It’s not a matter of being “in on it”, it’s just the reality of a) how policing works and b) California’s decriminalized crime laws.

Arresting a person takes an officer off the streets for several hours, which is a waste of scarce resources if the department knows for a fact that there will be no prosecution and the arrested person will be back on the street with no consequences.

Also, any theft under $950 is a mere misdemeanor - it’s a ticketable offense, with no arrest allowed.

Why would the police arrest a suspect if they already know the suspect won't be prosecuted That's what's really happening here.

I'm not in California, but over here, the cops call the DA first to see if they will accept charges before making an arrest. In which case, it would not make sense to say crime is going down based solely on arrest statistics. Arrests and crime are not the same thing. What these statistics could really be indicating, since arrests are down but crime is up, is that accountability for crime is down.