Assembly Standing Committee on Budget

Christian Griffith and the budget team are here to answer any questions, and we also have Ms. Carolyn Chu from LAO and some of her colleagues to answer any questions as well. After the presentation, we obviously will take questions as well as public comment. If you are not here but would like to make public comment on the phone, the number is 877-692-8957 access code is 1850-1100 and that number should be hopefully on the screen.

Any questions or issues, please call Assembly Budget at 916-319-2099 with that, we'll turn over to Ms. Lee. Welcome.

Good afternoon, Chair Ting, Vice Chair Fong, and Members of the Committee. I'm Erica Lee with the Department of Finance, and I am here to present on five early action bills for your consideration. And, Chair Ting, would you like me to go through all of the bills or stop after each one?

If you could go through all five, that'd be great.

Okay, great. Starting with SB 100, this is a budget Bill Junior that amends portions of the 2021 and the 2022 Budget Acts. Specifically, this Bill includes 15.4 million for calorie cycle for cleanup and debris removal activities associated with the Mckinney wildfire. This Bill also specifies that an additional 4.4 million of Prop. 98 General Fund and 5.3 million Prop. 98 General Fund may be used to support the extension of family fee waivers from July 12023 to September 30, 2023.

This Bill also makes various technical changes, amends various local fiscal agents, and expands the use of funds for several organizations to various legislative priorities. This Bill extends the expenditure timeline of $10 million General Fund appropriated in the 2022 Budget act to support health, information technology, housing or wellness infrastructure projects for the St. Paul's Program for All Inclusive care for the elderly, or the PACE organization in San Diego to June 30, 2025 and this Bill makes other technical and clarifying amendments.

Moving on to the second Bill, a budget trailer Bill. SB 110 is a Bill on early childcare and education. This Bill authorizes the California Department of Education and the Department of Social Services to use available federal funds to provide temporary stipends to California State preschool program and state subsidized childcare program providers.

An estimated $112 million Federal Fund balance is available for the Department of Education to distribute temporary stipends to preschool providers, and an estimated $159 million Federal Fund balance is available for the Department of Social Services to distribute temporary stipends to childcare providers. Without this statutory change, these federal funds would otherwise go unspent and be returned to the Federal Government.

This Bill also extends the waiver of family fees for state subsidized childcare programs and the California State Preschool Program from July 1, 2023 to the end of September of this year. Moving on to the third Bill, SB 111 is the student loan tax Relief Bill. This Bill provides tax relief to Californians who had student loans or fees discharged as part of financial relief to individuals who were impacted by economic hardship during the COVID-19 pandemic. Specifically, under the American Rescue Plan act, or ARPA.

Federal law exempts loans discharged in 2021 through 2025 from taxation, and this Bill would allow the state to provide that same relief at the state level. This Bill also exempts from state income tax Community College fees discharged under the COVID-19 emergency in taxable years 2022 through 2026. This Bill also includes student loan debt that would be discharged under the Biden-Harris administration's Federal Student Loan Debt Relief Plan, which is currently on hold.

And finally, the Bill clarifies that higher Education Emergency grant funds received by students in postsecondary education to support expenses and financial needs of students related to the COVID-19 pandemic are not subject to state income tax in taxable years 2020 through 2027. And moving on to the Fourth Bill, SB 112, the Hospital Bill.

This Bill establishes a new short term loan program to provide interest free cash flow loans to qualified hospitals in extreme financial distress in order to stabilize these hospitals and maintain access to care, particularly in rural and in disadvantaged communities. It establishes the Distressed Hospital Loan Fund and authorizes the Department of Finance to transfer up to 150 million General Fund to the Fund to be available for this program.

The Bill requires the Department of Healthcare Access and Information, or HKI, and the California Health Facilities Financing Authority, TAFA, to develop a methodology to determine eligibility for this program. The Bill states that loans will be interest free and paid back over six years and if certain conditions are met, a portion of the loan may be forgiven at the discretion of the state.

Important to note, prior to loan forgiveness, the Bill requires approval by the Department of Finance and notice to the Joint Legislative Budget Committees as well as the relevant fiscal and policy committees of the Legislature regarding other accountability and transparency measures. The Bill includes legislative reporting on loan forgiveness, as I just mentioned, as well as on any loan modifications. It requires eligible facilities to submit financial information which will be treated confidentially by appropriate state officials, and that's similar to other programs regulating sensitive information.

It also authorizes the state to require any hospital with outstanding loans for a year to provide an independent audit of its operations. And lastly, the program will sunset on December 31st, 2031. Moving on to the final Bill, SC 113 is a cleanup Bill to AB 2183. This Bill makes changes to the provisions relating to the election and appeal bond provisions in AB 2183 as agreed upon by the Administration, the United Farm Workers and the California Labor Federation.

Amendments in this Bill include eliminating the option to conduct mail in ballots, retaining the option for card check petition process, but placing a cap on the number of cards check petitions over the next five years, and creating an independent and confidential verification process that the Agricultural Labor Relations Board must conduct before a labor organization can be deemed the representative of a bargaining unit.

And the Bill appropriates ten thousand dollar General Fund to allow the Agricultural Labor Relations Board to begin implementation of the provisions in this Bill in the current year, and that ends my presentation on the five bills.

Thank you. Any other comments or clarifications from LAO or Budget Committee?

Carolyn Chu, LAO we're happy to answer questions.

Great. I'll go to questions. Mr. Fong. Thank you. Mr. Chair. A few quick questions on a number of the bills. We'll start with SB 100, the budget Bill Junior Department of Finance our analysis and provided by the Committee says that this Bill spends an additional 35.4 million. Is there savings somewhere else, or is this a spending increase over the next few budget years?

The additional 15.4 million for Cal Recycle is a new General Fund augmentation, and that is largely due to a timing issue. This would otherwise be through a DRIO or disaster recovery Emergency Response Account Fund. But because of timing in terms of when to re up, that we were not able to use those funds. And so, this is the mechanism for which we need to pay for that in the current year.

Okay. So does this additional spending, does it impact the 2324 year budget year, or is it just for the current budget year?

It's for the current budget year. Okay. And then in terms of broadly speaking, when it comes to the budget, do we have a number in terms of how much funding remains unspent.

In any given year? We generally do an exercise to see what funds are unspent, and so that generally happens near the end of a fiscal year.

Okay. Would we be able to have that number as we discuss?

It's actually rolled into the Budget act number, so we would have adjustments that you would see reflected in our update at the May revision.

Okay. So we'll get it at the May revision. Okay. Thank you. The Student loan forgiveness Bill, the SB 111, I guess, to the LAO. Are there other components of federal income tax law that the state needs to conform so the state could provide relief to student loans? Is this the only one, or are there other conformity provisions that we could do?

Carolyn Chu with the LAO. As far as I'm aware, these are the provisions with which the state could conform. But my colleague, Mr. Alamo. Yes. Confirms that is correct.

Okay. My understanding is that at the federal level, employees can deduct up to $5,250 of student loan assistance from the employer. Would that be something that is, California conformed to that provision? So you can have a federal deduction, but I don't believe that it's a state tax deduction.

Can we follow up with you about that after hearing?

It's just a plug for one of my bills, so I don't know if the Department of Finance wants to comment on that.

I think we'd have to get back to you as well.

Okay. And then were the loans. AB 509 is the Bill. So just, if you wanted to look at that, were the loans that students have taken out to attend trade schools, will they be eligible for forgiveness and will they be tax exempt?

Let me bring up my colleague for some information.

Thank you for the question. Colby White, Department of Finance. So, loans to trade schools. If the loan is tax exempt under ARPA, it covers certain loans. It doesn't cover things like certain private loans and things like that. So it would turn on whether it was a federally backed loan. Okay. So that's the criteria that would determine whether it would be. There would be tax exemption or not. There's a very specific set of criteria, and I will follow up after this to provide you that specific set.

But that's. I appreciate. And then focusing. My last line of questioning will be for the distressed hospital loan program, certainly something that's significant in my district, representing Tilleri and Kern counties. I think I asked this in Health Committee, but to Department of Finance, what will the criteria be for identifying what a distressed hospital would be?

Sure, I'll start that, and then I may turn to my colleague for some further details. But the Bill requires the Department of Healthcare access and Information, as well as the California Health Facilities Financing Authority, to develop a methodology in regards to eligibility. And those factors that would be considered are financial distress, whether the hospital is small, rural, or a critical access hospital is a trauma center, serves a rural catchment area, and whether closure would significantly impact access to services in that region.

Those are sort of the high level details. I'll turn to my colleague for further details.

Guadalupe Enriquez with the Department of Finance. In addition to that, in order to demonstrate the need for assistance due to financial hardship, hospitals will be required to submit a plan with projections for uses of the loan, as well as strategies to regain financial liability to continue to operate. Again, the goal here is to maintain access and continue operations, particularly in the regions that Miss Lee mentioned. Those will be some of the metrics and factors that will be considered for loan.

Would a hospital's Medi Cal population be considered criteria? Yeah, that's one of the considerations is whether the hospital serves a disproportionate share of Medicaid patients. In developing this loan program, is it fair to say that a significant factor in determining a distressed hospital is to look at their payer mix, and those with high medical are likely to be operating in the red due to low reimbursement rates. So, does the Administration acknowledge that the reimbursement rates have to be looked at as well?

So not necessarily the rates, but in order to determine financial distress, some of the factors that will be considered will be projected financial metrics, cash on hand, history of operating margins. So looking at the hospital's fiscal picture on the whole. Okay, because I think the concern that we have.

So Madera is clearly the biggest example, though Kawea is on the brink, and then you've got a lot of other hospital systems, not only in Tiller County, but in Rich Crest, California, the hospital there is under significant stress. Is there acknowledgment that, do you believe that $150 million dollars is adequate to avoid this problem, or is there a plan moving forward if there are more hospitals that need assistance? How do you address that?

Sure, I would start with the one hundred fifty is for the current year, to address the immediate need. And I think this is a bigger problem than can be solved based on the words through this Bill. So further discussion does need to happen about the future of the viability of hospitals generally. So, the one hundred fity million dollsr is a one time amount for this program for a short period of time to really address more urgent matters.

Sure. So there is an acknowledgment that $150,000,000 may not be enough to assist the distressed hospitals, not just Madeira, but other hospitals.

It is something that I think we need to talk more about between the Administration, Legislature, and other stakeholders.

Okay. What is the maximum amount a hospital could receive in a loan through this program? So, these loans will be considered, on a case-by-case basis within the one hundred fifty million. And do you have kind of an idea of when you think hospitals would be able to apply for this loan once the Bill moves through and when the loans would be available?

So the goal is to disburse loans in this current year, but you don't have an exact timeline in terms of, I think, at the soonest, June. Soon as June. So current year?

Okay. And what is your expectation, or what is the administration's expectation on how long this funding would be able to keep a hospital open? Is there discussions about that, how long a hospital could get a loan for?

Yes.

Yeah.

So it'll all depend on each hospital will be a little different, and the needs will be different. And so that'll be part of the evaluation that the departments will be conducting in terms of how long, depending on the hospital situation. So it depends on the plan? Depends on the plan being submitted and how long. But there is no minimum or maximum at the moment? Not at the moment. Okay.

And then in terms of when a hospital closes and patients have to go somewhere else, how do we address the long-term sustainability? So, I guess maybe this, going back to the conversation I think that was in the Senate, is that this is like kind of a Band Aid. You're triaging a situation, trying to either reopen a hospital or keep a hospital afloat. But there is a sustainability question.

In terms, how does a hospital come to, you know, a hospital could submit a plan, but I guess if the solution is an increase in reimbursement, does that has to be part of the conversation? Am I correct? Yes. And so, as Ms. Lee mentioned, those are part of conversations. Know we'll be engaging with the Legislature in the future. Okay.

And then I guess my final question, and maybe it's related, but it's not tied to this Bill, but I'll have to ask, is that I think there are discussions on an MCO tax. What is the status of that, in terms of whether the revenue there would be utilized for either a reimbursement rate increase or kind of a sustainable hospital source of funding or for the providers? Broadly, I guess, yes.

So for the mayor vision, we have been in conversations with the Federal Government to find ways to maximize the managed care organization tax to bring as much benefit to the state. So as part of those conversations, there is a plan to use some of that funding for long term rate increases, but that's as part of the managed care organization for the 2425 budget. Are there formulas available, or is there specifics that you could provide in terms of what that would potentially look like?

I know there are discussions, but there's any details you can give us. I'm happy to follow up with your staff on the changes compared to the Governor's Budget for the updated managed care tax. I think, broadly speaking, I think that certainly this is necessary. I think the definition of distress is going to be really important because I think there is a risk that certain distressed hospitals may not, at this point in time, be eligible. And I think that defeats the purpose of this loan program.

I think secondarily, I think one hundred fifty million, while it is a significant amount of money, I think it may not be enough to bridge these hospitals, which I hope the Administration would at least acknowledge that. And I think that that is going to be a concern, because part of the plan that needs to be submitted is that these hospitals have to get to sustainability.

And if reimbursement rates or something isn't addressed, that plan may not be viable and that may reduce the participation or reduce the effectiveness, I think, of this loan program, and I think that it also will affect the ability to pay back the loan. So, if the hospital has no ability to generate a sustainable revenue stream, then how do you expect a hospital to not only stay open, but also pay back the loan? And so, I think that is going to be a critical component.

And if there is going to be a conversation, whether it's the MCO conversation or something in addition to that, I think that we need more specifics so that we can kind of holistically digest and look at what the long term strategy is to keep our hospitals open, not only in my community, but throughout the State of California. Thank you, Chair. Thank you. We'll go to Ms. Reyes. Thank you so much. I just wanted to provide just some comments on SBAB 110. Of course.

And I want to begin by thanking our budget chair, Assemblymember Ting, our sub two chair, Assembly Member Mccarty, and Speaker Rendon, for working with the Senate and with the Administration to prioritize this particular issue and put it into the early action budget package. I also want to thank our childcare advocates, some of who are here with us, because it's been their advocacy, reminding us all that family fees, if we don't extend that, they're going to expire June 30.

If we don't expire that or we don't extend that, so many families would be impacted. Extending it to September 30 is critical. So, I'm so glad that it is part of this early package. And the one thing that, of course, we will be working with is to increase the rate for our childcare providers to make sure that they do receive dignified wages, something we've been fighting for for some time. And I think this year it just might happen.

We want to make sure they can keep their doors open. So I sincerely appreciate the language that's provided here. Thank you. Thank you, Mr. Chair. Thank you. Other questions from the Committee. Mr. Pong? Thank you so much, Mr. Chair. And good afternoon, Members. Thank you so much for the presentation. And I would like to express my strong support for SB and AB 111.

These bills are consistent with my Bill, Assembly Bill 1958, that was signed by the Governor last year to help community college students with discharge of any paid unpaid fees, as well as the first Bill I introduced this year, AB 26, to exempt state taxes for federal student loan debt relief. I want to thank our budget chair, speaker, Members, and governor's Office for supporting our students in their educational journey. And thank you so much. Thank you.

Ms. Bonta, I have a question around AB 112 and SB 112 related to the hospitals. Kind of along the line of questioning of Mr. Fong, but more about the nexus between the State of the hospitals and the contemplation of the extent of retrofitting that needs to be done at the hospitals and whether that's at all contemplated in either the criteria for eligibility of receipt of funds or the overall need to be able to have the funds be able to use.

Given the fact that we could be investing in hospitals that also have a secondary, longer term sustainability issue around retrofitting, which could cause them to continue to be in peril. Yep. So, Guadalupe Manriquez with the Department of Finance. The loan may be forgiven based on considerations that the Department will determine later. And so we are tracking seismic safety or seismic compliance as something that hospitals are facing. So while not specifically forgiveness, the Bill doesn't outline that forgiveness will be for seismic.

It's one thing that we'll be considering as we think about forgiveness. So essentially, you could build in loan forgiveness clause that would allow for, if there is a need for retrofitting to happen, for there to be loan forgiveness, it could be one of the considerations. Okay, Dr. Wood, I just want to follow that line of questioning a little bit. That's a pretty significant issue if we go down that path.

The last number I heard with the state that the cost to retrofit the hospitals or to come up, bring everybody up to seismic is $134,000,000,000. And I would venture to guess that every hospital might feel they're a little bit distressed right now looking at the bills related to that. So, I guess, really the point of my comment really is more around what the criteria are, what reasons, beyond structural that are going to impact whether a hospital is distressed or not. Is it a management issue?

Is it a patient flow issue? Is it rates, Medi Cal rates, because Members may not be aware of this, but not every entity out there has the same Medi Cal rates. These are often negotiated. They're all negotiated. Hospital rates are negotiated with the medical, managed care plans. It's a very complicated web, and so some entities have very high medical rates, and some have very low medical rates. And so, this is going to be a challenging thing.

And I guess Mr. Fung has left here, but I'm concerned that the amount that's set aside will not likely be adequate. Thank you. Other questions from the responsible. So just on AB 110, very excited to see the family fee waiver, as well as the majority leader expressed the June to September 30 extension of the family fee waiver.

Could you put that into context around either the number of families that would be able to have continued care, and more importantly, what that means in terms of, with it ending in September 30? It's a wonderful four months, but it is still creating a cliff that we are perhaps deferring and whether or not that has been addressed at all.

Thank you for the question. Gabby Santora, Department of Finance Just to provide context, this proposal for early action is necessary in order to meet the timeline. In order to waive family fees through September 30, the Federal Government currently permits a full waiver of the family fees through that time period using federally funds that were awarded a couple of years ago. So, this proposal uses a balance that's allowable for that purpose to pursue waiver of family fees as allowed by the Federal Government.

So just at this juncture, this is what our ability is to do. So we're trying to take action in order to sort of meet that flexibility. And we recognize that there could be conversations going forward about what to do for the rest of the fiscal year. Apologies. I do not have at my fingertips the number of families that would be affected, but it would be all families who participate in subsidized childcare as well as a preschool.

Mr. Mccarty? Yeah. Thank you. Maybe just to add on that. So, this is positive news for stabilizing childcare and helping families, but it's really a little, little Band Aid. I think it's important to note that we are continuing budget discussions right now on the budget year.

This is kind of a quasi current year adjustment, the budget year, to have lasting impact, because we know, as Seminar Raya said, we've done all these significant pieces to our early Ed system with rates and universal TK and even waiving these family fees, but I'm sorry. With slots and universal TK, but we haven't done quite enough with rates. So unless we permanently address this issue, we're going to have major challenges in the overall early Ed field.

So this is just a down payment, and we'll certainly be back to have further discussions. Thank you. Thank you. Other questions. I know Mr. Bennett had a question on the last Bill, SB 113, really around the limiting the number of Carcheck majority support position elections that result in the certification of a labor organization to 75 certifications. Was there a reason that was limited to 75 or there's a limit at all?

I think the limit was placed on just to deal with workload. It is a large limit and will likely not be met, but it's just to provide some cap on ALRB's workload.

Thank you, Mr. Senior. Thank you, Mr. Chair. Just to follow up on the hospital issues, I recently toured Loma Linda and been made aware of the financial issues hospitals are facing. Did you guys study the hospitals that closed and figured out what went wrong? And if so, do you have any insight on that? And then whether this loan program would have kept them from closing with the Department of Finance, I'd have to follow up with the Department to see if an analysis has been done. Okay.

I'd be interested, just from a policy standpoint, on what went wrong that those hospitals closed. Is it the Medicare reimbursement? Is it labor cost? I heard a lot of hospitals, they're struggling with nurses, and they're paying triple for traveling nurses. So, they could have three nurses, but they're spending all their salary on travel nurses because they're desperate for staffing.

So I think there's some complicated issues going on at the hospitals, and we should get to the bottom of it because we can't afford for hospitals to close. I mean, a lot of places like Loma Linda is our only major trauma center in the Inland Empire. It's one of the major ones. They also have a children's hospital. So where are those patients going to? Can't, I don't think we can afford to lose them.

But rather than just throwing money at the problem, I'd love to have a better understanding of what went wrong. Maybe a case study, what went wrong with the hospitals that closed. And I understand we probably need a short term assistance, but also make them, like Assemblyman Fong said, sustainable so they don't have to keep coming back for loans and stuff. So I appreciate that. Thank you.

And I would just add that I think that is part of the broader discussion about more of the long term sustainability versus this particular pilot or this short term program.

Great. Thank you. Any other questions, comments from the Committee? Sorry. Mr. Alvarez. Hi. Just on item or AB 100, the net cost General Fund is 15.4, and it identifies specifically in our report costs for Mckinney Fire. What are the costs for the Mckinney fire? What's the total cost for that?

Beyond this debris cleanup. Is that your question?

Beyond the 15.4, is this 15.4 entirely for costs associated with the fire?

The 15.4 are specific to the Mckinney wildfire costs, but I'll let my colleague provide more detail.

Thank you. Yeah, surge, regular part of finance. So 15.4 are specifically for debris removal and cleanup associated with the Mckinney fire. So there's likely other costs associated with that fire. But when it comes to debris removal and cleanup, that's the entirety of the cost for that. Okay. Thank you very much, Mr. Alvarez. Christian Griffith, with Assembly budget, typically with a lot of fires, the state role is to pay for debris removal.

So there's other costs that are being borne by the Federal Government, locals, but this is one of the things the state typically does in the budget for large fires. Great. Thank you. I appreciate that. Thank you, Mr. Conway. Yeah. Thank you, Mr. Chair. Just kind of reinforcing a few of the points that have already been made well, by my colleagues, including reinforcing the importance of the hospital issue.

And while we appreciate kind of this short term fix, potentially with the loan program, really the issue is more longer term. Should we be considering additional funding or direct grants to help struggling hospitals, particularly in rural areas? And more broadly, what do we need to do to save these hospitals and the services they provide in rural areas where oftentimes those are the areas where these are the primary aspects of health care in those communities?

So kind of just flagging those issues, you've covered it to some extent. I don't know if you have any particular perspectives around the rural hospital piece as Ms. Lee mentioned earlier, the methodology to determine fiscal distress will consider whether the hospital is small, rural access areas, whether the closure will significantly impact services in the area. So it is one of the primary factors for the loan program. Great.

And then on SBAB 111, student loan relief, just want to reiterate that, commend the work going on here, the importance of these programs. So, thank you to the Committee speaker Rendon, Senate Pro Tem Atkins, to ensure that students are not taxed on the important relief they received during the pandemic. So, we will continue to reiterate the importance of that. And finally, on childcare, SBA 110, just a few questions.

Will the Department of Social Services and Department of Education be able to receive and allocate the supplemental funds by September 30 in accordance with federal law?

Thank you for the question. Gabby Santora, Department of Finance, confirming that these funds that would be used, that need to be liquidated by September 30. Both departments already have access to them, and we anticipate that they will be able to use them before that deadline.

Great. So just a couple of follow up questions, but it sounds like you've provided the answer. What barriers, if any, are there for expanding these funds? And what happens if all the funds are not expended by September 30?

Happy to provide a bit of context to respond to your question, noting that with regards to the stipend funds, they are the source of that from the Federal Government.

There is a survey reporting requirement that the Department of Social Services, they have put together a plan to make sure that they are distributing those funds, ah, with, with a sense of urgency to work off of existing information that they've already received from providers to make sure it goes out and meets the federal requirements so that we don't miss that deadline. But to the extent, just as a hypothetical, if they aren't liquidated by September 30, they would revert back to the Federal Government.

We're good. Okay. Any other questions from the Committee? Comments before we go to public comment? We will go to public comment. Feel free to line up in front of the microphone. You'll have one minute for public comment, and then we'll go to the phone lines.

Good afternoon, Mr. Chair and Members. Connie Delgado here, speaking on behalf of the District Hospital Leadership Forum, representing the 33 district and municipal hospitals in support of SB 112 that creates the Distressed Hospital Loan program. Members, district hospitals are unique in that they're governmental entities. These are stand-alone facilities. They make it or break it on their own. Many are located in rural and underserved communities

In 19 counties, district hospitals are the only public hospitals within a county, and our figures from third quarter of 2022 showed that 25 of the 33 hospitals had a negative net income. Significant Medi-Cal shortfalls have caused hospitals to close and reduce services. We saw the devastating effects of the hospital closure in Madera and the hardship for the patients in that community. Programs like this, the Distressed Hospital Loan program, are a step in the right direction in helping to stave off some of those hospital closures and reductions.

We want to thank the administration, the Members of this Committee, for your consideration and respectfully ask for an aye vote.

Nicette Short in support of SB 112. I'm here on behalf of PEACH, which is the association that represents the California's community safety net hospitals, and we're in full support. We represent California's 100 community safety net hospitals. An alarming 75% of these hospitals are currently operating at a loss and are struggling. One of those safety net hospitals is Beverly Hospital in Montebello.

They are a 200-bed, acute care hospital that has been a pillar in that community for 70 years. More than 90% of their patients are covered by Medicaid and Medicare. They saw 40,000 patients in their emergency department last year, which is a 20% increase from the year before, and they are fighting to stay afloat.

They recently filed Chapter 11 bankruptcy, which allows them to stay open, allows them to work through that process, allows them to work with their staff and with the community and hopefully with all of you to help keep that hospital alive for that community. This bill is a lifeline for that hospital and that community and for several under resourced communities like them.

We appreciate the committee support, we appreciate the administration's support, and we look forward to kind of continuing this conversation, as you all had, about kind of ongoing, long term structural reforms to the Medicaid program that are really necessary to make sure that more of our safety net hospitals don't end up where we are now. Thank you.

Honorable Chair Ting and Members, Amy Hines-Shaikh with Wildcat Consulting, representing the California Community Land Trust Network.

We continue to appreciate the ongoing investment in the Foreclosure Intervention Housing Preservation program and hope that that continues and we look forward to the ongoing discussions for long term housing solutions. Thank you.

Good afternoon, Chair and Members. Mark Farouk with the California Hospital Association, in support of SB 112. I want to thank the Members of this committee for the discussion regarding this loan program and the discussion potentially regarding longer term funding that is absolutely necessary. Also want to thank the Senate and the Administration for this early action budget bill.

We think this loan program can help a small handful of distressed hospitals make it until we can have a larger discussion in June in the larger budget package about sustainable funding, an issue that many Members of this committee brought up here today. Again, we appreciate this discussion. Looking forward to having further discussions about long term sustainability of our hospitals, given that one in five hospitals are at risk of closure and over 50% operate in the red. Thank you very much.

Good afternoon chair and Members. My name is Raquel Yaffey on behalf of the California Alternative Payment Program Association, or CAPPA. CAPPA wants to express our support for AB 110 and the ECE Coalition's work to ensure this year's budget includes funding to raise rates for childcare providers and delay the starred family fees until an equitable system is in place that doesn't harm families.

We also strongly encourage having a set stable amount for the continued enrollment, re-enrollment and support of families that are more unstable than ever before. Lastly, we request the continuation of a single voucher type to secure stable childcare for all families. Without this, families with unstable hours risk being disenrolled from care. Thank you for recognizing the importance of affordable and accessible childcare. We look forward to seeing the Assembly's budget plan and hope to see similar investments in childcare as the Senate has outlined in theirs. Thank you.

Good afternoon, Chair Ting and Members of the Committee. Bryan Little, California Farm Bureau Federation, offering strong objections to SB and AB 113. This is legislation that creates major changes to the Labor Code that normally would be considered by the policy committees of both this body and the Senate.

It will not be, and one of the reasons why that's a problem is because those of us who would be the other half of the major stakeholders, other than Labor Federation and UFW, were never consulted about the changes in law brought by AB and SB 113. We still have not been consulted about that, and because of the way this is being handled, we apparently will never have an opportunity to be consulted about that.

As a result, we would ask you to not pass SB/AB 113 and again reiterate our strong objections. Thank you.

Good afternoon. Matthew Allen with Western Growers Association. I'll be brief and just associate my comments with those made by Bryan Little, and we are in opposition to SB 113. Thanks.

Good afternoon, Mr. Chair and Members. Jolie Onodera with the California State Association of Counties here in support of SB 112, the Distressed Hospital Loan program, as a first step in addressing this issue. Thank you.

Good afternoon, Mr. Chair and Members. Malik Bynum with CCPU, a partnership between UDW and SEIU, representing over 40,000 family childcare providers in the state. Want to echo our comments from Senate Budget yesterday on SB and AB 110 and 100 as it relates to extending family fees to September of 2023, and also want to appreciate the proposal to install a temporary wage supplement for childcare providers, but acknowledging that there's much more to do at the bargaining table and that this is just a down payment as we look towards establishing a methodology that accounts for the true cost of care of providing childcare in our state. Thank you.

Good afternoon, Chair, Members. Janice O'Malley with AFSCME California, just wanted to align our comments with Malik Bynum on ABs 100 and 110, but also wanted to touch very briefly on AB 112, on distressed hospitals. We appreciate the conversation. Obviously, our healthcare workers and the nurses that work in these distressed hospitals, they live in these communities, they access these services. We would appreciate ongoing conversations on making sure that there's oversight and accountability as we move through this process and look forward to continuing those conversations moving forward. Thank you.

Kimberly Rosenberger with SEIU, the other half of that CCPU, we're doing a little good cop, bad cop. We are really appreciative of the efforts and also the Committee for acknowledging the need to raise the rates and the continued commitment as we negotiate. We are frustrated that we are having conversation about ARP dollars and getting them out urgently with little transparency because they sat and there wasn't true clarity on how the dollars were being used until we got to the last minute.

So we are appreciative of the flexibility, so we can continue having conversation before those dollars go out, but a little frustrated. On that note, we do want to say, though, that we are very appreciative of all the effort to continue the family fees and continue the conversations around childcare. Now, I'm going to speak with authority but not confidence for my colleagues on AB 112, SB 112. We appreciate the Distressed Hospital proposal to protect communities access to care.

We agree with the Committee on the need for additional transparency and accountability on the program, specifically one to ensure that the plans, finances and staff assessment are made available to ensure the public can review and hold the hospitals accountable to ensuring access to care, especially when it comes to the workforce. As a lack of retention and turnover in the staff has been a problem, we would urge a requirement to invest in the healthcare workforce.

We sincerely appreciate the acknowledgement of the benefits to the IHSS Career Pathways program and thank you for the inclusion and a blueprint to extend the program through December. Thank you.

Hello, my name is Ivonne Bejar. I am a childcare provider for 21 years from Sacramento, a member of Child Care Providers United. Thank you for hearing us and addressing our immediate needs. We urge you continuous support as we address higher ongoing rates, benefits and support for high needs areas on the collective bargain table. Thank you for your continued support. Gracias.

Buenas tardes. Mi nombre es Maria Sanchez. Soy una proveedora de cuidado infantito por dieciseis años... y quiero dar las gracias por escucharnos... Gracias por su continuo apoyo.

Mi nombre es Eva Palafox. Soy una proveedora de cuidado infantil del condado de Yolo. Y me miembro de Child Care Providers United States projecto de local no antenna cinco veintiuno. Gracias por escucharnos si a attendernos nuestras necesidades en mediatas instantos a su apoyo continuo a medida que abordamos las tarifas mas altas de curso los beneficios... A gracias por apoyo.

Hello. Good afternoon. My name is Tanika Banahene. I'm a childcare provider here in Sacramento county and also a member of Child Care Provider United, a project of SEIU Local Unit 99, 521 and UDW. Thank you for hearing us and addressing our immediate needs today. We urge you to continue to support our fight in childcare and also addressing the needs of the true cost of care for childcare providers here in the Sacramento county, throughout Sacramento county, and also other areas in region that have much lower rates in region throughout Sacramento.

Once again, the work that we do, the work that you all do is very important and also the work that we will continue to do at the bargaining table as well. Once again, thank you for your support and this much needed fight in addressing the needs of higher rates. Thank you.

Good afternoon, Chair and Committee Members. My name is Andrew Avila, on behalf of Early Edge California, here to express our support for SB 110, which will provide suspension to family fees using federal dollars, in addition to providing temporary rate supplements to our childcare programs. We know this action is necessary for families to access high quality preschool, and we really appreciate the Senate and administration's early action on this and the Committee for having this discussion. Thank you.

Good afternoon. Monique Ramos on behalf of the Early Care and Education Coalition, we'd like to thank you for the early budget action in order to continue the suspension of family fees as well as the stipends. But the truth is we still really need a rate solution.

Providers are closing their doors and if we expect working parents to have somewhere to put their children that's safe during the day while they work, it is absolutely necessary to provide a rate increase and a long term solution to family fees, as well as a cost-based reimbursement system. Thank you.

Adonai Mack with Children Now. We join the previous speakers and our colleagues from the ECE Coalition in strong support of the childcare item. California must make a multi year commitment to adopting rate reform and provide an immediate down payment to address California's childcare crisis. The billion dollars we hope that you accept do something similar to what they did in the Senate. However, it will take more than just one billion, it'll take billions more to implement a cost based rate system.

And we encourage you and legislative leadership to continue to address the care crisis and transform care and early learning in California to ensure our young children and families can thrive. Thank you.

Good afternoon Chair Ting and Members of the Committee. I'm Juliet Terry with the Child Care Resource Center. We are a proud member of the ECE Coalition and stand in solidarity and voice with all of our partners and the Coalition's asks today. We are in strong support of AB 110 and we'd like to thank the Assembly and the Administration for the ongoing dedication to these really critical issues of childcare and the extension of the family fee waivers in your early action package.

Thousands of families will be able to sustain access to childcare in the coming months because of this action. Several members today have really voiced that concern about the need for ongoing funding solutions for stabilizing our childcare system, and we urge the Assembly to consider these funding requirements as you finalize your package. Childcare is the backbone of both our communities and our economy, and we need to treat it as such. Thank you.

Hi there. Jennifer Greppi with Parent Voices California and I will say that we are all cheering today for the extension of family fees through September 30th. This will give us the time that we need to work with you all to create the more equitable fee schedule that all of these parents are really relying on moving forward. And we also just want to express that making sure that our child care providers have rates that they can really thrive on is such an important next step.

And thank you so much for taking this early action. We are so grateful, and we're here to work with you moving forward. Thank you.

Good afternoon. Linda Nguy with Western Center on Law and Poverty, in support of SB 112, which would increase health care access for low income Californians, particularly low income residents of Madera, who have been without a hospital in their county since it abruptly closed in December without the 180 day notice.

We would note that greater transparency is needed and look forward to future conversations. Thank you.

Good afternoon, Chairman Ting and Members of the Committee. My name is Laurie Furstenfeld. On behalf of the Child Care Law Center and a proud member of the ECE Coalition, we want to thank you for proposing AB 110 and hearing SB 110 today. Family fees were eliminated during the pandemic, and it worked. Families could pay down debt.

They could put their kids in enriching activities, get some relief from toxic stress, and pay for groceries and bills. Extending the family fee waiver and temporarily increasing rates is vital to bring immediate relief to families and providers. We agree with Assemblymember McCarty and Assemblymember Gómez Reyes that a long term solution is critical. We need a lasting solution with equitable family fees and just wages for providers. Thank you.

Good afternoon, Mr. Chair and Members. Rosanna Carvacho Elliott here, on behalf of the Early Care and Education Consortium in support of SB 110 today. Thank the Assembly for this early action to extend the family fee waivers, as well as do the funding for providers who are on the subsidy system. One thing I do want to note is that there are providers across the board who are still struggling to recover from the pandemic.

And just helping the subsidy providers is a very small subset of the entire ecosystem of child care providers, which, as you've heard from some of the other speakers today, is necessary to allow our families to be able to go to work and have their children in a safe environment. Thank you very much.

Thank you. Any other public comment from the audience? Not seeing any. Let's go to the phone lines. Operator, are you there?

Yes, Mr. Chair.

Let's start with public comment on the phone.

Okay. And if you wish to comment on this item, please press one, then zero at this time. We'll start with line number 11. Please go ahead.

Hello, my name is Orlando Cabalo. I'm the coordinator for the Free the Degree Coalition and a part of the Campaign for California Borrowers Rights Coalition.

We're calling in strong support of AB/SB 111. We thank the Legislature for and support AB 111 as it provides state tax relief on federal student debt cancellations through full conformity with the Federal American Rescue Plan Act. With California's nearly 4 million student loan borrowers holding a collective $147 billion in debt, President Biden's debt cancellation plan alone could benefit more than 3.5 million residents in our state.

Exempting student debt relief from state taxation will allow student loan borrowers to realize the full benefits of debt cancellation, and this is a crucial step in protecting our most vulnerable borrowers. For these reasons, we strongly support AB 111 and thank the Legislature for standing by student loan borrowers. Thank you.

Line 12, please go ahead.

Good afternoon, Members of the Committee. My name is Maéva Marc. On behalf of Kidango and the 4000 families we serve in the Bay Area, we want to thank you for prioritizing child care and emphasizing the package that you have this year to ensure that families continue to have stability and that child care programs also are able to be sustainable. We urge you to continue to make investments towards making our system more equitable for families as well as providers.

Thank you for your support and we are in strong support of AB 110 and SB 110.

Line number eight, please go ahead.

Hi, my name is Nicolette Del Palacio. I'm speaking on behalf of The Institute for College Access and Success, also known as TICAS. TICAS would like to express strong support of SB 111. We thank the Legislature for the early action on the trailer bills which provide state tax relief on several federal student debt cancellation programs through full conformity with the federal ARPA act here in California. This will impact the nearly 4 million student loan borrowers collectively holding more than $147 billion in debt.

Full conformity to ARPA and these trailer bills mean several recent student loan relief and discharge programs under the Biden Administration beyond the 10K-20K Debt Cancellation Plan, such as IDR plans and relief for defrauded students will also be exempt from state taxation. For these reasons, we strongly support SB 111 and thank the Legislature for standing by student loan borrowers. Thank you.

Line 18, please go ahead.

Samantha Seng with NextGen California and a part of the Campaign for California Borrowers Rights Coalition calling in strong support of SB 111. We thank the Legislature for and strongly support these trailer bills that provide state tax relief on federal student debt cancellations through full conformity with ARPA.

As you've heard, this conformity goes beyond the President's debt cancellation plan, will also exempt other crucial discharge programs at the federal level that were passed at the federal level, and this is a crucial step in protecting California's most vulnerable student loan borrowers who we know are disproportionately low income and students of color.

We also want to thank the Legislature for including additional provisions in these trailer bills that further support struggling college students, including the exemption from state tax for state funded institutional debt forgiveness and Federal Emergency Grant aid. So thank you again. We strongly support SB 11 and thank the Legislature for standing by student loan borrowers. Thank you.

Line 22, please go ahead.

Good afternoon, Chair and Members. This is Sara Bouabibsa with Young Invincibles, also a member of the Campaign for California Borrowers Rights. I just want to echo all of the sentiments of advocates before me and want to thank the Legislature for supporting and advancing student loan tax forgiveness through SB 111. These trailer bills will provide tax relief on federal student debt cancellation through full conformity with ARPA.

We know that two thirds of California residents qualify for the 20,000 student debt cancellation, so this tax relief is going to our most vulnerable borrowers. For these reasons, we strongly support SB 111, and we thank the Legislature for standing by student loan borrowers. Thank you.

Line 25, please go ahead.

Shannon Swanson, policy specialist with the Cal State Student Association, the official voice of nearly half a million CSU students and a part of the Campaign for California Borrowers Rights, calling in strong support of SB 111. Thank you so much.

Line number 19, please go ahead.

Good afternoon, Chair, Members. Amarantha Silva, member of Parent Voices California, resident of Marin County, in the strong support of AB 100 and AB 110. Thank you for supporting children, families and parents with your actions. Thank you.

Line 15, please go ahead.

Hi, this is Cody Hounanian. I'm the Executive Director of the Student Debt Crisis Center and a part of the Campaign for California Borrowers Rights Coalition, calling in strong support of SB 111. We thank the Legislature for both AB 111 and SB 111, which are identical trailer bills that would provide state tax relief on federal student debt cancellation through full uniformity with federal with policies in the federal American Rescue Plan.

We ask that you also exempt the state taxes from any federal emergency grant aid that college students may have received. There are several federal student loan relief programs that offer student debt forgiveness, or what we call cancellation for variety of reasons. These can include disability discharge, public service, and many other reasonable and important factors that can impact a borrower's life.

Unfortunately, for years we have heard from borrowers, many in our own network, who are afraid of accessing this relief as they are likely to face an unexpected tax bomb. During the pandemic, Congress passed the American Rescue Plan, which made student debt relief not taxed.

Line 34, please go ahead.

Mr. Chairman-

Line 34, you muted.

Amy Blumberg on behalf of the California Children's Hospital Association calling in support of AB 112, the Distressed Hospital Loan program, and we'd like to align our comments with those of the California Hospital Association and want to thank the Legislature for this early action item. Thank you.

Line 37, please go ahead.

Never mind.

Okay, we'll move on to Line 30. Please go ahead.

Good afternoon, Chair, Members. Raquel Morales on behalf of the Education Trust West in support of SB 110. We appreciate the early action on these issues and encourage the Legislature to continue working on a long term solution to stabilize our child care system. Thank you.

Line 24, please go ahead.

Good afternoon, Chair and Members. Danielle Kando-Kaiser, on behalf of the East Bay Community Law Center and strong support of SB 111. Thank you.

Line 38, please go ahead.

Hola. Muy buenas tardes. Mi nombre es Veronica Duarte. Soy Padre Voices de Marin. Estoy aquí para soporte de la de ciento y de ciento diez. Es posible en un tiempo no muy lejos que los comentarios puedan ser también tengamos oportunidad de darlos en español para mas personas. Thank you.

Line 21, please go ahead.

Good afternoon, Members. My name is James Moses. I'm with the California Association for Education of Young Children. I'm calling in alignment with our ECE Coalition partners. We're in strong support of Legislative Action Bill 110 and really looking forward to the family fee waivers being extended through September 30th, as well as rate supplements for our providers, and encourage the Legislature to look at immediate and long term solutions for our rate reform for childcare providers. Thank you.

And line 20, please go ahead. I'm sorry. Line 20, please go ahead.

Can you hear me?

Yes. Your line is open. Please go ahead.

Thank you. Good afternoon, Chair and Members. My name is Sadalia King. I'm with Catalyst California here in support of AB 110 and uplifting the ECE Coalition's request and the need for the rate increase. Our antiquated rate system does not disperse resources equitably and lags behind the actual cost of care, and providers cannot wait another year to receive a rate increase without harming California's ECE system, children, their families, across the state.

And this system is a unique space for our economy because it's necessary for all parents and guardians to work. Regardless of tax brackets, parents and guardians need someone to care and educate for their children to work and for the future of California. We urge your aye vote and support for California families. Thank you for all that you do. Enjoy the rest of your day.

Line 32, please go ahead.

Hello, Chair and Members. My name is Justina Erpelding and I am with EveryChild California and we are proud members of the ECE Coalition. We strongly support AB 110 and look forward to working with the Assembly to continue to stabilize the ECE field with long term rate increases for providers in a creation of an equitable family fee structure. Thank you.

Line 27, please go ahead.

Hi, my name is Jennifer Portillo, representing the Inland Empire Children's Cabinet, and I'm calling in to be in support of SB 110. Thank you.

Line 26, please go ahead.

Hi, my name is George Ashford. I'm here with Generation Up and the Campaign for California Borrowers Rights in strong support of SB 111. This is a super important Bill to make sure that the budget is in conformity with ARPA, to make sure that students are not getting taxed on the federal debt relief they're receiving. It's really important that students are able to get the full benefits of these federal actions to continue addressing the burden that student debt places on us. Thank you.

Line 40, please go ahead.

I am with Four States in Irma County, and I also represent Northern Directors Group, a coalition of childcare agencies in Northern California. We align with our ECE colleagues and ECE Coalition. Thank you for the early action to extend the family fee waiver, and we look forward to working with you on a more sustainable solution on reimbursement rates to avoid a collapse of our childcare and early education field. Thank you very much.

Line 41, please go ahead.

Hola. Buenas tardes. Mi nombre es Marta... Estoy aquí para apoyarla a vez quien SB ciento diez. Gracias.

Line 17, please go ahead.

Hi, yeah, Chair Ting and Committee Members. My name is Serena Lynn. I'm a parent of a three and a six year old, and I work with Educational Richmond Systems and a proud member of the ECE Coalition. I want to voice my wholehearted support and appreciation for AB 110 and the work that legislators have done on SB 110 as well, investing in quality childcare and education and supporting the continuum of care.

And by continuum of care, I mean our 3 and 5 year olds and our childcare and development services, our zero to three year olds. I am just so thankful to AB 110 and you have listened to our children and our families and our providers. The increased reimbursement rate is necessary. And I also look forward to a more sustainable solution where providers will be supported. And thank you. Thank you for moving to waive the family fee. Thank you.

And line 42, please go ahead.

Mr. Chair, Members, Sara Flocks of the California Labor Federation calling in support of SB 113 that contains clarifying language and changes necessary to implement AB 2183 which was signed into law by the Governor last year. Thank you so much for the early action.

And, Mr. Chair, we have no one else wishing to speak at this time.

Thank you. Operator. Any other public comment here in the Committee room? Any other final thoughts from the Committee? Mr. Garcia?

Just briefly, and I apologize for walking in after the fact, but the conversation on hospitals is an important, I want to recognize the work of Assemblymember Soria, who's been leading the charge on this effort. And that's all I wanted to say. So thank you.

Thank you, Mr. Garcia. Mr. Bennett.

I just want to comment that the crisis of childcare and pay for those workers that are trying to help other families be able to go to work is absolutely very serious one, and it's one that I'd hope the Federal Government would be able to help us with. Also, almost all other first world countries do a much better job of helping people take care of children while they're going to work. Thank you.

Thank you. I totally appreciate your comments.

I know that, in particular we transitioned from CDE to DSS in terms of funding and oversight this year. I know there's been some bumpiness and some challenges with that. We're hoping that DSS can get the money that's been appropriated out as soon as possible. I know that it's important. I think we've done our part in appropriating a significant amount of dollars to childcare, but it doesn't do us any good if it's sitting in the state budget versus in the pockets of all our providers.

So very much appreciate Mr. Bennett's comments. Any other final comments? No. Very much appreciate DOF and LAO for being here. With that, we are adjourned.