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LAO Report

Report

Lowering the State's Costs For Prescription Drugs

February 17, 2005 - State agencies purchase about $4.2 billion annually in prescription and nonprescription drugs as part of their responsibilities to deliver health care services to their program recipients. Our review—which focused on 10 percent of these purchases—found several deficiencies in the state's procurement of drugs which lead to it paying higher costs than necessary. We make a number of recommendations to correct these procurement and administrative deficiencies which would, if implemented, generate savings totaling tens of millions of dollars annually.


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Evaluating the Administration's California Rx Proposal

February 10, 2005 - Our analysis indicates that the Governor's California Rx plan for drug discounts for the uninsured provides a reasonable starting point for the development of such a program. However, we propose, among other changes, that in the event that drug makers fail to make good on their promises for significant price concessions, an automatic trigger would phase-out the proposed voluntary approach to obtaining rebates from drug manufacturers, and be replaced by an alternative strategy likely to result in greater discounts on more drugs for consumers.
A related report—Lowering the State's Costs For Prescription Drugs—which addresses the state's purchasing of drugs for its own programs, will be released shortly.


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Proposition 98 Primer

February 8, 2005 - Proposition 98 is a complex formula for setting a minimum annual funding level for K-12 schools and community colleges. This primer is intended to assist the Legislature in understanding the basic "mechanics" of the proposition and showing how it has affected school spending since its passage in 1988. We also describe the Governor's proposed changes to Proposition 98 and discuss our concerns about how they would diminish legislative budget authority.


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Design-Build: An Alternative Construction System

February 3, 2005 - We examine the advantages and disadvantages of the design-build method compared to the traditional design-bid-build method and find that design-build can be a useful option for some public construction projects. We make recommendations for statutory changes to provide that option while preserving the public's confidence in the procurement process, quality control, and access for small contractors to public contracts.


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California Highway Patrol: Enhancing Road Patrol Service Through Efficiencies

January 31, 2005 - We suggest a number of measures to address workload growth in CHP's road patrol program. Most of these changes give the Legislature the opportunity to increase in-view patrols with existing levels of funding for CHP. Specifically, by making various changes to CHP's current policies, processes, and procedures—as well as to the way it allocates and uses uniformed and nonuniformed staff—the department can free up substantial resources, potentially in the hundreds of uniformed officers, for proactive patrols, thereby enhancing CHP's road patrol service throughout the state.


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Hard Decisions Before the Legislature: Toll Bridge Seismic Retrofit

January 24, 2005 - The administration recently estimated that the toll bridge seismic retrofit program will require an additional $3.2 billion to complete and has recommended changing the Bay Bridge's design to save money. The Legislature faces two key decisions: (1) whether to approve a redesign of the Bay Bridge east span and (2) how to fund the program's completion. Redesigning the Bay Bridge could save money, but also raises the risk of cost and schedule increases that could more than offset the savings. Funding should come from both state and local sources, and the Legislature has several options regarding the sources used and the amount to provide from each.


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Revenue Volatility In California

January 20, 2005 - Following the boom-bust revenue cycle in recent years, concerns have developed about volatility in California's General Fund revenues. This brief quantifies the amount of revenue volatility experienced in California during the past quarter century, identifies the main causes of the volatility, and discusses the outlook for volatility in the future. We also highlight some options for reducing future impacts of volatility—both those involving changes to the tax system and budgetary changes—and discuss the trade-offs inherent in each of the alternatives.


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Improving Coastal Access And Development Mitigation

January 19, 2005 - The Legislature has made protection of and access to California's 1,100 miles of coastline a statewide priority. While the California Coastal Commission has made progress toward protecting California's coastline, certain of the commission's permitting practices have temporarily reduced, and may permanently reduce, the public's access to the coast. The Coastal Commission's mitigation strategies include owners offering to dedicate (OTD) portions of their property to public use as a condition of receiving a coastal development permit. We make a number of recommendations focused on encouraging more upfront mitigation of coastal development, finding a more appropriate funding source for mitigation, and shortening the timeframes for acceptance and opening of OTDs.


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Tax Agency Consolidation: Remittance and Return Processing

January 10, 2005 - The physical consolidation of remittance and return processing activities of the Franchise Tax Board, the Board of Equalization, and the Employment Development Department would likely result in some savings in the medium and long term. It would also require a significant investment of funds in the near term in order to make such a consolidation feasible. Expanding the opportunities for electronic processing at all three agencies provides an alternative means of achieving savings in the long term while improving tax agency performance at the same time.


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An Assessment of Differential Funding

September 21, 2004 - This report examines various options for funding higher education enrollment at different rates depending on type of instruction, class level, and other factors.


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An Initial Assessment of the California Performance Review

August 27, 2004 - On August 3, 2004, the California Performance Review (CPR) released its report on reforming California's state government, with the aim of making it more efficient and more responsive to its citizens. This report provides our initial comments on the CPR report. Specifically, we: (1) provide an overview of its reorganization framework and other individual recommendations, (2) discuss the savings it assumes from its major proposals, and (3) raise key issues and considerations relating to CPR's various proposals.


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Funding UC Faculty Research Facilities

June 23, 2004 - Faculty research generates substantial overhead revenue for UC, and a portion of this revenue is intended to pay for the construction of faculty research facilities. We find, however, that most of this research facility revenue is being used by UC for other purposes. Since hundreds of millions of dollars a year are available to UC to fund construction of faculty research facilities, we recommend the Legislature treat faculty research facilities in the same manner as it treats other higher education facilities that can be "self-funded." We recommend faculty research facilities be funded by reimbursements using nonstate funds rather than General Fund-backed bonds. This will free up hundreds of millions of dollars of scarce state resources for other high priority projects in higher education or other program areas.


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A Review of the California Youth Authority’s Infrastructure

May 24, 2004 - The California Youth Authority is confronted with various challenges that call for a fresh examination of its facility needs: (1) an aging infrastructure with housing-related and other deficiencies; (2) demands for special facilities, as a result of state, federal, and court mandates to deliver mental health and education services to wards; and (3) facility overcapacity as a result of a significant decline in the ward population. Given these concerns, we believe that a fundamental reassessment of the department’s facilities—achieved through the development of a facilities master plan—could lead to a significant improvement in the way the department’s infrastructure needs are met.


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An Assessment: Governor's Local Government Proposal

May 24, 2004 - The administration's local government proposal would make far-reaching changes to state-local finance. Our review of the proposal indicates that it would greatly increase the stability of local finance and increase accountability in the mandate process. We also find, however, that the proposal locks in place the current flawed state-local fiscal structure, imposes added fiscal stress on many local governments, and is not structured in a fashion that addresses long-term state fiscal goals. For the Legislature's consideration, we provide various recommendations to bring the proposal into greater alignment with legislative goals and state fiscal objectives.


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Proposition 50 Resources Bond: Funding Eligibility of Private Water Companies

May 14, 2004 - The implementation of the Proposition 50 resources bond has raised the issue of whether private water companies should be eligible for these funds. We identify several legal, tax, and policy issues for legislative consideration in evaluating this issue. We recommend that the Legislature declare its policy position on this matter. Our review concludes that the broad public purpose of Proposition 50 bond funds would be served by including private entities as eligible recipients of such funds.