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2. UNDERSTANDING THE STATE BUDGET How It All Works

3. Really…It won’t just go away One approach….

4. And we don’t have one of these….

5. Objectives Understand Why You Should Care Understand Some of the Major Budget Barriers Understand Major State Revenues and Expenditures Understand Who are the Players Understand the Budget Process Timelines

6. You Should Care Deeply Because: The State Budget = $$$$$ to your local program Your Admin budget Your EDP M&O budget New State Initiatives are unveiled. New Federal State Requirements may be unveiled. Somebody has to explain it to your Board of Supervisors.

7. It’s important to be informed and say the right thing

8. Major Budget Barriers “Ballot Box Budgeting” –Proposition 13 Set maximum PT rate at 1 percent Gave Legislature responsibility for allocating property tax Requires 2/3’s vote for new local taxes and Legislatively approved taxes –Proposition 98 Guaranteed Funding for K-14 Education –Approximately 40 percent of State Budget –A share of any new state revenues automatically goes to education –Proposition 1A Reduces State Authority to change –Property tax allocation –Local Sales tax rate allocation –VLF rate reductions

9. Where Does the Money Go? FY 2010-11 –K-12 Education43.4% –Health and Social Services25.3% –Higher Education14.3% –Corrections 9.6% –Other 7.4% Source: LAO

10. Where Does the Money Come From? Personal Income Tax52.5% Sales Tax (State Share)28.9% Corporate Income Tax 11.3% Other 7.3% Source: LAO

11. Who are the Players? The Governor’s Office The Department of Finance (DOF) The State Department of Child Support Services (DCSS) CSDA Local Child Support Agencies (LCSA) The Legislature The Legislative Analyst’s Office (LAO) Advocates

12. The Governor’s Office The Governor has the Constitutional responsibility to submit a Proposed State Budget by January 10 th of each year. Using the Governor’s broad executive authority, the Governor provides direction to the myriad Agencies, Departments, Boards and Commissions under his discretion. The Governor is a member of the so called Big 5. The Governor is expected to sign the budget by June 30th.

13. Typical Big 5 Meeting

14. The Department of Finance (DOF) The Director of Finance, as the chief financial officer of the Governor, directs the efforts for preparation of the Governor’s Budget. Under the direction of the Governor, the Director of Finance issues instructions and guidelines for budget preparation to agencies and departments. The effort typically gets underway even before the Legislature has passed the budget for the current fiscal year. A DOF representative has a permanent “seat” at the budget hearing table.

15. DOF continued… Generally, if you can’t get your proposal “blessed” by DOF it is DOA. Every state department has a DOF budget analyst who is a good source of information. Be nice to the DOF.

16. Be Nice to DOF

17. The Legislature Each of the 40 California State Senators will have – or try to have– a say in the budget. Same goes for the 80 members of the State Assembly. Each chamber has a Budget Committee and subcommittees (We will get to this later). Big 4

18. Legislature Continued… Big 4 cont... –Senate Pro Tempore –Assembly Speaker –Senate Minority Leader –Assembly Minority Leader –Plus Governor = Big 5 –Budget Committee Consultants Budget Subcommittee Consultants Agenda/Analysis

19. No comment

20. Legislature Continued… A consultant’s analysis is extremely influential towards the success or failure of any budget recommendation. –There are both majority party and minority party consultants. –Be nice to the consultants.

21. Be Nice to the Legislative Consultant

22. Legislative Analyst’s Office (LA0) The Legislative Analyst's Office has been providing fiscal and policy advice to the Legislature for more than 65 years. It is known for its fiscal and programmatic expertise and nonpartisan analyses of the state budget. The office serves as the "eyes and ears" for the Legislature to ensure that the executive branch is implementing legislative policy in a cost efficient and effective manner.

23. LAO Continued… The LAO is overseen by the Joint Legislative Budget Committee (JLBC), a 16-member bipartisan committee. The office currently has a staff of 43 analysts and approximately 13 support staff. The analytical staff is divided into ten subject areas: Criminal Justice, State and Local Finance, K-12 Education, Higher Education, Health, Local Government, Resources and Environmental Protection, Social Services, State Administration, and Transportation, Business, and Housing.Criminal JusticeState and Local Finance K-12 EducationHigher EducationHealthLocal GovernmentResources and Environmental ProtectionSocial ServicesState AdministrationTransportation, Business, and Housing

24. LAO Continued… The LAO has a permanent “seat” at the budget table. The LAO annually publishes its Analysis of the State Budget. The opinion of the LAO is extremely important to Legislature and the success or otherwise demise of any given item in the budget. The LAO will bring their own ideas and opinions to the table. Be nice to the LAO

26. State Department of Child Support Services (DCSS) Under the Leadership of the State Director –Under the umbrella of the Health and Human Services Agency (HHSA) and the Governor’s Office –DCSS internally develops its budget and any new budget proposals or initiatives. DCSS’ proposed budget is evaluated and approved by HHSA, DOF and the Governor’s Office. –Generally the Director and/or a senior DCSS executive will present the Department’s budget to the Legislature.

27. Child Support Directors Association (CSDA) Is the professional organization representing local child support agencies. Brings together the concerns and issues of LCSAs to present to DCSS – Board of Directors – CSDA Finance Committee – CSDA Policy and Regulations Committee – Conference Calls with DCSS Exec Team Prohibited from lobbying based on DCSS interpretation of federal law.

28. Local Child Support Agencies (LCSAs) Each LCSA will be impacted by the budget process. LCSAs work through CSDA to articulate budget related concerns to DCSS. An LCSA through its own county lobbying apparatus, may take a county only position on the budget or a budget item.

29. The Budget Process  The Ideal: –Governor Submits Proposed Budget to the Legislature by January 10 th. –Identical Budget Bills Introduced in the Senate and Assembly –Legislative Analyst Review – Feb., March –Legislative Budget Committee Hearings – April and May

30. Budget Process Continued… Legislative Conference Committee – May and June Leadership Meetings – ongoing Governor’s Signature – June 30 th Good to Go Summer Vacation NOT!

32. The Real Budget Process January 10 th (any year) – DMOGWHTD –Complete shock –Everybody unequivocally believes it is the absolute end of the civilized world as we have come to know it! –Media has field day with outlandish quotes and reaction. February – A month of relative peace and tranquility –LAO writing up its Analysis of the State Budget –Committee Consultants gathering information

33. The Real Budget Process continued… March – We are all starting to get a little uneasy. –LAO releases Analysis of State Budget –Senate and Assembly Budget Committees begin to meet –Indignation abounds about how we have gotten ourselves into this position (again!) –Begin to see how far apart the parties are towards reaching a compromise

34. March…Getting Uneasy

35. The Real Budget Process Continued… April – Gosh Darn it’s Time to Get Serious Month –Senate and Assembly Budget Subcommittees begin to meet. –Budget subcommittee consultants begin their analysis and recommendations on Governor’s budget proposals. –Budget Subcommittees hold hearings For Child Support Item 5175

36. The Real Budget Process Continued… April Continued… –Child Support issues are the jurisdiction of Senate Budget Subcommittee #3 for Health and Human Services. –Child Support issues are the jurisdiction of Assembly Budget Subcommittee #1 for Health and Human Services. –During Budget Committee and Subcommittee hearings, DOF and LAO have a permanent seat at the budget table. Let me explain. –Budget Committees work through early May.

37. May…”Houston, we have a problem”

38. The Real Budget Process Continued… May – “Houston we have a problem” – DOF issues May Revise Revises DOF revenue and expenditure estimates Generally becomes the final marker for the budget deficit the state must constitutionally address Outlines any additional program reductions or initiatives – Senate and Assembly Budget Subcommittees conclude – Full Senate and Assembly Budget Committees accept subcommittee reports and approve respective budgets for inclusion in respective chamber budget bills – Senate and Assembly pass their respective version of the budget

39. The Real Budget Process Continued… June – We’re so close, “Lets get er done” –Senate and Assembly select members for the Budget Conference Committee. Conference committee resolves areas of disagreement between the Assembly and Senate version of the budget Big 5 typically meets to iron out larger issues key to the getting a budget deal Senate and Assembly take up unified budget bill. Ideal world – Budget approved –Budget sent to Governor –Governor signs with his “blue pencil” changes –Summer vacation begins

40. Summer in Sacramento

41. The Real Budget Process Continued… July, August and September – The 100 degree rule –Budget is not resolved –Local government’s anxious for a decision so they can conclude their budget –Local government’s must adjust to new funding allocations or new unfunded mandates or local requirements.

42. How the Budget Finally Gets Done

43. The Real Budget Process Continued… Time to Go Home –Arms are twisted and broken –Promises are made –Favors exchanged –A couple of Republicans from the Assembly and Senate break ranks –2/3rds majority finally reached in both houses Now Majority Vote – Passage of Prop. 25 Time to Get Ready for Next Year

44. And Then There’s the 2011-12 State Budget Jerry Brown elected Governor Proposition 25 – Majority Vote Budget Introduces bold budget plan to address the structural shortfall Dependant on deep budget cuts, extension of taxes and radical Program Realignment Governor walks over to CSAC and opens unprecedented dialogue with county government

45. Just One Minor Problem… To keep the Governor’s promise to take any new taxes directly to the people, he needs two Republican votes from the Senate and the Assembly to qualify the measure to extend taxes and realign programs Republicans say “No thank you”

46. How Will It End? Like this?

47. Or Like This?

48. My Favorite

49. Or…

50. And Here’s What Happened Democrats passed Budget with No Republican votes Governor Vetoed Budget Governor offered his own Budget plan –Democrats passed the Governor’s plan –No Republican votes

51. And Here is What they Did Cut Expenditures by approximately $11 Billion Scored Additional Revenues of approximately $13.2 Billion Borrowed and Transferred approximately $2.9 Billion Adopted “Triggers” in the event Revenues fall short of Forecasts –Tier 1 Trigger -- $1 Billion below Budget Forecast $600 million in cuts to specified programs Tier 2 Trigger -- $2 Billion below Budget Forecast –Reduce School Year by Seven Days

52. And Here’s How it Ended Up Optimistic Revenue Projections Did Not Materialize – Oh but what a big surprise Lawsuits against key elements of the Budget Compromise Appears at least Tier 1automatic budget cuts will be enacted. Federal Budget Deficit Super Committee is a Super Dud. May negatively impact Child Support Program.

53. And then we get to 2012-13 Budget Deficit of $9 Billion Democrats Reject Governor’s Proposed Cuts Governor Proposes Tax Initiative for November Election Year Gridlock LAO Overview

54. A Word about Program 5175 Program has largely been protected from cuts experienced by most other Health and Social Services programs. Program received $18.7 million in new funding last year that will continue on to next year. Need to keep on message, “Child Support is a revenue generating cost avoiding program. It is not only a sound investment for the State, but also an excellent investment that protects many of California’s most economically fragile children and families from poverty.”

55. A Word About Realignment Phase I Realignment Already Implemented Phase II Sounds like it is Off the Table for at least another year. Let’s Talk Realignment for a couple of Minutes.

56. Questions ???????

57. Contact Information David Oppenheim Executive Director, CSDA E-mail doppenheim@csdaca.orgdoppenheim@csdaca.org Phone (916) 446-6700

58. And this is why our work is important