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Excess ERAF: A Review of the Calculations Affecting School Funding

March 6, 2020 - This report focuses on a state law enacted in the 1990s that shifts some of the property tax revenue in certain counties from schools and community colleges to other local agencies. For historical reasons, the shifted revenue is known as “excess ERAF.” (The acronym refers to the local accounts—known as Educational Revenue Augmentation Funds—that facilitate the shift.) We recently found that some counties are calculating excess ERAF in ways that seem contrary to state law and shift too much property tax revenue from schools to other agencies. We have three specific concerns related to the calculation of excess ERAF that together affect about $350 million in annual property tax revenue. Earlier this year, the Newsom administration began to address one of these concerns. In this report, we recommend the Legislature direct the administration to enforce state law on our other two concerns. We also recommend improving oversight to prevent similar issues from arising in the future.

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The 2020-21 Budget: California Department of Food and Agriculture

February 28, 2020 - In this analysis we assess the Governor’s 2020‑21 budget proposals for the California Department of Food and Agriculture (CDFA). Specifically, we make recommendations regarding the Governor’s proposals to (1) fund a comprehensive assessment to identify solutions to the California Exposition and State Fair’s (Cal Expo) declining revenues and make available funding to offset near‑term deficiencies, and (2) establish a Fresno‑Merced innovation corridor to boost the region’s economy.

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The 2020-21 Budget: Effectively Managing State Prison Infrastructure

February 28, 2020 - Given the magnitude of the state’s prison infrastructure needs, combined with the possibility of closing a prison in the near future, it will be important for the state to think strategically about managing its prison infrastructure—both in the near term and long term. In this report, we (1) provide an overview of the state’s prison infrastructure, (2) discuss the major drivers of prison infrastructure needs and spending, and (3) provide a road map to guide the Legislature in the development of a plan to strategically manage the state’s prison infrastructure.

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The 2020-21 Budget: Re-Envisioning Medi-Cal—The CalAIM Proposal

February 28, 2020 - In this report, we provide an overview and assessment of the Governor's California Advancing and Innovating Medi-Cal (CalAIM) proposal, also known as Medi-Cal Healthier California for All. CalAIM would make far-reaching reforms to Medi-Cal that would increase the program’s focus on its high-cost and high-needs enrollee populations, transform and streamline Medi-Cal managed care, extend components of a current federal waiver, and rethink how behavioral health services are financed and delivered.

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The 2020-21 Budget: California Student Aid Commission

February 27, 2020 - In this brief, we provide an overview of the Governor’s proposed budget for the California Student Aid Commission (CSAC). We then (1) assess the Governor’s Cal Grant cost estimates, (2) analyze the Governor’s proposal to fund a student loan outreach initiative, and (3) analyze the Governor’s state operations proposals for CSAC.

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The 2020-21 Budget: Reinventing the Department of Business Oversight

February 26, 2020 - The Governor proposes budget trailer legislation to make various changes related to the Department of Business Oversight. In this report, we assess the Governor's proposals and make recommendations for the Legislature to consider.

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The 2020-21 Budget: Resources and Environmental Protection

February 25, 2020 - In this report we assess several of the Governor's 2020-21 budget proposals in the natural resources and environmental protection program areas. This includes reviews of the Governor's proposals related to the Department of Toxic Substances Control, Department of Parks and Recreation, and the Department of Fish and Wildlife.

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The 2020-21 Budget: Department of Social Services

February 24, 2020 - This brief provides information, analysis, and key issues to consider in evaluating the Governor’s 2020-21 budget proposals for the major programs in Department of Social Services.

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The 2020-21 Budget: Proposition 98 Education Analysis

February 24, 2020 - In this report, we assess the Governor’s overall Proposition 98 budget and his specific proposals for K-12 education. Of the $3.7 billion in new Proposition 98 funding for 2020-21, the budget dedicates $2 billion for one-time initiatives and $1.7 billion for ongoing augmentations. Nearly all of the ongoing funding is to cover an estimated 2.29 percent cost-of-living adjustment for various K-14 programs. Total K-12 funding per student would grow to $12,619 in 2020-21, an increase of $499 (4.1 percent) over the revised 2019-20 level. Most of the one-time proposals in the Governor’s budget seek to address longstanding issues in K-12 education. Many of the proposals, however, seem unlikely to have much long-term effect on these issues. We also are concerned that many proposals are missing important details regarding how the funds would be spent. We recommend the Legislature reject most of these proposals, freeing up more than $1 billion in Proposition 98 funding. We think the Legislature should consider using the freed-up funds to provide fiscal relief to districts. Although the Legislature has various options for providing fiscal relief, we think making additional payments toward districts’ unfunded pension liabilities would offer the greatest fiscal benefit. Paying down these liabilities would improve the funding status of the pension systems and likely reduce district costs over time.

Correction 2/26/20: Corrected reference to the cost of the Governor’s education workforce proposals.

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The 2020-21 Budget: Taxation of E-Cigarettes

February 24, 2020 - In this report, we discuss issues for the Legislature to consider as it decides whether to change the state’s approach to taxing e‑cigarettes. We find that a tax based on nicotine content has some advantages. We also suggest that the Legislature consider a wide range of possible tax rates. Once the Legislature has chosen a rate, we recommend indexing the rate to inflation and revisiting it frequently to assess whether further adjustments are warranted. If the Legislature chooses to enact a new tax on e‑cigarettes, we recommend that it take an approach to revenue allocation that prioritizes flexibility.

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The 2020-21 Budget: Governor's Wildfire-Related Proposals

February 21, 2020 - While wildfires have always been a natural part of California’s ecosystems, recent increases in the severity of wildfires and the adverse impacts on communities have increased the focus on the state’s ability to effectively prevent, mitigate, and respond to wildfire risks. This report has two parts. First, we assess the state’s approach to addressing wildfire risks in light of the complex challenges that make an efficient and effective approach difficult. Second, we evaluate the Governor’s various wildfire‑related budget proposals in the absence of having a statewide strategic wildfire plan.

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The 2020-21 Budget: Early Education Analysis

February 21, 2020 - In this report, we provide an overview of the Governor’s early education proposals, then analyze his three major early education proposals. Specifically, we analyze his proposals to (1) expand the number of full‑day preschool slots, (2) create a new department to administer child care programs, and (3) fund facilities for more preschool programs.

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The 2020-21 Budget: The Governor's IT Project Proposals

February 20, 2020 - This report provides an overview of the proposed and approved IT projects in the Governor’s proposed 2020-21 budget. We first provide relevant background information on the state’s IT project approval process, approaches to development and implementation of projects once approved, maintenance and operation of IT systems once completed, and requirements for state government entities to request resources for projects through the budget process. We then identify and summarize the budget requests to plan proposed projects and to develop and implement projects (whether proposed or approved).

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The 2020-21 Budget: Higher Education Analysis

February 20, 2020 - In this report, we analyze the Governor’s higher education budget proposals. Similar to last year, these proposals are wide ranging—including large base increases; targeted increases for apprenticeship programs and food pantries; one-time initiatives relating to extended education programs, work-based learning, faculty diversity, and animal shelters; and many facility projects.

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The 2020-21 Budget: Medical Education Analysis

February 20, 2020 - In this brief, we analyze the Governor’s proposals relating to UC medical education. After providing an overview of medical education, we first analyze the Governor’s proposals to expand enrollment and build a new academic building at the UC Riverside School of Medicine. We then analyze the Governor’s proposal to expand enrollment and services at the UCSF Fresno branch campus.