Consolidating California’s Statewide Automated Welfare Systems

Consolidating California’s Statewide Automated Welfare Systems M AC TAy lo r • le g i s lA Ti v e A nAl y sT • Feb r uA ry 13, 2012 An LAO RepOR t 2 Legislative Analyst’s Office www.lao.ca.gov An LAO RepOR t ExECutivE SummAry California’s Statewide Automated Welfare System (SAWS) is made up of multiple systems which support such functions as eligibility and benefit determination, enrollment, and case maintenance at the county level for some of the state’s major health and human services programs (including Medi-Cal, California Work Opportunity and Responsibility to Kids [CalWORKs], and CalFresh). These automation systems have been a sizable financial commitment for the state, taking multiple years and hundreds of millions of state and federal dollars to develop and maintain. Over the years, the Legislature has consolidated the total number of SAWS systems, reducing the state’s financial burden of maintaining multiple systems and also assisting in standardizing the eligibility determination processes of the state’s health and human services operations. Most recently, the Legislature enacted Chapter 13, Statutes of 2011 (ABX1 16, Blumenfield), which will decrease the number of SAWS systems to two. Additionally, this legislation specifies that the reduction will occur by migrating, or moving, 39 counties from an existing system to Los Angeles County’s new replacement system. In this report, we identify several issues for the Legislature to consider as the administration pursues legislative goals for SAWS consolidation, with a particular focus on how to contain potentially significant, but to some extent avoidable, migration costs. We offer alternative procurement approaches for the migration that would encourage greater vendor participation and competition for state services. Increased competition should help drive down the costs for the migration effort. Finally, we make several recommendations intended to enhance legislative oversight and clarify legislative priorities for SAWS consolidation. www.lao.ca.gov Legislative Analyst’s Office 3 An LAO RepOR t introduCtion The SAWS is made up of multiple systems presents and comments on recent legislative which support such functions as eligibility and changes that would consolidate the SAWS’ systems, benefit determination, enrollment, and case and ends with recommendations for the Legislature maintenance at the county level for some of the to consider as the administration pursues state’s major health and human services programs. consolidation activities. This report provides a background on SAWS, BACkground Development of the Consortia Strategy. Since systems, the CalWORKs Information Network the 1970s, the state has made several attempts to (CalWIN) and Consortium IV (C-IV), would build a single, statewide automated welfare system round out the four. to deliver and support some of California’s major Reducing the Number of Consortia. In health and human services programs, such as 2006 legislation, the Legislature expressed its Medi-Cal, CalWORKs, and CalFresh (formerly preference to reduce the number of consortia. known as Food Stamps). In the early 1990s, several The administration had proposed migrating systems were under development. For example, the the 35 counties utilizing ISAWS to the C-IV state, along with certain counties, began developing consortium, rather than build a new system that a system called Interim Statewide Automated would replace an aging ISAWS. (A migration, in Welfare System (ISAWS). Los Angeles (LA) County simplest terms, is the effort of moving data housed was developing its own system called the LA in one county consortium system to another Eligibility Automated Determination, Evaluation, county consortium system.) The Legislature and Reporting System (LEADER). At the same approved this plan and ISAWS Migration, as that time, other counties were pursuing their own effort was called, was completed in mid-2010. That automated systems, each attempting to demonstrate migration cost about $210 million ($130 million that theirs could be the single statewide system. General Fund) and brought the number of In 1995, the Legislature ultimately concluded consortia to three. See Figure 1 for a current map of that a single statewide system was not feasible at California counties by consortia. the time. Instead, it approved a strategy whereby Consortia Costs. The consortia systems have a limited number of systems, called consortia, been a sizable financial commitment for the state. would make up SAWS. Specifically, the Legislature Developing each of the systems took multiple instructed the Health and Welfare Data Center, years and hundreds of millions of state and now called the Office of Systems Integration (OSI), federal dollars. Once developed, the state has been to work with the counties on a consortia strategy responsible for paying the annual maintenance that would include “no more than four county and operations (M&O) costs on these systems, consortia.” The Legislature chose ISAWS and totaling tens of millions of dollars. See Figure 2 (see LEADER as two of these consortia. The OSI and page 6) for details on consortia development and counties decided that two other county-developed maintenance costs. 4 Legislative Analyst’s Office www.lao.ca.gov AN LAO R EPORT Figure 1 California Counties by Consortia Del Norte Siskiyou Modoc C-IV (Consortium-IV) CalWIN Shasta Lassen (CalWORKs Information Network) Humboldt Trinity LEADER (Los Angeles Eligibility Automated Determination, Evaluation, and Reporting System) Tehama Plumas Butte Glenn Sierra Mendocino Nevada Lake Colusa Yuba Placer Sutter Yolo El Dorado Sonoma Alpine Napa Sacramento Amador Solano Calaveras Marin San Tuolumne Contra Joaquin Mono Costa San Francisco Alameda Stanislaus Mariposa San Mateo Santa Clara Merced Madera Santa Cruz San Fresno Inyo Benito Monterey Tulare Kings San Luis Obispo Kern San Bernardino Santa Barbara Ventura Los Angeles Riverside Orange San Diego Imperial www.lao.ca.gov Legisl ative An alyst’s 5 AN LAO R EPORT Figure 2 Costs for the Statewide Automated Welfare System (In Millions) Total/General Fund Costsa Maintenance and Operation Consortium Development 2010-11 2011-12 ISAWS (fully implemented in 35 counties in 1998) $110/$90b $20/$11 —c LEADER (fully implemented in LA County in 2001) 110/75 31/16 $31/$15 C-IV (fully implemented in 4 counties in October 2004) 280/215 46/24 71/37d CalWIN (fully implemented in 18 counties in 2006) 525/350 78/41 76/39 Totals $1,025/$730 $175/$92 $178/$91d a Includes federal Temporary Assistance for Needy Families block grant funds, which are fungible to the General Fund. b ISAWS development costs exclude planning expenses as the ISAWS system was built as part of an already existing system. c Maintenance and operation costs for ISAWS counties included in overall C-IV consortium costs. d Reflects updates to the original publication as of March 12, 2012. ISAWS = Interim Statewide Automated Welfare System; LEADER = Los Angeles Eligibility Automated Determination, Evaluation, and Reporting System; C-IV = Consortium IV; CalWIN = CalWORKs Information Network. Legislature Considers Again the Possibility of an appropriation to begin work on a new system a Single Statewide System. related to eligibility determination process changes. While the administration did take initial Health Care Services (DHCS) and the Department of Social Services (DSS) to implement a statewide submitted to the Legislature for review. Ultimately, enrollment determination process for many of the the administration suspended planning when programs administered by the SAWS consortia. Care Act (ACA) was passed in early 2010. In large part, this was due to the fact that the ACA of eligibility determination processes and enrollment processes for state health programs, such as Medi-Cal and Healthy Families, and will statute required DHCS and DSS to develop a therefore impact the state systems, like SAWS, that support them. Additionally, ACA creates health of possibly building a single statewide system, to streamline the eligibility determination process. with SAWS for information and data exchange. Administration Suspends Planning Effort Eligibility changes, pursuant to ACA, could result for Possible Single Statewide System. To ensure the Legislature was kept informed of the plan, therefore the administration paused in planning for a new system. (See the nearby box for more submit a strategic plan for a (minimum) 45-day information on health exchanges.) legislative review period prior to a request for 6 Legislat iAvenalyst’s www. lao.ca.g ov An LAO RepOR t LEAdEr rEpLACEmEnt pLAnS Technology Issues Lead to Proposed New and update the system. These maintenance services System. As LEADER’s maintenance contract have not been easily replaced and the state has had approached an end in spring of 2005, the state and to enter into multiple “sole source” contracts with LA County considered building a replacement the development vendor for continued support. system rather than procure another vendor for Sole source contracts are generally more expensive continued maintenance. Project staff stated than contracts that have been competitively bid, LEADER’s dated technology could no longer meet where the presence of other vendors tends to drive the business needs of the county. Additionally, down costs. staff explained that when the LEADER system was In 2005, the administration proposed moving originally designed, it was built using proprietary LA County from the LEADER system to an hardware and software, which meant that only the existing consortia system, so as to no longer be development vendor had the ability to maintain dependent on a single vendor for its maintenance. Health Benefit Exchanges In March 2010, President Obama signed into law the Patient Protection and Affordable Care Act (ACA). Pursuant to ACA, beginning January 1, 2014, most U.S. citizens and legal residents must have health insurance coverage or pay a penalty. To make coverage more accessible and affordable, ACA creates new entities called American Health Benefit Exchanges, through which individuals and small businesses will be able to research, compare, check their eligibility for, and purchase health coverage. Each state may develop its own exchange system and has significant flexibility in its design and implementation. Federal law requires that state exchanges begin running no later than January 1, 2014. If a state cannot or chooses not to establish an exchange by that time, the federal government will establish and operate one within the state. Chapter 655, Statutes of 2010 (AB 1602, John A. Pérez), established an independent entity within California state government called the Health Benefit Exchange (hereafter called the Exchange). The Exchange is comprised of a five-member board and is responsible for planning and implementing the state’s health exchange system. In January 2012, the Exchange, in collaboration with California Department of Health Care Services and the Managed Risk Medical Insurance Board, released a request for proposal that included the functions for the proposed exchange system, called the California Healthcare Eligibility, Enrollment, and Retention System (CalHEERS). The Exchange plans to award a contract in early April 2012 to a vendor who will design, develop, and implement CalHEERs. The vendor is responsible for building a system that includes multiple business functions such as: real-time eligibility determination; health plan certification, recertification, and decertification; reporting and tracking of data for federal, state, and local purposes; and consumer assistance. Additionally, CalHEERS must leverage existing state systems, which could include California’s Statewide Automated Welfare System and other health-related systems, and be built using flexible technology to allow for future enhancements. www.lao.ca.gov Legislative Analyst’s Office 7 An LAO RepOR t However, in 2007, the administration decided to Accenture LLP as the winning vendor to open the procurement to all viable and interested build the new system. vendors, stating that the existing consortia systems • In early 2010, the administration proposed did not meet all of LA County’s program and delaying the project another six months to business needs. The Legislature approved this again defer DD&I activities and costs. The change of approach, thus allowing LA County to go Legislature approved this additional delay. forward with a LEADER replacement system (LRS). Delays in LRS Development. Since the • In the 2011-12 Governor’s May Revision, Legislature’s approval of LRS development, the administration proposed another stop the state and LA County have proceeded with to LRS development, this time proposing project activities. After several years of planning an indefinite suspension of all project and preparing a request for proposal for LRS, activities. (See the nearby box for more the procurement for a vendor was planned for details on the administration’s proposal to completion by July of 2008 and work was to begin suspend LRS development.) However, the on the system by summer of 2009. However, there Legislature approved continued funding have been several delays: for LRS development in the 2011-12 Budget • In the 2009-10 Budget Act, the Legislature Act, but at less than one-half of the funding delayed the LRS project by six months, level included in the Governor’s 2011-12 deferring expenditures in light of the state’s January budget proposal. (The Legislature financial condition. This delay pushed out reduced the General Fund appropriation the design, development, and implemen- from the initially proposed $27 million to tation (DD&I) activities. Procurement $12 million.) In making this appropriation, efforts continued, however, and by the the Legislature was aware that the adminis- fall of 2009, project staff had selected tration was preparing a long-term plan for Administration proposes Suspending LrS development As part of the 2011-12 Governor’s May Revision, the administration proposed indefinitely suspending the Los Angeles Eligibility Automated Determination, Evaluation, and Reporting System (LEADER) replacement system (LRS) development, citing the state’s continued financial problems as a primary factor. However, the administration also stated that the federal government wanted to see a long-term plan for the state’s eligibility systems that included integration with the state’s proposed health exchange system, pursuant to federal Patient Protection and Affordable Care Act. Without federal approval of the plan, the federal government would not approve federal financial participation for either the maintenance of the LEADER system beyond April 2013 or the development of LRS. The administration needed additional time to develop such a plan, and thus proposed the suspension of LRS development. The administration submitted a high-level strategic plan to the federal government in the summer of 2011. At the time this report was prepared, the administration was expecting to soon receive a response from the federal government regarding its approval for the state to proceed with LRS development and its continued financial participation. 8 Legislative Analyst’s Office www.lao.ca.gov AN LAO R EPORT the SAWS systems to submit to the federal systems.) It is important to note that the consortium government. has not yet entered into a contract with the vendor and will only do so once it has received federal The Selected LRS Proposal. Based on approval to proceed with LRS development and Accenture LLP’s proposal for LRS development, a window of opportunity to potentially direct (total funds). (Generally, the federal government changes to the process of LRS development. costs for the state’s other welfare automation LEGISLATURE ESTABLISHES PLAN FOR A TW STEM CONSORTIA Highlights of Legislation. competition among the remaining systems. For in the 2011-12 Budget Act, the Legislature made example, we have witnessed how innovation in known its intent that the administration should proceed with LRS development. Additionally, the to improve the other systems. (See our May 2010 report, Moving Forward With Eligibility and Enrollment Process Improvements, for details.) No Requirement for Particular Plans. systems that make up SAWS. It directs OSI to migrate the 39 counties currently in the C-IV authority to the administration to pursue the consortium to a system that would replace both Legislature’s stated goals for welfare automation system consolidation and migration. We note that, determined that the CalWIN consortium would be the state’s other system. to provide a strategic plan for legislative review Major Milestone for SAWS. is a major milestone in SAWS history not only because it reduces the number of consortia to two, does not require the administration to develop a and how consolidation will occur—through a migration. We believe the move towards fewer are generally required to undertake as part of the systems is generally a good one and in the past California Technology Agency’s approval of an have suggested that the Legislature create a goal information technology (IT) project. An FSR is a of no more than two consortia in SAWS. Fewer systems decrease M&O costs, avoid some future decision to proceed with an IT project and includes development expense for building new systems, alternative approaches to meeting business needs and assist in standardizing the state’s health and as well as estimates of total costs and a timeframe human services operations at the county level. And for developing a new system. having more than one consortium still encourages www.lao.ca.gov Legisl ative An alyst’s 9 An LAO RepOR t While Chapter 13 does not require that the oversee the C-IV migration “under the LRS administration develop any particular plans to contract.” Statute does not specify a vendor. implement the legislation, there is nothing in The administration, however, has stated in Chapter 13 or other state law that prevents the communications with the federal government administration from conducting a planning effort that it plans to amend the current contract with that includes analyses of costs and alternative Accenture LLP to include the migration work. The approaches to meeting the goals in question. administration’s decision means that Accenture C-IV Migration to Be Handled Under a LLP would be given the migration work. Specified Contract. Chapter 13 directs OSI to iSSuES for LEgiSLAtivE ConSidErAtion A ddressing the for the additional migration activities. Without L Ack of P LAnning for c-iV M igrAtion understanding the scope and complexity of the effort, the state could be at a disadvantage when As stated above, Chapter 13 does not require negotiating to amend the current LRS contract. the administration to conduct an FSR or other plan that analyzes alternatives for migrating the Consider Alternative procurement 39 C-IV counties to LRS. Without such an initial Approaches for the C-iv migration analysis, it is unknown whether a certain approach The administration’s current plans are to is the most efficient, cost-effective, and/or least proceed with the LRS procurement results and risky. Some projects that have been allowed to amend the Accenture LLP contract for LRS to bypass this initial analysis (either by executive include the migration of C-IV. However, this plan proclamation and/or through statutory authority) could lead to potentially significant cost increases have encountered issues that could have been for the state, some of which could potentially be foreseen and dealt with earlier in the project’s avoidable. The result of this plan could be very planning stages. These issues can lead to significant similar to the results under a non-competitive bid cost increases and system delays. or sole source contract where no other vendors are migration Costs Could Be Significant allowed to compete for the work. (As previously mentioned, these types of contracts can lead to Currently, it is difficult to know how much increased costs, as no other vendors are present to the C-IV migration effort could cost. The ISAWS potentially drive down costs or offer alternative Migration project, the only large-scale migration solutions.) To better control for cost increases the state has conducted for the SAWS systems, cost due to the migration, the state may wish to over $200 million (all fund sources). While that consider alternative procurement options that effort may be very different from the proposed would infuse more competition for the migration migration, without an FSR or similar plan the state work, potentially offering different, less costly has no baseline estimate of the cost or the amount alternatives. We offer several options below and of time this migration could take. What is certain describe potential advantages and disadvantages is that the current $475 million price tag to build for each. LRS will increase, perhaps significantly, to account 10 Legislative Analyst’s Office www.lao.ca.gov An LAO RepOR t Option 1: Reopen the LRS Procurement. LRS. However, a possible advantage of conducting Rather than amend the current Accenture LLP a new procurement is that it forces the incumbent proposal for LRS, the state could reopen the vendor to reduce its cost for the migration, as it LRS procurement to the original vendors who knows that more viable vendors are competing for submitted proposals, adding the C-IV migration the migration contract. This could potentially help as a component. Four vendors participated in the the state secure a better price for the migration initial procurement. This option would allow each effort. Another advantage of this option is that it of the original vendors a limited time to submit a would not delay the LRS project from commencing revised proposal. This option could create some because the procurement for the migration could competition and help bring down overall project be conducted concurrently with LRS development. costs. It is important to point out that Accenture The downside of this option is that conducting a new LLP built the current C-IV system and is the procurement process for migration services could be selected vendor poised to build LRS. Generally, an administratively costly and add additional time to the incumbent vendor has a significant advantage over overall migration effort. other vendors when bidding on work that involves Option 3: Break Migration Into Multiple its own systems. As a result, this option might not Contracts. Breaking the migration work into significantly enhance competition. Additionally, separate service contracts and hiring vendors this option could easily delay the project start for each service could create a more competitive date by months as vendors rewrite and resubmit environment and potentially reduce the state’s costs proposals and the state reviews them. Delays are for the overall migration. This option would require costly for the state as many project staff must still the state to elicit vendors for major components of be retained and project contracts extended. the migration—such as project management, data Option 2: Plan Migration as a Separate conversion, testing, training, service desk, and Project. Another option for the state to consider is change management. As with option two above, to continue with the proposed LRS project using this alternative opens the door to multiple vendors the administration’s chosen vendor, leaving the who could compete for each of the proposed C-IV migration as a separate project. This option contracts. These vendors may be experts in a would require conducting a second procurement particular service and could possibly be able to for a vendor who would migrate the 39 C-IV offer more competitive rates than the incumbent counties to LRS once it has been implemented in vendor, thus helping to lower the overall costs for LA County. An advantage of this option is that it the migration work. A disadvantage of this option, creates an opportunity for more than just the original however, is that the state would have to conduct vendors to participate. Opening up the competition several procurements and manage numerous could attract vendors with particular expertise in contracts at the same time. From a resource and migration activities. These vendors may not have management perspective, this could be difficult been able to compete in a procurement to build a given that the state would also be developing LRS. complex eligibility system, but they may be strong Consider requiring competitors for a migration project. As with the Cost-reasonableness Assessments first option, the incumbent vendor may still have an advantage over all other vendors due to its knowledge A “cost-reasonableness assessment” is a study of both the C-IV system and the newly developing conducted by contracted experts who collect data www.lao.ca.gov Legislative Analyst’s Office 11 An LAO RepOR t on the costs of a particular effort (for example, As mentioned above, the state has not yet building a new IT system) from other public and signed a contract for LRS development. Therefore, private-sector experiences. They extrapolate what this could be an opportunity for the state to costs might be for California to proceed with a conduct its analyses of migration alternatives similar effort, and then compare these results with without being committed to a specific vendor or the information included in a vendor’s proposal. proposed plan. Regardless of the chosen procurement i L o MProVing egisLAtiVe Versight approach, but particularly if it is a sole-source approach, there would be value in performing By statute, OSI is required to report to the a cost-reasonableness assessment of a C-IV Legislature each February 1st on the general state migration. The administration has not performed of SAWS. Reports must include any significant such an assessment to date. Conducting a schedule, budget, or functionality changes that cost-reasonableness assessment for the migration occur to any of the consortium. Chapter 13 adds scenario would give the state information about that OSI include the projected timeline and key how much a migration could potentially cost. This milestones for LRS development in this same would be valuable data to possess, particularly if report. No other legislative reporting requirements the chosen procurement approach is to amend the are stipulated. Given the significant costs and current contract with the already chosen vendor magnitude of building a new eligibility system to include migration as a component. Under this for LA County as well as the effort to migrate 39 approach, no other vendor would be able to put counties to that system, more frequent reporting forward a cost proposal for which the state could requirements may be necessary to enhance the use as a comparison to know whether amending Legislature’s oversight of this project. the current contract would be a cost-effective recommend Enhanced reporting approach to the C-IV migration. to the Legislature recommend Legislature direct Administration Currently, there are multiple state projects to review feasible options for migration of similar scope and magnitude to the LRS effort Given the lack of information the state under development. For many of these projects, has regarding the cost for a C-IV migration, administration staff provide regular updates to we recommend the Legislature direct the the Legislature or legislative staff to ensure the administration to report on the extent to which Legislature is aware of significant milestones, the procurement options provided above (or others issues, and risks. These updates are often presented not presented here) may be feasible and potentially through informal meetings rather than formal less costly alternatives to its current plans. The written reports, allowing two-way communication Legislature could require the administration to occur. We understand that these regular to conduct an FSR or other analysis, such as a meetings, rather than being onerous, are considered cost-reasonableness assessment or cost-benefit helpful to project staff. They have provided analysis. This exercise could provide vital opportunities to communicate project status to information on the best and most cost-effective the Legislature, allowed the administration to approach to consolidating the consortia systems. showcase its accomplishments, and provided a 12 Legislative Analyst’s Office www.lao.ca.gov An LAO RepOR t forum for administration and legislative priorities If the Legislature’s long-term plan for SAWS is to to be discussed and heard, among other benefits. eventually move to a single system, it may make We believe similar communication would be sense to leave Chapter 7 intact. However, if the particularly helpful during LRS development and Legislature’s long-term plan is the maintenance of C-IV migration. a two-consortia system, there could be potential We recommend that, during budget hearings, conflicts between Chapter 7 and Chapter 13 the Legislature direct the administration to goals. As it currently stands, any administration conduct regularly scheduled briefings between (current or future) could present a plan that further the administration and legislative staff as LRS consolidates SAWS into a single system, as allowed progresses and as the administration goes forward under Chapter 7. However, such a plan might with its migration planning. The frequency could conflict with legislative priorities, such as enhanced vary depending on the phase of the project. For vendor competition, found under the more recently example, the Legislature may want monthly or passed Chapter 13 legislation. as-needed updates during key points, such as the recommend Legislature Clarify testing and piloting of LRS or the transfer of data its intent for SAWS during the migration effort. As suggested above, leaving Chapters 7 and 13 Consider reConCiling intact as they are could leave ambiguity regarding Chapters 7 and 13 legislative intent on the future of SAWS. We Chapter 7’s goals deal mainly with recommend that the Legislature consider enacting streamlining the eligibility determination processes legislation that would clarify its intent. This for health and human services programs. However, could include repealing or amending portions of as discussed above, Chapter 7 leaves open the door Chapter 7 to correspond with Chapter 13 goals. for the creation of a single statewide welfare system. SummAry Through Chapter 13, the Legislature has stated a particular focus on containing the potentially its intent that California reduce from three to two significant, but to some extent avoidable, costs the number of consortia systems that make up associated with a C-IV migration. We offer the state’s automated welfare system. We believe alternative approaches that the administration this decision has merit and in the long run should could take to help mitigate costs and make several reduce the state’s overall welfare automation costs recommendations for the Legislature to adopt and help standardize the eligibility determination regarding SAWS consolidation and its oversight processes for many of the state’s major health thereof. Figure 3 (see next page) summarizes and social services programs. In this report, we the issues raised and our corresponding identify issues for the Legislature to consider as recommendations. the administration pursues Chapter 13 goals, with www.lao.ca.gov Legislative Analyst’s Office 13 An LAO RepOR t Figure 3 Issues and Recommendations for Legislative Consideration Issue Recommendation Lack of planning for a Consortium-IV migration to Direct the administration to conduct a thorough analysis a new LEADER Replacement System could of feasible options for a Consortium-IV migration potentially result in significant, but to some extent (including, but not limited to, the options provided in this avoidable, costs for the state. report) through a feasibility study report, cost-reason- ableness assessment, or other cost-benefit analysis. Lack of additional reporting requirements in place to Direct the administration to schedule regular briefings keep the Legislature abreast of major milestones throughout LEADER Replacement System development in the LEADER Replacement System development and Consortium-IV migration. and Consortium-IV migration effort. Depending on the Legislature’s long-term plan for Consider enacting legislation that clarifies the the make-up of the Statewide Automated Welfare Legislature’s long-term plan for the number of systems System, there may be conflicting statutory goals. included in the Statewide Automated Welfare System. LEADER = Los Angeles Eligibility Automated Determination, Evaluation, and Reporting System. 14 Legislative Analyst’s Office www.lao.ca.gov An LAO RepOR t www.lao.ca.gov Legislative Analyst’s Office 15 An LAO RepOR t LAo publications This report was prepared by erika li, and reviewed by Mark C. newton. The legislative Analyst’s office (lAo) is a nonpartisan office that 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. 16 Legislative Analyst’s Office www.lao.ca.gov