Report of the Legislative Analyst's Office
July 13, 1994
On July 8, 1994, Governor Wilson signed into law the 1994 Budget
Act and other measures that make the law changes necessary to
achieve budgeted savings. In this report we highlight the major
features of the budget package.
I. Budget Overview 2
II. Health and Welfare 4
III. Proposition 98 Education 6
IV. Higher Education 8
V. Judiciary and Criminal Justice 10
VI. General Government 12
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I. BUDGET OVERVIEW*
__________________
The 1994 Budget Act was signed into law by Governor Wilson on
July 8, 1994. The Budget Act plus related trailer legislation
authorize total state spending of $57.5 billion, consisting of
$40.9 billion from the General Fund, $13.7 billion from special
funds, and $2.9 billion from selected bond funds. This represents
an increase of 5.9 percent in total state spending relative to
1993-94. General Fund spending will increase by $1.6 billion, or
4.2 percent, while special funds spending increases by
approximately $700 million, or 6.1 percent.
The 1994 budget package represents a two-year plan for
balancing the state's budget. As shown in Figure 1, the state
will end the 1994-95 fiscal year with a deficit in its reserve
fund of approximately $1 billion. As the figure shows, this
deficit is expected to be eliminated by the end of the 1995-96
fiscal year, leaving a small reserve of $23 million. The 1995-96
figures are based upon the administration's estimates of revenues
and expenditures for that year, including adjustments to reflect
the 1995-96 impacts of actions taken pursuant to the budget
agreement.
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Figure 1
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1994-95 Budget Package
Estimated General Fund Condition*
1994-95 and 1995-96
(In Millions)
1994-95 1995-96
Prior-year balance -$1,619 -$668
Revenues and transfers 41,892 45,442
___________________________________________________
Total resources available $40,273 $44,776
Expenditures 40,941 $44,399
Fund Balance -$668 $375
Reserve -$1,020 $23
Other obligations ($352) ($352)
* Details do not add to totals due to rounding.
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The administration's estimates of revenues and expenditures
for the two-year period shown in Figure 1 are premised upon a
number of important assumptions. The budget's estimates of
revenues assume that the state's economy will continue its
recovery from the recession and show modest but steady growth
through 1996. The budget also assumes that the federal government
will provide $3.6 billion over the two-year period in new federal
immigration-related assistance. Finally, the assumed rates of
growth in 1995-96 for major expenditure programs are relatively
modest, from a historical perspective.
An important feature of the 1994 budget agreement is the
adoption of a standby trigger mechanism that is intended to
ensure that the two-year budget plan stays on track (Chapter 135,
Statutes of 1994). In essence, the trigger mechanism requires
automatic spending cuts to be implemented under specified
conditions. These automatic spending cuts would be applied
across-the-board to all General Fund spending programs except
those protected by the state Con stitution or federal law
(primarily K-14 school funding and debt service). The trigger
mechanism could be activated in either 1994-95 or 1995-96 if the
state's cash position deteriorates and is not corrected by
legislative action.
Appendix 1 lists other major legislation that was needed to
implement the 1994-95 budget plan.
ACTIONS TO CLOSE THE BUDGET GAP
Based upon the May Revision of the Governor's Budget, we
estimated that the state faced a 1994-95 budget gap of $4.6
billion. This gap consisted of a $2.2 billion carryover deficit
from 1993-94 and a $2.4 billion operating shortfall in 1994-95
between baseline spending and projected revenues. Figure 2
summarizes the actions taken in the budget agreement to address
the budget gap. These actions can be summarized as follows:
= Shifts to Other Levels of Government - $1.5 Billion =
These cost shifts address about one-third of the total
budget funding gap. A majority of the savings result from
budget actions affecting counties, primarily the
correction of last year's property tax shift from counties
to schools. In addition, state actions to share in the
proceeds of certain federal disbursements (SB 855 and SB 910
funds) to counties and budget actions increasing county
responsibilities contribute to the savings. The other major
action in this category is the assumed increase in federal
funding for immigrant-related state costs.
= Cost Deferrals and Revenue Accelerations - $1.4 Billion =
The largest item in this category is the $1 billion
roll-over of the state's budget deficit from 1994-95 to
1995-96. A shift of costs for short-term borrowing expenses
to 1995-96 and accelerated tax settlements account for most
of the remainder.
= Program Reductions $1.1 Billion =
A wide variety of individual actions contribute to the total
General Fund savings from program reductions. The largest
savings result from reduced AFDC and SSI/SSP grants, and
from actions to reduce the cost of providing services in the
Medi-Cal program.
=Increased Resources $600 Million =
The administration's assumption of $410 million in
increased tax assessments resulting from the state's victory
in the Barclay's lawsuit accounts for the bulk of the
increased resources. Improved tax collection efforts account
for the remainder.
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Figure 2
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Summary of Actions Taken
To Close the 1994-95 Budget Gap
(In Billions)
_____________________________________________________
Shifts to other levels of government $1.5
Local government:
Revise prior property tax shift 0.3
State share of federal reimbursements
to counties 0.3
Subtotal (0.6)
Federal government:
Immigrant costs 0.8
Managed care funding 0.1
_____________________________________________________
Cost deferrals and revenue accelerations $1.4
1994-95 carryover deficit 1.0
Bond funding for flood control projects 0.1
Defer borrowing costs 0.2
Extend tax settlement authority 0.1
_____________________________________________________
Program reductions $1.1
Welfare grant reductions 0.1
Various Medi-Cal savings 0.2
Reductions to state agencies 0.3
Capture K-12 retirement savings 0.1
Shift special fund monies to
General Fund Programs 0.4
______________________________________________________
Increased resources $0.6
State victory in Barclays case 0.4
Expand tax compliance activities 0.2
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*Prepared by the State and Local Finance Section
(916) 445-6442
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II. HEALTH AND WELFARE*
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In this section, we describe the major features of the health
and welfare funding in the budget package. The 1994-95 budget for
health and welfare programs includes $14 billion from the General
Fund. This represents an increase of $445 million, or 3.3
percent, over estimated General Fund spending for these programs
in 1993-94.
Figure 1 describes the major General Fund reductions enacted
in the 1994 Budget Act and related legislation.
MEDI-CAL PROGRAM
Services to Undocumented Persons and Refugees
The budget assumes receipt of $407 million in federal funds
for the costs of health and social services provided to
undocumented persons and refugees. This includes $296 million to
fully offset state costs for emergency health services provided
to undocumented immigrants, rather than the 50 percent funding
California receives under current law. In addition, it assumes
$111 million in federal funds to provide health and social
services funds to refugees during the first 36 months of
residence.
Federal Funds for County Administration and Case Management
The budget assumes a substantial increase in federal funds to
reimburse counties for administrative and case management
services provided to Medi-Cal beneficiaries (SB 910 funds). Under
this program, the state uses the funds transferred from counties
and matching federal revenues to make supplemental payments for
these services, based on claims submitted by counties. The amount
of county claims is estimated to increase from $169 million in
1992-93 to a total of about $1.3 billion for the current and
budget years combined. The budget assumes that the state will
retain a share of these revenues, for a savings of $200 million.
Hospital Payment Reductions
The California Medical Assistance Commission negotiates
reimbursement rates for hospital inpatient services provided to
Medi-Cal beneficiaries. The budget assumes the commission will
negotiate no net increase in reimbursement rates in 1994-95, for
a savings of $45 million. In addition, the budget increases by
$85 million the amount of funds the state will retain of
disproportionate share payments (SB 855 funds). These payments
are made to hospitals which serve a large number (or
disproportionate share ) of indigent patients. This action
results in a corresponding reduction in the net proceeds of the
disproportionate share program for hospitals operated by
counties, special districts, and the University of California.
Drug Program Savings
The budget makes a number of changes to the Medi-Cal
prescription drug program. Currently, the Medi-Cal Program
negotiates with pharmaceutical manufacturers for rebates on their
products. The budget requires all manufacturers to provide a
minimum 10 percent rebate for a savings of about $43 million
annually. In addition, the budget limits the number of
prescriptions that may be provided to Medi-Cal beneficiaries to
six per month ($13 million savings) and reduces the amount
Medi-Cal reimburses pharmacists by 50 cents per prescription
($6.3 million savings).
Sponsored Aliens
The budget assumes passage of federal legislation that will
prevent individuals who legally enter this country under
sponsorship by a U.S. citizen from receiving Medi-Cal or Aid to
Families with Dependent Children (AFDC) benefits for five years.
Such legislation would result in annual savings of $22 million in
the Medi-Cal Program and $18 million in the AFDC Program.
Managed Care
The budget reduces reimbursement rates to privately operated
health insuranceplans that provide managed care services to
Medi-Cal beneficiaries. Specifically, the budget requires that
these prepaid health plans be reimbursed at no more than 97
percent of the amount Medi-Cal would otherwise spend to provide
health care to beneficiaries in the traditional fee-for-service
system, for a state savings of $18 million in 1994-95. In
addition, the budget implements contracting for dental services,
beginning in 1995-96, which is anticipated to result in savings
of $80 million annually.
Optional Benefits and Prenatal Program
The legislature rejected the Governor's proposals to
eliminate (1) certain Medi-Cal optional benefits and (2) the
state-only program for providing prenatal benefits to
undocumented women.
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Figure 1
Major Reductions in Health and Welfare Programs
1994-95 General Fund
(In Millions)
Change from
Program/Issue Prior Law
MEDI-CAL PROGRAM
Assume federal funds for services to
undocumented persons and refugees
(including AFDC and SSI/SSP) $407.3
Assume state share of federal case
management/county administration funds 200.0
Increase state share of disproportionate share
hospital payments 85.0
Reduce drug program costs 62.1
Asume no net increase in hospital inpatient
reimbursement rates 45.0
Bar sponsored aliens from eligibility 22.0
Reduce prepaid health plan rates 18.0
AFDC PROGRAM
Reduce grants 2.3 percent 56.3
Fund GAIN with Employment Training Fund 20.0
Bar sponsored aliens from eligibility 18.1
SSI/SSP
Reduce grants 2.3 percent 39.6
REGIONAL CENTERS
Unallocated reduction 20.0
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AID TO FAMILIES WITH
DEPENDENT CHILDREN PROGRAM
Governor's Welfare Reform Proposals
The enacted budget adopted part of the Governor's welfare
reform proposals. Specifically, the budget:
* Reduced the AFDC (Family Group and Unemployed
Parent components) maximum grants by 2.3 percent,
beginning September 1, 1994, for a General Fund savings
of $56 million. This reduces the maximum grant for a
family of three persons by $14 from $607 per month to
$593. (The Governor proposed a 10 percent reduction,
followed by a reduction of 15 percent after six months
on aid.)
* Reduced the $70 monthly special needs payment for
pregnant women on AFDC to $47, for a General Fund
savings of $3 million in 1994-95. (The Governor
proposed elimination of the special need payment and
elimination of the state-only program, in which grants
are provided to pregnant women without other children
during the first six months of pregnancy.)
* Adopted a version of the Governor's proposed Maximum
Family Grant Program, which prohibits increases in the
AFDC grant for children conceived while on aid, except
in cases of rape, incest, and failure of certain
contraceptives, effective January 1, 1995. This
provision will not have a fiscal impact until 1995-96.
Greater Avenues for Independence (GAIN) Program
The budget includes a one-time transfer of $20 million from
the Employment Training Fund to support the GAIN Program, for a
corresponding General Fund savings in 1994-95.
SUPPLEMENTAL SECURITY INCOME/
STATE SUPPLEMENTARY PROGRAM (SSI/SSP)
Reduction in Maximum Grants
The budget reduces the maximum grants for certain SSI/SSP
eligibility categories by up to 2.3 percent, beginning September
1, 1994, for a General Fund savings of $40 million in the budget
year. The major effects are a reduction of $26 per month for aged
and disabled couples, $30 for blind couples, and $13 for blind
individuals.
REGIONAL CENTERS
Unallocated Reduction
The budget includes an unallocated reduction of $20 million
to the Regional Centers for developmentally disabled persons.
This represents a reduction of 2.4 percent in total funding for
the centers.
*Prepared by the Health and Welfare Section
(916) 445-6061
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III. PROPOSITION 98 EDUCATION*
______________________________
In this section, we describe the major features of the budget
package as they relate to the Proposition 98 minimum funding
guarantee and K-12 schools. Most of the package's education
provisions are contained in Ch 153/94 (AB 2480, Vasconcellos).
Proposition 98 Provisions
The Proposition 98 portion of the budget package:
* Provides overall K-12 funding of $4,199 per pupil in
1994-95. The effective level of spending, however, is
$4,217 the level funded in the 1993 budget package due
to a reduction in school district costs related to
retirement.
* Fully funds enrollment growth for K-12 general purposes
in 1994-95 and 1995-96, and provides a cost-of-living
adjustment (COLA) in 1995-96 if funds are available.
* Increases funding for the community colleges by $103
million.
The major elements of the budget package are discussed below.
Proposition 98 Funding
The budget provides $24.9 billion ($14.4 billion General
Fund) in Proposition 98 funding for K-14 programs. This exceeds
the amount provided in 1993-94 $24.4 billion ($13.8 billion
General Fund) by $520 million. General Fund spending for
Proposition 98 programs exceeds the Proposition 98 minimum
funding guarantee by $483 million in 1993-94 and by $6 million in
1994-95.
Figure 1 summarizes, for 1993-94 and 1994-95, the effect of
the budget package on the three major recipients of Proposition
98 funding schools, community colleges, and other agencies. As
the figure shows, on a cash basis, the funding level for K-12
schools is $4,225 per pupil in 1993-94, slightly more than the
$4,217 level provided in the 1993 budget package. (This resulted
from a lower-than-expected number of K-12 students statewide.)
The 1994-95 funding level for K-12 schools is $4,199 per pupil.
The 1994-95 budget, however, effectively provides the same level
of funding for classroom needs $4,217 per pupil. This is because
school employers will experience reductions in their retirement
costs that offset the funding reduction.
The 1994 Budget Act provides the community colleges $103
million more than the colleges received during 1993-94. We
discuss budgetary actions affecting the community colleges in the
higher education section of this report.
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Figure 1
Proposition 98 Programs
1994 Budget Act and Education Trailer Bill
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(Funding In Millions)
1993-94 1994-95
K-12 programs
State appropriations $12,828 $13,178
Local taxes 8,415 8,892
Recapture -190 -
Loan 609 -
Adjusted cash totals $21,661 $22,070
Average daily attendance 5,127,018 5,256,627
Amount per ADA $4,225 $4,217(a)
Community colleges
State appropriations $936 $1,104
Local taxes 1,293 1,416
Loan 178 -
Fees 207 197
Adjusted cash totals $2,614 $2,717
Other agencies $75 $83
Total Proposition 98
State appropriations $13,840 $14,366
Local taxes 9,708 10,308
Recapture -190 -
Loan 787 -
Fees 207 197
Adjusted cash totals $24,350 $24,870
Change from January budget -$284
Change from 1993-94 $520
(a) Effective level after adjusting for retirement savings.
===========================================================
Property Tax Shifts
Chapter 155, Statutes of 1994 (AB 860, Pringle), requires
county auditors to increase the amount of property taxes
transferred to the Educational Revenue Augmentation Fund (ERAF)
in 1994-95. Technical issues relating to the implementation of
property tax shifts in 1992-93 and 1993-94 had resulted in a
smaller-than-expected transfer to the ERAF, and consequently
required the state to provide additional funds estimated at $159
million for 1993-94 in order to achieve the desired level of K-14
spending. The legislation corrects the problem by increasing the
transfer for 1994-95 and subsequent years, and requiring counties
to return the 1993-94 revenues over a two-year period.
K-12 PROGRAM IMPACTS
Apportionments
The budget provides a total of $8.3 billion from the General
Fund for general-purpose apportionments (revenue limits) to
school districts and county offices of education. Adding property
tax revenues available to these entities, the budget provides a
total of $16.9 billion in general-purpose funding. This
represents a reduction of $23 per pupil from the amount supported
by the 1993 Budget Act. Despite this reduction in overall
funding, the budget provides substantially the same level of
support for classroom needs.
Again, this is because school employers will experience
reductions in retirement-related costs. The retirement-related
cost reductions adding up to $100 million statewide are due to a
1994-95 reduction in Public Employees' Retirement System (PERS)
rates. About three-quarters of the rate reduction is one-time in
nature. The education trailer bill includes a provision that
restores school funding in 1995-96 to offset any higher costs
related to restoring PERS rates to their previous level.
The budget funds enrollment growth and a cost-of-living
adjustment (COLA) for K-12 general purposes in 1995-96. Language
included in AB 2480 expresses legislative intent that the COLA be
reduced, if necessary, to enure that (1) K-14 spending does not
exceed the 1995-96 Proposition 98 guarantee and (2) categorical
program funding is not reduced below the 1994-95 level. Under
current budgetary assumptions, the COLA could be up to $270
million (about 1 percent). The COLA could be significantly
greater and state costs for K-14 education significantly higher
if the state loses the CTA vs. Gould lawsuit on appeal.
Categorical Programs
The Legislature made a number of relatively minor changes to
the categorical program budget for 1994-95. The budget continues
the use of a single appropriation (the mega-item) to fund most
categorical programs. Funding for special education programs was
removed from this item, however, and separately appropriated.
With this change, the mega-item contains $3 billion for 38
individual programs.
The budget provides additional local flexibility over the
use of mega-item funds. Specifically, it authorizes schools to
redirect up to 10 percent of funds allocated to a specific
program to other categorical programs funded under the mega-item
provided that no program may be increased by more than 15
percent. The 1993 Budget Act authorized schools to redirect up to
5 percent of funds provided to a specific program, provided that
no program may be increased above its 1991-92 funding level. The
budget also permits schools or districts to use this flexibility
to initiate a Healthy Start or conflict resolution program.
The budget continues categorical program funding levels at
about the same level as provided in 1993-94. Only three programs
received significant additional funds. The largest increase went
to special education programs ($53.4 million, or 3.3 percent) to
provide support for growth in the number of special education
pupils. Growth funding also was provided to the Economic Impact
Aid program ($29.9 million, or 10 percent), which funds local
services to limited-English-proficient pupils and pupils who need
additional instructional time or services to succeed in school.
Finally, the budget contains a $9.1 million (8.8 percent)
increase in funding for instructional materials in grades
kindergarten through eight.
The only program experiencing a reduction in funding is the
state assessment program, renamed the California Comprehensive
Testing Program. Although the Legislature included $27.6 million
in the budget for the program, the Governor vetoed these funds.
In his veto message, the Governor indicated his intention to
provide funding in separate legislation.
*Prepared by the Education Section (916) 445-8641
______________________
IV. HIGHER EDUCATION*
______________________
In this section, we describe the major features of the 1994
budget package as they relate to higher education. Figure 1 shows
the change in funding for each major segment of higher education
for 1994-95 from selected fund sources. Fee revenues shown in
Figure 1 are after allowance for financial aid for needy
students. Figure 2 shows the change in student fee levels for
1994-95.
THE UNIVERSITY OF CALIFORNIA (UC)
The 1994 Budget Act provides $38.5 million (2.1 percent)
more in General Fund support for the UC in 1994-95 compared to
1993-94. As part of its budget plan for the UC, the Legislature
approved (1) a general student fee increase of $345 (10 percent)
in 1994-95 and (2) an additional fee increase of $600 (17
percent) for students enrolled in professional programs
(medicine, dentistry, veterinary medicine, law, and business).
(The UC Regents had proposed a general fee increase of $620, or
18 percent, and an additional fee increase of $2,000 for new
students in professional programs.) Including funds available as
a result of the fee increases, the UC will experience an increase
of $76.4 million, or 4.3 percent, above the current year.
In its plan, the Legislature provided (1) a 3 percent
faculty and staff salary increase beginning on October 1, 1994;
(2) merit salary increases for faculty and staff; and (3) $25
million in new lease-payment revenue bonds for priority-one
deferred maintenance projects. The Legislature also (1)
redirected $18 million from teaching hospital revenues to fund
critical campus needs (in structional equipment replacement,
deferred maintenance, and library books) and (2) reduced the
$21.6 million proposed in the Governor's January budget from the
Cigarette and Tobacco Products Research Account for tobacco-
related research projects to $4 million.
We anticipate UC student enrollment to decline slightly in
the budget year to match slight declines in the Master Plan
eligible student population. The Legislature expressed intent in
the Supplemental Report of the 1994 Budget Act for the UC to
continue to accept all applicants who are fully eligible under
the Master Plan in 1994-95 and 1995-96.
The Legislature also expressed its intent in the
supplemental report that the UC (1) increase its budgeted
student/faculty ratio from 17.6 to 18.7 by 1995-96,(2) establish
four-year degree pledge programs on all campuses by 1995-96, (3)
increase fees for students enrolled in professional programs over
the next six years to the average of fees charged by comparable
public universities, and (4) achieve specific objectives with
respect to enrollment of primary care and family practice medical
residents. The supplemental report also expresses the
Legislature's intent that salary increases for UC executives in
1994-95 average no more than one-quarter of the total increase
granted for faculty and staff, and acknowledges the UC's
commitment to the Legislature that the UC will not provide any
salary or merit increases to its top 22 executives in 1994-95.
=====================================================
Figure 1
Higher Education Budget Summary
Selected Funding Sources Change
From 1993-94 to 1994-95
======================================================
(Dollars in Millions)
Change From
Budget Act 1993-94
1994-95 Amount Percent
University of California
General Fund $1,831.7 $38.5 2.1%
Student fee offset 37.9 37.9 - (a)
____________________________
Totals $1,869.6 $76.4 4.3%
California State University
General Fund $1,553.2 $64.9 4.4%
Student fee offset 29.5 29.5 - (a)
____________________________
Totals $1,582.7 $94.4 6.3%
California Community Colleges (b)
General Fund (Prop.98) $1,104.1 $168.1 18.0%
General Fund (Non-Prop.98) 3.0 -38.3 -92.7
Property taxes 1,416.0 123.1 9.5
Loan - -178.0 -100.0
Student fee offset 196.8 2.0 1.0
____________________________
Totals $2,719.9 $76.9 2.9%
Student Aid Commission (Cal Grants)
General Fund $226.2 $18.6 9.0%
(a) Not a meaningful figure.
(b) Local assistance only.
===========================================================
THE CALIFORNIA STATE UNIVERSITY (CSU)
The 1994 Budget Act provides $64.9 million (4.4 percent)
more in General Fund support for the CSU in 1994-95 compared to
1993-94. As part of its budget plan for the CSU, the Legislature
adopted a student fee increase of $144 (10 per cent) in 1994-95.
(The CSU Trustees had proposed a fee increase of $342, or 24
percent, for the budget year.) Including funds available as a
result of the fee increase, the CSU will experience an increase
of $94.4 million, or 6.3 percent, above the current year.
The Legislature's budget plan for CSU also provides for (1)
an enrollment increase of 2,500 full-time-equivalent (FTE)
students, for a total budgeted enrollment level of 250,000 FTE
students, (2) an augmentation of $9.3 million for CSU's proposed
new campus at Fort Ord in Monterey County, (3) funding for
quality improvements and essential programs, and (4) $17 million
in new lease-payment revenue bonds for priority one deferred
maintenance projects. The Legislature also expressed its intent
in the Supplemental Report of the 1994 Budget Act that the CSU
(1) establish four-year degree pledge programs on all campuses by
1995-96; (2) provide no salary increases for executives who
received an increase in the current year, and limit the salary
increases for the remaining executives, as specified; and (3)
speed up enrollment growth at Fort Ord to reduce the state's
higher enrollment costs at the campus and the state's future need
to build facilities at existing campuses. The supplemental report
also provides that any compensation increases that create
additional full-year ( annualization ) costs in 1995-96 shall be
funded from existing resources, with no related reduction in
enrollments or increases in student fees.
CALIFORNIA COMMUNITY COLLEGES
The 1994 budget package increases funding for community
colleges local assistance by $77 million (2.9 percent) compared
to the amount actually received in 1993-94. (In 1993-94, the
community colleges received $71.5 million less than the budgeted
amount, primarily due to property tax and fee revenue
shortfalls.) The 1994-95 budget represents a $5.4 million, or 0.2
percent, increase compared to the 1993 Budget Act.
As Figure 2 shows, the Legislature maintained community
college fees at the current-year level of $390 per full-time
student, or $13 per credit unit. The Governor had proposed a fee
increase of $7 per credit unit (54 percent). The Legislature
approved the administration's proposed reduction of $15.2 million
related to declines in the enrollment of BA degree holders. The
Legislature also recognized $9.1 million in savings due to a
reduction in Public Employees' Retirement System (PERS) rates,
and used the remaining $5.4 million in PERS-related savings for
augmentations to basic skills and instructional equipment. The
Legislature provided $18.5 million to backfill the 1993-94
property tax shortfall.
The Legislature expressed its intent in the Supplemental
Report of the 1994 Budget Act that (1) the funding provided in
the budget is for a state-funded full-time-equivalent (FTE)
student enrollment of 869,590, (2) the state-funded enrollment
level shall not be reduced downward to reflect the lack of a
cost-of-living adjustment, and (3) the Chancellor's Office shall
conduct annual program reviews of categorical programs.
*Prepared by the Education Section (916) 445-8641
=====================================================
Figure 2
Higher Education Student Fees 1994-95
=====================================================
Change From
1993-94
1994-95 Amount Percent
University of California
Undergraduate/graduate $3,799 $345 10%
Graduate professional(a) 4,399 945 27
Medicine/law 4,775 945 25
Calif. State Univ. 1,584 144 10
Calif. Community Colleges(b) 390 - -
(a) Dentistry, veterinary medicine, and business.
(b) Excludes BA degree holders, who are charged $50 per
credit unit.
============================================================
__________________________________
V. JUDICIARY AND CRIMINAL JUSTICE*
__________________________________
In this section, we describe the major features of the
budget package as they relate to judiciary and criminal justice
programs (courts, adult and youth cor rections, and other
justice-related programs). The amounts approved for the Judiciary
and Criminal Justice programs are very similar to the amounts
proposed by the Governor and represent substantial increases
above the prior-year funding levels. Budgets for correctional and
law enforcement programs received substantial increases to
provide full funding for caseload increases as well as a number
of new program initiatives.
The 1994-95 budget for judiciary and criminal justice
programs includes $4.6 billion from the General Fund and $256
million from state special funds, for a total of $4.8 billion in
state funds. The General Fund amount represents an increase of
$351 million, or about 8.3 percent, above estimated spending for
these programs in 1993-94.
Figure 1 and the following text describe the major changes in
the 1994 Budget Act.
JUDICIARY
The 1994 Budget Act provides $151 million for support of the
judiciary, which includes the California Supreme Court, the
Courts of Appeal, Judicial Council, and the Commission on
Judicial Performance. This represents an increase of $11.5
million, or 8.3 percent, above 1993-94 expenditures. The increase
is primarily due to increases for computer information systems
and court-appointed counsel services.
TRIAL COURT FUNDING
In January, the Governor proposed an increase of about 65
percent from the 1993-94 expenditure level for the Trial Court
Funding Program as part of his state and county restructuring
proposal. Both houses rejected the Governor's restructuring
proposal and deleted $388 million of the proposed increase. The
Governor dropped the proposal in June. As a consequence of these
actions, the budget provides $624 million ($483 million from the
General Fund and $141 million from special funds) for support of
local trial courts in 1994-95, or about $7.0 million more than
the amount provided in the prior year. As a result, the state
will pay about 40 percent of statewide trial court expenses in
the 1994-95 and the counties will have to pay the balance. This
amount of state support is substantially below the intended level
of 65 percent that was previously expressed by the Legislature.
DEPARTMENT OF CORRECTIONS
The budget provides $3.08 billion ($2.97 billion from the
General Fund) for support of the Department of Corrections (CDC).
This is an increase of about 9 percent above the 1993-94 level
and is primarily due to projected increases in inmate and parole
populations and general staff salary and price increases. The
only significant reduction to the department's budget was an
unallocated General Fund cut of $10 million (about 0.3 percent)
below the amount proposed by the Governor.
Inmate and Parole Caseloads.
Although a number of changes were contemplated by the
Legislature that would have saved money by reducing the
number or length of stay of offenders in prison and on
parole, the final budget did not include any of these changes.
The budget is based on the administration's projected inmate
population of about 138,000 inmates by June 30, 1995, an increase
of approximately 11 percent over 1993-94. The parole population
is projected to reach about 97,000 parolees by June 30, 1995, an
increase of 8.6 percent. The administration's caseload estimates
include $5.6 million for the first-year impacts of the "Three
Strikes and You're Out" legislation (Ch. 12, Stats of 1994 [AB
971, Jones]), which became law in March 1994. In addition, the
budget includes $10 million for the department to begin various
planning efforts to accommodate the substantial future year
increase in population resulting from the Three Strikes law.
New Prisons
The budget includes $51 million in one-time costs to begin
activation of a new prison in Madera County and to fully open a
new prison in Fresno County. These facilities are designed to
house about 2,000 female inmates and 2,200 male inmates,
respectively.
Federal Funds for Incarceration and Supervision of Undocumented
Felons
The budget assumes that the state will receive $356 million
in federal funds for the incarceration of undocumented immigrant
inmates and wards in state prison and the Department of the Youth
Authority, as well as the supervision in the community of
undocumented immigrant parolees. These funds are treated as
revenues to the state and do not directly offset the costs of
either the CDC or the Youth Authority.
DEPARTMENT OF THE YOUTH AUTHORITY
The budget provides $364 million ($360 million from the
General Fund) for support of the Department of the Youth
Authority. The General Fund amount is an increase of less than 1
percent over 1993-94 expenditures. The budget deleted $33 million
in proposed General Fund support for juvenile detention camps and
ranches in approximately 20 counties in anticipation that the
counties will receive increased federal funds for probation
departments. However, the budget provides $14 million from the
General Fund to Los Angeles County to fund salaries and overtime
expenses previously deferred by the county for probation
department staff.
DEPARTMENT OF JUSTICE
The budget provides $234 million ($182 million from the
General Fund) for support of the Department of Justice (DOJ). The
General Fund amount is an in crease of about 15 percent over
1993-94 expenditures. The budgeted level in cludes increases in
virtually all of the department's program areas. The most
significant increases include workload increases in the Criminal
Law ($10.1 million) and Civil Law ($5.4 million) Sections, as
well as $3.8 million for a new Violence and Weapons Suppression
Program.
The 1994-95 budget also includes an increase of $15 million
for domestic violence programs. Specifically, the amount includes
$3.5 million to the DOJ for financial and technical assistance in
the prosecution of domestic violence cases, and $11.5 million to
the Department of Health Services to provide grants for domestic
violence shelters and services.
Among the budget trailer bills approved by the Legislature
was AB 167 (Barbara Friedman), which specified the Legislature's
intent to appropriate an additional $15 million for these
programs in 1995-96.
OFFICE OF CRIMINAL JUSTICE PLANNING
The budget provides a General Fund decrease of $5.4 million,
or 17 percent, below 1993-94 expenditures for the Office of
Criminal Justice Planning (OCJP). The reduction is primarily the
result of ending one-time augmentations provided for victim
assistance programs in 1993-94. Although the Legislature
considered abolishing the OCJP and transferring its
responsibilities to the DOJ, the Youth Authority, and a new Board
of Victim Assistance, the final budget left the office intact.
* Prepared by the Criminal Justice and State
Administration Section (916) 445-4660
==============================================
Figure 1
Major Funding Changes in Judiciary
and Criminal Justice Programs - 1994-95
General Fund
===============================================
(Dollars in Millions)
Change from 1993-94
Amount Percent
Judiciary $11.5 8.3%
Trial Court Funding 7.0 1.5
Department of Corrections 245.9 9.0
Department of the
Youth Authority 1.8 0.5
Department of Justice 24.3 15.4
Office of Criminal Justice
Planning -5.4 -17.0
================================================
_______________________
VI. GENERAL GOVERNMENT*
_______________________
In this section, we describe the major features of the budget
as they relate to general government, transportation, resources,
and capital outlay programs.
Transfer of Special Funds
In recent years, amounts have been transferred from special
funds to the General Fund to finance certain state activities.
Figure 1 shows the major transfers for 1994-95.
Performance Budgeting Pilot Program
The Governor's January budget added two departments to the
administration's performance budgeting pilot program the
Department of Toxic Substances Control and the California
Conservation Corps bringing the total number of participating
departments to six. The other departments are General Services,
Parks and Recreation, Consumer Affairs, and the Stephen P. Teale
Data Center. No funds specifically earmarked for performance
budgeting have been included in the budget.
Judges' Retirement System
The Legislature enacted AB 2385 to raise both the judges'
and state contribution rates paid into the Judges' Retirement
System (JRS) from 8 percent to 11 percent of judges' salaries,
effective January 1, 1995. This would have reduced General Fund
costs by a total of $7 million over 1994-95 and 1995-96. The
Governor, however, vetoed the measure.
Employee Compensation
Under approved memoranda of understanding (MOUs), represented
state employees (other than employees of the University of
California and the California State University) will receive a 3
percent cost-of-lving adjustment (COLA) on January 1, 1995. The
Department of Personnel Administration has approved identical
increases for non-represented state employees. This COLA will
cost an estimated $133 million ($68 million General Fund) during
the last six months of 1994-95. The Budget Act provides $66
million ($44 million General Fund) to cover a portion of these
COLA costs. As proposed in the Governor's Budget, the Budget Act
amount will be distributed to 14 departments to pay the COLA to
employees who provide direct public safety or 24-hour care
services or who are in major revenue-producing agencies. The
amounts needed to pay the COLA to other state employees must be
borne by departments and agencies from existing support funds. In
effect, this imposes unallocated reductions totaling an estimated
$67 million ($24 million General Fund).
Resources
The 1994 budget provides a total of about $1.2 billion for
resources programs, including about $834 million to support
various resource agencies and conservancies, and $322 million for
local assistance and capital outlay. The budget includes $30
million to fund various wildlife habitat acquisitions and
improvements as required by Proposition 117. It also provides $9
million, mostly from the California Water Fund, to the City of
Los Angeles for a waste water reclamation project to replace
water previously diverted from Mono Lake. To provide funds for
this project, the budget reduced support for the Department of
Water Resources by about $2.4 million compared to the level
proposed in January.
The budget redirects $5 million in emergency fire protection
funds to increase fire-fighter positions in order to enhance
intial fire attack capability in the Department of Forestry and
Fire Protection. The budget also provides a contingency loan of
$7.6 million from the Oil Spill Response Trust Fund to the
Department of Fish and Game to continue work on the Cantara
Spill.
Transportation
The 1994 budget provides about $1.7 billion for support of
the Department of Transportation (Caltrans) about the same level
as in 1993-94. This amount is about $68 million lower than
proposed by the Governor's Budget, and reflects a reduction of
$14 million in administration expenditures, a $26 million
reduction in capital outlay support (project engineering and
design) and an unallocated departmental reduction of $28 million.
The budget also provides $1.8 billion for transportation capital
outlay. This amount includes an increase of $41.5 million for
seismic retrofit of highway bridges. Additionally, the budget
transfers $154.3 million in State Highway Account funds to the
General Fund in order to pay for rail bond debt service in
1994-95. For local assistance, the budget provides $68
million for operating assistance to local transportation
authorities through the State Transit Assistance (STA) Program
about $14 million more than the current-year level. The budget
also provides about $909 million for local assistance programs
administered by Caltrans, including $200 million for State-Local
Transportation Partnership Program (SLTPP) and about $20 million
for Transit Capital Improvement (TCI). The budget, however,
limits expenditures for the SLTPP to $189 million in order to
free up funds to pay rail bond debt service. Also, the TCI level
reflects a $15.4 million reduction (from the level proposed in
the Governor's budget) in order to free up Motor Vehicle Account
funds for transfer to the General Fund. In turn, $14 million of
these funds were provided to Los Angeles County to fund salaries
and overtime expenses previously deferred by the county for
probation department staff.
Capital Outlay
The budget includes almost $800 million (about 85 percent
from bond funds) for capital outlay, as shown in Figure 2. Over
$500 million, or 65 percent, of all capital outlay appropriations
is for the three segments of higher education. About $470 million
of the amount for higher education is dependent on voter approval
of a general obligation bond for higher education facilities in
the upcoming November election. In addition, $46 million
appropriated for the Departments of Corrections, Youth Authority,
Forestry and Fire Protection, and the Office of Emergency
Services are also dependent on voter approval of bonds in
November. The Legislature has not yet acted to place any of these
bond measures on the November ballot.
The budget also authorizes $61 million in lease-payment bonds
to exercise a purchase option for the Department of Justice
Building in Sacramento, which is currently under construction.
The budget shifts $29 million of the cost for a new museum
facility at the California Museum of Science and Industry from
general obligation bonds (Earthquake Safety and Public Building
Rehabilitation Bond Act of 1990) to lease-payment bonds. The
balance of this $45 million museum project is still funded from
the 1990 general obligation bonds.
* Prepared by the following sections:
Business, Labor and Capital Outlay (916) 322-8402
Transportation and Resources (916) 445-5921
State and Local Finance (916) 445-6442
===================================================
Figure 1
Major 1994-95 Special Funds Transfers to
the General Fund
===================================================
(In Millions)
* Motor vehicle fuel tax revenues
(State Highway Account) $154.3
* Sale of vehicle-related information
(Motor Vehicle Account) 47.4
* Tidelands Oil revenue 37.6
* Insurance Fund reserve in excess
of $956,000 26.0
* Harbors and Watercraft Revolving Fund 18.2
* Federal 8(g) funds 15.7
* Satellite Wagering Account funds 2.7
* Fair and Exposition Fund reserve 2.6
* Forest Resources Improvement Fund reserve 1.4
* Energy Resources Programs Account reserve 1.4
====================================================
===========================================
Figure 2
1994-95 Capital Outlay Programs(a)
===========================================
(In Millions)
Legislative/Judicial/Executive $3.9
State and Consumer Services 107.9
Transportation 2.3
Resources 68.2
Health and Welfare 8.1
Corrections 52.2
Higher Education 504.5
General Government 9.1
_____
Total $783.2
(a) Excluding highways and the state
water project.
==============================================
__________
APPENDIX 1
__________
1994-95 Budget Major Implementing Legislation
Measure/Description
AB 113 Andal (Ch 145/94)
* Recovery of incarceration and medical costs from inmates
(Corrections).
* Prison medical contracts
AB 167 B. Friedman (Ch 140/94)
* Domestic violence shelters; vertical prosecution.
AB 473(a) Brulte and Snyder
* AFDC maximum family grants.
AB 816(a) Isenberg
* Prop 99 reauthorization.
AB 836 Pringle and Goldsmith (Ch 148/94)
* AFDC and SSI/SSP grant reductions (2.3 percent).
AB 860 Pringle (Ch 155/94)
* County property tax adjustments.
AB 973 Bornstein (Ch 142/94)
* 1993-94 community college property tax backfill.
AB 2377 Hannigan (Ch 147/94)
* Disproportionate share payments and county Medi-Cal
administrative claim monies.
* Prescription drug savings.
AB 2383 Assembly Ways and Means (Ch 151/94)
* Authorization of loans to pay non-federal share of
Northridge earthquake costs.
AB 2384 Assembly Ways and Means (Ch 150/94)
* Performance budgeting at Consumer Affairs.
AB 2385 Assembly Ways and Means (vetoed)
* Increase in judges' contribution rate.
AB 2388 Assembly Ways and Means (Ch 149/94)
* Establishes regulatory fees (guide dogs).
AB 2389 Assembly Ways and Means (Ch 144/94)
* Suspension of renters' tax credit (1 year).
AB 2395 Assembly Ways and Means (Ch 152/94)
* Fee funding for workers' compensation managed care
programs.
AB 2480 Vasconcellos (Ch 153/94)
* Education provisions (K-12 and higher education).
AB 3308 Takasugi (Ch 138/94)
* Extend tax settlement authority.
SB 141 Alquist (Ch 154/94)
* Oil settlement funds.
SB 1230 Senate Budget and Fiscal Review (Ch 135/94)
* Trigger provisions for 1994-95 and 1995-96.
SB 2123 Senate Budget and Fiscal Review (Ch 136/94)
* Controller provisions on cash borrowing.
___________________________________________________________
(a) At the time this analysis was prepared, the Governor had not
taken final action on these measures.
For information contact the:
Legislative Analyst's Office
State of California
925 L Street, Suite 1000
Sacramento, CA 95814