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June 11, 2009 - New federal tax credit provisions allow the state to tap potentially hundreds of millions of new federal dollars for higher education. Because these tax credits will fully reimburse most California Community College (CCC) students for the fees they pay, the state could raise those fees (and revenue for CCC) with no net impact on most students. The purpose of this brief is to provide additional information—in a question-and-answer format—related to our recommendation.
May 29, 2009 - We conclude that opportunities exist to both improve public safety and reduce state costs by better aligning the county probation and state correctional systems. We recommend that the Legislature create a new program that would provide financial incentives for county probation departments to reduce their revocations to state prison. Even if the number of probation violators sent to state prison was reduced by as little as 10 percent, state corrections operating costs would be reduced by about $60 million annually when fully implemented.
(Short video summary)
May 28, 2009 - Seventy-five percent of California foster youth perform below grade level standards, and by third grade 83 percent of foster youth have had to repeat a grade. We believe the state and local programs must reprioritize the way existing funds are spent in order to improve educational opportunities for foster youth. We recommend changing guidelines to provide certain services to all current and recent foster youth, expanding programs to include academic counseling and completion of education passports, and consolidating programs at County Offices of Educations. We also suggest convening a workgroup to address the transportation needs of K-12 and postsecondary foster youth.
May 14, 2009 - We examine the steps that the California Department of Corrections and Rehabilitation (CDCR) has taken to implement Chapter 7, Statutes of 2007 (AB 900, Solorio) which authorized a total of approximately $7.7 billion for a broad package of prison construction and rehabilitation initiatives in order to relieve the significant overcrowding problems facing state prisons. Based on our review, we identify several issues that merit legislative consideration. For example, we note that the department’s construction cost estimates for the infill bed projects reflect an almost quadrupling of costs since the last state prison was built about seven years ago. Moreover, we find that the cost to operate the infill bed and reentry facilities and pay the annual debt service for the lease-revenue bonds to construct these facilities will be significant. Based on the department’s estimates, when fully implemented, the infill bed and reentry facilities could increase General Fund costs by $1.3 billion annually.
May 12, 2009 - In this report, we identify a number of deficiencies in the Department of Real Estate’s Licensing and Education Program and their Enforcement and Recovery Program. Our recommendations would tighten existing educational requirements, increase licensee accountability for violations of the real estate law, improve department accountability for program outcomes, and expand consumer access to—as well as oversight of—the Recovery Account. (Short video summary.)
May 7, 2009 - In part because state revenue collections have been weaker than expected since passage of the February budget package, major cash flow difficulties loom for California in the summer and fall of 2009. Without significant budget-balancing and cash management actions by the Legislature or unprecedented borrowing from the short-term credit markets, the state will not be able to pay many of its bills on time for much of 2009-10. Returning the budget to balance will be important to resolving the state's cash flow challenges. We recommend that the Legislature act quickly to address these challenges—by late June or early July at the latest. We also note that the state should be cautious about accepting additional federal assistance for the state's cash flow problems, especially given the strings that may be attached to such aid. (Five-minute video summary)
See also: May 22, 2009, Conference Committee Update: California's Cash Flow Crisis
April 27, 2009 - Assembly Member De La Torre requested our assistance in determining the savings that could be achieved by expanding the Family Cost Participation Program (FCPP) to all services purchased by Regional Centers (RC) for consumers. We estimate that this expansion (excluding RC operations and 24-hour care) when fully implemented after about three years could yield ongoing, net annual General Fund savings ranging between about $11 million and $19 million depending on the number of participating consumers.
March 19, 2009 - The Davis-Dolwig Act is a 47-year-old state law that specifies that the state, not water ratepayers, should fund the recreation component of the the State Water Project (SWP). The budget proposes a number of statutory reforms to the act, in part to provide a dedicated funding source for its implementation. We find that the Governor’s proposal does not address a number of major problems with the implementation of the act and that the administration’s approach improperly limits the Legislature’s oversight role. We also find that, over many years, the Department of Water Resources has been allocating costs to the state under Davis-Dolwig that are significantly in excess of the direct costs to SWP for recreation. In our report, we offer the Legislature a package of statutory reforms to address problems that we have identified with the implementation of Davis-Dolwig. These include clarifying the role of public funding for recreation in SWP. We also recommend that the state evaluate the potential to divest itself of SWP reservoirs that are used mainly for recreation.
March 10, 2009 - The recently enacted federal economic stimulus package commits a total of $787 billion nationwide. We estimate that California will receive over $31 billion in monies that can be used to address budget shortfalls and supplement existing state spending and billions more in competitive grants. The recently enacted state 2009-10 budget specifies that if the amount available to address the state's budgetary problems is less than $10 billion, then annual state program reductions of nearly $1 billion and revenue increases of about $1.8 billion will go into effect. Based on the enacted state 2009-10 budget we estimate that $8 billion would be available. Given the state’s continuing economic struggles, however, it may be possible to use additional federal education dollars for budgetary relief. We identify key issues that the Legislature should consider in making decision regarding these new federal funds, including ways to maximize their benefit to the state General Fund and to provide appropriate oversight on the use of the federal monies.
January 14, 2009 - Balancing the budget—by increasing state revenues and decreasing expenditures—is the most important way that the Legislature can shorten the duration and severity of the state’s cash flow crisis. Absent prompt action to begin addressing the state’s colossal budget gap and other measures discussed in this report specifically to help the state’s cash flows, state operations and payments will have to be delayed more and more over time. In the event that the Legislature and the Governor are unable to reach agreement to balance the budget by the summer of 2009, major categories of services and payments funded by the state may grind to a halt. This could seriously erode the confidence of the public—and investors—in our state government. To avoid this, it is urgent that the Legislature and the Governor act immediately to address the budgetary and cash crises that have put the state on the edge of fiscal disaster.
January 6, 2009 - California’s economically disadvantaged (ED) students are failing to meet federal and state academic standards and generally perform below their non-economically disadvantaged peers. This trend appears in all grade levels, with nearly two-thirds of second grade ED students and nearly three-fourths of eighth grade ED students performing at low levels. Given these shortcomings, we believe the state needs to be both more strategic and more flexible in its approach to supporting ED students. Specifically, we recommend: redefining the conversation to focus on the barriers impeding academic success; simplifying the system for all involved; refining funding formulas to reflect the pervasiveness and severity of students’ academic challenges; strengthening overall accountability by measuring year-to-year growth in student achievement; and, identifying and facilitating the sharing of best practices.
January 5, 2009 - This report was prepared pursuant to Chapter 844, Statutes of 2004 (SB 1534, Johnson) which expands the income eligibility criteria for use of the 540 2EZ tax form in filing resident personal income taxes (PITs). The measure also requires the Legislative Analyst’s Office to study the impact of the law change.
December 10, 2008 - As part of his 2008–09 special session package, the Governor proposed to speed up construction of $822 million in planned state transportation projects. We believe that the concept of accelerating transportation projects has merit. We offer an alternative approach that we believe would provide greater benefits with a similar amount of funding. Specifically, we recommend the use of revenue bonds backed by future gas tax revenues to accelerate 122 highway rehabilitation projects. These projects would be ready for construction in 2008–09, 2009–10, and 2010–11, but are not scheduled for construction until later years, due to limited funding. Our bond proposal would require voter approval. Accordingly, we recommend the Legislature place a measure on the next ballot to seek voter approval to issue $800 million in gas tax revenue bonds to fund these projects.
November 10, 2008 - We concur with the administration’s assessment that the state’s struggling economy signals a major reduction in expected revenues. Combined with rising state expenses, we project that the state will need $27.8 billion in budget solutions over the next 20 months. The state’s revenue collapse is so dramatic and the underlying economic factors are so weak that we forecast huge budget shortfalls through 2013‑14 absent corrective action. From 2010‑11 through 2013‑14, we project annual shortfalls that are consistently in the range of $22 billion.
October 20, 2008 - California’s water delivery system is facing a series of challenges due in part to a combination of increasingly variable weather conditions, legal requirements, and system operation and conveyance constraints. These challenges affect water availability, reliability, and delivery. Recent public and private efforts have sought ways to address these challenges. These measures include proposals to increase water through groundwater storage, surface storage, infrastructure changes, and system operation improvements, among others. This report provides, through a “quick reference” document relying heavily on charts to present information, a snapshot of water in California, including: (1) An Overview of California’s Water Governance; (2) Water Supply, Source, and Delivery; (3) How Do We Finance Water Projects? (4) What Drives the Cost of Water?, and (5) Issues for Legislative Consideration