LAO Report: Overview of the May Revision (2012-2013 Budget)

In the May Revision of his 2012-13 budget proposal, the Governor identified a larger budget problem of $15.7 billion for state leaders to address in the coming weeks. While we find that the administration's economic and revenue forecasts are reasonable, we are concerned that the amount of property tax revenues from former redevelopment agencies (RDAs) may be substantially less than the May Revision assumes in 2011-12 and 2012-13. If so, this could increase the state's Proposition 98 school funding obligations and, therefore, the size of the budget problem above administration estimates. Moreover, the administration's $1.4 billion estimate for the amount of General Fund benefit that may be achieved in 2012-13 from transferring former RDAs' liquid cash assets to school districts is highly uncertain.

We advise the Legislature to focus on adopting realistic and ongoing budget actions to continue the progress the state has made in reducing its annual operating, or structural, deficit. We describe and assess the administration's major May Revision proposals. In some cases, we offer alternative ways to achieve the savings targeted by the Governor. With regard to Proposition 98, we offer alternatives to both the Governor's basic budget plan and his trigger plan.

RAND: new report on CA prisoner re-entry

When prisoners are released and return to communities, an often overlooked concern is the health care needs that former prisoners have and the role that health care plays in how successfully they reintegrate. To a large extent, the reentry population will eventually become part of the uninsured and medically indigent populations in communities.

This volume examines the health care needs of newly released prisoners in California, including the need for mental health and substance abuse treatment; which communities are most affected by prisoner reentry; the health care system capacity of those communities; and the experiences of released prisoners, service providers, and families of incarcerated individuals. The authors conducted a geographic analysis to identify where parolees are concentrated in California and the capacity of the safety net in four of these communities — Alameda, Los Angeles, San Diego, and Kern counties — to meet the health care needs of the reentry population. They then conducted focus groups in Alameda, Los Angeles, and San Diego counties with former prisoners and their family members and interviews with relevant service providers and community groups to better understand how health affects reentry; the critical roles that health care providers, other social services, and family members play in successful reentry; and how the children and families of ex-prisoners are affected by reentry. The authors discuss all this in the context of budget cuts that have substantially shrunk California's safety net and the May 2011 U.S. Supreme Court decision ordering California to reduce its prison population by 33,000. The volume concludes with recommendations for improving access to care for this population in the current fiscal environment.

View an overview of the report here: http://www.rand.org/pubs/monographs/MG1165.html

View the full 252 page report here: RAND_MG1165.pdf

Read a shorter 23-page summary of the report here: RAND_MG1165.sum.pdf

* Note: All links open in a new window via www.rand.org.

California’s Fiscal Outlook: The 2012-13 Budget

The Legislative Analyst's Office has just issued the following report:

California’s Fiscal Outlook: The 2012-13 Budget

Our updated assessment of California’s economy and revenues indicates that General Fund revenues and transfers in 2011-12 will be $3.7 billion below the level assumed in the June budget package. This revenue shortfall would translate into $2 billion of potential “trigger cuts” to various state programs—including all of the “Tier 1” trigger cuts and three-fourths of the “Tier 2” trigger cuts. (The Director of Finance will determine the actual amount of trigger cuts next month.)

We forecast that the state will end 2011-12 with a $3 billion deficit, including the effects of the trigger cuts that could result from our revenue forecast. In 2012-13, we forecast that the state will face increased costs due to the expiration of a number of temporary budget measures, a significant increase in Proposition 98 school costs under current law, the required repayment of a $2 billion Proposition 1A property tax loan used to help balance the budget in 2009, and other factors. These factors contribute to a projected $10 billion operating shortfall (the difference between annual General Fund revenues and expenditures) in 2012-13. The $3 billion “carry-in” deficit from 2011-12 and the projected $10 billion operating deficit in 2012-13 mean that the Legislature and the Governor will need to address an approximately $13 billion budget problem between now and the time that the state adopts a 2012-13 budget plan. (50 pp.)

This report available using the following link: http://www.lao.ca.gov/laoapp/PubDetails.aspx?id=2539

You can download and view the .pdf file of the report below.

In addition, click the lao.ca.gov link to see three videos summarizing the report. Legislative Analyst Mac Taylor provides an overview and Deputy Jennifer Kuhn discusses Proposition 98. Deputy Jason Sisney explains the revenue and economic outlook.

Higher Education: Answers to Frequently Asked Questions

Does the State Spend More on Corrections or Higher Education?

About a fifth of the state General Fund budget goes to higher education and corrections combined. State spending in these two areas responds to very different cost pressures, so it is not surprise that funding trends could differ. Nonetheless, the question is commonly asked which sector receives more state support. There is no single answer to the question.