Senate hearing: May revise sets limited Prop 36 dollars as courts, counties warn of wider state and local costs

Senate leaders and state fiscal officials briefed a joint informational hearing Wednesday on the fiscal picture for implementing Proposition 36, and witnesses from courts, corrections and grant administrators warned the panel that the resources in the May Revision will not cover local needs.

The Senate’s co-chairs opened the hearing by noting the scale of the state’s budget shortfall and that the May Revision does not include a specific package of ongoing funding for Prop 36 implementation. “As the governor announced yesterday, we have a $12,000,000,000 budget problem to solve,” Senator Richardson said at the start of the hearing.

Why it matters: Proposition 36 creates new treatment-mandated felony pathways and changes how some offenses are prosecuted and sentenced. That shift has budget implications across several state and local systems — state prison and parole, county courts and probation, county behavioral health, and grant-funded local programs. Witnesses told the committees those effects are already visible in early implementation data and will continue to evolve, requiring ongoing monitoring and likely additional appropriations.

Key fiscal details provided to the committees - Department of Finance: Justin Adelman, assistant program budget manager, said the May Revision includes $88.5 million for Proposition 36 in 2025–26 split across two main components: roughly $29.3 million to cover anticipated marginal costs to the state prison population (supervision, feeding, medical and related costs) and the remainder tied to the Second Chance Fund (the Prop 47 savings stream) that flows to grants administered by the Board of State and Community Corrections (BSCC). Adelman said the Prop 47 savings for 2025–26 were estimated at about $91.1 million, of which roughly 65% (about $49.2 million) is designated for BSCC grant programs.

- CDCR projections: Kathy Jefferson, deputy director, Office of Research at the California Department of Corrections and Rehabilitation (CDCR), described the department’s spring 2025 population projections. CDCR projects a net five-year decline (3.1% from 6/30/2024 to 6/30/2029) in institution population under current assumptions but said the department is modeling the Prop 36 effect conservatively: admissions are expected to ramp from January 2025 through February 2026 and then stabilize; average length of stay was assumed at about 11 months; and the share of Prop 36 admissions released to traditional parole was reduced in the model from 20% to about 3%, with most expected to move to postrelease community supervision.

- BSCC grants: Aaron Maguire, executive director of the Board of State and Community Corrections, said the BSCC has historically administered Prop 47 grant cycles and has released a new request-for-proposals (RFP) to make $127 million available in a fifth cohort designed to allow local jurisdictions to apply for treatment funding that can be used to implement Prop 36 programs. The BSCC expects award approvals at its September 2025 board meeting and a three-year grant cycle beginning in October 2025. Maguire said applicants may seek up to $2 million (small scope) or $8 million (large scope), with a Los Angeles County set-aside allowing a single application up to $20 million.

Gaps and trajectory: multiple witnesses said the dynamic is asymmetric — as Prop 36 leads to more felony-level filings and associated prison and court activity, the pool of savings from Prop 47 that finances some local treatment grants will shrink. Adelman told the committee that under current modeling the share of Prop 47-derived funding available to BSCC grants would decline in future years (he cited a decline to roughly $17.4 million in 2027–28 under certain projections). At the same time, CDCR’s estimates of increased state prison costs because of Prop 36 may rise in out years.

What lawmakers heard from fiscal witnesses: the May Revision funds portions of state responsibilities (CDCR marginal costs and an immediate round of grant funding), but the administration did not include a statewide appropriation to backfill county-level treatment capacity or probation resources. Adelman noted the administration’s view that funding county behavioral health and related local services is primarily a local responsibility and that the Proposition 36 statutory framework itself identifies the Second Chance Fund as a grant source.

Ending: State fiscal staff said projections and assumptions will be adjusted as more data arrive. Legislators asked the witnesses for quarterly updates and additional written materials (including the BSCC’s 2024 report and more recent court caseload figures) to inform budget decisions this summer.