2024-25 BUDGET

The 2024-25 Budget:

California Department of
Corrections and Rehabilitation
G A B R I E L P E T E K | L E G I S L AT I V E A N A LY S T | F E B R U A R Y 2 0 2 4

SUMMARY
In this brief, we provide an overview of the total amount of funding in the Governor’s proposed 2024-25
budget for the California Department of Corrections and Rehabilitation (CDCR), as well as assess and make
recommendations on several specific budget proposals. Below, we provide a summary of some of our
major recommendations.
Prison Capacity Reduction. The Governor proposes reductions to CDCR’s funding to account for
previous capacity reductions and for the planned deactivation of a prison in March 2025. In addition, the
budget reflects operation of nearly 15,000 empty beds in 2024-25, which is projected to grow to about
19,000 by 2028. This means the state could deactivate around five additional prisons. However, the
administration indicates that doing so could create challenges, such as reducing the availability of treatment
and reentry programs. We find that, while mitigating such challenges could create some new costs, these
would be far less than the nearly $1 billion needed to continue operating five prisons. Accordingly, we
recommend that the Legislature direct CDCR to begin planning to reduce capacity by deactivating prisons
and report on how to mitigate any resulting challenges.
COVID-19 Health Care Costs. The Governor proposes $38 million ongoing General Fund for
CDCR COVID-19 health care costs. We find that the department’s proposed methodology to estimate its
funding need is flawed because it does not factor in recent trends in COVID-19 prevalence or projected
declines in the prison population. Additionally, CDCR has not explored options to reduce costs by leveraging
employee health insurance. Accordingly, we recommend the Legislature withhold action on the budget-year
request and direct CDCR to update the proposal to address our concerns. We also recommend that the
Legislature reject the funding proposed for the future years.
Prison Medical Care Budget Shortfall. The Governor proposes a $40 million one-time General Fund
augmentation in 2024-25 to cover projected overspending in the prison medical care budget. We find that,
in recent budget years, CDCR has been able to address its overspending without an augmentation by using
savings elsewhere in its budget. However, the proposal does not make it clear why the department cannot
continue to do so. In addition, the department did not provide adequate justification on how it projected the
shortfall. Accordingly, we recommend the Legislature reject the Governor’s proposal.
Contract Medical Services. The Governor proposes various changes to the budgeting methodology
used in the biannual adjustment process that would result in a net increase of $24 million for contract medical
services in 2024-25. We find that some of the proposed changes appear reasonable and would better align
the department’s budget with its actual needs. However, we find that other changes are lacking because they
would not account for changes in the size or makeup of the prison population. Accordingly, we recommend
the Legislature withhold action on the proposal and direct CDCR to submit a revised proposal at the
May Revision that addresses our concerns.

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2024-25 BUDGET

OVERVIEW
Roles and Responsibilities. CDCR is
responsible for the incarceration of certain adults
convicted of felonies, including the provision
of rehabilitation programs, vocational training,
education, and health care services. As of
January 17, 2024, CDCR was responsible for
incarcerating about 93,900 people. Most of these
people are housed in the state’s 32 prisons and
34 conservation camps. The department also
supervises and treats about 35,300 adults on
parole and is responsible for the apprehension of
those who commit parole violations. In addition,
the department operates the Pine Grove Youth
Conservation Camp to provide wildland firefighting
skills to justice-involved youth from counties that
have entered into contracts with CDCR.

declining prison population and deactivation of
facilities, various proposed General Fund budget
solutions, and expiration of previously authorized
one-time spending. These reductions are partially
offset by various proposed augmentations, such
as funding for increased costs associated with
providing medical care to people in prison and
paying for workers’ compensation claims. (The
proposed $493 million decrease does not reflect
anticipated increases in employee compensation
costs in 2024-25 because they are accounted
for elsewhere in the budget.) The proposed
budget would provide CDCR with a total of about
61,200 positions in 2024-25, a decrease of about
1,000 (2 percent) from the revised 2023-24 level.
Capital Outlay Spending Proposed for
2024-25. The Governor’s budget proposes total
expenditures of $83.3 million ($959,000 General
Fund) for capital outlay projects in 2024-25.
This amount includes (1) $82.4 million in previously
authorized General Fund lease revenue bonds
for various counties to construct or renovate
correctional facilities and (2) $959,000 in additional
General Fund proposed for the preliminary plans
phase of a project to construct a potable water
treatment system at the California Health Care
Facility in Stockton.

Operational Spending Proposed for
2024-25. The Governor’s January budget proposes
a total of about $14.5 billion to operate CDCR in
2024-25, mostly from the General Fund. Figure 1
shows the total operating expenditures estimated
in the Governor’s budget for the prior and current
years and proposed for the budget year. As the
figure indicates, the proposed spending level
reflects a decrease of $493 million (3 percent) from
the revised 2023-24 level. This decrease primarily
reflects proposed reductions associated with the

Figure 1

Total Expenditures for Operation of CDCR
(Dollars in Millions)

Adult Institutions
Adult Parole
Administration
Juvenile Institutionsb
Board of Parole Hearings
Totals

Change From 2023-24

2022-23
Actual

2023-24
Estimated

2024-25
Proposeda

Amount

$12,597
695
842
212
70
$14,415

$13,243
703
956
—
79
$14,982

$12,923
701
789
—
76
$14,488

-$321
-2
-167
—
-3
-$493

Percent
-2.0%
—
-18.0
—
-4.0
-3.3%

a Does not reflect anticipated increases in employee compensation costs because they are accounted for elsewhere in the budget.
b Legislation approved as a part of the 2020-21 budget package realigned responsibility for youths previously housed in state

institutions to the counties.
CDCR = California Department of Corrections and Rehabilitation.

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2024-25 BUDGET

STATE PRISON AND PAROLE POPULATION
AND OTHER BIANNUAL ADJUSTMENTS
Background

Governor’s Proposal

Adjustments Proposed Biannually Based
on Projected Population Changes and Other
Factors. As part of the Governor’s January budget
proposal each year, the administration requests
adjustments to CDCR’s budget based on projected
changes in the prison and parole populations in
the current and budget years. The adjustments
are made both on the overall populations and
various subpopulations (such as people housed
in reentry facilities and sex offenders on parole).
In addition, some adjustments include factors
other than population trends, such as inflation
adjustments. The administration then modifies both
types of adjustments based on updated information
each spring as part of the May Revision.

Net Increase in Current-Year Adjustments.
The Governor’s budget for 2024-25 proposes,
largely from the General Fund, a net increase
of $20.4 million in current-year adjustments.
The current-year net increase in costs is primarily
due to both a higher total prison population
and increased pharmaceutical costs relative to
what was assumed in the 2023-24 Budget Act.
This increase in costs is partially offset by various
factors, including projected decreases in costs
related to a lower-than-expected parole population
and population receiving substance use disorder
treatment in prison.

Prison and Parole Population Projected to
Decrease in 2024-25. As shown in Figure 2,
the average daily prison population is projected
to be 91,700 in 2024-25, a decrease of about
2,500 people (3 percent) from the estimated
current-year level. The average
daily parole population is
Figure 2
projected to be 35,500 in 2024-25,
a decrease of 1,000 people
State Prison
(3 percent) from the estimated
Projected to
current-year level. The projected
decrease in the prison population
140,000
is primarily due to the estimated
impact of various sentencing
120,000
changes enacted in recent years.
100,000
The projected decrease in the
parole population is primarily due
80,000
to recent policy changes that
have reduced the length of time
60,000
people spend on parole by allowing
40,000
them to be discharged earlier
than otherwise.

Net Increase in Budget-Year Adjustments.
The budget also proposes a net increase of
$8.4 million in adjustments in the budget year.
The budget-year net increase is primarily
due to increases in (1) pharmaceutical costs;
(2) reimbursements to local governments for costs
they incurred in connection with state prisons,

and Parole Populations
Decrease

Prison
Parole

20,000

2019-20

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2020-21

2021-22

2022-23

2023-24

(Estimated)

2024-25

(Proposed)

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2024-25 BUDGET

such as by providing coroner services; and (3) the
number of voice calling minutes used by people
in prison. This increase in costs is partially offset
by various factors, including projected decreases
in costs related to declines in the prison and
parole populations.

Recommendation
Withhold Recommendation Until May
Revision. We withhold recommendation on the
administration’s overall biannual adjustments

until the May Revision. We will continue to
monitor CDCR’s populations and the other
factors affecting the proposed adjustments and
make recommendations based on the updated
information available at the May Revision, including
the administration’s revised population projections.
However, we have specific recommendations
on adjustments related to voice calling, utilities,
contract medical services, and parole support
staffing, which we discuss elsewhere in this brief.

PRISON CAPACITY REDUCTION
Background
State Currently Operating 32 Prisons.
As of January 17, 2024, CDCR was
responsible for incarcerating a total of about
93,900 people—89,100 men, 4,200 women, and
600 nonbinary people. Most of these people—
about 90,800—are housed in 1 of 32 prisons owned
and operated by the state. This includes 30 men’s
prisons and 2 women’s prisons. (People who are
transgender, nonbinary, or intersex are generally
required to be housed in a men’s or women’s facility
based on their preference.) The remaining people
are housed in various specialized facilities outside
of prisons, such as conservation camps and
community reentry facilities.
Many Factors Affect Prison Housing
Placements. Prisons are typically composed
of multiple facilities (often referred to as “yards”)
where people live in housing units, recreate, and
access certain services (such as dental care).
CDCR typically clusters people with similar needs
(such the amount of security they require) in the
same yard. Accordingly, prisons differ in their ability
to meet specific needs based on the types of yards
they are composed of. Some of the key needs that
CDCR staff consider in identifying an appropriate
housing placement for each person include:
•  Security. CDCR categorizes most of its
men’s yards into a range of security levels.
(Women’s yards are not classified into
different security levels as they generally
have similar levels of security.) People
housed in higher-security yards live in cells,
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while people housed in lower-security yards
generally live in open dormitories. In some
cases, people with the same security level
must still be housed separately due to safety
concerns. For example, this can be the case
for members of opposing gangs who may try
to harm each other.
•  Health Care Treatment. Health care
needs can affect which prisons people are
housed in. For example, people with higher
medical needs are typically placed at prisons
designated as Intermediate Health Care
institutions. This generally means that they
are closer to community hospitals to facilitate
access to specialty care. In addition, people
receiving mental health care services are not
housed at certain prisons located in desert
regions of the state as they are more likely
to be taking heat-sensitive medications.
Health care needs can also affect the
specific yard within a prison that people are
placed in. For example, people receiving
the highest level of outpatient mental health
care—referred to as the Enhanced Outpatient
Program—are generally housed together
in dedicated yards. These yards generally
include housing units with medication
distribution rooms that allow nurses to prepare
and distribute medications inside the housing
unit to improve medication compliance. In
contrast, other people are typically expected
to go to a centralized medication dispensary
to receive their medications.

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2024-25 BUDGET

•  Other Needs. Various other factors can affect
where people are housed. For example, nine
prisons have restrictions to mitigate the impact
of Valley Fever—an infection caused by a
fungus in the soil that enters people’s lungs
when inhaled. Accordingly, people who have
certain medical conditions that put them at
higher risk of getting very sick or dying from
Valley Fever are not housed at these prisons.
In addition, certain prisons do not have the
necessary physical features to accommodate
people in wheelchairs.
People in Prison Are Typically Assigned
to Work, Education, and/or Treatment and
Reentry Programs. When people arrive in prison,
they receive various assessments. These include
assessments for substance use disorder, literacy,
risk of recidivism (meaning their likelihood of
reoffending after release), and criminal risk factors
that contribute to their potential for recidivism (such
as having challenges with anger management or
a need for employment skills). Results of these
assessments and other considerations—such as
people’s interests and time before release—help
CDCR staff match people to assignments, which fall
into three general categories:
•  Work. Some jobs assigned to people in
prison—such as cleaning, maintaining, and
repairing facilities; providing clerical support;
and grounds keeping—are focused on
supporting prison operations. Other jobs—
such as manufacturing traffic signs and
license plates—provide goods or services
purchased by state agencies. Jobs typically
pay between $0.08 and $1.00 per hour
depending on various factors, such as the
amount of skill required.
•  Education. CDCR provides academic
education classes ranging from adult basic
education to college as well as technical
education in a variety of career fields. Upon
completion of a class, people receive credits
that reduce the amount of time they must
serve in prison. For example, people can
earn one week of credit for completing a high
school algebra course. In addition, upon
completion of certain educational milestones,

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such as completion of a high school
equivalency program, people can receive up
to 180 days of credit.
•  Treatment and Reentry Programs. CDCR
provides cognitive behavioral treatment
programs intended to help people change
negative patterns of behavior, such as anger
management or substance use disorder
programs. In addition, CDCR offers courses
focused on workforce readiness and financial
literacy that are intended to help people
prepare for reentry into their communities.
People also receive credits for completing
these treatment and reentry programs.
Assignments are reevaluated on a regular
basis and can change throughout people’s time
in prison. For example, someone may begin their
prison sentence with an assignment to adult
basic education so that they can improve their
literacy skills to help make future education or
treatment programs more accessible to them.
After completing adult basic education classes,
they may choose to work in the prison laundry in
order to earn money. Finally, as they approach their
release date they may be assigned to a cognitive
behavioral treatment program to address their
identified need for anger management skills.
CDCR Planning to Convert Majority of
Full-Time Work Assignments to Half Time.
CDCR is in the process of promulgating regulations
to convert about three-quarters of full-time
work assignments to half-time assignments.
The department indicates that this will create
more flexibility in scheduling and allow people to
participate in both work and education or treatment
and reentry programs at the same time. In addition,
because this change will mean that many people
who currently have jobs in prison will spend less
hours working, the regulations would increase
wages for most jobs so that their total pay is not
reduced. These changes are expected to go into
effect in April 2024.
Prisons Subject to Court-Ordered Population
Limit. State-owned and operated prisons are
subject to a federal court order related to prison
overcrowding that limits the total number of people
they can house to 137.5 percent of their collective
design capacity. Design capacity generally refers

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2024-25 BUDGET

to the number of beds CDCR would operate if it
housed only one person per cell and did not use
bunk beds in dormitories. Currently, this means
that the state is prohibited from housing more
than a total of 103,853 people in state-owned
prisons. It also means that when prisons or yards
are activated or deactivated, this population limit
is increased or decreased by 137.5 percent of the
design capacity of the affected prison or yard.

the state to avoid funding infrastructure repairs that
would otherwise have been needed to continue
operating these facilities. For example, with the
deactivation of DVI in Tracy, the state was able
to avoid a water-treatment project—estimated in
2018 to cost $32 million—that would have been
necessary to comply with drinking water standards.
The administration currently plans to deactivate
Chuckawalla Valley State Prison (CVSP) in Blythe
by March 2025.

Prison Population Decline Allowing for
Capacity Reductions. As shown in Figure 3,
the prison population has declined significantly in
recent years and is expected to remain low through
June 2028. In 2021, CDCR completed a multiyear
drawdown of people housed in contractor-operated
prisons made possible by the declining prison
population. Since 2021, the administration has
deactivated (1) two state-owned prisons—the
Deuel Vocational Institution (DVI) in Tracy and
the California Correctional Center in Susanville,
(2) eight yards at various state-owned prisons,
and (3) the California City Correctional Facility—a
leased prison that was operated by CDCR staff.
CDCR estimates that these deactivations resulted
in ongoing General Fund savings totaling about
$620 million annually. Deactivation also allowed

Administration Has Cited Concerns With
Further Capacity Reductions. Despite the above
capacity reductions, CDCR projections have
consistently showed that the population will remain
well below the court-ordered limit in future years.
However, in response to suggestions that further
capacity reductions should be considered, the
administration has cited the following concerns:
•  Increased Risk of Violating the
Court-Ordered Population Limit. Prison
population projections are fairly uncertain in
out-years. If the state does reduce capacity
but the population increases unexpectedly
in the future, the administration is concerned
that this could put the state at increased risk
of violating the court-ordered population limit.

Figure 3

Prison Population Projected to Decline Through 2028
Population as of June 30 Each Year
140,000

120,000

100,000

80,000

60,000

40,000

20,000

2018

2019

2020

2021

Actual

6

2022

2023

2024

2025

2026
Projected

2027

2028

•  Increased Complexity
in Housing Placement.
As discussed above, CDCR
typically clusters people
with similar security, health
care, or other needs in the
same yard. Further capacity
reductions would reduce the
overall number of yards in
operation. The administration
is concerned that this could
make it more challenging for
CDCR to find appropriate
housing placements,
particularly for people with
multiple complex needs.
•  Reduction in the Number
of Assignments. Further
reductions in prison capacity
would mean that, if use of
the department’s remaining
physical space and staffing

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2024-25 BUDGET

levels remain unchanged, a smaller portion
of the population would be able to have a
full-time or two half-time assignments. This is
because, in addition to reducing the number
of beds in operation, capacity reductions
remove physical space (such as classrooms
or workshops) that is used for assignments.
The administration argues such a reduction
is a concern because assignments provide
people in prison with a meaningful way to
occupy their time. The administration also
cites potential for a reduction in assignments
to cause an increase in recidivism. This could
occur if the reduction in assignments causes
more people than otherwise to leave prison
without having their assessed criminal
risk factors addressed through effective
interventions, such as treatment and
reentry programs.

needed for quarantine or natural disasters, and
space needed to comply with court requirements
(such as the court-ordered population limit).
Analysis Inventoried Certain Types of
Assignments. To prepare the report required
by PC 5033, CDCR inventoried the number of
full-time and full-time equivalent program and work
assignments in operation at each prison as of
June 30, 2023. (Two part-time assignments were
counted as one full-time equivalent assignment.)
As shown in Figure 4, these assignments include
jobs, treatment and reentry programs, career
technical education, adult basic education,
community college, and high school equivalency
courses. In total, CDCR identified 52,955 such
assignments. We note that this does not include
the 10,249 full-time or full-time equivalent
assignments that on June 30, 2023 were budgeted
but not in operation—such as due to an instructor
vacancy or a classroom being under construction.
In addition, the inventory did not include various

2023-24 Budget Package Required
Administration to Conduct Analysis of Prison
Capacity Needs. In response
to the above concerns cited by
Figure 4
the administration, the 2023-24
Actual Full-Time or Full-Time Equivalentª Assignments
budget package added Penal Code
As of June 30, 2023
Section (PC) 5033 to state law,
which required CDCR to submit
High School 6%
an assessment of its capacity
Community
Total: 52,955
needs by November 15, 2023
College 8%
to help inform decisions related
to further prison capacity
reductions. PC 5033 states that it
is the intent of the Legislature to
deactivate additional prisons and
Adult Basic
that maintaining prison capacity
Education 9%
beyond what is necessary for
safety, operational flexibility, and
Jobs 52%
Career Technical
to support rehabilitation is not cost
Education 10%
effective. PC 5033 also directed the
department to report, by prison,
on the capacity needed to operate
Treatment and
Reentry
in a manner that is rehabilitative,
Programs 16%
safe, and cost efficient. In doing
so, the statute specified CDCR
shall include an assessment of
available space for rehabilitative
programming, health care services,
a
A full-time equivalent assignment is two part-time assignments.
specialized bed needs, space

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2024-25 BUDGET

other educational and/or rehabilitative activities
that people may engage in while in prison, such as
grant-funded or volunteer-led programs and college
correspondence courses.
Analysis Calculated Percent of the Population
That Can Receive Assignments. The analysis
calculated, for each prison, the percent of the
population that could have one of the above
assignments if the prison were occupied at
120, 110, and 100 percent of its design capacity.
This calculation was done with the following two
different methodologies:
•  Under the first methodology, the calculation
only included the 52,955 assignments that
were actually in operation on June 30, 2023.
This methodology found that, if the prison
system is occupied at 120 percent of design
capacity, there would be enough assignments
to serve 62 percent of its population based
on the number of staff and classrooms in
operation on June 30, 2023. In contrast, if the
system was at 100 percent of design capacity,
there would be enough assignments to serve
77 percent of its population on June 30, 2023.
•  Under the second methodology, the
calculation used budgeted assignment
capacity instead of actual capacity as of
June 30, 2023. Accordingly, it included
the additional 10,249 full-time or full-time
equivalent assignments that were budgeted
but not in operation for various reasons
(such as staff vacancies) as of June 30, 2023.
This methodology found that if the prison
system was occupied at 120 percent of its
design capacity, there would be enough
budgeted assignments to serve 74 percent of
its population. In contrast, if the system was
at 100 percent of its design capacity, there
would be enough budgeted assignments to
serve 91 percent of its population.
The report did not reach a conclusion about
what percent of the population should have an
assignment. We note that there could be various
reasons why it would not be reasonable to maintain
assignments for 100 percent of the population.
For example, some people cannot participate in
assignments due to age or health reasons.

8

Governor’s Proposal
Adjust Funding for Centralized Services to
Account for Previous Capacity Reductions. The
Governor’s budget reflects a reduction in 2024-25
of $9.6 million from the General Fund and 57
positions (increasing to $11.1 million and 65 positions
annually beginning in 2025-26) to reflect reduced
administrative support needs resulting from previous
capacity reductions. For example, the reduction
includes two positions in CDCR’s Office of Fiscal
Services that are no longer needed to provide budget
support to individual prisons as the total number of
prisons has decreased.
Adjust CDCR Funding to Account for
Planned Deactivation of CVSP. To reflect the
planned deactivation of CVSP by March 2025, the
Governor’s budget reflects a reduction in 2024-25
of $33.2 million (largely from the General Fund) and
190.4 positions (increasing to $132.3 million and
743.2 positions annually beginning in 2025-26).
Continue Operating About 15,000 Empty Beds.
The budget reflects operation of nearly 15,000 empty
beds in 2024-25. The department indicates that,
while it intends to continue monitoring the issue, it is
not planning further capacity reductions at this time.

Assessment
No Concerns With Adjustments Related to
Previously Approved Deactivations. We have
no concerns with the proposal to reflect savings
for centralized services to account for previous
deactivations. Similarly, we have no concerns with
the proposal to reflect savings associated with the
planned deactivation of CVSP by March 2025.
Number of Empty Prison Beds in Operation
Projected to Grow to About 19,000 by 2028. As
discussed above, the Governor’s proposals would
leave about 15,000 empty beds in the near term.
As shown in Figure 5, the projected long-term
decline in the prison population suggests that, after
the proposed deactivations are completed, the
state could have nearly 19,000 empty prison beds—
comprising about one-fifth of the state’s total prison
capacity. This means that the state could be in a
position to deactivate around five additional prisons
by 2028 while still remaining roughly 2,500 people
below the court-ordered population limit.

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2024-25 BUDGET

Figure 5

Governor’s Proposals Leave Nearly
19,000 Empty Beds in Operation by 2028
As of June 30 Each Year
120,000

■ Empty beds ■ Occupied beds
100,000

80,000

60,000

40,000

20,000

2023
(Actual)

2024

2025

2026

Further Prison Capacity Reductions Would
Create Significant Savings. Reducing the number
of empty beds in operation by deactivating additional
prisons or yards would allow for significant savings in
three different areas:
•  Prison Operational Costs. As the prison
population declines, the state is able to spend
less on certain things—such as food and
clothing—that are directly tied to the number
of people that need to be housed in state
prisons. Specifically, the state saves roughly
$15,000 per year each time one fewer person
needs to be housed in a prison. These savings
accrue as the population declines—regardless
of whether prison capacity is reduced.
However, there are many other types of costs—
including most staffing costs—that are only
saved when capacity is reduced. Specifically,
when a whole prison is deactivated, the
state can save several tens of thousands of
dollars per capita annually in addition to the
population-driven savings. Per capita savings
associated with yard deactivations are generally
somewhat less than those associated with
prison deactivations. This is because, while
individual yard deactivations do allow staffing

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2027

levels to be reduced, prisons
have many centralized
staffing costs—such as for
administration and perimeter
security—that must be
maintained regardless of the
number of yards in operation.
As discussed above, after
the planned deactivations,
the state is projected to have
enough excess capacity to
allow for the deactivation of
around five additional prisons.
Deactivation of five prisons
could generate nearly $1 billion
in annual ongoing operational
cost savings, depending on
which prisons are deactivated.

•  Prison Infrastructure
Costs. As of January 2024,
CDCR identified 44 deferred
maintenance or capital outlay
projects across 23 prisons
at an estimated total cost of $2 billion that are
expected to be needed over the next ten years.
The majority of these projects are focused on
issues related to safety (such as replacement
of fire suppression systems) and critical
infrastructure (such as kitchen renovations).
Further capacity reductions would avoid the
need to fund these projects at the prisons
and/or yards that are deactivated.

2028

•  Staff Training Costs. CDCR’s staffing needs
are affected by various factors, including the
number of facilities being operated. Deactivating
additional prison capacity would temporarily
reduce the need for new correctional officers.
This is because existing officers at the facilities
that are deactivated would have the opportunity
to fill vacancies throughout the prison system
that would otherwise be filled by new officers.
The Governor’s 2024-25 budget maintains
$140 million General Fund for CDCR to continue
training new officers at the department’s
13-week academy and delivering other training
to existing officers. Accordingly, capacity
reductions could allow the state to temporarily
scale back these staff training costs.

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2024-25 BUDGET

These opportunities for savings are particularly
notable given that the state is projected to face
significant structural shortfalls—around $30 billion
each year—in 2025-26 through 2027-28. Deactivating
additional prison capacity would help the state avoid
needing to reduce General Fund spending in other
areas of the budget the Legislature prioritizes.
Administration’s Concerns With Further
Capacity Reductions Could Be Mitigated.
As discussed above, the administration has cited
concerns with further reductions in prison capacity.
However, we find that, with some advance planning
and potential one-time spending, these concerns
could likely be mitigated as follows:
•  State Can Take Steps to Reduce Risk of
Violating Population Limit. As discussed
above, the administration’s population
projections indicate that the state could be in
a position to deactivate around five additional
prisons by 2028, while still maintaining a roughly
2,500 person “buffer” below the court-ordered
population limit. This would be the same size as
the buffer typically maintained by CDCR prior to
the COVID-19 pandemic. (During the pandemic,
the need for physical distancing in prisons
temporarily necessitated a larger buffer.) This
is notable because the population at that time
was larger, meaning it was subject to potentially
greater unexpected population swings.
Nonetheless, the administration felt that a 2,500
person buffer was adequate. Moreover, in the
event the population unexpectedly increases by
more than 2,500 people, the state would have
various options to avoid violating the population
limit. For example, CDCR could contract with
county jails to temporarily delay transfers of
new prison commitments (according to data
collected by the Board of State and Community
Corrections, jails had a total population of
about 59,700 in the first three quarters of 2023
and a total capacity of about 81,600); expand
eligibility for people to be housed outside of
state prisons, such as in conservation camps
or community reentry facilities; and/or award
credits in order to release certain people (such
as those identified as posing a low risk to
public safety) earlier than otherwise. We note
that all of these steps have been used by

10

CDCR in the past. If the unexpected increase
in the population is sustained, CDCR could
reactivate yards or prisons as deactivated
state-owned facilities are typically placed
on “warm shutdown,” meaning they are still
owned and being maintained by the state.
Accordingly, deactivating prisons or yards and
maintaining them on warm shutdown allows
the state to save money on an annual basis
without foreclosing the possibility of reactivating
capacity if it is needed in the future.
•  Housing Placement System and/or
Infrastructure Could Be Modified to Increase
Flexibility. To the extent that further capacity
reductions would create challenges for CDCR in
identifying appropriate housing placements, the
department could consider changing housing
placement policies to create more flexibility.
CDCR has made such changes at various times
in the past to accommodate shifts in population
needs and reduce complexity. For example,
CDCR recently promulgated regulations to
consolidate its six types of restricted housing
units into three types. (Restricted housing units
can be used to temporarily house people as
punishment for certain serious rule violations
or who constitute a particular threat to prison
security.) In addition, with advance planning,
the department could build infill housing
units at existing prisons and/or construct key
infrastructure (such as specialized medical
beds) to offset any losses in housing flexibility
resulting from capacity reductions.
•  Existing Assignment Infrastructure Could
be Used More Effectively and/or More
Assignments Could be Created. The state
could mitigate the effect of capacity reductions
on the number of assignments available by
using its remaining assignment infrastructure
more effectively. For example, as discussed
above, vacancies and other and factors that
prevent budgeted assignments from operating
can substantially reduce the actual number
of assignments available at a given time.
Accordingly, CDCR could pursue strategies—
such as recruitment efforts—to address these
factors. In addition, CDCR could eliminate
assignments associated with unproven or

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2024-25 BUDGET

ineffective programs and use the freed-up
space to expand the number of assignments for
programs known to be effective. Alternatively,
the state could take steps to increase the
number of assignments. For example, the
state could create more assignments that do
not require classrooms (such as gardening
or activities done through tablets) or it could
construct new classrooms.
While mitigating the administration’s concerns
associated with capacity reductions could create
some new costs for the state, these costs are largely
temporary and would be far less than the nearly
$1 billion dollars it would cost annually to operate
around five prisons on an ongoing basis. Accordingly,
we find that significant ongoing savings from pursuing
further prison capacity reductions would likely far
outweigh any costs associated with mitigating the
potential negative effects of capacity reductions.
State Law Arguably Requires CDCR to
Accommodate Population Declines Through
Capacity Reductions. PC 2067 requires CDCR
to accommodate projected population declines
by reducing capacity in a manner that maximizes
long-term savings, leverages long-term investments,
and maintains sufficient flexibility to comply with
the court-ordered population limit. PC 2067 also
requires CDCR to consider certain factors—such as
operational cost and subpopulation-specific housing
needs—in determining how to reduce capacity.
In view of the opportunity for significant savings
and the possibility of mitigating negative effects on
housing flexibility, PC 2067 arguably requires CDCR
to further reduce capacity.

Recommendations
Direct CDCR to Deactivate Prisons.
We recommend that the Legislature direct CDCR
to begin planning to reduce capacity by the end
of 2028. Deactivating whole prisons would create
greater savings than deactivating yards at various
prisons. We estimate that deactivating five prisons,
for example, could allow the state to save nearly
$1 billion in ongoing General Fund costs. This would
not only help reduce the state’s structural budget
shortfall in the years to come but would bring CDCR
into compliance with PC 2067.
Direct CDCR to Report on Strategies
to Mitigate Any Concerns. We recommend
that the Legislature direct CDCR to report by
January 10, 2025 on (1) which specific prisons it plans
to deactivate, (2) any specific concerns it identifies
with these deactivations, as well as (3) strategies for
and estimated costs of mitigating those concerns.
Direct CDCR to Plan for Reductions to Staff
Training Costs. Deactivation of multiple prisons
by 2028 would likely reduce CDCR’s need for new
correctional officers over the period when the prisons
are being deactivated. To ensure savings associated
with this reduced need are captured, we recommend
that the Legislature direct CDCR to report by January
10, 2025 on (1) the projected impact of deactivations
on its need for new correctional officers and (2) plans
to scale back academy operations accordingly.
Approve Adjustments Related to Previously
Approved Deactivations. We recommend the
Legislature approve the proposed adjustments
related to the previously approved deactivations,
including the savings related to centralized services
and the planned deactivation of CVSP by March
2025. This will help address the state’s budget
problem in the budget and future years.

VOICE CALLING
Background
Various Ways for People in Prison to
Communicate With Friends and Family. In addition
to in-person visiting and writing letters, there are
various ways that people in prison can maintain
contact with friends and family through electronic
communication. These include voice calls, video
www.lao.ca.gov

calls, and electronic messages. Voice calls can be
made from standard, hardwired telephones located
at all prisons and portable tablet devices issued to
each person. The department regulates the use of
telephones and tablets among the prison population,
such as the times of day when calls can be made.

11

2024-25 BUDGET

CDCR Is Required to Provide Free Voice
Calling to People in Prison. Chapter 827 of
2022 (SB 1008, Becker) specifies that CDCR
shall provide accessible, functional voice calls
free of charge. On January 1, 2023, CDCR began
implementing this requirement by paying all charges
accrued for voice calls. Though CDCR does not
directly limit the number of minutes people can use,
it does continue to restrict when calls can be made
for operational reasons.
2023-24 Budget Act Provided $28.5 Million
General Fund Augmentation for Voice Calls.
Based on calling data from January through March
of 2023, CDCR estimated that about 93 million
minutes would be used per month in 2023-24.
Based on this estimate, the budget included
$28.5 million General Fund in 2023-24 to pay for
voice calls. This funding was authorized on an
ongoing basis with the understanding that CDCR
would adjust the level of funding for calling charges
through the department’s biannual adjustment
process. In addition, the budget act included
provisional language allowing the Department
of Finance (DOF) to augment or reduce this
funding amount based on actual or estimated
expenditure data.

Governor’s Proposal
$8.2 Million General Fund Augmentation in
2024-25. CDCR reports that the prison population
used about 119 million voice calling minutes in
July 2023 and 125 million minutes in August. Based
on the assumption that the August minute usage
level will hold flat throughout the remainder of
2023-24 and 2024-25, CDCR estimates it will need
an additional $7.4 million in the current year and
$8.2 million in the budget year to pay for this higher
than anticipated level of voice calling. CDCR will
update these estimates at the May Revision
based on additional months of actual calling
usage data. To address any current-year shortfall,
the administration intends to use the authority
provided by the provisional language in the 2023-24
budget to augment the amount available for voice
calls. To address the budget-year shortfall, the
Governor’s budget includes an $8.2 million General
Fund augmentation, which would bring the total
amount for voice calling to $36.7 million in 2024-25.

12

In addition, the proposed budget retains the
provisional language allowing DOF to augment
or reduce the funded amount after the budget
is enacted.

Assessment
Funding Adjustment Methodology Does Not
Account for Population Decline. As discussed
above, the proposed $8.2 million augmentation in
2024-25 assumes that the August 2023 calling level
persists through June 2025. However, the prison
population is projected to decline over this period.
Specifically, on August 16, 2023, the population
was about 95,700 and CDCR currently projects
the average daily population in 2024-25 to be
about 91,700—a 4,000 (4 percent) person decline.
Assuming that each person uses roughly the same
number of calling minutes per month, the decline
in the population will reduce the total number of
minutes used. Accordingly, by not accounting for
this population decline, the Governor’s budget likely
over estimates the number of calling minutes and
associated funding that will be used in 2024-25.

Recommendations
Withhold Action and Direct CDCR to Update
Methodology to Account for Population
Changes. As discussed above, the administration
plans to update its estimate of the 2024-25 funding
need at the May Revision based on additional
months of actual calling usage. Accordingly,
we recommend the Legislature withhold action
on the proposal until that time. Additionally, we
recommend that the Legislature direct CDCR to
incorporate the effects of projected changes in the
population into its methodology at the May Revision
and in future biannual adjustments for voice calling
costs. This methodology change would (1) help
promote more accurate budgeting and (2) likely
reduce the overall cost of the proposal in the
budget year, freeing up General Fund resources
that could be used to address the fiscal difficulties
facing the state.

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2024-25 BUDGET

UTILITIES
Background
Utility Funding Currently Adjusted Based on
California Consumer Price Index (CPI). CDCR
facilities use various types of utilities such as natural
gas, electricity, and water. The 2023-24 budget
provides about $140 million to pay for utilities.
This funding level was established in 2022-23 based
on a three-year average of CDCR’s actual utility
expenditures and is updated annually through a
technical adjustment using CPI. Prior to 2022-23,
utility funding was adjusted in proportion to increases
or decreases in the prison population. However,
this methodology was found to be inadequate after
recent large declines in the population left CDCR
underfunded for utilities.
Utility Prices Have Outpaced CPI. CDCR
reports that while its utility usage has remained
relatively constant, total costs have outpaced their
funding level. This is because utility rate increases
set by utility providers have generally outpaced CPI.
The department currently projects a $44 million
shortfall for utility costs in 2023-24. It intends to
pay for this shortfall using a combination of savings
from staff vacancies and facility deactivations that
occurred earlier in the current year than anticipated.

Governor’s Proposal
Adopt New Methodology for Adjusting CDCR
Utility Funding. The Governor proposes to budget
for CDCR’s utility costs based on actual prior
expenditures through CDCR’s biannual adjustment
process. Under the proposed methodology, the
adjustment reflected in the Governor’s budget
would be based on the prior fiscal year’s actual
expenditures. The adjustment reflected in the
May Revision would be based on expenditures from
January through June of the prior fiscal year and
July through December of the current year.
$22 million General Fund Augmentation for
Increased Utility Costs. CDCR’s actual utility
expenditures in 2022-23 were about $184 million.
As mentioned above, this is $44 million higher
than the department’s current funding level of
$140 million. Accordingly, under the proposed
methodology, the Governor’s budget would reflect
a $44 million increase relative to the enacted level.
www.lao.ca.gov

However, due to fiscal pressures currently facing the
state, the administration is requesting $22 million,
which is half of the anticipated need. Should actual
2024-25 utilities costs surpass the budgeted amount,
CDCR indicates that it would attempt to pay for the
unfunded costs with savings in other areas of its
budget, such as from staff vacancies, or request a
supplemental appropriation if sufficient savings are
not available.

Assessment
Proposed Augmentation and Methodology
for Ongoing Adjustment Appear Reasonable.
Given that utility prices are outpacing CPI, it appears
that CDCR’s current methodology for adjusting
its utility funding is not adequate. We find the
administration’s proposal to adjust utility funding
based on recent actual spending to be reasonable.
We also find that making these adjustments through
the biannual adjustment process will add transparency
compared to adjusting funding through a technical
adjustment as is currently done. In addition, while our
office has recommended that the Legislature set a
very high threshold for approving new spending, we
find that the proposed $22 million augmentation meets
this threshold. This is because utilities are closely
linked to maintaining the health and safety of people
who live and work in CDCR facilities.
If Actual Utility Costs Are Less Than Budgeted,
Funding Could Be Redirected. If actual utility
costs are lower than budgeted in a given year, the
administration would be able to redirect the excess
funding to other purposes. This is because CDCR’s
utilities funding is budgeted in an item of appropriation
that includes funding for various other purposes
related to supporting the prison population.

Recommendations
Approve Proposal and Adopt Budget
Provisional Language Limiting Use of Funding to
Utilities. We recommend that the legislature approve
the Governor’s proposed methodology and $22 million
augmentation for utilities funding. However, to prevent
potential excess funding from being redirected to
other purposes, we recommend that the Legislature
adopt budget provisional language to require any
excess funding to revert to the General Fund.
13

2024-25 BUDGET

COVID-19 HEALTH CARE COSTS
Background
COVID-19 Had Major Impact on CDCR. Between
the start of the pandemic and January 28, 2024, a
total of about 96,000 COVID-19 cases have been
reported by CDCR as occurring within prisons.
There have been 263 incarcerated people and
50 staff who have had COVID-19-related deaths.
During this time period, CDCR implemented several
restrictions and operational changes to reduce the
spread of the virus within its institutions. For example,
the department initially suspended visiting and
rehabilitation programs, reduced the density of
dormitories by housing some people in open areas
(such as gymnasiums), and suspended nonurgent
health care services. To reduce transmission, staff
and people held in CDCR were generally required
to be masked and regularly tested. However, some
of these restrictions and changes are no longer in
effect as the severity of the pandemic has abated.
For example, the department has resumed visitation
and rehabilitation operations and face coverings are
generally optional in most areas of prisons.

For example, January 2024 data shows that
CDCR is testing about 400 people per week for
COVID-19, compared to about 3,600 per week
in January 2023.
CDCR Spending on COVID-19 Health Care
Costs Declining. By the end of 2023-24, CDCR
expects to have spent a total of $1.1 billion since
the beginning of the pandemic on COVID-19
health care costs, including on testing,
vaccinations, and cleaning. The majority of this
amount occurred in the 2020-21 ($416 million)
and 2021-22 ($407 million) budget years.
(We note that a portion of these costs were
supported by federal funding.) Figure 7 shows
that, in subsequent years, COVID-19-related
spending has declined significantly.
For example, the 2023-24 Budget Act provided
$97 million one-time from the General Fund
for CDCR’s COVID-19 response, of which
the department estimates it will spend
about $54 million.

Governor’s Proposal

COVID-19 Prevalence Down in Recent Years.
$38 Million Ongoing for COVID-19 Health Care
According to data reported by CDCR, COVID-19
Costs. The Governor’s budget proposes $38 million
continues to spread in prisons but at a lower rate than
ongoing General Fund for CDCR COVID-19 health
the initial years. Figure 6 shows CDCR’s reported
number of new confirmed cases
each month. As shown in the figure,
Figure 6
new confirmed COVID-19 cases
have declined over time and the
Number of New Cases of COVID-19 Reported Has Declined
spikes in new cases observed
New CDCR COVID-19 Cases
annually in the months of December
and January have also decreased in
18,000
magnitude. For example, at its peak
in the December to January period
14,000
of 2020-21, there were a total
of about 23,500 new COVID-19
10,000
cases compared to a total of about
500 new COVID-19 cases reported
6,000
in the December to January period
of 2023-24. The decrease in the
2,000
prevalence of COVID-19 in the
prisons has resulted in reduced
2020
2021
2022
2023
2024
March - December
January
COVID-19-related workload.
CDCR = California Department of Corrections and Rehabilitation.

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2024-25 BUDGET

care costs including testing,
Figure 7
vaccination, staffing, treatment,
and personal protective equipment.
CDCR COVID-19 Health Care Spending Has Declined
Figure 8 shows the requested
(In Millions)
level of funding for each activity.
$450
The requested level of funding
is based on the average amount
350
of expenditures the department
has observed in certain
250
months in 2023. For example,
150
the department is requesting
$20.6 million for statewide testing
50
for staff ($7.4 million) and the prison
2019-20
2020-21
2021-22
2022-23
2023-24
population ($13.2 million). CDCR
Estimate
arrived at this estimate by adding
CDCR = California Department of Corrections and Rehabilitation.
the average expenditures on testing
for staff between April 2023 and
September 2023 and the prison
Figure 8
population between April 2023 and August 2023
and assuming that the department would continue
Proposed Level of Ongoing Funding for
spending at that monthly rate in 2024-25 and
CDCR COVID-19 Response
ongoing. CDCR applied a similar methodology
Statewide testing
$20,647,000
for estimating its funding need for state response
6,686,000
State response operationsa
operations—which includes treatment, staff
Vaccine distribution and administration
6,253,000
Personal protective equipment
4,802,000
overtime costs, and wastewater testing—but used
Total
$38,388,000
average expenditures from a different range of
a Includes treatment, staff overtime, and wastewater testing
months in 2023. To estimate the funding needed
CDCR = California Department of Corrections and Rehabilitation.
for vaccines and personal protective equipment in
2024-25 and ongoing, the department assumes
ongoing level of resources for testing of the prison
it will spend the same amount it projects it will
population would be based on trends that do not
spend in the current year. In addition to the
reflect more recently available information given
requested funding, the Governor’s budget proposes
that CDCR indicates it will not update its request in
budget provisional language that would allow
the spring. This budgeting approach raises further
DOF to reduce CDCR’s funding for COVID-19
concerns because it is not standardized to include
health care costs based on actual or estimated
the same months in the calculations for each of the
expenditure data.
expenditure categories. For example, it is unclear
Assessment
why the ongoing level of funding for testing of the
prison population should be based on average
Request Does Not Account for Recent
expenditures between April 2023 and August 2023,
Trends, Reflect a Standardized Methodology,
while the funding for testing of staff should be
or Projected Decline in Population. We find
based on average expenditures between April
that the department’s proposed methodology to
2023 and September 2023. Moreover, the proposal
estimate its funding need does not factor in recent
assumes CDCR expenditures on COVID-19 health
trends in COVID-19 prevalence, is not based
care costs will remain the same despite the fact
on a standardized methodology, and does not
that the prison population is projected to decline
reflect projected declines in the prison population.
both in 2024-25 and future years, suggesting
For example, the department’s methodology to
the department’s resource need will also decline
estimate its funding need for testing of the prison
going forward.
population factors in expenditures between
April 2023 and August 2023. As a result, CDCR’s
www.lao.ca.gov

15

2024-25 BUDGET

CDCR Has Not Explored Options to Reduce
State Spending by Leveraging Employee Health
Insurance. The state offers employer-sponsored
health insurance to state employees, including
CDCR. As such, CDCR staff are able to receive
vaccinations against COVID-19 from their
employer-sponsored health insurance. Notably,
all employer-sponsored health insurance plans
offered through the state provide COVID-19
vaccinations at no-cost to the employee. When
asked whether the department could leverage
employee health insurance to offset the vaccine
costs for employees, CDCR indicated that it had
not explored such an option. This is noteworthy
given that the department is requesting resources
for staff vaccinations against COVID-19 on an
ongoing basis.

Recommendations
Withhold Action on Budget-Year Request
and Direct CDCR to Provide Updated Proposal.
We recommend that the Legislature withhold
action on the Governor’s proposed resources
for COVID-19-related health care costs in CDCR
in 2024-25. We also recommend the Legislature
direct the department to update its 2024-25
request in the spring to reflect more recent data.
In doing so, the department should use a standard
snapshot of months when calculating its need for
each of the activities it is requesting resources

for and provide justification for why that set of
months is reflective of its costs. Additionally, the
department should adjust the proposal to reflect
the fact that the prison population is expected to
decline between 2023-24 and 2024-25. Finally, we
recommend the Legislature direct CDCR to explore
options to leverage the state’s employer-sponsored
health insurance to reduce the funding needed for
employee vaccines and further adjust the proposal
as necessary to reflect any resulting savings from
doing so. These adjustments would likely reduce
the overall cost of the proposal, freeing up General
Fund resources that could be used to address the
fiscal difficulties facing the state in the budget year.
Reject Funding for Future Years.
We recommend that the Legislature reject the
funding proposed for the future and fund the
department’s COVID-19-related health care
workload on a one-time basis. The department
has provided little reason to think that its
COVID-19-related funding needs will remain at 2023
levels in the future, particularly given the projected
decline in the prison population. Moreover, funding
such a request would increase the department’s
baseline spending in the future, and we find that it
is not prudent to make such a commitment given
the fact that our office projects the state’s fiscal
difficulties will continue in future years.

PRISON MEDICAL CARE BUDGET SHORTFALL
Background
Department Consistently Overspends Prison
Medical Care Budget. Since 2018-19, CDCR
reports that it has exceeded its General Fund
prison medical care budget by tens of millions of
dollars to hundreds of millions of dollars annually,
as shown in Figure 9. According to the department,
this shortfall is the result of overspending on
personnel-related expenditures. Specifically,
the department cites costs related to vacancies
including spending on overtime for staff that
must complete workload associated with vacant
positions and registry (contractors that provide
services on an hourly basis when civil servants
are unavailable). The department also cites costs
16

related to workers’ compensation claims and lump
sum payouts (payments made to employees to
compensate them for unused leave when they leave
state service) as contributing to the overspending in
the prison medical care budget.
Department Has Addressed Overspending
Without Additional Funding. CDCR indicates that
it has been able to address the overspending in
the prison medical care budget in previous years
without requiring additional funding. According to
the department, it has been able to redirect savings
from vacancies elsewhere in the CDCR budget,
including from mental health services, to cover the
overspending in the prison medical care budget.

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2024-25 BUDGET

Governor’s Proposal
$40 Million One Time to Cover Projected
Overspending in the Prison Medical Care Budget.
The Governor’s budget proposes a $40 million
one-time General Fund augmentation in 2024-25
to cover projected overspending in the prison
medical care budget. The department indicates that
personnel-related cost pressures will continue in
the budget year and that the savings used to offset
the overspending in previous years will no longer be
available. We note that the department estimates that
it will not overspend the prison medical care budget
in the current year.

Assessment
Unclear Why Department Needs Additional
Funding to Address Potential Overspending.
In recent budget years, CDCR has been able to
address its overspending in the prison medical
care budget within its existing budget authority
by using savings elsewhere in its budget. The
department has not provided any information on
why redirected savings will not be available to
do so in the budget year. Moreover, to the extent
that the department does overspend in the prison
medical care budget during the budget year
and cannot redirect savings to address it, the
department can seek additional funding through Item
9840-001-0001 in the Governor’s proposed budget.

Specifically, Item 9840-001-0001 includes $55 million
to augment departments’ General Fund budgets
upon approval of the Director of DOF no sooner
than 30 days after notification to the Joint Legislative
Budget Committee. In the event that this $55 million
is used for other contingencies and is unavailable
to support the prison medical care budget, we note
that Item 9840-001-0001 outlines a process through
which the administration can request a supplemental
appropriation to address these costs.
Inadequate Justification Provided for
$40 Million. CDCR has not provided sufficient data
supporting its need for the requested $40 million.
For example, the department has not provided a
back-up calculation showing how it projected that
$40 million in overspending would occur. As a result,
it is difficult for the Legislature to assess whether
this is a reasonable estimate, particularly because
there is no discernable pattern in the department’s
overspending in previous years. In addition, the fact
that the department does not expect to overspend its
prison medical care budget in the current year raises
questions about why it expects to do so in the budget
year. This lack of justification is particularly notable
given that the state is currently facing a budget
problem. Accordingly, proposals for new spending
should meet a higher threshold before being
approved. Given the lack of justification, the proposal
does not meet this higher threshold in our view.

Recommendation

Figure 9

Overspending in the Prison Medical Care Budget
(In Millions)
$160
140

$151

$143

120
$95

100
80

$73

60
40

$32

20

2018-19

www.lao.ca.gov

2019-20

2020-21

2021-22

2022-23

Reject. We recommend that the
Legislature reject the Governor’s
proposal. We find that the proposal
does not make it clear why CDCR
needs additional funding to address
potential overspending in the prison
medical care budget and cannot redirect
funding from elsewhere in its budget as
it has done previously. Moreover, even
if overspending cannot be addressed
by redirecting funding, the department
can seek additional funding through
Item 9840-001-0001 or a supplemental
appropriation. Finally, the proposal does
not provide adequate justification for the
requested $40 million, particularly given
the budget problem facing the state. We
note that rejecting this proposal will help
the state address its budget problem.
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2024-25 BUDGET

CONTRACT MEDICAL SERVICES
Background
CDCR Uses Contract Medical Services When
Health Care Needs Cannot Be Met. When CDCR
is unable to provide necessary medical services to
people held in prison because it lacks the needed
equipment or specialist providers, the department
contracts for these services with external providers.
These contract medical services are used in a
number of circumstances ranging from trips to
emergency departments for physical injuries to
chronic medical issues that require specialized
treatment. In some cases, providers are brought
into facilities to deliver treatment. However, in many
cases, people are transported out of a prison to
receive care in the community, including inpatient
care. Each time CDCR uses contract medical
services, the department is charged the full medical
costs plus a $19 fee for administrative claims
related to processing a CDCR patient through a
community specialty care provider network. CDCR
pays for most contract medical services from the
General Fund. However, in specific circumstances,
such as when an eligible person receives services
outside of prison for more than 24 hours, the
department may offset a portion of these costs
with federal reimbursements. These federal
reimbursements are provided through Medi-Cal, a
program partially funded by the federal government
that covers health care costs for low-income people
and families, including certain costs for eligible
people in prison.
CDCR Contracts With Medical Providers to
House People on Medical Parole. The medical
parole program within CDCR allows medically
incapacitated people to be placed in licensed health
care facilities that the department contracts with
in the community instead of prison. To be eligible
for medical parole, various criteria must be met.
For example, CDCR medical staff must determine
the person is permanently medically incapacitated
and the Board of Parole Hearings must determine
that the person does not reasonably pose a
threat to public safety. Once in the community,
CDCR parole agents and medical staff monitor
patients. In the event a patient shows significant

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improvements in their medical condition, the patient
can be returned to prison. The department reports
that, due to restrictions on the type of facilities it
places patients in, it is unable to qualify for federal
reimbursement through Medi-Cal for the care
provided to people on medical parole. As a result,
the department pays for the cost of treating each
patient—about $261,000 annually—entirely from the
General Fund contract medical services budget.
According to the department, there have been an
average of 50 people on medical parole in the past
three budget years and it has spent an average of
$13 million annually on the program.
CDCR Reports Budgeting Methodology
Does Not Accurately Reflect Costs. Through the
biannual adjustment process, CDCR is typically
budgeted for contract medical services based
on the (1) size of prison population, (2) a fixed
rate of $2,763 per person, and (3) a set amount
of $54 million ongoing in federal reimbursement
authority. For example, in 2023-24, this
budgeting methodology would have resulted in
the department receiving about $337 million for
contract medical services, including $282 million
from the General Fund and $54 million in federal
reimbursement authority. However, the department
raised concerns that this methodology did not
accurately reflect its costs for various reasons.
First, CDCR reports that a decline in the prison
population has led to reductions in the amount
being budgeted for contract medical services.
However, the department has not observed
corresponding reductions in the number of
people in its three highest medical risk categories
(High-1, High-2, and Medium) who are more likely to
use contract medical services. This is because the
population reduction disproportionately occurred
among people in the Low medical risk category.
Furthermore, CDCR reports that the $2,763 per
person fixed rate—which was established in 2012—
is insufficient because it does not fully reflect the
costs of medical parole or the $19 administrative
claims fees. Finally, the department indicates it
has been receiving less in federal reimbursements
than reflected in the budget in recent years.

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To temporarily address these issues, the 2023-24
budget provided CDCR with a one-time General
Fund augmentation of $40 million and a one-time
federal reimbursement authority reduction of
$12 million, bringing the total budget for contract
medical services to about $364 million.

Governor’s Proposal
$3.9 Million Current-Year Augmentation
Based on Existing Budgeting Methodology.
The department is projecting that the prison
population in the current year will be larger than
was assumed in the enacted 2023-24 budget.
Accordingly, the Governor proposes a $3.9 million
General Fund augmentation to the contract medical
services budget based on the current budgeting
methodology used in the biannual adjustment
process. This would increase the budget from
about $364 million to $368 million. Given the
weaknesses in the methodology described above,
CDCR indicates that this methodology would likely
not fully fund the department’s contract medical
service need for 2023-24. However, CDCR is
not requesting additional resources beyond the
$3.9 million proposed in the current year. This is
because the $40 million one-time augmentation
that the department received in the 2023-24
Budget Act should minimize its need for such
additional resources.
$24 Million Budget-Year Augmentation Based
on New Budgeting Methodology. The department
is projecting a decline in the prison population in
the budget year that would result in a $3.4 million
reduction to CDCR’s contract medical services
budget under the current methodology. However,
the Governor proposes four changes to the
budgeting methodology used in the biannual
adjustment process that would result in a net
increase of $24 million for contract medical services
in 2024-25. This reflects a $36 million General
Fund augmentation and a $12 million decrease in
federal reimbursement authority. This change is the
result of the following:
•  $8.2 Million General Fund Tied to New
Budgeting Methodology Based on
Medical Risk. First, the department is
proposing to replace the fixed per-person
rate of $2,763 with a per-person rate for

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each medical risk category. Specifically,
the department would receive $21,168
for each High-Risk 1 person, $6,323 for
each High-Risk 2 person, $2,230 for each
Medium-Risk person, and $1,009 for each
Low-Risk person. These amounts were
calculated using a five-year average of
per-person expenditures for each medical
risk category. This funding would be adjusted
biannually based on the size and medical risk
of the prison population.
•  $13 Million General Fund for Medical
Parole Based on Medical Parole
Population. The department is also proposing
that it be funded for medical parole separately
based on projections of the medical parole
population. Under the proposed methodology,
the department would receive $261,356 for
every person expected to be on medical
parole. The amount per person was calculated
based on a three-year average of expenses for
the people on medical parole. In the budget
year, the department projects 50 people will
be on medical parole. This funding would be
adjusted biannually based on the size of the
medical parole population.
•  $15 Million General Fund for Administrative
Claims Fees. In addition, the budget includes
funding to support the cost of administrative
claims fees. Under the proposal, the
department would receive ongoing funding
for the $19 administrative claims fees
associated with each contract medical
service used. CDCR projects that it will use
800,000 contract medical services per year in
the budget year and future years. This amount
would not be adjusted biannually.
•  $12 Million Reduction in Federal
Reimbursement Authority. Lastly, the
department is requesting that its federal
reimbursement budget authority be
reduced by $12 million on an ongoing basis.
The Governor’s proposal would reduce the
department’s federal reimbursement authority
to $42 million, which it reports is more aligned
with the actual level of federal reimbursements
it is currently receiving. This amount would not
be adjusted biannually.

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Assessment
No Concerns With Proposed Current-Year
Funding Level. We do not raise any concerns
with the proposed $3.9 million General Fund
augmentation to the contract medical services
budget based on the current budgeting
methodology in 2023-24. We acknowledge that
the weaknesses in the current methodology could
result in the department receiving insufficient
funds for contract medical services. However, the
$40 million in one-time funding provided as part of
the 2023-24 Budget Act should minimize the extent
to which this occurs.
Some Proposed Budget-Year Changes
to Funding and Methodology Appear
Reasonable… We find that the proposed
methodologies used to arrive at the $8.2 million
General Fund requested based on the medical
risk of the prison population and the $13 million
General Fund requested for medical parole appear
reasonable and would better align the department’s
budget with its actual needs for those services.
Moreover, because this improved methodology
would be part of the biannual adjustment process,
it would ensure the contract medical services
budget remains tailored to the department’s needs
going forward as the size and makeup of the prison
population changes.
…Except Administrative Claims Funding
and Federal Reimbursement Authority, Which
Would Not Be Adjusted for Population Changes.
We find that the Governor’s proposed funding
methodology for administrative claims and federal
reimbursement authority is lacking because it
would not change based on changes in the size or
makeup of the prison population. For example, the
department would continue to receive $15 million
General Fund to pay for 800,000 administrative
claim fees and $42 million in federal reimbursement
authority each year despite the fact that the prison
population is expected to decrease in future years.

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This is problematic as the total number of contract
medical claims will also likely decrease below
800,000, meaning the department will have more
funding than it needs for these claims. Similarly,
the department’s federal reimbursement authority
could provide it with more funding than it will be
able to qualify for as the population declines. (We
note that adjusting the department’s reimbursement
authority downward to account for reductions
in the prison population would not exempt it
from statutory requirements to maximize federal
reimbursements.) Moreover, the methodology for
these aspects of the contract medical services
budget is inconsistent with the population-driven
methodology proposed for the other portions of
the budget.

Recommendations
Withhold Action and Direct CDCR to Develop
Population-Based Budgeting Methodology for
Federal Reimbursements and Administrative
Claims. We recommend the Legislature withhold
action on this proposal until it is adjusted based
on updated population projections as part of the
biannual adjustment process at the May Revision.
In addition, given that the $15 million for
administrative claims fees and the $42 million in
reimbursement authority is not population-driven,
we recommend that the Legislature direct CDCR to
develop a new methodology for those aspects of
the contract medical services budget that account
for changes in the size and/or makeup of the
prison population. This revised proposal could be
considered by the Legislature at the May Revision.
Given that the state is currently facing a budget
problem, we note that the Legislature will need to
weigh any potential increase in spending related to
this proposal against its other spending priorities
as it will likely need to offset cost increases with
spending reductions elsewhere in the budget.
Accordingly, proposals for new spending should
meet a high threshold before being approved.

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PAROLE SUPPORT STAFFING
Background
Division of Adult Parole Operations (DAPO)
Employs Support Staff. In order to assist the work
that parole agents do in the field, DAPO—within
CDCR—employs various support staff that do not
involve the direct supervision of people on parole—
such as human resources analysts and office
technicians. Some of these parole support staff
are located at headquarters in Sacramento, while
others are located across the state in one of DAPO’s
2 regional offices or 47 field offices.
Budget for Parole Support Staff Biannually
Adjusted Based on Changes in Parole
Population. Since the 2019-20 fiscal year, CDCR
has budgeted for parole support staff through the
biannual adjustment process based on changes
in the parole population. This is because, similar
to most other parole positions, the need for many
parole support positions is driven by changes in
the parole population. For example, if the parole
population increases, there is an increased need
for parole supervision staff (which includes parole
agents and their supervisors). This creates a greater
need for parole support staff, such as human
resource analysts, to process a potential increase
in the number of workers’ compensation claims
resulting from the additional parole supervision
staff. Conversely, if the parole population declines,
CDCR needs fewer parole support staff due to the
decline in the number of parole supervision staff.
Under the current methodology, an increase or
decrease of about 5,000 in the parole population
would result in a corresponding increase or
decrease of about 11 parole support staff positions
and about $1.4 million in funding. In the 2023-24
Budget Act, CDCR received about $13 million and
99 parole support staff positions based on this
budgeting methodology.
Department Has Raised Concerns About
Reduction in Parole Support Staff Caused by
Parole Population Declines. The parole population
declined annually between 2020-21—when the
average daily parole population was 54,900—and
2022-23—when it was 39,200. Moreover, the average
daily parole populations is projected to continue to
decline to 36,500 in the current year and 35,500 in
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the budget year and remain near this level in future
years. As a result, the number of parole support
staff is also declining. However, CDCR indicates that
further decreases in the parole support staff budget
and positions would be problematic. This is because
CDCR reports that there are support staff positions
that are eliminated when the population declines
under the current methodology despite the fact that
the workload for these positions is not decreasing.
For example, the workload for support staff needed
to manage statewide contracts required for various
parole-related services remains the same even when
the parole population declines. CDCR reports that
further reduction to these positions will mean it is
unable to fully address such workload.

Governor’s Proposal
New Proposed Budgeting Methodology for
Parole Support Staff. The department is projecting
a continued decline in the parole population that
would result in reductions to CDCR’s parole support
staff positions and budget under the existing
budgeting methodology. Specifically, it would result in
about $200,000 less funding and 1.5 fewer positions
in the current year and about $430,000 less funding
and 4 fewer positions in the budget year. However,
the department proposes to change the budgeting
methodology beginning in the budget year for
parole support staff given its concerns about further
reductions to these positions. Under the proposed
methodology, no downward or upward adjustments
would be made to the parole support staff budget
or positions when the parole population is below
42,222. This would roughly maintain parole support
staff at existing levels in the budget year and onward
because the parole population is projected to remain
below 42,222 people during this time period. If the
parole population were to increase in the future above
42,222, then the budget for support staff would once
again increase under the proposed methodology,
but would do so based on new ratios that would
budget for slightly more support staff than under the
current methodology. Specifically, every increase
of 5,000 people on parole—over 42,222—would
generate about 12 additional support staff and about
$1.5 million in funding.
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Assessment

Recommendations

While Existing Budgeting Methodology Needs
Revision… We find that the existing budgeting
methodology for parole support staff requires a
revision. We agree with the department that there
is some workload among support staff that does
not change as the parole population increases or
decreases, such as the managing of statewide
contracts required for various parole-related
services. Accordingly, the current methodology
is flawed and could lead to underbudgeting for
some workload as the parole population continues
to decline.

Reject. We recommend the Legislature reject the
Governor’s proposal. We agree with the department
that the existing methodology needs revision to
account for some workload among parole support
staff that does not change as the parole population
changes. However, the proposed methodology is
also flawed. It not only fails to properly account for
workload that does not change when the parole
population changes but also fails to account for
workload that does change with changes in the
parole population.

…Proposed Methodology Is Also Flawed.
However, we find that the Governor’s proposed
methodology for budgeting for parole support staff
would continue to create a mismatch between
the level of resources the department needs and
the amount it is budgeted for. Specifically, under
the Governor’s proposal, if the parole population
decreases further, the department would retain its
funding for parole support staff whose workload
declines as the population shrinks. Similarly, if the
population increases, then CDCR would receive
additional funding for parole support staff whose
workload does not increase with growth in the
population. In either scenario, the methodology
would result in the department being overbudgeted.

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Direct CDCR to Submit a New Proposal
Based on Revised Budgeting Methodology. We
recommend the Legislature direct CDCR to submit
a new proposal in the spring based on a revised
budgeting methodology for parole support staff
that properly accounts for both population-driven
workload and non-population-driven workload.
Specifically, the proposal should (1) identify the
number of support staff positions and associated
funding needed to address workload that is not
tied to population changes, (2) provide workload
justifications for those positions, and (3) include a
methodology to fund the remaining workload based
on changes in the parole population.

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LAO PUBLICATIONS
This report was prepared by Orlando Sanchez Zavala and Caitlin O’Neil, and reviewed by Drew Soderborg.
The Legislative Analyst’s Office (LAO) is a nonpartisan office that provides fiscal and policy information and advice to
the Legislature.
To request publications call (916) 445-4656. This report and others, as well as an e-mail subscription service, are
available on the LAO’s website at www.lao.ca.gov. The LAO is located at 925 L Street, Suite 1000, Sacramento,
California 95814.

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