HomeMy WebLinkAboutAgenda Report - December 18, 2002 I-01AGENDA TITLE: Update Regarding the State of California Mid -Year Spending Reduction
Proposals
MEETING DATE: December 18, 2002
SUBMITTED BY: Janet S. Keeler, Deputy City Manager
RECOMMENDATION: That the City Council review the attached information
regarding the State of California Mid -Year Spending
Reduction Proposals.
BACKGROUND INFORMATION:At the request of Mayor Hitchcock, staff has placed this
item on the agenda for Council review and discussion.
The Mayor has requested that the status of the
State budget be a regular item on every agenda pending the resolution of the State budget
crisis.
Funding: Not applicable.
Respectfully submitted,
J et S. Keeler
puty City Manager
JSK/sl
Attachment
APPROVED:
nn -- City Manager
Janet Keeter
From:
Dixon Flynn
Sent:
Monday, December 09, 2002 4:01 PM
To:
Management Team
Cc:
City Council
Subject:
FW: Budget Alert
midyr02 cuts.pdf
(154 KB)
FYI.. From the League
-----Original Message -----
From: Frances Medema (mailto:medemaf@cacities.org]
Sent: Friday, December 06, 2002 4:50 PM
To: city_managers@lists.cacities.org; fiscalofficers@lists.cacities.org
Subject: Budget Alert
Governor Proposes $10.2B in Budget Cuts and Adjustments
December 6, 2002 - Governor Davis released today a list of proposed spending reductions
and budget adjustments totaling $10.2B over the next two years. A quick review of the
proposals undertaken by League staff calculates a direct $1.43B impact on programs
affecting cities.
If the budget deficit estimates hold true, the Governor's proposals represent only 40 - 50
percent of the total expected budget deficit. More actions will need to be taken to bring
the budget into balance.
If you haven't already sent a message to your Legislator asking them to protect local
services, please act now. To see a copy of the State Budget Alert issued by the League
earlier this week, and review talking points, click on the alert button on this page.
The list of items known to impact cities are:
1. Local Street and Road Maintenance
Funding in the Traffic Congestion Relief Act: The elimination of second, third, and
fourth quarter 02-03 apportionments to local agencies for street and road maintenance.
$90m
2. Local Flood Control Subventions:
Reversion of $58.1m from this program (out of $128.3m appropriated in the past three
years) to the General Fund.
3. Public Library Foundation: Reduction in
the Public Library Foundation per capita formula grants to local libraries totaling $15.8m
4. Redevelopment Agencies: Immediate
transfer of any balances in their Low and Moderate Income Housing Funds that were
unencumbered on December 1, 2002 to the General Fund. $500m
S. State -Funded Mandates: Continue the
suspension of payment for various budget year and prior year reimbursable non -Proposition
98 mandates. $769.4m
For a full version of the Governor's report <<midyr02 cuts.pdf>>
Frances Medema
Policy Analyst
League of California Cities
1400 K Street, Suite 400
Sacramento, CA 95814
1
Mid -Year Spending
Reduction Proposals
00
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1 W
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n GRAY DAVIS, GOVERNOR
I q STATE OF CALIFORNIA
DECEMBER 2002
OVERVIEW
The anticipated recovery of the U.S. and California economies has not yet materialized. The
Department of Finance's 2002-03 May Revision economic forecast, on which the current -year
budget is based, was more conservative than the consensus of economic forecasts at the time,
projecting very slow growth in 2002.
Since the May Revision, the nation has added only 194,000 jobs. Over the last 10 years, the
nation would have been expected to add about 200,000 jobs in a single month. Similarly,
California has added only 30,000 jobs, about a month and a half's worth of average job growth.
The national unemployment rate has hovered between 5.6 percent and 6.0 percent since the
May Revision, compared to California's unemployment rate of 6.4 or 6.5 percent every month
since the May Revision. Most troubling, the state's important high-tech sector does not appear
to have begun to recover. While job losses have slowed considerably in the state's high-tech
sector --- from a peak number of 19,200 jobs lost in April 2001 --- they remain a considerable
drag on the economy, exceeding 4,000 jobs lost per month, on average, in the most recent four
months.
Additionally, the stock market has lost a considerable amount of ground since midyear. When
the Department of Finance's May Revision forecast was finalized, the S&P 500 Index closed at
1128.37. By the end of November 2002, the S&P 500 Index had fallen 17 percent to 936.31.
The continued slide of the stock market in the summer and early fall and the possibility of
military action in Iraq have soured the mood of consumers.
As a consequence of these developments, State General Fund is projected to fall considerably
below budgeted levels, necessitating prompt action to curb current -year General Fund
spending. On November 26, 2002, the Governor issued Executive Order D-64-02, directing
departments to freeze spending where possible and to begin implementing current -year
reductions in non-essential functions.
This document proposes a number of current -year General Fund spending reductions and other
adjustments totaling $3.4 billion. These reductions and adjustments would result in additional
budget year savings of $6.8 billion, for a total of $10.2 billion over the two years. Of this
amount, State operations reductions total $320.8 million for 2002-03 and $1.6 billion for
2003-04, consistent with the direction pursuant to Control Section 3.90 of the 2002 Budget Act
(as added by Chapter 1023, Statutes of 2002) to achieve up to $750 million in State operations
savings in 2002-03.
While the exact magnitude of the budget gap is still unknown, the Administration will present a
balanced plan to address the full extent of the shortfall in the Governor's 2003-04 Budget to be
released in January. Along with over 40 other states, California faces painful choices in
balancing its budget as the national economic and fiscal slump continues, with recent forecasts
pushing resumption of normal economic growth well into 2004.
Revenue Update. October General Fund revenue receipts were $312 million below the 2002
Budget Act forecast. To date, fiscal year 2002-03 General Fund revenues are $381 million
below expectations. Combined with our preliminary estimate of $1.4 billion in lower -than -
projected accrued revenues for the prior fiscal year, the total fiscal year-to-date and prior -year
shortfall is about $1.8 billion.
EXPENDITURE REDUCTIONS
Addressing the Fiscal Challenge
This document proposes reductions and adjustments totaling $10.2 billion over the two years.
The proposed changes are summarized in the following table:
Amounts
(Dollars in Millions)
2002-03 2003-04 Total %
Cuts/Savings $2,038.1 $6,619.9 $8,658.0 84.9%
Fund Shifts 657.5 158.1 815.6 8.0%
Transfers/Other Revenue 685.6 14.1 699.7 6.9%
Loans/Borrowing 25.4 -- 25.4 0.2%
Totals $3,406.6 $6,792.1 $10,198.7 100.0%
The State operations reductions are summarized in a consolidated statewide issue, and with
certain exceptions, are not addressed in the individual departmental expenditure reduction
sections.
LEGISLATIVE, JUDICIAL AND EXECUTIVE
Judiciary
410 million
Judiciary State Operations: The 2002 Budget Act included $278.4 million General Fund to
support the Judiciary. The Administration proposes to revert $10 million as an unallocated
reduction to the State Judiciary. The Administration intends to propose an additional $29 million
unallocated reduction to the State Judiciary in the budget year.
State Trial Court Funding
-$50 million
Trial Court Operations: The 2002 Budget Act included $1.1 billion General Fund local
assistance for support of the trial courts. The Administration proposes to revert $50 million as
an unallocated reduction to the trial courts. The Administration intends to propose an additional
$200 million unallocated reduction to the trial courts in the budget year.
2
Office of Planning and Research
-$4.75 million
Cesar Chavez Day of Learning Grants: Chapter 213, Statutes of 2000, provides an annual
appropriation to the Governor's Office of Service and Volunteerism to administer learning grants
for the purpose of honoring the achievements of Cesar Chavez. The Administration proposes to
reduce this appropriation by $4,750,000 in 2002-03, and to suspend this program for three
additional years beginning in 2003-04 by amending the statutory authority for this program.
Office of Emergency Services
-$1.274 million
Disaster Assistance Division: The Administration proposes that $1,274,000 be reduced
preserving $24,199,000 in General Fund support for the program. This adjustment would
reduce the amount of State matching funding available in fiscal year 2002-03 for anticipated
disaster assistance claims to be received from local jurisdictions and processed by the Office of
Emergency Services.
STATE AND CONSUMER SERVICES
Department of General Services
-$0.609 million
California Rehabilitation Center Norco -Administration Building 100 -Occupant Relocation:
The 2001 Budget Act provided $16.7 million General Fund to construct temporary buildings at
California Rehabilitation Center at Norco. The Administration proposes that the project
construction bid savings of $609,000 General Fund be reverted.
State Teachers' Retirement System
-$500 million
Supplemental Benefit Maintenance Account: Pursuant to Chapter 840, Statutes of 2001, the
Supplemental Benefit Maintenance Account (SBMA) in the State Teachers' Retirement Fund
provides payments to retired teachers in amounts necessary to ensure that the purchasing
power of retired teachers' retirement benefits is at least 80 percent of the purchasing power at
the time of retirement. The State is statutorily required to make annual General Fund payments
to the SBMA equal to 2.5 percent of teachers' salaries, estimated to be $555 million in 2003-04.
It is proposed that this payment be reduced by $500 million in 2003-04, coupled with a statutory
commitment to restore the funds if purchasing power protection at the 80 percent level cannot
be maintained through July 1, 2036. It is our understanding, based on advice from the State
Teachers' Retirement System, that this proposal will not affect the ability to provide this benefit
for at least 30 years.
3
BUSINESS, TRANSPORTATION AND HOUSING
Department of Housing and Community Development
-$38.1 million
Shift of Farmworker Housing Grants to Bond Funds: With the passage of Proposition 46,
the Housing and Emergency Shelter Trust Fund Act of 2002, the Administration proposes that
General Fund supported projects now be funded from bond funds, resulting in savings to the
General Fund of nearly $11.0 million.
Homeless Shelter Operations Funding: The historic level of State funding for homeless
shelter operations has been $4.0 million. This proposal would reduce the funding by
$1.3 million in 2002-03.
Transfers to the General Fund: The Administration proposes that $5.5 million in funds
previously appropriated for Self -Help housing projects be returned to the General. Also,
$1.9 million will be returned to the General Fund from the Predevelopment Loan Fund.
Loans to the General Fund: The Administration proposes loans to the General Fund of
$18.1 million from the balances of seven special funds where those funds are not currently
pledged to projects.
Other State Operations Reductions: The Administration proposes three expenditure
reductions that will result in savings to the General Fund of $288,000.
Passage of Proposition 46 Increases General Fund Transfers: The passage of the Housing
and Emergency Shelter Trust Fund Act of 2002 (Proposition 46 on the November 2002 ballot)
triggers increased transfers to the General Fund as follows:
• An additional transfer of $5,599,000 from the Self -Help Housing Fund.
• An additional $2,999,000 from the Farmworker Housing Grant Fund.
Office of Real Estate Appraisers
-$1 million
Loan to the General Fund: The Administration proposes a loan to the General Fund of
$1 million from the Real Estate Appraisers Regulation Fund reserve.
Department of Managed Health Care
-$1 million
Transfer to the General Fund: The Administration proposes to transfer the proceeds of a
$1 million settlement with Kaiser Permanente to the General Fund.
4
Department of Transportation (Caltrans)
-$1.8 billion
Transfer of 2001-02 and 2002-03 Statewide Cost Allocation Plan (SWCAP) Recoveries:
During the past several years, Caltrans has recovered significantly less SWCAP amounts than
budgeted. The 2002 Budget Act transferred $14.4 million from the State Highway Account
(SHA) to the General Fund for 1998-99,1999-00, and 2000-01 SWCAP recoveries. The
Administration proposes that an additional $15 million be transferred from the SHA to the
General Fund for 2001-02 and 2002-03 SWCAP recoveries.
2000-01 General Fund Appropriations: The Administration proposes that $5.1 million related
to local project savings be reverted to the General Fund.
Additional Transfer from the Aeronautics Account to the General Fund: The
Administration proposes that an additional $5.2 million be transferred from the Aeronautics
Account reserve to the General Fund.
Shift responsibility for the Traffic Congestion Relief Program (TCRP) to the California
Transportation Commission. This Administration has made historic commitments to
transportation, including significant General Fund resources to the TCRP when they were
available. In light of the State's current fiscal situation, the Administration proposes to eliminate
General Fund support for the TCRP in the budget year and recapture unused General Fund in
the current year. The Administration intends to shift responsibility for the program from the
Department of Transportation (Caltrans) to the California Transportation Commission (CTC).
The 2002 State Transportation Improvement Program Fund Estimate identifies over $5 billion in
funding available for transportation projects. Caltrans has been directed to work closely with the
CTC and local transportation agencies to re-evaluate transportation funding resources and
project priorities relative to ensuring that high priority traffic congestion relief projects continue.
The CTC has responsibility for allocation of transportation funds for projects and is well suited to
oversee and coordinate this effort. Consistent with this direction, the Administration proposes
the following actions:
• Reduce funding in the Traffic Congestion Relief Fund (TCRF): The Administration
proposes to reduce the TCRF by returning $100 million to the General Fund.
• Suspending 2003-04 General Fund transfer to the Transportation Investment Fund
(TIF): The Administration proposes that the 2003-04 General Fund transfer to the TIF
for the Traffic Congestion Relief Program of $1 billion be suspended pursuant to
Article XIXB, Section 1 (d) of the Constitution. Suspension of future transfers will be
considered in the Governor's 2003-04 Budget.
Forgiveness of Planned 2003-04 General Fund Loan Repayment to TCRF:
Considering the current and projected status of the General Fund, the Administration
proposes to forgive the planned 2003-04 loan repayment of $500 million General Fund
to the TCRF. Forgiveness of the remaining outstanding loan to the General Fund will be
considered in the Governor's 2003-04 Budget.
• Deferral of Planned 2003-04 TCRF Loan Repayment to the SHA: Due to the 2002-03
transfer from the TCRF to the General Fund based on the current and projected status
of the General Fund, the Administration proposes to defer the planned 2003-04 loan
repayment of $50 million TCRF to the SHA.
• Elimination of Remaining 2002-03 SHA Local Street and Road Funding: Due to the
aforementioned deferral of the planned 2003-04 loan repayment of $50 million TCRF to
the SHA, the Administration proposes to eliminate the second, third, and fourth quarter
2002-03 apportionments to local agencies for street and road maintenance. The savings
to the SHA as a result of this proposal is estimated to be $90 million; however, this
amount will vary based on actual revenues.
TECHNOLOGY, TRADE AND COMMERCE
Technology, Trade, and Commerce Agency
-$13.5 million
Reimbursements of Film Production Costs: The Film California First program reimburses
state and local agencies for costs they incur for television and film productions in their
jurisdictions. Since its inception in 2000-01, this program has provided about $8 million per year
in reimbursements. The Administration proposes a reduction of $2.1 million, which should still
provide sufficient funds to address the annual demand on the program.
Biomass Funding: The Administration proposes eliminating the third year of program funding,
resulting in a savings to the General Fund of $4 million. In its first two years, the program
provided over $20 million in assistance to operators of plants that convert biomass fuels to
energy.
Loans to the General Fund: The Administration proposes loans to the General Fund totaling
$6.2 million from the balances of two special funds where those funds are not currently pledged
to projects.
Return Funding to the General Fund: The Administration proposes six expenditure
reductions that will result in savings to the General Fund of about $1.2 million.
IIIRESOURCES 1
California Conservation Corps (CCC)
-$1.655 million
Corps Member Benefits Savings: The CCC member savings account was designed to
provide medical and dental benefits to corps members when the General Fund is not available.
The Administration proposes to reduce the amount of funding in the account by $655,000 to
recoup program savings resulting from pre -payment of benefits premiums.
Collins -Dugan California Conservation Corps Reimbursement Account: The
Collins -Dugan Account was created to provide resources to hire more corps members, enhance
corps member education and educational support services, and purchase equipment.
Reimbursements are received from work projects completed by corps members, donations, and
transfers from other funds. Projected revenue in the current year is $25 million. The
Administration proposes to shift $1 million in program activity costs from the General Fund to
the Collins -Dugan California Conservation Corps Reimbursement Account.
Energy Resources Conservation and Development Commission
-$1.733 million
Peak Load Reduction Program: Chapter 329, Statutes of 2000, appropriated $50 million to
develop and implement cost-effective energy conservation and demand-side management
programs. The Administration proposes to revert $1.679 million of currently unencumbered and
uncommitted funds from that appropriation.
Electric Metering Program: Chapter 8, Statutes of 2001, First Extraordinary Session,
appropriated $35 million to provide time -of -use or real time electric meters to customers whose
usage is greater than 200 kilowatts. The Administration proposes to revert $54,000 that has not
been encumbered to the General Fund.
Department of Forestry and Fire Protection
-$5.485 million
Federal Emergency Management Agency (FEMA) Reimbursements: The department
receives reimbursement from FEMA for specified emergency fire suppression costs. The
federal government has broadened the criteria for obtaining these funds, which will result in an
additional $5 million in federal reimbursements in the current year.
Alma Helitack Base-Helipad Relocation Project: The 2002 Budget Act provided $485,000
General Fund for the Alma Helitack Base helipad relocation project. The relocation of the
helipad cannot be completed in 2002-03 and is proposed to be included in the scope of a future
capital project. Therefore, the Administration proposes to revert these funds.
Department of Fish and Game
-$2.242 million
Urban Fishing Program: This program is budgeted at approximately $2 million and provides
education and fishing opportunities in urban areas of Sacramento, Fresno, San Francisco, and
Los Angeles. This proposal will reduce program activities and generate $176,000 in General
Fund savings in the current year.
Vacant Enforcement Positions: This proposal will eliminate 31 vacant positions, including
Fish and Game Wardens, Patrol Captains, Regional Patrol Chiefs and Patrol Lieutenants.
Since the positions to be eliminated are already vacant, this reduction will not reduce the
department's current law enforcement capabilities. This proposal will generate $1.641 million in
General Fund savings in the current year.
7
Timber Harvest Plan Review: The department provides input to the Department of Forestry
and Fire Protection on timber harvest plans to protect fish and wildlife resources during timber
harvesting operations. This proposal will reduce the department's review of these plans,
generating $425,000 in General Fund savings in the current year.
Wildlife Conservation Board
-$44.129 million
Cargill Salt Ponds Restoration: Chapter 395, Statutes of 2000, appropriated $25 million
General Fund for the acquisition and restoration of wetlands at the Cargill Salt Ponds in San
Francisco Bay. The Administration proposes to shift $24.965 million for this acquisition to the
Water Security, Clean Drinking Water, Coastal and Beach Protection Bond Act of 2002
(Proposition 50).
Wetlands Acquisition and Restoration: Various prior year General Fund appropriations
totaling $19.164 million are available for wetlands acquisition and restoration. The
Administration proposes to shift the fund source for these projects from the General Fund to
Proposition 40 bond funds.
Coastal Commission
-$0.5 million
Local Coastal Program: The 2002 Budget Act includes $500,000 for grants to local
governments to help prepare and develop their local coastal programs. None of the funding has
been encumbered. Therefore, the Administration proposes to revert these funds to the General
Fund.
Department of Parks and Recreation
-5.165 million
State Parks: The Administration proposes to raise various park fees ranging from $1.00 to
$12.00, including day use, museum, and camping fees, generating approximately $4.5 million in
the current year. These additional funds can be used to support programs currently funded by
the General Fund.
Acquisition Projects: The Administration proposes that $444,000 be reverted from various
acquisition projects and programs funded through the 2000 Budget Act. The funds were
appropriated to provide funding for appraisal costs, acquisition of inholdings, and high priority
acquisitions within the State park system. The funding available for opportunity purchases is no
longer necessary since several bond -funded appropriations have become available to support
acquisition programs of this nature and other projects have been completed.
Office of Historic Preservation: The Administration proposes that $221,000 be reverted from
a project to acquire and restore property to house the Office of Historic Preservation. The
property has been acquired, and $221,000 of the appropriation remains. The cost of restoration
will be addressed as part of the West -End State Office Building Project funded by Chapter 674,
Statutes of 2001.
E:3
Department of Water Resources
-$65.3 million
Drought Panel Recommendations: The 2002 Budget Act provides $7.75 million for the
Drought Panel Recommendations Program, including $6.4 million for local assistance grants.
The program provides technical and financial assistance to rural homeowners and small water
agencies to prepare water shortage plans to reduce the effects of a drought on small
communities. Proposition 50 provides $500 million for grants for various water management
projects, including projects that protect communities from droughts. The Administration
proposes to provide $6.4 million from Proposition 50, in lieu of the General Fund, for this
program.
Local Flood Control Subventions: The Local Flood Control Subventions Program pays
70 percent of the non-federal share of flood control projects, with the remaining 30 percent paid
by the local agency sponsors. Over the last three years, $128.3 million General Fund has been
appropriated for flood control subventions. The Administration proposes to revert $58.1 million
to the General Fund.
Tehama Flood Control Project: The 2001 Budget Act provided $1.698 million General Fund
for the Tehama Flood Control Project. The Administration proposes to revert $830,000 to the
General Fund to reflect revised cost estimates by the U.S. Army Corps of Engineers.
CalFed
-$16.465 million
CalFed Fund Shift to Proposition 50: The 2002 Budget Act provides $46.1 million for the
CalFed Program. Proposition 50 includes $825 million for CalFed for a wide range of purposes.
The Administration proposes to provide $16 million from Proposition 50, in lieu of the General
Fund, for water storage issues, levee restoration and maintenance, ecosystem restoration,
watershed improvement, water use efficiency, and improved science.
The Administration also proposes a $465,000 reduction to the CalFed Program Oversight and
Coordination Program, including $100,000 budgeted for the Department of Fish and Game and
$365,000 budgeted for the State Water Resources Control Board.
ENVIRONMENTAL PROTECTION
California Environmental Protection Agency
-$0.085 million
Permit Assistance Centers: The 2002 Budget Act included $479,000 General Fund to
operate two permit assistance centers and the CaIGOLD online permit assistance service. The
Administration proposes to reduce funding for the two permit assistance centers, which will
increase reliance on the use of the CaIGOLD Internet system.
�7
Air Resources Board
42 million
Zero Emission Vehicle Grants: A total of $3.5 million General Fund from
Chapter 1072, Statutes of 2000, for zero emission incentive grants remains available for
encumbrance, but $2 million of this amount will not be needed to fund grant applications due by
the December 31, 2002, eligibility deadline, and is proposed to be reverted.
Department of Pesticide Regulation
-$0.352 million
Pest Management Grants: The Administration proposes to eliminate funding for pest
management grants, which fund research to identify and promote the large-scale adoption of
reduced -risk pest management practices.
Water Resources Control Board
-$2.422 million
Various Water Quality and Water Rights Programs: The Administration proposes to reduce
funding for water quality monitoring activities, water rights complaint investigations, review of
water rights applications, and technical assistance. However, the Budget still includes
$73.9 million General Fund for other high priority water quality and water rights programs, and
$10.4 million Cleanup and Abatement Account is available for investigations and cleanup
efforts.
Department of Toxic Substances Control
-$4.067 million
Toxics Cleanup and Oversight Programs: The 2002 Budget Act provided over $29 million
General Fund for various hazardous waste management and site mitigation programs. The
Administration proposes to reduce funding for the following activities: development of
guidelines for illegal drug lab removals, training on illegal drug lab removals, and off-highway
emergency response actions. In some cases, special funds may be used to offset the loss of
General Fund, as in the case of the border program, an administrative cost shift, and oversight
of federal superfund orphan sites and State orphan sites.
HEALTH AND HUMAN SERVICES
Emergency Medical Services Authority
Consolidation of Emergency Medical Services Authority (EMSA) into the Department of
Health Services (DHS): The Administration proposes legislation to consolidate the EMSA into
the DHS, effective July 1, 2003. This consolidation is expected to produce the following
benefits: (1) improved coordination of emergency medical policy with overall State health
10
policy, (2) improved efficiency through the consolidation of similar functions, and (3) increased
administrative efficiency. This consolidation is being proposed at this time to achieve full -year
General Fund savings in 2003-04.
Health and Human Services Data Center
-$0.47 million
Operations Program: The Budget Act of 2002 provided $133 million Revolving Fund
Expenditure Authority for the Health and Human Services Data Center (HHSDC) to provide
operations, software, telecommunications, and information systems support for its client
departments. Of the amount provided, $473,000 is for discretionary operations' projects. The
Administration proposes to defer the projects until the budget year, which would result in
Revolving Fund expenditure authority reductions of $473,000.
Department of Aging
-$2.5 million
Nutrition Program: The 2002 Budget Act provided $72.4 million ($9.5 million General Fund) to
serve meals to seniors in a congregate setting and to deliver meals to homebound seniors. Of
the amount provided, $2.9 million General Fund is a discretionary overmatch to the federal
funds that support the program. The Administration proposes elimination of the discretionary
overmatch, which would result in General Fund savings of $614,000 in the current year,
assuming an effective date of April 1, 2003. Funding of $62.9 million of federal funds and
$6.6 million General Fund remains intact.
Respite Registry Program (RRP): The 2002 Budget Act provided $135,000 General Fund to
the RRP to recruit and screen respite providers and match them to senior clients. In order to
protect other critical programs, the Administration proposes elimination of this program, which
would result in savings of $28,000 in the current year, assuming an effective date of
April 1, 2003.
Foster Grandparent Program (FGP): The 2002 Budget Act provided $1.1 million General
Fund to the FGP for tax-free stipends to participating volunteers. In order to protect other
critical programs, the Administration proposes legislation to eliminate the FGP. Assuming an
effective date of April 1, 2003, elimination of General Fund support for the program would result
in savings of $219,000 in the current year.
Senior Companion Program (SCP): The 2002 Budget Act provided $2 million -General Fund
to the SCP for tax-free stipends to participating volunteers. The Administration proposes
legislation to eliminate the SCP, in order to protect other critical programs. Assuming an
effective date of April 1, 2003, elimination of General Fund support for the program would result
in savings of $409,000 in the current year.
Brown Bag Program (BBP): The 2002 Budget Act provided $1.1 million General Fund to the
BBP to provide surplus fruits, vegetables, and other unsold food products to low-income elderly
persons. The Administration proposes legislation to eliminate support for the BBP, in order to
protect other critical programs. Additionally, there is $11 million in direct funding available to
local entities for similar food programs. Assuming an effective date of April 1, 2003, elimination
of General Fund support for the program would result in savings of $180,000 in the current year.
11
Community -Based Services Program (CBSP): The 2001 Budget Act included $18.5 million
General Fund for the CBSP to provide funding through a variety of programs to support senior
participation and avoid institutionalization. Avoiding institutionalization results in direct cost
savings to the State. Actual General Fund expenditures for 2001-02 were $500,000 less than
budgeted. Therefore, the Administration proposes that $500,000 be reverted to the General
Fund.
Adult Day Health Care Contract: The 2000 Budget Act appropriated $500,000 General Fund
for construction of an Adult Day Health Care Center in San Francisco. The amount was
reappropriated in the 2001 Budget Act. Contracts for the construction have not been
processed. Therefore, the Administration proposes that $500,000 be reverted to the General
Fund.
Department of Alcohol and Drug Programs
-$1.5 million
Alcohol and Other Drug Services: The 2001 Budget Act provided $40.4 million General Fund
for various non-MedFCal alcohol and drug services programs. The Administration proposes
that $1 million of this funding be reverted to achieve General Fund savings in 2002-03. These
savings are the result of lower than estimated local administrative expenditures, and reversion
of these funds will not result in program reductions.
Drug Medi -Cal: The 2002 Budget Act provided $46.8 million General Fund for Drug Medi -Cal
funding. After allocating administration funding by formula to the counties, $253,000 is
projected to remain unspent, which the Administration proposes for reversion to achieve
General Fund savings in 2002-03.
Audit Repayment Trust Fund: The Department of Alcohol and Drug Programs collects
repayments of state funds resulting from audits of local contracts. It is proposed to transfer
$273,000 from the Audit Repayment Trust Fund to the General Fund. This transfer will not
result in programmatic reductions.
Child Development Policy Advisory Committee
Child Development Policy Advisory Committee (CDPAC): The Administration proposes
legislation to repeal all statutory provisions related to the CDPAC, effective July 1, 2003. In
order to eliminate the CDPAC and to realize full -year General Fund savings of $367,000 in
2003-04, enactment of legislation is required in 2002-03.
Department of Health Services
-$201.8 million (Includes $25.8 million from prior years.)
Amendments to Medi -Cal Funding
Medi -Cal Provider Rate Reductions
-$90,387,000
Elimination of Selected Medi -Cal Optional Benefits
-$63,254,000
Reinstate Medi -Cal Quarterly Status Reports
-$5,000,000
Rescind Expansion of 1931(b) Medi -Cal Eligibility
-$6,209,000
Intermediate Care Facilities for the Developmentally Disabled
-$2,500,000
Medical Care and Services Subtotal
-$167,350,000
12
Reduce Outreach for Medi -Cal and Healthy Families -$168,000
County Administration Subtotal -$168,000
2002 Budget Act Total for Medi -Cal -$167,518,000
Prior Year Reversion—Disproportionate Share Hospital -$25,800,000
Capital Debt
2001 Budget Act Total for Medi -Cal -$25,800,000
Medi -Cal Provider Rate Reduction: The 2000 Budget Act included Medi -Cal provider rate
increases totaling $799.8 million ($402.8 million General Fund). The 2002 Budget Act
maintained these increases. The Administration proposes to reduce all MedkCal provider rates
by 10 percent effective April 1, 2003, achieving savings of $90.4 million General Fund in
2002-03.
Selected Medi -Cal Optional Benefits: The Medi -Cal program currently offers 34 optional
Medicaid benefits, the maximum number allowed under federal law. The Administration
proposes legislation to eliminate the following optional benefits from the Medi -Cal program for
adults above age 21 and not in long-term care: dental services, medical supplies, podiatry,
acupuncture, chiropractic services, psychology, independent rehabilitation centers, and
occupational therapy. The elimination of these benefits, effective April 1, 2003, will achieve
savings of $63.3 million General Fund in 2002-03.
Reinstatement of Medi -Cal Quarterly Status Reports: The 2000 Budget Act and
Chapter 93, Statutes of 2000, eliminated the requirement that families receiving Medi=Cal
submit quarterly eligibility status reports. The Administration proposes legislation to reinstate
Medi -Cal quarterly status reporting, effective April 1, 2003, which would result in current year
savings of $10 million ($5 million General Fund) and budget year savings of $170.1 million
($85 million General Fund). In January 2001, the Administration established continuous
eligibility for children. This proposal will not affect the eligibility of children in Medi -Cal.
Rescission of 1931(b) Medi -Cal Eligibility Expansion: Effective March 2000, eligibility for the
1931(b) Medi -Cal program was expanded to families with income up to 100 percent of the
Federal Poverty Level (FPL). The Administration proposes legislation to rescind this expansion
and limit eligibility to families with income up to approximately 61 percent of the FPL, consistent
with the income limits for the California Work Opportunity and Responsibility to Kids
(CaIWORKs) program. This proposal would affect mostly two-parent income households.
Effective April 1, 2003, this proposal would result in savings of $12.4 million ($6.2 million
General Fund) in 2002-03, $235.9 million ($118 million General Fund) in 2003-04, and annual
savings of $985.1 million ($492.6 million General Fund) after full implementation.
Intermediate Care Facilities for the Developmentally Disabled: The Administration
proposes legislation to levy an assessment of 6.5 percent on intermediate care facilities for the
developmentally disabled. This assessment will be matched with federal funds. This action will
result in revenues of $5 million in the current year and $20 million annually. A total of
75 percent of these funds would be provided to these facilities as a provider rate increase. The
remaining 25 percent of these funds
13
would be used to offset General Fund resources for these facilities. This proposal would result
in $2.5 million General Fund savings in the current year, and $10 million General Fund savings
in the budget year.
Cancer Research: The 2002 Budget Act provided $12.5 million General Fund for the Cancer
Research program. The Administration proposes that expenditures be reduced to $6.2 million,
resulting in General Fund savings of $6.3 million. This reduction represents a very small
proportion of the over $4.2 billion in national funding provided by the federal government and
private institutions.
Prostate Cancer Treatment: The 2002 Budget Act provided $20 million from the Tobacco
Settlement Fund for Prostate Cancer Treatment. Due to lower than anticipated participation in
the treatment program, the Administration proposes that expenditures be reduced to $10 million,
resulting in Tobacco Settlement Fund savings of $10 million to be transferred to the General
Fund. This proposal reduces the program to its original level. Approximately 1,200 men will
continue to receive treatment at the reduced funding level.
Eliminate Valley Fever Vaccine Research: The 2002 Budget Act provided $700,000 General
Fund for the Valley Fever Vaccine Research program. The Administration proposes that the
program be eliminated effective January 1, 2003, resulting in General Fund savings of $350,000
in 2002-03 and $700,000 in 2003-04. The research program is a consortium of several public
and private entities and the State funding represents but a portion of the funding available.
Eliminate the Gynecologic Cancer Information Program: The 2002 Budget Act provides
$150,000 General Fund for the development and distribution of health education materials for
gynecologic cancer. The Administration proposes to eliminate this information program,
resulting in General Fund savings of $150,000 in 2002-03, since there are alternative sources
for this information.
Outreach and Media Campaigns: The 2002 Budget Act provided approximately $26.1 million
General Fund for various outreach activities and media campaigns. The Administration
proposes that contracts that have not been signed and funds that have not been invoiced or
obligated be reduced, resulting in General Fund savings of $1.7 million. Additionally, the 2002
Budget Act included $10.3 million ($3.9 million General Fund) for application assistance and a
toll-free telephone line to increase the enrollment of children in Medi -Cal and Healthy Families.
The Administration proposes to eliminate training for certified application assistants, which
would result in current year savings of $168,000 General Fund.
Prior Year Reversion—Disproportionate Share Hospital Capital Debt: The Administration
proposes to revert $25.8 million General Fund that was included in the 2001 Budget Act but
remains unexpended due to lower than anticipated debt service payments. This funding was
intended for debt service payments on construction and renovation projects for disproportionate
share hospitals.
Department of Developmental Services
-$143.7 million
Increased Federal Financial Participation Savings: Past year General Fund savings are
available as a result of the Administration's effort to maximize claims for federal financial
participation allowed for eligible beneficiaries under the Home and Community -Based Waiver.
14
Updated projections indicate that increased federal financial participation for the 2001-02 budget
year totals $156.7 million. Therefore, the Administration proposes that another $142.7 million
be reverted in addition to the $14 million reverted in the 2002 Budget Act.
Statewide Standards: The Administration proposes to reduce Regional Center Purchase of
Services by $100 million through implementation of statewide standards, effective July 1, 2003.
The Department will seek to identify opportunities to maximize the $2.2 billion provided for the
Community Services program, increase administrative efficiency, and improve consistency of
the service provided to consumers throughout the state, while maintaining the entitlement
guaranteed under the Lanterman Act. While there are no current year savings associated with
this proposal, the necessary statutory changes are proposed to achieve the full -year budget
savings in 2003-04.
Porterville Air Condition Main Kitchen: The 1999 Budget Act provided $1 million General
Fund for the construction phase of the Air Condition Main Kitchen project at the Porterville
Developmental Center. This funding remains unexpended. Therefore, the Administration
proposes to revert these funds to the General Fund.
Department of Mental Health
44.8 million
Early Mental Health Services: The Administration proposes to eliminate Early Mental Health
Services that were counted toward the Proposition 98 guarantee and funded through the
Department of Mental Health, in order to protect other critical programs from reduction or
elimination. This proposal will achieve General Fund savings of $549,000 in 2002-03 and
$15 million in 2003-04. More than $1.1 billion is available in Realignment funds for local mental
health services, and an additional $3.4 billion in special education funding is available for the
children that received Early Mental Health Services.
Mental Health Managed Care: The Department of Mental Health (DMH) provides mental
health services to Medi -Cal eligible clients through a system of contracts between the DMH and
county mental health departments. The Administration proposes statutory changes to
implement a 10 -percent provider rate reduction effective April 1, 2003. This change will achieve
General Fund savings of $4 million in 2002-03 and $16 million in 2003-04.
Preadmission Screening and Resident Review (PASRR): The 2002 Budget Act included
$3.2 million ($789,000 General Fund) to expand the current mental health evaluation process to
include individuals that are not eligible for Medi -Cal who are residents of or being admitted to
nursing facilities statewide. Due to late implementation of the contract to provide PASRR
services, there will be General Fund savings in 2002-03. The Administration proposes that
$232,000 be reverted to achieve General Fund savings.
Second Level Treatment Authorization Request (TAR) Appeals: The 2002 Budget Act
included $64,000 General Fund for the Department of Mental Health to process Second Level
TAR appeals. California is the only state that currently allows second -level TAR appeals, if
mental health providers are not satisfied with the results of the first appeal to their county Mental
Health Plans. Therefore, the Administration proposes to eliminate this process and that
$64,000 be reverted to the General Fund.
15
Department of Community Services and Development
-$1.5 million
Department of Community Services and Development (DCSD) Consolidation: To improve
the efficiency and effectiveness of State government, the Administration proposes, that effective
July 1, 2003, the DCSD be consolidated with the Department of Social Services (DSS). The
Community Services Block Grant program and the Low -Income Home Energy Assistance
Program (LIHEAP) would be administered by the DSS. The proposed consolidation would
result in an elimination of nine DCSD positions and a redirection of approximately $922,000
federal funds from State operations to local assistance.
In addition, the Administration proposes elimination of the General Fund support for the
Naturalization Services and Mentoring Programs, effective July 1, 2003, as programs operated
by other State departments provide citizenship instruction and mentoring services. Over
$30 million is available for the AmeriCorps program, some of which has been used for tutoring
and mentoring; approximately $22 million in federal funds is available for English language and
citizenship instruction.
California LIHEAP: Chapter 7, Statutes of 2001, First Extraordinary Session, appropriated
$120 million General Fund for the DCSD to provide energy bill assistance and weatherization
services to certain needy households. Of this amount, $95.9 million has been expended and
$23.8 million reverted through December 2002, leaving $285,000 unspent. Therefore, the
Administration proposes that $285,000 be reverted to the General Fund in 2002-03.
Naturalization Services Program: The 2002 Budget Act provided $7.9 million ($2.9 million
General Fund) for this program. Of this amount, $1.3 million General Fund will not be granted
to community-based organizations by January 1, 2003, and as outlined above General Fund
support for this program is proposed for elimination beginning July 2003. The Administration
proposes that $1.3 million be reverted in 2002-03, along with State operations savings of
$14,000 General Fund.
Department of Rehabilitation
-$21.8 million
Home and Community -Based Waiver Funding for the Habilitation Services Program
(HSP): The cap on the Home and Community -Based Waiver (Medicaid reimbursements) has
been increased, and it is anticipated that the Department of Rehabilitation will receive an
additional $4.8 million for 2001-02 and $5.8 million for 2002-03, which would offset a
corresponding level of General Fund. Therefore, the Administration proposes to increase
reimbursement expenditure authority and revert $10.6 million to the General Fund.
Habilitation Services Program: The 2001 Budget Act included $120 million General Fund for
the HSP to provide employment skills training to persons with developmental disabilities. In
2001-02, $7.6 million General Fund was not utilized and is available for reversion. Therefore,
the Administration proposes that $7.6 million be reverted to the General Fund.
16
HSP Consolidation within the Regional Centers: The Administration proposes legislation to
consolidate the HSP within the Regional Centers to produce a more efficient program and
capture the resultant General Fund savings of $2.2 million in 2003-04. In order to achieve
full -year savings in 2003-04, it is proposed that the consolidation, which would be effective
July 1, 2003, be authorized to begin in 2002-03.
Rate Reductions for Work Activity Program (WAP) and Supported Employment Program
(SEP): The WAP and SEP provide employment skills training to persons with developmental
disabilities through non-profit organizations. The Administration proposes legislation to reduce
the rates paid for services by $1.4 million (with a related $103,000 in State operations), or
5 percent, and to revert the savings to the General Fund.
WAP Rate Suspension: The WAP provides employment skills training in sheltered work
settings to persons with developmental disabilities through non-profit organizations. Provider
rates are statutorily required to be adjusted biennially, and 2003-04 is a rate -setting year. The
Administration proposes legislation to suspend the statutory rate adjustment for three years.
Department of Child Support Services
-$9.7 million
Local Child Support Administration Incentives: The Department of Child Support Services
(DCSS) received an additional $9 million in federal Child Support Incentives for local
administration in 2002-03, which can be used to offset administrative costs currently funded by
the General Fund, with no effect on the child support enforcement program. Therefore, the
Administration proposes that $9 million be reverted to the General Fund to achieve savings in
2002-03.
Local Child Support Contracts: Two local child support contracts entered into in 2000-01 and
2001-02 were completed at a cost lower than budgeted. Therefore, the unexpended balance of
these contracts, $366,000 in 2000-01 and $290,000 in 2001-02, is available to be reverted to
the General Fund. Therefore, the Administration proposes that $656,000 be reverted to the
General Fund.
Foster Parent Training Fund: The Administration proposes legislation to eliminate funding
from child support collections for foster parent training programs within the California
Community Colleges, effective July 1, 2003. This action would result in additional General Fund
revenues in 2003-04. This action is proposed in the current year to realize full -year General
Fund savings in 2003-04.
Department of Social Services
-$24.8 million
Residential Care Facility Evaluations: Current State law requires an annual review of
adoption agencies, community treatment facilities, foster family and small family homes, group
homes, foster family agencies, transitional housing placement programs, adult residential
facilities, and residential care facilities for the chronically ill and elderly. The Department of
Social Services licenses these facilities and performs an annual inspection. The Administration
proposes that the evaluation process be streamlined to save administrative costs and to
17
prioritize inspections of high-risk facilities. Therefore, it is requested that $650,000 be reverted
to the General Fund. This proposal would also result in an associated State operations
reduction of $655,000 General Fund.
Supplemental Security Income/State Supplementary Payment (SSI/SSP) Cost -of -Living
Adjustment (COLA): The 2002 Budget Act provided $22.3 million General Fund for the
June 2003 COLA for the SSI/SSP program based on the California Necessities Index. The
Administration proposes to suspend the June 2003 and January 2004 COLAs. Therefore, it is
requested that $22.3 million be reverted to the General Fund. In addition, based on updated
caseload projections, the cost to provide the June 2003 COLA is now estimated to be
$24.1 million General Fund. This proposal will also result in a General Fund cost avoidance of
$1.8 million for the June 2003 COLA and $328 million for the January 2004 COLA in 2003-04.
Ca1WORKs COLA: Consistent with the suspension of the SSI/SSP COLAs, the Administration
proposes that the June and October 2003 CaIWORKs COLAs be suspended. This would not
result in General Fund savings, since the State must meet the federally -required Temporary
Assistance for Needy Families (TANF) maintenance -of -effort requirement. Therefore, the
Administration proposes that $12.2 million TANF be reverted to the Federal Trust Fund to be
available for CalWORKs costs in the Budget Year.
YOUTH AND ADULT CORRECTIONAL
Department of Corrections
-$13.566
Modify the Basic Correctional Officer Academy: The 2002 Budget Act includes funding to
provide 16 weeks of training to 1,930 cadets annually. However, it has been determined that
some training is duplicated at the Academy and the institutions. In order to avoid duplication of
effort, the Academy training will be reduced from 16 weeks to 12 weeks, and four weeks of
training will be provided on-the-job at the cadet's assigned institution resulting in a savings of
$1,305,000.
California Correctional Institution Tehachapi: Wastewater Treatment Plant Renovation:
The 1999 Budget Act provided $10.261 million General Fund for the renovation of the
wastewater treatment plant at the California Correctional Institution, Tehachapi. Construction
bids exceeded the allowable augmentation authority; therefore, the funding cannot be utilized.
The Administration proposes to revert these funds to the General Fund.
Administration Segregation Housing Unit Project: The 1998 Budget Act provided
$9.1 million for the preliminary plans and working drawings for a Statewide Administrative
Segregation Unit project. The department has realized $2.0 million in General Fund savings,
which the Administration proposes be reverted.
18
Board of Corrections
-$0.1 million
Local Juvenile Detention Facility Inspection Program: The Board currently inspects and
reports on the management, operation, and physical plant condition of all county juvenile halls
and camps. These facilities are inspected for compliance with standards established by the
Board. The Administration proposes to revert $44,000 from the funds provided to the Board for
these activities due to the proposed elimination of this program.
Challenge Grant II: The 2000 Budget Act included $13,300,000 as supplemental funding for
the existing Juvenile Crime Enforcement and Accountability Challenge grants. The
Administration proposes to revert $43,000 in unspent funds from the funds appropriated to the
General Fund.
Department of Youth Authority
-$0.4 million
Proposition 98 Funding for Education Services. A reduction of $376,000 is proposed in
Proposition 98 General Fund allocated for education services for wards at the Youth Authority.
11 EDUCATION
Proposition 98
Across -the -Board Reductions: The Administration proposes that K-14 local assistance
programs items be reduced across the board by 3.66 percent for a total of $1.078 billion. The
across-the-board reduction, combined with the specific reductions proposed below, reduces
total Proposition 98 appropriations to the current estimate of the required minimum Proposition
98 spending level. The Administration proposes separate legislation to help districts manage
these reductions by easing the three percent reserve requirement through June 2004 and
expanding the number of categorical programs among which funds can be shifted.
The spending required by Proposition 98 has been reduced due to the significant decline in
2002-03 estimated General Fund revenues and has also been adjusted to reflect revised
population figures and daily attendance. The total 2002-03 Proposition 98 funding requirement
is currently estimated to be $44.645 billion. Proposition 98 appropriations are proposed to be
reduced by a total of $1.734 billion, which is 3.7 percent of total Proposition 98 revenues
including property taxes. K-12 appropriations are reduced by $1.51 billion, a 3.6 percent
reduction of total K-12 revenues, and California Community College programs are reduced by
$135 million, a 2.8 percent reduction of total revenues. Additionally, $143 million set-aside for
Proposition 98 cost increases at the time of Budget enactment is no longer proposed to be
appropriated.
Other Proposition 98 reductions in specific programs are summarized below.
19
Department of Education
Fund Shift: Current Proposition 98 Funding With Prior Year Savings for Regional
Occupational Centers and Programs (ROC/Ps): Of appropriations made in 2001-02 and
prior years, $356.8 million of savings has been identified, which can be or has been reverted to
the Proposition 98 Reversion Account. The Administration proposes that these funds be shifted
to replace an equal amount of current year appropriations from 2002-03 Proposition 98 funding
dedicated for the Regional Occupational Centers and Programs (ROC/Ps).
Principal Training Program: The Administration proposes to reduce $5 million in Proposition
98 General Fund for the Principal Training Program, which provides incentive funding to local
education agencies for professional development for principals and vice principals. The
remaining $2.5 million in 2002-03 funding coupled with the $15 million provided in 2001-02 is
sufficient to meet the projected utilization and honors the State's match commitment.
California School Information Services: The Administration proposes to reduce $1.6 million
in Proposition 98 General Fund for the expansion of the California School Information Services
Program (CSIS) to a new cohort of districts. Delaying the start up of a new cohort will allow
CSIS to focus on implementing the statewide student identifier required by Chapter 1002,
Statutes of 2002, and to meet requirements of the federal No Child Left Behind Act. In addition,
CSIS is working with the Los Angeles Unified School District to implement a CSIS compatible
student information system, and is ensuring that the existing consortia of districts are fully
implemented.
Grants for Supplemental Support for Workforce Investment Act (WIA) Youth Services:
The Administration proposes to eliminate $7.0 million in current year non -Proposition 98
General Fund for WIA youth services coordination and outreach. At this time, the grants have
not yet been awarded by the State Department of Education.
Property Tax Offset for ROC/Ps: The Administration proposes to reduce $11.4 million in
current year Proposition 98 General Fund for ROC/Ps to capture the estimated current year
Proposition 98 savings made available for one-time expenditure purposes through property tax
offsets to ROC/Ps pursuant to Education Code Section 52335.2. The Administration proposes
separate legislation to accomplish this reduction.
Adult Education and Community College Concurrent Enrollment Audits: The
Administration proposes to recapture $13.5 million in current year Proposition 98 General Fund
for Adult Education to reflect the Department of Education's 6,100 ADA reduction to specific
programs to implement audit findings related to Adult Education concurrent enrollment during
the early 1990s. Additionally, the Administration proposes to recapture $80 million in
Proposition 98 General Fund community college apportionments to reflect estimated non-
compliant credit instruction claimed in 2001-02 by community college districts for concurrently
enrolled K-12 students. These practices conflict with the restrictions specified in current law for
K-12 special admit students in community colleges. The Administration intends to conduct an
audit to identify the scope and breadth of these practices in colleges and K-12 districts.
Anticipated Savings in the Adult Education in Correctional Facilities Program: The
Administration proposes to revert $3.0 million of the $19.1 million Proposition 98 General Fund
for the Adult Education in Correctional Facilities program to reflect the amount that is not
expected to be claimed based on prior -year reported instruction.
20
Elimination of CalWORKs Stage 3: The Administration proposes to reduce $98,806,000 from
the Proposition 98 General Fund appropriated for CalWORKs Stage 3 child care to eliminate
Stage 3 child care services, effective April 1, 2003. Over $2.37 billion in child care local
assistance funding is still available. All eligible CalWORKs recipients will continue to receive
subsidies during the entire period while on cash aid and for two years subsequent to leaving
cash aid, for a maximum period of seven years. Additionally, savings in this program of
$10 million resulted from revised estimates, bringing the total reduction in this area to
$108.8 million.
Community Day Schools: The Administration proposes to revert $10 million of the
$42.2 million in Proposition 98 General Fund to reflect anticipated savings in funds appropriated
for the 5th through eh hours of additional class time for community day school students who are
not mandatorily expelled.
Healthy Start Grants: The Administration proposes to reduce $2 million in Proposition 98
General Fund appropriated for a new cohort of Healthy Start sites, which will not affect existing
operational programs. A related $667,000 reduction in Department of Education State
operations is associated with this reduction.
High Risk Youth Education and Public Safety Program: The Administration proposes to
revert $7 million of the $18 million in Proposition 98 General Fund appropriated for the High -
Risk Youth and Public Safety Program to reflect anticipated savings.
College Preparation Partnership Program: The Administration proposes to revert $5 million
in Proposition 98 General Fund appropriated for allocation to public high schools to operate
preparation courses for college admissions tests. This action will create one-time savings by
aligning the year of appropriation with the year of expenditure.
Academic Improvement and Achievement Act: The Administration proposes to revert
$5 million in Proposition 98 General Fund appropriated to increase the percentage of pupils at
qualifying high schools that meet the requirements for admission to the California State
University or the University of California. This action will create one-time savings by aligning the
year of appropriation with the year of expenditure.
Base Adjustments in Proposition 98: Proposition 98 totals reflect net reductions of
$7.9 million for the allocation of employee compensation funding appropriated in statewide
items in the Budget Act of 2002 and elimination of deficiency funding that had been requested.
Mandates: The Administration proposes to defer payment of $870 million of claims for state
mandates for K-14 education agencies in 2003-04. The Controller has identified $614 million in
prior year deficiencies for mandates. This includes $259.9 million for the School Bus Safety II
mandate that was recently shown by a Bureau of State Audits review to reflect large amounts of
non -reimbursable costs. Additionally, the Commission on State Mandates has identified new
mandates totaling over $256 million, including both current and prior year costs. Most of these
claims have not been audited and in many cases, claim documentation does not provide
adequate information to determine if the costs claimed are actually reimbursable. The
Administration proposes to review the Commission's processes for determining reimbursable
activities, defining what can be claimed and how claims are to be documented with the intent to
reform these processes. Additionally the Administration proposes to substantially increase
auditing of these claims using the funding authorized in Chapter 1128, Statutes of 2002.
21
Reversion of Prior -Years Savings: The Administration proposes additional reversions of
Proposition 98 savings from prior years into the Proposition 98 Reversion Account to capture a
variety of existing savings, which would not otherwise revert until a future date. The reversions
total $241.4 million from Department of Education K-12 programs. When combined with the
Controller's balance and savings in the Teacher Credentialing Commission and Community
Colleges, $356.8 million of available funding is provided in the current year. These funds
provide the resources to shift funding from Proposition 98 in the current year to the Reversion
Account for ROC/Ps in an identical amount. Programs with savings include:
Community Day Schools: $14 million in 2001-02 program savings.
Tenth Grade Counseling: $97,000 in 2001-02 program savings.
Pupil Dropout Prevention Program: $210,000 in 2001-02 program savings.
Academic Improvement and Achievement Act: $603,000 in 2001-02 program
savings.
High Risk Youth Education and Public Safety Program: $10.1 million in 2000-01
program savings and $6.4 million in 2001-02 program savings.
College Preparation Partnership Program: $4.1 million in 2000-01 program savings,
$6.2 million in 2001-02 program savings, and $6.2 million in savings from Chapter 795,
Statutes of 1998.
Opportunity Programs: $1.2 million in 2001-02 program savings.
Classroom Library Materials/K-4 Classroom Libraries: $6,000 in 2001-02 program
savings.
Education Technology: $3.8 million in 2000-01 program savings and $23,000 in 2001-
02 program savings.
Digital High School: $392,000 in 2001-02 program savings.
Mandates: $20 million in 2001-02 program savings for mandates where claims were
less than budgeted.
Mathematics and Reading Professional Development Program: $31.7 million in
2001-02 program savings. These funds were proposed for reversion during the 2002-03
budget process but were inadvertently deleted from Chapter 99, Statutes of 2002. The
2002 Budget Act will continue to provide $62.2 million for this program.
Child Care Education Code Section 8278 Carryover: $79 million of the remaining
2001-02 unliquidated contract savings from Child Care and Development Programs with
the exception of CaIWORKs child care programs.
CalWORKs Child Care Carryover: $17.7 million of the remaining 2001-02 unliquidated
balances of the General Fund appropriated for CalWORKs Stage 2 and Stage 3.
22
Child Care Facilities Revolving Fund: $22 million from the balance established
pursuant to Education Code Section 8278.3 which are not anticipated to be committed in
the current year.
Child Care Savings: $6.8 million in 2001-02 program savings.
Charter School Facilities Block Grant: $5 million in 2001-02 program savings, which
are available as a result of a delay in program implementation.
Adults in Correctional Facilities: $2.8 million in 2001-02 savings.
California Information Technology Academies: $3.1 million in 2001-02 savings from
prior reappropriations for the program.
California Community Colleges
2002-03 Property Tax Decline: The Administration does not propose to backfill the
$37.5 million loss in property taxes estimated for the current year in apportionments.
Reversion of Prior -Years Savings: The Administration proposes $7.6 million of prior year
savings be reverted to the Proposition 98 Reversion Account related to the shift of funding for
ROC/Ps in the current year, as addressed in the Department of Education section. Specific
program savings include:
Special Services for CaIWORKs Program: $4.6 million in 2000-01 savings.
Increased Property Taxes for Apportionments: $3 million in 2001-02 apportionments
savings from an increase in reported property taxes compared to the 2002 Budget Act
estimate.
California Community Colleges Chancellor's Office: The Administration proposes to reduce
the budget for the California Community College Chancellor's Office's current -year non -
Proposition 98 General Fund appropriation by $396,000. This action reflects various reductions
in operating expenses and services to the State operations budget of the Community College
Chancellor's Office.
Other K-12 Education
State Special Schools, Student Assessment and Counseling Center Capital Project: The
2001 Budget Act includes $2.1 million General Fund for construction of a student assessment
and counseling center at the School for the Deaf in Fremont. This project can be funded using
lease revenue bonds. The Administration proposes that the $2.1 million for this project be
shifted from the General Fund to lease -revenue bonds to complete this project.
California State Library
California Civil Liberties Public Education Grants: The Administration proposes to reduce
$500,000 non -Proposition 98 General Fund for California Civil Liberties Public Education
Grants. Many valuable educational materials have been developed or provided since the
inception of this program, which has received the intended three years of funding. The State
23
Library has indicated that all meritorious grant applications have been funded. These materials
can now be considered for inclusion in the educational curriculum through the instructional
materials adoption process.
Public Library Foundation: The Administration proposes to reduce $15.8 million
non -Proposition 98 General Fund from the Public Library Foundation per capita formula grants
to local libraries. The 2002 Budget Act contains $31.5 million for the program. Local libraries
use the funds for acquiring library materials, staff, operating expenses and equipment. Funds
are not allocated for this program until February of 2003.
Commission on Teacher Credentialing
California Mathematics Initiative for Teaching: The Administration proposes to eliminate
$500,000 remaining Proposition 98 General Fund for the California Mathematics Initiative for
Teaching, which provides incentives for individuals to meet State preparation standards and
credentials to teach mathematics in elementary and secondary schools.
Support for Paraprofessional Program: The Administration proposes to revert $51,000
General Fund that is used to fund a position to support the Paraprofessional Program. This
position will be funded with available funds from the Teacher Credentials Fund. With this
reversion, the Commission on Teacher Credentialing has no non -Proposition 98 General Fund
remaining.
Reversion of Prior -Years Savings: The Administration proposes that $16.4 million be
reverted to the Proposition 98 Reversion Account. Specific program savings included:
California Pre -Internship Teaching Program: $13.5 million in 2000-01 program savings
and $2.9 million in 2001-02 program savings which otherwise would not revert until June 30,
2004.
California Postsecondary Education Commission
State Operations: The Administration proposes to reduce the California Postsecondary
Education Commission's General Fund State operations budget by $108,000 for various
operating costs as determined by the Commission.
University of California
Reductions and Savings: The Administration proposes to reduce the University of California's
current -year General Fund appropriation by $74.3 million. Reductions include: $20 million to
Academic and Institutional Support, $6.3 million to Student Services, $3.3 million to Outreach,
$2.5 million to Public Services programs, $1.1 million to the K-12 Internet Initiative program, and
$19 million in unallocated reductions. The proposed reduction also includes the reversion of
$18 million in estimated savings for Substance Abuse research, the Multi -Campus Unit for
Labor Studies research, and the Institute for Mexico and the United States research activities,
and $4 million in estimated savings for the AP Online project.
24
Hastings College of the Law
Unallocated Reduction: The Administration proposes to reduce the Hastings College of the
Law's current -year General Fund appropriation by $1 million. These reductions are unallocated
to allow Hastings the flexibility to determine reductions from any program area with the intent to
minimize affects on direct instruction and access.
California State University
Unallocated Reduction: The Administration proposes to reduce the California State
University's current -year General Fund appropriation by $59.6 million. This reduction is
unallocated to allow the CSU the flexibility to determine reductions from any program area with
the intent of minimizing effects on direct instruction and access.
GENERAL GOVERNMENT
Office of Criminal Justice Planning
-$13.0 million
Victims Services Local Assistance Programs: The 2002 Budget Act included $1.9 million
General Fund for local assistance grants for various Victims Services programs. The
Administration proposes to revert $214,000 from the funds appropriated for these programs.
Public Safety Local Assistance Programs: The 2002 Budget Act included $57 million
General Fund for local assistance grants for various Public Safety programs. The
Administration proposes to revert $3.4 million from the funds appropriated for these programs.
Los Angeles Crime Laboratory: The 2000 Budget Act included $96 million General Fund for
constructing the Los Angeles Regional Crime Laboratory. In November 2001, $82 million in
construction -related funds for this project was reverted to the General Fund to reflect a shift to
lease revenue bond funding. The Administration proposes to revert an additional $9.4 million
related to shifting for the planning and working drawings to lease revenue bonds as well. The
project remains fully funded as previously committed by the State.
California Arts Council (CAC)
-$1.2 million
CAC Grant Funds: The Administration proposes to revert $1 million from the California Arts
Council for local grants to assist art programs, artists, and local arts councils, and $112,000 for
related State operations.
25
Department of Industrial Relations
-$27.1 million
User Funding of Workers' Compensation Programs: Existing law provides for an
assessment on insured and self-insured employers to support costs associated with the
workers' compensation programs in the Department of Industrial Relations. This assessment
supports approximately 20 percent of program costs, with the remaining 80 percent provided
from the General Fund. Consistent with the vast majority of other states, the Administration
proposes to replace General Fund support of these programs with 100 percent user funding,
resulting in 2002-03 General Fund savings totaling $24.6 million.
Transfer to the General Fund: The 2002 Budget Act includes a $4 million transfer to the
General Fund from the Workplace Health and Safety Revolving Fund. The Administration
proposes to increase this transfer by $650,000. Since AB 749 (Chapter 6, Statutes of 2002)
revised the funding source for the Commission on Health and Safety and Workers'
Compensation, this fund will not be used after December 31, 2002. This increased transfer
represents the remaining balance in the fund.
Transfer from the Unpaid Wage Fund: Labor Code Section 96.7 requires the Labor
Commissioner to transfer any balance in excess of $200,000 from the Unpaid Wage Fund to the
General Fund. The Administration is proposing a transfer of $1,800,000 for 2002-03.
Department of Personnel Administration
-$100,000
Administrative Costs Associated With Pre-tax Parking: The Administration proposes to
reduce the Pre-tax Parking program administration by $100,000 due to program savings.
Workers Compensation Benefits
-$219,000
Disaster Service Workers: The 2002 Budget Act includes $663,000 to pay workers
compensation claims for Disaster Service Workers. The Administration proposes to revert
$219,000 of this amount.
Department of Food & Agriculture
-$980,000
Plant and Pest Programs: The 2002 Budget Act includes $3.5 million for activities associated
with the Weed and Vertebrae Program, Biocontrol Program, and Exotic Pest Research. Of this
amount, the Administration proposes to reduce $980,000, which includes $750,000 from the
Weed and Vertebrae Program and Biocontrol Program. It also includes a reduction of $230,000
for the Exotic Pest Control Program.
26
California Victim Compensation and Government Claims Board
Reimbursement to Counties for the Cost of Special Elections: The 2002 Budget Act
includes $1 million to reimburse counties for the cost of special elections. The Administration
proposes to revert $333,000 of this amount, which reflects the unencumbered balance
remaining after all pending special elections claims are paid by the Board.
Commission on State Mandates
Non -Proposition 98 Mandate Funding: Consistent with the action taken in the 2002 Budget
Act, it is proposed to continue the suspension of payment for various budget year and prior year
reimbursable non -Proposition 98 mandates, resulting in savings of $769.4 million in 2003-04.
Department of Veterans Affairs
Local Assistance Funding: The 2002 Budget Act provided $2,350,000 General Fund to
provide support to county veterans services offices. The Administration proposes to revert
$118,000 from the funds appropriated for these programs due to the State's current fiscal
constraints.
Local Government Financing
Transfer of Unencumbered Low and Moderate Income Housing Funds to the State:
Community Redevelopment Agencies are required to transfer at least 20 percent of their annual
property tax increment into the Low and Moderate Income Housing Fund for the purposes of
increasing, improving, and preserving low- and moderate -income housing. An estimated
$500 million of property tax revenue that would otherwise be available for schools and other
governmental functions, if not for the establishment of the Community Redevelopment
Agencies, remains unutilized. The Administration proposes that Community Redevelopment
Agencies be required to immediately transfer any balances in their Low and Moderate Income
Housing Funds that were unencumbered on December 1, 2002, to the State Controller for
deposit into the General Fund. This action is expected to generate approximately $500 million
in the current year. The Administration intends to address the overall policy of redevelopment
agency funding as part of the Governor's 2003-04 Budget.
Shared Revenues
Abolition of Special Reserve Fund for Vehicle License Fee Tax Relief: As part of the
implementation of the vehicle license fee rebate program, a Special Reserve Fund for Vehicle
License Fee Tax Relief was created. This rebate program was replaced with a General Fund
offset beginning in 2001-02. Only a modest portion of the $33 million balance in this Special
Fund is estimated to be needed for rebates attributable to late filers in future years. Therefore,
the Administration proposes legislation to eliminate this Special Reserve Fund and transfer its
balance to the General Fund. This shift of resources will have no impact on the vehicle license
fee tax relief program or local governments, and rebates that may result from late filers in the
future will be funded from the General Fund instead.
27
Capital Outlay Planning and Studies Funding
Capital Outlay Planning and Studies Funding: The 2002 Budget Act provides $1.5 million
General Fund to be allocated by the Department of Finance to State agencies for project
planning and studies. Because of fiscal constraints and a reduction in projects, fewer projects
require planning and studies funding. Accordingly, the Administration proposes funding in the
amount of $500,000 be reverted to realize General Fund savings in the current year.
Health Insurance Portability and Accountability Act
-$0.2 million
Reversion of Funding for California Youth Authority (HIPAA): The 2002 Budget Act
includes $497,100 General Fund for Youth Authority HIPAA activities. This funding is currently
in Item 9909 and was to be allocated via an Executive Order. Because the Youth Authority will
be unable to hire staff as early as expected, the Administration proposes that $250,000 be
reverted from Item 9909 to the General Fund.
STATEWIDE
Additional Architecture Revolving Fund Savings: The Department of Finance has identified
$1 million in the Architectural Revolving Fund (ARF) that can be transferred back to the General
Fund. Therefore, the Administration proposes to transfer these funds from ARF to the General
Fund.
Architecture Revolving Fund Transfer: The Department of Finance has identified a number
of projects that may be delayed, stopped, or shifted to an alternative funding source. It is
requested that the Department of Finance have the authority to transfer funds in the
Architecture Revolving Fund to the General Fund.
Inmate Construction Revolving Account Transfer: The Department of Finance has
identified a number of projects that may be delayed, stopped, or shifted to an alternative funding
source. It is requested that the Department of Finance have the authority to transfer funds in
the Inmate Construction Revolving Account to the General Fund.
Employee Compensation
-$470.0 million
Reduction of Employee Compensation Costs: The Department of Personnel Administration
is directed to negotiate through the collective bargaining process, where applicable, a
$470 million reduction in 2003-04 employee compensation costs. In order to accomplish this
reduction, the State is prepared to pursue deferring scheduled salary increases, lowering or
freezing future salary or benefit expenditures, layoffs, furloughs, and other similar personnel
actions in order to produce the needed savings.
Elimination of Annuitants from the Rural Health Care Equity Program: The Rural Health
Care Equity Program assists with the out-of-pocket health care expenses for employees and
annuitants who live in rural areas that are not covered by the State's contracts with HMOs. The
Administration proposes this program no longer include annuitants as of January 1, 2003.
28
Statewide—Reduction in State Operations
-$320.8 million
Chapter 1023, Statutes of 2002, added Control Section 3.90 to the 2002 Budget Act, authorizing
up to a five -percent reduction of State operations appropriations to reflect a total reduction of up
to $750 million. Given the magnitude of the anticipated two-year budget shortfall, the Governor
issued Executive Order D-64-02 to identify General Fund savings and reduce expenditures.
Only a portion of the $750 million target can be achieved without statutory changes to programs
that would allow reductions in State operations costs. The Administration has expanded the
focus of reductions beyond just State operations reductions. In this mid -year reduction
package, the Administration is proposing $3.4 billion in current year General Fund reductions, of
which $320.8 million encompasses State operations. To address, in part, the requirements of
Control Section 3.90 of the 2002 Budget Act, the Administration is proposing reversion items to
capture the savings.
Budgets for State operations will be reduced, and General Fund savings achieved through
various actions including, but not limited to, the following:
• Reductions in specific program areas
• Shifts in program funding
• Reductions and eliminations in operating expenses for non-essential activities (e.g.,
out-of-state travel, training, equipment purchases, etc.)
• Increases in federal funds
• Eliminations of departments/programs
• Prior years savings
Attachment A contains a list of the State operations reductions by department. Some of the
aforementioned savings are contingent upon reductions in local assistance programs. Since the
Attachment contains a summary of the information relating to State operations reductions by
department, individual departmental sections of this document may not address the detail of the
State operations reductions.
29
Attachment A
2002-03 GF State Operations Reductions
(Dollars in Thousands)
Page 1 of 4 December 2002
2002-03 Reductions
Personnel
Department
Years
Dollars
Judiciary
--
-$10,000
Secretary of Health & Human Services
--
-831
Secretary of Resources
--
-65
Secretary of Youth & Adult Corrections
--
-7
Inspector General
-7.2
-695
Inspector General Veteran's Affairs
--
-25
Secretary for Environmental Protection
--
-88
Secretary of Education
-0.3
-61
Secretary of Labor & Workforce Development
--
-244
Office of Planning & Research
--
-4,820
Office of Emergency Services
-39.9
-1,591
Controller
--
-72
Board of Equalization
--
-51
Treasurer
--
-171
Scholarshare
--
-171
Science Center
-1.9
-114
Consumer Affairs
--
-565
Athletic Commission
--
-1
Fair Employment & Housing
-11.0
-912
Franchise Tax Board
--
-9,122
General Services
--
-5,257
Personnel Board
--
-411
Housing & Community Development
-2.0
-288
Technology, Trade & Commerce
--
-354
Conservation Corps
--
-1,669
Energy Commission
--
-1,679
Colorado River Board
--
-23
Page 1 of 4 December 2002
Attachment A
2002-03 GF State Operations Reductions
(Dollars in Thousands)
Page 2 of 4 December 2002
2002-03 Reductions
Personnel
Department
Years
Dollars
Conservation
--
-497
Forestry & Fire Protection
-6.0
-5,398
State Lands Commission
--
-1,726
Fish & Game
-36.2
-2,587
Wildlife Conservation Board
--
-86
Parks & Recreation
--
-4,510
SF Bay Conservation & Development Commission
-0.9
-411
Water Resources
--
-16,152
Air Resources
--
-2,006
Waste Management
--
-70
Pesticide Regulation
-1.8
-561
Water Resources Control Board
-4.8
-2,787
Toxic Substances Control
--
4,067
Office of Environmental Health Hazard Assessment
-2.2
-292
Emergency Medical Services
--
-77
Office of Statewide Health Planning & Development
--
-36
Aging
-2.4
-466
Alcohol & Drug Programs
--
-403
Child Development
--
-18
Health Services
-1.8
-17,224
Managed Risk Medical Insurance Board
--
-66
Developmental Services
-85.0
-1,436
Mental Health
-1.9
-1,233
Community Services
--
-14
Rehabilitation
--
-3,652
Child Support
--
-856
Social Services
-15.9
-1,065
Page 2 of 4 December 2002
Attachment A
2002-03 GF State Operations Reductions
(Dollars in Thousands)
Page 3 of 4 December 2002
2002-03 Reductions
Personnel
Department
Years
Dollars
Corrections
3.1
-9,080
Board of Corrections
-0.5
-44
Prison Terms
-1.9
-753
Youth Offender Parole Board
-0.9
-39
Youth Authority
-8.4
-3,784
Correctional Peace Officers Standards & Training
--
-140
Education
-14.7
-2,376
CA State Library
--
-1,059
Summer School for the Arts
-0.8
-30
Teacher Credentialing
--
-51
Postsecondary Education
--
-108
University of California
--
-74,268
Hastings
--
-1,000
California State University
--
-59,634
Community Colleges
-1.0
-396
Agricultural Labor Relations
--
-12
Industrial Relations
--
-29,833
Student Aid
--
-682
Office of Criminal Justice Planning
-1.0
-229
Public Defender
-1.5
-182
Arts Council
--
-109
Public Employment Relations Board
--
-240
Personnel Administration
--
-11,602
Worker's Comp Subsequent Injuries
--
-1,000
Food & Agriculture
-7.4
-1,095
Fair Political Practices
-1.0
-60
State Mandates
--
-98
Page 3 of 4 December 2002
Attachment A
2002-03 GF State Operations Reductions
(Dollars in Thousands)
Grand Total
-257.7 -$320,757
Page 4 of 4 December 2002
2002-03 Reductions
Personnel
Department
Years Dollars
Administrative Law
-- -2
Veteran's Affairs
-0.5 -258
Veteran's Home Yountville
-- -203
Veteran's Home Chula Vista
-- -157
Health Insurance Portability
-- -250
Debt Service
-- -15,000
Grand Total
-257.7 -$320,757
Page 4 of 4 December 2002