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D A V I D P. MASTAGNI, ESQ. (SBN 057721)DAVID E. MASTAGNI, ESQ. (SBN 0204244)ISAAC S. STEVENS, ESQ. (SBN 251245)STUART K. TUBIS, ESQ. (SBN 278278)M A S T A G N I , H O L S T E D T , A MIC K ,M I L L E R & JOHNSEN, A.P.C.A Professional Corporation1912 " I " StreetSacramento, Caiifomia 95811-3151Telephone: (916) 446-4692Facsimile: (916) 447-461.4 Attomeys for Petitioner/PlaintiffAssociation of Special AgentsDepartment of Justice

FILEDE N D O R S E D2012 JAH 19 PH 5--02LEGAL PROCESS #2.

SUPERIOR COURT OF THE STATE OF CALIFORNL\IN A ND FOR THE COUNTY OF SACRAMENTO

ASSOCIATION OF SPECIAL AGENTS -DEPARTMENT OF JUSTICE,Petitioner/Plaintiff,

V .EDMUND G. BROWN, JR., in his officialcapacity as Govemor; A N A J. MATOSANTOS,in her official capacity as Director of theDepartment of Finance; and DOES 1 to 100,inclusive,

D efendants/Respondents.

CASENO.:34-20n-80001009D E C L A R A T I O N O F M I C H A E LL O Y D IN S UP P O R T O FP L A I N T I F F / P E T I T I O N E RA S S O C I A T I O N O F S P E C I A LA G E N T S - D E P A R T M E N T O FJ U S T I C E ' S E X P A R T EA P P L I C A T I O N F O RT E M P O R A R Y R E S TR A I N IN GO R D E R ; O R D E R T OS H OW C A U S E R E :P R E L I M I N A R Y I N J U N C T I O N .Code Civ. Proc. 525 etseq.; Cal.Rules ofCourt, rule 3.1150 and Cal.Rules of Court, rules 3.1200 et seg.Action Filed: November 23, 2011Trial Date: TBD

I , Michael Loyd, declare as follows:1. I am over eighteen years of age and am competent to provide testimony. I have

personal knowledge of the following facts and, i f called as a witness, I could and would competentltestify thereto.DECLARATI O N OF M I C H A E L L O Y DIN SUPPORT OF EX PARTEAPPLICATION FOR TRO

ASA-DOJv. B R O W N , E T A LCASE No. 34-2011-80001009

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1 2. I am the current President of PetitionerAssociation of Special Agents - Department2 of Justice ("ASA-DOJ"). I am employed as a Special AgentSupervisor in the CaiifomiaDepartmen3 of Justice ("DOJ")4 - 3. The ASA-DOJ is a nonprofit,mutual benefit corporation representing Caiifomia5 Department of Justice employees in the followingjob classifications: (1) Special Agent; (2) Specia6 Agent Supervisor; (3)Special Agent-in-Charge; and (4) Senior Special Agent-in-Charge.7 Throughout this declaration, I use the terms "Special Agent" and "Special Agents" to refer8 collectively to employees in these job classifications, unless I specify otherwise.9 4. The ASA-DOJ is an affiliate organization ofthe Caiifomia Statewide Law

10 Enforcement Association ("CSLEA"), the recognized employee organization representing State11 employees and State BargainingUnit Seven. CSLEA's Board of Directors comprise the presidents12 of each affiliate organization, including the ASA-DOJ.13 5. On or about September 9, 2010, CSLEA's Board voted to, and subsequently did,14 endorse Meg Whitman's candidacy in the 2010 gubernatorial election. EdmundG. Brown, Jr. was15 Ms. Whitman's main opponent in that race and, at the time, was the State Attomey General.16 6. .Ms. Whitman used CSLEA's endorsement toattack Brown, giving particular17 emphasis to the fact that the union represented Special Agents in the Department of Justice.18 7. Brown was elected Govemor of California on November 2, 2010.19 8. After taking office, Brownreleased abudget summarywhich outlined and described20 thefiscalchanges that resultedfi-om he 2011 -2012 enacted budget legislation. A tme and correc21 copy of Brown's Budget Siunmary is attached hereto as Exhibit "A . " A true and coiTcct copy of22 Brown's 2012-2013 budget proposal, which shows the final amounts allocated to state agencies in23 the 2011-2012 budget is attached hereto as Exhibit "B."24 9. I am informed and believe and thereon allege that many members of the Legislature25 did not support Brown's proposal to eliminate fiands for theDLE. I am further infomied and believ26 and thereon allege that Brown forced the Legislature to enact a budget containing cuts to the D LE27 by refusing to sign a budget that did not contain such cuts.28 10. Brown's budget summary, issued after the Budget Act had been passed, suminarize

DECLARATION OF MICHAEL LOYD ASA-DOJ V. BROWN, ET ALIN SUPPORT OF ExPARTE APPLICATION FOR TRO " CASE No. 34-2011-80001009

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1 the cuts to the DLE: "Eliminate General Fund from the Division of Law Enforcement. A reduction2 of $36.8 million beginning in 2011.12, and $71.5 million in 2012.13 and ongoing."Moreover, the3 cuts to the D LE were unusually targeted and specific. No other division within the Department of4 Justice suffered the same degree of targeted budget reducfion as the DLE.5 11. On June 30, 2011, Brown signed into law Califomia's budget for the 2011-20126 fiscal year. The Budget eliminated general fund support for the Division of Law Enforcement,7 thereby forcing the Attomey General, Kamala Harris, to initiate plans to eliminate 203 Special8 Agent posifion. This reducdon was eventually lowered to 152 Special Agent posifions.9 12. Before ASA-DOJ participated in the endorsement of Whitman, Brown expressly

10 opposed proposed cuts to theDivision of Law Enforcement. A t an Imperial County news conferenc11 on August 26,2009, for example, Brownhighlighted theneed for increasedfinancialsupport of the12 officers. "There are attempts to cut back on the Bureau of Law Enforcement . . . i f anything a lot13 more manpower, a lot more equipment is needed ... it's goingto take recognifion on the part of state14 govemment that even though it's facingafiscalcrisis, it's an even greater crisis i f we let down our15 guard and let these narcotics flow into the state."16 13. I aminformed and believe and thereon allege that Brown pushed the budget cuts to17 the D LE through the Legislature to retaliate against the Special Agents for participating in the18 endorsement of Meg Whitman. This has discouraged the ASA-DOJ from exercising its First19 Amendment right to participate in the politicalprocess.20 14. The dramatic budget reductionBrown forced on theD LE will effectively abolish th21 Bureau of Narcofic Enforcement ("BNE") and eliminate many programs maintained by the Bureau22 of Investigations and Intelligence ("BIT"). Already, thirty-three regional gang and drug task forces23 have been eliminated as a result of the cuts to the Bureau of Narcotic Eitforcement's budget.24 15. I am informed and believe and thereon allege that, on January 14, 2012 the25 Department of Justice sent written notices to approximately 92 Special Agents that they were being26 laid offfi'om heir posifions in the BII and BNE effecfive February 17, 2012.27 16. I am further informed and believe and thereon allege that, on January 14, 2012, the28 Department of Justice sent written notices to approximately 26 Special Agents advising them that

DECLARATION OFM I C H A E L L O Y D ASA-DOJ v. BROWN, ETAL.IN SUPPORT OF EX PARTE APPLICATION FOR TRO CASE No. 34-2011-80001009

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1 they were being transferred to other Department of Justice offices throughout the state.2 17. The draconian cuts made to the BNE and BII will essenfially abolish their fiincfion3 and abolish many ongoing law enforcement funcfions ofthe DLE.4 18. The Bureau of NarcoticEnforcement ("BNE") invesfigates dmg cartels and crimina5 organizations. It also regulates prescripfion dmg forms, trains medical professions to idenfify dru6 abuse, and investigates the misdirection of controlled substances to the illicit market. The BNE use7 sophisficated technology that local agencies simply cannot afford to procure or maintain. It also8 coordinates multi-jurisdictional investigations that cannot be managed by local agencies alone.9 19. Many Special Agents in the BNE are working, or have worked, as undercover

10 operatives infiltrating the ranks of organizedcriminal organizations and dmg traffickingoperafions11 In addition, the BNE utilizes confidential informants to assist in the investigation and prosecution12 of these organizations. The safety of these Special Agents and informants requires them to remain13 anonymous until a secure opportunity to withdraw fi"om the organization and its members is14 available.15 20. I am informed and believe that the anticipated loss of these Special Agents has16 already caused the Department of Justice to shut down some investigations in the Bureau of17 Narcotic Enforcement and the Bureau of Investigations and Intelligence.18 21. I am informed and believe and thereon allege that, due to the loss of general fund19 support fo r the Division of Law Enforcement, the Department of Justice has elected to abolish the20 BNE and BU and create a new bureau, referred to as the Bureau of Investigations, to perfonn som21 of the functions previously performed by the BN E and BE. I am further informed and believe and22 thereon allege that less than 100 Special Agents, Special Agent Supervisors, or Special Agents-in23 Charge will be employed in the new Bureau of Investigations.24 22. I ara informed and believe and thereon allege that, absent an injunction that allows25 the Attomey General to allocate funds to the BN E and BII, only fifteenSpecial Agents Supervisors26 and two Special Agents-in-Charge will be charged with operating the DLE's Task Force Program.27 23. 1 am informed and believe and thereon allege that, if the Attomey General wa28 allowed to allocate other DOJ funds to the DLE, she would. I am further infonned and believe and

D EC LA RA TION OF MIC HA EL LOYD ASA-DOJ v. BROWN, ETAL.I N SUPPORT OF EX PARTE APPLICATION FOR TRO CASE No. 34-2011 -80001009

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1 thereon allege that the AttomeyGeneral's representatives have stated that there are sufficient fund2 allocated to other DOJ programs that could be reallocated to the DLE to prevent the layoffs o3 Special Agents described herein.4 24. I am informed and believe and thereon allege that, absent an injunction that allows5 the AttomeyGeneral to allocate funds to the BNE and BI I, the Clandesfine Laboratory Enforcemen6 Program ("CLEP") will be shut down when the BNE is abolished.7 25. I am informed and believe and thereon allege that, absent an injunction that allows8 the Attomey General to allocate funds to the BNE and BH, the Caiifomia Methajnphetamin9 Strategy Program ("CALMS") will be shut down when the BNE is abolished.

10 26. I am informed and believe and thereon allege that, absent an injunction that allows11 the Attomey General to allocate funds to the BNE and BII, the Caiifomia Security Prescription12 Printers Program will be shut down when the BNE is abolished. This program is in charge of13 reviewingapplicationsfi'omvendors seeking approval to produce controlled substance prescription14 forms.15 27. I am informed and believe and thereon allege that, absent an injunction that allows16 the Attomey General to allocate funds to the BNE and BII, the Controlled Substance Utilization17 Review and Evaluation System ("CURES") will be shut down when the BNE is abolished. CURES18 is a database with over 100 million entries of controlled substance dmgs dispensed in the state. Th19 Prescription Drug Monitoring Program ("PDMP") allowed doctors and pharmacists to access the20 database to see patient's prescription drug histories, to identify and deter drug abuse.21 28. I am informed and believe and thereon allege that, absent an injunction that allows22 the Attomey General to allocate fijnds to the BNE and BE, the BNE's Diversion Program vvill be23 shut down when the BNE is abolished. The Diversion Program investigated doctors, phannacists,24 nurses, and other individuals who divertedcontrolled substances to the illicit market. The Diversion25 Program also assisted in the investigation and prosecution of individuals engaged in printing, theft26 forgery, and the passage of fake prescriptions for controlled substances. It also provided trainin27 to medical professionals, to help them identify schemes and methods used to illegally obtain28 controlled substances.

DECLARATION OF M I C H A E L L O Y D ASA-DOJ v. BROWN, ETAL.I N SUPPORT OF EX PARTE APPLICATION FOR TRO ' CASE NO. 34-2011 -80001009

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1 29. I aminformed and believe and thereon allege that, absent an injunction that allows2 the Attomey General to allocate fiinds to the BNE and BII, the Prevention, Education and3 Awareness Program will be shut down when the BNE is abolished. This program provides4 education, training and outreach services to make presentations on dmg abuse and drug-related5 issues.6 30. The Bureau of Investigations and Intelligence initiates complex enforcement and7 investigations, and provides assistance to local and federal law enforcement agencies, and sovereig8 govemments. The BI I also provides protection to witnesses and their families, conducts criminal9 investigative analysis, and provides sophisticated and unique forensic and intelligence services to

10 local agencies.11 31. The BII also investigates officer-involved shoofings, homicides, cold cases, sexua12 assaults, child pornography and exploitation, and human trafficking. It also serves as California's13 law enforcement liaison to Interpol.14 32. The BII uses sophisticated crime-fighfingtechniques and technology that is not15 available or affordable for local and federal law enforcement agencies.16 33. I am informed and believe and thereon allege that, absent an injunction that allows17 the Attomey General to allocate funds to the BNE and BII, the Sexual Assault Felony Enforcemen18 ("SAFE") Program will be shut down when the BII is abolished. SAFE task forces work with local19 law enforcement agencies to investigate predatory sex offenders and crimes originating from the20 sexual exploitation of children via the intemet.21 34. BrowTi's retaliatory efforts to eliminate funding to the DLE will endanger Special22 Agents. Special Agents whowill be laid off as a result of the cuts, and those being forced to retire23 in lieu ofbeing laid off or transferred, will lose their status as peace officers.24 35. The Department of Justice issued a memorandum stating that the AttomeyGeneral25 lacks the power to issue Concealed Carry Weapon permits to Special Agentswho are being laid of f26 or forced to retire. A tme and correct copy of this memorandum is attached to this declaration as27 Exhibit "C."28 36. Because Special Agents will lose their peace officer status when they are laid off,

DECLARATION OF M I C H A E L L O Y D ASA-DOJ v. BROWN, ETAL.I N SUPPORT OF EX PARTE APPLICATION FOR TRO CASE NO. 34-2011 -80001009

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1 they will no longer be able to carry concealed weapons. Many Special Agents carry concealed2 weapons - even when not on duty - to protect themselves ahd their families from retaliation from3 the criminals the Special Agents bring to justice. Once laid off, a Special Agent will not be able to4 carry a concealed weapon without first obtaining a CCW pennit - a process that can take months5 to complete in many counties in the state.6 I declare under penalty of perjury, under the laws of the State of California, that the7 foregoing is tme and correct to the best of my knowledge, and that i f called upon to testify to the8 facts contained herein, I could and would competently do so.9

10 Executed January 18, 2012 at Sacramento, Caiifomia.111213 MICHAEL LOYD141516171819202122232425262728

DECLARATION OF M I C H A E L L O Y D ASA-DOJ v. BROWN, ETAL.1 N SUPPORT OF EX PARTE APPLICATION FOR TRO CASE NO. 34-2011 -80001009

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MASTAONI, HOLSTEDT, AMICK,MILLER & JOHNSENA PROFESSIONAL CORPORATION1912 I STREETSACRAMENTO, CALIFORNI A 9S8U

E X H I B I T A

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2011-12State BudgetE d m u n d G. Brow n Jr. G overn or , State of C al i fo r n i a

I N T R O D U C T I O N^n^he 2011 Budget Act closes a $26.6 billion budget gap and nnakes substantial

i l progress inaddressing thestate's long-term structural budget deficit. It also returnsauthority to local governments and makes state government more efficient.

Figure INT-01Closing the Budget G ap(Dollars in Millions)

As shown in Figure INT-01, the Budgetrelies ondeep spending reductions. In total,the Budget reduces expenditures by$15.0 billion. Targeted revenue increases of$0.9 billion and other solutions of $2.9 billionwere also adopted. The remaining $8.3 billionin changes are from the improvement inthe state's revenue outlook. The total of$27.2 billion in changes balances the Budgetand leaves the state with a reserve of$543 million: General Fund spending totals $85.9 billion, a 6.1-percent reduction from2010-11.

Expenditure ReductionsRevenuesOtherNatural ChangesTotal Solutions and Changes

Two-yeartotal$15,043

947. 2,920

8,287$27,197

%55.33.5

10.730.5

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I N T R O D U C T I O N

R E A L I G N I N G S E R V I C E S TO L O C A L G O V E R N M E N T SThe Budget includes a major realignment of public safety programs from the state tolocal governments. The realignment moves program and fiscal responsibility to thelevel of government that can best provide theservice, eliminating duplication of effort,generating savings, and increasing flexibility. The im plemen tation of the CommunityCorrections Grant Program authorized by AB 109 will end thecostly revolving door oflower-level offenders and parole violators through the state's prisons. Other realignedprograms include local public safety programs, mental hea lth, substance abuse, fostercare, child welfare services, and adult protective services.The Budget funds the$5.6 billion realignment using two fund sources: (1) the dedicationof 1.0625 cents of the existing sales tax rate ($5.1 billion) and (2) the redirection ofvehicle license fee revenues ($453.4 million).See Figure INT-02 for a summary of Realignment Funding.

Figure INT-02R e a l i g n m e n t F u n d i n g

(Dol lars in Mi l l ions)ProgramCourt SecurityLocal Public Safety ProgramsLocal Jurisdiction forLower-level Offenders and Parole Violators

Local CostsReimbursement ofState Costs

Realign Adult ParoleLocal CostsReimbursement ofState Costs

Mental Healtii ServicesEPSDTMental Health Managed CareExisting Community Mental Health Programs

Substance Abuse TreatmentFoster Care and Child Welfare ServicesAdult Protective Sen/icesExisting Juvenile Justice RealignmentProgram Cost Growth*TotalVLF Funds1 0625% Sales TaxTotal Revenues'This amount will besubject to discussion and is intended to covercounty costs and reimburse reasonable state costs.

$5,559.1453.4

5,105.7$5,559.1

$6,024.8453.4

5,571.4$e,024.8

2011-12 2012-13 2013-14 2014-15$496.4 $496.4 $496.4 $496.4

489.9 489 9 489.9 489.9239.9 581.1 759.0 762.2956.7 - -127.1 276.4 257.0 187.7262.6 -

629 0 629.0 629.0- 183.7 183.7 183.71,083.6 1,119.4 1,119.4 1.119.4183.6 183 6 183.6 183.6

1,567.2 1,567 2 1,567.2 1,567.255.0 55 0 55.0 55.097.1 104.1 103.2 103.3- 339 0 624.5 1,063.9

$6,467.9453.4

6,014.5$6,467.9

$6,841.3453.4

6.387.9$6,841.3

C A L K F O R N C A STATE BUDGET 2011-12

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R E D U C I N G STATE G O V E R N M E N TTo reduce spending to match available resources, the Budget makes substantial cuts tostate programs. General Fund spending as a share of the econom y is now at its low estlevel since 1972-73. Figure INT-03 summarizes the $15 billion in spending reductionsincluded in the Budget. These include the following:

Figure INT-03A d o p t e d S o l u t i o n s R e d u c e S p e n d i n g

. (Dol la rs in Mil l ions )2-Year Total

EXPENDITURE R EDUCTIONSHeal th and Human Serv ices P rograms

Medi-Cal $2,036.3Proposition 63 Com munity Mental Health Services 861.2CalWORKS 837.0Developmental Services 567.2In-Home Supportive Services (IHSS) 413.0Supplemen tal Security Income/State Supplementary Payment Grants 178.4Other Healtti and Human Services Programs 106.8

Rea l ignment Sav ings 2,583.2Educat ion

Proposition 98 2,082.9UC and CSU 1,375.0Cal Grant Program 153.0Other Education 16.7

Al l Other Reduct ionsTransportation Debt Service ' 1,130.2Courts 743.6Employee Com pensation and State Operations Efficiencies 471.1Corrections and Rehabilitation 366.0State Mandates 327.5Other Reductions 793.5

Total Expe nditure Re duction s $15,042.6

Maintaining K-12 education funding at a similar level as 2010-11.Reducing State Supplementary Payment grants to below the level in effect in 1983.Reducing CaiWORKs grants to below the 1987 level.Reducing California Department of Corrections and Rehabilitation's inmate populationby 25 percent once realignment is fully implemented.

C A L II IF O R N IIA S T A T E B U D G E T 2011-12

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Requiring recipients of Medi-Cal health benefits to pay a share of the cost for doctorvisits and other services.Shrinking the state's support for the University of California and California StateUniversity by 22 and 25 percent, respectively.Requiring community college students to pay $10 more per class unit.Pausing the court system's construction program for one year.Eliminating the Adult Day Health Care program, W illiamson Act subventions, and therefundable c hild care and dependent tax credit.

Reducing the state's workforce by about 5,500 positions.Eliminating 20 boards, commissions, task forces, offices, and departments, includingthe California Medical Assistance Commission and the Office of Insurance Advisor.

I M P R O V I N G R E V E N U E O U T L O O KThe May Revision reflected the state's continuing recovery from the Great Recessionwith $6.6 billion in higher tax receipts compared to the January Budget. Since theMay Revision, tax receipts have continued to come in higher than expected by anestimated $1.2 billion in May and June. W ith the improved revenue receipts, the Budgetprojects an additional $4 billion in estimated 2011-12 revenues.

The Budget recognizes the potential risk to the state's fiscal condition if the higherrevenues do not materialize. Under the budget package, if revenues are projected tofall short of expectations by more than $1 billion, an additional $600 million in cuts tohigher education, health and human services, and public safety would be implementedbeginning in January 2012. If revenues are projected to fall short by more than $2 billion,an additional $1.9 billion in education reductions would be implementedshorteningthe school year by 7 days, eliminating the home-to-school transportation program,and reducing community college apportionments. These potential cuts are summarized inFigure IN T-04.

A D D R E S S I N G T H E S T A T E 'S L O N G - T E R M C H A L L E N G E SIn January, California's long-term fiscal problems were immense, with the budgetforecast projecting an annual structural deficit of up to $21.5 billion into the future.

3Ai:7a)aN-aA S T A T E B U D G E T 2011-12

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Figure INT-04T r i g g e r R e d u c t i o n s (Dollar in mill ions)

TIER 1 (if Revenues Fall Short of Budget Act Estimate ByMore Than $1 billion)Unallocated Reduction to the University ofCaliforniaUnallocated Reduction to California State UniversityEliminate State Grants for Local LibrariesAdditional Reduction to the Department ofDevelopmental ServicesIn Home Supportive Services (IHSS)20 percent Reduction in Service HoursIHSS Eliminate Funding for Local Anti-Fraud EffortsMedi-CaiExtend Provider Cuts and Copayments toailManaged Care PlansUnallocated Reduction to the Department ofCorrections and Rehabilitation (CDCR)Juvenile JusticeIncrease County Charge for Youthful Offenders Sent to CDCREliminate Vertical Prosecution GrantsProposition 98Community College $10 per unit fee increaseChild Care4 percent Across-the-Board Reduction

SubtotalTIER 2 (If Revenues Fail Short of Budget Act Estimate ByMore Than $2billion)

Proposition 98Reduce 7 Days ofSchoolProposition 98Reduce Community College ApportionmentsProposition 98Eliminate Home-To-School Transportation

SubtotalTotal Trigger Reductions

2011-12

$100.0100.015.9

100.0100.010.015.020.072.115.030.023.0

$601.0

$1,540.072.0

248.0$1,860.0$2,461.0

As shown in Figure INT-05, the2011 Budget Actmakes substantialprogress in reducing this deficitthrough thecombination of ongoingspending reductions and an improvedrevenue outlook. Under currentprojections, the structural deficithas been reduced to less than$5 billion annually.Despite eliminating most of thestructural deficit, the state continuesto face major long-term challengesand must address the remainingstructural problem. California remains

Figure INT-05State's Budget Gaps Have BeenNearly Eliminated(Dollars In Billions)

$0.0-$5.0

-$10.0-$15.0-$20.0-S25.0-$30.0

-$26.6

-$19.2 -$17.4-$21.5

2011-12 2012-13 2013-14 2014-1511 Governor's Budget Deficit Budget Act Deficit with Triggers

C A L I F O R N I A S T A T E B U D G E T 2011-12

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burdened by $35 billion in debt from a decade of unprecedented budgetary deferralsand borrowing . Education funding is more than $6 billion below the level provided in2007-08.The Administration plans to seek voter approval of a ballot measure by November 2012to better position California for the future by constitutionally protecting public safetyrealignment, supplementing the state's revenues to restore education funding, payingdown the state's wall of debt, and balancing the Budget into the future. A structurallybalanced Budget that preserves critical levels of government services will lay thegroundwork for a strong economic recovery and employment growth. The resultingstability will give businesses the certainty and reassurance they need to expandinvestmen ts in California.

r.AiZFORNHA S T A T E B U D G E T 2011-12

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S U M M A R Y CHARTS

S U M M A R Y C H A R T S

This section provides various statewide budget charts and tables.

CAY^IFOKT-KA S T A T E B U D G E T 2011-12

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SUMMARY CHARTS

Figure SUM-01General Fund Budget Summary

With All Budget Solutions(Dollars in Millions)

2010-11 2011-12Prior Year Balance -$4,507 -$1,206

Revenues and Transfers $94,781 $88,456Total Resources Available $90,274 $87,250

Non-Proposition 98 Expenditures $55,789 $53,058Proposition 98 Expenditures $35,691 $32,879

Total Expenditures $91,480 $85,937Fund Balance -$1,206 $1,313Budget Reserves:

Reserve for Liquidation ofEncumbrances $770 $770Special Fund for Economic Uncertainties -$1,976 $543

Figure-SUM-022011-12 Revenue Sources

(Dollars in Millions)

GeneralFund SpecialFundsChangeFromTotal 2010-11

Personal Income Tax $50,408 $1,047 $51,455 $556Sales and Use Tax 19.009 9,713 28,722 -2,413Corporation Tax 9,012 - 9.012 -951Highway Users Taxes - 5.509 5,509 -133Motor Vehicle Fees 173 5,768 5,941 -746Insurance Tax 1,893 - 1.893 -293Liquor Tax 326 - 326 8Tobacco Taxes 91 782 873 -25Other 7,544 9,159 16,703 1,526

Total $88,456 $31,978 $120,434 -$2,471Note: Numbers may not add due to rounding.

CAIUFOENIA STATE BUDGET 2011-12

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SUMMARY CHARTS

Figure-SUM-032011-12 Total Expendi tures by A g e n c y(Dollars in Millions).

GeneralFund SpecialFunds BondFunds TotalsLegislative, Judicial, Executive , $3,151 $3,039 $340 $6,530State and Consumer Services 624 743 20 1,387Business, Transportation & Housing 603 8.043 5,195 13,841Natural Resources 1,946 2,377 1,000 5,323Environmental Protection 51 1,050 369 1,470Health and Human Services 23,043 13.865 166 37,074Corrections and Re habilitation 9,821 24 - 9,845K-12 Education 34.302 84 1,380 35,766Higher Education 10,248 41 851 11,140Labor and Workforce Development 371 376 - 747General Government

Non-Agency Departments 469 1,614 2 2,085Tax Re lief/Local Government 996 1,737 37 2,770Statewide Expenditures 312 1,187 - 1.499Total $85,937 $34,180 $9,360 $129,477

Note: Numbers may not add due to rounding.

CALUFGRHXA STATE BUDGET 2011-12

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SUMMARY CHARTS

Figure SUM-04General Fund Expenditures by Agency

(Dollars in Millions)Change from

2010-11Dollar Percent2010-11 2011-12 Change Change

Legislative. Judiciai, Executive $3,146 $3,151 $5 0.2%State and Consumer Services 583 624 41 7.0%Business, Transportation & Housing 417 603 186 44.6%Natural R esources 1,990 1,946 -44 -2.2%Environmental Protection 75 51 -24 -32.0%Health and Human Services 26,541 23,043 -3,498 -13.2%Corrections and Rehabilitation 9.597 9,821 224 2.3%K-12 Education 35,849 34,302 -1,547 -4.3%Higher Education 11,608 10,248 -1,360 -11.7%Labor and W orkforce Development 42 371 329 783.3%General Government:

Non-Agency Departments 541 469 -72 -13.3%Tax Re lief/Local Government 970 996 26 2.7%Statewide Expenditures 121 312 191 157.9%

Total $91,480 $85,937 -$5,543 -6.1%

Note: N umber s may not add due to rounding.

10 CAl:'?OE. ? /. STATE BUDGET 2011-12

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Figure SUM-052011-12 Vetoes by Agency

General, Special, and Bond Funds(Dollars in Millions)

SUMMARY CHARTS

LegislativeSpendingPlanGeneralFundVetoes

Special Fund andBond FundVetoes TotalsLegislative. Judicial, Executive $6,554 -24 - $6,530State and Consumer Services 1,387 - - 1,387Busine ss, Transportation & Housing 14.084 - -243 13,841Natural Resources 5.324 - -1 5,323Environmental Protection 1.470 - - 1,470Health and Human Services 37,074 - - 37.074Corrections and Rehabilitation 9,846 -1 - 9,845K-12 Education 35.766 - - 35,766Higher Education 11.142 -2 - 11,140Labor and W orkforce Development 747 - - 747General Government

Non-Agency Departments 2.085 - - 2.085Tax Relief/Local Government 2,770 - - 2,770Statewide Expenditures 1,496 3 - 1,499Tota l $129,745 -$24 -$244 $129,477

Note: N umber s may not ad d due to rounding.

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f 'T^he 2011 Budget Act estimates General Fund revenues to be S94.8 billion in2010-11J_L and $88.5 billion in2011-12. Since the May Revision, cash receipts for the big three

re.venue sources are projected to come in$1.2 billion above the May Revision foreca stthrough theend of June. It is anticipated that General Fund revenue will be $4 billionhigher than forecast in 2011-12.

GENERAL FUND REVENUE SOLUTIONSRevenue solutions that were adopted as part of the 2011 Budget Act includethe following;

Financial Institutions Record MatchThis provision requires financial institutions toparticipate in a record match process between financial institution customer recordsand Franchise Tax Board (FTB) debtor records. FTB will use thematch information tocollect delinquent state income tax debts using existing laws and collection methods.This proposal isexpected to generate additional revenues of $40 million in 2011-12.Tax Shelter AmnestyThis program will allow FTB to provide amnesty for taxpayerswho used an abusive tax avoidance transaction (ATATs), which are generally taxschemes that serve nopurpose other than reducing tax. The Internal RevenueService, the FTB, and the courts generally deny claimed tax benefits of an ATATif the transaction that gives rise to those benefits lacks economic substanceindependent of income tax considerations, even though such transactions may not

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break any tax law rules. By authorizing the FTB to provide a narrow tax amn estyfor taxpayers that utilized an ATAT, this program is expected to generate additionalrevenues of $270 million in 2010-11 and a reduction of revenues of $50 million in2011-12.Use-Tax Look-Up TableThis provision requires the FTB to revise the income taxinstructions to include a use-tax table that would allow taxpayers to estimate theamount of use tax they owe, based on their adjusted gross income. This provision isexpected to generate additional revenue of $7 million per year starting in 2011-12.Repeal the Refundable Portion of the Child and Dependent Care CreditFederaland state laws allowed a credit for expenses that taxpayers incur for qualified childor dependent care expenses necessary so that taxpayers may engage in or pursuegainful em ploym ent. For federal purposes, this credit is nonrefundable; for statepurposes, it is refundable. This provision will revise the current child and dependentcare expenses tax credit to be nonrefundable, and is expected to increase revenueby $75 million starting in 2011-12.Internet Retailer Use Tax NexusThis provision clarifies the obligations underexisting law for out-of-state retailers to collect and remit use tax on sales oftangible personal property to California residents. Specifically, this bill expands thestatutory definition of "retailer engaged in business in this state" to include anyretailer entering into an affiliate agreement with a California resident under whichthe resident, for a commission or other consideration, directly or indirectly referspotential custom ers. O ut-of-state retailers who sell less than $10,000 into C aliforniathrough these affiliates or who sell less than $500,000 into the state, are exemptedfrom this requirement. This provision also requires use tax collection and remittanceby a retailer who is a member of a combined reporting group for income taxpurposes, when another member of the same group provides services in connectionwith the sale of tangible personal property in California. Finally, this provisionestablishes that any retailer with substantial nexus in this state is required to collectthe use tax on behalf of the state. This provision is estimated to generate revenue of$200 million starting in 2011-12.Redirect Revenue from Sales and Use Tax (SUT) to Local Revenue Fund 2011This provision redirects revenue attributed to 1.0625 cents of the SUT rate to theLocal Revenue Fund 2011 for realignment purposes. This provision is expected toredirect $5.1 billion in 2011-12.

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L E G I S L A T I V E , J u D i c n A L , A N B E X E C U T I V E

L E G I S L A T I V E , J U D I C I A L ,AND E X E C U T I V E

Governmental entities classified under the Legislative, Judicial, and Executive sectionare either established as independent entities underthe California Constitutionor are departments that operate outside the agency structure. Constitutionallyestablished bodies include the Legislature, the Judicial Branch, Governor's Office,and Constitutional Officers.The 2011 Budget Act includes total funding of more than $9 billion for all programsincluded in this area.

J U D I C I A L BRANCHThe Judicial Branch consists of the state-level judiciary which includes theSupreme Court, the Courts of Appeal, the Administrative Office of the Courts, and58 superior courts.

ADOPTED SOLUTIONSCourts ReductionA reduction of $350 million to the court system. A portion ofthis reduction will be offset by a variety of fund shifts, the use of reserve balances,and expenditure delays.

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Conservatorship Program SuspensionA reduction of $17.4 million General Fundrelated to statutory changes making the Conservatorship and Guardianship Act of2006 permissive at the trial court level.General Fund LoanA loan of $350 million from the State Trial Court ConstructionFund to the General Fund.Pause Court Construction ProjectsA transfer of $310.3 million from the Immediateand Critical N eeds Account to the General Fund. Forty projects will be delayed forup to a year once the current acquisition or design phase is complete. As additionalrevenues above the transfer amount materialize, these projects will be able to startthe next authorized phase.

OTHER CHANGESThe Budget includes the following significant change:

Revocation HearingsAn increase of $18.9 million for court workload resulting fromthe shift of responsibility for post-release supervision revocation hearings to thetrial courts

G O V E R N O R ' S O F F I C EThe O ffice of the Governor provides for the overall direction and executive administrationof all state agencies and departments under its purview. The Governor's Office isfunded from the General Fund and a special fund that supports centralized stateadministrative costs.

A D O P T E D SOLUTIONS25-Percent ReductionA reduction of $4.5 million ($3.7 million General Fund) to theGovernor's Office. These savings will be generated by eliminating positioris withinthe Governor's Office.

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L E G I S L A T I V E , J U D I C I A L , A N B E X E C U T I V E

C A L I F O R N I A E M E R G E N C Y M A N A G E M E N T A G E N C YThe principal objective of the California Emergency Management Agency (Cal EMA)is to reduce vulnerability to hazards and crimes through em ergency managem ent andcriminal justice.

A D O P T E D SOLUTIONSCalifornia Disaster Assistance Act PaymentsAn ongoing reduction of $20 millionrelated to an adjustment of projected future disaster payment liabilities.

D E P A R T M E N T O F J U S T I C EAs chief law officer of the state, the Attorney General has the responsibility to see thatthe laws of California are uniformly and adequately enforced through the programs of theDepartment of Justice.

A D O P T E D SOLUTIONSEliminate General Fund from the Division of Law EnforcementA reduction of$36.8 million beginning in 2011-12, and $71.5 million in 2012-13 and ongoing.General Fund resources have been maintained for the forensic laboratory program,the A rme d Prohibited Persons Program, and investigation teams to assist theDepartment's legal services division.Quest SettlementA one-time transfer of $20 million from the False Claims ActFund to the General Fund resulting from the whistleblower settlement reached bythe Attomeiy General against Quest Diagnostics.

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BUSINESS, T R A N S P O R T A T I O N , A N D H O U S I N G

B U S I N E S S , T R A N S P O R T A T I O N ,AND H O U S I N G

The programs within the Business, Transportation, and Housing Agency promotethe state's business and economic climate, transportation infrastructure, affordablehousing, and patients' rights. The Agency also includes public safety programs, includingthe Department of Motor Vehicles, the California Highway Patrol, and the Department ofAlcoholic Beverage Control. Funding for all programs is approximately $19.9 billion, whichis derived largely from special fund revenues, federal funds, and bond p roceeds.

B T H A G E N C Y SECRETARYThe Secretary for the Agency oversees and coordinates the activities of 13 departmentsand several economic development programs and commissions. The Agency also directlyadministers several programs, including the Sm all Business Loan Guarantee Program,tourism promotion, the Infrastructure Bank, and the film commission.

A D O P T E D SOLUTIONSReduced Small Business Loan Guarantee ProgramA decrease of $20 millionGeneral Fund in 2010-11 given the large infusion of new federal funds and the needfor General Fund savings.

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D E P A R T M E N T O F T R A N S P O R T A T I O NThe De partmen t of Transportation (Caltrans) designs and oversees the cons truction ofstate highways, operates and maintains the system, funds three intercity passengerrail routes, and provides funding for local mass transit projects. Over 15,200 miles ofhighways and 12,000 state bridges are maintained, and 809 public-use and special-useairports and heliports are inspected. The largest sources of funding for transportationprojects are excise taxes paid on fuel consumption, federal funds also derived from fueltaxes, and weight fees on trucks. Bond funds currently provide more than 32 percent ofthe total funding available for projects.The 2011 Budget Act provides $13.9 billion in state, federal, and bond funding fortransportation, including $4.2 billion for the operation and maintenance of the statehighway system and the state's intercity rail service and $9.7 billion for various state andlocal infrastructure projects.

A D O P T E D SOLUTIONSExcise Tax for Fuel Sales Tax SwapThe 2010 Budget Act included funding fromfuel excise taxes to reimburse the General Fund for the cost of debt service ontransportation-related state bonds. Enactment of Proposition 22 in November 2010,precluded the use of excise taxes for debt service or loans. In response. Chapter 6,Statutes of 2011, funds transportation-related debt service and makes loans to theGeneral Fund from weight fees on trucks and other revenues that are not restrictedas gasoline taxes are. The Budget provided $903.5 million in General Fund reliefin 2010-11 in addition to the $799.6 million in General Fund relief achieved prior toenactment of Proposition 22.Debt Service OffsetPre-Proposit ion 22 debt service reimbursement from fuelexcise taxes and post-Proposition 22 debt service reimbursement from weight feesand other revenues are expected to provide a total of $714.9 million in General Fundrelief in 2010-11. W eight fees and other revenues will provide another $777.5 millionin General Fund reimbursements for debt service costs in 2011-12.Special Fund LoansA loan of $550.8 million in 2010-11 and $210 million in 2011-12is provided from weight fee revenues. Repayment of $971 million in weight fee loansmade in recent years is delayed until the funds are needed to fund debt service ontransportation bonds or June 30, 2021, and repayment of $357 million in non-weight

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fee loans made from the State Highway Account and the Public TransportationAccount is also postponed until as late as June 30, 2021.

H I G H - S P E E D R A I LThe H igh-Speed R ail Authority (Authority) is responsible for the development andconstruction of a high-speed passenger train service between San Francisco andAnaheim (Phase I), with extensions to San Diego and Sacramento and points in-between(Phase II). Proposition IA, enacted in November 2008, authorizes $9 billion in bondproceeds for the rail lines and equipment, and an additional $950 million for state andlocal feeder lines. The federal government has awarded the Authority nearly $3.5 billion,most of which has been designated to fund portions of the project in the Central Valley.The 2011 Budget Act will allow the Authority to continue to work on design andenvironmental studies and to work with communities on issues related to theright-of-way for Phase I and portions of Phase 11 of the project. The Budget Act provides$16.6 million Proposition IA bond funds in state operations and $138.6 million ($72 millionProposition 1A bond fund, $66 .6 federal funds) in capital outlay funding for a total of$155.2 million for 2011-12. This will fund the Authority's administrative and legal costs,as well as contracts for program oversight, environmental outreach and communication,and financial consulting. The capital outlay funding w ill be used for environmental workand preliminary design and engineering for the seven Phase I segments and two PhaseII segments.

D E P A R T M E N T O F M O T O R V E H I C L E SThe Department of Motor Vehicles has a budget of approximately $945.9 millionand 8,251 employees to provide vehicle licensing, drivers' license, and othervehicle-related services.

A D O P T E D SOLUTIONSThe Budget includes the following significant changes:

Reallocation of Motor Vehicle License Fee to support Local Law EnforcementRealignment$300 million will be shifted from departmental support costs to localpublic safety programs.

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Vehicle Registration Fee IncreaseAn increase in registration fees of $12 pervehicle will be implemented, which will generate approximately $348 million inannual revenue. This will fully fund the Department's vehicle registration program.

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N A T U R A L RESOURCES

N A T U R A L R E S O U R C E S

p~r^he Natural Resources Agency consists of 26 departments, boards, commissions,J i , and conservancies responsible for administering programs to conserve, protect,

restore, and enhance the natural, historical, and cultural resources of California.The 2011 Budget Act includes total funding of $10.3 billion ($1.9 billion General Fund and$8.4 billion other funds) for all programs included in this Agency.

ADOPTED SOLUTIONSState Responsibility Area FeesA shift of $50million to new state responsibilityarea fees in 2011-12. Legislation requires the Board of Forestry to establish a fireprevention fee, up to $150 perstructure, within state responsibility areas. W hen fullyimplemented, state responsibility area fees will reduce General Fund costs,and ensure that residents living indeveloped w ildland areas pay for a portion of thefire protection and medical emergency response benefits that they receive.Eliminate Funding for CAL FIRE's Fourth FirefighterA decrease of $3.6 millionin 2010-11 and $30.7 million in2011-12 as a result of reducing CAL FIRE's staffinglevels to three firefighters perengine.Risk-Based Reduction to CAL FIRE's Fire Protection ProgramA decrease of$12.8 million in2011-12. CAL FIRE will identify budget savings that will have thelowest public safety risk, such as reducing winter-time staffing in Southern California,

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N A T U R A L RESOURCES

switching theVery Large Air Tanker to a call-when-needed basis, and reducingfunding for defensible space inspections.Reduction to State ParksA decrease of $11 million in2011-12. The Departmentof Parks and Recreation developed a comprehensive park closure plan that takesinto consideration several factors, including (1) the relative cultural and naturalresource significance of each state park, (2) the attendance of each state parkto minimize the impact to park visitation, and (3) net budget savings. W hen fullyimplemented, theexpenditure reductions w ill generate $22 million in ongoingGeneral Fund savings.Proposition IE Fund ShiftA shift of $16 million to Proposition IE funds in2011-12to support flood management activities. Proposition IE, approved by the voters in2006, authorizes $4.09 billion ingeneral obligation bonds to improve flood protection.The Budget will shift $16 million currently dedicated to levee maintenance. Deltalevees, and floodplain mapping activities from the General Fund to Proposition IE.


Oil and Gas Permitting and Enforcement AugmentationAn increase of $2.3 millionOil, Gas, and Geothermal A dministrative Fund and 16.2positions in2011-12.California oil and gas operators have been experiencing significant delays in projectapproval, perm itting, and construction site review. The Budget will enable theDepartment of Conservation to address additional permitting workload and enhancethe Department's existing regulatory oversight of oil and gas development.

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E N V I R O N M E N T A L PROTECTION

E N V I R O N M E N T A L P R O T E C T I O N

The Environmental Protection Age ncy works to restore, protect, and enhanceenvironmental quality. The'Agency coordinates state environmental regulatoryprograms and ensures fair and consistent enforcem ent of environmental laws.

A D O P T E D SOLUTIONFund Shift to Support Water Quality and Water Rights ProgramsA General Funddecrease to the State Water Resources Control Board in 2011-12 of $24.3 millionand increases in fees for Water Quality Programs ($21.5 million Waste DischargePermit Fund) and Water Rights Programs ($3.5 million Water Rights Fund).

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H E A L T H A N D H U M A N SERVICES

H E A L T H A N D H U M A N S E R V I C E S

fT77he Health and Hum an S ervices Agency oversees 12 dep artm ents and other stateA entities such as boards, comm issions, councils, and offices that provide health and

social services to California's most vulnerable and at-risk residents.The 2011 Budget Act includes total funding of $88.2 billion ($28.6 billion General Fundand $59.6 billion other funds) for all programs overseen by this Agency.

D E P A R T M E N T O F H E A L T H CARE SERVICESMedi-Cal, California's Medicaid program, is administered by the Department of HealthCare Services (DHCS). Medi-Cal is a public health insurance program that providescomprehensive health care services at no or low cost for low-income individuals.The federal government dictates a mandatory set of basic services including, but notlimited to, physician services, nursing facility services, hospital inpatient and outpatientservices, laboratory and radiology services, and family planning. In addition to thesemandatory services, the state provides optional benefits such as outpatient drugs,home and community based waiver services, and medical equipment, which avoid morecostly services.Medi-Cal costs historically have grown between 6 and 8 percent annually because ofhealth care inflation and caseload growth. Over the current year, spending is projected todecline by approximately 4.7 percent due to enacted program savings (after adjusting for

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the end of federal stimulus funding). Absent these savings, costs would have grown byapproximately 4.9 percent.

A D O P T E D S O L U T I O N SLimit Utilization of ServicesEstablished utilization controls at a level that ensuresthat 90 percent of the beneficiaries w ho utilize a particular service remain unaffec ted.Specifically, the controls set a maximum annual benefit dollar cap on hearingaids ($1,510) and limits the number of doctor visits to seven per year prior tophysician authorization. The limits on hearing aids save an estimated $229 ,000 in2011-12. The limit on physician visits saves an estimated $41 million in 2011-12.These changes take effect October 1, 2011.Require Beneficiaries to Share in the Cost of ServicesBeginning November 1,2011, a $5 copayment on physician, clinic, and dental services is required, resultingin savings of $157.3 million in 2011-12. There will also be a $50 copaymenton emergency room services (saves $96.8 million in 2011-12), a $100/day and$200 maximum copayment for hospital stays (saves $128.7 million in 2011-12),and $3/$5 copayments for pharmacy based on the drug status (saves $128.4 millionin 2011-12).Eliminate Adult Day Health Care and Other BenefitsEliminated the optional AdultDay Health Care program for savings of $169.6 million in 2011-12. Approximately35,000 beneficiaries use Adult Day Health Care services each month in abotjt330 centers statewide. Other benefit changes include restrictions to supplementalnutrition products ($13.8 million) and ending coverage of over-the-counter cough andcold medications ($2.1 million).Provider Payment ReductionsReduced provider payments by 10 percent forphysicians, pharmacy, clinics, medical transportation, hom e health, family healthprograms, certain hospitals, and nursing facilities. Consistent with the 10-percentreductions proposed for other providers, this proposal would also reduce ratesfor long-term care nursing facilities by 10 percent. This action will require federalapproval and save an estimated $623.4 million in 2011-12.Extend the Existing Hospital FeeExtended the existing hospital fee throughJune 30, 2011. Fee revenue is used to leverage federal funding to providesupplemental payments to hospitals for the provision of Medi-Cal services and tooffset General Fund. This is estimated to save $210 million General Fund in 2010-11.

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Collect Managed Care Drug RebatesImplemented an option provided by federalHealth Care Reform to begin collecting drug rebates for drugs dispensed in managedcare plans. The Medi-Cal program already collects significant rebates for drugsdispensed in the fee-for-service component of the program. This is estimated tosave $64 million General Fund in 2011-12.Medi-C al Wa iver The recently approved Medi-Cal waiver provides for up to$400 million in savings annually that can be claimed w ith expenditures in state-onlyprograms (federal waiver funds can only be claimed if qualifying health care expensesare incurred). Current projections are that the state will fall short of that level in2010-11. The state will petition the federal government to make additional waiverfunds available that will be claimed with expenditures by public hospitals. The statewill split the funds with public hospitals until the state achieves the full $400 millionsavings target. This is estimated to save up to $95.2 million General Fund in 2010-11depending on the final expenditures for state-only programs.State Share of Inter-Governmental TransfersLocal governments that operateMedi-Cal managed care plans have the option of submitting an Inter-GovernmentalTransfer (IGT) to fund the non-federal share of rate increases, and this implements afee equal to 20 percent of the IGT. Fee revenue will be used to offset General Fundcosts in the Medi-Cal program. There are currently 17 counties that operateMedi-Cal managed care plans and they will be subject to the fee if they chooseto participate in this voluntary program. This is estimated to save $34.2 millionGeneral Fund in 2011-12.

O T H E R C H A N G E SThe Budget includes the following significant changes:

Federal Drug Rebate CostsAn increase of $70 million in 2011-12 for drug rebatecosts to be reim bursed to the federal government as a one-time reconciliationpayment resulting from changes made by Health Care Reform.Adult Day Health Care (ADHC) TransitionAn increase of $85 million in 2011-12 toprovide funding for ADHC transition assistance and other long-term care services.

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M A N A G E D R I S K M E D I C A L I N S U R A N C E B O A R DThe Managed Risk Medical Insurance Board administers five programs that provide healthcoverage through commercial health plans, local initiatives and county-organized healthsystems to certain persons who do not have health insurance.

A D O P T E D SOLUTIONSIncrease PremiumsIncreased Healthy Families Program premiums for familieswith incomes at or above 150 percent of poverty for General Fund savings of$22.8 million. Upon federal approval, premiums would increase for the income groupfrom 150 to 200 percent of poverty by $14 per child (from $16 to $30) and increasethe maximum limit for a family with three or more children by $42 for a familymaximum of $90. For families with incomes from 200 to 250 percent of poverty,premiums would increase by $18 per child (from $24 to $42) and the maximum limitfor a family with three or more children would increase by $54 to $126.Increase Co-PaymentsIncreased Healthy Families Program co-paymentsfor emergency room visits from $15 to $50 and inpatient stays from $0 to$100 per day ($200 maximum per admission) to conform to a similar Medi-Calcost-containment proposal. This would result in savings of $4.9 million.Vision Benefit Cost ContainmentAdopted cost containment measures for visionservices to achieve $3.3 million in General Fund savings in 2011-12.

D E P A R T M E N T O F D E V E L O P M E N T A L S E R V I C E SThe Department of Developmental Services serves approximately 243,000individuals with developmental disabilities in the community and 1,970 individuals instate-operated facilities. The Budget includes $4.6 billion ($2.6 billion General Fund).Services are provided through the developmental centers and one community facility andthe regional center system.

A D O P T E D SOLUTIONS

Developmental Services S ystem W ide Redu ctionsA net decrease of$582.2 million over the two-year period from 2010-11 to 2011-12. Legislationauthorized various cost containment measures to achieve ongoing savings of$389.3 million.

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D E P A R T M E N T O F M E N T A L H E A L T HThe Department of Mental Health provides oversight of community mental healthprograms and direct services through state hospitals. The Budget includes $4.5 billion($1.3 billion General Fund) in 2011-12.

A D O P T E D S O L U T I O N SFund Community Services Programs with the Mental Health Services Fund (MHSF) A de crease of $861.2 million in 2011-12. Legislation authorizes the one-tim e useof the MHS F for the Early and Periodic S creening, Diagnosis and Treatment program ,the Mental Health Managed Care program, and mental health services to specialeducation students.

The Budget provides $98.6 million MHSF to county mental health agencieson a one-time basis for mental health services to special education students.O ngoing responsibility for these services is realigned to school districts. S hiftingthe responsibility for providing mental health services, including out-of-homeresidential services, is expected to contain costs and ensure that servicesprovided are related to educational outcom es.

D E P A R T M E N T O F S O C I A L S E R V I C E SThe Department of Social Services (DSS) serves, aids, and protects needy and vulnerablechildren and adults in ways that strengthen and preserve fam ilies, encourage personalresponsibility, and foster independence .

A D O P T E D S O L U T I O N SC A L I F O R N I A W O R K O P P O R T U N I T Y AND R E S P O N S I B I L I T Y T O K I D S ( C A L V V O R K S )

Reduce the Time Limit on Aid for AdultsA decrease of $102.6 million in 2011-12from reducing the cumulative total number of months aided adults can receive amonthly cash benefit from 60 months to 48 months. This reduction will result inapproximately 22,500 adults being removed from aid.Reduce Monthly Grants by 8 PercentA decrease of $314.3 million in 2011-12from reducing the maximum monthly CaiWORKs aid payment levels by 8 percent.This reduction will reduce the maximum monthly grant for a family of three from$694 to $638.

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Reduce Earned Income DisregardA decrease of $83.3 million in2011-12 fromreducing theamount of income that is not counted for purposes of calculating afanriily's monthly grant. The income disregard will be modified to not count the first$112 of monthly earned income and 50percent of each dollar earned beyond $112.Extend Short-Term R eforms A net decrease of $369.4 million in2011-12 fro mextending, forone year, the reduction in the county single allocation for employmentservices and S tage 1 child care-that has been inplace since 2009-10.Suspend Cal-Learn ProgramA decrease of $43.6 million in2011-12 fro m aone-year suspension of the Cal-Learn program, which provides intensive casemanagem ent, supportive s ervices, and fiscal incentives and disincentives toencourage teen parents to earn a high school diploma orequivalent deg ree.This reduction would maintain fiscal incentives during this period for pregnant orparenting teenagers'who continue to make satisfactory progress on their education.

I N - H O M E SUPPORTIVE SERVICES (IHSS)Eliminate Services for Recipients w ithout Medical Ce rtificationA net decrease of$67.4 million in2011-12 from requiring the provision of IHSS to be contingent upona written certification from a licensed health care professional that personal careservices are necessary to prevent out-of-home care.Implement Community First Choice OptionA decrease of $128 million in2011-12from theassump tion that the state w ill receive a 6-percent increase in federalmatching funds byexercising a federal option for home and community-basedattendant services benefiting all IHSS federally eligible recipients.Implement Pilot Project for Medication Dispensing MachinesA decrease of$140 m illion in2011-12 from implementing a pilot project that would utilize automatedmedication dispensing machines with associated telephonic reporting services formonitoring and assisting Medi-Cal recipients with taking prescribed medications.

SUPPLEMENTAL SECURITY I N C O M E / S T A T E SUPPLEMENTARY P A Y M E N T (SSI/SSP)Reduce SSI/SSP Grants for Individuals to the Federal MinimumA net decreaseof $178.4 million in2011-12 from reducing monthly SSP grants for individuals to thefederal minim um payment standard. W ith this reduction, themaximum monthly SS I/SSP cash grant for individuals will be reduced by $15 per month (from $845 to $830).SSP grants for couples are already to the federal minimum .

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J E A LT H A N D H U M A N SERVICES

I N F O R M A T I O N T E C H N O L O G Y P R O J E C T SDelay Development of the LEADER Replacement ProjectA decrease of$14.1 million in 2010-11 and $13 million in 2011-12 from delaying development ofthe Los Angeles Eligibility, Automa ted-Determ ination, Evaluation and ReportingReplacement (LEADER Replacement) system. This project will replace Los AngelesCounty's existing automated system for eligibility and benefit determination forCaiWORKs, CalFresh, Medi-Cal, and various social services programs.


Foster Care Rate IncreaseAn increase of $17.4 million in 2011-12 to increasepayment rates and grant a cost-of-living adjustm ent for foster fam ily hom esas well as prospective Adoption Assistance Payment, Kinship GuardianshipAssistance Payment, and Non-Related Legal Guardian payment rates required byjudicial decisions.Funding for Residential Care for Seriously Emotionally Disturbed PupilsA decreaseof $68 million in 2011-12 to reflect a shift in responsibility of funding for SeriouslyEmotionally Disturbed placements from the DSS to schools and a decrease in countyadministrative costs for this program. Of the total amount, $66.6 million will now beincluded in Proposition 98 General Fund for this program.

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CORRECTIONS A N D R E H A B I L I T A T I O N

C O R R E C T I O N S A N D R E H A B I L I T A T I O N

The California Department of Corrections and Rehabilitation (CDCR) is responsiblefor the incarceration of convicted felons, the supervision of these felons after theirrelease on parole, and the provision of rehabilitative strategies designed to successfullyreintegrate offenders into their communities. The CDCR is responsible for providing safeand secure detention facilities and necessary support services to inmates, including food,clothing, academic instruction, and vocational training.The 2011 Budget Act includes total funding of $10.1 billion ($9.8 billion General Fund and$252 million other funds) for all programs included in this Agency.

ADOPTED SOLUTIONSCommunity Corrections (AB 109)The Budget establishes a CommunityCorrections Grant Program and provides full funding for the implementation ofAB 109.' Lower-level offenders will begin to be sentenced, housed, supervised,and treated locally. Offenders who commit serious, violent, or sex offenses willcontinue to be sent to state prison. In addition, lower-level offenders w ill besupervised by local law enforcement upon release from state prison and revocationproceedings will be handled by the courts. Beginning July 1, 2013, the courts willalso assume responsibility for providing revocation proceedings for state parolees.This historic change in California's criminal justice system will allow Caiifomiato focus its resources and begin solving the prison overcrow ding crisis wh ile

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improving public safety outcomes. The Budget also contains $33.9 million for earlyimplementation efforts and training related to this change.Rehabilitation ServicesA one-time decrease of $101 million General Fund forCDCR rehabilitation services to restructure these services in light of the significantchanges to CDCR's inmate population.Reduction to Receiver's Medical Services ProgramA decrease of $82.6 million in2010-11 and $163.2 million in 2011-12, which represents 5-percent and 10-percentreductions, respectively. This reduction is intended to lower the cost of deliveringmedical care to inmates through the implementation of cost-saving measures.


Community Corrections Performance Incentive GrantsThe Budget includes$89.2 million General Fund for the California Community Corrections PerformanceIncentive Act. The Act established a system of performance-based funding thatshares state General Fund savings with county probation departments when theydemonstrate success in reducing the number of adult felony probationers goingto state prison. Through 2010-11, approximately 6,200 felony probationers weresuccessfully kept out of state prison as a result of this program.Structural S hortfall Fund ing An increase of $414.9 m illion in 2010-11 as a resultof various structural and operational shortfalls. W ith improved internal controlsand transparency in the Department's fiscal operations, along with an increaseof $379.6 million General Fund beginning in 2011-12 to address CDCR's ongoingstructural shortfalls, the Administration expects CDCR to manage its budget to avoidfuture shortfalls.Board of State and Community CorrectionsThe Budget includes legislation thatwill eliminate the Corrections Standards Authority as of July 1, 2012, and reconstituteit as an independent Board of State and Community Corrections. The Board willfocus on com mu nity corrections issues which are particularly relevant given the ,public safety realignment enacted in AB 109.

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K T H R U 1 2 E D U C A T I O N

K T H R U 12 E D U C A T I O N

f = y he 2011 Budget A ct includes total funding of $64.1 billion ($34.7 billion General FundJ . . and $29.4 billion other funds) for all K-12 Education programs.

PROPOSITION 98A voter-approved constitutional amendment. Proposition 98, guarantees minimumfunding levels for K-12 schools and community colleges. The guarantee, which went intoeffect in the 1988-89 fiscal year, determines funding levels according to multiple factorsincluding the level of funding in 1986-87, General Fund revenues, per capita personalincome and school attendance growth or decline. The sections that follow provide anoverview of K-12 funding adjustments, while the Higher Education section contains theProposition 98 adjustments for the Community Colleges.For 2011-12, the Proposition 98 Guarantee is $48.7 billion, of which $32.9 billion isGeneral Fund. This Guarantee level reflects an increase in General Fund revenues in2011-12, the expiration of a variety of short-term tax increases, and the rebenching of theGuarantee for revenue and program shifts.Rebenching the P roposition 98 Gu aranteeAccording to the Proposition 98 constitutional formula, K-14 education is guaranteedthe same percentage of General Fund revenue that was provided in 1986-87. W hen afactor in the calculation changes or a new program is added. Proposition 98 is adjusted

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' T H R U 12 E D U C A T I O N

or "rebenched" to accurately reflect the base year distribution of state revenues toK-14 education. In 2011-12, there are four new rebenching impacts:

An increase of $578.1 million to ensure that the Guarantee does not decrease withthe shift in motor vehicle fuel revenues. Legislation eliminated the sales tax andincreased the excise tax on motor vehicle fuel in 2010-11, reducing the amount ofrevenue that is counted as General Fund within the State Appropriation Limit for thepurposes of the Proposition 98 calculation.An increase of $221.8 million to reflect the inclusion of mental health andout-of-home care services within the Guarantee. The Budget shifts responsibility formental health services, including out-of-home residential services, from local me ntalhealth and county welfare departments to school districts.A decrease of $1,134 billion to reflect the exclusion of child care programs, with theexception of part-day preschool programs, from Proposition 98. The Budgetshifts the Child Care program fund source from Proposition 98 General Fund tonon-Proposition 98 General Fund. The part-day preschool programs are still fundedwithin Proposition 98.A decrease of $1.7 billion to ensure that the total Guarantee is unchanged asa result of new local revenue related to redevelopment agencies. The Budgetrequires local agencies to provide remittances totaling $1.7 billion in 2011-12 to K-12school districts and county offices of education located within the project area of aredevelopment agency.

In addition to the above adjustments. Proposition 98 is decreased $2.1 billion as a resultof the reduction in General Fund sales tax revenue related to the realignment of publicsafety programs to counties.

PROPOSITION 98 K-12 E D U C A T I O NADOPTED SOLUTIONS

Defer $2.1 billion in K-12 Education spendingThis additional deferral is necessaryto maintain funding for K-12 education programs at the 2010-11 funding level.Part-Day State Presc hool A decrease of $62.3 million, reflecting the follow ing: (1)a decrease of $16.1 million to reduce income eligibility to 70 percent of the StateMedian Income; and (2) a decrease of $46.2 million to reduce provider contractsacross-the-board.

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K THRU 12 E D U C A T I O N

O T H E R C H A N G E SThe Budget includes the following significant Proposition 98 General Fund policy andworkload adjustments necessary to support the operations of K-12 Education programs:

Shift In Mental Health Services from Counties to SchoolsThe Budgetrebenches the Proposition 98 guarantee and provides an increase of $221.8 millionProposition 98 General Fund to shift the responsibility for providing mental healthservices, including out-of-home residential services, required under federal lawfrom county mental health departments and county welfare departments toschool districts. The Budget also reflects the repeal of the AB 3632 mandate.Additionally, the Budget includes $2.8 million in one-time federal carryover funds forprogram oversight and technical assistance while transitioning these services fromcounties to schools, and for O ffice of A dministrative Hearings caseload resultingfrom increased AB 3632 mental health service related disputes. The Budgetcontinues to provide $98.6 million in Proposition 63 funds to county mental healthagencies on a one-time basis in 2011-12. Schools districts can contract with countiesto provide services using Proposition 63 funds, but schools would be responsible forany costs exce eding this amou nt. In total, the Budget provides $389.4 million fromall fund sources, including $69 million in federal funds currently budgeted for mentalhealth services.New Charter SchoolsA total of $11 million to provide charter schools thatcommenced operations between 2008-09 and 2011-12 with supplementalcategorical funding. This funding ensures new charter schools have accessto the same funding as existing charter schools and traditional public schools.New conversion charter schools would be excluded from this funding and wouldinstead receive a pass-through paym ent from the school district.Clean Technology and Renewable Energy TrainingAn increase of $3.2 million tosupport the Clean Technology and Renewable Energy Job Training, Career TechnicalEducation, and Dropout Prevention Program, whic h creates school-businesspartnerships that provide occupational training for at-risk high school students inareas such as conservation, renewable energy, and pollution reduction.Extension of Flexibility for K-12 School DistrictsThe Budget extends the followingflexibility options to school districts for an additional two years: categorical programflexibility, routine and deferred maintenance expenditure requirements, class sizerequirements, instructional time requirements, sale of surplus property, instructionalmaterials.purchase requirements, and local budget reserve requirement.

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K TiKRu 12 E D U C A T I O N

N O N - P R O P O S I T I O N 98 K -12 E D U C A T I O N

A D O P T E D SOLUTIONSEliminate the O ffice of the S ecretary of Edu cation A decrease of $1.9 million toOSE and a shift of $274,000 to the State Board of Education as part of streamlininggovernment operations. These adjustments result in an overall decrease of$1.6 million General Fund in 2011-12, and $400,000 in the current year.Child Care and DevelopmentA decrease of $180.4 million to child care anddevelopment programs, reflecting the following: (1) a decrease of $37.4 million toreduce license-exempt provider rates from 80 percent to 60 percent of licensedrates for voucher-based programs; (2) a decrease of $12.4 million to reduceincome eligibility to 70 percent of the State Median Income; and (3) a decrease of$130.7 million to reflect an across the board reduction in provider contracts.


Eliminate Funding for CALTIDESA decrease of $2,124,000 federal funds and3.0 positions to the Department of Education to reflect the elimination of CaliforniaLongitudinal Teacher Integrated Data System (CALTIDES) funding. The CALTIDESwas intended to provide a statewide longitudinal teacher database that would serveas the central state repository of information regarding the teacher workforce;however, this data sy stem is not a critical need.

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HIGHER E D U C A T I O N

H I G H E R E D U C A T I O N

California's system of higher education performs an important role in equippingCalifornians with the knowledge and skills necessary to meet the challenges ofthe future. Major entities comprising higher education in California include the Universityof California (UC), the California State University (CSU), the California CommunityColleges (CCC), and the California Student Aid Commission (CSAC).The 2011 Budget Act includes total funding of $22.1 billion ($12.2 billion General Fund and$9.9 billion other funds) for all programs included in these agencies.

UNIVERSITIES , COLLEGES, A N D COMMISSIONSThe Budget contains the following Higher Education solutions:

ADOPTED SOLUTIONSReductionsA decrease of $650 million each to UC and CSU, and a decreaseof $1.5 million to the Hastings College of the Law. The budget reductions will beimplemented in a manner that minimizes tuition and enrollment impacts.Com munity C ollege Apportionment Re ductionA decrease of $400 millionGeneral Fund in apportionme nt fun ding as a result of im plementing a base reduction.Furthermore, apportionm ent funding decreased by $129 million due to an additionaldeferral that will be repaid in the 2012-13. However, these reductions are offset by

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H I G H E R E D U C A T I O N

$110 million in additional student fee revenue as a result of increasing student feesfrom $26 per unit to $36 per unit. Therefore, the net apportionment reduction is$419 m illion.Income and Need Verification for Cal Grant Program Renewal AwardsA decreaseof $100 million in 2011-12. This solution requires the CSAC to verify each year thatCal Grant renewal recipients do not exceed income and asset ceiling levels as arequirement to remain program eligible.Student Loan Default Risk Index for Cal Grant Program ParticipationA decreaseof $10.7 million in 2011-12. Any institution of higher education whose three-yearstudent loan default rate exceeds certain levels is prohibited from participating in theCal Grant program for one academic year.State Support for Local LibrariesA decrease of $15.2 million General Fund localassistance for public libraries provided through the following programs administeredby the California State Library: Public Library Foundation, California EnglishAcquisition and Literacy Program, and the California Library Services Act.California Postsecondary Education Commission (CPEC) ReductionTo achievestatewide efficiencies and reduce state operations. General Fund support of CPECis eliminated in 2011-12. CPEC would continue to administer a component of thefederal Improving Teacher Quality Grants Program in 2011-12.

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L A B O R A N D WORKFORCE D E V E L O P M E N T

L A B O R A N DW O R K F O R C E D E V E L O P M E N T

'he Labor and W orkforce Developm ent Agency was established to addressissues relating to C alifornia workers and their em ployers. The Agency is primarily

responsible for three functions: labor law enforcement; workforce development;and benefit payment and adjudication.Th e 2011 Budget Act includes total funding of $26.4 billion ($370.7 million General Fundand $26 billion other funds) for all programs included in this Agency.

E M P L O Y M E N T D E V E L O P M E N T D E P A R T M E N TThe Employment Development Department (EDD) administers the UnemploymentInsurance (Ul), Disability Insurance and Paid Family Leave programs and collects payrolltaxes from employers, including the Personal Income Tax. The EDD connects job seekerswith employers through a variety of job services programs and at one-stop servicecenters, and provides employment training programs through the .Employment TrainingPanel and the W orkforce Investment Act of 1998. The B udget includes $26 billion($361 million General Fund) to support the EDD programs.

A D O P T E D SOLUTIONSOffset Unemployment Interest PaymentA savings of $319.5 million in 2011-12.The Budget authorizes a loan from the Unemployment Compensation Disability Fundto the General Fund to pay for the Ul interest expense.

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L A B O R A N D W O R E C F O R C E D E V E L O P M E N T

O T H E R C H A N G E SThe Budget includes the following significant change:

Alternative Base Period Program SupportAn increase of $48 millionUnemployment Fund in 2010-11 to implement an Alternative Base Periodmethodology which expands eligibility for Ul benefits to new entrants and sporadicparticipants in the labor market who were previously inelligible. Legislation amendsthe 2010 Budget Act and appropriates $48 million from the American Recoveryand Reinvestment Act incentive funds tied to implementation of an AlternativeBase Period methodology. These funds will be used to support program operationsthrough fiscal year 2014-15.

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GENERAL GOVERNMENT: NON-AGENCY DEPARTMENTS

G E N E R A L G O V E R N M E N T :N O N - A G E N C Y D E P A R T M E N T S

f-p=3he 2011 Budget Act includes total funding of $2.1 billion ($468.9 millionL , General Fund and $1.6 billion other funds) for General Government programs.

C A L I F O R N I A DEPARTMENT OF FOOD AND AGRICULTUREThe California Department of Food and Agriculture protects and promotes California'sagriculture industry and ensures that only safe and quality food reaches the consumer.Following the adopted solutions below, approximatel-y $75 million General Fund remainsin the Department's 2011-12 budget for a number of programs, such as agricultural plantand animal health, pest prevention, and food safety services.

ADOPTED SOLUTIONSEliminate General Fund Support for the Network of California FairsA permanentdecrease of $32 million beginning in 2011-12 as a result of eliminating state fundingfor support of the fairs.Reduce General SupportA permanent decrease to various department programsof $19 million in 2011-12. In 2012-13, an additional $12 million in ongoing reductionswill be implemented, resulting in total annual savings of $31 million. This reductionimpacts various programs relating to measurement standards, animal health and foodsafety, and plant health and pest prevention.

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G E N E R A L G O V E R N M E N T : N O N - A G E N C Y DEPARTMENTS

P U B L I C U T I L I T I E S C O M M I S S I O NThe California Public Utilities Commission (PUC) regulates privately ownedtelecommunications, electric, natural gas, and water companies. The PUC oversees thesafety of gas transmission and distribution system s in California.

A D O P T E D S O L U T I O NThe Budget includes a one-time transfer of up to $155 million from the GasConsumption Surcharge Fund to the General Fund. In addition, the PUC wasauthorized to suspend programs funded by the Gas Consumption Surcharge Fund,such as energy efficiency financing programs, if sufficient funding from this source isnot av ailable.

OTHER CHANGESThe Budget includes the following signicant change:California Renewable Resources Ac t An increase of $2.1 million Public UtilitiesReimbursement Account and 10 positions in 2011-12 to implement a 33-percentRenewable Portfolio Standard (RPS) by 2020. The enabling legislation requires the PUCto determine annual procurement targets and enforce compliance, review and approveinvestor-owned utility (IOU) renewable energy procurement plans, review IOU contractsfor RPS eligible energy, establish standard terms and conditions for IOU contracts foreligible renewable energy, and calculate market price referrals for non-renewable energyas benchmarks for renewable energy pricing.

C O M M I S S I O N O N S T A T E M A N D A T E SThe Commission on State Mandates is a quasi-judicial agency that hears test claims todetermine whether local agencies and school districts are entitled to reimbursement forincreased costs mandated by the state. The Constitution requires the Legislature to eitherfund or suspend specified mandates in the annual Budget Act.

A D O P T E D SOLUTIONSSuspension of State MandatesA decrease of $233.5 million in 2011-12 as a resultof suspending most mandates not related to law enforcement or property taxes.

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G E N E R A L G O V E R N M E N T ; N O N -A G E N C Y DEPARTMENTS

Deferral of Pre-2004 Mandate ObligationsA decrease of $94 million in 2011-12 asa result of deferring the 2011-12 payment for costs incurred prior to 2004-05.

V E T E R A N S A F F A I R SCalifornia owns and operates six veterans homes located in Yountville, Chula Vista,B arstow, Lancaster, Ventura, and W est Los Angeles. Two additional homes in Reddingand Fresno are under construction. These homes provide residential and medical careservices to honorably discharged California veterans who served on active duty and areover the age of 62 or disabled. County Veterans Services Offices, in coordination with theCalifornia Department of Veterans Affairs, assist veterans in receiving the federal benefitsfor which they are eligible.

A D O P T E D SOLUTIONSDelay Opening of Redding and Fresno Veterans HomesA decrease of$20.2 million to reflect savings achieved by delaying the opening of the Redding andFresno Veterans H omes .Reduce State Support for County Veterans Services OfficesA decrease of$7.3 million to reduce state operations for veterans' services and local assistance toCounty Veterans Services Offices.Greater Los Angeles and Ventura County Veterans Home Skilled Nursing Facility(SNF) Delay and Reduced Staffing CostsA decrease of $6.1 million to reflecta postponem ent to the opening of the SNF at the W est Los Angeles VeteransHome and to reflect revised census projections at the Lancaster and VenturaVeterans Homes.Enterprise-Wide Veterans Home Information System and Federal SharingAgreements SavingsA decrease of $5.6 million to reflect savings achievedthrough efficiencies of the Enterpnse-W ide Veterans Hom es Information S ystem andsavings resulting from th e cancellation of federal sharing agreements at the W estLos Angeles Veterans Home.

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T A X RELIEF A N D L O C A L GOVERNMENT

T A X R E L I E F A ND L O C A L G O V E R N M E N T

This part of the Budget contains state and federal funds used for tax relief andprovided to local governments. The largest programs are the homeowners' propertytax exemption ($442 million General Fund), theapportionment of fuel taxes to localgovernments ($1.7 billion special fund), and the apportionment of Vehicle License Fees tolocal govemments ($153million special fund).

ADO PT ED SOLUTIONSEliminate Funding for Williamson Act SubventionsA decrease of $10million.The funding partially backfilled revenues lost by local governments when theyentered into voluntary contracts with landowners to assess property at a lower ratein exchange for the landowners' agreement to use the land only for agricultural oropen space purposes.Voluntary Alternative Redevelopment ProgramSavings of $1.7 billion in2011-12associated with ABxl 27, which allows redevelopment agencies (RDAs) to continuein operation provided their establishing cities or counties agree to make $1.7 billion inpayments to K-12schools. This will reduce the state's Proposition 98 General Fundcosts in 2011-12 by a commensurate amount. RDAs whose establishing cities orcounties do not agree to make these payments will

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