Senate Budget and Fiscal Review Subcommittee No. 1 on Education

Senate Budget Subcommittee #1 on education will come to order. A few housekeeping things: the Senate continues to welcome the public in person and via the teleconference service for individuals wishing to provide public comment. Today's participant number is 877-226-8216. It's shown on the screen, and the access code is 621-7161. We're holding our Committee hearings in the O Street building. I ask all members to be present. When we have a quorum, I will call. I'm joined by Senator Smallwood-Cuevas.

Now, the subject of today's hearing is the fact that on May 12, the governor released his May revision to the January budget. Today's hearing is informational, no expected votes to be taken, and is an overview of the Governor's May revision proposals for pre-K through 12 and higher education. We'll first discuss higher education issues in Part A and then cover pre-K through 12 issues in Part B. We'll take public comment after both Part A and Part B are done.

So no public comment until after we're done with Part B. And this covers, in many ways, the changes that might have been made or updated since the January 10 budget. And we want to make sure we hear them. We want to make sure we hear from, in particular the Department of Finance, some of the interested parties, and the Legislative Analyst, and then take public comment.

We just have the bulk of this morning for the hearing, so if it starts to bog down, I will try to move us through with that. We will move to the first item in Part A, which is the University of California and CSU and the Community college system on student housing. And our witnesses will be Michelle Nguyen from the Department of Finance and Jennifer Pacella from the Legislative Analyst Office. So, welcome to the Committee, and whenever you're ready, Ms. Nguyen, go for it.

Good morning, Mr. Chair and members. Michelle Nguyen with the Department of Finance. For the Higher Education Student Housing Grant program, the May Revision proposes structural changes to this program as part of the $31.5 billion solutions package proposed at the May Revision. The May Revision proposes to shift the current and planned general fund support of approximately 1.1 billion for both the UC and the CSU under this program, to now be funded by UC and CSU bonds, rather than be funded with upfront general fund support.

In addition, the May Revision also proposes 75 million ongoing general fund to support the underlying debt service of these bonds. Of this proposed 75 million, 30 million is proposed for the UC projects and 45 million is proposed for the CSU projects. Under this proposal, the UC and CSU projects funded by bond financing would still be expected to adhere to all the statutory requirements of this program, including committing to the number of beds in their submitted grant applications and meeting statutory rent levels.

Further, we would not expect that this shift in funding mechanism would affect the timeline of the projects that are funded by this program for the community colleges. Their share and the structure of this program remains unchanged. The May Revision proposes 450,000,000 one-time general fund for 2023, 24 and 95.41,000,000 one-time general fund for 2024, 25 for affordable student housing at the community colleges.

For the Student Housing Revolving Loan program, the May Revision proposes no changes beyond what was proposed at the governor's budget. Though the May Revision proposes to shift the general fund support for UC and CSU projects to bond financing, the May Revision maintains the overall funding commitment for the student housing grant program, and the administration continues to recognize the importance of affordable student housing, but proposes to take these actions given the overall budget architecture of the May Revision. With that, thank you. Happy to address any questions that you might have.

Thank you very much. Now we'll go to the legislative analyst.

Jennifer Pacella, Legislative Analyst Office. So the student housing projects before you are part of a larger package of UC and CSU capital projects that the governor is proposing to convert to borrowing. That total package is 2.1 billion. You just heard Finance share the housing component, the 1.1 billion associated with the 75 million in ongoing debt service. As you've been talking about throughout the season, we think debt financing is a reasonable way to cover construction costs.

It spreads the cost out over the life of the facility. Borrowing comes with interest costs. In nominal terms, it doubles the cost once you take into account the inflationary effects. Over time, it increases project costs about 1.4 times. Given the benefits of debt financing, you might still want to put some University construction projects borrow for them. We recommend whatever projects you select be high state priorities, have strong justification, such as life safety.

Both segments, as you've heard about, have billions of dollars in deferred maintenance, seismic safety, and other life safety projects on their existing academic buildings. If you want to convert some of the housing projects to debt, one option would be for you to take debt on for all the existing projects that the state has already approved. The bulk of the projects for UC and CSU have already been approved.

So of that, 75 million in debt service under the May Revision, this would just bring down your debt service cost to 60 million. But it's a slightly more prudent approach. You could revisit the other projects again once the state budget situation improves. The May Revision, in contrast to the University projects, which are converted to borrowing, just leaves, as you heard, the college projects funded with cash, delays a little bit of that cash, about 20% to budget year plus one.

For the community college projects, we recommend not doing any projects at this time revisiting down the road. They're in early project phases. And with the college projects in particular, it's unclear whether providing more on-campus housing for campuses that currently don't have any housing is a more cost-effective approach than just supporting more community housing development, more traditional housing vouchers, or more traditional student financial aid that's intended to help students with their housing costs.

Given this is the first issue on the agenda, just to maybe save you some time as you work through the rest of your agenda, I just wanted to suggest two big-picture issues you might want to keep in mind. One is you've probably heard about the LAO revenues. We came out with some information yesterday. When you look at our office's combined personal income, corporate, and sales tax revenues, we're 11 billion below the May Revision. So we think that May Revision revenues are optimistic.

If revenues were to come down lower, you would need more budget solution. Your budget choices would be more difficult. And lastly, because of the weakening of the state revenues, we recommend you reject all May Revision new spending proposals without prejudice. Any new spending proposal puts your ongoing core programs just at somewhat greater risk of reductions down the road. We would recommend you apply this high threshold for new spending across the 98 and the non-98 sides of your budget. Thank you.

Thank you very much. I have a few questions, and in some ways, one of them is a follow-up to our last hearing on this subject. And I was just going to ask. Well, first I should just make a statement that with the community college, we had this discussion last time and the choice is not sort of vouchers and other things, particularly in my district where there's one big project, there's not adequate housing giving vouchers.

There's Section Eight vouchers where people can't find housing in the area. So there's not housing resources for people that are struggling. And a 600-unit project actually provides the housing that doesn't exist for vouchers. So at least for some places, that I don't think is a viable alternative. And my question first was going to be about the intersegmental projects. There were three and one of them, UC, was doing bonds.

So that it wasn't really subject to sort of the priorities in the pots, but the other two were subject to the priorities in the pots. And do we know with this funding everything that was in the appropriate amount? Are those both in the funding level for both pots or are the two intersegmental ones left still struggling and start maybe with the Lao?

So if you wanted to move forward, there's enough money for UC to do one more project and you're funding under the May revision, all of the community college May Revision projects. So there is a bit of a disconnect right now. You would presumably select the remaining UC project you wanted. You could select an inter-segmental project. Right now, if you approve the May Revision, that money corresponding on the college side would already be there. But there wouldn't be enough money on the UC side to do the other inter-segmental projects, the other two that you mentioned. So you might just in your final budget actions want to make sure you're taking conforming actions with UC and CSU. Right now they're not really conforming.

And to go back to another point that came up in the previous hearing, we would have to be explicit in budget trailer bill language in some way to link the two together. Right?

Yeah, you can do that through either your budget bill or your trailer bill. But yes, you can be explicit.

And for those of you following at home, the finance person nodded. It was inaudible, but she nodded. So that's good and I think that's something we would want to do. Before I get to my other question, a quorum has arrived and I'll ask if you please call the role.

This is the roll for quorum. Senator Laird. Here. Senator Laird, here. Senator Min. Senator Smallwood-Cuevas. Senator Smallwood-Cuevas, here. Senator Ochoa Bogh. Here. Senator Ochoa Bogh, here. We have a quorum.

Great, thank you very much. Now going back, I was going to ask a little about the shift to bonds and I appreciated the LAO went to one place I was going to go already, which is that it increases the cost with the debt service substantially. And I think I know the answer, but I have to ask it of Finance. Is it your intent if revenues get good again to buy out the bonds and just deal with this on a cash basis?

I don't think we have any specific plans for if the revenue situation gets better that then the bonds are bought out. I think certainly if that situation were to come and to pass, I think that could be on the table. But I haven't been part of any conversations where we've been talking about that specifically.

And I expected that to be a version of the answer. But I just thought it would be good to put out there because what's happening is if you look at the overall projections for the budget, the out years get worse and we are taking debt service and moving it into the out years where there's already a problem. We're actually adding to the problem.

I don't want to take away from the fact that we want this to be done and we're excited about the fact that a solution was found. But there's that issue. The other thing I was going to ask, and I don't know if either of you know the answer to this is this is off the general fund in a way that the general fund is paying the segments for the debt service. Is this going to affect their ability to bond on their overall capital programs?

Is this something that has moved into that that affects how they're going to have to deal?

I think our understanding is in the near term, no, they are below their debt caps and they have room to do additional projects. I think one of the issues for you is it has some impact over the long haul. You probably, as a state, only want to carry a certain debt service load. You only want UC and CSU to be carrying certain debt service loads. You have those loads specified in statute. So if you choose to use it sort of now, you won't be able to use it later. If you choose to use it for these projects, you won't be able to use it for other projects down the road. UC under this proposal, gets closer to their 15% cap. CSU has more room, but it's still effectively going to comment the other things you might want to do on the capital side of their budget, academic buildings down the road, or whatever it might be additional housing down the road.

So actually, just as a comment that might force the answer to the question I just asked is if it turns out this mechanism is pushing other things out that we all support and they have the ability to bond, we might want to at some point, try to give them the room under the cap by figuring out how to deal with this. But just now, questions from other committee members. We're on the first part of Higher Education part one, student housing.

Thank you, Mr. Chair. I just want to reiterate the point that you made about the need for housing in our communities. Just access to affordable housing, and particularly for very low income is tough. And it's a strain when we have students competing with families to try to get access to the very small percentage of affordable housing we have across the state, and particularly in places like LA. And so I just want to stress the need to prioritize those housing projects and the need for incentivizing and encouraging those projects to be a multiplier for opportunities in terms of how the campuses will move forward with these projects, looking at things like targeted local hire, looking at things like skill and train. So I just wanted to add that point. I think we'll have more the debt framework you shared, Mr. Chair, is also one to consider. But I wanted to clarify that the intersegmental housing, what does that also mean for the actual projects, the capital projects like the UC Immunology Department?

That one is in our next that's in our next item.

Okay. I just wanted to clarify that. Thank you.

Great. No, that's good. Any questions? And then one last thing. It occurred to me I left out something, and that is on the community college side, it might make sense to consider lease revenue bonds or something if in fact there's rents and there's a cash flow there. So that's just a discussion that might be had as we move down the road on the budget. Anything else on this item? Seeing none, then we're going to move to issue number two.

And we have Gabriela Chavez from the Department of Finance and Ian Klein from the Legislative Analyst Office. And we have people available for additional questions and it's the University of California and various proposals that are included there. So let me ask for the Department of Finance and the Legislative Analyst Office to make opening comments and then we'll go to questions.

Good morning, Chair and members. Gabriela Chavez with Department of Finance. The May Revision maintains the multi-year compact with the University of California and sustained an increase of approximately 215.5 million ongoing general fund to support operating costs representing a 5% base increase. Also, there is a shift of 4.8 million from UC's main appropriation to provide continued support for UC agriculture and natural resources.

In an effort to address the current fiscal challenges, the May Revision shifts the financing approach of several 2022 capital projects as discussed by my colleague. More specifically, one-time funding for several projects is replaced with debt service as follow. 30 million ongoing general fund is provided to support debt service costs associated with the UC Higher Education Student Housing Grant program projects. This funding rephrases approximately 437,000,000 in current and planned general fund support for UC.

Also, 33.3 million ongoing general fund is provided to support debt service costs associated with the UC Merced and UC Riverside campus expansion projects and the UC Berkeley Clean Energy campus projects. This action replaces 498,000,000 one-time general fund provided in the 2022 Budget Act. The administration is committed to supporting these projects. The debt service funding approach makes it possible for all projects to receive the appropriate support. There's a few new funding items.

The main revision includes 2 million ongoing general fund to support UC Riverside School of Medicine. Also, there's a 5,000,000 one-time general fund to support University of California, Los Angeles Rob J Bunche Center for African American Studies. Lastly, the May Revision also includes 2,000,000 one-time general fund to pilot an entrepreneur in residence project for foreign-born entrepreneurs and UC students in support of job creation and fostering global talent for innovations in areas of need. This complements recent investments in immigration talent and opportunity through efforts for youth, college students, workers, and those pursuing professional license and entrepreneurship. Happy to answer any questions.

Thank you very much. Then we're going to move to the Legislative Analyst Office.

Thank you very much, Mr. Chair and senators. The incline with the LAO as you heard moments ago from our Department of Finance colleague, the May Revision retains the 5% base increase for UC. Though we estimate the 5% increase would not cover all of UC's operating costs, the 5% increase is still high relative to the funding increases proposed for many other sectors in the state budget.

Given available resources and a continued softening of the budget outlook, we continue to recommend viewing this 5% augmentation as an upper bound which could be revised downward if necessary. The largest changes in the May Revision for UC involve the shifting of how the student housing projects are funded, which you just heard, as well as the capital outlay projects moving those from general fund to university bond funded with the state paying the Associated Debt Service on those projects.

In the interest of time, I'm going to focus the bulk of my presentation on those projects. Regarding the Berkeley Clean Energy Campus project, if the Legislature continues to determine that this project remains a high priority, it could approve the shift in debt financing, which we estimate to be roughly $16.7 million annually. However, UC has indicated that it is unclear at this time if additional state support will be needed in excess of the 249,000,000 in state contribution that had already been programmed to complete the project.

Furthermore, the campus's nonstate contribution toward the project remains unspecified, leaving some questions unanswered as to how the project's complete cost will be financed. Regarding the Riverside campus expansion project, the $154.5 million project was also shifted from general fund to University bond funded with the state paying the associated debt service, which would be roughly $10.3 million annually. We recommend approving this project as it is in line with our recommendation made earlier this year.

This project was listed as Riverside's top capital priority in the UC 2021, 2027 capital financing plan. Additionally, UCR has recently experienced substantial headcount enrollment growth growing by over 5600 students, or roughly 27% over the past 10 years. Additionally, facility utilization reports indicate that UCR is using existing classroom space in excess of 100% of legislative standards and lab space in excess of 125% of legislative standards, which this project would help to mitigate.

Regarding the Merced campus expansion project, the May Revision also shifts this project from 94.5 million in general fund to University bond funded with the state paying the associated debt service, which would be roughly $6.3 million annually. Regardless of funding approach, we recommend rejecting the project at this time. The project does not serve an immediate campus or state need, and it is still in its early planning phases. Merced has indicated that it will likely not need additional academic facility space until its enrollment reaches 12,500 students.

If its enrollment were to continue to grow over the next five years as it has over the previous five, its enrollment would only total roughly 10,400 students by the 2027, 2028 academic year, which just further illustrates that this is not an immediate campus need. Moving from the capital outlay projects. The May Revise also shifts funding from the base augmentation toward the ANR program, such that the ANR program receives an increase that is equal to that of the system on a percentage basis. We don't have major concerns with this shift but do want to highlight that this shift would come at the expense of other items which UC could have used this funding for, including salary increases, OE and E costs, or other benefit costs, to name a few.

With respect to the new one-time initiatives, as you heard earlier, there are going to be two new one-time initiatives for UC, which we recommend rejecting without prejudice. Due to the anticipated revenue weaknesses facing the state, we recommend against any new spending unless those proposals address immediate health or safety risks, which these proposals do not. Thank you very much, and I'm happy to answer any questions.

Thank you. I'm going to make a comment and a couple of questions and then go to my colleagues. And on the agriculture and natural resources, I just want to thank the Administration for putting a cost of living increase in here so it doesn't fall behind. I understand what the legislative analyst just said about how it competes against other things, but the reason we augmented it in 2021 is there had been no inflationary increases for 20 years and the program had sort of been gutted, and we didn't want that to happen again. So I appreciate the fact that that is here and understand the nuance. I can't be a beggar. So it's exactly the percent increase of the UC budget. It's 80% of what the total budget is as a COLA.

So I'm just happy there's an increase there. So thank you. And then I know that Senator Smallwood-Cuevas wanted to ask about UCLA, but let me tease it first by just asking. Is the Institute for Immunology and Immunotherapy at UCLA part of the bond solution or is it left as a cash thing in this budget.

Gabriela Chavez, Department of Finance. That proposal is still in cash as proposed in the governance budget. The funding has just been pushed as proposing governance budgets.

Pushed? What do you mean?

So originally for governor's budget, we proposed 100,000,000 22, 23, 100,000,000 23, 24, and 300 million on 24, 25.

You're pushing it from one year into those three years. That's what you mean, right?

Correct. Yeah.

Okay, great.

Maybe to clarify a little bit more. Originally, the 22, 23 Budget Act, it included 200 million in 22, 23, 200,000,000 23, 24, and 100,000,000 24, 25. What we proposed on governor's budget was to keep 100 in 22, 23, 100 in 23, 24, and 300,000,000 24, 25.

So it's still cash, but it's spread out over three years. That's the deal.

Correct.

Okay, well, I don't want to jump on Senator Smallwood-Cuevas, but how does that work for the actual development of the program? Does that match? I mean, when it was all the money in one year, were they just going to completely do it all at once, and now they have to phase it? How does that affect the actual program?

I think that's we haven't heard a delay on the project as of this moment, but I'll let you see provide specifics.

Okay.

University of California. Thank you, Chair and members of the committee. The project will go out to bid.

Is that mic on?

Oh, I'm sorry.

No, yours might be. I'm just looking to make sure you can be heard. But I'm not hearing you on the mic.

Is this better? Okay. Seija Virtanen University of California. Thank you, Chair and Members of the Committee. The UCLA California Center for Immunology and Immunotherapy will go out to bid as a design build project in late summer. If we can receive the funds is as proposed by the Governor's January 10 budget.

Okay, then let me move to another subject, and that's the $2 million for the UC global entrepreneurs. And is there any additional information on this? Is there trailer Bill Language. Is there something that explains what this really is?

We're not contemplating trailer Bill Language at the moment, but the proposal aims to assist foreign born UC associated individuals. This could be students or it could also be professors that are trying to the program will assist them with their immigration status and it will assist the individuals to start a job or apply for a license. And the main goal is to foster the global talent for innovation in areas of technology.

I appreciate the goal and I appreciate the high level explanation. I'm trying to understand what this really is. Does that mean that money is dispersed by UC for some of the things you just listed? How would this actually be implemented?

We're still working on the final details. The main goal would be so that the University can provide this assistance. Most of the times, these individuals do not qualify for federal grants. So if they want to start a business, they don't qualify for a small business loan. Or if they want to apply for their professional license, they don't qualify for federal funds. And this will come in place to assist them.

I think that as we move toward negotiations and finalizing the budget, we will want more details to be able to consider this. I don't feel like that's totally there yet. And then one last really last question. We had the discussion in housing about bond capacity. I assume the same things apply to this, that this is all within UC's ability. And if you get near the cap for other projects at another point, we'll have to look at this fitting into the bond cap. Is that sort of the same principle?

That's correct, sir. The University of California currently has enough room under our 15% bond cap to absorb both the student housing projects and the classroom expansion projects at Merced Riverside and the Berkeley Clean Energy campus projects. However, that leaves us about $300 million of room for other projects, including our seismic needs, deferred maintenance, other classroom projects at different campuses. We are ready to absorb these projects. We will implement the Governor's may revision as proposed if the Legislature wishes that. I do want to note two things.

First, we currently have an interest rate of 4.25% on our UC institutional bonds. Interest rates have been fluctuating, and there's a possibility that that interest rate may change between now and when we actually sell the bonds. And if that's the case, we'd like to have a conversation about a potential technical adjustment on the total debt service. The other concern that I want to note for the record is that we are capped at 15% for debt service. That is of our total state General Fund appropriation.

If the Legislature were put in a position to have to cut the University in a future year, we will have to continue to pay that debt service, and a large cut to the University might put us over the 15% cap.

Okay, thank you very much. Let's move on to questions of Members. Senator Smallwood-Cuevas.

No, I just wanted to follow up on the UC Global Center question and just want to emphasize that because as we're trying to really address the needs of non resident students, I'm concerned that we're investing in bringing more I mean, in resident students, that we're investing in bringing more non resident students and supporting. So I just want to make sure that our goal of really addressing California residents and supporting those students is prioritized.

And I'm confused about how this global enter is helping us achieve that goal for resident students. My other question, and I think I heard Finance Department say this, and I want to just be clear, is this also to support Dream students who may qualify for these resources? I just want to make sure that they are included in this target. I just want to clarify that.

Sure. The Administration is committed to support California residents. Part of the budget investments that we are providing is to reduce the number of out of state students in the three campus at UC Berkeley, UCLA, and UC San Diego. This program is just trying to take an advantage of the students who are already here, international students. It could also be students who maybe 540 who do not qualify for the federal grant. This is still being developed. It's a high level.

But the key is these individuals have great talent, and we're talking about areas in need technology, and we want to make sure that they're able to maintain that talent in the states. It could either be a job, it could also be a Professor who wants to start a business or apply for a apply.

These funds do apply to existing students who don't qualify.

Correct. They will have to be we're still working on the details, but it will be a UC associated individual. So UC student, UC faculty.

Thanks for clarifying that. I'm sorry. Did you want to so from the Ledge analyst?

Again, you probably know this, but the State does have both grant and loan programs for Dreamers who can't access those funds beyond the state. So those are the broad programs designed for Dreamers. I don't know if this one time program is really designed for that purpose.

And that's what I want to clarify. And again, going back to our goal of trying to really support California residents and certainly Dream students, that if we are creating this program to support folks who may not qualify.

I think I would want to see more investment in those existing programs for Dream students who we are really trying to get through the UC process, through to graduation and into the workforce. This is so broadly written, it feels as if it's going against our overall mission and goal to really increase the numbers of resident students and those students who are currently on our campuses who may need additional support, and I'm saying specifically Dream students so that clarification would be helpful.

In terms of the capital projects, I've said this in so many of the hearings, especially as we're looking at there being additional debt burden as a result of this. I think the Legislature and certainly the Senate has been a real advocate for those projects that are going to be shovel ready, that are going to help address our housing needs and expand our campuses.

We want to see UC really factor in a multiplier here in these very precious resources, in terms of how we implement this work and include that in your planning, in terms of the ways in which we invite local communities to participate in the construction and the building, maybe through targeted local hire programs, through skill and train initiatives.

Again, how do we make sure that these precious investments, and as we say, that, are going to have us make some hard decisions about what we're able to Fund in this round of the budget? That we are inviting our surrounding hardest hit communities to participate in those opportunities by creating good construction jobs that our hardest hit communities can get access to. So as we're going through this process, I think it's important for these proposals to present a multiplier effect across our communities.

And I just want that to be added to our conversation as we go through these next phases of negotiations.

Thank you very much. I appreciate those comments. Further questions from Members on this issue. Senator Ochoabo.

Thank you. Good morning. So I want to reiterate the questions and the concerns with the UC global entrepreneurs as well, focusing on the mission of the UC system, which is to educate California residents as a priority, and wanting to make sure that our Dreamers do have an opportunity to have and I'm keenly aware about the programs that we have currently.

I know Senator Gonzalez just had a Bill that would allow the grant programs or the loan programs for our Dreamers to allocate the unused portions of those grants to be or I'm sorry, unused loan programs to be used as grant programs on that end. And I had expressed some concerns on that particular program just to make sure that it's still available as a loan program and follow up with a grant program for the unremained portion of the funds.

So my question has to do with the UC Riverside School of Medicine, the $2 million increase. So as you may know, the Inland Empire has well, the state as a whole is suffering from an extreme shortage of healthcare workers, including doctors. How did we come up with the $2 million? I guess that would be the Department of Finance. The 2 million General Fund increases support the UC Riverside School of Medicine and not more so.

This was part of the 2022 Budget Act. Part of those negotiations landed on the 2 million.

Okay. Was it expressed by the oh, by the way, I did notice the color coordination. I don't know if it was intended or not, but.

Jack's Swalt, department of finance. It was not.

Well, it was just very well organized. If it not, you know, green, Department of finance just works perfectly as a team.

OK, let's move along.

And then I had a question also with I believe it's with this. What is the legislative standards? There was a comment about legislative standards.

Yes. That has to do with the number of students that are using a facility at a particular time. We could provide you more detail about that.

Okay, perfect. I guess that's it for me at this time. Thank you.

Okay. Senator Min.

Thank you. And I'm glad you're wearing green, because there's not enough green in this state right now, but not easy being green. Okay. As Kermit the Frog once. So first, I just want to say that I appreciate the maintenance of the proposed base increase. I think that's really important in this environment. The UCS, as we know, don't really, as this has been expressed to me multiple times, don't really have inelastic demand for admissions right now. So I'm glad to see that we're continuing to support that.

My question is kind of just a General question, which is it's hard for me to judge this particular item without knowing what some of the other options were. What did we leave on the table? So we've seen some shifts in support. We've seen some increases. But what were some of the other candidates that we're cutting or not providing any increases to that might have been of interest to us as legislators?

Jack Swalt Department of Finance. The Department of Finance has proposed a plan. We generally don't comment on things that we haven't included in that plan. We viewed the state's fiscal situation.

The priorities of the Governor came up with this proposal. We think it's prudent. We think it's fiscally sound. And that's why we've brought it before you today.

All right, so maybe I'll ask you see, then, were there other projects that you would have liked to see money shifted towards or increased on? I guess that's my question for you.

Thank you, Senator, for the question. The University's preference, obviously, would be to receive the cash from the state because then we can preserve our debt service capacity for other projects. We did have a list of projects, about 1.2 billion that the regions approved last November that we first put forward. But as the state's fiscal picture declined, we withdrew the request because it just wasn't feasible during the time of declining revenues. That list included primarily large scale energy efficiency projects for our campuses. It included some new classroom projects as well, and research space.

I appreciate that. And is that something you could share with us later?

Yes, I will share it with you.

Thank you. And look, I appreciate Department of Finance's comments. This is the budget, and I know you're hard at work, but it's also kind of hard to judge in a vacuum. We're looking at seven items here without knowing. This was obviously taken from a large laundry list of different priorities and projects. So just wondering why these were the winners and who the losers were. And it's a zero sum game right now, obviously, but thank you.

Thank you. Any other questions on this item before we leave it, then let me do one final one toward UC, and that is, in our last hearing, we had a discussion about the fact that for the 5% compact, CSU sent us a list of what they would spend the 5% on. And we did not have a similar one for UC. Is that something you intend to do or is that something you can do, Senator?

We do have a list of items that we would spend our 5% on. So the University of California regions passed a budget. They had a budget plan last November that included both the state General Fund and tuition expenditures. Most of those expenditures are for salaries and wages. They include things like our faculty merits, increasing the faculty salary scales provided.

Let me just interrupt for a second. So basically, they've just approved an entire budget and the 5% is plugged in as part of the revenue and it doesn't discreetly say what it's going to actually go for.

That's correct. The way we would then distribute the 5%, if we received that from the Legislature, is we first pay certain expenditures we consider set asides. These include our bond, debt financing, retirement contributions, and certain programs that serve all campuses, like Sapep. And the agricultural extension stations are sort of funded off.

But that's sort of like what you pay in order. It's not explicitly tied to the 5%, isn't it?

That's correct. And then the remainder of the 5% is sent to all the campuses based on student enrollment so that we can ensure that all the campuses receive the same amount of money per student in order to create some equity.

I think I'm still not getting it. So there's not a list of where the 5% will go?

That's correct.

Okay, well, if you get a list, provide it to us. It's something we would be interested in. We have it from CSU really clearly, and we have an itemized list of what they would do if they got more than 5% and sort of what is being screened out and while that's not binding, it's helpful. We had a lot of testimony at the end of the UC hearing about sort of the expenditures and just the thing we would be interested in. So no need to belabor it.

But thank you. Seeing no other questions, let me thank the people that were here for issue two. And we're going to go to various governors proposals for the CSU system as issue three. And we have Jennifer Louis from the Department of Finance. And we have Lisa King from the Legislative Analyst Office. We have some people available for questions, so let's begin with the Department of Finance.

Good morning, Mr. Chair and members. Jennifer Louie with the Department of Finance. The May revision for the California State University reflects the continued support of the multi-year compact, with the ongoing base augmentation remaining unchanged since Governor's Budget. And the May revision includes augmentations to the budget year and General Fund reversion shifts for both the past year in 2021-22 and the current year in 2022-23. Projects to be shifted and financed through the Geo bond debt service.

For the 21-22 past year, one-time General Fund reversions to debt service financing will go toward the Cal Poly infrastructure projects of $201,000,000 million one-time and a corresponding increase of $16 million ongoing General Fund.

Before my constituents in San Luis Obispo get really excited. It's Cal Poly Humboldt. Right.

Correct.

You just said Cal Poly. Clarify.

Sorry, sorry, apologies. For the Cal Poly humble infrastructure project starting in 23-24 budget year to support the debt service, followed by in the 2022-23 current year of one-time journal fund augmentation adjustments to withdraw the proposal to shift $75,000,001 time General Fund for University farms to debt service financing, thus adjusting the CSU capital outlay shift for 22-23 to $329.8 million. One-time General Fund to debt service financing.

The May revision also includes a shift to financing for the CSU Affordable student housing grant, an approximate total of $655,000,000 in current year, and plan support for the CSU affordable housing and an accompanying increase in the 23-24 of $45 million ongoing General Fund to support the debt service. My colleague overseeing the higher education student housing grant program last spoke and is available to provide further details if you have any follow-up questions.

Lastly, the May revision provides $31 million ongoing General Fund for the construction of the human identification laboratory at CSU Chico, with the total ongoing Journal Fund commitment towards CSU debt service financing now totaling $91.1 million. With that, I'm happy to answer any questions about the May revision for the California State University. Thank you.

Thank you very much. And we'll move to the Legislative Analyst.

Lisa King with the Legislative Analyst's Office. There's some overlap between this issue and the two you've previously heard. The comments we provided in the previous issue on the base increase for UC also generally apply here. And we've discussed the student housing item and so I'll just focus my comments on the three remaining May revision proposals for CSU, all of which are focused on capital projects.

First, regarding the proposal to shift the financing for the Cal Poly Humboldt capital projects from cash to debt financing, we think this can be a reasonable financing approach for the reasons we've already discussed this morning. But as we've also discussed this morning, it would significantly increase the total project costs. And so you could at this time consider whether these capital projects remain among your highest priorities. If so, you could move forward with the Governor's proposal to debt finance them.

If not, you could consider scaling back state support at this time. For the University farms. We actually have a proposal that moves in the opposite direction. So this is withdrawing a January proposal that would have shifted financing for this initiative from cash to debt financing. And for context, the reason for this is that some of the expenditures under this initiative, for example, the purchase of farm vehicles and equipment, were deemed inappropriate for bond financing.

Given that these types of assets do have a relatively short, useful life, we think that is a reasonable determination. Nonetheless, given that the state budget condition has changed significantly since these projects were first approved last year, you could still revisit whether they remain a high priority. Finally, as the Department of Finance noted, there is one remaining capital proposal which would provide $3.1 million ongoing to debt finance the CSU Chico Human Identification Laboratory.

This proposal is different from the others in that it is a new proposal rather than something previously approved. As my colleagues noted in the previous items, our overarching guidance this year, given the state budget condition, is to reject any new proposals unless they address immediate health and safety concerns, we don't believe that this proposal for the Chico campus meets that high threshold, and so we would recommend rejecting it. Thank you. I'm happy to take any questions.

Thank you. Let me just start going back to the 75 million for Agriculture University farms. Maybe I misread it. I thought it was in a previous version, switched to bonds and this was moving it to cash. Is that what's happening in the May revision?

The May revision essentially, Jennifer Louie with Department of Finance, the May revision essentially withdraws the Governor's Budget proposal, which included it originally as two debt servicing. So essentially, the May revision reverts back to the 2022 Budget Act, which is front-loading as a one-time appropriation cash.

Correct.

Okay, then that's clear. As somebody that was a strong proponent for that, that's great. And then I was going to ask, when I read the agenda, about the cost of debt service, but we had that discussion in the first two items. So the Cal Poly $201,000,000 generates debt service, and we had that discussion. So let me ask my colleagues if there are questions. Senator Ochoa Bogh.

So. Your comment with regards to when to use bond funds versus cash was very intriguing for financial literacy purposes for members. What projects are, in your opinion, I have an idea, but I just want to make sure that we're on the same thought process. What projects would you say best qualify for bond projects versus cash?

I'm happy to get us started, though. The determination in this case was, I believe, informed by CSU's recommendation for their University bonds program. The expectation is that the projects would have a useful life of a certain length, maybe 20 or 30 years, commensurate with the repayment period for those bonds, because some of these projects would have a shorter, useful life, for example, a farm vehicle. It was determined by CSU that it wouldn't be appropriate to be repaying that over the course of, say, 30 years.

So it was preferable, in their view, to use cash for that purpose.

Does that complete your questions, Senator Min? Okay, then don't take how quick this was for a lack of concern about this entire budget. So thank you very much. We really appreciate it. We're going to go to community colleges. Issue four. And we have Madison Sheffield from the Department of Finance and Paul Steenhausen from the Legislative Panelists. And we have other people available for questions. So welcome.

Thank you. Good morning, chair members. Madison Sheffield, Department of Finance. As my colleagues have discussed, the May revision includes additional reductions to the overall budget and, thus, each budget segment. That being said, just like at the governor's budget, the administration remains committed to the second year of the multi-year roadmap, and the May revision continues to fully support community college apportionments despite the necessity to make reductions in some areas.

I'll walk through some of the notable changes including the governor's budget. Sorry, the governor's May revision and your agenda obviously give us a lot of detail there as well. For Proposition 98, the May revision proposes 12.3 billion in local assistance funding for community colleges and adult education in 23-24. This is a decrease of approximately 258 million from the governor's budget.

We're projecting total computational revenue for the student-centered funding formula of about 9.4 billion in 23-24, and this is actually an increase of 398 million over the 23-24 student-centered funding formula we have projected the governor's budget.

Included in this increase from governor's budget to May revision is an increase of 25.4 million ongoing Prop 98 general fund to reflect a change in the COLA from 8.13 to 8.22 as we've discussed. And it also includes a decrease of approximately 2.4 million ongoing Prop 98 general fund needed to sustain the 0.5% enrollment growth policy and reflect revised estimates of enrollment. And for reference, the K-12 side has the same COLA percentage we were aligned there.

In addition, May revision includes an increase of 3 million ongoing Prop 98 general fund to provide that same 8.22% COLA for the same select categorical programs that we included at the governor's budget, including adult education.

As a result of the decrease in the projected overall General Fund revenue, the total prop money guarantee declined compared to governor's budget by approximately 2 million, sorry, 2 billion. The May revision proposes to fully fund apportionments at the new COLA despite the necessity to make this overall reduction to committee college's budget. This is done primarily by shifting one-time resources to support apportionments in 23-24, and out years will be considered during the next budget cycle when we have a better picture of the revenue.

The 503 million takes into account the new COLA of 8.22%, the workload adjustments we must make every budget, and the new revenue outlook for the apportionments. And this reduction to the community college's apportionments is backfilled primarily with 148 million in prior years. Apportionment savings of 345 million reductions to the COVID-19 Recovery Block Grant; I have a hard time with that every time, and reduction to deferred maintenance application and the details, the more refined numbers on that, is also in your agenda.

As part of the solutions package, we also have a reduction of 100 million Prop 98 general fund to the student enrollment and retention proposal that we included at governor's budget of 200 million. So reducing that from 200 to 100 million at May revision and then we also have a decrease of 50 million one-time Prop. 98 general fund to reflect revised estimates for the Student Success Completion Grant Program, which brings the cumulative 23-24 total for this program to 362.6 million Prop. 98 general fund.

You also see an included increase of 10 million one-time Prop. 98 general fund per year for three years to support the LGBTQ Pilot Project. This is building upon a 2021 Budget Act investment of 10 million one-time, and the proposal will be run the same way that the 2021 Budget Act investment was, which is to correct an error we have in the eight pages of this would only go to La Community College District.

This would actually be run out of a grant program from the chancellor's office, so just noting that. We also have an increase of 2.51 million one-time Prop. 98 general fund for the Small Business Entrepreneurship and Innovation Center at East Los Angeles College. The May revision also proposes statutory changes to allow community college districts to spend flexibly among the following specified categorical programs beginning in 23-24. Those programs include student equity achievement program, student financial aid administration, and student mental health resources.

The post-statutory changes would stipulate after five years, the chancellor's office would assess district-level progress in meeting five other roadmap goals as selected by the chancellor's office. And then districts not making sufficient progress towards the roadmap goals also defined by the chancellor's office would have their flexible spending authority revoked and be offered technical assistance. The language also provides the chancellor's office authority to align reporting requirements.

In addition, the May revision proposed statutory changes to clarify eligible uses of funding for the Strong Workforce Program, and we believe these funding uses are currently allowed to be clarified for districts so they can feel supported in those activities. This concludes my overview of the notable proposals for the community college system. Happy to take any questions.

Thank you very much. We're going to go to the legislative analyst.

Thank you. Good morning. Paul Steenhausen with the Legislative Analyst Office. As you will hear in more detail later in Part B of the agenda on Proposition 98, the May revises estimate of the Proposition 98 minimum guarantee, which is the main funding source for community colleges and K-12 schools, is down about $2 billion from the January proposal and that's due to lower revised estimates of revenues of state revenues.

So despite this downward assessment, this downward adjustment, the May revision proposes to increase the cost of living adjustment, the COLA, to community college apportionments and select categorical programs to the 8.22%. As a result, base apportionment costs for community colleges in the budget year, as Department of Finance just mentioned, would be about $9.4 billion. That would be the cost to fund apportionments, 9.4. But under the May revision proposal, there's only $8.9 billion in ongoing funding sources. So you have a $500 million gap.

And as the Department of Finance just mentioned, and you can see on your agenda on Page Six, that third bullet point down to cover that gap in the budget year, the Administration proposes to use about $500 million in one-time money to cover it. So under the May revise, these one-time funds would come in large part by cutting support for initiatives that the legislature has already approved in last year's budget, and that's deferred maintenance and the COVID-19 Block Grant.

As you're going to hear in Part B of the agenda, the May revision uses a similar approach, using one-time money from previously approved initiatives to fund ongoing COLAs on the K-12 side of the house. So you'll hear about that in a little bit in Part B because those initiatives and solutions are one-time in nature.

In the out years under the May revise, apportionments would have a structural deficit, and we see this is creating problems being problematic, having drawbacks for the legislature in several ways. First, if the state were to adopt the May revision, some or even all of growth in the minimum guarantee in 24-25 would first need to go toward filling that gap, that apportionment hole that was created in the 23-24 budget.

So that really takes away opportunities for the legislature to spend new money from that growth in the guarantee on your own legislative priorities, including perhaps a new cost of living adjustment. So first call is on just filling the hole. Second, as you heard earlier, again, you'll hear in Part B of the agenda, Proposition 98 spending on community colleges in K-12 is based on what our office would characterize as optimistic revenues.

So, adopting May revise spending proposals could put the legislature in a tough position should the economy continue to weaken and revenues come in lower than expected under the May revision. In other words, providing more ongoing spending commitments this year could result in having to take back more later. Another downside to the governor's approach, using one-time money to Fund ongoing costs, is that districts have already received their deferred maintenance, their money, and their COVID-19 Block Grant money.

All of it will have gone out within a few weeks, and most of has gone out already. So, from discussions with districts that we've had and perhaps have visited you as well, they've indicated they've spent a significant amount of time planning how to use that money. In the case of deferred maintenance, they've put certain projects out to bid or even identified contractors.

And so, taking money away from districts that have already seized the money and put in so much time and planning over a multi-year period would be very disruptive to them. So, given the situation and the significant downside risks, we recommend the legislature adopt a different starting point from what the governor has at May revision, with a focus on funding baseline costs and seeking to fund community colleges in a more sustainable way.

So as an alternative to the May revision, adopting a 5.1% COLA would better align costs with available ongoing funds. By providing a COLA that the legislature can afford, the state can afford, the legislature could also then avoid making reductions to those programs, those initiatives for which the money's already gone out to districts, and that also would increase the likelihood the state could fund COLAs in future years and fund legislative priorities and prerogatives in future years.

So under a baseline budget approach, no funding would be provided for newly proposed initiatives. So we would recommend the legislature, for example, reject the proposal in January, since revised in May, to provide another round of funding for the enrollment and retention initiative. And as this subcommittee heard last month on the community college item, the first round of funding that's in the current year budget is just being spent now.

And so it's very likely that there will be significant money left over through the budget year for districts to spend on enrollment and retention purposes. Anyway, I just want to emphasize the point though. A baseline budget approach can just be treated as a starting point. It gives the opportunity for the legislature to add to it or make other modifications based on your priorities.

And then, in Part B, you're going to hear more about the baseline approach and how it applies to K-12 education under our recommendation. So, apart from funding, just conclude talking about the flexibility proposal for categorical programs, student equity and achievement program, financial aid, and mental health services, we recommend the legislature reject this proposal. It would not provide meaningful flexibility to districts. Districts Forever, for example, already have considerable flexibility in how they use their student equity and achievement money.

They can already use it for financial aid and mental health services. And in addition, the legislature really does have an interest in making sure that the money is used for, say, mental health are used for mental health instead of some other purpose. So, we think that the legislature should reject that proposal. I'll stop there. Happy to answer any questions about this or other proposals in the May revision.

Thank you very much. And the legislative analyst proposal sort of teed off a couple of the questions or comments that I would have on Proposition 98. I know it's coming up in the second part of this hearing, but it's instrumental to community colleges because I think both of my concerns are about the overall architecture, which seems to be more at issue than some of the individual things because it's how much to do, how it all fits together, how it adds and subtracts.

And on, overall, Prop 98, I don't know if I'm wrong, but I read that it comes in two parts. It comes into the sort of general fund Prop 98, and it comes in property taxes. And it seems that the finance proposal and the legislative analyst proposal are different in the projected revenues, but one of the two of you is higher in property taxes, and the other of the two of you is higher in the apportionment.

Could you maybe speak to that for a second as we try to figure out what the baseline really is for these? And I suspect that you both have been rescued by the fact that he walked up from the crowd and looks anxious to answer the question. So we'll start with you.

Thank you, Senator Laird. Ken Kapphahn with the analyst office. I cover Proposition 98. So, we did just release our fiscal outlook for Proposition 98. As you mentioned, we have lower general fund estimates, so our estimate of the general fund portion of the guarantee is lower. But we also have higher property tax estimates. They're up around a little over 2 billion over the three-year period compared to the administration's estimate.

A portion of that 650 million is in the current year, but most of that difference is related to what's happening in the budget year.

And does Finance have any comment on that?

I don't have a lot of detail on the exact differences on our estimates of Prop 98 compared to others. My colleagues have more expertise there and happy to get you more details.

Okay. Because I think that when we have the negotiations and the debate about how to land the plane, reconciling those two differences are going to be a key part of it, and we will want to do that. So without having a definitive thing here, at least I'm signaling that that's an issue.

So I can speak a little bit to that. And this maybe won't resolve the differences in our outlook. We always every year have some differences. Typically, the property tax revenue lags what's happening with the housing market by a few years. So the preliminary data for 2223 came in a very strong year. That might seem a bit unexpected given the cooling in the housing market right now, but it's reflecting the big run-up in the housing boom in 2021.

I think our outlook is anticipating we have another good year ahead of us in 23-21, as that 2021 boom continues to affect property values and property tax payments, whereas the Department of Finance is anticipating more cooling will happen more quickly in 23-24. Both of our offices anticipate that we'll see much slower growth in property tax over the next three or four years, but we're a little bit higher in 23-24, where they're assuming that slowdown starts more quickly in 23-24.

Okay, then I'm just going to leave that where it is. Well, I have one specific question for Finance before I get back to the architecture. And on the LGBTQ Pilot Project: how does that money get out the door? How is it decided how that will be distributed?

Yeah, and obviously, correct me if I'm wrong, Lizette, on anything, it would be distributed the same way that the 2021 Budget Act Program was distributed. So, I believe it's a grant program administered by the chancellor's office so districts can apply. And I think there's a cap, or it's the lower bound of 500,000. So yeah, essentially a grant program would be how it would go out.

And if it's capped at 500,000, if it turns out that every grant was at the cap, you're really looking at 20 grants or something from this. If people are below the cap a bit, it spreads further. Is that generally okay?

And just to be fair, 10 million each year for three years is our proposal.

Okay, the chancellor's office was nodding. Just for those of you following at home. Then the last thing is, we had a clear statement from the legislative analyst about the architecture, and it seems that in order to stick with the 8.22% distribution, other things like deferred maintenance, the COVID Recovery Block Grant, student enrollment, and retention proposal, those are cut to keep that. But basically, those are all the moving pieces. It's really deciding how to correctly assess that architecture to balance the budget.

And the finance department's recommendation is to hold to the 8.22% and then cut a lot of these other things. Is that correct?

Yeah, that is correct. And as you probably saw in the governor's presentation of the budget, we believe that there's so much uncertainty in the revenue picture that we want to reassess next year. And that's included in our proposal is that we make these cuts to one-time programs that we've funded a lot of some very significant investments in the past few years. Many of them were one-time. And the funding of the 8.22%, the full COLA, is often the priority for community college districts. It's the most flexible funding.

It supports, it's their base funding. And so providing full support for that, we feel is the most important priority for this budget.

And then let me ask a follow-up question of the legislative analyst. And maybe I was confused, but when you went into some of the programs, you made it sound like money had gone out the door. Has money gone out the door for this year, and we're talking about the budget year, or is there some overlap there?

For the most part, what's being proposed to cut has gone out the door to the districts. From talking with districts, we've asked, what have you done with that money so far? For the most part, what money they have that would be proposed to be cut hasn't actually been spent, although in some cases it has.

But certainly, districts have spent quite a bit of time on local planning and deciding how to program that money and how to spend that money over a multi-year period, in some cases hiring contractors, hiring others to do assessments of costs on buildings, and making other local plans. So that is well underway.

Let's just choose the first part of what you said; let's just say the money's gone out the door, and then it's been cut after it's gone out the door. Does that put the district in a position of getting the apportionment, the 8.22%, and then deciding to cover the costs of what was cut out of the 8.22%? Is that generally the way that would work?

That's true.

Okay.

I can just add on that the chancellor's office would have discretion in how this would function if we were approved in the final budget act. They could adjust apportionments, as you mentioned, or they could actually revert the funding. Just to add on to what the LAO said, that with both these large portions of money, the COVID Block Grant and the deferred maintenance, those are often part of multi-year plans. The COVID Block Grant, it was part of a multi-year plan.

So, in many cases, the districts have not necessarily spent all of it, same with deferred money.

Well, you see, there's an analogous situation that we'll get to in the K through 12, and it's with the arts money. And so a lot of people collectively bargained the arts money, and now it's being cut. And I'm just nervous that some people have put the money out the door and then we're cutting it after they've put the money out the door.

And while I think you said that they could adjust the apportionment, it seems to me the more likely thing is everybody gets the same apportionment, they just have to eat the costs out of the apportionment.

Not sure if-

I just was trying to follow what you said.

Yeah, right.

Said they could adjust the apportionment.

Yeah, that's my understanding. Again, this would be at the discretion of the chancellor's office for exactly how it functions. But that's an option they have.

And LAO is being really respectful and has his hand up.

So it's not clear from the proposal how that money would be realized, how those savings would be realized. It could be some sort of clawback. Go back to the districts and say, actually, you need to give us that money back that we just gave you earlier in the year.

Or there could be some sort of approach the chancellor's office has floated about giving community colleges less in apportionments next year than they would have otherwise gotten, so treated as almost like an overpayment and then making a cut from there.

I think the chancellor's office had a comment.

I can provide a little bit of clarity. Good morning, Senator Laird, Lizette with the chancellor's office. Typically what we do every year in August is we issue a recalculation where we true up any dollars.

So under the governor's May revision scenario, what we would do is essentially issue their payment statement with the apportionment amount that is provided it is funded essentially in cash, and then show a negative balance on those two programs that would have a one-time cut, and so districts then will be in different scenarios. Some will have built these funds out into five years, particularly for the COVID-19 Block Grant that they had five years to spend that down.

So they may only be in the first year of expending those. The deferred maintenance dollars, most of those may have already been committed, so it is likely that they would have to absorb those from their apportionment dollars or other sources of local revenue.

Okay, thank you. As is really obvious, we're not going to get to a conclusion here today. But I think the important thing was to highlight this architecture and its impact so that as we move toward getting to a final budget, we do our best to try to accommodate the least disruption in whatever is possible. I didn't mean to go on, but there was a vortex there that I jumped into. Do either of my colleagues have any questions? Senator Min?

I'd like to hear from the community colleges. Obviously, we're in a budget crunch. I have some concerns. I know I've heard a lot from my local community college districts and trustees about the need to fund deferred maintenance. We've got a lot of ongoing needs, and when we had these big surpluses the last couple of years. I know they were pushing aggressively to try to get more for deferred maintenance.

This budget takes a lot out of deferred maintenance and puts it into student-centered funding formula, which I think is also important and helps your different districts spend in ways that are important to them. But I guess I was just looking for your comment on your deferred maintenance needs and your view on what this proposed budget does for that.

Thank you, Senator Min, happy to chime in on that issue. One of the advantages that the investment in deferred maintenance provided last year is that it was substantial. So colleges were able to take and address some of the larger, more expensive projects on their backlog list. And so what we're seeing is that there are about 5000 projects from various ranges from roofing to AC and other various issues that are costly.

And so one option that could be considered as part of solutions, recognizing that there are some tough choices to be made in this year's budget, and we're very appreciative of the COLA that's been provided, one option would be to provide a cash deferral for the deferred maintenance portion of it. That would allow these projects to move forward at the colleges and then the state could pay those back at a future date.

But having that certainty that the colleges would then have those resources in the future could allow those to move forward again, recognizing that tough choices have to be made.

So, just a follow-up, if I understand you correctly, maybe I have a follow-up question, which is, if we don't do the cash deferral or anything else, what is going to be the impact of this cut on projects that are underway, on projects that are being planned? What will be the cost to the state and your community college districts, and other consequences of that?

Thank you. Some colleges will have to reassess projects-apologies-some colleges will have to reassess their projects or will have to look for other resources in order to move forward with them, depending on the urgency and the safety needs of those projects. So it really will vary across our 72 districts, but again, many of them will have to reassess as they adopt their budgets this summer.

Is there a possibility of a bond here, or is that going to be something that, because of Prop 98, we're not able to do?

Bonds typically are not utilized for a deferred maintenance project. Those are usually new construction projects, potentially modernization. So what we're looking at here wouldn't necessarily qualify for a bond. So, again, colleges would likely have to identify other general and flexible apportionment dollars that they may have at their disposal.

Thank you. LAO, you look like you have some comments or thoughts here.

He was actually nodding.

He's writing, and I just want to see if he had any thoughts.

Yeah, that's true. I was agreeing with what Navarette was saying that colleges over the years had developed a pretty large backlog of deferred maintenance, more than $2 billion. The Legislature, to its credit, has provided money, and districts have been able to chip away at that and address life safety issues, issues affecting classroom and learning environment.

So by making these cuts to deferred maintenance, those projects might not happen, as Ms. Navarette said, or they could happen, but using apportionments or some other funding source, which means that much less money for something else that they were planning to do. So there really is, at the end of the day, an impact on colleges and what they can spend their money on toward their local needs and priorities.

And I assume that if you've planned a project you've started, maybe it's not shovel ready or you haven't started yet, but that's going to increase overall costs. Is that fair to assume?

It could increase costs because of inflation. But it's also districts have already incurred significant amount of costs just doing this planning process, hiring assessors to look at the problems and what the cost might be in the first place, and as I mentioned earlier, in some cases, districts have hired contractors, have gone out to bid.

Got it. So this is my last quick question. I just want to take it over to Department of Finance, which is again, I know this is a very complex budget, lots and lots of moving parts, and we're facing a lot of downward pressure, but it seems like investing in deferred maintenance projects that are already underway would be a wise use of dollars vis-à-vis other priorities. So I just want to get your thoughts on that.

Yeah, obviously we support the way we propose May revision. We believe that the apportionments funding is the most flexible. And not only that, but a key piece is that if we provide the 8.22% full COLA that rolls forward for districts that it raises their apportionments going forward. And whereas deferred maintenance, it doesn't have the same impact on their overall budget along term.

Thank you. And a random additional comment. And that is the district where I served it as trustee for eight years. The college is built on a side of the hill, so deferred maintenance is always an accessibility issue as much as just outmoded facilities. Any questions from Senator Ochobo?

Okay. Her mic was off, but she echoed concerns, so that's great. Okay, thanks, everybody, for that robust discussion on issue four. And we're going to move on to what I'm confident will be a very brief discussion, which is issue five on the California Student Aid Commission. We have Devin Mitchell from the Department of Finance, Lisa Qing from the Legislative Analyst Office, and various people joining them. So, let's begin with the Department of Finance. Welcome.

Thank you. Good morning. Senator Laird and Members of the Subcommitee. Devin Mitchell with the Department of Finance. The May Revision proposes using a reversion item to wind down the Golden State Education and Training Grant program at the end of the 2022/23 fiscal year and record approximately 480,000,001 time General Fund in savings.

The May revision also includes an increase of four positions and 397,000 ongoing General Fund inadvertently included in the Governor's Budget to provide procedure operations to be utilized to provide administrative support for the continued implementation of recently enacted financial aid programs and program revisions.

Additionally, an increase of 103,000 ongoing General Fund inadvertently included in the Governor's Budget for state operations is proposed to be utilized to assist local education agencies with meeting the requirement to support high school seniors applying for financial aid through the Cash for College program. The May revision also includes an increase of 6,000,001 time federal funds to be used for the Golden State Teacher Grant Program to support grants to students enrolled in special education teacher preparation programs for high need school sites.

The California Department of Education is providing CSAC with an additional round of Individuals with Disabilities Education Act Idea funding for the Golden State program. I or someone from the Commission can answer questions about any of the caseload driven budget adjustments in the May letter, but just in the interest of time, I'll focus on the biggest one, which is the Cal Grant and the middle class scholarship program in my remarks.

The proposal reflects updated projected expenditures in the Cal Grant program based on latest enrollment estimates among students eligible for the program, including the volume of financial aid applications received by the March 2 deadline. Estimated program expenditures increased by 51.4 million in the budget year and decreased by 1.2 million in the current year since January. The May revision also assumes incremental savings of 37.2 million General Fund in 2022, the current year, to reflect revised middle class scholarship program expenditures.

Updated projections shifted estimated program expenditures from 630.4 million a Governor's Budget to 593.2 million at May revision. Additionally, the May revision includes several pieces of trailer Bill Language and other sort of items. The Administration has determined that a good faith effort was made by the independent institutions of higher ed towards meeting the statutory associate degree for transfer commitment required to maintain the maximum Cal grant award amount for students attending independent institutions of higher education at $9,358 for the 23-24 award year.

Additionally, it is requested that statutory changes transmitted with the Governor's Budget be altered to maintain the requirement that the Golden State Teacher Grant Program Awardees serve in priority schools. It's also requested the statutory changes be added to the program to enable students attending certain online providers of higher education that meet other program requirements to become eligible to receive awards consistent with what the Administration has done in previous years.

It is also requested that statutory changes be added to require Cal grant participating institutions to use the three year cohort default rates on student loan repayment certified in 2020 to determine an institution's eligibility to participate in the Cal Grant program for the 2024-25 academic year. The Federal Government's extended student loan pause has caused the underlying data needed to compute that three year core default rate to be unavailable.

Finally, I'm going to turn it over to my colleague Jack Swalt to discuss the Public Interest Attorney Loan program item. Thank you.

Thank you. Jack Swalt Department of Finance. The Public interest attorney loan repayment program was created in law in 2001. There was no funding mechanism provided for that program. Given that the state was facing, the odds were not a great year fiscally or decade fiscally for the state. In 2015, Senator Block passed a Bill that had interest accounts held by attorneys and trust for their clients in cases where there was no heir, and that money is sheets to the state that money should be provided to Fund this program.

When that Bill passed, the Controller's Office indicated to me that there weren't sufficient resources to really move with the program. So it was kind of dormant for a while. And then about this fall, we got notice from the Treasurer excuse me, from the Controller's Office that there was sufficient funding to kind of build a program.

So what we're doing is we're providing 676,000 from this Fund, about 216,000 of that will be used for administrative support, so that's one person to manage the program and various needed technology, space, advertising necessary to run the program, and then enough money in the actual grant amounts to support 41 attorneys through the entire four year program. Qualified attorneys that complete all four years of the program are eligible to receive up to $11,000 in loan repayment.

And the way we have structured this program is, if we continue to see sort of a dearth of funding in future years, the amount of money that we currently have on hand would be sufficient to operate the program for four to five years, even if nothing additionally came in. So we're excited to finally get this program going 22 years in the making.

It gives me hope. If I do a Bill from the old folks home, I will see that it's being implemented 22 years later. That is really good. Let's go on to the Legislative Analyst.

Lisa King with the Legislative Analyst's Office. As you've heard, there are many mayor revision proposals for the Commission, but in the interest of time, I'll just focus on a few of the larger ones. Regarding Talgrants and middle class scholarship, we think the caseload adjustments at the Mayor revision are reasonable, and we recommend approving them. We also recommend approving the proposal to discontinue the Golden State Education and Training grant program.

As we discussed earlier this spring, this program, which serves workers displaced by the COVID-19 pandemic, is seeing that underlying need has significantly diminished. The last item I'll comment on is the other Golden State program. Golden State teacher grants. There are a number of proposed changes for this program. In the mirror. Vision. The most notable of these changes is to restore the requirement that recipients of these grants serve at a priority school.

This responds to a concern that was raised by the Subcommitee earlier in the spring, and we recommend approving it. There is also another change to this program. As the Department of Finance discussed. This is an amendment to Labor Code that would expand eligibility for the Teacher Grants program to students enrolled in certain online providers, as determined by the Labor Secretary. Here we would raise a few concerns.

First, demand for the Teacher Grants program is high under the current eligibility rules, and the Commission is projected to spend the funds ahead of schedule if allowed. Second, the proposed eligibility expansion could make the program somewhat more complex to administer, in part by involving a new agency in the process. And third, the proposal appears to target certain institutions that are based outside California, which is somewhat unusual for state financial aid, and we think raises some policy considerations that may warrant more thorough discussion. Thank you.

I'm happy to take questions on these or any other items in the Commission's budget for the May revision.

Thank you very much. And I think I'll start with you just in a clarification, and I'm sorry to introduce delayed post traumatic stress to everybody that was involved in our hearing last time, but there was an issue that you addressed about the Student Aid Commission asking for 17 positions conversion of 12 limited terms, five others to manage their current caseload. At the time, the recommendation was one or two from the Administration, and now in the May Revise, it's five.

And you since then did an analysis that I read in which you sort of went program by program and you supported the Administration, the May Revise proposal. Do you believe that based on your analysis and coupling it with the May revised proposal, that the other positions that are not recommended to be converted aren't really necessary to handle the caseload at this point? I don't want to put words in your mouth, but I was trying to understand it just to know where we are.

There we go. Generally speaking, we think that the proposed positions that are included in the may revision, the five that are intended to address the Commission's financial aid workload needs, are a reasonable way to address those needs within the available resources. Does that answer the question?

Sort of. But believe me, after the last hearing, I'm not going to belabor it for everybody. The only thing I would ask is of the Student Aid Commission and either could comment. And that is what I gleaned from the whole discussion at the last hearing and since is that you have the ability to administratively create limited term positions and so those 12 were administratively created and weren't necessarily positions that were authorized by the Legislature or based on recommendation of finance.

So does that mean that you can do that? If you have funds available and given within this budget, you would get five recommended, you'd still have 12 that were essentially a limited term. Does that mean you can still authorize that and then it's subject to whether or not you have the money to continue them? Is that the actual situation of what would happen if we adopt the May Revise recommendation?

Good morning. Jake Brymner, California Student Aid Commission chair. Laird. That is essentially correct. I would just comment that first, we are, of course, very appreciative for the Administration, including these positions in the May revision. We're very conscientious of the broader revenue issues that the state's grappling with. And while these didn't reflect the full scope of the positions that we discussed at that prior hearing, these are where we've addressed some of our most acute and urgent workforce needs.

And of course, these have been created, as I noted at the last hearing, as a result of both the one time programs that were established with lengthy runways that go beyond the two years that we can keep a limited term position in place and also expanded programs that have significantly grown caseload and new federal policy changes that are forthcoming.

I could talk more about that if it's helpful in terms of the revised Free Application for Federal Student Aid, the FAFSA, as well as the universal approach to high school seniors applying for financial aid. So we do believe that long term, for us to really deliver for students deliver on these programs, we'll need to continue to look at the capacity considerations for the Student Aid Commission.

We can't keep those limited term positions in place in perpetuity if we don't have the funding and the resourcing to do it. And it still would result in that churn of staff.

I appreciate that and the other feedback from stakeholders has been that if some pieces of the process were streamlined, there wouldn't be the same workload requirements. Is that something in some of these processes, given the number of people in the volume that you are either doing or considering doing? I know that's a real global question.

I think in concept, yes. It would, of course, depend on the specific areas of streamlining that have been identified in many instances. For example, with the financial aid completion requirement for our high school senior students, there's a certain number of students who we want to help see apply. Our local education agencies are coming to the Student Aid Commission utilizing things like the Cash for College program to try to help students apply.

So that's an area where I think that there will be a significant demand on staff time and capacity...

I think once again, we have outlined the issues and sort of feel like we have a sense of where they are and in the negotiations we'll look at this. But I just want to thank everybody for how responsive they were out of the last discussion and I think we're at a much more fruitful place. So that's just one issue. My colleagues may have others. Senator Smallwood-Cuevas.

Thank you, Mr. Chair. And my question just goes back to a comment that the Lao's office lifted up about the Golden State Teacher Grant allowing California residents to attend out of state online colleges. Is there a sense of how there's going to be some accountability over that? And I'm also thinking about consumer protections because some of these online programs are not all created equally and we want to make sure California residents are protected in this process.

Senator. We absolutely agree. We have trailer Bill Language posted on our website that describes the sort of criteria that we have for these programs and even if they are eligible under those criteria, they still need full approval from the Secretary of labor. So we share those concerns. The goal of this is to get non traditional students that may not be able to reach a classroom setting for the instructional coursework.

Of course there's still going to be an in person student teaching component but we share those concerns. We've built a pretty robust structure for this program or essentially this eligibility increase to operate in and more than happy to take any follow up questions you or your staff may have following review of that piece of legislation. Thank you.

Thank you. Any other questions from Members of the Committee? Senator Min?

Yeah, I just wanted to inquire on. A couple of these. Obviously, again, budgets are about choices and there's a lot of choices we have to make here. But I did find there's a pretty steep cut obviously to the arts, music and instructional materials lot grant. At the same time I see some things like the Elop program, which as I understand it, has not been rolled out yet, has not seen any cuts. We are in the wrong panel.

Yeah, we're getting there. We're on Student Aid Commission. We're getting there on this one. But you did a great job of highlighting what you're going to ask about in the panel. So that's great. Although actually Mr. Brymner, do you have any opinion on know.

I'll defer to colleagues on that one, Chair.

Okay. And I just broke my own rule. I used an acronym. Okay. Anything else on this item? Let me thank you for a very productive discussion.

Okay, we're just going to pause for a second because we're having a switch out of various people as the subject switch here. But in a moment we will move to Part B and the first issue in Part B. Okay, welcome everyone. We're going to move to Part B, which is pre-K through 12, and we appreciate everybody that participated in our first five issues in higher education. And these are the May revised proposals in this area. And we have Amanpreet Singh from the Department of Finance, Ken Kapphahn from the Legislative Analyst Office. We have the Department of Education. So let's begin with the Department of Finance. Welcome to the committee. And I think there's a mic issue there.

Good morning, Chair and members. Aman Singh with the Department of Finance. I will be discussing the Proposition 98 guarantee for TK through 12 education in the May Revision. The May Revision estimates that the Prop 98 guarantee amount for the budget year will be $106.8 billion. This is $2 billion lower than forecast at governor's budget, and in the three-year budget window, the guarantee is expected to decrease by $1.9 billion relative to the governor's budget. All budget years remain in a test one, which means that Proposition 98 receives about 39% of the revenue changes in each of the three years in the budget window. The guarantee is rebenched to reflect the continued implementation of universal transitional kindergarten.

Many education programs receive a statutory cost of living adjustment or COLA, and the COLA reflected in the May Revision is 8.22%, which was mentioned by my colleagues in the previous panels, and that is up from the rate of 8.13%, which is estimated at the governor's budget. The percentage change in average daily attendance, or ADA, from the current year to the budget year is expected to be 0.28%, which indicates slight growth.

ADA continues to be a lower share of enrollment than prior to the COVID-19 pandemic, with enrollment estimated at 91.4% in the current year compared to about 95, 96% pre-COVID. The Proposition 28 Arts and Music and Schools Act, which passed last November, requires additional funding to Proposition 98 equal to 1% of the prior year's guarantee level. The first Proposition 28 appropriation will be in the budget year, and it will be with a supplemental payment of $933,000,000.

Beginning in fiscal year 24-25, Prop 28 will be permanently rebenched into the Proposition 98 guarantee. Next, I'll move on to the Proposition 98 rainy day fund. The May Revision estimates a $10.7 billion payment to the rainy day fund, which is $2.2 billion higher than at governor's budget due to capital gains revenues being higher in the May Revision forecast than previously estimated. The May Revision does not reflect a discretionary withdrawal from the rainy day fund as the criteria for withdrawal have not been satisfied.

Next, I'll highlight notable K through 12 investments and updates, and in the interest of time, I'll stick to the items with the greatest budgetary impact. The May Revision continues to fully fund transitional kindergarten expansion. However, due to decreases in projected TK ADA, we estimate savings of 300 million in the current year and 396,000,000 in the budget year at May Revision compared to governor's budget.

For universal school meals, the May Revision provides an additional $110,000,000 in the current year and $191,000,000 in the budget year to fund revised estimates to support universal school meals. The May Revision provides $80 million for juvenile court and community schools to address the unique needs of those schools. And for the California State Preschool Program, the May Revision includes a $53 million reduction in costs to support preschool reimbursement rate increases that are currently supported by limited-term federal funds.

There's also a $52 million COLA reduction, and these reductions are to adjust for the fact that there's a lower number of contractors than forecast at governor's budget. We've outlined several K through 12 actions and solutions to prioritize Proposition 98 spending in the May Revision. First, the May Revision proposes a $689,000,000 decrease to support the COLA and to reflect further enrollment declines for the district and charter LCFF, for a net increase of roughly 3.4 billion when combined with governor's budget.

There is a $36.2 million increase to support COLA and growth adjustments for a county LCFF for a net increase of 88 million when combined with governor's budget, a $1.7 million decrease to support COLA for categorical programs for a net increase of roughly 555,000,000, 2.1 million increase to support inflationary costs in the California School Information Services program, $2 million to increase support to increase support for equity leads that would assist districts in charter school efforts to close achievement gaps.

Because available Proposition 98 resources have declined between governor's budget and the May Revision, the current proposal includes multiple budgetary solutions, including adjustments of one-time resources, which we did discuss in the previous panel. The first is utilizing an additional $1.5 billion in one-time resources to support the LCFF in the budget year, for a net total of roughly $3 billion when combined with this same proposal at the governor's budget.

The second is reducing 2022 Budget Act support for the Arts, Music, and Instructional Materials Discretionary Block Grant by an additional $607,000,000, for a net total of roughly 1.8 billion when combined with governor's budget. This takes total support for the program from roughly $3.6 billion to roughly $1.8 billion. Third is reducing 2022 Budget Act support for the Learning Recovery Block Grant by $2.5 billion, taking support for the program down from roughly 7.9 billion to $5.4 billion. The arts and music and Learning Recovery Block Grant reductions are adjustments of one-time resources. With these changes, the state is reasonably positioned to continue supporting and maintaining critical ongoing education investments in the multiyear window. That concludes my overview of the notable Proposition 98 items in the May Revision.

Thank you very much. We're going to move to the Legislative Analyst Office.

Thank you, Chair and members. Ken Kapphahn with the Analyst Office. We have a handout that covers all of our analysis and as we've been teasing all morning, this will cover our overall comments on the guarantee and the architecture of the K-12 spending plan. Across K-14 education, this May Revision reflects a budget picture that remains manageable but has clearly weakened over the past year.

You've heard a lot about mixed signals and economic uncertainty over the past few days and past few months, and that point is well taken. But what seems a bit more certain at this point is that state revenues have already entered a downturn. Most notably, personal income tax withholding has been below last year's rate every month since last fall, and we've seen core sales tax collections consistently below expectations, too. We see more downside than upside to the administration's revenue estimates.

We see about a 2 and 3 possibility that revenues are lower than what is reflected in the May Revision. The midpoint of our estimate, our best guess, or best estimate, if you will, is about 10 or 11 billion lower over the three years. Obviously, a wide range of uncertainty around that. Under that scenario, the Proposition 98 guarantee holding everything else constant would drop around 4 billion, or nearly $0.40 for each dollar of lower revenue.

Some portion of that could be mitigated by somewhat higher property tax revenue. We already talked about that. We also have some differences from the administration and our estimate of the share of overall revenues attributable to capital gains. Now, that might sound like one of those behind-the-scenes forecasting debates that just spilled into the open, but it has more of a practical effect this year because it's the key factor affecting the deposits into the Proposition 98 Reserve.

Whereas the administration has an additional 2.2 billion in deposits compared with January based on higher capital gains estimates, our outlook anticipates reductions in capital gains and no increase in required deposits. Turning to K-12 spending, this is page four of your handout. I'll focus on the broader picture. The May Revision overall reduces K-12 spending by 4 billion compared with the governor's budget, and I think you can think of those changes as falling into three basic categories.

There's a reduction in cost estimates for the Local Control Funding Formula of about 1 billion. That mainly reflects the Department of Finance scoring some additional savings from declines in student attendance that have happened over the past few years, offset by a handful of smaller ongoing increases. There's an additional 3.2 billion in reductions to grants the state approved last year, mainly the Arts, Music, and Instructional Materials Block Grant and the Learning Recovery Block Grant, and there's 138,000,000 in various smaller one-time increases.

With those lower revenues, some more difficult tradeoffs are probably unavoidable, but we think the May Revision is moving in the wrong direction compared with January. The January budget had proposed reducing some existing programs to make room for new proposals. The May Revision retains all of the January proposals, adds even more new proposals, and does so amidst an even weaker revenue environment. We're even more concerned about the state's ability to sustain all of those commitments moving forward.

The May Revision also proposes even more reductions to funding that school districts already have in hand. The largest is the 2.5 billion reduction to the Learning Recovery Block Grant, which represents funds that school districts received back in March. I think our biggest concern is that the May Revision relies even more on one-time funds to cover ongoing costs, including almost 3 billion to cover the Local Control Funding Formula.

That approach creates a deficit in your budget moving forward because those ongoing costs continue, but that one-time funding isn't available the following year. Those are all significant structural issues, and we think they're going to be difficult to address by making only small refinements to the May Revision. We'd recommend an alternative starting point, what we've called something more like a baseline budget instead of the May Revision spending framework, and that's outlined on page seven of your handout.

Essentially, this framework starts by rejecting all of the major new one-time and ongoing spending proposals from January and May, and instead only funding augmentations, where we're looking at smaller proposals that are workload-related or potentially health and safety-related. It also starts without making reductions to the grants and programs you approved last year, and it avoids creating ongoing deficits by aligning the COLA rate with the amount of ongoing funding available.

In practical terms, what that would mean is that the state could still cover a 5.1% COLA for existing programs. That's less than the statutory rate, but still high by historical standards and much higher than the increase for most other state programs. And for LCFF, it would still represent a 19% increase over the past two years combined. The state also would need far fewer reductions to programs in the current year. The May Revision contains a total of about 5.1 billion in reductions across all K-14 programs.

Under the baseline budget, you would only need about 1.5 billion in solutions, and we think you could achieve the reductions or solutions without reducing funding that has already been allocated to districts. Turning to page eight, we think that approach would have a couple of advantages. We think it's less disruptive for districts that have already made plans to spend the funding they received last year, including on priorities like learning recovery.

We think it puts the state in a better position to deal with potential downturns or weakness that might emerge if the economy continues to worsen. And importantly, it preserves your flexibility. If the state adopts the May Revision, some or even all of any increase in the guarantee next year might be taken up by addressing the deficit that exists in 23-24, instead of being available to fund COLA or other priorities that you might have.

Our suggestion to start with a baseline budget isn't something we would present as a take-it-or-leave-it recommendation. Of course, many variations and refinements are possible. We think starting from that point is going to lead to a better-finished product and something that's a little bit more aligned with some of the priorities that you've had when you adopted last year's budget as well as the things you've articulated in your subcommittee hearings this year. My colleague is here if you have any questions on specific items. But that concludes our comments.

Thank you very much. The Department of Education. Is there anybody here from the Department? Okay.

Good morning, Mr. Chair and Members. Malia Vella, deputy superintendent from the California Department of Education on behalf of State Superintendent of Public Instruction Tony Thurmond. We recognize the state's current budget climate is less than ideal, and we appreciate the administration submitting a revised budget that demonstrates a continued commitment to education.

While we understand the need for a little bit of tightening around the budget, we want to express our concerns regarding the proposed cuts to two grants from last year, namely the Arts, Music, and Instructional Materials Block Grant and the Learning Recovery Emergency Block Grant as many of our LEAs have already planned expenditures and utilization using those funds. We urge the Legislature to consider restoring those proposed cuts as soon as the revenue picture improves and should the Legislature move forward with the proposed revisions.

We also understand the need for temporary measures given the current budget constraints, but emphasize the importance of restoring these programs, mainly because they are investments in making sure that our students can continue to accelerate their learning and address mental health concerns. We also want to highlight some positive aspects of the May Revision. Specifically, we're supportive of the inclusion of work around restorative justice, bilingual educators, reading readiness, and literacy supports. These initiatives stem from bills that State Superintendent of Public Instruction has sponsored.

We are also supportive of the COLA to LCFF, which will help our LEAs have flexibility to meet their local needs. We are dedicated to working collaboratively with the Legislature and administration to ensure that the budget ultimately aligns with the needs of our students and educators, and are committed to sharing any relevant information and advocating for essential programs and resources. In conclusion, while we understand the challenges presented by the current budget climate, we appreciate the efforts to prioritize education while allowing for flexibility to meet local needs with the COLA. We urge the Legislature to consider restoring necessary programs in the future and assure you of our commitment to working together. That concludes my comments.

Thank you very much. I'm going to make a couple of comments and let other members ask questions first and then come in behind. And we had an animated discussion on the Arts Block Grant already. It came up in an earlier part of the hearing. A lot of districts have collectively bargained parts of it. It's a very difficult thing, and we are still very concerned about it. I just want to do that.

And then we had in the previous item on community colleges the discussion about the Prop 98 overall revenues and how they fit together and some of the things. And so it's not that we're not concerned. We had that discussion already. So before I ask any questions, let me ask if there are any questions of committee members.

I believe I already started asking some, but I'll continue.

Senator Min.

On the last panel shooting the gun a little quickly here. Just wanted to get a sense of why we made certain choices. As was mentioned, there's some steep cuts to the Arts, Music, and Instructional Materials Discretionary Block Grant. There's some other cuts. I will say I really do applaud and want to just give my thanks to you all for ensuring that we keep the COLA increase.

I think that's really important right now as we're facing pretty critical teacher shortfalls in large parts of the state. Our schools are very important and I think we need to make sure that the core there is strong. But I just was wondering, and in particular, I'm looking at school nutrition which is getting an increase, no cuts. And I know from my locals that there's a lot of wastage here. The ELA program, which is 4 billion, has, I don't believe, any cuts.

And my understanding has been explained to me that that has not even been rolled out yet, that we've got other things in here. And I guess so my question is why not touch some of these, particularly the ones that have not yet rolled out as far as payments? Why not defer these a little bit? Why are certain programs not being touched and why are others being impacted so dramatically? And I guess I'd first want to start with Department of Education or LAO and just get your thoughts on if you were designing the budget. And I know we talked about a base budget here, but what would be some of the trade-offs that you might consider here?

Edgar Cabral with the LAO. I think, just to clarify in terms of the ELA program, it has been rolled out. The program was created in 21-22 with $1.75 billion and then was increased to $4 billion starting in 22-23. So the money is out the door. What we have heard is a lot of concerns about being able to staff up the program and build the program.

And there is because of the under statute the program requirements about serving all students and families who are interested doesn't kick in until 23-24. So for these first two years, there haven't been any specific program requirements. So to your point, we do recommend there's a trailer bill change in the May Revision that would extend another year the ability to keep these funds so that they don't revert back to the state. The 21-22 funds were supposed to revert.

Essentially, they have until the end of this year to spend those funds. The May Revision extends it for an additional year. We don't think that's necessary considering that districts are getting $4 billion on an annual basis to run the program. If they didn't use that money to ramp up the program in 21-22, we don't think it's necessary.

And to the extent that that funding comes back, it means that next year as part of our budget conversations, that would be one-time problem funding available to address any potential issues moving forward. In terms of the nutrition, our understanding is that is more of a the state enacted the policy of doing universal meals for all families, for all students. So that is the commitment.

And the administration I think, has received additional information from the Department that over time what we've seen is a greater number of what we call paid meals. And so that's under the federal program only the students who qualify for free or reduced price lunch receive those subsidized meals. The state is essentially covering the costs of the families who are not the state program is covering the costs for the meals for families who are not low income. And so there's been an increase in those number of meals compared to what was budgeted and that's why those costs so that's sort of higher costs of the policy that was enacted a couple of years ago.

Does that complete your question?

Yeah, I think the summary around the school nutrition is absolutely correct. It's really just to make sure that we're making the programs whole because there was an increased cost to those programs based off of the students that have been served. Regarding the ELOP or Expanded Learning Opportunities Program, I know that we have a rule here against using acronyms, but for that program, really there have been capacity issues. We've seen our LEAs really try to roll those out.

They are geared towards K-6 schools and so we are trying to make sure that they can get up and running. There's been a lot of work done on that. And so to kind of pull back now or to reduce the funds now when they're at this critical juncture of really getting it rolled out for next year we think would be detrimental to the intent of the program.

And is that same logic around TK as well? Because I see we're expanding just that we're getting enrolled out.

Yes, absolutely.

Thank you very much. Other questions? Senator Smallwood-Cuevas.

I just want to just reiterate the support of us and administration working to establish this COLA and make sure we're keeping pace with inflation and the cost of living for so many of our education workers. I did have a question about the leadership development training, which I was glad to see the anti-bias training included in the May revised. Can you say more about what this professional development leadership training is?

Lina Grant, Department of Finance. So that's an additional 1 million ongoing. They've received 2 million for some time now for this work. This would support county Office of this funding goes already to the 2 million. So this would be 3 million goes to the county office of Los Angeles. County Office of Education. And this would support anti bias training and professional development for leadership training, and it supports the Mobile museum project that they have. Great. Thank you for clarifying.

I just wanted to make sure that I was on the same page with what that meant. Thank you so much.

I just had a really quick question. As Vice Chair of the API Legislative Caucus, we are, I think, along with many others, very concerned about and invested in the rollout of the Ethnic Studies program. And I just was hoping you could speak on that. I understand that there was $100 million appropriated a few years back, and just the status of that, I understand the program would require something like $276,000,000.

And so I just wanted to get an update from any of you on the status of that and whether that's something that we can prioritize in this budget, but maybe none of you have the answer off the top of your head. So it looks like we have some coming up.

Amber Alexander with the Department of Finance. I believe you're referring to some prior investments that have been made around professional development for Ethnic Studies in the prior budget. We'd have to defer to the Department of Education to provide an update in terms of the rollout of those funds, but we do believe an RFA has gone out for that work.

In terms of the conversations that have been happening around the Ethnic Studies graduation requirement, that is not something that funding has been provided for in the budget, knowing that there's certainly an interest, but that's not something that's included in the budget.

So this is AB 101's requirement of a...So there hasn't been no appropriation for that at this point.

There's been no appropriation for that.

Got it. And that would cost $276,000,000 is what I'm told.

That's not something that Finance has costed out, knowing that we have not built funding in, but we do believe it would be a significant cost to implement that mandate.

Okay, well, I believe that the requirement is that it is a graduation requirement by the year 2930 for that class. And I would just iterate my very strong belief, and I think I speak for a lot of folks in this body in the Assembly that we get funding for that.

Just to clarify, too, on behalf of Department of Finance, that graduation requirement is contingent on a Budget Act appropriation being provided.

Yes. Okay, thank you. Then I have a few questions before we move on. And the Proposition 28 arts and music funding has been a hot issue since the original Jan 10 budget came out. And I was going to ask the Department of Finance just that the language that's in the recommendation doesn't include clarification on how the supplement or supplant provision is going to be implemented. And I wondered how you envision this playing out in this year.

Amber Alexander with the Department of Finance we certainly recognize that there's an interest on behalf of those in the field to get clarification on that requirement. And that is something that we continue to have conversations around with our partners in the Legislature, in the Department of Education as well. That is not something that is addressed in any of the implementation language that's put forward in Trailer Bill. But we understand the need to have.

Well, that's actually why I asked the question. And so I just hope those conversations would be completed by the time we complete the budget so that we have clarification. I noticed some body language over in the Lao area. Is there any desire to make a comment about that? Maybe that's not the right way to ask it because I get you have no desire to make it. Do you have a comment?

I would just say that Edgar Cabral with the Lao I think the changes that were in there are some changes in the May revision. They are primarily technical. I think my understanding is many of them were suggestions that the Department of Ed had and we didn't have any specific concerns. But you're correct that the part of the discussion that's the hot button question, which is about how you define what supplement, not supplant, is not addressed in the May revision.

Okay. Would be interesting to have it addressed. Thank you for that. And on the literacy screening, I generally support this direction and it's just a question of making sure that we do the right thing to move it along. And I did a Bill on dental screening when I was in the Assembly. We have all these things where we try to catch them before they sort of careen out of control. So this is a good recommendation. I just hope it's the right direction of next steps and somebody ran to a chair. Is that because you had a comment you wished to?

Department of Finance just here if you had any questions.

Well, the concern that's been expressed and then the last one I had a question on was we had a discussion in a previous hearing about the military spouse authorization about teacher credentialing, and I think we had some concerns. That it might cede to any of nine other states the ability to sort of set requirements because it was done not uniquely by the State of California. And we had nervousness about that.

And one of the concerns that was raised to me since that discussion was whether or not California's domestic partners laws or things that might be laws about relationships could in any way be overruled or undermined by the other nine states if we had to do this jointly. Does anybody know?

The answer to that question was my Department of Finance. So I think what you're talking about was discussion around mobility compacts and whether or not California would become one of the Members of that compact. So that is not what we've put forward in the May Revise. Instead, the May Revise authorizes the Commission to issue a comparable California Credential to any United States military service Member or their spouse that possess a valid out of state teaching credential or services credential to provide instruction or services in the.

I'll just interrupt. Okay, thank you. And the question then is because that wasn't clear. Maybe the language was that just wasn't clear. So basically, is the recommendation in the May Revise many ways to address the concerns by doing a uniquely California thing rather than doing it jointly with the other states and sort of ceding some authority to them?

So this technically aligns with federal law that was recently passed. But yes, we're not committing to being part of a compact at this time.

Okay. So it's a way to meet both goals to make sure that the spouse issue is addressed, but not in a way that cedes California's control to a compact of other states.

Okay, thank you. I appreciate that because that addresses the concern that we had when we had the first hearing. Then are there any other questions before we move on from this item? Then? Once again, don't take the lack of discussion as lack of interest in some of the issues. We really vetted this in numerous previous hearings, and I think this was just the May Revise update, and we even talked about the Prop 98 architecture in the community college budget and not here.

Correct.

So thank you very much for participating today. We really appreciate it. That completes the actual issues part of the budget hearing. And we're going to go to public comment, and we're going to do public comment in the room. Before going to the teleconference line, I'm going to try to assess any time limits based on people that wish to how many people in the room wish to make public comment? There were some rather tentative things there. There were three hands and many, many more people lining up.

So I'm not totally sure. Okay, then if I'm going to get to many people on the phone, I'm going to have to do my best to try to limit you to about 30 seconds. So it would be good if you did your name, your organization, and the headline of your opinion, and then we would be happy to take additional comments or letters to the Committee. So welcome to the Committee.

Thank you so much. Carol Gonzalez here on behalf of Long Beach Community College District, Santa Monica College, South Orange County Community College District. And we'd like to thank you.

That pretty much took up your whole time. I'm not going to count my interruption.

Yeah, no problem. Thank you so much for your efforts on student housing through the Senate plan and the Governor for the investments in student housing, the COLA and the Select Categorical COLA for community colleges in the May revise. However, as you work through negotiations and move forward in the June budget, we respectfully ask not to reduce the Deferred Maintenance and the COVID Block Grant. These are essential for meeting the district's goals and consider you to focus on the January investments. Thank you.

Thank you very much. We appreciate your comments. Next speaker.

Thank you, Mr. Chair and Members. Jeff Bacha, representing the Riverside County Superintendent of Schools. Two headline issues for you. Number one, we strongly support the May revised proposal for 80 million in ongoing funding to county Offices of Education for Juvenile Court and community Schools.

And then on the issue that you raised regarding Proposition 28 and the question of supplement not supplant, we have submitted a letter as part of a coalition with a recommendation on that point and happy to follow up for further discussion on that.

Thank you very much. Next speaker.

Hi, good morning. Cynthia Gomez, state policy advocate at the Coalition for Humane Immigrant Rights, CHRILA. Speaking on two things. First, I want to echo comments made by Senator Smallwood-Cuevas earlier in this conversation. CHIRLA agrees that it's imperative that we ensure that investments in education are also accessible to Dreamer and undocumented students so that they can navigate higher education. Second, CHRILA is supportive of a budget proposal this year for a grant program in support of Dream resource centers and services for our high school students.

Despite the budget challenges, we hope to see this investment in the final budget. We see it as an important investment to build upon our state's past work and not leave undocumented students behind. Thank you.

Thank you very much. Next.

Good afternoon. This is Valerie Denero.

It's not afternoon yet, but the way this hearing is going.

Good morning.

I'm Valerie De Niro with Every Child California, and we advocate on behalf of state subsidized contractors that operate our childcare programs in the State of California. I'm also a Santa Cruz resident and one of your constituents, so a lot of these issues definitely impact my community as well. We thank you for your proposal for the one billion in rates towards rates and the pause on family fees until we can find a rate system that is equitable across the State of California for our system.

We're also asking you to request.

I really hate to try to limit a constituent, but that may be a very declarative closing sentence.

Okay, we would ask that your contracting earnings are paid based on certified hours, and we give our contractors, flexibility and spending. And thank you for the extra time this morning.

Thank you. And thanks for traveling all the way up here. Next speaker.

Mr. Chair and Members, Brendan Tuig on behalf of Edvoice. We're in strong support of the trailer Bill Language requiring screening for reading difficulties and risk of Dyslexia in grades kindergarten, first and second. We believe, we're very confident that it will improve literacy rates and expand opportunity for California's children. And we're also grateful to the Governor for prioritizing screening and recognizing the urgency of the issue by including it in the May revision.

And also a thank you to Senator Portantino for being steadfast in his efforts to make universal screening a reality in California and we urge your adoption in the final budget.

Thank you very much. Next speaker.

Good morning, Alex Graves with the AICCU, representing the private nonprofit colleges. Just want to first thank the Administration for recognizing our good faith effort to strengthen transfer opportunities to our institutions. And second, would just like to raise our concerns with the Trailer Bill proposal to expand the Golden State Teacher Grant program to students enrolled in out of state online programs.

We have over 40 schools of education, very strong interest in students who are currently accessing those funds and would prefer to see that those funds continue to be prioritized for California students attending California based institutions. Thank you.

Thank you very much. Appreciate your comments.

Thank you. Mr. Chair Members, Andrea Ball. Two headline issues. First, on the proposed cuts to the block grants, deep concern by Long Beach Unified School District, Orange County Department of Education, Central Valley Education Coalition, and Suburban School Districts Association. Second, in support of the May revision proposals for funding for county offices of education, support from the County Superintendent of Schools of Orange County, Madeira County and Marin County.

Thank you very much.

Good morning, chair and Members Melissa Bardo, on behalf of the Education Trust West, commenting on two higher education issues, we'd like to thank the Governor for maintaining his commitment to the base increases and COLA in the May revise. Consistent with the compacts and roadmap, we asked the Legislature to approve the funding increases while also emphasizing the importance of accountability and oversight to ensure campuses are making progress towards goals.

Lastly, on the Student Aid Commission proposals, we support the additional positions provided to the Commission to support financial aid programs and distribution of financial aid completion toolkits. We also greatly appreciate the Governor's proposal to increase on an ongoing basis support for the Cash for College program. And finally, as we look to the future, we respectfully ask that the Legislature prioritize any financial aid expansion dollars on Cal Grant reform so that 150,000 more Low income students can afford college. Thank You.

Thank you very much. Next speaker.

Good morning, Chair Laird. Manuel Rodriguez, on behalf of the Institute for College Access and Success also known as TICAS. First, I'll express support for the base increases to our CSUC COLA for community colleges, the ongoing Dollars for Cash for College program at CSAC, and the long term investment to student housing. I will echo concerns by the LAO and the great questions by Senator Smallwood-Cuevas on the Trailer Bill Language that extends eligibility to online institutions outside of California. We do have some questions concerns on those institutions.

We support the cohort default rate Trailer Bill Language that they brought up during the CSAC section, but also want to elevate that we need a long term metric on how we measure quality institutions for access to Cal Grant. And lastly, echo Edtrust West comments that as we look to the future, strongly support Cal Grant reform when it comes to financial aid.

Thank you very much, next speaker.

Good morning, Anna Loakimedes on behalf of Los Angeles Unified School District. Los Angeles Unified appreciates the continuing support for the LCFF and the COLA. In particular, we strongly support the extension of the timeline to expend the Expanded Learning Opportunities Carryover funds. We're actively working to stand up the program, but like many other districts, we need a little more time. We ask for flexibilities around the requirements that are dependent on staffing, particularly in expanded Learning and the TK ratio.

We believe that LEA's that can demonstrate a good faith effort to staff programs as statutorily required, should not be penalized by losing those funds or paying penalties. And finally, we would like to emphasize the importance of maintaining the allocation in the Arts and Music Block Grant and the Learning Recovery Block Grant for all the reasons that were discussed today.

Thank you very much, next speaker.

Good morning, Chair and Members. Amanda Dickey on behalf of the Santa Clara County Superintendent of Schools, we just want to urge the Senate to support the May revision proposal for court and community schools and county offices of education, including the DA, additional funding. But also wanted to mention that there's a really important tweak that needs to be changed in order to ensure that a number of county offices, including Santa Clara, Napa County and about five or six others, do not actually lose money under the proposal. We'll be in contact later with a letter.

Thank you very much, last speaker.

Adonai Mack. with Children Now we like to support the $20 million for the Bilingual Education Teacher preparation program as well as the increase in the residency grants. Also, we want to commend the Senate for adopting $1.0 billion for childcare rate reform. We believe that rate reform is paramount to ensuring that our childcare programs are successful in the future. What we'd like to raise concerns about is the equity multiplier.

We still believe that the Governor's proposal does not address the lowest performing subgroup of students and we'd like to see some language adopted around that. Thank you.

Thank you very much. Appreciate that. Moderator we're now going to move to the phone and 877-226-8216 access code 621-7161 moderator welcome to the Committee, and could you let me know how many people are in line?

Thank you. Mr. Chair, we have 14 callers who have signed up here to make a comment. For those who have not queued up, you may press one, then zero to join the queue. Please do not press one, then zero a second time, as that will remove you from the queue.

And then moderator let me just say that would take us, if I limit to 30 seconds, a little short of our ending time at a quarter to noon.

And so I'm just going to go to a quarter of noon and try to encourage everybody to be 30 seconds and take whoever can be on for 30 seconds until then. So moderator let's go to the first caller.

Mr. Chair, just to let you know, we are now up to 26 participants in queue.

If they take 30 seconds, we can get there. So if you take a minute, you're screening somebody out. So let's go.

We're going to go first to line 15.

Good morning, Cristina Salazar with Californians Together want to extend our gratitude to the Administration for the one time 20 million to bring the Bilingual Teacher Professional Development Grant program. We also want to say that we're still reviewing the panel for reading difficulty screeners. We think it's going in the right direction, but still have some concerns about the over identification of English learners. And we will follow up in writing. Thank you.

Thank you very much. Moderator next caller.

Line 19.

Martha Zaragoza Diaz, representing the California Association for Bilingual Education. We seek your strong support of the 20 million in the May revise for the Bilingual Teacher Professional Development Program. Lastly, CABE appreciates the efforts in addressing our concerns regarding universal screening of pupils for reading difficulties. But we still have some concerns which we will forward to you in our letter, which is forthcoming. Thank you.

Thank you very much. Moderator next call.

Line 20.

Good morning, Chair and Members. Shannon Swanson on behalf of the Cal State Student Association, we thank the Governor for his commitment to the compact and overall are grateful for the Legislature's sustained commitment to higher education access and affordability. We also respectfully ask that the Legislature remain committed to California's college students by prioritizing Cal Grant reform next year, and ask that you continue to help students across the state by prioritizing student housing in our budget. Thank you for your time.

Thank you very much. Next caller.

Line 13.

Good morning, Chair Karina Laigo with the Child Care Law Center. We align our comments regarding improving payment rates for childcare providers and continuing the suspension of family fees. We raise concern on Trailer Bill Language proposal to expand transitional kindergarten to enroll younger four year olds, and to exempt expanded learning opportunities programs operating on local education agencies from the California Department of Social Services Community Care licensing agreements.

Because of transitional kindergarten, community based childcare providers have consistently raised the negative impacts like families leaving and childcare providers having to close due to ...

Thank you very much. We really appreciate your comments. Moderator next caller.

Line 18.

Thank you, and good morning, Mr. Chair and Members. Pamela Gibbs, representing the Los Angeles County Office of Education. I will align my comments with Riverside County Office of Education and Orange County Department of Education related to the Juvenile Court School and County Community School additional funding. Next. We'd also like to request your support for a diverse Education Leaders Pipeline initiative to build upon the investments made by the Administration and Legislature relating to the educated workforce.

We believe we have a cost neutral solution and look forward to working with you on this.

Thank you very much. Moderator next caller.

Line 27.

Good morning, Chair and Members. My name is Liz Fenton with the Office of Kat Taylor, one of the co-sponsors of School Meals for All. Thank you for your leadership and strong commitment to continuing the progress that has been made in school nutrition programs. We support the full funding for child nutrition programs as proposed in the Governor's May revise.

In addition, we support the Senate Plan, which includes full funding for the program and 100 million for the Kitchen Infrastructure and Training program, which is key to protecting progress made in successfully implementing California School Meals for All. Thank you very much.

Thank you very much. Moderator next caller,

Line 28.

Good morning, Chair Laird and Members. Ron Rapp speaking on behalf of the California Faculty Association. First, we would like to thank the Governor for continuing his commitment to provide a 5% base increase to the CSU, which is a much needed start to resolving the perennial underfunding of the CSU. However, we ask the Legislature to address the underfunding of CSU by providing additional resources above the 5%.

Second, We ask that legislators reconsider the practice of providing undesignated funding increases to the CSU and instead provide more direction as to the intent of... thank you very much.

Thank you very much. And we're going to allow you to revise and extend your comments for the record. Moderator next caller.

Line 32.

Hi Chair and Members, Andrew Cheyne from Grace and Child Poverty California. We align our comments with Officer Pat Taylor in full support of the Governor's proposal for Universal School Meals, as well as the Senate plan on childcare school meals and summer EBT. Thank you so much.

Thank you so much. Moderator next caller.

Line 34.

Good morning, Chair Laird and Members. My name is Abby Halperin I'm with the Center of Ecoliteracy thank you for your leadership. We support the full funding for child nutrition programs as proposed in the Governor's May Revise. In addition, we support the Senate Plan, which includes 100 million for the Kitchen infrastructure and training program.

The Center of Ecoliteracy works with a network of over 100 public school districts across the state, and we've heard from these nutrition services directors that state investments will help realize the full potential of school meals to nourish our students, support local farmers, and benefit the planet. Thank you.

Thank you very much. Moderator next caller.

Line 40.

Hi, Tiffany Mok with CFT, A Union of Educators and Classified Professionals, and we support the COLA for 8.22% in all areas to help address our school staffing crisis. Thank you so much.

Thank you very much. Moderator next caller.

Line 29.

Good morning, Elizabeth Esquivel with the California Association of School Business Officials. We're appreciative of the May Revise, providing a full COLA for the LCFF and programs outside of the LCFF. We were disappointed to see an additional reduction to the Discretionary Block Grant and then another cut to the Learning Recovery Emergency Block Grant. We do appreciate the funding for the school nutrition to help implement universal meals and are really appreciative of the extension of the ELOB deadline.

Thank you very much. Thank you very much. We appreciate your comments.

Line 22.

Good morning, this is Debbie Raucher with John Burton, Advocates for Youth, here to express support for the Senate's proposal to fully fund the cost of attendance for foster youth using middle class scholarship and Student Success Completion Grant. Also wanted to express our concerns about the proposal to allow for flexibility in community college categorical program spending. We're concerned that this flexibility could result in a defunding of vital mental health support at some institutions. Thank you.

Thank you very much. Moderator next caller.

Line 30.

Good morning, Lindsay Nofelt representing Reading for Berkeley, a statewide connected reading advocacy organization. We are in strong support of the Governor's May Revision proposal to require annual universal screening for reading difficulties and risk of Dyslexia in grades K through two.

Thank you very much. Moderator next caller.

Line 41.

Good morning, this is Meredith Dodson representing the San Francisco Parent Coalition, a network of 5500 parents from over 110 public schools across San Francisco. We're calling to share our strong support of the kindergarten through second grade universal screening for reading difficulties, including the risk of Dyslexia as written in the May Revise. Students with Dyslexia are less likely to graduate high school and attend college, and also experience higher rates of incarceration.

We strongly support universal screening as written and appropriate budget allocation required to implement this important legislation. Thank you.

Thank you very much. Moderator next caller.

Line 36.

Good morning, my name is Romelle Antoine. I'm with the Black in School Coalition. We still remain disappointed in there being no changes to the equity multiplier. We stand ready to collaborate with you and Members of the Administration to get to a solution that works for the lowest performing subgroup not currently generating additional funds. Thank you.

Thank you very much. We appreciate your comments. Moderator next caller.

Line 23.

Good afternoon, my name is Chanel. With the Student Funding for California Community Colleges, the official voice for 1.8 million community college students. We appreciate the April 22 COLA and support student housing funding for community colleges and are to include these in the final budget agreement. But we are concerned about the statutory flexibility for categorical funding, and we're concerned about deferred maintenance. Additionally, we support Pell Grant full implementation for next year. Thank you.

Thank you very much. Moderator next caller.

Line 11.

Lori Depole, Post, State Director of Decoding Dyslexia, California. We are in strong support of the Governor's May Revise proposing annual screening of all K through two children for reading difficulties, including risk of dyslexia. Preventing reading failure cuts costs 40 other states already have screening legislation. We thank the Governor and Senator Portantino for making this a priority in California. Thank you.

Thank you very much. Moderator next caller.

Line 31.

Good morning. Melanie Lucas with the California State Parent Teacher Association. California State PTA strongly supports the Governor's provision proposal to require universal screening for reading difficulties and the risk of Dyslexia in grades K through two. Thank you so much for your time.

Thank you very much. Moderator next caller.

Line 26.

My name is Denise. On behalf of Equitable Literacy for All, we strongly support Governor Newsom's May revision proposal to require universal screening for reading difficulties and risk of Dyslexia and K through second grade. We strongly support these efforts to elevate literacy accomplishments which will benefit all children, our teachers, and our economy. Thank you so much.

Thank you so much. Moderator next caller.

Line 38.

Hi, My name is Beverly Wong. I'm calling from Parents Helping Parents, based in San Jose and serving five Bay Area counties. And we wanted to express our support of the Governor's May revision proposal to require annual universal screening for reading difficulties and risk of Dyslexia in grades K through two as well. Thank you so much.

Thank you very much. Moderator next caller.

Line 46.

Good morning, Chair Laird and Members. My name is Kat Soltanmorad the Tahoe Truckee Unified School District thank you for your strong commitment and progress towards School Meals for All. We support the additional 110 Million one time Proposition 98 General Fund and approximately 191 Million ongoing Prop 98 General Fund to fully Fund child nutrition programs in the next two years.

In addition, we support the Senate Plan, which includes the fully Fund and program 100 million dollars for kitchen infrastructure and training programs, which is protecting the progress made in California school meals for all programs. Thank you very much.

Thank you very much. Moderator next caller.

Line 39.

Rachel Levy, calling on behalf of the Community Advisory Committee of the Mount Diablo Unified School District. We are in support of universal screening for reading difficulties and risk of Dyslexia, K through two. Thank you for your time.

Thank you very much. Moderator next caller.

Line 37.

Good morning, Chair and Members. This is Derick Lennox calling on behalf of the 58 County Superintendents of Schools. The students served in Juvenile Court and community schools have some of the greatest educational, social and emotional needs in our state, and they warrant the Legislature's continued support.

We therefore urge your support for the administration's proposal to increase LCFF funding for students served in county officers of education. Thanks so much for your time.

Thank you very much. Moderator, we're at time, but we've done 23 of 26, so let's take the last three callers and we'll do it.

Line 33.

Good afternoon, Chair Laird and Members of the Committee. Jetaun Stevens, with Public Advocates calling to express appreciation for the Governor and Legislature's continued commitment to prioritizing affordable student housing, and particularly supportive of the Governor's solution oriented proposals that recognize the different capacities of the segment and want to express strong support to maintain the one time grant funding to build affordable student housing for the community colleges, which makes these projects viable. Thank you.

Thank you very much. Moderator next caller.

Line 45.

Good morning. This is Rachel Hurd, President of the Board of Education for the San Ramon Valley Unified School District. We strongly support the Governor's inclusion of screening of all students in grades kindergarten through second for reading difficulties, including risk of Dyslexia. Our district is already doing this screening and are seeing the benefits in the implementation of our multi-tiered systems of support.

I would also like to add the cuts to the Arts and Music Discretionary grant will be very problematic for our near term financial planning, as that discretionary grant is what we're using to Fund our MTSS Liaisons thank you.

Thank you very much. Moderator this is going to be the last caller.

Line 25.

Good morning, this is the Itzul Gutierrez from the California Association of Food Banks. As one of the original co-sponsors of School Meals for All, we're grateful in his strong support for the inclusion of more than 300 million in new investments, and the Governor's May Revise to fully implement and ensure school meals for children. And we're also grateful for the Senate budget plan to fully Fund School Meals, as well as augment the kitchen infrastructure and training funds. Thank you so much.

Thank you very much. Moderator we appreciate your services. We know it was rushed, but thank you for bearing with us. That completes our business. But I want to thank everyone who participated in public testimony today, and I'm sure there were people that were still trying to get on on the line, and there were people that abbreviated their comments with the public testimony in the room.

So if that happened, we would welcome your comments and suggestions in writing to the Budget and Fiscal Review Committee, or visit our website and submit comments there. Your comments and suggestions are important to us as we really get to the key time of the budget. So we appreciate your participation. Thanks to everyone for their patience and cooperation this hearing. We've concluded the agenda. The Senate Budget Subcommittee One on education is adjourned. Thank you.