(CN) — A critical fund for California’s courts that is supported by criminal fines and fees will be insolvent by 2023, the state Legislative Analyst’s Office said in a report released Friday that recommends more legislative control over how the judiciary spends money.
The Improvement and Modernization Fund (IMF) is generally used to support ongoing infrastructure technology initiatives and judicial education programs, court self-help centers, and special projects.
“Based on current projections, the IMF fund balance will effectively be zero at the end of 2022-23,” says the report prepared by policy analyst Anita Lee. "This is generally due to the ongoing decline in criminal fine and fee revenue, which has been even greater during the pandemic for various reasons, such as the temporary suspension of the collection of criminal fines and fees by certain trial courts. As such, it is possible that actual revenues will be even lower than currently projected.”
Fine and fee revenues dropped by 83% in the last 15 years — from $88 million in fiscal year 2006-07 to an estimated $14.6 million in 2021-22, the report says.
“The specific causes of this decline may be due to various reasons. For example, there may have been a reduction in collected criminal fine and fee revenues allocated to the IMF — such as from fewer tickets being written for traffic violations and/or more fines and fees being waived by the court which then reduces the amount available for collection,” Lee wrote, adding that even if the amount collected had remained the same, an increased share may have gone to higher priority state and local funds.
The Judicial Council, which oversees the fund, authorized more spending in the past than the IMF had money to cover. The council began cutting back in recent years to address the persistent shortfall, and in the 2015-16 budget the Legislature started providing funding for some programs the IMF would have covered if it had the money.
But without more cuts to expenditures or a sudden increase in revenue, the Legislative Analyst's Office estimates the fund will need $18 million to stay afloat.
Lee’s report recommends the Legislature trim the number of programs and projects supported by the fund and shift based on necessity and cost-effectiveness, then eliminate the IMF and deposit its revenues into the state’s general fund. The general fund would then pay for the programs.
The LAO says this move will have three “major benefits" — the programs supported by the IMF would no longer have to rely on a dwindling revenue source, the Legislature would have more control over how money is spent, and “given that the IMF is likely going to struggle to maintain solvency, this approach would permanently address the issue in a comprehensive, rather than piecemeal, manner.”
The report also gives an update on the State Court Facilities Construction Fund — which it said still faces insolvency next year. The analyst warned in a report last year that the fund was running out of money, and Governor Gavin Newsom responded with a one-time bailout in his proposed January budget.
According to the analyst, the bailout was only enough to cover this year, and absent any changes in spending the fund is still going to need $200 million every year for almost a decade. The report recommends the Legislature take further control by moving spending for trial court construction to the general fund.
“This approach would ensure that all construction-related obligations are fully accounted for and considered when evaluating the state’s overall fiscal condition and determining General Fund priorities. It would also maintain existing levels of support for all non-construction-related expenditures — such as facility modification projects and trial court operations,” Lee writes.
She notes the move would allow the Legislature to "fund future courthouse construction projects based on its priorities,” signaling a shift in decision-making power away from the Judicial Council and toward the Legislature.
But it would also stabilize courthouse construction funding, John Wordlaw, the council’s Chief Administrative Officer said via email.
“The fact is, the judicial branch is already heavily dependent upon the state general fund for construction funding,” he said, noting Governor Jerry Brown relied on the general fund when resuming funding for critical court construction projects. “Irrespective of the funding source, the Legislature always has oversight over construction efforts through its exclusive powers of appropriation. The state general fund actually brings stability to our construction program given its relative stability when compared to other fund sources.”
Though the Judicial Council’s Court Facilities Advisory Committee assesses and ranks courthouse projects based on need, in recent years the Legislature has asked that the council submit a wish list of projects to be considered for funding.
The council has also pushed for more sustainable funding for both construction and court operations rather than relying on variable revenue from fines and fees.
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