April 23, 2026 · Budget Sub4 · 18,646 words · 10 speakers · 156 segments
Subcommittee 4 of the Senate Budget and Fiscal Review Committee will come to order. We are holding our committee hearing here at State Capitol Room 113. I'm asking that all members of the subcommittee be present in Room 113 so we can establish a quorum. We will provide an opportunity for public comment following the conclusion of the discussion item list. And at the moment, we will go ahead and begin our order of business, and today it is as follows. Our agenda today involves budget proposals from the Secretary of Government Operations, the Department of Technology, the Office of Data and Innovation, and Department of General Services, and the Financial Information System for California. We have several matters on our discussion calendar as well as several matters on our vote-only calendar. We will take up public comment at the conclusion of the agenda. We will now turn to our first item of discussion. Agenda item one. Item one pertains to ongoing funding for the California Education Learning Lab. When ready, please proceed with your presentation on the item.
Thank you. Thank you, Madam Chair. Lark Park, I'm the director of the California Education Learning Lab. We're a well-established, state-funded higher education grant-making program that is in our eighth year of operation. We fund intersegmental projects led by faculty of the UCs, the CSUs, and the California Community Colleges to promote innovation in teaching and learning and student success in STEM and other fields. Over our history, we funded 120 projects all over the state and we've reached more than 13,000 faculty and 300,000 students. And our faculty grantees develop innovative curriculum, teaching resources, and technology tools, the vast majority of which are made available as open educational resources, which drives down instructional costs for students. The governor's proposal in January proposes to move the administration of the California Education Learning Lab from the governor's office of land use and climate innovation to the government operations agency. The LCI has been the administrative home for the learning lab for eight years, although the program has been administered in partnership with the foundation for California community colleges since 2020, that relationship would be unchanged with this proposal. LCI's mission has narrowed and GovOps has also had new programs related to higher education and workforce newly into the agency such as the California Education Interagency Council so it makes more sense to have the administrative home go from LCI to GovOps. The administration's proposal also has a restoration of Learning Labs budget at $4 million annually which is about half the amount historically that the Learning Lab program has been funded at. And the reason for this is so that Learning Lab can continue to push innovation in our curriculum and in our higher education system as we see incredible changes within the workforce. And for example, in 2025, we awarded $12 million under an AI challenge so that California could be on the forefront of understanding how AI impacts our classrooms and student learning across various disciplines And so with me today with your permission is one of our AI Grand Challenge project leaders Carl Whithouse Dr. Whithouse is a professor of rhetoric and writing and director of the writing program at UC Davis, and he is leading a multi-institutional, intersegmental collaboration on student writing and adapting student writing and critical thinking in the age of generative AI and large language models which are ubiquitous across our institutions and our society now.
Thank you for inviting me here today. So I'm Carl Witthaus, professor of writing and rhetoric at UC Davis. And I wanted to talk a little bit about the support that the learning lab has provided for the PEAR grant which is peer and AI review and reflection. We're working not only with faculty at UC Davis, but faculty at three CSU's, Sac State, Cal Poly Maritime, and CSU Bakersfield. We're also working with four community colleges, American River, College of Marin, Glendale, and LA Mission College. And part of what the $1.5 million grant enables us to do is work with faculty members over the course of two years. working with 220 faculty members will impact 12,000 students all told and we're really thinking about the way that AI technologies can be integrated into the college level writing classrooms. Part of the challenge that we face is that faculty at colleges have a wide range of perspectives on AI. A number of them believe that the way to go forward is to simply return to blue books and hand-based writing instruction and the AI grant that we have from the learning lab enables us to work with faculty who run the gamut in terms of range of attitudes towards AI and to encourage people to think about the writing technologies that students need to prepare them for the workforce. So we don't want to encourage cognitive offloading, simply not paying attention to the development of writing skills, but working with the type of tools that students will be using when they're in the work force. The other thing that the Learning Lab enables us to do is it really has conversations between faculty members at community colleges, CSU's and UC's on the faculty level. It's important, I've been at UC Davis for 19 years and in fact working with this grant through the Learning Lab is the first time that I've had real opportunities for sustained conversation about deliverables with faculty members from across the state and so I think this is a valuable grant it's a type of thing that isn't doesn't happen simply naturally among faculty members at colleges and it lets us focus on how we can develop skills for students that will be transferable from the classroom environment to what they are doing in the workforce I'm happy to answer any questions folks have about the grant are my experience over the last year and a half working with the learning lab thank thank you for your
presentation does the Department of Finance wish to comment Kayla Lamb and
Department of Finance nothing to add available for questions thank you
does the LEO wish to comment yes thank you good morning madam chair Natalie
Gonzalez with the Legislative Analyst Office Though we recognize that learning lab benefits some faculty and students we recommend rejecting the governor proposal to retain the program for four main reasons First, learning lab projects are difficult to scale. Though some projects may end up being scaled, there is no mechanism in place to ensure that grant efforts are scaled once funding ends. Additionally, professors at other campuses in the same discipline generally are not required to implement new curriculum or course designs that other faculty develop. Second, all three public higher education segments offer opportunities that aim to achieve similar objectives to learning labs. We reached out to UC, CSU, and the colleges to learn about these opportunities. Each segment indicated that they provide regular professional development opportunities to help faculty rethink teaching methods and redesign courses including ways to narrow equity gaps. Additionally, some faculty do have access to campus grants that fund projects focused on teaching and learning with some focused on AI. The state has also funded segment-wide efforts such as CSU's graduation initiative 2025 to help faculty enhance their instruction, improve overall student outcomes, and help close equity gaps. Third, federal and other non-state grants are available for similar purposes. For example, faculty can apply to federally funded grants that are focused on improving learning outcomes for STEM students. Some of these grants also include opportunity for intersegmental collaboration across the three segments. Despite concerns with potential federal cuts, the segments have reported that thus far they are still benefiting from some of these grant programs. Fourth and finally, the state is facing a projected budget deficit and difficult decisions are likely to be on the horizon. Winding down the Learning Labs work now could provide a small amount of ongoing general fund savings that could help the state begin to address its projected budget deficit. As a final note we wanted to mention that if the legislature wants to continue to prioritize faculty innovation grants while still achieving some general fund savings, it could consider directing the California Education Interagency Council to look for intersegmental grant opportunities that instead use federal philanthropic or corporate dollars. Thank you and happy to take any questions. Thank you. We turn
to questions for the subcommittee. At this moment I'll go ahead and begin by asking the Department of Finance, can you explain the decision to continue funding for the program in the current challenging budget year given the
budget decisions for the program in the last year's budget? Yes, Kayla Lamb and Department of Finance. Recent budget actions have established GovOps as the home agency for many higher education agencies and initiatives and reinstating the Learning Lab under GovOps provides cohesion and statewide oversight and planning related to higher education systems. Learning Labs foundation and intersegmental collaboration will support the improved coordination between higher education and workforce similar to the establishment of the California Education Interagency Council by legislation this fall. Additionally it It is advantageous to maintain a state level grant program that can align state priorities and respond to changes that are needed in the higher education and workforce spaces.
Can you also explain why the learning lab has staff provided through the FCC and not through a budget proposal?
I would defer to the department to detail the specifics of that. Our authorizing statute enables this relationship between the program and between LCI and the foundation for California Community Colleges because LCI has not historically been an education agency Having a relationship with the Foundation for California Community Colleges was seen as beneficial to be in the higher education ecosystem and have ready access to their vast network as well.
Good morning, y'all.
My next question is, can the learning lab explain how much of the previous funding rounds went to grantees versus other costs?
Yes. So less than 5% goes into administrative expenditures. About 80% goes directly to grantees and institutions. The remaining funds goes to supporting grantees, technical assistance, and the kinds of activities that will build community and make the projects and the scaling efforts more successful.
And when you mention technical assistance, do you know what portion of the funds goes to technical assistance? Can you give me an example of what that looks like?
Yes, so technical assistance can be everything from education about what open educational resources are, what kind of licenses that are available to be selected to become an open educational resource. Technical assistance is also in helping institutions understand how to apply for our grants, as well as how to administer the grants. technical assistance also involves assistance with evaluation activities and what are the best practices in evaluation and so for instance we have contracted with West Ed in the past to provide technical assistance to grantees so that they can better evaluate the projects. Thank you for that clarification
again do you have an understanding of what percentage of the funds goes to
technical assistance? Again, 80% of the funds goes directly to grantees, 5% to administration, so that it would be about 15% that goes to other types of activities, whether it's community building activities, educational activities, and technical assistance activities. About 15% is what you're saying goes to, okay.
And I think that's, you said that technical assistance also goes to the evaluations right there's someone that what you said Westad right so they they provided technical assistance to grantees in order to help them do project evaluation what are the what are the best practices for evaluation and so educating our grantees about that was part of their contract do they do that across the board with all grantees or just certain grantees and what have been some of the outcomes or positives and negatives of that?
Right. The contract with WestEd had several different levels of technical assistance. Most of it was on a voluntary basis, but they did one-to-one consultations. They also hosted webinars. They also developed templates. So it was something that we had encouraged all of our grantees to take part in some part of the technical assistance.
But do you believe that's been helpful? I mean.
Yes. It's very helpful. We do surveys and we track who is taking advantage of these types of activities and the surveys actually find that those activities have been very valuable to the grantees.
Okay. I'll go ahead and check in with my vice chair to see if he has any questions.
Yes, thank you very much. Apologize for being a little bit late, and if anything was covered before I was here that I asked about, I'll apologize ahead of time. Given that, as the LAO points out, that there are professional development opportunities in our established higher education systems, UC, CSU, community colleges, and other similar grant opportunities exist, what are the accomplishments of this program that those programs can't?
Well, first of all, I'd like to address the main point that the LAO has made, which is that there are programs and opportunities available at campuses. While that's certainly true, there are not enough opportunities. Professional development is an underfunded area across the board. Also not all professional development is the same. Most of our professional development is very project specific and innovation specific, and Centers for Teaching and Learning generally do more generalized types of professional development. So we believe that it's neither done in a sufficient quantity as well. The quality and the subject area vary quite a lot. So I would not say that the current efforts, while available, are sufficient. Additionally, the level of professional development needed now is greater than ever. I think COVID was very impactful in terms of trying to get faculty to learn how to teach remotely. Now with generative AI and large language models being readily available to students, there is a really vast need for different professional development. And again, what is done in STEM fields is different than what is done in writing, which is different than what is done in career education. There is not a one-size-fits-all in professional development. In terms of what have our projects achieved, we see success rates of 10, 20, 30 percent in terms of increases in student performance for a lot of our projects. So while I can't say that every single project that we funded can boast that level of student achievement advances, a great many of our projects actually can boast some significant advances, both quantitatively as well as qualitatively in terms of the curriculum and the student experience.
Can you be more specific? You say 10, 20, 30 percent of increased performance. What do you mean by that?
C's to B's, B's to A's in terms of retention in the course, reduction in drop, fail, withdraw. So there are definitely a variety of student metrics that people can measure, and our projects don't always measure the exact same thing, but we do see some significant impacts on student success with a lot of our projects.
Well, that's all laudable, but this is professional development, not student development. So better grades and better student performance is great, but what happens when they graduate? What proof do you have about true professional development?
Well, the professional development is only one component of the program, and they usually accompany a project proposal that is based on something innovative in teaching and learning So the impact on students is very important That's why the professional development exists. But that is not actually the sum total of the program. It is not strictly a professional development program. In terms of longer-term student success measures, those are harder to come by because those entail sort of longitudinal studies and as you know, a student's career in higher education spans multiple years, and these are not, you know, a particular class that they took that was associated with a learning lab project may be just one part of their entire educational curriculum. So we can only sort of see what the near-term impacts are that are based on the projects And we'd love the opportunity to pair up with Cradle to Career to see what some of the more longitudinal impacts would be on students' career success.
Cradle to Career. This gets back to the core challenge that we have with education generally. The University of California San Diego, this is going to sound like it's a little off topic, but it's not. And I'll get to the point when I conclude. The University of California San Diego recently issued a report where they have cited and discovered, discovered and cited that they have a 30-fold increase in remedial education needs in the last five years. And 70% of these remedial students cannot compute at the eighth grade level. They're freshmen in college. They have graduated from high school with four-point grade point averages or better, because that's what the UC system requires, and they can't compute at the eighth grade level. Now, COVID had a significant impact on our education. The good thing about COVID, by the way, is that, as you mentioned, those in higher education finally discovered that they really can teach remotely, not to everybody, but it provides a tremendous opportunity for adults that have some college but no degree and they're working and they really can't go back to a campus. That's a great thing. That's very good. But the curse of covid is a generation of kids who's learning out of the K through 12 system is wholly insufficient. number one and not recognized by the system 4.0 high school graduates that can't compute at the mathematics at the eighth grade level. Plus writing skills are similarly deficient but not quite to that extent. But separate and aside from the effect of COVID, We are spending significantly more per student in California than we did when I was in the assembly, which was a while ago. But we are spending more and performance is less is worse Our achievement nationwide is substandard completely separate and aside for the impact of COVID And I have to say to concentrate on a program like this that is maybe somewhat compromised because of the input that's coming to colleges in the first place, which is the fault of the K-12 system. But to concentrate on this and not really do anything about that is akin to fiddling while Rome is burning.
May I respond, Senator?
Sure.
I'm well aware of the report that you are citing. So several months ago, the California Education Learning Lab initiated a project called the California Mathematics Alignment Project to better have K-12, especially high school, collaboration with the California Community Colleges, the CSUs, and UCs because of these issues in math education that we are seeing. We have a lot of math faculty grantees who are alarmed by what they are seeing, and we understand that this starts before they come to college. And so it is a very important project of ours that we take better efforts to align the curriculum, the expectations, the pedagogy to understand what is valuable about math education and what is it that students need to learn and when they should learn it and to be more in sync and to, again, support our K-12 teachers and have everybody in alignment with what students should learn. So this is very much something that is on my mind and is a high priority for us, and we are well-positioned, actually, to lead those conversations. We've already been leading those conversations because we already have a footprint within those three segments of higher education, and we have found K-12 very much wants to have these conversations with us.
I'm happy to hear that. I would just suggest that concentrating on a program like this is, well, I've said like fiddling while Rome's burning. Maybe it's more like closing the barn door while the horses are already out because these are kids, many of them, that are victims, if you will, of the underachievement of our K-12 system to begin with. We need to spend more time with the problem of the source. But thank you for that information.
We'll move on to Senator Cabaldon.
Thank you, Madam Chair. I wanted to maybe pick up on some of what the vice chair said, but also link back to the LAO analysis. I have to say, I think I disagree with almost every sentence in, because the point of the Learning Lab Investments has been to try to spark, investigate, evaluate, breakthrough innovations that will get at exactly these challenges. There are a lot more horses. The great thing about people in California, we keep making more of them. And so there are a lot more horses in the barn And so it is important to try to get this stream down But faculty in my district in Vallejo at the Maritime Academy or elsewhere they are incredibly enthused about the work that happens here I've seen the projects too. And it's not quantum computing. It's not curing cancer. But it is very, very important breakthrough innovation. We need to do things differently. And Learning Lab is really in a position to be able to foster that through the intersegmental work that doesn't exist. And so the notion that the funding formulas for community colleges, because they're based on need or what have you, that there's a fiscal incentive to improve the outcomes of students, and therefore we don't need to do this innovation because institutions will do it automatically. We've had a 30% completion rate at community colleges with these same exact funding incentives for generations. The funding incentives do not achieve without the tools in order to accomplish them. So I just think that's not the answer, the funding systems. And then the individual institutional projects. So the community college faculty, yes, they receive flex days to go to professional development, some of which is random, some of which is purely discipline based. And there's no coherent strategy around it and does not connect them to any other institutions. And for the other segments, and having been a faculty member and a CSU faculty member and a community college, for the other segments, it's the same challenge. So it isn't that scale is not going to happen just because it's happening because departmental professional folks are going to the physics association conference. That's not unimportant at all. But that's not where you don't go to your discipline specific association annual conference necessarily for the latest innovations and how to apply them or to learn lessons about what may not be happening in physics, but is happening down the hall in biology or in computer science or artificial intelligence. And so these projects, I do think, given the level of investment relative to the budgets of the other of the segments themselves in the tens of billions of dollars, that this is this isn't a this is this is a wise investment that is needed in order to try to get to exactly this point is that we need to find and but also evaluate and figure out how to deploy. because it is also not just coming up with new ideas. It's what's stopping them from happening. You know, how do you, once you have a great system that figures out how to fix the math challenge that the vice chair has dealt with, you need to bring the parties together to actually make sure that that learning translates into policy change, into change in the classroom, that it doesn't get rejected by the, you know, having been an academic senate member, it doesn't get rejected by the, you know, the tendency of our colleagues to say, well, why would we do it that way? We've been doing it this other way, you know, since Renaissance Italy. Why would we change? And so to me, Learning Lab, I mean, obviously we have the budget priorities that we've got to grapple with, which is why we're not, I believe the chair's argument that we hold it open. But I think the criticisms are, for me, they're not well taken about the fundamental purpose, the need and the basic design. In my experience, working with the Learning Lab and, as I say, with other folks in my own district, it's a positive force and it's respected among faculty members. And that's half the battle, in many cases, across all three segments. And it gives an opportunity, especially for the quote-unquote junior segments, to get access to the kinds of research and resources and materials and to contribute to them in a way that they can't do through the normal professional development program. So I support holding it open, but I do think there's a lot of merit here as well. So thanks, Madam Chair.
Senator Smallwood-Cuevas.
Thank you, Madam Chair. So, I guess one of the things that I saw in a number of, from the LAO's report, but also in some of the background materials, is there's a critique of duplication. And so, I want to make sure I'm understanding the LAO's concern in particular. Can you speak, and maybe I missed it and I apologize for being late, but what would the, What is the specific gap that the learning lab is filling that is not being filled in our other higher education? I think the senator from Solano County was getting at this, but I wanted to hear from you all to kind of help us really understand what differentiates what you do from elsewhere in our higher education system.
it's not happening in those places. Right. No, thank you very much for the question, Senator. We are a program that first and foremost funds innovation in teaching and learning, innovation in higher education. And so we have often been the first out of the gate to identify a field that we think needs some focus, state investment and collaboration from the three segments of higher education to work on a problem together. We do understand that being first out of the gate doesn't mean that people aren't following. I think people should follow, right? You're identifying. You're being a pioneer for identifying what should be happening. And so intersegmental collaboration since the time of the master plan has been fraught over time, and it happens to varying degrees. We are the first program that incentivizes faculty collaboration on specific innovative projects. So it is the power of people working on something together to solve a problem that generates the kind of goodwill and understanding between the segments to see students as students of our higher education system versus just these are my students here and I only care about them here. Oftentimes, our faculty, they learn from each other and they get to understand what is the community college's experience with their students. And it provides a lot of value and it provides flexible curriculum. For example, Dr. Whithouse, the scale that they are getting on their project, 225 faculty members and how many students? 12,000. 12,000 students from a single project, from a single 1.5 million investment, and all of those, how many partners is it? Eight. Eight different partners. They will not just do this and then stop doing it. This will change the way they teach in their practice, which will impact the students that come after the 12,000 students that they are impacting. This kind of scale is not usually done. It's not done at the faculty level. And the sort of economy of scale you getting in terms of how it impacts curriculum Normally you might see oh this faculty member is just doing this over there We actually try to socialize the benefits very broadly. That's why the emphasis on open educational resources is so important, so that this is something that others can avail themselves of and take advantage of whether they're in this project or not. And others take advantage because you're documenting this innovation. You're documenting and creating tools that then get sent out into the broader systems to incorporate, to consider, to join in with the practices that are being experimented with. I'm just using that as a term. And perfected in this learning environment. That's absolutely right. which is why evaluation is an important component, so they can actually see this actually worked for students, this helped them. And it is also rare to have sort of that engine of promotion and of sharing so that the state gets better bang for the buck, so to speak, on its investment, is that we actively promote successful curriculum, successful strategies, successful professional development across the higher education ecosystem for exactly that point that you mentioned.
And would you say, given that the way the structure is being delivered, would you say that the metrics that we receive in terms of the outcomes, sometimes I am struggling to sort of see the way in which we can measure this to say, like comparing this to another budget need, right, and saying this is how, this is how the metric we could use to see the value of the, of the program and that kind of learning, it results in grades moving up, it results in more enrollment, and how, what is the metric that you think is the best way for us to evaluate, because that also seems to be a little, for, for me, it's not as clear.
So I'm Professor Carl Wichhaus from UC Davis and I'll speak to your immediate question about possibilities for longer term longitudinal impact evaluation of learning lab projects. But I also just wanted to comment on opportunities created by intersegmental collaborations and then also collapses of funding to support undergraduate teaching despite the efforts across individually sort of in the siloed campuses or siloed segments that doesn't happen without Learning Lab. But I think one of the interesting things about this project for impact would be a longitudinal study for workforce impact of learning lab projects. So how does it translate into career success based on the projects that learning lab has done for the undergraduate students? And that could be something that would be structured and could be evaluated over long term, not just for the AI grand grants, but other projects that Learning Lab has done. Also one of the challenges that we face on campuses right now is while the community colleges the CSUs and UCs are trying to fund centers for teaching and learning those funds are being restricted At UC Davis the College of Letters and Sciences now has a plan over the next three years to reduce the number of faculty by 54 through attrition. So we're losing faculty and being asked to do more with less. And I can guarantee you that will translate to fewer opportunities for professional development through our center for teaching and learning. So maintaining learning lab funding particularly focused on AI and innovative teaching and pedagogy right now is absolutely crucial. If we lose this type of funding, we're going to get small amounts of it on the local campuses, but we're also going to lose the chance to innovate not with the large supercomputing type of work that's being done, but really the usability that happens in the classroom and in having both faculty members and students work with these technologies on sort of the intimate levels of how do we use them in the day to day. And that's really the opportunity that Learning Lab provides for us that we're not getting otherwise.
I really appreciate that and I appreciate any innovation in the education space, especially bringing the different segments, intersegmental collaboration. I think collaboration is key. I think having, as the legislature, having data to help us really quantify the impacts, I think in sort of layman's terms, I think is really helpful. And so, you know, maybe as we think about the evaluative process that we're taking, is it, you know, a longitudinal study? Is it sort of looking more at direct improvements that we're seeing in the students and in the faculty that are actually participating? I just feel like we don't have a good enough amount of data to sort of be able to say this is fully working. But I appreciate the innovation and the opportunity for folks coming together. And I really thank you for that answer and helping to clarify that for me. Thank you.
Well, thank you. I see no other questions or comments from the dais. We thank you for your presentation this morning, and we'll hold this item open and move on to the next agenda item, which is agenda item number two, and it pertains to proposals for the Office of Civil Rights within GovOps. So when ready, please proceed with your presentation on this item.
Good morning, Madam Chair. committee members my name is Justin Howard I'm the deputy secretary for fiscal and administrative services at the government operations agency and thank you for the opportunity to present today on the office of civil rights the proposal before you is asking for 3.5 million dollars and 26 27 fiscal year and 2.8 million ongoing to implement two measures AB 715 from last year as well as SB 48 under these measures the office of civil rights which is established within the government operation agency is tasked with working directly with the local education educational agencies to prevent and address anti and other forms of discrimination and bias within California TK through 12 education system the Office of Civil Rights is responsible for providing education educational resources training and technical assistance to LA's administrators and educators additionally the Office of Civil Rights is being tasked with tracking reviewing and advising on complaints of anti-semitism and other forms of discrimination submitted through the Department of Education's uniform complaint procedures process I will note that to date that we've done a lot of work behind the scenes and getting the office of civil rights established we've established them as a separate and unique distinct program in our agency so that we have full transparency and accounting of their resources separate apart from other programs within our agency we've posted the position for the director which is actively being recruited by the governor's office appointments folks we've also posted the civil service positions and they are open they're posted until filled we are waiting for the director to get hired before we close those position openings with that we've also acquired space we've acquired equipment and we've done everything else that we can possibly do I will note that this is a very new area within our agency it's not something that we have a lot of expertise in so until we get the necessary subject matter matter experts hired it's going to be very difficult to answer any detailed questions related about what the activities will be within this office but we do expect to hopefully have somebody hired in the near future and with that I will do my best to answer any questions you have in this space Department of Finance do you
have any comment Kayla Lam and Department of Finance nothing to add available for questions alio Alexander Bence lao we have no concerns with this proposal
It just implements recent legislation, and it makes sense. Thank you.
And we bring it back to the dais. Senator Caballon?
In the news, I only have detailed questions. So when the two bills were passed at the end of the last session, they were accompanied also by the follow-on trailer bill that originally allocated unlimited money for this project. I think it actually did ultimately allocate appropriate unlimited money for the project, or sorry, whatever money you thought was needed, not you personally, but that the administration thought would be necessary to implement. And then we reached a side agreement that that was not actually going to be fully uncapped and that would be, I forget what the number was, a million or two million, something like that, for the first year implementation, which was a half a year. So those dollars are in play already. What do you anticipate being the encumbrance of those dollars at the end of this fiscal year?
Well, finance might be able to give more detail, but I can let you know that as it relates to the current year portion that we did request resources from, which would have been funded through a mechanism in the existing budget act. To date, we're not going to need the bulk of that money because we are delayed in getting the director hired. We do have some costs and expenses related to space and equipment and stuff that we got, but it's going to be a drop in the bucket compared to what our initial estimates were. Do you know of any other unit in state government where a majority of the employees are appointed by the governor and confirmed by the Senate? This would be the first to my knowledge of the 10 positions that we are requesting. Six of them, as noted, are governor appointees, which are all subject to Senate confirmation. I will note, however, though, the agency itself, the Office of the Secretary, is providing all the administrative work for this office. If you stand up a new department standalone, you're going to have a bunch of other administrative staff and stuff. But we are absorbing that workload within the office of the secretary in terms of budgeting and accounting and HR and things of that nature. So we're not adding those additional staff. So it may seem a little top heavy from that standpoint, given the workload that's being absorbed by the agency. And you noted that the director position is posted in the governor's office recruiting.
and you also noted the civil service positions have been posted and are in process. What about the coordinators under the Gonzalez legislation?
So we have draft positions that are kind of ready to go. They're still under review, but we are waiting to get the director appointed before posting the discrimination coordinator position. So once the director is appointed, then the dominoes will fall for the remaining positions. And the law took effect, or AB 715 took effect on January 1st, and districts are required to comply with it, and there was a lot of ambiguity, a lot of need for follow-up legislation to be sure, but then the law was passed and signed into law, and it took effect on January 1.
And so districts, and particularly teachers, are now expected to teach only factually accurate material under that statute, which is a whole host of problems with that. faculty member, you often teach using imagination, counterfactuals, storytelling, you know, lots of teaching is not factually, it's not supposed to be factually accurate, but this is one of the enduring challenges in the bill, so is there no, without the operation being up and running, despite the appropriation that we made in the budget trailer bill, is there no guidance at all this out there today on on those on those challenging ambiguities
from the statute at this time no I mean we don't have the subject matter actually be able to put that kind of guidance out we need to hire the people to be able to develop that guidance and materials to put out there for the faculty and teachers that you suggest so all right and maybe this is a question
for Finance but the governor's also proposed simultaneously the the consolidation proposal that's in budget sub one that's not in our jurisdiction to sort of merge the the State Board of Education the Department of Education and reconfigure the duties of the superintendent so on and so forth the Department of Finance or the administration consider moving any of these GovOps functions that are sitting there with technology and property acquisition and HR and what have you into maybe somewhere where they had some background? This one in Cradle to Career for example and the Interagency
Council? Danielle Brandon with the Department of Finance. I would say first of all I can't speak to the proposal in sub one and I believe that we are waiting for outcomes of that to make additional determinations. But right now, the government operations agency is the best place for these entities.
Okay. Yep.
I do want to note that C2C really is a data system, first and foremost, and we do have expertise in technology and data systems between Fiscal C2C, and we oversee CDT and ODI, which are all the technology. So to some extent it makes sense for C2C to remain separate and apart You know I serve on the C2C board I not convinced convinced but obviously this is an ongoing we have them in a creating education
func, we had the regional K-14 collaboratives also that were in, those were in OPSC, I think, which is also in DGS, which is in GovOps. And I also serve on the State Allocation Board, which is also the same way. So over decades, but particularly in the last few years, we've really concentrated, I mean, we should add the E to the GovOps name because it is the quasi-education agency for anything that's been, any new initiatives that have emerged in the last five or six years. So that is also a concern. But I think, to me, it poses a significant challenge. I hope the administration will have some strategy in the May revision about this law that was passed, and I voted for it, and the governor signed it into law. And it requires a lot of, and there's litigation and other consequences to it. And there's no guidance. There's no safe harbors that school districts or teachers can depend upon. and it was the reason why the budget allocation was made in order to start on January 1st. So now we've left the school community without the ability to have clarity about some important issues. And then we will be substantially behind on the other diversity coordinators that were also contemplated to go along with this as a result of the timing. So I understand the position that the agency is in, But I think the administration does have a responsibility to, as do we, to resolve these challenges and to also ultimately do the cleanup on the legislation itself. So thanks, Madam Chair.
Thank you, Madam Chair. And I align my comments with the senators. Can you tell me how the agency plans to coordinate all of this with the LEAs? What's the process that you are thinking about in terms of, you know, the LEAs, the CDEs, the existing complaint process, the new structure? You know, how do we avoid duplication, replication, and more chaos at the school level?
Well, I'll say this. we have had a series of meetings and we have standing meetings with the Department of Education and as to what is the best way to engage all the local education authorities once we have the appropriate staff hired and that will be part of the first set of workload that needs to be accomplished within the office is basically laying out that plan and strategy for how to most effectively and cost-efficiently provide the information education and assistance to the LDAs and what's the best format and manner to do it whether it's going out in person and visiting folks doing webinars doing a host of things there there's a variety of ways that you can do it but that'll be up to the new director once they get hired to help strategize the best way to achieve those results so that poor new director okay so the new director is going to have this
this challenge and so you're saying and and while this is being figured out the new director is going to come in and do this there is a whole cleanup process that is happening on this policy so I'm confused it how do you see going through this process of acquiring and using resources to do this work that is under lawsuit that is also going through another legislative potential overhaul is that the best use of our funding to start this process and then have to back redo it or do it again or I mean how do you has your agency dealt
with this in the past how how does this work I wouldn't say we've dealt with this specifically in the past this is definitely unique to our agency I will I will say that we are familiar to some extent with the legislation that's pending that adds an additional discrimination coordinated position and add some deputy discrimination coordinator positions as well and it adds a new workload and like clarifies like the work that these folks are to be doing we do believe that the resources in here we've asked for contract dollars to help to develop materials and things that nature we obviously will not spend that until such a time as we feel that we have kind of a solid footing on what needs to be done and what's gonna be the outcome of some of these other efforts To that extent, though, the cleanup legislation doesn't remove all the requirements that were in the previous bill. So there is stuff that needs to be done, and we will try to get the stuff done that does not have that overlapping uncertainty.
And what outcome should the legislature expect in a year that would show that the office is improving the purpose, the intended purpose, which is to address the climate or discrimination response? It feels like we're adding more layers, but what should we expect in terms of seeing the actual outcomes, and when can we expect to see those?
I don't know if I can speak to the outcome in terms of the materials being shared with the folks and how that changes that, but I can tell you from the implementation side, we should have our positions filled, we should have materials developed, we should be having the process of actually talking with and doing the outreach and education to the LEAs and educators and folks. And we should have ourselves properly plugged into the CD complaint process and talking with them about what's the best way to provide guidance on their process as well. So those would be some of the initial outcomes, at least in the current form, that I would expect us to have accomplished within the first year. Within the first year.
Okay. That's good that we have some benchmarks. And it would be good to see those in some form so we can have a way of tracking on that as we're investing. You know, this is a budget year like no other. I know we say that feels like every year that I've been here, but certainly this has been such a challenge with H.R. 1 and all of the other constraints and compression points. So just, you know, be helpful to see some kind of benchmark on that. My other question is I want to understand about SB 48 implementation and in understanding how the specialized coordinators will divide up their responsibilities. I'm also trying to understand there was a lot of work around who and what complaint response these coordinators will be addressing. and we want to make sure, especially as you think about the limited resources in the midst of this sort of very, I want to say complex implementation process, we want to make sure that we're allocating dollars in a way that is addressing the scale of the problem and where the problem is greatest. and so if you could walk us through your understanding of what are these specialized coordinator positions what are their responsibilities and how will that be implemented in terms of how is it shared across this team very good think that a very good question and a very difficult question for me to answer I will say that the discrimination complaint coordinators are kind of segmented into very specific buckets
whether it's anti-Semitism, whether it's the LGBTQ, and I believe it doesn't mean that.
Can you walk me through specifically what they are?
The ones?
That you're hiring for exactly and who is going to be?
So we have the one related to anti-Semitism. And then the other ones are there is a race and ethnicity discrimination prevention coordinator. There is a gender discrimination prevention coordinator. There is an LGBTQ, and I believe the pending legislation will have the plus, discrimination coordinator. And then there is, did I get all five? Those are religious. And then there is a religious discrimination prevention coordinator as well. And then the pending legislation adds another one related to disability, I believe, if I recall correctly.
So this is one of my sort of concerns in terms of how the work is going to be spread across these positions. And I'm sure if you're thinking about the director's job description, some of it has to be they should know what they're responsible for. And so is the allocation of these positions enough to address the scale of the unique concerns that each of these demographics will require? I'm challenged to understand how the religious disabilities, just because of looking at CRD's history and the years of discrimination complaints, how the religious discrimination compares to a race and ethnicity discrimination. I mean, it's just in terms of the volume of work. The volume of work and how, so are you, is the sense that these will have overflow since essentially they will be trained in anti-discrimination work and they will be able to support or are they, are we going to have uneven levels where folks are, some class of folks are going to be in deep backlog and delay, which we know very well. and this is from someone who's been watching CRD for a very long time, where we have two years of backlog cases where black complainants are the number one and have the 90% folks who file complaints, they have a half a chance of getting any remedy. So I am very clear about the inequity of how civil rights protection works. So I'm very challenged with how you have an equal number of coordinators assigned knowing that the volume, when you talk about race and ethnicity, if you just look at the history of the last 60 years of Department of Fair Employment and Housing and then you go to CRD, we know damn well that the inequity exists and the outcomes are horrendous. So I'm trying to understand what is the process that these dollars are going to be invested to ensure that if we are saying we're fighting discrimination, that we have the real tools to meet the need and that we are solving, we are actually going into solving for the problem that we say we're going to solve for, which is to stop discrimination in our schools.
Well, I think it's a good question. I mean, I would say this, once we get the positions filled and we have a better sense, and I don't want I crushed my colleagues over here at finance, but to the extent we need research, this is a preliminary proposal based upon our initial understanding of getting the office up and running. If there are workload needs that are greater in one area versus another, we'll look to shift resources internally. We have support staff. There is pending legislation. I don't know if that goes through or not, but if it does, that provides a deputy position related to the race and ethnicity area. we will shift resources where needed based upon the volume of work that those categories necessitate. So we will be nimble and flexible to make sure that we put the resources where they are once we have the positions hired and we see the volume of workload in these areas. Again, this is new for us, so we will work with CDE to get an understanding of the complaints that are coming in this area, and then we will allocate resources accordingly.
Well, I understand you're trying to make lemonade here, And I want to say, and I appreciate that you are recognizing the challenges of this, but I think this is, we are putting, I think the good senator said something about the horses leaving the barn and a cart before the horse or some great metaphor, but this is not fully clear. It's not fully baked. It has been a challenge, and it is setting up this department to do exactly what this department has always been, unfortunately, charged with, which is overburdened, underfunded, and not putting the resources where the resources need to go to deal with the scale of the problem. and here we are again we have these coordinator positions we've laid them out and there is no way that it is an equitable process that is going to solve for the problem that we say we're going to solve for and that is to eradicate eliminate discrimination in our schools and to create a responsive complaint process so I have a lot of concerns with how this is going to be implemented I absolutely believe that we need anti-Semitism protections in our schools. We need to know that that is a form of discrimination and that discrimination is hard to fight. And if you start with an inequitable system, we're going to have an inequitable outcome that is only going to compound the issue of racial discrimination in this state. So I just hope that we come back and have deeper conversations because I am not prepared to support this as it is. I'm not prepared to support this as it is because we have to make sure that we are not making a problem worse. This goal here is to make a problem better. And if we don't put the right investments in it, we don't have the right policy, you don't have the tools, then the state doesn't have the tools and we're going to fail. Senator Kowalding, you're recognized.
Yeah, thank you for indulging me with one more bite. And that is just that, you know, just pick up the Senator's analogy. I mean, we can lead DGS to drink, to the lemonade, but we can't make you drink. And we have it. So we have it. I mean, I wish we had begun implementation on January 1. That's what the point of the budget appropriation was for. But I think for me at least, my second highest wish is that we now don't rush. That there are all these discussions happening about this but then there are also the discussions that the governor has led that would rescue the good but beleaguered Deputy Secretary of GovOps to not be dealing with this It doesn't belong here. Maybe it belonged in CRD, maybe it belonged somewhere else, but it doesn't belong in GovOps in the first place. It does not make sense for there to be six gubernatorial appointees for what are, other than the director for what are our staff functions. It just, it doesn't. And to have them report to another gubernatorial appointee and you're trying to supervise somebody who's separately appointed and they're all confirmed by the Senate, it's, none of that makes sense. And so I guess what's become clear to me during this hearing is that it's not necessarily the best outcome for you to rush to do all these things and set up this entity this way and then have these bigger challenges worked out, both legislatively and otherwise. So I would hope the governor, the Department of Finance and the agency would would contemplate that and also consider what there was a lot of interest last year not doing the governor, the governor total appointment issue. But we couldn't change the bill at the last moment. There was a lot of a lot of questions about whether govops was the right agency. We couldn't fix that at the last moment. It'll be much harder to fix that if May 14th, the day before the May revise, you all announce, hey, good news. We just we just appointed six new people. It will be much harder for us to unwind that and get it right. So the difference between now and three weeks from now is not that big. And so to the May Revised gods, if they happen to be listening, just encourage the administration to do what it can to fix the administrative, the structural administration side of this. Things like factually accurate, some of the other core issues, only we can do that. we have you know we created this mess and I know you didn't ask for it but on the administrative side I do think the administration has a role to play to assure that we're not creating this very unique unnecessarily bogged down a entity in the wrong agency when it's it is as critical as Senator Smallwood Quibus said and we have to make sure that we get that right more and that's more important than getting it done on May 15th as opposed to June 1st so Thanks, Madam Chair.
Thank you, colleagues, for your questions. Mr. Vice Chair, are you sure? Okay. I just, I know this is, I don't recall the exact, all of the details of the legislation that is in front of us, but on my end, when it comes to the data that's going to be collected, what are you, do you have any plans? Is that going to stay private, within? Do you have any kind of, is there anything that you have to follow under those policies?
I'd have to get back to you on that.
Okay. Okay. All right. Sounds good. Well, thank you so much for your presentation today, and we will hold that item open. We appreciate you.
Thank you.
And next we'll go ahead and establish a quorum.
Jessica? For the purposes of quorum, Senator Hurtado?
Senator Nilo?
Senator Cabaldon?
Senator Smallwood-Cuevas?
The quorum has been established.
Okay, a quorum has been established now.
And now we will go ahead and just take I have to leave a little early so we go ahead and take up the vote items Items on our vote calendar include items 6 through 17
At this time, we ask for public comment only on items 6 through 17. If you wish to comment, please make your way to the microphone now. Please begin by stating your name and your affiliation. and when it's complete we'll continue with our agenda. We'll take the votes and then continue on with our agenda. My apologies. We'll take public comment on items 6 through number 17. Come on up. Good afternoon, Chair and members.
My name is Valerie Johnson. I'm with the California EDGE Coalition. We strongly support the governor's budget request to establish and staff the office of the California Education Interagency Council. California's lack of coordination across its higher education and workforce systems contributes to unmet labor market needs, widens equity gaps, and leaves students unable to access the supports that they need to succeed. EDGE was a proud supporter of both AB 1098 and SB 638, the legislation that established the council, and this coordination is essential to bringing together siloed systems and ensuring investments in education and workforce development are maximized and guided by a clear vision for economic mobility for California students and workers funding the council is a critical first step and we urge the committee to approve the item as budgeted. Thank you Thank you
Seeing no other individuals in line to comment. Do I have a motion from our vice chair on items 6 through 17? And the items are Okay, so So that's items number 11, 12, 13, 14, 15, 16, and 17. I will move those. We have a motion by Senator Nilo on items 11, 12, 13, 14, 15, 16, and 17. Consultant, can you please call the roll?
First items 11 through 17, Senator Hurtado? Aye.
Senator Nilo?
Aye.
Senator Cabaldon?
Aye.
And Senator Smallwood-Cuevas?
Aye.
Okay. we those those items are out and now we go to a gen and now on agenda items six seven eight nine and ten do we have a motion on item 6, 7, 8, 9, and 10. We have a motion by Senator Smallwood Cuevas. And consultant, can you please
call the roll? As to items 6, 7, 8, 9, and 10, Senator Hurtado? Aye. Senator Nilo? No. Senator
Cabaldon? Aye. And Senator Smallwood Cuevas? Okay. Items 6, 7, 8, 9, and 10 are out. And now we are going to be moving to agenda item number three. So item three pertains to the Office of Data and Innovation and a budget proposal for their digital service delivery teams. And when ready, please proceed on your presentation. Thank you.
Good morning and thank you Madam Chair and the committee for having us appear today I am Jeffrey Marino, the director of the California Office of Data and Innovation. The Office of Data and Innovation is a relatively new department established in 2019 in Governor Newsom's first budget. The department was created to bring a simple yet critical discipline into state government, understanding the needs of Californians and using that evidence to improve how the state delivers services. Our small team consists of experts in design, engineering, data science, analytics, and training. Too often, the state commits to solutions before the problem is fully defined. Our role is to bring data to those early decisions so projects start smaller, build upon incremental success and are therefore more likely to succeed. We do not stop with research alone. ODI is also a delivery partner. We work side by side with departments to design and build the tools, data systems, and digital services needed to solve those problems. Rather than creating dependency, we build capacity. For example, our team recently partnered with the Department of Social Services to build machine learning model that is now detecting most unauthorized EBT transactions and reducing response time from months to days, saving millions that was previously lost to benefit theft. In partnership with CDSS, we were able to begin testing the solution within months rather than years. Today, the team at social services are continuously improving the tool and further reducing theft and increasing savings. We've partnered with departments across the state in similar ways, improving both how services work and how California's experience them. Across this work, the pattern is consistent. When the state starts with real user needs and follows through with iterative delivery, participation increases, access improves, and programs perform better. With this proposal we have before you today, we request five positions and $1.25 million in reimbursement authority. I want to thank you for considering the request before you. It would allow us to expand this important work, helping the state deliver better outcomes while making smarter, more effective investments on behalf of all Californians. Thank you.
Thank you. Does the Department of Finance wish to comment?
Hello, Landman Department of Finance. Nothing to add available for questions. Do we have comment from the LAO?
Yes, Sinma with the LAO. We have reviewed this proposal, and at this time we have no concerns. The request for a reimbursement authority is a reasonable funding mechanism for ODI, and we think that it is consistent with ensuring that the departments that are benefiting from ODI services are paying for them.
Thank you. Thank you. Do we have questions from our vice chair or subcommittee members?
Senator Gevalden? This is one of my favorite programs in state government. Because it is small, but it uses that size to sort of be a non-threatening agent of change and innovation at the department level, in areas that the agencies understand to some extent or they're open to learning about how things can work more efficiently, more effectively, and particularly how human beings can interact with the stuff that state government does either through licensing or for civic engagement. or in other ways. So I mean, obviously, we have the variety of budget pressures before us, but I do think there's a lot of promise here. I'm very interested right now, for example, with the new privacy committee that the Senate has set up. We've spent the last decade, not just us, but everybody in the country and in the world, on a notice and consent approach to privacy, which we all know is completely ineffective. You know, where as the day goes by, if you're on a phone or a computer or what have you, you're interacting with, you know, dozens or hundreds of, do you accept this privacy policy? And, you know, click yes to all or no to all or whatever. And you're like, you know, I've been in queue for Taylor Swift tickets for, you know, for the last five hours. And I just got in the system. And, of course, at that moment, you're not, you just want to get it out of the way. or you're like obsessed with this handbag or this suit or something that it's the worst time and it's completely unreal. So over that 10 year period, the amount of cognitive drain on human beings, the amount of friction in transactions and in interactions has gotten dramatically worse. And yet thousands of companies know our exact location, what we ate for breakfast, what I will say five minutes from now. We have not achieved those goals. So a part of that is that we've said it's incumbent on users to, in the interest of giving them full agency and transparency, we want users to make every single decision. And so ODI is the sort of agency in these kinds of projects, I think I'm hopeful, are where we get breakthroughs in how can, just an example on privacy, how can people figure out what their privacy preferences are in a way that makes sense to them in plain language or using graphics or rankings or stories or what have you to approach and interrogate our individual privacy preferences and then apply those. across state government and maybe beyond, but to allow people to interact without the expectation that we're going to make it super, super hard and annoying just in order to protect privacy that we're not able to do. So we're experiencing that with the Delete Act and the drop registry that tens of thousands of Californians are signing up for or hundreds of thousands. and we give them a list of 500 data brokers with 17 data elements and say, tell us which ones do you want to continue to track your data. Well, you have to be a really, really obsessive privacy advocate and you have to be very privileged to have the time to investigate that. So we need better tools. This is just one example where we meet human beings where they actually are in their daily lives, in their cognitive load, in their digital experience in ODI, I think is both showing that they know how to do that or know how to learn about it and then importantly deploy it. And so I hope the budget allows us to meet this request because it's a small one, but some of the ODI innovations have outsized impact that more than justify the cost. So I look forward to this coming back after May.
Any other questions or comments from committee? I would like actually to ask you a question on the If you could if you don mind explain a little bit more about your system for forecasting community water system outages and particularly for the Central Valley, that's something that we face and something that you have worked on. Has your work on these issues led to success? I mean, can you just explain a little bit more about that particular project?
Sure, I'd be happy to. And this is a project that was worked on by the same team that worked on our DSS benefits theft project. And this is a service that we refer to as our modern data, I'm sorry, our data science accelerator. And what we're able to do, and first starting with discovery with the teams who are actually tasked with tracking these sort of data, water outages is first of all look at and when we talk about users and understanding user needs we have to keep in mind that to a large extent we're also talking about the state staff who are using processes that might be or are often very cumbersome or outdated or manual in order to achieve their goals and so in this particular case this was one of those one of those items where I I believe there was manual sort of checking of each of these systems, and there was not necessarily a prioritization model in place for which would be likely to be experiencing outages. And so in that case, our data science team was able to build a model that could predict, based upon certain attributes that are measurable, which ones would be likely to, and therefore that we should be prioritizing in terms of investigating the different water systems.
Can you also explain what steps ODI is taking to safeguard sensitive data as it works on projects using vendor AI services?
I'm sorry, repeat the last part.
So can ODI explain what steps it uses to safeguard sensitive data as it works on projects using vendor AI services?
Vendor AI services. Yes, I mean, I think that there's multiple parts to that question. One, I would start with going back to the original generative AI executive order that Governor Newsom issued in, I believe, September of 2023. And ODI played a very critical role in executing on that executive order, putting forth many of the guardrails, also consulting on updated terms and conditions for our entering into agreements with some of these large language model providers. And so within those terms and conditions, their data is safeguarded. It is established that none of the data will be used to train any of the models. And any of the products that we use in this regard are covered under these contracts and are considered enterprise agreements. And so in that sense, they are closed systems that are the property of the state of California, of the Office of Data Innovation, if that is the tool that we're using under our licenses. I also say we have a very close connection to our partners at the California Department of Technology and the Office of their State Information Security Officer and so while we follow all of the guidelines that are required by the Department of Technology before using any of these tools we also have an ongoing dialogue with CDT throughout that process to ensure that the data is safeguarded
Okay, well, I appreciate your presentation today, and we'll hold this item. We'll leave this item and hold it open. We don't have any additional questions. Okay.
Thank you very much.
Thank you. Now we'll move on over to agenda. We'll move over to the Department of Technology. Will representatives of the department please come forward? CDT. CDT. I said I'm going to start with an overview then, right? And maybe this is a good time to hand it over to the chair. Thank you. Would you mind providing us with a quick overview?
Absolutely. I'm sorry. Can you hear me? Yeah, I'm Mark Munro. I'm the deputy director for the Middle Mile Broadband Initiative at CDT. Happy to have the opportunity to speak with you today to provide a brief overview of the project.
And I also wanted to note that Deputy Miles Burnett is with us here to talk more broadly about CDT's budget after this.
This endeavor is the largest publicly owned open access Middle Mile network in the country. with over 8,100 miles of fiber optic network. In July 2021, SB 156 established the ambitious project designed to bring equitable, affordable, high-speed broadband services to all Californians. The historic investment made by Governor Newsom in the legislature represents California's commitment to closing the digital divide. We have heard loud and clear that this is a priority for our state, and we are working to develop a network that will allow California communities from tribes to urban centers to rural communities to take full advantage of our digital world. We are making tangible progress towards meeting this commitment. In January of this year, we activated the first 423 miles of the network along Highway 395. Just a few months later in April, the Bishop Paiute tribe became the first community in the state to deliver Internet service to households using the state's network and infrastructure. This is an important milestone that reflects exactly why this historic investment matters. For communities that have long been underserved, this network is not just abstract infrastructure. It is access to education, health care, economic opportunities, and civic participation. On construction, we are making steady headway.
More than 70% of the network has been permitted so far, including 670 additional miles approved just since January. That progress reflects close coordination with Caltrans and with CDT other partners in strength and streamlining what has historically been a complex process At the same time, we are cognizant of challenges. While the construction timeline has shifted, our mission has not. We remain fully committed to delivering this network as quickly and efficiently as possible. By December 2026, we expect approximately 5,300 miles of fiber to have been completed, with 4,300 miles ready to connect to last mile federal funding account or FFA partners, bringing service significantly closer to the Californians who need it most. We're also building the foundation for long-term success. Following a competitive process, we recently selected Skyline Technology Solutions to operate this network for us. As the operator, Skyline will be responsible for the day-to-day network and security monitoring. Skyline brings 20 years of experience managing statewide fiber networks, including most importantly Maryland's 3,300-mile broadband network. This appointment marks a significant milestone in bringing high-speed broadband services to unserved and underserved communities. Their decades of experience managing large-scale fiber systems will help ensure reliable, secure service for Californians. We are also decisively moving into operations and service. Earlier this year, we released pricing for core network services and have already engaged with dozens of FFA Last Mile partners. The overall response has been very positive, and those conversations are translating into real service agreements and deployment plans. Ultimately, this effort is about coordination and impact. We are working closely with the CPUC, local partners, and service providers to ensure that this network is not only built, but fully utilized to expand access across the state. This is complex but meaningful work. Every mile we complete brings us closer to a California where broadband access is not determined by zip code, but is guaranteed as a foundation to closing the digital divide. Thank you again for your time in leadership, and welcome any questions.
The chair has cast caution to the wind and left me in charge. Fasten your seatbelts. Just kidding. Department of Finance, any comments?
Brian Bender, Department of Finance. Nothing to add right now, but available for questions.
LAO?
The agenda provides very comprehensive background on the Middle Mile Broadband Initiative, and we thank the department for their presentation. The LAO just wants to highlight a couple of things for this subcommittee. In terms of where the program stands, 423 miles of the 8,137-mile network is currently complete and ready to operate. The remainder of the network is expected to be completed by the end of this calendar year. And in terms of funding, most of the appropriated funds, approximately $3.8 billion, have been encumbered. As of February 2026, only $68 million remains unencumbered. All that to say, there's been significant progress in this project, but there are still major outstanding benefits. milestones ahead. One thing that we would like to know is the new three party structure that the department has introduced with the addition of the separate operator to oversee the day-to-day operation of this network. This is a completely novel arrangement for the state and it raises some operational and accountability issues in the future. For example, if there is some service disruption or performance issues, it may not be clear which party is responsible for resolving it. We encouraged the legislature to ask the department how responsibilities are clearly defined between CDT, the third-party administrator, as well as this operator. And something that our office has flagged previously that remains a concern is the long-term sustainability of the network. The network is a massive public infrastructure investment, and the question of whether it can operate without ongoing state support is still open. We encourage the legislature to keep that in mind as the network moves into operation. Thank you.
Questions or comments from committee members? Senator Smallwood-Cuevas.
Thank you, Mr. Vice Chair. And I began this foray into this conversation in 2023 when I was just elected. At the time, there were two little girls doing their homework at the McDonald's in South LA because they did not have access to Wi-Fi. And for me, that's exactly why we did this project. That's why we've invested over $3 billion into this project. and I'm glad to hear that it's making significant inroads and that some of those neighborhoods, not all, are connected today. So we still have made some progress, but we still have a long way to go in terms of making sure all of California has the digital divide bridged. I have some questions, obviously concerns, as we have made this investment. It sounds like the investments that we have made and the project forecasts are now coming together, and that am I right that this project will be completed? And it was at the 8,000 miles of middle mile.
line will be completed in 2026. Is that correct? So the 8,100 miles will be completed. We do expect some miles to slip into 2027. We're starting to work on what that looks like. As we move forward, what we're focusing on is those FFA grant awardees. We need about 4,300 miles of the network to serve them and so they'll be coming online throughout the latter half of this calendar year and so we expect to be ready we're working closely with them with their schedules for construction to make sure we build the right thing to the right place at the right time and so we expect to have approximately 4,300 miles fully functional by the end of this year at least 4,300 miles the 4,300 that would be needed to reach those FFA locations. And I mentioned that we expect to have about 5 miles of fiber actually pulled but it just you know filling in any gaps that might be permitting or construction is still being done that will push some of the completion and the light-up of all of the remainder into 2027.
Yeah, and knowing that we have a gubernatorial transition, you know, a project this scale, To me, it's a risk, and especially the points that the LAO lays out, which I think are really important in terms of the authority to really oversee this project, both in its completion, but also in how this maintenance and all of the pieces that are required. It does concern me that we have this third-party process now, and I understand the third party is based in Maryland. It's a Maryland nonprofit. It's not a California company. It's concerning that we have invested so much. We are now in the final stretches. Now we have a new system that's being put in place to oversee it that's not even California-based. And how do we hold that third party accountable when they, you know, even their full-on operations, we don't have real access and oversight to it. So that just raises a lot of questions for me. On the one-year extension, why is a two-year extension necessary and what specific contract project milestones cannot be completed under the current deadline? Is that the 4,300 or what is that?
Yeah, so I think, so going back to the $550 million that was appropriated by the legislature and general fund in the past couple of years, almost all of that has been already, it's under contract, right? It had to be encumbered by the end of this calendar year, and it was encumbered well ahead of that. And so what we're trying to do here, it's kind of a belts and suspenders approach. We're not worried about having it encumbered. I'm trying to account for a scenario where maybe in the first or second quarter of 2027, as we're finalizing, we find out, oh, we need to maybe need to shift some miles from one of our partners to another one of our partners to make it go faster. Right. We're still as we're trying to finalize some of the permitting. There's just there might be some unknowns. And so I'm just it doesn't change our authority. It's still zero dollars. It's just that right now there is this two-year gap between the end of 2026 by when we have to have it encumbered and the end of 2028 when we have to have it liquidated. And so it's really just trying to look out and make sure that if we run into anything where we need to do a last-minute reallocation within the program to get it done faster, we have that authority. That's all.
Well, that's something we're going to have to watch and to make sure that we understand that authority and that process and the lineup of the contracts and what we might need to see happen by December 31st, 2026, so that we can resolve issues sooner and not have to move into 2027. And so maybe there's another report that we can get to get a better sense of where things will be by December 31st so we can have an idea of what to expect and what authority might need to be supported My other question has to do with the revenues do not cover operating costs Should that happen Because things do happen And I just thinking about again the question too about you know looking at how you maintain this system Who ultimately bears the financial risk of this if for some reason this third party this operator third party administrator?
the state of Maryland California like if something goes wrong with this partnership who's who's holding the bag? Okay, you know, I mean what all I'll say is that in the end CD this is CDT's project CDT holds ultimate responsibility over it I want to be clear though when when SP 156 was passed we we talked about a third party administrator right it was the state was doing something that the state had never done before and frankly speaking for you know the the order scope and magnitude nobody no states have ever done before and so the legislature you know it was a good idea to to to require that CDT contract with a third-party administrator to help manage all of this right and so And so when we talk about a third-party administrator, that's really what we're talking about and so there were some specifics in SB 156 and The when we went out to to meet those the requirements CNIC was the entity that, the only entity at the time that seemed to meet those requirements. They, we contracted with them, they formed a subsidiary, Golden State Net, and we've contracted with them to be our third party administrator. And so, and that isn't changing. The statute requires us to use a third party administrator, and it's fairly focused in what's required there. When CDT originally contracted with GSN, the functions that were included were all basically development functions, right? They're the one-time things, whether we're buying sections or leasing sections or building sections. They were there to manage that. And they're very helpful for that, right? Because they've developed and managed these networks before. And so, well, they weren't doing the development work themselves. That was, you know, Caltrans is doing a lot of it. Caltrans did a lot of the design. And now we have about 15 different partners that are actually doing the development work. And so we've used that third-party administrator to help manage those. So as we look forward to operations, we all share the same concern. We expect this network to expect our operating costs to be covered by the revenues generated over the long term. That's always been our goal. And so we've always looked at, as we go about this, how do we minimize our operating costs so that we can do that. So when we talk about the operator, it's still our expectation with the third-party administrator, they'll continue to help us manage the operator. And so as the operator goes out and actually does the day-to-day work, the TPA, the third-party administrators, going to be very useful in helping us monitor their work. Let's make sure the speeds are what they're supposed to be. Let make sure the repairs any repairs that need to be made are made quickly So there a number of their expertise is going to continue to be valuable and will continue to use that expertise in managing that operator When we talk about the operator Skyline, one of the really attractive aspects of Skyline as an operator is that, as a note, there are not a lot of systems like this, and Maryland has one. And they've been the operator for 16 years. So trying to find somebody who actually has experience, operating network like ours, that was, we're very excited to find that. But they don't just, they're not just Maryland-based. They've got a presence in California for some database purposes. And they do, they operate several other systems. I want to say departments of transportation in Texas, Florida, maybe some other states in there. So they actually work around the country. operating statewide networks but I tend to focus on Maryland because it's so much like ours and being able to have someone who's operated a network like
ours was just really pleased to be able to get that yeah that was my question how did we determine that this was the best choice for for the for the job and how does it fit into our original intent, which was that we would be providing service to those communities that had been left out and ensuring that it is a sustainable system that could provide services to these communities for generations to come. It sounds like they had the expertise. What were some of the other criteria for making that choice?
They very much understood what we're doing in terms of developing this network. And again, maybe that comes along with their expertise and their experience. As we have laid out what the program is, they appreciate not just the mechanics of it, but the policy of it. They are very much about being able to reach those communities. They're very excited by that. Obviously, their price was very competitive. and that's also a really important component. So looking at all of the things we were looking for in terms of being able to appreciate not just the mechanics of operating a network, which is obviously this doesn't work if it doesn't work, but also having that experience and then understanding that really our policy goals of reaching the unserved and underserved communities, and that and the price all really helped us make that decision.
I guess my final question is then how will we, the legislature, know, sort of have some oversight, some data reporting to understand these last two years, the progress, because part of our challenge in my first 23, 24, 25, was we just didn't get a comprehensive look at what progress we were making. how will we get that reporting from you all and also this third-party operator what sort of metrics are you using to evaluate and will we also get an opportunity to see some of that analysis of how well they're doing yes so the
reporting on their performance and and we'll be working with the the TPA Golden State net to make sure that we're having them report on the right things but That's all part of what they'll be providing. We will also, as I think most are tracking, we do an annual report. Every March and another one every September, I think. So we will continue to provide those reports. In addition to that, we have regular middle mile advisory committees every quarter. and that's a great place for to get updates but honestly I I would offer an open invitation for anytime anybody wants to come out and see what we're doing or to you know we're happy to provide briefings we really value the transparency and we want to make sure that you know whatever Avenue works best we are we provide that level of transparency that will be helpful because what we wouldn't want to see happen is to come back and say you know what that third party operator was this value and then we turn out that not so
much so those progress reports will be helpful the progress of this final leg will be helpful as we look at this extension should you receive that I think it'll be helpful for us to understand
senator Cabaldon and and and thanks to my colleague for surfacing already many of the many of the key issues that are here and she asked questions about the long-term financing and you indicated that you anticipate it will the operations will pay for themselves over time and I'm wondering if you can give us a little more clarity about what that time horizon looks like yeah so we
currently CDT has not come forward with any you know any budget requests for for funding. Now that we have an operator on board, then we're looking at that. Part of what CDT will be paying the operator for, in terms of operation, will depend on how much is operational. And so to the extent that, in other words, it requires more work to operate an 8,000 mile network than we talked about 4,300 miles. And so we're looking at that and part of what, you know, that component of expenditures, that's going to depend on what, on how much, how we make progress in terms of building out the network and getting it operational. We want it, you know, we talk about some miles moving outside of 2026. It continues to be our goal. We're doing everything we can to keep it within 2026. So when you look at kind of the balance between revenues and expenditures, that's really what we're talking about in terms of are we going to be able to balance that. We haven't anticipated a need until now. We're now in the process of looking at, okay, we've got this network. What will the operating cost be? Another component, you know, big component of the operating cost is we have, one of the ways we were able to stay in budget and reach the full 8,100 miles is that we were able to use, they're called indefeasible rights of use. They're 20-year capitalized leases. And so the majority of the network initially will be, we will be paying leases for. Those leases include kind of the one-time upfront. It's, you know, again, a capital cost. there's ongoing maintenance and operation costs. Just like the users of our network will be paying us, we also have to pay some of those. We only pay those costs when those segments are complete and we take receipts. So we've always looked at this as we're going to be done by 2026. And so you know those are two key components for expenditures And we kind of revisiting that saying okay now if some miles are getting moved out how might that affect that also is going to move out some of the costs associated with completing those miles And then the third component obviously is the revenues right and so our third party administrator Golden State Net is part of our agreement with them is that they are out doing the sales and marketing for the network. And so their ability to generate revenue is going to be directly linked to the miles and the segments that we have complete and the marketability of those. So those are all some things we're looking at right now to kind of reassess our expected ability in the short run to be able to make this financially sustainable. but over the long run I mean I think there's two things I'll point to when we don't be the way that SB 156 and the legislature funded this was that the we don't have to make back the capital costs right so that's going to make obviously put a lot less pressure on CDT to be able to kind of move forward without without those added costs of trying to make that up normally in industry you'd have to make those up so but in industry we would also have a near-term forecast about when we might achieve revenue stability I mean the part of the challenge here is that as you know last year when we when we took up the budget the administration refused to meet its legal obligation to provide the business plan to the legislature so we were unable in our hearing to to understand these issues and then we've been getting a you know series we got that late we think we get email notifications about the selection of the operator the both the communication but but it's all we've been getting a series of requests without any without more any more information that is absolutely the minimum required in order to get an action approved but we need to know what what the revenue picture looks like. And I don't think it's fair to simply leave that to the third party administrator, which under the framework that you're now undertaking, doesn't have any hooks with respect to customers or the operator in particular. So I think that this is an issue
we're gonna need to continue to return to. And although you said we're not asking for any money for operations, and we haven't asked for any money for operations, The BCP, in response to Senator Smallwood-Cuevas' question, but the BCP specifically says without extension of the encumbrance period, CDT would be unable to access any unused contingency to help fund operations after December 31st, 2026. So it is anticipated that there is money potentially that is in the encumbrance request that is for operations. So some budgeting must be happening for that period, and it must not balance out in the first couple of years, or otherwise we wouldn't have this language in the BCP. We've talked a little bit about this situation, but what about then pricing? Do we expect that the price that the users of the system, and I don't mean the end consumer, but the users of the system, that that price is going to be competitive and they will choose to use the backbone that we're creating?
Yes, we do. When we came out with the pricing earlier this year we have now shared it with I want to say 47 of the FFA awardees and the overall response has been very positive in terms of affordability
You indicated earlier in your testimony that the authorizing legislation which directed the department to select a third-party administrator, that that was for the purposes sort of of the startup, the development costs and what have you. And then as a result, you've moved towards this split system with a third-party administrator and then an operator. But I just want to read the specific statute, which says the office shall retain a third-party administrator to manage the development, acquisition, construction, so far so good, maintenance and operation of a statewide open-access middle-mile broadband network. So the plain language of the statute says that the third-party administrator is to be responsible for operation of the system. So what's the legal theory here for why the department believes that it had the authority to create this three-part system and hire and compensate a private operator from out of state?
So in terms of, you can go back to that code section, you can kind of see the section A right before it. Yes. But let's give broad authority to CDT to kind of do what the contract's necessary to make this. You might note that subdivision A of section 11.549.53 does not say notwithstanding subdivision B.
So the department seems to be relying on the notion that subdivision A gives it complete, free of any accountability whatsoever, the ability to do whatever it wants to with our authority. And that's that that conclusion. I'm going to come to that conclusion partly because it's been directly said and you were about to say it as well just now, but also because we had the same experience last year with the business plan. Sort of the lack of fidelity to the law, much less to the legislature's responsible to oversee the project seems plain here. So I think our the budget committee staff and L.A.O. have been quite kind with respect to this provision. but has powers and authorities necessary to implement the chapter, does in no way, nowhere in the statute does it say that that supersedes the language that specifically says it's not a request, it's not a guidance, that the office shall retain a third party administrator to blah, blah, blah, to manage operation of the open access middle mile broadband network. I don't understand what the legal authority is to ignore the plain language of subdivision B.
Yeah, I'm sorry. I should try to clarify. We're not saying that there's any attempt to ignore subdivision B. So when we read subdivision B, and it says clearly we're to hire a third-party administrator to manage these activities, right? And we talked about how we've used the third-party administrator to help manage the development. And we have a number of partners that are actually doing the development, right? But we've used the third-party administrator, as indicated here, to help manage that effort. And so we're doing the same thing with the operator. We've got a – we still have a third-party administrator, the same third-party administrator, which meets the requirements of the statute, and they are still helping to manage the operation But just like we have other companies that are doing the actual development and the third administrator is managing that we have another company to do to serve as the operator and we have the third administrator to help manage that activity so does the up the skyline
technologies then report directly to it is managed because the statute does not say the third party administrator is to help CDT manage operations. The statute says the third party administration is to manage operations. But the way that the graphic that you provided is laid out, it implies that the operators direct report is to CDT and there's this sort of dashed arrow where but the but the third party administrator even though it has the legal responsibility under the law to manage operations that is sort of helping your your department which would be taking over direct responsibility for overseeing the operator my what am i how am i missing this so what we're
trying to communicate there is and this kind of goes back to some of the earlier conversation that ultimately this is this project is cdt's responsibility and so cdt uh you know as somebody has used, as mentioned, the third-party administrator serves as its, you know, hands and feet in terms of actually managing the network. And so you have an operator that is reporting to the TPA, all right, but in terms of what the goals are for the network and what the TPA is managing to, that's still determined by CET because we want to make sure that the California residents' interests are, you know, central. All right.
I don't have it here. I'd love to see, you know, at some point the actual contractual arrangements here to assure that we are, that Skyline is in its role as operator, that it is being managed by the third-party administrator consistent with the plain language of the statute. Of course, the administration is free to propose a change to that plain language. But newsflash, if it does, I will personally insist that we also change to Division A, which is a completely unhinged, unbridled, at least the way it's being interpreted by the department, an unaccountable grant of authority that is no longer needed. It was to move heaven and earth, literally, to build this system. We should not have this kind of language that is interpreted by the department of giving it unfettered authority for the mere operation of a regular, critical, big, but also regular component of state government. We don't give this authority to the manager of the California aqueduct or anything else. So the administration should either propose a change to subdivision B or follow it. And if they propose the change, you know, we're going to have a discussion about what the future of subdivision A is. So this really is a critical project for all the reasons that Senator Smallville-Cuevas mentioned. We have most McDonald's in the rural parts of my district are also not on broadband. So it's, you know, and I represent deeply urban places like Vallejo, as well as, you know, folks in the mountains and the valleys of the Central Valley and the Coast Ranges. the project is so important that's why we're devoting so much energy and attention to it and appreciate the you know the work and the accomplishment of CDT and the third party ministry up to this point but obviously the next the next task is to make sure that when it's finished and to that it operates and delivers the actual broadband that we're trying to accomplish for the communities that we're representing. So thanks, Mr. Vice Chair.
Thank you. I think we've exhausted all possible questions, but the last point that you're talking about that we're talking about is significant. When the LAO completed her input to this discussion point, the way she described this project, if we had taken that snippet of what she said out of this room and placed it into the Transportation Committee, I would have thought that she was talking about the high-speed rail project. Now, I'll just leave that there the way it is, but I'll come back to the issue that Senator Cabaldon was pursuing. My understanding is that at the outset, when Golden State was hired, that they indicated that they would do, they'd be willing to do all of these things, but they were not willing to be the operator. So if that's true, we knew ahead of time that we were going to run into potential conflict with legislative direction that then the executive branch, by virtue of interpretation, was going to take a potentially different route. So it seems to me that that's what's happened. The administration has interpreted legislative direction that is questionable. Now, we want the project to succeed, but that's a pregnant issue that troubles me as part of the legislature relative to the relationship between the two branches of government. And I'm not sure how we resolve that, except that perhaps the administration, to make sure that it's clean in its approach, and this apparent potential glaring contrast between what the legislature directed and what the administration has done, that for clarification, perhaps the administration should come back and ask for a change in the direction of the legislature to coincide with what you have administratively interpreted.
Yeah, so if I could provide a little clarity on this. So under understand I think when we originally went into this in 2021 we did discuss all aspects of the project and statute with with Golden State now with a third party administrator We did And when we originally contracted with them we contracted with them for that again the management of the development work In 2023, we asked the third-party administrator, we asked Golden State Net, understanding that the expectation is that you would, per statute, manage the operation of the network, what would it cost to operate the network? and their estimate at the time was it came out to about the difference between revenues and expenditures over the first 10 years was in the range of 450 million dollars this was discussion with the third-party administrator yes yes and so we we had no money to operate it and certainly you know that that seemed like Like that was not in the best interest of it didn't seem what was consistent with what the certainly the administration or the legislature expected in terms of needing that kind of operating subsidy. Now, we acknowledge that the third party administrator, given where they were, they would they would have needed to staff up significantly. They would need to arguably go out and find an operator, not unlike we've done. But their estimate for doing all of that was significantly higher than and would have required an ongoing subsidy for at least 10 years. And so in looking at that, we said, well, we need to find, we need to explore other alternatives. And so the evolution of what's happened since then, and we've talked about this high level in our middle mile advisory committee meetings that we have on the quarterly basis. We've talked a bit about this. But the bottom line is we have understanding from the beginning that this is a management function, understanding that, you know, we could always pay the third-party administrator to operate the network. The cost was much higher than we were expecting. And so we have to make sure that this is best for the most affordable for Californians and is going to be financially sustainable. We've looked at other options, and that's how we came to the current process that we just completed and how we were able to select Skyline. And in terms of what we're expecting in terms of operating it, again, we're still looking at it, but we don't, you know, this is, in our view, a much more responsible approach in terms of being able to move forward with operation in a way, in a financially sustainable way.
Well I certainly understand the challenge of managing the project in a way that is fiscally responsible But you did that in a way that interpreted legislative direction different than what it was So I get your point, but you solved it by circumventing the legislation. And the legislature, if you had come back to the legislature at that time and said, we have a problem with how you've directed this based upon what it's going to cost to do it the way you direct and with the reasons that you just articulated, we need a change. Now, maybe I'm nitpicking on a point, But from a standpoint of the integrity of the role of our institutions, it may be a small point in the overall, but I think it's a significant point relative to, as I said, the integrity of the institutions. So I would suggest that the administration, in order to clear this up, should go back to the legislature to clarify this so that what you've done becomes coincided with legislative intent. intent. It would be changed retroactively, but I suspect that we would entertain that. But we have this glaring inconsistency that as a legislator, it bothers me. I understand. Would I have your commitment that you would pursue that direction?
I can certainly take back your concerns. Would you then take it back and then let us know what the answer is?
Yes. Yes. Thank you. Any other questions or comments? Thank you for the presentation. We will now move on to our final item, number five. Same folks or changing chairs?
Vice Chair and members of the committee, my name is Miles Burnett. I am the Chief Administrative Officer for the California Department of Technology And I will be presenting a short summary of the CalTabs modernization project CDT requests one million dollars in technology services revolving fund authority in 2627 and 550,000 in 2728 and ongoing to replace CalTabs with a modern SAS billing solution. CalTabs is a 20-plus year old highly customized proprietary billing system used by CDT to generate customer invoices and extensive billing data and billing reports. The system is built on fragmented and outdated technologies, incorporates extensive custom code, and depends on tightly coupled processing logic that limits flexibility and scalability. These technical constraints increase operational risk, complicate maintenance and enhancement efforts, and make the platform increasingly difficult to adapt to evolving business and security requirements, rendering continued reliance on the system unsustainable. This request covers the procurement of subscription licenses and implementation services to configure, deploy, and transition from the existing platform to a modern secure billing system. The new solution will streamline billing operations, enhance data quality, reduce technical complexity, and improve transparency for both internal and external stakeholders. And with that, I'm here to answer any questions you may have. Thank you.
Department of Finance, any comments?
Yeah, Ryan Bender, Department of Finance. something to add right now, but here for questions.
LAO?
Thank you. At this time, no concerns with the proposal. We think that an off-the-shelf software as a service approach is more sensible and lower risk than a custom solution, and we think that the use of the revolving fund is an appropriate mechanism. Thank you.
Any questions, comments from committee? Nor do I. So thank you very much. This one's easier than the last one. Thank you. We will now take public comment on items one through five. Anybody that has input for us on any of those items, approach the microphone. Seeing nobody crowding their way to the microphone. it appears to me that this meeting is adjourned.