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LAO Report

Report

Review of School Transportation in California

February 25, 2014 - In 2013-14, the Legislature undertook a major restructuring of school finance but retained the state’s Home-to-School Transportation (HTST) program. Recognizing the need for additional reform, the Legislature asked our office to make recommendations for improving the state’s approach to funding school transportation. The state’s existing approach for allocating HTST funding is widely recognized as outdated and irrational. Given the problems with the state’s existing funding approach, we recommend the Legislature replace it with one of three alternatives. In the report, we describe and assess the trade-offs of the following three options: (1) fund transportation services within the new Local Control Funding Formula; (2) create a new, targeted program to help districts that face extraordinarily high transportation costs; and (3) create a broad-based program whereby the state pays a share of each district’s transportation costs. Any of the three options would be a notable improvement over the state’s current approach.


Report

The 2014-15 Budget: Cap-and-Trade Auction Revenue Expenditure Plan

February 24, 2014 - In order to minimize the negative economic impact of cap-and-trade, it is important that auction revenues be invested in a way that maximizes GHG emission reductions for a given level of spending. In reviewing the Governor's proposed expenditure plan, we find that there is significant uncertainty regarding the degree to which each investment proposed for funding will achieve GHG reductions. This uncertainty is the result of several factors, including there being only limited data and analysis provided by the administration, as well as the fact that the level of emission reductions achieved would depend on the specific projects funded by departments. Given these concerns, we recommend that the Legislature direct ARB to develop metrics for departments to use in order to prospectively evaluate the potential GHG emission benefits of proposed projects, as well as direct the board to establish a set of guidelines for how departments should incorporate these metrics into their decision making processes.


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The 2014-15 Budget: Resources and Environmental Protection

February 21, 2014 - In this report, we analyze the Governor's 2014-15 budget for the state's resources and environmental protection programs. We review and make recommendations on a number of major policy proposals, including a review of the administration's recently released Water Action Plan as well as the proposal to reduce or eliminate several programs currently funded by the Beverage Container Recycling Fund (commonly referred to as the "bottle bill"). We find that these policy proposals are generally reasonable approaches, though we identify trade-offs in the proposals and offer recommendations for legislative consideration. The report also identifies several issues included in the Governor's budget that merit additional legislative oversight. This includes the proposal to provide the Department of Parks and Recreation and the Department of Forestry and Fire Protection with a total of $43 million from the General Fund to address deferred maintenance backlogs. While we find that it makes fiscal sense to address deferred maintenance, there is uncertainty about what factors have contributed to the large backlogs, as well as how the state can best address maintenance needs on an ongoing basis.


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The 2014-15 Budget: Analysis of the Health Budget

February 20, 2014 - The report analyzes the Governor's 2014-15 health budget proposals. In it, we (1) provide an analysis of the impact the implementation of the Patient Protection and Affordable Care Act (ACA)--known as federal health care reform--is having on the Medi-Cal program; (2) analyze the Governor's budget proposal to exempt certain, but not all, classes of Medi-Cal providers and services from retroactive recoupments of payment reductions; and (3) assess the fiscal outlook for the California Health Benefit Exchange, also known as Covered California.


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The 2014-15 Budget: Analysis of the Human Services Budget

February 20, 2014 - In this report, we analyze the Governor's 2014-15 human services budget proposals. In it, we (1) recommend that the Legislature consider modifications to the Governor's proposed response to new federal regulations concerning overtime in the In-Home Supportive Services (IHSS) programs; (2) find that although the Governor's California Work Opportunity and Responsibility to Kids (CalWORKs) budget proposal raises valid concerns, the Legislature should reject the proposal; and (3) recommend several modifications to the Governor's comprehensive proposal to reform the Community Care Licensing (CCL) program in light of recent health and safety issues discovered at residential care and other CCL-licensed facilities.


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The 2014-15 Budget: Governor's Criminal Justice Proposals

February 19, 2014 - In the report we provide an analysis of the Governor's budget proposals for state criminal justice programs, including the judicial branch, California Department of Corrections and Rehabilitation (CDCR), and various proposals related to local public safety. The report reviews the most significant proposals in these departments and offers corresponding recommendations for the Legislature's consideration. For example, we recommend that the Legislature take several actions to improve the administration’s approach to trial court funding, including the current trial court reserves policy. In addition, we review the administration’s proposals related to correctional relief staffing and overtime and make a series of recommendations to reduce spending on staffing and overtime and make CDCR's staffing process more cost-efficient.


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The 2014-15 Budget: Proposition 98 Education Analysis

February 14, 2014 - This report analyzes the Governor's 2014-15 Proposition 98 budget proposals. The Governor’s 2014-15 budget includes $11.8 billion in Proposition 98 spending increases (attributable to 2012-13, 2013-14, and 2014-15). Of that amount, the Governor dedicates $6.7 billion to paying off outstanding one-time obligations and $5.1 billion for ongoing programmatic increases. We believe the Governor's plan is a reasonable mix of one-time and ongoing spending--eliminating the largest outstanding one-time obligation and significantly increasing ongoing programmatic support for schools and community colleges. The Governor's Proposition 98 wall of debt plan also includes a reasonable multiyear approach to paying off all outstanding school and community college obligations one year before the expiration of Proposition 30 revenues. Our report also analyzes the Governor's specific proposals for career technical education, student assessments, and independent study programs. Though we think these proposals generally have merit, we offer various recommendations for refining them.


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The 2014-15 Budget: Analysis of the Higher Education Budget

February 12, 2014 - This report analyzes the Governor’s 2014-15 higher education budget. We continue to have serious concerns with the Governor’s approach to funding the universities, particularly as it significantly diminishes the Legislature’s role in key budget decisions and allows the universities to pursue segmental over state interests. We recommend the Legislature take an alternative approach that: (1) designates funding for specific purposes (including enrollment at the California State University and debt-service payments), (2) shares cost increases among the state and students, and (3) monitors the universities’ performance in specific areas (such as student success). We think the Governor’s approach to funding the community colleges is much better but recommend various ways for the Legislature to refine specific community college proposals. Most notably, rather than augmenting a single student support categorical program by $200 million, we recommend the Legislature consolidate seven student support programs into a block grant, thereby offering colleges considerably more flexibility in deciding the best ways to support their students.


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A Review of State Budgetary Practices for UC and CSU

February 11, 2014 - Over the last six years, the state has moved away from its traditional budgetary approach for the University of California (UC) and the California State University (CSU). Notably, the state no longer (1) funds enrollment or inflation, (2) designates as much funding for specific purposes, or (3) reviews UC's capital projects as part of the regular budget process. Instead, the state has been providing the universities with unallocated funding increases and allowing the universities to make funding decisions previously made by the state. Another recent change to the state's budgetary approach is its inclusion of performance measures (though the state has not yet determined how to factor these measures into its budget decisions). Despite these changes to the traditional budgetary approach, one aspect that has not changed in recent years is the state's ad-hoc approach to student tuition. We recommend the Legislature return to using its traditional approach to funding the universities but make some refinements. Specifically, we recommend the Legislature resume funding enrollment but set enrollment expectations for different types of students and for a longer time horizon. We also recommend the Legislature fund a new freshman eligibility study. Further, we recommend the Legislature resume funding inflation and assume students and the state share in cost increases. To address concerns about the traditional budgetary approach's lack of emphasis on efficiency, we recommend the Legislature use its recently adopted performance measure relating to spending per degree to monitor the universities' productivity. We also recommend the Legislature review capital projects for the universities through the regular budget process.


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The 2014-15 Budget: A Review of the 2014 California Five-Year Infrastructure Plan

February 10, 2014 - In this report, we review California’s Five-Year Infrastructure Plan, the first statewide infrastructure plan released by the administration since 2008. We commend the administration’s renewed focus on infrastructure. We also find that the plan raises some important policy issues related to the financing and maintenance of state infrastructure and serves as a valuable starting point for legislative discussions. However, we note that the plan does not include some key information and suggest some changes that could make the plan more helpful to the Legislature. In addition, given the size of the state’s infrastructure investments and their long-term nature, we recommend that the Legislature take a more active role in considering infrastructure in a comprehensive way. In order to assist the Legislature, we suggest some broad questions it may find helpful in guiding future discussions. We further suggest that the Legislature consider how, as an institution, it addresses infrastructure issues—for example, by creating a joint infrastructure committee.


Report

Initial Review of CSU's Early Start Program

January 14, 2014 - In 2012, the California State University (CSU) launched Early Start—a program that requires freshmen who do not pass CSU’s placement exams to begin taking remedial courses during the summer before freshman year. Chapter 430, Statutes of 2012 (AB 2497, Solorio), requires our office to report on Early Start participation, demographics, and outcomes. About 27 percent of CSU freshmen participated in Early Start in 2012. A higher percentage of Latinos, blacks, women, and financially needy students enrolled in Early Start compared to all CSU freshmen. Because CSU did not provide data on Early Start outcomes, we were unable to assess whether Early Start affected the time it took for students to become college ready. Moving forward, we recommend the Legislature eliminate the remaining Early Start reporting requirements and instead focus on the reasons why remediation rates remain high. To this end, we recommend the Legislature consider authorizing a broader series of studies on: (1) the appropriateness of CSU’s placement exams and cut scores, (2) whether CSU is accepting students who fall outside its eligibility pool (the top one-third of high school graduates), (3) the rigor of college preparatory coursework in California high schools and the timing of test results that inform what classes are taken senior year, and (4) whether the state's subsidy policies encourage CSU to address high remediation rates.


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Counties and Design-Build

January 7, 2014 - This report presents a summary of reports received by the LAO from California counties on construction projects that they completed with the design-build project delivery method. We find that it is difficult to draw conclusions about the effectiveness of design-build compared to other project delivery methods (such as design-bid-build) based on the reports we received. Nonetheless, when the Legislature next considers extending design-build authority for counties or other local agencies, we recommend that it consider some changes such as creating a uniform design-build statute for agencies that have design-build authority, eliminating cost limitations, and requiring project cost to be a larger factor in awarding design-build contracts.


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Oversight of Private Colleges in California

December 17, 2013 - California's Bureau for Private Postsecondary Education (Bureau) oversees private colleges operating in the state, but some institutions are exempt from the Bureau's oversight by virtue of their accreditation. This report compares the oversight provided by regional and national college accrediting agencies with the Bureau's oversight to assess the extent to which accreditors and the Bureau provide the same level of student protection. We make a number of recommendations in the report, including (1) continuing the exemption for most regionally accredited schools but conducting a limited review of business practices for a small number of these schools that are deemed higher risk, (2) reducing the scope of reviews for some nationally accredited schools that currently are subject to full state oversight, and (3) providing an opportunity for exempt schools to volunteer for a limited business practices review to help them meet new federal requirements.


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Protecting Children from Abuse and Neglect: Trends and Issues

August 8, 2013 - This report provides an overview of child abuse and neglect trends, explains the state and county roles in the Child Welfare Services (CWS) system, and examines the outcomes of children involved with the CWS system. In general, CWS outcomes have improved since the last decade. Foster children spend, on average, less time in foster care (which is generally considered a positive trend), are more quickly reunified with their families, and have more permanency in their living situations. However, this report raises several issues for the Legislature to consider in improving outcomes for children in the CWS system. In the report, we discuss how child well-being is not adequately measured in the CWS system and we suggest options for improving the evaluation of child well-being. We also raise issues related to improving group home quality through provider rate reform and accreditation standards. Finally, we make suggestions for how the current 2011 Realignment growth funding allocation process could be modified to provide county incentives for improved performance.


Report

Rethinking PARIS Data Match: Connecting Veterans on Medi-Cal to Federal Benefits

August 6, 2013 - Since 2009, the state has used a computer data matching process known as the Public Assistance Reporting Information System (PARIS) to identify certain military veterans who receive Medi-Cal services and may be able to voluntarily shift to health care services provided by the U.S. Department of Veterans Affairs (USDVA). We find that the fiscal and policy benefits from the state's current implementation of PARIS Veterans activities are limited, due to resource constraints and a problematic approach to outreach. We recommend that the Legislature provide additional resources to conduct a new pilot that tests a modified approach to PARIS Veterans outreach. We also find that the state has not pursued a major source of savings related to the PARIS Veterans match: counting a type of USDVA monetary benefit known as aid and attendance toward the costs of the In-Home Supportive Services program. We recommend that the Legislature require the administration to report on the rationale for current policies that prevent the state from realizing these savings.