GOV’S BUDGET: MAJOR INITIATIVE HIGHLIGHTS

From the budget, here are the major initiatives of note:

Over the past four years, the state has overhauled virtually every area of government.

Many of the changes were driven by the need to balance the budget, while others were done to improve services to the public. The changes focus on providing core public services in the most efficient manner possible. The difficult and time‑consuming task of making these initiatives successful remains a focus of the Administration.

Local Control Funding Formula—The 2013 Budget overhauled the state’s K‑12 school financing system with the Local Control Funding Formula that targets the most new dollars to those districts serving English learners, students from low‑income families, and youth in foster care— while giving all districts dramatically more flexibility to achieve their educational goals. The State Board of Education adopted significantly modified accountability procedures at its November 2014 meeting and will continue to review and revise spending regulations as necessary to improve student success.

Public Safety Realignment—Due to overcrowding, rising costs, and a revolving door of offenders in the state’s prisons, 2011 realignment shifted more responsibility for lower‑level offenders to counties with an emphasis on improved rehabilitation and reduced recidivism. With upcoming benchmarks to meet the Three Judge Panel’s overcrowding order and the implementation of Proposition 47 (passed at the November election), the state’s correctional system will continue to undergo major changes in the next year.

Health Care Reform—Due principally to the implementation of federal healthcare reform, Medi‑Cal caseload has increased from 7.9 million in 2012‑13 to an estimated 12.2 million this coming year. The program now covers 32 percent of the state’s population. This tremendous expansion of health care coverage for low‑income Californians continues to be an administrative and financial challenge. The Budget is covering billions of additional dollars of expenses while computer systems must continue to be upgraded to handle the workload. The state has also greatly expanded its reliance on managed care health plans, including the Coordinated Care Initiative.

Climate Change—The Budget proposes $1 billion in Cap and Trade expenditures for the state’s continuing investments in low carbon transportation, sustainable communities, energy efficiency, urban forests and high‑speed rail. The successful implementation of these projects and continued and even steeper reductions in carbon pollutants are necessary to address the ongoing threat posed by climate change.

Water Action Plan—The Water Action Plan is the Administration’s five‑year roadmap towards sustainable water management. The Budget includes the first $532 million in expenditures from the Proposition 1 water bond to continue the plan’s implementation.

Redevelopment Dissolution—By the end of the budget year, the elimination of redevelopment agencies will have returned more than $4 billion to cities, counties, and special districts to fund police, fire, and other critical public services. An additional $5 billion will have been returned to K‑14 schools. Administering the orderly dissolution of almost 400 redevelopment agencies has been complex and time consuming. Oversight of the dissolution process has progressed to the point where the Budget proposes legislation to streamline the state review process to continue the wind‑down activities.

Pension Reform—Over the past several years, the Administration, Legislature, and public employees have taken significant steps to reform public pension systems—protecting the retirement security of government workers while controlling their costs. In 2012, pension reform increased cost sharing for employees, pushed back retirement ages, and restructured pension formulas. In 2014, the Governor signed a new funding plan to close a $74 billion shortfall for teacher pensions over the next three decades. The Budget includes $1.4 billion ($371 million

General Fund) to implement the second year of the teacher pension funding plan.

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