LAO
A Ten-Year Perspective: California Infrastructure Spending
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A Ten-Year Perspective:
California
Infrastructure Spending
M A C T A y l o r • le g i s lA Ti v e A nAl y sT • A u g u s T 2 0 11
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ConTenTS
Introduction ..............................................................................................................5
Transportation ........................................................................................................15
K-12 Schools ............................................................................................................20
Resources ................................................................................................................25
Higher education ....................................................................................................30
Criminal Justice .......................................................................................................35
Conclusion ...............................................................................................................40
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InTRoduCTIon
One of the basic functions of government is or improved to meet current and future needs.
to provide the public infrastructure—land, streets Additionally, California will continue to need new
and highways, buildings, and utility systems—that infrastructure to accommodate population growth.
is integral to delivering public services, fostering This, in turn, will require additional resources for
economic growth, and enhancing the quality of life. operations and maintenance. Over the last decade,
The state and local govern-
ments in California have
Figure 1
developed an immense
Major State Infrastructure
inventory of public
Transportation
infrastructure. As shown
• 50,000 lane miles of highways and 12,000 bridges
in Figure 1, the state’s
• 9 toll bridges
infrastructure includes • 11 million square feet of Department of Transportation offices and shops
a diverse array of capital • 170 Department of Motor Vehicles offices
• 102 California Highway Patrol offices
facilities associated with
such programs as water Higher Education
resources, transportation, • 10 University of California campuses
• 23 California State University campuses
higher education, natural
Water Resources
resources, criminal
• 34 reservoirs
justice, health services,
• 25 dams
and general government
• 20 pumping plants
services. In addition to • 4 pumping-generating plants
the state government • 5 hydroelectric power plants
• 701 miles of canals and pipelines—State Water Project
infrastructure invest-
• 1,595 miles of levees and 55 flood control structures in the Central Valley
ments shown in Figure 1,
Natural Resources
the state historically has
• 278 park units containing 1.3 million acres, 4,000 miles of trails, and
provided some funding for
3,000 historic buildings
local public infrastructure: • 226 forest fire stations, 39 conservation camps, and 13 air attack bases
• 16 agricultural inspection stations
K-12 schools, community
colleges, local streets and Criminal Justice
roads, local parks, waste- • 33 prisons and 44 correctional conservation camps
• 5 youthful offender institutions
water treatment, drinking
• 19 million square feet of judicial branch facility space
water, flood control, and
• 11 crime laboratories
jails.
Health Services
Infrastructure
• 5 mental health hospitals
finance is an increasingly • 4 developmental centers
important issue. Much of • 2 public health laboratory facilities
the state’s infrastructure General State Office Space
is aging and needs to • 224 state-owned office structures
be renovated, adapted, • 2,370 leases for state office space
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the state took significant steps toward confronting (3) achievements and challenges in planning,
this dual challenge of renovating and expanding funding, and implementing capital outlay projects;
infrastructure, most notably through the autho- and (4) considerations for planning and funding
rization by voters of approximately $92 billion in future infrastructure. This first chapter provides
infrastructure-related general obligation bonds an overview of the state’s infrastructure spending
as well as the authorization of several large lease- as well as the state’s infrastructure planning and
revenue bond programs. financing process. Subsequent chapters discuss
In this report, we summarize the state’s specific issues within the state’s major capital outlay
infrastructure spending in order to provide a programs. In the final chapter, we summarize the
better understanding of how the state invests in major issues the Legislature will need to confront to
infrastructure. (See the nearby box for a brief effectively address statewide infrastructure issues.
description of how we defined and calculated
Major drivers of Infrastructure Spending
infrastructure spending.) Specifically, the report
reviews the last decade to identify (1) the types The state spent $102 billion from state funds on
of infrastructure in which the state has invested; infrastructure from 2000-01 through 2009-10. This
(2) how the state financed these investments; spending was largely driven by the following factors:
What Is Infrastructure Spending?
In this report, we define infrastructure spending as state spending for acquiring, planning,
designing, or constructing major physical assets. This includes spending for the major renovation
or rehabilitation of an existing asset. Other costs associated with the state’s infrastructure—such
as facility leases, utilities, or routine annual maintenance—are not included. We exclude most of
these other costs because they are operating expenses rather than investments in the state’s infra-
structure. One exception, however, is the state’s lease costs. Ideally, lease costs should be included
in our infrastructure spending totals because leasing private space is a substitute for building
and maintaining state-owned space. We did not include lease costs because the state’s method for
budgeting rental payments makes it difficult to determine annual spending levels by program. As a
result, our spending totals understate the state’s total infrastructure spending by about $400 million
to $500 million annually. (The Department of General Services estimates that the state’s rent for
leased space in 2010-11 was approximately $470 million.)
Even with the exclusion of lease costs, identifying the level of spending on infrastructure is
not straightforward. State spending is typically classified as either state operations, local assis-
tance, or capital outlay. While spending categorized in the budget as capital outlay is clearly for
infrastructure, portions of state operations and local assistance budgets also fund the planning
and construction of infrastructure. Many state departments, for example, use part of their state
operations budgets to plan and oversee infrastructure projects. Similarly, many local agencies spend
part of their state local assistance funds building infrastructure. Whenever possible, we identified
the amount of infrastructure spending in each program, but in some cases we had to estimate the
percentage of operating budgets or local assistance used for infrastructure purposes.
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• Maintaining Existing Infrastructure. regulations, the Americans with Disabilities
Investment is needed to preserve and Act, and improvements to prison healthcare
rehabilitate existing infrastructure as it facilities under the control of the federal
ages. Much of the state’s infrastructure was court-appointed Receiver.
built more than 30 years ago and requires
• Fulfilling New Priorities and Voter
minor renovations or major upgrades to
Initiatives. In addition to the state’s
operate efficiently and safely.
traditional infrastructure programs, the
• Building New Infrastructure to state has taken on new infrastructure
Accommodate Growth Demands. The responsibilities within the last decade.
state’s population grew at a rate of about Some examples include the acquisition
400,000 persons annually over the last of additional land for local parks and the
decade. Population growth increases authorizations of general obligation bonds
demand for infrastructure, such as schools to support children’s hospitals and high-
to accommodate higher student enroll- speed rail.
ments, additional roadways and trans-
portation facilities to facilitate mobility, Infrastructure Financing
and water supply and water quality infra-
The state’s infrastructure spending relies on
structure to accommodate increased water
various financing approaches and funding sources.
demands.
For example, fuel tax revenues fund a portion of
transportation infrastructure, water fees collected
• Responding to Legal Requirements.
from water users fund certain water projects, and
Investment is also needed to improve
the General Fund pays for other infrastructure.
existing infrastructure to meet federal
Some infrastructure has been funded through
and state legal requirements put in place
direct—or pay-as-you-go—spending from the
after the infrastructure was constructed.
General Fund and special funds. As shown in
These requirements include environmental
Figure 2, however, the majority of state infra-
structure spending
Figure 2
has been financed by
How Does the State Pay for Infrastructure?
borrowing through the
2000-01 Through 2009-10 (Dollars in Billions) use of long-term bonds.
We discuss each of the
Pay-As-You-Go major financing mecha-
General Fund $1.9 2% nisms below.
Special fund 33.8 33
Pay-As-You-Go.
Subtotals ($35.7) (35%)
Borrowing Under the pay-as-you-
General obligation bonds $59.1 58% go approach, the state
Lease-revenue bonds 5.5 5
funds infrastructure
Traditional revenue bondsa 2.0 2
up front through the
Subtotals ($66.6) (65%)
Totals $102.3 100% direct appropriation of
a
Higher education revenue bonds excluded. taxes and fees. Over the
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last decade, direct appropriations from General obligation bonds. As a result, they typically have
Fund sources represented a small portion of the somewhat higher interest and issuance costs than
state’s infrastructure spending (2 percent). In general obligation bonds.
contrast, pay-as-you-go spending from special Traditional Revenue Bonds. The state also
funds—primarily transportation revenues—made utilizes revenue bonds to finance infrastructure
up a significant share of the state’s infrastructure projects. Rather than being supported by the
spending (33 percent). General Fund, these bonds are paid off from a
General Fund-Supported Bonds. The state designated revenue stream—usually generated by
traditionally has sold two types of bonds that are the projects they finance—such as bridge tolls or
typically paid off from the state’s General Fund: water contract payments. These bonds usually do
general obligation bonds and lease-revenue bonds. not require voter approval. The State Water Project
The process for authorizing, appropriating, issuing, and university systems issue most of the state’s
and repaying bonds is summarized in Figure 3. revenue bonds.
The Legislature has a significant role in the earlier
Infrastructure Planning and decision Making
stages of the process, while the later stages of
the process are mainly under the control of the Planning, prioritizing, and developing the
administration. state’s infrastructure is a long-term, multistage
General obligation bonds accounted for almost process. As described below, the administration,
three-fifths of the state’s total infrastructure Legislature, and voters each play distinct roles in
spending over the last decade. Passing a general this process.
obligation bond and placing it before the voters Administration Leads Planning Process.
requires a two-thirds vote in the Legislature. The administration is responsible for identifying
Alternatively, proponents can gather signatures statewide infrastructure needs and developing
through the state’s initiative process to place a proposals for their funding. Specifically,
general obligation bond before voters. In either Chapter 606, Statutes of 1999 (AB 1473, Hertzberg),
case, general obligation bonds must be approved by directs the Governor to annually submit a statewide
a majority of voters in order to take effect. The debt five-year infrastructure plan and a proposal for
service on most general obligation bonds is directly its funding. The statewide plan is a consolidation
paid for by the General Fund, although some bonds of individual five-year plans developed by state
are paid off from designated revenue streams. agencies. Departments are expected to evaluate
Lease-revenue bonds, which accounted their infrastructure needs for the next five years
for 5 percent of the state’s total infrastructure and compare that with existing infrastructure
spending, are the second type of bond. These bonds to determine their net infrastructure need. The
do not require voter approval and instead can Department of Finance (DOF) then consolidates
be authorized by the Legislature. During the last the departments’ plans to provide a coordinated
decade, the state spent $5.5 billion in lease-revenue picture of the state’s capital investment needs.
bond proceeds. Lease-revenue bonds are paid off The administration has not provided a statewide
from payments (primarily financed by the General five-year infrastructure plan since the Governor’s
Fund) by the state agencies using the facilities they 2008-09 budget proposal.
finance, but their payment is not guaranteed by Legislature Makes Infrastructure Investment
the General Fund to the same extent as general Decisions. After the administration makes its
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Figure 3
The Bond Spending Process
Legislature Administration Voters
Approves General Obligation Place Bond Act on
Bond Act Ballot by Initiative
Governor Signs
General Obligation Approve Bond Act
Bond Act
Approves Lease-Revenue Governor Signs
Bond Act Lease-Revenue
Bond Act
Appropriates Funds in Continuously Appropriated
Annual Budget Act Funds Allocated to
Programs as Specified in
Bond Act
Requests Treasurer to Sell
Bonds Necessary to Carry Out
Appropriations
Department Spends
Proceeds of Bonds
General Fund Pays
Debt Service for
25 to 30 Years
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infrastructure proposals, the Legislature is respon- budget act. As such, the budget act allows the
sible for prioritizing infrastructure investments Legislature to control when funds are spent and to
and authorizing funding in legislation and the maintain oversight over infrastructure spending.
annual budget act. The Legislature makes most The Governor begins the process by including
infrastructure investment decisions by authorizing infrastructure proposals in his proposed budget
bond acts. As described above, the Legislature can that should correspond to departments’ five-year
authorize general obligation bonds to go before the plans. In some cases, the budget act appropriates
voters or directly authorize lease-revenue bonds or funding for individual projects while in others the
special funds for infrastructure purposes. Through Legislature appropriates lump sum amounts for
the process of passing bond acts, the Legislature state agencies or commissions to disburse based
has significant control over the amount and type on established criteria. Spending for a limited
of infrastructure the state funds. The statewide number of infrastructure programs is continuously
five-year infrastructure plan is meant to assist appropriated, meaning that a legislative appro-
the Legislature in making these infrastructure priation is not required before designated revenues
decisions. For example, the 2006 five-year infra- or bond proceeds can be spent. In most cases, the
structure plan (combined with the Governor’s Legislature has little or no control over continu-
self-initiated Strategic Growth Plan) provided the ously appropriated funds.
Governor’s vision for the 2006 bond package. Some Administration Supervises Infrastructure
elements from the plan were not included in the Development and Sale of Bonds. After the
final bond package and the Legislature added some Legislature appropriates infrastructure funds, the
new programs, such as housing. administration is responsible for carrying out the
In addition to authorizing bond acts for projects or distributing the funds to local govern-
a general type of infrastructure (for example, ments. The DOF estimates departments’ cash
K-12 facilities, prisons, or water resources), needs for carrying out authorized projects and—in
the Legislature typically also further allocates conjunction with the Treasurer—determines the
funding to specific purposes within a bond act. necessary amount of bonds to sell. Determining
For example, the most recent K-12 school bonds the size of bond sales and the distribution of bond
dedicated specific amounts to new schools, existing funds to departments provides the administration
schools, overcrowded schools, charter schools, some control over the pace of bond expenditures
career technical facilities, and high-performance and projects. Once funds are provided, depart-
or “green” schools. In total, the $42.7 billion 2006 ments carry out the infrastructure spending with
bond package included 67 pots of money spread varying levels of oversight—including direct
across the five bond acts. reports to the Legislature and DOF, periodic audits,
Annual Budget Further Directs Infrastructure and supplying information to the state’s account-
Spending. After bonds are authorized, most bond ability website.
programs still require future legislative action Voters Also Have a Role in Infrastructure
to appropriate funding in the annual budget act Funding. In addition to considering general
before state departments can begin spending or obligation bonds placed on the ballot by the
distributing the funds. Additionally, the Legislature Legislature, voters can authorize general obligation
can direct General Fund and special funds to bonds without the Legislature’s involvement
infrastructure through appropriations in the through the initiative process. Initiative bond
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measures, however, are a relatively small part of Assistance. Almost three-fifths of the state’s total
the state’s bond spending. Since 2000, voters have infrastructure spending over the last decade was
enacted $14 billion in initiative bond measures, distributed to and administered by local agencies.
compared with $82 billion in legislative general For example, nearly all of the state government’s
obligation bond measures. Recent bonds authorized spending supporting infrastructure for K-12
through the initiative process include $980 million schools and community colleges is local assistance.
for children’s hospitals (Proposition 3, 2008), Approximately 43 percent of the state’s transpor-
$5.4 billion for environmental protection and tation infrastructure resources are used by local
natural resources (Proposition 84, 2006), and agencies for local streets or transit, and 43 percent
$3 billion for stem cell research (Proposition 71, of state infrastructure spending for resources and
2004). environmental protection programs is distributed
as grants to local agencies. In some cases, state
Infrastructure Spending by Program
support is contingent upon matching funds from
Most Infrastructure Spending Is for local sources, while other grants have no matching
Transportation and Education. As shown in requirements.
Figure 4, transportation projects make up the Additional Infrastructure Spending Planned.
largest amount of state infrastructure spending. Current bond authorizations would result in
Education facilities (K-12 and higher education) increased expenditures for some programs over the
also received a significant share of the state’s next few years. For example, the Legislature has
infrastructure resources. While spending fluctuates authorized substantial spending from lease-revenue
from year to year depending upon the availability bonds to support infrastructure for state prisons
of funding and the
Figure 4
timing of project
Most State Infrastructure Is for
expenditures, spending
Transportation and Education
for transportation,
resources and environ- Infrastructure Spending, 2000-01 Through 2009-10
mental protection,
and criminal justice Criminal Justice
Othera
trended upwards
Resources
over the decade. As
discussed in later Transportation
chapters, much of the
Higher Education
increased spending in
these programs came
from the large bond
measures approved
since 2006.
K-12 Education
More Than Half
of Infrastructure a “Other” spending includes mental health hospitals; developmental centers; California Highway Patrol and
Department of Motor Vehicles offices; veterans homes; general state office space; and state bond
Spending Is Local programs in support of local housing development, children’s hospitals, and infrastructure for stem cell
research.
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and trial court facilities, and voters have authorized on these bonds will be about $5.5 billion in 2011-12
$10 billion for the development of a high-speed rail based upon anticipated bond sales. As shown in
system. To date, these programs have used only Figure 5, General Fund debt-service costs have
small amounts of this bond authority, but many almost doubled since 2000-01. As a result, the
projects are expected in the next five years. The growth of the state’s General Fund debt-service
Legislature also has authorized placing a general costs has outpaced spending growth in most other
obligation bond measure totaling $11 billion major state programs during the last decade. If
before voters in 2012 to support the state’s water viewed as a program, infrastructure debt service
infrastructure. Other programs—such as higher is one of the most rapidly growing costs of state
education—have essentially exhausted authorized government. This is partly the result of the state’s
bond funds and would require additional autho- increased use of bonds over the last decade as well as
rizations from the Legislature or voters to pursue the slowing of expenditures in most other programs
more projects. since 2007-08 due to the state’s fiscal shortfall.
Infrastructure Investments Often Lead to
Budgetary effects of Infrastructure Spending
Higher Operating Costs. Investments in new
Debt-Service Costs Have Increased infrastructure typically result in ongoing increased
Substantially. The major budgetary effect of the operating costs for staffing, utilities, and mainte-
state’s infrastructure investments is the debt-service nance of new facilities. For example, additional
costs for principal and interest payments on the prison facilities require more prison guards, and
state’s two types of General Fund bonds. We the acquisition of park land requires additional
estimate that General Fund costs for debt service park employees to supervise the land and possibly
future infrastructure
investments to develop
Figure 5
the parks for the
General Fund Debt Service Nearly Doubled
Over Last Decade public. On the other
hand, some infra-
(In Billions)
structure investments
$6
(such as renovations
or replacements) can
5
improve operational
Lease-Revenue Bonds efficiency—for
4
example, lowering
energy costs or
3
enhancing program
delivery.
2
General Obligation Bonds Debt Service
Expected to Increase.
1
In addition to the
state’s debt-service
costs for bonds it has
2000-01 2002-03 2004-05 2006-07 2008-09 2010-11
already issued, voters
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or the Legislature have authorized an additional the majority sold in the next few years. To
$46 billion of infrastructure bonds that have not yet the extent the Legislature limited bond
been sold. As these bonds are sold over the next few appropriations or the administration
years, the state’s debt-service costs will increase. delayed bond sales, the DSR would not
One indicator of the state’s debt-service burden is increase as much as forecast. For example,
the debt-service ratio (DSR)—that is, the ratio of if no additional bonds were sold, then the
annual General Fund debt-service costs to annual DSR would start to decline.
General Fund revenues and transfers. As shown
• Additional Bonds Could Be Authorized.
in Figure 6, California’s DSR has historically been
Our forecast assumes that no additional
at or below 4 percent. The sharp, recent fall-off in
bonds are authorized. To the extent
General Fund revenues due to the recession as well
additional bonds are approved and sold
as the sale of the large bond measures approved
in future years—such as the water bond
in the last decade have pushed the DSR to about
proposed for the 2012 ballot—the state’s
6 percent. In Figure 6, we forecast the DSR will
debt-service costs would be higher than
peak at slightly above 7 percent. The actual DSR in
projected in Figure 6.
the coming years, however, would be affected by a
variety of factors:
• Policy Changes Could Increase General
• Pace of Sale of Authorized Bonds Could Fund Costs. In recent years, the Legislature
Vary. Our forecast assumes that the has diverted transportation special funds
remaining $46 billion in authorized bond to cover debt service on transportation
funds are sold over the next decade, with general obligation bonds that would
otherwise be covered with
Figure 6 General Fund revenues.
State’s Annual Debt-Service Ratio Changes to this policy
or others could affect the
Ratio of Annual Debt-Service Payments to General Fund
Revenues and Transfers DSR.
8%
• General Fund
7 Revenues Could Grow at
Authorized, but Unsold
a Different Pace. General
6
Fund revenues are a key
5 component in deter-
mining the DSR. If, for
4
instance, General Fund
3 revenues are less than
forecast, then debt service
2
as a percentage of General
Previously Sold
1 Fund revenues would be
greater.
1980 1985 1990 1995 2000 2005 2010 2015 2020
Estimated
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• The State’s Borrowing Costs Could social services, or tax relief. The trade-offs have
Change. The interest rate on the state’s become more acute due to the state’s ongoing
bonds is a function of the supply and budget shortfalls.
demand for government bonds and the In addition to these General Fund impacts,
state’s credit rating. Interest rates on debt-service costs also limit revenues available for
government securities are at historically special fund programs. For example, the state’s trial
low levels, but the state’s low credit rating courts have increased fees in recent years in order
prevents California’s bonds from receiving to raise revenue for debt service on new courthouse
the lowest rates. (See nearby box for further construction and the state uses vehicle weight fees
discussion of the state’s credit rating.) to cover transportation debt service. Using these
Changes in the bond market or the state’s revenues for infrastructure debt service means that
credit rating could affect the interest costs they are not available for other program purposes.
on the state’s future bond sales.
Cross-Cutting Infrastructure Issues
Debt Service Involves Budgetary Trade-Offs.
In the following chapters, we provide a look
There is no one “right” level for the DSR. It simply
at major components of the state’s infrastructure
provides an indication of the relative priority of
program: transportation, K-12, natural resources,
debt service and infrastructure compared to other
higher education, and criminal justice. Each chapter
spending from the General Fund—a higher DSR
focuses on some issues that are unique to that
would appear to indicate an increased preference
program, but also highlights issues that cut across all
for infrastructure spending relative to other
state infrastructure programs. We discuss some of
programs. This is because the higher the DSR is
these cross-cutting infrastructure issues below.
and more rapidly it rises, the more debt-service
Infrastructure Data Are Limited. The state
expenses limit the use of revenues for other
does not have a comprehensive inventory of its
programs. That is, for any given level of state
infrastructure. The level of available data varies
revenues, each new dollar of debt service comes at
significantly by program, but typically does not
the expense of a dollar that could be allocated to
provide adequate information to evaluate facility
another program area, whether education, health,
What Is California’s Credit Rating?
California’s credit ratings for general obligation bonds currently are scored as A-, A1, and A-,
respectively, by the nation’s three major rating agencies—Standard & Poor’s, Moody’s Investors
Service, and Fitch Ratings. There are ten investment-grade ratings, spanning from AAA (highest) to
BBB (lowest). California’s ratings are currently the lowest of all states. These low ratings are princi-
pally related to the state’s ongoing structural deficit rather than the amount of debt outstanding. It
would appear the main adverse effect of the low ratings has been the additional interest premium
the state has had to pay on its new bond issues compared with what AAA-rated states pay. For
example, according to the California State Treasurer’s estimate in the 2010 Debt Affordability Report,
the state’s 30-year tax-exempt bonds sold at interest rates that were between 0.87 and 1.72 percentage
points more than the AAA average in 2009 and 2010.
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conditions, calculate capacity, and analyze infra- governments and the private sector. As noted above,
structure spending. The lack of data makes priori- a majority of the state’s infrastructure spending
tizing spending and measuring outcomes difficult. supports local government infrastructure. The K-12
Funding for Many Infrastructure Programs schools and local transportation programs receive
Lacks Stability. As mentioned above, the state has the most state infrastructure funding, but state
increasingly relied on general obligation bonds to funds also support local projects for water quality,
fund infrastructure projects. This funding approach parks, and jails. Recent bond acts also have made
usually does not provide a stable funding source for funds available for projects that typically are funded
state infrastructure projects. Instead of being funded with private resources such as certain water projects,
on a relatively steady basis, infrastructure programs housing developments, and hospitals. Under certain
must wait to see if a bond authorization is placed on circumstances, it may be appropriate for the state
the ballot and voters approve the measure. This has to provide funding assistance to local governments
led to a “boom-bust” experience. and the private sector. In other cases, local govern-
Policy Changes Could Reduce Demand for ments or the private sector could be responsible for a
Infrastructure. The new infrastructure proposed in greater share of the cost of infrastructure. In order to
most state plans generally assumes that programs adequately address the state’s infrastructure respon-
and services are provided in the same manner as sibilities within its limited resources, the Legislature
they are today. As we highlight throughout this may need to reconsider the division of financial
report, spending requirements for new infra- responsibilities between state and local government
structure can be reduced through various policy and the public and private sectors.
changes that decrease demand for state-funded Rehabilitation and Maintenance of Existing
infrastructure. Such demand management policies Infrastructure Is Inadequate. Despite investments
include better utilization of existing facilities and over the last decade, the state faces a growing
higher user fees. Altering or reducing the scope of backlog of deferred maintenance and aging infra-
state services also could reduce the need for new structure due to several factors. Much of the infra-
infrastructure investments. structure in California was built decades ago and is
Assignment of Funding Responsibilities Could approaching the end of its useful life. The need for
Be Re-Examined. A basic consideration for the state renovation has been exacerbated because of insuffi-
is which specific infrastructure programs should cient spending for routine maintenance and repair of
be financed with state resources. Currently, the facilities. Lastly, policy and spending decisions have
state pays for state-owned infrastructure, but also tended to favor investments in new infrastructure
provides substantial infrastructure funding to local rather than rehabilitation of existing systems.
TRAnSPoRTATIon
The state’s transportation system—primarily responsibility, while streets, roads, and transit
highways, streets and roads, and transit opera- systems are primarily controlled and maintained
tions—helps to move people and goods around and by local entities. Historically, each of the systems
through the state. Development and maintenance have been funded from various federal, state, and
of the highway system is primarily the state’s local sources.
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Funding Trends and vehicle weight fees—support transportation
infrastructure. As shown in Figure 7, the infra-
The state spends more on transportation than
structure spending supported from these special
it does on other types of infrastructure. Funding
fund revenue sources is at about the same level in
for transportation infrastructure, however, has
2009-10 as it had been ten years before. In 2007-08,
changed over the past decade.
the state began using special funds to help out
$81 Billion Spent in Last Decade. State
the General Fund resulting in a decrease in infra-
spending on transportation infrastructure totaled
structure spending from this source. In addition,
about $81 billion during the past ten years. As
over the past decade, special fund spending for
shown in Figure 7, approximately half of these
programs that we have not categorized as infra-
funds came from state sources, including about
structure have increased.
$33 billion from special funds (such as the excise
Increased Spending Provided Through Bonds.
tax on fuels) and $8 billion from bond funds. The
In recent years, a growing proportion of transpor-
remainder came from non-state sources, including
tation funding has come from general obligation
$30 billion from federal funds. While the amount
bonds passed by the voters. Funding from bonds
of funding has fluctuated from year to year, it has
has increased from an average of 3 percent of
generally increased over time. Total funding has
total transportation spending at the beginning
averaged about $10 billion annually over the last
of the decade to an average of 21 percent in the
three years.
last three years. This increase is due mainly to
Various Factors Impact Special Fund
Proposition 1B, a $20 billion transportation bond
Spending on Infrastructure. Various ongoing
measure that was authorized by voters in 2006.
revenue sources—such as state taxes on fuels
In addition, in 2008,
Figure 7 voters approved
Proposition 1A to
Transportation Infrastructure Spending
Over the Past Decade provide $10 billion in
bonds for high-speed
(In Billions)
rail and local transit
General Fund systems. The state’s
$12 Local Fundsa increased reliance on
Federal Funds
bond funds to finance
10 Bond Funds
Special Funds transportation projects
will put additional
8
pressure on the state’s
6 General Fund as these
bonds are sold. We
4
estimate that annual
debt service on trans-
2
portation bonds will
increase from roughly
2000-01 2002-03 2004-05 2006-07 2008-09 $700 million in 2010-11
a
Some local agencies contribute funding for state highway projects. to $2.3 billion in
16 Legislative Analyst’s Office www.lao.ca.gov
An LAO RepOR t
2020-21 if the state moves forward with selling shown in Figure 8, most state transportation infra-
already authorized bonds at the projected rate. structure spending is for state highways and local
(Currently most of transportation’s debt-service streets and roads. In addition, the state invests in
obligations are paid with special funds, reducing mass transportation infrastructure and California’s
the effect on the General Fund.) proposed high-speed rail system. Below, we discuss
Transportation Funding Less Predictable. spending trends in these areas.
During the last ten years, there has been tension Most Spending Is for Highways. The state’s
among state and local entities over the competing highways carry 55 percent of all traffic in California
potential uses of revenues for state highway and (as measured in vehicle miles of travel). The state,
local roads projects and public transportation. This therefore, directs the majority of its transportation
tension arises because there is always more demand funding to highway infrastructure projects.
for transportation projects than there are revenues During the last ten years, the state has spent about
available for these purposes. In addition, due to the $56 billion on highway infrastructure. This includes
state’s severe and ongoing fiscal problems, trans- payments to contractors for construction work and
portation funds have been used to help balance staffing to design and oversee projects built as part
the state’s General Fund budget. This competition of the state’s highway system. This sum does not
for funds is evidenced by the series of legislation include spending by the California Department of
and voter-approved initiatives that have been Transportation (Caltrans) on routine maintenance
enacted since 2000 which attempt to govern the use of the state’s highways. As shown in the figure,
of specific pots of transportation funding. spending on highway projects has increased in
These abrupt shifts in funding have resulted in recent years. This is mainly due to the infusion of
an inconsistent level of
funding for transpor-
Figure 8
tation projects from year
Most Transportation Infrastructure Spending
to year. Such instability Is for Highways
makes it difficult for the
(In Billions)
state or other entities
to plan and deliver $10 Highways
projects, which in turn Local Streets and Roads
9
Mass Transportation
can lead to project delays
8 High-Speed Rail Authority
that can often make
7
projects more costly.
6
Major elements
5
of Transportation
4
Infrastructure
3
Spending
2
The state allocates
1
funding to four major
types of transportation
2000-01 2002-03 2004-05 2006-07 2008-09
infrastructure. As
www.lao.ca.gov Legislative Analyst’s Office 17
An LAO RepOR t
bond funds described above, which has augmented Funding for Local Streets and Roads
traditional transportation funding. Continues to Increase. A portion of state and
Despite the significant investment in the federal transportation funds goes to cities and
state’s highways, the most important indicators for counties for local streets and roads infrastructure,
measuring the outcome of highway expenditures which carry the remaining 45 percent of vehicle
have not shown improvement. For example, the miles of travel in the state. Over the past ten years,
capacity and congestion levels of the highway about $19 billion has gone to local entities. During
system have not improved. Traffic congestion on this time, annual state funding for local roads has
the state’s highways increased 11 percent from increased. Despite these investments, local agencies
2000 to 2007. These investments also did not result report that they have substantial unmet road needs.
in a notable increase in the overall capacity of the Mass Transportation Capital Expenditures
state’s highways. This is likely due to various factors, Have Varied Over Time. The amount of annual
including the planned highway system is close to state funds expended for mass transportation capital
being fully built out, a focus on operational improve- projects has varied from roughly $200 million to
ments over the addition of new highway miles, $1.5 billion over the past ten years. Over this time,
and the relinquishment of some roadways to local the major source of funds has shifted from special
agencies. Highway expansions are costly and often funds to bond funds. However, it is likely that the
difficult to build due to limited available space in use of bond funds for capital projects will decline
developed areas. Because of these factors, the state is over the next few years as the Proposition 1B
no longer able to address traffic congestion through resources diminish. As an alternative, transit
expansion projects alone. Caltrans has begun to use operators may use a greater share of the funds
other approaches to relieving traffic congestion, such provided by the State Transit Assistance (STA)
as various operational improvements. program for capital projects. The STA is a state
Additionally, the condition of the state’s subsidy allocated by formula to transit operators
highways appears to have degraded significantly throughout the state that can be used for capital
over the past decade. Specifically, the estimated outlay or operations. Recent legislative changes
annual cost to replace extremely degraded portions will provide increasing levels of funding for STA.
of state highways has more than doubled from While only about 20 percent of STA has been used
2005 to 2009 to over $6 billion. Caltrans, however, for capital projects in the past, it is unclear whether
is currently only spending roughly $1.5 billion local transit operators will use more of this funding
annually for these purposes. In addition, Caltrans for capital expenditures as the overall amount of
spends only about 10 percent of its budget on STA increases and other sources of capital funding
routine maintenance of its infrastructure invest- decrease.
ments. As a result, as of 2007, only 28 percent of Future Spending for High-Speed Rail Is
the state’s highways were rated in good condition Uncertain, but Potentially Significant. State
by the Federal Highway Administration (based on spending for the high-speed rail system has been
an annual International Roughness Index survey). relatively minor over the past ten years compared
According to the same survey, 48 percent of the with other types of transportation spending.
state’s highways are in acceptable condition and Depending on the state’s progress in implementing
24 percent are in poor condition. this large-scale project, high-speed rail expendi-
tures could potentially become a significant portion
18 Legislative Analyst’s Office www.lao.ca.gov
An LAO RepOR t
of total transportation spending. The High-Speed management of the state’s transportation system
Rail Authority (HSRA), which is responsible for could help to maximize the use of the existing
implementing the project, expects spending to system and potentially reduce the demand for
grow to several billion dollars annually over the limited funds. Generally, such an approach is
next few years. Because all state funding for the referred to as “demand management.” Specific
project comes from bonds, debt-service costs paid strategies can range from “congestion pricing”
from the General Fund could likewise grow signifi- to “intelligent transportation systems” (ITS)
cantly. At this time, however, HSRA is facing many that use technology to smooth out traffic flows.
obstacles in beginning construction of this project Congestion pricing factors periods of heavy traffic
and the attainment of the funds needed to build the flows into the cost of driving borne by a motorist.
high-speed rail line is highly uncertain. For example, the toll on a road may fluctuate
depending on traffic conditions, going higher
Issues for Legislative Consideration
in peak periods or lower in other times. The ITS
Under the policies of the last decade, key approach involves the use of ramp meters, traffic
measurements indicate that performance and lights, and changeable message signs to ensure
conditions of the state highway system have deteri- more efficient use of roadways. In addition to
orated. At the same time, increased bond spending technological approaches, changes in land-use
is expected to put additional pressure on the policies could also be used to manage demand for
General Fund, special fund revenues available for transportation. For example, current efforts to
infrastructure have decreased, and there continues implement Chapter 728, Statutes of 2008 (SB 375,
to be more demand for transportation projects than Steinberg), could encourage land-use patterns and
there are available resources. The Legislature could transit-oriented development that could reduce
consider the following issues. future traffic demand.
Highway Spending Should Focus on Consider Different Sources of Revenue. In
Maintenance and Repair. Existing highway the long term, we think the Legislature should
infrastructure is a valuable and necessary asset. evaluate new strategies to ensure that more stable
However, as noted above, Caltrans spends only and adequate sources of transportation revenues
a small portion (10 percent) of its total budget are available. Advancements in technology have
on maintaining the state’s transportation infra- opened up new options for charging drivers for
structure. Poor maintenance appears to be contrib- the benefit of using the state’s roads. For example,
uting to the increasing need to completely rebuild motorists could be charged based on the number
portions of the state’s highways, which is signifi- of miles they travel rather than the amount of fuel
cantly more costly than making routine repairs. they purchase. In this way, charges would more
The Legislature could place a higher priority on closely match an individual’s usage. Significant
routine highway maintenance and focus on elimi- research is needed to determine if a mileage-based
nating the sizeable backlog of major road recon- funding system is feasible for California, and if
struction projects. For example, some available so, how such a system would best be implemented
transportation funding could be redirected from and its impact on individual motorists and the
highway expansion projects to highway repairs. California economy.
Managing Demand Could Improve Consider Taking Actions to Improve
Performance of Existing Infrastructure. Better Successful Development of High-Speed Rail. As
www.lao.ca.gov Legislative Analyst’s Office 19
An LAO RepOR t
stated earlier, the dedication of billions of dollars the project does move forward, a more effective
over the next several years to begin construction governance structure could help to remedy some of
of a new high-speed train system would add the serious problems faced by the high-speed rail
to the state’s General Fund debt-service costs. project and improve its chances for success. For
Notwithstanding the potential merits of the project, more specific recommendations on high-speed rail,
the Legislature currently has the opportunity to see our recent publication, High-Speed Rail Is at a
make critical decisions relating to the project. If Critical Juncture (May 2011).
K-12 SCHooLS
The state provides bond funding for K-12 schools and classrooms and nearly $9 billion to
school facilities through the School Facility modernize school facilities. Most of the funding
Program (SFP). Operated by the State Allocation for new construction and modernization is
Board (SAB) and Office of Public School provided on a first-come, first-serve basis to any
Construction (OPSC), SFP provides funding for a eligible school district. In addition to funding
variety of school facility projects. Most programs in for new construction and modernization, each of
SFP require matching funds from school districts. the ballot measures set aside funding for specific
In this chapter, we discuss the funding provided types of school facility construction, such as green
from SFP and the requirements for participation in schools and career technical education. These
the program. We also discuss district demand for funds for specialized purposes can be used for new
facilities and highlight major school facility issues construction or renovation.
for the Legislature to consider. Largest Program Is New Construction.
The largest piece of spending in the SFP is for
Funding Trends
construction of new facilities. (In addition to the
Voters Have Approved $29 Billion in State $13 billion authorized by voters for general new
Bonds Since 2000. As Figure 9 shows, bonds construction, the SAB has transferred $1.3 billion
have provided about $18 billion to construct new from other bond programs to meet the demand
for new school facilities.)
Figure 9 State funding is intended
State Has Approved $29 Billion in K-12 Bonds Since 2000 to cover 50 percent of
(In Millions) project costs, with school
districts responsible for
2002 2004 2006 Totals
funding the remaining
General new construction $6,250 $4,960 $1,900 $13,110a
Overcrowded schools 1,700 2,440 1,000 5,140 costs. To qualify for
Subtotals, New Construction ($7,950) ($7,400) ($2,900) ($18,250) new construction bond
Modernization $3,300 $2,250 $3,300 $8,850 funding, school districts
Charter schools 100 300 500 900
must demonstrate that
Career technical education — — 500 500
Joint use 50 50 29 129b existing classroom
Green schools — — 100 100 space is insufficient to
Totals $11,400 $10,000 $7,329 $28,729
house projected student
a
Does not include $1.3 billion transferred from other bond programs to support new construction.
b Does not include $45 million transferred from previous bond acts to support joint-use facilities. enrollment over the next
20 Legislative Analyst’s Office www.lao.ca.gov
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five years. State grants to school districts are made State Provides Larger Match for
on a per-pupil basis—dependent on the number Modernization Projects. The second largest piece
of unhoused students the new facility will accom- of state spending is for the modernization of
modate. Per-pupil grants are annually adjusted for existing schools. To provide a greater incentive for
inflation using the California Construction Cost school districts to modernize rather than build
Index. As we discuss in the nearby box, demand for new schools, the state provides a higher match for
new construction funding is primarily driven by modernization projects (60 percent rather than
population growth in inland counties. In addition 50 percent). School districts qualify for modern-
to funding general new construction, the state has ization funding if their facilities are more than
provided $5 billion for the construction of new 25 years old. As with new construction, the state
schools in districts experiencing overcrowding (as provides per-pupil grants. The state aid per pupil is
measured by the number of students per acre of greater if the renovation is for a facility that is more
space). than 50 years old.
new Construction demand driven by Population Shifts
The demand for new school facilities in California exists despite relatively little overall growth
in K-12 enrollment over the past ten years. (Average annual growth was less than 1 percent between
2000-01 and 2009-10.) The average overall growth rate, however, masks changes in population
growth among the various regions of the state. Specifically, while many of the larger urban areas
experienced significant
declines in enrollment K-12 Enrollment Trends Vary Greatly by County
over the past ten years, Projected Population Growth 2009-10 to 2019-20
several areas—primarily
suburbs and inland
Percent Change
counties—experienced
< -5%
significant population -5% to 0
0 to 5%
increases. This figure
5 to 15%
shows that enrollment > 15%
growth trends across
the state are expected to
follow the same pattern
into the next decade.
These shifts in the
population increase the
demand for new facilities
to accommodate the
enrollment growth in
certain areas of the state.
www.lao.ca.gov Legislative Analyst’s Office 21
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State Also Provides Incentives to Undertake (Local communities can also create a Mello-Roos
Specific Types of Facility Projects. Over the past district to issue bonds for infrastructure in the
ten years, state bonds for K-12 facilities also have community. In the past ten years, however, no
set aside funding for specific types of school facility Mello-Roos bonds have been approved by voters
construction. The state has provided $900 million for school facilities.) In addition to local general
for the construction of new charter school facilities, obligation bonds, some districts rely on other
$100 million for school districts to build environ- sources of revenue to provide a local match. Most
mentally friendly (or green) schools, $500 million notably, some districts—particularly those in areas
for the construction of career-technical education with significant new residential development—rely
facilities, and $130 million for joint-use facilities. heavily on developer fees as a source of facility
With the exception of funding for green schools revenue. On rare occasions, school districts also
and joint-use facilities, participants receive use parcel tax measures to raise funds for school
per-pupil grants for each project. Participants facilities. School parcel taxes require approval
in these programs are also subject to the same by two-thirds of the district’s voters. Since 2000,
matching requirements that apply to other new four school districts have approved parcel taxes
construction and modernization projects. dedicating some portion of the funds for modern-
Districts Rely on Local Bonds to Provide ization or expansion of school facilities.
Matching Funds. Although school districts have a Financial Hardship. School districts that are
number of options for obtaining matching funds unable to provide a local match for the construction
for facility projects, the majority of matching or modernization of a school facility can apply
funds come from local general obligation bonds for financial hardship funding and receive up
approved by voters in school districts. Approval of to 100 percent funding. In order to qualify for
these bonds has become easier due to the passage this funding, school districts must be audited by
of Proposition 39 in 2000, which reduced the
threshold for the approval of K-12 and community Figure 10
college general obligation bonds from two-thirds to Local General Obligation Bonds for
School Facilities Since 2000
55 percent. As Figure 10 shows, since 2000 voters
statewide have approved about $61 billion in local (In Millions)
general obligation bonds for school facilities. School Facility
School Improvement
Some Districts Use Other Local Revenue
District District Total
Options. Local communities can also approve
2000 $2,464 — $2,464
general obligation bonds for facilities using School
2001 2,275 — 2,275
Facility Improvement Districts (SFIDs). When 2002 9,812 $260 10,072
2003 573 — 573
school districts have facility needs in a portion
2004 7,757 49 7,805
of a school district’s territory, the district can
2005 5,517 28 5,545
create an SFID consisting of the specific areas 2006 6,707 249 6,956
2007 388 750 1,138
with facility needs. The voters in the SFID can
2008 20,937 592 21,529
then vote to approve a general obligation bond
2009 69 — 69
for facilities in that specific area. As Figure 10 2010 4,323 35 4,358
shows, voters approved almost $2 billion in SFID Totals $60,822 $1,963 $62,785
Source: EdSource.
general obligation bonds for facilities since 2000.
22 Legislative Analyst’s Office www.lao.ca.gov
An LAO RepOR t
OPSC to verify that the district has insufficient which provides grants for critical health and safety
funds to meet its full local match. As a condition repairs in certain low-performing schools. The state
of receiving financial hardship funds, projects is required to provide $800 million to ERP to meet
are subject to strict budget constraints to prevent the requirements of the settlement. The state has
districts from enhancing projects. provided $343 million for the program so far.
Districts Use Operations Funding for
Spending Trends
Maintenance of Facilities. As part of the require-
ments of receiving state bond funding, districts Most State Bond Funding Allocated, but Some
typically must set aside 3 percent of their general Unspent Funds Remain. Demand from school
fund expenditures annually for routine mainte- districts for bond funding has been consistent over
nance of their facilities. In acknowledgement the past ten years, but some funds remain unspent
of limited operating budgets, however, districts in several program areas. As shown in Figure 11, as
are required to set aside only 1 percent of their of June 2011, a total of $1.9 billion in bond authority
general fund expenditures from 2008-09 through remained unallocated by SAB. The programs
2014-15. For many years, the state also has provided with relatively high levels of unallocated funds
roughly $300 million annually to pay for deferred are modernization, overcrowded schools, charter
maintenance. To receive deferred maintenance schools, and green schools. (As shown in Figure 11,
funds, school districts must provide matching local SAB has awarded an additional $2.1 billion to
funds. The deferred maintenance requirements approved school projects, but these allocations
also have been modified from 2008-09 through remain on hold until the state sells additional
2014-15. During this period, school districts are bonds to fully fund the projects.)
not required to provide a local match and can use Difficult to Determine Future Need. Despite
deferred maintenance funds for any educational the significant investments in K-12 school facilities
purpose. over the past decade, the lack of statewide data
Williams Settlement Created Additional makes determining future need very difficult. The
State Program. In 2004, the state settled the state has no comprehensive inventory of school
Williams v. California
Figure 11
case, a class-action lawsuit
$1.9 Billion in State Bond Funding Still Available
filed on behalf of public
school students. The (In Millions)
lawsuit argued that the Approved
Allocated Projects on Holda Available
state was responsible for
New construction $13,615 $556 $503
insufficient instructional
Modernization 7,489 611 750
materials, a lack of
Overcrowded schools 2,781 376 425
qualified teachers, and Charter schools 258 509 133
Career technical education 377 91 33
poor facility conditions in
Joint use 174 — 1
many schools across the
Green schools 21 6 73
state. In response to the Totals $24,715 $2,148 $1,917
a
settlement, the Legislature The State Allocation Board has awarded authorized bond funds to these projects, but the projects
remain on hold until future state bond sales provide sufficient bond proceeds to cover the full project
created the Emergency costs.
Source: Office of Public School Construction.
Repair Program (ERP),
www.lao.ca.gov Legislative Analyst’s Office 23
An LAO RepOR t
facilities, their capacity, and unmet need. Reporting K-12 facilities. The lack of a reliable estimate of the
from school districts on existing capacity occurs need for K-12 infrastructure and the associated
only when districts apply for funding. As a result, costs makes it difficult to determine the best
it is not clear if state and local spending over the options for state funding. Without such data,
last decade on K-12 infrastructure has substantially policymakers and stakeholders cannot determine
reduced K-12 infrastructure needs. Based on the the proper size of future general obligation
pace of recent expenditures, however, it appears bond proposals or the specific amounts for
many districts continue to seek and qualify for various programs such as new construction or
state facility funding. For example, at the close modernization. Some estimate of infrastructure
of 2007, $2.7 billion in state new construction demand and cost—such as a sampling of district
bond funds remained unallocated. By the close of needs—would provide better data than the state
2010—despite the state’s severe economic downturn currently utilizes in making funding decisions.
and the freezing of state bond funds—only With some facility data, the state would have better
$500 million of these funds remained unallocated, information to project future needs and determine
and $178 million in new construction projects were reasonable estimates for the amount of future
awaiting review by SAB. general obligation bonds.
Reducing State Share of Cost. The Legislature
Issues for Legislative Consideration
could reconsider the share of costs it currently
In the last decade, the state spent over $30 billion covers (50 percent for new construction, 60 percent
on K-12 school facilities. As described above, it for modernization). Contributing a smaller share
is difficult to measure whether this spending has to each project would allow limited state funds
substantially addressed K-12 infrastructure needs in to support more projects. Given local support
California or (as appears more likely) if facility needs for school facility funding, a decrease in state
remain high. Assuming significant need remains, spending could be offset by more local spending,
the Legislature may want to reconsider California’s thereby minimizing the impact on school districts.
school facilities funding model because the state’s Local voters have been willing to approve local
capacity to provide a similar level of bond support school facility bonds. Since the enactment of
to K-12 schools over the next decade likely will be Proposition 39, 83 percent of school facility bonds
constrained due to the state’s fiscal problems. Given requiring a 55 percent vote have been approved.
that K-12 infrastructure spending accounted for The high approval rate has continued during the
almost 50 percent of the state’s general obligation economic recession: 77 percent of school facilities
bond spending from 2000-01 through 2009-10, any bonds requiring a 55 percent vote were approved in
effort to control the escalation of state debt-service 2009 and 2010. Realigning more funding responsi-
costs likely will have to include some reduction in bility to the local districts would also create incen-
the pace of K-12 infrastructure spending. As a result, tives for districts to better maintain and manage
the Legislature may want to consider some of the existing facilities.
options described below for prioritizing state K-12 Develop a System for Prioritizing Funding.
infrastructure spending. As stated above, the state generally offers its bond
Whether the Legislature continues with money on a first-come, first-served basis. This
the status quo or adopts some of these alternate process worked adequately over the past decade
policies, however, the state needs better data on when bond funds typically have been available to
24 Legislative Analyst’s Office www.lao.ca.gov
An LAO RepOR t
support all eligible projects submitted to SAB. If Explore Different Financing Tools for School
smaller bond amounts are available for K-12 schools Facilities. Given the problems inherent in evalu-
over the next decade, however, school districts ating and prioritizing the infrastructure demands
will likely exhaust the state’s bond proceeds before of over 9,000 schools, the Legislature could take a
all school projects have been funded. Under this different approach to facility financing. One such
scenario, a first-come, first-served system would approach would be to provide equal per-pupil
not necessarily allocate construction aid to districts funding to all school districts. This approach would
where the need is greatest. The Legislature instead provide school districts with a predictable and
could establish broad categories for awarding future stable funding source and more control over how
bond allocations on a priority basis. For example, these funds are used. In adopting this approach,
the first allocation of bond funds could be reserved the state probably would need to provide transition
for school districts with the oldest buildings, the funding to districts with large unmet facility
most overcrowding, or the largest percentage of needs in order to bring district facility conditions
unhoused pupils. The state could also reserve to a level that could be accommodated within the
funding for financially needy school districts that ongoing per-pupil funding amount. In our 2001
have insufficient local revenues to build essential report, A New Blueprint for School Facility Finance,
facilities. In this way, state funding would support we outline one way to transition from the current
projects that otherwise would not have been built bond-funded program to a program funded on
absent a state facility program. A broad prioriti- a per-pupil basis using ongoing General Fund
zation system would ensure that limited bond funds appropriations.
are reserved for the most critical projects.
ReSouRCeS
Over the last decade, the state has provided more fee special fund revenues—the primary means of
than $13 billion for state and local resources-related support for the State Water Project (SWP) operated
infrastructure. Most of this funding has come from by the Department of Water Resources (DWR).
bond funds. Infrastructure spending in the resources Significant Increases in Debt-Service Costs.
area covers a wide array of programs and projects. Voters have authorized close to $20 billion in general
For example, funds were spent on land acquisition obligation bonds for resources since 2000 (about
and restoration for resource conservation purposes, one-third of these bonds remain unsold). Unlike
infrastructure to improve environmental quality, bond measures issued in prior decades, recent bond
flood management and water supply projects, state measures have been larger (typically several billion
park facilities, forest fire stations, and fish hatcheries. dollars) and wider in scope (covering a broad array
of resources issues in a single measure, such as
Funding Trends
parks, wildlife conservation, flood management,
Major Reliance on General Obligation Bonds. and water quality). The large bond measures
As shown in Figure 12 (see next page), about have increased state debt-service expenditures
three-fourths of the $13 billion in spending over considerably, as shown in Figure 13 (see next page).
the last decade came from general obligation bond General obligation bond debt-service costs are
funds. Most of the remainder came from water user now the largest single General Fund expenditure
www.lao.ca.gov Legislative Analyst’s Office 25
An LAO RepOR t
for resources, totaling
Figure 12
over $700 million in
Bond Funding Drives Resources Spending
2009-10. These debt-
(In Billions)
service expenditures
$1.8 are estimated to
increase to approxi-
1.6
mately $900 million in
1.4
2010-11—a four-fold
1.2 increase in these expen-
ditures since 2000-01.
1.0
Major Portion of
0.8
Spending Is for Local
0.6 Infrastructure. Over
General Fund
0.4 two-fifths of state
Special Fundsa
spending on resources
0.2 Bond Fundsb
infrastructure over
the last decade was for
2000-01 2002-03 2004-05 2006-07 2008-09
local assistance, with
a Includes State Water Project, which makes up 90 percent of total special fund expenditures.
b Includes lease-revenue bonds, which make up 2 percent of total bond expenditures. that amount funded
almost entirely from
general obligation bonds.
Figure 13
These monies support
Debt Service for Resources General Obligation Bonds
a variety of program
Is Increasing
areas, including local
(In Millions)
park projects, land
$800
conservation activities,
wastewater treatment
700
and safe drinking water
600 infrastructure, and flood
management and other
500
water management
400 infrastructure. Reflecting
largely the variability
300
of available bond funds
200 from year to year, the
proportion of spending
100
on state projects versus
local assistance in any
2001-02 2003-04 2005-06 2007-08 2009-10
given year is also highly
variable.
26 Legislative Analyst’s Office www.lao.ca.gov
An LAO RepOR t
Spending Trends and outcomes primarily entails reconstruction of wildlife
habitat, but may include the removal of
Infrastructure Spending Covered a Disparate
pollution and other forms of rehabilitation
Set of Programs. Figure 14 breaks down resources-
of ecosystems. Departments with the
related infrastructure spending over the last decade
largest total land acquisitions include
into six programmatic areas. As the figure shows,
the Wildlife Conservation Board (WCB),
no one program area predominates.
the Department of Parks and Recreation
Spending Highly Variable Over Past Decade.
(DPR), and the State Coastal Conservancy.
The percentages spent on each programmatic
The WCB has also funded the restoration
area varied significantly year to year, again largely
of 200,000 acres during this time period.
reflecting the availability of bond funds. As shown
in Figure 15 (see next page), for example, spending
• Repair/Upgrades to Existing
on parks and recreation was considerably less
Infrastructure. Very few new resources
towards the end of the decade due to substantial
facilities (levees, dams, fire stations, and
depletion of available bond funds for that purpose,
state park structures) have been built during
while spending on flood protection increased with
the last decade. The focus instead has been
the passage of flood prevention bonds in 2006.
on the repair and replacement of existing
What Has the State Received From Its
infrastructure. In addition to the ongoing
Investments? The outcomes from the state’s invest-
repair and upgrade program for SWP, DWR
ments in resources-related infrastructure can be
has repaired and upgraded 116 critical flood
summarized as follows:
management sites and 117 non-critical sites,
• Land Acquisition, Preservation, and facilitated by a major influx of bond funds
Restoration.
Figure 14
Over the last
Resources Infrastructure Spending
decade, resources
Supports Many Programs
departments
have acquired 2000-01 Through 2009-10
a combined
1.5 million acres
Forestry and Fire Protection
of land at a cost State Water Project
of $2.8 billion.
Land and Wildlife
Land acquisi- Conservation
tions generally
preserve or
Water-Related
rehabilitate
Local Assistance
environmentally
sensitive areas
or habitats
Parks and Recreation
or expand
state parks. State Flood Capital Outlay
Restoration
www.lao.ca.gov Legislative Analyst’s Office 27
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for flood control authorized in 2006. The faces a growing backlog of deferred maintenance
DWR also operates a local levee assistance and aging infrastructure. For example:
grant program. Similarly, since 1990, the
• CalFire estimates that $2.5 billion will be
California Department of Forestry and
needed over the next five years and that
Fire Protection (CalFire) has substantially
roughly 20 projects need to be completed
replaced about 60 of its 476 buildings and
every year for the next 20 years in order
structures.
to replace aging fire stations and other
facilities.
• Meeting Federal Requirements. Much of
the water-related infrastructure spending
• The Department of Fish and Game (DFG)
has been in response to increasingly
operates 21 fish hatcheries that are 50 years
stringent federal environmental regula-
old on average. There is also a growing
tions. Key regulations relate to the local
backlog of deferred maintenance at DFG
management or treatment of stormwater
for maintaining the roads, parking lots,
runoff and wastewater. The State Water
dams, water delivery systems, and buildings
Resources Control Board has funded 296
necessary to provide the public with access to
local wastewater treatment new facilities
its wildlife conservation sites.
or upgrades and 62 non-point source
treatment constructions or upgrades in • The local wastewater infrastructure in the
the past ten years. The SWP has likewise state is similarly aging, requiring the state’s
made substantial repairs and upgrades local assistance to focus on repairs and
to its dams and hydroelectric facilities to upgrades to existing infrastructure.
comply with
Figure 15
Federal Energy
Annual Resources Spending Highly Variable
Regulatory
Across Programs
Commission
licensing (In Millions)
requirements. $800
Land and Wildlife Conservation
700
Issues for Legislative
Parks and Recreation
Consideration 600 State Flood Capital Outlay
As noted above, the
500
increased spending on
resources infrastructure 400
over the last decade has
300
resulted in significant
land acquisitions, 200
repairs to existing infra-
100
structure, and improved
regulatory compliance.
2000-01 2002-03 2004-05 2006-07 2008-09
However, the state still
28 Legislative Analyst’s Office www.lao.ca.gov
An LAO RepOR t
• The state’s aging levees require significant the state would address immediate and existing
upgrades in the next few years to meet infrastructure demands rather than creating new
federal and state standards. Upgrades for infrastructure responsibilities for which there is
six cities in the Central Valley alone are no dedicated funding available to pay for ongoing
estimated to cost $5 billion. operations and maintenance. Or the Legislature
may want to prioritize available funding for
• The DPR estimates a backlog of $1.3 billion
projects which provide direct safety benefits, or
in deferred maintenance projects that is
for those that create opportunities for the state to
projected to grow to $2 billion by 2020.
generate additional revenues to help support state
As noted earlier, recent resources bonds have park operations.
been considerably larger compared with earlier Applying the “Beneficiary Pays” Funding
measures. Based upon the above examples of Principle. On a number of occasions, the
infrastructure deficiencies, however, even if the Legislature has stated its policy intent that the costs
state were to prioritize resources infrastructure of a resources-related program or project should,
investments and maintain the current pace of to the extent possible, be paid by its direct benefi-
expenditures, it is likely demand would exceed ciaries. Expenditures with broad public benefits, on
available funds. Moreover, given the state’s fiscal the other hand, are appropriately funded with state
concerns and growing debt-service obligations, the public funds (such as General Fund monies and
Legislature may not wish to maintain the recent general obligation bond funds). Where the benefits
level of bond expenditures for resources programs of an activity are shared between public and private
in order to accommodate other budget priorities. beneficiaries, the application of the beneficiary
In response to this challenge, we recommend that pays funding principle would allocate the funding
the Legislature consider the following options for responsibility for its costs proportionally between
prioritizing spending and identifying alternative these two sets of beneficiaries.
financing tools for resources infrastructure. The funding of SWP projects offers a good
Setting Priorities for Bond Expenditures. example of the application of this funding principle.
As noted above, resources-related infrastructure As referenced earlier, about 96 percent of SWP’s
spending has relied heavily on general obligation costs have been paid from revenues raised from
bonds. In a constrained fiscal environment, water users directly benefitting from the project.
proposals to spend the proceeds of state general Outside of SWP, there are additional opportu-
obligation bonds warrant extra scrutiny by the nities to apply the beneficiary pays principle to
Legislature. It will be important that the resources achieve substantial state savings. Revenues from
bond expenditures in the annual budget act be well beneficiaries could support direct infrastructure
justified, reflect a programmatic need, be an appro- spending or provide an ongoing revenue source
priate funding source for the activity in question, for debt-service obligations. For example, private
and reflect legislative priorities. beneficiaries have not been charged their share of
For example, the Legislature may wish to prior- costs for CALFED Bay-Delta Program projects,
itize available funding to some of the renovation including some costs related to ecosystem resto-
and deferred maintenance backlogs described ration and conveyance. The Legislature could also
above while redirecting spending from new land review the way costs are split between the state and
acquisitions and new construction. In this way, local governments for infrastructure that benefits
www.lao.ca.gov Legislative Analyst’s Office 29
An LAO RepOR t
local residents. For example, while many levees needs rather than statewide needs and thus could
provide significant direct benefits to local popula- be candidates for realignment to local entities.
tions—such as public safety and the facilitation of Addressing Information Needs. California’s
economic development—the state currently pays levee system consists of state-run levees (about
for up to 70 percent of the nonfederal share of 15 percent of the system) and locally operated and
construction costs for federally authorized flood maintained levees (about 85 percent of the system).
control projects and up to 100 percent of the costs As the Legislature considers how much the state
for Delta levee improvements. Recent bond acts should invest in flood control facilities, one major
also provide bond funding for local parks, which concern is the lack of information about the current
primarily benefit local residents. condition of the levee system. These information
State-Local Realignment of Some Functions. gaps are problematic because the courts have found
Some current resources-related state services the state is potentially liable for failures of local—as
provide primarily local rather than broad statewide well as state—operated and maintained levees. The
public benefits. In such cases, the Legislature DWR is developing an inventory of projects needed
should evaluate the potential of realigning the to maintain and repair state-run levees. This
responsibility for these functions from the state inventory should be completed in 2012. However,
to local governments, thereby reducing the state’s no such inventory is under way for local levees. The
infrastructure responsibilities. For example, certain Legislature should consider how it can address this
state parks predominantly serve local recreational information gap.
HIgHeR eduCATIon
California’s public higher education system infrastructure. Support for higher education infra-
enrolls over 2 million students annually in three structure comes from state and non-state sources.
segments: the University of California (UC), The state has traditionally provided infrastructure
California State University (CSU), and California funding to support the segments’ core academic
Community Colleges (CCC). The three segments missions. For CSU and CCC, this is mostly limited
have approximately 150 million square feet of to instructional and administrative space, while the
facility space, which include instructional space, state supports those functions as well as research
faculty and administrative offices, and research space at UC. The Legislature has direct control
space as well as dormitories, performance halls, over state-funded projects because each is funded
athletic and recreational facilities, and other through an appropriation in the annual budget act.
student support space. The specific mix of facilities Through this process, the state spent $10.1 billion
differs by segment due to the distinct missions on higher education infrastructure in the last ten
assigned to each. For example, UC has significant years. As shown in Figure 16, the spending varied
space dedicated to research because of its role as by segment, with UC receiving the most support.
California’s research university. State Support Almost Entirely From Bonds.
Almost all of the spending from state sources was
Funding Trends
provided from bonds—with 80 percent coming
From 2000-01 through 2009-10, we estimate from general obligation bonds and an additional
the three segments spent about $41 billion on 19 percent from lease-revenue bonds. Bond
30 Legislative Analyst’s Office www.lao.ca.gov
An LAO RepOR t
spending on infrastructure has more than doubled and pay for many projects without state support.
higher education debt-service costs over the last For example, districts may choose to build instruc-
ten years, from about $516 million in 2000-01 tional and administrative space without applying
to an estimated $1.1 billion in 2010-11. Most of for state funds. Additionally, districts must pay for
the general obligation bond spending was from non-academic space (such as parking garages) with
bonds approved by voters in 1998, 2002, 2004, and local funds because such projects are not eligible
2006. In general, the state provides less funding for state funding. The primary source of this local
to higher education projects when the balance of financing is voter-approved bonds. Prior to 2000,
general obligation bonds is exhausted. In the case local bond measures for educational facilities
of UC and CSU, the state typically offsets some required two-thirds voter approval. Passage of
of this reduction by funding some projects with Proposition 39 in 2000 lowered the threshold for
lease-revenue bonds. Community colleges, in approval to 55 percent. Since that time, voters have
contrast, have not pursued lease-revenue bonds in approved 86 percent of local community college
recent years because repayment counts toward their bond measures and at least one bond measure in
Proposition 98 funding allotment (and therefore 65 of the state’s 72 community college districts. In
comes at the expense of other CCC programs). total, these bond measures authorized $22.8 billion
Local Bonds Provide Significant Amount of for community college infrastructure. (Because
Community College Funding. Few community these bonds are administered locally, we do not
college projects are funded exclusively with state have complete data on how much of this bond
funds. Local community college districts typically authority was spent over the last decade. While
contribute part of the cost for state-funded projects some districts quickly spend bond proceeds, others
plan for each bond
measure to support the
Figure 16
district’s capital outlay
General Obligation Bonds Are Largest Source of
Higher Education Infrastructure Spending program for
10 to 15 years.) Based
2000-01 Through 2009-10 (In Billions)
upon available infor-
General Fund mation, we estimate
$4.5
Lease-Revenue Bonds
that CCC districts spent
4.0 General Obligation Bonds
about $12.6 billion in
3.5 local funds on infra-
3.0 structure from 2000-01
to 2009-10—more than
2.5
three-times the amount
2.0
spent from state funds
1.5 on CCC infrastructure.
Non-State Funds
1.0
Provide Significant
0.5
Amount of University
Funding. The univer-
UC CCC CSU
sities rely on non-state
www.lao.ca.gov Legislative Analyst’s Office 31
An LAO RepOR t
funds to support certain types of non-academic able to accommodate new demands and address
infrastructure that the state does not typically pre-existing space deficiencies. Even though
support. Non-state sources include fees for minimal enrollment growth is expected in the
residence halls, parking fees for parking garages, next few years, the universities’ five-year plans
and medical center revenues for medical center include projects to increase capacity for meeting
space. Students also periodically vote to increase “existing enrollment needs.” Measuring whether
student fees in order to pay debt-service costs for the segments’ amount of existing space is sufficient
the construction of student support space such as and appropriate is difficult. The segments measure
student unions and recreational facilities. Overhead capacity using space and utilization standards,
fees from research grants and gifts are also used which together determine the amount of academic
to fully finance projects or augment state-funded space needed to meet programmatic demands.
projects. Over the last decade, UC spent about There is no consensus on the appropriateness and
$13 billion and CSU about $4.5 billion of non-state reliability of the standards for determining actual
funds on infrastructure. capacity. For example, CSU and CCC continue
to use space standards that are over 30 years old,
Spending outcomes
while UC uses more generous space standards
Segments Have More Space… Each segment developed in 1990, but never formally approved
has more space than a decade ago—UC’s academic by the Legislature. Additionally, large amounts of
and research space increased by approximately space classified as nonstandard or “other space”
25 percent, CSU’s academic and administrative are excluded from the capacity calculations. There
space by 15 percent, and CCC’s academic and office are also some questions regarding the utilization
space by 19 percent.
As projects funded in
Figure 17
the last few years are
Academic Space Kept Pace With Enrollment Growth
completed and put into
Percentage Change, 2001 Through 2009
operation, the segments
will have more new 30%
space.
Academic Space
...But Is That
25
Enrollment
Space Sufficient? As
shown in Figure 17,
20
the growth in space
over the last decade
15
has closely matched or
outpaced enrollment
growth. Each segment, 10
however, indicates
that its campuses are 5
still operating above
capacity and that the
new space has not been UC CSU CCC
32 Legislative Analyst’s Office www.lao.ca.gov
An LAO RepOR t
standards, such as facility use during off-peak consider other alternatives for addressing higher
periods including evenings, weekends, and the education’s increasing infrastructure demand.
summer term. Possible alternatives include reducing the demand
Investments in Existing Infrastructure Have for higher education facilities and targeting
Improved Some Facilities. Infrastructure spending available resources to the greatest priorities.
on existing facilities has resulted in fewer seismi- Prioritize Spending to Most Critical Areas.
cally unsafe buildings at each segment as well The segments have identified infrastructure needs
as some updated facilities. For example, UC has covering many purposes—including accom-
retrofitted 74 percent of the space it identified as modating enrollment growth and initiating new
needing seismic upgrades since 1979. Renewal and programs. Given the state’s limited resources, the
replacement needs, however, are still significant. Legislature could consider a more targeted funding
For example, CSU identifies 39 buildings requiring approach that focuses on existing core academic
seismic retrofitting. Additionally, UC reports facilities. Such an approach would be more cost-
that over 50 percent of its state-funded facilities effective, stretching the state’s spending further
are more than 35 years old and CCC reports that while encouraging the segments to use space more
47 percent of its inventory is over 40 years old. As efficiently. Main elements of a prioritized spending
a result, the segments’ facilities renewal needs are approach could include:
likely to increase as the systems in these buildings
• Focus on Renovation and Maintenance of
reach of the end of their useful life.
Existing Facilities. The state could focus
Identified “Needs” Continue to Grow. Despite
on ensuring that existing facilities are
the state’s investment and the improvements
adequately maintained and fully utilized
described above, the segments’ self-identified infra-
prior to constructing new facilities. As
structure needs are greater than ever. The segments’
renovation needs alone will likely exceed
five-year plans identify state infrastructure
the state’s total resources for higher
spending exceeding $24 billion—in other words,
education infrastructure, the Legislature
the segment’s five-year plans identify state spending
could consider significantly reducing—or
that is more than double the amount spent over
eliminating—allocations for new space.
the last ten years. It is important to note, however,
Renovation projects typically cost less than
that the segments’ plans include new initiatives to
new construction projects, and usually do
expand enrollment or create new programs and
not require additional ongoing resources
that many of the projects identified do not appear
for maintenance and operation.
to be vital to the existing operation of the colleges
and universities. • Reconsider Types of Space That Are State
Supportable. The Legislature could also
Issues for Legislative Consideration
consider reducing the scope of space that
Given other pressures on the state budget, the the state supports. For example, state
state likely will not have the resources to sustain the funding could focus exclusively on core
level of higher education infrastructure spending instructional space—classrooms and
undertaken in the last decade, let alone the greater limited faculty and administrative space.
demand forecasted by the segments’ five-year plans. The Legislature could also require UC to
In response to this challenge, the Legislature could take a greater responsibility for the funding
www.lao.ca.gov Legislative Analyst’s Office 33
An LAO RepOR t
of research space through the indirect practices and encourage the segments to reconsider
cost reimbursements for facility expenses how they plan for and manage space. In our view,
that are usually included in each research there are a number of reasons higher educa-
grant. The Legislature may also wish to tion’s infrastructure demand could decrease. For
reconsider state support of facilities for example:
professional schools—such as business and
• Enrollment Pressure Expected to Ease.
law schools—which have a greater ability
Demographic forecasts show a decline
to raise outside funds. For example, the law
in the college-age population through
school at UC Berkeley recently financed
the next decade. This should reduce
a $90 million addition entirely through
enrollment driven pressure to expand
donor gifts and student fees.
higher education facilities. In addition, due
to budget constraints, enrollment levels at
• Reconsider Level of State Support for
CSU and CCC are well below peak levels
Community College Infrastructure. As
from a few years ago. As a result, campuses
described above, the vote requirement
have unused capacity to accommodate
for local bond measures was reduced
additional students as enrollment returns
to 55 percent and voters have already
to previous levels.
approved more than $22 billion in local
bond measures for CCC infrastructure. In
• Utilization of Existing Facilities Could
light of this improved funding capability
Improve. Each segment has unused
by local districts, the state might want to
capacity that could accommodate
reconsider the level of the state’s responsi-
additional students. Virtually all campuses
bility to provide infrastructure funding for
could accommodate more students during
community colleges.
the summer term. As shown in Figure 18,
during the summer each segment enrolls
• Consider Policy Changes to Free Up Space
less than 30 percent of the students
for Critical Programs. The Legislature
enrolled during the traditional academic
could also prioritize its programmatic
terms. In addition, some campuses could
support for higher education to create
make fuller use of their existing space and
space for state priority programs. This
accommodate more students during the
could mean limiting support for profes-
traditional academic year by scheduling
sional schools or new initiatives in order
more early morning, evening, and weekend
to focus on undergraduate and graduate
classes.
education. Or the Legislature could
consider narrowing the core missions of
• Distance Education Could Reduce
the community colleges to exclude many
Demand for New Space. Distance
physical education and other personal
education—education delivered mainly
enrichment courses.
over the internet or television—also
Segments Could Adopt Strategies to Reduce could reduce infrastructure demand.
Infrastructure Demand. Adopting the above By educating online those students who
policies would represent a departure from current would have otherwise attended class in
34 Legislative Analyst’s Office www.lao.ca.gov
An LAO RepOR t
person, the
Figure 18
segments could
Summer Enrollment as Percentage of Fall Enrollment
reduce the need
Full-Time Equivalent Students
to build new
infrastructure. 30%
• New Initiatives
25
Could Be
CCC
Curtailed. The
segments could 20
also limit new UC
off-campus 15
centers, schools,
and programs.
10
There are often CSU
alternatives that
5
could meet the
goals of the new
programs more
2001-02 2003-04 2005-06 2007-08
efficiently or
at a lower cost, the Legislature could require the institu-
such as increasing enrollment in existing tions that establish a new program to
programs or using distance-education eliminate, consolidate, or reconfigure
technology to allow programs to share existing programs in order to create space
resources across campuses. Alternatively, for the new priority program.
CRIMInAL JuSTICe
The primary goal of California’s criminal infrastructure spending for these two programs
justice system is to provide public safety by comprised less than 2 percent of total state infra-
deterring and preventing crime, incarcerating structure spending over the last decade, CDCR and
individuals who commit crime, and reintegrating the state court system have large infrastructure
criminals back into the community. The major initiatives under way that could dramatically
state judicial and criminal justice programs include increase spending over the next five years.
the California Department of Corrections and
CDCR
Rehabilitation (CDCR) and the Department of
Justice (DOJ), as well as the state court system. The CDCR is responsible for the incarceration,
While DOJ maintains and operates 11 forensic rehabilitation, and care of roughly 144,000 adult
laboratories throughout the state, most of the felons at 33 state prisons and 1,200 juvenile wards
state’s infrastructure spending on criminal justice at five youth correctional facilities. The department
facilities supports CDCR and the courts. While also supervises and treats about 90,000 adult and
www.lao.ca.gov Legislative Analyst’s Office 35
An LAO RepOR t
1,200 juvenile parolees from 205 parole offices close certain juvenile facilities. The state’s
throughout the state. In addition, CDCR operates prisons, however, have experienced signif-
46 adult and juvenile conservation camps and icant overcrowding problems. On May 23,
contracts with private and public vendors for 2011, the U.S. Supreme Court upheld a
14 adult prison facilities. federal three-judge panel ruling requiring
the state to reduce overcrowding in its
Major drivers of CdCR Infrastructure Spending
prisons to 137.5 percent of design capacity
As shown in Figure 19, CDCR spent a total within two years.
of about $1.4 billion on infrastructure from
• Program Space. In order to effectively
2000-01 through 2009-10. About two-thirds of this
provide rehabilitation and health care
spending was supported with lease-revenue bonds,
services to inmates and wards, CDCR’s
while the remainder was mostly from the General
facilities generally require separate
Fund. Spending on CDCR infrastructure has
program space. In fact, various federal
largely been driven by the following three factors:
court orders have required the department
• Housing Needs. Increases in the inmate
to improve its delivery of these services by
and ward population often result in the
renovating existing or constructing new
need for additional housing units, while
program space (such as for medical services
reductions in the population can reduce
and mental health care).
housing needs. For example, a significant
decline in the number of juvenile wards • Facility Operations. Given the age of some
in recent years has allowed CDCR to of CDCR’s facilities, the department must
periodically replace basic
Figure 19 infrastructure systems
Lease-Revenue Bonds Are the Largest Source of at existing facilities
CDCR Infrastructure Spendinga (such as wastewater
(In Millions) treatment systems).
$250 Regular maintenance of
these systems can help
Lease-Revenue Bonds
delay the need for costly
200 General Fund
replacements. However,
due to the prison
150
overcrowding, budget
reductions, and poor
100 management practices,
the department has
50 struggled in recent years
to properly maintain
its roughly 40 million
2000-01 2002-03 2004-05 2006-07 2008-09
square feet of facility
a Does not include approximately $6 million in infrastructure spending from general obligation bonds, space.
which represents less than 1 percent of CDCR infrastructure spending over the last decade.
36 Legislative Analyst’s Office www.lao.ca.gov
An LAO RepOR t
AB 900 Will Significantly Increase Spending AB 900 could increase General Fund costs by
In 2007, the Legislature enacted Chapter 7,
$1.6 billion annually.
Statutes of 2007 (AB 900, Solorio), in order to
Issues for Legislative Consideration—CdCR
relieve the significant overcrowding problems
Reconsider Scope of AB 900 Construction
facing state prisons and improve rehabilitation.
Package. While AB 900 was enacted by the
Specifically, AB 900 authorized a total of
$7.7 billion—$7.4 billion in lease-revenue bonds
Legislature four years ago as an overall strategy to
and $300 million in General Fund support—for
relieve overcrowding in prisons, the state now faces
unprecedented circumstances that make the full
a broad package of prison and jail construction
implementation of AB 900 as initially envisioned
initiatives, as follows:
a lower priority. Specifically, supporting the debt-
• $2.4 billion to construct infill beds
service and annual operating costs of additional
intended to replace so-called “temporary”
prison facilities would put further pressure on the
housing in gymnasiums, day rooms, and
General Fund. Moreover, the federal court ruling
other public spaces in prisons.
to reduce overcrowding in the state’s prisons and
• $2.6 billion to construct “reentry facilities” recent state policy changes will significantly reduce
primarily for inmates within one year of the inmate population. For example, as part of the
being released from custody. 2011-12 budget package, the Legislature approved
legislation that, effective October 1, 2011, will shift
• $1.1 billion to construct inmate health care
responsibility for about 40,000 lower-level inmates
facilities.
and parole violators from the state to local govern-
ments. (For more information, please see our report
• $1.2 billion to help counties construct local
A Status Report: Reducing Prison Overcrowding in
jail facilities.
California.)
• $300 million to make various infra- In view of the above, we believe it makes sense
structure improvements at existing prisons. for the Legislature to hold off from moving forward
with the infrastructure projects authorized under
At this time, most of the funds authorized
AB 900 with a few exceptions. In order to comply
in AB 900 have not been spent. However, CDCR
with federal court orders regarding inmate health
plans to begin construction on a number of AB 900
care, certain health care projects should proceed as
projects in the next five years. If these plans are
planned. However, the need and scope for some of
implemented, spending on CDCR infrastructure
these health care-related projects will likely change
will increase dramatically during this period. Most
given that there will be significant reductions in the
of this spending will be funded from the sale of
inmate population. Additionally, given that certain
lease-revenue bonds. We estimate that the annual
offenders will be shifted from state prison to county
debt service for the lease-revenue bonds used to
jails, the Legislature should proceed with the local
construct all of the planned facilities would reach
jail construction authorized in AB 900.
approximately $600 million. In addition, the added
Reconsider Need for State Youth Correctional
annual operating costs for these facilities would be
Facilities. As previously mentioned, there has been
about $1 billion when fully activated. Thus, when
a steep decline in the number of juvenile offenders
fully implemented, the facilities authorized under
housed in the state’s youth correctional facilities
www.lao.ca.gov Legislative Analyst’s Office 37
An LAO RepOR t
from around 10,000 in 1995-96 to less than 1,200 of Appeal, and the Trial Courts. The Supreme
today. This decline can be attributed to several Court and the six Courts of Appeals are entirely
factors, including a general downward trend in state-supported. The Trial Court Funding program
juvenile arrest rates and statutory changes to shift provides state funds (above a fixed county share)
key juvenile offender program responsibilities to for support of the state’s 58 trial courts. The Judicial
counties. As a result of this steady decline, CDCR Council serves as the administrative body of the
has closed ten of its youth correctional facilities and judicial system, with the Administrative Office of
camps since 2003. In addition, the remaining youth the Courts (AOC) as its staff. In total, the Judicial
facilities and camps currently operate at only about Branch is responsible for approximately 19 million
55 percent of design capacity. (Individual facilities square feet of facility space. The vast majority of
range from a high of 93 percent to a low of about this space is dedicated to the trial courts, which
12 percent of design capacity.) Given the high cost consist of 532 facilities throughout the state.
of maintaining and renovating the state’s aging
State Assumes Responsibility
youth correctional facilities, the Legislature should
For Trial Court Facilities
consider closing additional facilities—particularly
if the juvenile population continues to drop. The Historically, counties funded the operation,
department recently announced plans to close the maintenance, and construction of trial court
Southern Youth Reception Center and Clinic in facilities. However, beginning in 1997, the
Norwalk. Legislature adopted a series of statutory changes
Improve Oversight of Facility Maintenance. that shifted the responsibility for trial court
Historically, CDCR has not completed various funding, employees, and facilities from counties to
types of maintenance projects—including preven- the state. Below, we discuss the two major pieces of
tative maintenance—in a timely manner. Moreover, legislation that were enacted related to trial court
in the past, prison wardens have sometimes facilities.
redirected funding earmarked for maintenance to Chapter 1082, Statutes of 2002 (SB 1732,
other purposes. In order to address this problem, Escutia). In 2002, the Legislature adopted
the Legislature could improve its oversight of Chapter 1082 (commonly referred to as the “Trial
CDCR’s maintenance budget by including a Court Facilities Act of 2002”), which authorized the
separately scheduled item for maintenance to transfer of title and all management responsibility
ensure that funding dedicated to this purpose is not for most court facilities from the counties to the
redirected for other purposes. Focusing on routine state on a building-by-building basis. (This transfer
repairs could pay off in the long term by avoiding was completed in December 2009.) The legislation
the much higher cost of completely rebuilding also requires counties to make payments to the
deteriorating prison facilities. (Please see page state for the maintenance of trial court facilities
D-119 in our Analysis of the 2007-08 Budget Bill for based on the amounts counties historically spent
a more detailed discussion of the need to provide for this purpose. The Judicial Council was given the
greater oversight of CDCR facility maintenance.) responsibility for the maintenance and renovation
of the transferred trial court facilities, as well as
J B
uDiCial RanCh
for the design and construction of new facilities.
The California Constitution vests the state’s Additionally, the legislation increases various
judicial power in the Supreme Court, the Courts criminal and civil fines and fees to finance the
38 Legislative Analyst’s Office www.lao.ca.gov
An LAO RepOR t
construction of $1.5 billion in trial court facility Major drivers of Court Infrastructure Spending
projects.
In general, court infrastructure spending is
Chapter 311, Statutes of 2008 (SB 1407,
largely driven by the following factors:
Perata). In 2008, the Legislature approved another
• Security and Size. In order to ensure
significant increase in spending on trial court
sufficient safety and security, the AOC
facilities with the passage of Chapter 311. This
prefers that court buildings have separate
particular legislation authorizes lease-revenue
circulation areas that allow court staff,
bonds to finance 41 “immediate and critical” trial
the public, and in-custody individuals
court projects totaling roughly $5 billion. Rather
appearing in court to remain separate
than being supported with the General Fund,
from each other. However, many of the
however, the legislation authorizes additional
existing court facilities lack these separate
increases in criminal and civil fines and fees to
circulation areas. In addition, increased
provide revenue for the debt service on the lease-
space for public areas of courthouses (such
revenue bonds. The legislation provides the Judicial
as jury rooms) and for the offices of judges
Council with substantial discretion to choose the
and court employees can also drive court
list of projects that would be classified as immediate
construction needs.
and critical and constructed. Subsequently,
Chapter 10, Statutes of 2009 (SBX2 12, Steinberg), • Seismic Safety and Age. Roughly
gives the Judicial Council further discretion by 80 percent of the state’s trial court facilities
authorizing the continuous appropriation of funds were built before the adoption of various
for acquiring land and developing preliminary seismic codes in 1988. As a result, some of
plans for the 41 projects. As part of the 2011-12 these facilities do not meet current building
budget package, however, the Legislature trans- standards and could prove to be a hazard
ferred $310 million in court construction funds in an earthquake. In addition, many court
to the General Fund, which most likely will delay facilities are more than 30 years old and
most of the projects authorized in Chapter 311 by require significant repairs that go beyond
up to a year. routine maintenance work.
Projected Increase in Spending on Courts
• Workload Changes and Program
Infrastructure. As a result of the two pieces of
Improvements. Increases in the number of
legislation discussed above, state spending on
judgeships and related court staff resulting
infrastructure for the courts is projected to signifi-
from additional workload can also drive
cantly increase in the coming years. Assuming
court infrastructure needs. In addition,
projects resume after the one-year delay, nearly all
new programs sponsored by the courts can
of the projects supported by Chapters 1082 and 311
change the type of facilities courts need.
are projected to be in the design or construction
For example, an increase in the number
process in 2013-14. This would result in expendi-
of self-represented litigants has increased
tures on court facilities of more than $2 billion at
the need for space for Self Help Centers in
that time and completion of all projects by 2017-18.
court facilities.
The annual debt service for the lease-revenue bonds
used to construct the total package of projects will
reach about $390 million.
www.lao.ca.gov Legislative Analyst’s Office 39
An LAO RepOR t
Issue for Legislative Consideration—Courts Consider Delaying Lower Priority Projects.
Because some of the fine and fee revenue currently
Focus on Highest Priority Projects.
dedicated to court construction could be further
The Judicial Council classifies projects as an
redirected to help address the state’s budget
“immediate need” (the highest ranking need-level)
shortfall, the Legislature may wish to consider
or “critical need” (the second highest ranking
holding off on the critical need projects at this
need-level). Based on the limited funds authorized
time. We estimate that funding only immediate
in Chapter 311, the Judicial Council is planning
need projects—including those not currently being
to move forward on some of the immediate need
pursued by the Judicial Council—would free up
projects and many critical need projects. In other
tens of millions of dollars in annual debt-service
words, the Judicial Council has chosen to hold off
payments that could be used to offset General Fund
on a number of immediate need projects in order
costs in other areas based on legislative priorities.
to proceed with lower-priority projects. Given the
limited resources available for court construction,
however, we believe it makes sense to prioritize the
immediate need projects.
ConCLuSIon
Major Findings K-12 school districts to match at least 50 percent of
projects costs.
In this report, we summarize the state’s major
State Initiated Many New Infrastructure
infrastructure investments from the previous
Programs. During the last decade the state
decade. Overall, we estimate that the state spent
expanded its infrastructure funding responsibilities
$102 billion on infrastructure from 2000-01 to
to provide support for programs that previously
2009-10. Below is a summary of our key findings
did not receive state support, such as high-speed
related to the state’s infrastructure spending.
rail, trial courts, children’s hospitals, and stem cell
Over 70 Percent of the Spending Was for
research facilities.
Transportation and K-12 Education Programs.
Borrowing Through Bonds Financed Most
The state spent approximately $41 billion on
Infrastructure Investments. General obligation
transportation infrastructure and $31 billion on
bonds and lease-revenue bonds accounted for
K-12 school facilities. The other large infrastructure
almost two-thirds of the state’s infrastructure
programs were natural resources ($13 billion) and
spending. Most of these bonds were placed on
higher education ($10 billion).
the ballot or authorized by the Legislature and
More Than Half of the Spending Was for Local
Governor. Less than 15 percent of approved general
Programs. The state provided local governments
obligation bonds stemmed from initiative bond
more than $59 billion to build, acquire, or improve
measures (measures placed on the ballot directly
infrastructure. Most of these funds were allocated
by the voters). Because of the reliance on bond
to K-12 school districts to build schools. The state
funding, state spending on many infrastructure
typically required local governments to provide
programs fluctuates considerably over time. After
a local funding match to qualify for these state
a bond passes, programs typically experience
funds. For example, the state generally required
40 Legislative Analyst’s Office www.lao.ca.gov
An LAO RepOR t
temporary expenditure increases until the bond become more challenging in recent years due to
funds are exhausted. the state’s constrained fiscal position. Accordingly,
Rehabilitation and Maintenance of Existing the Legislature will have to balance its interests
Infrastructure Is Inadequate. Much of the state’s in infrastructure improvements with competing
infrastructure was built decades ago. As a result, priorities in the annual budget.
the state now faces major renovation demands. In Because most infrastructure spending is from
some cases the need for renovation has increased bonds, one simple measurement of infrastructure
because of insufficient ongoing spending on spending’s impact on total state spending is the
maintenance and repair. state’s DSR—the percentage of state General Fund
Lack of Data Hinders Decision Making, but revenues dedicated to debt-service payments. For
Information Suggests Infrastructure Demand Will most of the last three decades, the DSR was under
Continue to be Substantial. The state has limited 5 percent. The state’s annual DSR is currently at
information on the condition of existing infra- about 6 percent and growing. Below, we consider
structure, which makes prioritizing spending and the effects that different levels of infrastructure
measuring outcomes difficult. Information drawn spending in the future would have on this trade-off
from current facility conditions and available between debt service and other state spending.
department plans, however, suggests that demand Existing Bond Authorizations. The state
for state infrastructure funds will continue to be currently has about $46 billion of infrastructure
substantial absent change in current policies. bonds that have been approved, but not yet sold.
As shown in Figure 20, these bonds support a
Infrastructure Spending outlook
variety of programs, with the largest bond balances
The above findings highlight some issues for remaining for transportation, high-speed rail,
the Legislature and Governor to consider in future resources and flood control, and corrections. In
infrastructure policy and spending decisions. some cases—such as transportation, resources, and
Looking forward to the next decade of state infra- higher education—most of the remaining funds
structure investment, the
largest single issue for the Figure 20
Legislature to determine is Authorized but Unissued General Fund Bonds
the level of state spending (In Millions)
to dedicate to this General Lease-
Obligation Revenue
purpose. For any given
Bonds Bonds Total
level of state revenues,
Children’s hospitals $535 $139 $674
each dollar spent on
Corrections 3 7,259 7,262
infrastructure (or infra- General government 78 209 287
structure debt service) Higher education 731 558 1,289
High-speed rail 9,540 — 9,540
decreases funds that
Housing 1,430 — 1,430
could be spent on other K-12 facilities 4,660 — 4,660
programs. This trade-off Local libraries 33 — 33
Resources and flood control 6,384 799 7,183
between long-term infra-
Stem cells 1,924 — 1,924
structure investment and Transportation 11,735 — 11,735
program spending has Totals $37,053 $8,964 $46,017
www.lao.ca.gov Legislative Analyst’s Office 41
An LAO RepOR t
have already been appropriated or committed to significant existing bond authority, and the
specific projects. As a baseline, we assume the state proposed 2012 bond could provide substantial
issues these remaining authorized bonds. Figure 21 funds for water resources. Absent new bond
shows that this would increase debt-service costs authorizations, however, other state infrastructure
from 6 percent to 7.2 percent by 2014-15. programs that typically are funded with bonds
Proposed Bond Authorizations. The would receive relatively low levels of funding. For
Legislature and Governor approved a measure example, the remaining bond authority for K-12
placing an $11 billion general obligation bond to and higher education facilities is approximately
support the state’s water infrastructure before the $5.9 billion—much less than the amount spent
state’s voters in 2012. If approved by the voters on these infrastructure programs in the last
and implemented according to plan, the proposed decade ($40.7 billion). If the Legislature and voters
2012 water bond would modestly increase the wanted to maintain spending for K-12 and higher
state’s DSR. education infrastructure at levels similar to the
New Bond Authorizations. The largest previous decade, they would need to authorize
unknown in forecasting infrastructure spending large new bond acts. As shown in Figure 21, such
is the extent to which the Legislature and voters new bond acts for education facilities would push
will authorize new bonds for infrastructure. the DSR to about 8.2 percent. Similar to education,
Some programs may not require new bonds, other programs—such as transportation, parks and
as existing and proposed bonds would provide other resources programs, housing, and general
substantial resources for many additional years. government office space—also have relatively low
For example, prisons and high-speed rail have levels of existing bond authority compared with
recent spending levels.
Authorizing new bonds
Figure 21
for these programs
Projected Annual Debt-Service Ratio
Under Different Scenarios would further increase
the state’s infrastructure
Ratio of Annual Debt-Service Payments to
General Fund Revenues and Transfers debt beyond that shown
in Figure 21. These
9%
Bonds to Maintain Education forecast figures also
Infrastructure Spending
8 assume the state does
Proposed Bonds
7 (2012 Water Bond) not use bond funds to
Authorized Bonds initiate any new infra-
6
structure programs.
5
The above analysis
4
shows that selling
3 the stock of already
authorized bonds would
2
increase the percentage
1
of the state’s General
Fund dedicated to infra-
85-86 90-91 95-96 00-01 05-06 10-11 15-16 20-21
Estimated structure debt-service
42 Legislative Analyst’s Office www.lao.ca.gov
An LAO RepOR t
costs above current levels. Authorizing additional and improved use of facilities during the summer.
bonds to maintain the last decade’s pace of infra- A greater focus on repair and maintenance could
structure spending or provide state support for new prolong the life of existing infrastructure and avoid
infrastructure initiatives would push the DSR to costly replacements. In transportation, congestion
unprecedented levels. pricing or toll roads could reduce demand for new
highway capacity.
Policy options
Identify Additional Revenue to Support
There is no one right level for annual state Infrastructure. Rather than relying on the state’s
spending on infrastructure. The amount of infra- general revenues to fund infrastructure, the
structure spending should reflect the state’s prior- Legislature could explore alternative revenue
ities for infrastructure compared with other state sources. The state already has shifted some infra-
spending. Continuing the levels of infrastructure structure costs related to transportation and court
spending from the last decade is one option. As programs to special fund revenues. Expanding
shown above, this would result in a larger share of the use of toll roads or other user fees could
state spending devoted to infrastructure programs. provide additional funding. Or the Legislature
As an alternative to dedicating an increasing share could consider new approaches like charging
of the state budget to infrastructure, the Legislature motorists based on the number of miles they travel.
could consider other options. Throughout this Opportunities also exist for resources programs
report, we highlighted other ways the state could to charge beneficiaries for a greater share of infra-
manage infrastructure to reduce state costs. We structure costs.
discuss three such options below. In our view, a balanced approach that includes
Reduce the Scope of Infrastructure Receiving prioritization, demand management, and new
State Support. One option is to prioritize the state’s revenues would be most effective for managing
infrastructure investments to the most critical and the state’s infrastructure demands. Developing a
appropriate programs. For example, the Legislature comprehensive plan that incorporates each of the
could reevaluate whether certain programs should above strategies, however, is a complex task because
be a state responsibility or consider shifting infrastructure includes state programs spanning
a greater share of cost to local governments, many different policy areas and requires difficult
the private sector, or other beneficiaries. The long-term policy choices regarding the scope of
Legislature could also consider whether existing state services, revenues, and overall state devel-
bond authorizations—such as those for new prisons opment. In the following section, we recommend
under AB 900—remain a priority. As described in some improvements to the state’s infrastructure
the higher education chapter, the Legislature could planning process that would allow the Legislature
redefine what types of space to support with state and administration to better address the state’s
funds. infrastructure needs.
Adopt Strategies to Reduce Infrastructure
Improving the Infrastructure Planning Process
Demand. Another alternative is to reduce infra-
structure demand through policies that increase To effectively assess the enormous variety and
utilization, encourage less costly alternatives, or complexity of the state’s infrastructure needs, the
improve efficiency. Higher education policies could state needs a well-defined process for planning
place a greater emphasis on distance education and financing projects. Unfortunately, the state
www.lao.ca.gov Legislative Analyst’s Office 43
An LAO RepOR t
currently lacks such a process. In order to better proposals fit within the context of overall state
address the issue of infrastructure planning and infrastructure needs, priorities, and funding
financing, we believe it is time to alter the state’s capabilities. The Legislature cannot effectively
approach. assess the trade-offs of funding different proposals
Infrastructure Funding Remains a Mostly Ad without some perspective on the infrastructure
Hoc Decision Making Process. As described in demands across various capital outlay programs.
the introduction, the state has implemented some Each of these planning failures contributes
infrastructure planning procedures, such as the to the other. Without a clear legislative process
statewide five-year infrastructure plan. Although for debating and acting upon the statewide
the plan has improved some aspects of the state’s infrastructure plan, the administration has little
infrastructure planning, the effectiveness of the incentive to prepare the plan for the Legislature.
process could be greatly improved. One of the Without a comprehensive statewide plan to
Legislature’s goals in requiring the Governor to consider, the Legislature continues with the
annually submit a statewide five-year infrastructure existing approach to infrastructure financing and
plan was to provide a comprehensive plan from spending.
which the Legislature could develop a coordinated Establish Legislative Committees to Focus on
approach for capital outlay funding each year. In Statewide Infrastructure. The Legislature should
our view, this approach has broken down for two consider changes to its infrastructure process.
key reasons. Given the importance and complexity of these
First, the administration has not consis- issues, we have recommended in the past that the
tently provided an annual five-year statewide Legislature establish special policy and budget
infrastructure plan. The most recent five-year committees to develop and oversee statewide
plan accompanied the Governor’s 2008-09 infrastructure policy. There are different ways
budget proposal. While we have found some that this could be accomplished. For example,
deficiencies with previous five-year plans (please the Legislature could establish a special joint
see our previous publication, A Review of the 2002 policy committee to oversee infrastructure
California Infrastructure Plan), the Governor’s issues. The policy committee’s membership could
statewide plan is an important starting point in include the chairs of relevant policy and budget
developing a coordinated infrastructure strategy. committees (transportation, education, et cetera)
Similar to the Governor’s January budget proposal, to ensure policies adopted by the committee are
the five-year plan could provide a focus for policy applied throughout different program areas.
hearings and annual budgetary decisions on infra- What is critical, however, is that the Legislature
structure spending. independently assesses the state’s infrastructure
A second problem is that the Legislature’s needs, makes decisions regarding infrastructure
decision-making process remains fragmented. investment priorities, and articulates its policies in
Most financing decisions occur through bond acts statute or annual resolutions.
focused on specific program areas, and spending Some important considerations and decisions
decisions occur through the budget process within for the policy committee could include:
individual budget subcommittees. In this way,
• Reviewing the administration’s infra-
proposals are reviewed and funded in isolation,
structure plan and monitoring the state’s
and there is no examination of how competing
progress in implementing the plan.
44 Legislative Analyst’s Office www.lao.ca.gov
An LAO RepOR t
• Setting priorities for infrastructure smaller changes to improve efficiency and
spending across programs. oversight. For example, it could:
• Require Biennial Updates to the
• Analyzing proposed bond acts to ensure
Five-Year Infrastructure Plans. The
they fit within priorities, plans, and
workload associated with annually
funding capabilities.
collecting information from departments
• Determining which local or other non-state and organizing a comprehensive five-year
programs should receive funding. plan is substantial. Requiring the plan to
be submitted to the Legislature biennially
• Assessing the state’s infrastructure data
would reduce the workload and allow
and creating legislation to improve data
more time for oversight, data collection,
collection when necessary.
needs assessments, and other planning.
A biennial five-year infrastructure plan
• Developing institutional expertise in
would align with legislative sessions and
capital outlay topics such as financing,
the general election cycle—an important
construction delivery methods, and cost
consideration because general obligation
escalation.
bonds (the primary financing source for
By accomplishing the above steps, the
infrastructure) must be approved by voters.
Legislature would establish the basic parameters
for development of a coordinated statewide infra- • Limit Continuous Appropriations. Some
structure strategy. Implementation of the statewide infrastructure spending is not included in
plan through approval of specific projects, however, the annual budget bill, but is continuously
would continue to be part of the annual budget appropriated pursuant to other statutes. In
process. For this, we recommend the Legislature our view, continuous appropriations limit
establish separate infrastructure budget subcom- legislative oversight. Whenever possible,
mittees in each house to consider all capital outlay we recommend that the Legislature retain
budget proposals. This would allow for a more control of infrastructure appropriations so
comprehensive review than the existing process that it can ensure that state infrastructure
because the subcommittee could compare spending investments align with state priorities.
across program areas and confirm that spending
California faces a significant challenge in
is focused on priorities. Such subcommittees also
addressing its infrastructure needs. It is simply too
could uphold policies established by the infra-
important an issue to continue making decisions
structure policy committee.
on an ad hoc basis. Given the importance of
Other Potential Reforms for the State’s
state infrastructure investments to California’s
Infrastructure Process. In our view, establishing
transportation network, educational programs,
infrastructure committees alone would be a
criminal justice system, and other programs, the
significant step forward, as additional coordination
state needs to have a decision-making process that
and prioritization could greatly improve the state’s
allows it to consider how any proposal fits within
infrastructure process. In addition to forming
statewide needs and priorities and how it affects
infrastructure policy and budget committees,
the state’s ability to finance those and other needs
however, the Legislature could consider other,
over time. Developing a coordinated approach
www.lao.ca.gov Legislative Analyst’s Office 45
An LAO RepOR t
to infrastructure planning and financing will be infrastructure demands. If the state elects to
a considerable undertaking. Improving existing maintain its current policies relating to infra-
practices, however, will allow the administration structure, the Legislature likely will need to shift a
and Legislature to be better informed and proactive larger share of the state’s budget to infrastructure.
in addressing the state’s infrastructure needs. Alternatively, the state could adopt new policies to
reduce demand or share costs with beneficiaries
Summary
and local governments. Because any decisions
Over the last decade, the Legislature, Governor, on infrastructure policies or new spending span
and voters have dedicated increased resources multiple policy areas and require long-term
towards renovating and expanding California’s planning, we encourage the Legislature to consider
public infrastructure. Despite making these a more coordinated approach for infrastructure
considerable investments, the state faces ongoing financing decisions.
46 Legislative Analyst’s Office www.lao.ca.gov
An LAO RepOR t
LAo InFRASTRuCTuRe PuBLICATIonS
general
Frequently Asked Questions About Bond Financing (February 2007)
Implementing the 2006 Bond Package: Increasing Effectiveness Through Legislative Oversight (January 2007)
The State’s Infrastructure and the Use of Bonds: A Primer (January 2006)
A Review of the 2002 California Infrastructure Plan (December 2002)
Overhauling the State’s Infrastructure Planning and Financing Process (December 1998)
Transportation
High-Speed Rail Is at a Critical Juncture (May 2011)
California Travels: Financing Our Transportation (January 2007)
“Pavement Maintenance: Protecting the state’s investment” Analysis of the 2004-05 Budget Bill, A-52
(February 2004)
After the Transportation Blueprint: Developing and Funding an Efficient Transportation System (March 1998)
K-12 education
“school Facilities” Analysis of the 2008-09 Budget Bill, e-110 (February 2008)
A New Blueprint for California School Facility Finance (May 2001)
Resources
“A Framework for evaluating resources Bond spending” The 2010-11 Budget: Resources and
Environmental Protection, res-46 (March 2010)
Financing Water Infrastructure (March 2009)
California’s Water: An LAO Primer (october 2008)
Financing Flood Management Infrastructure (november 2005)
Setting Resources Infrastructure Funding Priorities (February 1998)
Higher education
“year-round operations at uC and Csu” Analysis of the 2006-07 Budget Bill, e-207 (February 2006)
Funding UC Faculty Research Facilities (June 2004)
“Funding Higher education Capital outlay” Analysis of the 2003-04 Budget Bill, g-42 (February 2003)
Building Standards in Higher Education (January 2002)
Year-Round Operation in Higher Education (February 1999)
Criminal Justice
A Status Report: Reducing Prison Overcrowding in California (August 2011)
Implementing AB 900’s Prison Construction and Rehabilitation Initiatives (May 2009)
“The state Has inadequately Maintained its Major investment in Prison infrastructure” Analysis of the
2007-08 Budget Bill, D-119 (February 2007)
www.lao.ca.gov Legislative Analyst’s Office 47
An LAO RepOR t
LAo InFRASTRuCTuRe ASSIgnMenTS
Infrastructure
Mark Whitaker Capital Outlay Coordinator, Debt Service mark.whitaker@lao.ca.gov
(916) 319-8335
Transportation
Jessica Digiambattista Peters Transportation Financing, Highways jessica.peters@lao.ca.gov
(916) 319-8363
Eric Thronson Public Transportation, Housing eric.thronson@lao.ca.gov
(916) 319-8364
Russia Chavis Agriculture, CHP, DMV russia.chavis@lao.ca.gov
(916) 319-8338
K-12 Education
Edgar Cabral School Facilities edgar.cabral@lao.ca.gov
(916) 319-8343
Resources
Anton Favorini-Csorba Water, Flood Control, Fish and Wildlife anton.favorini-csorba@lao.ca.gov
(916) 319-8336
Lia Moore Forestry, Parks, Land Conservation lia.moore@lao.ca.gov
(916) 319-8333
Higher Education
Paul Golaszewski University of California paul.golaszewski@lao.ca.gov
(916) 319-8341
Judy Heiman California State University judy.heiman@lao.ca.gov
(916) 319-8358
Paul Steenhausen California Community Colleges paul.steenhausen@lao.ca.gov
(916) 319-8324
Criminal Justice
Aaron Edwards Correctional Health Care aaron.edwards@lao.ca.gov
(916) 319-8351
Drew Soderborg Courts, Juvenile Justice drew.soderborg@lao.ca.gov
(916) 319-8346
Health
Lishaun Francis Developmental Centers, Mental Health lishaun.francis@lao.ca.gov
(916) 319-8340
LAo Publications
This report was prepared by Mark Whitaker with contributions from many others, and reviewed by Marianne o’Malley.
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 website at www.lao.ca.gov. The lAo is located at 925 l street, suite 1000,
sacramento, CA 95814.
48 Legislative Analyst’s Office www.lao.ca.gov