[131] At the same time, the Federal Reserve increased interest rates to combat inflation, putting the American economy in a mild recession. Reagan worked with Bob Moretti to tighten up the eligibility requirements so that the financially needy could continue receiving payments. This was only accomplished after Reagan softened his criticism of Nixon's Family Assistance Plan. Nixon then lifted regulations to shepherd California's experiment.[132] In 1975, the Employment Development Department released a report suggesting that the experiment that ran from 1971 to 1974 was unsuccessful.[133]
Reagan did not run for the governorship in 1974, and it was won by Pat Brown's son, Jerry.[134] Reagan's governorship, as professor Gary K. Clabaugh writes, saw public schools deteriorate due to his opposition to additional basic education funding.[135] As for higher education, journalist William Trombley believed that the budget cuts Reagan enacted damaged Berkeley's student-faculty ratio and research.[136] Additionally, the homicide and armed robbery rates increased after 1974, even with the many laws Reagan signed to try toughening criminal sentencing and reforming the criminal justice system.[137] Reagan strongly supported capital punishment, but his efforts to enforce it were thwarted by People v. Anderson in 1972.