BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 122|
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THIRD READING
Bill No: AB 122
Author: Blumenfield
Amended: 6/8/11 in Senate
Vote: 21
PRIOR VOTES NOT RELEVANT
SUBJECT : Budget Act of 2011: Supplemental
Appropriations
SOURCE : Author
DIGEST : This bill appropriates $1.2 billion General Fund
for allocation by the State Controller to the Department of
Corrections and Rehabilitation ($1.15 billion), Department
of Mental Health ($50 million), Department of Forestry and
Fire Protection ($12.6 million), Department of Finance
($145,000), and Mariposa, Modoc, and Shasta Counties ($1.1
million).
Senate Floor Amendments of 6/8/11 delete the prior version
of the bill which expressed the intent of the Legislature
to enact statutory changes relating to the 2011 Budget Act.
ANALYSIS :
This bill:
1. Appropriates $25.7 million (General Fund) to augment the
2009 Budget Act for the Department of Corrections and
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Rehabilitation (CDCR) to address a shortfall in its
Revolving Fund.
Due to ongoing structural budget problems and
unanticipated cost increases last year, CDCR ran out of
cash in June 2010 and was unable to make timely payment
for some of its 2009-10 bills. While CDCR delayed some
vendor payments until 2010-11, CDCR used its Revolving
Fund in 2009-10 to make payments it could not delay. In
this way, CDCR overspent its 2009-10 appropriation and
created a deficit in the Revolving Fund.
2. Appropriates $1.19 billion (General Fund) to augment the
2010 Budget Act as follows:
A. Appropriates $643.4 million (GF) for CDCR health
care services, thus restoring much of the $820
million that was reduced from the prison medical care
budget in the 2010 Budget Act. Of those budgeted
savings, the Federal Receiver for Prison Health Care
is expected to achieve $176.6 million savings in
2010-11.
The Receivership cites its federal court mandate to
provide constitutionally adequate health care to all
prison inmates as the rationale for its level of
spending on prison medical care. The Receivership
reports already achieving significant additional cost
avoidance through implementation of permanent
operational efficiencies and reductions during the
past few years. The Receiver estimates that such
cost containment efforts helped to avoid $408 million
in otherwise anticipated expenditures in 2009-10
alone.
B. Appropriates $482.5 million (General Fund) for
CDCR to address its structural budget shortfall and
for net inmate and parolee population adjustments.
CDCR ascribes $389.2 million to a long-term
structural budget imbalance (underfunded security
salary costs, legal costs, overtime, and medical
guarding) that has been exacerbated by recent
short-term factors, such as increased costs for
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overtime due to furloughs, lump-sum payments to
retiring employees, and workers' compensation
payments.
The Administration contends that CDCR cannot absorb
these costs within its existing appropriation. Last
year, CDCR avoided a deficiency of this magnitude
partly by pushing approximately $120 million in
2009-10 costs into 2010-11 for payment through the
Victim Compensation and Government Claims Board
(VCGCB) process. In addition, CDCR indicates it
mitigated deficiencies in prior years by redirecting
available funding from discretionary programs, which
is not an option to solve this year's shortfall.
The Administration indicates that future funding
deficiencies in CDCR operations should be avoided as
a result of improved fiscal controls within CDCR and
an augmentation provided in the 2011 Budget Act to
address its structural budget imbalance.
C. Appropriates $12.6 million (General Fund) for the
Department of Forestry and Fire Protection (CalFIRE)
for increased Unemployment Insurance (UI) costs.
CalFIRE hires approximately 2,600 seasonal
firefighters to work during high-risk fire months.
CalFIRE, like other state departments, is responsible
for payment of standard UI claims and a portion of UI
extensions billed by the Employment Development
Department. Although CalFIRE's budget includes
funding for standard UI claims, CalFIRE is
experiencing increased UI costs due to recent UI
extensions, the downturn in the state's economy, and
the inability of seasonal firefighters to find work
during their off-months.
According to CalFIRE, the only alternative to
mitigate this deficiency would be to halt seasonal
firefighter staffing, and potentially release the
seasonal firefighter staff currently in place, until
next fiscal year. But that could impact CalFIRE's
ability to respond to large emergencies and cause
greater reliance on local government and private
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resources at a higher cost. In addition, releasing
seasonal firefighters would increase UI costs.
D. Appropriates $145,000 (General Fund) for the
Department of Finance (DOF) to reimburse its
financial advisor on the state's Ed Fund transaction.
Chapter 182, Statutes of 2007, authorized DOF to
pursue a sale or other transaction involving the
state's assets in the Ed Fund and to contract for
financial advice related to the transaction. In
April 2009, DOF contracted with FBR Capital Markets
to serve as a financial advisor. Under the contract,
the firm would have been paid a fee from the proceeds
of the final transaction.
The transaction was subsequently negated in August
2010 by the United States Department of Education's
decision to designate a new guarantor for the Federal
Family Education Loan Program. As a result, FBR was
due only direct expenses, capped at $250,000, in
accordance with the contract. When the transaction
was cancelled, this became an unanticipated General
Fund cost.
E. Appropriates $50 million (General Fund) to the
Department of Mental Health (DMH) for state
hospitals' costs, which DMH attributes primarily to
court-ordered increases in admissions and increased
staff overtime costs associated with vacancies,
furloughs, and implementation of hospital safety and
security measures.
Of this amount, approximately $24 million is a
shortfall from 2009-10 that DMH rolled into 2010-11.
Like CDCR, DMH utilized the VCGCB process to pay
prior year costs from its current year appropriation.
DMH has administrative and program actions underway
to mitigate the factors associated with this
shortfall and to prevent future deficiencies in the
state hospitals' budget. Efforts thus far include
monitoring of overtime, fiscal controls on contract
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expenditures, and limits on training, travel, and
purchases of equipment and supplies.
F. Appropriates $1.1 million (General Fund) for
payments to Mariposa, Modoc, and Shasta Counties as
reimbursement for qualifying homicide trial costs
pursuant to statutory criteria for receipt of
funding.
The State Controller approved the counties' claims
for eligible costs as follows:
(1) $1,090,000 to Shasta County for the trial of
Curtis Taylor and Beau Gray, and the trial of
Scott P. Varner.
(2) $53,000 to Modoc County for the trials of
Christopher Bradbury and Robert Chad Haralson.
(3) $3,800 to Mariposa County for the trial of
Cary Stayner.
3. Requires any unencumbered funds to revert to the General
Fund.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: No
Appropriates $1.2 billion.
DLW:mw 6/8/11 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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