A Framework for Allocating Federal Recovery Funds

May 4, 2021 - Define Goals and Invest in Planning Identify Significant Challenges. The federal assistance provided under the ARP is unprecedented. The magnitude of the federal package represents a unique opportunity for the state to take significant steps towards addressing various longstanding challenges that the pandemic has served to magnify.
https://lao.ca.gov/Publications/Report/4422

The 2021-22 Budget: CalWORKs Fiscal Outlook

Dec 8, 2020 - The 2021-22 Budget: CalWORKs Fiscal Outlook The 2021-22 Budget CalWORKs Fiscal Outlook In this post, we describe our most recent forecast for California Work Opportunity and Responsibility to Kids (CalWORKs) program costs and discuss recent caseload trends.
https://lao.ca.gov/Publications/Report/4306

The 2020-21 Budget: Proposition 2 Debt Payment Proposals

Mar 10, 2020 - Proposition   2 p resents the Legislature with a unique opportunity to determine how best to use funds that it is required to spend. We recommend the Legislature use Proposition   2 t o increase state contributions to CalSTRS to address actuarial losses in future years (should they occur).
https://lao.ca.gov/Publications/Report/4196

The 2022-23 Budget: Fiscal Outlook for Schools and Community Colleges

Nov 17, 2021 - Although CalSTRS recently reported investment returns far above its long ‑term target, these returns are unlikely to reduce required district contributions. Under the funding plan the Legislature adopted in 2013 ‑14, the state General Fund is responsible for most of the volatility in CalSTRS ’ investment returns.
https://lao.ca.gov/Publications/Report/4473

Rethinking California's Reserve Policy

Apr 10, 2025 - Due to complex interactions, those formulas inconsistently reduce the excess capital gains directed to Proposition  2. As shown in Figure  13 , since Proposition  2 was passed, excess capital gains to Proposition  2 have been reduced between 0  percent to 30  percent each year (larger increments are also possible, if not likely, in the future).
https://lao.ca.gov/Publications/Report/5028

The 2021-22 Budget: CalWORKs Fiscal Outlook [Publication Details]

Dec 8, 2020 - In this post, we describe our most recent forecast for California Work Opportunity and Responsibility to Kids (CalWORKs) program costs and discuss recent caseload trends. With this post we intend to provide information but do not include any explicit recommendations to the Legislature. This post is part of our 2021-2022 Fiscal Outlook series of publications.
https://lao.ca.gov/Publications/Detail/4306

New Inflation Poses Not So New Budget Risk

Dec 15, 2022 - Higher interest rates disincentivize consumers from borrowing and —by raising the cost of capital —dissuades firms from borrowing to make new investments. Relatedly, higher interest rates also increase the return on safer investments, such as treasury bonds and savings deposits.
https://lao.ca.gov/Publications/Report/4653

The 2024-25 Budget: Proposition 2 Debt Payment Proposals

Mar 20, 2024 - As a result of how CalSTRS implements the division of responsibility for unfunded liabilities between the state and employers, the state ’s share —and consequently the state ’s supplemental rate —is particularly sensitive to investment return volatility.
https://lao.ca.gov/Publications/Report/4887

Strong Tax Collections Belie California's Challenging Fiscal Outlook

Apr 26, 2022 - In normal economic times, there is a positive spread between the yields on ten-year and two-year notes. When this gap shrinks or inverts, however, it suggests bond investors anticipate that in the future, the Fed will be holding interest rates low due to a weaker economy.
https://lao.ca.gov/Publications/Report/4590

The 2025-26 Budget: Overview of the Spending Plan

Oct 16, 2025 - Like other budget maneuvers, this creates a misalignment between the state’s cash position and its budgetary costs. Notably, this cost shift is intended to continue on an ongoing basis—meaning costs incurred in 2026‑27 would be recognized in 2027‑28, and so on.
https://lao.ca.gov/Publications/Report/5079