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Video: Mark Baldassare & John Myers Discuss the PPIC Survey

For the first time since the start of the PPIC Statewide Survey, Californians ranked the drought as the most important issue facing the state. And that was not the only “first” for this survey. PPIC presented it in Sacramento Thursday in a new format. Mark Baldassare—PPIC’s president, CEO, and survey director—was interviewed onstage about the findings by John Myers, senior editor of KQED’s California politics and government desk.

In addition to the drought, Baldassare and Myers covered a long list of topics that were raised in the survey, including taxes, vaccinations, marijuana, University of California tuition, distrust in government, and voter turnout. Myers also raised a theme he explored in his report on the survey for KQED: Despite an improving economy and Californians’ support for the governor’s ideas about the budget, their outlook on the direction of the state remains gloomy.

A California Earned Income Tax Credit

Governor Brown has proposed a state Earned Income Tax Credit (EITC) for low-income families, similar to the federal tax credit. This adds to the mix of strategies policymakers are considering to address the state’s poverty rate, which is the highest in the nation when cost of living is accounted for. The governor’s proposal is aimed at workers who have earnings well below poverty. For example, a parent of two children would be eligible if she filed a tax return and earned no more than $13,870—equivalent to the annual pay for about 30 hours a week at a minimum-wage job. Because it depends on earnings and the number of dependents, the credit would vary widely. The maximum credit of $3,121 would go to families with three or more children and earnings below $7,000 per year, but the governor’s proposal estimates the average credit to be $460. About a quarter of the 3.1 million California filers who can claim the federal EITC would also be eligible for the proposed state EITC.

While a state EITC would increase the cash resources of millions of Californians, the resources families need to make ends meet are substantial. A family of four needs about $29,000 a year to stay above poverty, according to our California Poverty Measure (CPM), a comprehensive yardstick of poverty that accounts for regional variation in the cost of living and the impact of social programs.

How would the proposed EITC affect Californians? Using CPM research, we estimate that the proposed credit would:

Move 70,000 Californians, including 31,000 children, above the CPM poverty line.
Help about 1.28 million Californians experience less severe poverty.
Benefit 1.83 million Californians who already live above the CPM poverty line. (Many of those with low earnings are nonetheless above the poverty line because they receive benefits such as food stamps and/or live and share resources with other family members.)

The governor’s state EITC proposal focuses on augmenting low wages—an acknowledgment of the importance of earnings even for families in poverty. Research has shown that the federal EITC encourages work, and a state credit promises to do the same.

Why Farming Needs the New Groundwater Law

A groundwater deficit is growing in key agricultural areas of California. The double-whammy of the extended drought and longer-term reductions in surface water deliveries for environmental needs has pushed many farmers into using ever-more groundwater, at rates that can’t be sustained. In average years, about a third of water used by California’s farms is groundwater—and much more during droughts like this one. In some basins (especially those in major farming regions in the southern San Joaquin Valley and the Central Coast), groundwater withdrawals have long exceeded the pace of replenishment, thus shrinking our most reliable supply for times of drought.

The groundwater law enacted last fall gives local agencies the tools and authority they need to develop and implement sustainable groundwater management plans. Once agencies put these plans in place, they will have 20 years to achieve sustainability—until 2040 for the most stressed groundwater basins. The state can step in if these agencies fail to act.

Despite the seemingly generous timeline for compliance, the law’s goals will be challenging to meet. By June 2017, groundwater users in each basin need to designate a local groundwater sustainability agency that will be responsible for local oversight. And by January 2020, these agencies need to start implementing their sustainability plans. In most places, getting this preparatory work done will require significant additional technical analysis to understand how the basins’ supply and demand work. It will also require coming to agreement on how to collectively manage what has largely been considered an individual resource, with each user able to pump as much as he or she can put to beneficial use.

The drought has made it clear that the status quo is unsustainable. Declines in groundwater levels are resulting in higher energy costs to pump water from deeper depths, sinking lands, and wells going dry in some places.

The groundwater law was not widely embraced by the farm community; indeed, not a single legislator from the San Joaquin Valley voted in favor of it. Yet California farming needs to strengthen groundwater management to support the growing investments in highly valuable fruit and nut orchards and vineyards, which must be watered each year. It’s essential to manage groundwater so that it’s available during droughts, and the new law provides a pathway to do this.

Bringing basins into balance will require creative approaches to basin replenishment. Many irrigation districts are already taking critical steps in this direction. For example, agencies on the east side of the San Joaquin Valley manage surface and groundwater resources jointly to encourage groundwater basin replenishment in wet years. Some districts in the San Joaquin Valley and in the Central Coast have begun recharging basins with recycled wastewater from neighboring urban areas. Another promising approach is allowing floodwaters to spread on fields normally watered by drip irrigation.

A number of technical challenges will need to be addressed. For example, not every aquifer can be recharged, and in many areas, recharge is slow. Much of California’s water conveyance infrastructure was designed for use with surface reservoirs as the main water source, not groundwater. And over time, widespread conversions from flood to drip irrigation methods have allowed farmers to stretch limited surface water supplies, but this is also reducing opportunities for groundwater recharge. New institutional and financial arrangements will be needed to optimize groundwater storage.

Like nearly everything to do with the state’s water management, the solutions to groundwater recharge will require a deft blend of management, infrastructure and policy changes. The new law appropriately puts locals in the driver’s seat for managing a local resource. But the state must play a central role in supporting this transition, with financial and technical support. Allocating funds from Proposition 1, the water bond approved by California voters last November, will be a good start.

Learn more:
Read our policy brief about the challenges of water storage
Read our policy brief on water for farms

Health Insurance for the Undocumented

California continues to have at least 3 million uninsured residents, even after the coverage gains from the Affordable Care Act (ACA). Estimates suggest that between 1 million and 1.5 million of them are undocumented immigrants who are not eligible for federally subsidized coverage.

But there may be two opportunities for California’s undocumented population to gain access to coverage – depending on the legislature, governor, and courts. We estimate that as many as half of the state’s undocumented immigrants have incomes that are low enough to qualify for Medi-Cal coverage—with some variation across regions. To qualify for Medi-Cal, household income must be below 138% of the federal poverty level (about $16,000 for a single person or about $28,000 for a family of 3). Those with higher incomes may gain access to insurance through a state exchange.

First, the governor’s recently released proposal for the state budget includes funding to provide full Medi-Cal coverage to low-income undocumented immigrants who register for the federal Deferred Action for Parental Accountability (DAPA) program, which offers protected status to undocumented immigrants who have resided continuously in the U.S. for the past five years and are parents of children who are either U.S. citizens or legal permanent residents. This proposal is dependent on DAPA surviving current legal challenges.

Second, the Senate Appropriations Committee has approved state legislation that proposes to expand insurance coverage options to undocumented immigrants not eligible for DAPA. The bill (SB 4) would extend Medi-Cal to low-income undocumented immigrants under age 19. The number of adults who are eligible would depend on the state budget. The bill also includes provisions to allow those with higher incomes to purchase coverage through a state-based insurance exchange.

How many undocumented immigrants might be affected by these actions? Estimating the number is not straightforward. To help in the policy and planning process, we have recently updated our county estimates of undocumented immigrants for 2013 using zip code level tax records (filed with Individual Taxpayer Identification Numbers, or ITINs) and the analytic methods we have used in past work. We extend our earlier analysis to estimate how many undocumented immigrants might be eligible for insurance coverage based on family income for the pricing regions used by Covered California. To do this, we rely on information available from tax filings—we estimate income levels from adjusted gross income groupings and family size from tax filing status and the use of the federal child tax credit. PPIC expects to publish more results based on these analyses in the near future.

Statewide, our preliminary estimates indicate that just over half of undocumented immigrants (51%) are likely to be under the 138% poverty threshold used for Medi-Cal income eligibility. This share varies widely across regions. Nearly 60% in Los Angeles County and the Central Valley have incomes below the 138% threshold. Most Bay Area counties have lower shares below this threshold—from 36% in Santa Clara County to 44% in Contra Costa County. These findings are generally consistent with other work that uses different methods to profile California’s undocumented immigrants (MPI (2014), Marcelli and Pastor (2014), Warren (2015)).

We also estimate shares, by region, of undocumented immigrants that fall between 138% and 400% of the federal poverty level, the income range used by Covered California for its current enrollees to receive premium subsidies. Across most regions, between 40% and 60% of the undocumented population falls within this range, potentially making them eligible to purchase coverage through a state insurance marketplace.

Finally, about 85,000 undocumented have incomes above 400% of the federal poverty level – with most residing either in Bay Area counties or the coastal Southern California counties of Orange and San Diego.

Regional differences in health plans, provider capacity, and insurance costs make information on the size and distribution of the state’s undocumented population by income level crucial to planning effectively for coverage expansions. We expect to contribute regularly to the discussion as these planning efforts unfold.

Table source: Author’s analysis of tax data.
Table note: Counts are rounded to the nearest 500 and may not add to the statewide total as a result. Regions correspond to the insurance pricing regions used by Covered California, with one exception. Region 15 in the table includes all of Los Angeles County.

Are Enough Californians Attending UC?

At the recent UC Board of Regents meeting, the regents approved a plan by Governor Brown and UC President Janet Napolitano—among other things, it freezes in-state tuition, reforms the pension system, and increases transfer student enrollment in exchange for extra funding from the state. However, it does not fund any additional California resident enrollment, suggesting that without legislative action for more funding, campuses may not increase enrollment for in-state students.

Enrollment growth for California residents at UC has slowed since the recession, while at the same time the proportion of out-of-state students has grown to an all-time high. UC officials acknowledge that out-of-state enrollment has grown as a result of statewide budget cuts. They contend that the extra tuition paid by out-of-state students enables UC to admit more California residents than it could otherwise. And even with the fast growth of out-of-state students in the UC system, California residents still make up over 80% of UC freshmen. But are enough Californians attending the UCs?

One way to answer that question is to see if UC is meeting the requirements of California’s Master Plan for Higher Education. The plan indicates that the UCs should choose from among the top 12.5% of students in the state. If we examine the proportion of California high school graduates admitted to the UC system, we find that UC admits more than 12.5% of California high school graduates. This percentage declined between 2007 and 2010 during the recession (also during the increase in out-of-state students), but it never dipped below 13%.

Let’s also consider the number of students receiving a UC education. Only 7.4 % of California’s high school graduates enroll at a UC as freshmen—far short of the 13.7 % admitted. Some students choose to attend other competitive schools, others decline to enroll at UC after being rejected from their first-choice campus, and still others may prefer a cheaper or closer-to-home option such as starting at a community college or attending a CSU. Lastly, let’s look at the number of students who are ready and eligible for UC. As the percentage of high school graduates admitted to a UC has declined, the percentage of public high school students who complete the UC eligibility requirements has grown. This comes at a time when the state needs to be producing more college graduates to meet the demands of the state’s future economy.

So, are there enough Californians in the UC system? Even with the influx of out-of-state students, the UC system is currently meeting the expectations of the Master Plan for admission. However, the combination of a growing number of UC-ready students and a low yield rate for admits suggests that a shrinking share of students who could benefit from a UC education are getting a UC education—especially if California resident enrollment does not continue to grow.

PPIC and others have suggested that the state review and revise the Master Plan. In the context of today’s debates over enrollment at the state’s universities and colleges, California’s leaders should update the goals of California’s higher education systems and work out how to meet and appropriately fund them.

Notes: (TOP CHART) University of California Office of the President. (BOTTOM FIGURE): Author’s calculations from data from the California Department of Education and University of California Office of the President.

Drought: 10 Ways the Federal Government Can Help

For more than a year, Congress has been discussing actions that the federal government can take to help with California’s drought emergency. Federal agencies, using their existing authorities, have been providing modest amounts of help, including funding water conservation efforts, livestock disaster assistance, and supporting rural communities facing job losses from crop fallowing and drinking-water shortages. To date, however, no substantive federal legislation has been passed that addresses the drought.

Granted, the federal government cannot make it rain. But there are other things it can do to help California get through this drought and better prepare for future droughts. Along with a group of colleagues in our research network, we have compiled a list of 10 ways the feds can help. Some of these can be accomplished under existing executive authority, and some require new legislation. Here is the short list; more details can be found on the UC Davis Center for Watershed Sciences website.

Near-term opportunities for federal drought support include:

Amend the Safe Drinking Water Act to allow its Revolving Funds to be used for small, local water systems that serve fewer than 15 connections (many of which are facing dry wells with the drought).
Allow Central Valley Project contractors to carry over water in federal reservoirs as a hedge against future drought conditions, and to discourage potentially wasteful “use it or lose it” behavior, which can result in lower reservoir levels. During droughts, the U.S. Bureau of Reclamation should allow carry-over storage. And require the Army Corps of Engineers to use real-time forecasts of storms to reduce the risks of emptying reservoirs during the winter.
Make it easier to trade water during drought emergencies.
Facilitate distribution of federal cost-shares for local development of non-traditional sources of water and other drought-resiliency projects, by allowing agency federal department heads to give funds directly to states.
Collaborate with California to develop a drought biodiversity management plan modeled after successful approaches used by Australia during its Millennium Drought.
Expand the Central Valley Project’s ecosystem restoration fund by increasing per acre-foot fees on project water during drought and establishing a surcharge on water trades that use federal infrastructure.
Speed the listing of species threatened with extinction during drought emergencies and implement recovery actions.
Increase federal agency support for improved water information systems, and increase technical support, notably from the US Geological Survey and National Weather Service.
Longer term: Create an Independent System Operator (ISO)—similar to the ISO that currently manages California’s electrical grid—that would merge state and federal water projects into a single, public utility.
Longer term: Through legislation similar to the Coastal Zone Management Act, promote coordinated and integrated water management that addresses related issues of supply, quality, drought, flood and ecosystem challenges at a regional scale.

These 10 federal actions would help California better manage its current drought and help us prepare for inevitable future droughts.

A Dry Run for a Dry Future

During times of extreme water scarcity it is hard to find the silver lining. Yet the severity of this drought, including its record warm temperatures, is benefiting us in one way: it is a window into what droughts may look like in the future and gives us something to plan for—a target, if you will.

The state’s system of water rights laws and water supply infrastructure is built around managing periodic droughts. The design of this system reflects the climate conditions of the late 19th and early 20th centuries, as well as a much smaller population than we have today. Climate models and current observations indicate that we are facing an increasingly different future, one where warm droughts like our current one are no longer the rare exception.

It is crucial that we study our dry years closely. Like past cases, this drought has seen strong rainfall deficits. For four consecutive years (so far), the state has been dry to critically dry, with the driest calendar year on record in 2013. But recent studies have shown that while it has been unusually dry, the precipitation numbers of this drought fall within the realm of natural variability.

What is most unusual about this drought is its exceptional warmth. Statewide, three of the past four winters have been substantially warmer than the long-term average. The past two winters set records that were 4-5 degrees F above average. With this exceptional warmth, California experienced record low snowpack, since much precipitation fell as rain rather than snow and the lean snowpack melted rapidly.

The causes of this drought are being studied and debated by climatologists and oceanographers. Emerging research suggests that this drought may be linked, partially, to very warm waters in the far western tropical Pacific. Heat and moisture pumped into the atmosphere from these waters influence winds and storm tracks in the North Pacific, altering climate patterns in our region.

These teleconnections appear to have created the Ridiculously Resilient Ridge, an anomalous high pressure feature that camped over the waters off the West Coast and pushed North Pacific storms far to the north. This ridge, with its associated weak winds and unusual weather across the eastern Pacific, created The Blob: an area of very warm water stretching from the Bering Sea to Baja California. This blob has disrupted our marine ecosystems, harming fish, sea birds and marine mammals.

Onshore from all of this activity, winter storms that made it off the Pacific Ocean and into California were much fewer than normal. And those that did make it tended to be warm, reflecting conditions in the eastern Pacific, leaving us with rain instead of snow.

To date, there has been no definitive link that implicates this drought as a symptom of climate change. However, the consecutive years of dryness coupled with high temperatures strongly resemble the kind of droughts that are projected under the warmer climate during the latter half of this century. While the origins of future droughts may not be precisely the same, the on-the-ground results are likely to be.

Difficult as it is to endure, this drought provides important lessons. It is a useful and instructive test of how we manage water now—and how we will be forced to manage water in the future. As it unfolds, it tests the resiliency of California’s water infrastructure—made up of dams, aqueducts, and groundwater basins—along with our management systems and institutions. The drought is providing a preview of the warmer conditions during dry spells that will inevitably occur in future decades. As such, it is unveiling future challenges in managing the environment, including conserving our declining native biodiversity.

In short, this drought has revealed what a warmer climate future looks like. We should learn from it and plan accordingly.

Video: Realignment and Crime

Since 2011, when California shifted responsibility for tens of thousands of lower-level felons from the state to the local level, there is evidence that property crime remains higher than it would have been without the realignment policy. But there has been no observable impact on violent crime.

The findings of the report, Realignment, Incarceration and Crime Trends in California, were presented in Sacramento last week by the authors, Magnus Lofstrom, PPIC senior research fellow, and Steve Raphael, PPIC adjunct fellow. Among the issues that emerged in discussion with the audience, were the causes of the property crime increase and additional research that indicates higher staffing for police departments is an effective deterrent for crime.

“Water 101” Podcast Covers Challenges, Solutions

What do Californians need to know about our water system to be able to grasp the big management challenges we face—both in times of drought and for the longer term? Jeffrey Mount reveals all in a conversation with Joint Venture Silicon Valley CEO Russell Hancock. The wide-ranging conversation, now a free podcast, is a 45-minute entertaining crash course in the workings of watersheds, state water policy, and why we need an “all of the above” strategy to solving our water crisis.

The interview walks us through a number of key topics, but goes in-depth on one: groundwater.

“This will be the year of groundwater,” Mount said. “We’ve been treating groundwater like a non-renewable resource, like oil . . . Now as a state we’re trying to grapple with the fact that we’ve overtaxed that resource.”

By podcast’s end, you’ll be able to talk intelligently about the pores between soils (and why we need them), the costs of desalination plants, the potential for information technology solutions to help us manage our water better, and the long-distance origins of our current drought.

When asked what lasting change he would like to see as a response to the current drought, Mount said: “Droughts are pivot points: they lead to changes in technology, and they lead to changes in practice. We saw that in Australia; after the drought was over, people’s behavior changed. That is going to happen in this drought. People are using less water on a per-capita basis, and that will be the lasting part of the drought.”

We hope you’ll listen in.

Governor’s May Revision Continues Cautious Approach

Governor Brown released his revised 2015–16 budget last week. It includes $8 billion more in new spending than his January proposal but continues his cautious approach to taking on new spending commitments. The new funding proposals are the result of setting modest expectations for future revenue growth. Because actual growth from the improving state economy has far exceeded forecasts, the administration has significant additional funds available.

Only about two-thirds of the $8 billion increase comes from the General Fund. The other third stems from increased special funds and revenues from bonds.

General Fund. General Fund revenues are estimated to increase by about $6.3 billion—$4 billion to reflect the major influx of tax receipts collected since January 2015 and $2.3 billion next year. Almost all of that—$5.8 billion—must be spent on K–12 education and community colleges. This leaves little room for spending in other areas.
Cap-and-Trade Funds. The May Revision proposes to more than double spending of cap-and-trade revenues, going from $1 billion in the January budget to $2.2 billion today. Under the state’s greenhouse gas reduction program, businesses pay fees for the right to emit carbon into the atmosphere. In 2015, producers of transportation fuels joined the program, significantly boosting revenues. As a consequence, revenues are expected to jump $1.2 billion above the level proposed in January. The additional funds would be spent for transportation, housing, energy, and natural resources programs—consistent with the long-term expenditure plan approved by the legislature in 2014.
Proposition 1 Bond Funds. The May Revision also significantly increases spending for water quality and conservation projects. Proposition 1, approved by voters in 2014, includes $7.5 billion in bond funds for a variety of water quality, flood protection, and storage programs. The budget proposes to dedicate $1.8 billion in bond funds over the next three years. This increase builds on $1.9 billion in spending (from a variety of funding sources) approved by the legislature in the spring of 2015.

The $8 billion growth in revenues and expenditures represents a 4.8% increase from January, and an 8.1% increase from the 2014–15 budget passed by the legislature last June. So how can this be considered cautious? The answer is that the administration uses modest assumptions about future growth in revenues—until there is solid evidence of additional available resources.

The pattern of projected revenues for 2014–15 reveals how this strategy works. The following chart illustrates how recent budget projections have grown as revenues have increased.

In January 2014, the administration estimated revenues of $106 billion—up 6% from 2013–14 anticipated revenues. The 2014 May Revision boosted that figure to $107 billion. Actual revenue collection was up significantly in the fall of 2014, which led to a January 2015 estimate increase to $109.7 billion. From January to April 2015, revenues exceeded expectations by $3.2 billion, bringing the most recent estimate of General Fund revenues to $112.9 billion. This is truly exceptional revenue growth. Compared to 6% growth projected in January 2014, the May Revision figure for 2014–15 translates into General Fund revenue gains of 12.8%.

Despite the projected gains for this year, the current May Revision continues to take a cautious approach to revenue estimates for the coming year. The administration’s initial revenue estimates for 2015–16 are quite modest—the May Revision anticipates 4.1% growth in General Fund revenues. This low growth estimate limits the amount of new spending that can be added to the base budget. At the same time, the large increase in current-year revenues gives the governor flexibility to boost support for education and other critical areas. In this way, Governor Brown can significantly increase spending today while maintaining a cautious approach to the future.

Chart Source: California Department of Finance, 2015-16 May Revision.