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2010

Other Budget Issues

Further Detail

Background

The May Revision proposes statutory changes to require that, beginning July 1, 2010, non-serious, non-violent, non-sex offenders who are convicted of specified felonies and sentenced to three years or less serve their sentence in a county jail instead of state prison. The administration estimates this would reduce the state prison population by 10,600 inmates in 2010-11 and generate $244 million of savings. Beginning in 2011-12, the state would establish a public safety block grant program for counties to be funded using about one-half of the state’s prior fiscal-year savings from this shift.

Also as part of the May Revision, the Governor proposes legislation to continuously appropriate $503 million annually from the General Fund for various local public safety programs beginning in 2011-12. The programs now are funded with revenues from the temporary vehicle license fee (VLF) increase that is set to expire on June 30, 2011. (Taken together, these proposals would help balance the 2010-11 budget, but would result in a net General Fund cost increase of nearly $300 million beginning in 2011-12.)

Proposal to Shift Offenders Has Merit, but Raises Several Concerns

The Governor’s May Revision proposal to shift certain offenders to county jails provides a reasonable starting point for the Legislature to consider making additional correctional population reductions a part of its approach to balancing the state budget. Specifically, the proposal would achieve significant savings and help alleviate over-crowding in the state prison system, while still allowing for the incarceration of offenders convicted of specified crimes. In addition, under the proposal, counties would receive a portion of the state’s correctional savings to support the shifted responsibilities.

However, we find that the specific way in which the Governor has structured his proposal raises a number of significant implementation and operational issues, including:

• Jails Not Designed for Longer-Term Commitments. Under the Governor’sproposal, offenders could be held in county jail for up to three years. How-ever, under current law, an offender may only be held in county jail for a maximum of one year. Thus, county jails are not generally designed to house offenders for longer than one year. For example, most jails lack space to operate rehabilitation programs.
• Many Jails Already at Maximum Capacity. Approximately one-half of thecounties’ jails are under court-ordered or self-imposed population limits. This means that in some jails there simply is no additional room to accommodate the offenders shifted under the Governor’s proposal. Therefore, many county sheriffs would likely have to release other inmates early to make room for the shifted population. The Governor’s proposal does not include additional funds for counties to construct new jail facilities.
• Proposed Block Grant Targeted Too Narrowly. Under the Governor’s proposal, the new block grant—funded with state correctional savings—would be provided directly to county probation departments. This would make the funding available for the supervision in the community of offenders who are currently in county jail, but, under the Governor’s proposal, are likely to be released early from jail or sentenced to probation so as to make room in the jails for the offenders shifted from state prison. It makes sense to devote a portion of the proposed state grant funding to county probation departments for the supervision of these offenders. Allocating all of the block grant funds to county probation departments, however, means that counties might be precluded from considering other strategies for accommodating the shift of inmates, such as through expansion of jail operations; mental health, drug and alcohol treatment programs operated by other county departments; or other potential strategies. Counties would not have the flexibility to take an approach that would best meet local needs.
• Basis for Block Grant Amount Unclear. The administration proposes to pro-vide counties with one-half of the state’s savings from the proposed change in state sentencing laws. Payments would be calculated based on the average daily population of inmates in jail who would otherwise have been in prison. However, it is not clear how these payments correspond with the cost impacts of the shifted populations. Take the example of an offender who other-wise would have gone to prison for one year, but instead receives a sentence of one year in jail, is released early after six months due to overcrowding and placed on probation for three years. The payment may not come close to compensating for higher county costs. In other situations, the payment could more than offset local costs. The administration did not present a detailed cost analysis to justify why one-half of the state savings would be the appropriate level of funding to provide to the counties. In addition, the formula proposed as the basis of the block grant payments could be difficult to calculate and require several millions of dollars in administrative overhead to implement each year.
• Proposed Block Grant May Overlap With New Probation Incentive Program. Chapter 608, Statutes of 2009 (SB 678, Leno), established a new incentive funding program for county probation departments. Under this program, counties that reduce the number of their probationers who were sent to state prison, relative to a baseline, receive a share of the state savings to the prison system. However, the Governor’s proposed block grant may in fact allow county probation departments to receive funding twice for the same offender. For example, under the Governor’s proposal, a county probation department would receive a payment from the state for diverting a felon who would otherwise have been sentenced to two years in state prison for a crime to county jail. If that offender was on probation at the time of their new offense, the county probation department could also potentially receive another payment under SB 678.
• No Need to Act Now on Future Funding for Local Public Safety Grant Programs. As discussed above, the Governor is proposing budget trailer legislation to continuously appropriate $503 million from the General Fund for various lo-cal public safety grant programs. Since the temporary VLF increase that is currently used to support these programs is not set to expire until June 30, 2011, the Legislature does not need to decide the future funding level of these programs as part of its deliberations on the 2010-11 budget.

 LAO Recommendations

We recommend the adoption of the Governor’s May Revision proposal with modifications to address the concerns identified above. Specifically, we recommend the following changes:

• Change the Number and Types of Offenders Affected. The Legislature couldmodify the Governor’s proposal so that it only applies to offenders with shorter prison sentences—for example, those with sentences up to 16 months or 2 years. Alternatively, the Governor’s proposal could be modified to specify that offenders who committed certain crimes known as “wobblers” that currently may be treated either as felonies or misdemeanors would be punishable by jail and/or probation and not state prison. Either approach would lessen the burden on county jail systems for housing offenders receiving longer terms than those for which the jails were designed. Also, both options above would result in the shift of fewer offenders to county jail, making the transition more manageable for counties. However, modifying the proposal in this way would have the trade-off of substantially reducing state budget savings.
• Reexamine Local Jail Construction Program. Chapter 7, Statutes of 2007(AB 900, Solorio), included, among other provisions, about $1.2 billion in lease-revenue bond authority to help counties construct local jail facilities to address overcrowding in these facilities. We recommend that the Legislature examine making statutory changes to this program to ensure that counties are awarded funding for additional jail beds in a timely manner. This approach could help them respond over the longer term to the shift of offenders to the local level.
• Provide Counties With More Flexibility to Meet Their Needs. Whereas theGovernor’s proposal provides all of the block grant funding to probation, other local agencies, such as sheriff’s departments, would likely be affected by a shift of offenders to the local level. Accordingly, the Legislature could give counties flexibility in allocating funding among affected county departments, perhaps with minimum allocations for a few certain departments, such as probation. In addition, to hold down county costs of accommodating the shift of offenders to the local level, the Legislature could adopt statutory language permitting counties to place additional offenders, such as those convicted of a felony, on electronic home monitoring in lieu of incarceration in jail. Current law already allows sheriffs to use such alternative custody options for misdemeanants.
• Modify Funding Formula. The Legislature could also modify the administration’s proposed funding formula to a simpler approach, such as a fixed annual grant, that would eliminate the need for complicated and expensive administrative overhead. (The state enacted a similar fixed block grant program for juvenile offenders several years ago.) In doing so, the Legislature could also consider changing the level of funding provided to the counties. For ex-ample, the administration proposes giving counties one-half of the state savings, but this amount was not based on any calculations or assumptions as to how counties might adjust their operations to accommodate such changes in state sentencing laws. In determining the appropriate level of funding to give to counties, the Legislature should consider both the benefit to addressing the state’s fiscal shortfall as well as the funding that would assist counties in accommodating this shift of offenders.
• Provide Funding to Counties in 2010-11. Under the Governor’s proposal, localgovernments would have to wait a full year before they received their first payment. This would mean that in 2010-11 counties would have to manage the additional offenders without any corresponding increase in funding. The Legislature may wish to provide counties with a portion of the estimated state savings for 2010-11 to address this issue. However, any such redirection of resources would have the trade-off of reducing the net state savings of the proposal in the budget year.
• Reduce Potential Overlap With Probation Incentive Program. Given thatcounty probation departments are already eligible for performance-based grants from the state for keeping felony probationers out of state prison, the Legislature should consider how best to prevent counties from receiving funding under the Governor’s proposal that would be duplicative of this funding. For example, the Legislature could consider modifying the baseline calculations established under the probation incentive program to reflect these proposed changes in sentencing laws.
• Reject Proposed Continuous Appropriation for Local Public Safety Grants. In order to ensure greater flexibility in addressing the state’s budget shortfall, we recommend the Legislature reject at this time the administration’s pro-posed budget trailer legislation that would authorize a continuous appropriation of about $503 million for various local public safety grant programs be-ginning in 2011-12. The Legislature could reconsider what, if any, funding the state can afford for these programs, as well as their appropriate funding source, as part of the 2011-12 budget process.

Consider Additional Options for Reducing State Correctional Costs. Given thestate’s current General Fund shortfall, we recommend that the Legislature also consider adopting additional measures to reduce the inmate and parole populations. In recent years, our office has proposed a number of such measures for legislative consideration. (Please see our 2009-10 Budget Analysis Series: Judicial and Criminal Justice for a compre-hensive list of the strategies available to reduce the state correctional population.) For example, we have recommended in the past the release of certain non-violent, elderly inmates from prison early since these inmates represent a low risk of reoffending yet cost two to three times as much to incarcerate as the average inmate.

Moreover, the Legislature could consider making operational changes in the state’s parole system, such as restoring general felon parole ratios to their 2008-09 levels. As part of the 2009-10 budget package, the California Department of Corrections and Re-habilitation (CDCR) reduced its parole agent caseload ratio from 70:1 to 48:1. This change was related to certain other changes in the parole system enacted as part of Chapter 28, Statutes of 2009 (SBX3 18, Ducheny). Specifically, SBX3 18 made ineligible for revocation to state prison by CDCR certain low- and medium-risk parolees with no serious, violent, or sex offenses. As a result, CDCR planned to place approximately 32,000 parolees on banked caseloads (commonly referred to as “summary parole”) with no formal supervision. Since the remaining supervised parole population would now consist of more moderate to high-risk offenders, the general felon parole agent caseloads were reduced in the 2009-10 budget from 70:1 to 48:1. (The 48:1 ratio is similar to the one that is the basis on which CDCR is now supervising more serious parolees [such as third-strikers

We recommend that the Legislature reconsider this ratio change since (1) over 10,000 fewer offenders have been placed on summary parole than originally proposed by the administration as part of the 2009-10 budget package, and (2) the enhanced supervision provided in the 2009-10 budget offsets tens of millions of dollars in potential savings that could help to alleviate the state’s severe fiscal shortfall. Restoring the general felon parole ratios to 70:1 would result in approximately $65 million in savings starting in 2010-11.