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Funding for Fire Protection

February 20, 2002 - We raise concerns with the Governor's proposal to (1) eliminate the General Fund support for emergency fire suppression, (2) reduce General Fund expenditures for "day-to-day" firefighting activities by increasing reimbursements, and (3) eliminate an existing legislative notification requirement. We also offer options for the Legislature to consider for funding fire protection services.

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Accountability and Low-Performing Schools

February 20, 2002 - We discuss the state's school accountability system, with emphasis on aspects of the system concerned with improving performance at so-called "low-performing" schools. We also discuss challenges posed for the state's accountability efforts by recent changes in federal Elementary and Secondary Education Act (ESEA) reauthorization.

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Instructional, Library, and Science Materials

February 20, 2002 - We recommend that the Legislature (1) redirect $625 million requested for the "Instructional Materials Realignment Initiative" to our recommended Academic Improvement Block Grant and (2) deny requested advance appropriations totaling $1.95 billion for fiscal years 2003-04 through 2006-07.

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Reforming Categorical Program Funding

February 20, 2002 - We recommend that the Legislature consolidate 51 K-12 programs into five categorical block grants, because greater local flexibility should lead to increased efficiency and effectiveness in meeting specified educational needs.

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Discretionary Funds

February 20, 2002 - We recommend that, to the extent funds are available, the Legislature provide budget-year funding to continue revenue limit equalization ($42 million) and a reduced Public Employees' Retirement System (PERS) offset to revenue limits ($36 million) because these programs (1) provide general purpose funds to local education agencies (LEAs) and (2) meet important legislative priorities.

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Teacher Support and Development

February 20, 2002 - We recommend the Legislature consolidate 18 existing programs and create a new formula-based block grant to increase local flexibility and effectiveness is supporting teacher development. The block grant would provide a total of $722 million of Proposition 98 funds that school districts could use for teacher support and professional development activities.

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Proposition 98 Mandates

February 20, 2002 - We discuss the implications of the proposal in the Governor's Budget to delay reimbursement of the $66.7 million budget-year appropriation for the School Bus Safety II mandate and suspend six other education mandates.

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Public Employees' Retirement System Deferral

February 20, 2002 - The Legislature's action regarding the budget's proposal to defer employer contributions to the Public Employees' Retirement System (PERS) has important implications for the Legislature's efforts to craft a K-14 education budget.

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K-14 Education Priorities Proposition 98

February 20, 2002 - A crucial issue is posed for the Legislature by a potential General Fund increase needed for Proposition 98 of about $825 million. We discuss ways for the Legislature to act strategically in response to this challenge, in order to minimize impacts on non-Proposition 98 programs, yet still meet important K-14 education priorities.

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Funding Higher Education Capital Outlay

February 20, 2002 - We recommend the Legislature provide funding for higher education capital outlay based on statewide priorities and criteria, using reasonable construction cost guidelines, and based on year-round operation. We also recommend the Legislature consider the extent to which existing buildings at a campus are underutilized when making capital outlay funding decisions, and consider UC research revenue as a primary source of funding for UC research facilities.

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Capital Outlay Project Management Fees

February 20, 2002 - We recommend that the Legislature ask the Bureau of State Audits to conduct a performance audit of the Department of General Services relative to its project management activities to evaluate (1) the appropriateness of fees charged, (2) the method of determining fee levels, and (3) the quality control process in place for budget development.

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California Infrastructure Plan

February 20, 2002 - We recommend the Legislature defer approval of new capital outlay projects until the infrastructure plan has been submitted and the Legislature has had an opportunity to review it. We also recommend the Legislature appoint a select committee to make recommendations on how the Legislature might effectively respond to the infrastructure plan when it is submitted.

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The 2002-03 Budget: Perspectives and Issues

February 20, 2002 - Perspectives on the state's fiscal condition and the budget proposed by the Governor for 2002-03. We find that the state will need to identify and additional $5 billion in budget solutions beyond those proposed by the administration.

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State Fiscal Picture 2002-03

February 20, 2002 - Based on our projections of revenues and expenditures, adoption of the Governor's spending policies would result in a year-end deficit of about $4.5 billion in 2002-03. This represents a $5 billion deterioration in the budget condition relative to the administration's estimate, which assumes a $511 million reserve.

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Perspectives on the Economy and Demographics 2002-03

February 20, 2002 - The U.S. and California economies are nearly one year into a recession that was initially caused by such factors as sharp declines in spending by businesses on capital goods, and then aggravated by the September 11 terrorist attacks. The downturn has been mild so far in terms of employment, although more severe in terms of income losses. Our forecast is that the recession will conclude in the next couple of months and that a sustained expansion will begin before mid-year. While employment will recoup its losses by the end of 2002, the decline in income related to stock options will be longer lasting. Our outlook is predicated on (1) a rebound in high-tech spending in the second half of the year and (2) the absence of significant terrorism-related disruptions to the national or state economies.