There is nothing wrong with the dam. The main spillway is broken and needs to be rebuilt. The dam stands at 917 feet. The emergency spillway (the one that overtopped this week) is at 901 feet. Water will not come over the main dam unless an earthquake breaks it.
While I agree in general with your assessment, there is little doubt that the dam is overdue for improvements. It also needs more overflow reservoirs within the system that would not only increase the safety margin and water storage capacity, it would increase the electrical output potential.
If the Federal government wants to spend more on infrastructure these kind of projects need to be on the list. The present system allows politicians to steal funds that are raised for one purpose to spend on projects with little public benefit.
This is one area where Trump is dead right - every public expenditure should come with a cost-benefit analysis for the taxpayers.