Figure 1

Selected LAO Budget Options

(In Millions)

Department/Program—Description

2003-04

2004-05

Spending Reductions

Department of Developmental Services—Establish annual expenditure limits for regional centers for selected services.

$97.1

$119.4

Comments: This option would establish limits for the maximum allowable units of specific types of services regional centers are allowed to purchase for clients thereby slowing the rapid rate of growth in this program. Regional centers would have to reduce the amount of services provided to clients in order to implement this option.

Department of Health Services/Medi-Cal—Impose a moratorium on new adult day health centers.

30.1

31.1

Comments: This would temporarily slow the rapid growth that has been occurring in the number of adult day health centers.

Department of Health Services/Medi-Cal—Rescind continuous eligibility for children.

76.2

175.2

Comments: This option would disenroll children who are no longer eligible to receive Medi-Cal benefits. Administrative set-up would take three months and implementation would phase-in after that.

Department of Health Services/Medi-Cal—Exclude over the counter drugs from coverage.

7.6

7.8

Comments: Coverage is not required by federal government and such an exclusion is similar to many private health coverage plans. This option would exclude analgesics and cough and cold medications.

Department of Health Services/Medi-Cal—For newly enrolled disabled persons change default to managed care.

0.8

0.9

Comments: This option could help improve the coordination of care for disabled persons.

Department of Veterans Affairs—Close acute care hospital at Yountville veterans’ home.

2.0

2.1

Comments: The state could close the underutilized acute care hospital at the Yountville veterans’ home and provide care to veterans at a lower cost through facilities in the surrounding community.

Department of Social Services/Child Welfare Services (CWS)—Cap total cost per caseworker (including administrative costs) at $135,000.

$20.8

$20.8

Comments: Under this proposal, 11 high-cost counties would need to reduce their cost per caseworker.

Department of Social Services/CWS—Reduce frequency of group home visits from monthly to quarterly.

7.5

7.7

Comments: This option would still leave the frequency of home visits above the federal requirement which is semi-annual.

Department of Social Services/CWS—Suspend emancipated foster youth stipend for two years.

3.6

3.6

Comments: The emancipated foster youth stipend is not a core component of the foster care program.

Department of Social Services/Foster Care—Suspend supplemental clothing allowance for two years.

3.3

3.3

Comments: The clothing allowance is not a core component of the foster care program.

Department of Child Support Services/Local Administration—Suspend half of child support program initiatives for two years.

26.4

26.4

Comments: The initiatives that have been established over the last two years are not part of the core collections program.

University of California (UC)—Eliminate General Fund support for California State Summer School for Math and Science.

1.6

1.6

Comments: Program serves high-achieving high school students.

UC—Eliminate General Fund support for Community Teaching Internships for Mathematics and Science Programs.

1.3

1.3

Comments: Programs provide stipends to juniors and seniors majoring in math, science, and engineering, who work in local public schools as teaching interns. Other state and federal programs provide similar services.

UC—Reduce funding for Digital California Project by an additional 30 percent.

6.6

6.6

Comments: Option leaves approximately $15 million for program.

UC—Reduce General Fund support for cooperative extension program by an additional 5 percent.

3.0

3.0

Comments: Governor proposes a 10 percent reduction.

UC—Eliminate enrollment growth funding in 2003-04.

$117.2

—

Comments: Budget funds growth of 6.9 percent. (See Analysis for detailed discussion of enrollment issues.)

UC—Eliminate augmentation for UC Merced.

11.3

—

Comments: UC Merced is not scheduled to open until fall 2004. Approximately $10 million will still be available for start up costs associated with the campus in 2003-04.

UC—Eliminate General Fund support for institutional aid programs.

68.9

$68.9

Comments: Substantial growth in state Cal Grant programs has weakened justification for separate institutional aid programs. (See Analysis for detailed discussion of financial aid issues.)

UC—Increase state’s share of federal overhead reimbursements by 10 percent.

35.0

35.0

Comments: The federal government reimburses UC for the overhead costs of contracted research. The state funds much of this overhead, but currently shares with UC these federal reimbursements. This option would increase the state’s share from 55 percent to 65 percent, generating an estimated General Fund savings of $35 million.

California State University (CSU)—Eliminate funding for enrollment growth in 2003-04.

150.9

150.9

Comments: Budget funds growth of 7.1 percent. (See Analysis for detailed discussion of enrollment issues.)

CSU—Eliminate General Fund support for institutional aid programs.

51.1

51.1

Comments: Substantial growth in state Cal Grant programs has weakened justification for separate institutional aid programs. (See Analysis for detailed discussion of financial aid issues.)

Student Aid Commission (SAC)—Raise GPA requirement by one-third point for Cal Grant entitlement programs.

—

50.9

Comments: Option would raise the minimum GPA requirement for the Cal Grant A Entitlement program from 3.0 to 3.3 and for the Cal Grant B Entitlement program from 2.0 to 2.3. The Legislature would need to act now to achieve 2004‑05 savings.

SAC—Reduce income ceiling by $5,000 for Cal Grant entitlement programs.

—

19.4

Comments: Once reduced, the Cal Grant A and Cal Grant B income ceilings still would be approximately 3 times and 1.6 times the federal poverty level, respectively. Legislature would need to act now to achieve 2004-05 savings.

SAC—Eliminate Cal Grant T program.

$3.0

$3.0

Comments: State has another, better structured financial aid program that also encourages aspiring teachers to become fully credentialed and work in low-performing schools.

SAC—Eliminate Graduate Assumption Program of Loans for Education.

0.5

0.5

Comments: This is a highly specialized program that benefits few students (only two warrants were redeemed in 2000‑01, for a total cost of $4,000).

Corrections—Increase work credits for reception center inmates and involuntarily unassigned inmates.

70.0

68.0

Comments: This would extend day-for-day work credits to inmates who receive less credit due to lengthy inmate processing and a lack of sufficient work and academic slots at CDC institutions. (See Analysis for detailed discussion of the work credit issue.)

Corrections—Place nonviolent elderly inmates on parole early.

9.0

10.0

Comments: Research shows elderly inmates are two to three times more expensive to incarcerate yet they have a high level of success on parole. (See Analysis for detailed discussion of elderly inmate issue.)

Corrections—Discharge nonviolent parolees early.

35.0

48.0

Comments: This would allow parolees who have met the conditions of their parole for either 6, 9, or 12 months to be discharged early. Savings would range up to the amount shown depending on the length of time required to meet condition of parole.

Corrections—Place nonviolent inmates on parole early.

241.0

241.0

Comments: This would allow certain inmates to be discharged from prison and placed on parole up to 12 months early. This option would exclude “lifers,” “striker,” and inmates whose offense is serious or violent. Savings depend on how early inmates are placed on parole.

Corrections—Remove prison as an option for persons convicted of petty theft with a prior.

15.0

34.0

Comments: “Petty theft with a prior” is currently prosecuted as either a misdemeanor or a felony. This proposal would require the crime to be prosecuted as a misdemeanor, thereby reducing admissions to state prison in the budget year and beyond.

Youth Authority—Eliminate the Gang Violence Reduction Program.

1.7

1.7

Comments: This program, which provides grants to local law enforcement agencies for gang prevention, is duplicative of crime prevention programs administered by the Office of Criminal Justice Planning, Department of Justice, and Department of Education.

Youth Authority—Eliminate the Young Men as Fathers Program.

$0.9

$0.9

Comments: This program provides grants to counties for parenting programs in county juvenile facilities and alternative schools. This program is duplicative of a program administered by the Department of Health Services.

Local Government—Eliminate the High-Tech Law Enforcement Grants

18.5

18.5

Comments: This program provides grants to local law enforcement agencies for equipment. The statewide objective of this program is unclear. Law enforcement is largely a local function, and local funds can be used to purchase equipment if it is a local priority.

Local Government—Eliminate the Rural County Law Enforcement Grants

18.5

18.5

Comments: This program provides grants to rural county sheriffs for equipment. The statewide objective of this program is unclear. Law enforcement is largely a local function and local funds can be used to purchase equipment if it is a local priority.

Local Government—Eliminate Citizen’s Options for Public Safety (COPS) grant program.

116.3

116.3

Comments: The COPS program provides grants to local law enforcement mostly for personnel and equipment. Given that COPS funding represents a small share of total local law enforcement expenditures, its impact on public safety, if any, is likely to be relatively small.

Local Government—Suspend the Juvenile Justice grants program for one year pending evaluation results.

116.3

—

Comments: The Juvenile Justice grants provide funds to address service gaps in county juvenile justice systems. This proposal would suspend funding for one year pending completion of evaluations currently under-way. Suspension should not adversely affect the programs because grant recipients receive funding one year in advance of projected expenditures.

Natural Heritage Preservation Tax Credit Program—Suspend award of new credits for two years.

8.7

10.3

Comments: This program allows the donation of property to state or local agencies or nonprofit organizations, and gives the donor a partial state tax credit based on the assessed value of the property. The act authorizes $100 million of tax credits through 2005. As of January 2002, a balance of approximately $60 million of credits remains to be authorized by the Wildlife Conservation Board. The General Fund fiscal impact of this option reflects a reduction in tax credits that would otherwise be claimed if it were not for the suspension.

Agency Secretaries—Eliminate General Fund support for agencies.

$7.0

$7.0

Comments: The need for the agency level of state government is unclear.

Arts Council—Eliminate General Fund support for the department.

12.0

12.0

Comments: None.

Fair Employment and Housing—Eliminate department and commission.

12.6

12.6

Comments: In the absence of state law, federal law would provide for regulation and remedies for violations.

Health and Human Services and Teale Data Centers/Administrative Consolidation—Consolidate the administrative functions of the two data centers.

4.0

4.0

Comments: This option is discussed in detail in the “General Government” chapter of the Analysis.

Health and Human Services and Teale Data Centers/Server Consolidation—Gain administrative efficiencies by transferring some servers from departments to the data centers.

3.0

3.0

Comments: This option is discussed in detail in the “General Government” chapter of the Analysis.

Science Center—Eliminate General Fund support for the department.

13.1

13.1

Comments: None.

Technology, Trade, and Commerce Agency—Eliminate General Fund support for various programs.

16.5

16.5

Comments: Estimated savings assumes elimination of funding for the Film Commission, small business loan guarantee program, and Office of California-Mexico Affairs.

Various/Nonessential Commissions, Offices, and Departments—Eliminate nonessential state operations.

7.5

7.5

Comments: Estimated savings assumes the elimination of the Office of Planning and Research, Office of Administrative Law, Little Hoover Commission, and Commission on the Status of Women.

Franchise Tax Board (FTB) and Board of Equalization (BOE)—Consolidate certain district office activities.

1.8

1.8

Comments: Agencies would rely more on call centers to provide public assistance.

Federal Funds

Department of Developmental Services—Draw down federal funding for regional center services provided residents in intermediate care facilities for the de-velopmentally disabled (ICF-DDs).

$48.8

$52.4

Comments: The state could draw down additional federal funds to offset the state costs of services provided to these residents by modifying the rate structure of the ICF-DDs and through other changes.

Department of Developmental Services—Assume higher Medicaid waiver enrollment cap.

49.5

56.7

Comments: The state can obtain greater federal fund support for regional center services than is budgeted to the extent that federal authorities will allow additional clients to be included in a Medicaid waiver program.

Department of Health Services/Public Health—Move the Indian Health Program from DHS to MRMIB.

4.0

4.0

Comments: Consolidating this program with similar programs would maintain overall funding at the current level by shifting support from General Fund to federal funds.

Department of Health Services/Public Health—Move the Seasonal, Agricultural and Migratory Worker Program from DHS to MRMIB.

5.0

5.0

Comments: Consolidating this program with similar programs would maintain overall funding at the current level by shifting support from General Fund to federal funds.

Department of Health Services/Medi-Cal—Screen for veterans who could receive VA health coverage.

Undetermined Savings

Comments: Federal survey data suggest that there could be more than 100,000 veterans on Medi-Cal (at a cost to the state of an estimated $250 million annually) who could be eligible instead for comprehensive health care from the Veterans Administration (VA). The state could verify this data to determine if actions are warranted to ensure they receive VA care, thereby reducing General Fund costs.

Fees

Department of Health Services/Medi-Cal—Establish a provider-specific fee to fund rate adjustments for long-term care facilities.

$39.6

$54.8

Comments: This proposal would impose a fee on nursing homes to draw down additional federal funds that would offset General Fund costs.

Department of Social Services/Community Care Licensing—Remove FBI fingerprinting fee exemption for small licensed providers (caring for six children or less).

3.2

3.2

Comments: This creates parity among large (nonfee exempt) and small (fee exempt) providers. The fee for FBI fingerprinting is $24 and there is an additional $16 live-scan fee.

Fund Shifts

Department of Developmental Services—Shift General Fund spending for the Early Start program to Proposition 98 funds.

$59.1

$66.2

Comments: This option would shift all of the state’s General Fund cost of early intervention services to Proposition 98, thus permitting a net reduction in non-Proposition 98 General Fund expenditures.

Department of Health Services/Public Health—Shift financial responsibility for the California Children’s Services Medical Therapy Program to Proposition 98.

37.0

39.0

Comments: This option would shift all of the state’s General Fund cost of these nonmedical therapy services to Proposition 98, thus permitting a net reduction in non-Proposition 98 General Fund expenditures.

Department of Alcohol and Drug Programs—Redirect state and federal asset forfeiture proceeds.

10.0

10.0

Comments: This option would use part of the proceeds taken from illegal narcotics traffickers to help pay for substance abuse treatment programs.

Departments of Social Services and Education/Child Care—On a one-time basis, replace state child care spending with federal Temporary Assistance for Needy Families block grant funds transferred to the Child Care and Development Fund block grant.

400.0

—

Comments: If child care is realigned, as proposed by the budget, General Fund savings can be achieved by either (1) reducing the amount of revenues transferred to the counties with the state “recapturing” these revenues or (2) shifting other state program costs to counties. If child care is not realigned, the cost of maintaining current child care programs could be reduced by the $400 million proposed fund shift.

General Services/California Home Page—Outsource the home page and make it self-sufficient.

$3.0

$3.0

Comments: Other states have outsourced their home pages and cover costs through the collection of fees for online services (primarily for businesses).

Food and Agriculture/Pierce’s Disease—Eliminate General Fund support for control of Pierce’s Disease.

6.4

6.4

Comments: Fees already support a portion of the program’s costs. The General Fund costs could be shifted to fees as well.

Housing and Community Development/Projects With Undisbursed Funds—Switch funding from the General Fund to the housing bond.

200.0

—

Comments: This option is discussed in detail in the “General Government” chapter of the Analysis.

Loans/Transfers

Department of Social Services/CalWORKs—Borrow county performance incentive funds that remain unspent at the end of June 2003.

$100.0

—

Comments: These funds may be borrowed at no interest costs. Any borrowed funds would be added to the state’s current $394 million liability to the counties.

Off Highway Vehicle (OHV) Trust Fund—Loan excess funds to the General Fund.

40.0

—

Comments: The OHV fund balance at the end of 2003-04 is projected to be $49.1 million. This balance can be loaned with a specific repayment date, but cannot be transferred because it is a trust fund. Proposed loan would leave a balance of $9.1 million. The OHV Trust Fund consists of service fees for issuance of identification plates for OHV vehicles; user fees for the state OHV recreation areas; fines; and specified transfers from the Motor Vehicle Fuel Account.

California Debt and Investment Advisory Commission (CDIAC)—Borrow an additional $2.5 million from CDIAC’s special fund balance.

—

2.5

Comments: Budget includes $3 million loan from this fund. An additional $2.5 million would still leave a fund balance equal to roughly 40 percent of CDIAC’s annual budget.

Figure 2

Selected LAO Budget Options
Proposition 98 Spending Reductions

(In Millions)

Department/Program—Description

2003-04

2004-05

Staff Development Buyout Days—Suspend funding for one year.

$202.0

$202.0

Comments: One-time reduction would help preserve core services.

Mathematics and Reading Professional Development Program—Eliminate funding.

27.9

27.9

Comments: Short-term program would serve only 3 percent of core subject matter teachers in 2003-04. The State Board of Education has approved few training providers.

Principal Training Program—Extend over next several years.

28.7

-15.1

Comments: The State Department of Education (SDE) can fund all existing commitments for 2003-04 using $15 million in 2001-02 carryforward funds. This option would increase costs in 2004-05.

Administrator Training and Evaluation Program—Eliminate funding.

4.7

4.7

Comments: Program is more than 20 years old and serves same purpose as new Principal Training program.

Peer Assistance and Review—Eliminate funding.

76.6

76.6

Comments: No available evidence showing program effectiveness.

Advanced Placement Challenge Grant Program—Sunset one year early.

3.2

—

Comments: Program would otherwise terminate at end of 2003-04.

National Board Certification Program—Eliminate additional commitments.

—

5.0

Comments: Provide budget-year funding to honor existing commitments. Other recruitment strategies likely to be more cost-effective.

Teacher Recruitment Centers—Eliminate program.

8.3

8.3

Comments: Various other entities recruit and assist aspiring teachers.

Year Round Operations Grant Program—Phase out over next two years.

14.2

16.5

Comments: Program no longer meets original intent.

Charter School Facilities Grant Program—Eliminate funding.

2.3

2.3

Comments: Program no longer needed because Proposition 39 requires school districts to provide charter schools with sufficient facilities.

K-3 Class Size Reduction—Change ratio to 22 to 1 for high-income schools.

$219.0

$219.0

Comments: Change student teacher ratio to 22 to 1 for schools with less than 50 percent free and reduced priced lunch eligible students. Schools with at least 50 percent free and reduced lunch eligible students continue at 20 to 1.

College Preparation Partnership Program—Eliminate funding.

4.8

4.8

Comments: Duplicative and more restrictive than the Academic Improvement and Achievement program (also administered by SDE).

Local Arts Education Program—Eliminate funding.

5.7

5.7

Comments: Program provides supplemental services that could be funded using other resources.

Miller-Unruh Reading Program—Eliminate funding.

25.5

25.5

Comments: Current funding distribution promotes historic inequities.

School Improvement Program—Reduce funds by 20 percent.

85.8

85.8

Comments: Funds generally used for one-time purposes. These purposes could be delayed.

Civic Education—Eliminate program.

0.3

0.3

Comments: Program funds curriculum development by nonprofit entity that is duplicative of state efforts.

County Offices of Education—Do not fund growth in county apportionments.

22.3

22.3

Comments: County offices fund services similar to categorical programs, which would receive no growth funding in 2003-04.

Elementary School Intensive Reading Program—Eliminate program.

26.9

26.9

Comments: Services are duplicative of those provided through the existing supplemental instruction programs.

At Risk Youth (Angel Gate Academy LAUSD)—Eliminate funding.

0.6

0.6

Comments: The federal Department of Defense provides $4 million in funding that covers a majority of the program’s expenses.

Intensive Algebra Instruction Academies—Eliminate program.

11.2

11.2

Comments: Duplicative of services provided through existing supplemental instruction programs.

Gifted and Talented Education (GATE)—Suspend the program for one year.

49.8

49.8

Comments: Targets extra resources at highest-achieving students. These students can be served within base resources.

School Law Enforcement Partnership—Eliminate program.

$13.1

$13.1

Comments: Program duplicative of services provided through the School Safety and Violence Prevention Grant Program.

Statewide Education Technology Services—Eliminate program.

2.3

2.3

Comments: Program services do not directly affect core classroom services.

Gang Risk Intervention Program—Eliminate program.

2.9

2.9

Comments: These services can be provided through existing safety programs.

School Library Materials—Suspend program for one year.

20.4

20.4

Comments: Suspend this program because of one-time nature of expenses.

Institute for Computer Technology—Eliminate state funding.

0.5

0.5

Comments: This program receives a significant amount of foundation and grant funding.

California Technology Assistance Project—10 percent reduction in funding.

1.3

1.3

Comments: Program does not directly affect students.

Deferred Maintenance—Suspend funding for one year.

181.0

181.0

Comments: Existing law would continue to require that 3 percent of districts’ unrestricted funds go to maintenance.

9th Grade Class Size Reduction—Eliminate funding.

97.0

97.0

Comments: Schools with greatest need less likely to use program be-cause of lack of qualified teachers.

CCC—Eliminate Part-Time Faculty Compensation funding.

50.8

50.8

Comments: This program increases part-time faculty salaries with no demonstrated linkage to improved student outcomes.

CCC—Eliminate Part Time Faculty Office Hours funding.

3.9

3.9

Comments: Office hours can be negotiated as part of collective bargaining, without categorical funding.

CCC—Terminate Partnership for Excellence program.

164.5

164.5

Comments: Program is due to sunset at end of 2004 calendar year. Has shown little evidence of progress in reaching performance targets.