Category: Fiscal & Governance Reform

Video: PPIC’s Annual Survey on the Environment

As California pursues its goals to reduce greenhouse gas emissions—and considers still more ambitious ones—PPIC’s annual survey on environmental issues asked the state’s residents their views on climate change and energy. At a recent event in the capital, PPIC researcher Lunna Lopes provided the survey findings. Among the key points:

  • Californians see global warming as a serious threat—and most do not think action to reduce global warming will lead to fewer jobs.
  • There is strong support for the greenhouse gas emission reduction requirements in AB 32 and SB 32.
  • Californians favor the energy goals in SB 350, and they also favor state support for solar power and electric vehicles.
  • Many say water is the state’s top environmental issue—but most do not know the reduction targets of their local water district.

California Streams Going to Pot from Marijuana Boom

California has seen a recent boom in marijuana farms, mostly on private lands but also illegal grows on public lands such as national forests. Hard data are hard to come by for this crop, which is mostly grown in the shadows. But California Department of Fish and Wildlife officials estimate that production on public lands has increased by 55 to 100 percent in ecologically fragile north coast watersheds over the past five years alone. This surge is having a decidedly unhealthy effect on some of California’s rivers and streams. The situation is heating up as many of the state’s waterways are at all-time lows and some at-risk fisheries nearing collapse.

A study of four northwestern streams by the California Department of Fish and Wildlife (CDFW) found that marijuana plants consumed 20-30% of streamflow during the dry summer low-flow season—a crucial period for salmon and other species – as well as marijuana cultivation. Illegal marijuana growing also can bring a host of other environmental problems, from polluted runoff to habitat damage from improper road construction.

Peter Moyle, a fisheries expert with UC Davis and a member of the PPIC Water Policy Center research network, says, “All of these operations are taking water directly from streams, sucking away water from endangered Coho salmon, steelhead, tailed frogs, and other stream-dwellers, while damaging the banks of the streams. These diversions require permits—both from CDFW for stream alteration and from the State Water Board for diverting water—but few such permits seem to have been issued.”

Last year, Governor Jerry Brown marked $3.3 million in his budget proposal for enforcing pot growing rules in an effort to protect both the water supply and endangered species affected by growers.

Various state and local efforts are underway. The multi-agency Cannabis Pilot Project will enforce environmental protections in cannabis cultivation. The state’s Fish and Wildlife Watershed Enforcement Team inspects farms and seeks to permit them and bring them into compliance, but the understaffed team has been able to visit only a tiny portion of the state’s farms. New permitting processes to address illegal water diversions are in the works at the State Water Resources Control Board, but funding for compliance will be an issue. A recent a senate hearing called for a crackdown on illegal water diversions by marijuana growers.

In addition to highlighting the need for better regulation on the ground, the water impacts of marijuana growing are an example of the need for targeted and reliable sources of funding to address California’s environmental challenges. Currently, none of the tax revenue from California’s nearly $1 billion-a-year medical marijuana market is allocated for environmental protection.

Next year, Californians will likely be asked to vote on a ballot initiative to legalize possession of marijuana for recreational uses, as has been done in four other states and the District of Columbia. The potential ballot initiative provides an important opportunity to address a number of policy trade-offs, including the issue of how to pay for the environmental impacts of marijuana legalization.

Read “Regulating Marijuana” from the PPIC blog and Californians’ Attitudes Toward Marijuana Legalization.

Regulating Marijuana

In all likelihood, California voters will be asked to decide the legal status of marijuana on the 2016 ballot. Advocates of legalization are hoping to build on the momentum in four states (Alaska, Colorado, Oregon, and Washington) and the District of Columbia that made the recreational use of marijuana legal. Two national advocacy organizations—the Drug Policy Alliance and the Marijuana Policy Project—have made California a major focus for the 2016 election year.

Will a legalization initiative pass in California? Our May PPIC survey suggests that support is relatively high among likely voters: 56 percent said that marijuana should be legal. When we first began asking about legalization in May 2010, California voters were sharply divided. While support for marijuana legalization has fluctuated, since March 2014 we have seen an incremental trend toward support for legalization among likely voters. Among likely voters today, majorities of Democrats, independents, younger voters, and parents favor legalization. However, among some key electoral groups—including Latinos, Republicans, and older voters—legalization fails to get majority support. The success of any initiative aimed at legalizing the recreational use of marijuana is likely to depend on whether supporters can make inroads among these groups.

Would marijuana legalization be good public policy? That is an even more difficult question. This week a Blue Ribbon Commission on Marijuana Policy—chaired by Lt. Governor Gavin Newsom—made a series of recommendations to consider in crafting an initiative. The list includes ways to limit children’s access, reduce illegal activity and regulate sales.

Should an initiative pass, a significant degree of implementing legislation and regulation are likely to follow. In short, the devil is in the details.

These details may not only determine whether legalization is good public policy—they may also affect the electoral fortunes of any marijuana legalization initiative on the 2016 ballot. In our March 2015 survey, Republican (51%) and Latino (56%) likely voters were among the most likely to say they would be bothered if a store selling marijuana opened up in their neighborhood. Similarly, in our May 2015 survey, Republican (58%) and Latino (55%) likely voters were among the most likely to say that they are very concerned about more underage people trying marijuana if it were made legal. The details of regulation and implementation are likely to play an important role in addressing some of these voters’ concerns.

In the coming months, PPIC plans to contribute to the discussion surrounding the legal status of marijuana in the state. As always, our aim will be to provide essential information and help frame the debate. By identifying some of the key issues the state will have to address, we hope to help policymakers—and, ultimately, the voters—improve California’s marijuana policies.

Tax Increases and Voter Distrust

The California budget passed on time and without much drama this June, as tax revenues once again exceeded expectations because of the improving economy. The new budget will increase education spending, restore some human services funding cuts, pay down the government’s debt, increase the rainy day fund for future recessions, and support drought emergency funding—all without any new taxes. Still, many lawmakers and advocacy groups argue that the state’s tax system must change in order to generate adequate revenues for current spending while making future investments. In this context, the governor has called for special legislative sessions to find new funding for rising health care costs and transportation projects. At the same time, several interests groups are preparing tax initiatives for the November 2016 ballot.

Many political experts believe that the upcoming general election will be the most opportune time in the next four years to ask California voters to raise their taxes. The presidential race is likely to produce a high voter turnout and, specifically, a more youthful and liberal electorate with pro-tax leanings. Voters are currently in a relatively good mood about state leaders and their own finances.

In our May poll, we tested support for five tax proposals that are being considered by the legislature and tax proponents. Support among likely voters for four of the five proposals was underwhelming (41% sales tax extension, 46% Proposition 30 tax extension, 47% oil and natural gas severance tax, 50% commercial property tax increase, 67% cigarette tax increase). What explains voters’ reluctance to increase state taxes?

For one thing, despite improved fiscal conditions the widely-held perception that “the people in state government waste a lot of the money we pay in taxes” has hardly budged in four years (58% May 2011, 57% May 2015). Today, across all political and demographic groups, large proportions of likely voters say that there is a lot of wasted tax money.

Meanwhile, the perception that the state’s budget situation is a “big problem” is down sharply from four years ago (82% May 2011, 52% May 2015). Still, a majority holds this negative fiscal view even during these exceptionally good times. And there is an important connection between these two fiscal perceptions: among the likely voters who say the state’s budget situation is a big problem, 78% say that the people in state government waste a lot of tax money.

Notably, support for all five of the tax proposals is significantly lower among those who say that the state government wastes a lot of money. Even for the cigarette tax increase, two-thirds favor falls to 58% in this group, indicating that support for this popular tax proposal could erode in an election campaign. In sum, voter distrust will be a big hurdle for gaining majority support for new taxes in 2016.

Tax proponents may take solace in the fact that a majority of likely voters say that the state and local tax system is in need of major changes. However, support for making major tax changes has declined as the state’s budget situation has improved (65% January 2011, 54% May 2015). And the desire for major tax changes is tied to distrust: 70% with this view say that the state government wastes a lot of money.

Majority support for the Proposition 30 tax increase in November 2012 offers a textbook example of how the stars can align in a presidential election. But the PPIC poll tells us that voter distrust is a major obstacle even in good budget times. Voters will want assurances that current funds are well managed but inadequate—and that new taxes are needed for essential purposes. The special sessions could be a unique opportunity to begin a public dialogue about the fiscal ingredients necessary for creating a better future for all Californians.

Drought Bills: Small Changes, High Impact

As Californians continue to cope with the impacts of the ongoing drought, actions to improve the way we manage water are being taken at all levels of government. Last week Governor Brown signed into law Drought Trailer bill (SB 88) and Resources Budget Trailer bill (SB 83). These bills will improve the way we respond to the current drought and better prepare us for future droughts. Here are three ways they will do this:

  • Consolidation of some small water systems with bigger ones to increase drinking water accessibility for at-risk communities. Many small, disadvantaged rural communities in California lack reliable and safe drinking water. These communities often lack economies of scale because the cost of improving and maintaining these systems is high and their customer base is small. Even when these small water systems are eligible for state funding for capital improvements like water treatment systems, they often lack the technical and operational capacity necessary to sustain them over time. In some cases, consolidation—the physical or administrative merging of drinking water systems—can be a cost-effective solution. The bill allows the State Water Resources Control Board to pursue consolidation when other solutions are not appropriate, and it provides protection against liability issues that may make larger agencies unwilling to consolidate. In our report Paying for Water in California we recommended consolidation as one of a suite of actions that could help address chronic safe-drinking water challenges.

  • Better monitoring and reporting requirements for water diverters and some water rights holders. Earlier this year we recommended improving the state’s water information system to effectively manage water resources during droughts. This bill takes California one step closer to this goal. For example, individuals who divert water under the most senior water rights were previously required to report their diversions to the Water Board every three years; now they’ll be required to report annually. Surface-water diverters who use more than 10 acre-feet a year will also be required to install measuring devices. Well-drilling logs will also become public. The new reporting requirements reflect progress in modernizing California’s water accounting capabilities. The next step is to integrate improved water information and resource planning tools to better manage water scarcity.

  • Temporary environmental oversight exemptions for groundwater recharge projects, recycled water system standards, and local decisions to prohibit drilling of new groundwater wells. The California Environmental Quality Act (CEQA) can play an important role in evaluating the environmental impacts of projects or regulations, but the length and cost of the review process can discourage responsive policymaking. This bill streamlines review for projects and policy decisions that are low-risk and well-tested, but could immediately increase drought resiliency. California’s regulatory framework is such that these projects will likely be reviewed in other forums, so this bill doesn’t eliminate all oversight. As we heard from San Jose Mayor Sam Liccardo at our April “Water in Silicon Valley” event, this kind of streamlining would have real-world impacts. San Jose is seeking an expedited process from CEQA to begin building a groundwater recharge system that would expand use of San Jose’s existing recycled water system.

As the legislative year continues we can expect more statewide policy changes that address our stressed water system. We’ll provide regular updates on key water legislation in this blog.

Online Learning and College Costs

As the price of attending college has risen and access to higher education has declined, policymakers are looking to online learning as a way to better serve student needs, increase access—and lower the costs of higher education. In California, the state’s community colleges have taken the lead in online learning, with total course enrollment reaching about one million. We have been able to study the impact of online education on hundreds of thousands of students at the state’s community colleges. What we found points to important issues in the discussion of higher education access and costs.

It is easy to understand why online education is being championed as a cost-saver. Online courses do not require classroom space, and the cost of developing courses can be amortized over time. Savings could come through economies of scale, including centralization of online student services. If faculty members do not have to invest as much time designing, facilitating, and seeking approval for individual online courses, the colleges’ overall labor costs could drop.

But at this point, these savings are theoretical. So far, there is no empirical evidence that online learning is less expensive than face-to-face learning. In fact, research shows that preparing an online course is usually more time consuming—and therefore expensive—than preparing a traditional class.

And there are other drawbacks to online education as it’s currently practiced. In California’s community colleges, online student success rates are lower than success rates in traditional courses. Success rates for African American and Hispanic students are significantly worse. If these gaps persist and online enrollment continues to increase, then community colleges will be less equitable. The result will be increased costs to students and the state—and a failure to realize the promise of online education.

Despite these drawbacks, certain online courses are highly successful. Our analysis of these courses led us to recommend that the colleges move away from the current model, which relies on an individual faculty member to design and deliver an online course, and adopt a more systematic approach to creating online courses. A team that supports faculty members—including administrators, media developers, and information technology experts—would be better able to maximize the potential of the online learning environment.

However, it is unclear how moving to a team model would affect costs. Incorporating specialists in course design would raise upfront costs. Regularly updating software and updating course material could quickly exceed any savings from economies of scale. Providing essential student support services, such as technical support, online tutoring, and counseling, might also significantly raise costs.

But online learning is an important tool for improving access to higher education in California, even if it does not cost less. Online classes are increasingly popular in the community colleges—which are the higher education institutions most likely to serve nontraditional students. Incorporating best practices into these courses would improve the colleges’ ability to serve the state’s diverse students.

The community college system’s Online Education Initiative is an important step in the effort to accommodate demand for online learning and improve student outcomes. If it is successful, it can serve as a model for other online learning programs in higher education.

More Money, More Challenges for K-12 Schools

The 2015-16 budget agreement between the legislative leadership and governor provides substantial additional funding for the new Local Control Funding Formula (LCFF). The money allows the state to implement the formula more quickly, and some districts will experience very large funding increases. While LCFF significantly expanded district financial flexibility, it also calls for districts to use the new funding to improve local performance. Districts may find meeting various state and local expectations a complex task.

The budget includes $53.1 billion for LCFF, or $6 billion more than appropriated in the 2014-15 budget. To put this into perspective, this represents an increase of more than $1,000 per pupil on average, or 14% more than schools received this year.

When LCFF was enacted in 2013-14, the administration estimated that the transition from old to new formula would take eight years. But funding increases were larger than forecasts in 2014–15 and 2015–16. Since 2013-14, almost $11 billion has been added to LCFF, leaving a gap of only $5.5 billion to fully fund the formula. Depending on the health of the economy, this gap could disappear completely in the next few years—and far earlier than originally forecast.

The LCFF simplified school funding by consolidating several dozen funding streams into a formula that distributes funds based on the number of students in each grade and the proportion of low-income, English-learner, and foster students in each district. The formula also sets district funding targets to equalize per-pupil funding levels across districts. In addition, funding levels for kindergarten and grades 1–3 were enhanced to give districts the incentive to reduce class sizes in the early grades. Similarly, high school funding levels were increased to support vocational classes and other courses to prepare students for college and careers.

Districts must balance how new funds are spent with the various requirements of LCFF and local expectations for spending increases. They must make progress in shrinking class sizes (despite the shortage of available teachers in some areas). They also must pay for improvement plans that are required under LCFF. The law requires districts to assess student and school outcomes in eight state priority areas and develop improvement plans and budgets that address local priorities for improving student performance.

Districts must also accommodate the typical financial pressures of any large organization, such as physical plant maintenance and employee salary and benefit increases. LCFF generally requires that districts use money targeted for high-needs students only for educational services for those students. However, in a recent letter sent to school superintendents, State Superintendent of Public Instruction Tom Torlakson advised that extra funding for high-needs students may be spent on across-the-board salary increases if the expenditure will improve services for those students. This interpretation may allow districts more discretion and increase pressure for larger employee raises.

The coming fiscal year promises significant new funding for schools—and significant demands for those funds. It is important these funds are well spent, in part because districts are unlikely to see increases of this magnitude in the near future. Forecasts from both the Department of Finance and the Legislative Analyst’s Office suggest that school budgets in 2016–17 and 2017–18 are likely to grow at a rate of about 3%. This year’s 14% increase in LCFF funding may represent the largest chunk of new discretionary funding that most districts will see for several years.

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.

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.