LAO urges limited-term review of CDCR lump-sum payout request; DOF favors ongoing funding for stability
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Summary
CDCR asked for $91 million ongoing to cover payouts for separating correctional officers and nurses; LAO recommended limited-term approval with reporting to ensure transparency and to reassess as vacancy savings change, while Department of Finance argued ongoing funding aids planning.
The Department of Corrections and Rehabilitation requested $91 million in ongoing funding to cover annual lump-sum payouts to separating correctional officers and nurses for unused leave credits, an expense CDCR said was historically paid from vacancy salary savings.
"The department is requesting $91,000,000 ongoing for correctional officers and nursing staff separating from state employment and requiring payment for unused leave credits," Cynthia Mendoza, deputy director of CDCR's Office of Fiscal Services, told the committee. She said reductions in posted positions and a lower vacancy pool have reduced the salary-savings source that previously funded these payouts.
The Legislative Analyst's Office recommended caution. "We do find that the funding is reasonable in the near term given that the department does appear to have a structural shortfall," Caitlin O'Neil said, but LAO recommended approving the funding on a limited-term basis and requiring reporting at the end of that period so the Legislature can assess whether an ongoing appropriation remains necessary once closures and vacancy trends stabilize.
LAO also flagged transparency risks: if departments use unallocated vacancy savings to cover other costs, the Legislature may be unable to tell whether programmatic priorities are being delayed or canceled. LAO recommended that CDCR report on steps it will take to free up funding or reduce the shortfall so the Legislature can evaluate programmatic implications.
The Department of Finance said the Boston Consulting Group contract is wrapping up and that updated savings estimates will be available with the May Revision. DOF more strongly endorsed ongoing funding for CDCR on planning grounds, arguing the lump-sum payouts have been a persistent driver of prior deficits and that stable, ongoing support would aid the department's budgeting.
CDCR said lump-sum payout totals have varied in recent years (roughly $126 million–$144 million in peak years) and that posted positions (correctional officers and nurses) create harder-to-manage leave liabilities because those positions always require backfill. CDCR said it is pursuing leave-reduction plans, leave buyback programs when funding allows, and management encouragement for staff to take leave, but acknowledged limited means to mandate use of leave credits.
Why it matters: Lump-sum payouts can create recurring fiscal pressure for CDCR and, in prior years, drove deficit requests. The committee must decide whether to fund the liability as an ongoing expenditure or approve limited-term funding while monitoring vacancy and closure dynamics.
Next steps: LAO asked for reporting at the end of any limited-term funding window; DOF and CDCR expect updated savings and closure information at the May Revision.