Assembly Budget Subcommittee No 5 State Administration

. Thank you. Thank you. Thank you Thank you. Thank you. Thank you Thank you. Thank you. Thank you Thank you. Thank you. . Thank you. Thank you. Thank you Thank you. Thank you. Thank you Thank you. Thank you. Thank you Thank you. Thank you. . Thank you. Thank you. Thank you Good afternoon, everybody. Everybody who loves Budget Sub-Five, your favorite Budget Committee. All right, I see some hands out there. Welcome to the Assembly Budget Subcommittee 5 on State Administration hearing today. Today is our last hearing before May revision. We will focus on some items from HCD, the Cal ICH, the Department of Financial Protection and Innovation, state mandates, and an update on the Help America Vote Act funds. We will have an update from the Secretary of State on the Cal Access Replacement System and the NAP 2.0 project and an informational overview of California Arts Council funding. This is an in-person hearing with all panelists testifying in person. We will take questions from members of this subcommittee after each panel, and public comments will be limited to up to one minute. If you are unable to attend this hearing in person, you may submit your comments via email to asmbudget at asm.ca.gov. All right. And today we do have some vote-only items, but if we do not establish a quorum, then we will hold those open. and at this point we don't have a quorum so we will begin to hear items and if we need to move back we will. All right we are going to start with issue number one which is HCD connect system support. Please join us.

Chair, members, my name is Matt Shuler. I'm the Chief Operating Officer with Housing and Community Development. for the first item on the HCD Connect BCP. This proposal requests permanent position authority for seven positions in 26-27 and ongoing. These are existing temporary positions currently working on the project under the approved project plan that are needed to further implement and support the new information technology solution, HCD Connect, for monitoring and management of loan and grant programs and housing element work. To update you on the status of the project, We have been delivering on the project milestones within the approved scope schedule and budget HCD Connect has implemented an enhanced replacement solution for housing elements and annual progress reports in November of 2024 Implemented a new solution for the Home Key Plus program in January of 2025. And at the beginning of this month, in April 2026, last month, implemented a major project release, which is functionality for the AHSC and CDBG programs. The requested positions are essential to continue the maintenance and operations of what has already been built. and to plan and implement for future system functionality. And with that, I'd be happy to answer any questions.

Phelan Parker, Department of Finance. No comments at this time, but here to answer any questions.

Paul Steenhausen with the Analysts Office. We don't have any concerns with this proposal. Just want to note also that no additional funding is being requested for these permanent positions. Existing funding will be used to support the positions. Thank you.

Just a quick question. How will the HCD Connect interact with programs at the HDFC programs? Perfect.

And I believe it was GovOps that brought us that really nice menu that was laminated and had all their – or GoBiz.

You might think about that or rolling like a big butcher paper behind us and charting this all out because some of us are very visual and there's a lot happening. I'm actually teasing you on most of this, but there is a lot that is happening under HCD and the new orgs. I see a few smiles back there because you know what I'm talking about with all the reorg and HCD and different agencies, a homelessness or an agency council. It's a lot for somebody to absorb. So really looking at one of those type of charts, I think, for future legislators could be. And you're just the person to do it. I'm joking again.

And again, Matt Shuler, Chief Operating Officer with Housing and Community Development. This proposal requests million general fund and 16 positions in 2627 and ongoing and one general fund in 2627 all for resources to implement statutory requirements associated with eight pieces of legislation chaptered in 2025 I can provide a brief overview of each of the proposals if you'd like, or certainly could move directly to questions from the subcommittee if that would be preferable.

We don't have any concerns with these proposals. As your agenda notes, the proposals closely mirror the cost estimates when these bills were going through the policy process last year. Thank you.

All right. I do not want you to go through every single piece of legislation, but it is a testament to when we put legislation through. It not only costs dollars, but it means that we have to often hire additional staffing. And I don't think we always realize that. But aside from that, can HCD provide a cost estimate for the implementation of AB 1053? Certainly. So I'm pleased to be able to say we do have a revised cost estimate, really due to the landscape changing since the bill was originally considered. So when the original bill analysis was done, HCD anticipated needing to build out a completely new program with 25 new full-time staff to administer the process. And that's really what drove that initial higher estimate. But with the creation of the Housing Development Finance Committee and this budget's accompanying trailer bill language proposals, CalHFA and HCD will reshape the implementation model. The state will now have a shared housing development platform to streamline and centralize decision-making for multifamily housing, for more efficiencies at both agencies. And under this structure, the Housing Development Finance Committee can support core functions such as application review and underwriting, reducing the need for new positions and lowering administrative overhead costs. Additionally, CalHFA has rebuilt infrastructure to administer a multifamily construction lending program, including underwriting recourse loans, disbursing funds, and monitoring construction. HCD, HDFC, and CalHFA will work together to leverage these tools to disburse HCD program funds during construction. The state achieves the objectives of a 1053 at a significantly lower cost because the agency is working together, reduce duplicative program build out and allow the agencies to leverage the existing infrastructure instead of creating this standalone program from scratch. So all of that to say the revised estimate is down to one point nine million from the original six million dollars projected in the assembly appropriations analysis. And we like that. Thank you. You're welcome.

None.

Thank you. Thank you.

Thank you. Welcome. Nice to see you. Nice to see you too, Chair. Good afternoon, everyone. I'm Megan Marshall. I'm the Executive Officer for the California Interagency Council on Homelessness. I'm here today with a request for $339,000 in one-time general fund resources to implement AB 678. AB 678 directs CalICH to work with the LGBTQ plus communities to identify best practices, develop training and resource strategies, propose improvements to sexual orientation and gender identity data collection, and recommend policies to prevent discrimination and harassment in state-funded homelessness programs. So as a note, the initial appropriation estimate was a high-level projection based on similar work. But as this bill has advanced, CalICH has consulted with departments who have many years of expertise in working in LGBTQ plus equity-related projects, trauma-informed engagement. And with that clear understanding of the workload, we determined that the $339,000 was sufficient to implement the bill. As a point of interest, LGBTQ plus individuals, especially youth and transgender or gender nonconforming persons, are disproportionately represented among people experiencing homelessness and face elevated risks of discrimination and violence. Today, we do not have a reliable statewide number of persons experiencing homelessness who identify in this community. and the federally mandated and regulated Homeless Management Information System, or HMIS, does not collect sexual orientation. We do have some insight from the California State Study of People Experiencing Homelessness, or CASPE, report. It found that 9% of participants identified with this community and nearly one in five transition-aged youth did. And so these signings really just underscored the need for better data in a statewide collection and supportive services for operators of these types of programs for this population. So because HMIS is federally regulated, we cannot mandate additional data elements to be collected. And so as such, we have found that a contract is necessary for us to implement the legislation. legislation. So with that, I will take a pause and happy to answer any questions.

All right. We are just speeding, being speed racers. Assembly member, any comment?

Any comments from the public? See no individual running up here. We will close this item.

Thank you. We are speed racers today. Seeing that we will have a some of our members coming in and out and it may be difficult for us to get a quorum We will if we do not see four members coming then we will push the vote only items to after May revision We'll see if we can get four at the same time. All right. Department of Financial Protection and Innovation, continuation of resources. Welcome.

Any additional comments?

Taylor McGrew, Department of Finance. My colleague in the LAO is going to share some thoughts, but I'll just kind of get ahead. One of the things that DFPI is doing is doing manual reporting per the 2025 Budget Act, and we feel like that gives the legislature ample opportunity to ask questions about DFPI DFPI and their programs or any concerns they may have and we just want to we appreciate the legislature's support of DFPI and their ongoing programs and we will always encourage that the partner committees the Banking and Finance committees reach out to us if they have any questions But I here to answer any questions as well Thank you Hi Heather Gonzalez with the LAO And we don't have any particular concerns with the requests, particularly for the limited-term funding for the comparatively new activities at DFPI. However, in anticipation of the next request, which we think will likely be for ongoing, we would encourage the legislature to consider gathering some additional data and evidence on the outcomes of these activities in order to have a full evaluation of these programs when they come up for their permanent request.

I just want to thank you and your department for the wonderful work that you do. Often, it's not often that I sit on this committee and actually, you know, am pleased to see some of the reports and the outcomes. I wish more departments were like yours. We partner with you a lot in our communities. and this is definitely a space where I can see the direct impact of the work that you are doing. And so I just want to say thank you. Thank you.

I do have several questions, and I will be candid. We have had several people reach out to our office in particular, so if you'll just bear with me, I'm going to go through the specific questions. Given that we're trying to foster innovation in California, what steps has the department taken to evaluate whether the current assessments and examination costs for the CCFPL registrants are aligned with that goal? Happy to take that question. So the CCFPL puts a dual mandate on the department to protect consumers and foster responsible innovation. There are multiple components to what goes into administering the CCFPL. There is a direct supervision program, which is called our new covered persons program. That is the program with a team of examiners that after we pass a regulation to mandate registration for a four-year period, this team supervises, periodically examines, gets annual reports from certain categories of financial service providers. The regulations we currently have in place require registration of four industry types. It's private post-secondary education financing, earned wage advances, debt settlement companies, and student loan debt relief, or sometimes called doc prep companies. So that is the pool of registrants that are currently being supervised by the team that does that portion of the CCFPL. The fees and assessments that those registrants pay go to support the administration solely of that supervision program. What we also have at the department is a number of enforcement actions that we take under all the laws that we administer, and enforcement revenues from penalties and settlements fund the core operations, the general operations of our department. Now, what the CCFPL also did back in 2020 was add some enhancements to our core operations, including several things. Expanding a targeted outreach team to do the Protect Yourself from Fraud webinars and some of the other events that we host, to enhance our complaint handling team called the Consumer Services Office, to establish a small research and market monitoring team of data experts, and finally to establish an Office of Financial Technology Innovation, which has four people in it. And that is sort of like the lobby to our building for innovators. They do incredible external engagement work. They held more than 100 meetings last year with external stakeholders to gather insights, to share information to discuss trends And so the work of the Innovation Office is supported by our general revenues from the department which do come from other places but from enforcement So just to be very clear, the registrants, when they pay their annual assessments to our department, they're only paying for the cost of their direct supervision and regulation. The other components of the CCFPL that I mentioned that don't directly bring in revenue, the innovation office, the complaint team, et cetera, those are paid for by the revenues we bring in in general as a department because they are now part of our core general operations. And related to the fees or invoices that individuals receive, we've been told that they were sent last year with a very short due date in 2025. So someone might have received an invoice in, say, October, and it was due by December, and in some cases these were thousands of dollars. So do you have a plan to possibly give more time, or can you speak to that? Well, the deadlines for issuing invoices and having the assessments paid are going to be set forth in statutes and regulations, so we need to take a look at that. However, our team is very diligent about sending out reminder notices and also does work with licensees who may have particular challenges related to paying for the assessments. So we are happy to take a look at that. But we do have statutory and regulatory timelines we have to follow based on the current statutes and regulations. If you could look at that, I'm sure it's not in all cases, but in some cases the assessments were quite large, as I said, in the thousands, and for some of these businesses particularly to have a short turnaround that there could be some accommodation made to pay these maybe over time. Just really kind of hone in and look at that as we've been told that they were quite large, in some cases $50,000. Now, maybe that's not accurate, but that's what we were told.

Yeah, stay with us.

Here.

Assemblymember Haney.

Assemblymember Wallace.

Motion and a second, and roll call.

Aye.

Aye.

Do we have a motion?

Roll call.

Aye.

Assemblymember Haney.

Assemblymember Wallace.

Assemblymember Ward.

Motion to move and a second.

send a member closer something member

send a member ortega send a member

and there is a lot of discussion around the number of licenses for the debt collectors program. Originally the program was scoped at 7,000 but then

and how the resources are scoped at 1,200? Yeah there's a lot of legislative history on this one. So back in 2020, when the CCFPL and debt collector laws were still legislative process, the department originally estimated, using the best good faith estimate based on data obtained from other states in the CFPB, the Consumer Financial Protection Bureau, that there may be as many as 7,000 debt collectors here in California. When the Debt Collection Licensing Act passed in 2021, the department engaged with the trade organizations, California Association of Collectors, RMAI, and a few other stakeholders to refine the numbers to get a better estimate of what we think the population looks like in California. And so originally that 7,000 number was immediately scoped back down, cut in half. So the original estimated 90 positions that would have been given to the department were scaled down to 51, And that's what we have today. To date, we have 1,275 licensees and counting. So the number keeps taking up. The workload is absolutely there. One thing to note about implementing this law, we did our estimates based on what data we had at the time. Now that we're in the middle of implementation, we have discovered a very, very complex, multifaceted industry. We have debt collectors, debt buyers collecting on different kinds of debt from auto to payday to student loan to credit card and you name it and different laws that may apply to each. Lots of different state and federal laws that do apply to debt collection and also, of course, with debt buying. There's a specific Fair Debt Buying Practices Act that also sets forth certain requirements as well. And so the workload associated with processing licensing applications at the upfront which had its own challenges and then pivoting over to exams has proven that the workload is absolutely there The other factor to note here is that the Debt Collection Licensing Act has very very broad terms in it that are not well defined in terms of what constitutes engaging in the business of debt collection what constitutes a debt being passed due and so forth So we have been developing regulations to clarify the scope of the licensing requirements. That package should be moving to formal rulemaking very soon, and we know from engagement from the industry that many stakeholders are waiting to see the outcome of the regulations before they apply for a license. And that is also a factor, and we anticipate seeing growth in the licensee pool as we finalize those regulations.

Appreciate that.

Can you tell us how your licensing fees compared to other states, and can you explain why some of California's fees are higher? Yes, we can speak to that. The fees are apples and oranges compared to other states, but I'll let the acting deputy speak to what we know about other states. Pleasure. Thank you for the question. I know for California again, we calculate on a pro rata basis our licensee our license is perpetual meaning once we issue a license the Assessment is what we use to cover the cost to administer the program So again not apples oranges, but for Colorado they do an annual licensing fee of 1500 Per license as well as Massachusetts does a thousand per license plus a thousand for each branch office So in comparison terms, 60% of our licensees paid less than $1,000 for their assessment this last year. Thank you.

Hi. I actually have some information, and we're happy to provide additional. This doesn't quite answer it. But as of October 2025, the assessment was issued to 1,242 licensees. So 1,000 or less, there were 762 licensees, more than 1,000 but less than 5,271 licensees, 5,000 to 10,077 licensees, 10,000 to 100,114, and more than 100,018. Ken, whoever wants to speak to the very top tier, where we're talking close to $100,000, why is that? Well, the way that the statute structures our fees, licensees are required to pay. Now, this is netting out. Everyone pays a minimum assessment of $250. All licensees pay that. In fact, a lot of people just pay the $250 in that pool of the 60%. Then, subtracting that out, as well as any revenue we may have incurred from billable exams, the remaining amount is the amount that we need to assess on our licensee pool on a pro rata basis. Pro rata based on their net proceeds information. Now, the net proceeds is the term in the statute. It's not a common accounting term, so we had to clarify what net proceeds means via regulation. It's roughly meant to correlate to income. So the people who are paying the highest prorata assessments are the people that have the largest net proceeds and they are by and large a handful of major corporations who are paying that If you a small business that got not a lot of receipts you probably paying that But it varies. I mean, it's pro rata, as are many of our licensing programs. So the people with the largest incomes are paying the most, and the people with the lower incomes are paying less. All right. And last question. If the license transfer application received since the license fee increase was passed, what percentage are being transferred to parties or companies affiliated with a title insurance company or real estate broker or lender of other types versus joint ventures versus unaffiliated individuals? And the same question for new licenses. I would need more clarification about this license transfer question, so we'd be happy to talk about that with your office offline, because that is a new question. Okay.

And I appreciate your very candid answers.

Hi there, Clifford, California Association of Collectors. Appreciate the chair's questions. We remain very concerned that the assessments or licensing fees under the Debt Collectors Licensing Act are disproportionately high to what our members are experiencing from other states, and we really mean disproportionately high and believe that part of the problem may go back to the department, overestimating the number of licensees, 7,000 originally, then taking it down to 3,500. But as you've heard, there's only 1,200 licensees. A huge part of the calculation is based on the department's budget. So a significant problem for the future of the program. If businesses choose not to operate in California, our members are small and medium-sized businesses, not large companies, but they are getting significantly higher assessments than was expected, and it is a huge problem. Thank you.

Madam Chair, members of the committee, Ron Kingston, representing the Escrow Institute of California, we submitted a letter. But here's the nut of our concerns. Last year, the last fiscal year, the assessments and fees were $2,800. They went up to no less than $7,200 per licensee per location. In addition to that, the DAPI has the authority to increase up to another $1,000. Now it's $8,200 with no explanation to you, no explanation to the public, no explanation to anybody. Last year's enabling legislation that increased these fees and assessments were remarkable. These are small. The Escrow Institute is comprised of small, women-based, minority-run businesses. They're very well organized. They're very smart. Now, who else can perform these types of escrow services? Department of Real Estate, $100 a year. We're at $8,200 and climbing. The Department of Insurance, $1,000 a year. The question is is why should DFP I be able to be given that type of massive authority to charge and their fee structure totals million for a staffing level of 22 staff positions We ask for increased transparency. You, the legislature, had that in mind last year. There's so little transparency that we would hope that the subcommittee and the other members of the legislature join in in demanding transparency so we understand what are our licensees paying for. Thank you.

Good afternoon. Tim Lynch on behalf of the Receivables Management Association International here to express our concerns about the DCLA BCP. We were supporters of SB 908, the bill that created licensure. We continue to support the consumer protective elements of that, but as the previous speakers and the chair have noted, we think the scale of licensure that's included at $3,500 is roughly three times the size of the actual pool of licensees, so we encourage you to examine that. Thank you.

Good afternoon, Madam Chair and members. Ed Howard on behalf of the Office of Cat Taylor, wanting to strongly, strongly, strongly support the reauthorization of the 51 positions for debt collection for DFPI. That is among the state's most important safety net programs. By definition, every single one of the people who will benefit by lawful debt collecting are people who are on the margins. And if they fall because of unlawful behavior below the margins, it is the state's safety net that will have to pick up the difference. A couple of brief points about some of the points raised today. The first is that the fees are set by statute. The pro rata statute disproportionately benefits small debt collectors. You heard the data here today. And the ones that are paying the very large debt collections because of the implementation, faithful implementation of the statute, appear to be multi-billion dollar nation-spanning corporations. And the third, Ms. Martindale mentioned the workload justifying it. That is amply true. 30% of the complaints coming in as a part of this program are about debt collection. and the enforcement actions that the department has taken underscore how important this consumer protection program is to protect your most vulnerable consumers. Strongly support the budget.

Good afternoon. McKenna Moustaza with Nix in California. Respectfully just wanting to uplift a program under DFPI. This isn't an item that's on the agenda today, but our understanding that it is going to go through this subcommittee. So with the DFPI being here today, I just wanted to raise it to the committee all of the good work that DFPI is doing with the Student Loan Empowerment Network. The network provides free student loan counseling and legal assistance to borrowers all across the state of California. The program is already secured $4.6 million in student debt relief for borrowers. We've heard from borrowers, a tremendous amount of them, that the network is so crucial to them and their financial success. And this is putting dollars back into your constituents' pockets. So we respectfully ask that the funding for this program be retained in the final budget.

Thank you. Hi, Madam Chair. Randy Pollock on behalf of the International Franchise Association. This is on a different topic for the FPI. Two years ago, Senator Unberg passed a bill that would require the registration of franchise brokers, which we think is very important because it provides consumers' protection from brokers to understand what their background is before they invest a lot of money in a particular franchise. We're asking for an allocation of $150,000 so that they can get that system up and running. What's interesting about this is that the legislation has a fee in it of $450 for broker registration. We estimate there's somewhere between 2,000 to 3,000 brokers that would register that will fully cover this program. So we just ask for consideration of that $150,000 allocation. Thank you. Before you leave, say the program again, the franchise. It's a franchise broker registration. So these are the brokers who, when you're selling franchises, whether it's fast food, gyms going around that brokers would have to register. The bill passed unanimously. It's just the funding part that we're just struggling with.

I'm going to go back to ask a question. If you can clarify related to the escrow and as far as the initial fee being $2,800 and now potentially could be up to $8,200, comparing that to the real estate or Department of Insurance and how those fees have come about? So I can speak to that, Sarah Hamilton. So previously to the fee study being conducted and then the fees being increased, the fee tied to escrow had not been raised in 25 years. So proportionally, and I can't speak to Department of Real Estate, but the costs at the DFP are continuing to increase and had increased over the past 25 years. So one of the entities that we brought in to do the fee study, Crow, helped us evaluate the costs and the future of that program. And it was determined that raising the fee to 7215 specifically would help cover the costs of that program and that we would not need to potentially levy the additional $1,000.

Just on the individual who spoke on the student loan program, the 4.6, Is there anybody up here who can tell us how the public can access that program on student loans? I can speak to that. So in, I believe, fiscal year 22-23, the governor put in the budget a one-time general fund appropriation to establish a student loan assistance program for Californians. The allocation was $7.25 million for direct grants to community-based organizations, with the remainder for communications plan and some admin and overhead. So for the last two fiscal years, we've been administering that program to, I believe, about 13 organizations, a mix of community-based nonprofits that either do generalized financial coaching or do specialized assistance, kind of like legal aid. And that funding is running out this month. So that's what the advocate is referring to. Can we get a list of those organizations? As I know, most of us have constituents that are really struggling with student loans, and any type of support could mean a lot to them. Yes, we will provide you information about the grant program after we leave today. All right, thank you.

Thank you so much.

Assemblymember Haney, Assemblymember Ortega, Assemblymember Wallace, Assemblymember Ward. Aye.

Good afternoon. Kaylee App, Department of Finance. The governor's budget proposes to suspend a new mandate, the disclosure requirements and deferral property taxation mandate. This mandate is estimated to cost $42,000 in 2026-27 and $8,000 in 2027-28. We're happy to answer any questions. Thank you.

Alex Spence, LAO. As you see in the agenda, our recommendation is that the legislature repeal the ongoing mandate, but fund the previously incurred costs. But I happen to answer any other questions.

Chris Hill, Department of Finance. I'd also like to add for the record that the Department of Finance would have concerns with the proposed solar-to-fund because traditionally departments have to, local agencies have to incur costs before the mandate is suspended. And when mandates are suspended, typically those incurred costs are not funded. so this would be kind of a deviation from that. Just wanted to note it for the record.

Second.

Aye.

Aye.

Good afternoon, Madam Chair and members of the committee. Christian Belchin, actually with the Department of Finance, here to present to you on this item. Just thank you for the opportunity to be here today to present the item, which is specifically trailer bill language that amends government code section 8310.4, which was amended last year with the enactment of AB 91. First, I'd just like to begin by underscoring that this administration is still committed to implementing the foundational requirements that were put in place by AB 91 to ensure that those in the MENA community are appropriately accounted for in critical state programs through the collection of demographic data that coincides closest to their self nationalities The purpose of this trailer bill language is centered around three main principles. First is the data nondisclosure. Second is protecting federal funding. And third is delayed implementation. So in terms of data nondisclosure, the trailer bill language requires appropriate data nondisclosure for both state and local entities. And then for protecting federal funding, really the TBL is focused on protecting state and local programs from jeopardizing federal funding, but in some cases there may be conflicting federal requirements for data collection. And then in terms of delayed implementation, it really just supports successful implementation by allowing additional time for state and local agencies to comply with the requirements. I'm also happy to share that the administration is engaging with key stakeholders within the MENA coalition as well as with the author's office of AB 91. And we have met twice with the coalition and will continue to do so as we try to work on language that is able to accomplish the most impact possible without jeopardizing the federal funds. And I'm also joined today by several of my colleagues in the administration and the audience to help answer any specific questions you have. Thank you.

Thank you, Madam Chair.

Thank you. Good afternoon, committee members. My name is Kristen Dagsher. I'm the interim chief financial officer for the Secretary of State's office. And on behalf of the Secretary of State, pull that up, the microphone. Yeah. On behalf of Secretary Weber, I'd like to thank you for the opportunity to present our proposals to you today. Our first two proposals are in furtherance of the Help America Vote Act of 2002, otherwise known as HAVA. One of them is for VoteCal and the other is for spending plans. So I'll start with the VoteCal. VoteCal was developed in response to a federal mandate. VoteCal is a near-real-time centralized database that serves as a single system for storing and managing the official list of registered voters in the state. We are requesting a $10.3 million one-time spending authority from the Federal Trust Fund to support the maintenance and operations vendor, data analysis consultant, security assessment, election management system support and verification contracts to analyze and support the system for vulnerabilities and performance enhancements, connectivity costs with counties, and the maintenance of the system on the Department of Technology off-premise cloud environment. Would you like me to stop for questions on that one first or go to the other one?

Okay. The second one is for the HAVA spending plan. HAVA requires states and localities to meet uniform and non election technology and administration requirements applicable to federal elections The requested million in one expenditure authority will support voter education and training programs for election officials and poll workers, the development and dissemination of voting information to increase voter participation and confidence, voting system testing and approval, and county assistance for improving voting systems. The funding will also support election assistance for individuals with disabilities, election auditing, and improving the securing administration of elections. We're happy to answer any questions you have.

Alina Petrichko, Department of Finance. No comments.

It is anticipated that the federal funds will be fully depleted in fiscal year 27-28.

Motion and a second.

Aye.

Aye.

Aye.

Thank you.

Welcome. The objective of the CARS Project is to replace the outdated Cal Access for electronic reporting of the campaign. campaign finance and lobbying activities mandated by the Political Reform Act. The request before you is for one-time funding for $11.8 million in general fund to support the continuation of the CARS project. Specifically, the request would provide funding to support the final months of the project's execution and the first few months of maintenance and operation, continued funding for 33 prior approved positions and backfill staff to support ongoing program activities, and contracted services, including the prime vendor, CDT, project oversight services, and technology costs. Happy to answer any questions.

No comments.

Thank you for bringing this item forward. We've seen this several years, a lot of investment going into this important program. Although CalAXIS is pretty archaic, it still is functional if you know how to navigate it. My question is one, how much have we spent to date, and you can include this $11.8 million request as well, what would the total cost for this project have come to?

Total spending of this project to date?

Okay.

Of the total project cost for this entire project started in February 2022.

I'm sorry, my name is John Heinlein. I'm the assistant project director for the Cars Project. So the total cost for this project, 92,352,323.

It's been a lot of general fund. Yeah. And what the expenditures today, just so you asked. 36,877,323. Only 36 million expended. Yeah. So what's the delta there? Why haven't we expended down, What am I calculating here, $60 million or so? Or why are we at $36 million as opposed to? $36 million expended, but you said there was 90-something? Yeah, the total project costs $92 million. That includes one fiscal year of M&O, maintenance and operations. So right now, the CARS project is going to be, the system, the new system is going to be implemented in four different program increments. So after the fourth program increment, it will go live. Currently, the first two, and we did this on purpose because we did it so that we know we have a working software early on in the project. So each program increment is designed, developed, and user acceptance tested by the stakeholders. And then the vendor, that's a pay point for the vendor. So two of those program increments have been accepted. We're working on the third and fourth right now. So some of that funding trails and will be expended once these program increments are accepted. It just feels significant that we've only had $36 million expended, and if the total project cost is $92 million or something, there's quite a delta there. I think it has to do with the fact that this doesn't, I think, reflect the second program increment that was recently approved. That's, I think, close to $7 million. And then there's two other program increments, too. So I think it's a matter of kind of lagging costs. Okay. We're on schedule to expend the money. Okay.

Is that still on your target date? Yes, that's our target date. I heard you say and I did want to ask this question sort of what is your engagement with you know potential users for quality control purposes I would hate for something to go live and it be dysfunctional to the users that normally want that kind of public access Yeah, so if you're asking about, are we bringing in external users? Because part of the CARS system is used internally by the Political Reform Division group, so we user acceptance test with those folks. They also know the processes that are used by the external stakeholders, as well as the people that use the system, the campaigns, the committees, the lobbyists. So, you know, we recently, we've been meeting with the external stakeholder groups since the planning phase of this project. So recently we brought them in to do user testing. And there was two one-week periods where they, we gave them months in advance notice, where they volunteered to come in and we set them up, we trained them, we assigned them a mentor. and they tested the system each. There was like, I think it was nine per week came in and tested the system. And we intend to do this again once the public portal piece is completed. Great.

All of it will be imported back.

Okay, thank you for all my questions. Thank you. Great questions and appreciate the response. You're welcome.

Just a few months away.

Motion and a second.

Aye.

Aye.

Yes, thank you.

The system is approximately 30 years old. It was developed utilizing an application that in present day is running on obsolete and unsupported technology. The application itself is in a programming language that has been deprecated. This combination presents high risk and security issues for the department and challenges the ability to find a qualified information technology staff or vendors to support the application. The current technology has evolved significantly since the system was created, thus integration of the legacy system with the current and future technology and possibly third-party systems is impractical and near impossible. Only migration of existing data to a new system is a viable solution. The request will provide one-time funding of $9.795 million business fees fund for the continuation of the NAP 2.0 project, which will be for continued funding of the 15 positions that were previously approved, funding for temporary staff to backfill program positions redirected to the project, and funding for interdepartmental services provided by DGS and CDT and continued planning resources. Happy to answer any questions.

Alina Patrychka, Department of Finance, no additional comments.

Vote Cal is set up to help them It's a required state voter registration system that includes the near real-time integration with the 58 counties voter registration databases within their election management systems to meet the requirements of a B 1392 vote Cal must be modified to allow voter records for elected officials and candidates to be designated as confidential voters while still allowing disclosure through voter registration file requests, allow elected officials and candidates to opt out of having their voter registration information made confidential, and generate lists of federal and state elected officials and candidates identified in the voter registration module. Once VoteCal is modified, the SOS must contract with the election management system vendors to integrate the changes into their systems. Last-minute amendments in the State Appropriations Committee hearing materially expanded the bill's requirements by creating new statutory duties, new confidentiality and disclosure frameworks, extensive system modifications, and new ongoing administrative workloads without our opportunity to amend our previously submitted fiscal impact. Therefore, we're in front of you today requesting a one-time augmentation of $660,000 in general fund for 2627 to implement the confidential voter registration requirements of AB 1392. That amount is comprised of $510,000 for the modification of VoteCal and $150,000 to integrate the changes into the EMS systems, the election management systems. Happy to answer any questions.

Department of Finance. No comment.

Questions? I have a comment. I mean, this seems a kind of a quiet thing on our agenda, and it really actually is extremely important as we look at the political climate that we are living in across the United States and maybe even other countries. We know that, I'll just read it, AB 1392 makes voter registration information for all elected officials and candidates confidential, excluding it from voter file requests and most disclosures, while still allowing release of name, address, phone, and email for journalism or government purposes. Officials and candidates may opt out confidentially. And that's the point is we, I think many of us have been witness or been targets of some of this political violence, whether it's individuals showing up at your doorstep, which is not unheard of, whether it's at our state offices. And sadly I think we will see more legislation that will come in the future related to not only privacy but also to protection because there are just too many individuals out there that have decided that elected officials whether they Republican or Democrats are now the enemy and I mean just last week we saw at the correspondence dinner these are real actions and anything we can do to protect those who are serving I think is important. But with that, we have no questions here.

Good afternoon, Madam Chair Cork-Silva and members of the committee. My name is Danielle Brazil, and I have the distinct honor of leading this incredible agency since 2023. We're glad to be here in our 50th anniversary year. year, five decades of creative impacts, five decades of championing transformative power of the arts. And in the past seven years, there's been historic investments. Creative Corps is at 60 million, Cultural Districts at 10, and the Creative Economy Strategic Plan. The Arts Council was established in 1976 as a state arts agency. We are here to strengthen access to the arts, to culture, and creative expression as the tools to create a better California for all. We support a practice of artistic quality and equity for California's over 16,000 varied nonprofit arts and cultural sector. And we're the only statewide funder of the arts with funding that is accessible to all 58 counties. and we want to just thank you for helping to make that possible. I want to extend an invitation for my extraordinary dynamic leadership team to introduce themselves, because you should know these women. Chief Deputy Director Michelle Radman and Deputy Director Sylvia Britt. Would you like to take a moment just to introduce yourself to the committee? Yes, thank you, Danielle. Good afternoon, Chair and members of the committee. I'm Chief Deputy Director Michelle Radman. Thank you. Thank you again for having us here today. Thank you. I was appointed August 2024, and prior to that, I was Deputy Director for the California Office of Small Business Advocate within GOBiz. So I bridge economic development my past 13 years with arts and see that arts and culture is a vehicle for economic vitality in California. So I look forward to the conversation and answering any questions that you have today. Thank you. Hello, members. My name is Sylmia Britt, and I'm feeling a little campy, too, so I'm looking. I'm looking forward to this conversation. I'm the Depth Director here at the California Arts Council and looking forward to your questions and any information we can provide. That's it for us, Madam Chair. We yield the floor to you. All right. And from our Department of Finance, nothing. And our LAO, Heather Gonzalez, LAO, here for questions. All right. And I know this is a passion for our Assemblymember from San Diego. I don't think I'm alone, Madam Chair. I know it's a passion for yours as well. I appreciate the chance to be able to review this item here before committee today. I know we weren't really scheduled, but it's critical, I think, that we make sure that we're having a little bit of a spotlight on the need that we have for the creative economy, and especially for the work that the California Arts Council does. It's been a pleasure to be able to engage so closely with you across our state to be able to support so many of the community organizations. And it's not lost on me, as many of our local governments are also grappling with fiscal crisis. a good and significant source of many of these local community-based organizations come from those local government decisions that are really stressed right now. I'm grateful to the governor for, in his January draft, being able to show an allocation, really a status quo allocation of that $36 million, but certainly very supportive of the work that our colleague, Senator Rogers, has been able to lead on, and I've been happy to jump right on that as well, too, to celebrate your 50th anniversary of the California Arts Council with an allocation of $50 million. I know it's in the mix of all the discussion that we're having across our budget subcommittees, but it's not lost on many of the assembly members because we all benefit from the work that we're doing. I wonder if you could just talk a little bit about maybe, say, in the last two years or so, just some key examples of some of the work that's been put out and the economic benefit that's occurred from the support, the grant making that you do through the California Arts Council? Yeah, absolutely. In general, a grant dollar awarded by the state of California generates another six to eight dollars in local community. And a core principle of any economic measure is how long that dollar stays in a community, right? And so what we see is that our durable investment in arts and culture is about investing local and keeping those dollars local. The other thing that happens, as you well noted, Assemblymember Ward, is that a state dollar is leveraged by a local dollar from local government because these are public benefit corporations. They are serving the interest of the public. The other thing that's really important is that it leverages additional revenue from local philanthropy, and from local business. So it's really that kind of structured, four-legged stool that is really critical to advancing arts and culture in our state. I want to yield this to my colleagues if there's any additional information you want to share. Thank you, Chief Deputy Director Michelle Redman. I want to share about the cultural districts program that we administer at the California Arts Council. in there are total 24 cultural districts. The original 14 from the first cohort were designated in 2017 with an infusion of $10 million to those cultural districts. And then this past year, we were able to designate another 10 cultural districts. And so a part of that program is scaling up the cultural district infrastructure, bringing in workforce, bringing upscaling in the workforce there as well as focusing in on economic development and cultural preservation So we very proud to be able to administer that program Currently, those designees have $10,000 for each cultural district at this time. So that is one of the programs that we're very proud to be able to administer. And I know some of those cultural districts are within your districts as well. Thank you. Yeah, I have a few questions. Sorry, you weren't finished.

Are you going to be with us just so we can finish this item and then vote?

No, the only thing I'm really glad you brought that up as well, too. It's another letter that we have out there is in addition to the $50 million of ongoing and enhanced grant-making that we do for so many of our community organizations through the Arts Council that we are able to actually have a really significant year to support our cultural districts because $10,000 every two years per district does not stretch very far. I'm not even sure if that gets you a plaque to designate the district to be seen locally. But we know we need a lot of investment in infrastructure and programming if these are truly gems of California across the state. And 24 is spread pretty thin across the big golden state. I'd love to see an enhancement and see additional designations as a process would allow. But I certainly would love to be able to support those that have already been designated because we don't need them falling into disrepair. They themselves are economic generators. There's a reason they're designated. They have pride. They have local pride in addition to that statewide designation. And it really, I think, intersects with a lot of the tourism aspect of what we're trying to be able to support regionally. and along the lines of tourism, when I think about the major events that we have coming up in the Olympic and the Paralympic Games with the World Cup coming up, while it's this year and this summer, I think probably right in the middle of our fiscal year beginning, it's not lost on me that we need to talk about the arts in California because that's the lasting impression that the world gets to see about the culture that we are, the rich and diverse culture that we are, and we're going to need to make sure that we're supporting a lot of our local artists and a lot of our organizations to be able to display the message that we want to have take home. So this is the year to make that sizable investment and really up it. The Arts Council has had, I think, significant investments in past years prior to some economic downturns and just never really fully got back to that level of funding, certainly adjusted over time, that a lot of our local organizations and artists once enjoyed. So to any capacity in this very difficult budget year, and especially in light of the stressors that we have in many of our local governments, I hope that this is something that will get over the hump and that we can continue. I'm grateful to all of our colleagues in the Assembly who have co-signed one or both of these letters as well to be able to support you in the work that you're doing. And we'll keep fighting. So thank you, Madam Chair.

Well, I have lots to say, but first of all, I was happy, and I actually saw some photos of this, that former Governor Jerry Brown attended your reception related to the 50 years of the Art Council. and it certainly is important as we know that he does not often come back to town, if you want to say, related to these types of events. So I think that's really significant. So I wanted to shout that out. Second both Assemblymember Ward and myself have served as the arts and entertainment chairs and have seen I think over the handful of years that I been here well, it's actually over a decade now, that the cultural districts, I know originally at 14 districts. And did you say that they initially got $10 million each? Is that what you said?

Okay. So the additional 14 districts then, or I guess 10 additional districts, are now getting maybe 10,000 is what was said. So that's certainly...

If we could get two pieces of information, one would be who the new 10 additional, or just all of the cultural districts, because I can't remember back all of them. And then second, if we can get your latest list of arts grants. I know we had. And again, just to remember, the Arts Council was, I think, three or four years ago slated to get some significant cuts. And we're really happy that that did not happen. And we appreciate that from the governor's office. But we also know that this is your 50th anniversary and we are hoping that there can be some reinvestment for that. But I think one of the things that speaks to me particularly this year related to the arts is we often see what happens in the world or the United States or in California. And that plays out in the art world. And it can play out in music. It can play out in theater and dance. And in this last year, there has been so much trauma that our communities are interfacing with related to immigration. And related to not just our Latino community, but especially our Latino community, but other communities as well. the fear that they're facing, the tearing apart of families, even the killings of some of these individuals who have actually been taken to prisons. I think it close to over 50 or 60 individuals let alone the Minnesota And we saw a song come out from Bruce Springsteen So when things happen in our community we see them showing through art And just, I believe, yesterday or this weekend maybe, one of the artists brought up onto stage the mariachis that were detained by ICE, Casey Musgraves. And these are statements, and these are the way artists define who they are, in addition to Coachella, where you had Carol G bring up mariachis to play alongside of her. And so that's why, to me, art is so important, because it isn't just the venues to see the paintings. It isn't all of that. It's what happens in our community gets manifested, whether it's in print, whether it's on canvas, whether it's through song or dance. And so much throughout our history is about the pain. And, of course, it's about joy, too, but it's often about what's happening. And that's why this item is so important. So I want to thank my colleague for asking us to hold this open. And with that, that's an informational hearing.

Sorry.

Aye.

Assemblymember Haney.

Aye.

Assemblymember Haney.

Assemblymember Haney.

Assemblymember Haney.

Assemblymember Haney.

Assemblymember Haney.

Assemblymember Haney.

Good afternoon. Thank you so much for hearing this item today. Julie Baker, California Arts Advocates. What if I told you that you could make a single modest yet proven high-impact investment for all California communities, one that consistently delivers in areas like combating isolation and loneliness, fostering community pride and belonging, enhancing public safety, strengthening civic infrastructure, boosting youth engagement, and driving improvements in health, wellness, and economic development. An investment that would go to an agency that for half a century has consistently achieved results for exceeding its budget, yet remains at a funding level lower than it was 25 years ago. At a time when the federal government is attempting to cut cultural funding, they're actually trying to close the NEA, and suppress funds, and AI poses a risk to creative jobs, California can demonstrate its strength through an unwavering commitment to diversity, asserting that culture and creativity are essential to our civic lives and to public good. Therefore, we urge the subcommittee to support, and we thank you, Assemblymember Chris Rogers' budget request, which seeks to increase the California Arts Council grant-making appropriation from $24 million to $50 million. This request is co-signed by committee members Haney, Ward, and Ortega, and is strongly supported by nearly 350 labor unions, trade associations, creative businesses, arts nonprofits, and Mayors Barbara Lee and Kevin McCarty. While we also urge support for investing in the cultural district program, which is currently unfunded. While $26 million is a negligible amount in the context of the state's $260 billion-plus budget, this investment would in fact double the number of grants to community-based nonprofits the agency is able to award and move California from 35th in the nation for per capita funding to in the top 20. Given the current temporary surplus driven by the AI boom, it is only fitting that this unexpected windfall be directed toward supporting human creativity. Such an investment is profoundly meaningful and would be a tremendous affirmation for all arts and culture workers throughout the state. Thank you so much.

Good afternoon, Madam Chair and members. Thank you so much for the opportunity to speak today. It's great to see you all. My name is Sean Fenton. I'm the Executive Director of Theater Bay Area, and I also serve as the President of the Board for California Arts Advocates. I'm here today in strong support of increasing the CAC's local assistance grant funding to $50 million in the agency's 50th year. As you know, the CAC is the backbone of arts infrastructure in California. Its grants reach communities that often do not have access to other sources of funding, especially rural communities, small organizations, cultural organizations, and BIPOC-led organizations. And when the CAC is underfunded, those are the communities that feel it first. And we are already seeing the consequences of this gap. In recent years, we have lost beloved community institutions like Aurora Theater Company, Cutting Ball Theater, Bay Area Children's Theater, and too many more, representing not just artistic loss, but the loss of jobs, access, and cultural infrastructure in their communities. These are not abstract impacts. CAC grants support arts education, community-based programs, cultural districts, and local organizations that are deeply embedded in the communities they serve. As Executive Director of Theater Bay Area, I see this directly as so many of our member companies receive support from the CAC, including San Francisco Bay Area Theater Company, African American Shakespeare, and so many more. And right now, demand far exceeds available funding. Many qualified applicants are turned away each year, not because of a lack of merit, but simply due to a lack of available resources. And that represents missed opportunities for communities across California. I also want to be clear about the request itself. The million ask is for local assistance grant funding not the total agency budget And while the million number aligns with the Arts Council 50th anniversary this is not just symbolic This number reflects the real demand we seeing across California and, as Julie said, begins to move the state closer to national norms and per capita arts funding. So in this 50th year for the CAC, this is a practical and meaningful step, and we urge you to increase CAC local assistance funding to $50 million. Thank you very much for your leadership and support.

Good afternoon, Chair Quirk, Silva, and members. I'm Eliza Tudor, Executive Director at Nevada County Arts Council, a state-local partner under the California Arts Council, an administering partner for two California cultural districts, Grass Valley, Nevada City, and Truckee. I'm here to urge state investment in California for the Arts' 50 and 50 campaign, $50 million for California Arts Council in its 50th anniversary year, including $10 million for California cultural districts. This is an urgent moment. The governor's January budget proposal included no new investments for arts and culture, just as communities are looking to the arts to help with economic recovery, downtown vitality, tourism, youth opportunity, belonging, and civic trust. In Nevada County, cultural district funding is not symbolic. It is practical infrastructure. It allows us to coordinate across two very different rural districts, from the Sierra foothills in the west to the high Sierra in the east. It supports the work of convening cities, chambers, tourism partners, indigenous and cultural heritage partners, small businesses, artists, venues, and county leadership around shared priorities. It strengthens cultural tourism, elevates creative businesses, supports main streets and historic downtowns, and builds partnerships that no single city, chamber, non-profit, nor volunteer group could sustain alone. But cultural districts cannot thrive on designation alone. Without state investment, the burden falls back on already stretched local organizations and community partners. The result is uneven capacity, lost momentum, and missed opportunity in the very regions this program is designed to serve. California's creative sector is economic infrastructure, civic infrastructure, and community infrastructure. If we want every region of California to benefit from arts and culture, then state investment must follow state vision. I respectfully urge you to invest $50 million in the California Arts Council, including $10 million for the California Cultural District Program. Thank you.

Good afternoon, everyone. My name is Richard Falcon. I am the founder and executive director of Teatro Nahual here in Sacramento celebrating our 20th year bringing forward culturally relevant Latino programming not just for Latino culture but for everyone And for a moment I want to talk about the audacity of hope that our one President Obama talked about. Because one of the things I have found in my travels through as someone who had an opportunity to administer the creative core for the Capital Region, as someone currently now with our organization is administering the individual artist fellowship here for the capital region. When I get to travel through all the arts organizations and the artists throughout the area that I serve and throughout the state, regardless of the funding, we still have the audacity of home because we know in our hearts the benefits that we provide. We know culturally what we're able to carry and bring forward to California, the nation, and the world. So we are grateful. I can tell you just for me personally and my organization, if not for the California Arts Council and some of the funding we received elsewhere, we wouldn't be here celebrating our 20th anniversary and carrying forward with this audacity of hope. So with that, we would like to please beseech you, bring that funding forward. Let us show you what we can do. The Creative Corps showed it. We show it every day. And a lot of the issues that you are talking about and trying to solve in the state, let an artist help you to design some of those policies and programs that you are bringing forward. Thank you so much.

Good morning. My name is Jaya King, and I am an artist and muralist here in Sacramento. I've experienced firsthand support from the California Arts Council Impact Grant. I created a public mural in Sacramento focused on domestic violence awareness in partnership with Weave. That project also included a series of trauma-informed creative workshops led by my collaborator as well as a community paint day at the local farmer's market. As a muralist, I want to emphasize that public art is more powerful than just beautifying a space. This work creates access, paid artist opportunities, community engagement, increased foot traffic benefiting local business, and awareness to the nonprofit supporting survivors of domestic violence and sex trafficking. Projects through grants like these help sustain the creative ecosystem that is essential to California's identity, public health, and economic well-being. I respectfully ask that you support Assemblymember Chris Rogers' request to increase the California Arts Council budget to $50 million for grant making. Thank you for your time.

This particular mural is on the Weave Thrift Store in Arden You can walk up public access free go in and purchase some really rocking clothes through Weave support this nonprofit, support the people they support. And, yeah, you can see what artists do in our superpower.

Outside. Everybody gets to drive by and see it every day.

We'll go pick you up. Please do. Please do.

So, Mr. Chair.

Thank you.

Thank you so much. Thank you, Chair. Thank you. Thank you.