Legislative Analyst's Office

Analysis of the 2000-01 Budget Bill

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Land Acquisition Funding

Administrative Funding Should Be Based on Anticipated Workload

The budget proposes language for the Wildlife Conservation Board (WCB--Item 3640) and State Coastal Conservancy (SCC--Item 3760) that would allow those departments to use a portion of land acquisition and improvement funding for administrative costs. We believe the language would permit fund redirections that may not match actual workload. Accordingly, we recommend deletion of this language.

The WCB and SCC are state departments which, among other things, administer programs to purchase, protect, and restore various types of natural lands. These programs typically involve such activities as putting together real estate transactions and administering grants to local governments and nonprofit organizations.

While the two departments have specified statutory duties and dedicated sources of revenue, the Governor and Legislature have at times provided them with additional funds, generally for the purpose of acquiring or improving land and habitat either through direct acquisition or through grants to local entities. Typically, these funds are not available for the departments' administrative costs.

Departments Receive Additional $83 Million in 1999-00. As a result of legislative augmentations in the 1999-00 budget, the two departments received a total of $83 million in additional funds for land acquisition and capital outlay projects in the current year. Specifically, WCB's current-year budget was augmented by $36.8 million above the amount originally proposed in the Governor's budget. The SCC's budget was augmented by $46.3 million.

Administrative Funds Sought. After receiving these augmentations, both departments subsequently requested additional support funding and position authority to accommodate the workload generated by the legislative augmentations. The WCB requested funding for three positions, while SCC requested seven positions. The 2000-01 budget proposes to continue funding for these additional positions.

Budget Bill Language Proposed. In addition to continuing the new positions in 2000-01, the budget proposes budget bill language that would permit the two departments to redirect up to 1.5 percent of certain capital outlay and local assistance appropriations to administrative support. With specified exceptions the proposed language would apply to General Fund and many special fund appropriations.

The language is intended to ensure that the departments receive sufficient administrative support if funding for capital outlay or local assistance is augmented during the budget process above the amount initially requested by the Governor's budget.

Proposed Funding Mechanism Does Not Reflect Actual Costs. The proposed language allows the same percentage (1.5 percent) of appropriated funds to be transferred to administrative costs, irrespective of the particular workload associated with the appropriation. We believe this could significantly overfund or underfund the departments, for two reasons:

• Support Workload Not Always Proportional to Capital Outlay Appropriation. In some cases, an appropriation may be provided to acquire a property that is relatively inexpensive but which involves complex negotiations and time-consuming staff work. Other appropriations, while large in amount, may be provided for the purchase of a specified parcel from a willing seller, or to be passed through to a nonprofit organization. In these instances, staff workload associated with the capital outlay appropriation could be much less. Thus, the cost of the workload may in some cases be well below 1.5 percent of the appropriation, and in other cases well above that threshold.
• Workload Does Not Always Occur in Same Fiscal Year as Capital Outlay Appropriation. The work associated with the acquisition of specific property can occur over a number of fiscal years. For example, the SCC asserts that it begins to develop some projects in response to external demands, even before funding to complete the project materializes. In addition, many projects may require post-implementation monitoring for years and even decades. Moreover, we note that some capital outlay appropriations are not necessarily encumbered in the budget year, thus further weakening the link between support funding (available only in budget year) and capital outlay spending (which may occur up to two years later).

Appropriate Support Funding Should Be Built Into Budget. For the budget year, the WCB proposes $769,000 in support and $71.4 million for capital outlay expenditures. We expect that the proposed support funding reflects the anticipated workload for the budget year. However, under the proposed budget bill language, our review shows that WCB could increase its support expenditures by another $375,000 even when there is no increase to the capital outlay appropriation beyond what is already proposed in the budget.

We see no reason why the departments should be provided such flexibility. Accordingly, we recommend deletion of Item 3640-001-0447 (Provision 1) and Item 3760-001-0565 (Provision 2).

We recognize that to the extent capital outlay expenditures are increased legislatively, there would be additional workload. However, augmentations might only result in relatively minor, absorbable workload increases. In those cases where an augmentation would significantly increase the department's workload in the budget year, we recommend that the augmentation also include funding (and position authority, if necessary) for the necessary administrative support.