The Governor's Budget proposes to reorganize part or all of five Resources and Environmental Protection departments. We believe that opportunities to consolidate state programs to improve efficiency and program effectiveness ought to be explored, and that parts of the reorganization proposal have merit. We recommend that the Secretary for Resources and the Secretary for Environmental Protection report at budget hearings on the details and status of the Governor's reorganization plan.
If it appears that the plan will not be submitted to the Legislature in time for full consideration before the 1995-96 budget is adopted, then we recommend that full- year funding for the respective departments be reestablished. If legislation is subsequently enacted to consolidate or restructure these departments, the Budget Act should be amended accordingly at that time.
The Governor's Budget proposes to abolish the Department of Conservation (DOC), the State Lands Commission (SLC), and the Energy Resources Conservation and Development Commission (ERCDC), and transfer their programs, with certain exceptions, to a new Department of Energy and Conservation.
Current law requires that a Governor's Reorganization Plan be submitted to the Legislature in the form of a bill. Current law also requires the Governor, in transmitting the plan, to clearly specify its nature and purposes, and the advantages of the proposed reorganization.
Current law, however, does not specify in any detail the content of the reorganization plan other than it must provide for:
Current law also specifies the procedure for submission and approval of a Governor's Reorganization Plan. The plan must be presented first to the Legislative Counsel for drafting. Subsequently, the Governor submits the plan to the Milton Marks Commission on California State Government Organization and Economy (the Little Hoover Commission), at least 30 days before submission to the Legislature, for study and recommendation by the commission. Once the Governor submits the plan to the Legislature, the Legislature has 60 days to either approve or reject the plan, but cannot amend it. At the time this Analysis was prepared, the Resources Agency had submitted a letter to the Little Hoover Commission describing an outline of the plan, but has not yet submitted the actual plan to the commission.
The administration indicates that the purpose of the proposed reorganization is to consolidate like functions, improve service, and reduce costs. We think that opportunities to consolidate state programs in order to improve efficiency and program effectiveness ought to be explored. And, in past analyses, we have supported proposals that are similar to certain components of the Governor's current proposal. For instance, we have reviewed and concluded that there are potential benefits from consolidating the state's recycling functions. Similarly, we have supported consolidating certain programs of the Energy Commission and the Public Utilities Commission.
Because details of the reorganization plan are not yet available, we are not able to provide specific comments on the plan's proposals. Below, we offer some criteria for the Legislature to consider in evaluating the reorganization plan, once submitted by the Governor. In addition, we provide some general comments about the extent to which the Governor's proposal (as outlined broadly) stacks up against the criteria.
Recommendation. We think that opportunities to consolidate state programs to improve efficiency and program effectiveness ought to be explored. Given that it is not certain when the plan will ultimately be presented to the Legislature, we recommend that the Secretary for Resources and the Secretary for Environmental Protection report at budget hearings on the plan and its status. If it appears at that point that the plan will not be submitted to the Legislature in time for full consideration before the 1995-96 budget is adopted, then we recommend that full- year funding for the departments involved in the proposed reorganization be provided. If the reorganization plan is subsequently enacted, the Budget Act should be amended accordingly.
The progress of the three Resources and Environmental Protection departments in implementing performance budgeting has been mixed, particularly in the development of performance measures. We recommend that the three departments report at budget hearings on: (1) their progress to date, (2) their proposed performance measures and budget contracts with the Legislature for 1995-96, and (3) future plans for implementing performance budgeting.
The Pilot Program. In January 1993, the Governor proposed to pilot test performance budgeting in four state departments. According to the 1993-94 Governor's Budget, the pilot program was being proposed because the state's traditional budget process was "seriously dysfunctional." The four departments were the Departments of Consumer Affairs, General Services, Parks and Recreation, and the Stephen P. Teale Data Center.
The Legislature subsequently enacted Ch 641/93--the Performance and Results Act of 1993 (SB 500, Hill)--to authorize the pilot program. Subsequently, the California Conservation Corps (CCC) was added to the pilot project by Ch 894/93 (AB 202, Collins), and the Department of Toxic Substances Control (DTSC) was added in 1994. (Currently, there are only five departments in the pilot, since one of the original pilot departments--the Teale Data Center--is no longer a participant, according to the Department of Finance.) Thus, of the five departments selected by the administration to participate in the performance budgeting pilot project, three are within the Resources or Environmental Protection Agencies. (Please see our Crosscutting Issues section in the State Administration chapter for an overview of all five departments.)
Performance Budgeting. Performance budgeting differs from the traditional approach to budgeting in that it focuses on outcomes, such as customer satisfaction, rather than processes or inputs, such as the number of employees in a given department. It allocates resources based on expectations of performance, and it measures performance in order to assess (1) how well a department is achieving its desired outcomes, and (2) whether its performance is improving over time. By focusing attention on performance measures, it attempts to improve governmental performance and thus enhance public satisfaction with services.
Performance budgeting includes several components, including performance measures, strategic plans, quality improvement programs, and budget contracts. Because performance measures are an especially critical element of performance budgeting, the following analysis focuses largely on the quality of these measures which have been developed by the three Resources and Environmental Protection departments. As this review indicates, we think that the CCC has made more progress in this regard than either the DPR or the DTSC, even though both of these departments, and in particular DPR, have completed many of the necessary steps to implement performance budgeting.
Most of the progress to date in the Resources and Environmental Protection departments has been in completing the preparatory steps necessary to implement performance budgeting. The three departments have shown different degrees of progress in completing these steps.
Department of Parks and Recreation. The department completed a strategic plan in 1994 outlining the department's mission and goals. Based on the results of that plan, the DPR entered into a Memorandum of Understanding (MOU) with the Legislature in 1994-95 (contained in the Supplemental Report of the 1994 Budget Act), which committed the department to meeting various performance measures in return for receiving its requested level of funding for 1994-95. The DPR will report both in March 1995, and at the end of 1994-95, on its progress in meeting the performance measures specified in its 1994-95 MOU. In January 1995, DPR submitted its draft contract for 1995-96, which closely resembles its current-year contract.
California Conservation Corps. The CCC began its performance budgeting efforts in April 1994. Since then, the department has completed a strategic plan, and prepared a 1995-96 contract, including performance measures, for submission to the Legislature. At the time this analysis was prepared, the CCC had not yet submitted that contract to the Legislature because it is under review by the Resources Agency and the Department of Finance for approval. (However, the department has shared draft performance measures for 1995-96 with legislative staff.)
Department of Toxic Substances Control. The DTSC also began its performance budgeting efforts early in 1994. The DTSC has developed a draft strategic plan. However, due to recent changes in management and personnel, the DTSC has put its performance budgeting efforts on hold. It is uncertain at this point whether the department will continue with the pilot. The DTSC has not submitted a 1995-96 budget contract, and it appears likely that, if it proceeds with performance budgeting, it will not be in a position to submit a budget contract until 1996-97.
Progress to Date Mixed. While all three departments have taken concrete steps towards implementing performance budgeting, our review indicates that progress has been mixed. In particular, we think that two departments--CCC and DPR--vary widely in their success in developing performance measures. (We focus on these two departments because they have submitted or will submit budget contracts for 1995-96, whereas DTSC most likely will not.)
In contrast, most of the DPR's proposed 1995-96 performance measures relate to performance outputs or processes--the amount of work the department accomplishes. For example, one of the department's proposed 1995-96 performance measures is to establish a new motorcycle safety training program, to be given in State Vehicular Recreation Areas. Another proposed measure is to develop a plan for reducing visitor dissatisfaction with the department's reservation system for camping in park units. We think that in both of these cases, more meaningful performance measures would be those that determine the extent to which motorcycle injuries have been reduced and visitor satisfaction increased.
The DPR's proposed 1995-96 performance measures, by and large, do not allow the Legislature to evaluate the department's progress from one year to the next with the same degree of consistency as the CCC's. This is partly because the focus of many of those measures is on undertaking new initiatives--such as establishing a new program or developing a new plan--which means that there is little or no current baseline data for these activities. Also, in most of its performance measures, the department has committed to a specified level of performance for only one year.
With regard to DPR's progress, the administration indicates that in 1995-96, the DPR will begin to match specific funding amounts to expected results, and that by 1996-97, DPR's entire program will be expressed in terms of budgeted funds and results. However, we think that the department is unlikely to achieve this goal, given that neither its 1994-95 nor its proposed 1995-96 contracts show any progress in this direction, and contain no information on the relationship between the funding the department receives and the results it achieves.
Real Progress Will Require Time and Commitment. Developing performance measures that relate to outcomes, that provide consistency in measuring performance across years, and that help establish a link between funding and outcomes, is one prerequisite for successful performance budgeting. However, achieving concrete performance budgeting results--in the form of improved program performance, enhanced public satisfaction, savings, and greater accountability--will require three additional elements.
Recommendation. The experience to date of the three Resources and Environmental Protection departments involved in performance budgeting suggests that development of meaningful performance measures will be a key element in making performance budgeting work. We recommend that the three departments report at budget hearings on their progress to date and their proposed budget contracts and performance measures with the Legislature for 1995-96, and their future plans for implementing performance budgeting.
We recommend that the Legislature consider negotiating a performance budgeting contract with the CCC which provides substantially more administrative flexibility than it might be willing to approve for other performance budgeting departments. Should the Legislature decide to provide the CCC with such increased flexibility, we further recommend that the Legislature design appropriate rewards, sanctions, and reporting requirements to complement this increased flexibility.
The administration has indicated that performance budgeting, along with other management techniques such as quality improvement and strategic planning, offers the potential for substantial savings, improved program performance, enhanced public satisfaction, and greater accountability in the delivery of state services. As we discuss in our Crosscutting Issues section of the State Administration chapter of this Analysis, however, significant results cannot be expected from relatively minor changes in administrative flexibility. For that reason, we believe that it would be worthwhile to test the effect on performance of providing substantially greater administrative flexibility to an appropriate department.
California Conservation Corps an Appropriate Candidate. In this context, we think that the CCC would be a likely candidate, for the following reasons:
For 1995-96, however, the Governor's Budget caps expenditures from reimbursements at $20.3 million. Consequently, if the CCC is successful in generating more activities for which they are fully reimbursed, the CCC will not be able to carry out these activities without further approval by the Department of Finance and notification of the Legislature. Similarly, any excess reimbursements (accumulated over time) cannot be expended without further appropriation. While the CCC should be held accountable for its use of revenues in the fund, we think it would be consistent with performance budgeting to let the department use the fund as envisioned in statute. This would entail permitting the department to deposit revenues from reimbursements directly into the Collins-Dugan Fund, and continuously appropriating the funds to the department for a specified period--such as two years--for the purposes specified in statute.
Rewards, Sanctions, and Reporting Requirements Should Be Specified. We think that performance budgeting should include appropriate rewards for departments that use increased flexibility to improve their performance. For example, departments might be permitted to reinvest a portion of any savings resulting from increased efficiency in program improvements. Appropriate incentives and rewards likely will encourage innovation and staff commitment to the performance budgeting pilot program.
While increased managerial flexibility may lead to improved departmental performance, it also carries with it a potential for increased failure. If the Legislature should grant the CCC significant administrative flexibility, we think it is particularly important that all parties--the administration, the CCC, and the Legislature--agree to appropriate sanctions in the event that the CCC fails to use its increased flexibility to meet its performance measures. We think that such sanctions should not take the form of budgetary or administrative constraints, which could have an adverse impact on departmental programs, but rather be sanctions applicable to those making the promises and those possessing the authority to fulfill them. For example, appropriate sanctions might include not granting a pay increase to those individuals making the promises, or removing them from their positions.
In order to ensure that increased administrative flexibility produces the desired results--savings, program performance, public satisfaction and accountability--the Legislature may also want to require the CCC to provide semi-annual reports. Such reports might identify Collins-Dugan Fund revenues and expenditures, and the impact of the increased flexibility on the department's progress in meeting its performance measures.
Recommendation. We believe that the CCC might be able to demonstrate that significant administrative flexibility can produce significant results. Accordingly, we recommend that the Legislature consider negotiating a budget contract with the CCC which provides substantially more administrative flexibility than it might be willing to provide to other performance budgeting pilot departments. We further recommend that the Legislature design appropriate rewards, sanctions, and reporting requirements to complement the increased flexibility.
The state uses a variety of special and bond funds to support the departments, conservancies, boards, and programs that regulate and manage the state's resources. In this section, we provide a status report on selected special funds and bond funds supporting these programs. For purposes of this review, we divided the funds into three categories: (1) resources special funds, (2) park-related bonds, and (3) bonds for water programs. (We discuss the condition of various environmental protection funds in the write-ups of the individual departments and boards.)
Based on our review of selected special funds and bond funds, we conclude that, if the Legislature approves the Governor's spending proposals, there will be little money available in (1) special funds for legislative priorities and (2) park-related bond funds to start new park projects.
Figure 7 summarizes the totals available, the expenditures proposed in the Governor's Budget, and the reserve balances available for selected special funds. Below we discuss the status of individual funds and provide some general comments.
Special Account for Capital Outlay (SAFCO). Funds in this account are derived from state lease revenues arising from oil and gas development in state tidelands. Money from the SAFCO is used primarily for capital outlay purposes, but is available for other General Fund purposes as well. For the budget year, however, no deposit will be made to SAFCO, and no expenditures from the account are proposed, leaving a projected balance at the end of 1995-96 of $1.7 million. Tidelands revenues will instead be deposited in the General Fund.
Outer Continental Shelf Lands Act, Section 8(g) Revenue Fund. Revenues to this fund come from royalties and other payments for the oil and gas recovered from submerged federal lands that are adjacent to California. The amount is determined by an agreement with the federal government. These funds can be appropriated for any purpose.
For 1995-96, the budget proposes to transfer all of these revenues ($23.9 million) to the General Fund. Departments and programs which rely on Section 8(g) funds are proposed to receive funding from the General Fund instead. (In the 1994-95 Budget Act, the Legislature rejected a similar proposal, and continued to fund Section 8(g) departments out of the 8(g) fund.)
Environmental License Plate Fund (ELPF). The ELPF derives its funding from the sale of personalized motor vehicle license plates by the Department of Motor Vehicles. Funds from the ELPF can be used for the following purposes:
The budget proposes expenditures totaling $21.1 million from the ELPF, a decrease of $4.2 million (16 percent) from estimated current-year spending. The decrease in spending is due primarily to a proposed transfer from the ELPF to the Habitat Conservation Fund (HCF) of $5.9 million.
Public Resources Account, Cigarette and Tobacco Products Surtax Fund. The Public Resources Account (PRA) receives 5 percent of the revenue from the Cigarette and Tobacco Products Surtax Fund. The budget projects account resources to be about $22.7 million in 1995-96. Generally, the PRA funds must be used in equal amounts for (1) park and recreation programs at the state or local level and (2) habitat programs and projects.
Of the projected revenues, the budget proposes to transfer about $3.4 million to the HCF. This will leave $19.3 million available for other expenditures from the PRA, of which the budget proposes expenditures for various departments totaling $18.5 million. This is a decrease of $3.7 million (17 percent) from estimated current- year expenditures. This decrease is due largely to the elimination of PRA funding to the Department of Water Resources (DWR) for support and capital outlay.
Habitat Conservation Fund. The HCF was created by Proposition 117, the California Wildlife Protection Act of 1990. The proposition requires that the fund receive annual revenues of $30 million primarily for wildlife habitat acquisitions and improvements. To provide this funding level, Proposition 117 requires transfer of (1) 10 percent of funds from the Unallocated Account, Cigarette and Tobacco Surtax Fund, and (2) additional funds from the General Fund to total $30 million. Proposition 117 allows the Legislature to substitute for the General Fund the transfer of other appropriate funds.
The budget proposes to transfer about $27.4 million from various funds into the HCF in 1995-96. These funds are proposed to fund activities of the California Tahoe Conservancy, State Coastal Conservancy, Department of Parks and Recreation, and the Wildlife Conservation Board (WCB). Specifically, the budget proposes $21.4 million to be allocated to the WCB. Beginning in 1995-96, the Santa Monica Mountains Conservancy, in accordance with Proposition 117, will not receive any funding from the HCF.
Park-Related Bonds. Figure 8 shows the amounts available in selected park bond funds and the expenditures proposed for 1995-96. Park development projects and land acquisitions have traditionally been funded by various bonds passed by the voters. The availability of bond funds has contributed to the Legislature's flexibility in funding its priorities in past years. This is because the Legislature has been able to free up funds in the ELPF and the PRA by using bond funds to the greatest extent possible to fund various projects.
The budget projects available park-related bond fund balances totaling $40.4 million at the beginning of 1995-96, as shown in Figure 8. The figure also shows that the fund balance at the end of 1995-96 is estimated to be $14.9 million. Of this amount, $11.4 million is in the 1988 Park Bond. Much of these funds are earmarked for the development of particular geographic areas and for certain categories of projects. Consequently, the amount of funding that is available for projects that do not fall into these categories will actually be less than $11.4 million.
Based on our review of bond funding for water programs, we conclude that (1) there are sufficient funds available in 1995-96 to continue local water supply and wastewater treatment programs, but (2) there is little money available for new water projects not yet in the "pipeline."
There are several bond fund programs that provide loans and grants to local water agencies to enhance water quality and water supply. These include (1) the safe drinking water program; (2) water supply programs, including programs for water conservation, groundwater discharge, and water reclamation; and (3) the wastewater treatment program.
As indicated in Figure 9, the budget reflects expenditures totaling $74.8 million for these programs.
Safe Drinking Water. The budget projects total expenditures of $18.9 million in 1995-96, leaving a balance of $67 million at the end of 1995-96. The DWR advises, however, that it has pending grant applications against most of this balance.
Water Supply. The budget reflects $40.2 million in expenditures for water supply programs in 1995-96, leaving a balance available for 1996-97 of $34.7 million. According to staff at the DWR and the State Water Resources Control Board, most of this balance is for pending applications for projects.
Wastewater Treatment. The budget proposes expenditures of $15.6 million from the 1984 State Clean Water Fund to fund wastewater treatment projects in 1995-96. This will leave a balance in the fund of $30.4 million at the end of 1995-96. The budget indicates that a majority of the balance is for projects considered to be in the pipeline.
In summary, based on the projected expenditures of water bond funds, there will be sufficient amounts to continue funding water programs in 1995-96 at the levels proposed in the budget. However, it appears that most of the remaining fund balances are not available for new projects in 1996-97 given pending applications for projects already in the pipeline.
The Secretary for Environmental Protection heads the California Environmental Protection Agency (Cal-EPA). The Secretary is responsible for overseeing and coordinating the activities of the following departments that make up Cal-EPA:
Major activities of Cal-EPA have included permit and regulatory reform, the promotion of pollution prevention, the development of markets for environmental technologies, and the establishment of business assistance programs such as the "one- stop permitting" centers. Many of Cal-EPA's initiatives have been implemented in conjunction with the constituent agencies within Cal-EPA and with other state agencies, such as the Trade and Commerce Agency.
The budget proposes total expenditures of $2.5 million for the Secretary in 1995-96. Of these expenditures, about $1.6 million are for personal services (salaries and benefits) of 22.9 personnel-years. These levels of expenditures for staff are about the same as estimated current-year expenditures. This staffing level does not include a large number of positions which currently are on loan to the Secretary from various Cal-EPA boards and departments.
At least 36 employees will be loaned to the Secretary from other Cal-EPA boards and departments in 1994-95. This represents expenditures of $1.2 million in 1994-95, in addition to the $1.6 million of personal service expenditures reflected in the Secretary's budget.
The Supplemental Report of the 1994 Budget Act required the Secretary to report to the Legislature on a quarterly basis on the number of employees loaned to work for the Secretary from other departments or boards within Cal-EPA. The report required information on salary and benefits paid as well as evidence to support compliance with rules of the State Personnel Board which govern interagency loans of employees.
Current law provides that employees may be loaned between state agencies generally for up to two years for training purposes or "to enable an agency to obtain expertise to meet a compelling program or management need." Rules of the State Personnel Board define such a compelling need as needs which are "urgent," "nonrecurring," and "have a broad and significant impact on departmental operations and efficiency." Loaned employees remain employees of the agency from which they are lent for the duration of the loan.
We have reviewed the Secretary's two quarterly reports for the first half of the current year. The following summarizes the reports:
The Secretary has advised us that it is likely that many of the positions currently filled by employees loaned to the Secretary from Cal-EPA boards and departments will be filled by loaned employees in 1995-96. The Secretary does not anticipate that the number of loaned employees will increase in 1995-96.
The existence of employee loans is not reflected in the budgets of either the Secretary or the constituent boards and departments from which the employees are loaned. Given the extent of the employee loans, this complicates the oversight by the Legislature of the activities of both the Secretary and the departments within Cal- EPA.
In order for the Legislature to be fully informed of the various environmental technology projects and programs initiated by Cal-EPA, we recommend that the Secretary report at budget hearings on: (1) Cal-EPA's strategic plan for the development and commercialization of the environmental technology industry, setting out both short and long-term goals; (2) how the various programs and entities that have been established, or are proposed, fit within the strategic plan; (3) the role of state agencies other than Cal-EPA in the various initiatives; and (4) the cost, funding sources, and personnel-years for the various initiatives.
The Cal-EPA has initiated a number of projects relating to the development and commercialization of California's environmental technology industry. Our review shows that most of these initiatives were administratively established without legislative authorization. Funding and staff support for the initiatives has been provided from Cal-EPA's constituent departments. Below we review these initiatives.
California Environmental Technology Partnership. The California Environmental Technology Partnership was initiated administratively by Cal-EPA in 1993 as a public-private partnership "to promote the research, development, commercialization, and export of California's $20 billion environmental technology industry." The partnership consists of Cal-EPA, the Trade and Commerce Agency, and representatives from industry, universities, laboratories, and public interest groups. The partnership has developed a "strategic plan" for California's environmental technology industry, with a number of goals, including:
In the current year, six staff have been loaned from Cal-EPA boards and departments to provide support to this partnership. The partnership activity is in addition to activities in individual departments and boards related to technology development. For instance, in the current year, the budget provides $1.6 million (reimbursements) for the DTSC to implement a streamlined certification of new, lower-risk technologies, and $1.2 million (Motor Vehicle Account) for the ARB to provide research grants for technology development.
California Environmental Technology Center. The California Environmental Technology Center, created administratively in August 1994, is a public-private partnership between Cal-EPA and the Scripps Institution of Oceanography at the University of California at San Diego (UCSD). The center's objective--which is broad in scope--is to promote the development of environmental technologies and create markets for their use. The center helps to fund and coordinates public and private resources for environmental research and development projects, and provides business strategies and analyses of marketplace opportunities.
A majority of the center's funding will support research partnerships among industry, laboratories, universities and federal and state governments. Expenditures for the center in 1994-95 are about $1.2 million, redirected from various boards and departments within Cal-EPA. This amount includes $400,000 of in-kind services representing staff loaned to the center from Cal-EPA boards and departments.
The budget proposes expenditures of about $1.9 million in 1995-96, a 38 percent increase over the current year. Of this amount, $750,000 will be redirected from funding of various boards and departments in Cal-EPA. Additionally, the budget requests an augmentation of $1.1 million from various special funds supporting Cal-EPA boards and departments. In-kind services of $300,000 will also be provided by the UCSD. The administration anticipates that ongoing funding for the center's activities in future years will come primarily from federal research and development grants.
Office of Environmental Technology. The Governor's Budget states that Cal-EPA will establish an Office of Environmental Technology. It has yet to be decided where this new office will be located. Currently, new environmental technologies are evaluated for permitting purposes (for both sale and use) by potentially several regulatory agencies within Cal-EPA. The proposed office would offer a one-stop evaluation and "certification" of the effectiveness and efficiency of new environmental technologies, so as to expedite the permitting process. The overall objective is to enhance the ability of these technologies to access, and be used in, the market. While reference is made to establishing the office by redirecting certain scientific and engineering programs from various Cal-EPA boards and departments, no details have been provided.
Need for Legislative Oversight. While the Legislature has reviewed and approved technology development activities in various boards and departments, the above Cal-EPA projects have been initiated without prior review by the Legislature. While we see merit in promoting the development and commercialization of California's environmental technology industry, we believe that the Legislature ought to be fully informed of the objectives, scope and funding of these initiatives before they are undertaken in order to ensure that they are consistent with legislative priorities, coordinated, and not duplicative of one another.
Accordingly, we recommend that the Secretary report at budget hearings on the following:
The California Conservation Corps (CCC) provides on-the-job training and education opportunities to California residents aged 18 through 23 with projects that conserve and enhance the state's natural resources and environment. The CCC headquarters in Sacramento operates 13 residential base centers, one nonresidential service district, and 30 satellite centers. The CCC also develops and provides funding for 11 community conservation corps in neighborhoods with large concentrations of minority youth and high youth unemployment.
The budget proposes expenditures totaling $56.7 million in 1995-96. This amount includes (1) $27.5 million from the General Fund, (2) $5.6 million from the Energy Resources Programs Account, (3) $2.1 million from the Petroleum Violation Escrow Account, and (4) $20.3 million in reimbursements. Total proposed expenditures are $2.2 million (or 3.7 percent) lower than estimated current-year expenditures. The reduction is due primarily to reduction of one-time funding of $2.7 million provided in the current year to settle a Fair Labor Standards Act lawsuit.
As we discuss under the Crosscutting Issues section of this chapter, the CCC is one of five departments selected by the administration for a pilot project in performance budgeting.
We withhold recommendation on the request for $2.8 million from the Petroleum Violation Escrow Account (PVEA) and from reimbursements for a new Energy Center in Southern California, because the proposal hinges on passage of legislation in 1994-95. We further recommend that the CCC report at budget hearings on the status of this legislation, and its plans to fund and develop the center in the event that funding is not provided for 1994-95.
Since 1979, the CCC has operated an Energy Center in Placer County, which provides training to corps members in implementing a range of energy and water conservation projects, including weatherization, water conservation and plumbing, and solar energy installation. Project sponsors include federal, state, and local governments, schools, nonprofit organizations, and utility companies. Sponsors typically pay for materials and reimburse the CCC for much of its labor costs.
Budget Request. The budget requests $2.1 million from the Petroleum Violation Escrow Account (PVEA) and $706,000 in increased reimbursements for the development in 1995-96 of a new Energy Center in Southern California. Of the total requested, about $1.2 million is for corps member salaries, $596,000 is for staff costs, and $932,000 is for operating expenses and equipment, including vehicles, tools, and staff training costs.
The budget indicates that the Governor has committed to increasing the size of the CCC by 50 percent by the year 2000. According to the CCC, the proposed energy center is one step towards this expansion. The new center is expected to be approximately the same size and cost as the Placer Energy Center, and will conduct similar operations. It will have training capacity for a total of 90 corps members, including residential accommodations for 66 corps members. The department anticipates ongoing, annual costs to operate the center of $2.1 million beginning in 1996-97.
Request Depends on Passage of Legislation. The department currently has statutory authority to add another energy center. However, the department proposes to start the center in the current year and, in order to do so, indicates that it plans to seek funding (through legislation) for the center. The department plans to request $609,000 from the PVEA to cover the costs of center development for three months (April through June). This includes $547,000 for facility start-up costs, such as minor renovations to bring a residential facility into compliance with health and safety codes. At the time this analysis was prepared, the proposed legislation had not been introduced.
The department indicates that it has not selected a final location, but has examined various alternative locations near Compton for the new center, as well as a Department of Water Resources facility at Castaic Lake. According to the department, if it does not receive funding for the current year, it may have to request an amendment to the budget request in order to provide additional funding for facility start-up costs in the budget year.
Recommendation. Based on our review, we believe the expansion proposal has merit. However, it is not known at this time whether legislation will be enacted providing funding to the CCC in the current year to develop the Energy Center. Because the amount needed in 1995-96 for the center's development depends on whether the CCC can perform some of the development tasks in 1994-95, we withhold recommendation on the budget-year request pending the enactment of legislation.
We further recommend that the CCC report at budget hearings on the status of the proposed legislation and the CCC's plans to fund and develop the center in the event that the legislation does not pass. If it becomes apparent that the requested level of funding for the current year will be provided, then we recommend approval of the request for 1995-96. Otherwise, the CCC and the Department of Finance will need to revise the budget-year request, and the revised request should be reviewed at that time.
The Department of Conservation (DOC) is charged with the development and management of the state's land, energy, and mineral resources. The department administers programs in the areas of: geology, seismology, and mineral resources; oil, gas, and geothermal resources; agricultural and open-space land; and beverage container recycling.
The DOC proposes expenditures totaling $185.8 million in 1995-96, a decrease of about $187.0 million, or 50 percent, from estimated current-year expenditures. This level of funding reflects the administration's proposal to eliminate the DOC beginning January 1, 1996, as discussed below.
At the time this analysis was prepared, it was not possible to determine if the Governor's reorganization proposal for various resources and environmental protection departments has merit because the details of the plan have not been provided to the Legislature. If it appears that the Governor's reorganization plan will not be submitted to the Legislature in time for full consideration before the Budget Act is adopted, we recommend that full-year funding for the DOC be reestablished. The Budget Act should be amended if legislation to eliminate or restructure the DOC is subsequently enacted.
As we discuss in the Crosscutting Issues section of this chapter, the budget proposes to eliminate the DOC and transfer its recycling program to the California Integrated Waste Management Board, and its other programs to a newly formed Department of Energy and Conservation. Reflecting this proposal, the budget proposes to fund the DOC only for the first half of 1995-96.
Given that it is not certain when the Governor's reorganization plan will ultimately be presented to the Legislature, we recommend that the Secretary for Resources and the Secretary for Environmental Protection report at budget hearings on the plan and its status. If it appears at that point that the plan will not be submitted to the Legislature in time for full consideration before the Budget Act is adopted, then we recommend that full-year funding for the DOC be reestablished. If legislation
is subsequently enacted to consolidate or restructure the department, the Budget Act should be amended accordingly at that time.
We recommend (1) a reduction of $679,000 from the Surface Mining and Reclamation Account and six positions and (2) an increase of $100,000 in reimbursements for the classification of the state's mineral resources, because (1) the proposed workload for these positions exceeds the workload required under current law and (2) any workload resulting from petitions should be funded from reimbursements. (Reduce Item 3480-001-035 by $679,000 and increase reimbursements in Item 3480-001-001 by $100,000.)
Under the Surface Mining and Reclamation Act of 1975 (SMARA), the State Geologist is required to classify certain areas of the state on the basis of their mineral resources. Areas are to be classified as containing little or no mineral deposits, containing significant deposits, or requiring further evaluation. This classification is carried out by the department's Division of Mines and Geology (DMG), which provides staff for the State Geologist. In the current year, the DMG has a staff of 12.5 positions and a budget of $1.1 million to perform its mineral classification responsibilities.
Budget-Year Proposal. For 1995-96, the budget requests an additional $579,000 from the Surface Mining and Reclamation Account in the General Fund to support six positions for the mineral classification program. This would bring the total support for the program to $1.7 million and 18.5 positions. According to the department, the positions are justified in order that the State Geologist and the DMG can complete mineral classification of the entire state in a timely manner.
Plan to Classify Entire State Exceeds Statutory Responsibilities. Our review, however, indicates that the State Geologist is not required by statute to classify the mineral resources of the entire state. Rather, under current law, the State Geologist is required to classify only those areas which fall into at least one of the following three categories: (1) areas identified by the Office of Planning and Research (OPR) based on specified criteria; (2) other areas specified by the State Mining and Geology Board (the board has broad policy responsibilities for mineral resource conservation and mining in California); and (3) areas for which classification has been requested by a petition, submitted by either a government or private entity, which has been accepted by the board.
Thus, the department's intent to complete a mineral classification of the entire state goes beyond the responsibilities delineated in current law. Furthermore, the department has not provided justification as to why there is a need to do so. A better prioritization of workload in accordance with statutory direction would likely not result in a need for six additional staff.
Program Workload Could Increase Due to Increased Petitions. Our analysis further indicates that the number of areas identified by OPR or the board for classification has not increased significantly in recent years. However, there has been an increase in the requests for mineral classification from outside entities. In recent annual work plans, for example, the DMG has consistently pointed to a flow of new petitions and repeated requests of mining industry groups for mineral classification of additional areas. The increased petitions could result in higher classification workload if the board accepts more petitions in 1995-96 than in previous years. (In past years the board has tended to approve no more than four petitions annually.)
Reimbursements Should Fund Increased Workload Resulting From Petitions. If the board should accept more classification petitions in 1995-96 than in past years, our analysis indicates that the resulting increase in workload would most appropriately be funded from reimbursements, not from the Surface Mining and Reclamation Account. This is because under current law, petitioners are required to pay the costs associated with the workload they create for the department. Specifically, Ch 1097/90 (AB 3551, Sher) requires that petitioners pay the reasonable costs of classifying an area for which they have requested classification.
Reimbursements Should Also Fund More of Existing Workload. In addition, our analysis indicates that the department should also fund a greater portion of its existing workload through reimbursements, instead of the Surface Mining and Reclamation Account. This is because although the department has conducted about four petitioned classifications annually in recent years, it has consistently failed to collect reimbursements from petitioners to cover the costs it incurs in preparing these petitions, as required by Chapter 1097.
We estimate that the average cost to the department of providing mineral classification for an area in response to a petition is about $25,000. Thus, the department should be reimbursed by about $100,000 for petitioned work, and the work should not be funded from the Surface Mining and Reclamation Account.
Recommendation. Our analysis indicates that the department's intent to complete mineral classification of the entire state goes beyond its responsibilities as delineated in current law. Our analysis further indicates that any classification workload resulting from petitions for mineral classification should be funded not out of the Surface Mining and Reclamation Account, but out of reimbursements. We therefore recommend a reduction of $679,000 in Surface Mining and Reclamation Account funds and six new positions. We further recommend that reimbursements be increased by $100,000.
A private contractor has completed a review of the department's implementation of the Landslide Hazard Identification Program and has made various recommendations relating to the department's ongoing implementation of the program. We recommend that the department report at budget hearings on the current status of its implementation of the review's recommendations.
Current law requires the department to review its implementation of the Landslide Hazard Identification Program which identifies and maps areas of the state subject to landslide hazards. The department is further required to submit this review to the Legislative Analyst for review and comment. Our review indicates that the department has completed the required review, which was submitted to the department by a private contractor, and that the review addressed the elements specified in statute. For example, the consultant's review indicated that the department had mapped about 2,600 square miles of landslide-prone areas as of September 1993, and was in the process of mapping an additional 814 square miles.
The consultant's review also found that landslide hazard mapping had progressed slowly, however, and that the department lacked an overall plan to establish mapping priorities. To address these and related problems, the review recommended that the department (1) develop a new master plan and mapping priorities for the program; (2) better inform cities and counties about the program; and (3) increase its productivity so as to complete all mapping within 10 to 15 years.
Given the importance of the program to public safety, we recommend that the department report at budget hearings on its implementation of the review's recommendations.
The California Department of Forestry and Fire Protection (CDFFP), under the policy direction of the Board of Forestry, provides fire protection services directly or through contracts for timberlands, rangelands, and brushlands owned privately or by the state or local agencies. In addition, the CDFFP (1) regulates timber harvesting on forestland owned privately or by the state and (2) provides a variety of resource management services for owners of forestlands, rangelands, and brushlands.
The budget requests $417.4 million from the General Fund ($296.3 million), various other state funds ($22.2 million), and federal funds and reimbursements ($98.9 million) for support of the CDFFP in 1995-96. This is a decrease of $14.9 million, or 3.4 percent, from estimated current-year expenditures. The decrease is due primarily to a decrease in the General Fund of $14.3 million, or 4.6 percent, resulting largely from a decrease in the level of funds budgeted for emergency fire suppression costs below current-year estimated expenditures.
At the time of our Analysis, the department had not yet submitted to the Legislature a required report on the status of the department's reorganization. We recommend that the department report at budget hearings on the status of the reorganization.
In 1994-95, the department reorganized, with the intent of focusing more narrowly on high priority tasks including emergency fire suppression. The department indicated that it would redirect staff resources to increase its fire protection staff by 35, and consolidate its statewide command from four to two regions, with command centers located in Redding and Riverside.
Concerns Raised About Reorganization. In our Analysis of the 1994-95 Budget Bill (p. B-33), we raised concerns about the department's proposed reorganization. Specifically, the department was undertaking its reorganization before submitting to the Legislature a long-term strategic plan that outlines its statutory mission and the fiscal and policy means of achieving it, as required by the Supplemental Report of the 1993 Budget Act. As a consequence, the Legislature was not able to evaluate the appropriateness of the reorganization relative to the department's mission and strategic plan, particularly given potential risks we identified with the reorganization proposal.
Report on Reorganization Not Yet Presented to Legislature. Because of these concerns, the Legislature required the department to submit a report by January 1, 1995, on the status of the department's reorganization, and any future reorganization phases which the department was considering. At the time this analysis was prepared, the report had not yet been submitted to the Legislature.
Elements of Reorganization Appear to Have Been Successful, but Questions Remain. One of the risks we pointed out in 1994 was that CDFFP headquarters in Sacramento would not track the deployment of emergency fire suppression resources as closely as it did under the previous organizational structure, but would still need to coordinate and mediate demands when the two regional offices were competing for resources. While these situations occur infrequently, such situations would be critical because they would occur when the state's fire-fighting resources were already stretched to the limit.
Based on discussions with department field staff, it appears that under the new reorganized structure, CDFFP has avoided any serious, statewide breakdowns in its system of allocating resources. To this end, the department should be credited for its efforts to date. However, other problems have been identified that need to be resolved. For example, the consolidation of command centers has highlighted limitations in CDFFP's telecommunications and dispatch system. During the course of the 1994-95 fire season, for example, the Redding command center encountered difficulties communicating with ranger units and equipment located in coastal areas once served by the Santa Rosa command center.
Recommendation. Given the impact of the department's fire- fighting mission on public safety and management of the state's forest resources, we recommend that the department report at budget hearings on the status of the reorganization and discuss any future reorganization plans under consideration to resolve problems encountered in its operations as a result of the current reorganization.
The budget requests $40 million specifically for emergency fire suppression. This amount represents a more realistic projection of the likely costs of emergency fire-fighting in 1995-96 than that provided in previous years, and reduces the likelihood that the department will require a deficiency appropriation for emergency fire suppression.
The budget requests $40 million for the department to suppress emergency wildfires in State Responsibility Areas (SRAs) in 1995-96. As in 1994-95, the budget also requests authority for the Department of Finance to allocate up to $10 million to the department from the Special Fund for Economic Uncertainties for emergency fire suppression. Thus, the total funding provided for in the Budget Act for emergency fire suppression in 1995-96 is $50 million.
Department Incurs High Annual Costs for Emergency Fire Suppression. The CDFFP incurs emergency fire suppression costs when it responds to large wildland fires or keeps field staff and equipment at full strength during times of high fire activity. Although annual costs in suppressing wildland fires fluctuate, these costs represents a significant drain on the General Fund. From 1989-90 through 1993-94, for example, the average annual cost of emergency fire suppression was about $41 million. Estimated expenditures on emergency fire suppression in the current year exceed this five-year average, at about $56 million.
Past Budgets Consistently Underbudgeted for Emergency Fire Costs. Funding provided in the Budget Act has often been inadequate in the past to meet the high costs of emergency fire suppression. In recent years, the Budget Act has usually allocated $20 million to the department for these costs. In addition, the Budget Act has authorized the Department of Finance to allocate up to $10 million from the Special Fund for Economic Uncertainties for emergency fire suppression. If $30 million is inadequate, the department must then seek additional funding through a deficiency appropriation.
Budget Proposal More in Line With Recent Costs. The $50 million requested for 1995-96 represents a more realistic projection of the costs of emergency fire suppression than in previous years. This level of funding reduces the likelihood that the department will require a deficiency appropriation to fund emergency fire suppression, as in past years.
We recommend a reduction of $401,000 for four land use coordinators because the efficacy of these positions will be limited by the lack of a clear policy regarding the department's appropriate role and objectives in shaping federal and local land use decisions. (Reduce Item 3540-001-140 by $401,000.)
The budget proposes $401,000 from the Environmental License Plate Fund for four "land use coordinators." These coordinators would have two principal objectives: (1) to provide departmental input into local land use decisions, to improve the fire safety of local development occurring in SRAs and (2) to review and comment on federal land use practices to encourage better fuel management on federal lands.
Concept of Stronger Department Role in Land Use Planning Has Merit. The Legislature has recognized the need for involvement by CDFFP in local land use planning that affects the state's fire protection mission in SRAs. Under current law, for example, county planning agencies are required to submit drafts of safety elements of the county's general plan, or any amendments to the safety element, to the Board of Forestry. The board is required to comment in writing on these submissions.
Recently, the Legislature has sought to strengthen the department's statewide role in shaping local land use decisions. In 1994, for example, the Legislature passed AB 3812 (V. Brown). (This legislation was vetoed by the Governor.) Assembly Bill 3812 would have required county planning agencies to submit to the board not only the safety elements of their general plans, but also draft conservation and land use elements.
Department Lacks Clear Policy on Role in Land Use Planning. We believe that appropriate departmental involvement in local and federal land use planning could result in better management of wildland and forest resources and safer development. However, we are concerned that this proposal will not achieve those goals at either the federal or local levels for the following reasons.
Accordingly, we recommend a reduction of $401,000 because the efficacy of the requested land use coordinator positions will be limited by the lack of a clear policy on the department's appropriate involvement in federal and local land use decisions.
We withhold recommendation on $10 million for airtanker retrofit pending receipt of the department's plan for modernizing its air operations program. (Withhold recommendation on $10 million in Item 3540-001-001.) Further recommend that the department report at budget hearings on the projected costs of, and schedule for, modernizing its air operations program.
The budget proposes $10 million from the General Fund to replace the piston engines with turbo-prop engines in four of the department's 16 S-2 airtankers, which are used to extinguish wildland fires. (The retrofitted airtankers will be known as S- 2Ts.) This proposal is the first part of a two-year retrofit plan. The department plans to request an additional $10 million from the General Fund in 1996-97 to retrofit four more S-2 airtankers. The department indicates that the retrofit plan is part of a multi- year plan to modernize the department's air operations program (AOP).
Multi-Year Plan Not Yet Finalized. Beyond the request to retrofit S-2 airtankers, however, the details of the department's long-range plan to modernize its AOP were not clear at the time this analysis was prepared. This is because the department has not adopted a final plan for modernizing the program. Thus, for example, it is not yet clear whether the department intends to retrofit all 16 S-2s, and under what schedule. However, department staff indicate that the plan will adopt most of the recommendations made in a consultant report prepared in 1993. We have several concerns about using the consultant report as the basis for the modernization plan. We believe that the department's final plan should address these concerns.
Consultant Study Did Not Examine Less Expensive Options. The consultant study performed a life-cycle cost analysis of only two options for modernizing CDFFP's fleet of airtankers, one of which is to retrofit the S-2s with turbo-prop engines. Converting the S-2s to S-2Ts is a relatively expensive option. We are concerned, however, that the consultant study did not examine other less expensive options. For example, the consultant study cited other planes, specifically the E-2, the S-3, and the T-43, as potentially offering significant cost advantages as replacement planes, but did not analyze the costs of shifting to these planes. The report also did not examine the option of gradually shifting to contracting with privately owned aircraft as the current fleet of S-2s is retired.
Study Does Not Examine Increased Role of Helicopters in Air Operations. Additionally, the consultant report focused primarily on the department's airtankers. It did not examine the role of helicopters in the department's AOP. However, helicopters may play a greater role in CDFFP's air operations program in the future because of their versatility and capability to operate in high density population areas and drop retardant with a greater degree of accuracy than airtankers. In its 1992 plan for the AOP, for example, CDFFP noted that helicopters had become a vital part of the department's fire-fighting strategy, and indicated that over time there would be more helicopters and fewer airtankers in the CDFFP fire- fighting arsenal.
Modernization Plan Should Account for Important Variables. We believe that the department's modernization plan should also address several other variables which will have an impact on the department's air operations program and emergency fire suppression mission.
Current S-2s Will Not Require Replacement Until 1997. According to the department, it can continue flying all 16 of the S-2s until the 1997 fire season before it will have to begin retiring the planes at the rate of four per year. We believe that this provides an opportunity for the department to refine its options for modernizing its air operations program.
The department indicates that the modernization plan will be finalized sometime in March. Pending completion of the plan, we withhold recommendation on $10 million from the General Fund to retrofit four S-2 airtankers. We further recommend that the department report at budget hearings on the projected total cost of, and schedule for, modernizing its air operations program.
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