Senate Budget Sub4 — 2026-04-09

Senator Hurtado. Present.

Senator Smallwood Cuevas. Present.

All right. All right. Good morning. Good morning, Chair and members of the committee. I am Arma Cozina, Deputy Secretary for Finance and Administration at the California Department of Food and Agriculture. Before we get started, I just wanted to say, to pass on my regards from Secretary Ross, who was unable to join us due to previously committed travel. She sends her regards and will prioritize your next hearing. She's very apologetic that she couldn't be here herself. I just want to say thank you for having me here as a proxy and for affording us the opportunity to discuss CDFA's proposals for fiscal year 2627. As a brief overview of CDFA's work, first just to brag a little bit about California agriculture. California leads the nation in agricultural production with nearly 63,000 farms and ranches generating approximately $61.2 billion in annual sales. These farmers and ranchers play a key role in food security for Californians, the nation, and the world. The state leads national production both in variety and abundance with over 400 different crops, some exclusive to California, making up nearly half of the vegetables and over three quarters of the fruits and nuts grown in the United States. California, or CDFA, works diligently to safeguard this resilient food system and promote an equitable marketplace, cultivating a California-grown food supply that is globally recognized for innovation quality and sustainability In furtherance of that mission we support a broad range of functions ranging from those that you might expect protecting plants and animals from invasive pests and diseases, protecting food safety, maintaining inspection standards, to functions that you might not expect, overseeing marketing orders and agreements, overseeing the network of California fairs, including their pivotal role in emergency response, and overseeing the state's weights and measure standards. Something that my colleague will assure you is the backbone of commerce in California. The fiscal year 2627 governor's budget proposes approximately $685 million in 2059 positions for the support of the department. This includes 213.5 million in general fund, 190.9 million in industry funds, 132.3 million in federal funds, 74.8 million in bond funds, which I know we'll discuss later, and 73.7 million in other funds. Regarding the challenges we face as a department, the same forces that affect the agriculture industry at large also pose significant challenges for the department. Changes in international trade, climate, and land use all exacerbate pest and disease pressures on California's natural and working lands. This destabilizes our food system and industry funding while simultaneously increasing the demand for CDFA's programs. CDFA is proactively working to identify these risks to avoid future outbreaks and planning to ensure our programs can quickly respond to outbreaks when they occur. For example, in 2023 and 2024, California addressed the largest invasive fruit fly response in state history through an integrated resource management approach. Swift, comprehensive action, as well as support from yourselves, ensured that we achieved 100% eradication, and both national and international markets remained open to California products. Similarly, when bird flu was first detected in dairy cows in early 2024, it marked a troubling evolution of an already devastating animal disease in the poultry sector. The state invested in expanded diagnostic and epidemiology capacity at CDFA and built a state-of-the-art veterinary laboratory to support future response efforts. Through those efforts, there are currently no active dairy quarantines in the state, and we are better prepared for any future outbreaks of both pests or animal diseases. Any questions about our overview?

Absolutely. Thank you. So in addition to those core functions that we talked about just a moment ago, there are two initiatives where the department is focused in recent years with support from the administration and the legislature. These are our climate smart agriculture programs and the Farm to School Program. Since 2019, the state has invested $590 million to advance climate-smart agriculture practices, resulting in the reduction of approximately 27.7 million metric tons of carbon dioxide equivalent. These practices range from compost application to improved irrigation to method reduction through manure management. Each practice and grant program was validated and overseen by staff within our Office of Agricultural Resilience and Sustainability. These staff also provide technical expertise regarding climate smart agriculture to advance state climate policy assist stakeholders work with local technical assistance providers and support farmers throughout the state Those farmers that adopt climate smart agriculture practices have then gone on to participate in our Farm to School program And for Farm to School, the state has invested $125 million to transform the California school food system through the Farm to School Incubator Grant Program. In just five years, this has grown to reach 49% of all California school children with projects that provide access to local, climate smart, and nutritious foods, as well as lifelong nutrition and agricultural education. The 2627 budget proposes funding and trailer bill language that will continue this vital work and codify the farm to school program. This includes $20 million annually for the farm to school incubator grant program, $1.3 million one time and $200,000 annually to build and maintain a customer relationship management tool that will effectively track program implementation and scale outreach throughout the supply chain. $3.2 million and $3.2 million ongoing to ensure that the climate smart agriculture practices and markets are accessible to producers, particularly small scale and historically underserved producers, so that they can improve the resilience of their operations and hopefully participate in the farm to school program and that integral supply chain. Investing in farm to school and climate smart agriculture, we believe is a cost effective strategy that simultaneously supports children, farmers and local economies. Thank you for your consideration.

I'd say on Department of Finance, nothing further to add. Happy to answer any questions.

Good morning, Chair and members of the subcommittee. Brian Metzger with the Legislative Analyst's Office. We recommend that the legislature reject this proposal as presented, given the state's current budget condition and its limited capacity for supporting additional ongoing commitments. We appreciate that the program does appear to provide some benefits to farmers, schools, and students, but advise the legislature to prioritize funding to address urgent needs and mitigate near-term risks. However, if the legislature were to fund this proposal, we would note that state and federal governments provide a total of about $5 billion annually for school nutrition programs. Given these investments in school nutrition, the legislature could explore whether some farm-to-school activities could be potentially supported by monies the state must provide to schools to comply with Prop 98 constitutional requirements. Those grants allocated directly to schools through the Incubator Grant Program, for example, could be counted as Prop 98 expenditures, which could free up that non-Prop 98 general fund in this proposal.

Absolutely. So looking at the trailer bill language, it codifies most of the pieces of the Farm to School Act that have already been existing, but now that we are proposing ongoing funding, a lot of the language that we've had before has been, you know, should we have funding, we should pursue these activities. And so it would be to increase, it would be to do all of the same incubator grant program activities that we've done before. And then there are pieces, it would also codify the existing framework that we have for working with our partners at the Department of Education and Department of Social Services to make sure that we kind of working jointly across these programs and realizing any efficiencies that there might be Creating programming for the Farm to School program in consultation with those departments to make sure that we kind of have a unified platform for agricultural education and leadership opportunities And then what might be a little bit new is making sure that we collect data to evaluate program goals and implementation progress. We have done these types of evaluations in the past, and they've been incredibly beneficial in helping us to improve the program. And so this would codify that, and I believe there's funding proposed to go along with that to make sure that we're doing regular program evaluations. So those would be the new functions as part of the trailer bill language.

So we would hold the database internally. So all of that data would be part of our customer relationship management tool that is proposed here. and then it would be evaluated on a biannual basis by a third-party evaluator. I believe there's been one evaluation in the past that is all public, and that was through, I'm going to blank on the name, but it's through Berkeley, that they did that independent third-party evaluation.

The evaluation is to make sure that we are as effective as possible and that we are putting money into, we are distributing the money through our four tracks as efficiently as possible and putting the money where there's the most need in the state to identify if there are regions that we have not been able to access in the state and why, and then to help guide us towards solutions that might be able to better effectively reach those populations.

There's always room for improvement.

Sure. We found that we generate, I apologize, normally I have a colleague here who can provide the exact information, so I'll follow up with the exact numbers, but we provide, we receive, for every dollar that's invested in the program, the evaluation has determined that it generates over $2 worth of value within the supply chain, in addition to all the benefits that it provides for our school children. And so that was part of the evaluation. And then in terms of where we can improve, we've reached 49% of California's school children, and so it's identified regionally where those 51% are that we still have yet to reach. And it has also made recommendations about how to do that. So one of the things that was recommended and that is part of our proposal is investing in the farm-to-school network to make sure that providers are able to do peer-to-peer education and be able to scale up what's working for their school district, be able to scale it up for similar school districts throughout the state, and to provide peer-to-peer technical assistance.

That is a great question, and I will have to follow up with that information. I apologize. I don't have it with me.

I mean, I just went through the map briefly online, and it did show that there was, I represent one of the largest agricultural regions in the world, I would say, and it seemed that there was a lack of support there, which to me it's an area that's just underfunded, undersupported. I mean, there's just a lot of need, right, especially very food insecure. It's something that I think would really benefit from this type of program, but I didn't really see that level of support that you would think would be there. So I just kind of wanted to point that out. I know that there's good intentions behind this, and I want to make sure that it's as effective as possible while it's in place. With that, I'm gonna go ahead and ask committee members if there's any questions or comments on this item. Thank you so much for that overview. And I think this is a very important program, but I did have some questions about it. one of the things that I noticed that in, is sort of where are the schools and what kind of schools are benefiting from this program. And in my district, it looks like the charter schools are in partnership more than our public schools, like our huge LAUSD student population, many of them living in food deserts, not getting access to quality foods. So I'm wondering if you could walk us through what is the grant scoring process? How does that work? How does income, student need, scarcity of fruits and vegetables, grocery stores, just overall community need way in that sort of scorecard rubric and process?

So there's the application process, and I do want to get you that information on exactly how equity is accounted for in that. But if folks aren't making it to the application process, we also need to make sure that we solve those barriers. And that's where we've tried to look at a very comprehensive approach to technical assistance and then to ongoing outreach in those areas. And again, that's where peer-to-peer support is really important because we can provide as much outreach as we want. But if we don't understand the specific needs of those schools, they need to talk to a school administrator that does. The application process has the same result as not having access, meaning we just don't see a lot of our public schools and we have a tremendous amount of need. And this is a phenomenal investment in these kinds of programs to skip over the very communities that need them the most. So I really would like to see that information. The other question I had was about, you mentioned the evaluation process. Is there an equity component, evaluative component to how you look at where the resources are going and how effective those resources are being utilized?

Yeah, and that's helpful because the supplier side is another question. We have a growing, out of necessity, really, urban farming movement in Los Angeles, particularly in South L.A. And there are partnerships with black farmers, for example, in Central Valley and some of our urban farmers in Los Angeles, and particularly South Los Angeles. And I'm just curious how those kinds of suppliers are identified, and is there a similar rubric in terms of what the equity sort of strategy is for, you know, making sure that it's the students in those campuses that need it the most, but also that we're bringing in local and encouraging and helping to sustain some of the urban farming that's happening and particularly where they have partnerships with black farmers who are disproportionately impacted by what's happening in the agricultural sector.

And as the good doctor comes up, if you could also really hone in on what supports are given to that relationship building, that would be helpful.

Well, I appreciate that, and thank you for that overview. I guess we're getting at sort of the how it's done, but what we don't know is, you know, what is actually being done, and I hope that we can get more detailed information in terms of these schools that are disadvantaged, that are public schools, a lot of Title I students living in food deserts. Is this program really centering them in how much of the resources that they're getting? What are we doing to support those suppliers from disadvantaged areas and particularly in urban areas? and is that also being centered in terms of making sure that these regions have the best access? We're not using the dollars to reach the most disadvantaged, and that's equity. I think the program is not doing what it's intended to do. So I don't have any answers to that. I hope you can provide those before we take our next steps on this. Yeah.

Thank you, Madam Chair. First of all, I should have said this at the conclusion of your overview, the apology from your Secretary. That is really an attest, really, to her responsiveness and attentiveness. I think it's not typical that the head of a department or agency appears before our committees in any case, and she usually does. And for her to specifically apologize because she can't be here is, as I said, really an attest to her attentiveness. That's, I think, somewhat unusual, but I find it typical of Secretary Ross. These programs, were they initially initiatives internally from the department or from the governor and the administration?

the conversation that you had with Senator Smallwood Cuevas on some specific things. But at the outset, what was defined as specific measurable goals that was expected to be accomplished by the program? And how have the results compared to that defined at the beginning?

Thank you. I appreciate that. And the reason that I ask the question is because actually for the last three years, taking lead from the alleged analyst's office, in order to bridge the gap of our structural deficit, particularly the unique nature of it being with growing revenues and growing deficits, in order to assess where we can make adjustments in particular programs that have been either established or enhanced in the last five or six years, particularly when revenues were particularly flush. That we have to take a look at what programs were expected to accomplish at the beginning, specific measurable results. My concern is sometimes that's not done, but nonetheless, what are those expected measurable results? And at this point, what have we experienced? And I'll be asking that question with regard to other issues. I hope that that will be asked in all of the other subcommittee meetings too, because that's the only way we can really assess where, if we're going to cut back, where we can cut back. So that comment is more general, not on the specific program, but I would share the concerns expressed by the LAO on that.

Thank you, Madam Chair, and I appreciate the discussion and also the Vice Chair's focus on what the goal here is. And I think part of the challenge is that the goal is way too big for what this program could possibly do. This program is worth $4 or $5 per school child per year. It's not a, I think the goal as I remember it, and this is even worse than you, it was that we would achieve That, what you described, that every child will have access to healthy foods, but it wasn't the, but by doing a set of things to deal with the infrastructure, the supply chain, and the structural connections between agriculture and schools. Not that the program itself was going to be a gold-plated school lunch program. And that's a critical distinction. And I think, so we tend to evaluate it, like how many kids are getting, but that's not the point of this program, because at $4 per kid statewide, it's not going to change. Not every school can have it, and that's not a sustainable approach to really changing the underlying system. So I do think, and it's one of the reasons why I think this is, I share the LAO's concern about the impacts, but also that to me that suggests that a permanent allocation, it's not ripe yet. That it should be in a policy committee, not in trailer bill language, because these are live questions about how to do that. If we're going to renew it at all, and also it is a large one-time allocation. And so we should be learning, you know, I represent not as significant as Senator Hurtado in terms of total production, but not trivial. just a set of agricultural communities where this program has been in many instances very successful at figuring out, okay, how do you deal with the contracts between individual farmers, emerging farmers, and the institutional purchasers at the school districts? How are you dealing with the structure of the system? And that includes things like education for the individual kids. But again, that's not scalable to do that through this program. So to have a couple dozen schools or even a couple hundred statewide, getting those services isn't really, that's not changing the system. So I would just encourage us to think about designing structural change. If we're not doing that, if we're mainly focused on, right now we want to deliver something different for school children, then I think LAO is exactly right. If it's just about the food that's showing up at school, that's a Prop 98 allocation, and it should be done in that context. But from my mind, that's not what this program was about. That's why farm is the first word in it, not the last. It really is about that. And the two is the second word because it's about that distribution system, the production system, and making that simpler. and the bureaucracy of trying to connect to what is a big institutional purchasing system in a lot of places and then assuring that you have, as you say, the infrastructure to do the preparation and all of that. It becomes even more important after the passage of last year's legislation on ultra-processed foods as well, to both the expectations and then the opportunity where we can change the market that school purchasers are facing about what their options are in order to meet that bill's mandates, but also to support in a broad way California agriculture. So I think there's a lot, I'm a big fan of at least how the project's been working. But I do think also that we need to line up what our objectives are with how much we're actually spending. And how this money should be used principally to induce systemic structural change, learnings best practices model contracts that sort of thing as opposed to thinking about it mainly from at the end result for the individual kids That obviously the point but we have to change the system in order for that to achieve any kind of meaningful scale at just this amount of money But I do think a one-time allocation makes more sense, as we've been doing for the last several years, as we build through here and through the policy committee the longer-term structure to try to accomplish that. Okay, thank you so much for your presentation and on this item.

Absolutely, thank you. The budget includes $74.8 million in bond funds in fiscal year 26-27 for programs authorized under Prop 4 for the Department of Food and Agriculture. These are, in essence, all of the funds remaining that have been specifically identified for CDFA and the bond. So this is in accordance with the approach that we proposed last year that essentially had three funding timelines for these programs. The first group of existing popular programs were slated for kind of immediate implementation. Those programs include SWEEP, our Healthy Soils Program, Urban Agriculture, Fairground Emergency Response Upgrades, and the Invasive Species Program. Those funds were largely allocated in last year's budget, less a few administrative funds for administering the grants over the course of a few years. And funding will be released either this spring or this fall, depending on largely what is going to be best for the stakeholders that are receiving those funds. The one caveat is that such a large amount was allocated in the bond for healthy soils, that you'll see that roughly half was allocated last year and the remainder was requested this year to make sure that we could get that money out smoothly. For some of these programs, as I mentioned, you may see a small amount requested this year. That's the amount needed in fiscal year 26-27 to administer the program. The second group consists of new programs where we have existing capacity and stakeholder engagement. So those programs would have, we had proposed an accelerated timeline with half of the funding allocated last year for one first solicitation. And the other half allocated this year for a future solicitation. So these programs are slated for public comment this spring with the first solicitation in the summer. And then because they are new programs, these are the year-round certified farmers market program and the mobile farmers market program. So we do have existing relationships in that area because they are regulated entities. But we want to make sure that this is a new grant program that we're rolling it out correctly. And so we would do half of it in the first solicitation this summer. And then half in some future solicitation so that we can make adjustments as needed if we're not reaching the populations that have been intended in the language of the bond. The third group are those new programs that have required more thoughtful development, engagement, and implementation. These programs, namely the Regional Farm Equipment Sharing Program and the Tribal Food Sovereignty Program, received administrative funding last year for staff to begin developing the program parameters. and this year we're requesting the balance of the grant funds in the hope of releasing the solicitations early in 2027.

I Ed Sayon Department of Finance Nothing further to add Happy to answer any questions LAO Brian Metzger LAO We find the administration proposed climate bond plan including this chapter to be reasonable and consistent with bond requirements

Thank you. Thank you. For me, what is the department doing to track and follow up on the successes or challenges of the programs receiving climate bond funding?

Oh, yeah. So you mentioned that you do the audits for making sure that the funds are being used for what they're intended for in this area. So who is specifically in charge of those audits?

Okay, so why don't we have that information? I mean, you just said that.

Okay, so those are processes that are through the Department of Finance, I'd assume?

And who is the Bond Council?

back to your office. Okay, thank you. Alright so if you yeah we have the doctor the good doctor come on up Because I left my notebook the first time

And I'm just a little curious on the Healthy Soils program. I know it's very much focused on farmers and their land and making sure that the soil is healthy. But, I mean, has there been any consideration to go beyond soil that is perhaps contaminated? For example, in the Central Valley, valley fever is a huge issue. I mean, is that something that is part of the Healthy Soils Program or considered to be part of it?

Questions from, okay, we'll start with Senator Cobaldon.

on the Chair's question. I wanted to query, you had said in the last item that the funding for technical assistance provided that address some of the issues that Senator Small and Quivis had raised in programs like the State Water Efficiency and Enhancement Program. That's part of the grants themselves?

Okay, and so that's in the $38 million that we budgeted, that we appropriated last year. It's not part of your $700,000 ongoing state admin.

Okay, gotcha. I appreciate that. And then is Market Match in this program, or is that in a different program?

Apologies.

I'm trying to recall which piece of this we have through our Office of Grants Administration or if it is through a different department.

Yeah, the market match program.

Okay. And the CNIT program, the Certified Nutrition Incentives Program.

So is the current year the second year of that?

So in the budget year, there would be no money for CNIP?

And then for market match? Am I understanding this right?

Okay. Okay. That is a very, very, very important program, so I do hope to return to that at a different time. but obviously that's not this item. And I guess I have a hot take question for LAO on this. And more in the, you know, it is, it isn't required or necessarily even normal for when the voters authorize a bond that we try to spend every last penny in the first 24 months. And I'm curious, you know, we know because of your analyses and department fans, the state's overall fiscal situation and both our current year revenues and budget year revenues that we are projecting to be somewhat higher, but also the long-term structural deficit. So I'm curious if LAO has examined the policy question about, because when we are in a point of the deficits that your office has forecast, that sort of counter-cyclical spending will be even more important than now. And so the choice to front load as much of the spending as possible in the climate bond, and of course the only part that's in our jurisdiction is this. Is your office examining, have you considered that question of whether it's wise from overall sort of a macro perspective in California's economy and public spending for us to front load spending at the point where we have the most money, or whether we should be at least considering the question of whether bond funds might be over a longer period of time. And I'm not proposing it, I'm just trying to understand whether you've thought about this issue, because if we have the downturn in our budget that you forecast, that point it will be really important that there is some some spending occurring in the California economy. Brian Metzger, LAO. The focus of our

Just to clarify, I'm not talking about in order to backfill cuts. Instead, and not even just Prop 4, but sort of generally our bond portfolio, it's a policy choice about over what period do we spend school bonds, housing bonds, climate bonds, and what have you, just to whether or not we are considering this question of, you know, your reports say, but at some year it's inevitable that we will face very substantial deficits, as you say. And just from a pure economics perspective, we're going to need spending to be happening in order to avoid California's government contributing to a substantial recession as well. So it's not so much like we should save the bond in order to backfill the general fund later as much as the macroeconomic question for the state as a whole. But anyway, appreciate it. Thanks.

Thank you, Madam Chair. The three categories that you mentioned are, one is to protect communities and nature from the impacts of climate change. Then second, to reduce or remove carbon pollution where possible. And then in some cases, address existing environmental challenges exacerbated by climate change. So mostly we're talking about mitigation. And I think that's important because in the middle category where we're talking about potentially reducing carbon emissions, That's what the Air Resources Board is doing, of course, and my concern there is the reality that we can't affect climate change in California. To the extent that it's caused by man-generated carbon emissions, we have absolutely no effect on that by reducing our carbon emissions in the state of California. So I'm not saying, and I've been critical of what ARB has done because it has significant impacts on cost of living, but I've not said we shouldn't do anything. However, I have said we should do it with caution, with the realization that whatever we do isn't going to have any effect on climate change whatsoever. So the mitigation part of that is important to adapt to the things that are going to be caused by climate change. And so I'd emphasize the first and the third category, number one. Secondly in establishing these programs getting back to comments that I made before I would hope that in each case we will have specific measurable goals that we want to achieve And as Senator Kvaldin rightly pointed out in the previous program, your goal was, I said that you have an acronym. The acronym is BHAG, and it stands for Big Hairy Audacious Goal. And any program should have a big, hairy, audacious goal, but that shouldn't be the measurable results because almost by definition, you're not likely to completely achieve that, so you have to have achievable outcomes too. So I would hope that that would be established at the outset of those programs. But again, I want to emphasize, I'm glad to see the efforts toward mitigation. But again, given that we emit less than 1% of global greenhouse gases, we're not going to change the atmosphere. I think we need to realize that.

Thank you, Madam Chair. So my question had to do more about how the administration and your agency is thinking about sort of the workforce components of these investments and particularly our intentionality around pathways. Are we making sure and is it the state's priority to make sure that these investments in the wildfire resilience are not just funding projects on paper, but also building long-term economic opportunities for our workforce in terms of access to future of work, climate resilient careers, in terms of looking at pathways for our conservation corps, our fire camp folks, apprenticeships, which I know is also a priority. Are we connecting the dots? And do you have someone in your agency that is, you know, focusing on making sure that as these funds are being expended, that we are very intentional about what kinds of multiplied opportunities come out of these investments, particularly as it pertains to workforce?

How do you that there is an intentional focus on the workforce? Because these are significant investments. And my sense is that, you know, there should be some significant, sort of outputs of career pathways and folks going into these great, you know, climate smart agriculture. That's future of work, right? So that those would be good jobs for folks.

I appreciate that. But I do think when we're talking about hundreds of millions of dollars, billions of dollars, I think it's important to have an intentional metric around where are some of the outcomes that make these investments sort of a return on investment where we are actually not just expending the revenue, but we're generating some revenue because we are investing in people and particularly careers in some of these communities where we're seeing recession-level unemployment now. And the senator talked about our economy and how we need to really be mindful of the precariousness of our economy. this question of affordability that constituents are talking about. So I would want to see and figure out ways to maybe work with you all on having some intentional, not broad, but specific outcomes in terms of what careers are coming out of this work and who is getting the opportunity to participate and be put on a pathway to good jobs. So thank you for that.

Thank you for your patience with our musical chairs. It's mostly CDFA, but I'm happy to blame finance for this one. So we understand that the governor budget from last year included a reduction of 4 million and 69 positions resulting from control section 4 the sweep of vacant positions and associated funding And we also understand that the JLBC is recommending rejecting elimination of the 35 of those identified positions. Broadly speaking, most of the 69 positions that were identified at CDFA were unfunded positions that were being held vacant, while most others had been vacant for a significant amount of time. Most due to being located in hard to fill locations or hard to fill classifications. The funding that was eliminated was not tied directly to the positions that have been identified. as a large percentage of those positions, as I mentioned, were unfunded, but was allocated internally based on where CDFA could minimize the programmatic impacts. We would say that CDFA is committed to ensuring that we maintain the functions as best we can, our core functions at CDFA with the funding that we have available. So to the extent that there is funding available for a position, we would look throughout the department for position authority to make sure that we would be able to hire for those positions that were incredibly impactful for our constituents and impactful in terms of implementing the legislature vision for CDFA.

Brian Metzger, LAO. We were asked just to provide a brief overview of how this all worked because it can be kind of complicated. So just going to try to run through this quite quickly. So as was mentioned over the past several years or a couple of years, I should say, the administration has proposed options for reducing costs at state departments. And one of those was to eliminate certain vacant positions. The legislature received a specific proposal on that last May revision to eliminate about 6,000 vacant positions across various departments. That didn't give the legislature much time to review all 6,000 of those positions. And so a final agreement was reached that allowed the legislature through the Joint Legislative Budget Committee to review about 1,000 of those positions. Those vacant positions included, you know, those that were a part of the agreement were all proposed for elimination across nine particular departments, including CDFA, as well as vacant positions that were associated with implementing legislation that was chaptered in 2022 and 2023. In a letter to the Department of Finance in December, the JLBC did not concur with the elimination of about 650 of those thousand positions. And of the 650, as was mentioned, 35 are at CDFA, 21 of which are funded with special or other funds, and 14 of which are funded by the general fund. For those positions that are funded with special funds and with other funds, we recommend that the legislature maintain these positions consistent with the non-concurrence from the JLBC. Doing so would not have an impact on the general fund condition and would avoid negative programmatic impacts. And those positions that are funded by the general fund because of the potential impact on maintaining the general fund condition, we would recommend considering them on their relative merits given the overall budget condition.

Nate Williams with the Department of Finance. Nothing further to add, but happy to answer any questions.

These general reductions, this is not directed at CDFA. This is more Department of Finance and the administration. We had the elimination of positions. We also had the unallocated expenditure reductions that departments and agencies were expected to come up with. And at the time, I said those largely will not materialize because we do that repeatedly, and usually they don't materialize, not entirely, but largely. And the elimination of positions often ends up the same way. It is a budget move that appears to reduce a deficit, but in the final analysis, as my friend Dave Cox used to always say, it doesn't materialize that way. So it's just my comment of a criticism of the strategy in the first place.

I don't agree. I agree with a lot of characterization, but I also think it is a necessary house cleaning. I've also been a deputy director of a state agency before, and we do need to, positions that have been vacant for an extended period, we need to wipe them off the books. And the fact that we had even this many that we did concur with, I think is evidence of that. Whether it produces $5 billion of savings or not, I think that's a fair point. But as a pure state operations management and administration activity, it is important for us to right-size our position, even if some of them are theoretical. So I've been supportive of these efforts, and we should continue to do them. On the special fund side, I appreciate LAO's point. At the same time, we should be looking at the special fund positions on their merits also. Because the special funds don't come out of nowhere. They are paid by somebody's fees or some penalties. They're real money. And if there are a dozen or two dozen in this particular department of special positions that on their merits aren't needed, then those positions should be eliminated. And if that means, if there are savings to be had, those savings should be passed on to the revenue structure that's involved for those programs. So I don't think, I would not just take special fund positions off the table and say, hey, since it's not a general fund, we don't care how many extra positions are on the books. We should be doing with both of them. At the same time, the actual delivery of the services, the oversight, the audits, programs like the Edgar Curry Bill from last year, these need to get done and they need to be done effectively. And not every vacant position, even if it meets those standards, should be eliminated. That's why we have the review process and that's why I appreciate the work that both JLBC and LAO have done in that space. So my view is that we should be examining them all on their merits, and I know you have done that to a large extent and that would result in maintaining at least some of the key ones like the AB 402 implementation But I think the special positions deserve just as much legitimate scrutiny And they shouldn't get a free pass in this process as well. So I know the chair has a lot of questions, so I'll stop there.

Sure. Nate Williams, Department of Finance. So just to kind of step back, you know, in 2024, when these efforts kind of began, Department of Finance took a look at what are vacancy rates across all state governments and then kind of specifically broke it down to the department level. And we kind of came up with targets as to what kind of savings we were looking to achieve through these and what kind of position reductions we were looking to achieve. And then we relied on the departments because they have this specific knowledge of where they might be able to find efficiencies in their own programs to really select the specific positions that went on that list. I do kind of want to encourage members of the committee to kind of look at this less as these are the specific positions that are going away and can never come back and they're completely gone. And the work that's associated when we think about that position is not going to get done because these were vacant positions. And then the department does maintain kind of broad administrative authority to reclassify positions as needed to kind of fill those really important kind of critical positions as needed. So this was kind of a snapshot at a point in time in 2024. We understand that these positions have kind of been in limbo since then. And so there could be different operational needs that the department could address after these positions were to be eliminated.

Who all was engaged? Yeah, so each department was relied upon to make the actual determinations as to which positions would fall on that list. So I would probably defer to the department. The specifics, a lot of departments used kind of similar criteria, so they would look at historical vacancies, ones that had been vacant for a long time, or things like that, too. Those were kind of the easiest to select on their list. Okay.

Sure. There are some of the positions that I could say, and each one is unique, but looking at each position that was identified as to why it might have been on that list. We have positions in our rural field stations that are environmental scientists or veterinary positions that are very hard to fill, particularly at state rates. That's also for our pest prevention assistance. And so in those positions where we're doing field work in our rural communities and it's very difficult to recruit for those positions, I would imagine that they had been vacant for longer than six months and that's why they were considered as part of our reductions. For other positions, I know that-

We worked together across the department, across all of our division directors to understand what was vacant and therefore available as part of this drill. We also worked to understand what our legislative mandates were and ensure that we had both the funding and the position authority to fulfill those mandates and where we had one and not the other. So there are positions, for example, within our Division of Measurement Standards where we don't have requisite revenue to fill those positions. And so for those positions, you might see them on the list because they had been vacant for many years. So it really is individual to each position. We continue to work together as a department, across the department, to understand where we are, where we have both funding and a mandate to do an activity. These might be some of our core programs, like the broom rate program that I believe has been mentioned. For those programs where we do have a mandate and there is funding for that program, we do have, as was mentioned by finance, the authority to reclassify positions to ensure that we fulfill that mandate. And so we are actively and kind of continuously working to make sure that those core mandates are fulfilled even with fewer positions, open positions to do them.

We're committed to fulfilling our requirements under legislation for those programs. So we are committed to ensuring that audits, specifically to those position, audits of agricultural and milk handler entities occur. We are committed to ensuring that that occurs within the budget constraints that we have. And should we have the budget to fill a position or should we have an open position that we have funding for within that program? We're committed to working across the department to ensure that there is position authority to fill that position and to fulfill that function.

A specific assessment on that end, I would have to ask our milk marketing program and our marketing services branch, and we can absolutely follow up with that information as to whether a specific assessment has been done regarding those positions and that function.

That is within our division or our marketing services division, but those positions are not identified here.

What about any other reports? I will double check on the ones around the milk marketing agreement and the quota administration program, but let me double check on that one.

Is there a reason behind that? We have not dropped any of those functions at the Department of Food and Ag. So whether or not these particular positions were full, we believe that we are fulfilling our legislative mandate for both of those programs.

How many?

In relation to these particular positions or in general? I would say the positions that it applies to.

Yes, we believe that we are fulfilling the mandate, and that includes providing those reports and providing accurate data. We believe that we're fulfilling that mandate as statutorily required.

That's within our division of marketing, our marketing services division. And that is within our marketing services branch and they run the quota administration program. So we do have staff in that program that are fulfilling that mandate. I will get back to you with the exact number of staff in that program.

We will follow up with the exact numbers for that program.

2024? That was a position.

The milk marketing, the position that was listed for sweep, that was a position that existed before and that had been vacant for more than six months.

I can go back and check on that particular position for you.

Yeah, let me let me go back and double check on that position for you. I do believe that the functions within that program are being met, whether or not that position specifically continues to exist. So let me double check on that program and that position.

Okay.

I'll miss the Department of Finance. Nothing further to add.

All right. No worries. Brian Metzger, LAO. No concerns with this proposal. The Department's provide an update regarding the cybersecurity funding agency last year. What a department of assessment and prevention.

Okay. Is the department facing any consistent emerging cybersecurity threats? And if so, what is the department doing to mitigate them?

And I don't know if you can share this or not, but if there have been prior incidents that you're aware of, is there a particular area that we should be aware of that it was targeted?

The security funding that was authorized in last year's BCP has really helped us in being more proactive in identifying those concerns, and that's why we have not had any issues in the past year. I'll knock on it as well.

Yeah, preferably for an offline response, but I would like to know the department's, given what we funded and what you're implementing now on the cyber side, the department's expectation of its security under the quantum computing, the quantum threats to our cryptography protections. And then second, the department's both practices and intentions with respect to autonomous AI agents, both externally in swarms of them, but also internal practices with respect to the ability of CDFA employees to install autonomous agents on their own state equipment or to allow network egress from their browsers for autonomous or semi-autonomous AI agents. Please don't answer this now, but would appreciate a separate response in writing.

Any other questions from committee members? Okay, seeing none, we will go ahead and move to take public comment on the following items. 8570, Department of Food and Ag, item number nine, dog importation, certificates of veterinary inspection. Item number 10, livestock carcasses disposal. 0855, Gambling Control Commission. Item number 11, Information Technology Program Support. Item number 12, Tribal Nation Grant Fund. 2100, Department of Alcohol Beverage Control. Item number 13, relocation of Palm Desert District Office. And I will ask for a mo Okay we gonna take comment and then we move on those items only and then we go from there Any comments?

Item number 9 and item number 10, CDFA.

Thank you. And I just want to be a little more clear. So we're only taking comment on items number 9, 10, 11, 12, and 13. Does anyone have a comment on items 9, 10, 11, 12, or 13? Okay. Seeing none, no additional comments on these items. We will go ahead and move to ask for a motion from our vice chair on those items.

Correct.

Okay, would you mind calling the roll on those items? As to items 9, 10, 11, 12, and 13. Senators Sertaro?

Senators Nilo?

Senator Cabaldon?

Senator Smallwood-Cuevas?

We have the votes for those five items, 9, 10, 11, 12, and 13. And they are out. So we'll go ahead and go back to our items of discussion. Moving on to item number five. And if we can please start with an overview.

On the overview? Overview? What is the overview? Their overview? Oh, that was the overview. Yes. We'll go ahead and just move, proceed with agenda item number five, if that's okay with you all. And item number five pertains to Department of Cannabis Control's requested enforcement and legal affairs workload adjustment. So we're going to do a little bit of shuffling throughout this to bring in our subject matter experts. Okay, but I'll go ahead and start.

Thank you for the presentation. Does the Department of Finance wish to comment?

And do we have, does the LAO wish to comment on this?

Okay. We have quite a bit of cases, right? So those are statewide, and they're increasing by about 1,000, you said, a year. Are those majority of the cases coming from the northern part of California, northern region?

I mean, I definitely support those efforts. I just, it seems to me like that, you know, we probably have some additional concerns around the safety of the people that are in the office. and is that also taken into account with this budget ask?

I understand that, but I also understand that technology these days, and especially when it comes to organized crime, they're very much sophisticated when it comes to the type of technology that they have access to and can have get information that we you know that it I mean it seems like they just have some of those tools and information that they could maybe down the road put folks at risk So I just wanted to kind of mention that and see if you guys have taken it onto account because I would imagine that folks that are working in that office are probably from around the region.

So have we taken that into account?

Okay, so that's all taken, but you've taken that into account in regards to this budget request?

And I come from a small little town, so, yes, we pretty much know everything that's kind of going on, and who is new, who is not new. I mean, that's just how small towns work. Okay, any questions from committee?

Yes, but it's not so much the complaints filed. A good portion of our cases are actually developed based on referrals from other law enforcement agencies. In fact, the majority of our best cases are. So once we build a presence in that area, the likelihood of us receiving more cases does go up.

It's centralized. It's centralized. It's on the I-5 corridor. It allows our people to go east or west, north or south relatively easily. It tends to be kind of the hub for the North States So finding a location for an office is easier in that area and recruiting staff The further we go in one direction or the other or in any of the directions the more rural it becomes and the more difficult it will be to fill the positions that we need to Yeah, okay.

John Parsons, Department of Finance. I think this approach that we're looking at here for governor's budget involves an incremental increase, sort of a slight transition rather than throwing significantly more resources into this, knowing that enforcement is going to take more than just this, as you said. But I think the value of having a presence in the northern part of the state was a strong consideration.

Thank you for that. And also, I've been here long enough to understand the department's silence on this, and I get it. But as we look to the May revise and beyond, and there are going to be a lot of priorities for us to grapple with. But I'm raising this because it is very standard for us to think, this is a special fund. And we should unless the special fund is also in its own dire fiscal situation because of the illicit market that this requires a much more profound effort to try to tackle the foundation of the illicit market And that we and the administration should be considering, given the fact that we are likely to have one-time resources in total in the budget, without necessarily having ongoing ones, that we ought to, in addition to this proposal, be considering some sort of surge that is focused on attacking at its legs the illicit market and the structures that it depends on in order to thrive in California.

Senator Smallwood-Cuevas. Thank you, Madam Chair. So I guess my question is, can you explain how much the state is currently spending on these enforcement efforts? And is there an analysis of the outcomes of that investment in terms of closures, seizures, penalties? And are we able to measure the reduction in the illicit market overall? Also, if you could add to your responses, what is the sort of aggregate of enforcement in terms of what the state is doing, the federal is doing, local and local governments? I'll try to answer that and then tell me any areas that I missed.

And it's a rotating amount of money that's available each year for that, depending on how much is available in the tax fund. But they have accumulated a couple of years of dollars there and are currently in the middle of an RFP for $125 million to local law enforcement related to this issue. In past grant fund years, this has gone to a mixture of both public safety and public health type of initiatives. And so you've seen some community reinvestment and some investment in law enforcement. But last year, as part of the budget process and adoption of a trailer bill, the legislature did make a shift to prioritize that money for illicit market enforcement specifically. So we've spent a lot of time with BSCC this year as they've been developing that RFP to ensure that the components of the RFP transgressions really do support local law enforcement in this effort. Tell me your other parts of your question. That's general funding. The coordination piece. market. And you track that. Yes, yes. And we can provide figures on the amount of illicit product that has been seized, the amount of search warrants that have been executed as follow-up to this. So I'll speak just generally to effectiveness, but then I'd like Kevin to weigh in on this as well. So it's challenging to measure effectiveness because in law enforcement, it's often measured by statistics, but statistics don't always show you effectiveness. So we can tell you how many seizures have been conducted, how many search warrants have been executed, how many plants have been cut down from illicit farms. And that doesn't always tell you whether those plants came back the next year or months later, or months later, whether that store reopened sometimes days later. And so it's tough to measure effectiveness just from those statistics alone. This being an illicit market also makes measurement of even the size of it challenging. And so what we have even now is best estimates of what it is. I mean, by nature, it's sort of underground activity. And so one of the things that, well, two of the metrics that we've been looking closely at is one is what is the best estimate of the size of the illicit market? And last year, the department published a market report where we had an economist really look at that issue. Probably could make a lot of arguments about what factors could be considered in making that sort of estimate, but that's where they came up with the best estimate based on federal seizures and law enforcement activity and then what we know about the market of 11.8 million pounds being produced. that does not seem to be growing, but it does not seem to be getting smaller as legalization is going on. And so as we're looking at this, we should honestly be seeing increases in this activity because it is a high value for criminal organizations. It's a way that they can make a lot of money with fairly low risk, especially because of penalty reductions that have happened in this area. and we're not seeing it grow. And so what we can say is that our efforts are at least keeping it at bay. They might not be reducing it, but at least it's not growing. That's not a satisfying answer even to us of what this looks like. So that's one of the measures that we look at. And then, again, Director Kellum talked about the 40% of consumption coming from the licensed market versus the illicit market. That number started out in the high teens in 2018, grew to the low 20%, about 23%, I believe it was, and then has plateaued at 40% for the last couple of years. So we're seeing consumers, we saw some shifts to the legal market, but we're not seeing significant shift. And so what that tells us is that there still money coming from consumers into the illicit market And those figures come from both national and state survey data of Californians who are consuming cannabis and measuring their consumption And Kevin, if there's anything else you want to add. Thank you for that. And I would like to see some sort of analysis of the successes of the work that's happening in the illicit market.

I'm Clint Kellan, the director. Because we were talking about this a little bit yesterday in relation to even our licensed compliance complaints. You know, like any entity, you're always a little under-resourced in relation to the work before you. And so it's not so much a matter of being able to address all the complaints, but figuring out effectively which of those complaints merit the most attention and then driving the work there. And then also, I think, as Kevin mentioned earlier, it's really taking that information and figuring out how to make the most impactful investigations overall versus just chasing down every individual complaint that we receive. sometimes which still have a lot of information. They may be trying to mislead us, a lot of gamesmanship in that process. So the complaints is an element of showing you sort of the magnitude. I think the estimated pounds produced in the state in relation to the legal market is quite significant and kind of showing you the scale. So there's a lot of work to be done, but the complaints themselves is not something that we're sort of like chasing, like we're going to get this to zero. we're really trying to figure out how we can just be effective with the resources we have.

Questions from our vice chair?

Yes.

Yes, I think we will. I think it's going to take time. I think it's going to take effort. I think it's going to take resources, and I think it's going to take a multimodal approach. And it probably relatively infrequent that you going to hear cops say this but enforcement is only a tool in the toolbox to eliminate this problem This is going to require a whole approach to resolve this issue It going to require reducing consumer confusion It going to require ensuring that we have a strong legal market It's going to require enforcement as well. And it's going to require novel approaches at attacking the distribution cycle, making this more expensive for those that are in the illicit market, for leveraging every single type of investigation that we can, pursuing tax evasion, pursuing money laundering, pursuing the weapons charges, not just the cannabis related crimes, they're all interrelated. And this is a poly crime issue, not a cannabis issue. So because the organizations that are heavily involved in this are doing this specifically because of the money behind it, the money is the thing that we need to attack more than anything else. So can we make, will we make a measurable impact? Yes, I believe we will. But I don't think it's every step we take is an incremental additional aspect of getting there. It's going to take time and it's going to take effort and it's going to take resources. But yes, I do think we will make a measurable impact.

No, you will not see us come up here and propose to reinstitute individual crimes like that related to consumption. I think consumers don't know. So this is a situation where illicit stores often look very similar, if not identical, to legal retail stores. They don't know that they need to check if they're licensed or not. They don't know that there's a difference between licensed and unlicensed stores. They don't know that there's a difference in product. And this emergence of intoxicating hemp has only served to complicate that situation more. So you've got smoke shops, you've got online retailers promoting hemp products as being wellness products, selling them sometimes in grocery stores, sometimes in stores that they're visiting, and they think it's on the shelf and it's legal just like any other product that they see on a shelf. What we are doing on that front is we have a small amount of money. It's only a million dollars a year, so we don't expect to change every Californian's minds or be able to educate every Californian on this. But it's a consumer awareness campaign that is focused on the importance of checking to see if your store is licensed before you go.

So what we end up seeing in the difference between the legal market and the illicit market is that there is a cost difference in the illicit market. It is lower priced than the legal market. Generally, it seems like they look at what the prices are in the legal market and undercut it by 10%, 15% enough to entice a consumer in, but make the most amount of money that they possibly can. Something that was interesting for us last year was we watch some metrics related to the legal market, like the amount of sales that are occurring, the number of units that are sold, and there's been a lot of variability in the total sales amounts. But in general, we've seen the number of units sold increase over time. After the excise tax was raised from 15% to 19%, we saw one of the first drops in number of units sold. It was pretty small overall but it was it was notable that it was the first time And then when that tax rate went back to 15 percent it continued its steady increase So there is some evidence there that consumers are motivated by price

My comments arise out of the fact that the voters were presented with an impossible project. By design, that proposition was developed by people that wanted to legalize the recreational use of marijuana, and they wanted to satisfy all objections, which is why there's multiple layers of approval, and many people supported it because they figured it was going to be a bonanza of additional tax revenue. The whole thing was totally disingenuous. I was opposed to it. I voted against it. And I find myself in a very frustrating situation here in the last several years, not so much this year and last year, but in the previous two years, lots of legislation proposed to try to make the legal market functional. And I voted in favor of every one of those. And it just frustrated the heck out of me. So I come at this with a very, I'm naturally an optimist, but I come at this discussion terribly pessimistic. And in order to accomplish the sort of things that you articulated from the standpoint of enforcement, would take resources that I don't think we're willing to put to this effort, particularly given our structural deficit over the next few years and other priorities. We would have to reduce other priorities in order to fund this, by definition because of the structural deficit. We approved a legal market along with the existing existence of a very efficient and effective illegal market. And they can continue to reduce their prices. If we eliminated all burdens on the legal market, the problem is the illicit market was established far before that. They would continue to be able to undercut the legal market, and they'd just make less money. maybe the only way we could address this to go back to the voters and change what was originally approved. I'm getting a little bit off the budget side of this, but the problem is, as I said, in order to attack enforcement as you said, and you're right, it would be a multiple dimensional effort that would be hugely expensive. And I have a hard time believing that this administration, this legislature, would allocate that amount of resources given that it would have to come from someplace else. So I'm just real concerned that we've been handed an impossible mission of drawing on the title of that TV show.

I very much appreciate that and agree with Senator De Nilo on most of what he said. And we had an illicit market before Prop 64. They didn't even create it. We just didn't have a funding source earmarked. I mean, the whole market at that point was illicit in some ways, but we didn't have a funding source earmarked. And it still posed public health and public safety organized crime issues at the time. And we were grappling that like we would deal with any sort of generic crime And not every crime has a licensed community to pay for its enforcement We do it because we want to live in a safe secure free society But we have in this space now, since Prop 64 basically said, we're going to spend whatever we have in the enforcement account here, which in the enforcement account is not as big as it should be, because we have such a large illicit market. So the illicit market is winning two times, right? They're capturing far more than they should of the overall market, and then they reduce our revenues in order to fight them. And so my view is that we need to go at those organized crime systems in fundamental ways, and that we should, I agree, that we have no money to be able to do this on a long-term basis, but we have some near-term resources that we should at least be considering deploying on top of the limited resources that are being paid by the licensure fees and what have you, in order to try to tackle this problem more fundamentally and not get to the point where we're just accepting, hey, we're going to do incremental changes and hope for the best. There are too many of these areas where that's not worked out and very few examples where it has. And so I appreciate your continuing efforts to do this, but we have an obligation to see the bigger picture and to see that just like any other crime, there is a larger public interest and larger taxpayer interest in making sure that we solve it. I like that we have bipartisan agreement. And I hope they prove me wrong. I, you know, just to end with saying that I'm really impressed with all the information and just off the top of your mind, you know, providing us with detailed information about your operation, what you're doing, the needs, the drops, the increases. I don't know if I would be able to retain all that information and, you know, provide it off the top of my head during a hearing presentation, but I appreciate the work that you all do. And I think that, like my colleagues said, I agree with them in terms of, obviously, organized crime is becoming a larger issue. And it's not just with the illicit component of the cannabis side of things. I think pretty soon and very quickly, if not already, we're going to see that also with the fentanyl side of things, too. I mean, I heard not too long ago that the precursors that they bring from other countries are now, they're finding, like, a way to make those within the country. And so if that point is reached, we're going to need a lot more offices throughout all kinds of places. And again, the illicit side has always existed. And obviously, I think we're just going to continue to have these types of issues moving forward and growing. So I appreciate the work that you all do. Thank you for the presentation.

Our second budget proposal would support the department cannabis system integrations project So the department currently relies on multiple legacy IT systems to support licensing and compliance functions When the department was created in 2021, it brought together three separate regulatory programs, each using its own licensing platform. Those systems were built independently and were never designed to function as a single integrated system. We have since sunset one of those platforms, but we are still operating with two separate systems today which do not communicate with each other. As a result, businesses are entering and maintaining license information in multiple places, and staff are working across systems to piece together information. This creates fragmented data, manual workarounds to connect information, and limitations in our ability to efficiently oversee licensees and compliance activity. This proposal advances a multi-year effort to integrate those systems into a single cohesive platform. The goal is to create a system that provides end-to-end visibility across businesses operating within the cannabis market, improves data quality and accessibility, and supports more efficient licensing and compliance operations. This proposal is fundamentally about improving how the department operates. An integrated system would allow staff to make faster, more informed decisions, improve our ability to identify risks and take timely enforcement action, and reduce administrative burden for both the department and licensees. It also strengthens the department's ability to maintain the integrity of the regulated market through better oversight and coordination. So in sum, this proposal is a modernization effort. It moves us from fragmented legacy systems to an integrated platform supporting the department's regulatory responsibilities. And then we also have our acting chief deputy, Sean O'Connor, here, who most recently served as our head of our IT division. Great. Thank you.

No comments at this time. John Parsons.

Okay, so we'll go ahead and turn questions to the subcommittee. Vice Chair? Okay, I think everyone's ready for the lunch, right? Okay, we'll hold this item open and we'll go ahead and move on to item number seven.

Okay, thank you for the presentation. Does the Department of Finance wish to comment?

Okay. Okay, LAO?

Okay, questions from the subcommittee? Mr. Vice Chair?

No, that effort is really just the illicit market in general. So the first BCP, it's related to investigation of the illicit market in general. So I think there's some perception that it is targeting cultivation because the recommended office is in the north state or the requested office is in the north state. But it does not target cultivation specifically. It's really creating more infrastructure across that entire environment.

This is a, the hemp market has been somewhat unique. So in-

Sorry. If it wasn't already challenging to begin with. So in 2018, with the federal farm bill, hemp was removed from the Controlled Substances Act. And it first led to an environment where hemp was being sold very openly and mostly derivatives of hemp that were sort of what we would refer to as more synthetic versions of THC, like Delta 8 THC. But over time, as there was very little federal enforcement, that market became emboldened across the nation. This is not a California-specific challenge. And so people started taking hemp, extracting CBD, converting it to Delta-9 THC, making novel forms of cannabinoids with hemp, and sometimes calling products and calling plants hemp when they were never hemp to begin with and they were really just illicit cannabis. So what we've seen develop over time is this environment where products are called hemp, but they really, in their ultimate function for a consumer, are very similar to cannabis products. very intoxicating, and then some with bad side effects if the conversion process use were occurring. So because this is a national issue and not just a California issue, what we now see is companies that are based in other states that make these products that sell them into California. So about a year and a half ago, there was an effort within California by the Department of Public Health to adopt emergency regulations that addressed sales of hemp products within California, but we still see a significant amount of online sales from those companies, mostly, again, outside of California, selling into California. So that's the piece that is relatively new, and that is not well addressed at this point that we are trying to address.

Okay, seeing that we have no other questions at this time, we will go ahead and hold this item open and move to the next agenda item, item number eight. Thank you. Thank you so much. Then we can go to lunch. Exactly. Well, I don't know. Can we? Will I let you all? I don't know. Yeah, we still got public comment. Got a little excited there Yep I sorry Okay we could just go straight to the item Okay, great.

Thank you. Thank you for your presentation. Do we have a comment from the Department of Finance?

Okay.

Thank you for your presentation.

I believe LAO is 1,000% correct on this question. The amount of money that we've budgeted for the panel, and particularly for the members, just to be very direct, is not consonant with the near term or the long term duties. And there are many, many, many, many examples across state government where the cases are more numerous, more frequent, more novel, more complicated across a much wider range of topic areas. ABC is a, it is a simple, the Alcoholic Beverage Control Board is an example. And I take seriously this panel's contention that ABC might be simple and with a strong body of precedent. But you look at the water boards, maybe even a better example, both at the state level where the state water board members hear a variety of appeals for which they issue written decisions across a dizzying array of topic areas. Water rights appeals, water quality control permits under the state and federal law, control plans, on and on and on, meaning every single month for days in order to do that. Their compensation is the same as this board. It might be less. The regional water boards I served on one every single month for two days of dozens of hearings about sewer sewer plant appeals water quality appeals fish chemistry biology federal and state law and precedents incredibly complicated, wide-scoped, the composition. There's $250 per meeting. $180,000 per year is so out of scope for the number of appeals that this board is hearing that I think LAO's recommendation makes a lot of sense, in part because of the testimony also by the panel, which is if part of what's at stake at issue here is the development of a body of precedent, that's not a permanent task. And so the notion of spending, you know, taking the first three years as a limited term approach to do that, to start to develop that body of precedent, has some merit. I don't, the one area where I said 100%, maybe 98%, I agree with LAO, because I don't, where I would disagree is it's not the right period to benchmark what the long term is by itself. But it seems to me very clear that the long term is not a board that is earning $180,000 to hear a handful of appeals in the same domain over the long run. It's completely out of scale to the rest of state government and to equivalent appeals boards. So I would have a great deal of concern about approving the permanent allocation or an allocation at this level. I understand what the statute is here, but from the prior items, the funding in the cannabis control account, we definitely have higher priority uses for that than a million dollars a year in compensation alone, not counting benefits for the appeals board that's hearing a half a dozen optimistically appeals during this year. That's just not, that's completely out of scale to the work. And so I have significant concerns about this proposal for when it, and I hope the May revise will address them and that the administration pays attention to the very legitimate concerns and analysis that the LAO has presented here today. Mr. Vice Chair. what he said. That's why I didn't comment or question. He speaks for us, I guess, on this item. Okay, well, that wraps up this item. We'll go ahead and hold this item open, and we'll move on to public comment on items 1 through 8. Now's your time, folks. Items 1 through 8. Comment 1 through 8. Thank you so much. Good afternoon, chair and members. Rebecca Marcus of the Golden State Advocacy Group on behalf of the California Certified Organic Farmers, or CCOF, and the California Climate and Ag Network in support of items one and two. We support the governor's continued investment in farm to school and the allocation of Prop 4 funds. On behalf of CCOF, I would like to request a $15 million investment to the California Underserved and Small Producer Program, or CUSP, at CDFA. This is a crucial safety net program for farmers facing extreme conditions due to climate change. Additionally, CCOF is requesting $15 million to fund the Healthy Food Procurement Program at CDFA, as outlined in Assemblymember Wilson's AB 1731. This is an important complement to the Farm to School program to link our local food producers with our schools. Thank you. Madam Chair, Chris McKaley here on behalf of Full Will, a non-profit advocate for sustainable food. They support the $15 million request from AB 1731 by Assemblymember Wilson. We also think that this will help schools comply with last year's Assemblymember Gabriel's bill phasing out processed foods in schools. Thank you, Madam Chair. Hello again. Martin Bork, Ecology Center. Apologies for my earlier confusion. I appreciate Senator Cabaldon your questions about Market Match and the CNET program. I'm here to say on behalf of 182 organizations that we strongly support this budget proposal from Senator Becker to make this program ongoing and also to make it available at every market throughout the state. It's a 10-year-old program and it's proven success and every dollar spent on fresh fruits and vegetables is matched at farmers markets. It goes right into the pockets of small underserved farmers. Thank you. Good afternoon. Thanks for the opportunity to speak. My name is Josh Osink with Urban Village. We operate 10 farmers markets around the Bay. I'm here to speak in favor of support of CNIP, funding the market management program. There's a few measures floating around right now to address hunger. I know that you've got to pick and choose. This one really stands apart. One, it pulls down federal money. It's clear, confused from earlier. The farm bill that's currently moving through the federal legislature has GusNIP funding intact, and it's really important that we bring those federal dollars down. The state of California missed one of the RFPs in 24 because the state didn't have the funds allocated on time. So this budget cycle is really, really important. $25 million distributed last year went in the pockets of 1,000 small farmers. Madam Chair, almost half of that money went back to Fresno and Tulare. So you Your county's represented huge in receiving that money. That money in small farmers' pockets has a three to one economic multiplier effect in those rural economies. So we're really getting a lot of bang for our buck here. With Market Match, every dollar spent is food on someone's table and gas in a farmer's tank. Thanks so much. Hi, I'm Alma Wilcox, speaking on behalf of Alchemist Community Development Corporation, a Sacramento-based nonprofit about the funding request for the California Nutrition Incentive Program, which funds Market Match. I manage our CalFresh at Farmers Markets and Market Match program and see every week the difference that these programs make to California's small farms and food insecure customers. Market Match helps households buy fresh fruits and veggies directly from certified local growers, and since 2020, Market Match usage has grown two and a half times over. And in just 2025, we directly facilitated $1.7 million in CalFresh and Market Match transactions at just nine Sacramento County farmers markets. With current CNET funding, only 40% of the farmers markets statewide can offer Market Match. And we don't just want this program to continue, but to have the resources to support more California farmers and more hungry families. For these reasons, I support the full budget request. Thank you. Thank you, Madam Chair. Good afternoon. Darby Kernan on behalf of Public Health Institute and their program Roots of Change. We want to thank Senator Cabaldon for his comments earlier about the importance of Market Match program I like to align my comments with our colleagues in support of the CNIP which supports Market Match and the need for additional funding to maintain the program Thank you Good afternoon, Madam Chair and members. Taylor Truffaut on behalf of a variety of agricultural associations. We'd like to comment on item three. We really appreciate the questions and the thoughtful discussion about vacancy eliminations. Having an appropriately staffed CDFA is essential for food safety, pest and disease, animal health, and ultimately national food security. Some of these positions proposed for elimination are in rural areas. They serve very specific needs of the farming population so they're difficult to fill but that doesn't make them any less important. Many of the positions are also funded through special funds not general funds so the state is not going to see a savings as a part of this and ultimately the farm community is continuing to assess themselves. So the the revenue is going to continue to come into the state but we will not be able to finance an actual position. That becomes a problem and so considering that we're requesting you reject item three at an appropriate time. Thank you. Hi, I'm Gail Delhant with Western Growers, and to use Senator Nilo's words, what she said. Hi, Elise Landman here on behalf of Dairy Institute commenting on item three. We are concerned on the impact these position cuts would have on CDFA's rapid response systems that protect livestock from threats such as avian influenza and other contagious pathogenic viruses. Rapid response systems are crucial to protecting livestock in keeping the supply of milk flowing to dairy processors. Thank you. Good afternoon, Chair and members. My name is Yamile Perez-Aragon. I'm with Community Alliance with Family Farmers, or CAF. We represent over 8,000 small and underserved farmers across California. I'm here to urge this committee and the Senate to fund two vital safety net programs for our small farmer community. First, the Local Food Purchase Assistance Program, or LFPA. It is a unique program that builds bridges between small farms and food banks across California. It provides a stable market to small farmers, and it feeds families. Unfortunately, we're seeing over $100 million in federal cuts to institutional procurement programs, including LFPA. So the state must step up and resource this lifeline. We respectfully request $45 million in state investment to keep this bridge and keep this program going. Second, the California Underserved and Small Producer Program, or CUSP. This is the state's only climate disaster safety net for small and underserved farmers. To date, CUSP has delivered over $24 million in direct emergency relief. It helped more than 1,600 farmers during the drought alone, and 75% of those funds reached the smallest, most vulnerable farmers. We need a $15 million allocation from GGRF or general funds to keep this program ready for the next disaster. Finally, we support $14.8 million in Prop 4 investments for equipment sharing. Thank you. Hello. Thank you, Madam Chair. My name is Acacia Lynch, and I work with Fresh Approach, which, alongside CAF and the California Association of Food Banks, works to administer the LFPA program. This is an incredible program that puts local farmers first. We support over 850 local farms, 45 food hubs and aggregators, as well as distributing this to over 50 food banks and distribution sites. This program touches every corner of California. And with that, we are respectfully requesting $45 million to continue to care for California and have a program that supports multiple solutions against these multiple cuts that we're facing. Thank you. Hello, my name is Jacob Weiss. I'm the general manager of Spork Food Hub and Fiery Ginger Farm, which is a produce distributor owned by farmers in West Sacramento. Yeah, you're probably familiar. And also in Davis. We work with over 100 farmers across the entire state serving food banks through the LFPA program as well as the state correctional system and school districts The impact of the funding from LFPA is incredible I can give countless stories of farmers who are beginning farmers and trying to enter this through their own version of the American dream, and this is a lifeline. This is a first step so that in 30 years we have farms in California. We lose almost 5,000 farms every time they do the ag census in the state. And, you know, the stories that we hear from our farmers of being able to purchase additional land to grow food for food banks and school districts. We have a farmer in Gwenda, Yanez Farm, who purchased land last year and is now growing food. We have a farmer in Salinas, California, who leased an additional 10 acres to grow food for this program and school districts and prisons. We have a farmer in Madera, California, who grows mandarins for the food banks, for the state prisons, for school districts. And these are real people and real money. So I think viewing LFPA and the funding for CDFA's Farm to School Program as investments is a really important way to view how this can help propel California forward in the future. So thank you for your consideration. Good afternoon. My name is Mireya Gomez-Contreras. I'm the executive director and operator of Esperanza Community Farms and Esperanza Food Hub. We have been participating in the LFPA program in three counties, Monterey, Santa Cruz, and San Benito counties. In the last year and a half, we've started working with 30 growers, former farm workers who are now operating their own business. So if you can imagine those 30 growers behind me and their kids, and the money that's been going into their pocket for them to be able to grow their acreage, double it in some cases, 10 to 20. the bills that they've been able to pay in the winter time when in the past years they've not been able to have that kind of economic stability and on the other end the 300 member families who receive a box of all 100% organic very fresh produce those are the families that are going to be losing their basket and they've been receiving it for well over 16 months and it truly has been a lifeline for them And the thing that I'm really excited about is that we've been able to pair this with the specialty crop block grant to be able to provide technical assistance to the same growers. And we've connected them to schools so that the impact that this LFPA program funding is having is going to, it's establishing a network of growers that are collaborating to pull their produce to deliver to school districts. And before that, they weren't able to. And so we do need more time, so I support the $45 million that we're requesting out of the general fund. Thank you. Hi, good afternoon. My name is Jenna Muller. I'm from Full Belly Farm in Western Yolo County. We're a certified organic, diversified farm. We employ over 80 people year-round. And I'm also here to urge you to fund the $45 million request for LFPA. I probably don't need to tell you, but, you know, farming is a difficult profession even in the best of times, and we're not in the best of times. We're facing very uncertain weather challenges, water challenges, rapidly rising prices. And so this program provides us with a mechanism to get our food onto the tables of folks who may otherwise not have access to high quality, healthy, organic produce. So for our farm alone, these dollars have purchased over $230,000 worth of produce that's gone to food banks, which is really amazing. And that for us is a really impactful amount of money that we can then invest in our soil our workforce our communities and it benefits all of Californians who really deserve access to really healthy produce Yeah, so it really will help us weather these uncertain times, and we would appreciate and urge you to fund the $45 million request. Thank you. Good afternoon, Chair members. My name is Shira Spector. I'm here on behalf of Fenton Strategies for the Office of Cat Taylor, Tomcat Ranch LLC, and more than 225 members of the School Meals for All Coalition. On item one, in strong support of the governor's proposal for $25.2 million in ongoing funding for the Office of Farm to Fork and the Farm to School Incubator Grant Program. The program is helping to realize the full potential of California's School Meals for All program by reducing barriers for schools to serve freshly prepared, locally grown, and sustainably produced school meals. I'm also here to urge the state to provide bridge funding to Save the Farms Together, the LFPA program, and keep the California Underserved and Small Producers program funded. Federal cuts threaten over $100 million in farm institution programs, and without this $45 million state bridge, these partnerships will collapse just as SNAP is cutting. SNAP cuts are increasing demands on food banks. CUSP provides over $24.5 million in direct relief to 1,652 farmers during drought and extreme weather events, with 72 to 76% of funds going to small and underserved farmers. We respectfully request $45 million to save farms together and $15 million to sustain CUSP. Thank you. Hello, Chair and members. My name is Oscar Sandoval. I'm the policy manager with the Center for Healthy Communities, and it's always nice to see other Central Valley people here. So thank you, Chair Urtalo. Our organization is primarily known for our SNAP and WIC advocacy work with our state's public colleges. However, we're here today to speak in favor of Market Match and CNIP. We also do a lot of work, since we're housed at Chico State, within the Butte County area to make farmers markets more accessible. In 2025 alone, we did $136,000 in CalFresh benefits redeemed at farmers markets. We also helped with $133,000 in market match incentives that local residents spent on Butte County farmers markets. We also helped with $269,000 that went directly into farmers' pockets. And this was a total of $399,000 in terms of total economic benefit and impact at Butte County. So obviously we're in strong support of these programs being funded statewide and just being funded in general. So we thank you for your time today and look forward to continuing to work with you. Hi, good afternoon. My name is Kang Vang. Oops. Okay. I'm the owner and founder of Fresno BIPOC Produce Inc., a food hub in Fresno, and I work with and have helped over 200 small farmers. And I'm here today to urge you to increase and continue funding for LFPA and CUS programs. These programs are critical lifelines for our small and underserved farmers. They have helped them not only to survive, but to grow as a business. I've seen firsthand through these two programs farmers were able to invest in their businesses, for example, buying new and buying more supplies. So investing in LFPA and CUS is not just to support the small farmers. It is investment in equity, food security, and building resilient local food systems and economies. So I ask you again to prioritize and expand these programs for our small farmers. Thank you. Hi, my name is Jesus Castellano. I'm farming stone fruit and grapes in Dinuba. And I like that farmers together stay on because we have a lot of fruit still there in the trees. And we need to move because we short money and see what it can do. Because the pumps dry too and it's a lot of money to make new pumps. And we need quite a bit of money. Thank you. Hello, my name is Ryan Gosser. I'm a farmer and I'm also an owner and producer of a food hub in Sonoma County called Feed. It represents 35 to 40 local producers. Most of them are organic. And we definitely have seen the impact of the lack of funding for the local food purchase assistance program. I'm in here to encourage, to help bridge the $45 million, to help. The co-op itself provides fresh, organic, local produce for those who are in need of healthy and enjoyable food. So there's nothing better than when you're sharing your love and your passion with the community and getting to see the smile on their face when they're enjoying the product that you spend so much of your time growing, managing, and working with the earth for the people. So thank you for your time. Hello, good afternoon. My name is Maddie Rohner, and I'm the general manager of the Tahoe Food Hub. We're located in Truckee, California, in Nevada County. I'm also here to urge funding for LFPA. Just in our small corner of the state, this program has allowed us to support 34 different small farms in eight different counties, as well as feed over 700 different families in the Truckee and North Lake Tahoe area. The program helped bridge the gap for farmers during the slower winter season and also provided much-needed food for folks. After we had a subpar winter very long shoulder seasons and a lot of people were struggling financially as well as being impacted by federal snap cuts This program is incredibly impactful keeping dollars within the community allowing farmers to invest in their infrastructure and staff as well as feeding people this amazing high quality produce that they deserve. And it's also been incredibly impactful for us as a food hub to be able to expand our operations, to be able to hire new staff, to be able to procure produce at a lower cost for school districts as well through bulk ordering. So I highly encourage you guys to include the $45 million. Thank you. Good afternoon. I'm Andrea Chu, general manager of the Natural Trading Company in Newcastle. We're an organic farm growing vegetables and fruit on 40 acres, and we're one of the many small family farms in Placer County that have been farming for generations. We're proud to work with Maddie at the Tahoe Fuda. and be one of the farms that supply them food. LFPA-funded purchases from partners like Sierra Community House Pantry have been a lifeline for our farm and our community. They've helped offset losses from years of economic uncertainty, and it's allowed us to create stable year-round jobs and keep fresh organic food flowing to those who need it most. So I urge you to fund LFPA in this year's budget and to fund the $45 million request. so that small farms like ours can continue their longtime farming traditions and continue to feed their communities. Thank you. Hello, I'm Helen Dodd representing Farm to People, a Los Angeles food justice nonprofit in Senator Smallwood Cuevas' district. We're requesting $45 million in general funding to save LFPA. Since 2023, we've been paired with the second largest food bank in the nation. And with that scale of demand, we've worked with over 80 local farm partners, some of whose farms were saved by LFPA. For example, Mariella in Riverside extended the lease on her family's farmland. And Dave, also in Riverside, was able to stabilize an even crop plan, all because LFPA provided guaranteed market access. Simultaneously, Farm to People facilitated the flow of just harvested whole fruits and vegetables to mothers, kids, and families in L.A. struggling to make ends meet. Overall, LFPA's impact is clear from the eight million pounds of fresh food distributed throughout Los Angeles. Thank you for considering this critical food access initiative. Good afternoon, Chair and members. My name is Beth Smoker. I the policy director with the California Food and Farming Network And I here in support of not I do support LFPA and CUSP and CNIP and Farm to School but a little break in the testimony you been giving I going to speak in support of the million for CDFA Tribal Food Sovereignty Program and Prop 4 California has the largest Native American population in the nation, with over 154 recognized and unrecognized tribes. Tribal communities were forcibly displaced by our government to remote locations with little access to grocery stores and limited land to harvest from, resulting in deep food insecurity, serious public health consequences, and the erosion of land tenure. This program would be CDFA's first designated program specifically for tribes in its 107-year history. It's time. By investing in indigenous-led solutions rooted in centuries of traditional ecological knowledge, this program will build climate resilience and food security, not just for tribal communities, but for all Californians facing climate crisis. Thank you. Good afternoon. Josh Wright with the California Association of Food Banks. We want to voice our support for the LFPA. The LFPA greatly increases food banks' ability to access varied and high-quality produce like strawberries, mushrooms, and avocados. Our clients report to us that the foods from the LFPA improved longstanding health issues and their quality of life. And we also want to voice our continued support for full funding for the Farm to School program. We are proud to support these programs which help California's farmers provide school education and enable our food banks to better serve their communities. Thank you. Good afternoon, Chair and members. Abby Helperin from the Center for Ecoliteracy. I was in support of ongoing funding for Farm to School. I was going to talk about the blueberry farmer in the Central Valley that was saved by this program, about the food hub in Sacramento that grew from serving four districts to over 40, and about how LAUSD doubled its local procurement to over $4.7 million from local farmers. But instead, I want to also address some of the specific concerns that you all raised in conversation today. Equity was a big theme I heard in your conversations, and it's been built into the design of the program. In the scoring rubric for last year's grant, 25 to 35% of the points were directly based on the community need, ensuring that this program targets the schools and farmers who need it most, and it's working. 80% of the schools served are Title I, and 100% of the farmers in last year's grant are prioritized food producers. On evaluation, the comments you raised, this program has been extensively evaluated and the results show that it hitting or exceeding many of the metrics outlined in the Farm to School Roadmap And on systems change Farm to School is not about just one issue It supporting our families our farmers students their education and their health And in a tight budget year, we should prioritize programs like Farm to School that have multiple benefits and are making the most of the state's incredible leadership on child nutrition programs. Thank you so much. Good afternoon, Chair and members. Sarah Brennan from the Weidemann Group on behalf of NextGen California in support of the $25.2 million in ongoing funding for the Office of Farm to Fork and the Farm to School Incubator Grant Program as proposed in the Governor's January budget. Farm to School prioritizes students in underserved communities, ensuring that those who rely on school meals have access to fresh and healthy food, and it's working. In 2024, 80% of participating schools were Title I. Because of lack of access to healthy foods in most acute and low-income communities and communities of color, this program plays a key role in addressing longstanding inequities while helping schools move away from heat-and-serve model and more towards freshly prepared, nutritious meals. By investing in farm-to-school, California is helping ensure all students have the healthy food they need to learn and thrive. NextGen also supports establishing a permanent ongoing appropriation for the California Nutrition Incentive Program, enabling all certified farmers markets to match cow fresh spending on fruits and vegetables and expand access to the nutrition incentives for WIC participants and seniors, making healthy California-grown food more affordable in communities that need it the most. Thank you. or comments we have for today on the agenda items. That concludes our hearing for today's agenda. So the Senate Budget 724 is now approved. Thank you.