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

Create a summary list by choosing a Policy Area OR Department below, and clicking Go.

	Program	Budget Issue	LAO Finding Or Recommendation	Last Updated
Go Back	Department of Corrections and Rehabilitation	Reimbursements to counties for certain costs, such as those resulting from crimes committed in state prisons.	Provide the proposed $3.3 million one-time augmentation to eliminate an existing backlog of unpaid claims over a three-year period from 2010-11 to 2012-13, with a first installment of $1.1 million provided in 2010-11. However, in order to avoid the creation of an additional backlog of unpaid claims, approve the Governor's proposed base increase of $2.2 million.	3-05-10

Detailed Narrative
Under existing state law, the California Department of Corrections and Rehabilitation (CDCR) is required to reimburse counties for certain costs incurred, such as those resulting from crimes committed in state prisons, such as the cost to prosecute crimes committed by inmates. The 2009-10 budget provided $20.8 million from the General Fund to support these reimbursements. However, the Governor's budget for 2010-11 proposes a net increase of 2.1 million to this level of funding resulting from the following adjustments: $3.4 million reduction resulting from the expiration of one-time funding provided in 2009-10. $3.3 million one-time augmentation to eliminate a backlog of unpaid claims. $2.2 million increase in base funding to fully support on an ongoing basis the level of claims projected to be submitted annually beginning in 2010-11. Given that the $3.3 million backlog of unpaid claims is for expenses that have already occurred, the state is required to reimburse counties for these costs. However, in view of the state’s current General Fund shortfall, the state many not be able to afford to pay the full amount owed now, as proposed by the Governor. As an alternative, we recommend the Legislature provide the $3.3 million over a three-year period from 2010-11 to 2012-13, with a first installment of $1.1 million provided in 2010-11. Compared to the Governor’s budget, this would result in budget-year savings of $2.2 million. However, in order to avoid the creation of an additional backlog of unpaid claims, we recommend that the Legislature approve the proposed base increase of $2.2 million. Since the department will likely revise its budget request based on updated information regarding county claims in the current year, we also recommend that the Legislature withhold final action on this request until the May Revision.

Detailed Narrative

Under existing state law, the California Department of Corrections and Rehabilitation (CDCR) is required to reimburse counties for certain costs incurred, such as those resulting from crimes committed in state prisons, such as the cost to prosecute crimes committed by inmates. The 2009-10 budget provided $20.8 million from the General Fund to support these reimbursements. However, the Governor's budget for 2010-11 proposes a net increase of 2.1 million to this level of funding resulting from the following adjustments:

$3.4 million reduction resulting from the expiration of one-time funding provided in 2009-10.
$3.3 million one-time augmentation to eliminate a backlog of unpaid claims.
$2.2 million increase in base funding to fully support on an ongoing basis the level of claims projected to be submitted annually beginning in 2010-11.

Given that the $3.3 million backlog of unpaid claims is for expenses that have already occurred, the state is required to reimburse counties for these costs. However, in view of the state’s current General Fund shortfall, the state many not be able to afford to pay the full amount owed now, as proposed by the Governor. As an alternative, we recommend the Legislature provide the $3.3 million over a three-year period from 2010-11 to 2012-13, with a first installment of $1.1 million provided in 2010-11. Compared to the Governor’s budget, this would result in budget-year savings of $2.2 million.

However, in order to avoid the creation of an additional backlog of unpaid claims, we recommend that the Legislature approve the proposed base increase of $2.2 million. Since the department will likely revise its budget request based on updated information regarding county claims in the current year, we also recommend that the Legislature withhold final action on this request until the May Revision.