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April 30, 2012 - The FI$Cal project recently completed a procurement and selected the vendor who will build FI$Cal, the state's single, fully integrated financial information system. Project staff has submitted several documents to the Legislature, including a special project report that updates the project plans, a report to the legislature that includes information on the procurement, and a budget request for $89 million ($54 million General Fund) and 86 new positions in order to begin the first year of system development. This report (24 pages): (1) provides an extensive background on the project; (2) describes the innovative procurement process that state staff conducted to secure vendor services to build the FI$Cal system, including information on the procurement results; (3) reviews the FI$Cal project plans as explained in project documents; and (4) analyzes features of the project’s proposed plans and offers recommendations to the Legislature as it considers the budget request and the future of the system. Based upon our analysis of the proposed plans and review of project status, we believe that the benefits of proceeding with FI$Cal development at this time outweigh the costs of the project. In addition to the inherent benefits derived from having a modern, fully integrated financial information system for the state, proceeding with FI$Cal would also avoid substantial costs associated with replacing various individual financial management systems over the next several years. However, we recognize the tight budget times requiring the Legislature to make difficult decisions regarding programmatic reductions. Therefore, should the Legislature wish to proceed with the project, we offer alternative funding options that reduce the state’s reliance on General Fund monies to pay for the project in the short term. These options include the state's GS $Mart loan program, vendor financing, and advanced payments from the special funds for the first few years of system development. Additionally, we point out ways the project’s change management and staffing plans to implement FI$Cal statewide could be improved to reduce risk and maximize project benefits.
April 30, 2012 - This report provides an overview and assessment of the state's comprehensive system for monitoring the fiscal condition of school districts. Under this system, County Offices of Education review the fiscal condition of school districts at several points during the year and provide additional support for districts showing signs of fiscal distress. In the most serious case—when a district no longer appears able to meet its financial obligations—the state provides the district with an emergency loan and assumes administrative control. Our review indicates that the oversight system has been effective in preserving school district fiscal health and preventing districts from requiring an emergency loan. Most notably, during the more than 20 years the new system has been in effect, 8 districts have received emergency state loans whereas 26 districts required such loans in the 12 years prior to the new system. Additionally, the number of districts experiencing fiscal distress has increased in tight budget times, but without a corresponding increase in the number of emergency loans required. This suggests the system’s structure of support and intervention is serving a critical early warning function—allowing districts to get the help they need while fiscal problems tend to be smaller and more manageable. Given its effectiveness, we recommend preserving the existing system, as it has shown to be a vital tool for fostering the ongoing fiscal well-being of districts.
April 19, 2012 - In 2006, after finding that California had failed to provide a constitutional level of medical care to its inmates, a federal court appointed a Receiver to take over the direct management and operation of the state's inmate medical care program from the California Department of Corrections and Rehabilitation (CDCR). Since that time, the current and prior Receiver have taken a variety of actions to revamp CDCR's medical program. In this report, we (1) provide a status report on the Receiver’s actions, (2) describe how these actions have impacted inmate medical care spending and outcomes, (3) discuss the experiences of other states that have faced problems similar to California’s in delivering inmate medical care, and (4) provide recommendations for delivering a constitutional level of inmate medical care in the most cost-effective manner as possible in the long run. These recommendations include establishing an independent oversight board, taking steps to address current operational efficiencies to bring state expenditures to a more sustainable level, and establishing a pilot project to contract for medical care services.
April 17, 2012 - In April 2012, the California High-Speed Rail Authority (HSRA) released its most recent business plan, estimating the cost of constructing the first phase of the high-speed train project at $68 billion. However, the HSRA has secured only about $9 billion in voter approved bond funds and $3.5 billion in federal funds. The revised business plan also makes significant changes from prior plans, such as proposing to integrate high-speed rail with other passenger rail systems, constructing the southern portion of the system first, assuming lower construction costs, and using “cap-and-trade” auction revenues if additional federal funds fail to materialize. Consistent with the HSRA's revised business plan, the Governor’s budget plan for 2012-13 requests $5.9 billion to continue the high-speed rail project--$2.6 billion in state bond funds matched with $3.3 billion in federal funds to begin construction in the Central Valley. In addition, about $800 million is requested to make improvements to existing passenger rail services and about $250 million to complete preliminary design work and environmental reviews for various sections of the project. In this brief report, we find that HSRA has not provided sufficient detail and justification to the Legislature regarding its plan to build a high-speed train system. Specifically, funding for the project remains highly speculative and important details have not been sorted out. We recommend the Legislature not approve the Governor’s various budget proposals to provide additional funding for the project. However, we do recommend that some minimal funding be provided to continue planning efforts that are currently underway.
April 13, 2012 - Over the last four years, the judicial branch has experienced various one–time and ongoing budget reductions as the state has faced large budget shortfalls. The Governor's 2012–13 budget continues the ongoing reduction to the branch, provides the Judicial Council with full authority to implement the reduction among branch entities, and proposes increasing civil fees to generate $50 million in new revenues to help the branch address their reduction. To the extent the Legislature approves the Governor's proposal, ongoing solutions should be identified and implemented in 2012–13, particularly since recent transfers and loans from branch special funds have greatly reduced the fund balances available as a potential budget solution. Specifically, we recommend the Legislature reject the Governor's proposed budget bill language authorizing the Judicial Council to allocate the reductions, adopt specific actions to achieve ongoing savings in the judicial branch, and require that the judicial branch submit a report on potential operational efficiencies.
March 22, 2012 - Reductions to school district budgets over the past five years have resulted in a sharp decline in the teacher workforce, with the number of full–time teachers decreasing by 32,000 since 2007–08. This has led to an increased focus on how the teacher layoff process works. This report gives an overview of the existing layoff process, evaluates how well the process is working, and makes recommendations for improving its effectiveness. For our analysis, we distributed a survey to all public school districts in the state asking them about their implementation of the teacher layoff process, used information provided by two state agencies--the California Department of Education (CDE) and the Office of Administrative Hearings (OAH)--and included information from the California Teachers Association (CTA).
March 19, 2012 - The In-Home Supportive Services (IHSS) program—administered at the state level by the Department of Social Services (DSS)—provides in-home care for persons who cannot safely remain in their own homes without such assistance. Since 2009-10, the IHSS program has experienced significant budget-related changes intended to achieve General Fund savings. As part of the 2012-13 budget, the Governor proposes significant changes to the IHSS program. First, the Governor proposes to transition IHSS from a fee-for-service benefit to a managed care benefit. In addition, the Governor proposes to eliminate domestic and related care services for most IHSS recipients who live with another person. We find that this reduction presents significant legal and implementation challenges, and we therefore offer the Legislature two savings alternatives for its consideration. The first alternative is to consider extending a 3.6 percent across-the-board reduction in service hours that is set to expire at the end of the current year. The second alternative is to consider reenacting a reduction in state participation in provider wages to a level, determined by a study, that does not impact recipient access to services.
March 2, 2012 - The 2012-13 Governor’s Budget includes proposals to address some of the funding challenges currently faced by parks, including the continuation of the plan to close up to 70 state parks by July 2012. However, the Legislature and stakeholders have expressed interest in identifying alternative ways to prevent park closures and, more importantly, help ensure that the park system is adequately maintained and operated in the future. In this report, we evaluate various options that could be adopted to reduce costs or increase revenue for the state park system. Based on this analysis, we recommend specific steps to help maintain the park system, such as transferring the ownership of some state parks to local governments, eliminating the use of peace officers for certain park tasks, allowing private companies to operate some state parks, and increasing park user fees.
March 1, 2012 - The Governor’s budget plan proposes to eliminate DMH and create a new Department of State Hospitals (DSH), shifting the remaining community mental health programs to various departments. This new structure would allow the administration to better focus on the fiscal and programmatic issues unique to state hospitals. In 2008-09, the Office of State Audits and Evaluations (OSAE) conducted an audit which outlined the problems state hospitals experienced, concluding that staffing did not adequately reflect hospital workload, funding was not sufficient for annual operating expenditures, and that state hospitals were not efficiently using their staff. Similarly in a 2011 self-audit, DMH found that many of the same problems from the 2008 audit remained. We concur with both audit teams’ assessments. In this brief report, therefore, we recommend an audit be conducted that looks at a number of issues, including state hospital budgeting practices, the fiscal controls being put in place, and the level of vacancies and their impact on the state budget and on hospital performance. We recommend this added oversight with respect to state hospitals should take place regardless of the Legislature’s decision on the creation of a new DSH.
March 1, 2012 - Over the three-year period from 2009-10 to 2011-12, the Department of Developmental Services’ (DDS) General Fund spending has remained relatively flat. This has been the case in spite of rapidly growing caseloads and other cost pressures. In this brief, we discuss the measures adopted by the Legislature over these three years to reduce General Fund costs in both Developmental Centers (DCs) and Regional Centers (RCs).
February 27, 2012 - There are plenty of mixed signals in economic data for California’s policymakers, as they continue to craft state and local budgets in a constrained fiscal environment. The economy now is clearly improving in many important ways, including employment growth, but significant impediments block the state’s path to a more robust economic recovery. Like the economic data, reports concerning state revenues have been mixed recently too, with weakness in income tax payments accompanied by speculation concerning a future bonanza of tax revenues due to the possible offering of stock by Facebook, Inc. This report provides our updated projections concerning these and other trends in the economy and state revenues.
February 24, 2012 - The DMV, which provides service to over 20 million customers per year and operates 313 facilities, has made efforts in the past decade to improve its efficiency and provide better customer service in field offices and elsewhere. The 2012-13 Governor’s budget includes several proposals to build on these efforts, including incentivizing DMV customers to complete transactions without visiting a field office, combining information technology systems, expanding electronic driver's license testing, and undertaking infrastructure projects to adjust to demands at DMV field offices due to shifting populations. We find that the Governor’s budget proposals have merit and could improve DMV’s efficiency. We have identified, however, a number of shortcomings and recommend that the Legislature modify some of the Governor’s proposals, as well as take additional actions to further expand some of the department’s current efforts to increase efficiency and outreach.
February 23, 2012 - In 2011, the state enacted several bills to realign to county governments the responsibility for certain felon offenders who previously had been eligible for state prison and parole. These changes will significantly reduce the inmate and parole populations managed by CDCR. This report identifies the impacts of the realignment of adult offenders on CDCR's operations and facility needs, discusses whether realignment will enable the state to meet the prison population limit required by the federal court, as well as whether the change in the makeup of CDCR's inmate population following realignment will affect its housing, mental health, and medical facility needs. The report provides recommendations on how to better match CDCR facilities and programs with the remaining inmate population following the realignment.
February 22, 2012 - The Governor proposes to reduce funding for the CalWORKs program and state-subsidized child care programs. Under his budget plan, these programs would be reduced a total of $1.4 billion or about 20 percent in 2012-13 compared to what current law otherwise would require. These savings would be achieved by imposing stricter limits on which families are eligible to receive which types of services, as well as lowering state payments for CalWORKs recipients and child care providers. Additionally, the Governor’s proposal would make major changes to the way the state administers both welfare-to-work and child care services. In this report, we describe and analyze the Governor’s proposals related to the CalWORKs program and then turn to a similar discussion of the proposed changes to child care programs. We conclude by providing the Legislature with illustrative packages of ways to achieve savings in these two areas using different approaches than the Governor's.
February 22, 2012 - In 2011, the state enacted several bills to enact a wide-ranging “realignment,” shifting several state programs and a commensurate level of revenues to local governments. Perhaps the most significant programmatic change implemented as part of the 2011 realignment was realigning to county governments the responsibility for managing and supervising certain felon offenders who previously had been eligible for state prison and parole. This report provides an update on the status of realignment, reviews changes proposed by the Governor, and makes several recommendations designed to promote the long-term success of realignment, such as creating a reserve fund for revenue growth as well as designing an ongoing allocation formula that is responsive to future demographic changes.