An ACJ message pertaining to the latest budget cut

Posted on July 7, 2011

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July 7, 2011

Dear Fellow Judges:

From the very beginning of the existence of the Alliance of California Judges, we have warned that our courts faced a growing fiscal catastrophe, in part due to the out-of-balance priorities established by judicial leadership. The current budget suggests that catastrophe has finally arrived.

The Judicial Council now faces stark choices. There are few sources available to mitigate these budget reductions without decimating trial court operations. The AOC must, in some combination, drastically reduce its own operations, or drastically curtail needed construction, and eliminate continued funding for CCMS.

The AOC’s allocation of the trial court’s share of the $200 million cut in the Governor’s original budget was $178 million, which we contend was overstated to the local courts by $20 million. Nevertheless, the AOC proposed to mitigate this reduction by other funds. The Legislature has now passed a budget that includes an additional $150.0 million unallocated cut to the judiciary. The Department of Finance has previously projected that this additional cut will be the equivalent to closing our trial courts two days per month in the next fiscal year.

The enacted budget also eliminates an additional $310 million in court construction funding, combined with the previous loan to the General Fund of $350 million from the State Court Facilities Construction Fund and $90 million from the Immediate and Critical Needs Account.

This letter is lengthy and full of financial detail, but it is important for judges to understand the complexity of this fiscal crisis and the specific steps that must be taken immediately to keep our courts open to the public. Our detailed narrative budget analysis follows this letter as an addendum.

The AOC Must Bear the Lions Share of the Budget Cut

Revenue reductions must be allocated so that statewide administrative expenses are reduced to the barest minimum in order that trial court operations are least impacted, and capital funds preserved as much as possible.

The Judicial Council and Administrative Office of the Courts must bear the lion’s share of reductions to the extent possible. That is the only remaining source available without decimating the construction program and the trial courts. We must preserve the core function of adjudication at all costs, and this means the elimination of much of the AOC. This likely means closing all regional and satellite offices, suspending all consulting contracts, eliminating statewide administrative positions, suspending mandatory CJER in favor of local programs, and other drastic measures, absorbing the entire reduction at the state level rather than at the level of trial court or appellate court operations.

We urge that all funds appropriated by the legislature for local trial court operations, in whatever amount, must be fully delivered to the trial courts without reduction or reserve, and that each court be guaranteed a baseline level of funding consistent with historic practices. This remains the basic premise of AB 1208. This principle should guide the allocation process.

There appear to be sufficient construction funds available to offset the operating budget reductions, only at the expense of completely deferring all capital outlays for construction originally planned for fiscal year 2011- 2012, and which would likely require further legislative approval. Also, the AOC budget for its own operations, including the Court Facilities Program, appears to allow for up to $260 million theoretically available for mitigation.

The AOC has previously proposed a disproportionate cut to the trial courts arising from the Governor’s original $200.0 million general fund reduction. The AOC and Judicial Council have a budget of $142.0 million and the Court Facilities Program has a budget of $228.0 million. So far, the AOC has only proposed an $8.0 million reduction to the general revenue portion ($99.0 million) of its own budget.

We can no longer afford a top heavy administration where, unlike judges and most court employees, the top 30 executives of the AOC — who earn from approximately $140,000 to $217,000 per year — make no personal contribution to their retirement plan. We request that the Chief Justice immediately rescind her predecessor’s resolution authorizing this benefit.

Full Disclosure of $247 Million of Unspecified “Operating Expenses and Equipment.”

We are also requesting that the Judicial Council make an immediate public disclosure of the line item budgets for the portion of the Judicial Council and AOC budget of $142.0 million (Judicial Branch Budget program 250.30) and the $228.0 million budget for the Court Facilities Program (Judicial Branch Budget program 250.35) which provide for $247 million of unspecified “operating expenses and equipment.” To our best knowledge, these details have so far not been made available. Public disclosure of these detailed budgets will allow every judge of the state and other interested stakeholders to participate and make meaningful recommendations. There is absolutely no reason that these budgets should be secret. Our previous requests that this information be made public have been ignored.

CCMS Funding Must End

This also means that trial court operating funds must no longer be used to advance CCMS. The branch cannot afford this project at this time without dedicated funding. CCMS should be delivered to the courts using it, to be implemented upon local servers for those courts, and the continued maintenance of that product should be managed by each of those courts within their own operating budget. In this way, the CCMS product will be preserved for future further development and deployment when the Legislature makes specific funds available, beyond current operating needs. All other expenditure for development and deployment should be immediately suspended.

The recent report by the AOC to the Legislature released in May 2011 reveals that the AOC has so far expended $454.0 million on the CCMS project through the end of fiscal year 2009- 2010. In this fiscal year 2010- 2011 the report states that the Judicial Council and the AOC will spend $93 million on CCMS, notwithstanding these dire budget forecasts. The report indicates a projected expenditure of $125 million for fiscal year 2011-2012 and a further expenditure of $88.0 million for 2012- 2013. These payouts must stop immediately. The following is an excerpt of this report:

The AOC Must End All But Absolutely Essential Expenditures

The AOC simply cannot continue with business as usual. We are also concerned about the AOC’s long-standing practice of engaging in many consulting contracts. Past and on-going contract costs include, by example:

(1) $224,476 to the “Institute for the Future” (according to the Institute’s website: ‘We work with organizations of all kinds to help them make better, more informed decisions about the future. We provide the foresight to create insights that lead to action’) to “Develop strategic vision for the California Judicial Branch.”

(2) $522,602 to the National Center for State Courts (NCSC) to conduct a workload assessment of superior court judges and trial court staff. We believe that this is in addition to approximately $500,000 that the AOC pays annually to the NCSC as a state assessment.

(3) $209,000 to Patton Boggs, LLP for legislative and budget advice.

(4) $78,820 to (Ret) Judge Roger Warren, Special Consultant. Judge Warren currently serves on the Board of Directors of Justice at Stake and is a former president of NCSC.

There are millions of dollars more of examples like this of AOC spending. Can we continue this level of consultant spending within the branch (which does nothing to actually adjudicate cases) while we are compromising our ability to serve the public directly in our communities?

The AOC Must Close All But Basic State Facilities

While we talk of closing courts, the AOC has opened satellite offices in the state, like the office in the picture below taken in San Dimas, California:

The Alliance of California Judges looks forward to participating in a transparent allocation process among all concerned, and we intend to meaningfully participate in that process to ensure the greatest degree of balance between state and local functions and between operational and long-term capital needs.

Very truly yours,

Directors of the Alliance of California Judges

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Addendum— Narrative Budget Analysis

Our view of the budget numbers is as follows:

The original cut in March to the trial courts results in a proposed allocated reduction to the trial courts of $178 million. This amount was to be mitigated by a one-time reduction of $10 million from CCMS funding, $20 million from the Modernization Fund, and the balance of mitigation from construction funds.

However, construction funds have been depleted as follows:

Fund Condition Statements reveal that the State Court Facilities Trust Fund has a beginning balance of $382 million. There is $141 million of projected revenue, and a General Fund transfer of $350 million, leaving a total fund balance before expenditures of $173 million. Of this amount, $71 million is budgeted for “state operations,” leaving $102 million for budget mitigation.

This amount will leave a “balance” to be mitigated (from the original $200 million cut) of $46 million.

The Immediate and Critical Needs Account (SB 1407) has a beginning balance of $366 million with projected revenues of $319 million, for total resources of $685 million. There has been an AB 110 loan from this account to the General Fund of $90 million, leaving $595 million. Of this amount, $26 million is to be expended for “state operations,” and $420 million for capital outlay on court construction projects. We understand that court construction will be delayed one year, and the enacted budget “sweeps” $310 million back to the general fund. Deferring construction completely leaves approximately $260 million in this account available for mitigation. Using these funds to mitigate the remaining trial court cut from the original budget leaves $214 million for mitigation.

Thus, there are sufficient construction funds available to offset the operating budget reductions, only at the expense of completely deferring all capital outlays for construction originally planned for fiscal year 2011- 2012, leaving a balance of approximately $64 million between the SCFCF and ICNA. This could not be done without legislative approval, nor are we suggesting that this type of cut to planned construction is wise.

The only other source of funding to mitigate other than trial court reserves is the AOC Budget of $142 million and the Court Facilities Program budget $228 million.

The AOC has already allocated $8 million of the original $200 million cut to its own budget, leaving a budget of $134 million. If we assume that the $8 million is applied pro rata, then of this amount, $98 million is for personnel salary and benefits, and $36 million is for “operating expenses and equipment” which is not otherwise detailed.

The Judicial Branch Facilities Program has a budget of $228 million. Of that $102 million is from the Court Facilities Trust Fund, and this amount is needed for court maintenance, which is already underfunded, so that amount is unavailable for any mitigation, leaving potential mitigation resources of $126 million. Of this amount $21 million is budgeted for salaries and benefits, and the balance of the $105 million is for unspecified “operating expenses and equipment.”

Therefore, between the AOC budget for its own operations, including the Court Facilities Program, there appears to be $260 million theoretically available for mitigation. We are not suggesting the complete elimination of all AOC services, but the statewide operation must be reduced drastically, and the funds diverted to court operations.

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Note from JCW: There are at least six known leased satellite offices for the Office of Court Construction & Management and there were 14 planned overall. The reason was that the Office of Court Construction & Management alleged that they could not find available office space in the courts they served.

This is in addition to two floors in SRO/Burbank & 2850(Finance) 2860(Office of Court Construction & Management and NCRO regional office) and 2880 Gateway Oaks Parkway in Sacramento. (one whole floor each in 2850/2860 and an additional 1/4 floor in 2850 and a 1/4 floor suite in 2880)

The main suite in 2860 Gateway Oaks has been almost completely remodeled 4 times in the past 10 years.

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An article from Cheryl Miller on Legalpad