California’s prisons will have 40,000 fewer inmates by 2017 and the state will be supervising 51,000 fewer parolees thanks to an historic shift of responsibility for low-level criminals from the state to county governments, according to a report released Thursday.

The shift, prompted by the state’s need to reduce prison overcrowding and improve the delivery inmate health care while also saving money, appears to be on its way to meeting all of those objectives, according to the report, from the non-partisan Legislative Analyst’s Office.

But the realignment of state and local responsibilities for criminal justice programs has not been a complete success.

Despite the drop in the number of inmates, the most recent estimates suggest that the state will not meet a June 2013 deadline set by the federal courts for reducing overcrowding. The report recommends that the Legislature tell Gov. Jerry Brown’s Administration to seek an extension from the courts, which the office believes the state is likely to receive, given the progress made to date.

Eventually, the report says, the state will face a mismatch of prison beds, with a surplus of space suitable for low-level inmates and a shortage of cells for the most dangerous felons.

“The projected drop in the number of low-security inmates, inmates in reception centers and female inmates is projected to be quite a bit larger than the drop in the number of high-security inmates,” said Drew Soderborg, senior fiscal and policy analyst fo the Legislative Analyst’s Office

Finally, the transfer of responsibility to the counties for low-level prisoners risks leaving the state with a shortage of labor for its fire-fighting camps, which could drive up the cost of containing forest fires.

Still, the report recommends that the Legislature consider stopping the planned construction of new prisons and medical facilities and weigh the closure of existing prisons that will no longer be needed.

The reduction in spending for prison construction and for the provision of medical care and mental health services will ultimately save the state hundreds of millions of dollars a year, on top of the up-front savings from simply shifting the supervision of new, low-level offenders to the counties, along with the money to pay for that function.