Through new budget, Brown maps out sweeping change in California

SACRAMENTO — The days of catastrophic deficits behind him, Gov. Jerry Brown is set to propose a state budget Thursday that would shift the Capitol’s focus from fiscal triage to sweeping policy changes in education, criminal justice and healthcare.

Brown is expected to use his spending plan to shake up California’s public university systems, according to administration officials. The governor has long complained that they are bloated and inefficient, and he wants to attach strings to some of their funding.

He has also signaled that the state’s court and prison budgets could be cut, including a shift of 16,000 inmates to cheaper, lower-security housing.

The governor wants to change how the state funds its nearly 10,000 public schools, and he will present his plan for implementing President Obama’s healthcare overhaul.

Although he is largely free of the financial crisis that has long gripped state government, Brown has made clear that many of his proposals would reshape the way California spends the money it has rather than create costly new programs. The revenue from tax hikes passed by voters in November is spoken for, and Brown said this week that he would be dogged about keeping spending in check.

“If we don’t do that,” he said, “then we have an illusion that things are good and we go back to this money-today, no-money tomorrow.”

Legislative leaders, emboldened by their new Democratic supermajorities in the Senate and Assembly, are likely to test his resolve. They have already suggested they’ll push to restore many government services that were rolled back in recent years.

The tussle among the governor, lawmakers and lobbyists representing interests with a stake in the roughly $95-billion general fund typically lasts for months. Lawmakers have until June to pass a final budget.

Meanwhile, remnants of red ink remain. Legislative analysts say Brown will need to close a deficit of $1.9 billion. The governor has signaled that cuts in the state court and prison budgets could help cover that shortfall.

Court officials said they’ve been told to expect a $200-million cut. The court system’s administrative director, Judge Steven Jahr, called that scenario a “potential crisis that would further cripple our justice system.” Other officials warned of potential courthouse closures and reduced hours.

The governor also wants to end federal control of the healthcare system in state prisons. If he succeeds, Sacramento could save hundreds of millions of dollars by ending contracts with out-of-state prisons used to alleviate overcrowding. He would also retake control of prison medical spending, which is now determined by a federal overseer.

“We’re wasting a lot of money on nonsense” in the prisons, Brown told reporters Tuesday.

Even in areas where spending will increase under state formulas and federal law — public schools, universities and healthcare — Brown will face obstacles in determining how the money is spent.

The University of California and California State University systems were each promised at least $125 million more this year. Brown wants to tie some future funding to graduation rates and acceptance of transfer students from the state’s community colleges.

Brown also wants the universities to more aggressively embrace online teaching, which he says could reduce the need for higher student fees.

University officials, who have bristled at many of those suggestions, are already saying the promised money is not enough. The University of California has said tuition hikes are likely unless state funding is increased by more than $400 million, a number the governor has said is unrealistic. He has not yet provided his own figure.

The governor will also propose a radical shift in the way elementary and secondary schools are funded, seeking to direct more money to districts that serve poor students and English learners, who cost more to educate than other students.

Brown wants to give local districts more control over the money they receive from the state, eliminating mandates for smaller classes, spending on new technology and dozens of other requirements set in Sacramento.

Education and legislative leaders have expressed support for the governor’s goals — and skepticism about the administration’s ability to ensure that money will be used in the way he intends.

Brown’s proposed budget will outline his plans for expanding health coverage under the new federal healthcare law, which is set to require increased coverage beginning in January 2014. The law will put hundreds of thousands of new enrollees into California’s public insurance program, but the governor has raised concerns about what that will cost.

In addition, Brown has said the state may reduce the roughly $2 billion it gives to counties to care for the uninsured, amid objections from advocates and county officials.

“There needs to be a safety net that survives even after health reform is fully implemented,” said Anthony Wright, executive director of Health Access California, which promotes expanded health coverage.

This year, Brown has a new $1 billion to spend, generated by a change in corporate taxes that voters approved as Proposition 39 in November. Half of the money is dedicated to clean-energy programs, and Brown is expected to use most of that for a proposal to increase energy efficiency at thousands of public schools. The rest goes to the general fund.

While his plans will be subject to negotiations with lawmakers, Brown made it clear he feels his hand is strengthened by his recent victories at the polls.

“My position,” he said, “has become more strategically important.”

anthony.york@latimes.com

chris.megerian@latimes.com