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LAO Alternative Higher Education Budget Proposal

February 20, 2008 - We recommend an alternative to the Governor’s proposal that avoids making unallocated reductions and adheres to the State Master Plan for Higher Education. Our alternative would fund anticipated enrollment growth at the three segments. It would also modestly increase the share of education cost paid by students, while increasing financial aid to cover these higher costs for financially needy students.


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Governor’s Higher Education Budget Solutions

February 20, 2008 - The Governor’s budget proposal for higher education includes large, unallocated reductions to the universities and the elimination of a key financial aid program. Taken together, these proposals could have a significant effect on college access and affordability.


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K-12 COLA Index

February 20, 2008 - The current index used to calculate cost-of-living adjustments (COLAs) for K-12 programs is not a particularly good indicator of increases in school costs. The Governor proposes to switch to a new index. Instead, we recommend the Legislature modify the current K-12 COLA index to focus on projected compensation cost increases.


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K-12 Categorical Reform

February 20, 2008 - We recommend the Legislature consolidate 43 K-12 categorical programs (totaling $42 billion) into a base grant and three supplemental block grants. Categorical reform of this magnitude would offer districts multiple benefits--including a simplified, streamlined, more transparent funding system; greater ability to focus on student success rather than program compliance; and, perhaps most relevant in tight fiscal years, greater latitude to use available funds to address critical local needs.


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Proposition 98 Priorities

February 20, 2008 - We offer an alternative to the Governor’s Proposition 98 budget proposal. Under the alternative, K-12 schools and community colleges would receive roughly the same amount of ongoing program support in 2008-09 as in the current year ($57.7 billion). As part of the alternative, we recommend funding certain core costs while obtaining savings from programs that are duplicative, poorly structured, or technically overbudgeted.


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Budget Process for Population Changes Needs More Work

February 20, 2008 - While the prison system has taken some initial steps to improve its current population budget request documents, further work is needed. We recommend several steps to improve the process used to budget for changes in the prison inmate population that will improve their accuracy, efficiency, and transparency.


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Implementing AB 900’s Infill Bed Plan: Progress and Concerns

February 20, 2008 - Prison officials have made some progress, but encountered some obstacles, in implementing a $7.7 billion package of prison construction projects. We raise concerns about how the estimated construction cost per bed for new infill bed facilities has nearly tripled compared to the cost of a prison built a few years ago. We recommend that the infill bed plan be revised after obtaining an independent estimate of construction costs to avoid the possibility of overspending hundreds of millions of dollars for these projects.


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Realignment of Parole Could Improve Public Safety and Help Address Budget Shortfall

February 20, 2008 - We propose a nearly $500 million realignment of responsibility for supervision of low-level criminal offenders from the state parole system to county probation. Funding for parole realignment would come from a reallocation of waste and water district property taxes, city Proposition 172 sales taxes, and vehicle license fees. Our plan is designed to give counties a greater stake in the success of these offenders in the community, thereby reducing their likelihood of reoffending.


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Administration’s Population Reduction Proposals Not Best Options

February 20, 2008 - The administration proposes to release certain inmates from prison early and place them under minimal parole supervision, a policy it terms "summary parole." We recommend alternatives offering a better tradeoff between public safety and budget savings: (1) changing crimes currently classified as "wobblers" to misdemeanors and (2) substituting an "earned discharge" program for the Governor’s summary parole proposal.


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Restructuring Criminal Justice Local Assistance Programs

February 20, 2008 - The Governor’s budget proposes 10 percent across-the-board reductions for criminal justice local assistance programs to achieve about $60 million in savings. We recommend instead that the Legislature achieve savings of about $270 million by eliminating or reducing General Fund support for programs that have not demonstrated results, do not serve a statewide purpose, could be consolidated, or could be funded from other sources.


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Specific Cost-Savings Options for the Judicial Branch

February 20, 2008 - The budget proposes an unallocated reduction of $246 million for the Judicial Branch. We recommend the Legislature adopt a savings target that is consistent with its own program and spending priorities and take specific actions. Options include suspending State Appropriations Limit adjustments, phasing in electronic court reporting, adjusting the budget for delays in the appointment of new judges, and increasing court revenues.


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No Funds to Pay 2007-08 Mandate Costs

February 20, 2008 - The administration proposes special session legislation to eliminate local government authority to submit estimated cost claims. We review this proposal and conclude that, on balance, its benefits outweigh the loss to local governments from less timely reimbursement payments.


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Animal Adoption Mandate

February 20, 2008 - We recommend the Legislature repeal the Animal Adoption mandate because the Legislature’s goals are not suited to implementation as a mandate.


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Motor Vehicle Account Condition

February 20, 2008 - In order to address a projected shortfall in the Motor Vehicle Account (MVA), the Governor proposes to increase vehicle registration fee by $11 per vehicle--bringing total registration fee to $52 per vehicle, and to double the penalty for late registration. Absent such corrective actions, the level of MVA spending proposed by the budget would leave the account with a shortfall of over $160 million at the end of 2008-09, growing to $500 million in 2009-10, and nearly $1 billion at the end of 2010-11. If revenues and expenditures grow at historical trends, the fee hike proposal would keep MVA solvent through 2013-14.


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Infrastructure Bank Loan Program

February 20, 2008 - The Infrastructure and Economic Development Bank (I-Bank) provides low cost loans to local governments for infrastructure projects that are supposed to promote economic development and improve land use. However, loans made by the I-Bank do not effectively meet these objectives. We recommend modifying the program to better target limited state funds.