Leg Analyst: Guv's 'Odd Couple' Too Odd

January 26, 2010, 11:03 am • Posted by John Myers
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"We recommend rejection of this proposal."

That's about as simple as it gets in Capitol budget terms, and that's the bottom line of the Legislative Analyst's Office after examining Governor Arnold Schwarzenegger's novel proposal to link funding for prisons with funding for the University of California and California State University systems.

And the LAO report (read it here) ends with a zinger: "It is an unnecessary, ill-conceived measure that would do serious harm to the budget process."

The pairing of these two very different parts of the state budget was first suggested by Schwarzenegger in his State of the State speech on January 6. The pitch was simple: the state should be forced to spend more general fund dollars on higher education than on prisons.

"What does it say about a state that focuses more on prison uniforms than caps and gowns?" the governor said in his speech. "It simply is not healthy."

The budget odd couple left almost everyone scratching their heads, though on its face it's pretty simple: in four years time, there would be a cap on prison spending at 7% of the state's general fund and a corresponding floor for the UC and CSU systems, combined, of at least 10% of general fund revenues.

But that wouldn't be so simple because, as the LAO points out, about 9.5% of current GF revenues are going to prisons and only about 5.7% to UC/CSU.

To get to the magic numbers, the governor's proposal would require any cuts in prison spending -- beginning next year -- to be transferred dollar for dollar to higher ed. If that swap of cash doesn't get the UC/CSU piece of the pie up to 10% by July 2014, lawmakers would have to use "other available resources" to make up the difference.

It's worth noting that this setup procedure -- cutting prison costs even beyond current levels and possibly forcing cuts in other programs to pay for the proposal -- hasn't been widely talked about, and has been completely absent from any public mention of the plan by Governor Schwarzenegger. It's also worth noting that while the governor's advisers have released an overview of the proposed constitutional amendment, it has yet to be drafted in bill form or to have an author(s) in the Legislature.

Another unnoticed provision, one that lead LAO author Steve Boilard calls a "huge loophole," is the fact that the costs of operating any new prison built under 2007's AB 900 would be exempt from the 7% cap. Granted, AB 900 remains a work in progress... but if things move forward, many of the same cost drivers that have made prison expenses skyrocket would be free to keep on going up, grandfathered out of the governor's amendment to the state constitution.

Other concerns from the LAO about the Schwarzenegger proposal? Several. On the education side, the analysts say it fails to take into account the actual budgets of the UC and CSU systems -- budgets that are currently more dependent on student fees than they were back in the era where they accounted for at least 10% of the general fund (as the Guv is proposing). Another issue... one that's particularly galling to some in the education community... is that the proposal doesn't include California's community colleges under its definition of "higher education." The CCC system gets general fund dollars as part of the Proposition 98 guarantee that also covers K-12 education. But community colleges, notes the LAO, are "a key component of state higher education spending."

Other flaws the LAO found in the proposal include its lack of guarantee that extra higher ed cash will actually go toward any "public benefit"; the fact that it "arbitrarily" caps prison spending "irrespective of the cost pressures" that are often driven by the courts and state sentencing laws; and the ominous fact that the measure, combined with Prop 98, would "constrain spending choices (by elected officials) for over half of the state budget."

The LAO report may only increase the sense around the Capitol that the proposal (which would ultimately have to be ratified by the voters on perhaps the November ballot) is on life support. The only full throated support is coming from UC President Mark Yudof who has called it "bold and visionary." Of course, Yudof is also asking lawmakers for an extra $913 million for the UC system.

Sacramento Press Club

Photo: Sacramento Press Club

Nonetheless, the governor continues to defend its merits.

"Instead of having education continue taking a hit and the prison spending goes up, let's go and flip it around," said Schwarzenegger in his appearance yesterday at the Sacramento Press Club. The governor said his plan would force the prisons to be more "cost effective" -- a reference, no doubt, to the language in his constitutional amendment that would allow the state to venture more into the world of privatized prisons.

But in the final analysis, some may wonder if -- in an era where 'ballot box budgeting' is panned by almost everyone -- is it wise to add yet another mandate to one of the longest state constitutions in America?

Filed under: CA Budget, Education, Prisons, The Governor
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About John Myers

John Myers is Sacramento Bureau Chief for KQED Public Radio and "The California Report," heard daily on 23 public radio stations across the Golden State.
  • Milan Moravec

    Current Threats to University of California Don’t Come From the Outside – $3 Million Extravagant Spending by UC President Yudof for University of California Berkeley Chancellor Birgeneau to Hire Consultants – When Work Can Be Done Internally & Impartially
    During the days of the Great Recession, every dollar in higher education counts. Contact Chairwoman Budget Sub-committee on Education Finance Assemblywoman Carter 916.319.2062 – tell her to stop the $3,000,000 spending by Birgeneau on consultants.
    Do the work internally at no additional costs with UCB Academic Senate Leadership (C. Kutz/F. Doyle), the world – class professional UCB faculty/ staff, & the UCB Chancellor’s bloated staff (G. Breslauer, N. Brostrom, F. Yeary, P. Hoffman, C. Holmes etc) & President Yudof.
    President Yudof’s UCB Chancellor should do the high paid work he is paid for instead of hiring expensive East Coast consults to do the work of his job. ‘World class’ smart executives like Chancellor Birgeneau need to do the hard work analysis, and make the tough-minded difficult, decisions to identify inefficiencies.
    Where do the $3,000,000 consultants get their recommendations?
    From interviewing the UCB senior management that hired them and approves their monthly consultant fees and expense reports. Remember the nationally known auditing firm who said the right things and submitted recommendations that senior management wanted to hear and fooled the public, state, federal agencies?
    $3 million impartial consultants never bite the hands (Chancellor Birgeneau/ Chancellor Yeary) that feed them!
    Mr. Birgeneau's accountabilities include "inspiring innovation, leading change." Instead of deploying his leadership and setting a good example by doing the work of his Chancellor’s job, Birgeneau outsourced his work to the $3,000,000 consultants. Doesn't he engage UC and UC Berkeley people at all levels to examine inefficiencies and recommend $150 million of trims? Hasn't he talked to Cornell and the University of North Carolina – which also hired the consultants — about best practices and recommendations that eliminate inefficiencies?
    No wonder the faculty, staff, students, Senate & Assembly are angry and suspicious.
    In today’s Great Recession three million dollars is a irresponsible price to pay when a knowledgeable ‘world-class’ UCB Chancellor and his bloated staff do not do the work of their jobs.
    Pick up the phone and call: save $3 million for students!

  • http://BigspenderUCBChancellorBirgeneaulossofcredibility Transparency

    UCB Chancellor Birgeneau Loss of Credibility, Trust
    The UCB budget gap has grown to $150 million, and still the Chancellor is spending money that isn't there on expensive outside consultants. His reasons range from the need for impartiality to requiring the "innovative thinking, expertise, and new knowledge" the consultants would bring.

    Does this mean that the faculty and management of a world-class research and teaching institution lack the knowledge, impartiality, innovation, and professionalism to come up with solutions? Have they been fudging their research for years? The consultants will glean their recommendations from interviewing faculty and the UCB management that hired them; yet solutions could be found internally if the Chancellor were doing the job HE was hired to do. Consultant fees would be far better spent on meeting the needs of students.

    There can be only one conclusion as to why creative solutions have not been forthcoming from the professionals within UCB: Chancellor Birgeneau has lost credibility and the trust of the faculty as well as of the Academic Senate leadership that represents them. Even if the faculty agrees with the consultants' recommendations – disagreeing might put their jobs in jeopardy – the underlying problem of lost credibility and trust will remain.