LAO
Cal Facts: 2013
Read the report at Legislative Analyst's Office ↗
2013
MAC TAYLOR LEGISLATIVE ANALYST JANUARY 2013
i
With a state as big, as populous, and as complex
as California, it would be impossible to quickly
summarize how its economy or state budget works.
The purpose of Cal Facts is more modest. By providing
various "snapshot" pieces of information, we hope to
provide the reader with a broad overview of public
finance and program trends in the state.
Cal Facts consists of a series of charts and tables
which address questions frequently asked of our
office. We hope the reader will find it to be a handy
and helpful document.
Mac Taylor
Legislative Analyst
ii
L a ’ O s
egisLative naLyst s ffice taff
Legislative Analyst
Mac Taylor
State and Local Finance Education
Jason Sisney Jennifer Kuhn
Marianne O'Malley
Edgar Cabral
Chas Alamo Carolyn Chu
Justin Garosi Rachel Ehlers
Ryan Miller Paul Golaszewski
Nick Schroeder Judy Heiman
Brian Uhler Kenneth Kapphahn
Mark Whitaker Paul Steenhausen
Corrections, Transportation, Health and Human Services
and Environment Mark Newton
Anthony Simbol Shawn Martin
Farra Bracht
Ross Brown
Brian Brown
Lishaun Francis
Aaron Edwards Eric Harper
Anton Favorini-Csorba Rashi Kesarwani
Jeremy Fraysse Lourdes Morales
Anita Lee Janne Olson-Morgan
Lia Moore Felix Su
Jessica Digiambattista Peters Ryan Woolsey
Tiffany Roberts
Drew Soderborg
Tor Tarantola
Brian Weatherford
Administration and Support
Information Services Izet Arriaga
Larry Castro Anthony Lucero
Sarah Kleinberg Tina McGee
Karry Dennis-Fowler Sarah Scanlon
Jim Stahley
Michael Greer
Jim Will
Vu Chu
Douglas Dixon
Sandi Harvey
iii
c
Ontents
IntroductIon .....................................................i
LAo StAff ......................................................ii
cALIfornIA'S Economy ......................................1
StAtE–LocAL fInAncE.....................................11
ProgrAm trEndS
K-12 ...............................................................29
HigHer education ............................................37
Human ServiceS ..............................................43
HealtH ...........................................................46
criminal JuStice .............................................53
reSourceS ......................................................57
tranSportation ...............................................60
otHer programS ............................................63
iv
California's EConomy
1
California’s Economy Is
Ninth-Largest in the World
Gross Domestic Product in 2011 (In Trillions)
United States
(excluding California)
China
Japan
Germany
France
Brazil
United Kingdom
Italy
California
Russia
2 4 6 8 10 12 14
California’s gross domestic product (GDP), the total
value of goods and services produced here, was just
under $2 trillion in 2011. California—with 12 percent
of the U.S. population—accounts for 13 percent of the
nation’s output.
Over one-third of California’s GDP is produced in the
Los Angeles-Long Beach-Santa Ana metropolitan area.
The GDP of Texas—the next largest state economy—
was $1.3 trillion in 2011.
California's EConomy
2
California's Mix of Jobs by Industry
Is Similar to the U.S.
Percentage of Nonfarm Employment,
August 2012
Trade, Transportation
& Utilities
Government
Professional and
Business Services
Educational and
Health Services
Leisure and Hospitality
Manufacturing
Financial Activities
Construction
US
Other Services California
Information
2 4 6 8 10 12 14 16 18 20%
California has an above-average share of jobs in
professional/business services and in information
due in part to the state’s leadership in two sectors:
technology and film/television production.
California’s relatively young population helps explain
its smaller share of workers in health services.
California's EConomy
3
Jobs Since the Recession:
Some Sectors Are Struggling
Change in California Employment (In Thousands)
July 2007 Through February 2010
February 2010 Through September 2012
Construction
Trade, Transportation
& Utilities
Manufacturing
Professional
& Business Services
Financial Activities
Leisure & Hospitality
Government
Information
Other Services
Educational
& Health Services
-400 -300 -200 -100 0 100 200
As of September 2012, the state had recovered about
500,000 of the net 1.4 million jobs it lost between
July 2007 and February 2010.
Construction and manufacturing were two of the
hardest-hit sectors during the recession, and they have
grown little or none at all since February 2010.
The recovery in most service sectors has been more
substantial. Employment in educational and health
services kept growing during the recession.
California's EConomy
4
More California Workers
Unemployed for Over Six Months
(In Millions)
2.5
2.0
Over 1 Year
1.5
6 to 12 Months
1.0
Less Than 6 Months
0.5
2007 2008 2009 2010 2011 2012a
a Includes data through August 2012.
The number of workers seeking jobs who have been
unemployed for more than six months has risen steadily
over the last five years. These unemployed workers
made up about one-half of the unemployed in 2012,
compared with only about one-sixth five years ago.
Workers unemployed for long periods can face
economic hardships due to loss of income and eligibility
for unemployment insurance. They also may face
greater difficulty getting a job due to erosion of job
skills and other factors.
California's EConomy
5
Unemployment Varies Significantly
Throughout California
Above 13%
10% to 13%
8% to 10%
Below 8%
The unemployment rate in inland counties as of October
2012 was 12.2 percent, whereas unemployment in
coastal counties (including the Bay Area counties) was
8.8 percent.
Since the recession began, California’s unemployment
rate has been between 2 and 3 percentage points
higher than the U.S. unemployment rate.
Only eight counties had unemployment rates below the
national average: Marin, San Mateo, San Francisco, Napa,
Orange, Santa Barbara, San Luis Obispo, and Sonoma.
California's EConomy
6
California Receives About $330 Billion
From the Federal Government
Federal Fiscal Year (FFY) 2009-10
Defense and
Homeland Security Social Security
and Medicare
Medi-Cal
and Other
Health and
Social Services
Education
Transportation
Other
In FFY 2009-10, federal spending in California was
roughly three times the amount of state spending
(General Fund and special funds).
The federal government provides funding to individuals,
state and local governments, nonprofits, and
businesses in the form of payments (such as Social
Security and Medicare), employee and retiree
compensation, grants, and procurement (spending on
goods and services).
About one-quarter of these federal funds flowed through
California's state budget.
California's EConomy
7
Trade Is an Important Source
Of California Economic Activity
2011 International Exports (In Billions)
California Exports by Region
Asia
Europe
Mexico
Canada
Other
10 20 30 40 50 60 $70
California Exports by Product
Computers and
Electronics
Machinery and
Building Materials
Agriculture and
Food
Transportation
Equipment
Chemicals
Other
10 20 30 40 50 60 $70
California's EConomy
8
California Home Prices
Have Begun to Climb
(In Thousands)
$600
California Median Home Price
500
U.S. Median Home Price
400
300
200
100
1985 1990 1995 2000 2005 2010
The median single-family home sales price in California
declined by $250,000 when the “housing bubble” burst.
Home prices have recently begun to climb again.
Many homeowners remain underwater on their
mortgages (when the mortgage amount outstanding
is greater than the market value of the home) and
thousands have gone through foreclosure. In 2011, there
were 155,000 foreclosures in California—down from
238,000 in 2008. Though foreclosures have declined,
more than 250,000 delinquency notices were issued
in 2011.
California's EConomy
9
California’s Elderly Population Will
Grow Rapidly in the Next Decade
LAO Projected Growth by Age Group,
2010 Through 2020
0-4
5-17
18-24
25-44
45-64
65-74
75+
-10 0 10 20 30 40 50 60 70%
The first “baby boomers” turned 65 in 2011. The aging of
this generation and continuing drops in death rates are
projected to cause the share of California’s population
age 65 and over to grow rapidly through 2020.
As of 2010, the largest groups by age listed above were
those ages 25 through 44 (10.5 million Californians)
and 45 through 64 (9.3 million).
The school and college-age groups are projected to be
slightly smaller in 2020 due mainly to falling birth rates.
California's EConomy
10
California's Racial and Ethnic
Makeup Has Changed Since 1980
Share of Population in Each Group
Hispanic
Other
Asian-American
1980
African-American
White
Hispanic White
2010
Other
African-American
Asian-American
Non-Hispanic whites made up 40 percent of California’s
population in 2010—down from 67 percent in 1980.
Between 1980 and 2010, the population of California’s
Hispanic and Asian-American communities increased
substantially. Hispanics, for example, made up 38 percent
of the population in 2010—up from 19 percent in 1980.
African-Americans made up 6 percent of the population
in 2010—down from about 8 percent in 1980.
State and LocaL Finance
11
California's Tax Burden
Is Somewhat Above Average
State and Local Taxes Per $100 of
Personal Income, 2009-10
Arizona
Texas
Florida
Oregon
Illinois
Pennsylvania
United States
Nevada
Ohio
California
New York
$2 4 6 8 10 12 14 16
In 2009-10, California's state and local tax
burden—$11.30 per $100 of personal income—was
somewhat above the $10.59 average for the U.S. as
a whole. (Temporary state tax increases adopted in
2009 were then in effect.)
California's tax burden was higher than that of all
neighboring states. Of the other most populous states,
only New York's tax burden was higher.
California’s tax burden was the tenth highest among
all 50 states.
State and LocaL Finance
12
State and Local Governments
Rely on a Variety of Taxes
Type of Tax Current Basic Tax Rate
Personal Marginal rates of 1 percent to 12.3 percent.a
Income Additional 1 percent surcharge for taxable
income over $1 million.
Sales and Use Average rate of 8.4 percent.a Varies by
locality.
Property 1 percent of assessed value, plus rate
needed to pay voter-approved debt.
(Assessed value typically grows by up to
2 percent per year.)
Corporation Tax 8.84 percent of net income apportioned to
California (10.84 percent for certain bank
and financial companies).
Insurance 2.35 percent of insurers’ gross premiums.
Vehicle 0.65 percent of depreciated vehicle value.
License
Cigarette 87¢ per pack.
Alcoholic Varies by beverage, from 20¢ per gallon of
Beverage wine or beer to $6.60 per gallon of spirits
(over 100 proof).
Vehicle Fuel 36¢ per gallon.
Diesel Fuel 10¢ per gallon.
a
Includes temporary tax increases imposed by Proposition 30 (2012).
State and LocaL Finance
13
Composition of Revenues
Has Changed Over Time
70%
60
50
Personal Income Tax
40
30 Sales and Use Tax
20
Corporation Tax
10
Other Sources
71-72 76-77 81-82 86-87 91-92 96-97 01-02 06-07 11-12
Over the past four decades, the share of General
Fund revenue raised from the personal income tax
has increased dramatically—from 33 percent to
61 percent. The growth in this share is due to growth
in real incomes, the state’s progressive income tax
structure, and increased capital gains.
During the same period, sales and use tax revenue
declined from 37 percent to 22 percent of General Fund
revenues. This reduced share reflects an increase in
spending on services (which generally are untaxed)
and an increase in the share of total sales tax revenues
that go to local governments and not the General
Fund.
State and LocaL Finance
14
Top 1 Percent of Income Earners Pay
Around 40 Percent of Income Taxes
60% Top 1 Percent Share of:
Personal Income Tax Payments
Income
50
40
30
20
10
1993 1995 1997 1999 2001 2003 2005 2007 2009
The fraction of the personal income tax (PIT) paid by
the 1 percent of returns with the most income has varied
from around 30 percent in the early 1990s to nearly
50 percent in 2000. The volatility of capital gains and
business income causes these levels to rise and fall.
Proposition 30 (2012) raises income tax rates for these
high income taxpayers through 2018.
State and LocaL Finance
15
Personal Income Tax Much More
Volatile Than Personal Income
Percent Change From Prior Year
40%
30 Personal Income Tax
Personal Income
20
10
0
-10
-20
-30
93-94 95-96 97-98 99-00 01-02 03-04 05-06 07-08 09-10 11-12
Personal income is a broad measure of economic
activity in California. It measures wages and salaries,
proprietors’ income, and other income, but it excludes
capital gains.
As this graphic shows, personal income taxes paid to
California’s General Fund are much more volatile than
personal income in the state. This is partly because the
state taxes capital gains, which are especially volatile
and mainly go to high-income taxpayers who pay the
highest tax rates. These taxpayers' other income also
tends to be volatile.
Year-to-year changes in stock and other asset prices
generate most of the volatility in capital gains.
State and LocaL Finance
16
Sales and Use Taxes Levied
For State and Local Purposes
Rate Purpose
3.94% State General Fund
0.25 State Education Protection Account—
created by Proposition 30 (2012)
0.25 State Fiscal Recovery Fund—to repay deficit-
financing bonds
1.06 Local Revenue Fund—for various local agencies
(2011 Realignment)
0.50 Local Public Safety Fund—for criminal justice
activities (1993 Realignment)
0.50 Local Revenue Fund—for health and social
services (1991 Realignment)
1.00 Bradley-Burns local sales and use tax—for city
and county operations (.75 percent) and county
transportation purposes (.25 percent)
(7.50%) Subtotal (base state and local rate)
0.86% Statewide average of optional local add-ons
8.36% Total, Average State and Local Tax Rate
The average sales and use tax (SUT) rate paid by
California consumers currently is 8.4 percent. This
includes the 0.25 percentage rate in effect through
2016 under Proposition 30 (2012).
In 2011-12, state General Fund SUT collections were
$18.9 billion—down $8.4 billion from 2010-11—due
to the shift of 1.06 percentage point of the state SUT
rate to local governments. This shift helps to fund the
2011 transfer of various state responsibilities to local
governments.
State and LocaL Finance
17
Votes Required to Increase Taxes,
Fees, Assessments, or Debt
Governing
Measure Body Voters
State
Tax 2/3 —
Fee Majority —
General obligation bond 2/3 + Majority
Lease-revenue bond Majority —
Initiative proposing — Majority
revenue or debt
Constitutional amendment 2/3 + Majority
(Legislative)
Local
Tax:
Funds used for general 2/3a + Majority
purposes
Funds used for specific Majoritya + 2/3
purposes
Property assessment Majority + Majorityb
Fee Majorityc —
General obligation bond:
K-14 districts 2/3 + 55%
Cities, counties, and 2/3 + 2/3
special districts
Other debt Majority —
a
For most local agencies.
b
Votes weighted by assessment liability of affected property owners.
c
Fees on property (excluding water, sewer, refuse collection, gas, and electric fees)
require voter approval.
State and LocaL Finance
18
Inflation-Adjusted Per Capita State
Spending Has Declined Recently
General Fund and Special Funds
$4,500
4,000
3,500
3,000
2,500
2,000
80-81 85-86 90-91 95-96 00-01 05-06 10-11
State spending from the General Fund and special
funds in 2011-12 was $122 billion, about the same as
in 2006-07 ($124 billion). Adjusting for inflation and
population, however, General Fund and special fund
spending declined 18 percent over the same period.
While inflation-adjusted per capita General Fund
spending in 2011-12 was at its lowest point since
1993-94, spending from special funds was higher
than it has been in at least 30 years. The state's 2011
realignment of program responsibilities to counties
shifted several billion dollars from the General Fund
to special funds.
State and LocaL Finance
19
Education Makes Up
Half of State Spending
General Fund—2011-12
Health and
Social Services
K-12
Education
Other
Criminal
Justice and the Higher
Courts Education
About one-half of the $87 billion General Fund budget in
2011-12 was for payments to school districts, community
colleges, and universities ($44 billion). Health and
social services spending accounted for about one-third
of the budget ($27 billion).
In 2011-12, $63 billion—73 percent of the total General
Fund budget—was paid to local governments (including
school districts and counties). State personnel costs,
excluding university employees, accounted for about
12 percent of the budget.
ARTWORK # CF_State-Local_02
Blue Lines Are Width Margins For Graphic
State and LocaL Finance
20
Ballot Measures Have Had Major
State-Local Fiscal Implications
Measure/Election Major Provisions
Proposition 13/ • Limits general property tax rate to 1 percent
June 1978 and increases in assessed value after a
property is bought or constructed.
• Makes Legislature responsible for dividing
property tax among local entities.
• Requires two-thirds vote for Legislature to
increase taxes, and two-third voter
approval of new local special taxes.
Proposition 4/ • Limits state and local entity spending to prior-
November 1979 year amount, adjusted for population growth
and per capita personal income growth.
• Requires state to reimburse local governments
for mandated costs.
Proposition 98/ • Establishes minimum state funding guarantee
November 1988 for K-12 schools and community colleges.
Proposition 99/ • Imposes a 25 cent per pack surtax on
November 1988 cigarettes and a comparable surtax on other
tobacco products, and limits use of revenues,
primarily to augment health-related programs.
Proposition 172/ • Imposes half-cent sales tax and dedicates the
November 1993 revenue to local public safety programs.
Proposition 218/ • Limits authority of local governments
November 1996 to impose taxes and property-related
assessments, fees, and charges.
• Requires majority of voters to approve
increases in all general taxes, and reiterates
that two-thirds must approve special taxes.
Proposition 10/ • Imposes a 50 cent per pack surtax on
November 1998 cigarettes and a comparable surtax on other
tobacco products, and limits use of revenues,
primarily to augment early childhood
development programs.
(Continued)
State and LocaL Finance
21
Ballot Measures Have Had Major
State-Local Fiscal Implications
Measure/Election Major Provisions
Proposition 39/ • Lowers voter approval from two-thirds to
November 2000 55 percent for local general obligation bonds
for school facilities.
Proposition 42/ • Permanently directs to transportation
March 2002 purposes sales taxes on gasoline previously
deposited in the General Fund.
Proposition 49/ • Requires that the state fund after-school
November 2002 programs at a specified funding level.
Proposition 58/ • Requires a balanced state budget, restricts
March 2004 borrowing, and creates a reserve fund.
Proposition 1A/ • Restricts state’s ability to reduce local
November 2004 government revenues from the property tax,
sales tax, and vehicle license fee.
Proposition 63/ • Imposes an additional 1 percent tax on
November 2004 incomes of $1 million and over to fund mental
health services.
Proposition 1A/ • Limits state’s ability to retain gasoline sales
November 2006 taxes in General Fund and constitutionally
requires repayment of past-year loans to
transportation.
Proposition 22/ • Reduces the state’s authority to use or redirect
November 2010 state fuel tax revenues and local property tax
revenues.
Proposition 26/ • Broadens the definition of “taxes” to include
November 2010 payments previously considered to be state
and local fees and charges.
Proposition 30/ • Temporarily imposes a quarter-cent sales tax
November 2012 and increases the personal income tax rate for
upper-income taxpayers.
• Guarantees local governments receive
tax revenues annually for responsibilities
transferred to them in 2011.
State and LocaL Finance
22
Significant Budget Shortfalls
Since 2001
Projected General Fund Condition at
Beginning of Each Budget Cycle (In Billions)
$15
10
5
0
-5
-10
-15
-20
-25
-30
01-02 03-04 05-06 07-08 09-10 11-12 13-14
California has dealt with large budget shortfalls
since 2001. Recessions, new program and tax cut
commitments, reliance on one-time budget actions, and
revenue volatility were major causes of the shortfalls.
The size of the state's projected shortfall can change
considerably between November (the date of the
estimates above) and June (the state's deadline for
passing a budget). The eventual shortfall addressed
in the 2009-10 budget, for example, totaled around
$60 billion.
The state's economic recovery, prior budget cuts, and
additional, temporary taxes have contributed to a much
smaller budget shortfall in 2013-14.
State and LocaL Finance
23
Retirement Liabilities Are the Bulk of
California's Long-Term Obligations
General Fund and Special Funds (In Billions)
Retirementa
Infrastructure
Budgetary
50 100 150 200 $250
a Based on pension systems' valuations of liabilities
California is paying for some obligations on an annual
basis, including bonds for infrastructure projects and
some retirement liabilities. Other obligations, including
retiree health benefits for state employees, are paid
when they are due. The state has no schedule in place
for paying off certain obligations, including pension
benefits for teachers.
Obligations that the state has incurred recently to
manage its budget problems are a relatively small
part of the state’s long-term liabilities. These include
amounts owed to state special funds, K-12 schools,
and other local governments.
State and LocaL Finance
24
State Costs for Employee
Compensation Include Benefits
Health
Retirement
Salary
Excluding university, legislative, and judicial employees,
the state spent about $21.6 billion (all funds) for
employee compensation in 2011-12. About 30 percent
of these costs are for health benefits (including vision
and dental) and retirement benefits (including pensions,
Medicare, and Social Security).
About two-thirds of the state’s General Fund employee
compensation costs (excluding universities) are for
employees at the California Department of Corrections
and Rehabilitation.
State and LocaL Finance
25
Universities Represent One-Third
Of State Government Jobs
University
Other of California
California
State University
Caltrans
Corrections
and Rehabilitation State Hospital
California
Highway
Patrol
In 2011-12, the state employed about 357,000 full-time
staff at a salary cost of roughly $25 billion (all funds).
The state has many positions that are authorized
but not filled. The current vacancy rate across state
departments is about 13 percent.
Since 1980, state employment has averaged
8.9 employees per 1,000 population. In 2011-12, there
were about 9.1 employees per 1,000 population. On
this basis, California ranked 46th among the states.
State and LocaL Finance
26
Allocation of Property Tax
Has Varied Over Time
(Dollars in Billions)
Tax Distribution
Selected
Years Revenue Schools Counties Cities Other
1977-78 $10.3 53% 30% 10% 6%
1979-80 5.7 39 32 13 16
1993-94 19.1 51 21 11 18
2010-11 48.9 39 25 17 19
Figures include debt levies.
"Other" includes redevelopment agencies and special districts.
In 1978, Proposition 13 set a maximum tax rate of
1 percent and shifted control of the distribution of
property taxes to the state. The state prorated these
revenues among local agencies except that it gave a
smaller share to schools and backfilled schools’ losses
with state aid.
In 1992 and 1993, the state modified the property tax
distribution to give a greater share to schools (thereby
reducing state school spending).
In 2004, the state increased the share of property
taxes to cities and counties to offset their losses from
the (1) reduced vehicle license fee rate and (2) use of
local sales taxes to repay the state’s deficit financing
bonds.
In 2012, the state dissolved redevelopment agencies.
Over time, property taxes that once went to these
agencies will be distributed to other local governments
in the area.
State and LocaL Finance
27
County, City, and Special District
Revenue Sources Vary
2009-10 (Dollars in Billions)
Special
Counties Cities Districtsa
Total Revenues $49.2 $53.2 $8.2
Sources of Revenues
Property taxes 23% 13% 36%
Sales and other taxes 3 18 —
User charges, permits, 15 41 30
assessments, fines
Intergovernmental aid 57 9 25
Other revenues 3 17 10
a
Excludes enterprise and self-insurance special districts.
Counties receive more than half of their revenues from
the state and federal governments and must spend
these funds for specific purposes, primarily health
and social services programs. The 2011 realignment
significantly increases the amount of state funding to
counties.
Cities receive over 40 percent of their revenues from
various user charges. Cities use these funds to pay
for electric, water, and other municipal services. Over
one-third of city revenues come from local taxes, the
largest of which is the property tax.
Special district financing varies significantly based on
the type of service the district provides.
State and LocaL Finance
28
Ending Redevelopment Increases
Revenue to Many Local Governments
Redevelopment Property
Tax Trust Fund
Pass-through
Payments to Local
Governments
RDA Debt and
Other Obligations
Administrative
Costs
Distributions
to Local
Governments
School Special
Districts Counties Cities Districts
Prior to their dissolution, redevelopment agencies
(RDAs) received over $5 billion in property taxes
annually. Over time, as former RDA debts and
obligations are retired, these funds will be distributed
to other local governments.
ARTWORK # CF_State-Local_04
In addition to property tax revenues, cash and proceeds
from the sale of assets of former RDAs will be distributed
to local governments.
Program Trends
29
California's Public Education System
Is Extensive
2011-12a
K-12 System
962 Districts
9,895 Schools
6.2 Million Students
534,000 FTE Faculty and Staff
$41 Billion Proposition 98 Support
California Community Colleges
72 Districts
112 Colleges
1.2 Million FTE Students
62,000 FTE Faculty and Staff
$5.8 Billion Proposition 98 Support
California State University
23 Campuses
340,000 FTE Students
37,000 FTE Faculty and Staff
$2 Billion State General Fund Support
University of California
10 Campuses, 5 Medical Centers, 3 National Labs
214,000 FTE Students
138,000 FTE Faculty and Staff
$2.3 Billion State General Fund Support
a Except for K-12 non-funding information (2010-11).
FTE = Full-Time Equivalent
Program Trends
30
State Is Primary Source of
Revenue for Schools
2011-12
Federal Funds Lottery
12%
Local Funds
27%
State Funds
61%
The state contributes the largest share of funding for
school operations.
A very small share of school funding comes from the
California Lottery.
Local funding comes primarily from property taxes.
A relatively small amount comes from various other
sources, including parcel taxes and fees for certain
district services (such as transportation).
The federal government contributes funding for several
specific purposes—such as supporting low-income
students and educating students with disabilities.
Program Trends
31
Most School Spending
Is for Instruction
2010-11
Other
Administration
Pupil Services
Facilities Instruction
Total Spending:
$66.1 Billion
More than $6 of every $10 is spent on instruction and
instructional support—largely paying teacher salaries
and benefits.
Almost $2 of every $10 is spent on facilities, including
acquisition, construction, maintenance, and operations.
About $1 of every $10 is spent on pupil services,
including school meals, pupil transportation, guidance
counseling, and health services.
Program Trends
32
Programmatic Funding Per Pupil
Has Declined in Recent Years
$8,414
$8,235
$7,933 $7,765 $7,598
2007-08 2008-09 2009-10 2010-11 2011-12
After several consecutive years of increases,
programmatic per-pupil funding has declined over
the last several years. In 2011-12, schools received
8 percent less than in 2007-08.
Per-pupil funding over the period shown is higher than
it otherwise would have been as a result of significant
one-time federal funding, payment deferrals, and fund
swaps.
Program Trends
33
School Staffing Shrank
Over Past Four Years
Full-Time Equivalent (FTE) Personnel
2007 2010 Percent Change
300,512 268,495 -11%
Teachers
27,629 23,666 -14%
Pupil Support
25,687 21,602 -16%
Administrators
226,141a 220,096a -3%
Operational
Support
a Due to data limitations, assumes all part-time staff work half time.
Over this period, year-to-year changes in the teacher
workforce were relatively small whereas shifts in
administrators and pupil support personnel were more
volatile.
Program Trends
34
California's Public Schools
Serve Diverse Population
California’s Public Schools Enroll More Than
6 Million K-12 Students:
About 1 in 2 is from a About 1 in 4 is an
low-income family. English language learner (ELL).
About 1 in 10 receives special education services.
Students are considered low income if their family's
income is at or below 185 percent of the federal poverty
level ($42,643 for a family of four).
Of the state's ELL students, almost 85 percent are
native Spanish speakers.
The most common special education services are for
learning disabilities, such as dyslexia.
Program Trends
35
K-12 Enrollment Trends
Vary Greatly By County
Enrollment Growth, 2011-12 Through 2020-21
10% or Greater
5% to 10%
0% to 5%
Declining
Statewide K-12 enrollment is projected to grow by
1.1 percent from 2011-12 through 2020-21. Changes
in enrollment over this decade will vary significantly
by county, with increases expected in 38 counties and
decreases expected in 20 counties.
The greatest increase is projected to occur in Riverside
County, which is expected to gain 73,500 students over
the decade.
The greatest decrease is projected to occur in
Los Angeles County, which is expected to lose 140,000
students over the decade.
Program Trends
36
Student Achievement
Rising Over Time
90%
80
70
60
50
40
All Students
30
Low-income
20 English Learners
Students With
10
Disabilities
02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 10-11 11-12
The percent of sixth-grade students scoring at or above
basic on the California Standards Test (CST) in math
has been rising over time.
Trends in English Language Arts scores closely mirror
trends in math scores.
Recent CST gains for students with disabilities (SWDs)
are attributable in part to a greater proportion of SWDs
taking an alternative test and being exlcuded from the
CST data.
Program Trends
37
Most College Students in
California Attend Public Institutions
Full-Time Equivalent (FTE) Students, 2010-11
For-Profitsa
Private
Nonprofits
California
Community
Colleges
University
of California
Public
California
State University
a Figure likely underestimates California students enrolled in for-profits
due to inconsistencies among institutions in reporting the location of
students in online programs and branch campuses.
The share of FTE students enrolled in public colleges
and universities is higher in California than in the nation
(74 percent and 68 percent, respectively).
Though a large majority of California students attend
public institutions, the proportion of students in private,
for-profit institutions has grown in recent years while
the share in each of the other segments has declined.
Budget-related enrollment constraints at the public
institutions have contributed to this trend, as have the
more flexible program options offered by many for-profit
colleges.
Program Trends
38
Tuition Has Nearly Doubled in
Recent Years
Systemwide Tuition and Fees for
Undergraduate California Residentsa
$14,000
12,000
UC
10,000
8,000
6,000
CSU
4,000
2,000
CCC
07-08 08-09 09-10 10-11 11-12 12-13
a Excludes campus-based fees.
Since 2007-08, California Community College (CCC) fees
have more than doubled, while tuition at the University
of California (UC) and California State University (CSU)
has nearly doubled.
System wCuidrree nTtulyiti, tohne CaCndC Fpeeer-su fnoitr f eUen (d$e4r6g) risa dlouwaetset aCmaloifnogr nthiae Residents(a)
50 states. Undergraduate tuition at CSU ($5,472) is lower
than 14 of its 15 public university peers, undergraduate
tuition at UC ($12,192) is slightly above the average of
its four comparison public research universities.
About half of the students currently enrolled in public
colleges and universities receive grants or waivers that
fully cover systemwide tuition and fees, compared with
about one-third of students in 2007-08.
Program Trends
39
Financial Aid More
Than Doubled Since 2007-08
(Dollars Awarded in Billions)
$7
Federal Grants
Institutional Grants and Waivers
6
Cal Grants
5
4
3
2
1
2007-08 2008-09 2009-10 2010-11 2011-12
Each major source of aid shown above has more than
doubled since 2007-08.
Most growth in financial aid costs has been related to
covering fee and tuition increases. Some of the growth
also is due to an increasing number of community
college students qualifying for fee waivers.
Many middle-income students who do not receive grants
or waivers claim federal education tax credits averaging
about $1,800 per year. We estimate these benefits also
have more than doubled over this period—growing
from roughly $750 million to more than $1.5 billion.
Program Trends
40
State Share of Higher Education
Spending Has Declined
Per-Student Education and Student Services
Spending by Source of Fundsa
$20,000
Other Institutional Sources
18,000 Net Tuition and Fees
16,000 State Cal Grant Funds
14,000 State Appropriations
12,000
10,000
8,000
6,000
4,000
2,000
2007-08 2011-12 2007-08 2011-12
University of California California State University
(UC) (CSU)
a Excludes health science instruction, research centers, and public service
programs not directly related to instruction. Includes general campus
instruction, students services, and a corresponding portion of academic
support, institutional support, and operation/maintenance of plant.
While core educational spending per student at UC
and CSU was relatively flat from 2007-08 to 2011-12,
the share covered by the state declined. This decline
was mitigated by increases in tuition and other support,
including federal and private funds and nonresident
surcharges.
Year-to-year comparisons are complicated by several
factors. For example, the figure does not adjust for
inflation. In addition, UC restarted contributions for its
pension program in 2010, adding more than $200 million
in costs by 2011-12. To cover these cost increases, the
universities have reduced spending in other areas, for
example, by increasing student-to-faculty ratios.
Program Trends
41
Graduation Rates Vary
Significantly by Segment
Six-Year Undergraduate Graduation Ratesa
90%
80
70
60
50
40
30
20
10
UC CSU CCC
a Percentage of students enrolled as freshmen in 2003-04 who graduated
or transferred to a baccalaureate program within six years (2008-09).
The systemwide graduation rate for the University of
California (UC) and California State University (CSU)
is about 80 percent and 50 percent, respectively.
Only about 30 percent of California Community College
(CCC) students who seek to transfer or graduate with
an associate degree or certificate actually do so.
Variations in graduation rates are due in part to the level
of academic preparation among incoming students at
each segment. For example, while freshmen at UC
generally arrive ready for college-level math and writing,
about 50 percent of CSU freshmen and 90 percent of
CCC freshmen require remediation.
Program Trends
42
Subsidized Child Care Notably
Reduced in Recent Years
Percent Change Since 2008-09
0%
-5
-10
-15
Funding
-20
Slots
-25
-30
2009-10 2010-11 2011-12
California offers subsidized child care and preschool
services to families receiving welfare benefits and other
low-income families.
From 2008-09 through 2011-12, combined state and
federal funding for these programs was reduced from
$3.2 billion to $2.4 billion, a decrease of 25 percent.
Less funding has resulted in fewer children served,
with an estimated loss of 82,000 slots (19 percent).
Some recent policy changes have achieved savings
without affecting the number of children served.
For example, the state has reduced the maximum
reimbursement rate for some providers and cut funding
for certain support activities.
Program Trends
43
CalWORKs Grant Levels Have
Declined, While CalFresh Benefits
Have Risen
Federal Poverty Levelb
$2,000 CalFresh Benefita, b
1,750 CalWORKs Granta, b
1,500
1,250
1,000
750
500
250
03-04 04-05 05-06 06-07 07-08 08-09 09-10 10-11 11-12
a Maximum monthly amount.
b For a family of three.
CalWORKs is California’s cash assistance and
welfare-to-work program for low-income families. Cal-
WORKs recipients also qualify for cash food assistance
through the CalFresh program.
While federally funded CalFresh benefit levels are tied
to the price of food and have risen somewhat, the size of
the state-determined CalWORKs grant has decreased
in recent years.
In 2011-12, combined CalFresh and CalWORKs benefits
brought a family of three with no income to approximately
73 percent of the federal poverty level. This is higher
than the national average of approximately 61 percent.
Program Trends
44
Social Services Programs Had
Varied Growth Through Recession
Percent Change in Caseload From 2007-08 to
2011-12
150%
100 96.9%
50
26.6%
8.1%
3.4%
0
-33.7%
-50
CalFresh CalWORKs IHSS SSI/SSP Foster Care
The CalFresh caseload nearly doubled from 2007-08
levels and continues to rise. The CalWORKs caseload
increased to a lesser extent and peaked in 2010-11.
The In-Home Supportive Services (IHSS) caseload—less
sensitive to economic fluctuations—has increased by
8 percent over the last five years. Several policy changes
have also had the effect of slowing growth in caseload.
The SSI/SSP caseload has increased only slightly in
the last five years. This is due in part to recent grant
reductions that in effect reduce the eligible population.
The foster care caseload has declined since 2001 and
through the recession, in part reflecting the creation
of the Kinship Guardianship Assistance Payment
program.
Program Trends
45
The State's Foster Care System:
Smaller Caseloads and Shorter
Lengths of Stay
140,000
Other Placement
120,000 Group Home/Shelter
Foster Home
Kinship Carea
100,000
80,000
60,000
40,000
20,000
1998 2000 2002 2004 2006 2008 2010 2012
a Kinship care is where foster children are placed with relative caregivers.
Kinship care is the most frequently used placement option, which is consistent
with state policy requiring foster children to be placed in the most family-like
setting possible.
Foster care caseloads have been declining since 2000
as more children exit the system than enter it.
Part of the caseload decline can be attributed to
the creation of a new program in 2000 that provides
financial assistance to relative caregivers to become
legal guardians for their relative foster children—a
permanent placement option outside the foster care
system.
Caseload declines also reflect the shorter lengths of
stay for children in the foster care system in recent
years. The median length of stay for children in foster
care on their first removal from their parent’s home has
declined from 17 months in 2000 to 13 months in 2009.
Program Trends
46
Health Insurance Coverage, 2011
Nonelderly, Birth to Age 64
Uninsured
20%
Othera
Job-Based
12%
50%
Medi-Cal/
Healthy Families
18%
a Includes, for example, self-purchased private
health insurance and federal veterans’ benefits.
In 2011, 50 percent of nonelderly Californians, or
16.5 million persons, had job-based health insurance
coverage. Another 18 percent, or nearly 6 million
persons, had coverage through the Medi-Cal or Healthy
Families Programs.
Twenty percent of nonelderly Californians, or about
6.7 million persons, lacked any form of health insurance
coverage at a given point in 2011.
The federal Patient Protection and Affordable Care Act,
also known as federal health care reform, is projected
to reduce the number of uninsured Californians by
roughly 2 to 3 million by 2019.
Program Trends
47
Health Spending Is a Growing Part
Of the California and U.S. Economy
Public and Private Health Spending as a Percent
of Gross Domestic Product or Gross State Product
16%
14
12
10
8
6
United States
4
California
2
1991 1993 1995 1997 1999 2001 2003 2005 2007 2009
Public and private spending on health care services in
California was $230 billion in 2009—which was about
12 percent of Gross State Product.
Health care spending as a percent of the state economy
and per capita is below the national average. This
could be due to factors such as a relatively high
rate of uninsured, a younger population, low Medi-
Cal reimbursement rates, and a high prevalence of
managed care in California.
California per capita health care spending grew by an
average of 6.3 percent per year from 2000 to 2009.
Program Trends
48
Disproportionate Share of Medi-Cal
Spending for Seniors and Disabled
2011-12 Estimates
Children and Families
Seniors and Persons With Disabilities
100%
80
60
40
20
Enrollees Expenditures
(7.6 million individuals) ($13.6 billion General Fund)
While the largest group of beneficiaries (75 percent)
is families and children, a disproportionate share of
Medi-Cal spending from the General Fund (59 percent)
is for seniors and persons with disabilities (SPDs).
The SPDs typically are more intensive users of
expensive health care services. Under fee-for-service
arrangements, Medi-Cal spends $5.5 billion General
Fund on prescription drugs, hospital inpatient care,
and long-term care. The SPDs represent 75 percent
of these expenditures.
Program Trends
49
Medi-Cal Managed
Care Continues To Expand
Managed Care Prior to 2008
Managed Care Since 2008
Current Fee-for-Service Counties
Medi-Cal provides health care services under two
arrangements: (1) fee-for-service (providers are paid
for each medical service delivered) and (2) managed
care (health plans are paid a "capitated" rate per plan
beneficiary regardless of the number of services
delivered).
Managed care availability increased from 22 counties
in 2008 to 30 counties in 2012. Currently, managed
care is not available in 28 mostly rural counties, where
beneficiaries receive fee-for-service medical care.
The state plans to expand managed care into all counties
over the next several years.
Program Trends
50
Seniors and Persons With
Disabilities (SPDs) Are Shifting Into
Medi-Cal Managed Care
Percent Enrolled in Medi-Cal Managed Care
Medi-Cal Populationa
90% Children and Families
Medi-Cal Only SPDs
80
Dual Eligible SPDs
70
60
50
40
30
20
10
05-06 06-07 07-08 08-09 09-10 10-11 11-12 12-13 13-14 14-15
a Projections (shown by dotted lines) do not account for expansion of
Medi-Cal enrollment beginning in January 2014 as a result of the
Affordable Care Act.
The Medi-Cal population can be grouped into two broad
categories: (1) children and families, and (2) SPDs.
There are two types of SPDs: (1) Medi-Cal only SPDs
and (2) dual eligible SPDs who are covered by both
Medi-Cal and Medicare.
Beginning June 2011, the Medi-Cal only SPD population
in 16 counties shifted into managed care from fee-for-
service (FFS) arrangements.
Dual eligible SPDs are primarily in FFS Medi-Cal. In
2013 (pending federal approval), the state begins a
demonstration project to enroll dual eligibles in managed
care.
Program Trends
51
While Smoking Has Decreased,
Obesity, Heart Attacks and Diabetes
Have Increased
Percent of California Adults Aged 18 and Over
25%
2005
20 2010/2011
15
10
5
Current Obese Heart Attack Diabetes
Smokers
The percentage of adults in California who smoke has
declined in recent years, while the percentage who are
obese, have been determined to have had a heart attack,
or have been diagnosed with diabetes has increased.
The decline in smoking rate and increase in obesity
rate reflects an ongoing trend that has occurred over
the last several decades.
Smoking or being obese can increase the risk of having
a heart attack, becoming diabetic, or getting cancer.
Smoking, obesity, heart disease, and diabetes are major
contributors to health care costs. For example, in 2006,
California public agencies spent about $13 billion on
direct health care costs resulting from obesity.
Program Trends
52
State Hospital Forensic Population
Increases, Civil Commitment
Population Decreases
6,000
Forensic Commitments
Civil Commitments
5,000
4,000
3,000
2,000
1,000
2003 2006 2009 2012
In 2012, the five state hospitals averaged a caseload of
about 5,500 patients who fall into two broad categories:
(1) forensic commitments, who have been committed
by the courts as inmate transfers, mentally disordered
offenders, not guilty by reason of insanity, incompetent
to stand trial, or sexually violent predators; and (2) civil
commitments, who are generally referred to the state
hospitals for treatment by the counties.
Over the last nine years, the forensic population in state
hospitals has increased from 3,591 to 4,944, while the
county-referred population has decreased from 717
to 489. The change in population mix reflects better
county resources for non-violent individuals and better
diagnoses of mental illness for those who are ill.
Program Trends
53
Crime Rate at Historic Low
Rate Per 100,000 Population
9,000
8,000
Total
7,000 Violent
6,000 Property
5,000
4,000
3,000
2,000
1,000
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
California experienced a decline in both property and
violent crime rates since the early 1990s. Between
1991 and 2011, the state’s overall crime rate declined
by 56 percent. This trend is similar to declines in crime
patterns in the rest of the United States.
In 2011, about 3,000 crimes were committed in California
per 100,000 residents—a total of about 1.1 million
incidents. This is down from a high of over 2 million
crimes reported annually in the early 1990s.
The state’s property crime rate is lower than the
nationwide rate. However, the rate of violent crime (such
as murder, rape, and assault) in California remains
somewhat higher than the United States as a whole.
Program Trends
54
Prison and Parole Population
Expected to Continue to Decline
As of June 30
200,000
180,000 Inmates
160,000 Parolees
140,000
120,000
100,000
80,000
60,000
40,000
20,000
2001 2003 2005 2007 2009 2011 2013 2015 2017
Projected
California’s prison population peaked at around 173,000
inmates in 2007. The state’s parole population also
peaked in the same year at around 126,000 parolees.
Since then, these populations have declined largely
due to various policy changes that reduced the number
of admissions to the state’s prisons.
The significant decrease in these populations between
2011 and 2012—as well as the continued decline that
is projected over the next several years—is largely
attributable to the 2011 realignment legislation. This
legislation limited prison commitments to felons who
have a current or prior conviction for a serious, violent,
or sex offense and generally limited state parole to
felons whose current offense is serious or violent.
Program Trends
55
Most Inmate Costs Related to
Security and Health Care
2010-11
Inmate
Health Care
Security
Facility
Operations
and Records
Administration
Inmate Food Total Costs:
and Activities Miscellaneous $48,900
Rehabilitation
Programs
In 2010-11, the average cost to incarcerate an inmate
in state prison was about $48,900. The primary cost
drivers for the state’s prison system are security (such
as pay for correctional officers)—which accounts for
about half of the total cost—and health care—which
accounts for about 30 percent.
Other states typically spend around $30,000 per
year per inmate. The difference is primarily due to
the relatively high salaries received by California’s
correctional officers as well as California’s high cost
for inmate health care.
Program Trends
56
Recent Declines in
Judicial Branch General Fund Support
(In Billions)
$5
Other Funds
Realigned Court Securitya
4 General Fund
3
2
1
00-01 02-03 04-05 06-07 08-09 10-11 12-13
(Budgeted)
a 2011 realignment shifted funding for most court security from the
state General Fund to counties. Displayed for comparison purposes.
Total funding for the judicial branch increased steadily
throughout most of the past decade—reaching a peak
in 2010-11 of roughly $4 billion.
General Fund support of the judicial branch has been
significantly reduced since 2008-09. The General Fund
share of the entire judicial branch budget declined from
56 percent in 2008-09 to 20 percent in 2012-13.
In addition to the state General Fund, other funding
sources for the judicial branch include civil filing fees,
criminal penalties and fines, county maintenance of
effort payments, and federal grants.
Program Trends
57
Capping Greenhouse Gas Emissions
MMTCO2E
420
Emissions without AB 32
400
380
360
340
Emissions with AB 32
320
300
2015 2016 2017 2018 2019 2020
MMTCO2E = Million Metric Tons of Carbon Dioxide Equivalent
Assembly Bill 32 (2006) established the goal of reducing
greenhouse gas (GHG) emissions statewide to 1990
levels by 2020. In order to meet this goal, the state
adopted a cap-and-trade program that places a “cap”
on aggregate GHG emissions from the state’s largest
emitters.
The ARB will issue carbon allowances equivalent to
the cap. Large emitters will, in turn, be able to "trade"
(buy and sell) these allowances on the open market
in order to comply with the regulation.
Over time, the cap on emissions will gradually decline
from roughly 400 MMTCO2E in 2015 to 340 MMTCO2E
in 2020.
Program Trends
58
Renewable Energy Development Up,
But Still Small Share of Supply
Percentage of Total Electricity Supply
Solar
Small Hydro
12%
Wind
Biomass
Geothermal
10
8
6
4
2
1997 1999 2001 2003 2005 2007 2009 2011
Although total electricity demand in California increased
between1997 and 2008, electricity demand has since
declined—primarily due to the recession and slow
economic recovery.
Renewable energy development in the state, while
modestly growing since 2008, still remains a small
percentage of total electricity supplied.
Program Trends
59
Population Centers Rely
Heavily on Imported Water
Imported Water as a Percent
of Use by Water Region
0-33%
33-66%
Over 67%
Net Exporters
Water supply in California does not occur where demand
is greatest—75 percent of the state’s precipitation falls
in the north, while 75 percent of the state’s population
lives in the south.
The State Water Project and the federal Central Valley
project include dams, reservoirs, and aqueducts that
store and move water through the Sacramento-San
Joaquin River Delta. These supply drinking water to
most Californians and water for about one-third of the
state’s cropland. Urban Southern California users and
agricultural users in Imperial and Riverside counties
also rely on water imported from the Colorado River.
Program Trends
60
Average California Driver in 2011…
... drove nearly 40
miles each day
... spent roughly
$4,650 on vehicle
expenses and fuel
... paid about $220 in
state fuel tax and
$115 in federal fuel tax
... registered 1.2 vehicles
There are 24 million licensed drivers in California, which
is about 80 percent of Californians over the age of 16.
Highway congestion resulted in about 86 million hours
of delays in 2011 statewide.
Traffic crashes remain a leading cause of preventable
death in California. In 2010, 2,715 people were killed in
crashes. California had the seventh lowest fatality rate
in the nation—0.84 fatal injuries for every 100 million
miles driven.
While roughly 85 percent of all Californians drive to work
alone or in a carpool, about 5 percent of Californians
use transit to reach their jobs.
Program Trends
61
Annual Spending on Highway Repairs
Falls Short of Needs
(In Billions)
$8
Estimated Highway Repair Needs
7
6
5
4 Shortfall
3
2
1
Funding for Highway Repairs
2005 2007 2009 2011
Many of California’s over 50,000 lane miles of state
highways are reaching the end of their useful life.
In 2011, Caltrans estimated it needed $7.4 billion
each year to repair the state’s aging highway system.
However, the state currently only provides about
$1.8 billion each year for repairs.
One way the state can slow the growth of highway repair
costs is to adequately fund and perform maintenance
to extend the useful life of roads.
Program Trends
62
High-Speed Rail (HSR)
Construction May Begin in 2013
San
Francisco
San
Jose
Merced
Gilroy
Fresno
Kings/Tulare
Pacific Ocean
Bakersfield
Palmdale
Los Angeles
Planned Station
Anaheim
Central Valley Segment
Local Projects in “Bookends”
The planned HSR system from San Francisco to
Anaheim is estimated to cost $68.4 billion. To date,
only $12.3 billion in federal funds and state bond funds
have been identified.
The 2012-13 budget includes $6 billion—$2.7 billion
in bond funds and $3.3 billion in federal funds—for
construction in the Central Valley and $1.1 billion for
local projects around San Francisco and Los Angeles
intended to support the development of HSR.
Program Trends
63
Major State Information
Technology (IT) Projects
Total Cost to
a
Estimated Date /Total
Project Project Completion Estimated Cost
Name Sponsor(s) Year (In Millions)
FI$Cal DOF, SCO, 2017 $77.6 / $616.8
STO, DGS
EDR FTB 2016 74.7 / 522.2
LRS HHSA 2014 6.5 / 475.6
CA-MMIS DHCS 2017 43.8 / 458.6
CMIPS II DSS 2013 175.5 / 423.7
SOMS CDCR 2014 205.0 / 416.3
MyCalPAYS SCO 2013 252.0 / 370.6
(21st Century)
Project
CROS BOE 2017 3.2 / 269.4
Totals $838.3 / $3,553.2
a
Total cost as of fiscal year 2011-12.
Fi$Cal = Financial Information System for California; DOF = Department of
Finance; SCO = State Controller’s Office; STO = State Treasurer’s Office;
DGS = Department of General Services; EDR = Enterprise Data to Revenue;
FTB = Franchise Tax Board; LRS = LEADER Replacement System;
HHSA = Health and Human Services Agency; CA-MMIS = Medicaid Management
Information System; DHCS = Department of Health Care Services;
CMIPS II = Case Management, Information and Payrolling System;
DSS = Department of Social Services; SOMS = Strategic Offender Management
System; CDCR = California Department of Corrections and Rehabilitation;
CROS = Centralized Revenue Opportunity System; BOE = Board of Equalization.
Currently, there are 51 approved reportable state
agency IT projects in various phases of development.
The total cost of all of these IT projects is estimated
to be about $4.7 billion.
Program Trends
64
The Unemployment Insurance
Trust Fund Insolvency Continues
(Dollars in Billions)
$15
Revenues
Benefit Payments
10 Fund Balance
4.9%a
5
0
5.4%a
6.8%a
Fund Deficit
7.2%a
-5
12.4%a
11.3%a
-10
00 01 02 03 04 05 06 07 08 09 10 11
a Unemployment rate for year in question.
The Unemployment Insurance Trust Fund has been
insolvent since 2009, when high unemployment resulted
in the state paying $11.3 billion in unemployment
benefits while collecting only $4.8 billion in state
unemployment insurance revenues.
Unemployment benefits have continued to outpace
revenues since 2009, and the fund deficit grew to
$9.9 billion in 2011.
Without an increase in revenues, or a combination of
revenue increases and benefit cuts, the Unemployment
Insurance Trust Fund is likely to remain insolvent for
the foreseeable future. Such insolvency triggers federal
loans to the fund on which the state pays interest (the
interest payment exceeds $300 million for 2012).
Program Trends
65
Most State Infrastructure Spending
Is for Transportation and Education
Infrastructure Spending, 2006-07 to 2010-11
K-12 Education
Transportation
Resources
Higher Education
Other
Criminal Justice
Over the past five years, the state spent $52 billion on
infrastructure. State and local transportation projects
and education facilities (K-12 and higher education)
accounted for over 75 percent of this spending.
More than half of state infrastructure spending was
financed through state general obligation bonds.
Special fund revenue paid for about one-third of state
infrastructure spending.
Program Trends
66
Debt-Service Ratio
Expected to Remain Level
Infrastructure Bond Payments as
Percentage of General Fund
7%
Bonds Already Sold
Unsold but Authorized
6
5
4
3
2
1
85-86 90-91 95-96 00-01 05-06 10-11 15-16
Forecast
The state pays debt-service costs on two types of
bonds used primarily to fund infrastructure—general
obligation bonds approved by voters and lease-revenue
bonds approved by the Legislature. In 2011-12, the
debt-service cost for these infrastructure bonds was
$5.2 billion, or 6 percent, of General Fund revenues.
The state’s debt-service ratio grew in the 1990s when its
use of infrastructure bonds increased. The ratio increased
in 2007-08 due to approval of large bond measures in
2006 and declines in revenues due to the recession.
Although debt-service costs likely will increase as
authorized bonds are sold, the debt-service ratio is
expected to remain near 6 percent over the next few
years. This is because General Fund debt service and
revenues are expected to grow at similar rates.