baseline General Fund budget by $100,000 (including 2.1 personnel years, consisting of three full-time and part-time personnel) to perform administrative activities now funded from OPR’s budget. In total, the Governor proposes $1 million of General Fund support for the new volunteerism agency in 2010-11.

Recommend Against Creation of a New Volunteerism Agency. The Legislature established the agency level of government in statute to encompass major state functions—generally with thousands of employees—related to core state responsibilities, such as prisons, business and transportation, health and human services, and state administration. By contrast, volunteerism grants, oversight, and promotion are very minor functions of state government. At a time when the Legislature faces huge reductions in core state programs, we do not concur with the Governor's proposal to create a new state agency for this minor function. Moreover, we do not believe there is a rationale for a separate, new department related to volunteerism. A separate volunteerism department or agency is not required under federal law for California to receive AmeriCorps and other funding. The federal government appears to require only that state entities like CV have the administrative resources necessary to administer and oversee federal grants.

Moving CV to Housing and Community Development Department Is an Option. The U.S. Code specifically references the need for state entities like CV to coordinate activities with other state departments administering federal financial assistance programs. One existing entity administering federal financial assistance programs for the state is the Department of Housing and Community Development (HCD), a large, established department that administers various federal funding programs, including the Community Development Block Grant program, homeless shelter grants, and certain affordable housing and Section 8 rent assistance funds. Accordingly, upon elimination of OPR, we suggest that CV be established as a section or subsection within HCD’s Division of Financial Assistance, which administers these federal financial assistance programs. The missions of CV and HCD’s Division of Financial Assistance seem well matched, as they are focused on assisting lower-income persons and communities through distribution of federal and other assistance. Under this option, the Legislature also should provide a small amount of administrative funding and personnel resources to ensure that HCD’s administrative and overhead functions suffer little or no impact as a result of becoming the new parent of CV. Most of the staff positions of CV--who, by virtue of their current placement as a program within OPR are exempt from civil service--would be converted to civil service positions within HCD. In our view, no trailer bill would be required to accomplish this transfer of budgetary and position authority to HCD. (One element of the administration’s proposed trailer bill to establish a volunteerism agency, the proposed California Volunteers Fund, is discussed in a separate analysis on this Web site.)

Governor’s General Fund Volunteerism Funding Proposal for 2010-11. In the 2009-10 Budget Act, the Legislature programmed $927,000 of General Fund support for CV activities. Principally as a result of budget adjustments related to the Governor’s furlough program, the final expected General Fund spending by CV in 2009-10 is only about $839,000. The Governor, however, proposes just over $1.0 million of General Fund spending for CV functions in 2010-11. The Governor’s proposal takes the base amount of General Fund support provided by the Legislature in 2009-10 and grows it by roughly $100,000 to transfer three full-time and part-time positions to CV’s successor entity to perform administrative and overhead functions now provided by the staff of OPR, CV’s current parent entity.

There is no set required level of state funding for California service projects to receive AmeriCorps and related federal funding. Instead, the federal government offers an administrative grant of somewhere around $850,000 to $1 million to the state, and the state must match each dollar. Then, the overall quality of the state’s management and oversight efforts for the grants is one factor in the state’s ability to compete for a portion of federal AmeriCorps and related funding.

Recommend General Fund Support at $90,000 Less Than Proposed. Given these facts, we recommend that the Legislature provide General Fund support for CV of only $927,000, or $90,000 less than proposed by the Governor. With the expiration of the furlough program on July 1, 2010, this would basically represent flat funding for CV in 2010-11—the same amount included by the Legislature in CV’s 2009-10 budget item. As noted above, we believe it is important to transfer the two or three administrative staff to HCD to ensure that it experiences no negative administrative effects as a result of becoming CV’s new parent. Accordingly, we recommend elimination of the position designated unilaterally by the Governor as the secretary of service and volunteering (a position formerly authorized as CV's executive director) with its over $130,000 of annual salary and benefits. There would still be several managerial-level positions in the CV organization, including the current chief of staff position, which could be converted by HCD (if that department chooses) to head the new CV section or subsection in the Division of Financial Assistance. The savings from elimination of the secretary position may be sufficient--even after scoring the $90,000 of General Fund savings that we recommend--to allow CV to establish one or more new line staff positions to enhance oversight of federal grants. This would address a concern of CV that any reductions in funding could make the state less competitive for federal grants due to a perceived decline in administrative and oversight capacity. Under our recommendation, therefore, CV could have greater administrative and oversight capacity than it does now.