Industry: Government
News
May 26, 2017

State law protects Cal Grant recipients from tuition increases at UC or CSU: when tuition rises, so do these students’ Cal Grants. Consequently, as tuition has increased and enrollment of low-income students has expanded, the program has grown rapidly. Next fall, tuition is scheduled to increase by $280 per year at UC and by $270 per year at CSU. In addition, UC, which has enrolled 7,400 new undergraduates in each of the last two years, plans to enroll an additional 2,500 in the fall of 2017‒18, the largest three-year increase in seventy years. CSU has added around 50,000 additional students over the past five years. The expansion of Cal Grants has drawn the attention of the governor. He noted in his May budget revision that "rising Cal Grant costs from tuition hikes will also limit the state’s ability to increase General Fund support in the future.”

News
May 26, 2017

No state needs to reform the relationship that governments have with public-employee unions more than California. Yet lawmakers keep going in the wrong direction. Contract negotiations between government and the labor unions who represent the public employees should be transparent. Too often, both sides are working toward a common goal – a generous deal for the unions. Simply put, there isn’t much bartering between state and local governments and the public-sector unions. Union bosses secure the contracts they want because there is little push back during collective-bargaining sessions. This arrangement has been finely tuned. Unions have for decades delivered cash and manpower to elect friendly candidates to state and local office.

. . . Assembly Bill 1455, which is currently awaiting a State Assembly vote, would conceal the material content of collective bargaining talks with public-employee unions from taxpayers, who have to pay for above-market wages, hordes of duplicative and often unnecessary positions, and luxurious retirements.

News
May 26, 2017

California proposes to issue a pension obligation bond to finance extra contributions to the state pension fund, CalPERS. It would also cover up wealth transfers from citizens to state employees. Here’s how it works: When pension promises are made by the state to its employees, both the state and employees incur costs (“Normal Costs”) in the form of contributions to CalPERS with the hope that the sum of contributions and investment earnings will be sufficient to fund the promised pension payments. If investments earn at the rate CalPERS used when setting the Normal Cost, everything works out. But if investments earn at a lower rate, deficits (“Unfunded Liabilities”) arise. In contrast to joint sharing of Normal Cost, employees don’t share in the cost of Unfunded Liabilities. 100% of that cost falls on citizens, whose services get crowded out and taxes get raised to pay off the liabilities.

News
May 19, 2017

Fresno Unified School District used state money meant for low-income minority students to pay for police programs, bathroom renovations and other expenses not related to the students, the California Department of Education reported. . . The American Civil Liberties Union has led the criticism of the district’s spending, arguing that the district misspent more than $36 million in special funds, including $5.6 million on bathroom renovations and additional janitors; $5.6 million for a middle school redesign; $3.8 million for school employees; and $440,000 to hire more school police officers and to expand the use of a bullet-tracking system.

News
May 19, 2017

Since Fiscal Year 1984-1985, real special fund expenditures have ballooned a whopping 447 percent or about 6 percent, on average, per year.  In Governor Brown’s budgeting era, more and more of the budget is locked into these special funds. The May Revise pegs total special fund expenditures at $56 billion for Fiscal Year 2017-2018, about 50 percent higher than Arnold Schwarzenegger’s last budget and more than double Gray Davis’ last budget.  Moreover, we’ve seen a rise in the share of special fund spending to overall expenditures. The May Revise has special fund spending accounting for almost one-third of overall expenditures. This is not an anomaly for Governor Brown.  On average, real special fund expenditures have been 28 percent of overall spending during his last two terms – the highest of recent Governors. 

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