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During this two- year period, the Commission carried out an
ambitious agenda of studies and reports on important issues
that in one way or another affect the lives of Californians.
Two themes consistently emerge in the focus areas:
The Commission focused on ways:
The Commission examined the State's budgeting process, its real property management techniques, and the structure and operation of the civil service system. The Commission also analyzed three agency reorganizations proposed by the Governor and considered the role that the State should play in the ever-changing utility markets.
The following pages contain a description of the reports that
were issued during 1995 and 1996. The reports are listed in
chronological order.
Spurred by the "boot camp" phenomenon and the anticipated
influx of up to $1.3 billion in federal funding that is expected
to fuel the development frenzy for this form of alternative
sentencing, the Commission explored the status of boot
camps in California. The Commission's report said:
Currently, a rush to boot camps is on in America and in
California, with these programs receiving increasing attention
as an alternative sentencing option for both adult and juvenile
offenders. The primary goal of boot camps is to reduce the
costs of imprisonment by placing lower-risk, non-violent
offenders in abbreviated, highly structured programs outside
of crowded mainline institutions.
In order to ensure that their viability as an alternative form
of sentencing is continued, California needs to take a
proactive role in the development of boot camps. To
accomplish this goal, the State should:
The Commission believes that by implementing these
recommendations, the State can provide the necessary
leadership that can turn boot camps into success stories rather
than just passing and costly fads.
By statutory mandate, the Little Hoover Commission is
obligated to analyze and comment on reorganizations
proposed by the Governor. In this report, the Commission
recommends the implementation of Governor's
Reorganization Plan No. 1 of 1995, a proposal that affects the
State's energy programs.
The broad reorganization effort laid out sweeping changes in
the structure of the agencies that oversee the State's energy,
oil and recycling programs. Specifically, the proposal would:
eliminate the Energy Commission and transfer its functions
to a newly created Department of Energy and Conservation;
transfer the functions and divisions of the Department of
Conservation to the new Department of Energy and
Conservation; create an Energy Facilities Siting Board for
siting responsibilities now handled by the Energy
Commission; transfer various oil and gas management
responsibilities from the State Lands Commission to the
existing Division of Oil, Gas, and Geothermal Resources; and
transfer the Division of Recycling to a newly reconstituted
Integrated Waste Management Board that will have a full-time chairman and part-time members.
The time constraints imposed by the reorganization statutes
preclude an exhaustive study of the effects of proposed
changes. However, the Commission's report suggests two
modifications to the plan. First, the Commission
recommends that the State should be required every two
years to adopt an explicit energy policy that is the product of
involvement by the new Department of Energy and
Conservation, the Governor and the Legislature. Second, the
Commission suggests that public representation be added to
the new Energy Facilities Siting Board.
The Commission concludes its study by stating that this
reorganization may not address all of the necessary revisions
to give California the best energy and resources policy in the
future. However, the Commission says, the reorganization
puts into place a structure that provides focus, accountability
and cohesive functioning, and holds out the promise that
energy, conservation and recycling efforts will be enhanced as
the State moves into the new century.
In its second reorganization analysis of 1995, the Commission
recommends the implementation of Governor's
Reorganization plan No. 2 of 1995, a proposal that merges
the State Police with the California Highway Patrol.
The Commission's review indiates that the proposed
reorganization would result in at least two benefits to the
State:
While the Commission's report identifies some minor
concerns related to the reorganization, the Commission finds
that the potential benefits to the State outweigh the minor
issues raised.
For several years, California has borrowed money to stay
afloat -- and then borrowed again when some of those loans
came due. At a personal level, such actions would be viewed
as irresponsibly living beyond one's means and flirting with
financial ruin. When a state allows such practices, the
consequences are no less grave -- and in fact are more so, since
millions of lives may be affected.
In this report, the Commission examines the State's actions
in crafting the 1994-95 budget agreement, an agreement
which is described as an "unconventional two-year plan for
$10 billion in external financing and a trigger mechanism to
slash state spending if revenues do not materialize to repay
the loans." Based on research and public testimony, the
Commission believes that an alarm needs to be sounded
immediately to alert both policy makers and the public that
the State's deteriorating credit ratings, the size of its short-term borrowings, and its reliance upon bank guarantees are
placing serious external restraints on California's financial
condition. The adverse consequences from these restraints
are quite real and are reflected in the State's credit ratings,
which have gone from being top notch to very poor, with
only two other states in the nation with worse ratings. These
ratings not only mean that the State spends millions of
dollars more in higher interest charges to borrow money, but
they are also a dismal signal to businesses, which avoid
investing in states that may need to tax their way out of
financial problems.
In order to bring its spending and cash flow budgets into
balance and to restore its tarnished credit rating, the
Commission recommends that California's policy makers:
craft a budget that is based on reasonable and sustainable
estimates of revenues, federal reimbursements and debt
obligations; focus on a realistic cash flow plan to compliment
the budget plan; cut programs as deeply as necessary to end
the 1995-96 fiscal year in a balanced position; and adopt long-term policies that California's budgets will be balanced in
reality, not through financial maneuvers.
In this comprehensive report, the Commission takes a critical
look at the State's civil service system and the numerous
structural problems plaguing it.
This study concludes that California's civil service system,
which was established to protect the public and state
employees from political corruption, has mutated into a
bureaucracy within a bureaucracy -- one that is rigid,
duplicative and unresponsive. Examples of the problems
abound: Thousands of applicants take exams for civil service
jobs and lucky candidates ultimately are picked by lotteries.
Changing the form that state workers fill out when they are
sick requires reams of paperwork and months of paper
shuffling. Scores of state employees each year appeal written
reprimands through a months-long and court-like process
that involves sworn testimony and formal rulings. And large
departments have "bone yards" where workers who are too
much trouble to fire are assigned meaningless tasks.
A fundamental problem, the Commission finds, is the
collective bargaining system that developed 20 years ago was
overlaid upon the century-old, merit-based civil service
system. The result is a personnel management system that is
at best redundant and often dysfunctional.
To develop a flexible and motivating personnel system, the
Commission offers eight recommendations. The
Commission urges elimination of the State Personnel Board,
which was created to administer the merit-based civil service
system, and consolidation of personnel functions in the
Department of Personnel Administration. The Commission
recommends that internal personnel rules be exempted from
many provisions of the Administrative Procedure Act. The
Commission recommends that individual departments be
given more flexibility over examination, selection and
classification procedures. It recommends that the
management classes be unified and managers better trained.
It recommends that alternative dispute mechanisms be used
to swiftly resolve contested discipline actions. It
recommended that tenure be eliminated and the State
Constitution be amended to eliminate the presumption that
the State's work must be performed by civil servants.
Finally, the Commission urges the Governor to establish
management-labor advisory committees to encourage
cooperative problem-solving.
In its third reorganization plan analysis of 1995, the
Commission offers its support for Governor's
Reorganization Plan No. 3 of 1995, a proposal which seeks to
consolidate the office of the California State Fire Marshal
with the California Department of Forestry and Fire
Protection.
In developing its support recommendation for the plan, the
Commission conducted a public hearing, reviewed materials
supplied by the Administration, solicited the perspective of
all major fire service organizations in the state and received
input from many of those who would be directly affected by
the merger.
While the Commission recognizes that the plan leaves the
complexities of merging the two organizations to be finalized
at a later date, it nevertheless believes that proceeding with
conceptual simplicity will give state officials maximum
opportunities to effectively re-engineer operations without
the hindrance of micro-management. Moreover, a check-and-balance will exist because state policy makers will continue to
have oversight through the budgetary process, and statutory
mandates that affect both the State Fire Marshal and the
Department of Forestry and Fire Protection will continue to
be met.
As the demands on California to provide services increase
and resources remain limited, it is critical that the State move
to equip its agencies and programs with the flexibility to
perform efficiently and effectively. It is no less critical that
policy makers be provided with information that will allow
them to make informed choices among competing interests.
In this report, the Commission concludes that performance-
based budgeting -- while not a panacea -- is a promising tool
for managers and policy makers to help them achieve these
goals. Performance-based budgeting, which links measured
results with allocations of funding, holds departments
accountable for outcomes, prioritizes spending based on a
program's ability to successfully reach goals, and allows
policy makers to understand the array of results that can be
accomplished through different levels of spending. This is in
sharp contrast to the traditional system of budgeting, where
spending growth is based simply on increases in demand for a
particular program.
While California has several of its departments already
participating in a performance-based budgeting pilot project,
the Commission notes that this approach to budgeting has
generated little enthusiasm in the Legislature and in the
Executive Branch, enthusiasm that is critical for the success of
this type of program. To ensure that performance-based
budgeting is given a fair opportunity to be tested on a broad
scale, the Commission recommends that the Governor and
the Legislature make a commitment to provide logistical
support and oversight for the pilot project, to extend the time
line for the pilot project, and to encourage its expansion to
other departments where appropriate.
Whether in good times or in bad times, the one constant in
California is the staggering pace of its population growth.
Individuals from the world over are inspired by the State's
history of economic and natural wealth, and those who are
drawn to the State seek to claim a part of California's
tradition of prosperity -- comfortable homes, rewarding
employment and a safe environment. One of the key factors
in determining the success of these aspirations rests largely on
how Californians, individually and collectively, make
economic use of their lands. And the manner in which
citizens utilize their land is largely dependent on the actions
of the government in regulating land use.
In this report, the Commission looks at the role the State
plays in the process of making land use decisions. In
examining that role, the Commission found that current land
use procedures are costly and time-consuming, are thwarting
innovation in development strategies, are undermining the
State's long-held policies advocating orderly growth, and are
a frequent source of dispute and litigation for the parties
involved in the land use process.
While the report acknowledges that there will always be a
myriad of competing and seemingly irreconcilable interests
involved in the land use debate, the report nonetheless offers
several recommendations to improve the efficiency and
effectiveness of the process. Specifically, the Commission
recommends that the State: establish a single, timely process
for assessing the environmental consequences of proposals;
revise land use statutes in a manner that encourages regional
solutions to growth-related problems; invest in critical
infrastructure and establish a coordinated effort that provides
for growth and protects environmental assets; and revamp
zoning, parking and other ordinances that stifle creative
solutions to intransigent land use problems.
Over the past decade, the Little Hoover Commission has
advocated repeatedly that the State reform the management
of its real property assets. While sincere efforts have been
made to make the current system function better, most of
those attempts have fallen short of significant improvement.
Regardless of whether the source of these failures is
institutional inertia, political controversy or an
organizational structure that provides neither accountability
nor control, the end result is the same -- higher costs to the
State and lost revenues.
In this report, the Commission makes numerous findings
concerning the deficiencies in the State's management of its
real property. To assist the State in overcoming these
shortcomings, the Commission offers three specific
recommendations. First, the State should aggressively pursue
more efficient and market-based management, infusing
competition whenever possible to encourage innovation and
economy. Second, the State should establish a streamlined,
yet rigorous, process for independently analyzing and
winning legislative approval of large state construction
projects. Third, the State should unify its management of
developed property by creating an independent yet
accountable entity that is free to use market mechanisms and
business practices and that is free from day-to-day political
influence.
The report concludes that if these recommendations and
reforms are implemented, the State could expect its real
property assets to be better managed to save money and even
generate revenue. More importantly, the State could expect
its more than 100 different departments to give greater
consideration to the size, shape and location of their facilities
in order to make themselves internally efficient and publicly
accessible.
In this report, the Commission takes a look at a unique
experiment being conducted in California's educational
system -- the use of charter schools. This report, which
followed a six-month study and an on-site inspection of more
than one-quarter of the charter schools in the State, said:
The performance of schools in California and across the
nation is widely recognized as falling short. For the past
couple of decades, multiple efforts at reforming the education
system have been focused on improving the preparation of
students to be productive citizens. Some of these reforms
have been aimed at improving the existing system by making
the components work better. Other reforms have touted the
benefit of eliminating the present system and moving to a
privatized system that relies on market forces to produce
excellence. But a growing movement combines elements of
both: Charter schools embrace private-sector concepts such as
competition and customer-focus while retaining the
accountability and equity that are the foundation of public-
sector activities.
In the three years since California's charter law was enacted,
more than 100 charter schools have been opened. Since then,
however, no definitive academic evaluation has been
performed. With this in mind, the Commission set out to
determine whether this innovative system is actually
delivering the many benefits promised by its supporters.
While the Commission found that charter schools are a
success by many measures, it also found that there are some
shortcomings in the system that need to be addressed if
charter schools are to remain a viable part of the State's
education system. In this report, the Commission offers
numerous recommendations for improving the system,
including: removing the statutory cap on the number of
charter schools allowed to operate; requiring the Legislature
to set specific parameters for the upcoming assessment of the
charter school system; clarifying the charter law to ensure
that charter schools are included in statewide achievement
standards systems; modifying the charter school funding
process; and requiring the Legislature to authorize and fund a
charter school technical assistance/advocacy unit.
Over the last 20 years, state and federal policy makers have
charted a course toward competition among utility and other
essential service providers -- allowing whenever possible for
market forces to replace governmental regulation. In 1996,
California affirmed its leadership in this pursuit with the
adoption of landmark legislation establishing competitive
electricity markets.
With competitive markets as a backdrop, the Commission
embarked on an intensive, year-long study of the State's
regulation of the energy, telecommunications and other
utility markets. In this report, the Commission proposes
sweeping changes to realign government oversight to match
the evolving markets, increasing the chances that California
consumers will benefit from emerging competition.
The Commission presents 14 findings and offers 27 specific
recommendations that are designed to assist the State in
developing its proper role in changing utility markets. The
recommendations establish a long-term goal of a single energy
oversight agency, with those functions consolidated in the
California Energy Commission. The recommendations call
for the Public Utilities Commission to assist in the transition
to competitive utility markets and then focus its attention on
the dynamic telecommunications industry. The Commission
also recommends that the State: move the administration of
energy efficiency and research and development programs to
the Department of Conservation; expand the Attorney
General's consumer protection and antitrust role in the
energy and telecommunications markets; transfer rate-setting
of investor-owned water providers to the State Water
Resources Control Board; and move the safety and licensing
authority over transportation providers to the Department of
Motor Vehicles and the California Highway Patrol.
The Commission also recognizes that developments in the
next few years will shape the State's ultimate role in
competitive markets and determined that the best strategy
would begin with a commitment to frequently reassess the
evolving public interests. The Commission concludes its
report by acknowledging the difficulties, both logistically and
institutionally, in executing the recommended restructuring.
However, the Commission believes that the risks associated
with not reforming the structure are too great to dismiss.
In the next few decades, California's elderly and disabled
population will soar as the Baby Boom generation ages and
medical advances stave off death from disabling injuries and
diseases. Many of these people will need long-term care
services to cope with functional limitations -- and much of
the financial burden will fall on government. California can
expect to see the $5 billion it spends today on long-term care
double in the next 25 years just to provide the current level of
service.
This report, which is the result of a comprehensive 11-month
study, concludes that while the State has taken some
preliminary steps towards restructuring the long-term care
services it provides to consumers, Californians needing long-term care still face a bewildering maze of choices. The
Commission found that the State's oversight structure is too
fragmented to allow effective coordination and integration of
long-term care services, that many of the State's policies favor
expensive institutionalization at the expense of home-based
services preferred by consumers, and that consumers
continue to take issue with the quality of care in skilled
nursing facilities despite the presence of new federal
regulations.
To address these issues, the report offers 24 specific
recommendations, including consolidating long-term care
into a single state agency, increasing resources for programs
that delay institutionalization, and strengthening the
consumer-complaint systems now in place for skilled nursing
facilities and residential care facilities.