"It is not too late for the Delta, or for CalFed."

That was the conclusion last month of the Little Hoover Commission, a respected state watchdog group, in a report on the troubled Delta program set up in 2000.

"The vision is not flawed, but the implementation effort has drifted off course."

Way off course.

A small raft of audits and reviews produced this year paint a picture of a program that was a good idea but failed to live up to expectations.

CalFed did not accurately track the money it was receiving and spending. It did not set out specific goals so that outside observers and decisionmakers could judge its success or failure.

It operated without accountability.

Its governance structure was dysfunctional.

In a program that emphasized balance as a way to maintain the support of traditionally fractious groups, implementation was distinctly unbalanced.

The cohesion among former rivals that characterized its early days has been fraying.

CalFed is most definitely at a crossroads.

"You could look at it as a failure, or you could look at it as we're behind and need to do a fast catch-up on all fronts," said Greg Gartrell, an assistant general manager at the Contra Costa Water District and chairman of CalFed's drinking water quality subcommittee.

The Little Hoover Commission concluded that CalFed can be restructured and fixed in what amounts to a midcourse correction.

"If California is to prosper," the commission said, "California's leaders at a minimum must provide the basic infrastructure that makes the state functional, healthy and attractive."

Setting the ship aright will not be easy.

Earlier this month, Joe Grindstaff, director of the California Bay-Delta Authority, the agency in charge of CalFed, recommended sweeping reforms and a $1 billion, three-year plan that, among other things, included:

" Eliminating the authority, moving its staff to other departments and putting the secretary of resources in charge.

" Establishing performance standards to be met.

" Focusing on Delta-based programs and de-emphasizing statewide and regional programs, such as water-use efficiency, groundwater storage and watershed enhancement.

" Creating a new 100-year vision for the Delta.

The authority's board of directors initially balked at the proposal, but weeks later, on Dec. 20, decided to move forward with the recommendations.

Meanwhile, Gov. Arnold Schwarzenegger is expected to begin charting a new direction in next month's State of the State address, which will be followed with more details on CalFed reform in his recommended budget to be released later in January.

Then lawmakers will have their say.

Still, even the plan put forward by Grindstaff falls short, said Sen. Mike Machado, D-Linden, a key lawmaker on Delta issues and CalFed.

Lawmakers asked for performance standards years ago. They want to see specific standards now and not just another commitment to develop them, Machado said.

The same goes for creating mechanisms to ensure that "beneficiaries" of CalFed programs pay.

"If they fail to do that," Machado said, "there's not a lot of enthusiasm" among lawmakers to fund the program.

"I think we're really at a precipice," Machado said. "Taxpayers deserve to know what people want to do, why they want to do it, how much it's going to cost. We're not getting any of that. ... Why are we doing some of the things we're doing? I don't think they can explain that right now."

This was a year of tumult for CalFed.

In December 2004, Machado raised an alarm over the program's failure to come up with a realistic finance plan. A month later, scientists confirmed the Delta's ecological crisis.

In May, CalFed's director resigned. Its top two scientists and others left shortly after.

Lawmakers said they wanted performance standards, a realistic finance plan and more accountability. Without that, they might consider pulling the plug.

Schwarzenegger ordered reviews and audits, which the administration is expected to rely on in crafting a new direction.

The Legislature drastically cut CalFed's budget, saying it needed to put the program on "life support."

Still, 2005 could turn out to be the year CalFed -- or at least Delta water policy -- turned a corner.

"We're five years into a 30-year program that immediately ran into state and federal fiscal crises," said Keith Coolidge, deputy director for the Bay-Delta Authority. "Admittedly, there have been issues, which is why we're doing the reviews."

"Next year will be the year of recommitment," Coolidge said.

For all of its failures and disappointments, many involved in California water policy say the state has little choice but to embrace CalFed.

"If we shut this down, if the governor and the Legislature thought this was a bad idea and shut it down," said Barry Nelson, a water policy analyst at the Natural Resources Defense Council, "the day after tomorrow, we'd be talking about how do we build this thing like CalFed?"

Mike Taugher covers natural resources. Reach him at 925-943-8257 or mtaugher@cctimes.com.