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February 10, 2011 - In this 15-minute video, LAO State Finance Director Jason Sisney describes why public employee retirement costs have risen substantially in recent years for California governments and the Legislature's options for creating new types of retirement benefits for future state and local employees. At the same time, as Sisney discusses, the Legislature may have to identify new funding soon to address substantial unfunded liabilities in the teachers' and University of California retirement systems, among others.
February 9, 2011 - Presented to Assembly Budget Subcommittee No. 2 on Education Finance
February 7, 2011 - Presented to Senate Budget and Fiscal Review Subcommittee No. 1 on Education
February 7, 2011 - Since 2007-08, state support for K-12 education has dropped notably, though this reduction has been partly offset by one-time federal aid and state K-12 payment deferrals. Per-pupil programmatic funding was down 3.7 percent in 2009-10 and 5 percent in 2010-11. To help school districts manage this reduction, the state temporarily removed the strings associated with roughly 40 categorical programs and eliminated various other requirements. We surveyed school districts to gather information regarding how they were being affected by recent federal and state actions. Most importantly, the survey responses show that many districts: (1) have reserved some federal Ed Jobs for 2011–12; (2) would find an additional deferral in 2011–12 more difficult to accommodate; (3) have benefited notably from existing flexibility provisions and desire additional flexibility; and (4) already have increased class sizes notably, instituted furlough days, laid off some teachers, and shortened the school year. Given these survey findings, we identify several ways the Legislature could provide school districts with more flexibility in the short term. We also provide the Legislature with a relatively simple approach for making more lasting improvements to California’s K–12 finance system.
February 2, 2011 - Presented to Assembly Budget Subcommittee No. 1 on Health and Human Services and Assembly Budget Subcommittee No. 2 on Education Finance
February 1, 2011 - Presented to Assembly Budget Subcommittee No. 2 on Education Finance
January 27, 2011 - Presented to Assembly Budget Subcommittee No. 2 On Education Finance
January 27, 2011 - Presented to Senate Budget and Fiscal Review Subcommittee No. 1 On Education
January 27, 2011 - The Governor proposes to increase California Community College (CCC) fees from $26 per unit to $36 per unit beginning on July 2011. We believe that a fee increase should be an important component of the state’s budget strategy for CCC, as it would leverage more federal funds (in the form of federal tax credits) to mitigate programmatic impacts on CCC instruction and services, while having no negative effect on financially needy students (who do not pay fees). While the Governor is on the right track, the Legislature might consider going even further in the budget year to tap additional federal dollars in support of the CCC system. In future years, we recommend the Legislature ensure that CCC fee levels are pegged to the maximum amount covered by federal tax credits.
January 26, 2011 - Presented to Assembly Budget Subcommittee No. 1 on Health and Human Services and Assembly Budget Subcommittee No. 2 on Education
January 25, 2011 - Presented to Assembly Budget Subcommittee No. 2 On Education Finance
January 24, 2011 - Presented to Senate Budget and Fiscal Review Subcommittee No. 1 on Education Finance
January 24, 2011 - Over the last several years, the state has deferred payments to school districts as a way to achieve significant Proposition 98 savings. Relying on deferrals has allowed the state to achieve significant one-time savings while simultaneously allowing school districts to continue operating a larger program by borrowing or using cash reserves. As the magnitude and length of payment deferrals have increased, however, school districts have found fronting the cash required to continue operating at a higher programmatic level increasingly difficult. As part of his 2011-12 budget plan, the Governor continues to rely heavily on payment deferrals. His one major budget proposal for K-12 education is a $2.1 billion deferral. In this report, we track the state's increased use of deferrals, discuss the advantages and disadvantages of deferrals, and highlight several other major factors the Legislature should consider as it decides whether to approve additional K-12 deferrals.
January 24, 2011 - The Governor’s budget solutions in higher education include unallocated General Fund reductions of $500 million for the University of California (UC) and the California State University (CSU). As we discuss in our recent publication, The 2011‑12 Budget: Higher Education Budget in Context, while these reductions are large, in our view they do not appear unreasonable given the size of the state’s budget problem, and considering that the current-year budget imposed no program reductions on the universities. Despite some new revenue from tuition increases, the universities would have to implement a range of service reductions affecting students, faculty, and staff to absorb these reductions. This brief provides our recommendations for mitigating the impact of the reductions on UC’s and CSU’s educational missions.
January 24, 2011 - The Governor’s budget plan provides $2.2 billion for child care and development (CCD) in 2011-12—a reduction of $535 million, or 19 percent, compared to the current year. To achieve these savings he proposes several significant changes to current policies. In assessing the Governor’s CCD proposals and building its own CCD package, we recommend the Legislature: (1) balance access to and quality of care, (2) prioritize services for those who most need them, and (3) prioritize direct service over administrative activities. Consistent with these principles, we recommend the Legislature reject the Governor’s proposal to cut state subsidies by 35 percent, reconsider the Governor’s proposal to restore CalWORKs Stage 3 child care, and approve—perhaps in modified form—his proposals to change eligibility criteria and reduce administrative and support activities. We also offer the Legislature a menu of additional CCD savings options and build three illustrative CCD packages.