FCL NEWSLETTER -- March, 2000

Conventional wisdom around the Capitol about Governor Gray Davis and the state budget says that: 1) our Democratic governor is unabashedly appropriating ideas from Republican proposals, as documented in The Wall Street Journal, February 9, 2000; 2) our compulsively cautious governor wakes up at night worrying about budget deficits popping up in the middle of his second term - four or more years away; 3) our ambitious governor believes that Pete Wilson would be a leading Republican presidential candidate today were it not for the deficits that cropped up early on Wilson's watch; 4) our tight-fisted governor has two big fears that keep him from spending more on health and welfare: one, he's afraid that long-term entitlements will drain the state's budget in less prosperous times and, two, he's convinced that anyone who comes to depend on the state for basic human needs will slip down on the ladder of personal and social responsibility.

If this conventional wisdom is correct, it is then not surprising that there is little that is earth-shaking in the governor's $85.1 billion spending plan, up by $5.1 billion or 8.0% from the current year. The biggest jump is in one-time commitments, totaling about $2.9 billion, most of which do not relate directly to the needs of the millions of Californians who have yet to benefit from the state's booming economy.

Instead, he budgets $665 million to refund smog impact fees, declared unconstitutional by the courts; $500 million for other "legal contingencies"; $400 million for a range of capital expenditures; $358 million for a one-time increase in the state's budgetary reserve; $121 million for rail projects primarily serving affluent commuters;$100 million each for "legislative initiatives" (translation: legislators' pet projects, usually for their districts), for grants to local law enforcement agencies, and for tax credits for agricultural land donations; and $50 million each for school bus replacement and for housing loans to teachers, forgivable if the teacher agrees to serve for five years in a "hard-to-staff" (translation: inner city or rural) school.

All that the governor proposes is subject to change in the legislative process, which is constitutionally required to be completed by June 30, and in the traditional "May Revise" of the budget, to be released by the governor's Department of Finance on May 15. Watch these pages for further developments.

-Ken Larsen

Pie Chart shows:
- Education (K-12) -- 33.8%
- Health and Human Services -- 26.4%
- Higher Education -- 11.5%
- Business Transportation and Housing -- 6.7%
- Youth and Adult Corrections -- 5.8%
- Resources -- 2.7%
- Tax Relief -- 2.6%
- Courts -- 1.7%
- State and Consumer Services -- 1.1%
- Environmental Protection -- 1%
- Other -- 6.7%

California's state and local governments spend more than $17 billion each year on law enforcement. Much of this expenditure is used to lock up non-violent offenders, many of whom abuse alcohol and drugs or suffer from serious mental illness.

Although there is no sweeping vision of reform, there is some good news in the governor's proposed fiscal year 2000-01 state budget. For the first time in decades, the California Department of Corrections (CDC) expects a slow-down in the growth of the adult prison population and the California Youth Authority (CYA) expects a slight reduction in its wards.

Slow growth is the primary reason that the governor requests only a 1.8% increase in the Youth and Adult Correctional Agency budget. Nevertheless, the $5.4 billion proposed for fiscal year 2000-01 is a huge amount of money. There are two ways to prevent further increases in prison costs: reduce parole failures, and reduce prison commitments.

Reducing Parole Failure

One approach to cutting overall prison costs in the future is to reduce the number of parole failures. Unlike most other states, where the majority of parolees successfully complete parole, 67% of California's parolees return to prison. Parole failures lead to high confinement costs and create instability that makes education and work programming more difficult.

The CDC proposes three significant budget changes to reduce parole failures. First, it would add 1500 prison drug treatment beds at a cost of $12.3 million, expanding on a legislative initiative based on the well-regarded Amity Foundation substance abuse program in San Diego. For parolees with a history of drug- dependency, the program combines six to 18 months of in-prison treatment with community after-care. Up to 80% of prisoners are incarcerated for offenses with a connection to drugs or alcohol. The proposed expansion, while a step in the right direction, will only reach a small fraction of these individuals.

The second proposal adds 105 new parole agent positions at a cost of $10.4 million to supervise "second strike" parolees at risk for a 25-year-to-life term if convicted of another felony. To get the most for the money, the state's nonpartisan Legislative Analyst proposes integrated job development and drug treatment services to parolees as they transition back into the community. Although good community job development and substance abuse programs exist, CDC has been slow to embrace them. The time is ripe to make more effective use of quality local services.

The third proposal adds 25 new parole agent positions at a cost of $1.9 million for closer supervision and community treatment of mentally ill parolees and $6 million is allocated for continuing existing parolee mental health services.

In addition, mentally ill parolees need timely reinstatement of their SSI and SSDI benefits and they need to be steered into support services in the community. County mental health providers have often been reluctant to provide services to parolees, who then are likely to reoffend.

The Legislative Analyst notes prisoners with mental illness are being released into an inadequate patchwork of supervision, treatment, and assistance and that this situation needs to be changed. However, the state does not need a separate system of care for mentally ill parolees. This care must be community- based and available after the end of parole.

The CDC is responsible for treatment of at least 20,000 people with severe mental illness, more than four times the number in the state's mental hospitals. To provide legally mandated services to prisoners with severe mental illnesses who are in administrative segregation units, the CDC proposes an $18 million augmentation. This item is required by a court order in Coleman v. Davis.

Reducing Prison Commitments

The high cost of imprisonment can also be avoided by keeping people out of jail or prison. The governor's budget proposes $20 million to help mentally ill people stay out of the criminal justice system.

This funding is a continuation and expansion of community demonstration projects under the supervision of the Board of Corrections. The Legislative Analyst raises several questions about these projects:

a) When is penal confinement appropriate for someone with a mental disability? The current law is based on concepts of guilt and insanity that were inherited from another era, and refined principally in capital cases. They may not serve us well in the case of a homeless person who sets fires indiscriminately. There may be room for another type of verdict, such as guilty-with- serious-mental-disorder. Consideration of these questions could have significant social and fiscal rewards.

b) Should resources be focused on the individuals who are most likely to end up in jail or prison, or should they be directed to the larger number of less risky offenders who can be served more successfully and at less cost? Programs should be evaluated for the types of cases they serve as well as for overall success.

c) To what extent should treatment for mental disorders be required, even though a person may not be a danger to self or others? Most people respond to empathetic encouragement toward mental health. However, a small number of people do not respond, and many therapists are not able to reach some clients, either because they lack skill or they have other conflicting commitments. San Bernardino County is experimenting with a "mental health court" that diverts offenders who are mentally ill from jail into court-supervised residential programs where they are under close probationary supervision, and required to take medications. Such programs need careful examination.

What's Missing from the Governor's Crime Budget?

Although funding is needed for improved mental health services, most offenders entering prison are not mentally ill. Most of them grew up in stressful conditions, fell behind in school, became truant, and had no opportunity to benefit from character-building clubs, mentors, or education programs. Or they grew up in an abusive home and no one attempted to change their habits of violence until they became involved in a serious offense. Or they spent their days confined in a lackluster classroom and gravitated into alcohol or drug abuse.

Conspicuously absent from the governor's budget are funds to meet the needs of the youth who may become the offenders of tomorrow. Compared with the more than $5 billion available for incarceration of youth and adults, it is estimated that the state spent only about $300 million in fiscal year 1999-00 for youth crime and violence prevention measures.

Currently, evaluation and supervision of these programs is spotty. Two pending bills, AB 235 (Sheila Kuehl, D., Santa Monica) and AB 565 (Dean Flores, D., Fresno) seek to make more funding available for such programs and to improve evaluation of their performance. Enactment of either of these measures will provide a way to measure the state's progress in this vital area in future years.

Steve Birdlebough

Here are some of the key elements of the governor's plan to deal with hunger, health, and housing ? key elements of the state's safety net.

Housing

Housing advocates have identified proposed 2000-2001 housing spending of $86.9 million, probably the highest level since 1979, during the second term of Governor Jerry Brown, whose chief of staff was Gray Davis.

* Low-Income Housing Tax Credit: permanent increase from $35 million to $50 million annually.

* One-Time Teacher Housing Loans: $50 million for down payments of teachers who pledge to teach at least 5 years in "hard-to- staff" schools.

* Multifamily Housing: $11.5 million for the new Multifamily Housing Program created within the Department of Housing and Community Development last year to provide low-interest loans for construction, acquisition, rehabilitation and rental assistance

* Migrant Worker Housing: $6.1 million to continue reconstruction of state-owned migrant farm worker housing.

* Farm Worker Housing Grant Program: $3.5 million for construction or rehabilitation of owner-occupied or rental housing for farm workers (down from $4 million this year).

* Preservation of "at-risk" federally subsidized housing: $2.5 million to continue technical assistance to preserve affordability of Section 8 units that otherwise might convert to market rates.

* Winter Homeless Shelters: $1.3 million for National Guard operation of armory shelters and $.733 million to Housing and Community Development for operation of shelters in some communities without armories.

* Emergency Housing Assistance Program: $2 million county emergency and transitional housing assistance.

* Self-Help Housing: $2.2 million for housing development for low and moderate income families in rural areas ($1 million increase)

* Supportive Housing: $ 1 million (no change).

* Affordable Housing for Developmentally Disabled: $1 million for increasing supply of affordable housing for developmentally disabled in San Jose area.

* Homeless Mentally Ill: $20 million one-time appropriation for pilot integrated service programs, including housing assistance, with emphasis on persons at-risk for criminal activity, including probationers and parolees.

In addition, housing advocates are seeking additional funding for these programs and legislation:

* Farm Worker Housing Pilot Program;

* Farm Worker Housing Upgrade Program;

* Migrant Housing Centers.

Health

The California Department of Health Services is slated to receive $9.4 billion (a 6% increase) from the state's General Fund and augment that amount with federal and other dollars for a total expenditure of $25.8 billion (a 6% increase) in 2000-2001. About 90 % of the DHS budget goes to Medi-Cal programs.

The governor has proposed the following steps to bring health care to the millions of California residents whose needs are not currently being met:

* Managed Risk Medical Insurance Board (MRMIB): $422 million; the increase of $102 million or 32% is due mostly to anticipated growth in the Healthy Families Program.

* "Aging With Dignity" Initiative: A centerpiece of the governor's budget, this appropriation of $91.8 million ($48.7 state general fund) in the Department of Health Services budget is aimed at improving nursing homes, including monitoring and inspections, quality awards for outstanding service to Medi-Cal recipients and wage increases for staff.

* No-Cost Medi-Cal for Low Income Seniors and Disabled Individuals: $4.8 million ($2.4 million General Fund) to provide eligibility to approximately 13,000 medically needy beneficiaries who earn up to 100% of the federal poverty level or $687 per month for a single person.

* Expand Medi-Cal for the Working Disabled: $4.8 million ($2.4 million General Fund) to provide eligibility for those with incomes up to 250 % of federal poverty level.

* Prenatal and Long Term Care for Undocumented Individuals: A total of $102.2 million for services that the previous governor fought in the legislature and in the courts.

Mental Health

The Department of Mental Health is slated to spend $1.7 billion, a jump of 9.6% over estimated current year expenditures. The DMH is responsible for treatment through state-county partnerships, four state hospitals, and the prison psychiatric unit at the California Medical Facility in Vacaville.

The governor is asking for:

* One-Time Augmentation of New Integrated Service Program: $10 million additional funding for a total of $20 million for competitive grants to counties to offer integrated mental health services under provisions of SB 34, passed last year.

* Early Periodic Screening, Diagnosis and Treatment: $42.9 million increase.

* Mental Health Managed Care: $4.7 million increase.

* State Hospital Funding: $59.4 million for anticipated increase in patient population.

Hunger

The state provides hunger assistance primarily through Food Stamps and nutrition programs. The core Food Stamp program is paid with federal dollars, with states and counties providing administration. In addition, the state buys Food Stamps from the federal government to feed some immigrants ruled ineligible by federal welfare reform.

The governor has put forward the following proposals:

* $51.6 million for the California Food Assistance Program (CFAP)to provide state-only food stamps for legal non-citizens ages 18 - 64.

* $1.9 million for feeding approximately 3150 legal immigrants whose Food Stamp eligibility sunsets September 30, 2000.

* $.8 million in one-time funds from the Proposition 98 Reversion Account to fund a 1998-99 deficit in the Child Nutrition Programs.

Anti-hunger advocates have offered the following as top priorities for additional funding and legislation:

* $1 million, to be matched dollar-for-dollar with federal money, to educate working families about food stamps.

* Reduction of the 11-page food stamp application to a more manageable size, as in other states, which have applications as short as three pages.

* Continuing food assistance to the thousands of immigrants who will lose food stamp benefits when the California Food Assistance Program (CFAP) ends in October 2000.

* Increasing the number of schools offering school breakfast programs.

* Documenting the extent of food insecurity in California, including demographic, regional and county specific data that has never been gathered before and is needed to make effective policy.

-Ken Larsen