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[Proposition One] - State Expenditure Limitation Initiative: A Survey of Possible Budget Reductions, 08/29/1973
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Ronald Reagan Presidential Library
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Collection: Reagan, Ronald: Gubernatorial Papers,
1966-74: Press Unit
Folder Title: [Proposition One] - State Expenditure
Limitation Initiative: A Survey of Possible Budget
Reductions, 08/29/1973
Box: P38
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THE STATE EXPENDITURE LIMITATION INITIATIVE--
A SURVEY OF POSSIBLE BUDGET REDUCTIONS AND TRANSFERS
TO OBTAIN COMPLIANCE THROUGH 1977-78
AUGUST 29, 1973
LEGISLATIVE ANALYST
STATE OF CALIFORNIA
STATE CAPITOL, SACRAMENTO
73-16
THE STATE EXPENDITURE LIMITATION INITIATIVE--
A SURVEY OF POSSIBLE BUDGET REDUCTIONS AND TRANSFERS
TO OBTAIN COMPLIANCE THROUGH 1977-78
August 29, 1973
TABLE OF CONTENTS
Page
Introduction
1
Determining the Expenditure Limitation
2
Composition of the 1973-74 Revenue Base
3
Projected Workload Expenditures
5
Expenditure Projection 1973-74 to 1977-78 Workload
Basis (Table 1)
7
Determination of Expenditure Reductions Necessary Under
the Initiative
9
Impact of the Governor's Initiative on Future State
Expenditures (Table 2)
10
Basis for Developing List of Potential Reductions
11
Transfers to the Private Sector
11
Eliminate or Reduce the Functions
12
Permissive Local or Federal Assumption of
Functions or Funding
13
Display of Total Potential Budget Reductions
13
Potential Budget Reductions Required in Order to Comply
With Expenditure Limitation 1974-75 (Table 3)
14
Major Potential Reductions
15
Property Tax Relief
15
Reductions in Public School Support
16
Eliminate State Student Aid Subsidies for Private
Institutions of Higher Education
17
Tuition at the State University and Colleges and
the California Community Colleges
18
Page
Major Potential Reductions (contd)
Eliminate State Support for Noncredit Courses at
the Community Colleges
19
Highway Funds
20
Capital Outlay
24
Regulation of Business
25
Consumer Affairs
28
Appendix A - State Expenditures Which can be Reduced in
Order to Comply With Expenditure Limitation
30
INTRODUCTION
You have asked us to suggest the manner in which the state's
revenue and expenditure program may be affected by the passage of the
Governor's proposed initiative next November and what areas of possible
budget reduction could be considered by the Governor and Legislature.
As you know, the major feature of the proposed initiative is the
establishment of an expenditure limitation which will restrict state
government expenditures to a percentage of the personal income of
Californians. The "goal" of the initiative is to reduce expenditures
over the years until they reach 7 percent of personal income.
One of ourchief concerns has been that the reduction in state
expenditures will have a principal effect of shifting costs to local
government. For this reason we give special attention to those items
where reductions would induce a minimum pressure to shift rather than
reduce costs. This will be difficult of achievement inasmuch as two-
thirds of the state budget is comprised of payments to local government
and the $620 million which we see as the amount of savings called for in
1974-75 is equal to about 25 percent of state operations. The nature of
these operations is such that reductions of 25 to 50 percent, as will be
the effect in four years, is impractical.
It should be made clear that we are not recommending these
reductions under normal conditions. They are almost entirely items
which we would recommend only if required by passage of the initiative
and subject also to review of the alternative proposals which the budget
will incorporate. Since the administration has proposed and is supporting
-1-
the initiative, it seems apparent that they must have in mind a series
of reductions which is in far more complete form than what we can put
together at this time. We will give great weight to those recommenda-
tions when they are submitted.
In order to assess the impact of these expenditure reductions
on existing programs and policies as you have requested, we must first
determine the expenditure limitation amount and compare that to
estimated workload expenditures.
DETERMINING THE EXPENDITURE LIMITATION
Under the initiative, the expenditure limitation for 1974-75 will
be derived through the application of the following formula to the
appropriate data.
1974-75
(1973-74 Revenue
)
1974
Expenditure =
(
- .001 ) X Personal
Limit
(1973 Personal Income
)
Income
In each future year, the ratio in the first year's formula is
reduced by .001 until the ratio reaches 7 percent of personal income.
At that point, the initiative authorizes the Legislature, by a two-
thirds vote, to prevent the ratio from declining any further.
This formula gives an extraordinary importance to the determina-
tion of 1973-74 revenues because (1) the ratio established in the first
year becomes the base for the expenditure limit in future years, and
(2) it influences the length of time the limitation must be in effect
before it reaches the "7 percent goal". (After the first year, however,
the determination of the annual state revenue amount is irrelevant to
the determination of the expenditure limitation amount because the ratio
declines automatically each year by one-tenth of one percent.)
-2-
Three kinds of problems exist in determining the 1973-74 revenue
amount as defined by the initiative. First is the problem of legal
definition of "revenues". We do not know precisely what state receipts
are to be included in calculating a base revenue amount under the
initiative. Second is the problem of determining the tax base. Because
the state budget contains a surplus in 1972-73 and 1973-74, the state
has enacted a six months' sales tax reduction and a variable income tax
credit for 1973. Under the initiative, some but not all of the changes
contained in that statute will reduce 1973-74 revenues for the purpose
of calculating the expenditure limitation. Third is the problem that
no one knows what the economy will do. There could be a slowdown in
late 1973 or in 1974 which will decrease 1973-74 revenues.
COMPOSITION OF THE 1973-74 REVENUE BASE
The Governor initially estimated the 1973-74 revenue limitation
base at $9,759 million. He subsequently revised this to $9,316 million.
In line with legal opinions, new legislation and other developments we
have further adjusted the base downward by $831 million to $8,485 million
as follows:
-3-
Millions
Reasons
Governor's revised estimate
of the total base
$9,316
1) Deductions made by
the Legislative Analyst
a) Vets Farm and Home
Building Fund
-293
Per Legislative Counsel opinion
b) Water project income
-107
Per Legislative Counsel opinion
c) First year effect of
Sec. 4 of Initiative does not
7-1/2 percent income
contain a disclaimer to the
tax credit in the
revenue loss
Initiative
- 60
Sub-total--Reductions before
any legislative changes in the
revenue base
$ -460
2) Deduction resulting from
the adoption of SB 90--
1973 Session
a) Six-month sales tax
postponement
$ -316
b) Difference between
20 percent and
variable 1973
income tax credits
- 55
Per Legislative Counsel opinion
Sub-total--Reductions from
enactment of SB 90
-371
Total Deductions
$ -831
Net revenue base for
Governor's Initiative
$8,485
-4-
The exclusion of the veterans and water income will have only an
insignificant impact on the reduction in state expenditures because both
the revenues and their related expenditures are excluded from our calcula-
tions. These exclusions, however, do have a significant impact on the
length of time the Governor's expenditure limitation would be in effect
before it reaches the 7 percent "goal." Using the Governor's estimated
base of $9.3 billion results in a ratio of 8.35 percent of personal
income, and with this starting point it would take 14 years to reduce
the ratio below 7 percent. However, the exclusion of about $400 million
in veterans and water income reduces the time the declining limitation
would be in effect by about four years.
The other reductions noted above, such as the sales tax and
personal income tax changes, further reduce the base to the point where
only six years will be required to reach the 7 percent floor because the
1973-74 starting ratio, using a $8,485 million net revenue base, is
7.60 percent.
PROJECTED WORKLOAD EXPENDITURES
Table 1 shows total projected workload expenditures, including
certain nongovernmental cost funds, increasing from $9,226 million in
1973-74 to $12,301 million in 1977-78. We have also included in the
projection the estimated effect of Chapter 209 Statutes of 1973 (SB 6)
in the education category. The total cost of this legislation is
estimated at $87.6 million in 1973-74.
It was assumed in preparing these projections that there will be
a continuation of strong economic activity during this period with a
gradual tapering off becoming more apparent by 1977-78.
-5-
It is emphasized that these are workload projections and the
separate program categories are anticipated to grow at divergent
rates based on various demographic, economic (including inflationary
price pressures) and other workload factors as they affect each
program. There are a number of other variables that could significantly
alter the projections. For instance in the Social Welfare category,
potential state costs resulting from HR 1 (P.L. 92-603) are estimated
as $110 million per year after 1973-74. This amount is about the mid-
point in a range of possible costs. Further federal reductions in
grants-in-aid programs could also alter state costs.
-6-
Table 1
Expenditure
Projection 1973-74 to 1977-78
Workload Basis
(In Millions)
Projection
1973-74
1974-75
1975-76
1976-77
1977-78
Factor
Education
Fixed by Constitution
$ 946
$
952
$ 958
$ 964
$
970
$ +6 million/1
Fixed by Statute /2
1,283
1,388
1,502
1,625
1,758
8.2%
Budget Act
263
279
295
313
332
6%
Subtotal
$ 2,492
$ 2,619
$ 2,755
$ 2,902
$ 3,060
Higher Education
Budget Act
$
862
$ 918
$
978
$ 1,041
$ 1,109
6.5%
Debt Service
Fixed by Constitution
$
175
$
186
$
197
$
209
$
222
6%
Social Welfare
Fixed by Statute
$ 665
$
718
$ 776
$ 838
$ 905
8%
Budget Act
129
139
150
162
175
8%
Potential HR 1 Cost
57
110
110
110
110
Subtotal
$
851
$ 967
$ 1,036
$ 1,110
$ 1,190
Various
Department of Health
Budget Act
$ 1,078
$ 1,164
$ 1,257
$ 1,382
$ 1,538
Various
Corrections and Youth Authority
Budget Act
$ 220
$
233
$
247
$
262
$ 278
6%
Property Tax Relief
Fixed by Constitution
$
277
$
285
$ 294
$
303
$ 312
Fixed by Statute
698
752
782
816
849
}
Various
Subtotal
$
975
$ 1,037
$ 1,076
$ 1,119
$ 1,161
Shared Revenues
Fixed by Statute
$ 737
$ 774
$ 812
$
852
$
894
5%
Public Works
Fixed by Statute
$
501
$
526
$ 552
$ 580
$
609
5%
Salary Increases
Budget Act
$
217
$
337
$
464
$ 575
$ 669
(Yearly increases)
(120)
(127)
(111)
( 94)
Various
New Legislation
:
$
50
$
100
$
150
$
200
$+50 million/1
Other
Fixed by Statute
$
56
$
60
$
64
$
68
$
73
7%
Budget Act
1,009
1,005
1,075
1,150
1,231
Various
Subtotal
$ 1,065
$ 1,065
$ 1,139
$ 1,218
$ 1,304
Total Governmental Cost Funds
$ 9,173
$ 9,876
$10,613
$11,400
$12,234
Nongovernmental Cost Funds
53
56
60
63
67
6%
Overall Total
$ 9,226
$.9,932
$10.673
$11,463
$12.301
7.4
Amount per year.
-7-
12 Includes cost of Chapter 209/1973(SI 6)
The expenditure programs in Table 1 are categorized into three
program types: (1) those in which expenditures are fixed by the
Constitution, (2) those fixed by continuing statutory authority, and
(3) those subject to the Budget Act or other legislation each year.
The 8.2 percent growth rate projected for that portion by the
education category fixed by statute results mainly from the provisions
of Chapter 1406, Statutes of 1972 which provides increased state founda-
tion program support with annual adjustments based on statewide assessed
valuation.
Higher education is projected at 6.5 percent reflecting the strong
inflationary tendencies present in all categories and a slight increase
in student enrollment.
The projected growth rate in Social Welfare is a result of several
factors, including the liberalization of HR 1 eligibility requirements
for the disabled, an increase in caseload, especially in the unemployed
category, a continuing inflationary trend and a projected economic slow-
down toward the end of the period.
The projected growth rate for the Department of Health varies from
8 percent to 9.5 percent. This projection is based primarily upon an
increase in the Medi-Cal caseload for the nonfederally eligible and a
continuing rise in the medical component of the cost-of-living index.
The 6 percent annual growth rate projected for the Department of
Corrections and the Youth Authority is again a result of increasing
prices as well as increases in the inmate populations.
-8-
For salaries (including both General Fund and special fund
categories) we have projected average increases of 6 percent in 1974-75
and 1975-76, a 5 percent increase in 1976-77 and a 4 percent increase in
1977-78. If the full 1973-74 salary increase, now before the Cost-of-
Living Council, is not granted, the expenditure base will be reduced
accordingly. However, any reduction would be added to the 1974-75
salary requirements.
DETERMINATION OF EXPENDITURE REDUCTIONS NECESSARY UNDER THE INITIATIVE
If you compare the expenditure limits under the initiative to the
workload expenditure projections shown in Table 1, you find that in
order to comply with the initiative it will be necessary to reduce state
expenditures significantly. Table 2 makes this comparison and shows that
the following reductions will be necessary:
1974-75
$ 620 million
1975-76
$ 718 million
1976-77
$ 877 million
1977-78
$1,366 million
The reduction of $1,366 million in 1977-78 is disproportionately
high because of the termination of federal revenue sharing. This five-
year appropriation may be continued, of course, and this would reduce
the necessity for reductions by about $250 million.
-9-
Table 2
Impact of the Governor's Initiative
on Future State Expenditures
(Amounts in Millions)
California
Governor's
Federal
Other
Estimated
Required
Personal
Limitation
Revenue
Excluded
Total
Workload
Expenditure
Fiscal Year
Income
Percentage
Amount
Sharing
/1
Revenues
/1
Revenues
Expenditures
Reductions
1973-74
$ 111,616
7.60%
$ 8,485
$ 231
$ 93
$ 8,809
$ 9,226
--
1974-75
120,018
7.50
9,003
215
94
9,312
9,932
$- 620
1975-76
130,045
7.40
9,626
232
97
9,955
10,673
- 718
1976-77
141,180
7.30
10,309
175
102
10,586
11,463
- 877
1977-78
150,367
7.20
10,829
--
106
10,935
12,301
-1,366
-10-
/1 The initiative does not limit expenditures which can be made from certain kinds of revenue, including
federal funds, retirement funds, unemployment funds and income of the University of California and the
State University and College systems.
BASIS FOR DEVELOPING LIST OF POTENTIAL REDUCTIONS
When faced with the task of reducing expenditures in the magnitude
forced by the initiative, it is tempting to simply make arbitrary across-
the-board cuts. However, we believe such an approach is not responsible
budgeting and that any reductions should be made on the basis of priorities
following a careful examination of all programs.
We have reviewed the items in the 1973-74 budget to determine
where reductions of the magnitude necessary to comply with the initiative
could best be absorbed and have the least injurious effects on services
rendered to the public by state government. In making our review we
found the potential reductions fell logically into the following three
categories:
1. Transfers to the Private Sector
2. Eliminate or Reduce the Functions
3. Permissive Local or Federal Assumption of Functions or Funding
We have classified the potential reductions into these three categories
in Appendix A on page 30 entitled "State Expenditures Which Could be
Reduced in Order to Comply with Expenditure Limitation." This appendix
displays, in detail, the major potential reductions for the 1974-75 fiscal
year. It includes comments on each potential reduction, explanations of
how the reduction would be applied, its impact, and the advantages or
disadvantages of its inclusion.
Transfers to the Private Sector. A basic premise of the initiative
is that state expenditures should be reduced and that certain functions
might more properly be performed by local or federal governmental agencies
(at their option), by the private sector (at its option), or perhaps
-11-
should not be performed or financed at all. An example of potential
transfers to the private sector would be most boards and commissions
within the Department of Consumer Affairs. They fall into a quasi-
governmental category because they exist primarily to license and
regulate particular commercial and occupational groups. In the context
of this assignment, these boards and commissions could be converted
into private corporations, funded from private fees, but assigned the
responsibility for regulating these quasi-government activities.
This procedure would remove these expenditures from state budget totals
but would permit the activity to continue under public control. Some
activities, such as liquor pricing using the police power of the state,
could be removed for the private sector to deal with.
Other transfers to the private sector could include: establish-
ment of tuition charges at the California State University and Colleges
and at the California Community Colleges, reduction of scholarships to
persons attending private institutions and, in general, establishment
of fee structures designed to pay more fully for services rendered,
e.g., state park entrance fees. These suggested reductions are discussed
in following sections and in the appendix of this report.
Eliminate or Reduce the Functions. This category of reductions
includes functions which, under the expenditure reduction assumption,
might be reconsidered as inappropriate state expenditures. In general,
these are the newly established programs such as senior citizens' tax
relief, renters' tax relief, expanded correctional programs and, in
education, public library assistance, certain services provided through
-12-
the County School Service Fund, Miller-Unruh Reading Program, State
Compensatory Education Program and Early Childhood Program. These
suggested reductions are discussed in the following sections and in
the appendix of this report.
Permissive Local or Federal Assumption of Functions or Funding.
This category of reductions includes functions which could be taken
over by other governmental jurisdictions such as the assumption of
a portion of the funding for the state highway system to local
entities as discussed subsequently.
Display of Total Potential Budget Reductions. The three
categories of potential budget reductions are shown in Table 3. The
reductions are separated into the major state budget classifications
for a total potential reduction of $785.6 million and detailed reductions
are shown in the Appendix.
It should be emphasized that these suggestions are displayed to
show the great impact this magnitude of reductions would have upon all
phases of agriculture, business and industry, as well as government, in
California. Each recommendation should be carefully examined to
determine its long-range implications and the statutory changes required
for its implementation. In many cases these reductions could be accomplished
efficiently; however, in other instances transitional problems could be
most severe.
-13-
Table 3
Potential Budget Reductions Required
In Order to Comply with Expenditure Limitation
1974-75
(3)
(1)
(2)
Permissive Assumption
Transfer to
Eliminate or
of Function
Private Sector
Reduce Function
or Funding
Total
General Government
$ 3,095,097
$
628,180
$ 26,415,992
$ 30,139,269
Property Tax Relief
-
59,000,000
-
59,000,000
.
Agriculture and Services
18,251,748
25,353,783
-
43,605,531
1/
Business and Transportation
16,104,684
91,155,363
30,514,084
137,774,131
Resources
10,746,200
4,650,000
27,000,000
42,396,200
Health and Welfare
886,000
3,629,258
-
4,515,258
Education
4,000,000
133,000,000
18,000,000
155,000,000
Higher Education
145,488,800
3,710,030
-
149,198,830
Capital Outlay
-
-
164,000,000
164,000,000
Totals
$198,572,529
$321,126,614
$265,930,076
$785,629,219
This does not include $456.9 million to shift 68 percent of state highway system
(and corresponding CHP responsibilities) to local entities. This potential reduc-
tion could be phased in to relieve scheduled termination of federal revenue sharing
in 1977-78.
-14-
MAJOR POTENTIAL REDUCTIONS
The following several pages describe the more significant
potential reductions. They expand the explanation given in the
extensive list of reductions contained in the Appendix.
PROPERTY TAX RELIEF
The initiative requires that if there are any reductions in the
homeowners' exemption or business inventory exemption reimbursements to
local government, the expenditure limit shall be reduced by an equal
amount. Therefore, no reduction in these two programs is considered
here. However, there are two tax relief programs which can be reduced
without affecting the expenditure limitation. They are: (1) the
Renters' Tax Relief Program enacted in Chapter 1406, Statutes of 1972
which will provide tax refunds to renters ranging from $25 to $45
beginning in 1974, and (2) the Senior Citizens' Property Tax Assistance
Program which provides partial property tax reimbursement to homeowners
over age 62 according to their income.
Renters' Tax Relief Program. This program was established to
provide renters tax relief offsetting the sales tax increase enacted in
Chapter 1406. Annual disbursements which are a mixture of personal income
tax credits ($70 million) and direct refunds ($40 million) will total an
estimated $110 million during 1973-74. We believe it is reasonable to
consider elimination of this program in 1974-75 (which will reduce state
expenditures by about $41 million) because revenue reductions which will
ultimately result from the Governor's initiative will eliminate the
basis for the enactment of tax relief to renters.
-15-
Senior Citizens' Property Tax Relief Program. The present program
grants property tax assistance according to a sliding schedule of house-
hold income. Assistance ranges from 96 percent of property taxes paid
on incomes below $1,400 to 4 percent on incomes between $9,500 and $10,000.
We suggest the following changes in this program which will reduce state
assistance by $18 million in 1974-75:
(1) Reduce the household income limitation upon which assistance
is based from $10,000 to $6,000. This change will reduce the
number of claimants from 300,000 to 200,000.
(2) Change the schedule of assistance SO that persons with incomes
between $5,800 and $6,000 receive assistance equal to 4 percent
of property taxes paid rather than 32 percent. The levels
of income upon which 50 percent assistance is provided is
reduced from $5,200 to $4,200.
REDUCTIONS IN PUBLIC SCHOOL SUPPORT
Any significant expenditure reductions imposed by the expenditure
limitation plan would probably require substantial reductions from public
school support. Section 9a of the initiative precludes reducing expendi-
tures for the school property tax roll-back in Chapter 1406 of 1972 (SB 90)
but this section does not appear to preclude reductions in other sub-
ventions for education. SB 90 authorized an estimated $561 million in
increased state support to public school districts in 1974-75 including
local property tax roll-back as well as new programs. On the basis of
the last in, first out concept of reducing expenditures, that portion of
SB 90 funding not identified as property tax roll-back should be
considered for reduction.
-16-
This consists of new program funds for compensatory and early
childhood education totaling $107 million in 1973-74 increasing to
$122 million in 1974-75. Reduction of these funds ($82 million for
compensatory education and $40 million for early childhood education)
could be considered for reduction on the basis that these are new programs
that could be halted with the least amount of disruption to existing
school district programs.
In addition to the program increases in SB 90, other potential
program reductions could be considered from the $19.2 million of other
categorical aid (e.g., Miller-Unruh Reading Program) and $10.8 million of
existing compensatory education programs. We do not suggest serious
consideration of these and have not included these in the totals.
ELIMINATE STATE STUDENT AID SUBSIDIES FOR PRIVATE INSTITUTIONS OF
HIGHER EDUCATION
The Governor's initiative encourages reductions in state expendi-
tures if private enterprise provides duplicating services. Several state
funded student aid programs provide indirect subsidies to private institutions
of higher education and one program provides a direct subsidy through
contract. Because average student aid award levels for public institutions
are less than those at private institutions, any reduction or elimination
of awards for students attending private institutions would generate
expenditure reductions.
Four programs administered by the State Scholarship and Loan
Commission provide substantial subsidies to private institutions. They
are: (1) State Scholarship Program, (2) Graduate Fellowship Program,
(3) College Opportunity Grant Program, and (4) Medical Student Contract
Program. By phasing out awards to students attending private institutions
-17-
beginning in 1974-75, students currently enrolled could continue their
education without penalty. As a result of this proposal savings would
tend to increase each year for a period of about four years and be
approximately four times the amount of the 1974-75 estimate.
This proposal would save approximately $5.5 million in 1974-75
if legislation eliminated the contract program and aid programs to
students attending private institutions. It is assumed the same number
of awards would still be granted but restricted to public institutions.
Some additional state operating costs have also been assumed since many
of the students who would have attended private institutions under the
aid programs would be diverted to public institutions.
TUITION AT THE STATE UNIVERSITY AND COLLEGES AND THE
CALIFORNIA COMMUNITY COLLEGES
Consideration might be given to establishment of an annual tuition
of $200 per FTE student at the State University and Colleges and $100 per
FTE student at the community colleges.
The University of California initiated a resident tuition charge
(educational fee) in 1970-71. This charge for undergraduate students is
$300 annually. The State University and Colleges and the community
colleges do not impose a resident tuition. This represents a difference
in policy between the segments.
In addition to resident tuition other mandatory fees are charged
resident students. The University has a registration fee of $300 and
the State University and Colleges has a materials and service fee of
$118. The proposed tuition would result in total charges as follows:
-18-
Existing
Proposed
Tuition
Total Fees
Tuition Total Fees
University
$300
$600
$300
$600
State University and Colleges
--
118
200
318
Community Colleges
--
---
100
100
The estimates of the dollar amounts to be generated from the
increased tuition are maximum amounts without offsets for increased
student aid needs, dropouts, diversion from the State University and
College system to the community colleges, etc. Assuming no change in
projected enrollments a $200 fee at the CSUC system administered on a
graduated scale similar to the existing materials and service fee would
generate revenue of about $56 million in 1974-75. A $100 fee at the
community colleges for credit courses administered on a per unit basis
would generate an estimated $65 million in 1974-75 as an offset to state
support.
We would suggest this proposal as a viable method of reducing
state spending but consideration should be given to the increased student
aid needs which would require recognition and would offset part of these
savings.
ELIMINATE STATE SUPPORT FOR NONCREDIT COURSES AT THE COMMUNITY COLLEGES
Students in "ungraded" classes (classes which carry no grade level
designation and award no credit units) constituted 23 percent of the total
community college enrollment of 922,000 in 1972-73. This enrollment is
converted to ADA for which the state apportions support funds. These
courses are similar in nature to the extension programs conducted at the
University of California and the State University and Colleges on a self-
supporting student fee basis.
-19-
This proposal would eliminate state support for courses which are
noncredit and do not contribute to certificate and/or degree programs.
These programs could continue as self-supporting fee programs. Existing
law allows community colleges to charge tuition up to the full cost of
instruction less state support for these ungraded courses attended by
defined adults (students 21 or older enrolled in 10 class hours or less)
with exceptions related to citizenship courses and elementary and high
school diplomas. This authority could be extended to regular students
taking these courses.
This proposal would save an estimated $18 million in 1974-75 if
this ADA were eliminated from the apportionments.
HIGHWAY FUNDS
Historically, expenditures of state highway users taxes for highway
purposes have been dependent largely upon decisions made at the federal
level relative to allocations from the Federal Highway Trust Fund. Until
this month, with the approval of the Federal Aid Highway Act of 1973, the
highest priority for road expenditures was for the federal Interstate
Highway Program. In addition, previous federal highway legislation has
been drafted in such a manner that state highway authorities have been
given virtual control for all federal highway fund expenditures. However,
the 1973 federal highway act in many ways appears to mark the beginning
of a philosophy on the part of the federal government which is similar
to its philosophy for the distribution of funds for public transportation
purposes, i.e., local entities determine project priorities and receive
funds directly from the federal government. The Federal Aid Highway Act
of 1973 not only provided, for the first time, a trust fund diversion
-20-
of at least $800 million for public transportation projects but also
reduced proposed expenditures for the Interstate Highway Program by
approximately one-half ($4+ billion to $2.7 billion). In addition, a
number of new programs were initiated for urban areas which will give
local government control over a large portion of federal revenues which
previously would have been controlled by the state.
The above shift in federal policy will have a marked effect
relative to the expenditure of state highway users taxes in that a large
degree of flexibility will exist in policy decisions relating to what
level of government can determine transportation priorities and at the
same time there will be sufficient funding to make project plans a reality.
Until recently, transportation priorities have been determined largely
by the State Division of Highways, whether or not a road project served a
state, regional, or local purpose. This is caused by the fact that the
department controlled the vast majority of all of the federal and state
fiscal resources by virtue of state policy and/or federal regulations.
On April 24, 1972, the Department of Public Works issued a report
entitled "1971 Section 256 Report and California Continuing Functional
Classification Study Report." This report was a result of a two-year
study that was conducted by the department as required by a federal mandate.
The purpose of the report was to examine the entire road system of the
state and to classify such roads by means of designating the travel
purposes of a given segment of road rather than designating roads simply
in terms of whether a road was part of a state system of roads or a
local system of roads.
-21-
In the report it is stated that, while the state highway system
contains 16,100 miles of roadway, only 5,100 miles serve a statewide
purpose and the remaining 11,000 miles should be delegated to the most
responsive level of government. While in past years other regional
transportation studies conducted by different entities have suggested
the same conclusion, i.e., a large portion of the state highway system
does not serve a state or national interest, local entities have not
been in a position to assume responsibility for roads that truly serve
local or regional interests because of the limited availability of funds
to defray the expense of accepting such a responsibility.
In light of the department's 1972 study and the apparent change
in federal philosophy, the state must be in a position to effectively
provide services that represent state needs and at the same time provide
local government with a revenue source with which to defray the expenses
associated with the acceptance of responsibility for providing facilities
which serve local purposes. While local government cannot be expected
to accept in the 1974-75 fiscal year a major portion of such road
responsibility, the required policy decisions and necessary statutory
changes could be consummated by the 1977-78 fiscal year.
Assuming the adoption of the suggested potential reduction in
state highway expenditures in the 1974-75 fiscal year of $90,654,700
(see Appendix A, page 58), state expenditures of state users taxes
(excluding all federal funding) would approximate $536.8 million during
the 1977-78 fiscal year. If the local governments were able to assume
the suggested responsibility for roads during the 1977-78 fiscal year,
an expenditure reduction of state funds of approximately $365.1 million
-22-
could be experienced at the state level (see Appendix A, page 59).
This reduction would result in the termination of about 12,000 state
employees, an unknown portion of which would be absorbed by local
governments. In effect, 68 percent of the current state highway system
would be assumed by designated local entities. In order to provide the
applicable local entities sufficient funding to defray this increased
expenditure requirement, approximately 2.6 cents per gallon of the
seven cents per gallon fuel excise tax now imposed by the state could
be imposed at the local level. During the 1977-78 fiscal year approximately
$364 million in such revenues would be made available.
Even assuming no growth in federal apportionments now received by
the state, at least $80 million in federal highway users taxes could be
assumed by local entities from a total of approximately $378 million per
year now received by the state for expenditure. The latter could be
accomplished under existing federal law and not hinder the ability of the
state to construct and maintain its 5,100 miles of highways using and
matching the balance of available federal funds.
In conjunction with the proposed assumption of responsibility
for a portion of the state's present road system by local entities, a
corresponding expenditure reduction could be made in the 1977-78 budget
of the California Highway Patrol in the amount of $91,850,000 by having
cities and counties assume the responsibility for patrolling these local
roads (see Appendix A, page 57). This reduction in state funding would
result in the termination of about 4,000 highway patrol personnel, both
uniform and nonuniform. The termination of 16,000 state employees (12,000
in Public Works and 4,000 in the Highway Patrol) could cause severe
individual relocation problems even if all were absorbed by local governments.
-23-
CAPITAL OUTLAY
Capital outlay appropriations, under terms of the initiative,
are counted toward the expenditure limitation when appropriated.
However, expenditures from bond funds are not counted toward the
limitation. Hence, in order to maximize expenditures all future capital
outlay projects, except those from the Motor Vehicle Account in the
State Transportation Fund and special funds specifically excluded from
the expenditure limitation, i.e., Fish and Game Preservation Fund,
could be funded by bond programs. Under this policy, expenditures could
be reduced in 1974-75 in the following manner.
This bond program would affect projects normally funded by the
General Fund, the Capital Outlay Fund for Public Higher Education/1 and
other miscellaneous special funds. Our estimate for 1974-75 appropriations
from these sources assumes the same level of construction effort with
an increase in construction costs of 7 percent. Hence, a total of
$150 million could be funded by bond programs thereby decreasing
projected 1974-75 expenditures by that amount. It must be pointed out
that this method of financing requires $57.7 million in added interest
cost for every $100 million of bonds issued, assuming 20-year maturity
with average redemption of 10.5 years, and a 5.5 percent average interest
rate. Thus, although it would comply with initiative-mandated expendi-
ture reductions, it would add to total state costs.
/1 Oil royalties in the Capital Outlay Fund for Public Higher
Education may be interpreted as sale of real property and
thus excluded by the initiative.
-24-
The last several budget acts have included appropriations from
the Education Fee Fund (tuition) for capital outlay projects at the
University of California. These funds are not included in the budget
total and are excluded from the expenditure limitation. The University
could use these funds to offset the state appropriation for the operating
budget and replace capital outlay programs with state bond funds.
Increasing the 1973-74 appropriation from this source by 7 percent
provides for a reduction of $14 million in 1974-75. The total reduction
contained in these two elements therefore would be $164 million.
REGULATION OF BUSINESS
Within the structure of California state government, a number of
departments are involved in the regulation of various business activities.
Included in this category are the following departments: Banking,
Savings and Loan, Corporations, Insurance and Real Estate. Each depart-
ment has numerous statutory responsibilities which are intended to provide
the mechanism to regulate and supervise the practices peculiar to each
kind of business activity. Specific suggestions for removing funding
and control of these business activities from state government follow:
Banking. Consideration might be given to establishing an agency
independent from state government to assume those responsibilities
currently assigned by statute to the Departments of Banking and Savings
and Loan. This private corporation could be patterned in some respects
after the Federal Reserve Board and the Federal Home Loan Bank Board
and designated the California Banking Board. As a private corporation,
the members of which are state appointees, the body could be empowered
to levy assessments on all participating banks and savings and loan
associations. This would provide funding required to carry out the
statutory responsibilities which would be assigned to the board.
-25-
As a publically appointed and controlled body the public policy
associated with regulation could be carried out with funds which are
nonpublic. Such a system would require very careful attention to
establishing adequate regulatory authority and monitoring and reporting
of actions. It is not a desirable situation, but the magnitude of
special fund money spent for regulation by agencies such as the Banking
and Savings and Loan Departments makes this an appropriate area for
consideration.
Corporations. The actions related to the regulation of certain
corporate activities in California could be delegated to an independent
agency (which could be established as a private corporation). Such a
body which we believe should be designated the California Corporations
Commission could be given statutory powers to levy assessments against
all designated corporations in order to establish funding for its
regulatory activities. Additional authority to appoint public members
would establish a governing body (the commission) responsible for
administering the laws and regulations pertaining to California
corporations. In the Appendix we identify the level of funding for
activities related to the Department of Corporations. Corporate
activities performed by the Secretary of State are also designated for
removal from the state budget and transferred to the proposed
California Corporations Commission.
Insurance. Regulation of insurance is the only interstate
business which is wholly under the states rather than the federal govern-
ment. As a California industry, its worth is estimated at $8 billion.
-26-
With the adventy of the Equity Funding fraud and pending
legislation before the Congress relative to no-fault automobile
insurance, it may be that the federal government will take steps to
regulate the insurance industry.
In the absence of federal regulation, we suggest that a
California Insurance Commission be established similar in nature to
that regarding corporations. It is assumed that such a public member
commission would take over most responsibilities relative to state
regulation, licensing and auditing of insurance companies. A require-
ment that audits of insurance companies by private Certified Public
Accountant firms be made available to the commission for examination
could lessen the field examination requirements.
There is no question that regulation of the insurance industry
is required. In our judgment, federal regulation is preferable to the
independent "commission" approach discussed above. The tax collection
function of the Department of Insurance could be transferred to appropriate
state tax agencies.
Real Estate. With regard to the business activities associated
with real estate, we suggest reducing only that portion of state funds
associated with education and research in the field of real estate. The
Department of Real Estate is not recommended for elimination as a state
government entity because of its activities in (1) the licensing of
real estate agents and brokers, (2) the setting of minimum standards for
offerings of subdivided properties, and (3) the regulation of real estate
securities and real estate syndicate securities.
-27-
Summary. The state level of funding for the Departments of
Banking, Savings and Loan, Insurance and Corporations is currently
budgeted at $12,775,439 for the 1973-74 fiscal year. If we assume that
90 percent of the responsibility for business activities of these
departments should rest with the independent agencies, the level of state
support for the total operation would be about $1.3 million.
CONSUMER AFFAIRS
The existing Department of Consumer Affairs (formerly the
Department of Professional and Vocational Standards) is comprised of
boards and bureaus which have the statutory objective of regulating
various occupational groups. Licensing and enforcement of laws, rules
and regulations are the primary function of these member boards and
bureaus, each operating from a special fund.
Chapter 1394, Statutes of 1970 (which established the department)
defined objectives and authorized activities which significantly broadened
the department's responsibility and functions in the field of consumer
affairs.
In the Appendix we suggest that funds which support the majority
of the boards and bureaus be eliminated from the state budget.
In lieu of state regulation, we believe that each of these groups
could establish a self-regulating body (similar to the State Bar) which
would perform the licensing and regulatory activities currently performed
by the boards and bureaus.
Substantial statutory changes would be required to establish
these independent agencies and specific powers and self-regulatory
responsibilities of each professional and/or business related function
-28-
must be precisely delegated by the Legislature. These agencies can
be structured as private corporations with support from private funds.
Enabling legislation should clearly define the responsibilities of
these agencies and provide the policy guidelines within which each
professional or vocational group would function.
We have not included removal from the structure of state govern-
ment the State Athletic Commission, the Board of Guide Dogs for the
Blind, the Bureau of Automotive Repair, the Board of Medical Examiners,
the Contractor State License Board or the Bureau of Home Furnishings.
Because the public (consumers) interest must be protected, we
propose that a Department of Consumer Affairs remain in state government
to oversee the activities of these independent agencies. Under this
arrangement, the state would not license or regulate the various groups
but rather work (in conjunction with local government consumer protection
agencies) to provide a mechanism to prevent abuses initiated by members
of professional or vocational groups. A staff of investigators would
be required to provide statewide support to local consumer protection
units and to initiate action against abuses which occur on a statewide
basis. We suggest that approximately $1 million could be appropriated
from the General Fund for operation of this department.
-29-
APPENDIX A
STATE EXPENDITURES WHICH CAN BE
REDUCED IN ORDER TO
COMPLY WITH EXPENDITURE LIMITATION
Categories**
1. Transfers to the Private Sector
2. Eliminate or Reduce the Functions
3. Permissive Local or Federal Assumption
of the Functions or Funding
Categories **
Transfers to the Private Sector
State Expenditures Which Can be
Eliminate or Reduce the Functions
Reduced in Order to
Permissive Local or Federal Assumption
Comply with Expenditure Limitation
of the Functions or Funding
1974-75
get
Department
Function
**
1973-74
Potential
Fund
Comments
Reduction
Justice
(1) Investigative
1
$ 821,549
$ 1,133,887
General
The state could abandon its
Services (Crime
plan to develop a statewide
Laboratories)
system of criminalistic
laboratories, which will
cost more than $3.0 million
annually in 1976 when federal
support expires. As is
largely now the practice, thes
services would be provided by
the private sector or local
law enforcement agencies.
(2) Criminal
3
16,390,051
17,373,454
General
Many of the Criminal Justice
Identification and
and
Information System (CJIS)
Information
State
functions could be left to the
Trans-
federal government. The
porta-
National Crime Information
tion
Center, which is maintained
by the Federal Bureau of In-
vestigation, also maintains
files of fingerprints, criminal
histories, stolen property,
guns, stolen vehicles and
wanted persons. The files
are maintained on a national
basis to serve law enforcement
agencies throughout the
country. Other activities such
as the California Law Enforce-
ment Telecommunications System
(CLETS) would probably need to
to be continued by the
Department.
Categories **
Transfers to the Private Sector
State Expenditures Which Can be
Eliminate or Reduce the Functions
Reduced in Order to
Permissive Local or Federal Assumption
Comply with Expenditure Limitation
of the Functions or Funding
1974-75
udget
Department
Function
**
1973-74
Potential
Fund
Comments
tem
Reduction
2-43
Commission on Peace
Peace Officer
2
$14,574,630
$8,996,000*
Peace
Elimination of the total
Officer Standards and
Training
or 3
Officer
program would reduce
Training
Train-
state expenditures by ap-
ing
proximately $14.6 million
annually. This program
could function with
substantial reductions of
expenditures in all program
elements. The commission
could save approximately
$6,325,000 annually by re-
ducing reimbursements to
localities for training of
peace officers from 100 to
50 percent. The commission
raised the reimbursement
rate from 50 to 100 percent
on July 1, 1971 to reduce
fund surplus.
*
The lower expenditure
level for the 1974-75 fiscal
year reflects the fact that the balance in the fund
is not sufficient to continue the 100 percent
reimbursement rate to localities for peace officers
training and will necessitate an, as yet, undeter-
mined rate reduction.
Categories **
Transfers to the Private Sector
State Expenditures Which Can be
Eliminate or Reduce the Functions
Reduced in Order to
Permissive Local or Federal Assumption
Comply with Expenditure Limitation
of the Functions or Funding
1974-75
idget
Department
Function
**
1973-74
Potential
Fund
Comments
:em
Reduction
60
Secretary of State
Corporate Filings:
1
$1,040,011
$1,102,412
General
Establish a nonprofit, private
Filing functions
corporation to manage the func-
in the areas of
tions of the Secretary of State
acticles of
pertaining to establishing
incorporation and
corporations. Adjust corporate
other corporate-
filing fees to enable this non-
related actions;
profit private corporation to
annual statements
be self-sufficient. (Current
of corporate officers
fees generate more than suffi-
and addresses;
cient revenue.) Other func-
trademark registra-
tions of the Secretary of
tion and other
State's corporate filings pro-
miscellaneous
gram could then be absorbed
business-related
by the Secretary of State
filings
with remaining resources.
50
Secretary of State
Uniform Commercial
1
615,847
652,798
General
Eliminate functions. If
Code:
the private financial sector
Filing of specified
requires such a function it can
types of financ-
establish one itself. For
ing statements
example, the Retail Credit
and federal and
Association was established
state tax liens.
privately to maintain credit
Enables lenders to
data on individuals.
check out prospec-
tive borrowers for
purposes of business
loans.
Categories **
Transfers to the Private Sector
State Expenditures Which Can be
Eliminate or Reduce the Functions
Reduced in Order to
1.
Permissive Local or Federal Assumption
Comply with Expenditure Limitation
of the Functions or Funding
1974-75
idget
Department
Function
**
1973-74
Potential
Fund
Comments
tem
Reduction
0.1
Secretary of State
Corporate
2
$3,000
$3,180
General
Eliminate the function.
Checklist:
There is no statutory
Office provides
requirement for this service.
a checklist to
corporate attorneys
for use in
submitting
corporate-related
documents to the
office.
Categories **
Transfers to the Private Sector
State Expenditures Which Can be
Eliminate or Reduce the Functions
Reduced in Order to
Permissive Local or Federal Assumption
Comply with Expenditure Limitation
of the Functions or Funding
udget
1974-75
Department
Function
**
tem
1973-74
Potential
Fund
Comments
Reduction
63
State Treasurer
District Securities
1
$190,000
$206,000
General
Private financial consulting
Division.
firms could perform project
and bonding evaluation ser-
vices. There would be no
increase in local cost be-
cause the present General
Fund cost is fully offset
by fees.
76
Board of Pilot Commis-
3
$43,904
$46,538
Board of
Permit determination
sioners for the Bays of
Pilot
by local government.
San Francisco, San Pablo
Commiss-
and Suisun
ioners'
Special
Categories **
Transfers to the Private Sector
State Expenditures Which Can be
Eliminate or Reduce the Functions
Reduced in Order to
Permissive Local or Federal Assumption
Comply with Expenditure Limitation
of the Functions or Funding
1974-75
idget
Department
Function
**
1973-74
Potential
Fund
Comments
:em
Reduction
31
Senior Citizens' Property
Provides up to 96
2
$62,000,000
$18,000,000
General
Reduce income ceiling from
Tax Assistance Program
percent assistance
$10,000 to $6,000 with 50
in payment of prop-
percent level of property tax
erty taxes to per-
assistance changed from $5,200
sons over 62 years
to $4,000.
of age with incomes
less than $10,000
85
Renters' Tax Relief
Provides refunds
2
$40,000,000
$41,000,000
General
Revenue reductions mandated
of $25 to $45 to
by the Governor's initiative
individual renters
eliminate necessity of pro-
to offset sales
viding continued sales tax
tax increase enacted
relief to renters. Revenues
in Chapter 1406,
will also increase $70 millior
Statutes of 1972.
annually as a result of the
elimination of the renters'
personal income tax credit.
Categories **
Transfers to the Private Sector
State Expenditures Which Can be
Eliminate or Reduce the Functions
Reduced in Order to
Permissive Local or Federal Assumption
Comply with Expenditure Limitation
of the Functions or Funding
1974-75
udget
Department
Function
**
1973-74
Potential
Fund
Comments
tem
Reduction
110
Tax Relief Administra-
Allocates to de-
tion
partments for costs
associated with
administration of
tax relief pro-
visions of Chapter
1406.
Franchise Tax Board
Renters' Tax Relief 2
$472,000
$500,000
General
Administrative cost reduction
reflects program elimination.
State Controller
Renters' Tax Relief 2
$90,000
$95,000
General
Administrative cost reduction
reflects program elimination.
-37-
Categories **
Transfers to the Private Sector
State Expenditures Which Can be
Eliminate or Reduce the Functions
Reduced in Order to
Permissive Local or Federal Assumption
Comply with Expenditure Limitation
of the Functions or Funding
1974-75
udget
Department
Function
**
1973-74
Potential
Fund
Comments
Reduction
Food and Agriculture
Control and Eradi-
1
$ 2,656,000
$ 2,656,000
General
Benefiting industry pays part
cation of Plant
of costs now. Shift costs
Pests and Diseases
fully to industry or give
industry the control function.
Food and Agriculture
Nursery Service
1
$ 283,000
$ 283,000
Agricul-
Drop as state activity. To be
tural
conducted by industry.
Food and Agriculture
Seed Potato
1
$ 92,000
$ 92,000
Agricul-
Same as above.
Certification
tural
Food and Agriculture
Commercial Ferti-
1
$ 388,000
$ 388,000
Agricul-
Same as above.
lizer Control
tural
Food and Agriculture
Seed Service
1
$ 54,000
$ 54,000
Agricul-
Same as above.
tural
Food and Agriculture
Market News
1&2
$ 1,045,000
$ 1,045,000
General
Drop as state activity, fund
by fees, or transfer to in-
dustry.
Food and Agriculture
Milk Marketing
1&2
$ 3,138,000
Future reduction
Agricul-
Drop as state activity or
tural
transfer to industry.
(Subject to further study
on extent of curtailment
of activity)
Food and Agriculture
Exclusion and De-
2
$ 2,140,000
$ 1,000,000
General
Reduce border inspection
tection of Plant
work.
Pests and Plant
Diseases.
Categories **
Transfers to the Private Sector
State Expenditures Which Can be
Eliminate or Reduce the Functions
Reduced in Order to
Permissive Local or Federal Assumption
Comply with Expenditure Limitation
of the Functions or Funding
1974-75
dget
Department
Function
**
1973-74
Potential
Fund
Comments
tem
Reduction
13
Food and Agriculture
Supervision of
2
$ 310,000
$ 310,000
Fair &
Eliminate administrative cost
Local Fairs
Expo.
for subventions to local fair
below.
o
Food and Agriculture
Subventions to
2
$8,000,000
$8,000,000
Fair &
Eliminate subventions to
tem
Local Fairs
Expo.
local fairs for support and
(Business and
capital outlay.
Professions Code,
Sections 19622-
19630).
-29-
Categories **
Transfers to the Private Sector
State Expenditures Which Can be
Eliminate or Reduce the Functions
Reduced in Order to
Permissive Local or Federal Assumption
Comply with Expenditure Limitation
of the Functions or Funding
1974-75
udget
Department
Function
**
1973-74
Potential
Fund
Comments
tem
Reduction
117
Department of Commerce
Promotes business
1
$752,000
$800,000
General
The department's three pro-
and industrial
grams, (1) the promotion of
growth.
business and industrial growth
(2) the expansion of export
trade, and (3) the promotion
of tourism are a direct ser-
vice to the private business
sector and should be the re-
sponsibility of the State
Chamber of Commerce and in-
dustrial trade groups.
118
Museum of Science and
Public education
1
$1,200,000
$1,275,000
General
Located in Exposition Park in
Industry
of Science and
Los Angeles County this
Industry.
Museum could become self-
supporting from a combination
of private endowments and the
institution of an excludable
entrance fee.
-40-
Categories **
Transfers to the Private Sector
State Expenditures Which Can be
Eliminate or Reduce the Functions
Reduced in Order to
Permissive Local or Federal Assumption
Comply with Expenditure Limitation
of the Functions or Funding
1974-75
udget
Department
Function
**
1973-74
Potential
Fund
Comments
tem
Reduction
Department of
Licensing, regula-
It is proposed that the
Consumer Affairs
tion, investiga-
following boards and bureaus
tion, protection
within the Department of
of consumer
Consumer Affairs be
interest in member
eliminated from the state
boards and
budget. Statutory changes
bureaus listed
would be required to
below.
establish these various
professional or vocational
119
State Board of
1
$535,441
$602,527
Account-
groups as independent private
Accountancy
ancy
or public agencies which in
the latter case, would be
supported from fees.
120
California State Board
1
183,752
194,777
Califor-
of Architectural Exam-
nia
iners
State
To protect the consumer
Board of
interest on a statewide
Architec-
basis, we suggest that a
tural
reconstituted Department of
Examiners
Consumer Affairs be
established and supported by
an appropriation of $1
123
State Board of Barber
1
448,539
475,451
State
million from the General Fund.
Examiners
Board of
This state agency would
Barber
work with local governmental
Examiners
consumer protection units and
also deal with abuses and
124
Cemetery Board
1
92,261
97,797
Cemetery
fraudulent activities of
the various groups which occur
125
Bureau of Collection and
1
238,176
252,467
Collec-
on a statewide scale.
Investigative Services
tion
Agency
See page 28 for a
126
Bureau of Collection and
detailed discussion of
Investigative Services
1
215,897
228,850
Private
proposals related to consumer
Investi-
affairs.
gator &
Adjuster
Categories **
Transfers to the Private Sector
State Expenditures Which Can be
Eliminate or Reduce the Functions
Reduced in Order to
Permissive Local or Federal Assumption
Comply with Expenditure Limitation
of the Functions or Funding
1974-75
udget
Department
Function
**
1973-74
Potential
Fund
Comments
tem
Reduction
Department of
Consumer Affairs
(Continued)
128
State Board of
1
$938,030
$994,312
Board of
Cosmetology
Cosmeto-
logy's
Contin-
gent
129
State Board of Dry
1
436,435
462,621
Dry
Cleaners
Cleaners
130
Bureau of Employment
1
286,057
303,220
Bureau
Agencies
of Em-
ployment
Agencies
131
State Board of Funeral
1
154,126
163,374
State
Directors and Embalmers
Funeral
Directors
and
Embalmers
132
State Board of
1
49,060
52,004
Geology
Registration for
Geologists
35
California State Board
1
50,531
53,563
State
of Landscape Architects
Board of
Landscape
Architects
Categories **
Transfers to the Private Sector
State Expenditures Which Can be
Eliminate or Reduce the Functions
Reduced in Order to
Permissive Local or Federal Assumption
Comply with Expenditure Limitation
of the Functions or Funding
1974-75
udget
Department
Function
**
1973-74
Potential
Fund
Comments
tem
Reduction
Department of
Consumer Affairs
(Continued)
136
Nurses' Registry
1
$ 11,405
$ 12,089
Nurses'
Registry
137
State Board of
1
768,702
814,824
Profess-
Registration for
ional
Professional Engineers
Engineers
I
138
Bureau of Repair Services
1
484,454
513,521
Repair
Services
139
Certified Shorthand
1
69,508
73,678
Shorthand
Reporters Board
Reporters
140
Structural Pest Control
1
566,755
600,760
Struc-
Board
tural
Pest
(Includes healing arts
Control
boards - Items 248-261)
248
Board of Behavioral
1
188,246
199,541
Behaviorall
Science Examiners of the
Science
State of California
Examiners
249
Board of Chiropractic
1
135,014
143,115
State
Examiners
Board of
Chiro-
practic
Examiners
-A3-
Categories **
1. Transfers to the Private Sector
State Expenditures Which Can be
2. Eliminate or Reduce the Functions
Reduced in Order to
3. Permissive Local or Federal Assumption
Comply with Expenditure Limitation
of the Functions or Funding
udget
1974-75
Department
Function
**
1973-74
Potential
Fund
tem
Comments
Reduction
Department of
Consumer Affairs
(Continued)
250
Board of Dental
1
$406,963
$431,381
State
Examiners of California
Dentistry
252
Board of Medical
1
79,716
84,499
Physical
Examiners of the State
of California
Therapy
253
Board of Medical
1
88,842
94,173
Hearing
Examiners of the State
Aid
of California
Dispen-
sers
254
State Board of
1
99,252
105,207
Nursing
Examiners of Nursing
Home
Home Administrator's
Adminis-
trators
State
License
Examining
Board
255
California Board of
1
884,379
937,442
Calif.
Nursing Education and
Board of
Nurse Registration
Nursing
Education
and
Nurse
Regis-
tration
Categories **
Transfers to the Private Sector
State Expenditures Which Can be
Eliminate or Reduce the Functions
Reduced in Order to
Permissive Local or Federal Assumption
Comply with Expenditure Limitation
of the Functions or Funding
1974-75
udget
Department
Function
**
1973-74
Potential
Fund
Comments
tem
Reduction
Department of
Consumer Affairs
(Continued)
256
State Board of Optometry
1
$ 94,796
$100,484
State
Optometry
257
Board of Osteopathic
1
16,809
17,818
Contin-
Examiners of the State
gent
of California
Fund of
the Board
of Osteo-
pathic
Examiners
258
California State Board
1
815,091
863,996
Pharmacy
of Pharmacy
Board
Contin-
gent
259
Board of Examiners in
1
107,219
113,652
Board of
Veterinary Medicine
Veterin-
ary
Examiners
Contin-
gent
60
Board of Vocational
1
552,621
553,978
Vocational
Nurse and Psychiatric
Nurse &
Technician Examiners of
Psychia-
the State of California
tric
Technic-
ian Exa-
miners'
Categories **
Transfers to the Private Sector
State Expenditures Which Can be
Eliminate or Reduce the Functions
Reduced in Order to
Permissive Local or Federal Assumption
Comply with Expenditure Limitation
of the Functions or Funding
1974-75
udget
Department
Function
**
1973-74
Potential
Fund
Comments
Reduction
Department of
Consumer Affairs
(Continued)
261
Board of Vocational
1
$121,434
$128,720
Vocational
Nurse and Psychiatric
Nurse &
Technician Examiners of
Psychia-
the State of California
tric
Technician
Examiners
Subtotal for Consumer Affairs
$9,669,841
Support for reconstituted
Department of Consumer Affairs
-1,000,000
Net Reduction
$8,669,841
Categories **
Transfers to the Private Sector
State Expenditures Which Can be
Eliminate or Reduce the Functions
Reduced in Order to
Permissive Local or Federal Assumption
Comply with Expenditure Limitation
of the Functions or Funding
1974-75
udget
Department
Function
**
1973-74
Potential
Fund
Comments
tem
Reduction
146
Franchise Tax Board
Administration of
2
$1,330,000
$470,000
General
Reduce administrative cost of
Senior Citizens'
Senior Citizens' Property Tax
Property Tax
Assistance Program resulting
Assistance Program
from reducing the income
ceiling from $10,000 to $6,000
The number of claimants is re-
duced from 300,000 to 200,000.
_17_
Categories **
Transfers to the Private Sector
State Expenditures Which Can be
Eliminate or Reduce the Functions
Reduced in Order to
Permissive Local or Federal Assumption
Comply with Expenditure Limitation
of the Functions or Funding
1974-75
udget
Department
Function
**
1973-74
Potential
Fund
Comments
Item
Reduction
147
General Services
Reviewing proposed
1
$ 42,658
$ 45,217
General
OAC provides staff support
building code regu-
to the Building Standards
lations and hearing
Commission. Transfer to
appeals from con-
private sector.
struction industry.
150
General Services
Printing for state
2
$ 558,229
$ 591,723
Service
Amount represents a five
agencies
Revolv-
percent reduction in agency
ing
printing estimated to total
Printing
$11,164,589 in 1973-74.
150
General Services
Printing for
2
$ 260,507
$ 276,137
Service
Amount represents a five
Legislature
Revolv-
percent reduction in legis-
ing
lative printing estimated
Printing
to total $5,210,142 in
1973-74. (Original source
is Item 11 for legislative
printing.)
Categories **
Transfers to the Private Sector
State Expenditures Which Can be
Eliminate or Reduce the Functions
Reduced in Order to
Permissive Local or Federal Assumption
Comply with Expenditure Limitation
of the Functions or Funding
1974-75
udget
Department
Function
**
1973-74
Potential
Fund
Comments
tem
Reduction
54
Industrial Relations
(1) Conciliation
1
$ 408,841
$ 433,371
General
Labor relations specialists
Services
in the private sector could
assume this function on a
fee basis.
(2) Apprenticeship
2
1,863,434
1,975,240
General
Labor and management in the
Standards
private sector could assume
all responsibilities for
apprenticeship training and
program development. In
terms of program accomplish-
ment and need, this is a low
priority activity for state
involvement.
(3) Industrial
2
5,083,368
5,388,370
General
This program could be elim-
Safety
nated since the federal
government, through
the Occupational Safety and
Health Act of 1970, has
preempted states in industrial
safety and health activities
and permits states to ad-
minister such programs only
in compliance with federal
standards as reflected in an
"approved" state plan. The
federal government pays up
to 50 percent of the costs of
administering such plans.
Categories **
Transfers to the Private Sector
State Expenditures Which Can be
Eliminate or Reduce the Functions
Reduced in Order to
Permissive Local or Federal Assumption
Comply with Expenditure Limitation
of the Functions or Funding
1974-75
udget
Department
Function
**
1973-74
Potential
Fund
Comments
Item
Reduction
155
Industrial Relations
Workmen's Benefits
1
$2,368,225
$2,510,319
General
The workmen's compensation
for Subsequent
insurance industry or pri-
Injuries
vate employers could assume
the responsibility for
workmen's compensation
benefits for handicapped
persons who sustain further
injury. The state could
require all employers to
cover in their basic work-
men's compensation insur-
ance policies employees
who have sustained a prior,
permanent disability.
FO
Categories **
Transfers to the Private Sector
State Expenditures Which Can be
Eliminate or Reduce the Functions
Reduced in Order to
Permissive Local or Federal Assumption
Comply with Expenditure Limitation
of the Functions or Funding
1974-75
udget
Department
Function
**
1973-74
Potential
Fund
Comments
tem
Reduction
63
Veterans' Affairs
Educational As-
2
$2,085,100
$2,085,100
General
This program could be reduced
sistance to Veter-
or eliminated, thereby having
ans' Dependents
veterans' dependents compete
for scholarships on the same
basis as other students.
Children of veterans, who are
100% disabled or who died of
service connected injuries,
receive federal educational
benefits.
Veterans' Affairs
Veterans' Home and
2
4,569,536
4,757,213
General
Either close this institution
Hospital
or 3
or increase care fees to
eliminate state support. Feder:
and private institutions could
assume these functions. Fund-
ing is currently derived as
follows:
General Fund 50%
Federal Funds 27%
Fees
23%
55
Veterans' Affairs
Subvention to
2
500,000
500,000
General
This item could be eliminated.
County Veterans'
It represents approximately
Service Offices
18 percent of County Veterans'
Service Office expenses.
Categories **
Transfers to the Private Sector
State Expenditures Which Can be
Eliminate or Reduce the Functions
Reduced in Order to
Permissive Local or Federal Assumption
Comply with Expenditure Limitation
of the Functions or Funding
1974-75
udget
Department
Function
**
1973-74
Potential
Fund
Comments
tem
Reduction
Alcoholic Beverage
Shared Revenues
2
$13,450,000
$11,700,000
Alcohol-
or 3
The Department of ABC collects
Control
ic Bev-
various fees, approximately
erage
$5.8 million of which goes
Control
directly into the General Fund
and $15 million into the ABC
Fund. This latter fund is
divided by statutory formula
90 percent to counties and
cities and 10 percent to the
General Fund. This 90 per-
cent subvention ($13,450,000)
could be eliminated and the
related fee dropped or the
licensing function could be
transferred to local govern-
ment and they could be given
the power to levy and collect
the fees. This revenue would
be adequate to pay for the
licensing function.
Categories **
Transfers to the Private Sector
State Expenditures Which Can be
Eliminate or Reduce the Functions
Reduced in Order to
Permissive Local or Federal Assumption
Comply with Expenditure Limitation
of the Functions or Funding
1974-75
udget
Department
Function
**
1973-74
Potential
Fund
Comments
Reduction
3-69
State Banking Department
(Local Agency
3
$ 35,000
$ 37,100
General
Authorize local governments
Security)
and
to perform functions now
Administration of
State
performed by the State Bank-
county, city, and
Banking
ing Department.
district funds by
depository banks
(state and
national)
State Banking
Certification
2
3,000
3,180
State
Eliminate state certification
of Securities
Banking
of securities.
Supervision of
7
1,823,947
1,933,383
State
Major responsibilities of the
state-chartered
Banking
State Banking Department could
banks and trust
be transferred to an indepen-
companies
dent agency patterned after
(in some respects) the Federal
Reserve Board. On page 25 ,
we discuss the organization
of such an agency which we
have designated the California
Banking Board.
Corporations
Regulation of
1
3,693,641
3,918,259
General
Establish a California Corpor-
Security transac-
ationsCommission to regulate
tions, franchises,
security transactions and
and administration
provide general corporate sur-
of the Lender-
veillance. Empower commission
Fiduciary Law
to levey assessments from
corporations sufficient to
carry out statutory responsi-
bilities. (See page 26 for
additional information)
Categories **
Transfers to the Private Sector
State Expenditures Which Can be
Eliminate or Reduce the Functions
Reduced in Order to
Permissive Local or Federal Assumption
Comply with Expenditure Limitation
of the Functions or Funding
1974-75
udget
Department
Function
**
1973-74
Potential
Fund
Comments
tem
Reduction
172
Department of Housing,
Inspection of mobile- 1
$2,450,000
$2,600,000
General
Privately operated indepen-
Division of Codes and
home manufacturers
dent inspection agencies
Standards
factory-built
could be licensed by the
housing.
state to perform inspection
functions.
2
Categories **
Transfers to the Private Sector
State Expenditures Which Can be
Eliminate or Reduce the Functions
Reduced in Order to
Permissive Local or Federal Assumption
Comply with Expenditure Limitation
of the Functions or Funding
1974-75
udget
Department
Function
**
1973-74
Potential
Fund
Comments
tem
Reduction
73
Insurance
Regulation of
1
$4,046,315
$4,289,094
General
In the absence of fed-
1,000 insurance
eral regulation of the
and title companies
insurance industry, a
and 125,000
California Insurance
agents and brokers
Commission should be establish-
ed with the power to levy
assessments on the industry
in order to support
required licensing and
regulatory activities.
(See page 26
for
additional information.)
174
Riot and Civil
Subsidize insurance 2
200,000
200,000
General
This program should be
Disorders Insurance
industry in provide
deleted. The state should
ing riot and civil
not subsidize the insurance
disorders Insur-
industry.
ance.
176
Real Estate
Education and
2
570,041
297,483
Real
Eliminate that portion of the
research in real
Estate
fund which is used for
estate
Educa-
education of real estate
tion
brokers and the advancement
Research
of research and teaching
and
in the field of real estate.
Recovery
Categories **
Transfers to the Private Sector
State Expenditures Which Can be
Eliminate or Reduce the Functions
Reduced in Order to
Permissive Local or Federal Assumption
Comply with Expenditure Limitation
of the Functions or Funding
1974-75
get
Department
Function
**
1973-74
Potential
Fund
Comments
Reduction
Savings and Loan
Examination of
1
$1,509,533
$1,600,105
Savings
Establish a nonprofit private
savings and loan
and Loan
corporation to regulate the
associations
Inspec-
Department of Savings and Loan
tion
and Department of Banking
activities (See page 25 for
additional information.) This
board can be patterned after
the Federal Reserve Board and
the Federal Home Loan Bank
Board in some respects.
Appraisal of real
1
735,821
779,970
Savings
estate loans made
and Loan
by savings and
Inspec-
loan associations
tion
Administration
1
928,182
983,873
Savings
and Loan
Inspec-
tion
Categories **
Transfers to the Private Sector
State Expenditures Which Can be
Eliminate or Reduce the Functions
Reduced in Order to
Permissive Local or Federal Assumption
Comply with Expenditure Limitation
of the Functions or Funding
1974-75
idget
Department
Function
**
1973-74
Potential
Fund
Comments
tem
Reduction
184
California Highway
Selective deploy-
3
$ 17,714,136
$18,776,984
Motor
The assumption of this func-
Patrol (CHP)
ment of traffic
Vehicle
tion could be left to local
officers on the
Account,
authorities which would result
county road
State
in a budget reduction for CHP
system
Trans-
of $18,776,984 starting in
porta-
1974-75.
tion
Fund
Traffic supervision
3
107,284,056
See Comments
Motor
In conjunction with the
and services on
Vehicle
Highway Fund proposed, a
the State Highway
Account,
portion of this responsibil-
System
State
ity could be assumed by
Trans-
local authorities starting
porta-
in 1977-78. This repre-
tion
sents a budget reduction
Fund
for CHP of $91,850,000
starting in 1977-78. (See
page 20 for further dis-
cussion.)
Categories **
Transfers to the Private Sector
State Expenditures Which Can be
Eliminate or Reduce the Functions
Reduced in Order to
Permissive Local or Federal Assumption
Comply with Expenditure Limitation
of the Functions or Funding
1974-75
udget
Department
Function
**
1973-74
Potential
Fund
Comments
tem
Reduction
N/A
Department of
1) Maintenance of
2
$ 1,880,000
$ 700,000
State
Potential reduction in non-
Transportation
Roadside Rests
Highway
essential functions are net
Account
of reimbursements if any. A
2) Maintenance of
16,850,000
14,000,000
reduction of $90,654,700 in
Landscaping &
the 1974-75 fiscal year could
Functional
be balanced with a reduction
Planting
of three-fourths cents per
gallon of the seven cents per
3) Highway Planting
11,500,000
12,075,000
gallon fuel excise tax.
During the 1974-75 fiscal
4) Functional
10,250,000
10,762,500
year approximately
Betterments
$90,564,000 would be saved
by a three-quarter cent
5) Roadside Rests
1,500,000
1,575,000
reduction in the excise tax.
6) Contingencies
28,500,000
29,925,000
Local Assistance:
7) Matching Funds
4,107,000
4,312,350
(Federal aid
Secondary Roads)
8) Subvention
5,027,000
5,278,350
(Federal aid
Secondary-Urban
Extension)
9) Grade Crossing
16,930,000
12,026,500
Projects
TOTAL
$96,544,000
$90,654,700
Categories **
Transfers to the Private Sector
State Expenditures Which Can be
Eliminate or Reduce the Functions
Reduced in Order to
Permissive Local or Federal Assumption
Comply with Expenditure Limitation
of the Functions or Funding
1974-75
udget
Department
Function
**
1973-74
Potential
Fund
Comments
Reduction
N/A
Department of
Administrative-
3
$909.4 million
See Comments
State
Based upon projected trends
Transportation
Construction
Highway
in federal financial aid
Maintenance of
Account
and recommendations
State Highway
contained in April 24, 1972
System
Department of Public Works rpt.
a potential expenditure
reduction of approximately
$365.1 million could be
accomplished during the
1977-78 fiscal year. This
would involve a transfer of
responsibility to local
entities over a portion of
the present state highway
system. Revenue required
to defray the $365.1 million
additional cost could be
provided through the transfer
of taxing authority from the
state to local government.
The latter would involve a
reduction in fuel excise tax
imposed by the state in the
amount of 2.60 cents per gallon
and the imposition of the
excise tax at the local
level. During the 1977-78
fiscal year approximately
$364 million in revenues
would be generated. (See
page 20 for detail).
This transfer of function and
funding could be implemented
in addition to the expenditure
and revenue reduction at the
state level during 1974-75.
Categories **
Transfers to the Private Sector
State Expenditures Which Can be
Eliminate or Reduce the Functions
Reduced in Order to
Permissive Local or Federal Assumption
Comply with Expenditure Limitation
of the Functions or Funding
1974-75
udget
Department
Function
**
1973-74
Potential
Fund
Comments
Item
Reduction
194
Tahoe Regional
Planning and Regu-
2
$ 50,000
$ 50,000
General
Eliminate support for
Planning Agency
lating Development
interstate agency.
in Tahoe Basin
199
Air Resources Board
Basic support
3
$2,348,000
$2,000,000
General
Eliminate this subvention
to local air pollution
districts.
202
Air Resources Board
Subvention for
2
$4,600,000
$4,600,000
General
Substitute exempted state
control of air
revenues in Environmental
pollution
Protection Program Fund
for General Fund support
to finance overhead costs,
land-use planning, etc.
206
Conservation
Payments to Cal-
1
$ 34,200
$ 34,200
General
Eliminate payment to
Tech for one-half
private school.
their operating
cost for seismo-
graph network
-09-
Categories **
Transfers to the Private Sector
State Expenditures Which Can be
Eliminate or Reduce the Functions
Reduced in Order to
Permissive Local or Federal Assumption
Comply with Expenditure Limitation
of the Functions or Funding
1974-75
udget
Department
Function
**
1973-74
Potential
Fund
Comments
tem
Reduction
206
Conservation
Fire suppression
1
0
0
General
Initiate timber severance
tax and 20 cents per
hundred assessment on state
responsibility lands to
produce $14,200,000 to cover
future year cost increases.
(See report on Revenue
Sources to support new role
for Division of Forestry,
by Legislative Analyst).
27
Parks & Recreation
Support Budget
1
$24,520,000
9,000,000
General
Increase user fees to
make the program more self-
supporting (currently about
40%). Increase fees another
$9,000,000 to provide 100%
self-support in 1976-77.
34
Water Resources
Watermaster
1
$269,000
$269,000
General
Administration and half the
service and admin-
program costs to be paid by,
istration
or services done by,
beneficiaries who are holders
of water rights.
Water Resources
Supervision of
1
$1,443,000
$1,443,000
General
Increase fees to make
Safety of Dams
inspections and evaluation
services self-supporting.
Categories **
Transfers to the Private Sector
State Expenditures Which Can be
Eliminate or Reduce the Functions
Reduced in Order to
Permissive Local or Federal Assumption
Comply with Expenditure Limitation
of the Functions or Funding
1974-75
udget
Department
Function
**
1973-74
Potential
Fund
Comments
Reduction
34
Water Resources
Tidelands oil
3
$25,000,000
$25,000,000
Calif.
Determine that this money
ont.
)
revenues used for
Water
is exempt as a sale of an
State Water Project
Fund
asset (oil) or transfer
Construction
the money from the California
Water Fund to the General
Fund and require water
service contractors to
advance funds to complete
construction of State Water
Project.
-62-
Categories **
Transfers to the Private Sector
State Expenditures Which Can be
Eliminate or Reduce the Functions
Reduced in Order to
Permissive Local or Federal Assumption
Comply with Expenditure Limitation
of the Functions or Funding
1974-75
Budget
Department
Function
**
1973-74
Potential
Fund
Comments
tem
Reduction
281
Corrections
(1) Parole
2
307,425
338,168
General
Delete 25.5 positions authoriz
ed for 1973-74 to reduce the
conventional parole caseload.
The Legislature approved one-
half of the originally request
ed 51 new positions to reduce
the caseload from 1:68 to 1:50
(2) Parole
2
1,231,757
1,354,933
General
The low caseload (1:33) in the
work unit program has not
demonstrated a level of succes
commensurate with its costs an
could be eliminated.
(continued)
-63-
Categories **
1. Transfers to the Private Sector
State Expenditures Which Can be
2. Eliminate or Reduce the Functions
Reduced in Order to
3. Permissive Local or Federal Assumption
Comply with Expenditure Limitation
of the Functions or Funding
1974-75
Budget
Department
Function
**
1973-74
Potential
Fund
Comments
Item
Reduction
281
Corrections
(3) Release funds
2
$1,424,280
$1,652,165
General
Gate money could be reduced
Contd.)
for parolees
from $200 per releasee to $68
as authorized prior to 1973-74
(4) Camp Program
2
71,011
78,112
General
Delete eight new security posi
tions approved for conserva-
tion camps. (The Legislature
deleted 7 of a requested 15
such positions.) Since their
inception, these were 80-man
camps which operated with six
correctional personnel plus
Division of Forestry personnel
However, in 1971-72, the de-
partment reduced the inmate
population to 60 and administr
tively added an additional
office at each of 15 camps.
Due to the reduction of
individual camp capacity and
the demonstrated ability of
the department to operate with
but the additional position.
(continued)
-64-
Categories **
1. Transfers to the Private Sector
State Expenditures Which Can be
2. Eliminate or Reduce the Functions
Reduced in Order to
3. Permissive Local or Federal Assumption
Comply with Expenditure Limitation
of the Functions or Funding
1974-75
Budget
Department
Function
**
1973-74
Potential
Fund
Comments
Item
Reduction
281
Corrections
(5) Institutional
2
$ 187,164
$ 205,880
General
Delete 19 stationary firemen
Contd.)
Staffing
and engineers. These new
civil service positions were
approved at this session to
replace inmates who have
traditionally operated the
boiler plants. The departmen
contended that population re-
duction restricted the
number of minimum inmates
available for this service.
However, the recent and
continuing population increas
should alleviate this problem
-65-
Categories **
1. Transfers to the Private Sector
State Expenditures Which Can be
2. Eliminate or Reduce the Functions
Reduced in Order to
3. Permissive Local or Federal Assumption
Comply with Expenditure Limitation
of the Functions or Funding
1974-75
Budget
Department
Function
**
1973-74
Potential
Fund
Comments
Item
Reduction
293
California Hospital
Preparation of a
1
$ 886,000
$ 886,000
Calif.
The functions of this
Commission
uniform hospital
Hospi-
commission could be admin-
accounting system
tal
istered through a private
and the provision
Commis-
nonprofit organization
of other account-
sion
under the supervision of
ing services to
the hospital industry.
improve the
The California Hospital
efficiency and
Commission Fund is currently
effectiveness of
supported through fees
hospital services.
levied against all hospitals,
except federal hospitals,
within the state.
-yy-
Categories **
Transfers to the Private Sector
State Expenditures Which Can be
Eliminate or Reduce the Functions
Reduced in Order to
. Permissive Local or Federal Assumption
Comply with Expenditure Limitation
of the Functions or Funding
1974-75
Budget
Department
Function
**
1973-74
Potential
Fund
Comments
Item
Reduction
--
Education
Public School
2
$107,000,000
$122,000,000
General
Halt new programs authorized
Support
in SB 90 for compensatory
education on the basis that
it would be less disruptive
than reducing established
programs. (For further
discussion see page 16 ).
-67-
Categories **
1. Transfers to the Private Sector
State Expenditures Which Can be
2. Eliminate or Reduce the Functions
Reduced in Order to
3. Permissive Local or Federal Assumption
Comply with Expenditure Limitation
of the Functions or Funding
1974-75
Budget
Department
Function
**
1973-74
Potential
Fund
Comments
Item
Reduction
Education
County School
2
$10,000,000
$10,000,000
General
In our 1971 study of the
Service Fund -
County Superintendent of
Other Purposes
Schools office we recom-
mended several select
reductions in the other
purposes service of the
county superintendent.
These services include
coordination, audio-visual,
library, courses of study
development and teacher
training. These services
are no longer appropriately
funded from the County
School Service Fund because
of changes in the number
of local districts served
and districts requesting
service from the county
office.
-68-
Categories **
1. Transfers to the Private Sector
State Expenditures Which Can be
2. Eliminate or Reduce the Functions
Reduced in Order to
3. Permissive Local or Federal Assumption
Comply with Expenditure Limitation
of the Functions or Funding
1974-75
Budget
Department
Function
**
1973-74
Potential
Fund
Comments
Item
Reduction
:
Education
Driver Training
3
$17,000,000
$18,000,000
Special
75 percent of traffic
violation penalties is
state revenue collected
in the Driver Training
Penalty Assessment Fund
which is used to reimburse
the General Fund for excess
costs of driver training.
This proposal would transfer
the revenue and expendi-
tures of this program to
the local school districts.
-69-
Categories **
Transfers to the Private Sector
State Expenditures Which Can be
Eliminate or Reduce the Functions
Reduced in Order to
Permissive Local or Federal Assumption
Comply with Expenditure Limitation
of the Functions or Funding
1974-75
Budget
Department
Function
**
1973-74
Potential
Fund
Comments
Item
Reduction
300
Education
Special Schools
1
$10,109,153
$4,000,000
General
Shift all or part of the
cost of room and board to
the parents of students
in state special schools.
Full réimbursement of these
costs would generate
$4 million in reimburse-
ments at an average of
$2,250.
310
Education
Public Library
2
$ 1,000,000
$1,000,000
General
Eliminate the state subsidy
Assistance
to local public libraries
designed to encourage the
development of regional
cooperative library systems
Now that 99 percent of the
population is served by
21 systems, the need to
continue this program is
of lesser priority.
-UL-
Categories **
Transfers to the Private Sector
State Expenditures Which Can be
Eliminate or Reduce the Functions
Reduced in Order to
Permissive Local or Federal Assumption
Comply with Expenditure Limitation
of the Functions or Funding
dget
1974-75
em
Department
Function
**
1973-74
Potential
Fund
Comments
Reduction
6
University of California
Agriculture
1
$9,762,629
$1,000,000
General
Arbitrary reduction to off-
Extension
set failure to charge a fee
for its services to the
private sector. The reduc-
tion should be directed to
special surveys and con-
sultations as requested by
individuals.
University of California
Extended
2
$1,262,000
$1,344,030
General
This new program is designed
University
to expand educational service
to a new clientele not pre-
viously served (i.e., part-
time students). Under fisca
constraints this expansion
could be eliminated since
this program is still in the
pilot phase.
University of California
Undergraduate
2
$1,000,000
$1,000,000
General
This program, new in 1973-74,
Teaching
is a low priority for con-
tinuation in 1974-75.
Improvement of undergraduate
teaching is already a re-
quirement of the profession
and should not need in-
centives without additional
financing.
Categories **
Transfers to the Private Sector
State Expenditures Which Can be
Eliminate or Reduce the Functions
Reduced in Order to
Permissive Local or Federal Assumption
Comply with Expenditure Limitation
of the Functions or Funding
1974-75
udget
Department
Function
**
1973-74
Potential
Fund
Comments
Reduction
327
Community Colleges
Tuition
1
---
$65,000,000
General
Establish an annual tuition
of $100 per FTE student on
a cost per unit basis to
offset ADA apportionments.
(For fuller discussion see
page 18 ). (Consideration
should be given to increased
student aid to offset a
part of these savings.
Community Colleges ADA
Noncredit courses
1
$17,000,000
$18,000,000
General
Eliminate state ADA support
and/
for courses which are non-
or
credit and do not contribute
2
to certificate and/or
degree programs. These
courses could be continued
on a self-supporting fee
basis. (For further discus-
sion see page 19 ).
Categories **
Transfers to the Private Sector
State Expenditures Which Can be
Eliminate or Reduce the Functions
Reduced in Order to
Permissive Local or Federal Assumption
Comply with Expenditure Limitation
of the Functions or Funding
1974-75
Budget
Department
Function
**
1973-74
Potential
Fund
Comments
Item
Reduction
330
State Scholarship and
Private institu-
1
$ 37,432,760
$ 5,488,800
General
Phase out the use of state
Loan Commission
tion subsidy
scholarships and fellow-
ships at private institu-
tions. (For further discus-
sion see page 17).
Statewide
Capital Outlay
3
$163,000,000
$164,000,000
Various
Establish policy of bond
financing for all capital
outlay which would exclude
these expenditures from
the limitation but would
be more costly. (For
further discussion see
page 24 ).