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Analysis of the 2005-06 Budget BillLegislative Analyst's Office
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The California Conservation Corps (CCC) provides young people between the ages of 18 and 23 with work experience and educational opportunities. The program participants, referred to as corpsmembers, work on projects that conserve and improve the environment, such as tree planting, trail building, and brush clearance. Corpsmembers also provide assistance during natural disasters, such as filling sandbags during floods. Work projects are sponsored by various governmental and nongovernmental agencies that reimburse CCC for the work performed by corpsmembers.
The CCC estimates about 4,000 men and women (1,500 full-time equivalent positions) will participate in the program during 2005-06. Corpsmembers earn minimum wage and work approximately 40 hours per week. On average, corpsmembers will stay in the program for a little over seven months. The 2005-06 budget provides funding for nine residential and 18 nonresidential facilities throughout the state.
The budget requests about $59.9 million for state operations for CCC in 2005-06, of which $57.7 million is for state operations and $2.2 million is for local assistance. The proposed budget is a decrease of about $12.7 million (or 18 percent) below estimated current-year expenditures. Most of this decrease reflects an unanticipated one-time increase in reimbursement activity in the current year, as well as a decrease (about $4.4 million) in available bond funds for resource conservation grants to local corps. Of the total proposed expenditures for state operations, about $31.7 million (55 percent) will come from the Collins-Dugan California Conservation Corps Reimbursement Account (CDRA), $24.5 million (42 percent) from the General Fund, and about $1.8 million (3 percent) from other special funds and bond funds.
Beginning in the current year, the budget proposes to restore some of the funding reduced in prior years. Specifically, the budget proposes $3.3 million (CDRA) to restore funding for the Ukiah residential center and 32.3 positions that were eliminated in recent years. Additionally, the budget provides for $3.3 million (Proposition 40) for resource conservation projects and grants to local corps.
We recommend that special fund support for the California Conservation Corps be increased by $11.5 million, with a corresponding reduction in General Fund support, in order to reflect the availability of funds from the Collins-Dugan California Conservation Corps Reimbursement Account. (Reduce Item 3340-001-0001 by $11.5 million; increase Item 3340-001-0318 by $11.5 million.)
Governor's Proposal for CDRA. The CDRA earns revenues from reimbursements paid by project sponsors for work done by corpsmembers. Statute provides that CDRA can be used to support a broad range of activities of CCC. The budget proposes expenditures of $31.7 million from CDRA. The proposed level of CDRA expenditures is projected to leave the account with a reserve of $15.8 million—or about 50 percent of proposed expenditures—at the end of 2005-06.
Proposed Fund Reserve Unnecessarily High. While we appreciate the inherent uncertainty in projecting reimbursement-driven revenues and expenditures, we think a fund reserve of the magnitude proposed by the budget is not justified and is unnecessarily high. This is based on our review of the history of actual versus projected revenues and expenditures in this account. Specifically, we found that in each year since 2001-02, more than $10 million in funds remained available in the account at the end of the budget year for use in future years than had been initially projected by the Governor's budget.
General Fund Savings Available. Due to the substantial projected fund balance in the CDRA, we find that CCC could use a portion of the reserve in the account to support expenditures proposed to be funded from the General Fund. Accordingly, we recommend a one-time increase in expenditure authority of $11.5 million from CDRA and a corresponding one-time reduction of $11.5 million from the General Fund. This will maintain the proposed level of support for CCC and leave a healthy reserve of $4.3 million in CDRA at the end of 2005-06 (about 10 percent of expenditures). Because the additional funding from the CDRA is from the account's reserve, the resulting General Fund savings should be considered a one-time savings.