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.

2011 Realignment Report (LAO)

As part of the 2011-12 budget plan, the Legislature enacted a major shift—or “realignment”—of state program responsibilities

and revenues to local governments. In total, the realignment plan provides $6.3 billion to local governments (primarily counties) to fund various criminal justice, mental health, and social services programs in 2011-12, and ongoing funds for these programs annually thereafter...

LAO analysis of pension reduction initiative

This is the summary from LAO:

This measure provides that public employee defined pension benefits in California can only allow for "full retirement ages" of 62 years of age or older. This provision of the measure states that it would apply to public employees who are employed on the day after this measure is approved by the state's voters, notwithstanding the Contract Clause of the State Constitution.

Legislative Analyst’s Office: May Budget Revision Report

In the May Revision, the administration estimates that California must address a $17.9 billion gap between current-law resources and expenditures in the 2010‑11 General Fund budget. In our view, the administration’s estimate is reasonable...

Elderly Inmates in California Prisons

According to the California Department of Corrections and Rehabilitation (CDCR), the percentage of inmates over the age of 55 has more than doubled over the past decade, from 3 percent (or about 4,900 inmates) in 2000, to 8 percent (or about 13,600 inmates) in 2010.

The department projects that the percentage of inmates over the age of 55 will continue to increase over the next few years to about 12 percent of the prison population by 2015.

Substance Abuse Treatment Programs in the Criminal Justice System

Three Major Types of Substance Treatment Programs for Offenders:

• Community-Based Diversion Programs. Programs provided to offenders in the community in lieu of prison or a jail sentence.
• In-Prison Programs. Programs provided to offenders while in state prison.
• Parolee Programs. Programs provided to parolees in the community, mostly on a voluntary basis, upon release from prison.

Proposition 36 Programs

Overview. Proposition 36 (the Substance Abuse and Crime Prevention Act of 2000) changed state law so that certain adult offenders who use or possess illegal drugs are sentenced to participate in drug treatment and supervision in the community rather than being sentenced to prison or jail...

Reducing the Ward and Parolee Populations at the Division of Juvenile Facilities

Overview of Division of Juvenile Facilities

Background. The Division of Juvenile Facilities (DJF), the statutory name for the agency often referred to as the Division of Juvenile Justice, is responsible for the housing, supervision, and rehabilitation of individuals that have been committed to their custody. As a result of Chapter 175, Statutes of 2007 (SB 81, Committee on Budget and Fiscal Review), only juveniles who are violent, serious, or sex offenders are committed to DJF.

Characteristics of Wards. As of December 31, 2009, about 1,600 wards (generally ages 13 to 25, average age of 19) reside in DJF institutions. Males comprise about 95 percent of the ward population. Latinos account for roughly 60 percent of the total population, while African-Americans make up about 30 percent of the population. Whites and other races make up the remaining 10 percent.

Juvenile Facilities. The DJF is comprised of fi ve youth correctional facilities and two camps. Recently, DJF closed the Herman G. Stark Youth Correctional Facility in Chino...

May Revision Overview: Judicial & Criminal Justice

Major State Programs. The major state judicial and criminal justice programs include the California Department of Corrections and Rehabilitation (CDCR) and the Department of Justice, as well as the state court system. 2009-10 Budget. The 2009-10 Budget Act includes a total of $12.5 billion from the General Fund for judicial and criminal justice programs, which is about 14 percent of all General Fund spending. This amount—which includes support for operations, capital outlay, and debt service for related facilities—represents a decrease of about $727 million, or 6 percent, below the revised level of current-year spending for these programs....

Informational: CDCR, Local Government Financing

LAO Compromise

• Results in an additional $112.1 million in General Fund... savings relative to Assembly version.
• Funds only programs that have demonstrated effectiveness at improving public safety.
• Recognized the availability of special funds to support programs.
• Eliminates programs that are primarily a local responsibility.

Prisons vs. Universities Proposal Would Unwisely Lock Up Budget Flexibility

In his January budget, the Governor proposed a state constitutional amendment that would require reductions in spending on state corrections, with corresponding increases in spending for public universities. Beginning in 2014‑15, the state would be required to dedicate no more than 7 percent of state General Fund spending to corrections and no less than 10 percent to public universities. We urge the Legislature to reject this proposal because it (1) would unwisely constrain the state’s ability to allocate funding where it is most needed each year; and (2) is unnecessary, as the state already has the ability to shift funding among programs without this constitutional amendment...

The 2010-11 Budget: Assessing the Prison Population Reduction Proposal

As part of the January 2010 special session to begin bringing the 2009‑10 and 2010‑11 budgets into balance, the Governor proposes statutory changes to reduce the state’s inmate and parolee populations. Specifically, the Governor proposes to require that offenders who have no prior serious or violent offenses and are convicted of certain property and drug felony crimes serve a maximum sentence of one year and one day in county jail in lieu of a state prison sentence.

The administration estimates that, if approved by March 1, 2010, these changes would reduce state correctional costs by $25.2 million in 2009‑10 and $291.6 million in 2010‑11. In this brief, we (1) analyze the Governor’s proposal, particularly in the context of recent policy actions to reduce the inmate and parole populations, and (2) recommend modifying the Governor’s proposal to permit counties to place additional jail inmates on electronic home monitoring...

California Out-of-State Correctional Facility Program

Overview of Out-of-State Bed Program

Mission. The California Out-of-State Correctional Facility (COCF) program is administered by the California Department of Corrections and Rehabilitation (CDCR). Its mission is to transfer inmates out of state for the purpose of temporarily alleviating overcrowding within existing state prisons.

Number of Inmates. The department currently has 8,021 male inmates housed in fi ve out-of-state facilities. Inmates housed in these facilities are generally highersecurity level inmates. Most inmates have been transferred involuntarily. Inmates with serious medical and mental health issues are generally excluded from the program...

Achieving Better Outcomes for Adult Probation

County probation departments in California supervise roughly 350,000 adult offenders in their community. In addition to supervision, these departments also refer probationers to a variety of rehabilitation and treatment programs. Although the probation programs and supervision are a local responsibility, their performance affects state-level public safety programs. This is because adult offenders that fail on probation can have their probation term revoked and be sentenced to state prison, where it costs the state on average approximately $49,000 per year to incarcerate an offender...

Implementing AB 900’s Prison Construction & Rehabilitation Initiatives

On May 23, 2007, the Governor signed into law Chapter 7, Statutes of 2007 (AB 900, Solorio), in order to relieve the significant overcrowding problems facing state prisons. Specifically, AB 900 authorized a total of approximately $7.7 billion for a broad package of prison construction and rehabilitation initiatives. Prison Construction Projects ($7.7 Billion). The measure contained a number of significant provisions to finance the construction of both state prisons and county jail space using $7.4 billion in lease-revenue bonds and a $300 million General Fund appropriation...

Spending in Correctional Officer Overtime

The Governor's budget provides a $35.7 million General Fund augmentation to the California Department of Corrections and Rehabilitation (CDCR) to pay for overtime costs for custody staff. The CDCR argues that its base overtime budget - which it identifi es to be $104.3 million—has not been adjusted since 2000-01, despite a 34 percent base salary increase provided to correctional officer staff over that period. The $104.3 million overtime budget identifi ed by CDCR does not include about $49 million in additional overtime funding provided since 2004-05 for various activities, such as medical guarding...

California Department of Corrections and Rehabilitation

Background. The California Department of Corrections and Rehabilitation (CDCR) is responsible for the incarceration and care of adult felons and non-felon narcotics addicts at 33 state prisons, as well as juvenile offenders at 6 youth correctional facilities. The CDCR also supervises parolees and wards released to the community. The department has nearly 70,000 employees. Operations Budget. The 2009-10 budget includes about $9.8 billion—almost entirely from the General Fund—to operate CDCR. Over 90 percent of these funds support adult inmates and parolees. The budget includes a $180 million unallocated reduction to the Receiver's medical services program and a $400 million unallocated reduction resulting from a Governor's veto...

Overview of Corrections Spending and Administration

Background. The CDCR is responsible for the incarceration and care of adult felons and non-felon narcotics addicts at 33 state prisons, as well as juvenile offenders at 6 youth correctional facilities. The CDCR also provides services to parolees and wards released to the community. Total Budget. The revised 2008-09 budget includes total expenditures of $11.2 billion for CDCR from all fund sources. About 90 percent of these expenditures are funded from the General Fund. The department has nearly 70,000 employees. Operations Budget. The budget includes $10.4 billion—almost entirely from the General Fund—to operate CDCR. Over 90 percent of the department's operations budget supports supervision of adult inmates and parolees, with the remaining funds supporting supervision of juvenile offenders and various administrative costs...

The 2009-10 LAO Budget Analysis Series

In November, the administration projected a $24 billion drop in revenues from the estimates in place a few months earlier when the 2008.09 Budget Act was adopted. Now, due to the worsening economy, the administration projects an additional $7 billion decline in revenues. Combined with the states chronic operating shortfall and rising expenses, the administration projects that the state would end 2009.10 with a deficit of $40 billion absent corrective action...

LAO Compromise: Proposals to Reduce Inmate and Parole Populations

Benefits of LAO Compromise:

• Would generate $398 million in General Fund savings... in the budget year. This amount would increase significantly in 2009-10, thereby providing an ongoing budget solution.
• The LAO package includes a series of proposals that are consistent with recommendations of national experts on corrections, such as earned discharge and additional credits for completing rehabilitation programs. Our approach would increase offender accountability and provide incentives for offenders to participate and complete programs designed to reduce recidivism. The LAO package reduces public safety risk compared to early release or the broad use of summary parole or direct discharge.

Informational: Reentry Facilities Program Study and Acquisition

We recommend the following conference compromise:

• Approve funding of $3 million for the reentry facilities program study and acquisition activities (Assembly plus $3 million).
• Approve budget bill language (BBL) proposed by the administration allowing the California Department of Corrections and Rehabilitation (CDCR) with the approval of the Department of Finance to use funds for site investigations and real estate due diligence activities preliminary to the site selection and acquisition of interests in real property. The CDCR is also authorized, with the approval of the State Public Works Board, to enter into agreements for the acquisition of an option to purchase real property...