Existing law, the federal Telecommunications Act of 1996, establishes a program of cooperative federalism for the regulation of telecommunications to attain the goal of local competition, while implementing specific, predictable, and sufficient federal and state mechanisms to preserve and advance universal service, consistent with certain universal service principles. The federal universal service principles include the principle that elementary and secondary schools and classrooms, health care providers, and libraries should have access to advanced telecommunications services. The act authorizes each state to adopt regulations to provide for additional definitions and standards to preserve and advance universal service within the state, only to the extent that they adopt additional specific, predictable, and sufficient mechanisms that do not rely on or burden federal universal service support mechanisms.

Existing law requires the Public Utilities Commission to develop and implement a program funded by the California Teleconnect Fund Administrative Committee Fund to advance universal service by providing discounted rates to qualifying schools maintaining kindergarten or any of grades 1 to 12, inclusive, community colleges, libraries, hospitals, health clinics, and community organizations.

This bill would require the commission to include auxiliary organizations of the California State University University, as defined, in the program funded by the California Teleconnect Fund Administrative Committee Fund.

Existing law, the federal Telecommunications Act of 1996, establishes a program of cooperative federalism for the regulation of telecommunications to attain the goal of local competition, while implementing specific, predictable, and sufficient federal and state mechanisms to preserve and advance universal service, consistent with certain universal service principles. The federal universal service principles include the principle that elementary and secondary schools and classrooms, health care providers, and libraries should have access to advanced telecommunications services. The act authorizes each state to adopt regulations to provide for additional definitions and standards to preserve and advance universal service within the state, only to the extent that they adopt additional specific, predictable, and sufficient mechanisms that do not rely on or burden federal universal service support mechanisms.

Existing law requires the Public Utilities Commission to develop and implement a program funded by the California Teleconnect Fund Administrative Committee Fund to advance universal service by providing discounted rates to qualifying schools maintaining kindergarten or any of grades 1 to 12, inclusive, community colleges, libraries, hospitals, health clinics, and community organizations.

This bill would require the commission to include auxiliary organizations of the California State University in the program funded by the California Teleconnect Fund Administrative Committee Fund.

Date of Hearing: May 13, 2015

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Jimmy Gomez, Chair

ABPCA Bill Id:AB 1503

Author:(Perea) – As Amended Ver:April 30, 2015

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill requires the Public Utilities Commission (PUC) to include auxiliary organizations of the California State University (CSU) system in the California Teleconnect Fund discount program.

FISCAL EFFECT:

1. Increased expenditures for local assistance to CSU auxiliaries potentially in the $5 million to $20 million annual range (CTF).

As an example, there are a total of 93 California State University Auxiliaries on 24 campuses. The CSU, Fresno (CSUF) auxiliary was denied a reported $217,000 discount. If one auxiliary at each campus qualified for a $200,000 discount, annual costs would be $4.8 million. If each of the 93 auxiliaries qualified for a $200,000 discount, annual costs would be $18.6 million.

This program is funded through a surcharge on all intrastate communications services. According to the PUC, to ensure sufficient revenues and a positive fund balance, the CTF surcharge would likely increase between 0.1% to 0.25%. The CTF surcharge will increase from .93% to 1.08% effective on June 1, 2015.

2. One-time administrative costs of approximately $250,000 for PUC to establish a framework for the eligibility criteria for CSU auxiliaries in a new proceeding or revise the existing CTF proceeding (CTF).

COMMENTS:

1. Rationale. The CSU Fresno Association, Inc., a nonprofit auxiliary association of CSUF, operates the college bookstore, campus housing, and the athletic facility. Last year, the association applied for a $217,000 discount from the CA Teleconnect Fund for telecommunications and internet access services, but was deemed ineligible.

According to the author, when non-profit auxiliaries need to spend more financial resources on these telecommunications and internet services, they either have fewer financial resources available to give back to other student programs or they cannot offer communications services at the same or sufficient level.

This bill allows auxiliary associations of California State Universities to qualify for communications discounts under the program.

2. Background. The CTF was created by the CPUC in 1996, under to foster the development of a telecommunications infrastructure for California and reduce the digital divide. The program is funded by a surcharge on all end users of intrastate telecommunications services.

The program provides a 50% discount on select telecommunications and Internet access services to qualifying entities. Qualifying entities include K-12 schools, community colleges, libraries, municipal, county government, district-owned and operated hospitals, health networks and clinics, and non-profit community based organizations. Communication services eligible for the 50% discount include T1 and T3 lines (fiber optics), cable internet, digital subscriber lines (DSL), wireless internet, and dial-up.

3. Current CTF Proceeding. In January 2013, the CPUC issued a Rulemaking (13-01-010) to determine whether the CTF is meeting its statutory goals, and whether the CTF’s current structure and administrative processes are adequate to further the program’s goals. Among other things, the rulemaking seeks to regularly review the CTF to ensure that the programs' subsidies flow to its intended recipients. A proposed proposed decision in this proceeding is out for comment and eligible for a vote at the May 21, 2015 PUC meeting.

4. CSU Auxiliary Organizations. CSU auxiliary organizations are non-profit organizations that operate pursuant to written agreements with the CSU Board of Trustees. They have separate governing boards with close campus linkages and follow all legal and policy rules established by the CSU system and campus administration. Auxiliary organizations perform essential functions associated with the institution that complement the core academic programs at each campus. CSU auxiliary organizations are generally classified into one or more of the following functions: student self-governance, student body center/union/recreation center; externally-supported research and sponsored programs, including workshops, institutes or conferences; commercial services, such as book stores or food service; or Philanthropic activities, including acceptance of donor gifts. This bill would include CSU auxiliary organizations as qualifying entities that may apply for the discount under the CTF.

Analysis Prepared by: Jennifer Galehouse / APPR. / (916) 319-2081

Date of Hearing: April 27, 2015

ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE

Anthony Rendon, Chair

ABPCA Bill Id:AB 1503

Author:(Perea) – As Introduced Ver:February 27, 2015

SUBJECT: Telecommunications universal service programs: teleconnect fund

SUMMARY: This bill would include auxiliary organizations of the California State University (CSU) in the program funded by the California Teleconnect Fund (CTF) Administrative Committee Fund. Specifically, this bill:

1. Requires the California Public Utilities Commission (CPUC) to include auxiliary organizations of the CSU in the program funded by the California Teleconnect Fund Administrative Committee Fund.

EXISTING LAW:

1. Establishes the CTF under the CPUC to advance universal service by providing discounted rates to qualifying schools maintaining kindergarten or any grades 1 to 12, inclusive, community colleges, libraries, hospitals, health clinics, and community organizations. (Public Utilities Code Section 280)

2. Establishes the CTF Administrative Committee, to advise the CPUC regarding the development, implementation, and admiration of the program to advance universal service to qualifying entities. (Public Utilities Code Section 280)

FISCAL EFFECT: Unknown.

COMMENTS:

1. Author’s Statement: “Ensuring auxiliary organizations that serve our CSU system have access to affordable and reliable communication services care are critically important. Their success ensures students receive the services and experiences they deserve in their college careers. My Alma Matter’s auxiliary association, CSU Fresno Association, Inc., applied for a CA Teleconnect Fund program discount last year as a non-profit community organization. They provide services essential to the college experience such as operating the college bookstore, campus housing and the athletic facility. Unfortunately, they were deemed ineligible and will have to pay an additional $217,000 for communications services. When these small non-profit auxiliaries need to spend more financial resources on these services, they have fewer financial resources available to give back to other student programs or they cannot offer communications services at the same or sufficient level.”

2. Background: The CTF was created by the CPUC in 1996, under Decision 96-10-066, to foster the development of a telecommunications infrastructure for California and reduce the digital divide. The program provides a 50% discount on select telecommunications and Internet access services to qualifying entities. Qualifying entities include K-12 schools, libraries, municipal, county government, district-owned and operated hospitals and health clinics, and non-profit community based organizations. The program is funded by a surcharge on all end users of intrastate telecommunications services. Communication services eligible for the 50% discount include T1 and T3 lines, cable internet, digital subscriber lines (DSL), wireless internet, and dial-up.

In 2006, the CPUC issued Decision 08-06-020, which further expanded the CTF to include, among other things, the California community colleges and California Telehealth Network as qualifying entities that may apply for the discount. The CPUC believed that extending the CTF to community colleges meets the statutory goals of CTF as increasing access to advanced telecommunications technology will help community colleges to better train and service their students and bridge the digital divide in communities’ service by such community colleges, especially for low income students. In January 2013, the CPUC issued a Rulemaking (13-01-010) to determine whether the CTF is meeting its statutory goals, and whether the CTF’s current structure and administrative processes are adequate to further the program’s goals. Among other things, the rulemaking seeks to regularly review the CTF to ensure that the programs subsidies flow to its intended recipients.

3. CSU Auxiliary Organizations: CSU auxiliary organizations are non-profit organizations that operate pursuant to written agreements with the CSU Board of Trustees. They have separate governing boards with close campus linkages and follow all legal and policy rules established by the CSU system and campus administration. Auxiliary organizations perform essential functions associated with the institution that complement the core academic programs at each campus. CSU auxiliary organizations are generally classified into one or more of the following functions, student self-governance, student body center/union/recreation center, externally-supported research and sponsored programs, including workshops, institutes or conferences, commercial services, such as book stores or food service, or Philanthropic activities, including acceptance of donor gifts. This bill would include CSU auxiliary organizations as qualifying entities that may apply for the discount under the CTF.

The author may wish to consider an amendment to limit the types of facilities to ensure that eligible organizations are limited to those which provide on-campus, student related services.

4. Suggested Amendments:

280. (a) For purposes of this section, "auxiliary organization" means non-profit organizations, physically located on a California State University campus, that administers bookstores, housing or dining.  

(b) The commission shall develop, implement, and administer a program to advance universal service by providing discounted rates to qualifying schools maintaining kindergarten or any of grades 1 to 12, inclusive, community colleges, libraries, hospitals, health clinics, community organizations, and auxiliary organizations of the California State University,  consistent with Chapter 278 of the Statutes of 1994.

(b)  (c) There is hereby created the California Teleconnect Fund Administrative Committee, which is an advisory board to advise the commission regarding the development, implementation, and administration of a program to advance universal service by providing discounted rates to qualifying schools maintaining kindergarten or any of grades 1 to 12, inclusive, community colleges, libraries, hospitals, health clinics, community organizations, and auxiliary organizations of the California State University,  consistent with Chapter 278 of the Statutes of 1994, and to carry out the program pursuant to the commission’s direction, control, and approval.

(c) (d) All revenues collected by telephone corporations in rates authorized by the commission to fund the program specified in subdivision (a) shall be submitted to the commission pursuant to a schedule established by the commission. The commission shall transfer the moneys received to the Controller for deposit in the California Teleconnect Fund Administrative Committee Fund. All interest earned by moneys in the fund shall be deposited in the fund.

(d) (e) Moneys appropriated from the California Teleconnect Fund Administrative Committee Fund to the commission shall be utilized exclusively by the commission for the program specified in subdivision (a), including all costs of the board and the commission associated with the administration and oversight of the program and the fund.

(e) (f) Moneys loaned from the California Teleconnect Fund Administrative Committee Fund in the Budget Act of 2003 are subject to Section 16320 of the Government Code. If the commission determines a need for moneys in the California Teleconnect Fund Administrative Committee Fund, the commission shall notify the Director of Finance of the need, as specified in Section 16320 of the Government Code. The commission shall  not increase the rates authorized by the commission to fund the program specified in subdivision (b) while moneys loaned from the California Teleconnect Fund Administrative Committee Fund in the Budget Act of 2003 are outstanding unless both of the following conditions are satisfied:

(1) The Director of Finance, after making a determination pursuant to subdivision (b) of Section 16320 of the Government Code, does not order repayment of all or a portion of any loan from the California Teleconnect Fund Administrative Committee Fund within 30 days of notification by the commission of the need for the moneys.

(2) The commission notifies the Director of Finance and the Chairperson of the Joint Legislative Budget Committee in writing that it intends to increase the rates authorized by the commission to fund the program specified in subdivision (a). The notification required pursuant to this paragraph shall be made 30 days in advance of the intended rate increase.

(f) Subdivision (e) shall become inoperative upon full repayment or discharge of all moneys loaned from the California Teleconnect Fund Administrative Committee Fund in the Budget Act of 2003.

1. Arguments in Opposition: According to The Utility and Reform Network (TURN), “TURN is […] concerned that expanding CTF to include all CSU campuses will necessitate an increase on the surcharge for ratepayers. The CTF budget grew from $60 million in FY 2009-10 to approximately $108 million in FY 2014-15 and the FY 2015-16 budget increased to $148 million, 37% above the previous year. The CTF program has been an important tool for helping bridge the digital divide. Given that the funding for CTF is from ratepayers, it is imperative that the Commission and legislature takes steps to ensure these funds are well-managed, well spent and achieve the goals for which they were intended.”

REGISTERED SUPPORT / OPPOSITION:

Support

None on file.

Opposition

The Utility Reform Network (TURN)

Analysis Prepared by: Edmond Cheung / U. & C. / (916) 319-2083