Caltrans should eliminate 1,500 full-time positions in its highway construction division because of inefficiencies and overstaffing, according to a report issued Tuesday by the nonpartisan Legislative Analyst's Office.

LAO said Caltrans' Capital Outlay Support (COS) program spends more money than other states and local transportation agencies for comparable work. The division is responsible for environmental review, design and construction oversight of highway projects, among other duties.

"We reviewed Caltrans' COS budget for recent years and found that the program's budget lacks sufficient workload justification," the LAO report states. "In order to gauge the reasonableness of the department's COS requests for staffing and funding, we evaluated the program using several different methods. The cumulative evidence from our review shows that the program is overstaffed and lacks strong management."

LAO further concluded that Gov. Arnold Schwarzenegger's three monthly furloughs have had little apparent impact on the COS program.

"The department's inability to estimate the impact of the furlough program indicates overstaffing in the COS program," the report states. "Given that there is little concrete evidence that the program's output has declined due to furloughs, the program appears to be overstaffed by as much as 15 percent."

LAO said eliminating 1,500 of 10,359 COS positions would save roughly $200 million in special state and federal funds that could be used for project construction, though it would have no direct impact on the state's general fund budget.

The analyst's office recommended that the Legislature require Caltrans to justify its need for all of those positions during the budget process. If the department can't do so, LAO said the Legislature should cut 1,500 positions in the fiscal year starting July 1.

Bruce Blanning of Professional Engineers in State Government, which represents 13,000 construction professionals, called the LAO report "outrageously irresponsible." He said LAO's recommendation would punish Caltrans workers for productivity in the face of Schwarzenegger's furloughs.

In response to LAO's criticism that Caltrans has not supplied sufficient information to justify the department's staffing needs, Blanning said, "The main thing Caltrans is doing is getting projects out, building infrastructure and relieving traffic, rather than taking measurements of how many people it takes to perform functions."

LAO recommended that the Legislature ask Caltrans to provide additional information that justifies its annual $2 billion request for the COS division. The analyst's office also suggested that the Legislature demand cost-cutting measures and an audit of COS.

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