The 2026-27 Budget: California Department of Corrections and Rehabilitation

analysis full 2026-27 BUDGET The 2026-27 Budget: California Department of Corrections and Rehabilitation GABRIEL PETEK | LEGISLATIVE ANALYST | FEBRUARY 2026 SUMMARY In this brief, we assess and make recommendations on several California Department of Corrections and Rehabilitation (CDCR) budget proposals. Below, we provide a summary of our major recommendations. (A figure summarizing all of our recommendations is in the appendix of this brief.) Prison Closure. We find that the state could close an additional prison within the next few years and still retain a significant buffer to manage unexpected population increases. This could save around $150 million annually in operational costs and avoid the need for infrastructure projects at the closed prison. Accordingly, we recommend that the Legislature direct CDCR to begin planning to do so. To avoid funding infrastructure projects at a prison that is closed shortly after, we recommend the Legislature reject infrastructure proposals for the Correctional Training Facility in Soledad (as it appears to be a strong candidate for closure) unless the administration identifies a different candidate. In addition, because there are indications the administration has begun deactivating portions of prisons and has declined to provide information to our office about this potential change, we recommend requiring CDCR to report in budget hearings about its deactivation activities and enacting statute requiring legislative notification when the department implements capacity reductions going forward. Establishment of the Second California Prison Receivership. In September 2025, a federal court in the Coleman v. Newsom case appointed a Receiver to take over the management and operation of the state’s prison mental health system and approved the Receiver’s action plan to improve care. The Governor proposes—in consultation with the mental health Receiver—$33.9 million ongoing to implement a portion of the action plan. These funds would come from fines collected from the state for failing to comply with court orders to reduce mental health vacancies. We recommend that, despite the appointment of the Receiver, the Legislature continue to exercise oversight over the delivery of prison mental health, track progress towards exiting the mental health Receivership, direct CDCR to take additional steps to address mental health vacancies (such as increasing the use of tele-mental health), and monitor the impact of the recent salary increases for CDCR mental health staff implemented by the Receiver. Finally, we recommend approving the Governor’s proposal to implement the action plan. Tele-Mental Health. The Governor proposes to redirect 100 on-site mental health providers at various prisons to remote staff and includes $8.9 million in the budget year growing to $12.8 million by 2028-29 and ongoing to add support staff—including on-site medical assistants who help facilitate appointments—and equipment for the conversion. Given the urgency the state is in to fill prison mental health positions—and that tele-mental health positions appear to be easier to fill—we recommend approving portions of the proposal. However, we recommend reducing the request and CDCR’s baseline budget for tele-mental health medical assistants to account for the time when they are not directly supporting appointments. We also recommend taking steps to increase the use of tele-mental health to the maximum levels allowed, including allowing remote providers to work from out of state, expanding licensing exemptions so that licensed out-of-state mental health providers no longer need a California license to work at CDCR, and pairing these changes with more recruitment from out of state. Finally, we recommend the Legislature monitor whether on-site providers need a pay differential to encourage them to remain in positions that cannot be done remotely. www.lao.ca.gov 1 analysis full 2026-27 BUDGET OVERVIEW Roles and Responsibilities. CDCR is funding to pay for leave cashouts when employees responsible for the incarceration of certain adults separate from state service (discussed in greater convicted of felonies, including the provision detail later in this brief) and increased debt service of rehabilitation programs, vocational training, costs. The proposed $258 million decrease does education, and health care services. As of not reflect increases in employee compensation January 14, 2026, CDCR was responsible for costs in 2026-27 because they are accounted for incarcerating about 90,300 people. Most of these elsewhere in the budget. The proposed budget people are housed in the state’s 31 prisons. would provide CDCR with a total of 58,100 positions The department also supervises and treats in 2026-27, a decrease of 549 (1 percent) from the about 33,600 adults on parole and is responsible revised 2025-26 level. for the apprehension of those who commit Capital Outlay Spending Proposed for parole violations. 2026-27. The Governor’s budget proposes total Operational Spending Proposed for expenditures of $9.2 million General Fund for 2026-27. As shown in Figure 1, the Governor’s capital outlay projects in 2026-27. This amount January budget proposes a total of $14.1 billion includes (1) $6.6 million to construct a potable to operate CDCR in 2026-27, mostly from the water treatment system at the California Health General Fund. The proposed spending level reflects Care Facility in Stockton, (2) $1.6 million for the a decrease of $258 million (2 percent) from the working drawings phase of a project to construct revised 2025-26 level. This decrease primarily new groundwater wells to supply Central California reflects the planned closure of the California Women’s Facility and Valley State Prison in Rehabilitation Center (CRC) in Norco and estimated Chowchilla, and (3) $1.1 million for the preliminary savings that the department expects to achieve plans phase of a project to construct new through identification of operational efficiencies. groundwater wells to supply Correctional Training These decreases are partially offset by various Facility (CTF) in Soledad (discussed in ‘the “Prison proposed augmentations, such as dedicated Closure” section of this brief). Figure 1 Total Expenditures for Operation of CDCR (Dollars in Millions) Change From 2025-26 2024-25 2025-26 2026-27 Actual Estimated Proposeda Amount Percent Adult Institutions $12,306 $12,893 $12,779 -$114 -1% Adult Parole 657 753 725 -29 -4 Administration 789 687 571 -117 -17 Board of Parole Hearings 71 74 75 1 2 Totals $13,823 $14,407 $14,149 -$258 -2% a Does not reflect increases in employee compensation costs in 2026-27 because they are accounted for elsewhere in the budget. CDCR = California Department of Corrections and Rehabilitation. 2 LEGISLATIVE ANALYST’S OFFICE analysis full 2026-27 BUDGET GENERAL FUND CONDITION State Faces Serious Budget Challenges… workload the department has little ability to avoid, As discussed in The 2026-27 Budget: Overview or actions that could reduce future costs. of the Governor’s Budget, the administration’s Administration’s Proposals Largely Meet revenue estimates over the budget window This Threshold, but We Identify Various Ways are $42 billion higher than previous budget act to Reduce CDCR Costs. The administration’s assumptions and almost $30 billion higher than our proposals for CDCR largely meet the high bar for November 2025 estimates. Even with the higher new spending. For example, the budget includes revenues, the administration estimates a roughly $23 million General Fund to support modifications $3 billion deficit for 2026-27, growing to a $27 billion to comply with the Americans with Disability Act deficit in 2027-28. The administration’s higher (ADA) at various prisons. Addressing ADA issues revenue estimates are mainly driven by strong stock is necessary, both for the safety of the prison market performance. However, certain factors population and to comply with federal law. However, signal the stock market might be approaching we do make recommendations to modify several a peak. If a stock market downturn occurs, Governor’s proposals, including in ways that would income tax revenues would fall considerably, and reduce their cost. For example, in the “Tele-Mental the misalignment between state revenues and Health” section of this brief, we recommend the proposed spending would widen. Legislature direct CDCR to reduce the number …Necessitating a High Bar for New General of medical assistants it is requesting as part of a Fund Spending. This means the state lacks the proposed expansion of tele-mental health services. necessary revenues to sustain current expenditure This is because fewer of these staff are needed to levels. As such, any proposals that require new carry out the tasks CDCR is requesting them for. General Fund support—especially on an ongoing We also identify steps the Legislature could take basis—require greater scrutiny and must meet a outside of modifying proposals to reduce CDCR higher bar for approval as it would require General costs—most notably, by closing an additional prison Fund solutions elsewhere in the budget. In this as described in the “Prison Closure” section of this fiscal context, we encourage the Legislature to brief. Taking these and other steps to reduce CDCR limit new spending to such things as: activities costs is critical given the serious budget difficulties addressing immediate health and safety issues, facing the state. STATE PRISON AND PAROLE POPULATION AND OTHER BIANNUAL ADJUSTMENTS BACKGROUND made both on the overall population and various subpopulations (such as people housed in reentry Adjustments Proposed Biannually Based facilities and people on parole who have sex on Projected Population Changes and Other offense convictions). In addition, some adjustments Factors. As part of the Governor’s January budget include factors other than population trends, such proposals each year, the administration requests as inflation adjustments. The administration then adjustments to CDCR’s budget based on projected modifies both types of adjustments based on changes in the prison and parole populations in updated information each spring as part of the the current and budget years. The adjustments are May Revision. www.lao.ca.gov 3 analysis full 2026-27 BUDGET GOVERNOR’S PROPOSAL increased penalties for various theft and drug crimes, making some people eligible for a prison Prison and Parole Populations Projected sentence. For example, it made theft of $950 or less to Decrease in 2026-27. As shown in Figure 2, a felony instead of a misdemeanor if a person has the average daily prison population is projected certain past theft convictions. Additionally, it allows to be 87,600 in 2026-27, a decrease of about people who possess specific illegal drugs (such as 1,500 people (2 percent) from the estimated fentanyl) to be charged with a “treatment-mandated current-year level. The average daily parole felony” instead of a misdemeanor if they have population is projected to be 32,400 in 2026-27, certain past drug convictions. Those who decline a decrease of 1,400 people (4 percent) from or do not complete treatment can be convicted of the estimated current-year level. The projected a felony. As shown in Figure 3, CDCR estimates decrease in the prison population is primarily due that Proposition 36 will cause the average daily to the estimated impact of various sentencing prison population to be 562 people (or 0.6 percent) changes enacted in recent years. The projected higher than otherwise in 2025-26 and 978 people decrease in the parole population is primarily due (or 1.1 percent) higher in 2026-27. The department’s to fewer people entering parole as a result of the estimates of the impact of the measure on the declining prison population. prison population have come down by about Estimated Population Impact of 70 percent compared to what was estimated at the Proposition 36 Reduced. The department’s 2025-26 May Revision. This is largely due to the overall population projections reflect its estimated availability of six months of actual data to inform the impact of Proposition 36 (2024), which went current estimates. The department also updated into effect on December 18, 2024. The measure its estimates of the impact on the parole population. It now estimates Figure 2 that Proposition 36 will reduce the parole population by about Prison and Parole Populations Projected to Decrease 1 percent in the near term because Average Daily Population it will lengthen some people’s prison terms, thereby delaying their 120,000 release to parole. Prison Net Decreases in Parole 100,000 Current- and Budget-Year Funding Adjustments. Relative to what was assumed in the 2025-26 80,000 Budget Act, the Governor’s budget reflects net decreases in baseline spending for both the 60,000 current year ($6.6 million) and the budget year ($31 million). 40,000 This reflects lower costs due to updated prison population estimates, offset partially by higher 20,000 costs related to such things as pharmaceutical purchases and conversion of certain housing units to accommodate populations that 2021-22 2022-23 2023-24 2024-25 2025-26 2026-27 (Estimated) (Proposed) require higher staffing levels. 4 LEGISLATIVE ANALYST’S OFFICE analysis full 2026-27 BUDGET Figure 3 CDCR Proposition 36 Population Impact Estimates Prison Population Parole Population Estimate as Estimate as Estimate as Estimate as of 2025-26 of 2026‑27 of 2025-26 of 2026‑27 May Revision Governor’s Budget Change May Revision Governor’s Budget Change 2025-26 1,878 562 -1,316 5 -126 -131 2026-27 3,522 978 -2,544 63 -248 -311 CDCR = California Department of Corrections and Rehabilitation. ASSESSMENT treatment-mandated felonies and theft of $950 or less with prior convictions—were higher in the Estimate of Proposition 36 Prison Population second half of 2025 than the first half the year—the Impact May Be Slightly Low. The department time period CDCR based its projection on. did not provide detailed backup showing its methodology to estimate the impact of Prison Population Currently Trending Slightly Proposition 36 on the prison population. However, Higher Than Projections. Over the first half of based on discussions with the department, it is our 2025-26, the actual prison population has been understanding that CDCR used actual admissions trending slightly higher than CDCR’s projections. data—and in some instances, reviewed individual Specifically, on September 30, 2025, the actual case files—through June 30, 2025 to identify the prison population was about 900 people higher number of people who were committed to CDCR (1 percent) than the department projected and due to Proposition 36. (This June 30 cut-off date about 1,200 higher (1.3 percent) than projected by is a standard feature of CDCR’s fall population Figure 4 projection process.) The department then CDCR Projections Based on Time Period With assumed that this rate Relatively Low Admissions for Some Proposition 36 Crimes of admissions observed Monthly Prison Admissions Due to Two Components of Proposition 36 in the first six months of Proposition 36 implementation would 100 remain constant. This 90 Treatment-Mandated Felony assumption is not Theft of $950 or Less With Prior Convictions 80 unreasonable. However, 70 data provided by CDCR 60 to the Committee on the Revision of the Penal 50 Code and the California 40 Policy Lab suggest the 30 assumption that the 20 rate of Proposition 36 admissions to prison will 10 remain constant could 0 Januaryª Februaryª Marchª April May June July August September OctoberNovemberDecember be incorrect. As shown in Figure 4, admissions Time Period Included in CDCR Projections for two key components a Month had fewer than five admissions for the treatment-mandated felony. Precise count was not provided to prevent of Proposition 36— re-identification of individuals. www.lao.ca.gov 5 analysis full 2026-27 BUDGET December 31, 2025. This could be a sign that the RECOMMENDATION impact of Proposition 36 on the prison population Withhold Recommendation Until May is indeed slightly underestimated. However, other Revision. We withhold recommendation on the factors could also contribute. For example, some administration’s overall biannual adjustments until large counties had new district attorneys take the May Revision. We will continue to monitor office in late 2024 and early 2025 who may have CDCR’s populations and the other factors subsequently changed policies or practices that affecting the proposed adjustments and advise impact how often their staff seek prison sentences. the Legislature based on the updated information Given the recency of such changes, CDCR’s available at the May Revision, including the population projection methodology, which is based administration’s revised population projections. largely on the number of prison admissions in recent years, may not yet have fully detected such new trends. PRISON CLOSURE BACKGROUND replacement of fire alarm systems) and critical infrastructure (such as kitchen renovations). State Currently Operating 31 Prisons. As of None of the projects are intended to add capacity. January 14, 2026, about 87,200 people (97 percent) Notably, this estimate does not include costs of out of the total 90,300-person population were projects that are expected to be needed to add housed in one of CDCR’s 31 prisons. (The air cooling systems to prisons. This is because remaining people are housed in various specialized the administration is currently in the process of facilities outside of prisons, such as conservation piloting options for doing so. However, our rough camps and community reentry facilities.) Prisons estimates suggest that the one-time installation are typically composed of multiple facilities (often costs to cool facilities statewide could total in the referred to as “yards”) where people live in housing low billions of dollars. (For more information on units, recreate, and access certain services (such the department’s air cooling pilot program, please as dental care). CDCR typically clusters people with see the “Air Cooling Pilot Program” section of our similar needs (such as the amount of security they brief The 2025-26 Budget: California Department require) in the same yard. Accordingly, prisons differ of Corrections and Rehabilitation.) As such, it is in their ability to meet specific needs based on the possible that the total cost of infrastructure projects types of yards they are composed of. In addition, that will be needed at prisons over the next ten some prisons—due to either their location, years could reach into the several billion dollar infrastructure, or both—can fill relatively unique range—or around a couple hundred million dollars roles within the system. For example, some prisons per prison on average. have infrastructure that allow them to provide Prisons Subject to Court-Ordered Population certain specialized health care services—such as Limit. The state’s prisons are subject to a federal inpatient psychiatric care—not widely available court order related to prison overcrowding that throughout the prison system. limits the total number of people they can house to Many Prisons Have Significant Infrastructure 137.5 percent of their collective design capacity. Needs. As of December 2025, CDCR identified Design capacity generally refers to the number 46 deferred maintenance or capital outlay projects of beds CDCR would operate if it housed only across 25 prisons at an estimated total cost of one person per cell and did not use bunk beds $2.5 billion that are expected to be needed over in dormitories. Currently, this means that the the next ten years. The majority of the projects state is prohibited from housing more than a are focused on issues related to safety (such as 6 LEGISLATIVE ANALYST’S OFFICE analysis full 2026-27 BUDGET total of about 98,500 people in its prisons. It also • Three state-owned prisons: Deuel Vocational means that when prisons are closed or yards are Institution (DVI) in Tracy, California deactivated, this population limit is decreased by Correctional Center in Susanville, and 137.5 percent of the design capacity of the affected Chuckawalla Valley State Prison in Blythe. prison or yard. • The California City Correctional Facility, Prison Population Decline Allowing for a leased prison that was operated by Capacity Reductions. As shown in Figure 5, the CDCR staff. overall prison population has declined significantly • 13 yards and 46 housing units at in recent years and is expected to remain low various prisons. through June 2030. The dramatic decline that These reductions to state-operated prison occurred between 2020 and 2021 was primarily the capacity have resulted in around $1 billion in result of temporary measures—such as the delay General Fund savings annually. It has also allowed of intake from county jails—intended to reduce the state to avoid funding infrastructure repairs that the spread of COVID-19. After these temporary would otherwise have been needed to continue measures ended, the population remained low operating these facilities. For example, with the and continued to decline primarily due to the closure of DVI in Tracy, the state was able to impact of various sentencing changes enacted avoid a water-treatment project—estimated in in recent years. This decline has allowed the 2018 to cost $32 million—that would have been state to reduce prison capacity. In 2021, CDCR necessary to comply with drinking water standards. completed a multiyear drawdown of people housed The administration currently plans to close in contractor-operated prisons. Additionally, since California Rehabilitation Center (CRC) in Norco by 2021, the administration has deactivated: October 2026. CDCR Appears to Figure 5 Be Moving Toward Deactivating Additional Prison Population Projected to Decline Through 2030 Yards… Stakeholders As of June 30 Each Year began reporting in January 2026 that 120,000 CDCR has made internal announcements to staff 100,000 and the incarcerated population that the department intends 80,000 to deactivate yards at California State 60,000 Prison Solano (SOL) in Vacaville and Avenal 40,000 State Prison (ASP) this spring. We asked 20,000 CDCR whether these reports were accurate. The department indicated 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 that yards at these two prisons have been Actual Projected discussed for deactivation but that the Governor’s budget does not reflect their deactivation. www.lao.ca.gov 7 analysis full 2026-27 BUDGET …But Has Declined to Share Current scheduled to close. (AVSS systems are intended Status Until May. When explicitly asked for the to help provide objective evidence related to current status of these yards—regardless of what allegations of staff misconduct in addition to was reflected in the Governor’s budget—the other operational benefits.) Funding for the final administration declined to answer. For example, phase of the rollout, which included ten prisons, the administration did not confirm or deny whether was authorized by the 2023-24 budget package. notifications have gone out to staff and the However, due to cost escalation, the department incarcerated population—or if any other concrete reports that it does not have sufficient funds to steps have been taken—to begin deactivating complete the rollout at the two remaining prisons, these yards. Instead, the administration indicates CTF and CMC. Specifically, CDCR estimates that it that because any yard deactivations that occur will cost about $10 million per prison, or a total of this spring would be reflected as current-year $20 million. However, it only has about $10 million in adjustments in the May Revision, these possible previously authorized funds remaining. Accordingly, yard closures at SOL and ASP constitute proposals the department would need an additional and therefore are subject to confidentiality until the $10 million to complete the installation at these release of the May Revision. two prisons. Three Capital Outlay Projects Related to GOVERNOR’S PROPOSAL Prison Water Supply ($9.2 Million). The Governor Adjust CDCR Funding to Account for Planned proposes a total of $9.2 million for capital outlay Closure of CRC. To reflect the planned closure projects: (1) $6.6 million to construct a potable of CRC by October 2026, the Governor’s budget water treatment system at the California Health reflects a General Fund reduction of $91 million and Care Facility in Stockton, (2) $1.6 million for the 522 positions in 2026-27 (increasing to $138 million working drawings phase of a project to construct and 778 positions annually beginning in 2027-28). new groundwater wells to supply Central California Make Infrastructure Modifications at Various Women’s Facility and VSP, and (3) $1.1 million Prisons. The Governor proposes several one-time for the preliminary plans phase of a project to General Fund augmentations in 2026-27 to support construct new groundwater wells to supply CTF. infrastructure projects at various prisons. These are as follows: ASSESSMENT Modifications at Various Prisons to Comply No Concerns With Adjustments Related to With ADA Requirements ($23 Million). Planned Closure of CRC. We have no concerns The Governor proposes $23 million to make with the proposal to reflect savings associated with accessibility improvements—such as installation the planned closure of CRC by October 2026. of grab bars and shower seat fixtures—at eight State Could Close Additional Prison and prisons: California Institution for Men in Chino; Retain Significant Buffer to Manage Unexpected California Institution for Women in Corona; Population Increases. As shown in Figure 5, California Medical Facility in Vacaville; Mule Creek CDCR projects that the overall prison population State Prison in Ione; Pleasant Valley State Prison in will continue to decline through June 30, 2030. Coalinga; Richard J. Donovan Correctional Facility Under the administration’s projections, we estimate in San Diego; SOL; and Valley State Prison (VSP) that by 2030, CDCR will have several thousand in Chowchilla. empty beds in operation. This estimate reflects the closure of CRC and assumes that yards at SOL and Audio Video Surveillance Systems (AVSS) at ASP are deactivated. As discussed in the “State Correctional Training Facility (CTF) in Soledad Prison and Parole Population and Other Biannual and California Men’s Colony (CMC) in San Luis Adjustments” section of this brief, the overall prison Obispo ($10 Million). The Governor proposes population is currently trending slightly higher $10 million to complete a multiyear rollout of than CDCR’s projections. This suggests that the AVSS systems at all prisons, except CRC as it is current population projections may be slightly low. 8 LEGISLATIVE ANALYST’S OFFICE analysis full 2026-27 BUDGET However, even if we assume that the population is meaning that it is not located near hospitals in the a couple thousand people higher in 2030 than the community where people could be transported to administration currently projects, the state could receive specialty care) nor is it designated to house still close a prison of average size and retain about people receiving higher levels of mental health 2,500 empty beds in operation. (When CDCR’s care. Fourth, CTF has particularly high identified population was significantly higher—and therefore infrastructure needs. Specifically, the administration much closer to the court-ordered population limit— estimates that within the next ten years, the prison CDCR typically aimed to house about 2,500 people will require kitchen replacements at an estimated fewer than the population limit as a “buffer” against cost of $296 million and a fire alarm system unexpected population increases.) Moreover, CDCR replacement at an estimated cost of $83 million. has several thousand beds inside deactivated The other prisons where the administration housing units or yards that are located inside currently proposes infrastructure projects are not operational prisons. These beds provide additional as strong of candidates for closure when evaluated buffer against unexpected population increases under these same criteria. as a portion of them could be reactivated relatively Not Cost-Effective to Start Projects at quickly to provide additional capacity or housing Prisons That Could Be Closed. Infrastructure flexibility if needed. projects can take a few years to complete. For Prison Closure Would Create Significant example, the administration expects that the Savings. Reducing the number of empty beds proposed well project at CTF would not be in operation by closing an additional prison completed until February 2030. Likewise, the would allow for significant savings. Specifically, AVSS project at CTF would not be complete until we estimate that the state would save around June 2027. If CTF were closed around the same $150 million annually in operational costs. time, the state would have experienced little or no (These savings would be partially offset, perhaps benefit from money spent on these projects. by a couple tens of millions of dollars annually, by No Concerns With Remaining Projects. We increased cost pressures due to the reduction in find that the Governor’s proposed infrastructure salary savings that results from prison closures. projects at the remaining prisons are reasonable. For more information on the relationship between Each of the projects address health and safety prison closures and salary savings, please see concerns that should not be deferred. “Structural Shortfall and Funding for Separating Administration’s Lack of Transparency Employee Leave Cashouts” section of this brief.) on Current-Year Changes Limits Legislative In addition, closing a prison would avoid the need Oversight and Hinders Budget Deliberations. to fund infrastructure projects at the prison that is As previously discussed, there are some indications closed—potentially avoiding hundreds of millions of that CDCR has begun the process of deactivating dollars in one-time costs. yards at SOL and ASP. However, it declined to CTF Strong Candidate for Closure, Other directly answer our questions about whether this Prisons With Proposed Infrastructure Projects was true—instead alluding to potential updates Less So. We find CTF to be a strong candidate that could be provided at the May Revision. In our for closure for four primary reasons. First, unlike view, this lack of transparency presents two major many prisons, it does not fulfill a unique function problems. First, it limits the Legislature’s ability within the prison system—such as providing to provide oversight over a significant operational specialized health care services—that would be change that deviates from the budget plan that difficult or costly to relocate. Second, it does not was enacted for the 2025-26 fiscal year. Under have modern housing facilities, which are generally the administration’s approach of waiting until May considered safer and more flexible to house a wide to update the Legislature, it is possible that the range of populations as they offer greater visibility yards are deactivated before the Legislature is ever for officers. Third, CTF is not designated as an notified of the change. Second, the administration’s Intermediate Health Care institution (generally approach limits important information that is www.lao.ca.gov 9 analysis full 2026-27 BUDGET relevant for ongoing legislative deliberations on the preliminary plans for a well project and to install 2026-27 budget. For example, deactivation of yards AVSS at CTF unless the administration identifies impacts how many full prisons could potentially be a different prison for closure. Otherwise, the state closed in future years without having to reactivate risks funding CTF projects that ultimately provide capacity at other prisons. This is relevant and little or no benefit if the prison is closed in the critical context for budget deliberations around coming years. prison infrastructure and the state’s out-year fiscal Approve Remaining Infrastructure Proposals. capacity. We note that this is not the first time this As discussed in the “General Fund Condition” has occurred. The administration similarly refused section of this brief, the state’s budget condition to provide information about the actual operational necessitates that any new General Fund spending status of its prisons in fall of 2024 when various must meet a very high bar for approval. Because stakeholders began reporting that CDCR was in the infrastructure projects at the remaining prisons the process of deactivating yards and making other address health and safety concerns, we find they operational changes, such as reducing evening meet this bar and recommend approving them. recreational time and modifying standardized Direct CDCR to Report in Hearings on Status security staffing. of Yard Closures and Require Notification of Future Capacity Reductions. In order for the RECOMMENDATIONS Legislature to provide effective oversight of CDCR Approve Adjustments Related to CRC and make informed decisions about the funding Closure. We recommend the Legislature approve it provides to CDCR in the budget, it needs timely the proposed adjustments related to the planned access to information about critical current-year closure of CRC. These adjustments will help align operational changes, such as planned yard the CDCR budget with the reduced prison capacity, deactivations. Accordingly, we recommend that as well as help reduce ongoing state General the Legislature direct CDCR to report in hearings Fund costs. on any steps it has taken to date—such as formally Direct CDCR to Close Another Prison. We notifying staff or the incarcerated population— recommend that the Legislature direct CDCR to to implement yard deactivations. Providing this begin planning to close another prison in 2027-28 information as soon as possible, rather than waiting or as soon as logistically possible. This would help until May, is critical as it is relevant to 2026-27 align the state’s prison capacity with the projected budget deliberations that occur throughout the prison population and help reduce ongoing state spring and waiting until May substantially reduces General Fund costs. the window of time for the Legislature to consider the budgetary implications of these changes before Do Not Approve CTF Infrastructure Proposals its June 15 constitutional deadline for passing a Unless CDCR Identifies a Different Prison for budget. Additionally, since it appears the lack of Closure. Even if the Legislature chooses not to timely information for the Legislature is becoming a direct CDCR to close a prison as part of this year’s more consistent problem, we recommend that the budget process, the Legislature or administration Legislature pass statute directing CDCR to report to may choose to do so in future years given the the relevant fiscal committees of both houses and declining prison population and the fiscal difficulties the Legislative Analyst’s Office when it implements facing the state. CTF would be a strong candidate a capacity reduction going forward. This will ensure for such a closure. Accordingly, we recommend that the Legislature is aware of any future capacity that the Legislature reject the proposals to fund reductions in a timely manner. 10 LEGISLATIVE ANALYST’S OFFICE analysis full 2026-27 BUDGET STRUCTURAL SHORTFALL AND FUNDING FOR SEPARATING EMPLOYEE LEAVE CASHOUTS BACKGROUND Recent Conditions Have Reduced CDCR Vacancies… As shown in Figure 6, the percent Vacant Positions Create Salary Savings. of positions that are vacant—referred to as the Under state budgeting practices, departments vacancy rate—has decreased for both custody staff are budgeted assuming that all of their authorized and other non-health care staff. The department positions are filled. However, in practice, some indicates that this decline is primarily caused by the amount of authorized positions are vacant at any following factors: given time. This is because it takes time to fill newly authorized positions and there is often a • Deactivation of Prison Facilities Due to lag between the time that one person leaves an Population Decline. As discussed in the existing position and another person is hired as “Prison Closure” section of this brief, in a replacement. This means that departments are response to a declining prison population, the budgeted to pay for a larger number of positions state has closed four prisons and deactivated than are actually filled at a given time, which portions of several other prisons in recent generates savings in departments’ budgets. This years. This decreases vacancies in two ways. accrued savings is referred to as “salary savings.” First, vacant positions at the closed facility Departments Typically Use Salary Savings are generally eliminated. Second, staff at to Pay Certain Costs That Are Not Formally closing facilities are given opportunities to fill Budgeted. Under state budgeting practices, vacancies at the other remaining facilities. departments are not formally budgeted for certain • Elimination of Certain Vacant Positions as costs and, as a result, are expected to absorb them a Part of Statewide Efficiency Exercises. within existing resources. For example, when an The 2024-25 budget package included Control employee separates from state service, they receive Section 4.12, which established a statewide a payment for any unused leave that is considered administrative exercise led by the Department “compensable”—primarily, vacation and annual of Finance to identify vacant positions and leave. Departments are typically expected to pay related funding for elimination. As a result, for these separating employee leave cashouts using CDCR’s budget was reduced by about salary savings. In addition, the state typically does $14 million ongoing. not provide systematic, regular adjustments to state …Causing a Structural Shortfall in CDCR’s department budgets to reflect the rising costs of Budget. The decline in CDCR’s vacancy rate doing business including rising rent or fuel costs or has reduced the department’s salary savings. growth in overtime costs due to salary increases. However, the costs, which the department has Departments have had to find ways to pay for these traditionally absorbed using salary savings, such rising costs, often using salary savings. as separating employee leave cashouts, have not Figure 6 CDCR Vacancy Rate Has Decreased for Non-Health Care Staff Health Care Custody Non-Custody Fiscal Year Positions Vacancy Rate Positions Vacancy Rate Positions Vacancy Rate 2022-23 18,215 25% 38,072 18% 9,267 19% 2023-24 18,232 27 36,098 12 8,028 12 2024-25 18,083 25 34,719 8 7,849 7 CDCR = California Department of Corrections and Rehabilitation. www.lao.ca.gov 11 analysis full 2026-27 BUDGET been commensurately reduced. This has left a beginning in 2025-26) to pay for increased structural shortfall in some items of appropriation utility costs. In addition, the 2025-26 Budget within CDCR’s budget. (This structural shortfall is Act provided $31.4 million General Fund in in addition to an unallocated $125 million General 2025-26 and ongoing to accommodate growth Fund reduction in 2025-26, growing to $375 million in food costs. in 2027-28 and ongoing, that the administration is expecting to achieve through operational GOVERNOR’S PROPOSAL efficiencies identified with the help of a contractor. Provide $106 Million General Fund to Pay for To the extent these efficiencies do not materialize, Separating Employee Leave Cashouts and Fire the structural shortfall in CDCR’s budget would Watch Costs. The Governor proposes $91 million become worse. We are reviewing information General Fund in 2026-27 and ongoing to pay for provided by the administration on the status of the compensable leave cashed out by separating this work and will communicate our findings to employees. CDCR reports that from 2020-21 the Legislature.) to 2024-25, it paid about $130 million annually Administration Has Responded Through on average in these payments. Accordingly, the a Combination of Actions. The administration proposal would provide dedicated funding for has responded to this shortfall in CDCR’s budget a portion of the department’s expected annual through a combination of actions: costs of these payments. The department would • Reducing Costs. CDCR indicates that it is continue to absorb the remainder. The Governor attempting to achieve temporary cost savings separately proposes $15.2 million one-time General through a variety of actions, including limiting Fund in 2026-27 to support costs associated travel, training, and overtime where possible, with employees conducting fire watch at various as well as not filling vacant positions as fast prisons while they lack adequate fire alarms, which as it otherwise would. These actions “free is another non-discretionary cost that CDCR has up” resources that can be used to address traditionally absorbed using salary savings. the shortfall. • Seeking a Current-Year Augmentation. ASSESSMENT On May 19, 2025, the administration notified Some of Proposed Funding Is Reasonable… the Legislature that CDCR was projected As discussed in the “General Fund Condition” to exceed its 2024-25 budget by about section of this brief, proposals that require new $358 million and requested reappropriations General Fund support must meet a higher bar for of previously unspent funds from prior years approval as they necessitate reduced General to address this shortfall. Given that the Fund spending elsewhere. Given the structural notification came late in the fiscal year, the shortfall in CDCR’s budget, we find the proposed Legislature had little choice but to provide funding for separating employee leave cashouts the reappropriations. (These prior-year funds to be reasonable in the near term as this is an were unspent due to savings associated unavoidable expense. Similarly, the one-time with various factors, including vacant funding for fire watch, an important safety function, positions, population reductions, and prison is reasonable. facility deactivations.) …But Unclear if Ongoing Funding Is Needed • Seeking Augmentations Through the for Separating Employee Leave Cashouts. It is Budget Process. In recent years, the unclear if the currently low vacancy rate causing Governor has proposed and the Legislature CDCR’s structural shortfall is an ongoing condition. has approved several augmentations to It is possible that after the department is no longer provide funding for cost drivers that CDCR deactivating facilities in close succession, CDCR’s has traditionally absorbed, often through vacancy rate will increase to historical levels. If salary savings. For example, the 2024-25 this occurs, CDCR could have sufficient salary Budget Act provided $23.1 million General savings to pay these costs without the proposed Fund (increasing to $46.2 million annually dedicated funding. 12 LEGISLATIVE ANALYST’S OFFICE analysis full 2026-27 BUDGET Existence of Structural Shortfall Raises Approve Funding for Separating Employee Broader Concerns. The department did not Leave Cashouts on a Limited-Term Basis. Given provide a detailed accounting of its structural that CDCR’s need for the $91 million for separating shortfall. Moreover, the department’s actual costs employee leave cashout payments may not be in a given year are influenced by various factors— ongoing, we recommend providing the funding only some of which are outside of its control, such as on a three-year, limited-term basis. This will provide trends in prison admissions—making precise cost an opportunity for the Legislature to reassess the projection difficult. Accordingly, it is possible that department’s vacancy rate and funding need in the a shortfall still exists in the current and/or budget future. If the Legislature directs CDCR to close an year despite previous and proposed augmentations additional prison, as we recommend in the “Prison intended to help close it. This raises two concerns: Closure” section of this brief, it could be reasonable to approve this funding on a longer-term basis, such • Undermines Budget Transparency. as for five years. This is because a further prison As previously discussed, CDCR has closure could keep vacancy rates low for a longer approached the shortfall, in part, by period of time. attempting to manage to its budget. This means that the department is either not Require Administration to Report by doing or delaying activities that it is budgeted January 10, 2029 to Inform Future Funding to do in order to free up funding to address the Decisions. We recommend the Legislature require shortfall. However, because these decisions CDCR to provide it with key information to inform are typically internal to the administration and its deliberations about whether the $91 million for made after the budget is enacted, it is difficult separating employee leave cashout payments will for the Legislature to know what activities are be needed in 2029-30 and ongoing. Specifically, affected and what programmatic implications we recommend that the Legislature adopt that may have. This is problematic as CDCR budget bill language requiring CDCR to report by might chose to not implement or delay January 10, 2029 the following data for 2026-27 activities that are a legislative priority. and 2027-28 for each collective bargaining unit representing its employees: (1) the number of hours • Department Could Still Overrun Its and associated dollar value of compensable leave Budget. Without full information about the cashed out by existing employees through leave size of the shortfall and the activities that the buy-back programs (programs in which the state administration is undertaking to attempt to offers to pay employees for their compensable close it, it is difficult to assess the likelihood of leave before they separate from state service), whether CDCR will again need a current-year (2) the number of hours and associated dollar value augmentation at the end of the fiscal year. of leave cashout payments made to separating This is particularly problematic as the fiscal employees, (3) average compensable leave difficulties facing the state mean that such balances, (4) numbers of vacant and filled positions, augmentations come at the cost of other and (5) projections of changes in the number of General Fund priorities. vacant and filled positions. In addition, the report should include discussion of whether, and if so RECOMMENDATIONS why, the administration believes additional years Approve Fire Watch Funding. We recommend of dedicated funding for these payments are the Legislature approve the one-time $15.2 million needed. This would inform the 2029-30 budget General Fund proposed for fire watch. Given the process when the dedicated funding for separating important safety function these funds support and employee leave cashout payments would expire CDCR’s inability to address these costs due to the under our recommendation. If the Legislature structural shortfall, this proposal meets the high bar chooses to provide the funding for a limited period for additional General Fund spending that we think that is longer than three years, then it could set the needs to be applied when assessing proposals, as due date for this report such that the report would discussed in the “General Fund Condition” section be available to inform budget deliberations prior to of this brief. the expiration of the funding. www.lao.ca.gov 13 analysis full 2026-27 BUDGET Exercise Oversight of Structural Shortfall. department should discuss the programmatic We recommend that the Legislature direct the implications of any steps it is taking to address department to report in spring budget hearings on the shortfall as well as the expected budgetary what specific steps it is taking in the current year savings attributable to them. This would allow the and is considering or planning to take in the budget Legislature to ensure any actions CDCR is taking year to free up funding to address the shortfall, the are consistent with its priorities and to assess size of the shortfall, and what unbudgeted costs whether it will need to take further actions to currently makeup the shortfall. In responding, the address a shortfall. ESTABLISHMENT OF THE SECOND CALIFORNIA PRISON RECEIVERSHIP BACKGROUND Coleman Court Monitoring Prison Mental Health Care Since 1990 Overview of CDCR Mental Health Federal Court Found State Provided CDCR Provides Outpatient and Inpatient Inadequate Prison Mental Health Care. In 1990, Mental Health Services to About Two Out of a lawsuit, later renamed Coleman v. Newsom, was Five People in Prison. Nearly 35,000 people in filed in federal court alleging that the state violated prison have a diagnosed mental health need— the Eighth Amendment of the U.S. Constitution representing about two out of five people in prison. prohibiting cruel and unusual punishment by Most people in prison with a mental health need providing inadequate mental health care in the can be treated in an outpatient setting, meaning state’s prisons. After finding the state in violation, they live in a prison housing unit and receive regular the court appointed a Special Master in 1995 to mental health treatment but do not require 24-hour monitor the state’s progress. The court and the care. However, under certain circumstances, Special Master oversaw the state’s efforts to fully some people may require more intensive treatment implement the court-ordered remedies necessary provided in an inpatient bed. These inpatient beds to bring the delivery of prison mental health care are located at certain prisons and provide intensive into compliance. 24-hour care with the goal of preparing a patient to return to an Figure 7 outpatient housing unit. CDCR Spends Over Prison Mental Health Costs Have Increased $700 Million on Mental (In Millions) Health Care Annually. The Governor’s budget proposes to $800 spend $746 million for mental 700 health-related expenses. This 600 reflects a $6 million increase 500 (nearly 1 percent) from the revised 400 2025-26 level. While this is a 300 modest increase, Figure 7 shows 200 that costs for mental health have 100 increased by over $100 million since 2023-24. 2023-24 2024-25 2025-26 2026-27 Estimated Budgeted 14 LEGISLATIVE ANALYST’S OFFICE analysis full 2026-27 BUDGET State Has Struggled to Comply With Court Secretary of CDCR over prison mental health care Orders. Although there has been progress in some and appointed a federal Receiver to take over the areas in the delivery of mental health services, direct management and operation of the state’s the state remains out of compliance with various prison mental health system. As a result of this court-ordered remedies. As a result, the Coleman appointment, CDCR now has two active Receivers. court has found the state in contempt for failing to California’s prison medical system has been under address these deficiencies. For example, in June direct management of a Receiver appointed by a 2024, the Coleman court found CDCR to be in federal court since 2006 because the state was contempt of the court’s orders and began levying found to be providing unconstitutional levels of fines related to mental health staffing vacancies, care in a case now referred to as Plata v. Newsom. which we discuss next. The court has indicated (For more on the medical Receiver, please see that the state also needs to make various other Overview and Update on the Prison Receivership.) improvements, including in the following key areas: Receiver Has Greater Authority Than Special (1) ensuring people with a mental health need Master. The establishment of the mental health are receiving services in a timely manner, (2) fully Receivership led to the dissolution of the Special implementing all portions of CDCR’s suicide Master. The Receiver differs from the Special prevention plan, and (3) finalizing the Continuous Master in that a Receiver has direct executive Quality Improvement Tool (CQIT), which is an authority and acts in place of the Secretary of information technology (IT) system that will be used CDCR in regard to the management of prison to detect quality of care issues. mental health. For example, where the Special Coleman Court Collected $155 Million Master provided reports to the court on vacancies in Fines Related to Mental Health Staffing. and made recommendations to address them, the Beginning in April 2023, fines accrued for each of Receiver can directly hire CDCR healthcare staff, five key classifications (psychiatrists, psychologists, set the mental health budget, and create internal clinical social workers, recreational therapists, policies and goals to improve care. In addition, and medical assistants) that did not achieve the Receiver has the authority to seek waivers a 90 percent fill rate. As of January 2026, the through the court of any state or contractual court has collected $155 million in fines which requirements that are impeding progress. were deposited into a special deposit fund. The Receiverships are typically used as a last resort collection of additional fines has been paused by courts because high thresholds must be met due to the establishment of the mental health for them to be established, such as demonstrating Receivership in September 2025, which we that there is a grave and immediate harm to the discuss next. About $33 million of the fines already plaintiffs, that the use of less extreme remedies collected have been spent and the remainder will have been exhausted, and that a Receiver is the stay in the special deposit fund to be used by least intrusive means necessary to correct the the Receiver. violations. A Special Master does not require the same level of rigor for appointment. This is because Mental Health Receivership Established the department maintains its direct executive in 2025 authority and a Special Master, lacking the authority Court Appoints Mental Health Receiver to to make changes, primarily monitors compliance Take Control of the Delivery of Mental Health activities. As such, Special Masters must rely Services. The establishment of a Receivership is a on the department and court to make changes legal remedy in lawsuits seeking to reform jails and when they discover problems with compliance. prisons. Courts appoint a Receiver in order to place In practice, this means that changes under a neutral expert in control of some aspect of prison Special Master monitoring can take longer than or jail operations. Effective September 1, 2025, under a Receivership as a Receiver can directly the federal court suspended the authority of the implement changes. www.lao.ca.gov 15 analysis full 2026-27 BUDGET Mental Health Receiver’s Action Plan GOVERNOR’S PROPOSALS Estimated to Cost $41 Million Annually and $33.9 Million Ongoing to Implement Portions Take Five to Seven Years to Execute. When of Receiver’s Action Plan. The Governor the Coleman court appointed the mental health proposes—in consultation with the mental Receiver, it also approved the Receiver’s action health Receiver—to implement a portion of the plan. The Receiver’s action plan lays out six Receiver’s action plan using $33.9 million. This primary goals, each with its own set of objectives includes ongoing funding for: (1) salary increases and actions intended to address the outstanding ($25.3 million) of mental health positions, (2) to deficiencies. Figure 8 shows the goals and establish the Office of the Receiver ($8.2 million) accompanying selected actions. The Receiver’s and (3) other consulting-related expenses initial estimated cost to begin implementing the ($356,000). However, it excludes funding to action plan is $41.4 million annually. The main create the resource teams that would support drivers of these costs are (1) salary increases for staff working in inpatient units. The administration mental health staff ($25.3 million), (2) establishing indicated that the Office of the Receiver will come the Office of the Receiver ($8.2 million), and forward with future proposals to implement other (3) creating resource teams to support staff working portions of the plan—including resource teams—as in inpatient units ($6.7 million). To achieve the goals needed. Consistent with court-ordered plans, the and implement all actions of the plan, the Receiver funding will be provided from the fines deposited estimates it will take five to seven years. from the General Fund in prior years into the special deposit fund. As such, there is no additional General Fund impact in the budget year. Figure 8 Receiver’s Action Plan Outlines Goals and Actions to Improve Mental Health Care Goal 1 Improve Mental Health Care Delivery Through Culture Change and Effective Management Selected Actions • Implement a comprehensive communications strategy. • Centralize and streamline mental health reporting structure under the Receiver. Goal 2 Achieve and Retain a Qualified Mental Health Workforce Selected Actions • Enhance recruitment of clinicians by expanding use of mental health internship programs. • Assess factors contributing to clinician fear and identify strategies for addressing them. • Evaluate compensation concerns. Goal 3 Provide Adequate Care at Every Level and Treat Each Patient at the Appropriate Level of Care Selected Actions • Evaluate the use of Resource Teams to enhance patients’ ability and willingness to step down. • Increase compliance with existing policies regarding use of force. Goal 4 Fully Implement a Suicide Prevention Program Selected Actions • Establish implementation goals and plans to resolve outstanding suicide prevention recommendations. • Complete transition of annual suicide reporting to CDCR. Goal 5 Complete Development and Implementation of a Quality Assurance Program Selected Actions • Recommend final indicators and compliance thresholds to the court. • Complete development of user-friendly dashboards to monitor compliance. • Seek court approval for a process to recommend that CDCR has fully implemented a remedy. Goal 6 Create Mechanisms to Demonstrate Remedies Selected Actions • Partner with external expert to assess feasibility of seeking accreditation. CDCR = California Department of Corrections and Rehabilitation. 16 LEGISLATIVE ANALYST’S OFFICE analysis full 2026-27 BUDGET ASSESSMENT Receiver’s Plans to Address Three Key Areas Appear to Be Reasonable Starting Point for Receivership Has Important Moving the State Toward Compliance. The Implications for Prison Mental Receiver’s action plan appears to be a reasonable Health System start to begin moving the state in the direction of compliance. This is because it contains actions Mental Health Receivership Reduces but in the three key areas that the state remains out Does Not Eliminate State Control of Prison of compliance in: Mental Health Care. The establishment of the Receivership will result in a significant loss of • Improving Recruitment and Retention. autonomy for the state in the delivery of prison The state’s inability to fill vacancies was a mental health care. Despite this, the Legislature will strong contributor to the appointment of still retain the ability to review and approve or reject the mental health Receiver. Recognizing Receiver mental health system budget proposals, this importance, the Receiver’s action plan pass legislation mandating CDCR to take specific “places significant emphasis on building and actions, and conduct oversight of the system. While retaining a mental health workforce because the Receiver has the authority to ask the court it is a foundational element to providing to overrule such legislative actions, the Coleman constitutionally adequate mental health care.” court has directed the Receiver to work in a manner This suggests that addressing mental health consistent with California state laws, regulations, vacancies will be essential to ending the and contracts. Notably, the medical Receiver Receivership and returning authority back to appointed to oversee CDCR medical care in the the state. As discussed in our recent report Plata v. Newsom case has worked collaboratively Addressing Chronic Vacancies in Prison with the state and has involved the Legislature in Mental Health Care, CDCR and the Receiver’s the decision-making process, especially when proposals to address this issue have developing the medical care budget. strengths, but additional steps could be taken. For more on this see the box on the next page. Exiting the Mental Health Receivership Is Important. Retaining state control by exiting the • Completion of CQIT. CDCR has made Receivership is important for several reasons. significant progress in developing the First, the existence of the Receivership indicates CQIT. As such, the Receiver has noted that that the state continues to not be compliant with it is in its final stages of implementation. the requirement to provide a constitutional level of Given that CQIT is intended to facilitate care. This means the state, to effectively uphold the self-monitoring—an important step to rights of people in prison, must also improve care demonstrating compliance with constitutional to the point of being able to exit the Receivership. care—ensuring its completion and that Second, the state cannot have full autonomy over agreed upon metrics are captured is prison mental health care until it is able to exit the critical. The Receiver’s proposed actions to Receivership. Finally, a Receiver can increase state recommend final indicators and thresholds, as costs. At a minimum, the state will continue to incur well as developing a process to demonstrate the cost to maintain the Office of the Receiver— CDCR has implemented the remedy, are currently $8.2 million annually—until the state exits reasonable steps. Receivership. It is likely, however, that the Receiver • Implementation of Suicide Prevention could increase spending by considerably more, a Plan. CDCR’s implementation of the suicide key consideration given the multiyear deficits facing prevention program continues to be a the state. For example, under the medical Receiver challenge because CDCR has not been able in the Plata court case, state spending on prison to demonstrate compliance with all portions medical care has more than doubled since the of the plan. In addition, it is not clear what first year of the Receivership (after accounting for barriers exist to implementing the plan. inflation)—reaching $3.1 billion in 2025-26. As such, we find that the Receiver’s approach of creating goals for specific areas that are www.lao.ca.gov 17 analysis full 2026-27 BUDGET Summary of Addressing Chronic Vacancies in Prison Mental Health Care Continued State Effort to Address Vacancies Is Critical. Despite the Receivership created in the Coleman v. Newsom case, the Legislature will retain the ability to approve, reject, or modify the Receiver’s budget proposals, pass legislation mandating the California Department of Corrections and Rehabilitation (CDCR) to take specific actions, and conduct oversight of the system. Additionally, chronic mental health vacancies likely affect mental health outcomes and addressing them will be essential to returning authority back to the state. Accordingly, it is critical for the state to continue to take action to reduce mental health vacancies. Recommend Legislature Take Various Steps to Reduce Chronic Vacancies. To address chronic mental health staffing vacancies, we recommend the Legislature take the following the steps: Assess Effectiveness of Other Steps Before Considering Across-the-Board Pay Increases. For various reasons, including that current CDCR compensation appears to meet or exceed market rates and factors outside of compensation likely play a major role in the state’s ability to staff mental health positions, we do not find across-the-board compensation increases to be a cost-effective strategy, though more targeted increases could be appropriate. Eliminate the Requirement for Licensed Out-of-State Providers to Get California Licenses. This would allow CDCR to benefit from recruiting from a wider pool of applicants. We also recommend directing CDCR to recruit more from out of state. Increase Use of CDCR Tele-Mental Health to Maximum Court-Approved Levels. The Coleman court allows up to half of providers to patients not in inpatient beds to provide services through tele-mental health. Even under a proposed expansion, however, only about 30 percent of providers will be remote. Further expanding tele-mental health could attract qualified professionals who might not otherwise want to work in a prison setting, as well as allow the state to recruit from areas where there are more providers available. Ask Court to Allow Tele-Mental Health Providers to Work From Out of State. This would open up a potentially large pool of new applicants who are interested in working for CDCR but would prefer not to move from their current location. Require CDCR Report on the Feasibility of Concentrating Mental Health Population in Prisons That Are Easier to Staff. Concentrating the mental health population could have various benefits, such as making it easier to recruit staff located in areas with a wider pool of applicants and reducing the need for staff at locations with large vacancies. However, this could prove logistically difficult. Having a report that explores the feasibility and costs of this option would better position the state and the Legislature to know what the challenges of such an approach are. Direct CDCR to Align Inpatient Capacity With Actual Need. CDCR is operating hundreds more inpatient beds than the amount projected to be necessary. This increases costs and the number of positions it needs to fill unnecessarily. We recommend directing CDCR to request the Receiver to allow it to operate only the inpatient beds projected to be necessary. Taken together, these steps will help the state better recruit and retain mental health staff, reduce the state’s reliance on expensive contracted staff, meet its constitutional requirements, lead to more effective care, and help return the mental health system to state control. 18 LEGISLATIVE ANALYST’S OFFICE analysis full 2026-27 BUDGET out of compliance and identifying the root The Receiver acknowledges that the time line is causes of why certain portions of the suicide ambitious. The medical Receivership has been in prevention plan have not been implemented place for nearly 20 years, despite indications over are a reasonable start to resolving the that time period that it might be coming to an end. outstanding issues. For example, 14 years ago, the Plata court, noting improvements in care, ordered the development Prison Costs Could Increase Beyond What of a plan for transitioning the responsibility back to Is Proposed in the Action Plan. Costs in mental the state. Whether the mental health Receivership health will increase under the Receivership and will follow a similar trajectory depends on various could increase beyond the $33.9 million proposed factors such as collaboration between CDCR in the Governor’s budget. However, it is less and Receiver staff, how quickly remedies can clear what the magnitude of those increases be implemented, how effective the Receiver’s will be. Given that the Governor’s proposal only strategies are, and whether the court or Receiver includes a portion of the action plan’s costs, it is find new problems. possible more proposals will be submitted in the CDCR Compensation Increases Could Impact future. For example, it seems likely that additional Recruitment in Other Departments. We find that funding for resource teams could be requested. the CDCR compensation increases in the action In addition, as the Receiver becomes more familiar plan could affect other state departments who with CDCR operations and the mental health also hire mental health staff. For example, potential delivery system, the Receiver could identify new providers seeking work at the Department of State deficiencies and implement significant changes Hospitals (DSH) may be incentivized by the salary to address those. These changes could require increases at CDCR to apply to CDCR rather than significant resources. For example, the Receiver DSH, particularly in cases where DSH facilities has indicated the adequacy of mental health are nearby prisons. As a result, this may create treatment and office space will be evaluated at all recruitment and retention challenges for other prisons. If new construction projects are proposed departments that also hire mental health providers. after the evaluation is complete, this could increase To address these issues, other department may costs substantially beyond what is proposed in seek similar compensation increases to ensure their the action plan. For example, to address deficient pay remains competitive with CDCR. medical facilities, the medical Receiver ordered the construction of 31 healthcare facility improvement Governor’s Proposal Reasonable projects that have totaled over $1.5 billion. Given As discussed above, the Receiver’s action plan that the state is facing multiyear budget deficits, was approved by the court when appointing the these newly incurred costs would exacerbate the Receiver and appears to be a reasonable start to budget problem. addressing the key areas of noncompliance. Given Mental Health Receivership Could Last that the Governor’s proposal closely aligns with the Longer Than Estimated. The Coleman court has Receiver’s action plan, we also find the proposal to discretion on deciding how the state can exit the be reasonable. Although the proposed funding has mental health Receivership. Although the action no budget-year impact since it will be funded by plan estimates the Receiver will take five to seven the fines in the special deposit fund—we expect the years to achieve compliance, it could extend longer funds to be depleted by 2030-31, which would then than estimated. This is because the Coleman require ongoing General Fund. There could also be case has already spanned several decades, which impacts to the General Fund from future bargaining indicates the issues remaining are complex and agreements that incorporate these salary increases. may not be resolved as quickly as expected. Those impacts are currently unknown. www.lao.ca.gov 19 analysis full 2026-27 BUDGET RECOMMENDATIONS annual updates on the progress made through reports and in budget hearings. The Legislature can Legislative Oversight encourage progress toward achieving compliance To end the Receivership, the state needs to in other ways, such as by considering the issue demonstrate that the deficiencies identified by the in confirmation hearings for CDCR staff involved court have been sustainably addressed. Although in mental health care. Taking these steps would the Receiver has put forth an action plan to bring add additional oversight to the court’s existing the state into compliance, legislative oversight monitoring, which will increase accountability and could be instrumental in facilitating the state’s exit further encourage actions toward a swift resolution. from the Receivership. Below, we provide several Direct CDCR to Take Additional Steps to recommendations that could allow the Legislature Address Mental Health Vacancies. In addition, to help the state regain control of the delivery of to the Receiver’s action plan, we recommend prison mental health care. several additional actions in our report Addressing Continue to Exercise Oversight Over the Chronic Vacancies in Prison Mental Health Care. Delivery of Prison Mental Health. We recommend Specifically, we recommend the Legislature: the Legislature continue to exercise oversight of the • Assess the effectiveness of the Receiver and delivery of prison mental health care. This includes CDCR’s ongoing steps to address vacancies applying its standard budgetary processes to before considering across-the-board carefully review and act upon each budget proposal pay increases. submitted on behalf of the mental health Receiver. • Eliminate the requirement for In exercising its oversight over the prison mental licensed out-of-state providers to get health budget, the Legislature should look for ways California licenses. to achieve the Receiver’s goals cost-effectively, • Increase use of CDCR tele-mental health to particularly in light of the multiyear deficits facing maximum court-approved levels. the state. This would ensure that the additional • Ask the court to allow tele-mental health resources dedicated to prison mental health are providers to work from out of state. being allocated both in ways that control costs and that can be maintained over the long run. Also, the • Require CDCR report on the feasibility of Legislature could request periodic updates from concentrating the mental health population in the mental health Receiver and CDCR at budget prisons that are easier to staff. hearings on various issues such as instances where • Direct CDCR to continue to seek further state law is being waived by the Coleman court or alignment of its inpatient bed capacity with its challenges to implementing the action plan. The projected need for such beds. Legislature could then consider changes to state • Require CDCR to regularly adjust inpatient law to address these issues. bed capacity. Track Progress Towards Exiting Mental Taken together, these steps will help the state Health Receivership. We recommend the better recruit and retain mental health staff. This, Legislature track how effective CDCR and the in turn, could reduce the use of costly contract Receiver are at meeting the goals and implementing staff and will allow the state to better meet its the action plan. In particular, the Legislature will constitutional requirements, lead to more effective want to monitor progress on the implementation care, and help return the mental health system to of CQIT, the suicide prevention plan, efforts to state control. reduce mental health vacancies, and any newly Monitor Impact of Salary Increases. We identified substantive deficiencies. Conducting recommend monitoring the overall impact of oversight to ensure these parts of the plan are salary increases both in CDCR and other state being implemented in a timely and effective manner departments. For example, this can be done by will be important to reaching a constitutional level having the administration track how effective the of care. The Legislature could do so by requesting 20 LEGISLATIVE ANALYST’S OFFICE analysis full 2026-27 BUDGET department was at recruiting and retaining mental multiyear deficits facing the state, any increased health staff before and after the salary increases spending would have to come at the cost of other took effect. It would also be helpful to know whether General Fund priorities. any of the newly recruited CDCR mental health Approve Governor’s Proposal staff declined offers from other state departments or did not apply to other state departments As discussed above, we recommend that because of their lower pay. If this is not the case the Legislature continue to apply its standard for many new CDCR employees, it suggests the budgetary processes to carefully review and act impact of the salary increases is minimal on other upon each budget request submitted on behalf of state departments. This would also imply the the mental health Receiver—including this proposal state may not need to make further changes to and future proposals. Given that the proposal is those department’s salaries. If many new CDCR reasonable, we recommend approving it. Although employees declined offers from or decided not to this will not require additional expenditures from apply to other state departments due to lower pay, the General Fund in the budget year, this will likely then increases in salaries for affected departments create future General Fund commitments when the could be considered. However, in the context of the mental health deposit funds are depleted. TELE-MENTAL HEALTH BACKGROUND California Department of Health Care Access and Information in 2022 estimated that there would be CDCR Struggles to Fill Mental Health a shortage of psychiatrists and behavioral health Positions. CDCR has frequently encountered providers in all 58 California counties by 2025, with difficulty filling mental health positions. As 27 prisons located in counties experiencing high or mentioned in the “Establishment of the Second severe shortages. California Prison Receivership” section of this CDCR Uses Tele-Mental Health Services as a brief, CDCR is under federal court order in the Supplement to On-Site Providers. To supplement Coleman v. Newsom case to reduce mental the services offered to incarcerated patients health vacancies. Specifically, the department when on-site providers are limited, CDCR uses must reduce vacancies below 10 percent in five tele-mental health which can replace an in-person key classifications: psychiatrists, psychologists, visit. CDCR hires full-time tele-mental health staff licensed clinical social workers, recreational in several classifications, including psychiatrists, therapists, and medical assistants. As of June psychologists, and social workers. These staff have 2025, the vacancy rate for these five classifications the option to either commute to offices—some taken together was at 43 percent. of which are outside of prisons—or work from Various Factors Make Filling Mental Health home if they are able to ensure patient privacy. Positions Difficult. A wide variety of factors can CDCR provides tele-mental health services via live make it difficult to hire and retain mental health video by using specialized equipment. During a staff at prisons, including challenging working tele-mental health visit in prison, an incarcerated conditions and a limited pool of providers. Based patient is escorted to a medical room within the on discussions with CDCR staff, mental health prison where they communicate via audio and professionals may not want to work at a prison for video with the mental health provider over a secure various reasons. Staff have cited concerns about network. A medical assistant at the prison can safety, air conditioning and heat, lack of privacy, perform tasks that require a physical presence, and dilapidated or limited offices and treatment such as adjusting the equipment or measuring the space, as well as a rigorous work schedule with patient’s blood pressure and other vital signs while few flexibilities. Moreover, most prisons are in the provider interacts with the patient remotely. areas where providers are limited. For example, the www.lao.ca.gov 21 analysis full 2026-27 BUDGET Under Coleman court oversight, there are limits staff), six IT staff (who will set up and maintain on where tele-mental health can be deployed. For equipment), two human resource staff (who example, the court only allows up to 50 percent of will focus on mental health staff recruitment), outpatient providers—those serving patients with and one manager (who will oversee the the lowest mental health needs—to be remote, and program). This decreases to $3.4 million in those providers must be located within California. 2027-28 and ongoing. The court prohibits the use tele-mental health by • $674,000 for equipment and software in inpatient providers—those serving patients with the 2026-27. This increases to $893,000 in highest mental health needs. 2027-28 before decreasing to $442,000 in Existing Telehealth Resources Total 2028-29 and ongoing. $115.7 Million. In 2025-26, CDCR is budgeted for $115.7 million from the General Fund for tele-mental ASSESSMENT health costs. This includes 311.5 providers Expansion of Tele-Mental Health Is One (psychiatrists, psychologists, and social workers), Strategy That Could Help Alleviate Staffing along with 234 medical assistants and supervisory Challenges. In our report Addressing Chronic staff. CDCR reported that, as of September 2025, Vacancies in Prison Mental Health Care, we nearly one-quarter of all of its mental health find that the expansion of tele-mental health providers were remote. is a promising strategy to address vacancies. Tele-mental health could be a particularly useful GOVERNOR’S PROPOSAL tool for providing services at hard-to-staff prisons. Redirect 100 On-Site Providers to This is because it helps address some of the Tele-Mental Health. The Governor proposes to key issues that create recruitment and retention redirect 100 on-site providers at various prisons difficulties. Specifically, tele-mental health can: to become remote staff. The positions consist of • Mitigate Concerns About Challenging psychiatrists, social workers, and psychologists. Working Conditions at Prisons. Because CDCR indicates that the redirected positions will providers delivering tele-mental health still serve the prisons they were redirected from. services do not have to be physically present Because the department already has funding for at a prison, this means that some of the the on-site positions that will be converted, no concerns that accompany being on-site additional funding is needed for this aspect of are mitigated. For example, people working the proposal. remotely likely do not face the same level of Add Support Staff and Equipment to Expand safety concerns, can have more privacy, and Tele-Mental Health. The Governor’s proposal do not need to work in dilapidated facilities includes $8.9 million General Fund in the budget that may lack air conditioning. year, growing to $13.5 million in 2027-28 and • Increase Pool of Providers. Tele-mental declining to $12.8 million in 2028-29 and ongoing health has the potential to increase the pool to add support staff and equipment to facilitate the of providers that serve these institutions conversion of the on-site positions. This includes: because they can be hired and work from • $4.8 million for 50 medical assistants in anywhere in the state. For example, CDCR 2026-27—a one-to-one ratio of provider to can recruit tele-mental health staff from areas medical assistant—who will be at the prisons of the state where it is easier to recruit due to setting up equipment and observing patients the availability of providers—such as the Bay during tele-mental health appointments. With Area—and have them serve at remote prisons the addition of 50 more medical assistants where such providers are more scarce—such in 2027-28, this increases to $9.2 million as North Kern State Prison in Delano. before declining to $8.9 million in 2028-29 and ongoing. • $3.5 million for ten supervisory staff in 2026-27 (who will help oversee the remote 22 LEGISLATIVE ANALYST’S OFFICE analysis full 2026-27 BUDGET Other Options Could Augment Ability of below the 50 percent threshold allowed by the Tele-Mental Health to Help Address Staffing court. This suggests that the state has room to Challenges by Increasing Pool of Providers. further expand tele-mental health beyond the As discussed in Addressing Chronic Vacancies in level proposed. Prison Mental Health, we find that two other options Unclear Whether CDCR Strategically could increase the impact of tele-mental health and Deploying Tele-Mental Health. The Governor’s expand the pool of mental health providers that proposal provides few details that make it difficult CDCR can draw from. to assess whether CDCR is proposing to deploy • Allowing Tele-Mental Health Staff to the requested resources strategically. For example, Work Outside of California. Tele-mental at the time of publication, CDCR did not specify health staff are currently required to provide which prisons the staff will be redirected from or services from California by the Coleman which caseloads will be served by tele-mental court. This unnecessarily limits the pool health. Moreover, it is not clear why those prisons of potential applicants to people living and caseloads were selected, how long the or willing to relocate to California. If the redirected positions have been vacant, or the rate state and court allowed tele-mental health of remote workers at the prisons that staff would providers to work outside of California, it be redirected from. As such, it is unclear whether could likely attract a much larger pool of CDCR is targeting tele-mental health services to the qualified providers. Moreover, California prisons with the greatest needs that are the most often pays mental health professionals more challenging to staff. than other states. If people in other states Medical Assistant Positions Not Fully were allowed to provide tele-mental health Justified. We find that the justification for the 100 services in California prisons, the state might additional medical assistants to support remote be able to attract qualified candidates living providers is lacking. Although the request is based in lower-cost-of-living areas with higher pay, on previous tele-mental health expansions in while still allowing them to maintain their which each tele-mental health provider is paired residency in other states. with one medical assistant, it is not clear that this • Adding More Licensing Exemptions for is necessary. This is because tele-mental health Those Who Work at Prisons. Currently, providers are not always providing tele-mental providers with out-of-state licenses are health care and therefore do not always need the required to obtain a California license to help of a medical assistant. For example, mental work in CDCR, though some may use their health providers are required to spend some of their out-of-state license on a temporary basis. time taking clinical notes. In discussions with the Removing this requirement could further department, they indicate that medical assistants augment the recruitment of out-of-state can be redirected for other tasks at those times. tele-mental health providers (and in-person However, the department did not provide data providers as well). Notably, CDCR and the demonstrating that there is unaddressed workload California Department of Human Resources that medical assistants would be needed for. would retain their current roles in identifying This suggests that the one-to-one ratios are likely qualified recruits and providing the necessary overbudgeting the tele-mental health program. training and supervision to ensure people Tele-Mental Health Expansion Could are performing their duties adequately. This Undermine Recruitment and Retention of would help to ensure that the quality of care On-Site Providers. Because tele-mental health is maintained. could mitigate concerns about challenging working conditions at prisons, it could become more State Could Go Further in Expanding attractive for on-site providers to make the switch. Tele-mental Health Than Proposed. Based To the extent on-site providers switch to remote on our estimate, the Governor’s proposal work, CDCR would lose needed on-site providers. would increase the rate of remote providers to Additionally, because tele-mental health providers roughly 30 percent of all outpatient providers— www.lao.ca.gov 23 analysis full 2026-27 BUDGET can only serve people in outpatient settings, Increase Use of CDCR Tele-Mental Health further tele-mental health expansions could result to Maximum Court-Approved Levels. We in remaining on-site providers having more of the recommend directing CDCR to increase the use most challenging patients to treat—those in the of tele-mental health up to the maximum levels inpatient settings—potentially resulting in reduced approved by the court. This could attract qualified job satisfaction for these providers. professionals who might not otherwise want to work in a prison setting, as well as allow the state to RECOMMENDATIONS recruit from areas where there are more providers available. We also recommend directing CDCR to In our report, Addressing Chronic Vacancies do this in a strategic manner. One way to implement in Prison Mental Health Care, we recommend the expansion would be to assign tele-mental expanding existing efforts in tele-mental health in health services to those with the lowest mental various ways. As such, our recommendations in health need in an outpatient setting before moving this section build on our analysis from that report. to those in the outpatient setting with greater Below, we discuss additional steps for legislative mental health needs. CDCR could also identify consideration that could help reduce vacancies prisons that face the greatest staffing challenges among mental health providers and make progress and utilize a greater share of remote providers at towards improving mental health outcomes. those facilities. The cost of such changes would be Approve Funding for Supervisory and Human unlikely to exceed $30 million ongoing in addition Resources Staff, as Well as Equipment and to the funding necessary to support the expansion Software. As discussed in the “General Fund proposed by the Governor. These costs would Condition” section of this brief, the state’s budget come primarily from buying equipment and having condition necessitates that any new General Fund sufficient support staff. We find that this additional spending must meet a very high bar for approval. spending meets the high bar necessary for new We find that the equipment and support staff General Fund spending given the Coleman court’s requested for the program meet this threshold and orders to reduce vacancies and the potential recommend approving as it could help the state expansion has to improve care. Moreover, some of comply with the Coleman court’s order to reduce these additional costs could be offset by savings vacancies and improve care. from our recommendation to reduce the ratio of Direct CDCR to Modify Request and medical assistants to providers. Tele-Mental Health Budget to Account for True Take Steps to Augment Impact of Tele-Mental Need for Medical Assistants. We recommend Health Expansion. Given the urgency the state directing CDCR to present a revised proposal is in to fill prison mental health positions, we for medical assistants at the May Revision that recommend directing CDCR to request that the reduces both the request and the baseline budget Coleman court allow remote providers to work for medical assistants in the tele-mental health from out of state. Additionally, we recommend program to account for the time when they are expanding licensing exemptions so that all licensed not directly supporting appointments. This would out-of-state mental health providers no longer need reduce the cost of the proposal and generate state to acquire a California license to work at CDCR. savings—an important consideration given the We also recommend pairing these changes with fiscal difficulties facing the state. Moreover, it would more recruitment from out of state. Taken together, reduce the number of medical assistant positions these changes would enhance the impact of the the department must fill, which would make it easier tele-mental health expansion we recommend. for the department to comply with the Coleman The fiscal cost of these changes would be minimal court’s orders to keep medical assistant vacancy and likely absorbable, depending on how CDCR rates low. pursues greater out-of-state recruitment. 24 LEGISLATIVE ANALYST’S OFFICE analysis full 2026-27 BUDGET Monitor Recruitment and Retention of resources staff, tele-mental health staff, and on-site On-Site Staff and Consider Targeted Pay staff, as well as union members representing mental Differentials as Needed. We recommend the health providers, on what effects tele-mental health Legislature monitor the effects that the expansion expansion has had on the ground. If the expansion of tele-mental health has on on-site staff. This can of tele-mental health begins to undermine the be done through budget hearings in the upcoming recruitment and retention of on-site staff, the year, if tele-mental health is expanded in the Legislature could then consider different options for 2026-27 budget. At such hearings, the Legislature addressing that challenge, such as providing pay can hear from Receiver staff, CDCR human differentials for those who work on-site. PAROLE COMMUNITY REHABILITATION PROGRAMS BACKGROUND programs, including $225.8 million from the General Fund. Below, we provide details on some of the Certain People Released From Prison Are programs offered to people on parole. Supervised by CDCR on Parole. When people are Day Reporting Centers (DRCs) and released from prison, they are generally supervised Community-Based Coalitions (CBCs) Connect in the community—usually between one to two People to Various Services. DRCs and CBCs years. While some of these people are supervised offer a “one-stop shop” for people on parole to by county probation departments, people convicted be connected to various nonresidential services, of a serious or violent offense are generally some of which are offered on-site. The programs supervised by state parole agents. Alongside generally focus on addressing factors that might supervision, the state provides people on parole contribute to future criminal activity such as anger with access to a variety of rehabilitation services management, but also have a limited ability to in order to successfully reintegrate them into the connect people with transitional housing. CBCs community. As noted in the “State Prison and are modeled after DRCs but participants can be Parole Population and Other Biannual Adjustments” in the program for up to one year, whereas DRCs section of this brief, CDCR projects there to be an allow people to participate up to 180 days with an average daily population of about 32,400 people on option to extend for an additional 185 days. CDCR parole in 2026-27. has authority to operate 18 DRCs throughout CDCR Uses Contracts to Provide California that serve over 6,000 people each year. Rehabilitation Services to People on Parole. The 10 CBCs are in Northern California and serve CDCR funds a number of different rehabilitation over 1,200 people each year. programs for people on parole throughout the Long-Term Offender Reentry and Recovery state. These services are generally provided by (LTORR) Provides Housing and Services. LTORR contractors. Programs are structured as either programs are substance-free, residential programs residential programs that provide housing—typically that provides housing, meals, and various services. paired with other services—or as programs The services generally focus on the needs of people that participants attend during the day. These that have served long prison sentences such as programs can last for months. For example, many employment and computer-supported literacy. programs last up to 180 days (6 months) but can There are 14 LTORR programs throughout California be extended for an additional 185 days. Within that serve over 1,800 people each year. these programs, people can receive various services such as substance use disorder treatment, Ventura Training Center (VTC) Program case management, sex offender treatment, and Provides Firefighter Training. As part of the employment assistance. The revised 2025-26 2018-19 budget, the state funded the conversion of budget includes $270.1 million total funds for these the Ventura conservation camp in Camarillo into a www.lao.ca.gov 25 analysis full 2026-27 BUDGET new residential center—called VTC—co-managed increase for 11 DRCs, 3 LTORR programs, by the California Conservation Corps, the California 10 CBCs, and VTC. This third phase of funding Department of Forestry and Fire Protection, and would cover all remaining parole rehabilitation CDCR. The program offers a firefighter training contracts that previously did not receive funding. and certification program for people on parole The one-time, catch-up adjustment is calculated so that at the end of the 18-month program, based on when the service was first provided in participants are fully trained firefighters eligible to each county and the cost-of-living increases that be hired by firefighting agencies. VTC is designed have occurred in that area since. The administration to serve 80 people at a time and CDCR reports is proposing this catch-up adjustment because the that 210 paroled people have completed training department has not increased funding in previous with more than half of those graduates being years for these contracts and is concerned that employed full-time with state, local, and federal it will not receive any bidders on these contracts firefighting agencies. as previously happened at two locations with State Has Started Providing Cost-of-Living expired contracts. Increases for Some Providers. As discussed in our publications The 2023-24 Budget: Considering ASSESSMENT Inflation’s Effects on State Programs and the Inflation Increases Appear Reasonable for “Parole Community Rehabilitation Programs” Parole Rehabilitation Programs. As mentioned in section in The 2025-26 Budget: California the “General Fund Condition” section of this brief, Department o Corrections and Rehabilitation, the state’s budget condition necessitates that any inflation can erode the quantity and quality of new General Fund spending meet a high bar for state services, such as service obtained through approval. We find that cost-of-living increases for contracts. For example, CDCR has indicated that parole rehabilitation programs meet this high bar for in recent years there has been a lack of providers two key reasons. First, without the increases there willing to bid on expired CDCR contracts because could be disruptions to the state’s ability to maintain contract rates did not have cost-of-living increases its existing service levels for its core rehabilitation built into them, meaning they have not kept up with programs. Because costs have increased due to increased costs resulting from inflation. To address inflation in recent years, it is plausible that providers this, the 2024-25 and 2025-26 budgets provided are less willing to extend their existing contracts. several parole rehabilitation programs whose In addition, other providers that don’t already offer contracts were set to expire with General Fund these services (1) may be less willing to do so, increases that combined to $47.5 million in 2025-26 (2) would do so by providing lower-quality services, and an ongoing 2 percent annual cost-of-living or (3) would provide services to fewer people. This increase thereafter. This funding provided trend would make it difficult for CDCR to find quality cost-of-living increases specifically to 7 DRCs and providers and ensure people on parole receive 12 LTORR programs, as well as other programs. rehabilitation programming. Previously, CDCR reported it was not successful in obtaining bids for GOVERNOR’S PROPOSAL DRC and LTORR contracts that had been set to Build in Inflation Adjustments to Parole expire at the end of 2023-24, which were advertised Rehabilitation Program Funding. The Governor’s at the same or similar rates to the prior contracts budget proposes $5.3 million General Fund in for these services. The department reported that 2026-27, $11.4 million in 2027-28, $12.4 million in the 2024-25 and 2025-26 funding increases appear 2028-29, $13.3 million in 2029-30, $14.3 million to have increased the number of bids submitted in 2030-31, and ongoing increases annually for these services. Second, failing to provide these thereafter to reduce the impact of inflation on services could have long-term adverse fiscal parole rehabilitation programs. This consists of (1) a implications for the state if more people return to roughly 30 percent one-time, catch-up adjustment prison as a result of not having their rehabilitative and (2) an ongoing 2 percent annual cost-of-living needs addressed. 26 LEGISLATIVE ANALYST’S OFFICE analysis full 2026-27 BUDGET Parole Rehabilitation Programs Have Not external researchers to do so. Such an evaluation Been Evaluated for Cost-Effectiveness. Ensuring could result in modest one-time costs to CDCR that programs are cost-effective helps ensure that would likely be absorbable, though the that the state is allocating its limited resources for Legislature could work with the department to rehabilitation programs in a manner that has the determine whether dedicated funding is necessary. maximum effect on people successfully completing We think that the modest costs to the state their parole terms and not committing additional would be justified, as the evaluation would allow crime. Accordingly, to the extent that the state is not the Legislature to determine whether all parole allocating its resources to the most cost-effective programs—totaling over roughly $270 million in programs, it is potentially allowing more crime annual spending—merit continued support or need to occur than would otherwise be the case. to be restructured to be effective. We recommend Although some metrics exist about participants, this evaluation be provided to the Legislature no the department generally lacks robust evaluations later than January 10, 2030 to provide the external of the actual cost-effectiveness of its parole evaluator time to complete the review. rehabilitation programs. This makes it difficult for Consider Funding on Limited-Term Basis the department to determine which programs are Pending Results of Evaluation. To maintain cost-effective, whether there are potential obstacles these programs in operation while the evaluation is or challenges preventing them from operating being carried out, we recommend the Legislature cost-effectively, and whether some are more consider providing three years of the proposed cost-effective than others. As such, it is difficult increases in funding. In addition, if the Legislature for the Legislature to assess which programs are approves this funding on a limited-term basis, we the most successful at reducing recidivism and to recommend converting prior-year commitments to target funding towards those programs. limited term as well to maintain consistency across the programs. This would allow the Legislature to RECOMMENDATIONS review the evaluation as part of its deliberations Require Evaluation of All Parole Programs. during the 2030-31 budget process, at which Given that parole programs have not been point it could consider whether to provide ongoing evaluated for cost-effectiveness, we recommend funding for these programs. that the Legislature direct CDCR to partner with CALIFORNIA SEX OFFENDER MANAGEMENT BOARD AND THE STATE AUTHORIZED RISK ASSESSMENT TOOLS FOR SEX OFFENDERS REVIEW COMMITTEE BACKGROUND its role, the board certifies treatment providers and monitors their compliance with evidence-based California Sex Offender Management Board practices. To receive certification, which must (CASOMB) Oversees Treatment of People be periodically renewed, providers must pay an With Sex Offenses. CASOMB is responsible for application fee not to exceed $180 and be approved developing statewide standards for the assessment, by CASOMB. CASOMB is under the jurisdiction of treatment, and management of individuals CDCR and composed of 19 members including the convicted of sex offenses, as well as addressing Secretary of CDCR, as well as several legislative issues related to their community management. In and gubernatorial appointees. www.lao.ca.gov 27 analysis full 2026-27 BUDGET State Authorized Risk Assessment Tools for GOVERNOR’S PROPOSAL Sex Offenders (SARATSO) Review Committee Funding to Support Budget Operations and Oversees Risk Assessment Tools. Risk Technology Maintenance. The Governor proposes assessments use information about a person, such $450,000 ongoing General Fund beginning in as their age, gender, and past criminal history, to 2026-27 to support both agencies. It includes identify their risk of committing future crime. Risk $300,000 for expenses related to both agencies’ assessments can be used by courts and public responsibilities, such as traveling to deliver safety agencies, such as probation and parole, to trainings, reserving venues, and auditing providers. determine what level of supervision or rehabilitative It also includes $150,000 for the maintenance support would be appropriate. The SARATSO and operation of a recently developed IT project Review Committee is responsible for selecting, that centralized the data from both agencies for maintaining, and updating the risk assessment processing applications and payments, tracking tools used by state and local agencies to determine certifications and trainings, and complaints against the risk level of people with previous sex offenses. providers. The administration indicates that these The committee also certifies and trains people to funds are necessary as the existing fees are no score and interpret the results of the assessment. longer keeping up with the agencies’ rising costs. Trainings are offered year-round throughout the state at no cost or for a fee depending on the type ASSESSMENT of training. The SARATSO Review Committee is Proposed Funding Would Maintain Service supported by CDCR staff and composed of four Levels… The proposed funding would allow members including representatives from CDCR, both agencies to maintain their existing service state hospitals, and the Attorney General, as well as levels. According to both agencies, their service a representative from the Chief Probation Officers levels are beginning to be impacted because of California. their existing funding is not keeping up with their Agencies Funded by General Fund, Fees ongoing operations. For example, CASOMB reports and Grants. The revised 2025-26 budget for both funding shortfalls could affect the time it takes to CASOMB and the SARATSO Review Committee is process applications, monitor and audit providers, $1.4 million—$1 million from the General Fund and and close complaints. In addition, the SARATSO $406,000 from special deposit funds. The special Review Committee reports that it has had to deposit fund revenues for CASOMB and the reduce trainings offered—which affects the number SARATSO Review Committee are from fees (such of people who can conduct and interpret risk as certification and training fees) and grants. assessments for people with sex offenses. CASOMB Fees Have Been Capped Since …But New IT Project Could Lead to 2010. CASOMB fees assessed to people delivering Efficiencies… The recently developed IT project sex offender treatment services were established is expected to centralize and streamline the in 2010 and were capped by state law at $180 agencies’ use of information. This could result per application. CASOMB uses the cap to set fee in improvements in processing certifications, rates for different providers. For example, agencies monitoring compliance, and tracking trainings with 10 or fewer clients are assessed a $90 fee, completed. As such, it is possible that the agencies those with more than 10 clients but fewer than 40 will be able to do more than with their prior software are assessed a $120 fee, and agencies with 40 or or be able to do it at a lower cost. more clients are assessed a $180 fee. In addition, …And the Administration Has Not providers renewing their certifications are generally Explored Changes to Fee Structure. Based on assessed a lower fee ranging between $50 and conversations with the administration, CASOMB $100, depending on how many clients they serve. and the SARATSO Review Committee have not recently explored an alternative fee structure that could further offset the General Fund costs. 28 LEGISLATIVE ANALYST’S OFFICE analysis full 2026-27 BUDGET RECOMMENDATIONS of $1 million, and (3) require no General Fund support. The plan should consider fee increases Approve One-Time Funding and Direct (including raising fees above the statutory cap) and Agencies to Provide a New Funding Plan. We ways to increase grant revenue, as well as effects recommend approving the requested resources on service levels and broader outcomes, if any, on a one-time basis because this funding will under each of these scenarios. This would better maintain service levels. In addition, we recommend position the Legislature to weigh the trade-offs of directing the agencies to provide a new funding providing ongoing General Fund support for these plan by January 10, 2027 describing how they agencies as it deliberates the 2027-28 budget, could restructure their operations and fees to when the requested funding would expire under (1) avoid the need for the requested $450,000 our recommendation. General Fund on an ongoing basis, (2) require less than their current baseline General Fund budget www.lao.ca.gov 29 analysis full 2026-27 BUDGET APPENDIX Appendix Figure 1 Summary of LAO Recommendations Issue Governor’s Proposal LAO Recommendation State Prison and Parole Projects, in 2026-27, a prison population Withhold recommendation until the May Revision. We Population and Other of 87,600 (a 2 percent decrease from will monitor the California Department of Corrections Biannual Adjustments the estimated current-year level) and a and Rehabilitation’s (CDCR’s) populations and the parole population of 32,400 (a 4 percent other factors affecting the proposal and advise the decrease from the estimated current-year Legislature based on the updated information at the level). May Revision, including revised CDCR population projections. Prison Closure $91 million General Fund reduction in Approve CRC closure adjustments. Direct CDCR to 2026-27 ($138 million in 2027-28 and begin planning to close another prison to help align ongoing) to reflect the planned closure capacity and the projected prison population and of the California Rehabilitation Center reduce General Fund costs. Reject infrastructure (CRC) in Norco by October 2026. Several proposals at the Correctional Training Facility in one-time General Fund augmentations in Soledad to avoid infrastructure spending at a prison 2026-27 to support infrastructure projects that is a strong closure candidate unless a different at various prisons. candidate is identified. Require CDCR to report in budget hearings about its deactivation activities and enact statute requiring notification of future capacity reductions due to indications CDCR has begun deactivating portions of prisons and has declined to provide information about this. Structural Shortfall and $91 million ongoing General Fund to pay Provide $91 million on a three-year, limited-term Funding for Separating for employee leave cashouts. CDCR basis as CDCR’s need for leave cashout funding Employee Leave Cashouts has historically funded these payments may be limited term. Adopt budget bill language and other costs through vacant position requiring CDCR to report certain data related to savings. However, recent conditions (such leave cashouts to inform future decisions. Exercise as prison closures) have reduced the oversight of structural shortfall by directing CDCR to amount of vacant positions, creating a report in budget hearings on what steps it is taking structural shortfall. to address it. Establishment of the $33.9 million ongoing from Coleman Recommend continued oversight of prison mental Second California Prison contempt fines to implement a portion health, tracking progress towards exiting the Receivership of the newly appointed Receiver’s action mental health Receivership, directing CDCR to take plan. Funds support salary increases of additional steps to address mental health vacancies, mental health positions, establishment and monitoring the impact of salary increases. of the Office of the Receiver, and other Approve funding to implement the action plan. consulting expenses. Tele-Mental Health $8.9 million General Fund in 2026-27 Approve portions of the proposal as it may help fill (growing to $12.8 million by 2028-29 and vacant mental health positions. Reduce the request ongoing) to redirect 100 on-site mental and CDCR’s baseline budget for tele-mental health health providers at various prisons to medical assistants to account for the time when remote staff and add support staff— they are not directly supporting appointments. Take including on-site medical assistants who steps to increase tele-mental health to the maximum facilitate appointments—and equipment to levels allowed, including allowing remote providers implement the conversion. to work from out of state, allowing licensed out-of-state providers to work at CDCR without a California license, and recruiting more from out of state. Monitor whether on-site providers need a pay differential to encourage them to remain on-site. Parole Community $5.3 million General Fund in 2026-27 Direct CDCR to evaluate all parole rehabilitation Rehabilitation Programs (generally increasing annually thereafter) for programs to determine whether they merit continued various parole rehabilitation programs. support or need to be restructured to be effective. Consider providing funding on a limited-term basis and converting prior-year commitments to limited term as well to maintain consistency across the programs. (Continued) 30 LEGISLATIVE ANALYST’S OFFICE analysis full 2026-27 BUDGET Issue Governor’s Proposal LAO Recommendation California Sex Offender $450,000 ongoing General Fund to support Approve on a one-time basis to maintain service Management Board and two agencies that oversee various aspects levels. Direct the agencies to provide a new funding the State Authorized Risk of the supervision and treatment of people plan describing how they could restructure their Assessment Tools for with sex offenses. operations and fees to (1) avoid the need for the Sex Offenders Review requested funding an on ongoing basis, (2) require Committee less than their current baseline General Fund budget of $1 million, and (3) require no General Fund support. www.lao.ca.gov 31 analysis full 2026-27 BUDGET LAO PUBLICATIONS This report was prepared by Orlando Sanchez Zavala and Caitlin O’Neil, and reviewed by Drew Soderborg and Ross Brown. 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, California 95814. 32 LEGISLATIVE ANALYST’S OFFICE