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LAO Report

Report

The 2013-14 Budget: Obtaining Federal Funds for Inmate Medical Care--A Status Report

February 5, 2013 - Since 1997, federal policy has made it possible to draw down federal Medicaid reimbursement for off-site inpatient health care services for eligible state prison inmates. Most recently, the Patient Protection and Affordable Care Act and the associated Low-Income Health Program (LIHP) created as part of the state's "Bridge to Reform Waiver" have expanded the number of inmates eligible for the state's Medicaid program (known as Medi-Cal) and have increased the total amount of reimbursements the state can receive. Our research finds that while the state has recently developed a process for obtaining federal funds for such services, the state has been unable to maximize the available federal funding. In particular, the federal court-appointed Receiver overseeing prison medical care has been unable to secure memoranda of understanding (MOUs) with certain counties to enroll inmates in their LIHPs. In addition, the Department of Health Care Services (DHCS) has been unable to process certain claims for federal reimbursement because of technical and quality control problems. In order to ensure that the state maximizes the available federal funding, we recommend that the Legislature (1) hold budget hearings to identify and resolve any remaining obstacles preventing the Receiver from securing MOUs with counties to enroll inmates in their LIHPs, and (2) require DHCS to report on its efforts to address problems that are preventing certain claims for federal reimbursement from being successfully processed.


Report

California's Criminal Justice System: A Primer (2013)

January 17, 2013 - In recent years, the state has passed various laws altering the state's criminal justice system. Most notably, in 2011, the state shifted--or "realigned"--responsibility to house and supervise tens of thousands of adult felons from the state to local governments. Major policy changes such as the 2011 realignment, as well as others, are likely to raise numerous questions from policymakers, practitioners, and the public regarding those policies' impacts on public safety and costs. Consequently, we are releasing an updated version of our 2007 report California's Criminal Justice System: A Primer. This report includes key statistics on crime rates, adult and juvenile arrests, prosecutions in the criminal courts, and state and local corrections in California. Where possible, this information is provided through 2011, providing readers with a picture of the state's criminal justice system prior to the full implementation of the 2011 realignment, against which they can evaluate how the system changed following realignment (such as in terms of crime rates, court caseloads, and correctional populations). This report also includes in-depth discussions of some of the most important criminal justice issues likely to face policymakers in coming years.


Report

An Analysis of New Cal Grant Eligibility Rules

January 7, 2013 - In response to concerns about the quality of some postsecondary institutions, California recently adopted new eligibility standards for colleges participating in the Cal Grant programs. The standards include a maximum student loan default rate and a minimum graduation rate. This report traces the history of these changes and assesses their impacts. We find that the changes, which primarily affect students at for-profit schools, are generally working as intended but have three notable drawbacks: (1) schools can manipulate the default rate, (2) the rules exempt some institutions without strong justification for doing so, and (3) the standards penalize institutions serving more disadvantaged students. We recommend exploring alternative student debt measures when the information needed to calculate these measures becomes more readily available. We also recommend applying the graduation rate requirement to all schools but modifying the measure to track the graduation rate only of Cal Grant recipients. In addition, we recommend taking into consideration a school's student characteristics to avoid creating a disincentive to serve disadvantaged students.


Report

Overview of Special Education in California

January 3, 2013 - Special education is the catch-all term that encompasses the specialized services that schools provide for disabled students. Developing a more thorough understanding of how California’s disabled students are served is the first step towards improving their educational outcomes. Toward this end, our primer is intended to provide the Legislature and public with an overview of special education in California—conveying information on special education laws, affected students, services, funding, and academic outcomes.

Also, see our 2016 animated video series Overview of Special Education in California.


Report

Energy Efficiency and Alternative Energy Programs

December 19, 2012 - California currently maintains over a dozen major programs that are intended to support the development of energy efficiency and alternative energy in the state. Over the past 10 to 15 years, the state has spent a combined total of roughly $15 billion on such efforts. In response to the Supplemental Report of the 2012-13 Budget Package, this report provides an overview of these different programs, as well as a preliminary assessment of them in terms of priority, overlap, and redundancy. We find that the state currently lacks a comprehensive framework that fully coordinates the state's energy incentive programs to help ensure that the state’s goals are being achieved in the most cost-effective manner. The absence of such a comprehensive framework (1) results in some level of program duplication, (2) results in some departments making policy choices that may not be aligned to legislative priorities, and (3) makes it difficult to compare effectiveness across programs. As a result, we recommend that the Legislature develop a comprehensive strategy for meeting the state’s energy efficiency and alternative energy objectives. In general, the comprehensive strategy should specify: (1) the state’s energy efficiency and alternative energy goals, (2) how programs should fit together to achieve the state’s goals, and (3) how program effectiveness will be measured.


Report

Insufficient ERAF: Examining a Recent Issue in Local Government Finance

December 18, 2012 - Over the last two years, an unanticipated funding shortfall in Amador and San Mateo Counties cut city and county reimbursements for two complex state-local financial transactions: the triple flip and VLF swap. It is likely this funding insufficiency, commonly called insufficient ERAF, will continue in future years, requiring state action if the affected local governments are to receive their full triple flip and VLF swap payments. In addressing claims of insufficient ERAF in future years, the Legislature will be faced with the difficult decisions of how much compensation cities and counties should receive and how the compensation should be provided. In this report we describe the causes and potential future development of insufficient ERAF and outline a framework that could be used in developing a remedy for insufficient ERAF.


Report

Faculty Recruiting and Retention at the University of California

December 13, 2012 - In this report, we assess UC’s ability to recruit and retain tenured and tenure-track faculty. We find that (1) UC has been hiring candidates who have received their highest degree from some of the most selective universities in the nation, (2) UC has a long history of hiring its top choice faculty candidates, (3) most new entry-level faculty stay at UC long enough to earn tenure, (4) less than 2 percent of faculty resign from UC each year, and (5) UC’s faculty compensation is competitive with other top universities. These findings indicate that UC generally has been successful in its faculty recruitment and retention efforts. In light of these findings, coupled with the continuing need to prioritize limited state funding, the Legislature will need to assess the relative trade-offs between providing funding for faculty salary increases and other competing budget priorities involving faculty and higher education more generally.


Report

Restructuring California's Adult Education System

December 5, 2012 - A century and a half after the founding of adult education in the state, we find that the system faces a number of major problems and challenges, including: (1) an overly broad mission; (2) lack of clear delineations between adult education and collegiate coursework at community colleges; (3) inconsistent and conflicting state-level policies; (4) widespread lack of coordination among providers; and (5) limited student data, which impairs the public's ability to hold the system accountable for performance. Given adult education's numerous and significant challenges, we believe the system is in need of comprehensive restructuring. This report lays out a vision and roadmap for a more efficient and effective system. Our package of recommendations includes: (1) a state-subsidized system focused on adult education's core mission; (2) common, statewide definitions that clearly differentiate between adult education and collegiate education; (3) a common set of policies for faculty and students at adult schools and community colleges; (4) a dedicated stream of funding that creates incentives for cooperation among providers, with new adult education funds allocated based on regional needs; and (5) an integrated data system that tracks student outcomes and helps the public hold providers accountable for results.


Report

Understanding California’s Property Taxes

November 29, 2012 - Property taxes and charges are a major source of revenue for thousands of local governments in California, generating more than $55 billion in revenue in 2010-11. At the same time, many elements of California's property tax system are complex and not well understood. The purpose of this report is to serve as an introductory reference to this key funding source. In the report, we answer some common questions about the state's property taxes, such as: what taxes and charges are on the property tax bill, what properties make up California's tax base, which local local governments receive property tax revenue, and how does the property tax affect the state budget. We also identify some policy concerns related to how property tax revenue is distributed among local governments and evaluate the property tax system relative to common tax policy criteria.


Report

Maximizing State Benefits from Public-Private Partnerships

November 8, 2012 - In recent years, the state has entered into public-private partnerships (P3) to finance, design, construct, operate, and maintain two state infrastructure projects in order to achieve benefits that they might not have obtained under a more traditional procurement approach. In this report, we find that the P3 practices of these recent projects are not necessarily aligned with the P3 best practices identified in research. Based on our findings, we identify several opportunities for the state to further maximize its benefits when deciding to procure a state infrastructure project as a P3. Specifically, we recommend that the Legislature (1) specify P3 project selection criteria in statute, (2) require a comparative analysis of a range of procurement options in order to better determine which procurement option would most effectively benefit the state, (3) require the existing Public Infrastructure Advisory Commission (PIAC) to approve state P3 projects, and (4) modify the structure and responsibilities of PIAC to better provide state expertise on P3s.


Report

Local Government Bankruptcy in California: Questions and Answers

August 7, 2012 - Recently, three California municipalities filed for bankruptcy relief under Chapter 9 of the federal bankruptcy code: Stockton, San Bernardino, and Mammoth Lakes. These filings—occurring just months after the City of Vallejo completed its three year Chapter 9 process—have raised questions about the use of Chapter 9 in California. In this report, we answer some of the common questions about the Chapter 9 process for California local governments such as: which local governments are allowed to file for bankruptcy protections and under what circumstances, what are the major steps of the bankruptcy process, and what types of obligations can be changed or eliminated through bankruptcy.


Report

The 2012-13 Budget: Proposition 98 Maintenance Factor: An Analysis of the Governor's Treatment

May 31, 2012 - The Governor’s Proposition 98 budget package is built on two main assumptions regarding the creation and payment of “maintenance factor.” These two assumptions produce unreasonable outcomes for schools and the rest of the state budget in the near term and long term. In particular, the Governor’s approach would ratchet down the Proposition 98 base in some years (including 2011-12), ratchet up the base in other years (including 2012-13), and, in some cases (including 2012-13 and 2014-15), lead to schools receiving almost exclusive benefit from any growth in state revenues. We recommend the Legislature reject the Governor’s approach and adopt a budget package based upon a more reasonable approach. Specifically, under our recommended approach, maintenance factor is created any time school funding falls below the level otherwise needed to keep pace with growth in the economy, and maintenance factor is paid such that school funding is built up to the level it otherwise would have been absent the earlier shortfalls. We believe our recommended approach both keeps the underlying rationale for the creation and payment of maintenance factor linked and goes furthest in honoring the intent of Proposition 98 and Proposition 111.


Report

The 2012-13 Budget: State Should Consider Less Costly Alternatives to CDCR Blueprint

May 16, 2012 - In April 2012, the California Department of Corrections and Rehabilitation (CDCR) released a report (referred to as the “blueprint”) on the administration’s plan to reorganize various aspects of CDCR operations, facilities, and budgets in response to the effects of the 2011 realignment of adult offenders, as well as to meet various federal court requirements (such as reducing the inmate population to meet specified population cap targets). In this brief we (1) summarize and assess the major aspects of the blueprint and (2) present alternative approaches that are available to the Legislature. In our view, much of the administration’s blueprint merits legislative consideration. However, the General Fund costs of the planned approach—in particular, an estimated $78 million in annual debt service—is a significant tradeoff. We find that the state could meet its facility requirements (including those for medical and mental health treatment) and specified population cap targets at much lower ongoing General Fund costs than proposed by the administration, potentially saving the state as much as a billion dollars over the next seven years.


Report

Reforming the State's Transfer Process: A Progress Report on Senate Bill 1440

May 11, 2012 - In an attempt to fundamentally reform the state’s transfer of students between the California Community Colleges (CCC) and the California State University (CSU) system, the Legislature and Governor enacted Chapter 428, Statutes of 2010 (SB 1440, Padilla). The legislation requires community colleges to create two-year associate degrees for transfer. Students who earn such a degree are automatically eligible to transfer to the CSU system as an upper-division (junior) student in a bachelor’s degree program. Our review finds that since the legislation was enacted, CCC and CSU have made some progress, but additional work needs to be done by both segments to achieve SB 1440's intended goals. For their part, community colleges need to increase the number of associate degrees for transfer they make available to students. It is incumbent on CSU, meanwhile, to maximize the number of academic programs to which these degrees can be applied. Toward these ends, we recommend the Legislature provide additional guidance and clarification to CCC and CSU on their responsibilities, as well as continued oversight to track their progress.


Report

Year-Three Survey: Update on School District Finance in California

May 2, 2012 - This report summarizes findings from our third annual finance survey of California public school districts. Survey responses indicate that districts have experienced notable changes as a result of recent budget reductions, including a smaller workforce, larger class sizes, shorter school years, and less extensive programmatic offerings. Given the slow pace at which the economy is recovering, combined with uncertainty over the outcome of the November election, school districts indicate they are planning for additional reductions in 2012-13. Given these findings, we recommend the Legislature take immediate actions to assist districts in managing their fiscal challenges in 2012-13, as well as initiate long-term improvements to the K-12 funding and accountability systems.