Augmentation for

Employee Compensation (9800)

A major portion of state government expenditures is for compensation of state employees. The Governor's budget projects $13 billion in salary and wage expenditures for nearly 284,000 authorized personnel-years in 1998-99 (including $4.3 billion and 90,000 personnel-years in higher education). Including benefits (such as contributions to retirement and health insurance), estimated employee compensation expenditures exceed $15 billion for the budget year.

The following employee compensation issues are discussed below:

Employee Pay/Benefit Increases

State Civil Service Employees. State employees (other than those in higher education) last received a general pay increase (3 percent) on January 1, 1995. Figure 12 (see next page) shows a history of general salary increases for state civil service employees and the consumer price indices for the United States and California since 1981-82. As shown in the figure, the Governor's budget includes an amount equivalent to a 3 percent salary increase for these state employees ($279 million). The total consists of $142 million from the General Fund and $68 million each from special funds and nongovernmental cost funds.

The Governor's budget indicates that the amount ultimately needed for this purpose is dependent on reaching agreement with the 21 employee bargaining units through the collective bargaining process. In recognition of this, the Budget Bill includes provisional language stipulating that (1) the amount in the bill is not to be construed to control or influence the collective bargaining process and (2) the funds are to be distributed in accordance with approved memoranda of understanding (MOU) for represented employees and based on salary and benefit schedules established by the Department of Personnel Administration (DPA) for nonrepresented employees. As discussed below, only one of the 21 employee bargaining units has reached tentative agreement on an MOU, and the Legislature has not approved that tentative agreement.
Figure 12
State General Salary Increases

1981-82 Through 1998-99

(Percent Increase)
Fiscal Year State General

Salary Increase

Consumer Price Index
United States California
1981-82 6.5% 8.8% 10.7%

4.2 2.3
1983-84 6.0 3.7 3.6
1984-85 8.0 3.9 4.9
1985-86 6.0 2.9 4.0
1986-87 6.0 2.2 3.3
1987-88 3.8 4.1 4.2
1988-89 6.0 4.6 4.8
1989-90 4.0 4.8 5.0
1990-91 5.0 5.5 5.3

3.2 3.6

3.1 3.2
1993-94 5.0 2.6 1.8
1994-95 3.0 2.9 1.7

2.7 1.4

2.9 2.3


2.2 2.5


3.0b 2.2 2.9
aLegislative Analyst's Office estimate of consumer price indices.
bGovernor's budget proposal is equivalent to a 3 percent general salary increase.

Employees in Higher Education. In higher education, the Governor proposes increases to the baseline budgets of the University of California and the California State University (in keeping with the terms of the Governor's four-year "compact") but leaves it to the systems to allocate these funds among compensation and other purposes. Out of this increase, the systems propose to spend $171 million for salary and benefit increases. Figure 13 shows how this amount will be allocated.
Figure 13
Higher Education

Salary and Benefit Increases

1998-99 Governor's Budget

General Fund

(In Millions)

University of California
4.5 percent faculty salary increase,

effective 10/1/98

2 percent staff cost-of-living increase, effective 10/1/98 19.9
Full-year cost of 1997-98 salary


Merit salary adjustments 35.2
Subtotal ($97.2)
California State University
Salary and benefit increases to be negotiated $71.3
Full-year cost of 1997-98 salary/

benefit increases

Subtotal ($73.7)
Higher Education Total $170.9

New Collective Bargaining

Agreements Still Under Negotiation

The Department of Personnel Administration should report to the budget committees during budget hearings on the administration's collective bargaining proposals and the status of negotiations.

The DPA began negotiations in 1995 with the 21 bargaining units representing rank-and-file state employees (other than higher education) for new MOUs governing compensation and other terms and conditions of employment. These MOUs are to replace those that, for the most part, expired June 30, 1995. In 1995, the DPA reached agreement with only one of the 21 units, the highway patrol officers. This MOU was approved by the Legislature but it expired on June 30, 1997. In December 1997, the DPA reached an agreement with the California Correctional Peace Officers Association but this proposed MOU had not, at the time this Analysiswas written, been submitted to the Legislature. Moreover, under the terms of the MOU, even if approved by the Legislature, it would expire on June 30, 1998.

Under current law, the provisions of expired MOUs generally remain in effect pending adoption of replacement MOUs. Unless the DPA can negotiate successfully with one or more of the 21 bargaining units before June 30, 1998, the state will begin another budget year with expired MOUs. Given this situation, we recommend that the DPA report to the budget committees during budget hearings on the administration's collective bargaining proposals and the status of negotiations.

Strengthen Legislature's

Collective Bargaining Oversight

We recommend that the Legislature reaffirm the policy adopted in the Supplemental Report of the 1996-97 Budget Act to assure that the Legislature will have the opportunity to fully review proposed collective bargaining agreements. We recommend further that the Legislature include the same language in the Supplemental Report for the 1998-99 Budget Act.

In our overview of employee compensation issues in past Analyses, we have discussed the need to strengthen the Legislature's oversight of proposed collective bargaining agreements. In order to ensure that the Legislature has the opportunity to appropriately review new MOUs, we have recommended that the Legislature adopt the following policies:

In response to this recommendation, the Legislature adopted the following language in the Supplemental Report of the 1996-97 Budget Act:

It is legislative intent to refer all memorandum of understanding to the appropriate policy and budget committees in each house. It is further legislative intent to give these committees a total of 30 days to review the policy and fiscal implications of each memorandum of understanding.

We recommend that the Legislature reaffirm the policy stated in the supplemental report and implement it for any MOU that is sent to the Legislature. We also recommend that the Legislature include the same language in the supplemental report for the 1998-99 budget.

Control Section 3.60

Public Employees' Retirement System Employer Contribution Rates

We withhold recommendation on employer contribution rates for retirement benefits pending (1) final determination of the actual rates to be applied in the budget year and (2) receipt and review of information regarding the actuarial assumptions underlying the rates.

This control section specifies the contribution rates for the various retirement classes of state employees in the Public Employees' Retirement System (PERS). The section also authorizes the Department of Finance to adjust any appropriation in the Budget Bill as required to conform with changes in these rates. In addition, the section requires the State Controller to offset these contributions with any surplus funds in the employer accounts of the retirement trust fund.

Under current law, the PERS is responsible for developing employer contribution rates each year based on actuarial analyses. At the time this Analysis was prepared, a final determination of these rates had not been made.

Consequently, we withhold recommendation pending final determination of 1998-99 rates and receipt and review of information from the PERS regarding the actuarial assumptions underlying the determined rates. This information is typically available in March or April.

Tax Relief (9100)

The state provides local property tax relief, both as subventions to local governments and as direct payments to eligible taxpayers, through seven different programs. The two largest programs are the Homeowners' Property Tax Relief (homeowners' exemption) and the Renters' Tax Relief (renters' credit) programs.

As required by the state Constitution, the homeowners' exemption grants a $7,000 property tax exemption on the assessed value of owner-occupied dwellings, and requires the state to reimburse local governments for the resulting reduction in property tax revenues. The exemption reduces the typical homeowner's taxes by about $75 annually. The Governor's budget proposes an expenditure of $395 million on this program in 1998-99. This is an increase of almost $4 million, or 1 percent, which reflects the expected growth in the number of homeowners claiming the exemption.

Proposal to Eliminate Renters' Credit

The renters' credit provides a refundable tax credit to Californians who rent their principal place of residence. The credit is applied first to income taxes due, with any balance paid directly to the renter as a refund. The amount of the credit is $60 for single renters and $120 for married couples or heads of households. The renters' credit program has been suspended in each year since 1993, but under existing law, the credit is scheduled to be reinstated in 1998. The budget proposes to permanently eliminate the credit, for a budgetary savings of about $540 million in 1998-99.

The renters' credit is primarily claimed by low- and moderate-income taxpayers. According to projections for the 1998 tax year, three-fourths of those eligible to claim the credit will have less than $30,000 in annual income and nearly one-third will have less than $10,000 in annual income (see Figure 14). Given the income of those eligible to claim the renters' credit, many have come to view the program as a means of easing the tax burden of lower-income Californians.
Figure 14
Renters' Credit

Claimants by Incomea

Adjusted Gross Income Number of


(In Thousands)


Of Total

Less than $10,000 1,804 31


$10,001 to $20,000 1,506 26
$20,001 to $30,000 1,070 18
$30,001 to $40,000 655 11
$40,001 to $50,000 384 7
More than $50,000 424 7
Totals 5,843 100


aBased on projections for the 1998 tax year.

If the Legislature wished to reinstate the renters' credit but at a lower cost to the state, a number of options would be available, including:

The Analysis of the 1997-98 Budget Bill addressed a number of other issues regarding the proposed elimination (see pages G-169 through G-172).

Commission on State Mandates (8885)

The Commission on State Mandates (commission) is responsible for determining whether local government claims for reimbursement of state-mandated local costs should be paid by the state. If the commission determines that a statute, executive order, or regulation contains a reimbursable mandate, the commission develops an estimate of the statewide cost of the mandated program and includes this estimate in a semiannual report. After receipt of this report, the Legislature appropriates funds in a "claims" bill to pay newly approved mandates. Subsequent-year costs of the mandate are then funded through the budget, under each affected department.

The commission is also responsible for reviewing requests from counties to reduce their general assistance grant levels. Specifically, under the "SB 1033" (Chapter 72, Statutes of 1993) process, counties may apply to the commission for a finding of "significant fiscal distress." Upon receipt of such a finding, counties are authorized to reduce their general assistance grant levels for up to three years.

The budget proposes expenditures of $1.1 million for 1998-99. This is $109,000, or 11 percent, more than estimated current-year expenditures. Most of this increase, $100,000, reflects funds for the commission to review two SB 1033 claims in the budget year. In the current year, the commission did not receive any SB 1033 applications and redirected its SB 1033 funds ($50,000) to pay for expenses associated with implementation of SB 11, Ayala (Chapter 945, Statues of 1995), a measure which modified and shortened the mandate test claim process. Because authority for seven counties to reduce their general assistance grant levels will expire in the budget year, it is highly possible that the commission will receive more than two SB 1033 applications in 1998-99. If this occurs, the commission will request additional funds, pursuant to Control Section 27.00, and proposed budget bill language would lengthen the time for application review.

$4 Million Cost for Late Budgets

In order to reduce state costs and legal ambiguity, we recommend the Legislature enact legislation to (1) repeal the 30 mandates that have been suspended consistently for several years , or (2) modify them so that the local government responsibility is optional, fee-financed, or mandatory only if the Legislature provides funding in the Budget Act.

Beginning in the 1991-92 Budget Act, the Legislature has regularly "suspended" a long series of laws and regulations that impose costs on local governments which the state is required to reimburse. To suspend a mandate, Section 17581 of the Government Code requires the Legislature to identify the law or regulation in the Budget Act and include an appropriation of zero dollars. During the year the Budget Act is in force, local governments are not required to carry out the mandated responsibilities, and are not eligible for state reimbursement. In recent years, the Legislature has eliminated state liabilities regarding 14 of these suspended mandates, generally by repealing the mandated activity, or by making the mandated activity optional or fee financed. Thirty other mandates shown in Figure 15, however, are once again proposed for suspension in the Budget Bill.

The process of "suspending" mandates was developed as a way to reduce state costs, without permanently eliminating the mandate. While awkward, the process works reasonably well, provided the state budget is adopted by July 1. In years when the budget is delayed, however, this process creates significant legal uncertainty, and can result in state costs to reimburse those local governments which carry out the mandated responsibilities during the interim between budgets.

For example, the 1998-99 budget includes $4.1 million to reimburse local governments for their costs to comply with the mandates shown in Figure 15 during the 49 days in 1997 in which the state did not have a budget. The $4.1 million cost--scheduled separately in the budgets for 11 departments--is a rough estimate, based on the $6 million the state paid to compensate local governments for their mandated costs during the 1992 budget delay. These are costs the state will have to pay, yet in our view the state received very little benefit from having these mandates reestablished for a month and a half.

In order to clarify local government responsibilities and avoid incurring costs during budget delays, we recommend the Legislature enact trailer legislation which does one of the following for each mandate proposed for suspension:

Figure 15
Mandated Programs

Proposed for Suspension In Budget Bill

Program Mandates
Programs Mandated by Law Chapter Year
Substandard housing 238 1974
Voter registration procedures 704 1975
Mineral resources policies 1131 1975
Local coastal plans 1330 1976
Guardianship/conservatorship 1357 1976
Voter registration roll purge 1401 1976
Senior citizen property tax deferral 1242 1977
Absentee ballots 77 1977
Filipino employees 845 1978
Handicapped voter access 494 1979
Short-Doyle case management 815 1979
Deaf teletype equipment 1032 1980
Regional housing 1143 1980
Involuntary lien notices 1281 1980
Victims statements minors 332 1981
Lis Pendens 889 1981
Democratic presidential delegates 103 1982
Mobilehome property tax deferral 1051 1983
Court audits and proration of fines 980 1983
Short-Doyle audits 1327 1984
Domestic violence information 1609 1984
Election materials 1042 1985
Residential care services 1352 1985
Open Meeting Act 541 1986
Property taxation 48 1987
CPR pocket masks 1334 1987
Programs Mandated by the CCRa Title Section
Firefighters clothing equipment 8 3401-3410
Personal alarm devices 8 3401(c)
Detention of minors 15 4500-4549
Pretreatment facilities 22 64435(f)
aCalifornia Code of Regulations.

Local Government Financing (9210)

This budget item contains appropriations to local governments for three purposes:

This item also includes spending on the property tax administration loan program. This program was created by Chapter 914, Statutes of 1995 (AB 818, Vasconcellos) and extended through 2000-01 by Chapter 420, Statutes of 1997 (AB 719, Torlakson). This legislation appropriates $60 million each year for loans to counties for additional spending on property tax administration. These loans may be forgiven if counties can demonstrate that they have generated or preserved sufficient property tax revenues for schools to offset the costs of the loan. When the loans are forgiven, a cost is accrued in Item 9210. The budget recognizes a cost of $50 million for this purpose each in 1996-97 and 1997-98. The budget, however, shows no estimated costs for 1998-99, apparently on the basis that it is not known if any loans will be forgiven. It is most likely, though, that the state will incur costs of approximately $50 million in the budget year as loans are forgiven. The loan program and property tax administration are discussed in more detail in Part VI of The 1997-98 Budget: Perspectives and Issues. (Please see pages 215 through 226.)

Findings and


General Government
The Year 2000 Computer Problem
1. Departments Report Progress. Recommend that budget subcommittees require departments to report on their progress in accomplishing Y2K remediation efforts. G-18
2. Deny Fund New Projects. Recommend denying funding new information technology projects until a department has completed its Y2K remediation efforts. G-19
3. Approve Department of Information Technology's (DOIT's) Funding Augmentation Request. Recommend the Legislature augment DOIT's budget to provide additional oversight and assistance to departments. G-20
4. Reserve Fund Necessary. Recommend the Legislature establish a reserve fund from which departments can request monies for yet-to-be identified efforts to address the problems related to the year 2000 conversion. G-20
Consumer Affairs
5. Implementation of Smog Check Program Components Needs Plan. Although the department is requesting $68 million to implement certain components of the Smog Check program, a clear implementation plan is not evident. The department should provide a complete report before the budget hearings to provide the Legislature with needed information on the current status of all components of the Smog Check program. G-23
6. Call Center Augmentations Not Justified.Recommend the deletion of the proposed augmentations totaling $6.1 million and 109.7 positions for the department's call center because the department has not justified the need for these augmentations. (Reduce various items by a total of $6.1 million and 109.7 positions.) G-28
7. Barbering and Cosmetology Augmentations Unnecessary. Recommend deletion of the proposed augmentations because these costs should be accommodated within existing resources using the flexibilities given the department under performance-based budgeting. (Reduce Item 1111-001-0069 by $737,000 and 18.3 positions.) G-31
8. Bureau of Home Furnishings and Thermal Insulation Laboratory Upgrades Inappropriate.Recommend the deletion of the proposed augmentation since permanent improvements to a privately owned building should not be funded directly with state dollars. (Reduce Item 1111-001-0752 by $221,000.) G-32
9. Implementation Plan For Chapter 401, Statutes of 1997 Not Complete. Recommend deletion of the proposed $326,000 increase in reimbursement authority for the implementation of Chapter 401, Statutes of G-32
1997 (SB 780, Kelley) since the department is to provide an estimate of ongoing costs at a later date. (Re duce Item 1111-001-0995 by $326,000.)
10. Private Postsecondary and Vocational Education Program Implementation Plan Needs Legislative Review. Withhold recommendation on the $6.6 million in special funds, federal funds and reimbursements, and 79.5 positions proposed to assume the responsibilities of the Council for Private Postsecondary and Vocational Education because the department had not implemented the transfer when the budget was prepared. The department needs to provide an implementation plan to the Legislature prior to budget hearings. G-33
11. Department Should Report on Status of Year 2000 Modifications. The department should, prior to budget hearings, submit a report to the Legislature on the status of modifications to critical information technology systems. G-34
Fair Employment and Housing
12. Management Improvements Need to Precede Staff Increases. Recommend the Legislature not approve the Department of Fair Employment and Housing's request for a $1,250,000 augmentation and 21 positions because of the need for management improvements. Further, we recommend the Legislature adopt supplemental report language directing the department to submit to the Legislature by November 1, 1998, a report on its progress in implementing management changes, the specific performance improvements realized from each change, and other changes/improvements to be implemented. (Reduce Item 1700-001-0001 by $1,250,000.) G-35
Alcoholic Beverage Control
13. Alcohol Beverage Control (ABC) Fund Deficit.Recommend the Legislature enact trailer bill legislation allowing the ABC to increase license fees in an amount higher than proposed by the Governor in order to sustain current enforcement efforts. G-38
14. Nondocumented Alien Workload. Reduce Item 2100-001-0081 by $928,000. Recommend deletion of $928,000 and 21.5 positions proposed to verify citizenship of all licensees because the request lacks important details. G-39
Department of Industrial Relations
15. Targeted Industries Partnership Program (TIPP) Should Not Be Funded From General Fund. We recommend that the Legislature delete the proposed $2.4 million General Fund augmentation for the TIPP because this would not be a cost-effective use of General Fund money.(Reduce Item 8350-001-0001 by $2,407,000.) G-41
16. Joint Enforcement Strike Force (JESF) Should Also Not Be Funded by General Fund. We recommend the Legislature not approve the department's request for a $1.2 million General Fund augmentation to continue the JESF because it has not proven to be a cost-effective mechanism for enforcing payroll tax laws. (Reduce Item 8350-001-0001 by $1,173,000.) G-43
17. Eliminate Managed Care Unit. We recommend the Legislature delete $222,000 and 3.3 personnel-years for the Managed Care Unit within the Division of Workers' Compensation because there is little workload and insufficient fee revenue to support the program. (Reduce Item 8350-001-0001 by $222,000, delete Item 8350-001-0132, and transfer the balance in the Workers' Compensation Managed Care Fund to the General Fund.) G-44
18. Reduce Requested Increase for Rent. We recommend the Legislature delete the $4,110,000 augmentation for building rent costs because the budget overestimates the rental costs the department will incur when it moves into new state office buildings in San Bernardino, Los Angeles, Oakland and San Francisco. (Reduce Item 8350-001-0001 by $4,111,000.) G-45
19. Wage Law Enforcement on Public Works Contracts. We recommend the Legislature delete $191,000 and 2.5 positions requested for enforcement of prevailing wages because under recent legislation should not increase the department's workload. (Reduce Item 8350-001-0001 by $191,000.) G-46
Department of Food and Agriculture
20. Food Safety Program. Recommend deletion of the requested $991,000 and eight positions for various food safety program augmentations until the department can present a comprehensive food safety plan to the Legislature for review. (Reduce Item 8570-001-0001 by $991,000.) G-47
21. Domestic Parcels Inspection Program. Withhold recommendation on the $1,874,000 from the General Fund and 26.3 personnel-years requested for continuation and augmentation of the Domestic Parcels Inspection Program until the pilot program report--due March 1, 1998--has been submitted and reviewed. G-49
22. Agricultural Export Program Augmentation.Recommend deletion of a $464,000 augmentation from the General Fund for the Agricultural Export Program and a one-time equipment purchase for the department's chemical laboratory. The export program activities can be supported within current department resources and the equipment purchase should be funded through laboratory service fees. (Reduce Item 8570-001-0001 by $464,000.) G-50
23. Marketing Campaign Not Necessary.Recommend deletion of $82,000 (General Fund) because the proposed marketing campaign should be the responsibility of the agriculture industry. (Reduce Item 8570-001-0001 by $82,000.) G-51
24. Laboratory Contract Cost Increase Not Justified.Recommend deletion of a $1,110,000 General Fund augmentation for the department's contract for services from the California Veterinary Diagnostic Laboratory System because the department has not substantiated the higher contract costs. (Reduce Item 8570-001-0001 by $1,110,000.) G-51
Fair Political Practices Commission
25. Litigation Regarding Political Reform Law.Withhold recommendation on $1.2 million and 22 personnel-years to carry out the California Political Reform Act because a federal court recently enjoined enforcement of the law. G-54
Board of Equalization
26. Request for Implementation of Chapter 702, Statutes of 1997 (SB 110, Dills) Premature. Recommend deletion of the proposed increased in reimbursement authority for the Board of Equalization (BOE) to implement Chapter 702 because the BOE has not approved an implementation plan for this legislation. (Reduce Item 0860-510-0995 by $4,177,000.) G-56
Franchise Tax Board
27. Augmentation for Workload Growth Not Justified. (Reduce Item 1730-001-0001 by $2,992,000.) Recommend the Legislature delete the proposed augmentation because the Franchise Tax Board has not justified the need for these resources. G-58
28. Separate Preprinted Labels for Tax Returns Unnecessary. (Reduce Item 1730-001-0001 by $1,231,000.) Recommend the Legislature delete the proposed augmentation to provide a separate preprinted label to taxpayers because taxpayers can provide the necessary information on their tax returns. G-59
29. Department Expects to Miss Critical Failure Date for Year 2000 Implementation. The department should report to the Legislature on the status of modifying critical information technology systems to accommodate the year 2000 change and include any expected revenue loss. G-60
Department of Information Technology
30. Information Technology Policies Still Needed.Recommend the adoption of budget bill language appropriating the $437,000 requested when the Department of Information Technology (DOIT) develops a number of specific policies related to the initiation and implementation of information technology projects. G-62
31. Project Cost and Schedule Estimates Need Improvement. Recommend that the Legislature adopt supplemental report language directing DOIT to adopt a policy requiring that feasibility study report transmittal letters and special project reports contain an indication of the administration's assessment of the sensitivity to change of the costs, benefits, and schedules contained in these documents. G-66
32. Advocacy Role Conflicts With Oversight Responsibilities. Recommend that the Legislature approve DOIT's funding request for additional resources to institute the new funding approval process, but require the resources requested for advocacy be redirected to responsibilities DOIT is required by statute to fulfill. G-67
33. Civil Service Classification System Still Needs Reforming. Recommend that DOIT report to the Legislature, prior to budget hearings, on its progress and plans to change the civil service classification system to improve the state's access to information technology expertise. G-68
34. Department Continues to Be Leader on Year 2000 Conversion. Recommend that the Legislature approve DOIT's request for additional resources in 1998-99 for year 2000 conversion. Also recommend that the Legislature direct DOIT to take a number of additional steps with regard to the conversion. G-68
35. Data Center Configuration Policy Needed.Recommend that the Legislature direct DOIT to develop a five-year strategic plan for configuration of the state's data centers. G-75
Health and Welfare Agency Data Center
Data Center Operations
36. State Should Increase Expertise of State Staff.Recommend that the Health and Welfare Agency Data Center (HWDC) provide the Legislature with an estimate, prior to budget hearings, on how much it would cost to train state staff to perform services to support the HWDC Router Network that the budget proposes be supported by private consultants. G-76
37. Acquisition of Data Center Building Premature.Recommend that the Legislature deny the request to purchase the data center's building in 1998-99 and delete $445,000 proposed in the support budget for maintenance and operating expenses for the building. Instead, recommend that the Legislature appropriate $455,000 to continue the existing lease of the facility. G-77
38. Data Center Should Seek Review. Recommend that HWDC report at budget hearings on what tools and resources are needed to renew project management methodologies and legal contracts. G-78
Statewide Automated Welfare System (SAWS)
39. Requests for Legislative Reports Ignored. Recommend that the Legislature take no action on $88 million proposed for SAWS until the center submits a series of reports requested by the Legislature in the 1997-98 Budget Act and in current law. G-83
40. Welfare Case Data System. Recommend that the Legislature appropriate the $18 million through budget bill language if (1) the Department of Information Technology certifies that the procurement document allows for expansion of the system and (2) the state's oversight role is increased. G-85
Statewide Automated Child Support System (SACSS)
41. Child Support Project Canceled; New Project Offers Opportunities, Challenges. Recommend that the Legislature require the alternative procurement method be used for the new project, in which the state outlines its desired outcomes rather than specifying a particular technology. Recommend that HWDC report at budget hearings on the status of federal funding for the new project. G-87
42. Counties Need Assistance With Year 2000.Recommend that the HWDC and DSS report during budget hearings on the progress of the counties in modifying existing child support systems to understand the year 2000. G-89
Child Welfare Services Case Management System (CWS/CMS)
43. Contract Increases Not Justified. Recommend the Legislature delete the proposed augmentation because the vendor, not the state, should pay additional monies to make the CWS/CMS work. (Reduce Item 4130-001-0632 by $15.1 million.) G-90
Other Issues
44. Statewide Fingerprint Imaging System (SFIS) Expansion Not Justified. Withhold recommendation on $8.9 million requested for SFIS, pending receipt and review of the justification for the request. G-92
45. Electronic Benefits Transfer (EBT) System Delayed.Recommend that HWDC report during budget hearings on its progress in implementing this project. G-92
46. Automated Tape Library (ATL) Not Yet Justified.Withhold recommendation on $671,000 requested for the Automated Tape Library, pending receipt and review of the justification for the request. G-93
47. Year 2000 Funding Request Not Yet Justified. Withhold recommendation on $3.6 million requested for HWDC's Year 2000 project pending receipt and review of the justification for the request. G-93
Office of Emergency Services
48. Law Enforcement Branch. Recommend that the Office of Emergency Services (OES) retain law enforcement coordination responsibilities. Also recommend approval of request for two additional law enforcement coordinator positions. G-95
49. Disaster Claims Processing to Stay at OES. The OES reviewed the feasibility of transferring its disaster claims processing to another state agency, as was required by recent legislation and determined that it would be more costly and less efficient to transfer these responsibilities. G-97
State Controller
50. Statewide Travel Reimbursement Project Not Mission Critical. Recommend reduction for the development of an automated statewide travel reimbursement project because it is not mission critical nor mandated, and information technology efforts should be focused on converting computers to accommodate the year 2000. Reduce Item 0840-001-0001 by $689,000. G-99
51. Additional Information Needed for Local Government Reporting System. Withhold recommendation on $724,000 requested to replace the current Local Government Reporting Systems, pending receipt of additional information on the critical failure dates for the current systems and a plan to include users of the proposed system in the development process. G-100
Secretary of State
52. Delay in Voter Registration Computer System.Recommend legislation to delay the date the Secretary of State must repay a $3.5 million state loan to develop a new statewide voter registration tracking system. G-103
53. Proposition 208 Ruling May Invalidate Funding Request. Withhold recommendation on $286,000 to implement new political reform law in light of federal court ruling enjoining its enforcement. G-104
Department of General Services
54. Surplus Property Warehouse Efforts Fall Short of Legislature's Request. Recommend that the department report during budget hearings on how it intends to comply with provisions of the Supplemental Report of the 1997-98 Budget Act which directed it to phase out the operations of surplus property warehouses. G-107
55. Update on CALNET Procurement. Because of its value and impact on state government, recommend that the Department of General Services report to the G-107
Legislature during budget hearings on its progress in awarding this contract.
56. Department Unnecessarily Expanding Pilot.Recommend reduction to ensure the pilot project is carried out as provided in authorizing legislation. (Reduce Item 1760-101-0022 by $710,000.) G-108
57. Surplus Property Assessments. Recommend a reduction of $925,000 because several proposed consultants studies should not be undertaken in 1998-99. Also withhold recommendation on $250,000 for a master plan for the Lanterman Developmental Center pending completion and review of consulting work funded in the current year. (Reduce Item 1760-015-0002 by $925,000.) G-109
Housing and Community Development
58. High Costs to Administer Homeless Grants. Recommend that the Legislature enact legislation simplifying the administration of the Emergency Housing Assistance Program in order to maximize the dollars going for direct homeless assistance. G-112
59. Alien Verification Fee Plan Lacks Necessary Federal Guidance. Recommend that the Legislature not approve a department request for an alien verification and fee system until federal guidelines are provided. G-115
Trade and Commerce
60. New and Expanded Foreign Offices.Recommend deletion of $1,053,000 requested for four new foreign offices and expansion of other foreign offices because (a) establishing foreign offices should be considered as a policy issue through legislation other than the Budget Bill and (b) additional funds are not needed to

sustain the current level of activity in existing offices. (Reduce Item 2920-012-0001 by $1,053,000)

61. Agency Needs to Set Priorities Within Existing Resources. Withhold recommendation on $7.8 million in various augmentation requests (a) until the agency reassesses the need for these increases by setting priorities within current resources and (b) pending the agency submitting information identifying the specific expected outcomes from spending additional funds and how these outcomes will be measured. G-120
Department of Finance
62. Highlight Information Technology Expenditures.Recommend that the Legislature adopt supplemental report language directing Department of Finance (DOF) to identify information technology expenditures and projects in the 1999-00 Governor's Budget. G-122
63. Audit of Data Centers. Recommend DOF report during budget hearings on the Health and Welfare Agency Data Center and the Stephen P. Teale Data Center on the findings of the recent financial audit of the two centers. G-123
Office of Administrative Law
64. No Funding Proposed to Meet Statutory Requirement. The Office of Administrative Law's proposed budget contains no appropriation or proposed redirection of existing resources to publish the regulations on the Internet, as required by statute. G-124
Department of Veterans Affairs and

Veterans' Homes of California

65. Rethinking Veterans' Assistance. Recommend adoption of budget bill and supplemental report language initiating a review of the potential timing, availability, and priority use of surplus funds in the Cal-Vet Farm and Home Purchase Program for other programs of benefit to veterans and taxpayers. G-125
66. Substandard Nursing Care at Yountville Home.Recommend that Department of Veterans' Affairs and Department of Health Services report at budget hearings on actions taken to address substandard care and status of regulatory actions and fines. G-128
67. Yountville Veterans' Home Augmentations.Modify funding and staffing sought for the home contingent upon adoption of budget bill language and receipt of additional information by the Legislature. Also recommend a Bureau of State Audits study of the mix of nursing beds at the facility. Reduce Item 8960-011-0001 by $1,882,000, Reduce Federal Funds by $255,000 and Reduce Reimbursements by $273,000. G-130
68. Barstow Veterans' Home Beds Still Vacant.Withhold recommend on the budget for the veterans' home due to the large number of vacant beds at the Barstow facility and the potential availability of federal funds and collections from insurers. G-134
Interest Payments to the Federal Government
69. Interest Liability Settle-Up. We withhold recommendation on interest payments to the federal government pending resolution of a dispute between the state and the federal government on the amount owed. G-136
Control Section 24.10--

Penalty Assessment Fund

70. Legislature Should Consider Options. The budget proposes to redirect penalty assessment revenues that will result in a General Fund revenue loss of $12 million. Redirected funds would defray increasing local assistance demands on the fund that pays for peace officer training. The Legislature should weigh the needs of all of the local peace officer training programs as it considers how to use the revenues. Other alternatives include reducing revenues by lowering penalty assessments or transferring surpluses to the Motor Vehicle Account. G-139
Health and Dental Benefits for Annuitants
71. Budget-Year Costs Are Uncertain. Withhold recommendation on the $302.3 million General Fund request for health and dental benefits for annuitants pending final determination of premium rates and a possible adjustment for the number of annuitants in the program. G-143
Overview of Employee Compensation
72. Legislature Needs Report on Status of Collective Bargaining Negotiations. The Department of Personnel Administration should report to the budget committees during budget hearings on the administration's collective bargaining proposals and the status of negotiations. G-147
73. Strengthen Legislature's Collective Bargaining Oversight. Recommend that the Legislature reaffirm the policies stated in the Supplemental Report of the 1996-97 Budget Act to assure that the Legislature will have the opportunity to fully review proposed collective bargaining agreements. Further recommend that the Legislature include the same language in the supplemental report this year. G-148
Control Section 3.60
74. Public Employees' Retirement System Employer Contribution Rates. Withhold recommendation on employer contribution rates for retirement benefits pending (1) final determination of the actual rates to be applied in the budget year and (2) receipt and review of information regarding the actuarial assumptions underlying the rates. G-150
Commission on State Mandates
75. Suspended Mandates Lead to State Costs and Legal Confusion. Recommend the Legislature enact trailer legislation regarding the 30 mandates proposed for suspension. G-154


Return to 1998-99 Budget Analysis Table of Contents
Return to LAO Home Page