Prisons vs. Universities Proposal Would Unwisely Lock Up Budget Flexibility

POLICY BRIEF Prisons vs. Universities Proposal Would Unwisely Lock Up Budget Flexibility MAC TAylor • l e g i s l A T i v e A n A l y s T • JAnuAry 26, 2010 In his January budget, the Governor pro‑ 10 percent to public universities. We urge the posed a state constitutional amendment Legislature to reject this proposal because it that would require reductions in spending (1) would unwisely constrain the state’s ability to on state corrections, with corresponding increas‑ allocate funding where it is most needed each es in spending for public universities. Begin‑ year; and (2) is unnecessary, as the state already ning in 2014‑15, the state would be required to has the ability to shift funding among programs dedicate no more than 7 percent of state General without this constitutional amendment. Fund spending to corrections and no less than Background: ShareS of State funding have Shifted over time Share Going to Corrections Fund spending in CDCR by this amount on a Has More Than Doubled one‑time basis.) The CDCR’s share of the General Fund has increased from 4 percent over the past The state correctional system is administered 25 years, as shown in Figure 1 (see next page). by the California Department of Corrections and Rehabilitation (CDCR). (In 2005, CDCR Share Going to Universities subsumed several predecessor agencies, includ‑ Has Declined ing the Department of Corrections, the Califor‑ The state maintains two public university sys‑ nia Youth Authority, the Board of Corrections, tems—the University of California (UC) and the and the Board of Prison Terms.) The Governor’s California State University (CSU). For 2009‑10, revised 2009‑10 budget provides CDCR with UC and CSU together receive $4.9 billion in $8.1 billion in General Fund support, which rep‑ General Fund support, or about 5.7 percent resents about 9.5 percent of total General Fund of total General Fund expenditures. As shown spending. (This amount reflects various offsets of in Figure 1, the share of the state budget going almost $1 billion, which lowered state General An lAo reporT to the universities has Figure 1 declined from about Percentage of State General Fund Spent on 11 percent in 1984‑85. Corrections and Public Universities In addition to General (2010-11 shares are proposed.) Fund support, UC and 12% CSU receive about $2.5 billion annually in 10 student fee revenue that also supports their gen‑ eral costs. (In addition, 8 the state provides about $3.7 billion in annual 6 General Fund support to Public Universities the California Commu‑ 4 Corrections nity Colleges.) 2 Different Factors At Play The shifts in the 84-85 89-90 94-95 99-00 04-05 09-10 shares of General Fund ing university students has declined as the uni‑ support going to the versities have enacted student fee increases that state’s correctional system and its universities shift a portion of costs onto students. In addition, are due to very different factors. For example, an increasing amount of state funding that is over the past two decades, prison costs have used to pay education expenses on behalf of UC increased largely as a result of increases in the and CSU students is appropriated to the state’s inmate and parolee populations, federal court Cal Grant program, and thus is not counted as a orders to improve inmate health care, and nego‑ direct appropriation to the universities. tiated increases in compensation for correctional employees. Meanwhile, the state cost of educat‑ ProPoSal Would lock in ShareS of State SPending The Governor’s proposed constitutional reverse the current shares dedicated to cor‑ amendment would require that, beginning in rections and universities.) These minimum and 2014‑15, no more than 7 percent of state General maximum shares would be in place indefinitely. Fund support be spent on CDCR (or any suc‑ For any single year, they could be suspended cessor state agency) and no less than 10 percent by a two‑thirds vote of the Legislature or a fiscal be spent on UC and CSU. (This would roughly emergency declaration by the Governor. 2 Legislative Analyst’s Office www.lao.ca.gov An lAo reporT The constitutional amendment would ex‑ address in this brief, which is focused instead on clude from the calculation of General Fund the provisions related to state spending.) expenditures (1) bond payments, (2) spending on Beginning in 2011‑12, the amendment would correctional rehabilitation programs, and (3) the require that any savings that are achieved in cor‑ costs of operating new prison facilities authorized rections spending be used to augment spending under Chapter 7, Statutes of 2007 (AB 900, Solo‑ on UC and CSU. If such savings were insufficient rio). The amendment would also prohibit the state to raise UC and CSU to their 10 percent share from releasing inmates from prison early in order by 2014‑15, the Legislature would be required to to achieve the reductions in corrections spending “apply other available resources” to achieve that required by the measure. However, it would pro‑ goal. (“Other resources” include existing General vide new flexibility to CDCR to privatize prison Fund support going to other state departments services in order to achieve savings. (Prison priva‑ and/or new tax revenues.) tization is an import policy issue that we do not recommend rejection of ProPoSal We share the Governor’s desire to find ways cation spending. Consequently, by setting up a to reduce costs in the state’s correctional system. “silo” for UC and CSU, the measure would make In fact, we have recommended a wide range of it more difficult for the state to effectively allocate actions to increase efficiencies in all sector of gov‑ funding even within the area of higher education. ernment, including corrections and higher educa‑ Inappropriately Pits Two Program tion. However, we recommend rejection of this Areas Against Each Other proposal for a variety of reasons discussed below. The state needs to support its university Fails to Capture Higher Education system and its prison system. Both provide valu‑ Funding able services to Californians. The administration’s The proposal’s spending requirements for UC proposal implicitly suggests there is a linkage of and CSU relate only to General Fund support. crucial budgetary significance between these This simplistic measure, however, in no way cap‑ two specific program areas. This is not, however, tures the state’s commitment to higher education what budgeting is about. Each year, the Legisla‑ spending. As noted above, the proposal would ture must make decisions among all programs, not factor in a key source of financing for the choosing as best as possible where the commit‑ universities’ basic instructional program— ment of resources would be most beneficial. student fee revenues. (In fact, the decline in their Constrains Effective Resource Allocation overall share of General Fund spending shown in Figure 1 has been largely offset by increases Requires Arbitrary Share of State Fund- in student fee revenues.) Furthermore, the pro‑ ing for Universities. The proposed amendment posal excludes spending in California Community would require a significant increase in state Colleges—a key component of state higher edu‑ spending on its universities without any require‑ www.lao.ca.gov Legislative Analyst’s Office 3 An lAo reporT ment that this funding be used to expand access Amending Constitution Not Necessary to higher education, improve education out‑ Even if it were desirable to shift funding comes, increase affordability, or to provide any between corrections and public universities, this public benefit at all. The measure would require can already be done without amending the state billions of dollars in additional spending on UC Constitution. In developing the state budget each and CSU without a clearly indentified goal. year, the Governor and Legislature identify avail‑ Arbitrarily Caps Share of Funding for Cor- able resources (not just from the General Fund, rections. At the same time, this proposal would but various other funding sources as well) and al‑ arbitrarily cap the share of state funding that locate these funds toward the highest priorities. If could be dedicated to corrections. The 7 percent they wished, the Legislature and Governor could spending cap would be in place each year (un‑ decide to dedicate less General Fund support to less suspended), irrespective of the cost pressures corrections. They could also choose to increase experienced by corrections. For example, one funding for higher education. The Governor’s key cost pressure in corrections is the number of proposed 2010‑11 budget illustrates this point. inmates—which in part is driven by the number He has made higher education a funding priority, and length of sentences handed down by the proposing General Fund augmentations to UC courts, which in turn depend in part upon state and CSU, while other areas of the budget—in‑ sentencing laws and prosecutorial behavior. In cluding corrections—would take significant cuts. some years, it could be extremely difficult for the We recognize that some potential approach‑ state to keep its spending on corrections under es for reducing costs in corrections might require the prescribed limit without significant—perhaps changes to state statute, collective bargaining radical—changes to the criminal justice system. agreements, the Constitution, or other policies. Potential Impact Beyond Corrections and This is not unusual; many of the General Fund Higher Education. The proposed amendment solutions considered by the Legislature in recent could affect budget areas beyond corrections years have required trailer bills or other vehicles and higher education. Locking up a tenth of the in order to be implemented. But a constitutional state budget on UC and CSU, in combination provision imposing certain floors and ceilings on with similar funding guarantees already in place, spending in different sectors would simply limit would constrain spending choices for over half of budget options, rather than permit new ones. the state budget. This could make it more dif‑ ficult for the Legislature to shift funding to cover R ecommend R ejection of P RoPosal new cost demands in other areas that may be a For the above reasons, we recommend the legislative priority, such as social services, health Legislature reject this proposal. It is an unneces‑ care, the judiciary, or infrastructure. sary, ill‑conceived measure that would do serious harm to the budget process. LAO Publications This report was prepared by steve Boilard, with assistance from Anthony simbol. The legislative Analyst’s office (lAo) is a nonpartisan office which provides fiscal and policy information and advice to the legislature. To request publications call (916) 445-4656. This report and others, as well as an e-mail subscription service, are available on the lAo’s internet site at www.lao.ca.gov. The lAo is located at 925 l street, suite 1000, sacramento, CA 95814. 4 Legislative Analyst’s Office www.lao.ca.gov