Modifying the Governor’s Other General Fund Proposals

In this section, we analyze other major General Fund proposals included in the Governor’s budget for judicial and criminal justice programs and offer recommendations and alternatives to these proposals in order to assist the Legislature in addressing the state’s massive budget shortfall. We summarize our recommendations in Figure 12 and discuss them in detail below.

Inflation Adjustment Not Warranted In Current Economic Climate

The CDCR’s budget includes a $93.2 million General Fund augmentation ($99.7 million all funds) to accommodate a projected increase in costs for goods and services purchased by the department due to inflation. The administration’s estimate assumed that inflation would be 3.2 percent in the budget year. However, more recent projections estimate that inflation will be less than 1 percent in the budget year. Given this nominal projected growth rate, as well as the size of the state’s budget shortfall, we recommend that the Legislature reject the proposed inflationary increase for CDCR to achieve state savings in the amounts cited above. (This is consistent with our recommendation to the Legislature that it reject inflation adjustments included in all other state department budgets.)

Overtime Request Not Fully Justified

The Governor’s budget provides a General Fund augmentation of about $36 million to CDCR to pay for overtime costs for correctional officers, sergeants, and lieutenants. According to the department, the requested amount would cover the estimated additional costs related to salary increases provided to these staff since 2000–01. The department argues that its base budget for overtime has remained unchanged over that period, despite a 34 percent base salary increase for these correctional staff. Therefore, CDCR’s budget is unable to purchase as many hours of overtime as it could in prior years. So, this request would allow CDCR to purchase an equivalent amount of overtime as in 2000–01.

Inadequate Justification—No Estimate of Actual Resource Need. The department’s basic methodology for calculating its request provides a generally reasonable accounting of its loss of buying power for overtime. However, it does not address a more fundamental question: How much funding for overtime does the department really need? The answer to such a question depends on factors such as vacancy rates, utilization of sick leave and vacation, and frequency of operational activities that drive overtime costs (such as for medical transportation of inmates to outside medical facilities). The department’s request does not factor in any of these issues.

Not a True Accounting of Base Funding. The department’s budget proposal identifies a base level of funding for overtime of $104.3 million. However, this does not include about $49 million in additional overtime funding provided by the Legislature since 2004–05 for activities such as medical guarding and staffing of administrative segregation housing units. The department’s total overtime budget for all staff classifications is actually about $159 million. In addition, the 2004–05 Budget Act included a $100 million augmentation to CDCR’s budget to support an additional 1,239 correctional officers who would be used as relief officers to fill positions that become vacant as a result of sick leave, vacation, and other leaves. The department argued at the time this augmentation was considered by the Legislature that these additional positions would reduce the reliance on overtime.

Despite Additional Resources Provided, Excessive Spending on Overtime Continues. In 2007–08, CDCR spent about $656 million dollars for overtime (all classifications). About 84 percent ($551 million) of this spending went for department security–related staff, such as correctional officers, sergeants, and lieutenants, who make up just over half of the department’s total positions. Figure 13 shows the department’s overtime expenditures for 2007–08 by classification.

Department Unable to Explain Cause of Excessive Overtime Costs. As shown in Figure 13, the actual CDCR spending level for overtime exceeds the department’s base funding level by almost a half billion dollars. However, the department has been unable to identify the key causes for this excessive spending. Although the department reports that it has an automated system in place to track overtime usage and its causes, inconsistencies in how the information has been recorded at each institution make the data unreliable.

Historically, the department’s vacancy rate was seen as a key contributor to overtime costs because prison administrators frequently rely on overtime to backfill vacant positions. Over the past couple of years, however, CDCR has been able to considerably reduce its vacancy rate for rank and file security personnel—particularly correctional officers—from about 11 percent in 2005–06 to 6 percent in 2007–08. Despite this sharp reduction in the vacancy rate, the total amount of overtime used by these employees increased by 6 percent over the same time period. Consequently, correctional officers (and other rank and file security staff) make an average of about $16,000 per year in overtime pay.

Based on our discussions with the department, various factors contribute to high overtime usage. These factors include leave utilization rates and the frequency of medical transports and guarding. We were also informed that “shift swapping” is common practice in the prisons. This refers to instances when two employees arrange to exchange shifts so that each employee works a double–shift one day while getting another day off. Both employees earn overtime pay for the additional eight hours worked on their double–shifts (though the total hours worked during the week remain 40 for each employee). The department was unable to quantify how much shift–swapping costs the state each year.

Based on data provided to us by the State Controller’s Office, overtime usage varies considerably among prisons. Per prison spending for correctional officer overtime in 2007–08 ranged from $6 million at Mule Creek State Prison to $22 million at the California Institution for Men. Some of this variation might reasonably be explained by vacancy rates and the differing missions of specific prison facilities. However, our analysis found that the great variation in the use of overtime remained even when controlling for these factors. For example, Chuckawalla Valley State Prison (CVSP) and Avenal State Prison (ASP) are both lower–security institutions that had about 30 vacant correctional officer positions in March 2008. However, overtime spending for correctional officers was more than twice as much at ASP ($14.5 million) than at CVSP ($6.7 million). This type of variation suggests that other factors, such as how prison administrators manage their staffs and budget may play a significant role in overtime expenditures.

Legislature Not Provided a Plan for Cost Control. The department’s request for additional overtime funding does not include a plan for how it will more effectively control and manage its overtime costs on an ongoing basis. We believe that such a plan is critical given the excessive costs, lack of adequate data tracking, and unexplained variation in spending among prisons. Without better cost management, it is unclear that excessive overtime spending will be restrained in the future.

LAO Recommendation—Reject the Request Due to Lack of Justification. Given the lack of justification and the absence of a cost control plan, we recommend that the Legislature reject CDCR’s $36 million overtime proposal. The state’s budget shortfall also makes it difficult to accommodate a General Fund augmentation of this magnitude, particularly when the department has been able to accommodate increased overtime costs in recent years, primarily through savings from department vacancies and reduced program operations. Although our recommendation would mean that some vacancies will go unfilled and certain programs will be scaled back, we find that approving the budget request provides no incentive for CDCR to manage or control its overtime spending. Finally, we would note that if the Legislature approves proposals to significantly reduce the inmate population (such as those proposed by the Governor), the resulting reduction in staff levels may lessen the department’s need for additional overtime resources.

LAO Recommendation—Require Report on Overtime Usage and Cost Controls. Over the years, the Legislature has expressed concerns about CDCR’s excessive overtime costs. However, as discussed above, the department has been unable to provide adequate information regarding the actual magnitude of and primary reasons for these costs. In order to assist the Legislature in addressing the department’s overtime needs, we recommend that the Legislature adopt supplemental report language requiring CDCR to provide a report identifying (1) the extent to which different factors drive overtime costs, (2) an estimate of the department’s actual need for overtime funding, and (3) a plan for how it will control overtime expenditures in the future.

Inmate and Parolee Population Adjustments Will Require Further Review

Caseload Projections Adjusted From Spring. The Governor’s 2009–10 budget proposal is based on CDCR’s fall 2008 caseload projections. These projections, which reflect revisions to previous projections issued by the department, are summarized in Figure 14. (These are “baseline” projections and do not account for population changes that would occur if, for example, the Legislature approves the Governor’s proposals to significantly reduce the inmate and parole populations.)

Revised Projections Result in Current–Year Costs and Budget–Year Savings. The Governor’s budget includes a net increase of $27 million in the current year and a net budget–year reduction of $9 million (all funds), largely related to the projected changes in the adult and juvenile offender caseloads. The department’s caseload–related request also includes funding adjustments related to other housing and supervision related activities, such as the use of contracted facilities. Figure 15 summarizes the funding adjustments included in the Governor’s budget for caseload–related changes.

Actual Adult Populations Trending Higher Than Projected. Over the first six months of the current fiscal year, the adult inmate population has averaged about 700 inmates higher than the current projections. The adult parole population has averaged about 300 parolees higher than projected over the same period. If these trends hold for the remainder of the fiscal year, it would result in additional annual costs of about $17 million.

Aspects of the Caseload Request May Be Overstated. The department’s total caseload budget request is comprised of 35 separate adjustments. At the time this analysis was prepared, we found that three of these adjustments appear to be overstated.

First, the department requests $9.4 million in the current and budget years for staff overtime costs at administrative segregation units. However, the department has been unable to provide sufficient justification for why administrative segregation costs have increased. Moreover, the Office of the Inspector General recently released a report finding that CDCR may be overutilizing administrative segregation. The Inspector General estimates that this practice unnecessarily costs the state about $11 million annually.

Second, CDCR’s request appears to overstate the number of adult sex offenders supervised on parole, potentially by more than 1,000 parolees. We estimate that correcting for the actual parolee sex offender caseload could reduce the department’s budget in each of the current and budget years by about $13 million, after accounting for costs associated with intensive supervision, Global Positioning Satellite tracking, and community treatment.

Third, CDCR is requesting $11.5 million and 279 positions in the budget year to accommodate increases in the population of inmates requiring mental health care. While the department is requesting these positions in order to comply with federal court orders in the Coleman v. Schwarzenegger legal case, we note that, as of November 2008, the department had nearly 1,000 vacancies in its mental health program. As a result, CDCR proposes to phase in the 279 new positions over the next fiscal year. However, it is still unclear at this time if the department could realistically fill these new positions in addition to its 1,000 existing vacancies by June 30, 2010. Moreover, it is unclear how this particular request relates to a separate CDCR budget proposal to fund 135 additional mental health positions at the California Medical Facility at Vacaville. (The department has indicated that it plans to reconcile the two proposals in time for the May Revision.)

At the time of the May Revision, the department will issue updated population projections for the current and budget years, as well as revise its caseload funding request. This could include changes to its funding requests related to administrative segregation, sex offenders on parole, and the mental health program. Therefore, we recommend that the Legislature withhold action on CDCR’s caseload request until the May Revision. We will continue to monitor the department’s caseload and recommend any changes, if necessary, following our review of the May Revision.

Department Made Little Progress Developing New Budgeting Process. As we discussed in our Analysis of the 2008–09 Budget Bill (please see page D–92), CDCR’s current process for budgeting caseload changes suffers from several problems. Specifically, the current process is an ineffective approach to identifying the actual budgetary needs of the department, is an inefficient use of department staff time, and fails to provide a transparent budget document for legislative review.

As part of the 2008–09 Budget Act, the Legislature approved provisional language requiring CDCR to develop a new caseload funding methodology for legislative consideration by January 10, 2009. While the department expresses ongoing support for improving its methodology, it did not meet the legislative requirement. Moreover, the department indicates that it will not be able to present a new methodology to the Legislature before the end of the current fiscal year. This is primarily because the position assigned to this project remains vacant. We recommend that the Legislature require CDCR to report at budget hearings on its efforts to date in developing an improved caseload budgeting process. We further recommend that the Legislature adopt budget bill language requiring CDCR to improve its budgeting process in the budget year.

Utilize More Federal Funds for Parolee Employment Programs

The CDCR currently operates various employment training and referral programs for adult parolees at a total cost of about $35 million in the current year. Of this amount, $9.5 million is funded from federal Workforce Investment Act (WIA) funds. The remainder is funded from the General Fund. For the budget year, the Governor’s budget proposes to reduce the amount of WIA funds for parolee employment programs to $2.3 million in order to augment selected workplace training programs. These proposed actions result in a General Fund cost of $7.2 million. Given the state’s severe fiscal condition, we recommend that the Legislature restore the $7.2 million in federal WIA funds to CDCR parolee employment programs in the budget year. This redirection will result in an equal amount of General Fund savings.

Substance Abuse Program Fund Shift Provides No Fiscal Benefit

The administration proposes to raise the excise tax on alcoholic beverages by a “nickel–a–drink” to generate an estimated $585 million annually in new revenues. Under the administration’s budget plan, these new revenues would be deposited into the General Fund and then would subsequently be transferred into a newly created special fund called the Drug and Alcohol Prevention and Treatment Fund (DAPTF). These funds would be used for the support of alcohol and drug treatment programs administered by the state (and currently paid by the General Fund). Specifically, those programs are administered by the Department of Alcohol and Drug Programs ($312 million), CDCR ($219 million), and the Department of Social Services ($54 million). The funding provided from the DAPTF to CDCR would support existing substance abuse treatment programs for inmates and parolees.

We have several concerns with the administration’s proposal to create a new special fund for drug and alcohol treatment programs. In particular, the proposal limits the Legislature’s ability to set fiscal priorities by dedicating the General Fund revenues from the proposed alcohol tax increase to a specific fund for a specific purpose. Our analysis indicates that this would provide no fiscal benefit and only serve to restrict legislative discretion over the budget. Therefore, we recommend that the Legislature reject the administration’s proposed fund shift as well as the creation of the DAPTF.

Delay Appointment of Additional Judgeships

Budget Plan Adds 100 Judges. Chapter 390, Statutes of 2006 (SB 56, Dunn) and Chapter 722, Statutes of 2007 (AB 159, Jones), authorized 100 new judgeships over a two–year period—2006–07 and 2007–08—based on a workload study undertaken on behalf of the court system earlier this decade. Fifty judges were to be appointed in the last month of each fiscal year and were to be budgeted accordingly. While the first 50 judgeships established in 2006–07 have been funded, the enacted 2008–09 budget did not provide any funding for the second 50 judgeships that were originally to be established in 2007–08. In view of the state’s General Fund shortfall, the 2008–09 budget plan provided for a one–year delay in the appointment of the second round of 50 judges.

For 2009–10, the Governor’s budget proposes a total of $71.4 million in General Fund support for (1) the full–year cost of the 50 judgeships that were originally supposed to be established in 2007–08 and (2) the establishment of 50 additional judgeships that would require new legislative authorization. The budget plan further assumes that the Governor will appoint 50 judges on July 1, 2009 and 50 more on June 1, 2010, and budgets these positions accordingly.

Delay Would Create Savings. In view of the state’s massive General Fund shortfall, we recommend that the Legislature again delay the creation of new judgeships for at least a year and thereby achieve $71.4 million in savings in 2009–10. We note that, even if the Legislature approved all of the funding requested in the budget plan to establish new judgeships on the timetable that is proposed, many of the judgeships would remain unfilled in 2009–10, based on the rate at which the Governor has appointed judges in the past.

Other Means Available to Mitigate Workload Needs. The trial courts have provided some analysis that justifies the establishment of new judgeships on a workload basis. However, we believe delays in the creation of these judgeships must be considered given the state’s financial condition. In order to accommodate any increases that occur in judicial workload, the Legislature could direct the courts to examine what changes could be made in court operations (including any statutory changes that the Legislature could make to reduce court workload or increase court efficiency). The Legislature should specifically direct the courts to explore and report at budget hearings on these potential strategies:

• Use of Video Conferencing Technology. Currently, workload in the trial courts varies greatly across the state. In Alpine County, for example, there were 468 filings per judicial position, while in Riverside County there were 6,618 filings per judicial position. Video conferencing equipment in California’s courts would enable judges from courts with less workload to hear cases in courts with a much higher workload in a more cost–effective and efficient manner.
• Existing Assigned Judges Program (AJP). Currently, the Chief Justice of the California Supreme Court can issue temporary judicial assignment orders to active or retired judges and justices to allow them to hear cases as part of AJP. At this time, there are about 385 retired judges currently serving on such assignments. Our analysis indicates that AJP allows the courts to manage increased workload at a much lower cost than the creation of new judgeships.

We recognize that expanding the use of videoconferencing and AJP would require increased state funding, but each approach would be significantly less expensive than creating additional judgeships.

Reject DOJ Writs and Appeals Request

The Correctional Writs and Appeals (CWA) section within DOJ is responsible for representing the state in cases in which prison inmates and parolees challenge various decisions made by the Governor, BPH, and CDCR. The majority of the section’s workload involves so–called “habeas corpus” petitions in which inmates seek their release from prison facilities in which they are confined. The section also handles other types of cases that arise while the inmate is incarcerated, such as petitions to deem inmates incapable of making health care decisions for themselves so that they can be administered drugs against their will to improve their mental health.

Governor’s Budget Proposes Staffing Increase. The CWA section has experienced an increase in workload since 2006. The 2007–08 budget authorized about 23 positions and $3.6 million in additional General Fund support for the section to address these workload concerns. Based on the department’s projections that the section will continue to see an increasing number of habeas corpus challenges, the Governor’s budget for 2009–10 requests an additional 26 positions for the section, including 13 Deputy Attorney General positions costing $4.5 million from the General Fund.

Workload Projections Appear Overstated. Based on historical workload growth, the department’s projections assume that there will be a 25 percent increase in CWA cases in 2008–09 and 2009–10. However, our analysis of workload data provided by the department for the past few years, as well as more recent data from the first six months of 2008–09, suggests that the CWA workload will likely only increase between 10 percent and 17 percent.

Pending Actions Could Reduce Workload. In addition, we note that several pending actions could reduce future CWA workload. As discussed earlier in this report, a federal three–judge panel could order prison populations to be reduced by thousands of inmates at some point in the near future. Moreover, the Governor’s budget plan includes various correctional reforms that would significantly reduce the state’s inmate and parolee populations. Such population changes would likely reduce the number of habeas corpus cases filed with DOJ’s CWA section.

Implementation of Proposition 9 Could Also Reduce Workload. The CWA is also responsible for representing the state in cases in which inmates sentenced to life with the possibility of parole file a habeas corpus petition in court challenging the decisions made by BPH at their parole consideration hearings. The passage of Proposition 9 (approved by the voters in November 2008), however, will likely reduce this aspect of CWA’s workload. This is because Proposition 9 extends the time (from between 1 and 5 years to between 3 and 15 years) that individuals with a life sentence who are denied parole must generally wait for another parole consideration hearing. As a result, there will be fewer parole hearings held each year, and thus likely fewer habeas corpus appeals made in response to the rulings at such hearings.

LAO Recommendation. In view of the above, we have concluded that the department’s budget request is not adequately justified on a workload basis at this time. Accordingly, we recommend that the Legislature reject the budget request to provide 26 additional positions and $4.5 million to DOJ.